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Exhibit 10.8.doc
FINANCING AND SECURITY AGREEMENT
SUNRISE BATON ROUGE ASSISTED LIVING, L.L.C., SUNRISE BLOOMINGDALE
ASSISTED LIVING, L.L.C., SUNRISE FARMINGTON HILLS ASSISTED LIVING,
L.L.C., SUNRISE NEW ORLEANS ASSISTED LIVING, L.L.C., SUNRISE OAKLAND
ASSISTED LIVING LIMITED PARTNERSHIP, SUNRISE RIVERSIDE
ASSISTED LIVING, L.P., AND SUNRISE WILTON ASSISTED LIVING, L.L.C.
AS BORROWERS
BANK OF AMERICA, N.A.
AS LENDER
$36,000,000 REVOLVING CREDIT FACILITY
APRIL 30, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
Section 1.1 Certain Defined Terms. 1
Section 1.2 Accounting Terms and Other Definitional Provisions. 14
ARTICLE II BORROWING 15
Section 2.1 The Loan. 15
Section 2.2 Procedure for Advances. 16
Section 2.3 Fees. 17
Section 2.4 Interest Rate Matters. 17
Section 2.5 Extensions. 18
Section 2.6 Permitted Costs. 19
Section 2.7 Co-Borrower Obligations. 19
Section 2.8 Agreement Among Borrowers. 20
Section 2.9 Benefits to Borrowers. 21
Section 2.10 Guaranty. 21
ARTICLE III COLLATERAL 24
Section 3.1 Collateral. 24
Section 3.2 Facilities. 25
Section 3.3 Assignment of Partnership Interests. 25
Section 3.4 Guaranties. 25
Section 3.5 Collateral for Obligations. 25
Section 3.6 Costs. 25
ARTICLE IV GENERAL FINANCING PROVISIONS 25
Section 4.1 Conditions Precedent to Credit Facility Closing. 25
Section 4.2 Conditions Precedent to Determining Availability Under Borrowing Base or
Making an Advance under the Loan. 28
Section 4.3 Computation of Interest and Fees. 28
Section 4.4 Liens; Setoff. 28
Section 4.5 Payment and Performance of Obligations. 29
Section 4.6 Payments to Others for the Account of the Borrowers. 29
Section 4.7 Prepayment. 29
Section 4.8 Assignments. 29
Section 4.9 Liability of the Lender. 30
ARTICLE V REPRESENTATIONS AND WARRANTIES 30
Section 5.1 Existence/Good Standing. 30
Section 5.2 Power and Authority. 30
Section 5.3 Binding Agreements. 30
Section 5.4 Litigation. 30
Section 5.5 No Conflicting Agreements. 31
Section 5.6 Financial Information. 31
Section 5.7 No Default. 31
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Section 5.8 Taxes. 32
Section 5.9 Place(s) of Business and Location of Collateral. 32
Section 5.10 Title to Properties. 32
Section 5.11 Margin Stock. 32
Section 5.12 ERISA. 32
Section 5.13 Governmental Consent. 33
Section 5.14 Full Disclosure. 33
Section 5.15 Business Names and Addresses. 33
Section 5.16 Licenses and Certifications. 33
Section 5.17 Operating Agreements and Management Contracts. 34
Section 5.18 Participation Agreements and Resident Agreements. 34
Section 5.19 Compliance with Laws. 35
Section 5.20 Presence of Hazardous Materials or Hazardous Materials Contamination. 35
Section 5.21 Nature of Credit Facility; Usury; Disclosures. 35
Section 5.22 Compliance with Zoning. 35
Section 5.23 Utilities. 35
Section 5.24 Access; Roads. 36
Section 5.25 Other Liens. 36
Section 5.26 Defaults. 36
Section 5.27 Survival; Updates of Representations and Warranties. 36
Section 5.28 Accounts. 36
ARTICLE VI CONDITIONS OF LENDING 37
Section 6.1 No Default. 37
Section 6.2 Opinion of Counsel for the Borrowers. 37
Section 6.3 Approval of Counsel for the Lender. 37
Section 6.4 Supporting Documents. 37
Section 6.5 Financing Documents. 38
Section 6.6 Insurance. 38
Section 6.7 Security Documents. 38
ARTICLE VII AFFIRMATIVE COVENANTS OF BORROWER 38
Section 7.1 Financial Statements. 38
Section 7.2 Taxes and Claims. 39
Section 7.3 Legal Existence. 40
Section 7.4 Conduct of Business and Compliance with Laws. 40
Section 7.5 Use of Proceeds. 41
Section 7.6 Insurance. 41
Section 7.7 Flood Insurance. 42
Section 7.8 Maintenance of Properties. 43
Section 7.9 Maintenance of the Collateral. 43
Section 7.10 Other Liens, Security Interests, etc. 43
Section 7.11 Defense of Title and Further Assurances. 43
Section 7.12 Subsequent Opinion of Counsel as to Recording Requirements. 43
Section 7.13 Books and Records. 44
Section 7.14 Collections. 44
Section 7.15 Notice to Account Debtors and Escrow Account. 44
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Section 7.16 Business Names. 44
Section 7.17 ERISA. 44
Section 7.18 Change in Management. 45
Section 7.19 Management. 45
Section 7.20 Surveys. 45
Section 7.21 Payments for Labor and Materials. 46
Section 7.22 Correction of Property Defects. 46
Section 7.23 Fees and Expenses; Indemnity. 46
Section 7.24 Governmental Surveys or Inspections. 46
Section 7.25 Cost Reports. 46
Section 7.26 Updated Appraisals. 46
Section 7.27 Notification of Certain Events, Events of Default and Adverse Developments. 47
Section 7.28 Compliance with Environmental Laws. 48
Section 7.29 Hazardous Materials; Contamination. 48
Section 7.30 Participation in Reimbursement Programs. 49
Section 7.31 Subordination of Distributions and Management Fees. 49
Section 7.32 Depository Bank. 49
Section 7.33 Copies of Notices. 49
ARTICLE VIII NEGATIVE COVENANTS OF BORROWER 50
Section 8.1 Borrowings. 50
Section 8.2 Deeds of Trust and Pledges. 50
Section 8.3 Sale or Transfer of Assets. 50
Section 8.4 Other Liens; Transfers; "Due-on-Sale"; etc. 50
Section 8.5 Advances and Loans. 51
Section 8.6 Contingent Liabilities. 51
Section 8.7 Licenses. 51
Section 8.8 ERISA Compliance. 51
Section 8.9 Transfer of Collateral. 51
Section 8.10 Sale of Accounts or Receivables. 52
Section 8.11 Amendments; Terminations. 52
Section 8.12 Prohibition on Hazardous Materials. 52
Section 8.13 Subsidiaries. 52
Section 8.14 Distributions to Partners or Members. 52
Section 8.15 Mergers or Acquisitions. 52
Section 8.16 Partnership Interests. 52
Section 8.17 Impairment of Security. 53
Section 8.18 Conditional Sales. 53
ARTICLE IX EVENTS OF DEFAULT 53
Section 9.1 Failure to Pay and/or Perform the Obligations. 53
Section 9.2 Breach of Representations and Warranties. 53
Section 9.3 Failure to Comply with Covenants. 53
Section 9.4 Failure to Comply with Books and Records. 53
Section 9.5 Other Defaults. 54
Section 9.6 Default Under Other Financing Documents. 54
Section 9.7 Receiver; Bankruptcy. 54
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Section 9.8 Judgment. 54
Section 9.9 Execution; Attachment. 54
Section 9.10 Default Under Other Borrowings. 54
Section 9.11 Material Adverse Change. 55
Section 9.12 Impairment of Position. 55
Section 9.13 Change in Status or Ownership. 55
Section 9.14 Zoning. 55
Section 9.15 Change in Management. 55
Section 9.16 Licenses. 55
Section 9.17 Mechanic's Lien. 56
Section 9.18 Compliance with Law. 56
ARTICLE X RIGHTS AND REMEDIES UPON DEFAULT 56
Section 10.1 DEMAND; ACCELERATION. 56
Section 10.2 Further Advances; Immediate Acceleration. 56
Section 10.3 Specific Rights With Regard to Collateral. 56
Section 10.4 Performance by Lender. 58
Section 10.5 Uniform Commercial Code and Other Remedies. 58
Section 10.6 Receiver or Other Court Order. 59
Section 10.7 No Conditions Precedent to Exercise of Remedies. 59
Section 10.8 Remedies Cumulative and Concurrent. 59
Section 10.9 Strict Performance. 60
ARTICLE XI MISCELLANEOUS 60
Section 11.1 Notices. 60
Section 11.2 Consents and Approvals. 61
Section 11.3 Remedies, etc. Cumulative. 61
Section 11.4 No Waiver of Rights by the Lender. 61
Section 11.5 Entire Agreement. 61
Section 11.6 Survival of Agreement; Successors and Assigns. 62
Section 11.7 Expenses. 62
Section 11.8 Counterparts. 62
Section 11.9 Governing Law. 62
Section 11.10 Modifications. 63
Section 11.11 Illegality. 63
Section 11.12 Gender, etc. 63
Section 11.13 Headings. 63
Section 11.14 Waiver of Trial by Jury. 63
Section 11.15 No Warranty by Lender. 64
Section 11.16 Liability of the Lender. 64
Section 11.17 License of Tradename. 64
Section 11.18 No Partnership. 64
Section 11.19 Third Parties; Benefit. 65
Section 11.20 Conditions; Verification. 65
Section 11.21 Time of Essence. 65
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EXHIBIT 10.8
FINANCING AND SECURITY AGREEMENT
THIS FINANCING AND SECURITY AGREEMENT (the "Agreement") is made as of
the 30th day of April, 2001, by and among SUNRISE BATON ROUGE ASSISTED LIVING,
L.L.C., a Louisiana limited liability company, SUNRISE BLOOMINGDALE ASSISTED
LIVING, L.L.C., an Illinois limited liability company, SUNRISE FARMINGTON HILLS
ASSISTED LIVING, L.L.C., a Michigan limited liability company, SUNRISE NEW
ORLEANS ASSISTED LIVING, L.L.C., a Louisiana limited liability company, SUNRISE
OAKLAND ASSISTED LIVING LIMITED PARTNERSHIP, a California limited partnership,
SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a California limited partnership and
SUNRISE WILTON ASSISTED LIVING, L.L.C., a Connecticut limited liability company
(individually a "Borrower" and collectively the "Borrowers"), and BANK OF
AMERICA, N.A., (the "Lender").
