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EXHIBIT 10.31.3
AMENDED AND RESTATED MASTER CONSTRUCTION LOAN AGREEMENT
SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP
as BORROWER
NATIONSBANK, N.A.
as AGENT
December 23, 1997
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS; RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.01. Incorporation of Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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Section 1.02. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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Section 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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ARTICLE II. AVAILABILITY UNDER THE LOAN AND VERIFYING REQUISITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.01. The Loan and Procedures for Adding a Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . 7
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Section 2.02. Permitted Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Section 2.03. Requisitions Demonstrating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Section 2.04. Conditions Precedent to Facility Closing and Addition of Deeds of Trust . . . . . . . . . . . . . 9
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Section 2.05. Conditions Precedent to Determining Availability Under Borrowing Base . . . . . . . . . . . . . . 14
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Section 2.06. Conditions Under Which an Eligible Project is a Completed Facility . . . . . . . . . . . . . . . 16
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Section 2.07. Advances to Others for the Account of the Borrower . . . . . . . . . . . . . . . . . . . . . . . 16
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Section 2.08. Requisitions for the Operating Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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Section 2.09. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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Section 2.10. Liability of the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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Section 2.11. Stored Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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Section 2.12. Limitations on Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE III. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.01. Compliance in Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 3.02. Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 3.03. Building Permits; Other Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 3.04. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 3.05. Access; Roads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 3.06. Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 3.07. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 3.08. Affirmation of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE IV. AFFIRMATIVE COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.01. Compliance with Laws; Encroachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Section 4.02. Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Section 4.03. Inspections; Cooperation; Payment of Inspecting Engineer . . . . . . . . . . . . . . . . . . . . 20
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Section 4.04. Vouchers and Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 4.05. Payments for Labor and Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 4.06. Correction of Construction Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 4.07. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 4.08. Fees and Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 4.09. Copies of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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ARTICLE V. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.01. Other Liens; Transfers; "Due-on-Sale"; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 5.02. Impairment of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 5.03. Conditional Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 5.04. Changes to Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 5.05. Construction Contract; Construction Management . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE VI. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.01. Defaults Under Other Financing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 6.02. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 6.03. Compliance with Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 6.04. Damage to Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 6.05. Disclosure of Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 6.06. Mechanic's Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 6.07. Survey Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 6.08. General Contractor Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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ARTICLE VII. REMEDIES ON DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.01. Remedies on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 7.02. No Conditions Precedent to Exercise of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 7.03. Remedies Cumulative and Concurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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Section 7.04. Strict Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE VIII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.01. No Warranty by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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Section 8.02. Liability of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Section 8.03. No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Section 8.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Section 8.05. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Section 8.06. Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Section 8.07. Third Parties; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Section 8.08. Conditions; Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Section 8.09. Captions and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Section 8.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Section 8.11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Section 8.12. Signs; Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Section 8.13. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Section 8.14. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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AMENDED AND RESTATED MASTER CONSTRUCTION LOAN AGREEMENT
THIS AMENDED AND RESTATED MASTER CONSTRUCTION LOAN AGREEMENT (this
"Agreement"), made as of the 23rd day of December, 1997, by and between SUNRISE
EAST ASSISTED LIVING LIMITED PARTNERSHIP, a limited partnership organized and
existing under the laws of the Commonwealth of Virginia (the "Borrower") and
NATIONSBANK, N.A., as agent (the "Agent") for itself and for certain additional
lenders (collectively with the Agent, the "Lenders"), who are or shall be from
time to time participating as lenders hereunder pursuant to the Agency
Agreement.
RECITALS
A. The Borrower obtained from the Agent and certain other lenders
(collectively, the "Original Lenders") a credit facility in the maximum
principal sum of $90,000,000 (the "Original Credit Facility") which was a
non-revolving line of credit pursuant to which the Borrower could obtain
certain construction/interim loans (each a "Facility Loan;" collectively, the
"Facility Loans") for assisted living facilities and independent living
facilities. The Original Credit Facility has been evidenced by a Master
Promissory Note dated June 13, 1996 as amended pursuant to a First Amendment to
Master Promissory Note dated September 5, 1996 and by a Second Amendment to
Master Promissory Note dated March 31, 1997 (collectively, the "Master Note").
B. In connection with the making of each Facility Loan, the Borrower
executed a promissory note in the maximum principal sum of each Facility Loan
(each a "Facility Note" and collectively, the "Facility Notes"). Availability
under the Master Note was reduced by the principal sum of each Facility Note.
As of the date hereof, seven (7) Facility Loans have been made under the
Original Credit Facility as hereinafter described. The assisted or independent
living facilities for which Facility Loans were obtained is referred to herein
by its location and word "Facility." Advances under the Notes were made
pursuant to the terms of a Master Construction Loan Agreement by and between
the Borrower and the Agent dated June 13, 1996 (the "Original Construction
Agreement")
C. The Borrower obtained a construction/interim loan for the Franconia
Facility evidenced by a Note dated June 13, 1996 in the maximum principal sum
of $7,940,400 (the "Franconia Note") which is secured by, among other things a
Credit Line Deed of Trust, Assignment and Security Agreement also dated June
13, 1996 (the "Franconia Deed of Trust") in favor of trustees designated
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by the Agent and recorded in the Land Records of Fairfax County, Virginia in
Deed Book 9749, Page 1562. A principal balance of $100,000 remains outstanding
under the Franconia Note.
D. The Borrower obtained a construction/interim loan for the Granite
Run Facility evidenced by a Note dated June 13, 1996 in the maximum principal
sum of $7,688,000 (the "Granite Run Note") which is secured by, among other
things an Open-End Mortgage, Assignment and Security Agreement also dated June
13, 1996 (the "Granite Run Deed of Trust") and recorded in the Land Records of
Delaware County, Pennsylvania in Volume 1500, Page 1704 and re-recorded in
Volume 1526, Page 977. A principal balance of $100,000 remains outstanding
under the Granite Run Note.
E. The Borrower obtained a construction/interim loan for the Abington
Assisted Living Facility evidenced by a Note dated June 13, 1996 in the maximum
principal sum of $8,995,000 (the "Abington Assisted Note") which is secured by,
among other things an Open-End Mortgage, Assignment and Security Agreement also
dated June 13, 1996 (the "Abington Deed of Trust") and recorded in the Land
Records of ▇▇▇▇▇▇▇▇▇▇ County, Pennsylvania in Deed Book 7783, Page 849. A
principal balance of $100,000 remains outstanding under the Abington Assisted
Note.
F. The Borrower obtained a construction/interim loan for the Abington
Independent Living Facility evidenced by a Note dated June 13, 1996 in the
maximum principal sum of $4,430,000 (the "Abington Independent Note") which is
also secured by, among other things the Abington Deed of Trust. A principal
balance of $100,000 remains outstanding under the Abington Independent Note.
The Loans evidenced by the Abington Assisted Note and the Abington Independent
Note are treated as one Loan.
G. The Borrower obtained a construction/interim loan for the ▇▇▇▇▇▇
Plains Facility evidenced by a Note dated September 5, 1996 in the maximum
principal sum of $7,993,000 (the "▇▇▇▇▇▇ Plains Note") which is secured by,
among other things a Mortgage, Assignment and Security Agreement also dated
September 5, 1996 (the "▇▇▇▇▇▇ Plains Deed of Trust") and recorded in the Land
Records of ▇▇▇▇▇▇ County, New Jersey in Deed Book 6632, Page 58. A principal
balance of $100,000 remains outstanding under the ▇▇▇▇▇▇ Plains Note.
H. The Borrower obtained a construction/interim loan for the ▇▇▇▇▇
Facility evidenced by a Note dated September 5, 1996 in the maximum principal
sum of $8,020,000 (the "▇▇▇▇▇ Note") which is secured by, among other things a
Mortgage, Assignment and Security Agreement also dated September 5, 1996 (the
"Wayne Deed of Trust") and recorded in the Land Records of Passaic County, New
Jersey in Mortgage Book 0-164, Page 17. A principal balance
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of $100,000 remains outstanding under the Wayne Note.
