EXHIBIT 10.6
MASTER CREDIT FACILITY AGREEMENT
BY AND BETWEEN
SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a California limited partnership,
SUNRISE PARMA ASSISTED LIVING, L.L.C., a Virginia limited liability company,
SUNRISE WILTON ASSISTED LIVING, L.L.C., a Connecticut limited liability company,
SUNRISE WALL ASSISTED LIVING, L.L.C., a New Jersey limited liability company,
SUNRISE WESTON ASSISTED LIVING, LIMITED PARTNERSHIP, a Massachusetts limited
partnership
AND
▇▇▇▇▇▇ FINANCIAL GROUP, INC.
dated as of
NOVEMBER 29, 2001
TABLE OF CONTENTS
Page
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MASTER CREDIT FACILITY AGREEMENT..................................................................................1
ARTICLE 1 THE COMMITMENT..........................................................................................2
SECTION 1.01. The Commitment............................................................................2
SECTION 1.02. Requests for Advances.....................................................................2
SECTION 1.03. Maturity Date of Advances.................................................................2
SECTION 1.04. Interest on Advances......................................................................3
SECTION 1.05. Coupon Rates for Advances.................................................................4
SECTION 1.06. Notes.....................................................................................4
SECTION 1.07. Extension of Variable Facility Termination Date...........................................5
SECTION 1.08. Conversion from Variable Facility Commitment to Fixed Facility Commitment.................5
SECTION 1.09. Limitations on Right to Convert...........................................................6
SECTION 1.10. Conditions to Conversion..................................................................6
ARTICLE 2 THE ADVANCES............................................................................................6
SECTION 2.01. Rate Setting for an Advance...............................................................6
SECTION 2.02. Advance Confirmation Instrument for Variable Advances.....................................7
SECTION 2.03. Breakage and other Costs..................................................................7
SECTION 2.04. Advances..................................................................................7
SECTION 2.05. Determination of Allocable Facility Amount and Valuations.................................8
ARTICLE 3 COLLATERAL CHANGES......................................................................................9
SECTION 3.01. Right to Add Collateral...................................................................9
SECTION 3.02. Procedure for Adding Collateral...........................................................9
SECTION 3.03. Right to Obtain Releases of Collateral...................................................10
SECTION 3.04. Procedure for Obtaining Releases of Collateral...........................................10
SECTION 3.05. Right to Substitute Collateral...........................................................11
SECTION 3.06. Procedure for Substituting Collateral....................................................11
ARTICLE 4 EXPANSION OF CREDIT FACILITY...........................................................................13
SECTION 4.01. Right to Increase Commitment.............................................................13
SECTION 4.02. Procedure for Obtaining Increases in Commitment..........................................13
ARTICLE 5 TERMINATION OF FACILITIES..............................................................................14
SECTION 5.01. Right to Complete or Partial Termination of Facilities...................................14
SECTION 5.02. Procedure for Complete or Partial Termination of Facilities..............................14
SECTION 5.03. Right to Terminate Credit Facility.......................................................14
SECTION 5.04. Procedure for Terminating Credit Facility................................................15
ARTICLE 6 CONDITIONS PRECEDENT TO ALL REQUESTS...................................................................15
SECTION 6.01. Conditions Applicable to All Requests....................................................15
SECTION 6.02. Conditions Precedent to Initial Advance..................................................17
SECTION 6.03. Conditions Precedent to Future Advances..................................................17
SECTION 6.04. Conditions Precedent to Addition of an Additional Mortgaged Property to the
Collateral Pool...............................................................................................18
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SECTION 6.05. Conditions Precedent to Release of Property from the Collateral Pool.....................19
SECTION 6.06. Conditions Precedent to Substitution of a Substitute Mortgaged Property into the
Collateral Pool...............................................................................................20
SECTION 6.07. Conditions Precedent to Increase in Commitment...........................................21
SECTION 6.08. Conditions Precedent to Conversion.......................................................22
SECTION 6.09. Conditions Precedent to Complete or Partial Termination of Facilities....................22
SECTION 6.10. Conditions Precedent to Termination of Credit Facility...................................23
SECTION 6.11. Delivery of Closing Documents Relating to Advance Request, Addition Request or
Expansion Request.............................................................................................23
SECTION 6.12. Delivery of Property-Related Documents...................................................23
ARTICLE 7 REPRESENTATIONS AND WARRANTIES.........................................................................24
SECTION 7.01. Representations and Warranties of Borrower...............................................24
SECTION 7.02. Representations and Warranties of Lender.................................................24
ARTICLE 8 AFFIRMATIVE COVENANTS OF BORROWER......................................................................25
SECTION 8.01. Compliance with Agreements...............................................................25
SECTION 8.02. Maintenance of Existence.................................................................25
SECTION 8.03. Financial Statements; Accountants' Reports; Other Information............................25
SECTION 8.04. Access to Records; Discussions With Officers and Accountants.............................27
SECTION 8.05. Certificate of Compliance................................................................27
SECTION 8.06. Maintain Licenses........................................................................28
SECTION 8.07. Inform Lender of Material Events.........................................................28
SECTION 8.08. Compliance with Applicable Laws..........................................................29
SECTION 8.09. Alterations to the Mortgaged Properties..................................................29
SECTION 8.10. Loan Document Taxes......................................................................30
SECTION 8.11. Further Assurances.......................................................................30
SECTION 8.12. Transfer of Ownership Interest of Borrower and Sunrise...................................30
SECTION 8.13. Transfer of Ownership of Mortgaged Property..............................................32
SECTION 8.14. Change in Senior Management..............................................................33
SECTION 8.15. Date-Down Endorsements...................................................................33
SECTION 8.16. Ownership of Mortgaged Properties........................................................33
SECTION 8.17. Compliance with Net Worth Test...........................................................33
SECTION 8.18. Compliance with Liquidity Test...........................................................33
SECTION 8.19. Facility Balancing.......................................................................33
ARTICLE 9 NEGATIVE COVENANTS OF BORROWER.........................................................................34
SECTION 9.01. Other Activities.........................................................................34
SECTION 9.02. Liens....................................................................................34
SECTION 9.03. Indebtedness.............................................................................34
SECTION 9.04. Principal Place of Business..............................................................34
SECTION 9.05. Condominiums.............................................................................35
SECTION 9.06. Restrictions on Partnership Distributions................................................35
ARTICLE 10 FEES..................................................................................................35
SECTION 10.01. Standby Fee..............................................................................35
SECTION 10.02. Origination Fee..........................................................................35
SECTION 10.03. Due Diligence Fees.......................................................................35
SECTION 10.04. Legal Fees and Expenses..................................................................36
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SECTION 10.05. Failure to Close any Request.............................................................36
ARTICLE 11 EVENTS OF DEFAULT.....................................................................................36
SECTION 11.01. Events of Default........................................................................36
ARTICLE 12 REMEDIES..............................................................................................38
SECTION 12.01. Remedies; Waivers........................................................................38
SECTION 12.02. Waivers; Rescission of Declaration.......................................................39
SECTION 12.03. Lender's Right to Protect Collateral and Perform Covenants and Other Obligations.........39
SECTION 12.04. No Remedy Exclusive......................................................................40
SECTION 12.05. No Waiver................................................................................40
SECTION 12.06. No Notice................................................................................40
ARTICLE 13 RIGHTS OF ▇▇▇▇▇▇ MAE..................................................................................40
SECTION 13.01. Special Pool Purchase Contract...........................................................40
SECTION 13.02. Assignment of Rights.....................................................................40
SECTION 13.03. Release of Collateral....................................................................41
SECTION 13.04. Replacement of Lender....................................................................41
SECTION 13.05. ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses..................................................41
SECTION 13.06. Third-Party Beneficiary..................................................................41
ARTICLE 14 INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES.................................................41
SECTION 14.01. Insurance and Real Estate Taxes..........................................................41
SECTION 14.02. Replacement Reserves.....................................................................42
ARTICLE 15 PERSONAL LIABILITY OF THE BORROWER....................................................................42
SECTION 15.01. Personal Liability of the Borrower.......................................................42
ARTICLE 16 INTENTIONALLY OMITTED.................................................................................42
ARTICLE 17 MISCELLANEOUS PROVISIONS..............................................................................42
SECTION 17.01. Counterparts.............................................................................42
SECTION 17.02. Amendments, Changes and Modifications....................................................43
SECTION 17.03. Payment of Costs, Fees and Expenses......................................................43
SECTION 17.04. Payment Procedure........................................................................44
SECTION 17.05. Payments on Business Days................................................................44
SECTION 17.06. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.............................44
SECTION 17.07. Severability.............................................................................45
SECTION 17.08. Notices..................................................................................46
SECTION 17.09. Further Assurances and Corrective Instruments............................................47
SECTION 17.10. Term of this Agreement...................................................................48
SECTION 17.11. Assignments; Third-Party Rights..........................................................48
SECTION 17.12. Headings.................................................................................48
SECTION 17.13. General Interpretive Principles..........................................................48
SECTION 17.14. Interpretation...........................................................................48
SECTION 17.15. Standards for Decisions, Etc.............................................................49
SECTION 17.16. Decisions in Writing.....................................................................49
SECTION 17.17. Requests.................................................................................49
EXHIBITS
EXHIBIT A Schedule of Initial Mortgaged Properties and Initial
Valuations
EXHIBIT B Fixed Facility Note
EXHIBIT C Variable Facility Note
EXHIBIT D Certificate of Borrower
EXHIBIT E Guaranty
EXHIBIT F Compliance Certificate
EXHIBIT G-1 Organizational Certificate (Borrower)
EXHIBIT G-2 Organizational Certificate (Guarantor)
EXHIBIT H Conversion Request
EXHIBIT I
Master Credit Facility Agreement Conversion Amendment
EXHIBIT J Rate Form
EXHIBIT K Advance Confirmation Instrument
EXHIBIT L Advance Request
EXHIBIT M Request
EXHIBIT N Confirmation of Obligations
EXHIBIT O Expansion Request
EXHIBIT P Facility Termination Request
EXHIBIT Q Amendment to
Master Credit Facility Agreement
EXHIBIT R Credit Facility Termination Request
APPENDIX I Definitions
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MASTER CREDIT FACILITY AGREEMENT
THIS
MASTER CREDIT FACILITY AGREEMENT is made as of the 29th day of
November, 2001 by and among (a) (i) SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a
California limited partnership ("Riverside"), (ii) SUNRISE PARMA ASSISTED
LIVING, L.L.C., a Virginia limited liability company ("Parma"), (iii) SUNRISE
WILTON ASSISTED LIVING, L.L.C., a Connecticut limited liability company
("Wilton"), (iv) SUNRISE WALL ASSISTED LIVING, L.L.C., a New Jersey limited
liability company ("Wall"), and (v) SUNRISE WESTON ASSISTED LIVING, LIMITED
PARTNERSHIP, a Massachusetts limited partnership ("Weston") (individually and
collectively, Riverside, Parma, Wilton, Wall and Weston, "Borrower"), and (b)
▇▇▇▇▇▇ FINANCIAL GROUP, INC., a Minnesota corporation ("Lender").
RECITALS
A. Borrower owns one or more Multifamily Residential Properties (unless
otherwise defined or the context clearly indicates otherwise, capitalized terms
shall have the meanings ascribed to such terms in Appendix I of this Agreement)
as more particularly described in Exhibit A to this Agreement.
B. Borrower has requested that Lender establish a $60,000,000 Credit
Facility in favor of Borrower, comprised initially of a $60,000,000 Variable
Facility, all or part of which can be converted to a Fixed Facility in
accordance with, and subject to, the terms and conditions of this Agreement.
C. To secure the obligations of Borrower under this Agreement and the
other Loan Documents issued in connection with the Credit Facility, Borrower
shall create a Collateral Pool in favor of Lender. The Collateral Pool shall be
comprised of (i) Security Instruments on the Multifamily Residential Properties
listed on Exhibit A and (ii) any other Security Documents executed by Borrower
pursuant to this Agreement or any other Loan Documents.
D. Each Security Document shall be cross-defaulted (i.e., a default
under any Security Document, or under this Agreement, shall constitute a default
under each Security Document, and this Agreement) and cross-collateralized
(i.e., each Security Instrument shall secure all of Borrower's obligations under
this Agreement and the other Loan Documents) and it is the intent of the parties
to this Agreement that Lender may accelerate any Note without needing to
accelerate any other Note and that in the exercise of its rights and remedies
under the Loan Documents, Lender may, except as provided in this Agreement,
exercise and perfect any and all of its rights in and under the Loan Documents
with regard to any Mortgaged Property without needing to exercise and perfect
its rights and remedies with respect to any other Mortgaged Property and that
any such exercise shall be without regard to the Allocable Facility Amount
assigned to such Mortgaged Property and that Lender may recover an amount equal
to the full amount outstanding in respect of any of the Notes in connection with
such exercise and any such amount shall be applied as determined by Lender in
its sole and absolute discretion.
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E. Subject to the terms, conditions and limitations of this Agreement,
Lender has agreed to establish the Credit Facility.
NOW, THEREFORE, Borrower and Lender, in consideration of the mutual
promises and agreements contained in this Agreement, hereby agree as follows:
ARTICLE 1
THE COMMITMENT
SECTION 1.01. The Commitment.
Subject to the terms, conditions and limitations of this Agreement:
(a) Variable Facility Commitment. Lender agrees to make
Variable Advances to Borrower from time to time during the Variable Facility
Availability Period. The aggregate principal balance of the Variable Advances
Outstanding at any time shall not exceed the Variable Facility Commitment.
Borrower may re-borrow any part of the Variable Advances which it has previously
borrowed and repaid.
(b) Fixed Facility Commitment. Lender agrees to make Fixed
Advances to Borrower from time to time during the Fixed Facility Availability
Period. The aggregate original principal of the Fixed Advances shall not exceed
the Fixed Facility Commitment. The borrowing of a Fixed Advance shall
permanently reduce the Fixed Facility Commitment by the original principal
amount of such Fixed Advance. Borrower may not re-borrow any part of the Fixed
Advance which it has previously borrowed and repaid.
SECTION 1.02. Requests for Advances.
Borrower shall request an Advance by giving Lender an Advance Request
in accordance with Section 2.04. The Advance Request shall indicate whether the
Request is for a Fixed Advance, a Variable Advance or both.
SECTION 1.03. Maturity Date of Advances.
(a) Variable Advances. The MBS Issue Date shall be the first
day of a month and the maturity date of the MBS funding each Variable Advance
shall be specified by Borrower in its Advance Request, which date shall be:
(i) no earlier than the date which completes one full
month after the MBS Issue Date; and
(ii) no later than the date which completes nine full
months after the MBS Issue Date.
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For these purposes, a year shall be deemed to consist of 12 30-day
months. For example, the date which completes three full months after September
1 shall be December 1; and the date which completes three full months after
January 1 shall be April 1.
No principal payments in respect of any Variable Advance shall be due
prior to the maturity date of such Variable Advance.
(b) Fixed Advances; Amortization Period. The maturity date of
each Fixed Advance shall be specified by Borrower, provided that such maturity
date shall be the 5th, 7th or 10th anniversary of the making of such Fixed
Advance, provided that in no event shall the maturity date of any Fixed Advance
be later than the 10th anniversary of the Initial Closing Date. The principal of
each Fixed Advance shall be amortized on a 25-year schedule.
(c) Prepayment. Fixed Advances are not prepayable at any time,
provided that, notwithstanding the foregoing, Borrower (i) may prepay not less
than all of any Fixed Advance during the last ninety (90) days of the term of
such Fixed Advance, and (ii) may prepay not less than all of any Fixed Advance
pursuant to the yield maintenance provisions of the Fixed Facility Note.
SECTION 1.04. Interest on Advances.
(a) Partial Month Interest. Notwithstanding anything to the
contrary in this Section, if an Advance is not made on the first day of a
calendar month, and the MBS Issue Date is the first day of the month following
the month in which the Advance is made, Borrower shall pay interest on the
original stated principal amount of the Advance for the partial month period
commencing on the Closing Date for the Advance and ending on the last day of the
calendar month in which the Closing Date occurs, (i) for a Variable Advance at a
rate per annum equal to the greater of (1) the Coupon Rate as determined in
accordance with Section 1.05(a) and (2) a rate determined by Lender, based on
Lender's cost of funds and approved in advance, in writing, by Borrower,
pursuant to the procedures mutually agreed upon by Borrower and Lender, and (ii)
for a Fixed Advance at a rate, per annum equal to the greater of (1) the
interest rate for the described in subsection (c)(i) of this Section and (2) a
rate determined by Lender, based on Lender's cost of funds, and approved in
advance, in writing, by Borrower, pursuant to procedures mutually agreed upon by
Borrower and Lender.
(b) Variable Advances.
(i) Discount. Each Variable Advance shall be a
discount loan. The original stated principal amount of a Variable Advance shall
be the sum of the Price and the Discount. The Price and Discount of each
Variable Advance shall be determined in accordance with the procedures set out
in Section 2.01. The proceeds of the Variable Advance made available by Lender
to Borrower will equal the original stated principal amount of the Variable
Advance. Borrower shall pay to Lender, in advance of Lender making a Variable
Advance requested by Borrower, the entire Discount for the Variable Advance. On
the maturity of each Variable Advance, the Borrower shall pay the Lender an
amount equal to the original stated principal amount of such Variable Advance.
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(ii) Variable Facility Fee. In addition to paying the
Discount and the partial month interest, if any, Borrower shall pay monthly
installments of the Variable Facility Fee to Lender for each Variable Advance
from the applicable MBS Issue Date to its maturity date. The Variable Facility
Fee shall be payable in advance, in accordance with the terms of the Variable
Facility Note. The first installment shall be payable on or prior to the Closing
Date for the Variable Advance and shall apply to the first full calendar month
of such MBS. Subsequent installments shall be payable on the first day of each
calendar month, commencing on the first day of the second full calendar month of
such MBS, to its maturity date. Each installment of the Variable Facility Fee
shall be in an amount equal to the product of (1) the Variable Facility Fee, (2)
the original stated principal amount of the Variable Advance, and (3) 1/12.
(c) Fixed Advances.
(i) Annual Interest Rate. Each Fixed Advance shall
bear interest at a rate, per annum, equal to the sum of (1) the MBS Pass-Through
Rate for such Fixed Advance and (2) the Fixed Facility Fee.
(ii) Fixed Facility Fee. In addition to paying the
partial month interest, if any, Borrower shall pay monthly installments of the
MBS Pass-Through Rate and the Fixed Facility Fee to Lender for each Fixed
Advance from the applicable MBS Issue Date to its maturity date. The MBS
Pass-Through Rate and the Fixed Facility Fee shall be payable in arrears, in
accordance with the terms of the Fixed Facility Note. The first installment
shall be payable on the first day of each calendar month, commencing on the
first day of the second full calendar month of such MBS, to its maturity date.
Each installment of the Fixed Facility Fee shall be in an amount equal to the
product of (1) the Fixed Facility Fee, (2) the amount of the Fixed Advance, and
(3) 1/12.
SECTION 1.05. Coupon Rates for Advances.
(a) Variable Advances. The Coupon Rate shall equal the sum of
(1) an interest rate as determined by Lender (rounded to three places) payable
for the MBS pursuant to the MBS Commitment ("MBS Imputed Interest Rate") and (2)
the Variable Facility Fee.
(b) Fixed Advances. The Coupon Rate shall be the rate of
interest applicable to such Fixed Advance pursuant to Section 1.04(c)(i).
SECTION 1.06. Notes.
(a) Variable Advances. The obligation of Borrower to repay
shall be evidenced by the Variable Facility Note. The Variable Facility Note
shall be payable to the order of Lender and shall be made in the amount of the
Variable Facility Commitment.
(b) Fixed Advances. The obligation of Borrower to repay shall
be evidenced by the Fixed Facility Notes. The Fixed Facility Notes shall be
payable to the order of Lender and shall be made in the original principal
amount of each Fixed Advance.
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SECTION 1.07. Extension of Variable Facility Termination Date.
Borrower shall have the right to extend the Variable Facility
Termination Date for one (1) five (5) year period ("Extension") upon
satisfaction of each of the following conditions:
(a) Borrower provides written notice requesting the Extension
("Extension Notice") to Lender not less than 30 nor more than 360 days prior to
the then effective Variable Facility Termination Date.