RECITALS
A. The Borrowers have obtained from the Lender a revolving credit
facility in the maximum principal sum of $36,000,000 (the "Credit Facility").
The Credit Facility is evidenced by a Revolving Credit Note of even date
herewith (the "Note").
B. The Credit Facility will be secured by seven (7) assisted living
facilities, and their related real property interests and business assets, each
owned by one of the Borrowers.
C. The Lender has agreed to make available the Credit Facility jointly
and severally to the Borrowers upon the terms and conditions set forth in this
Agreement.
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 Lender,
hereby agrees 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, health-care insurance receivables,
contract rights, notes, drafts, instruments, acceptances, chattel paper, leases
and writings evidencing a monetary obligation or a security interest in or a
lease of
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goods, all rights to payment of a monetary obligation or other consideration
under present or future contracts arising out of or relating to any and all
Facilities (including, without limitation, all rights (whether or not earned by
performance) to receive the payment of money or other consideration from, or on
behalf of, any private pay patient), or by virtue of property that has been
sold, leased, licensed, assigned or otherwise disposed of, services rendered or
to be 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 commercial tort claims, other
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) Supporting
Obligations, Letter-of-credit rights and letters of credit 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 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.
"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.
"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%).
"Agreement" means this 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).
"Appraised Value" means the appraised value of a Facility as
stabilized, as reviewed by the Lender.
"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., as amended from time to time.
"Borrowing Base" means at any time an amount equal to the lesser of (a)
the aggregate dollar amounts of 75% of the Appraised Value for each of the
Facilities; or (b) the aggregate dollar amounts of 80% of the Total Development
Cost of each Pool A Project, 60% of the Total
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Development Cost of each Pool B Project, 40% of Total Development Cost of each
Pool C Project and 0% of the Total Development Cost for each Pool D Project.
"Borrowing Base Deficiency" shall have the meaning set forth in Section
2.1 (The Loan).
"Borrowing Base Report" shall have the meaning set forth in Section 2.1
(The Loan).
"Chattel Paper" means a record or records (including, without
limitation, electronic chattel paper) that evidence both a monetary obligation
and a security interest in specific goods, a security interest in specific goods
and software used in the goods, or a lease of specific goods; all Supporting
Obligations with respect thereto; any returned, rejected or repossessed goods
and software covered by any such record or records 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 of the foregoing.
"Collateral" means all of the Borrowers' Accounts, Equipment, General
Intangibles, documents, Chattel Paper, Instruments and Inventory, all right,
title and interest any 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 Facilities as that term is defined herein and in
the Uniform Commercial Code, and shall also cover, without limitation, (a) any
and all property specifically included in those respective terms in this
Agreement or in the Financing Documents, (b) 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, (c) all right, title and
interest of the Borrowers under all construction, architectural and design
contracts and plans and specifications, (d) 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, (e) any and all bank accounts or other deposit accounts of
the Borrowers wherever located, and (f) all Proceeds, of the foregoing.
"Collateral Assignments" means collectively the Collateral Assignment
of Licenses, Participation Agreements and Resident Agreements dated of even date
herewith between the Borrowers and the Lender and the Collateral Assignment of
Operating Agreements and Management Contracts dated of even date herewith among
the Borrowers, the Management Company and the Lender.
"Commitment Fee" has the meaning described in 2.3.1 (Commitment Fee).
"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.
"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.
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"Credit Facility Closing" shall mean the date on which the documents
evidencing and securing the Credit Facility are executed and delivered to the
Lender.
"Credit Facility Committed Amount" means $36,000,000.
"Debt Service" means for any period of determination the following
amounts for each Facility: (a) Wilton (CT) - $10,197,112; (b) Riverside (CA) -
$8,025,000; (c) Oakland (CA) - $10,556,000; (d) Farmington (MI) - $8,400,000;
(e) Baton Rouge (LA) - $8,250,000; (f) New Orleans (LA) - $8,025,000; (g)
Bloomingdale (IL) - $10,912,500 each 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 for each Facility and
securing the Obligations as the same may be from time to time amended, modified,
restated or substituted.
"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.
"EBITDA" means earning of a Facility before interest, federal and state
income taxes, depreciation, amortization and any other non-cash and one time,
non-recurring charges consented to by the Lender in its sole discretion
(provided that the consent of Lender holding at least 66.67% of the pro rata
shares of the Loan shall be required for adding back charges in excess of
$5,000,000 in the aggregate in any one rolling four (4) quarter period, 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.
"EBITDAR" means EBITDA plus Rent Expense.
"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 Lender 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),
Section 7.23 (Fees and Expenses), Section 10.4 (Performance by Lender) 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.
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"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 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 (2) 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 (2) 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.
"Event(s) of Default" shall mean the occurrence of any one or more of
the events specified in ARTICLE IX (Events of Default) 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 (Events of Default).
"Expense Payments" shall have the meaning set forth in Section 10.4
(Performance by Lender).
"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 Management
Fee Subordination Agreements, the Security 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 first resident
takes occupancy in any given Facility (regardless of whether a Borrower then
owned the Facility or when the Facility was added to the Borrowing Base), such
Facility shall maintain a ratio of EBITDA for the Facility to Debt Service for a
Facility with 77 units or fewer, equal to not less than 0.6 to 1.0
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as of the end of the third (3rd) full fiscal quarter, a ratio of not less than
1.0 to 1.0 as of the end of the fourth (4th) full fiscal quarter and a ratio of
not less than 1.25 to 1.0 as of the end of each of the fifth (5th) full fiscal
quarter and thereafter and for a Facility with 78 units or more, a ratio equal
to not less than 0.6 to 1.0 as of the end of the third (3rd) full fiscal
quarter, a ratio equal to not less than 1.0 to 1.0 as of the end of the fourth
(4th) full fiscal quarter, a ratio of note less than 1.15 to 1.0 as of the end
of the fifth (5th) full fiscal quarter and a ratio of not less than 1.25 to 1.0
as of the end of the sixth (6th) full fiscal quarter and thereafter, measured
thereafter as of the end of each full fiscal quarter on a rolling four-quarter
basis. For Acquisition Projects, EBITDA will be calculated on a pro-forma basis
using such Facility's most recent fiscal quarter operating results.
"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, commercial tort claims, other claims (including
without limitation all claims for income tax and other refunds), payment
intangibles, Supporting Obligations, choses in action, judgments, software,
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, Letter-of-credit rights, letters of credit, contractual
rights, the right to receive refunds of unearned insurance premiums, 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, books and records in whatever
media (paper, electronic or otherwise) recorded or stored, with respect to any
or all of the foregoing, all Supporting Obligations with respect to any of the
foregoing, and all Equipment and General Intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all Proceeds 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 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.
"Hedge Transaction" means any transaction between any of the Borrowers
and the Agent or any affiliate of the Agent now existing or hereafter entered
into, which provides for an interest rate or commodity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross-currency rate swap,
currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging Borrower's exposure to
fluctuations in interest rates, currency valuations or commodity prices.
"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
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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).
"Improvements" shall have the meaning given to that term in each Deed
of Trust.
"Instrument" means a negotiable instrument or any other writing which
evidences a right to payment of a monetary obligation and is not itself a
security agreement or lease and is of a type that in the ordinary course of
business is transferred by delivery with any necessary endorsement or
assignment, and all Supporting Obligations with respect to any of the foregoing
and all Proceeds with respect to any of the foregoing.
"Inventory" means any and all inventory of each of the Borrowers and
all right, title and interest of each 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 each
of the Borrower's businesses and all documents of title or documents
representing the same and all Proceeds of the foregoing.
"Klaassens" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Land" shall have the meaning given to that term in each 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" shall have the meaning given to that term in each Deed of
Trust.
"Letter-of-credit right" means a right to payment or performance under
a letter of credit, whether or not the beneficiary has demanded or is at the
time entitled to demand payment or performance.
"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 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.
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"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 unfiled 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.
"Liquidation Costs" shall have the meaning set forth in Section 10.5
(Uniform Commercial Code).
"Loan" shall have the meaning set forth in Section 2.1 (The Loan).
"Managed Care Plans" means any health maintenance organization,
preferred provider organization, individual practice association, competitive
medical plan, or similar arrangement, entity, organization, or Person.
"Management Agreement" means 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 any 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).