I. The Borrower obtained a loan for the Old Tappan Facility evidenced
by a Note dated September 5, 1996 in the maximum principal sum of $8,300,000
(the "Old Tappan Note") which is secured by, among other things a Mortgage,
Assignment and Security Agreement also dated September 5, 1996 (the "Old Tappan
Deed of Trust") and recorded in the Land Records of Bergen County, New Jersey
in Mortgage Book 9272, Page 700. A principal balance of $100,000 remains
outstanding under the Old Tappan Note.
J. The Borrower obtained a loan for the Westfield Facility evidenced by
a Note dated May 12, 1997 in the maximum principal sum of $8,388,000 (the
"Westfield Note") which is secured by, among other things a Mortgage,
Assignment and Security Agreement also dated May 12, 1997 (the "Westfield Deed
of Trust") and recorded in the Land Records of Union County, New Jersey in Deed
Book 6259, Page 141. A principal balance of $100,000 remains outstanding under
the Westfield Note.
K. The Borrower has applied to the Lenders to increase the maximum
principal sum of the Original Credit Facility to $250,000,000 or such greater
amount as the Lenders may from time to time commit to lend pursuant to the
Agency Agreement (such increased and modified credit facility being hereinafter
referred to as the "Credit Facility" or the "Loan") and to provide that the
Credit Facility will be revolving. Advances or readvances are to be made
pursuant to, and secured by, the provisions of that certain Amended and
Restated Financing and Security Agreement dated the same date as this Agreement
by and between the Agent and the Borrower (as amended, restated or substituted
from time to time, the "Financing Agreement") and this Agreement.
L. Advances of the Loan may be made to the Borrower for the general
business purposes of the Borrower or its Wholly Owned Subsidiaries which are
Guarantor Subsidiaries, including, but not limited to, financing the
construction or purchase of assisted living facilities or independent living
facilities.
M. The Borrower and the Lenders have agreed to (1) the consolidation of
the indebtedness evidenced by the Facility Notes with the Master Note which
will continue to be secured by, among other things, the Franconia Deed of
Trust, the Granite Run Deed of Trust, the Abington Deed of Trust, the ▇▇▇▇▇▇
Plains Deed of Trust, the ▇▇▇▇▇ Deed of Trust, the Old Tappan Deed of Trust and
the Westfield Deed of Trust, (collectively, the "Existing Deeds of Trust") and
(2) modification of the terms or repayment of the indebtedness evidenced by the
Master Note and the Facility Notes pursuant to the terms of the Amended,
Restated, Increased and Consolidated Master Promissory Note of even date
herewith (as
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amended, restated, renewed or substituted from time to time, the "Note") and
pursuant to the terms of the Amended and Restated Financing and Security
Agreement of even date herewith (as amended, restated or substituted from time
to time, the Financing Agreement.
N. The Loan will be evidenced by the Amended, Restated and Increased
Master Promissory Note of even date herewith (as amended, restated, renewed or
substituted from time to time, the "Note").
O. The Lenders have agreed to make available the Credit Facility upon
the conditions that this Agreement amending and restating the Original
Construction Agreement in its entirety be executed and delivered to the Agent.
NOW, THEREFORE, and in consideration of these presents, and in further
consideration of the mutual covenants and agreements herein set forth and of
the sum of Ten Dollars ($10.00) lawful money of the United States of America by
each of the parties to the other paid, receipt of which is hereby acknowledged,
the parties hereto do hereby covenant and agree as follows:
ARTICLE I. DEFINITIONS; RULES OF CONSTRUCTION.
Section I.01. Incorporation of Recitals. The Recitals set forth
hereinabove are incorporated herein by reference.
Section I.02. Definitions. The Borrower and the Agent hereby agrees
that, unless the context otherwise specifies or requires, the following terms
shall have the meanings herein specified, such definitions to be applicable
equally to the singular and the plural forms of such terms and to all genders
and that other capitalized terms used but not defined herein shall have the
meaning set forth in the Financing Agreement:
"Architect" shall mean the architect named in the Architect's
Contract, if any, and his or its successors and permitted assigns.
"Architect's Contract" shall mean the architect's agreement by and
between the Borrower, as owner, and , the architect for the particular
Facility, or any contract for architectural services relating to the
development of the Land and/or the construction of the Improvements for all of
the Facilities made by the Borrower and an architect and approved in writing by
the Agent, as the same may be amended from time to time with the prior written
approval of the Agent.
"Completion Date" shall mean the date which is fifteen
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(15) months from the recordation of the Deed of Trust on such Facility or upon
the issuance of an occupancy permit.
"Construction Contract" or "Construction Contracts" shall mean
individually or collectively the general contractor's agreements by and between
the Borrower or any Guarantor Subsidiary, as owner, and a general contractor
for the development of any of the Land and/or the construction of any of the
Improvements and approved in writing by the Agent, as the same may be amended
from time to time with the prior written approval of the Agent.
"Default" shall mean an event which, with the giving of Notice or
lapse of time, or both, would constitute an Event of Default under the
provisions of this Agreement.
"Development Fee" shall have the meaning set forth in Section
2.01(c) hereof.
"Event(s) of Default" shall mean the occurrence of any one or more
of the events specified in Article VI of this Agreement and the continuance of
such event beyond the applicable grace and/or cure periods therefor, if any,
set forth in Article VI or in another Financing Document.
"Financing Agreement" shall mean the Amended and Restated Financing
and Security Agreement between the Borrower and the Agent of even date herewith
as the same may from time to time be extended, amended, restated, supplemented
or otherwise modified.
"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.
"Hydric Soils" shall mean any soil category upon which building
would be prohibited or restricted under applicable governmental requirements
(including, without limitation, those imposed by the U.S. Army Corps of
Engineers based upon its guidelines as to, among other things, soil, vegetation
and effect on the ecosystem).
"Inspecting Engineer" shall mean such person or firm as the Agent
may from time to time appoint or designate for purposes related to the
inspection of the progress of the development of any of the Land and the
construction of any of the Improvements, conformity of construction with the
applicable Plans and Specifications, and for such other purposes as the Agent
may from time to time deem appropriate or as may be required by the terms of
this Agreement.
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"Interest Reserve" shall have the meaning set forth in Section 2.01
hereof.
"Land" shall mean the land described in the applicable Deed of
Trust.
"Major Subcontractor" shall mean a subcontractor under a subcontract
in an amount of $100,000 or more pertaining to any Facility.
"Material Lease" shall mean a lease of a portion of a Facility to a
party other than a resident which exceeds 1,000 square feet of space or $15,000
per annum in rent.
"Notice" shall mean a written communication delivered as specified
in Section 11.1 of the Financing Agreement.
"Operating Reserve" shall mean a reserve in an amount approved by
the Agent included in each Total Development Budget to cover the costs of
leasing up a Facility and initial operating deficits.
"Plans and Specifications" shall mean any and all plans and
specifications prepared in connection with the development of the Land and/or
the construction of the Improvements for any Facility for which a Loan is made
and which are approved in writing by the Agent, as the same may from time to
time be amended with the prior written approval of the Agent, including but not
limited to, the plans and specifications prepared by the Architect, a copy of
which have been initialed by the Borrower and the Agent for identification and
delivered to the Agent.
"Requisition" or "Requisitions" shall have the meaning set forth in
Section 2.03 hereof.
"Stored Materials" shall have the meaning set forth in Section 2.11
hereof.