(b) No Event of Default or Potential Event of Default exists
on either the date the Extension Notice is given or on the then effective
Variable Facility Termination Date.
(c) All of the representations and warranties of Borrower
contained in Article 7 of this Agreement and the other Loan Documents are true
and correct in all material respects on the date the Extension Notice is given
and on the then effective Variable Facility Termination Date.
(d) Borrower is in compliance with all of the covenants
contained in Articles 8 and 9 on the date the Extension Notice is given and on
the then effective Variable Facility Termination Date.
Upon receipt of the Extension Notice and upon compliance with
conditions set forth above, the Variable Facility Termination Date shall be
extended for five (5) years on the terms and conditions contained in this
Agreement and the other Loan Documents. The Variable Facility Fee and the
Standby Fee applicable to the Variable Facility during the Extension shall be as
agreed to by the parties prior to the Extension.
SECTION 1.08. Conversion from Variable Facility Commitment to Fixed
Facility Commitment.
Except as provided in Section 1.09, Borrower shall have the right, from
time to time during the Fixed Facility Availability Period, to convert all or
any portion of the Variable Facility Commitment to the Fixed Facility
Commitment. The Variable Facility Commitment shall be reduced by, and the Fixed
Facility Commitment shall be increased by, the amount of each conversion.
(a) Request. To convert all or a portion of the Variable
Facility Commitment to the Fixed Facility Commitment, Borrower shall deliver a
Conversion Request to Lender. Each Conversion Request shall designate (1) the
amount of the conversion and (2) any Variable Advances Outstanding which will be
prepaid on or before the Closing Date for the conversion as required by Section
1.09(c).
(b) Closing. Subject to Section 1.09 and provided that all
conditions contained in Section 1.10 are satisfied, Lender shall permit the
requested conversion to close at offices designated by Lender on a Closing Date
selected by Lender, and occurring within 30 Business Days after Lender's receipt
of the Conversion Request (or on such other date as
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Borrower and Lender may agree). At the closing, Lender and Borrower shall
execute and deliver, at the sole cost and expense of Borrower, in form and
substance satisfactory to Lender, the Conversion Documents.
SECTION 1.09. Limitations on Right to Convert.
Borrower's right to convert all or any portion of the Variable Facility
Commitment to the Fixed Facility Commitment is subject to the following
limitations:
(a) Closing Date. The Closing Date shall occur during the
Fixed Facility Availability Period.
(b) Minimum Request. Each Conversion Request shall be in the
minimum amount of $5,000,000.
(c) Obligation to Prepay Variable Advances. Borrower shall
prepay any difference by which, after the conversion, the aggregate unpaid
principal balance of all Variable Advances Outstanding will exceed the Variable
Facility Commitment.
SECTION 1.10. Conditions to Conversion.
The conversion of all or any portion of the Variable Facility
Commitment to the Fixed Facility Commitment is subject to the satisfaction, on
or before the Closing Date, of (a) the conditions precedent contained in Section
6.08 and (b) all applicable General Conditions contained in Section 6.01.
ARTICLE 2
THE ADVANCES
SECTION 2.01. Rate Setting for an Advance.
Rates for an Advance shall be set in accordance with the following
procedures:
(a) Preliminary, Nonbinding Quote. At Borrower's request
Lender shall quote an estimate of the MBS Pass-Through Rate (for a proposed
Fixed Advance) or MBS Imputed Interest Rate (for a proposed Variable Advance).
Lender's quote shall be based on (1) a solicitation of bids from institutional
investors selected by Lender and (2) the proposed terms and amount of the
Advance selected by Borrower. The quote shall not be binding upon Lender.
(b) Rate Setting. If Borrower satisfies all of the conditions
to Lender's obligation to make the Advance, then Borrower may submit to Lender,
by facsimile transmission before 1:00 p.m. Washington, D.C. time on any Business
Day ("Rate Setting Date"), a completed and executed Rate Form. The Rate Form
shall specify the amount, term, MBS Issue Date, Facility Fee, any breakage fee
deposit amount, the proposed maximum Coupon Rate ("Maximum Annual Coupon Rate")
and Closing Date for the Advance.
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(c) Rate Confirmation. Within one Business Day after receipt
of the Rate Form, Lender shall solicit bids from institutional investors
selected by Lender based on the information in the Rate Form and, provided the
actual Coupon Rate (if the low bid were accepted) would be at or below the
Maximum Annual Coupon Rate, shall obtain a commitment ("MBS Commitment") for the
purchase of an MBS having the bid terms described in the related Rate Form.
Lender shall then complete and countersign the Rate Form thereby confirming the
amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed Interest Rate or
MBS Pass-Through Rate, Facility Fee, Coupon Rate, Discount, Price, and Closing
Date for the Advance and shall immediately deliver by facsimile transmission the
Rate Form to Borrower.
SECTION 2.02. Advance Confirmation Instrument for Variable Advances.
On or before the Closing Date for a Variable Advance, Borrower shall
execute and deliver to Lender a fully executed Advance Confirmation Instrument,
confirming the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed
Interest Rate, Variable Facility Fee, Coupon Rate, Discount, Price and Closing
Date for the Advance, and Borrower's obligation to repay the Variable Advance in
accordance with the terms of the Variable Facility Note and this Agreement. Upon
the funding of the Variable Advance, Lender shall insert the date of funding on
the Advance Confirmation Instrument and deliver a copy of the completed Advance
Confirmation Instrument to Borrower to evidence the date of funding and to
confirm that the Advance Confirmation Instrument is not effective until the date
of funding. Lender's failure to do so shall not invalidate the Advance
Confirmation Instrument or otherwise affect in any way any obligation of
Borrower to repay Variable Advances in accordance with the Advance Confirmation
Instrument, the Variable Facility Note or the other Loan Documents.
SECTION 2.03. Breakage and other Costs.
If Lender obtains, and then fails to fulfill, the MBS Commitment
because the Advance is not made (for a reason other than Lender's default),
Borrower shall pay all reasonable out-of-pocket costs payable to the potential
investor and other reasonable costs, fees and damages incurred by Lender in
connection with its failure to fulfill the MBS Commitment. Lender reserves the
right to require Borrower to post a deposit at the time the MBS Commitment is
obtained. Such deposit shall be refundable to Borrower upon the delivery of the
related MBS.
SECTION 2.04. Advances.
Borrower may deliver an Advance Request to Lender.
(a) If the Advance Request is to obtain the Initial Advance
and all conditions precedent contained in Section 6.02 and the General
Conditions contained in Section 6.01 are satisfied on or before the Closing Date
for the Initial Advance, Lender shall make the Initial Advance on the Initial
Closing Date or on such other date as Borrower and Lender may agree.
(b) If the Advance Request is to obtain a Future Advance, such
Advance Request shall be in the minimum amount of $3,000,000, provided that the
limitation set forth in this sentence shall not apply to Future Advances made
simultaneously with a Rollover Variable
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Advance. Borrower may have one or more Advances of not less than $3,000,000 even
though such Advances are made on the same day and mature on the same date. If
all conditions precedent contained in Section 6.03 and the General Conditions
contained in Section 6.01 are satisfied, Lender shall make the requested Future
Advance, at a closing to be held at offices designated by Lender on a Closing
Date selected by Lender, which date shall be not more than three (3) Business
Days after Borrower's receipt from Lender of the confirmed Rate Form (or on such
other date as Borrower and Lender may agree).
(c) Borrower shall be entitled, from time to time, to
additional Advances based on increases in the Aggregate Loan to Value Ratio or
in the Aggregate Debt Service Coverage Ratios as determined by Lender annually.
The amount of such additional Advances shall be equal to the amount which, when
combined with Advances already Outstanding, equals the Borrowing Up Limitation.
No such additional Advances shall be permitted if the Variable Facility
Commitment has been terminated, or if there are Outstanding Advances in the full
amount of the Variable Facility Commitment and the Fixed Facility Commitment.
SECTION 2.05. Determination of Allocable Facility Amount and
Valuations.
(a) Initial Determinations. On the Initial Closing Date,
Lender shall determine (i) the Allocable Facility Amount and Valuation for each
Mortgaged Property and (ii) the Aggregate Debt Service Coverage Ratio and the
Aggregate Loan to Value Ratio. Determinations made pursuant to the preceding
sentence shall be made (i) for five and seven year Fixed Advances, based on an
underwriting interest rate of 7.75%, and (ii) for 10 year Fixed Advances, based
on an underwriting interest rate of 6.5%. The determinations made as of the
Initial Closing Date shall remain unchanged until the first anniversary of the
Initial Closing Date.
(b) Monitoring Determinations. (i) Once each Calendar Quarter
or, if the Commitment consists only of a Fixed Facility Commitment, once each
Calendar Year, within 20 Business Days after Borrower has delivered to Lender
the reports required in Section 8.03, Lender shall determine the Aggregate Debt
Service Coverage Ratio and the Aggregate Loan to Value Ratio and calculations
required in connection with the other covenants set forth in the Loan Documents,
and whether the Borrower is in compliance, (ii) after the first anniversary of
the Initial Closing Date, on an annual basis, and if Lender reasonably decides
that changed market or property conditions warrant, Lender shall determine
Allocable Facility Amounts and Valuations, (iii) Lender shall also redetermine
Allocable Facility Amounts to take account of any addition, release or
substitution of Collateral or other event which invalidates the outstanding
determinations. In determining the Aggregate Debt Service Coverage Ratio, if the
Borrower has purchased an interest rate cap that (1) is from a cap provider
acceptable to Lender, in its sole discretion, (2) contains terms and conditions
acceptable to Lender, in its sole discretion, and (3) is assigned to Lender as
security for the Obligations, Lender shall determine the portion of the
Aggregate Debt Service Coverage Ratio attributable to the Variable Facility
based on the lower of (A) the actual interest rate for the Variable Facility for
such period and (B) the rate provided by the interest rate cap. In determining
Valuations, Lender shall use Cap Rates based on its internal survey and analysis
of cap rates for comparable sales in the vicinity of the Mortgaged Property,
with such adjustments as Lender deems appropriate and without any obligation to
use
8
any information provided by Borrower. If Lender is unable to determine a Cap
Rate for a Mortgaged Property, Lender shall have the right, not more than once
annually, to obtain a market study in order to establish a Cap Rate. Lender
shall promptly disclose its determinations to Borrower. Until redetermined, the
outstanding Allocable Facility Amounts and Valuations shall remain in effect.
Fixed Advances based on increased Valuations or additions to the Collateral Pool
and expansion of the Facility shall be based on underwriting floors determined
by Lender from time to time. During the first Loan Year a Mortgaged Property is
in the Collateral Pool, all calculations of Aggregate Debt Service Coverage and
Aggregate Loan to Value Ratios including such Mortgaged Property shall be based
on actual operations of such Mortgaged Property during the period the Mortgaged
Property was in the Collateral Pool and underwriting proforma results for the
remainder of such Loan Year.
ARTICLE 3
COLLATERAL CHANGES
SECTION 3.01. Right to Add Collateral.
Subject to the terms and conditions of this Article, Borrower shall
have the right, from time to time during the Term of this Agreement, to add
Multifamily Residential Properties to the Collateral Pool.
SECTION 3.02. Procedure for Adding Collateral.
The procedure for adding Collateral contained in this Section 3.02
shall apply to all additions of Collateral including, but not limited to,
additions of Collateral in connection with substitutions of Collateral and
expansion of the Credit Facility.
(a) Request. Borrower may deliver to Lender an Addition
Request to add one or more Multifamily Residential Properties to the Collateral
Pool. Each Addition Request shall be accompanied by the following: (i) the
information required by the DUS Guide Underwriting Requirements and any
additional information Lender may reasonably request; and (ii) the payment of
all Additional Collateral Due Diligence Fees.
(b) Underwriting. Lender shall evaluate the proposed
Additional Mortgaged Property in accordance with the DUS Guide Underwriting
Requirements, and shall make underwriting determinations as to the Aggregate
Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio applicable to
the Collateral Pool on the basis of the lesser of (1) the acquisition price of
the proposed Additional Mortgaged Property if purchased by Borrower within 12
months of the related Addition Request, and (2) a Valuation made with respect to
the proposed Additional Mortgaged Property. Within 30 Business Days (provided
that Lender shall use reasonable efforts to respond sooner) after receipt of (1)
the Addition Request and (2) all reports, certificates and documents required by
the DUS Guide Underwriting Requirements, including a zoning analysis undertaken
in accordance with Section 206 of Part III of the DUS Guide, Lender shall notify
Borrower whether it shall consent to the Addition Request. If Lender
9
consents it shall set forth the Aggregate Debt Service Coverage Ratio and the
Aggregate Loan to Value Ratio which it estimates shall result from the addition
of the proposed Additional Mortgaged Property. Within 30 Business Days after
receipt of Lender's consent to the Addition Request, Borrower shall notify
Lender whether it elects to add the proposed Additional Mortgaged Property to
the Collateral Pool. If Borrower fails to respond within the period of 30
Business Days, it shall be conclusively deemed to have elected not to add the
proposed Additional Mortgaged Property to the Collateral Pool.
(c) Closing. If Lender consents to the Addition Request,
Borrower timely elects to add the proposed Additional Mortgaged Property to the
Collateral Pool and all conditions precedent contained in Section 6.04 and all
General Conditions contained in Section 6.01 are satisfied, Lender shall permit
the addition of the proposed Additional Mortgaged Property to the Collateral
Pool, at a closing to be held at offices designated by Lender on a Closing Date
selected by Lender, occurring within 30 Business Days after Lender's receipt of
Borrower's election (or on such other date as Borrower and Lender may agree).
SECTION 3.03. Right to Obtain Releases of Collateral.
Subject to the terms and conditions of this Article, Borrower shall
have the right to obtain a release of Collateral from the Collateral Pool.
SECTION 3.04. Procedure for Obtaining Releases of Collateral.
(a) Request. To obtain a release of Collateral from the
Collateral Pool, Borrower may deliver a Release Request to Lender. The Release
Request shall not result in a termination of all or any part of the Credit
Facility. Borrower may terminate all or any part of the Credit Facility only by
delivering a Facility Termination Request or Credit Facility Termination Request
pursuant to Article 5.
(b) Closing. If all conditions precedent contained in Section
6.05 and all General Conditions contained in Section 6.01 are satisfied, Lender
shall cause the Release Property to be released, at a closing to be held at
offices designated by Lender on a Closing Date selected by Lender, and occurring
not less than 15 days after Lender's receipt of the Release Request (or on such
other date as Borrower and Lender may agree), by executing and delivering, and
causing all applicable parties to execute and deliver, all at the sole cost and
expense of Borrower, the Release Documents. Borrower shall prepare the Release
Documents and submit them to Lender for its review.
(c) Release Price. The Release Price for each Mortgaged
Property shall be the greater of (i) the Allocable Facility Amount for the
Release Property and (ii) the amount of any Advances Outstanding which are
required to be repaid by Borrower to Lender so that, immediately after the
release, the Coverage and LTV Tests will be satisfied. In addition, Borrower
shall pay to Lender all other amounts due under the Notes and any Advance
Confirmation Instruments evidencing the Advances being repaid.
10
(d) Application of Release Price. The Release Price shall be
applied first against the Variable Advances Outstanding until there are no
further Variable Advances Outstanding, then against the prepayment of Fixed
Advances Outstanding, so long as the prepayment is permitted under the
applicable Fixed Facility Note. If, on the date Borrower pays the Release Price,
Variable Advances are Outstanding but not then due and payable, Lender shall
hold the Release Price in an interest-bearing account as additional Collateral,
until the next date on which Variable Advances are due and payable, at which
time Lender shall apply the appropriate portion of the Release Price to such
Variable Advances.
SECTION 3.05. Right to Substitute Collateral.
Subject to the terms, conditions and limitations of this Section 3.05,
Borrower shall have the right to add one or more Multifamily Residential
Properties to the Collateral Pool in substitution of one or more Mortgaged
Properties then in the Collateral Pool ("Substitute Mortgaged Property").
SECTION 3.06. Procedure for Substituting Collateral.
(a) Request. Borrower may deliver to Lender a Substitution
Request to add one or more Multifamily Residential Properties in substitution of
one or more Mortgaged Properties then in the Collateral Pool. Each Substitution
Request shall be accompanied by
(i) the information required by the DUS Guide
Underwriting Requirements and any additional information Lender may reasonably
request; and (ii) a statement whether the addition of the Substitute Mortgaged
Property will occur simultaneously with the release of the Release Property and,
if not, the proposed date on which the Substitute Mortgaged Property will be
added to the Collateral Pool which, in no event, shall be a date which is more
than 90 days after the proposed date of the release of the Release Property.
(b) Underwriting. Borrower may add any Substitute Mortgaged
Property provided that, after the substitution, the Coverage and LTV Tests are
satisfied. Lender shall make underwriting determinations as to the Aggregate
Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio immediately
prior to and immediately after giving effect to the proposed substitution, and
the Valuation and the Net Operating Income for both the Substitute Mortgaged
Property and the Release Property. Notwithstanding anything to the contrary
contained herein, underwriting determinations with respect to the proposed
Substitute Mortgaged Property shall be made on the basis of a Valuation and
otherwise in accordance with the DUS Guide Underwriting Requirements. Within 30
days after receipt of (i) the Substitution Request and (ii) all reports,
certificates and documents required under the DUS Guide, including a zoning
analysis undertaken in accordance with Section 206 of Part III of the DUS Guide,
Lender shall notify Borrower whether Lender shall consent to Substitution
Request. If Lender consents, it shall set forth the Aggregate Debt Service
Coverage Ratio and the Aggregate Loan to Value Ratio which it estimates shall
result from the substitution of the Substitute Mortgaged Property into the
Collateral Pool. Within 30 days after receipt of Lender's consent notice,
Borrower shall notify Lender whether it elects to cause such substitution to
occur. If Borrower fails to respond
11
within the period of 30 days, it shall be conclusively deemed to have elected
not to cause the proposed substitution to occur.
(c) Closing. If Lender consents to the Substitution Request,
Borrower timely elects to cause such substitution to occur and all conditions
precedent contained in Section 6.06 and all General Conditions contained in
Section 6.01 are satisfied, Lender shall permit the Substitute Mortgaged
Property to be substituted into the Collateral Pool in replacement of the
Release Property, at a closing to be held at offices designated by Lender on a
Closing Date selected by Lender, and occurring
(i) if the addition of the Substitute Mortgaged
Property and the release of the Release Property are to occur simultaneously,
within 30 days after Lender's receipt of Borrower's election (or on such other
date as Borrower and Lender may agree); or
(ii) if the addition of the Substitute Mortgaged
Property is to occur subsequent to the release of the Release Property, within
90 days after the release of the Release Property.
If, in the case of clause (ii) of this paragraph, the addition of the Substitute
Mortgaged Property to the Collateral Pool does not occur within 90 days or such
longer period as approved by Lender, in its sole discretion, after the release
of the Release Property, then Borrower shall have waived its right to substitute
such Release Property with the Substitute Mortgaged Property, the Release Price
shall be determined pursuant to Section 3.04(c) and Borrower shall comply with
the requirement contained in Section 3.04(d). Such Release Price, or the
applicable portion thereof, shall be immediately due and payable by Borrower to
Lender to reduce the Advances Outstanding as required by, and in the manner
contained in, Section 3.04(d).
(d) Restriction on Borrowings. If the addition of the
Substitute Mortgaged Property and the release of the Release Property does not
occur simultaneously then, until the addition of the Substitute Mortgaged
Property, the aggregate unpaid principal balance of Advances Outstanding shall
not exceed the amount of the then-existing Commitment minus the Allocable
Facility Amount of the Release Property, unless Borrower has delivered
additional Collateral reasonably acceptable to Lender in an amount at least
equal to such Allocable Facility Amount. If the aggregate unpaid principal
balance of Advances Outstanding exceeds such amount (and satisfactory additional
Collateral has not been delivered by Borrower to Lender), Borrower shall pay
such excess as a condition precedent to the addition of a Substitute Mortgaged
Property. Notwithstanding the foregoing, in no event shall the value of the
additional Collateral exceed 15% of the principal balance of the Advances
Outstanding. Any payment received by Lender under this Section shall be applied
against Advances Outstanding in the manner prescribed for Release Prices
pursuant to Section 3.04(d). The additional Collateral shall be released to
Borrower upon the addition of the applicable Substitute Mortgaged Property to
the Collateral Pool.