"Master Credit Facility" means the existing revolving credit facility
in the current maximum principal sum of $400,000,000 from the Lender as agent
for itself and certain other lenders to Sunrise East Assisted Living Limited
Partnership as principal borrower and certain other subsidiaries of SALI as
co-borrowers, as such credit facility may be renewed, modified or restructured.
"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) 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" shall have the meaning given to that term in each Deed
of Trust.
"Minimum Occupancy Requirement" means for a Facility with 77 units or
fewer, a minimum Resident Occupancy of (A) 50% by the ninth (9th) Operating
Month, (B) 70% by the twelfth (12th) Operating Month and (C) 85% by the
fifteenth (15th) Operating Month and
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thereafter and means for a Facility with 78 units or more, a minimum Resident
Occupancy of (A) 45% by the ninth (9th) Operating Month, (B) 65% by the twelfth
(12th) Operating Month, (C) 80% by the fifteenth (15th) Operating Month and (D)
85% by the eighteenth (18th) Operating Month and thereafter.
"Multi-employer Plan" shall mean a Plan which is a multi-employer 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).
"Notice" shall mean a written communication delivered as specified in
Section 11.1 (Notices).
"Obligations" means all present and future debts, obligations, and
liabilities, whether now existing or contemplated or hereafter arising, of the
Borrowers to the Lender under, arising pursuant to, in connection with and/or on
account of the provisions of this Agreement, the Note, the Deeds of Trust, each
Security Document, any Hedge Transaction 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),
any indebtedness to the Lender arising out of any Hedge Transaction, 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 Lender 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.
"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 first resident
takes occupancy in a Facility.
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"Operating Reserve" shall mean a reserve in an amount approved by the
Lender included in each Total Development Cost to cover the costs of leasing up
a Facility and initial operating deficits.
"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.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent
or which the Lender 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 Lender; (b) deposits or pledges to secure obligations under
workers' compensation, social security or similar laws, or under unemployment
insurance in the ordinary course of business; (c) Liens in favor of the Lender
pursuant to the Credit Facility or in connection with any Hedge Transaction; (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 Lender
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.
"Pledge, Assignment and Security Agreement" means the Pledge Assignment
and Security Agreements of even date herewith executed by the partners or
members of each of the Borrowers in favor of the Lender, pursuant to which such
partners or members of the Borrowers have pledged and assigned all of their
respective interests in the Borrowers to the Lender as additional security for
the Credit Facility.
"Pool A Project" means any Facility for which, when the Borrowing Base
is computed at the end of a reporting period meets the Minimum Occupancy
Requirement and Fixed Charge Coverage Ratio Requirement.
"Pool B Project" means any Facility which, when the Borrowing Base is
computed at the end of any fiscal quarter, does not meet the definition of a
Pool A Project.
"Pool C Project" means any Facility which, when the Borrowing Base is
computed at the end of two or more consecutive fiscal quarters, does not meet
the definition of a Pool A Project.
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"Pool D Project" means any Facility which, when the Borrowing Base is
computed at the end of any fiscal quarter is not maintaining a minimum Fixed
Charge Coverage ratio of .75 to 1.0 and which has been operating for four (4)
full fiscal quarters or longer.
"Post Default Rate" means the interest rate on the Note in the absence
of an Event of Default plus three percent (3%) per annum.
"Primary Borrower" means Sunrise Baton Rouge Assisted Living, L.L.C. 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
Lender.
"Proceeds" has the meaning described in the Uniform Commercial Code as
in effect from time to time.
"Property" means collectively the "Property" as that term is defined in
each of the Deeds of Trust.
"Qualified Ground Lease" means (a) any lease (i) 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, (ii) which may be transferred and/or assigned without the consent of
the Lessor (or as to which the lease expressly provides that (A) such lease may
be transferred and/or assigned with the consent of the lessor and (B) such
consent shall not be unreasonably withheld or delayed), (iii) which has a
remaining term (including any renewal terms exercisable at the sole option of
the lessee) of at least 50 years, (iv) under which no material default has
occurred and is continuing, (v) with respect to which a security interest may be
granted without the consent of the lessor, and (vi) which contains lender
protection provisions reasonably acceptable to the Lender including, without
limitation, provisions to the effect that (A) the lessor shall notify the Lender
of the occurrence of any default by the lessee under such lease and shall afford
the Lender the right to cure such default and (B) in the event that such lease
is terminated, the Lender 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 Lender of a written request for approval of the lender
protection provisions and other terms of a proposed Qualified Ground Lease, the
Lender 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 Proceeds thereof.
"Rent Expense" means the actual rent expense incurred by a 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
(whether or not such Facility is stabilized).
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"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"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 31, 2001 or any date to
which it may be extended from time to time pursuant to the terms of Section 2.5
(Extensions).
"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) 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.
"Security Documents" means, 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 Lender on any collateral to secure the Obligations, as the same may from
time to time be amended, restated, supplemented or otherwise modified.
"State" means the Commonwealth of Virginia.
"Supporting Obligation" means a Letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"Survey" means a plat of the Land for any Facility which clearly
designates at least (a) the location of the perimeter of such Land by courses
and distances; (b) the location of all easements, rights-of-way, alleys,
streams, waters, paths and encroachments; (c) the location of all building
restriction lines and set-backs, however established; (d) the location of any
streets or roadways abutting such Land; and (e) the then "as-built" location of
the Improvements located
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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 ALTA/ACSM Rand
Surveys adopted by the American Land Title Association and the American Congress
on Surveying and Mapping (1997 Edition) and otherwise complying with the
provisions of EXHIBIT E attached hereto.
"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 Costs" means as to a Facility actual costs expended
by or on behalf of any of the Borrowers in constructing one of the Facilities,
reported to the Lender and verified by the Lender.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.
"Unused Line Fee" shall have the meaning set forth in 2.3.2 (Unused
Line Fee).
"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
Uniform Commercial Code shall have the same meanings as assigned to them by the
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 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.
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ARTICLE II
BORROWING
Section 2.1 The Loan.
(a) The Lender agrees 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 Lender 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.
(b) The obligation of the Borrowers to repay the Loan
shall be evidenced by the Revolving Credit Note of even date herewith (as
further amended, restated, substituted, extended, renewed and otherwise modified
from time to time, the "Note") payable to the Lender 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 Lender on a pro rata basis based on their pro rata shares
of the Credit Facility Committed Amount.
(d) The Borrowers will prepare a Borrowing Base
Report (each a "Borrowing Base Report") attached hereto as EXHIBIT B which must
also be certified by the Borrowers listing for each of the Facilities (i) the
applicable Appraised Value (ii) Total Development Cost, and (iii) its status as
of the most recent reporting date as a Pool A, Pool B, Pool C or Pool D Project.
The initial Borrowing Base Report is attached hereto as EXHIBIT C. The Borrower
shall submit updated Borrowing Base Reports in connection with each request for
an advance or a certification of no deterioration in the pool status of any
Facility since the last Borrowing Base Report and will also submit current a
current Borrowing Base Report within forty-five (45) days after the end of each
of the Borrowers' fiscal quarters. The Borrowing Base Report will be based on
appraisals obtained by the Lender and other information on the Facilities
provided by the Borrowers or obtained by the Lender. The Borrowing Base shall be
computed based on the Borrowing Base Report most recently prepared by the
Borrowers and reviewed and accepted by the Lender. In the event the Borrowers
shall fail to furnish other current reports or information as reasonably
required by the Lender pursuant to the Financing Documents, or in the event the
Lender believes that a Borrowing Base Report is no longer accurate, the Lender
may, in its reasonable discretion exercised from time to time and without
limiting its other rights and remedies under the Financing Documents, upon
notice to the Borrowers and the expiration of a cure period of five (5) Banking
Days, designate any Facility as a Pool D 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 a Facility from the lien
of the applicable Deed of Trust, (ii) by the change of any Facility's status as
a Pool A or B Project to a Pool B or C Project or a Pool A, B or C Project to a
Pool D Project respectively as determined by the Lender. The Borrowing Base
shall be subject to increase as a result of the change of a Facility's status as
a Pool B, C or D Project to a Pool A as determined by the Lender.
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(e) The Borrowers shall furnish to the Lender such
schedules, certificates, lists, records, reports, information and documents as
required by the Lender from time to time so that the Lender may, in its
reasonable discretion, determine the Borrowing Base.
(f) If at any time the aggregate principal amount of
the Loan outstanding 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 Lender either pay the amount and/or add Facilities to increase the Borrowing
Base to an amount which is at least equal to the aggregate principal amount
outstanding under the Loan.
(g) The current Borrowing Base Report is attached
hereto as EXHIBIT C.
(h) As of the date hereof the Borrowers have
designated and the Lender has accepted each of the Facilities owned by the
Borrowers into the Borrowing Base as Facilities.
Section 2.2 Procedure for Advances.
(a) The Lender will make advances from time to time
upon receipt of written request from the Borrowers in the form designated by the
Lender, 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. 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. (Eastern time)
three (3) Banking Days prior to the Banking Day on which the funds will be
advanced. The Borrowers shall advise the Lender at the time of such notice which
Eurodollar Period they are selecting. The Lender 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 Lender three (3) Banking Days in
advance of the expiration of a Eurodollar Period of their intention to either
pay off such portion of the Loan or renew the applicable Eurodollar Period, it
shall be assumed by the Lender that the Eurodollar Period is to be renewed.