"Survey" shall mean a plat of the Land for any Facility which
clearly designates at least (i) the location of the perimeter of such Land by
courses and distances; (ii) the location of all easements, rights-of-way,
alleys, streams, waters, paths and encroachments; (iii) the location of all
building restriction lines and set-backs, however established; (iv) the
location of any streets or roadways abutting such Land; and (v) the then
"as-built" location of the Improvements located on such Land and the relation
of such Improvements by courses and distances to the perimeter of such Land,
building restriction lines and set-backs, all in conformity with the Minimum
Standard Detail Requirements for Land Title Surveys adopted by the
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American Congress on Surveying and Mapping (1992 Edition).
"Total Development Budget" or "Total Development Budgets" shall mean
individually or collectively the budget for the construction of the
Improvements for and the initial operating phase of a Facility as such Total
Development Budget is approved by the Agent (as amended from time to time with
the approval of the Agent).
Section I.03. Rules of Construction. The words "hereof", "herein",
"hereunder", "hereto", and other words of similar import refer to this
Agreement in its entirety. The terms "agree" and "agreements" mean and include
"covenant" and "covenants". The headings of this Agreement are for convenience
only and shall not define or limit the provisions hereof. All references (a)
made in the neuter, masculine or feminine gender shall be deemed to have been
made in all such genders, (b) made in the singular or plural number shall be
deemed to have been made, respectively, in the plural or singular number as
well, (c) to the Land, the Improvements or the Property shall mean all or any
portion of each of the foregoing, respectively unless the context indicates
that such terms refer to an individual Facility, and (d) to Section numbers are
to the respective Sections contained in this Agreement unless expressly
indicated otherwise.
ARTICLE II. AVAILABILITY UNDER THE LOAN AND VERIFYING REQUISITIONS.
Section II.01. The Loan and Procedures for Adding a Deed of Trust.
(a) Pursuant to the terms of the Note and the Financing Agreement, the
Borrower may obtain advances from time to time under the Loan on a revolving
basis not to exceed at any time outstanding the lesser of the (i) the Credit
Facility Committed Amount or (ii) the Borrowing Base. As of the date hereof
the Borrower has designated and the Lenders have accepted certain Facilities
into the Borrowing Base as Eligible Projects. This Agreement shall govern the
procedures for verification by the Agent of Costs Incurred to Date on each
Eligible Project. This Agreement shall also govern the terms, conditions and
procedures under which Eligible Projects may be added to the Borrowing Base.
(b) Also pursuant to the terms of the Note and the Financing
Agreement, the Borrower may designate and the Lenders may accept certain
Facilities which are not designated as Eligible Facilities as Optional
Collateral. This Agreement will govern the terms, conditions and procedures
under which the Total Project Costs for the Optional Collateral is determined
and under which Optional Collateral may be added.
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11
(c) The Borrower will give notice to the Agent in writing in
advance of its intention to add a particular Facility as an Eligible Project
under the Credit Facility. Each Total Development Budget for an Eligible
Project shall include an interest reserve (the "Interest Reserve"), an
Operating Reserve, a hard cost contingency reserve of not less than five
percent (5%) of the total budgeted construction costs and a development fee
payable to the Borrower (the "Development Fee") and shall demonstrate to the
Agent's satisfaction in its sole discretion that the Eligible Project will be
designated as a Pool A Project.
(d) The Borrower will give notice to the Agent in writing in
advance of its intention to add a particular Facility as Optional Collateral.
Section II.02. Permitted Costs. (a) Advances under the Borrowing
Base shall be made available by the Lenders pursuant to a Borrowing Base Report
issued quarterly by the Agent and certified by the Borrower in accordance with
the terms of the Financing Agreement. That portion of the Borrowing Base
composed of Costs Incurred to Date shall be related to expenditures for each
Eligible Facility described in the applicable Total Development Budget. Each
Total Development Budget may include the cost of (i) the acquisition by the
Borrower 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 Agent and to the
extent specifically permitted by the Agent, the process of verification of
Requisitions shall confirm the payment by the Borrower of the following costs
and expenses related to the development of the Premises and the construction of
the Improvements and no others may be included in a Total Development Budget:
(i) the payment of interest when due without further authorization or consent
of the Borrower; (ii) the actual cost of the Land and all labor, services,
materials, supervision, construction fees and the like reasonably incurred by
the Borrower in connection with the construction upon the Land of the
Improvements in accordance with the Plans and Specifications; (iii) for the
actual cost of pre-opening expenses, marketing expenses and operations of the
Facility to the extent of operating deficits; (iv) for the actual cost of
commitment fees, extension fees, appraisal fees, closing or settlement costs,
fees of attorneys, engineers, architects and accountants, insurance and bond
premiums, ad valorem real estate taxes and other costs directly related to the
development of the Land and the construction, marketing, initial start-up
operating of the Improvements and (v) for the Development Fee and other
pre-opening fees.
Section II.03. Requisitions Demonstrating Expenses.
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Verification of the Borrower's Costs Incurred to Date will be administered by
the Agent's Real Estate Loan Administration Group. Requisitions for each
Eligible Project shall be submitted by the Borrower from time to time setting
forth costs incurred by the Borrower or a Guarantor Subsidiary shall be in the
form approved by the Agent (each a "Requisition" collectively, the
"Requisitions") signed by ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on
behalf of the Borrower and approved by the Architect, showing the percentage of
completion and setting forth in trade breakdown form and in such detail as may
be required by the Agent the amounts expended and/or costs incurred for work
done and necessary materials incorporated in the Improvements. The Requisition
shall also show the percentage of completion of each line item on the
Borrower's cost breakdown approved by the Agent. The Borrower shall submit
with each Requisition a statement that the work completed to the date of such
Requisition is of quality consistent with the applicable Plans and
Specifications. In addition, at the time of delivery of each Requisition by
the Borrower, the Borrower shall furnish to the Agent such additional
information (such as paid receipts, invoices, statements of accounts, etc.) as
the Agent may reasonably require to assure that amounts shown in the
Requisition have been paid by the Borrower. Requisitions verified by the Real
Estate Loan Administration Group during the course of a fiscal quarter will be
included in the calculation of the next Borrowing Base Report.
Section II.04. Conditions Precedent to Facility Closing and Addition
of Deeds of Trust.
(a) Conditions Precedent to Facility Closing. The following shall
be conditions precedent to the Facility Closing or to the addition of a
Guarantor Subsidiary:
(i) The Note, the Deeds of Trust and Security Documents and
the other Financing Documents in connection with the Loan shall have been
properly executed and delivered to the Agent, the applicable Deeds of Trust
shall be acknowledged and recorded in the appropriate public office or
delivered to a representative of the title company for recording and payment
shall have been made for all conveyancing and recording in connection with the
settlement of the Loan, and for any transfer or documentary stamp taxes due
under any federal, state or municipal law.
(ii) The Agent shall have received and approved a copy of the
Borrower's fully executed Partnership Agreement and a certified copy of the
recorded Certificate of Limited Partnership or a certificate of no changes
therein since the closing of the Original Credit Facility. In connection with
the provision of a Deed of Trust by a Guarantor Subsidiary, the Agent shall
have received and approved copies of all organizational documents,
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including certified copies of all documents on record with the State in which
such entity is organized.
(iii) The Agent shall have received and approved a
certificate executed by all of the general and limited partners of the Borrower
authorizing the execution and delivery of the Financing Documents and
consenting to the Loan and similar authority certificates or resolutions of any
Guarantor Subsidiary.
(iv) The Agent shall have received and approved a current
certificate of fact from the Commonwealth of Virginia for the Borrower and a
certificate of good standing or certificate of fact from the State in which any
Guarantor Subsidiary is formed.
(v) The Agent shall have received and approved an opinion of
counsel for the Borrower as to the Borrower's good standing, form, powers and
authority and as to the validity, binding effect and enforceability of the
Financing Documents.