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ARTICLE 4
EXPANSION OF CREDIT FACILITY
SECTION 4.01. Right to Increase Commitment.
Subject to the terms, conditions and limitations of this Article,
Borrower shall have the right, during the Fixed Facility Availability Period, to
increase the Fixed Facility Commitment and, during the Variable Facility Advance
Period, to increase the Variable Facility Commitment. Either Commitment may be
increased by the addition of Collateral to the Collateral Pool and/or increases
in the value of the Mortgaged Properties. Borrower's right to increase the
Commitment is subject to the following limitations:
(a) Maximum Amount of Increase in Commitment. The maximum
amount by which the Commitment may be increased is $40,000,000.
(b) Minimum Request. Each Request for an increase in the
Commitment shall be in the minimum amount of $5,000,000.
(c) Terms and Conditions. The terms and conditions of this
Agreement shall apply to any increase in the Commitment closed prior to the
First Anniversary. Thereafter, the Variable Facility Fee, Fixed Facility Fee and
Standby Fee applicable to any increase in the Commitment shall be mutually
agreed upon by Lender and Borrower; provided, however, that if Borrower incurs a
Standby Fee, then the Variable Facility Fee and Fixed Facility Fee shall,
subject to the provisions of Section 10.01 of this Agreement, remain unchanged
for so long as the Commitment is outstanding and the Standby Fee is paid.
SECTION 4.02. Procedure for Obtaining Increases in Commitment.
(a) Request. To obtain an increase in the Commitment, Borrower
shall deliver an Expansion Request to Lender. Each Expansion Request shall
include the following:
(i) The total amount of the proposed increase;
(ii) A designation of the increase as being part of
the Fixed Facility Commitment and/or the Variable Facility Commitment;
(iii) A request that Lender inform Borrower of any
change in the Geographical Diversification Requirements; and
(iv) If the increase in the Commitment is to close
after the date one year after the date hereof, a request that Lender inform
Borrower of the Fixed Facility Fee and/or the Variable Facility Fee to apply to
Advances drawn from such increase in the Commitment.
(b) Closing. If all conditions precedent contained in Section
6.07 and all General Conditions contained in Section 6.01 are satisfied, Lender
shall permit the Expansion
13
Request to occur, at a closing to be held at offices designated by Lender on a
Closing Date selected by Lender, and occurring not less than fifteen (15)
Business Days after Lender's receipt of the Expansion Request (or on such other
date as Borrower and Lender may agree).
ARTICLE 5
TERMINATION OF FACILITIES
SECTION 5.01. Right to Complete or Partial Termination of Facilities.
Subject to the terms and conditions of this Article, Borrower shall
have the right to permanently reduce the Variable Facility Commitment and/or the
Fixed Facility Commitment.
SECTION 5.02. Procedure for Complete or Partial Termination of
Facilities.
(a) Request. To permanently reduce the Variable Facility
Commitment or the Fixed Facility Commitment, Borrower shall deliver a Facility
Termination Request to Lender. A permanent reduction of the Variable Facility
Commitment to $0 shall be referred to as a "Complete Variable Facility
Termination." A permanent reduction of the Fixed Facility Commitment to $0 shall
be referred to as a "Complete Fixed Facility Termination." The Facility
Termination Request shall include the following:
(i) The proposed amount of the reduction in the
Variable Facility Commitment and/or Fixed Facility Commitment; and
(ii) Unless there is a Complete Variable Facility
Termination or a Complete Fixed Facility Termination, a designation by Borrower
of any Variable Advances which will be prepaid and/or any Fixed Advances which
will be prepaid or defeased.
Any release of Collateral, whether or not made in connection with a Facility
Termination Request, must comply with all conditions to a release which are
contained in Article 6.
(b) Closing. If all conditions precedent contained in Section
6.09 and all General Conditions contained in Section 6.01 are satisfied, Lender
shall reduce the Variable Facility Commitment or Fixed Facility Commitment, as
the case may be, to the amount designated by Borrower, at a closing to be held
at offices designated by Lender on a Closing Date selected by Lender, within
thirty (30) Business Days after Lender's receipt of the Facility Termination
Request (or on such other date as Borrower and Lender may agree), by executing
and delivering the Facility Termination Document evidencing the reduction in the
Facility Commitment.
SECTION 5.03. Right to Terminate Credit Facility.
Subject to the terms and conditions of this Article, Borrower shall
have the right to terminate this Agreement and the Credit Facility and receive a
release of all of the Collateral.
14
SECTION 5.04. Procedure for Terminating Credit Facility.
(a) Request. To terminate this Agreement and the Credit
Facility, Borrower shall deliver a Credit Facility Termination Request to
Lender.
(b) Closing. If all conditions precedent contained in Section
6.10 are satisfied, this Agreement shall terminate, and Lender shall cause all
of the Collateral to be released, at a closing to be held at offices designated
by Lender on a Closing Date selected by Lender, within 30 Business Days after
Lender's receipt of the Credit Facility Termination Request (or on such other
date as Borrower and Lender may agree), by executing and delivering, and causing
all applicable parties to execute and deliver, all at the sole cost and expense
of Borrower, the Credit Facility Termination Documents.
ARTICLE 6
CONDITIONS PRECEDENT TO ALL REQUESTS
SECTION 6.01. Conditions Applicable to All Requests.
The obligation of Lender to close the transaction requested in a
Request (other than a Credit Facility Termination Request made pursuant to
Section 5.04) shall be subject to the following general conditions precedent
("General Conditions") in addition to any other conditions precedent contained
in this Agreement:
(a) Compliance with Debt Service Coverage Ratio. The Aggregate
Debt Service Coverage Ratio shall be not less than 1.45:1.0.
(b) Compliance with Loan to Value Ratio. The Aggregate Loan to
Value Ratio shall not be greater than 70%.
(c) Geographical Diversification; Compliance with
Concentration Test.
(i) The Mortgaged Properties in the Collateral Pool
shall comply with the Geographical Diversification Requirements.
(ii) (a) If the Collateral Pool consists of four (4)
Mortgaged Properties, the Valuation of any one Mortgaged Property shall not
exceed 33 1/3% of the aggregate Valuations of all Mortgaged Properties, and (b)
if the Collateral Pool consists of five (5) or more Mortgaged Properties, the
Valuation of any one Mortgaged Property shall not exceed 25% of the aggregate
Valuations of all Mortgaged Properties.
(d) Payment of Expenses. The payment by Borrower of Lender's
and ▇▇▇▇▇▇ Mae's reasonable fees and expenses payable in accordance with this
Agreement, including, but not limited to, the legal fees and expenses contained
in Section 10.04.
15
(e) No Material Adverse Change. Except in connection with a
Credit Facility Termination Request, there has been no material adverse change
in the financial condition, business or prospects of Borrower or Sunrise or in
the physical condition, operating performance or value of any of the Mortgaged
Properties since the date of the most recent Compliance Certificate (or, with
respect to the conditions precedent to the Initial Advance, from the condition,
business or prospects reflected in the financial statements, reports and other
information obtained by Lender during its review of Borrower and Sunrise and the
Initial Mortgaged Properties).
(f) No Default. Except in connection with a Credit Facility
Termination Request, there shall exist no Event of Default or Potential Event of
Default on the Closing Date for the Request and, after giving effect to the
transaction requested in the Request, no Event of Default or Potential Event of
Default shall have occurred.
(g) No Insolvency. Receipt by Lender on the Closing Date for
the Request of evidence satisfactory to Lender that neither the Borrower nor
Sunrise is insolvent (within the meaning of any applicable federal or state laws
relating to bankruptcy or fraudulent transfers) or will be rendered insolvent by
the transactions contemplated by the Loan Documents, including the making of a
Future Advance, or, after giving effect to such transactions, will be left with
an unreasonably small capital with which to engage in its business or
undertakings, or will have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature or will have intended
to hinder, delay or defraud any existing or future creditor.
(h) No Untrue Statements. The Loan Documents shall not contain
any untrue or misleading statement of a material fact and shall not fail to
state a material fact necessary to make the information contained therein not
misleading.
(i) Representations and Warranties. Except in connection with
a Credit Facility Termination Request, all representations and warranties made
by Borrower and Sunrise in the Loan Documents shall be true and correct in all
material respects on the Closing Date for the Request with the same force and
effect as if such representations and warranties had been made on and as of the
Closing Date for the Request.
(j) No Condemnation or Casualty. Except in connection with a
Credit Facility Termination Request or a Release Request, there shall not be
pending or threatened any condemnation or other taking, whether direct or
indirect, against any Mortgaged Property (other than a Mortgaged Property
subject to a Release Request) and there shall not have occurred any casualty to
any improvements located on any Mortgaged Property (other than a Mortgaged
Property subject to a Release Request), which casualty would have a material
adverse effect on the continued operations of such Mortgaged Property.
(k) Delivery of Closing Documents. The receipt by Lender of
the following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to Lender in all respects:
(i) The Loan Documents;
16
(ii) A Compliance Certificate;
(iii) An Organizational Certificate; and
(iv) Such other documents, instruments, approvals
(and, if requested by Lender, certified duplicates of executed copies thereof)
and opinions as Lender may reasonably request.
(l) Covenants. Except in connection with a Credit Facility
Termination Request, Borrower is in full compliance with each of the covenants
contained in Articles 8 and 9 of this Agreement, without giving effect to any
notice and cure rights of Borrower.
SECTION 6.02. Conditions Precedent to Initial Advance.
The obligation of Lender to make the Initial Advance is subject to the
following conditions precedent:
(a) Receipt by Lender of the fully executed Advance Request;
(b) Delivery to the Title Company, for filing and/or recording
in all applicable jurisdictions, of all applicable Loan Documents required by
Lender, including a duly executed and delivered original of the Variable
Facility Note, a Fixed Facility Note, the Guaranty, the Initial Security
Instruments covering the Initial Mortgaged Properties and UCC-1 Financing
Statements covering the portion of the Collateral comprised of personal
property, and other appropriate instruments, in form and substance satisfactory
to Lender and in form proper for recordation, as may be necessary in the opinion
of Lender to perfect the Liens created by the applicable Security Instruments
and any other Loan Documents creating a Lien in favor of Lender, and the payment
of all taxes, fees and other charges payable in connection with such execution,
delivery, recording and filing;
(c) The receipt by Lender of the first installment of Variable
Facility Fee and the entire Discount payable by Borrower pursuant to Section
1.04; and
(d) Receipt by Lender of the Initial Origination Fee pursuant
to Section 10.02(a) and the Initial Due Diligence Fee pursuant to Section
10.03(a).
SECTION 6.03. Conditions Precedent to Future Advances.
The obligation of Lender to make a requested Future Advance is subject
to the following conditions precedent:
(a) Except in connection with a Rollover Variable Advance,
receipt by Lender of the fully executed Advance Request;
(b) Except in connection with a Rollover Variable Advance,
delivery by Lender to Borrower of the Rate Form for the Future Advance;
17
(c) Except in connection with a Rollover Variable Advance,
after giving effect to the requested Future Advance, the Coverage and LTV Tests
will be satisfied;
(d) If the Future Advance is being made pursuant to Section
2.04(c), the Advances Outstanding shall not exceed the Borrowing-Up Limitation;
(e) If the Advance is a Fixed Advance, delivery of a Fixed
Facility Note, duly executed by Borrower, in the amount and reflecting all of
the terms of the Fixed Advance;
(f) If the Advance is a Variable Advance, delivery of the
Advance Confirmation Instrument, duly executed by Borrower;
(g) Except in connection with a Rollover Variable Advance, for
any Title Insurance Policy not containing a Revolving Credit Endorsement, the
receipt by Lender of an endorsement to the Title Insurance Policy, amending the
effective date of the Title Insurance Policy to the Closing Date increasing the
limits of liability by the amount of the Future Advance and showing no
additional exceptions to coverage other than the exceptions shown on the Initial
Closing Date and other exceptions approved by Lender;
(h) If the Advance is a Variable Advance, the receipt by
Lender of the first installment of Variable Facility Fee for the Variable
Advance and the entire Discount for the Variable Advance payable by Borrower
pursuant to Section 1.04;
(i) No material adverse change in the financial condition of
Borrower or Sunrise has occurred between the respective dates of the financial
statements which were most recently furnished to Lender relating to such
entities;
(j) No Governmental Approval not already obtained or made is
required for the execution and delivery of the documents to be delivered in
connection with the Future Advance; and
(k) Borrower is not under any cease or desist order or other
orders of a similar nature, temporary or permanent of any Governmental Authority
which would have the effect of preventing or hindering performance of the terms
and provisions of the Agreement or any other Loan Documents, nor are there any
proceedings presently in progress or, to its knowledge, contemplated which, if
successful, would lead to the issuance of any such order.
SECTION 6.04. Conditions Precedent to Addition of an Additional
Mortgaged Property to the Collateral Pool.
The addition of an Additional Mortgaged Property to the Collateral Pool
on the applicable Closing Date is subject to the satisfaction of the following
conditions precedent:
(a) If the addition of an Additional Mortgaged Property is
completed prior to the date one year after the date of the Initial Closing,
satisfaction of the Coverage and LTV Tests after giving effect to the addition
of the Additional Mortgaged Property;
18
(b) If the addition of an Additional Mortgaged Property to the
Collateral Pool closes on or after the date one year after the Initial Closing,
(i) the Additional Mortgaged Property has a Debt Service Coverage Ratio of at
least l45% and a Loan-to-Value Ratio of not more than 70%, in each case based on
the underwriting performed pursuant to Section 3.02(b), and (ii) satisfaction of
the Coverage and LTV Tests after giving effect to the addition of the Additional
Mortgaged Property;
(c) Receipt by the Lender of all legal fees and expenses
payable by the Borrower in connection with the Collateral Additional Request
pursuant to Section 10.03(b);
(d) Delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Addition Loan Documents required by Lender,
including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Additional Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to Lender and in form
proper for recordation, as may be necessary in the opinion of Lender to perfect
the Lien created by the applicable additional Security Instrument, and any other
addition Loan Document creating a Lien in favor of Lender, and the payment of
all taxes, fees and other charges payable in connection with such execution,
delivery, recording and filing;
(e) If required by Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of any Additional Borrower and/or
the Additional Mortgaged Property to the Collateral Pool and, as to any Security
Instrument so amended, the receipt by Lender of an endorsement to the Title
Insurance Policy insuring the Security Instrument, amending the effective date
of the Title Insurance Policy to the Closing Date and showing no additional
exceptions to coverage other than the exceptions shown on the Initial Closing
Date and other exceptions approved by Lender; and
(f) If the Title Insurance Policy for the Additional Mortgaged
Property contains a tie-in Endorsement, an endorsement to each other Title
Insurance Policy containing a tie-in Endorsement, adding a reference to the
Additional Mortgaged Property.
SECTION 6.05. Conditions Precedent to Release of Property from the
Collateral Pool.
The obligation of Lender to release a Property from the Collateral Pool
by executing and delivering the Release Documents on the Closing Date is subject
to the satisfaction of the following conditions precedent on or before the
Closing Date:
(a) Immediately after giving effect to the requested release,
the Coverage and LTV Tests will be satisfied;
(b) Receipt by Lender of the Release Price;
19
(c) Receipt by Lender on the Closing Date of one or more
counterparts of each Release Document, dated as of the Closing Date, signed by
each of the parties (other than Lender) who is a party to such Release Document;
(d) If required by Lender, amendments to the Notes and the
Security Instruments, reflecting the release of the Release Property from the
Collateral Pool and, as to any Security Instrument so amended, the receipt by
Lender of an endorsement to the Title Insurance Policy insuring the Security
Instrument, amending the effective date of the Title Insurance Policy to the
Closing Date and showing no additional exceptions to coverage other than the
exceptions shown on the Initial Closing Date and other exceptions approved by
Lender;
(e) If Lender determines the Release Property to be one phase
of a project, and one or more other phases of the project are Mortgaged
Properties which will remain in the Collateral Pool ("Remaining Mortgaged
Properties"), Lender must determine that the Remaining Mortgaged Properties can
be operated separately from the Release Property and any other phases of the
project which are not Mortgaged Properties and whether any cross use agreements
or easements are necessary. In making this determination, Lender shall evaluate
whether the Remaining Mortgaged Properties comply with the terms of Sections 203
and 208 of Part III of the DUS Guide;
(f) Receipt by Lender of endorsements to the tie-in
endorsements of the Title Insurance Policies, if deemed necessary by Lender, to
reflect the release;
(g) Receipt by Lender on the Closing Date of a Confirmation of
Obligations, dated as of the Closing Date, signed by Borrower and Sunrise,
pursuant to which Borrower and Sunrise confirm their obligations under the Loan
Documents; and
(h) The remaining Mortgaged Properties in the Collateral Pool
shall satisfy the Geographical Diversification Requirements.
SECTION 6.06. Conditions Precedent to Substitution of a Substitute
Mortgaged Property into the Collateral Pool.
The substitution of a Substitute Mortgaged Property into the Collateral
Pool is subject to the satisfaction of the following conditions precedent:
(a) If the addition of a Substituted Mortgaged Property is
completed prior to the date one year after the date of the Initial Closing,
satisfaction of the Coverage and LTV Tests after giving effect to the addition
of the Substituted Mortgaged Property;
(b) If the addition of a Substituted Mortgaged Property to the
Collateral Pool closes after the date one year after the Initial Closing, (i)
the Substituted Mortgaged Property has a Debt Service Coverage Ratio of at least
l45% and a Loan-to-Value Ratio of not more than 70%, in each case based on the
underwriting performed pursuant to Section 3.02(b), and (ii) satisfaction of the
Coverage and LTV Tests after giving effect to the addition of the Substituted
Mortgaged Property;
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(c) Receipt by the Lender of all legal fees and expenses
payable by the Borrower in connection with the Substitution Request pursuant to
Section 10.03(b);
(d) Receipt by Lender of the Substitution Fee;
(e) Delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Substitution Loan Documents required by Lender,
including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Substitute Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to Lender and in form
proper for recordation, as may be necessary in the opinion of Lender to perfect
the Lien created by the applicable additional Security Instrument, and any other
Substitution Loan Document creating a Lien in favor of Lender, and the payment
of all taxes, fees and other charges payable in connection with such execution,
delivery, recording and filing;
(f) If required by Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of the Substitute Mortgaged
Property to the Collateral Pool and, as to any Security Instrument so amended,
the receipt by Lender of an endorsement to the Title Insurance Policy insuring
the Security Instrument, amending the effective date of the Title Insurance
Policy to the Closing Date and showing no additional exceptions to coverage
other than Permitted Liens;
(g) If the Title Insurance Policy for the Substitute Mortgaged
Property contains a tie-in endorsement, and endorsement to each other Title
Insurance Policy containing a tie-in endorsement, adding a reference to the
Substitute Mortgaged Property; and
(h) Delivery to Lender of additional Collateral or the
repayment of Advances Outstanding to the extent required pursuant to Section
3.04(d).
SECTION 6.07. Conditions Precedent to Increase in Commitment.
The right of Borrower to increase the Commitment is subject to the
satisfaction of the following conditions precedent on or before the Closing
Date:
(a) The Coverage and LTV Tests will be satisfied;
(b) Receipt by Lender of the Expansion Origination Fee;
(c) Receipt by Lender of fully executed original copies of all
Expansion Loan Documents, each of which shall be in full force and effect, and
in form and substance satisfactory to Lender in all respects; and
(d) If determined necessary by Lender, Borrower's agreement to
such Geographical Diversification Requirements as Lender may determine.
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SECTION 6.08. Conditions Precedent to Conversion.
The conversion of all or a portion of the Variable Facility Commitment
to the Fixed Facility Commitment is subject to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) After giving effect to the requested conversion, the
Coverage and LTV Tests will be satisfied;
(b) Prepayment by Borrower in full of any Variable Advances
Outstanding which Borrower has designated for payment, together with any
associated prepayment premiums and other amounts due with respect to the
prepayment of such Variable Advances;
(c) Receipt by Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date and showing no additional exceptions to coverage other than the
exceptions shown on the Initial Closing Date and other exceptions approved by
Lender; and
(d) Receipt by Lender of one or more counterparts of each
Conversion Document, dated as of the Closing Date, signed by each of the parties
(other than Lender) to such Conversion Document.
SECTION 6.09. Conditions Precedent to Complete or Partial Termination
of Facilities.