(b) In addition, if the Lender has reason to believe
a Default or an Event of Default has occurred, the Borrowers hereby irrevocably
authorize the Lender 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 Lender,
in its sole and absolute discretion, deems necessary or appropriate to protect
the Lender's 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 Lender may make hereunder exceeds the Credit Facility Committed
Amount. The Lender 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 Lender to make other similar advances. Any such advances
will be evidenced by the Note secured by the Collateral and the Deeds of Trust.
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Section 2.3 Fees.
2.3.1 Commitment Fee.
On or before the date of the Credit Facility Closing, the
Borrowers shall pay to the Lender a commitment fee of $90,000 (the "Commitment
Fee"). The Borrowers shall pay to the Lender an additional extension fee of
$90,000 on the earlier of (a) the original maturity date of the note if the note
is extended pursuant to its term or (b) if the currently proposed restructure of
the Master Credit Facility is not fully subscribed by a syndicate of lenders in
the aggregate principal sum of $350,000,000 by May 30, 2001 and closed by June
30, 2001 (then such additional fee shall be payable on July 2, 2001).
2.3.2 Unused Line Fee
(a) The Borrowers shall pay to the Lender on the
first day of each fiscal quarter and on the Revolving Credit Termination Date 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 daily unused and
undisbursed portion of the Loan.
Section 2.4 Interest Rate Matters.
2.4.1 Inability to Determine Eurodollar Rate.
In the event that the Lender 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 Lender will give notice of such determination
to the Borrowers at least one (1) day prior to the date of an advance or any
subsequent Eurodollar Period for the Loan. If any such notice is given, the
Lender shall have no 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 Lender or the date when the Lender 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 Lender and the Borrowers shall
mutually agree upon an alternate method of determining the rates of interest
payable on the Loan or the principal outstanding under the Note shall be
immediately due and payable.
2.4.2 Illegality.
Notwithstanding any other provision of the Financing Documents
to the contrary, in the event that it shall become unlawful for the Lender to
obtain funds in the London interbank market or for the Lender to maintain the
Loan at the Eurodollar Rate, then, by written notice to the Borrowers, the
Lender may declare that advances will not thereafter be made or the Loan
maintained by the Lender hereunder at the Eurodollar Rate, whereupon the Lender
and the Borrowers shall mutually agree upon an alternate method of determining
the rates of interest payable on the Loan or the principal outstanding under the
Note shall be immediately due and payable.
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2.4.3 Increased Costs and Reduced Return.
(a) 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 the Lender in such
market or otherwise) and the result of any such event is, in the Lender's
reasonable judgment, to increase the costs which the 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 April 1, 2001, or its obligation
to make available the Loan at the Eurodollar Rate or to reduce the amount of any
sum received or receivable by the Lender under the Note, then, within ten (10)
days after demand by the Lender, Borrowers hereby agree to pay to the Lender
such additional amount or amounts as will compensate the Lender for such
increased cost or reduction.
(b) In addition to any amounts payable pursuant to
subsection (a), if the Lender shall have determined that the applicability of
any law, rule, regulation or 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 the Lender (or any lending office of the Lender) or the 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 the Lender's capital or on the capital of the 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 the Lender or the
Lender's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration the Lender's policies
and the policies of the Lender's holding company with respect to capital
adequacy) by an amount deemed by the Lender to be material, then, upon demand by
the Lender, the Borrowers hereby agree to pay to the Lender from time to time
such additional amount or amounts as will compensate the Lender or the Lender's
holding company for any such reduction suffered.
2.4.4 Notice of Amounts Payable to Lender.
If the 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 of the amount payable by the Borrowers to the Lender
hereunder. A certificate of the 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.
Section 2.5 Extensions.
At any time not later than thirty (30) days prior to the Revolving
Credit Expiration Date, the Borrowers may request that the Lender, in its sole
discretion, extend the Revolving Credit
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Expiration Date for a period of one hundred twenty (120) days; provided,
however, that the Borrowers will be required to repay the Loan in full
simultaneously with the closing of the restructuring of the Master Credit
Facility.
Section 2.6 Permitted Costs.
Advances under the Borrowing Base shall be made available by the Lender
pursuant to a Borrowing Base Report issued quarterly by the Lender or more
frequently in the Lender's discretion and certified by the Borrowers in
accordance with the terms of this Agreement. Total Development Costs may include
the following cost which have actually been paid by the Borrowers or on their
behalf by their Affiliates (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 Lender and to the extent specifically permitted by
the Lender, the process of verification of Requisitions shall have confirmed 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 Cost: (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 other pre-opening fees.
Section 2.7 Co-Borrower Obligations.
Each Person included in the term "Borrowers", including each Additional
Borrower, hereby covenants and agrees with the Lender as 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 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 Borrowers' attorney-in-fact, with power of substitution (with
the prior written consent of the Lender in the exercise of its sole and absolute
discretion), in the name of the Primary Borrower or in the name of any of the
Borrowers 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
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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 Lender to disburse or credit the proceeds of any
advance under the Loan directly to an account of any Borrower, or otherwise,
which direction shall evidence the making of such advance and shall constitute
the acknowledgment by each Borrower 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 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 Lender, 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 Borrowers hereby irrevocably authorizes the
Lender to make advances to any one or more of the Borrowers 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 the
Primary Borrower under the provisions of the most recent certificate of
corporate resolutions and/or incumbency of the Primary Borrower on file with the
Lender and also upon the written, oral or telephone request of any one of the
Responsible Officers of any Borrower.
(e) The Lender 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 Lender 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 Lender's
gross negligence or willful misconduct.
Section 2.8 Agreement Among Borrowers.
Without implying any limitation on the joint and several nature of the
Obligations, the Lender 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 Lender consents to that agreement, that each
such Person shall have rights of contribution from all such Persons to the
extent such Person incurs Obligations in excess of the proceeds of the Loan
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
Lender 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
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counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. Unless otherwise consented to in
writing by the Lender, no Person included in the term "Borrowers" shall evidence
the inter-company indebtedness or rights of contribution by note or other
instrument, and shall not secure such indebtedness or rights of contribution
with any Lien or security.
Section 2.9 Benefits to Borrowers.
Each Person included in the term "Borrowers" hereby represents and
warrants to the Lender 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 (a) the terms of the consolidated financing provided under this
Agreement are more favorable than would otherwise be obtainable by such Persons
individually, and (b) 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 2.10 Guaranty.
(a) Each Person included in the term "Borrowers"
hereby unconditionally and irrevocably, guarantees to the Lender:
(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 Lender
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may, in its sole and absolute discretion, without notice to or further assent of
such 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.
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(c) The obligations and liabilities of each Person
included in the term "Borrowers", as guarantor under this Section 2.10 shall be
primary, direct and immediate, shall not be subject to any counterclaim,
recoupment, set off, reduction or defense based upon any claim that such Person
may have against any one or more of the other Persons included in the term
"Borrowers", the Lender and/or any other guarantor and shall not be conditional
or contingent upon pursuit or enforcement by the Lender 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 Lender 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 2.10, 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
Lender 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 2.10, 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 2.10 in any manner whatsoever, and
this Section 2.10 shall remain and continue in full force and effect. It is the
intent and purpose of this Section 2.10 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 2.10 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 2.10, 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
2.10 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;
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(iv) notice of any increase in the amount of
any portion of or all of the indebtedness guaranteed by this Section
2.10;
(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 Lender's administration of all indebtedness guaranteed by this
Section 2.10;
(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 Lender
which changes the scope of the risk as guarantor hereunder; and
(ix) All other notices and demands otherwise
required by law which such Person may lawfully waive.
(e) Within ten (10) days following any request of the
Lender to do so, each Person included in the term "Borrowers" will furnish the
Lender and such other persons as the Lender 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 2.10.
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,
each of the Borrowers hereby assigns, grants and conveys to the Lender, and
agrees that the Lender shall have, to the extent permitted by law a perfected,
continuing security interest in, all of the Collateral. Each of the Borrowers
further agrees that the Lender shall have in respect of the Collateral all of
the rights and remedies of a secured party under the 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 Lender 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.
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Section 3.2 Facilities.
The Facilities are listed on EXHIBIT D 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 Facilities 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
Facility or in the Improvements constructed thereon, and (c) all of the other
Collateral relating to the Facilities.
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 or owners of each of the
Borrowers have assigned to the Lender 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 executed and
delivered by the Guarantor in favor of the Lender.
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 Lender 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 Lender 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 Lender with the exception of travel expenses incurred in connection with
any enforcement actions following the occurrence of an Event of Default.
ARTICLE IV
GENERAL FINANCING PROVISIONS
Section 4.1 Conditions Precedent to Credit Facility Closing.
The following shall be conditions precedent to the Credit Facility
Closing:
(a) The Guaranty, this Agreement and the Note shall
have been properly executed and delivered to the Lender.
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(b) The Lender shall have received and approved a
copy of each Borrower's fully executed organizational and governing documents
[Partnership Agreement or Operating Agreement and 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) and a certificate of no changes therein since the
closing for such Facility in the Master Credit Facility.
(c) The Lender 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 this Agreement or any
other Financing Documents being delivered in connection herewith and consenting
to the Loan.
(d) The Lender shall have received and approved a
current certificate of good standing or certificate of fact from the State in
which each Borrower is formed.
(e) The Lender 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 the Financing Documents.
(f) In connection with the execution and delivery of
this Agreement, the Guaranty and the Note, the Borrowers shall pay to the Lender
the Commitment Fee of $90,000. The Commitment Fee will be in addition to and
shall not be deemed to reduce or replace any other fee due in connection with
the Credit Facility.