(vi) The Agent shall have received and properly executed a
Subsidiary Guaranty and a Joinder Agreement.
(b) Conditions Precedent to Accepting an Eligible Project:
(i) The Facility Closing shall have been completed.
(ii) The Agent shall have received a certificate of authority
to do business for the Borrower in each other jurisdiction where a Facility is
located.
(iii) The Total Development Budget for such Eligible Project
shall have been reviewed and approved in writing by the Agent consistent with
the provision of Section 2.01.
(iv) The Agent shall have received a paid policy of title
insurance (American Land Title Association Standard Form "B" Loan Policy -
Current Edition) covering the Facility or a valid and enforceable commitment to
issue the same, together with such reinsurance agreements and direct access
agreements as may be required by the Agent and/or endorsements to policies
issued to the Agent in connection with the Original Credit Facility, in the
amount agreed upon by the Agent from a company satisfactory to the Agent and
which may be endorsed or assigned to the successors and assigns of the Lenders
and to additional Lenders without additional cost, insuring the liens of the
Deeds of Trust to be valid first liens on the Property, free and clear of all
defects, exception and encumbrances except such as the Agent and its
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counsel shall have approved but without a creditor's rights exception and
(unless otherwise agreed by the Agent) containing affirmative insurance against
mechanics liens.
(v) The Agent shall have received advice, in form and
substance and from a source satisfactory to the Agent, to the effect that a
search of the applicable public records discloses no conditional sales
contracts, chattel mortgages, leases of personalty, financing statements or
title retention agreements filed or recorded against the Property except such
as the Agent shall have approved.
(vi) The Agent shall have received all policies of insurance
required by the terms hereof and by the other Financing Documents to be in
effect from a company or companies and in form and amount satisfactory to the
Agent, including without limitation, flood insurance (in the amount 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 Agent, that all fees and premiums due on account thereof have been paid
in full.
(vii) The Agent shall have received and accepted an appraisal
of the Facility.
(viii) The Agent shall have received from the Borrower a
complete set of the Plans and Specifications signed and sealed by the
Architect, together with written evidence, in form and substance satisfactory
to the Agent, to the effect that the Plans and Specifications are satisfactory
to the Borrower, the General Contractor, the Inspecting Engineer and, to the
extent required by applicable law or any effective restrictive covenant, have
been approved by all Governmental Authorities having or claiming jurisdiction
and by the beneficiary of any such restrictive covenant, respectively.
(ix) The Agent shall have received and approved a fully
executed copy of the applicable Construction Contract, the Architect's Contract
and a list of Major Subcontractors as well as any information regarding the
General Contractor, the Architect and the Major Subcontractors which the Agent
has requested.
(x) The Agent shall have received and approved a copy of a
current Survey of the Land certified to the Agent and to the title insurance
company and any recorded subdivision plat of the Land.
(xi) The Agent shall have received and approved a site plan
for the Improvements approved by all appropriate Governmental Authorities.
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(xii) The Agent shall have received from the Borrower written
evidence, in form and substance satisfactory to the Agent, from all
Governmental Authorities having or claiming jurisdiction to the effect that all
building, construction and other permits required in connection with the
development of the Land and the construction of the Improvements have been
validly issued, that all fees and bonds required in connection therewith have
been paid in full or posted, as the circumstances may require, and that the
Improvements meet zoning requirements and all sewer and storm drain
requirements.
(xiii) The Agent shall have received and approved a report
setting forth a construction progress schedule in form and substance
satisfactory to the Agent, calling for the completion of the Improvements by a
date no later than the Completion Date.
(xiv) If construction work of any kind has commenced upon the
Land or materials have been placed or stored upon the Land prior to the
recordation of the Deed of Trust among the Land Records where the Land is
located, the same shall be fully insured against by the title insurance
company.
(xv) The Agent shall have received and approved evidence that
the applicable General Contractor carries public liability and property damage
insurance and workers' compensation insurance in form and amounts and issued by
companies acceptable to the Agent.
(xvi) The Agent shall have received and accepted a Phase I
environmental audit of the applicable Facility prepared by a person or firm
acceptable to the Agent.
(xvii) The Agent shall have received evidence acceptable in
all respects through certification by the Architect or other source acceptable
to the Agent that the applicable Improvements, when constructed, will comply
with all legal requirements regarding access and facilities for handicapped or
disabled persons, including, without limitation and to the extent applicable to
assisted living facilities (or, if applicable, independent living facilities),
The Federal Architectural Barriers Act (42 U.S.C. Section 4151 et seq.), The
Fair Housing Amendments Act of 1988 (42 U.S.C. Section 3601 et seq.), The
Americans With Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.), The
Rehabilitation Act of 1973 (29 U.S.C. Section 794) and any applicable state
statutes relating to access and facilities for handicapped or disabled persons.
(xviii) The Agent shall have received and approved soil
reports which shall (i) demonstrate that the soil
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conditions of the Land for the applicable Facility are suitable for the
construction of the Improvements and (ii) evidence to the Agent's satisfaction
that there are no Hydric Soils on the Land.
(xix) The Agent shall have received and approved copies of
any executed Material Leases of the applicable Property or of any portion
thereof.
(xx) The Agent shall have received and approved an opinion of
local counsel in the jurisdiction where the applicable Facility is located that
the Financing Documents applicable to that Facility are enforceable and for the
Borrower that neither the making nor the servicing of the Loan will subject the
Lenders to a requirement of qualifying to do business or taxation (except ad
valorem taxes on the Property) in the State where the applicable Facility is
located and that the Loan is not usurious, which opinion must also inform the
Lenders (i) of the cost and timing of foreclosure; (ii) of any limitations on
the Lenders' right to obtain, or the amount of, a deficiency judgment; and
(iii) the existence of and details surrounding any redemption period enjoyed by
the Borrower following a sale at foreclosure.
(xxi) With regard to any Deed of Trust for a Facility located
in any state having such requirement, the Agent shall have received evidence
satisfactory to the Agent that a Certificate of Need has been issued for such
Facility.
(c) Conditions Precedent to Accepting a Facility as Optional
Collateral:
(i) The Facility Closing shall have been completed.
(ii) The Agent shall have received a certificate of authority
to do business for the Borrower in each other jurisdiction where a Facility is
located.
(iii) The Agent shall have received a copy of the Borrower's
paid policy of owner's title insurance and a current title report covering the
Facility.
(iv) The Agent shall have received advice, in form and
substance and from a source satisfactory to the Agent, to the effect that a
search of the applicable public records discloses no conditional sales
contracts, chattel mortgages, leases of personalty, financing statements or
title retention agreements filed or recorded against the Property except such
as the Agent shall have approved.
(v) The Agent shall have received all policies of
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insurance required by the terms hereof and by the other Financing Documents to
be in effect from a company or companies and in form and amount satisfactory to
the Agent, including without limitation, flood insurance (in the amount 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 Agent, that all fees and premiums due on account thereof
have been paid in full.
(vi) The Agent shall have received and accepted a Phase I
environmental audit of the applicable Facility prepared by a person or firm
acceptable to the Agent.
(vii) The Agent shall have received and approved copies of
any executed Material Leases of the applicable Property or of any portion
thereof.
(viii) The Agent shall have received and approved an opinion
of local counsel in the jurisdiction where the applicable Facility is located
that the Financing Documents applicable to that Facility are enforceable and
for the Borrower that neither the making nor the servicing of the Loan will
subject the Lenders to a requirement of qualifying to do business or taxation
(except ad valorem taxes on the Property) in the State where the applicable
Facility is located and that the Loan is not usurious, which opinion must also
inform the Lenders (i) of the cost and timing of foreclosure; (ii) of any
limitations on the Lenders' right to obtain, or the amount of, a deficiency
judgment; and (iii) the existence of and details surrounding any redemption
period enjoyed by the Borrower following a sale at foreclosure.