The right of Borrower to reduce the Facility Commitment and the
obligation of Lender to execute the Facility Termination Document, are subject
to the satisfaction of the following conditions precedent on or before the
Closing Date:
(a) Payment by Borrower in full of all of the Variable
Advances Outstanding and Fixed Advances Outstanding, as the case may be,
required to reduce the aggregate unpaid principal balance of all Variable
Advances Outstanding and Fixed Advances Outstanding, as the case may be, to not
greater than the reduced Variable Facility Commitment and Fixed Facility
Commitment, as the case may be, including any associated prepayment premiums or
other amounts due under the Notes (but if Borrower is not required to prepay all
of the Variable Advances or Fixed Advances Outstanding, as the case may be,
Borrower shall have the right to select which of the Variable Advances or Fixed
Advances, as the case may be, shall be repaid);
(b) Receipt by Lender of the Facility Termination Fee; and
(c) Receipt by Lender on the Closing Date of one or more
counterparts of the Facility Termination Document, dated as of the Closing Date,
signed by each of the parties (other than Lender) who is a party to such
Facility Termination Document.
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SECTION 6.10. Conditions Precedent to Termination of Credit Facility.
The right of Borrower to terminate this Agreement and the Credit
Facility and to receive a release of all of the Collateral from the Collateral
Pool and Lender's obligation to execute and deliver the Credit Facility
Termination Documents on the Closing Date are subject to the following
conditions precedent:
(a) Payment by Borrower in full of all of the Notes
Outstanding on the Closing Date, including any associated prepayment premiums or
other amounts due under the Notes and all other amounts owing by Borrower to
Lender under this Agreement;
(b) Defeasance by Borrower, if necessary, in accordance with
the provisions of this Agreement, with respect to all Fixed Facility Notes
Outstanding on the Closing Date; and
(c) Receipt by Lender of the Credit Facility Termination Fee.
SECTION 6.11. Delivery of Closing Documents Relating to Advance
Request, Addition Request or Expansion Request.
With respect to the closing of an Advance Request, an Addition Request
or an Expansion Request, it shall be a condition precedent that Lender receives
each of the following, each dated as of the Closing Date for the Request, in
form and substance satisfactory to Lender in all respects:
(a) Loan Documents. Fully executed original copies of each
Loan Document required to be executed in connection with the Request, duly
executed and delivered by the parties thereto (other than Lender), each of which
shall be in full force and effect.
(b) Opinion. Favorable opinions of counsel to Borrower and
Sunrise, as to the due organization and qualification of Borrower and Sunrise,
the due authorization, execution, delivery and enforceability of each Loan
Document executed in connection with the Request and such other matters as
Lender may reasonably require.
SECTION 6.12. Delivery of Property-Related Documents.
With respect to each of the Initial Mortgaged Properties or an
Additional Mortgaged Property, it shall be a condition precedent that Lender
receive each of the following, each dated as of the Closing Date for the Initial
Advance or an Additional Mortgaged Property, as the case may be, in form and
substance satisfactory to Lender in all respects:
(a) A favorable opinion of local counsel to Borrower or Lender
as to the enforceability of the Security Instrument, and any other Loan
Documents, executed in connection with the Request.
(b) A commitment for the Title Insurance Policy applicable to
the Mortgaged Property and a pro forma Title Insurance Policy based on the
Commitment.
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(c) The Insurance Policy (or a certified copy of the Insurance
Policy) applicable to the Mortgaged Property.
(d) The Survey applicable to the Mortgaged Property.
(e) Evidence satisfactory to Lender of compliance of the
Mortgaged Property with property laws as required by Sections 205 and 206 of
Part III of the DUS Guide.
(f) An Appraisal of the Mortgaged Property.
(g) A Replacement Reserve Agreement, providing for the
establishment of a replacement reserve account, to be pledged to Lender, in
which the owner shall (unless waived by Lender) periodically deposit amounts for
replacements for improvements at the Mortgaged Property and as additional
security for Borrower's obligations under the Loan Documents.
(h) A Completion/Repair and Security Agreement, together with
required escrows, on the standard form required by the DUS Guide.
(i) An Assignment of Management Agreement, on the standard
form required by the DUS Guide.
(j) An Assignment of Leases and Rents, if Lender determines
one to be necessary or desirable, provided that the provisions of any such
assignment shall be substantively identical to those in the Security Instrument
covering the Collateral, with such modifications as may be necessitated by
applicable state or local law.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.01. Representations and Warranties of Borrower.
The representations and warranties of Borrower are contained in the
Certificate of Borrower, the form of which is attached to this Agreement as
Exhibit D.
SECTION 7.02. Representations and Warranties of Lender.
Lender hereby represents and warrants to Borrower as follows:
(a) Due Organization. Lender is a corporation duly organized,
validly existing and in good standing under the laws of Minnesota.
(b) Power and Authority. Lender has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.
(c) Due Authorization. The execution and delivery by Lender of
this Agreement, and the consummation by it of the transactions contemplated
thereby, and the
24
performance by it of its obligations thereunder, have been duly and validly
authorized by all necessary action and proceedings by it or on its behalf.
ARTICLE 8
AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees and covenants with Lender that, at all times during the
Term of this Agreement:
SECTION 8.01. Compliance with Agreements.
Borrower shall comply with all the terms and conditions of each Loan
Document to which it is a party or by which it is bound; provided, however, that
Borrower's failure to comply with such terms and conditions shall not be an
Event of Default until the expiration of the applicable notice and cure periods,
if any, specified in the applicable Loan Document.
SECTION 8.02. Maintenance of Existence.
Borrower shall maintain its existence and continue to be a [limited
partnership] [corporation] [limited liability company] organized under the laws
of the state of its organization. Borrower shall continue to be duly qualified
to do business in each jurisdiction in which such qualification is necessary to
the conduct of its business and where the failure to be so qualified would
adversely affect the validity of, the enforceability of, or the ability to
perform, its obligations under this Agreement or any other Loan Document.
SECTION 8.03. Financial Statements; Accountants' Reports; Other
Information.
Borrower shall keep and maintain at all times complete and accurate
books of accounts and records in sufficient detail to correctly reflect (x) all
of Borrower's financial transactions and assets and (y) the results of the
operation of each Mortgaged Property and copies of all written contracts, Leases
and other instruments which affect each Mortgaged Property (including all bills,
invoices and contracts for electrical service, gas service, water and sewer
service, waste management service, telephone service and management services).
In addition, Borrower shall furnish, or cause to be furnished, to Lender:
(a) Annual Financial Statements. As soon as available, and in
any event within 120 days after the close of its fiscal year during the Term of
this Agreement, the audited balance sheet of Sunrise as of the end of such
fiscal year, the audited statement of income, equity and retained earnings of
Sunrise for such fiscal year and the audited statement of cash flows of Sunrise
for such fiscal year, all in a form substantially similar to the financial
statements of Sunrise delivered to Lender prior to the Initial Closing Date,
prepared in accordance with GAAP, consistently applied, and accompanied by a
certificate of Sunrise's independent certified public accountants to the effect
that such financial statements have been prepared in accordance with GAAP,
consistently applied, and that such financial statements fairly present the
results of its operations and financial condition for the periods and dates
indicated, with such certification to
25
be free of exceptions and qualifications as to the scope of the audit or as to
the going concern nature of the business. As soon as available, and in any event
within 120 days after the close of its fiscal year during the Term of this
Agreement, the unaudited balance sheet of the Borrower as of the end of such
fiscal year, the unaudited statement of income, equity and retained earnings of
Borrower for such fiscal year and the unaudited statement of cash flows for
Borrower for such fiscal year, accompanied by a certificate of the Chief
Financial Officer of Sunrise stating that such financial statements have been
prepared in accordance with GAAP, consistently applied, and fairly present the
results of its operations and financial condition for the periods and dates
indicated subject to year end adjustments in accordance with GAAP.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after each of the first three fiscal quarters of
each fiscal year during the Term of this Agreement, the unaudited balance sheet
of Borrower and Sunrise as of the end of such fiscal quarter, the unaudited
statement of income and retained earnings of Borrower and Sunrise and the
unaudited statement of cash flows of Borrower and Sunrise for the portion of the
fiscal year ended with the last day of such quarter, all in reasonable detail
and stating in comparative form the respective figures for the corresponding
date and period in the previous fiscal year, accompanied by a certificate of the
Chief Financial Officer of Sunrise stating that such financial statements have
been prepared in accordance with GAAP, consistently applied, and fairly present
the results of its operations and financial condition for the periods and dates
indicated subject to year end adjustments in accordance with GAAP.
(c) Quarterly Property Statements. As soon as available, and
in any event within 45 days after each Calendar Quarter, a statement of income
and expenses of each Mortgaged Property accompanied by a certificate of the
Chief Financial Officer of Sunrise to the effect that each such statement of
income and expenses fairly, accurately and completely presents the operations of
each such Mortgaged Property for the period indicated.
(d) Annual Property Statements. On an annual basis within 45
days after the close of its fiscal year, an annual statement of income and
expenses of each Mortgaged Property accompanied by a certificate of the Chief
Financial Officer of Sunrise to the effect that each such statement of income
and expenses fairly, accurately and completely presents the operations of each
such Mortgaged Property for the period indicated.
(e) Updated Rent Rolls. Upon Lender's request (but not more
frequently than quarterly), a current Rent Roll for each Mortgaged Property,
showing the name of each tenant, and for each tenant, the space occupied, the
lease expiration date, the rent payable, the rent paid and any other information
requested by Lender and accompanied by a certificate of the Chief Financial
Officer of Sunrise to the effect that each such Rent Roll fairly, accurately and
completely presents the information required therein.
(f) Security Deposit Information. Upon Lender's request, an
accounting of all security deposits held in connection with any Lease of any
part of any Mortgaged Property, including the name and identification number of
the accounts in which such security deposits are held,
26
the name and address of the financial institutions in which such security
deposits are held and the name and telephone number of the person to contact at
such financial institution, along with any authority or release necessary for
Lender to access information regarding such accounts.
(g) Accountants' Reports; Other Reports. Promptly upon receipt
thereof: (i) copies of any reports or management letters submitted to Borrower
by its independent certified public accountants in connection with the
examination of its financial statements made by such accountants (except for
reports otherwise provided pursuant to subsection (a) above); provided, however,
that Borrower shall only be required to deliver such reports and management
letters to the extent that they relate to Borrower or any Mortgaged Property;
and (ii) all schedules, financial statements or other similar reports delivered
by Borrower pursuant to the Loan Documents or requested by Lender with respect
to Borrower's business affairs or condition (financial or otherwise) or any of
the Mortgaged Properties.
(h) Annual Budgets. Prior to the start of its fiscal year, an
annual budget for each Mortgaged Property for such fiscal year, setting forth an
estimate of all of the costs and expenses, including capital expenses, of
maintaining and operating each Mortgaged Property.
(i) Federal Tax Returns. Within 30 days of filing, the Federal
Tax Return of Sunrise and the Borrower.
SECTION 8.04. Access to Records; Discussions With Officers and
Accountants.
To the extent permitted by law and in addition to the applicable
requirements of the Security Instruments, Borrower shall permit Lender to:
(a) inspect, make copies and abstracts of such of Borrower's
books and records as may relate to the Obligations or any Mortgaged Property;
(b) discuss Borrower's affairs, finances and accounts with
Sunrise's Senior Management and senior accounting staff and discuss matters
relating to the conditions, operations or maintenance of the Mortgaged
Properties with such personnel and the Executive Directors of such Mortgaged
Properties; and
(c) receive any other information that Lender deems reasonably
necessary or relevant in connection with any Advance, any Loan Document or the
Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default and in the absence of an emergency, all inspections shall be
conducted at reasonable times during normal business hours upon reasonable
notice to Sunrise.
SECTION 8.05. Certificate of Compliance.
Borrower shall deliver to Lender concurrently with the delivery of the
financial statements and/or reports required by Section 8.03 (a) and (b) a
certificate signed by the Chief Financial Officer of Sunrise (i) setting forth
in reasonable detail the calculations required to
27
establish whether Borrower and Sunrise were in compliance with the requirements
of Article 8 of this Agreement on the date of such financial statements, and
(ii) stating that, to the best knowledge of such individual following reasonable
inquiry, no Event of Default or Potential Event of Default has occurred, or if
an Event of Default or Potential Event of Default has occurred, specifying the
nature thereof in reasonable detail and the action Borrower is taking or
proposes to take. Any certificate required by this Section shall run directly to
and be for the benefit of Lender and ▇▇▇▇▇▇ ▇▇▇.
SECTION 8.06. Maintain Licenses.
Borrower shall procure and maintain in full force and effect all
licenses, Permits, charters and registrations which are material to the conduct
of its business and shall abide by and satisfy all terms and conditions of all
such licenses, Permits, charters and registrations.
SECTION 8.07. Inform Lender of Material Events.
Borrower shall promptly inform Lender in writing of any of the
following (and shall deliver to Lender copies of any related written
communications, complaints, orders, judgments and other documents relating to
the following) of which Borrower has actual knowledge:
(a) Defaults. The occurrence of any Event of Default or any
Potential Event of Default under this Agreement or any other Loan Document;
(b) Regulatory Proceedings. The commencement of any rulemaking
or disciplinary proceeding or the promulgation of any proposed or final rule
which would have, or may reasonably be expected to have, a Material Adverse
Effect; the receipt of notice from any Governmental Authority having
jurisdiction over Borrower or Sunrise that (A) any license, Permit, charter,
membership or registration material to the conduct of Borrower's or Sunrise's
business or the Mortgaged Properties has been suspended or revoked or (B)
Borrower or Sunrise has been required to cease and desist any practice,
procedure or policy employed by Borrower or Sunrise in the conduct of its
business, and such cessation would have, or may reasonably be expected to have,
a Material Adverse Effect;
(c) Bankruptcy Proceedings. The commencement of any
proceedings by or against Borrower or Sunrise under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;
(d) Environmental Claim. The receipt from any Governmental
Authority or other Person of any notice of violation, claim, demand, abatement,
order or other order or direction (conditional or otherwise) for any damage,
including personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, pollution, contamination or other adverse
effects on the environment, removal, cleanup or remedial action or for fines,
penalties or restrictions, resulting from or based upon (i) the existence or
occurrence, or the alleged existence or occurrence, of a Hazardous Substance
Activity or (ii) the violation, or alleged violation, of any
28
Hazardous Materials Laws in connection with any Mortgaged Property or any of the
other assets of Borrower;
(e) Material Adverse Effects. The occurrence of any act,
omission, change or event (including the commencement or threat of any
proceedings by or against Borrower or Sunrise in any Federal, state or local
court, or before any Governmental Authority, or before any arbitrator), which
has, or would have, a Material Adverse Effect, subsequent to the date of the
most recent audited financial statements of Borrower or Sunrise delivered to
Lender pursuant to Section 8.03;
(f) Accounting Changes. Any material change in Borrower's or
Sunrise's accounting policies or financial reporting practices; and
(g) Legal and Regulatory Status. The occurrence of any act,
omission, change or event, including any Governmental Approval, the result of
which is to change or alter in any way the legal or regulatory status of
Borrower.
SECTION 8.08. Compliance with Applicable Laws.
Borrower shall comply in all material respects with all Applicable Laws
now or hereafter affecting any Mortgaged Property or any part of any Mortgaged
Property or requiring any alterations, repairs or improvements to any Mortgaged
Property. Borrower shall procure and continuously maintain in full force and
effect, and shall abide by and satisfy all material terms and conditions of all
Permits.
SECTION 8.09. Alterations to the Mortgaged Properties.
Except as otherwise provided in the Loan Documents, Borrower shall have
the right to undertake any alteration, improvement, demolition, removal or
construction (collectively, "Alterations") to the Mortgaged Property which it
owns without the prior consent of Lender; provided, however, that in any case,
no such Alteration shall be made to any Mortgaged Property without the prior
written consent of Lender if (i) such Alteration could reasonably be expected to
adversely affect the value of such Mortgaged Property or its operation as a
multifamily housing facility in substantially the same manner in which it is
being operated on the date such property became Collateral, (ii) the
construction of such Alteration could reasonably be expected to result in
interference to the occupancy of tenants of such Mortgaged Property such that
tenants in occupancy with respect to ten percent (10%) or more of the Resident
Agreements would be permitted to terminate their Resident Agreements or to ▇▇▇▇▇
the payment of all or any portion of their rent, or (iii) such Alteration will
be completed in more than 12 months from the date of commencement.
Notwithstanding the foregoing, Borrower must obtain Lender's prior written
consent to construct Alterations with respect to the Mortgaged Property (i)
costing in excess of $500,000 or (ii) having a material effect on the use or
operation of such Mortgaged Property; provided, however, that the preceding
requirements shall not be applicable to Alterations made, conducted or
undertaken by Borrower as part of Borrower's routine maintenance and repair of
the Mortgaged Properties as required by the Loan Documents.
29
SECTION 8.10. Loan Document Taxes.
If any tax, assessment or Imposition (other than a franchise tax or
excise tax imposed on or measured by, the net income or capital (including
branch profits tax) of Lender (or any transferee or assignee thereof, including
a participation holder)) ("Loan Document Taxes") is levied, assessed or charged
by the United States, or any State in the United States, or any political
subdivision or taxing authority thereof or therein upon any of the Loan
Documents or the obligations secured thereby, the interest of Lender in the
Mortgaged Properties, or Lender by reason of or as holder of the Loan Documents,
Borrower shall pay all such Loan Document Taxes to, for, or on account of Lender
(or provide funds to Lender for such payment, as the case may be) as they become
due and payable and shall promptly furnish proof of such payment to Lender, as
applicable. In the event of passage of any law or regulation permitting,
authorizing or requiring such Loan Document Taxes to be levied, assessed or
charged, which law or regulation in the opinion of counsel to Lender may
prohibit Borrower from paying the Loan Document Taxes to or for Lender, Borrower
shall enter into such further instruments as may be permitted by law to obligate
Borrower to pay such Loan Document Taxes.
SECTION 8.11. Further Assurances.
Borrower, at the request of Lender, shall execute and deliver and, if
necessary, file or record such statements, documents, agreements, UCC financing
and continuation statements and such other instruments and take such further
action as Lender from time to time may request as reasonably necessary,
desirable or proper to carry out more effectively the purposes of this Agreement
or any of the other Loan Documents or to subject the Collateral to the lien and
security interests of the Loan Documents or to evidence, perfect or otherwise
implement, to assure the lien and security interests intended by the terms of
the Loan Documents or in order to exercise or enforce its rights under the Loan
Documents.
SECTION 8.12. Transfer of Ownership Interest of Borrower and Sunrise.
(a) Prohibition on Transfers. Subject to paragraph (b) of this
Section, neither the Borrower nor Sunrise shall cause or permit a Transfer or a
Change of Control.
(b) Permitted Transfers. Notwithstanding the provisions of
paragraph (a) of this Section, the following Transfers are permitted without the
consent of Lender:
(i) A Transfer that occurs by inheritance, devise, or
bequest or by operation of law upon the death of a natural person who is the
owner of a direct or indirect ownership interest in Borrower or Sunrise .
(ii) A Transfer to trusts established for the benefit
of the transferor and/or immediate family members for estate planning purposes.
(iii) A Transfer of member interests by the limited
partners of Borrower or stock of Sunrise; provided, however, that no Change in
Control occurs as the result of such Transfer.
30
(iv) The issuance by Borrower or Sunrise of
additional member interests or stock, as the case may be, and the subsequent
Transfer of such interest; provided, however, that no Change in Control occurs
as the result of such Transfer.
(v) A merger with or acquisition of another entity by
Borrower or Sunrise, provided that (A) Borrower or Sunrise, as the case may be,
is the surviving entity after such merger or acquisition, (B) no Change in
Control occurs, and (C) such merger or acquisition does not result in an Event
of Default, as such terms are defined in this Agreement.
(vi) A Transfer of a Mortgaged Property to a wholly
owned Affiliate of Sunrise, so long as such entity meets the requirements of a
"Borrower" under this Agreement, makes the representations and warranties made
by the Borrower under this Agreement, and executes such documents as Lender may
reasonably require to evidence such entity's obligations under the Loan
Documents.
(vii) A Joint Venture Transfer.
(viii) A Transfer of interests in Sunrise on public
stock exchanges, provided no Change of Control occurs.