(g) The Total Development Cost for such Facility
shall have been reviewed and approved in writing by the Lender consistent with
the provision of Section 2.1 (The Loan)
(h) The Lender 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 Lender in an amount or amounts satisfactory
to the Lender and aggregating not less than $40,000,000 from a company
satisfactory to the Lender and which may be endorsed or assigned to the
successors and assigns of the Lender 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 Lender and its
counsel shall have approved but without a creditor's rights exception and (if
applicable in the Lender's sole discretion) containing affirmative insurance
against mechanics liens.
(i) The Lender shall have received advice, in form
and substance and from a source satisfactory to the Lender, 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 Lender shall have approved.
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(j) The Lender shall have received all policies of
insurance required by the terms hereof and by the other Financing Documents from
a company or companies and in form and amount satisfactory to the Lender,
including without limitation, flood insurance (in the amount required by the
Lender or evidence that flood insurance is not available or otherwise required
with respect to the Property), together with written evidence, in form and
substance satisfactory to the Lender, that all fees and premiums due on account
thereof have been paid in full.
(k) The Lender shall have received and accepted an
appraisal of the Facility.
(l) The Lender shall have received and approved a
copy of a Survey of the Land certified to the Lender 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 E attached hereto. If
available, the Borrowers shall deliver current as-built surveys of each
Facility, such surveys shall be delivered as soon as possible after the Credit
Facility Closing
(m) The Lender shall have received and accepted a
Phase I environmental audit of the applicable Facility prepared by a person or
firm acceptable to the Lender or a copy of an acceptable environmental audit of
the applicable Facility from the Master Credit Facility.
(n) The Lender shall have received evidence
acceptable in all respects through certification by the Architect or other
source acceptable to the Lender 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.
(o) The Lender shall have received and approved
copies of any executed Material Leases of the applicable Property or of any
portion thereof.
(p) With regard to any Deed of Trust for a Facility
located in any state having such requirement, the Lender shall have received
evidence satisfactory to the Lender that a Certificate of Need has been issued
for such Facility.
(q) The Lender shall have received written evidence
from a qualified third party, in form and substance satisfactory to the Lender,
to the effect that the applicable Improvements have been substantially completed
in accordance with their Plans and Specifications.
(r) The Lender shall have received written evidence,
in form and substance satisfactory to the Lender, to the effect that requisite
certificates for permanent occupancy or completion of the Improvements have been
validly issued.
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(s) The Lender shall have received a copy of an
operating License for the Facility or other evidence satisfactory to the Lender
that the Facility may be lawfully operated as contemplated by the Financing
Documents.
Section 4.2 Conditions Precedent to Determining Availability Under
Borrowing Base or Making an Advance under the Loan.
The Lender shall not be obligated to confirm the calculation of the
Borrowing Base or make an advance under the Loan unless the conditions described
in Section 4.1 (Conditions Precedent to Credit Facility Closing) and the
following additional conditions shall have been satisfied with regard to such
Facility to the Lender's satisfaction:
(a) No Default or Event of Default shall have
occurred and be continuing under any Note or any of the other Financing
Documents.
(b) None of the Improvements shall have been
materially damaged by fire or other casualty unless the Lender shall have
received or reasonably anticipates receiving proceeds of insurance sufficient in
the judgment of the Lender to effect a satisfactory restoration of such
Improvements in accordance with the terms of the Deed of Trust.
(c) The representations and warranties made in
ARTICLE III (Collateral) 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.
(d) 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 Lender.
(e) The Lender shall have determined whether each
Facility is a Pool A, Pool B, Pool C or Pool D Project.
Section 4.3 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 4.4 Liens; Setoff.
Each of the Borrowers hereby grants to the Lender 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 Lender, or any affiliate of the
Lender, 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 the Lender, if
any, at any time existing. During the continuance of any Event of Default under
this Agreement, the Lender is hereby authorized by each 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.
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Section 4.5 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 any of them might otherwise have against the
Lender, 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, (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 Lender 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 4.6 Payments to Others for the Account of the Borrowers.
At the option of the Lender and without any request from the Borrowers,
and without waiving any of its rights hereunder, the Lender may elect to cure or
avoid any default by the Borrowers under the Financing Documents by applying
amounts due hereunder or advancing the Lender's 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 Lender agrees to endeavor to give the Borrowers notice of any
such payment or performing of any 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 Lender of, or constitute a defense to, any of the
rights of the Lender under this Agreement or the Deeds of Trust, including
(without limitation) the right of the Lender to repayment of the amount of such
payment.
Section 4.7 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 three (3) days' prior written
notice to the Lender 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 Lender upon request by the Lender, such amount as shall be sufficient to
compensate the Lender for any and all losses or expenses which the Lender may
sustain or incur (including without limitation, any such loss or expense arising
from the redeployment of funds obtained by the 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 4.8 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 Lender. Any assignment made or attempted by the Borrowers, or any of
them, without the prior written consent of the Lender shall be void and of no
effect. No consent by the Lender to an assignment by the Borrowers shall release
the
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Borrowers as the parties primarily obligated and liable under the terms of this
Agreement unless the Borrowers shall be released specifically by the Lender in
writing. No consent by the Lender to an assignment shall be deemed to be a
waiver of the requirement of prior written consent by the Lender with respect to
each and every further assignment and as a condition precedent to the
effectiveness of such assignment.
Section 4.9 Liability of the Lender.
The Lender 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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Lender to make available the Credit Facility, the
Borrowers represent and warrant to the Lender 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 action. No consent or
approval of partners or members of, or lender 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
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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,
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 Lender.
Section 5.5 No Conflicting Agreements.
There is (a) no provision of any Borrower's organizational or governing
documents 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 Lender
with respect to the Borrowers, each Facility is complete and correct in all
material respects and fairly presents the financial condition of the Borrowers
and the financial condition of the Facilities and Guarantor. 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, 2000 (and to the Borrowers'
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.
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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 have paid or caused to have been paid all Taxes as shown on such
returns or on any assessment received by each of 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, is 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 Lender 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 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
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Commonly Controlled Entity has incurred a "complete withdrawal" within the
meaning of ERISA Section 4203 from any multi-employer 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
multi-employer plan; (f) no multi-employer 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
multi-employer plan will be placed in "reorganization".
Section 5.13 Governmental Consent.
Neither the nature of any of the Borrowers or of any of their
businesses 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
Lender 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 Lender 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
their current names or tradenames or "Karrington" and have not conducted their
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 Lender of any change in the name of any
Facility.
Section 5.16 Licenses and Certifications.
The Borrowers further represent and warrant to the Lender 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 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,
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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 Lender, (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 Lender.
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 Lender 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 Lender 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 Lender in connection with the Credit Facility.
Section 5.18 Participation Agreements and Resident Agreements.
The Borrowers have furnished to the Lender, on or before the Credit
Facility Closing, the Borrowers' form of Resident Agreement used with respect to
all Facilities and, if requested by the Lender after the occurrence and during
the continuance of a Default, copies of all current, executed Resident
Agreements for any or all of the Facilities.
(a) The Borrowers further covenant to the Lender
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.
(b) To the extent the Borrowers participate 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.
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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 with Zoning.
The Borrowers represent and warrant that the anticipated use of each
Facility 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 Utilities.
The Borrowers represent and warrant that all utility services necessary
for the operation of the Improvements for each Facility for their intended
purpose are available at the boundaries
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of all the Land, including, without limitation, telephone service, water supply,
storm and sanitary sewer facilities, natural gas (if available) and electric
facilities.
Section 5.24 Access; Roads.
The Borrowers represent and warrant that all roads and other accesses
necessary for the full utilization of the Facilities 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.
Section 5.25 Other Liens.
The Borrowers represent and warrant that except as otherwise provided
in the Financing Documents, none of the Borrowers have made a contract or
arrangement of any kind the performance of which by the other party thereto
would give rise to a lien on any Facility.
Section 5.26 Defaults.
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 5.27 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 Lender acknowledges
and agrees 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 Lender. The Lender 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 5.28 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 Lender); (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
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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 Borrowers' 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.
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 the Lender shall receive a written
opinion of counsel for the Borrowers and the Guarantor satisfactory in all
respects to the Lender.
Section 6.3 Approval of Counsel for the Lender.
All legal matters incident to the Loan and all documents necessary in
the opinion of the Lender to make the Loan shall be satisfactory in all material
respects to counsel for the Lender.
Section 6.4 Supporting Documents.
The Lender shall receive at the Credit Facility Closing: (a) a
certificate of the general partner or managing member of each of the Borrowers,
in a form acceptable to the Lender in 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 Lender may reasonably require the Borrowers and/or the
partners or members of the Borrowers to execute, in form and substance
acceptable to the Lender; and (c) such additional information, instruments,
opinions, documents, certificates and reports as the Lender may reasonably deem
necessary.
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Section 6.5 Financing Documents.
All of the Financing Documents required by the Lender whether at the
Credit Facility Closing shall be executed, delivered and, if deemed necessary by
the Lender, recorded, all at the sole expense of the Borrowers.
Section 6.6 Insurance.
The Borrowers shall have satisfied the Lender 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
Lender has 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 Lender all
Security Documents (in form and substance acceptable to the Lender in its sole
discretion) deemed necessary by the Lender, 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 Lender.
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
Until payment in full and the performance of all of the Obligations
hereunder, each of the Borrowers shall:
Section 7.1 Financial Statements.