(ix) With regard to any Deed of Trust for a Facility located
in any state having such requirement, the Agent shall have received evidence
satisfactory to the Agent that a Certificate of Need has been issued for such
Facility.
(x) For each Facility in the Optional Collateral, the Agent
shall have received copies of all applicable Licenses and the certificate of
occupancy.
Section II.05. Conditions Precedent to Determining Availability
Under Borrowing Base. The Lenders shall not be obligated to include any
Requisition for an Eligible Facility in the calculation of the Borrowing Base
unless the conditions described in Section 2.04(b) and the following additional
conditions shall have been satisfied to the Agent's satisfaction:
(a) The Agent shall have received a monthly title report on each
Eligible Project which is under construction from the applicable title
insurance company, indicating that since the
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18
last preceding report, there has been no change in the status of title and no
other exceptions not theretofore approved by the Agent, if required by the
terms of the existing title insurance policy, the Agent shall have received an
endorsement which shall have the effect of advancing the effective date of the
policy to the date of the advance then being made and increasing the coverage
of the policy by an amount equal to the Requisition being verified if the
policy does not by its terms provide for such an increase.
(b) No Default or Event of Default shall have occurred and be
continuing under any Note or any of the other Financing Documents.
(c) The Improvements shall not have been materially damaged by
fire or other casualty unless the Agent shall have received proceeds of
insurance sufficient in the judgment of the Agent to effect a satisfactory
restoration of such Improvements in accordance with the terms of the Deed of
Trust.
(d) The Agent shall have received written evidence, in form and
substance satisfactory to the Agent, to the effect that all work requiring
inspection by Governmental Authorities having or claiming jurisdiction has been
duly inspected and approved by such authorities and by any rating or inspection
organization, bureau, association or office having or claiming jurisdiction.
(e) The representations and warranties made in Article III of this
Agreement and in the Financing Agreement shall be true and correct in all
material respects on and as of the date of the advance with the same effect as
if made on such date.
(f) All terms and conditions of the Financing Documents required
to be met as of the date of the applicable advance shall have been met to the
complete satisfaction of the Agent.
(g) In the reasonable judgment of the Agent, all work completed on
the applicable Property at the time of the application for an advance has been
performed in a good and workmanlike manner and all materials and fixtures
usually furnished and installed at that stage of construction have been
furnished and installed and that all costs covered by the Requisition have been
paid by the Borrower.
(h) There shall be at least five (5) Pool A Projects in the
Borrowing Base. The Agent shall have determined whether each Eligible Project
is a Pool A, Pool B or Pool C Project.
(i) Before verifying any Requisition, the Agent shall require the
Borrower to obtain from the applicable General Contractor and if required by
the applicable title insurance
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19
company from all subcontractors and material suppliers acknowledgments of
payment and releases of liens and rights to claim liens for work performed or
materials delivered covered by such Requisition. All such acknowledgments and
releases shall be in form AIA Forms G706 and G706A.
(j) The Agent's Inspecting Engineer will inspect work performed
which is covered by each Requisition being verified.
Section II.06. Conditions Under Which an Eligible Project is a
Completed Facility. The Agent shall verify that an Eligible Project is a
Completed Facility based on the satisfaction of the following additional
conditions:
(a) The Agent shall have received the final "as built" Survey for
the applicable Property.
(b) The Agent shall have received written evidence from a
qualified third party, in form and substance satisfactory to the Agent, to the
effect that the applicable Improvements have been substantially completed in
accordance with their Plans and Specifications.
(c) The Agent shall have received written evidence, in form and
substance satisfactory to the Agent, to the effect that requisite certificates
for permanent occupancy or completion of the Improvements have been validly
issued.
(d) Final waivers of liens of the General Contractor, and if
required by the applicable title insurance company, subcontractors, laborers
and material suppliers have been furnished to the Agent or, as to any disputed
lien or claim of lien, a bond in form and substance acceptable to the Agent has
been provided or other arrangements satisfactory to the Agent have been made.
(e) The Agent shall have received a copy of an operating License
for the Facility or other evidence satisfactory to the Agent that the Facility
may be lawfully operated as contemplated by the Financing Documents.
Section II.07. Advances to Others for the Account of the Borrower.
At the option of the Agent, the Agent may apply amounts due hereunder 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 Deed of Trust.
At the option of the Agent, and without limiting the generality of the
foregoing, the Agent may pay directly from the Loan proceeds all interest bills
rendered by the Agent in connection with the Loan, and following the occurrence
of an Event of Default may make advances directly to the General Contractor,
the title insurance
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20
company, any subcontractor or materialman, or to any of them jointly, and the
execution hereof by the Borrower shall, and hereby does, constitute an
irrevocable authorization to so advance the proceeds of the Loan. No further
direction or authorization from the Borrower shall be necessary to warrant such
direct advances and all such advances shall satisfy pro tanto the obligations
of the Lenders hereunder and shall be secured by the Deeds of Trust and other
Collateral as fully as if made to the Borrower, regardless of the disposition
thereof by the party or parties to whom such advance is made.
Section II.08. Requisitions for the Operating Reserve. No portion
of any Requisition for costs included in the Operating Reserve shall be
verified until both a certificate of occupancy has been issued by the
applicable governmental authorities and, if applicable to the Facility, an
operating License has been issued for the Facility by the appropriate
Governmental Authority or Authorities. Advances from the Operating Reserve
shall be for the sole purpose of paying a portion of the Debt Service on the
Loan or net operating losses as shown on a monthly financial report for such
Facility prepared in accordance with the requirements set forth in the
Financing Agreement, and certified by the Chief Financial Officer of the
Guarantor.
Section II.09. Assignments. The Borrower agrees 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 Agent. Any assignment made or
attempted by the Borrower without the prior written consent of the Agent shall
be void and of no effect. No consent by the Agent to an assignment by the
Borrower shall release the Borrower as the party primarily obligated and liable
under the terms of this Agreement unless the Borrower shall be released
specifically by the Agent in writing. No consent by the Agent to an assignment
shall be deemed to be a waiver of the requirement of prior written consent by
the Agent with respect to each and every further assignment and as a condition
precedent to the effectiveness of such assignment.
Section II.10. Liability of the Lenders. The Lenders shall in no
event be responsible or liable to any person other than the Borrower for the
disbursement of or failure to disburse the Loan proceeds or any part thereof
and neither the General Contractor nor any subcontractor, laborer or material
supplier shall have any right or claim against the Lenders under this Agreement
or the administration thereof.
Section II.11. Stored Materials. The Agent will permit inclusion of
materials (the "Stored Materials") to be included in Requisitions prior to
their incorporation into the Improvements if they have been fully paid for by
the Borrower. The Borrower
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shall securely store of cause to be securely stored any stored materials.
Section II.12. Limitations on Advances. The following additional
limitations on certain advances shall apply to each of the Loans:
(a) Interest Reserve. Except as provided in Section 2.02 hereof,
after the earlier of the issuance of certificate of occupancy for a Facility or
the expiration of the Construction Phase, no further advances shall be made
from the Interest Reserve in such Total Development Budget.
(b) Development Fee. The Development Fee will be advanced ratably
with the first twelve (12) monthly Requisitions.
(c) Operating Reserve. No advances from the Operating
Reserve shall be made until both a certificate of occupancy has been issued by
the applicable governmental authorities and, if applicable to the Facility, an
operating license has been issued for the Facility by the appropriate
Governmental Authority or Authorities. Advances from the Operating Reserve
shall be for the sole purpose of paying Debt Service or net operating losses as
shown on a monthly financial report for such Facility prepared in accordance
with the requirements set forth in the Financing Agreement, and certified by
the chief Financial Officer of the Guarantor.
ARTICLE III. REPRESENTATIONS AND WARRANTIES.