(c) Consent to Prohibited Transfers. Lender may, in its sole
and absolute discretion, consent to a Transfer that would otherwise violate this
Section if, prior to the Transfer, Borrower or Sunrise, as the case may be, has
satisfied each of the following requirements:
(i) the submission to Lender of all information
required by Lender to make the determination required by this Section;
(ii) the absence of any Event of Default;
(iii) the transferee meets all of the eligibility,
credit, management and other standards (including any standards with respect to
previous relationships between Lender and the transferee and the organization of
the transferee) customarily applied by Lender at the time of the proposed
Transfer to the approval of Borrower or Sunrise, as the case may be, in
connection with the origination or purchase of similar mortgages, deeds of trust
or deeds to secure debt on multifamily properties;
(iv) in the case of a Transfer of direct or indirect
ownership interests in Borrower or Sunrise, as the case may be, if transferor or
any other person has obligations under any Loan Documents, the execution by the
transferee of one or more individuals or entities acceptable to Lender of an
assumption agreement that is acceptable to Lender and that, among other things,
requires the transferee to perform all obligations of transferor or such person
set forth in such Loan Document, and may require that the transferee comply with
any provisions of this Instrument or any other Loan Document which previously
may have been waived by Lender;
31
(v) Lender's receipt of all of the following:
(A) a transfer fee equal to 1 percent of the
Commitment immediately prior to the transfer.
(B) In addition, Borrower shall be required
to reimburse Lender for all of Lender's reasonable
out-of-pocket costs (including reasonable attorneys' fees)
incurred in reviewing the Transfer request.
SECTION 8.13. Transfer of Ownership of Mortgaged Property.
(a) Prohibition on Transfers. Subject to paragraph (b) of this
Section, neither Borrower nor Sunrise shall cause or permit a Transfer of a
Mortgaged Property.
(b) Permitted Transfers. Notwithstanding provision (a) of this
Section, the following Transfers of a Mortgaged Property by Borrower or Sunrise
are permitted without the consent of Lender:
(i) The grant of a leasehold interest in individual
dwelling units or commercial spaces in accordance with the Security Instrument.
(ii) A sale or other disposition of obsolete or worn
out personal property having a value of less than $50,000 in any Calendar Year
per Mortgaged Property or having a value of $50,000 or more if it is
contemporaneously replaced by comparable personal property of equal or greater
value which is free and clear of liens, encumbrances and security interests
other than those created by the Loan Documents.
(iii) The creation of a mechanic's or materialmen's
lien or judgment lien against a Mortgaged Property which is released of record
or otherwise remedied to Lender's satisfaction within 30 days of the date of
creation.
(iv) The grant of an easement if, prior to the
granting of the easement, Borrower causes to be submitted to Lender all
information required by Lender to evaluate the easement, and if Lender consents
to such easement based upon Lender's determination that the easement will not
materially affect the operation of the Mortgaged Property or Lender's interest
in the Mortgaged Property and Borrower pays to Lender, on demand, all reasonable
costs and expenses incurred by Lender in connection with reviewing Borrower's
request. Lender shall not unreasonably withhold its consent to or withhold its
agreement to subordinate the lien of a Security Instrument to (A) the grant of a
utility easement serving a Mortgaged Property to a publicly operated utility, or
(B) the grant of an easement related to expansion or widening of roadways,
provided that any such easement is in form and substance reasonably acceptable
to Lender and does not materially and adversely affect the access, use or
marketability of a Mortgaged Property.
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SECTION 8.14. Change in Senior Management.
Borrower shall give Lender notice if ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is no longer a
member of Senior Management or the board of directors of Sunrise.
SECTION 8.15. Date-Down Endorsements.
At any time and from time to time, a Lender may obtain an endorsement
to each Title Insurance Policy containing a Revolving Credit Endorsement,
amending the effective date of the Title Insurance Policy to the date of the
title search performed in connection with the endorsement. Borrower shall pay
for the cost and expenses incurred by Lender to the Title Company in obtaining
such endorsement, provided that, for each Title Insurance Policy, it shall not
be liable to pay for more than one such endorsement in any consecutive 12 month
period.
SECTION 8.16. Ownership of Mortgaged Properties.
Borrower shall be the sole owner of each of the Mortgaged Properties
free and clear of any Liens other than Permitted Liens.
SECTION 8.17. Compliance with Net Worth Test.
Sunrise shall at all times maintain its Net Worth so that it is not
less than $275,000,000.
SECTION 8.18. Compliance with Liquidity Test.
Sunrise shall not permit at any time its Liquidity to be less than
$15,000,000.
SECTION 8.19. Facility Balancing.
If the Borrower fails to meet the Coverage and LTV Tests then, within
45 days of Lender's notice to Borrower of such failure, the Borrower shall (i)
add Additional Mortgaged Properties to the Collateral Pool in accordance with
Article 3 so that after such addition the Coverage and LTV Tests are met, or
(ii) prepay Advances Outstanding in an amount sufficient to cause the Borrower
to be in compliance with the Coverage and LTV Tests. Any prepayments made
pursuant to the preceding sentence shall be applied first against the Variable
Advances Outstanding in the sequence specified by Borrower until there are no
further Variable Advances Outstanding then against the prepayment of Fixed
Advances Outstanding so long as the prepayment is permitted under the applicable
Fixed Facility Note. If no prepayment is permitted under the applicable Fixed
Facility Note, such prepayment amount shall be held by Lender (or its appointed
collateral agent) as Substitute Cash Collateral in accordance with a security
agreement and other documents in form and substance acceptable to Lender. Any
Substitute Cash Collateral remaining will be returned to the Borrower on the
earlier of the date when the Coverage and LTV Tests are again met (calculated
using the definition of "Facility Debt Service" set forth in paragraph (b) of
such definition) or the Termination Date. If on the date the Borrower pays any
amounts required by this Section, Variable Advances are Outstanding but are not
then due and payable, Lender shall hold such amounts (which amounts shall bear
interest at a rate determined by Lender) as additional collateral until the next
date on the Variable Advances
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are due and payable at which time Lender shall apply the appropriate portion of
such prepayment to such Variable Advances.
ARTICLE 9
NEGATIVE COVENANTS OF BORROWER
Borrower agrees and covenants with Lender that, at all times during the
Term of this Agreement:
SECTION 9.01. Other Activities.
Borrower shall not:
(a) amend its Organizational Documents in any material respect
without the prior written consent of Lender;
(b) dissolve or liquidate in whole or in part;
(c) except as otherwise provided in this Agreement, without
the prior written consent of Lender, merge or consolidate with any Person; or
(d) use, or permit to be used, any Mortgaged Property for any
uses or purposes other than as a Multifamily Residential Property and ancillary
uses consistent with Multifamily Residential Properties.
SECTION 9.02. Liens.
Borrower shall not create, incur, assume or suffer to exist any Lien on
any Mortgaged Property or any part of any Mortgaged Property, except the
Permitted Liens.
SECTION 9.03. Indebtedness.
Borrower shall not incur or be obligated at any time with respect to
any Indebtedness (other than Advances, Indebtedness having aggregate payments of
up to $75,000 per Calendar Year for personal property leases and title retention
agreements and unsecured loans from Sunrise) in connection with any of the
Mortgaged Properties.
SECTION 9.04. Principal Place of Business.
Borrower shall not change its principal place of business or the
location of its books and records, each as set forth in Borrower's Certificate,
without first giving 30 days' prior written notice to Lender.
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SECTION 9.05. Condominiums.
Borrower shall not submit any Mortgaged Property to a condominium
regime during the Term of this Agreement.
SECTION 9.06. Restrictions on Partnership Distributions.
Neither Borrower nor Sunrise shall make any distributions of any nature
or kind whatsoever to the owners of its Ownership Interests as such if, at the
time of such distribution, a Potential Event of Default or an Event of Default
has occurred and remains uncured.
ARTICLE 10
FEES
SECTION 10.01. Standby Fee.
Borrower shall pay the Standby Fee to Lender for the period from the
date of this Agreement to the end of the Term of this Agreement. The Standby Fee
shall be payable monthly, in arrears, on the first Business Day following the
end of the month, except that the Standby Fee for the last month during the Term
of this Agreement shall be paid on the last day of the Term of this Agreement.
If Borrower pays the Standby Fee, no Commitment shall be reduced or terminated
as a result of Borrower's failure to borrow any or all of such Commitment and no
fee maintenance shall be due in respect of such Commitment unless Borrower fails
to borrow any or all of such Commitment for 24 consecutive months, at which time
the unused portion of the Commitment shall be terminated and all fees, including
the Facility Termination Fee, shall be due at such time.
SECTION 10.02. Origination Fee.
(a) Initial Origination Fee. Borrower shall pay to Lender an
origination fee equal to $450,000 (which is equal to the product obtained by
multiplying (i) the Commitment as of the date of this Agreement ($60,000,000) by
(ii) .75%).
(b) Expansion Origination Fee. Upon the closing of an
Expansion Request under Article 4, Borrower shall pay to Lender an origination
fee ("Expansion Origination Fee") equal to the product obtained by multiplying
(i) the increase in the Commitment made on the Closing Date for the Expansion
Request by (ii) .75%.
SECTION 10.03. Due Diligence Fees.
(a) Initial Due Diligence Fees. Borrower shall pay to Lender
due diligence fees ("Initial Due Diligence Fees") with respect to the Initial
Mortgaged Properties in an amount equal to $21,500 for each Mortgaged Property.
Borrower has previously paid to Lender a portion of the Initial Due
Diligence Fees and shall pay the remainder of the Initial Due Diligence Fees to
Lender on the Initial Closing Date.
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Any portion of the Initial Due Diligence Fee paid to Lender not actually used by
Lender to cover reasonable due diligence expenses shall be promptly refunded to
Borrower.
(b) Additional Due Diligence Fees for Additional Collateral.
Borrower shall pay to Lender additional due diligence fees (the "Additional
Collateral Due Diligence Fees") with respect to each Additional Mortgaged
Property in an amount equal to $21,500. The Additional Collateral Due Diligence
Fees shall be paid together with any Additional Request or Substitution Request.
SECTION 10.04. Legal Fees and Expenses.
(a) Initial Legal Fees. Borrower shall pay, or reimburse
Lender for, all out-of-pocket legal fees and expenses incurred by Lender and by
▇▇▇▇▇▇ Mae in connection with the preparation, review and negotiation of this
Agreement and any other Loan Documents executed on the date of this Agreement.
(b) Fees and Expenses Associated with Requests. Borrower shall
pay, or reimburse Lender for, all reasonable costs and expenses incurred by
Lender, including the out-of-pocket legal fees and expenses incurred by Lender
in connection with the preparation, review and negotiation of all documents,
instruments and certificates to be executed and delivered in connection with
each Request, the performance by Lender of any of its obligations with respect
to the Request, the satisfaction of all conditions precedent to Borrower's
rights or Lender's obligations with respect to the Request, and all transactions
related to any of the foregoing, including the cost of title insurance premiums
and applicable recordation and transfer taxes and charges and all other
reasonable costs and expenses in connection with a Request. The obligations of
Borrower under this subsection shall be absolute and unconditional, regardless
of whether the transaction requested in the Request actually occurs. Borrower
shall pay such costs and expenses to Lender on the Closing Date for the Request,
or, as the case may be, after demand by Lender when Lender determines that such
Request will not close.
SECTION 10.05. Failure to Close any Request.
If Borrower makes a Request and fails to close on the Request for any
reason other than the default by Lender, then Borrower shall pay to Lender and
▇▇▇▇▇▇ ▇▇▇ all actual damages incurred by Lender and ▇▇▇▇▇▇ Mae in connection
with the failure to close.
ARTICLE 11
EVENTS OF DEFAULT
SECTION 11.01. Events of Default.
Each of the following events shall constitute an "Event of Default"
under this Agreement, whatever the reason for such event and whether it shall be
voluntary or involuntary, or within or without the control of Borrower or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any Governmental Authority:
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(a) the occurrence of a default under any Loan Document beyond
the cure period, if any, set forth therein; or
(b) the failure by Borrower to pay when due any amount payable
by Borrower under any Note, any Mortgage, this Agreement or any other Loan
Document, including any fees, costs or expenses; or
(c) the failure by Borrower to perform or observe any covenant
contained in Sections 8.01 through 8.17 or Sections 9.01 through 9.06 for 30
days after receipt of notice of such failure by Borrower from Lender, provided
that such period shall be extended for up to 30 additional days if Borrower, in
the discretion of Lender, is diligently pursuing a cure of such default within
30 days after receipt of notice from Lender; or
(d) any warranty, representation or other written statement
made by or on behalf of Borrower or Sunrise contained in this Agreement, any
other Loan Document or in any instrument furnished in compliance with or in
reference to any of the foregoing, is false or misleading in any material
respect on any date when made or deemed made; or
(e) (i) Borrower or Sunrise shall (A) commence a voluntary
case under the Federal bankruptcy laws (as now or hereafter in effect), (B) file
a petition seeking to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up
or composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts as they
become due, (F) make a general assignment for the benefit of creditors, (G)
assert that Borrower or Sunrise (solely with respect to the Guaranty) has no
liability or obligations under this Agreement or any other Loan Document to
which it is a party; or (H) take any action for the purpose of effecting any of
the foregoing; or (ii) a case or other proceeding shall be commenced against
Borrower or Sunrise in any court of competent jurisdiction seeking (A) relief
under the Federal bankruptcy laws (as now or hereafter in effect) or under any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding upon or composition or adjustment of debts, or (B) the
appointment of a trustee, receiver, custodian, liquidator or the like of
Borrower or Sunrise , or of all or a substantial part of the property, domestic
or foreign, of Borrower or Sunrise and any such case or proceeding shall
continue undismissed or unstayed for a period of 60 consecutive calendar days,
or any order granting the relief requested in any such case or proceeding
against Borrower or Sunrise (including an order for relief under such Federal
bankruptcy laws) shall be entered; or
(f) if any provision of this Agreement or any other Loan
Document or the lien and security interest purported to be created hereunder or
under any Loan Document shall at any time for any reason cease to be valid and
binding in accordance with its terms on Borrower or Sunrise, or shall be
declared to be null and void, or the validity or enforceability hereof or
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thereof or the validity or priority of the lien and security interest created
hereunder or under any other Loan Document shall be contested by Borrower or
Sunrise seeking to establish the invalidity or unenforceability hereof or
thereof, or Borrower or Sunrise (only with respect to the Guaranty) shall deny
that it has any further liability or obligation hereunder or thereunder; or
(g) (i) the execution by Borrower of a chattel mortgage or
other security agreement requiring payments, in the aggregate, of more than
$75,000 per Calendar Year on any materials, fixtures or articles used in the
construction or operation of the improvements located on any Mortgaged Property
or on articles of personal property located therein, or (ii) if any such
materials, fixtures or articles having a cost, in the aggregate, of more than
$75,000 in any Calendar Year are purchased pursuant to any conditional sales
contract or other security agreement or otherwise so that the Ownership thereof
will not vest unconditionally in Borrower free from encumbrances, or (iii) if
Borrower does not furnish to Lender upon request the contracts, bills of sale,
statements, receipted vouchers and agreements, or any of them, under which
Borrower claim title to such materials, fixtures, or articles; or
(h) the failure by Borrower to comply with any requirement of
any Governmental Authority within 30 days after written notice of such
requirement shall have been given to Borrower by such Governmental Authority;
provided that, if action is commenced and diligently pursued by Borrower within
such 30 days, then Borrower shall have an additional 30 days to comply with such
requirement; or
(i) a dissolution or liquidation for any reason (whether
voluntary or involuntary) of Borrower or Sunrise; or
(j) any judgment against Borrower or Sunrise, any attachment
or other levy against any portion of Borrower's or Sunrise's assets with respect
to a claim or claims in an amount in excess of $100,000 in the aggregate remains
unpaid, unstayed on appeal undischarged, unbonded, not fully insured or
undismissed for a period of 60 days; or
(k) the failure by Borrower or Sunrise to perform or observe
any material term, covenant, condition or agreement hereunder, other than as
contained in subsections (a) through (j) above, or in any other Loan Document,
within 30 days after receipt of notice from Lender identifying such failure,
provided such period shall be extended for up to 30 additional days if Borrower,
in the discretion of Lender, is diligently pursuing a cure of such default
within 30 days after receipt of notice from Lender.
ARTICLE 12
REMEDIES
SECTION 12.01. Remedies; Waivers.
Upon the occurrence of an Event of Default, Lender may do any one or
more of the following (without presentment, protest or notice of protest, all of
which are expressly waived by Borrower):
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(a) by written notice to Borrower, to be effective upon
dispatch, terminate the Commitment and declare the principal of, and interest
on, the Advances and all other sums owing by Borrower to Lender under any of the
Loan Documents forthwith due and payable, whereupon the Commitment will
terminate and the principal of, and interest on, the Advances and all other sums
owing by Borrower to Lender under any of the Loan Documents will become
forthwith due and payable.
(b) Lender shall have the right to pursue any other remedies
available to it under any of the Loan Documents.
(c) Lender shall have the right to pursue all remedies
available to it at law or in equity, including obtaining specific performance
and injunctive relief.
SECTION 12.02. Waivers; Rescission of Declaration.
Lender shall have the right, to be exercised in its complete
discretion, to waive any breach hereunder (including the occurrence of an Event
of Default), by a writing setting forth the terms, conditions, and extent of
such waiver signed by Lender and delivered to Borrower. Unless such writing
expressly provides to the contrary, any waiver so granted shall extend only to
the specific event or occurrence which gave rise to the waiver and not to any
other similar event or occurrence which occurs subsequent to the date of such
waiver.
SECTION 12.03. Lender's Right to Protect Collateral and Perform
Covenants and Other Obligations.
If Borrower or Sunrise fails to perform the covenants and agreements
contained in this Agreement or any of the other Loan Documents, then Lender at
Lender's option may make such appearances, disburse such sums and take such
action as Lender deems necessary, in its sole discretion, to protect Lender's
interest, including (i) disbursement of reasonable attorneys' fees, (ii) entry
upon the Mortgaged Property to make repairs and replacements, (iii) procurement
of satisfactory insurance as provided in Section 5 of the Security Instrument
encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a
leasehold, exercise of any option to renew or extend the ground lease on behalf
of Borrower and the curing of any default of Borrower in the terms and
conditions of the ground lease. Any amounts disbursed by Lender pursuant to this
Section, with interest thereon, shall become additional indebtedness of Borrower
secured by the Loan Documents. Unless Borrower and Lender agree to other terms
of payment, such amounts shall be immediately due and payable and shall bear
interest from the date of disbursement at the weighted average, as determined by
Lender, of the interest rates in effect from time to time for each Advance
unless collection from Borrower of interest at such rate would be contrary to
applicable law, in which event such amounts shall bear interest at the highest
rate which may be collected from Borrower under applicable law. Nothing
contained in this Section shall require Lender to incur any expense or take any
action hereunder.
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SECTION 12.04. No Remedy Exclusive.
Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under the Loan Documents or existing at law or in equity.
SECTION 12.05. No Waiver.
No delay or omission to exercise any right or power accruing under any
Loan Document upon the happening of any Event of Default or Potential Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.
SECTION 12.06. No Notice.
To entitle Lender to exercise any remedy reserved to Lender in this
Article, it shall not be necessary to give any notice, other than such notice as
may be required under the applicable provisions of this Agreement or any of the
other Loan Documents.
ARTICLE 13
RIGHTS OF ▇▇▇▇▇▇ ▇▇▇
SECTION 13.01. Special Pool Purchase Contract.
Borrower acknowledges that ▇▇▇▇▇▇ Mae is entering into an agreement
with Lender ("Special Pool Purchase Contract"), pursuant to which, inter alia,
(i) Lender shall agree to assign all of its rights under this Agreement to
▇▇▇▇▇▇ ▇▇▇, (ii) ▇▇▇▇▇▇ ▇▇▇ shall accept the assignment of the rights, (iii)
subject to the terms, limitations and conditions contained in the Special Pool
Purchase Contract, ▇▇▇▇▇▇ Mae shall agree to purchase a 100% participation
interest in each Advance issued under this Agreement by issuing to Lender an
MBS, in the amount and for a term equal to the Advance purchased and backed by
an interest in the Fixed Facility Note or the Variable Facility Note, as the
case may be, and the Collateral Pool securing the Notes, (iv) Lender shall agree
to assign to ▇▇▇▇▇▇ ▇▇▇ all of Lender's interest in the Notes and Collateral
Pool securing the Notes, and (v) Lender shall agree to service the loans
evidenced by the Notes.