Furnish to the Lender:
(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 F 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 their
Wholly Owned Subsidiaries in reasonable detail satisfactory to the Lender,
prepared in accordance with GAAP and audited by an independent certified public
accountant satisfactory to the Lender, which financial statement shall include a
balance sheet of the Borrowers and their 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 Lender and a Compliance Certificate in the form of EXHIBIT F attached
hereto, (ii) an unqualified letter or opinion of the
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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
Lender 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 Lender; 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
Facility for such month, including an income and expense statement for such
period and census and billing reports with respect to each Facility then
operating for such period;
(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 Quarterly Reports. (i) Borrowing Base
Reports (as and when described in Section 2.1 (d) (The Loan), (ii) not later
than fifteen (15) days after the close of each of the Borrowers' fiscal quarters
an estimate of the occupancy numbers for each Facility as of the end of such
quarters which report shall not be used to measure compliance with covenants
described for EXHIBIT F but will assist the Lender in evaluating additional
Facilities proposed for inclusion in the Borrowing Base and, (iii) in connection
with each Borrowing Base Report, a report describing each then Pool B , Pool C
or Pool D Project, including its performance in the preceding quarter and
projected performance for subsequent quarters.
(f) Other Information. With reasonable promptness
such additional information, reports or statements as the Lender may from time
to time reasonably request.
(g) Certification. All required financial statements,
required pursuant to Subsections (a) and (b) of this Section 7.1 (Financial
Statements) 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 Bank of America, N.A. (the
"Lender") 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 Lender 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;
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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 its existence as limited partnership or limited liability
companies in good standing in the states of its formation and in each
jurisdiction where it is 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), 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
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, each
of the Borrowers covenants and agrees that it 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, 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 participates 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 Borrower 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
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(e) to the extent the Borrower presently participates
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 Borrower 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 of paying down the Master
Credit Facility or for general corporate purposes and, without the prior written
consent of the Lender for no other purpose or purposes.
Section 7.6 Insurance.
Provide or cause to be provided to the Lender 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 Lender
including, by way of example and not by way of limitation, at least the
following:
(a) Casualty or physical damage insurance coverage
for each Facility 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 Lender 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 Facilities naming the Lender as loss payee in the
mortgagee clause thereof;
(b) 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 Lender 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 Facility;
(c) Workers' compensation insurance in accordance
with the requirements of applicable law or regulation naming the Lender as loss
payee thereunder;
(d) Business interruption insurance naming the Lender
as additional insured with respect to each Facility in an amount equal to at
least twelve (12) months' debt service on the applicable Loan; and
(e) To the extent that healthcare professionals are
employed by any of the Borrowers or the Management Company, medical liability,
malpractice and other
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healthcare professional liability insurance protecting the Borrowers and their
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 any of the Borrowers contract 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 Lender, 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 (i) be issued by one or more recognized, financially sound and responsible
insurance companies approved by the Lender 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, (ii) 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
Lender, without contribution, to collect any and all proceeds payable under such
insurance, (iii) provide that such policy shall not be canceled or modified
without at least thirty (30) days prior written notice to the Lender, and (iv)
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
Lender a renewal policy or policies marked "premium paid" or other evidence of
payment satisfactory to the Lender. The Borrowers will immediately give the
Lender notice of any cancellation of, or change in, any insurance policy. The
Lender shall not, because of accepting, rejecting, approving or obtaining
insurance, incur any liability for (A) the existence, nonexistence, form or
legal sufficiency thereof, (B) the solvency of any insurer, or (C) the payment
of losses.
Section 7.7 Flood Insurance.
If required by applicable law or regulation, provide or cause to be
provided to the Lender a separate policy of flood insurance in an amount equal
to the maximum limit of coverage available with respect to the Property, from a
company or companies satisfactory to the Lender 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 Property or is not otherwise available with respect to the Property,
the Borrowers shall supply the Lender with written evidence, in form and
substance satisfactory to the Lender, 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
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least thirty (30) days' prior written notice to any and all insureds named
therein, including the Lender.
Section 7.8 Maintenance of Properties.
Keep its properties, whether owned in fee 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. The Lender or an agent designated by the 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 Lender shall not have any duty to, and the Borrowers hereby release
the Lender 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, a Borrower may lease office Equipment and other Equipment used in the
normal course of its business for the operation of a Facility provided the total
implied cost of such leased Equipment at any Facility 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 Lender may
reasonably require in order to perfect, preserve, maintain, protect, continue
and/or extend any lien or security interest granted to the Lender under this
Agreement or any of the Security Documents and its priority. The Borrowers shall
pay to the Lender, on demand all taxes, costs and expenses incurred by the
Lender, 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 Lender a subsequent opinion of counsel as to the filing,
recording and other requirements with which the Borrower has complied to
maintain the liens and security interests in favor of the Lender in the
Collateral in the event that the Borrower shall transfer its principal place of
business or the office where it keeps its records pertaining to the Accounts and
Receivables.
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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 Lender disclosing the
Lender's assignment of, and security interest in and lien on, the Collateral and
all collections received by the Borrower on its Accounts, furnish to the Lender
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 Lender may from time to
time specify, unless the Lender 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 the Lender 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 Lender 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 Lender 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 Lender 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 Lender 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), 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 Lender in such form and at such times as reasonably specified by
the Lender, give notice of the Lender's 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 Lender.
Section 7.16 Business Names.
Immediately notify the Lender of any change in the name or names under
which it conduct its 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: (a) deliver such bonding as is required under ERISA Section 412 will be
maintained; (b) as soon as practicable and in
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any event within fifteen (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, deliver to the Lender 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 multi-employer plan; (v) incur a
complete or partial withdrawal with respect to any multi-employer plan within
the meaning of ERISA Sections 4203 and 4205; and (d) within fifteen (15) days
after notice is received by any of the Borrowers or any Commonly Controlled
Entity that any multi-employer plan has been or will be placed in
"reorganization" within the meaning of ERISA Section 4241, notify the Lender to
that effect. Upon the Lender's request, the Borrowers will deliver to the Lender
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 Lender in advance of any change of the Management Company
for any Facility.
Section 7.19 Management.
(a) Subject to the terms of the individual Management Fee Subordination
Agreements by and among each of the Borrowers, ▇▇▇▇▇ and the Lender of even date
herewith (individually or collectively, the "Management Fee Subordination
Agreement"), each of 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, and
agree (i) 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 Lender, and (ii) to terminate
the Management Agreement upon receipt of notice from the Lender directing the
Borrower to terminate the Management Agreement after the occurrence of an Event
of Default, and, if requested to do so by the Lender, 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 Lender prior to
execution. A fully executed copy of the Management Agreement shall be delivered
to the Lender by the Borrowers promptly after it is signed.
Section 7.20 Surveys.
Upon the Lender's request from time to time, furnish the Lender with a
Survey with a current certification to the Lender by a registered land surveyor
of the jurisdiction in which the Land is located. At any time the Borrower is
required to furnish a Survey to the Lender 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
Lender, by endorsement to the title insurance policy or otherwise, that the
Survey discloses no violations, encroachments
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or other variances from applicable set-backs or other restrictions except such
as the Lender and its counsel shall approve.
Section 7.21 Payments for Labor and Materials.
Pay when due all bills for services or labor performed and materials
supplied in connection with the repair 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 Lender in each instance,
each of the Borrowers covenants and agrees that, within thirty (30) days after
receipt of notice from any source of the filing of such lien, the Borrower will
promptly discharge the same by payment or filing bond or otherwise as permitted
by law; and if the Borrower fails to do so, the Lender may, at its option, in
addition to, and not in limitation of, all other rights and remedies of the
Lender 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 Lender 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 Lender with
interest thereon at the Reimbursement Rate provided for in the Deed of Trust.
Section 7.22 Correction of Property Defects.
Promptly following any demand by the Lender, correct or cause the
correction of any structural defects in the Improvements, as determined by the
Lender in its sole but reasonable discretion, not approved in writing by the
Lender.
Section 7.23 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
Lender harmless and indemnify the Lender 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 7.24 Governmental Surveys or Inspections.
Furnish to the Lender 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 7.25 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 Lender of any settlement of any cost report
disclosed to the Lender 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 7.26 Updated Appraisals.
Upon request made by the Lender, deliver 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 Lender and shall be in all
respects reasonably acceptable to the Lender which
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appraisals shall include, if deemed necessary by the Lender, 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 appraisal reports and all
other aspects of the appraisal reports must be satisfactory to the Lender in all
material respects. The release of such appraisal reports by the Lender to the
Borrowers shall be at the Lender'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 Lender's standard appraisal release letter provided an Event of
Default has not occurred and is not continuing. The Borrowers shall reimburse
the Lender upon demand for all costs and expenses incurred by the Lender with
respect to the preparation and review of all future appraisals required pursuant
to the terms hereof, if either (a) such appraisal is required by law or banking
regulation, (b) an event of default has occurred under the Financing Documents,
or (c) the Lender 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 7.27 Notification of Certain Events, Events of Default and
Adverse Developments.
Promptly give written notice to the Lender 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
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Affiliate (present or prospective) as determined by the Lender, in its sole but
reasonable discretion;
(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 7.27 describing in detail satisfactory to the Lender
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 Lender
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 7.28 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, 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 7.29 Hazardous Materials; Contamination.