Section III.01. Compliance in Zoning. The Borrower represents and
warrants that the anticipated use of each Eligible Project and any Optional
Collateral 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 III.02. Plans and Specifications. The Borrower represents
and warrants that, to the extent required by applicable law or any effective
restrictive covenant, the Plans and Specifications for each Eligible Project
and any Optional Collateral have been approved by all Governmental Authorities
having or claiming jurisdiction and by any beneficiary of any such restrictive
covenant.
Section III.03. Building Permits; Other Permits. The Borrower
represents and warrants that all building, construction and other permits
necessary or required in connection with the development of the Land and the
construction of the Improvements
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have been or, prior to any advance under the applicable Loan, will be, unless
otherwise agreed to by the Agent, validly issued and all fees and bonds
required in connection therewith have been paid or posted, as the circumstances
may require.
Section III.04. Utilities. The Borrower represents and warrants that
all utility services necessary for the development of all the Land and the
construction of the Improvements for each Eligible Project and the operation
thereof for their intended purpose are or will be available at the boundaries
of all the Land, including, without limitation, telephone service, water
supply, storm and sanitary sewer facilities, natural gas (if available) and
electric facilities.
Section III.05. Access; Roads. The Borrower represents and warrants
that all roads and other accesses necessary for the development of all the Land
and the construction of all the Improvements for all Eligible Projects and full
utilization thereof for their intended purposes have either been completed or
the necessary rights of way therefor have either been or will be acquired by
the appropriate Governmental Authorities or have been or will be dedicated to
public use and accepted by such Governmental Authorities and all necessary
steps have been taken by the Borrower or such Governmental Authorities to
assure the complete construction and installation thereof by a date sufficient
to ensure the timely completion of the Improvements and in no event later than
the Completion Date.
Section III.06. Other Liens. The Borrower represents and warrants
that except as otherwise provided in the Financing Documents, the Borrower has
made no contract or arrangement of any kind the performance of which by the
other party thereto would give rise to a lien on any Eligible Project or
Optional Collateral.
Section III.07. Defaults. The Borrower represents and warrants that
there is no default on the part of the Borrower 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 III.08. Affirmation of Representations and Warranties. Each
Requisition, and any request for an advance under the Loan shall constitute an
affirmation that the foregoing representations and warranties of the Borrower
and those set forth in the other Financing Documents are true and correct as of
the date thereof and, unless the Agent is notified to the contrary prior to the
disbursement of the advance Requisitioned, will be so on the date thereof.
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ARTICLE IV. AFFIRMATIVE COVENANTS AND AGREEMENTS.
Section IV.01. Compliance with Laws; Encroachments. The
Improvements shall be constructed in accordance with all applicable (whether
present or future) laws, ordinances, rules, regulations, requirements and
orders of any Governmental Authority having or claiming jurisdiction. The
Improvements shall be constructed entirely on the Land and shall not encroach
upon any easement or right-of-way, or upon the land of others. Construction of
the Improvements shall occur wholly within all applicable building restriction
lines and set-backs, however established, and shall be in strict compliance
with all applicable use or other restrictions and the provisions of any prior
agreements, declarations, covenants and all applicable zoning and subdivision
ordinances and regulations unless a variance shall have been obtained.
Section IV.02. Surveys. Upon the Agent's request from time to time
as construction of a Facility progresses and upon the completion of the
construction of the Improvements, the Borrower shall furnish the Agent with a
Survey with a current certification to the Agent 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 Agent pursuant to the terms of this
Agreement, the Borrower shall also furnish an original print thereof to the
title insurance company and such Survey shall not be sufficient for the
purposes of this Agreement unless and until the title insurance company shall
advise the Agent, by endorsement to the title insurance policy or otherwise,
that the Survey discloses no violations, encroachments or other variances from
applicable set-backs or other restrictions except such as the Agent and its
counsel shall approve.
Section IV.03. Inspections; Cooperation; Payment of Inspecting
Engineer. The Borrower shall permit the Lenders and their duly authorized
representatives (including, without limitation, the Inspecting Engineer) to
enter upon any of the Land, to inspect the Improvements and any and all
materials to be used in connection with the development of any of the Land
and/or the construction of the Improvements, to examine all detailed plans and
shop drawings and similar materials as well as all records and books of account
maintained by or on behalf of the Borrower relating thereto and to discuss the
affairs, finances and accounts pertaining to any Facility and any of the
Improvements with representatives of the Borrower. The Borrower shall at all
times cooperate and cause the General Contractor and each and every one of its
subcontractors and materialmen to cooperate with the Lenders and their duly
authorized representatives (including, without limitation, the Inspecting
Engineer) in connection with or in aid of the performance of the Agent's or
Lenders' functions
- 20 -
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under this Agreement. The reasonable fees of any Inspecting Engineer engaged
or employed by the Agent in connection with or in aid of the performance of the
Agent's or the Lenders' functions under this Agreement shall be paid by the
Borrower.
Section IV.04. Vouchers and Receipts. The Borrower shall furnish to
the Agent, promptly on demand, any contracts, bills of sale, statements,
receipted vouchers or agreements pursuant to which the Borrower has any claim
of title to any materials, fixtures or other articles delivered or to be
delivered to the Land or incorporated or to be incorporated into any of the
Improvements. The Borrower shall furnish to the Agent, promptly on demand, a
verified written statement, in such form and detail as the Agent may require,
showing all amounts paid for labor and materials and all items of labor and
materials furnished or to be furnished for which payment has not been made and
the amounts to be paid therefor.
Section IV.05. Payments for Labor and Materials. The Borrower shall
pay when due all bills for services or labor performed and materials supplied
in connection with the development of the Land and the construction of the
Improvements. In the event any mechanics' lien or other lien or encumbrance
shall be filed or attached against the Property without the prior written
consent of the Agent in each instance, the Borrower covenants and agrees that,
within twenty (20) days after 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 Agent may, at its option, in
addition to, and not in limitation of, all other rights and remedies of the
Agent in the Event of Default by the Borrower, and without regard to the
priority of said mechanics' lien or other lien or encumbrance, pay the same,
and all amounts expended by the Agent for such purpose shall constitute loans
to the Borrower and shall be secured by the Deed of Trust and the other
Financing Documents, and be due and payable forthwith by the Borrower to the
Agent with interest thereon at the Reimbursement Rate provided for in the Deed
of Trust.
Section IV.06. Correction of Construction Defects. Promptly
following any demand by the Agent, the Borrower shall correct or cause the
correction of any structural defects in the Improvements and any material
departures or deviations from the Plans and Specifications, as determined by
the Agent in its sole but reasonable discretion, not approved in writing by the
Agent.
Section IV.07. Insurance. The Borrower shall provide or cause to be
provided to the Agent, and shall 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 Plans and Specifications, the Financing Agreement, the Deeds
of
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Trust and the Financing Documents from a company or companies, and in form and
amounts satisfactory to the Agent.
Section IV.08. Fees and Expenses; Indemnity. The Borrower shall pay
all fees, charges, costs and expenses required to satisfy the conditions of the
Financing Documents. The Borrower shall hold the Lenders harmless and
indemnify the Lenders against all claims of brokers and "finders" arising by
reason of the execution and delivery of the Financing Documents or the
consummation of the transaction contemplated hereby. Neither party is aware of
any broker having a claim for payment.
Section IV.09. Copies of Notices. Promptly following the giving or
receipt by the Borrower of any notice given to or received from the General
Contractor or any subcontractor or materialman with respect to the Property, if
such notice concerns any default or failure to perform by any party, or relates
to any matter requiring the Agent's or the Lenders' approval under this
Agreement, the Borrower shall forward to the Agent copies of any such notice.
ARTICLE V. NEGATIVE COVENANTS.