SECTION 13.02. Assignment of Rights.
Borrower acknowledges and consents to the assignment to ▇▇▇▇▇▇ Mae of
all of the rights of Lender under this Agreement and all other Loan Documents,
including the right and power to make all decisions on the part of Lender to be
made under this Agreement and the other Loan Documents, but ▇▇▇▇▇▇ ▇▇▇, by
virtue of this assignment, shall not be obligated to perform the obligations of
Lender under this Agreement or the other Loan Documents.
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SECTION 13.03. Release of Collateral.
Borrower hereby acknowledges that, after the assignment of Loan
Documents contemplated in Section 13.02, Lender shall not have the right or
power to effect a release of any Collateral pursuant to Article 6. Borrower
acknowledges that the Security Instruments provide for the release of the
Collateral under Articles 3 and 5. Accordingly, Borrower shall not look to
Lender for performance of any obligations contained in Articles 3 and 5, but
shall look solely to the party secured by the Collateral to be released for such
performance. Lender represents and warrants to Borrower that the party secured
by the Collateral shall be subject to the release provisions contained in
Articles 3 and 5 by virtue of the release provisions in each Security
Instrument.
SECTION 13.04. Replacement of Lender.
At the request of ▇▇▇▇▇▇ Mae, Borrower and Lender shall agree to the
assumption by another lender designated by ▇▇▇▇▇▇ ▇▇▇ (which lender shall meet
▇▇▇▇▇▇ Mae's then current standards for lenders for credit facilities of the
type and size of the credit facility evidenced by this Agreement), of all of the
obligations of Lender under this Agreement and the other Loan Documents, and/or
any related servicing obligations, and, at ▇▇▇▇▇▇ Mae's option, the concurrent
release of Lender from its obligations under this Agreement and the other Loan
Documents, and/or any related servicing obligations, and shall execute all
releases, modifications and other documents which ▇▇▇▇▇▇ Mae determines are
necessary or desirable to effect such assumption.
SECTION 13.05. ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses.
Borrower agree that any provision providing for the payment of fees,
costs or expenses incurred or charged by Lender pursuant to this Agreement shall
be deemed to provide for Borrower's payment of all reasonable fees, costs and
expenses incurred or charged by Lender or ▇▇▇▇▇▇ Mae in connection with the
matter for which fees, costs or expenses are payable.
SECTION 13.06. Third-Party Beneficiary.
Borrower hereby acknowledge and agree that ▇▇▇▇▇▇ ▇▇▇ is a third party
beneficiary of all of the representations, warranties and covenants made by
Borrower to, and all rights under this Agreement conferred upon, Lender, and, by
virtue of its status as third-party beneficiary and/or assignee of Lender's
rights under this Agreement, ▇▇▇▇▇▇ Mae shall have the right to enforce all of
the provisions of this Agreement against Borrower.
ARTICLE 14
INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES
SECTION 14.01. Insurance and Real Estate Taxes.
Borrower shall (unless waived by Lender by separate agreement)
establish funds for taxes, insurance premiums and certain other charges for each
Mortgaged Property in accordance with Section 7(a) of the Security Instrument
for each Mortgaged Property.
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SECTION 14.02. Replacement Reserves.
Borrower shall execute a Replacement Reserve Agreement for the
Mortgaged Property which they own and shall (unless waived by Lender by separate
agreement) make all deposits for replacement reserves in accordance with the
terms of the Replacement Reserve Agreement.
ARTICLE 15
PERSONAL LIABILITY OF THE BORROWER
SECTION 15.01. Personal Liability of the Borrower.
(a) Full Recourse. The Borrower is and shall remain personally
liable to the Lender for the payment and performance of all Obligations
throughout the term of this Agreement.
(b) Transfer Not Release. No Transfer by any Person of its
Ownership Interests in the Borrower shall release the Borrower from liability
under this Article, this Agreement or any other Loan Document, unless the Lender
shall have approved the Transfer and shall have expressly released the Borrower
in connection with the Transfer.
(c) Miscellaneous. The Lender may exercise its rights against
the Borrower personally without regard to whether the Lender has exercised any
rights against the Mortgaged Property or any other security, or pursued any
rights against any guarantor, or pursued any other rights available to the
Lender under the Loan Documents or applicable law. For purposes of this Article,
the term "Mortgaged Property" shall not include any funds that (1) have been
applied by the Borrower as required or permitted by the Loan Documents prior to
the occurrence of an Event of Default, or (2) are owned by the Borrower and
which the Borrower was unable to apply as required or permitted by the Loan
Documents because of a bankruptcy, receivership, or similar judicial proceeding.
ARTICLE 16
INTENTIONALLY OMITTED
ARTICLE 17
MISCELLANEOUS PROVISIONS
SECTION 17.01. Counterparts.
To facilitate execution, this Agreement may be executed in any number
of counterparts. It shall not be necessary that the signatures of, or on behalf
of, each party, or that the signatures of all persons required to bind any
party, appear on each counterpart, but it shall be sufficient that the signature
of, or on behalf of, each party, appear on one or more counterparts. All
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counterparts shall collectively constitute a single agreement. It shall not be
necessary in making proof of this Agreement to produce or account for more than
the number of counterparts containing the respective signatures of, or on behalf
of, all of the parties hereto.
SECTION 17.02. Amendments, Changes and Modifications.
This Agreement may be amended, changed, modified, altered or terminated
only by written instrument or written instruments signed by all of the parties
hereto.
SECTION 17.03. Payment of Costs, Fees and Expenses.
Borrower shall pay, on demand, all reasonable fees, costs, charges or
expenses (including the fees and expenses of attorneys, accountants and other
experts) incurred by Lender in connection with:
(a) Any amendment, consent or waiver to this Agreement or any
of the Loan Documents (whether or not any such amendments, consents or waivers
are entered into).
(b) Defending or participating in any litigation arising from
actions by third parties and brought against or involving Lender with respect to
(i) any Mortgaged Property, (ii) any event, act, condition or circumstance in
connection with any Mortgaged Property or (iii) the relationship between Lender
and Borrower and Sunrise in connection with this Agreement or any of the
transactions contemplated by this Agreement.
(c) The administration or enforcement of, or preservation of
rights or remedies under, this Agreement or any other Loan Documents or in
connection with the foreclosure upon, sale of or other disposition of any
Collateral granted pursuant to the Loan Documents.
(d) Any disclosure documents, including fees payable to any
rating agencies, including the reasonable fees and expenses of Lender's
attorneys and accountants.
Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents or the Advances. However, Borrower will not be obligated to
pay any franchise, excise, estate, inheritance, income, excess profits or
similar tax on Lender. Any attorneys' fees and expenses payable by Borrower
pursuant to this Section shall be recoverable separately from and in addition to
any other amount included in such judgment, and such obligation is intended to
be severable from the other provisions of this Agreement and to survive and not
be merged into any such judgment. Any amounts payable by Borrower pursuant to
this Section, with interest thereon if not paid when due, shall become
additional indebtedness of Borrower secured by the Loan Documents. Such amounts
shall bear interest from the date such amounts are due until paid in full at the
weighted average, as determined by Lender, of the interest rates in effect from
time to time for each Advance unless collection from Borrower of interest at
such rate would be contrary to applicable law, in which event such amounts shall
bear interest at the highest rate which may be
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collected from Borrower under applicable law. The provisions of this Section are
cumulative with, and do not exclude the application and benefit to Lender of,
any provision of any other Loan Document relating to any of the matters covered
by this Section.
SECTION 17.04. Payment Procedure.
All payments to be made to Lender pursuant to this Agreement or any of
the Loan Documents shall be made in lawful currency of the United States of
America and in immediately available funds by wire transfer to an account
designated by Lender before 2:00 p.m. (Washington, D.C. time) on the date when
due.
SECTION 17.05. Payments on Business Days.
In any case in which the date of payment to Lender or the expiration of
any time period hereunder occurs on a day which is not a Business Day, then such
payment or expiration of such time period need not occur on such date but may be
made on the next succeeding Business Day with the same force and effect as if
made on the day of maturity or expiration of such period, except that interest
shall continue to accrue for the period after such date to the next Business
Day.
SECTION 17.06. Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial.
NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF
THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF THE BORROWER UNDER THE NOTES, AND THE BORROWER AND
SUNRISE UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED,
CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE
DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF
LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO
(1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS,
AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES,
WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE
MORTGAGED PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER
THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE
DISTRICT OF
COLUMBIA UNIFORM COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF
PERFECTION AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS
SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT
IS LOCATED. BORROWER AND SUNRISE AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN
RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL
BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN DISTRICT
44
OF COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN
DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE
JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE
LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION,
JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY
DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH
ANY OF THE LOAN DOCUMENTS. THE BORROWER AND SUNRISE IRREVOCABLY CONSENTS TO
SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM
THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES
ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL
RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER
FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST
BORROWER AND SUNRISE AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION.
INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER
JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED
HEREIN THAT THE LAWS OF
DISTRICT OF COLUMBIA SHALL GOVERN THE RIGHTS AND
OBLIGATIONS OF BORROWER AND SUNRISE AND LENDER AS PROVIDED HEREIN OR THE
SUBMISSION HEREIN BY BORROWER AND SUNRISE TO PERSONAL JURISDICTION WITHIN
DISTRICT OF COLUMBIA THE BORROWER AND SUNRISE (I) COVENANT AND AGREE NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN
DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, THE BORROWER AND SUNRISE HEREBY
CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED
TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO THE BORROWER
AND SUNRISE THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION.
THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY
BORROWER AND SUNRISE UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED
BY BORROWER'S AND SUNRISE'S FREE WILL.
SECTION 17.07. Severability.
In the event any provision of this Agreement or in any other Loan
Document shall be held invalid, illegal or unenforceable in any jurisdiction,
such provision will be severable from the remainder hereof as to such
jurisdiction and the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired in any jurisdiction.
45
SECTION 17.08. Notices.
(a) Manner of Giving Notice. Each notice, direction,
certificate or other communication hereunder (in this Section referred to
collectively as "notices" and singly as a "notice") which any party is required
or permitted to give to the other party pursuant to this Agreement shall be in
writing and shall be deemed to have been duly and sufficiently given if:
(i) personally delivered with proof of delivery
thereof (any notice so delivered shall be deemed to have been received at the
time so delivered);
(ii) sent by Federal Express (or other similar
overnight courier) designating morning delivery (any notice so delivered shall
be deemed to have been received on the Business Day it is delivered by the
courier);
(iii) sent by telecopier or facsimile machine which
automatically generates a transmission report that states the date and time of
the transmission, the length of the document transmitted, and the telephone
number of the recipient's telecopier or facsimile machine (to be confirmed with
a copy thereof sent in accordance with paragraphs (1) or (2) above within two
Business Days) (any notice so delivered shall be deemed to have been received
(i) on the date of transmission, if so transmitted before 5:00 p.m. (local time
of the recipient) on a Business Day, or (ii) on the next Business Day, if so
transmitted on or after 5:00 p.m. (local time of the recipient) on a Business
Day or if transmitted on a day other than a Business Day);
addressed to the parties as follows:
As to Borrower: c/o Sunrise Assisted Living, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
c/o Sunrise Assisted Living, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Watt, Tieder, Hoffar & ▇▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As to Lender: ▇▇▇▇▇▇ Financial Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
46
As to ▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Vice President for Multifamily Asset
Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Change of Notice Address. Any party may, by notice given
pursuant to this Section, change the person or persons and/or address or
addresses, or designate an additional person or persons or an additional address
or addresses, for its notices, but notice of a change of address shall only be
effective upon receipt. Each party agrees that it shall not refuse or reject
delivery of any notice given hereunder, that it shall acknowledge, in writing,
receipt of the same upon request by the other party and that any notice rejected
or refused by it shall be deemed for all purposes of this Agreement to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service, the courier
service or facsimile.
SECTION 17.09. Further Assurances and Corrective Instruments.
(a) Further Assurances. To the extent permitted by law, the
parties hereto agree that they shall, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as Lender or Borrower may
request and as may be required in the opinion of Lender or its counsel to
effectuate the intention of or facilitate the performance of this Agreement or
any Loan Document.
(b) Further Documentation. Without limiting the generality of
subsection (a), in the event any further documentation or information is
required by Lender to correct patent mistakes in the Loan Documents, materials
relating to the Title Insurance Policies or the funding of the Advances,
Borrower shall provide, or cause to be provided to Lender, at their cost and
expense, such documentation or information. Borrower shall execute and deliver
to Lender such documentation, including any amendments, corrections, deletions
or additions to the Notes, the Security Instruments or the other Loan Documents
as is reasonably required by Lender and at reasonable cost to the Borrower.
47
(c) Compliance with Investor Requirements. Without limiting
the generality of subsection (a), Borrower shall do anything necessary to comply
with the reasonable requirements of Lender to enable Lender to sell the MBS
backed by an Advance.
SECTION 17.10. Term of this Agreement.
This Agreement shall continue in effect until the Credit Facility
Termination Date.
SECTION 17.11. Assignments; Third-Party Rights.
No Borrower shall assign this Agreement, or delegate any of its
obligations hereunder, without the prior written consent of Lender. Lender may
assign its rights and obligations under this Agreement separately or together,
without Borrower's consent, only to ▇▇▇▇▇▇ ▇▇▇, but may not delegate its
obligations under this Agreement unless required to do so pursuant to Section
13.04.
SECTION 17.12. Headings.
Article and Section headings used herein are for convenience of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 17.13. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, (i) the terms defined in Appendix I
and elsewhere in this Agreement have the meanings assigned to them in this
Agreement and include the plural as well as the singular, and the use of any
gender herein shall be deemed to include the other genders; (ii) accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP; (iii) references herein to "Articles," "Sections,"
"subsections," "paragraphs" and other subdivisions without reference to a
document are to designated Articles, Sections, subsections, paragraphs and other
subdivisions of this Agreement; (iv) a reference to a subsection without further
reference to a Section is a reference to such subsection as contained in the
same Section in which the reference appears, and this rule shall also apply to
paragraphs and other subdivisions; (v) a reference to an Exhibit or a Schedule
without a further reference to the document to which the Exhibit or Schedule is
attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the
words "herein," "hereof," "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular provision; and (vii) the
word "including" means "including, but not limited to."
SECTION 17.14. Interpretation.
The parties hereto acknowledge that each party and their respective
counsel have participated in the drafting and revision of this Agreement and the
Loan Documents. Accordingly, the parties agree that any rule of construction
which disfavors the drafting party
48
shall not apply in the interpretation of this Agreement and the Loan Documents
or any amendment or supplement or exhibit hereto or thereto.
SECTION 17.15. Standards for Decisions, Etc.
Unless otherwise provided herein, if Lender's approval is required for
any matter hereunder, such approval may be granted or withheld in Lender's sole
and absolute discretion. Unless otherwise provided herein, if Lender's
designation, determination, selection, estimate, action or decision is required,
permitted or contemplated hereunder, such designation, determination, selection,
estimate, action or decision shall be made in Lender's sole and absolute
discretion.
SECTION 17.16. Decisions in Writing.
Any approval, designation, determination, selection, action or decision
of Lender or Borrower must be in writing to be effective.
SECTION 17.17. Requests.
The Borrower may submit up to a total of 10 Requests per Calendar Year,
provided (i) that Future Advance Requests shall not count against such limit and
(ii) all Requests given by Borrower on any day shall count as one (1) Request.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
49
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Borrower
SUNRISE RIVERSIDE ASSISTED LIVING, L.P.,
a California limited partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
SUNRISE PARMA ASSISTED LIVING, L.L.C., a
Virginia limited liability company
By: Sunrise Assisted Living Investments,
Inc., Sole Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
SUNRISE WILTON ASSISTED LIVING, L.L.C., a
Connecticut limited liability company
By: Sunrise Development, Inc., Sole
Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
50
SUNRISE WALL ASSISTED LIVING, L.L.C., a
New Jersey limited liability company
By: Sunrise Development, Inc., Sole
Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
SUNRISE WESTON ASSISTED LIVING, Limited
Partnership, a Massachusetts limited
partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
Lender
▇▇▇▇▇▇ FINANCIAL GROUP, INC., a Minnesota
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Executive Vice President
----------------------------------
51
APPENDIX I
DEFINITIONS
For all purposes of the Agreement, the following terms shall have the respective
meanings set forth below:
"Acquiring Person" means a "person" or "group of persons"
within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.
"Addition Loan Documents" means the Security Instrument
covering an Additional Mortgaged Property and any other documents,
instruments or certificates required by Lender in connection with the
addition of the Additional Mortgaged Property to the Collateral Pool
pursuant to Article 3.
"Addition Request" means a written request, substantially in
the form of Exhibit M to the Agreement, to add Additional Mortgaged
Properties to the Collateral Pool as set forth in Section 3.02(a).
"Additional Borrower" means the owner of an Additional
Mortgaged Property, which entity becomes a Borrower under the Agreement
and the applicable Loan Documents.
"Additional Collateral Due Diligence Fees" means the due
diligence fees paid by Borrower to Lender with respect to each
Additional Mortgaged Property.
"Additional Mortgaged Property" means each Multifamily
Residential Property owned by any Borrower or Additional Borrower
(either in fee simple or as tenant under a ground lease meeting all of
the requirements of the DUS Guide) and added to the Collateral Pool
after the Initial Closing Date pursuant to Article 3.
"Advance" means a Variable Advance (including a Rollover
Variable Advance) or a Fixed Advance.
"Advance Confirmation Instrument" means the written
instrument, substantially in the form of Exhibit K to the Agreement,
issued by Borrower to Lender to confirming Borrower's obligation to
repay Variable Advances pursuant to Section 2.02.
"Advance Request" means a written request, substantially in
the form of Exhibit L to the Agreement, for an Advance made pursuant to
Section 2.04.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management (other
than property management) and policies of that Person, whether
52
through the ownership of voting securities, partnership interests or by
contract or otherwise.
"Aggregate Debt Service Coverage Ratio" means, for any
specified date, the ratio (expressed as a percentage) of--
(a) the aggregate of the Net Operating Income for the
Mortgaged Properties
to
(b) the Facility Debt Service on the specified date.
"Aggregate Loan to Value Ratio" means, for any specified date,
the ratio (expressed as a percentage) of--
(a) the Advances Outstanding on the specified date,
to
(b) the aggregate of the Valuations most recently
obtained prior to the specified date for all of the
Mortgaged Properties.
"Agreement" means the
Master Credit Facility Agreement, as it
may be amended, supplemented or otherwise modified from time to time,
including all Recitals and Exhibits to the Agreement, each of which is
hereby incorporated into the Agreement by this reference.
"Allocable Facility Amount" means the portion of the Credit
Facility allocated to a particular Mortgaged Property by Lender in
accordance with the Agreement. The Allocable Facility Amount for each
Mortgaged Property shall equal the then current Aggregate Loan to Value
Ratio multiplied by the then current Valuation of such Mortgaged
Property.
"Amortization Period" means the period of 25 years.
"Applicable Law" means (a) all applicable provisions of all
constitutions, statutes, rules, regulations and orders of all
governmental bodies, all Governmental Approvals and all orders,
judgments and decrees of all courts and arbitrators, (b) all zoning,
building, environmental and other laws, ordinances, rules, regulations
and restrictions of any Governmental Authority affecting the ownership,
management, use, operation, maintenance or repair of any Mortgaged
Property, including the Americans with Disabilities Act (if
applicable), the Fair Housing Amendment Act of 1988 and Hazardous
Materials Laws (as defined in the Security Instrument), (c) any
building permits or any conditions, easements, rights-of-way,
covenants, restrictions of record or any recorded or unrecorded
agreement affecting or concerning any Mortgaged Property including
planned development permits, condominium declarations, and reciprocal
easement and regulatory
53
agreements with any Governmental Authority, (d) all laws, ordinances,
rules and regulations, whether in the form of rent control, rent
stabilization or otherwise, that limit or impose conditions on the
amount of rent that may be collected from the units of any Mortgaged
Property, and (e) requirements of insurance companies or similar
organizations, affecting the operation or use of any Mortgaged Property
or the consummation of the transactions to be effected by the Agreement
or any of the other Loan Documents.