(a) Give notice to the Lender within five (5) Banking Days of 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 Lender upon request with satisfactory evidence of
such compliance; (c) provide the Lender, within thirty (30) days after a demand
by the Lender, with a bond, letter of credit or similar financial assurance
evidencing to the Lender's satisfaction that funds are available to pay the cost
of removing, treating, and disposing of such Hazardous Materials or Hazardous
Materials Contamination and
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discharging any lien which may be established as a result thereof on any
property owned, 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 Lender and its 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 7.30 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 7.31 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 or Members) 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 Lender and the Management Company.
Section 7.32 Depository Bank.
Provided the Lender pays commercially competitive rates on the
Borrowers' funds, maintain its primary operating accounts with the Lender;
provided that the 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 Lender in any jurisdiction) prior to
applying them to any other indebtedness owed to the Lender other than the Master
Credit Facility.
Section 7.33 Copies of Notices.
Promptly following the giving or receipt of any notice given to or
received from the General Contractor or any subcontractor or materialman with
respect to the Property, if such
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notice concerns any default or failure to perform by any party, or relates to
any matter requiring the Lender's approval under this Agreement, the Borrower
shall forward to the Lender copies of any such notice.
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 Lender, none of the Borrowers will
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 Lender, 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 of an Facility.
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.
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 Facility 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 the Loan or the asset
sold or disposed of is replaced by one of equal or greater value or (b) the
transfer of a Facility or the sale of a Facility, 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.
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
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shall not, without the prior written consent of the Lender, 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 License, 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 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
Lender that notice has been received of a "termination" (as defined in ERISA) of
any Multi-employer Plan to which any of the Borrowers 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 Multi-employer Plan to which any of the Borrowers or
any Commonly Controlled Entity has an obligation to contribute; or (h) fail to
notify the Lender that notice has been received from the administrator of any
Multi-employer Plan to which any of the Borrowers 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
Lender, prior to such transfer, an opinion of counsel addressed to the
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Lender to the effect that the Lender's 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 their 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 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.
Section 8.14 Distributions to Partners or Members.
Make a distribution to partners or members of any of the Borrowers from
proceeds of the Loan as a repayment of equity in a Facility unless the Borrowers
give advance written notice to the Lender of the amount of such proposed
distribution and the Lender 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 in
any of the Borrowers.
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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.
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
Lender.
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 Lender, except with regard to
payment of (i) any Borrowing Base Deficiency which shall be due as provided in
Section 2.1 (The Loan), and (ii) 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.
Default shall be made by the Borrowers in the due observance and
performance of any covenant, condition or agreement contained in ARTICLE VII
(Affirmative Covenants of Borrower) (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
(Negative Covenants of Borrower).
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
Lender.
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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 Lender, 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 any of 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 remains
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.
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 or
default shall be made under the Master Credit Facility.
(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.
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Section 9.11 Material Adverse Change.
If the Lender 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 Facility and such Facility is excluded
from the calculation of the Borrowing Base.
Section 9.12 Impairment of Position.
If the Lender 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 Lender.
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 Borrowers exclude the affected Facility 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 Lender.
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, 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.
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Section 9.17 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 unbonded or for which
no other arrangements satisfactory to the Lender 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 Facility from the Borrowing
Base.
Section 9.18 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 LENDER 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 Lender 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 Lender 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), 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 Lender may, without notice to the Borrowers:
(a) assign any and all Operating Agreements and
Management Contracts to any Person designated by the Lender, and/or exercise all
rights and privileges of the
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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 Lender to collect and/or realize
upon any or all of the Collateral and to remit the proceeds to the Lender;
(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 Lender to the
extent permitted by applicable law, with the Lender taking control of the
Proceeds thereof and/or direct the Borrowers to (and the Borrowers shall) turn
over to the Lender 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 Lender, make such use of the Borrowers' places 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 Lender 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 Lender written assignments,
to the extent permitted by applicable law, in form and content acceptable to the
Lender, of specific Accounts or groups of Accounts; provided, however, that the
lien and/or security interest granted to the Lender 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 Lender whether or not any assignment thereof, which is separate
from this Agreement, is in form absolute.
Following an Event of Default, the Lender 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
Lender, the terms of which agreement shall be approved by the Lender.
Section 10.4 Performance by Lender.
Following an Event of Default, the Lender 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 Lender
may consider necessary or appropriate for such purpose. The Lender will give the
Borrowers notice, at least subsequently, of any such performance by the Lender.
All sums so paid or advanced by the Lender 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 Lender on demand and
shall constitute and become a part of the Obligations.
Section 10.5 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 Lender shall have all
of the rights and remedies of a secured party under the applicable Uniform
Commercial Code and other applicable laws, and the Lender is 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, the Lender; and upon demand by the Lender, the
Borrowers shall assemble the Collateral and make it available to the Lender, at
a place designated by the Lender or its 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.
Any written notice of the sale, disposition or other intended action by
the Lender with respect to the Collateral which is sent by regular mail, postage
prepaid, to the Borrowers at the
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address set forth in ARTICLE IX (Events of Default), or such other address of
the Borrowers which may from time to time be shown on the Lender's 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 Lender 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 Lender 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 Lender to the payment
of the Liquidation Costs and Expense Payments, and any balance of such proceeds
will be applied by the Lender to the payment of the balance of the Obligations
in such order and manner of application as the Lender 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 10.6 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 Lender 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 10.7 No Conditions Precedent to Exercise of Remedies.
The Borrowers shall not be relieved of any obligation by reason of the
failure of the Lender 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 Lender 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 Lender.
Section 10.8 Remedies Cumulative and Concurrent.
No remedy herein conferred upon or reserved to the Lender or the Lender
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 Lender shall be
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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 Lender.
Section 10.9 Strict Performance.
No delay or omission of the Lender 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
Lender 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 Lender hereunder in any one or more instances, or the acceptance by the
Lender 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 Lender: BANK OF AMERICA, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
with a courtesy copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & Valentine LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Esq.
if to the Borrowers:
c/o Sunrise Assisted Living Investments, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention to each of the following
separately delivered or mailed:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇
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with a courtesy copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
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 Lender 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 Lender of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later exercise
by the Lender of any or all such other rights, powers or remedies. In order to
entitle the Lender 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.
Section 11.4 No Waiver of Rights by the Lender.
No failure or delay by the Lender 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 Lender 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, the Lender shall not 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 Lender and any of the Borrowers
relating to the Obligations. Neither the Lender 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.
61
67
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 Lender 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 the Lender, and all
covenants, promises and agreements by or on behalf of the Lender 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 Lender.
Section 11.7 Expenses.
The Borrowers agree to pay all reasonable out-of-pocket expenses of the
Lender (excluding travel expenses but including the reasonable fees and expenses
of the legal counsel of the 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 Lender 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 Borrowers), any future modification of the
Financing Documents, the addition of Facilities 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 Lender from
any liability resulting from the failure to pay any required recordation tax,
transfer taxes, recording costs or any other expenses incurred by the Lender 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 Lender upon demand for
all reasonable out-of-pocket expenses (including reasonable attorneys' fees and
legal expenses and travel expenses) incurred by the Lender 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.
62
68
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 Lender, 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 repayment of the
Obligations, then, at the options of the Lender, all of the Obligations of the
Borrowers to the Lender 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.
EACH OF THE BORROWERS AND THE LENDER 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 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 Lender, and the Borrowers and the Lender 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 Lender 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.
63
69
Section 11.15 No Warranty by Lender.
By accepting or approving anything required to be observed, performed
or fulfilled by the Borrowers or to be given to the Lender 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 Lender 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 Lender.
Section 11.16 Liability of the Lender.
The Lender shall not be liable for any other act or omission by the
Lender pursuant to the provisions of this Agreement in the absence of fraud or
gross negligence. The Lender shall incur no liability to the Borrowers or any
other party in connection with the acts or omissions of the Lender in reliance
upon any certificate or other paper believed by the Lender to be genuine or with
respect to any other thing which the Lender may do or refrain from doing, unless
such act or omission amounts to fraud or gross negligence. The Borrowers hereby
agree that the Lender shall not be chargeable for any negligence, mistake, act
or omission of any accountant, examiner, agency or attorney employed by the
Lender (except for the gross negligence or willful misconduct of any person,
corporation, partnership or other entity employed by the Lender) 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 Lender
and its 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. 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 the Lender and its 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 the 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 Lender other than the
relationship of borrower and lender and the Borrowers and the Lender shall not
be considered partners or co-venturers for any purpose on account of this
Agreement.
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Section 11.19 Third Parties; Benefit.
All conditions to the obligation of the Lender to make advances
hereunder are imposed solely and exclusively for the benefit of the Lender and
its 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
Lender 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 whole or in part by the Lender at any time in the sole and absolute exercise
of its discretion. 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 Lender shall, at all times, be free independently to
establish to its satisfaction and in its absolute discretion such existence or
non-existence.
Section 11.21 Time of Essence.