Section V.01. Other Liens; Transfers; "Due-on-Sale"; etc. The
Borrower shall not, without the prior written consent of the Agent, create or
permit to be created or remain with respect to any of the Property or any part
thereof or income therefrom, any mortgage, pledge, lien, encumbrance or charge,
or security interest, or conditional sale or other title retention agreement,
whether prior or subordinate to the lien of the Financing Documents, other than
in connection with the Financing Documents or as otherwise provided or
permitted therein. Except for any grant, conveyance, sale, assignment or
transfer in the ordinary course of the Borrower's 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 Borrower shall not,
without the prior written consent of the Agent, make, create, permit or
consent to any conveyance, sale, assignment or transfer of any of the Property
or any part thereof, other than in connection with the Financing Documents or
as otherwise provided or permitted therein.
Section V.02. Impairment of Security. The Borrower 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 V.03. Conditional Sales. The Borrower shall not
incorporate in the Improvements any property acquired under a
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conditional sales contract, or lease, or as to which the vendor retains title
or a security interest, without the prior written consent of the Agent.
Section V.04. Changes to Plans and Specifications. After
review and approval of a Total Development Budget by the Agent, the Borrower
shall not permit any change order increasing the price of the Improvements for
an Eligible Project by more than $50,000 for any one change order or by more
than 10% of the total hard cost portion of the Total Development Budget in the
aggregate or materially altering the scope of the Improvements, without the
prior written consent of the Agent which consent will not be unreasonably
withheld.
Section V.05. Construction Contract; Construction Management. The
Borrower shall not execute any contract or agreement or become a party to any
arrangement for the construction of any Improvements or for construction
management services with respect to any Property without the prior written
consent of the Agent.
ARTICLE VI. EVENTS OF DEFAULT.
The terms "Event(s) of Default", as used in this Agreement shall mean the
occurrence or happening, from time to time, of any one or more of the
following:
Section VI.01. Defaults Under Other Financing Documents. Any
default or event of default (as defined therein) shall occur under the Master
Note, any Note or any of the other Financing Documents.
Section VI.02. Representations and Warranties. Any representation
or warranty contained in this Agreement, or in any other document, certificate
or opinion delivered to the Agent in connection with the Credit Facility, shall
prove at any time to be incorrect or misleading in any material respect either
on the date when made or on the date when reaffirmed pursuant to Article III of
this Agreement.
Section VI.03. Compliance with Covenants. The Borrower shall fail
to comply with the terms of any covenant or agreement contained in this
Agreement and such failure shall continue uncured for a period of thirty (30)
days after Notice from the Agent to the Borrower, unless the nature of the
failure is such that (a) it cannot be cured within the thirty (30) day period,
and (b) the Borrower institutes corrective action within the thirty (30) day
period and (c) the Borrower diligently pursues such action and completes the
cure within ninety (90) days.
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Section VI.04. Damage to Improvements. At any time prior to the
issuance of a certificate of occupancy or completion therefor, any of the
Improvements are substantially damaged or destroyed by fire or other casualty
and the Agent determines in good faith that such Improvements cannot be
restored and completed in accordance with the terms and provisions of the Deed
of Trust.
Section VI.05. Disclosure of Contractors. The Borrower shall fail
to disclose to the Agent, upon demand, the names of all persons with whom the
Borrower has contracted or intends to contract for the construction of the
Improvements or for the furnishing of labor or materials therefor.
Section VI.06. Mechanic's Lien. A lien for the performance of work
or the supply of materials which is perfected against any of the Land remains
unsatisfied or un-bonded or for which no other arrangements satisfactory to the
Agent have been made for a period of twenty (20) days after the date of
perfection.
Section VI.07. Survey Matters. Any Survey required by the Lenders
during the period of construction shows any matters not approved by the Agent
and such matters not approved are not removed within 30 days after Notice
thereof by the Agent to the Borrower.
Section VI.08. General Contractor Default. The General Contractor
shall have defaulted under any Construction Contract, which default the Agent,
in its sole discretion, shall deem substantial, and the Borrower, after thirty
(30) days Notice from the Agent, shall fail to commence exercising any
resulting right or remedy to which it may be entitled thereunder and diligently
pursue such right or remedy.
ARTICLE VII. REMEDIES ON DEFAULT.
Section VII.01. Remedies on Default. The Agent shall have the right,
upon the happening of any Event of Default, to terminate this Agreement by
Notice from the Agent to the Borrower and, in addition to any rights or
remedies available to them under the Deed of Trust or any of the other
Financing Documents, to enter into possession of any of the Property and
perform any and all work and labor necessary to complete the development of
such Land and the construction of the Improvements thereon (whether or not in
accordance with the Plans and Specifications therefor) and to employ watchmen
to protect the Property and the Improvements. All sums expended by the Lenders
for such purposes shall be deemed to have been advanced to the Borrower under
the applicable Note and shall be secured by the Deed of Trust. For
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this purpose, the Borrower hereby constitutes and appoints the Lenders, or the
Agent on behalf of the Lenders, its true and lawful attorney-in-fact with full
power of substitution to complete work on any Eligible Project in the name of
the Borrower, and hereby empowers said attorney or attorneys as follows:
(a) To use any funds of the Borrower including any balance which
may be held in escrow and any funds which may remain un-advanced under any of
the Loan for the purpose of completing the development of any of the Land and
the construction of any of the Improvements, whether or not in the manner
called for in the Plans and Specifications;
(b) To make such additions and changes and corrections to any of
the Plans and Specifications which shall be necessary or desirable in the
judgment of the Agent to complete the development of any of the Land and the
construction of any of the Improvements;
(c) To employ such contractors, subcontractors, agents, architects
and inspectors as shall be necessary or desirable for said purpose;
(d) To pay, settle or compromise all existing bills and claims
which are or may be liens against any of the Property, or may be necessary or
desirable for the completion of the work or the clearance of title to any of
the Property;
(e) To execute all applications and certificates which may be
required in the name of the Borrower; and
(f) To do any and every act with respect to the development of the
Land and the construction of the Improvements which the Borrower may do in its
own behalf.
It is understood and agreed that this power of attorney shall be
deemed to be a power coupled with an interest which cannot be revoked. Said
attorney-in-fact shall also have the power to prosecute and defend all actions
or proceedings in connection with the development of the Land and the
construction of the Improvements and to take such actions and to require such
performance as the Lenders may deem necessary.
Section VII.02. No Conditions Precedent to Exercise of Remedies. The
Borrower shall not be relieved of any obligation by reason of the failure of
the Lenders to comply with any request of the Borrower 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
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the Property, or by reason of any agreement or stipulation between any
subsequent owner of the Property and the Lenders extending the time of payment
or modifying the terms of the Financing Documents without first having obtained
the consent of the Borrower; and in the latter event, the Borrower shall
continue to be liable to make payments according to the terms of any such
extension or modification agreement, unless expressly released and discharged
in writing by the Lenders.
Section VII.03. Remedies Cumulative and Concurrent. No remedy herein
conferred upon or reserved to the Lenders or the Agent is intended to be
exclusive of any other remedies provided for in the Financing Documents, and
each and every such remedy shall be cumulative, and shall be in addition to
every other remedy given hereunder, or under the Financing Documents, or now or
hereafter existing at law or in equity or by statute. Every right, power and
remedy given by the Financing Documents to the Lenders or the Agent shall be
concurrent and may be pursued separately, successively or together against the
Borrower or the Property or any part thereof, and every right, power and remedy
given by the Financing Documents may be exercised from time to time as often as
may be deemed expedient by the Lenders or the Agent.