"Appraisal" means an appraisal of Multifamily Residential
Property conforming to the requirements of Chapter 5 of Part III of the
DUS Guide and accepted by Lender.
"Appraised Value" means the value set forth in an Appraisal.
"Borrower" means, individually and collectively, Sunrise
Riverside Assisted Living, L.P., a California limited partnership,
Sunrise Parma Assisted Living, L.L.C., a Virginia limited liability
company, Sunrise Wilton Assisted Living, L.L.C., a Connecticut limited
liability company, Sunrise Wall Assisted Living, L.L.C., a New Jersey
limited liability company, Sunrise Weston Assisted Living, L.P., a
Massachusetts limited partnership, and any Additional Borrower becoming
a party to the Agreement and any other Loan Documents, but excluding
any party which was a Borrower and any and all Mortgaged Properties
owned by such Borrower have been released from the Collateral Pool.
"Borrowing Up Limitation" means the lesser of (a) the amount
that would result in an Aggregate Loan to Value Ratio of 70%, or (b)
the amount that would result in (i) an Aggregate Debt Service Coverage
Ratio of 1.15 for the portion of the Commitment (including the portion
of any additional Advances to be made pursuant to Section 2.04(c)) that
comprises the Variable Facility Commitment (using a prorated portion of
the Net Operating Income and using the Facility Debt Service for only
the Variable Facility Commitment in making such determination of the
Debt Service Coverage Ratio, provided such amount shall not exceed 103%
of the amount that would result using the calculations set forth in
(ii) below), and (ii) a Debt Service Coverage Ratio of 1.45 for the
portion of the Commitment (including the portion of any additional
Advances to be made pursuant to Section 2.04(c)) that comprises the
Fixed Facility Commitment (using a prorated portion of the Net
Operating Income and using the Facility Debt Service for only the Fixed
Facility Commitment in making such determination of Debt Service
Coverage Ratio).
"Business Day" means a day on which ▇▇▇▇▇▇ ▇▇▇ is open for
business.
"Calendar Quarter" means, with respect to any year, any of the
following three month periods: (a) January-February-March; (b)
April-May-June; (c) July-August-September; and (d)
October-November-December.
"Calendar Year" means the 12-month period from the first day
of January to and including the last day of December, and each 12-month
period thereafter.
54
"Cap Rate" means, for each Mortgaged Property, a
capitalization rate reasonably selected by Lender for use in
determining the Valuations, as disclosed to Borrower from time to time.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by
the United States Government or any agency thereof
and backed by the full faith and credit of the United
States having maturities of not more than twelve (12)
months from the date of acquisition.
(b) certificates of deposit, time deposits, demand
deposits, eurodollar time deposits, repurchase
agreements, reverse repurchase agreements, or
bankers' acceptances, having in each case a term of
not more than twelve (12) months, issued by any
commercial bank having membership in the FDIC, or by
any U.S. commercial lender (or any branch or agency
of a non-U.S. bank licensed to conduct business in
the U.S.) having combined capital and surplus of not
less than $100,000,000 whose short-term securities
are rated at least A-1 by Standard & Poor's
Corporation or P-1 by ▇▇▇▇▇'▇ Investors Service,
Inc.; and
(c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corporation or P-1 by ▇▇▇▇▇'▇
Investors Service, Inc. and in either case having a
term of not more than twelve (12) months.
"Change of Control" means the earliest to occur of: the date
on which (a) an Acquiring Person becomes (by acquisition,
consolidation, merger or otherwise), directly or indirectly, the
beneficial owner of more than 40% of the total ownership interest of
Borrower or Sunrise, as the case may be, then outstanding, or (b) ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ ceases to be the chairman of the board of directors of
Sunrise.
"Chief Financial Officer" means the chief financial officer of
Sunrise or any other person with responsibility for any of the
functions typically performed in a corporation by the chief financial
officer.
"Closing Date" means the Initial Closing Date and each date
after the Initial Closing Date on which the funding or other
transaction requested in a Request is required to take place.
"Collateral" means the Mortgaged Properties and other
collateral from time to time or at any time encumbered by the Security
Instruments, or any other property securing Borrower's obligations
under the Loan Documents.
"Collateral Pool" means all of the Collateral.
"Commitment" means, at any time, the sum of the Fixed Facility
Commitment and the Variable Facility Commitment.
55
"Complete Fixed Facility Termination" shall have the meaning
set forth in Section 5.02(a).
"Complete Variable Facility Termination" shall have the
meaning set forth in Section 5.02(a).
"Compliance Certificate" means a certificate of Borrower
substantially in the form of Exhibit F to the Agreement.
"Conversion Amendment" means the Master Credit Facility
Conversion Amendment, substantially in the form of Exhibit I to the
Agreement, reflecting the conversion of all or any portion of the
Variable Facility Commitment to the Fixed Facility Commitment as set
forth in Section 1.08(b).
"Conversion Documents" means the Conversion Amendment,
together with an amendment to each Security Document and other
applicable Loan Documents, in form and substance satisfactory to
Lender, reflecting the change in the Fixed Facility Commitment and the
Variable Facility Commitment pursuant to Section 1.08.
"Conversion Request" means a written request, substantially in
the form of Exhibit H to the Agreement, to convert all or any portion
of the Variable Facility Commitment to the Fixed Facility Commitment
pursuant to Section 1.08.
"Coupon Rate" means, with respect to a Variable Advance, the
imputed interest rate determined by Lender pursuant to Section 1.05(a)
and, with respect to a Fixed Advance, the interest rate determined by
Lender pursuant to Section 1.05(b).
"Coverage and LTV Tests" mean, for any specified date, each of
the following financial tests:
(a) The Aggregate Debt Service Coverage Ratio is not
less than 1.45:1.0.
(b) The Aggregate Loan to Value Ratio does not exceed
70%.
"Credit Facility" means the Fixed Facility and the Variable
Facility.
"Credit Facility Termination Documents" means the instruments
releasing the Security Instruments as lien on the Mortgaged Properties,
UCC-3 Termination Statements terminating the UCC-1 Financing Statements
on the Mortgaged Properties, and such other documents and instruments
necessary to evidence the release of the Collateral from any lien
securing the Obligations, and the Notes, all in connection with the
termination of the Agreement and the Credit Facility pursuant to
Article V.
56
"Credit Facility Termination Request" means a written request,
substantially in the form of Exhibit R to the Agreement, to terminate
the Agreement and the Credit Facility pursuant to Section 5.04(a).
"Debt Service Coverage Ratio" means -
(a) For any Mortgaged Property, for any specified date,
the ratio (expressed as a percentage) of --
(ii) the aggregate of the Net Operating Income
for the preceding 12 month period for the
subject Mortgaged Property
to
(iii) the Facility Debt Service on the specified
date, assuming, for the purpose of
calculating the Facility Debt Service for
this definition, that Advances Outstanding
shall be the Allocable Facility Amount for
the subject Mortgaged Property.
(b) For purposes of determining the Initial Commitment
Amount or the Borrowing Up Limitation, for any
specified date, the ratio (expressed in decimal form)
of --
(iv) the applicable portion of Net Operating
Income for the preceding 12 month period
to
(v) the applicable Facility Debt Service on the
specified date, as described in the
definitions of Initial Commitment Amount or
Borrowing Up Limitation, as applicable.
"Discount" means, with respect to any Variable Advance, an
amount equal to the excess of --
(i) the face amount of the MBS backed by the Variable
Advance, over
(ii) the Price of the MBS backed by the Variable Advance.
"DUS Guide" means the ▇▇▇▇▇▇ ▇▇▇ Multifamily Delegated
Underwriting and Servicing (DUS) Guide, as such Guide may be amended
from time to time, including exhibits to the DUS Guide and amendments
in the form of Lender Memos, Guide Updates and Guide Announcements
(and, if such Guide is no longer used by ▇▇▇▇▇▇ Mae, the term "DUS
Guide" as used in the Agreement means the ▇▇▇▇▇▇ ▇▇▇ Multifamily
Negotiated Transactions (NT) Guide, as such Guide may be amended from
time to time, including amendments in the form of Lender Memos, Guide
Updates and Guide Announcements). All references to specific articles
and sections of, and exhibits to, the
57
DUS Guide shall be deemed references to such articles, sections and
exhibits as they may be amended, modified, updated, superseded,
supplemented or replaced from time to time.
"DUS Guide Underwriting Requirements" means the overall
underwriting requirements for Multifamily Residential Properties as set
forth in the DUS Guide.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" means any event defined to be an "Event of
Default" under Article 11.
"Expansion" means an increase in the Commitment made in
accordance with Article 4.
"Expansion Loan Documents" means amendments to the Variable
Facility Note or the Fixed Facility Notes, as the case may be,
increasing the amount of such Note to the amount of the Commitment, as
expanded in accordance with Article 4 and amendments to the Security
Instruments, increasing the amount secured by such Security Instruments
to the amount of the Commitment.
"Expansion Request" means a written request, substantially in
the form of Exhibit O to the Agreement, to obtain an Expansion pursuant
to Section 4.02.
"Facility Debt Service" means -
(c) For use in determining the initial Commitment amount,
the sum of the amount of interest and principal
amortization that would be payable during the 12
month period immediately succeeding the Initial
Closing Date, with respect to the full amount of the
initial Commitment, except that, for these purposes:
(vi) the initial amount of the Variable Facility
Commitment shall be deemed to require level
monthly payments of principal and interest
(at an interest rate equal to (A) the Three
Month LIBOR rate plus (B) the Variable
Facility Fee plus (C) 300 basis points) in
an amount necessary to fully amortize the
original principal amount of the Variable
Facility Commitment over the Amortization
Period, with such amortization deemed to
commence on the first day of the 12 month
period; and
(vii) the initial amount of the Fixed Facility
Commitment shall be deemed to require level
monthly payments of principal and interest
(at an interest rate equal to (A) the base
United States Treasury Index Rate for
securities having a maturity substantially
similar to the maturity of the Fixed Advance
plus (B) the anticipated investor spread (as
determined by the Lender) for MBS having
similar
58
characteristics as the MBS to be issued in
connection with the Fixed Facility
Commitment plus (C) the Fixed Facility Fee)
in an amount necessary to fully amortize the
original principal amount of the Fixed
Facility Commitment over the Amortization
Period, with such amortization to commence
on the first day of the 12 month period.
The interest rates described in this clause
(a) determined as of the Initial Closing
Date are hereinafter referred to as the
"Underwriting Rates."
(d) For use in determining (i) whether Borrower may
obtain Advances based on increases in the Aggregate
Loan to Value Ratio or Debt Service Coverage Ratios
in accordance with Section 2.04(c) of the Agreement,
as of any specified date, and (ii) the additional
borrowing capacity created by the addition of
Additional Mortgaged Properties (whether pursuant to
Section 3.2 of the Agreement or in connection with an
Expansion pursuant to Article 4 of the Agreement),
the sum of:
(viii) the amount of interest and principal
amortization, during the 12 month period
immediately succeeding the specified date,
with respect to the Advances Outstanding on
the specified date and Advances to be
obtained pursuant to Section 2.04(c), except
that, for these purposes:
(A) each Variable Advance Outstanding or to be obtained
pursuant to Section 2.04(c) shall be deemed to
require level monthly payments of principal and
interest at a rate equal to the greater of (A) the
highest Underwriting Rate utilized to obtain any
advance pursuant to Section 2.04(c) during the Term
of the Agreement and (B) the rate that would apply to
such Variable Advance if the Underwriting Rates were
being determined on the date of calculation, in an
amount necessary to fully amortize the original
principal amount of the Variable Advance over the
Amortization Period, with such amortization deemed to
commence on the first day of the 12 month period; and
(B) each Fixed Advance Outstanding shall require level
monthly payments of principal and interest (at the
Coupon Rate for the Fixed Advance) in an amount
necessary to fully amortize the original principal
amount of the Fixed Advance over the Amortization
Period, with such amortization to commence on the
first day of the 12 month period; and
(C) each Fixed Advance to be obtained pursuant to Section
2.04(c) shall be deemed to require level monthly
payments of principal and interest at a rate equal to
the estimated Coupon Rate for such
59
Fixed Advance in an amount necessary to fully
amortize the original principal amount of such Fixed
Advance over the Amortization Period, with such
amortization deemed to commence on the first day of
the 12 month period; and
(ix) the amount of the Standby Fees payable to
Lender pursuant to Section 11.01 during such
12 month period (assuming, for these
purposes, that the Advances Outstanding
throughout the 12 month period are always
equal to the amount of Advances Outstanding
on the specified date).
(e) For use in determining the Aggregate Debt Service
Coverage Ratio for purposes of determining Release
Prices pursuant to Section 3.04(c) of the Agreement,
for purposes of determining compliance with the
Coverage and LTV Tests, and for other ongoing
monitoring purposes, as of any specified date, the
sum of:
(x) the amount of interest and principal
amortization, during the 12 month period
immediately succeeding the specified date,
with respect to the Advances Outstanding on
the specified date, except that, for these
purposes:
(A) each Variable Advance shall be deemed to require
level monthly payments of principal and interest (at
the Coupon Rate for such Variable Advance) in an
amount necessary to fully amortize the original
principal amount of the Variable Advance over the
Amortization Period, with such amortization deemed to
commence on the first day of the 12 month period; and
(B) each Fixed Advance shall require level monthly
payments of principal and interest (at the Coupon
Rate for such Fixed Advance) in an amount necessary
to fully amortize the original principal amount of
the Fixed Advance over the Amortization Period, with
such amortization to commence on the first day of the
12 month period; and
(xi) the amount of the Standby Fees payable to
Lender pursuant to Section 10.01 during such
12 month period (assuming, for these
purposes, that the Advances Outstanding
throughout the 12 month period are always
equal to the amount of Advances Outstanding
on the specified date).
"Facility Termination Document" means the Amendment of the
Master Credit Facility Agreement, substantially in the form of Exhibit
Q to the Agreement, evidencing the permanent reduction in the Facility
Commitment pursuant to Section 5.02.
60
"Facility Termination Fee" means, with respect to a reduction
in either the Variable Facility Commitment or the Fixed Facility
Commitment pursuant to Article 5, the sum of
(A) an amount equal to the product obtained by
multiplying
(1) the reduction in the Variable Facility
Commitment, by
(2) the Variable Facility Fee, by
(3) the present value factor calculated using
the following formula:
1 - (1 + r)-(n)
--------------
r
[r = Yield Rate
n = the number of years (counting any partial
year as a full year) remaining between the
Closing Date for the reduction in the
Commitment and the Variable Facility
Termination Date.
The "Yield Rate" means the rate, determined as of the Initial Closing
Date, on the U.S. Treasury security having a maturity closest to the
Variable Facility Termination Date; and
(B) an amount equal to the product obtained by
multiplying
(1) the reduction in the Fixed Facility
Commitment, by
(2) the Fixed Facility Fee, by
(3) the present value factor calculated using
the following formula:
1 - (1 + r)-(n)
---------------
r
[r = Yield Rate
n = the number of years (counting any partial
year as a full year) remaining between the
Closing Date for the reduction in the
Commitment and the Fixed Facility
Termination Date.
The "Yield Rate" means the rate, determined as of the
Initial Closing Date, on the U.S. Treasury security having a maturity
closest to the Fixed Facility Termination Date.
Notwithstanding the foregoing, if a Facility
Termination Fee is incurred in connection with the refinancing of a
Mortgaged Property by Lender, which refinanced loan is purchased by
▇▇▇▇▇▇ ▇▇▇, the Facility Termination Fee shall not exceed 1% of the
61
reduction in the Variable Facility Commitment or the Fixed Facility
Commitment, as the case may be.
"Facility Termination Request" means a written request,
substantially in the form of Exhibit P to the Agreement, for a
permanent reduction in the Variable Facility Commitment or the Fixed
Facility Commitment pursuant to Section 5.02.
"▇▇▇▇▇▇ Mae" means the federally-chartered and
stockholder-owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, 12 U.S.C. Section 1716 et
seq.
"Fees" means Additional Collateral Due Diligence Fee, Facility
Termination Fee, Fixed Facility Fee, Standby Fee, Substitution Fee,
Variable Facility Fee any and all other fees specified in the
Agreement.
"Fixed Advance" means a loan made by Lender to Borrower under
the Fixed Facility Commitment.
"Fixed Facility" means the agreement of Lender to make Fixed
Advances to Borrower pursuant to Section 1.01.
"Fixed Facility Availability Period" means the period
beginning on the Initial Closing Date and ending on the date five years
after the Initial Closing Date.
"Fixed Facility Commitment" means $0, plus such amount as
Borrower may elect to add to the Fixed Facility Commitment in
accordance with Section 1.08 and Article 4.
"Fixed Facility Fee" means (i) 105 basis points for a Fixed
Advance drawn from the Fixed Facility Commitment in effect during the
period ending on the date 12 months after the Initial Closing Date
(whenever such Fixed Advance is made) and (ii) for any Fixed Advance
drawn from any portion of the Fixed Facility Commitment, increased
under Article 4 or converted under Section 1.08 from any portion of the
Variable Commitment after the period ending on the date 12 months after
the Initial Closing Date, the number of basis points determined at the
time of such increase by Lender as the Fixed Facility Fee for such
Fixed Advances.
"Fixed Facility Note" means a promissory note, in the form
attached as Exhibit B to the Agreement, which will be issued by
Borrower to Lender, concurrently with the funding of each Fixed
Advance, to evidence Borrower's obligation to repay the Fixed Advance.
"Future Advance" means an Advance made after the Initial
Closing Date.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time, consistently applied.
62
"General Conditions" shall have the meaning set forth in
Article 6.
"Geographical Diversification Requirements" means a
requirement that (i) if the Collateral Pool consist of two (2) or three
(3) Mortgaged Properties, such Mortgaged Properties shall be located in
at least two (2) SMSA's, and (ii) if the Collateral Pool consists of
four (4) or more Mortgaged Properties, such Mortgaged Properties shall
be located in at least three (3) SMSA's.
"Governmental Approval" means an authorization, permit,
consent, approval, license, registration or exemption from registration
or filing with, or report to, any Governmental Authority.
"Governmental Authority" means any court, board, agency,
commission, office or authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Revenues" means, for any specified period, with respect
to any Multifamily Residential Property, all income (including, without
limitation, community fees) in respect of such Multifamily Residential
Property as reflected on the certified operating statement for such
specified period as adjusted to exclude unusual income (e.g. temporary
or nonrecurring income), income not allowed under the DUS Guide as
shown in Section 403.02 of Part III (e.g. interest income, furniture
income, etc.), and the value of any unreflected concessions.
"Guaranty" means that certain Guaranty to be executed by
Sunrise in the form of Exhibit D to this Agreement.
"Impositions" means, with respect to any Mortgaged Property,
all (1) water and sewer charges which, if not paid, may result in a
lien on all or any part of the Mortgaged Property, (2) premiums for
fire and other hazard insurance, rent loss insurance and such other
insurance as Lender may require under any Security Instrument, (3)
Taxes, and (4) amounts for other charges and expenses which Lender at
any time reasonably deems necessary to protect the Mortgaged Property,
to prevent the imposition of liens on the Mortgaged Property, or
otherwise to protect Lender's interests.
"Indebtedness" means, with respect to any Person, as of any
specified date, without duplication, all:
(a) indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than (i)
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices, and (ii) for
construction of improvements to property, if such person has a
non-contingent contract to purchase such property);
(b) other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar instrument;
63
(c) obligations of such Person under any lease of
property, real or personal, the obligations of the lessee in respect of
which are required by GAAP to be capitalized on a balance sheet of the
lessee or to be otherwise disclosed as such in a note to such balance
sheet;
(d) obligations of such Person in respect of
acceptances (as defined in Article 3 of the Uniform Commercial Code of
the
District of Columbia) issued or created for the account of such
Person;
(e) liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or
otherwise become liable for the payment of such liabilities; and
(f) as to any Person ("guaranteeing person"), any
obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation
of a primary obligation (as defined below) with respect to which the
guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing, or in effect
guaranteeing, any indebtedness, lease, dividend or other obligation
("primary obligations") of any third person ("primary obligor") in any
manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, to (1) purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (2) advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (3) purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (4) otherwise assure or
hold harmless the owner of any such primary obligation against loss in
respect of the primary obligation, provided, however, that the term
"Contingent Obligation" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation of any guaranteeing person shall be
deemed to be the lesser of (i) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made and (ii) the maximum amount for which
such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Contingent Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Contingent Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by Owner in good faith.