Time shall be of the essence for each and every provision of this
Agreement of which time is an element.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
WITNESS OR ATTEST: SUNRISE BATON ROUGE ASSISTED LIVING,
L.L.C., a Louisiana limited liability company
By: Sunrise Assisted Living Investments, Inc.,
its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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WITNESS OR ATTEST: SUNRISE BLOOMINGDALE ASSISTED
LIVING, L.L.C., an Illinois limited liability
company
By: Sunrise Assisted Living Investments, Inc.,
its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
WITNESS OR ATTEST: SUNRISE FARMINGTON HILLS ASSISTED
LIVING, L.L.C., a limited liability company
By: Sunrise Assisted Living Investments, Inc.,
its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
WITNESS OR ATTEST: SUNRISE NEW ORLEANS ASSISTED LIVING,
L.L.C., a Louisiana limited liability company
By: Sunrise Assisted Living Investments, Inc.,
its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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WITNESS OR ATTEST: SUNRISE OAKLAND ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
WITNESS OR ATTEST: SUNRISE RIVERSIDE ASSISTED LIVING, L.P.,
a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
WITNESS OR ATTEST: SUNRISE WILTON ASSISTED LIVING, L.L.C.,
a Connecticut limited liability company
By: Sunrise Assisted Living Investments, Inc.,
its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
WITNESS: BANK OF AMERICA, N.A.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
--------------------------- --------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
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73
LIST OF EXHIBITS
A. Form of Note
B. Form of Borrowing Base Report
C. Current Borrowing Base Report
D. Places of Business
E. Survey Requirements
F. Form of Compliance Certificate
74
EXHIBIT A
FORM OF NOTE
75
EXHIBIT B
FORM OF BORROWING BASE REPORT
76
EXHIBIT C
CURRENT BORROWING BASE REPORT
77
EXHIBIT D
PLACES OF BUSINESS
The Borrowers' Chief Executive
Office and Principal Place of Business is:
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Locations of Collateral:
-----------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fairfax County
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Sunrise of Oakland Hills
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
Alameda County
Sunrise of Riverside
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
Riverside County
Sunrise of Bloomingdale
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
DuPage County
Sunrise of Wilton
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇▇ of Wilton
Sunrise of Farmington Hills
Twelve Mile Road
Farmington Hills, MI
Oakland County
▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇
East Baton Rouge Parish
Sunrise of New Orleans
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT E
SURVEY REQUIREMENTS
1. Field Note Description. The Survey shall contain a certified metes
and bounds description complying with the following: (a) the beginning point
shall be established by a monument located at the beginning point, or by
reference to a nearby monument; (b) the sides of the Land shall be described by
giving the distances and bearings of each; (c) the distances, bearings, and
angles shall be taken from an instrument survey by a registered professional
engineer or registered professional land surveyor; (d) curved sides shall be
described by data including: length of arc, central angle, radius of circle for
the arc and chord distance, and bearing; (e) the description shall be a single
perimeter description of the entire Land, if and as instructed, there shall also
be a separate metes and bounds description of one or more constituent tracts out
of the Land; (f) the description shall include a reference to all streets,
alleys, and other rights-of-way that abut the Land, and the width of all
rights-of-way mentioned shall be given the first time these rights-of-way are
referred to; (g) for each boundary line abutting a street, road, alley or other
means of access, the description must, in calling the boundary line, state that
the boundary line and the right-of-way line are the same; (h) if the Land has
been recorded on a map or plat as part of an abstract or subdivision, reference
to such recording data shall be made; and (i) the total acreage and square
footage of the Land shall be certified.
2. Lot and Block Description. If the Land consists of one or more
complete lots or blocks included within a properly established recorded
subdivision or addition, then a lot and block description will be an acceptable
substitute for a metes and bounds description, provided that the lot and block
description must completely and properly identify the name or designation of the
recorded subdivision or addition and give the recording information therefor.
3. Map or Plat. The Survey shall also contain a certified map or plat
clearly showing the following: (a) the Land; (b) the relation of the point of
beginning of the Land to the monument from which it is fixed; (c) all easements,
streets, roads, alleys and rights-of-way on or abutting the Land, showing
recording information therefor by volume and page; (d) if the Land has been
recorded on a map or plat as part of an abstract or subdivision, all survey
lines must be shown, and all lot and block lines (with distances and bearings)
and numbers, must be shown; (e) the established building setback lines, if any,
including those by restrictive covenant, recorded plat and zoning ordinance
(identifying the source in each case, by volume and page reference if
applicable); (f) all easements appurtenant to said Land, with recording
information by volume and page; (g) the boundary lines of the street or streets
abutting the Land and the width of said streets and the width of the
rights-of-way therefor; (h) the distance from the nearest intersecting street or
road to the Land; (i) all structures and improvements on the Land (with
designation and dimensions of each party wall, if any) with horizontal lengths
of all sides and the relation thereof by distances to (1) all boundary lines of
the Land, (2) easements, (3) established building lines, and (4) street lines;
(j) the types of materials comprising the exterior walls and roofs of all
buildings; (k) all street addresses of improvements on the Land; (l) all curb
cuts, driveways, fences, sidewalks, ▇▇▇▇▇▇ and landscaping; (m) the number of
stories of all multistory structures; (n) the location, type and size of all
utility lines as they service the Land and Improvements (sewer, water, gas,
electric and telephone); (o) all encroachments and protrusions, if any, from or
80
upon the Land or any improvements thereon or upon any easement, building setback
line or other restricted area, with exact measurements; (p) all parking and
paved areas, including the number of vehicles that may be parked; (q) all
distances, angles and other calls contained in the legal description; (r) the
location, type and size of all monuments, and as to each monument, indication
whether it was found or placed by the surveyor; (s) the boundaries of any flood
hazard area or flood plain area in which any part of the Land lies, with the map
number, date and source (governmental authority) of each flood map shown; (t)
all surface water bodies or courses; (u) the date of any revisions subsequent to
the initial survey prepared pursuant to these requirements; (v) a legend
explaining the meaning of all symbols used on the plat; and (w) the scale of all
distances and dimensions on the plat.
4. Certification. The certification for the property description and
the map or plat shall be addressed to Lender, Borrower and the Title Insurer,
signed by the surveyor (a registered professional land surveyor or registered
professional engineer), bearing current date, registration number, and seal, and
shall be in the following form or its substantial equivalent:
5. This is to certify to Lender, Borrower and Title Insurer that this
map or plat and the survey on which it is based were made in accordance with
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys" jointly
established and adopted by ALTA and ACSM in 1997, and pursuant to the Accuracy
Standards (as adopted by ALTA and ACSM) of an Urban Survey. The undersigned
further certifies to Lender, Borrower and the Title Insurer that (a) this survey
is true and correct and was made on the ground under my supervision as per the
field notes shown hereon and correctly shows the boundary lines and dimensions
and area of the land indicated hereon and each individual parcel thereof
indicated hereon; (b) all monuments shown hereon actually exist, and the
location, size and type of such monuments are correctly shown; (c) this survey
correctly shows the size, location and type of all buildings, structures, other
improvements and visible items on the subject Property; (d) this survey
correctly shows the location and dimensions of all alleys, streets, roads,
rights-of-way, easements, building setback lines and other matters of record of
which the undersigned has been advised affecting the subject Property according
to the legal description in such easements and other matters (with instrument,
book, and page number indicated); (e) except as shown, there are no visible (1)
improvements, easements, rights-of-way, party walls, drainage ditches, streams,
uses, discrepancies or conflicts, (2) encroachments onto adjoining premises,
streets, or alleys by any of said buildings, structures, or other improvements,
(3) encroachments onto the subject Property by buildings, structures, or other
improvements on adjoining premises, or (4) encroachments on any easement,
building setback line or other restricted area by any buildings, structures or
other improvements on the subject property; (f) the distance from the nearest
intersecting street or road is as shown hereon; (g) the subject property abuts a
dedicated public street or road as shown hereon; and (h) except as shown, no
part of the Property is located in a 100 year Flood Plain or in an identified
"flood prone area," as defined pursuant to the Flood Disaster Protection Act of
1973, as amended, as reflected by Flood Insurance Rate Map Panel # dated , which
such map panel covers the area in which the Property is situated. The
undersigned has received and examined a copy of the title insurance commitment
no. issued by the Title Insurer for the Property as well as a copy of each
instrument listed therein.
81
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to (i) Section 7.1 of
the Financing and Security Agreement dated as of April 30, 2001 (together with
all amendments and modifications, if any, from time to time made thereto, the
"Financing Agreement") by and among Sunrise Oakland Assisted Living Limited
Partnership, Sunrise Riverside Assisted Living, L.P., Sunrise Farmington Hills
Assisted Living, L.L.C., Sunrise Baton Rouge Assisted Living, L.L.C., Sunrise
New Orleans Assisted Living, L.L.C., Sunrise Bloomingdale Assisted Living,
L.L.C., and Sunrise ▇▇▇▇▇▇ Assisted Living, L.L.C. (collectively, the
"Borrowers") and Bank of America, N.A. as Lender, and (ii) the Guaranty of
Payment dated April 30, 2001 and Section 3.1 of the Third Amended and Restated
Master Guaranty of Payment Agreement dated as of March 14, 2000 (together with
all amendments and modifications, if any, from time to time made thereto, the
"Guaranty") by Sunrise Assisted Living, Inc. ("Guarantor") in connection with
the Master Credit Facility. 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
________________, 200_:
(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) The attached Borrowing Base Report accurately represents the
status of each Facility 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).
SUNRISE BATON ROUGE ASSISTED LIVING,
L.L.C., on behalf of all Borrowers
By: Sunrise Assisted Living Investments, Inc.
its sole member
By:________________________(SEAL)
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
82
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
________________, ____:
(a) The Guarantor is not in default under any of the
provisions of the Guaranty;
(b) A true and correct Guarantor's Compliance Certificate
submitted in connection with the Master Credit
Facility is attached hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate, this ______ day of ______________, 200__.
SUNRISE ASSISTED LIVING, INC.
By:___________________________(SEAL)
Christian ▇.▇. ▇▇▇▇▇▇
Chief Financial Officer