Section VII.04. Strict Performance. No delay or omission of the
Lenders or the Agent to exercise any right, power or remedy accruing upon the
happening of an Event of Default shall impair any such right, power or remedy
or shall be construed to be a waiver of any such Event of Default or any
acquiescence therein. No delay or omission on the part of the Lenders or the
Agent to exercise any option for acceleration of the maturity of the
Obligations, or any of them, or for foreclosure of the Deeds of Trust, or any
of them, following any Event of Default as aforesaid, or any other option
granted to the Lenders hereunder in any one or more instances, or the
acceptance by the Lenders of any partial payment on account of the Obligations
shall constitute a waiver of any such Event of Default and each such option
shall remain continuously in full force and effect.
ARTICLE VIII. MISCELLANEOUS.
Section VIII.01. No Warranty by Lenders. By accepting or approving
anything required to be observed, performed or fulfilled by the Borrower or to
be given to the Agent or the Lenders pursuant to this Agreement, including,
without limitation, any certificate, balance sheet, statement of profit and
loss or other financial statement, Survey, receipt, appraisal or insurance
policy, the Lenders shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition
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thereof and any such acceptance or approval thereof shall not be or constitute
any warranty or representation with respect thereto by the Lenders.
Section VIII.02. Liability of Lenders. The Lenders shall not be
liable for any act or omission by them pursuant to the provisions of this
Agreement in the absence of fraud, willful misconduct or gross negligence. The
Lenders shall incur no liability to the Borrower or any other party in
connection with the acts or omissions of the Lenders or the Agent in reliance
upon any certificate or other paper believed by the Lenders or the Agent to be
genuine or with respect to any other thing which the Lenders or the Agent may
do or refrain from doing, unless such act or omission amounts to fraud or gross
negligence. In connection with the performance of their duties pursuant to
this Agreement, the Lenders may consult with counsel of their own selection,
and anything which the Lenders may do or refrain from doing, in good faith, in
reliance upon the opinion of such counsel shall be full justification and
protection to the Lenders.
Section VIII.03. No Partnership. Nothing contained in this Agreement
shall be construed in a manner to create any relationship between the Borrower
and the Lenders other than the relationship of borrower and lender and the
Borrower and the Lenders shall not be considered partners or co-venturers for
any purpose on account of this Agreement.
Section VIII.04. Severability. In the event any one or more of the
provisions of this Agreement shall for any reason be held to be invalid,
illegal or unenforceable, in whole or in part or in any other respect, or in
the event any one or more of the provisions of any of the Financing Documents
operates or would prospectively operate to invalidate this Agreement, then and
in either of those events, at the option of the Lenders, such provision or
provisions only shall be held for naught and shall not affect any other
provision of the Note or of any of the other Financing Documents or the
validity of the remaining Obligations and the remaining provisions of the Note
and the Financing Documents shall remain operative and in full force and effect
and shall in no way be affected, prejudiced or disturbed thereby.
Section VIII.05. Successors and Assigns. Each and every one of the
covenants, terms, provisions and conditions of this Agreement and the Financing
Documents shall apply to, bind and inure to the benefit of the Borrower, its
successors and those assigns of the Borrower consented to in writing by the
Lenders, and shall apply to, bind and inure to the benefit of the Lenders and
the endorsees, transferees, successors and assigns of each of the Lenders, and
all persons claiming under or through any of them.
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Section VIII.06. Modification; Waiver. None of the terms or
provisions of this Agreement may be changed, waived, modified, discharged or
terminated except by instrument in writing executed by the party or parties
against whom enforcement of the change, waiver, modification, discharge or
termination is asserted. None of the terms or provisions of this Agreement
shall be deemed to have been abrogated or waived by reason of any failure or
failures to enforce the same.
Section VIII.07. Third Parties; Benefit. All conditions to the
obligation of the Lenders to make advances hereunder are imposed solely and
exclusively for the benefit of the Lenders and their assigns and no other
persons shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that the Lenders will
refuse to make advances in the absence of strict compliance with any or all
thereof and no other person shall, under any circumstances, be deemed to be the
beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by the Agent at any time in the sole and absolute exercise of
its discretion pursuant to its agreements with the Lenders. The terms and
provisions of this Agreement are for the benefit of the parties hereto and,
except as herein specifically provided, no other person shall have any right or
cause of action on account thereof.
Section VIII.08. Conditions; Verification. Any condition of this
Agreement which requires the submission of evidence of the existence or
non-existence of a specified fact or facts implies as a condition to the
existence or non-existence, as the case may be, of such fact or facts that the
Lenders shall, at all times, be free independently to establish to their
satisfaction and in its absolute discretion such existence or non-existence.
Section VIII.09. Captions and Headings. The captions and headings
contained in this Agreement are included herein for convenience of reference
only and shall not be considered a part hereof and are not in any way intended
to limit or enlarge the terms hereof.
Section VIII.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original for all
purposes; provided, however, that all such counterparts shall together
constitute one and the same instrument.
Section VIII.11. Notices. All Notices shall be deemed to have been
received when delivered by hand, when delivered by an overnight courier, or
when deposited in the mail in the manner provided for the giving of Notice
except in any case where it is
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expressly provided in this Agreement that a Notice is not effective until
actually received by the party to whom it is addressed.
Section VIII.12. Signs; Publicity. At the Agent's request, but at the
expense of the Agent, the Borrower shall place a sign acceptable to the
Borrower at a location on each of the Eligible Projects satisfactory to the
Agent, which sign shall recite, among other things, that the Lenders are
financing the development of the Land and the construction of the Improvements.
The Borrower expressly authorizes the Agent to prepare and to furnish to the
news media for publication from time to time news releases with respect to the
Credit Facility and each Eligible Project, specifically to include but not
limited to, releases detailing the Agent's and the Lenders' involvement with
the Credit Facility and the financing of any Eligible Project, all subject to
prior review by the Borrower.
Section VIII.13. Applicable Law. This Agreement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the
Commonwealth of Virginia.
Section VIII.14. Time of Essence. Time shall be of the essence for
each and every provision of this Agreement of which time is an element.
Section 8.15 Document Controlling. In the event of any conflict
between this Agreement and the Financing Agreement, the Financing Agreement
shall control.
IN WITNESS WHEREOF, the Borrower and the Agent have caused this Agreement
to be executed under seal as of the day and year first above written.
WITNESS OR ATTEST: SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP,
a Virginia limited partnership
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: Sunrise Assisted Living
---------------------
Name: Investments, Inc., general partner
Title:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
-----------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
WITNESS: NATIONSBANK, N.A., as Agent for the Lenders
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_/s/ ▇▇▇▇▇ ▇. Tatusko__ By: _/s/ ▇▇▇▇▇▇ ▇. Montanari_(SEAL)
-------------------- -----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF _Fairfax_, TO WIT:
I HEREBY CERTIFY, that on this 23rd day of December, 1997, before me, the
undersigned Notary Public of said State/Commonwealth, personally appeared ▇▇▇▇▇
▇. ▇▇▇▇, who acknowledged himself to be a Vice President of Sunrise Assisted
Living Investment, Inc., known to me (or satisfactorily proven) to be the
person whose name is subscribed to the within instrument, and acknowledged that
he executed the same for the purposes therein contained as duly authorized
officer of said corporation by signing the name of the corporation by himself
as vice president.
WITNESS my hand and Notarial Seal.
_/S/ ▇▇▇▇ ▇. Washington_____
----------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF Fairfax_ , TO WIT:
I HEREBY CERTIFY, that on this 23rd day of December,1997, before me, the
undersigned Notary Public of said State/Commonwealth, personally appeared
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, who acknowledged himself to be a vice president of
NationsBank, N.A., as Agent for the Lenders, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, and
acknowledged that he executed the same for the purposes therein contained as
the duly authorized officer of said Bank by signing the name of the Bank by
himself as vice president.
WITNESS my hand and Notarial Seal.
_/S/ ▇▇▇▇ ▇. Washington______
----------------------
Notary Public
My Commission Expires:
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