"Initial Advance" means the Variable Advance made on the
Initial Closing Date in the amount of $27,860,000.
"Initial Closing Date" means the date of the Agreement.
64
"Initial Commitment Amount" means the lesser of (a) the amount
that would result in an Aggregate Loan to Value Ratio of 70%, or (b)
the amount that would result in (i) an Aggregate Debt Service Coverage
Ratio of 1.15 for the portion of the Commitment that will be the
Variable Facility Commitment (using a prorated portion of the Net
Operating Income and using the Facility Debt Service for only the
Variable Facility Commitment in making such determination of Debt
Service Coverage Ratio), provided that such amount shall not exceed
103% of the amount that would result using the calculation set forth in
(ii) below, and (ii) a Debt Service Coverage Ratio of 1.45 for the
portion of the Commitment that will be the Fixed Facility Commitment
(using a prorated portion of the Net Operating Income and using the
Facility Debt Service for only the Fixed Facility Commitment in making
such determination of Debt Service Coverage Ratio).
"Initial Mortgaged Properties" means the Multifamily
Residential Properties described on Exhibit A to the Agreement and
which represent the Multifamily Residential Properties which are made
part of the Collateral Pool on the Initial Closing Date.
"Initial Security Instruments" means the Security Instruments
covering the Initial Mortgaged Properties.
"Initial Valuation" means, when used with reference to
specified Collateral, the Valuation initially performed for the
Collateral as of the date on which the Collateral was added to the
Collateral Pool. The Initial Valuation for each of the Initial
Mortgaged Properties is as set forth in Exhibit A to the Agreement.
"Insurance Policy" means, with respect to a Mortgaged
Property, the insurance coverage and insurance certificates evidencing
such insurance required to be maintained pursuant to the Security
Instrument encumbering the Mortgaged Property.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended. Each reference to the Internal Revenue Code shall be
deemed to include (a) any successor internal revenue law and (b) the
applicable regulations whether final, temporary or proposed.
"Joint Venture Transfer" means, with respect to any Mortgaged
Property, the transfer of such Mortgaged Property to an entity of which
at least 20% of the ownership interest in such entity is owned by
Sunrise and up to 80% of the ownership interest in such entity is owned
by an investor approved by Lender; provided that (a) such Mortgaged
Property is refinanced under the ▇▇▇▇▇▇ ▇▇▇ Delegated Underwriting and
Servicing Program with the Lender being the lender for such transaction
(in connection with which Lender agrees to use reasonable efforts to
reduce closing costs and recordation taxes), (b) Sunrise is the sole
managing member of the entity to which the Mortgaged Property is
transferred, (c) Sunrise or an Affiliate thereof is the manager of the
Mortgaged Property to be transferred, (d) the Borrower or Sunrise pays
a fee equal to 50 basis points multiplied by the Allocable Facility
Amount of the Mortgaged Property to be transferred and pays all legal
fees and costs and expenses of Lender and ▇▇▇▇▇▇ Mae in
65
connection with the transfer and refinance of said Mortgaged Property,
and (e) Sunrise provides a guaranty of the standard non-recourse
carveouts under the Delegated Underwriting and Servicing Program. In
addition, all terms and conditions set forth in the
Master Credit
Facility Agreement relating to the release of properties from the
Collateral Pool shall apply to any Joint Venture Transfer.
"Lease" means, other than a Resident Agreement, any lease, any
sublease or subsublease, license, concession or other agreement
(whether written or oral and whether now or hereafter in effect)
pursuant to which any Person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in any Mortgaged
Property, and every modification, amendment or other agreement relating
to such lease, sublease, subsublease or other agreement entered into in
connection with such lease, sublease, subsublease or other agreement,
and every guarantee of the performance and observance of the covenants,
conditions and agreements to be performed and observed by the other
party thereto.
"Lender" shall have the meaning set forth in the first
paragraph of the Agreement, but shall refer to any replacement Lender
if the initial Lender is replaced pursuant to the terms of Section
13.04.
"Lien" means any mortgage, deed of trust, deed to secure debt,
security interest or other lien or encumbrance (including both
consensual and non-consensual liens and encumbrances).
"Liquidity" means, at any time, the amount of cash and Cash
Equivalents owned by a Person.
"Loan Documents" means the Agreement, the Notes, the Guaranty,
the Advance Confirmation Instruments, the Security Documents, all
documents executed by the Borrower or Sunrise pursuant to the General
Conditions set forth in Article 6 of the Agreement and any other
documents executed by the Borrower or Sunrise from time to time in
connection with the Agreement or the transactions contemplated by the
Agreement.
"Loan to Value Ratio " means, for a Mortgaged Property, for
any specified date, the ratio (expressed as a percentage) of --
(a) the Allocable Facility Amount of the subject Mortgaged
Property on the specified date,
to
(b) the Valuation most recently obtained prior to the
specified date for the subject Mortgaged Property.
66
"Loan Year" means the 12-month (plus any partial month) period
from the first day of the first calendar month after the Initial
Closing Date to and including the last day of the twelfth calendar
month after the first anniversary of the Initial Closing Date, and each
12-month period thereafter.
"Material Adverse Effect" means, with respect to any
circumstance, act, condition or event of whatever nature (including any
adverse written determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts, condition or
conditions, or circumstance or circumstances, whether or not related, a
material adverse change in or a materially adverse effect upon any of
(a) the business, operations, property or condition (financial or
otherwise) of the Borrower or Sunrise, (b) the present or future
ability of the Borrower or Sunrise to perform the Obligations for which
it is liable, (c) the validity, priority, perfection or enforceability
of the Agreement or any other Loan Document or the rights or remedies
of Lender under any Loan Document, or (d) the value of, or Lender's
ability to have recourse against, any Mortgaged Property.
"MBS" means a mortgage-backed security issued by ▇▇▇▇▇▇ ▇▇▇
which is "backed" by an Advance and has an interest in the Notes and
the Collateral Pool securing the Notes, which interest permits the
holder of the MBS to participate in the Notes and the Collateral Pool
to the extent of such Advance.
"MBS Imputed Interest Rate" shall have the meaning set forth
in Section 1.05(a).
"MBS Issue Date" means the date on which an MBS is issued by
▇▇▇▇▇▇ Mae.
"MBS Delivery Date" means the date on which an MBS is
delivered by ▇▇▇▇▇▇ ▇▇▇.
"MBS Pass-Through Rate" means the interest rate for a Fixed
Advance as determined by Lender (rounded to three places) payable in
respect of the ▇▇▇▇▇▇ Mae MBS issued pursuant to the MBS Commitment
backed by the Fixed Advance as determined in accordance with Section
2.01.
"Mortgaged Properties" means, collectively, the Additional
Mortgaged Properties, the Substitute Mortgaged Properties and the
Initial Mortgaged Properties, but excluding each Release Property from
and after the date of its release from the Collateral Pool.
"Multifamily Residential Property" means a residential
property, located in the United States, containing five or more
dwelling units in which not more than twenty percent (20%) of the net
rentable area is or will be rented to non-residential tenants, and
conforming to the requirements of Chapter 2 of Part III of the DUS
Guide (Property Requirements).
67
"Net Operating Income" means, for any specified period, with
respect to any Multifamily Residential Property, the Gross Revenues
during such period less the aggregate Operating Expenses during such
period. If a Mortgaged Property is not in the Collateral Pool for the
entire specified period, the Net Operating Income for the Mortgaged
Property for the time within the specified period during which the
Mortgaged Property was in the Collateral Pool shall be the Mortgaged
Property's actual Gross Revenues for each full Calendar Quarter the
Mortgaged Property was part of the Collateral Pool and the Mortgaged
Property's pro forma net operating income determined by Lender in
accordance with the underwriting procedures set forth in Chapter 4 of
Part III of the DUS Guide (Determination of Loan Amount) for each full
Calendar Quarter during the specified period that the Mortgaged
Property was not part of the Collateral Pool less the aggregate
Operating Expenses during such period.
"Net Worth" means, as of any specified date, for any Person,
the excess of the Person's assets over the Person's liabilities,
determined in accordance with GAAP, on a consolidated basis, provided
that all real property shall be valued on an undepreciated basis.
"Note" means any Fixed Facility Note or the Variable Facility
Note.
"Obligations" means the aggregate of the obligations of
Borrower and Sunrise under the Agreement and the other Loan Documents.
"Operating Expenses" means, for any period, with respect to
any Multifamily Residential Property, all expenses in respect of the
Multifamily Residential Property, as determined by Lender based on the
certified operating statement for such specified period as adjusted to
provide for the following: (i) all appropriate types of expenses,
including a management fee and deposits to the Replacement Reserves
(whether funded or not), are included in the total operating expense
figure; (ii) upward adjustments to individual line item expenses to
reflect market norms or actual costs and correct any unusually low
expense items, which could not be replicated by a different owner or
manager (e.g., a market rate management fee will be included regardless
of whether or not a management fee is charged, market rate payroll will
be included regardless of whether shared payroll provides for
economies, etc.); and (iii) downward adjustments to individual line
item expenses to reflect unique or aberrant costs (e.g., non-recurring
capital costs, non-operating borrower expenses, etc.).
"Organizational Certificate" means, collectively, certificates
from Borrower and Sunrise to Lender, in the form of Exhibits G-1 and
G-2 to the Agreement, certifying as to certain organizational matters
with respect to Borrower and Sunrise .
"Organizational Documents" means all certificates, instruments
and other documents pursuant to which an organization is organized or
operates, including but not limited to, (i) with respect to a
corporation, its articles of incorporation and bylaws, (ii) with
respect to a limited partnership, its limited partnership certificate
and partnership agreement, (iii) with respect to a general partnership
or
68
joint venture, its partnership or joint venture agreement and (iv) with
respect to a limited liability company, its articles of organization
and operating agreement.
"Outstanding" means, when used in connection with promissory
notes, other debt instruments or Advances, for a specified date,
promissory notes or other debt instruments which have been issued, or
Advances which have been made, but have not been repaid in full as of
the specified date.
"Ownership Interests" means, with respect to any entity, any
ownership interests in the entity and any economic rights (such as a
right to distributions, net cash flow or net income) to which the owner
of such ownership interests is entitled.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permits" means all permits and accreditations, or similar
licenses or approvals issued and/or required by an applicable
Governmental Authority or any Applicable Law in connection with the
ownership, use, occupancy, leasing, management, operation, repair,
maintenance or rehabilitation of any Mortgaged Property or any
Borrower's business.
"Permitted Liens" means, with respect to a Mortgaged Property,
(i) the exceptions to title to the Mortgaged Property set forth in the
Title Insurance Policy for the Mortgaged Property which are approved by
Lender, (ii) the Security Instrument encumbering the Mortgaged
Property, (iii) Liens for personal property leases and title retention
agreements having aggregate payments of up to $75,000 per Calendar
Year, and (iv) any other Liens approved by Lender.
"Person" means an individual, an estate, a trust, a
corporation, a partnership, a limited liability company or any other
organization or entity (whether governmental or private).
"Potential Event of Default" means any event which, with the
giving of notice or the passage of time, or both, would constitute an
Event of Default.
"Price" means, with respect to an Advance, the proceeds of the
sale of the MBS backed by the Advance.
"Property" means any estate or interest in any kind of
property or asset, whether real, personal or mixed, and whether
tangible or intangible.
"Rate Form" means the completed and executed document from
Borrower to Lender pursuant to Section 2.01(b), substantially in the
form of Exhibit J to the Agreement, specifying the terms and conditions
of the MBS to be issued for the requested Advance.
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"Rate Setting Date" shall have the meaning set forth in
Section 2.01(b).
"Release Documents" mean instruments releasing the applicable
Security Instrument as a Lien on the Release Property, and UCC-3
Termination Statements terminating the UCC-1 Financing Statements, and
such other documents and instruments to evidence the release of the
Release Property from the Collateral Pool.
"Release Property" means the Mortgaged Property to be released
pursuant to Section 3.04.
"Release Price" shall have the meaning set forth in Section
3.04(c).
"Release Request" means a written request, substantially in
the form of Exhibit M to the Agreement, to obtain a release of
Collateral from the Collateral Pool pursuant to Section 3.04(a).
"Rent Roll" means, with respect to any Multifamily Residential
Property, a rent roll prepared and certified by the owner of the
Multifamily Residential Property, on ▇▇▇▇▇▇ ▇▇▇ Form 4243, as set forth
in Exhibit III-3 of the DUS Guide, or on another form approved by
Lender and containing substantially the same information as Form 4243
requires.
"Replacement Reserve Agreement" means a Replacement Reserve
and Security Agreement, reasonably required by Lender, and completed in
accordance with the requirements of the DUS Guide.
"Request" means an Advance Request, an Addition Request, an
Expansion Request, a Substitution Request, a Release Request, a
Conversion Request, a Credit Facility Termination Request, or a
Facility Termination Request.
"Resident Agreement" means a written agreement for occupancy
of a portion of a Mortgaged Property by an individual senior resident.
"Rollover Variable Advance" means a Variable Advance made
solely to refinance an existing Variable Advance on the maturity date
of such Variable Advance.
"Security" means a "security" as set forth in Section 2(1) of
the Securities Act of 1933, as amended.
"Security Documents" means the Security Instruments, the
Replacement Reserve Agreements and any other documents executed by
Borrower and Sunrise from time to time to secure any of Borrower's and
Sunrise's obligations under the Loan Documents.
"Security Instrument" means, for each Mortgaged Property, a
separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt,
Assignment of Leases and Rents and Security Agreement given by a
Borrower to or for the benefit of Lender to
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secure the obligations of Borrower under the Loan Documents. With
respect to each Mortgaged Property owned by a Borrower, the Security
Instrument shall be substantially in the form published by ▇▇▇▇▇▇ Mae
for use in the state in which the Mortgaged Property is located. If the
Collateral Pool includes any Mortgaged Properties located in the State
of California, "Security Instrument" shall include any additional
Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment
of Leases and Rents and Security Agreement given by a Borrower to or
for the benefit of Lender to secure the obligations of Borrower under
the Loan Documents deemed desirable by Lender. The amount secured by
the Security Instrument shall be equal to the Commitment in effect from
time to time.
"Senior Management" means (i) the Chief Executive Officer,
Chairman of the Board, President, Chief Financial Officer and Chief
Operating Officer of Sunrise, and (ii) any other individuals with
responsibility for any of the functions typically performed in a
corporation by the officers described in clause (i).
"Single-Purpose" means, with respect to a Person which is any
form of partnership or corporation or limited liability company, that
such Person at all times since its formation:
(i) has been a duly formed and existing partnership,
corporation or limited liability company, as the case
may be;
(ii) has been duly qualified in each jurisdiction in which
such qualification was at such time necessary for the
conduct of its business;
(iii) has complied with the provisions of its
organizational documents and the laws of its
jurisdiction of formation in all respects;
(iv) has observed all customary formalities regarding its
partnership or corporate existence, as the case may
be;
(v) has accurately maintained its financial statements,
accounting records and other partnership or corporate
documents separate from those of any other Person;
(vi) has not commingled its assets or funds with those of
any other Person;
(vii) has identified itself in all dealings with secured
creditors (other than trade creditors in the ordinary
course of business and creditors for the construction
of improvements to property on which such Person has
a non-contingent contract to purchase such property)
under its own name and as a separate and distinct
entity;
(viii) commencing on the Initial Closing Date, is and has
been adequately capitalized in light of its
contemplated business operations;
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(ix) commencing on the Initial Closing Date, has not
assumed, guaranteed or become obligated for the
liabilities of any other Person (except in connection
with the Credit Facility or the endorsement of
negotiable instruments in the ordinary course of
business) or held out its credit as being available
to satisfy the obligations of any other Person;
(x) has not acquired obligations or securities of any
other Person;
(xi) in relation to a Borrower, except for loans made in
the ordinary course of business to Affiliates, has
not made loans or advances to any other Person;
(xii) has not entered into and was not a party to any
transaction with any Affiliate of such Person, except
in the ordinary course of business and on terms which
are no less favorable to such Person than would be
obtained in a comparable arm's-length transaction
with an unrelated third Party;
(xiii) has had no employees;
(xiv) has allocated fairly and reasonably any overhead for
shared office space; and
(xv) has not engaged in a non-exempt prohibited
transaction described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code.
"SMSA" means a "standard metropolitan statistical area," as
defined from time to time by the United States Office of Management and
Budget.
"Standby Fee" means, for any month, an amount equal to the
product obtained by multiplying: (i) 1/12, by (ii) 12.5 basis points,
by (iii) the Unused Capacity for such month.
"Subsidiary" means, when used with reference to a specified
Person, (i) any Person that, directly or indirectly, through one or
more intermediaries, is controlled by the specified Person, (ii) any
Person of which the specified Person is, directly or indirectly, the
owner of more than 50% of any voting class of Ownership Interests or
(iii) any Person (A) which is a partnership and (B) of which the
specified Person is a general partner and owns more than 50% of the
partnership interests.
"Substitute Mortgaged Property" means each Multifamily
Residential Property owned by Borrower (either in fee simple or as
tenant under a ground lease meeting all of the requirements of the DUS
Guide) and added to the Collateral Pool after the Initial Closing Date
in connection with a substitution of Collateral as permitted by Section
3.05.
"Substitution Fee" means, with respect to any substitution
effected in accordance with Section 3.05, a fee equal to 50 basis
points multiplied by the Allocable Facility Amount of the Substitute
Mortgage Property added to the Collateral Pool.
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"Sunrise" means Sunrise Assisted Living, Inc., a Delaware
corporation.
"Surveys" means the as-built surveys of the Mortgaged
Properties prepared in accordance with the requirements of Part III,
Section 113 of the DUS Guide, or otherwise approved by Lender.
"Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or local
improvements, which are levied, assessed or imposed by any public
authority or quasi-public authority, and which, if not paid, will
become a lien, on the Mortgaged Properties.
"Term of this Agreement" shall be determined as provided in
Section 17.10.
"Termination Date" means, at any time during which Fixed
Advances are Outstanding, the latest maturity date for any Fixed
Advance Outstanding, and, at any time during which Fixed Advances are
not Outstanding, the Variable Facility Termination Date.
"Three-Month LIBOR" means the London interbank offered rate
for three-month U.S. dollar deposits, as such rate is reported in The
Wall Street Journal. In the event that a rate is not published for
Three-Month LIBOR, then the nearest equivalent duration London
interbank offered rate for U.S. Dollar deposits shall be selected at
Lender's reasonable discretion. If the publication of Three-Month LIBOR
is discontinued, Lender shall determine such rate from another
equivalent source selected by Lender in its reasonable discretion.
"Title Company" means First American Title Insurance Company.
"Title Insurance Policies" means the mortgagee's policies of
title insurance issued by the Title Company from time to time relating
to each of the Security Instruments, conforming to the requirements of
Part III, Section 111 of the DUS Guide, together with such
endorsements, coinsurance, reinsurance and direct access agreements
with respect to such policies as Lender may, from time to time,
consider necessary or appropriate, whether or not required by the DUS
Guide, including variable credit endorsements, if available, and tie-in
Endorsements, if available, and with a limit of liability under the
policy (subject to the limitations contained in Sections 6(a)(i) and
6(a)(iii) of the Stipulations and Conditions of the policy) equal to
the Commitment.
"Transfer" means --
(1) as used with respect to ownership interests in Borrower or
Sunrise means (i) a sale, assignment, pledge, transfer or other
disposition of any ownership interest in Borrower or Sunrise, or (ii)
the issuance or other creation of new ownership interests in Borrower
or Sunrise or in any entity that has a direct or indirect ownership
interest in Borrower or Sunrise, or (iii) a merger or consolidation of
Borrower, as the case may be, into another entity or of another entity
into Borrower as the case may be, or (iv) the reconstitution of
Borrower from one type of entity to another type of entity, or (v) the
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amendment, modification or any other change in the governing instrument
or instruments of Borrower or Sunrise which has the effect of changing
the relative powers, rights, privileges, voting rights or economic
interests of the ownership interests in Borrower or Sunrise.
(2) as used with respect to ownership interests in a Mortgaged
Property means (i) a sale, assignment, lease, pledge, transfer or other
disposition (whether voluntary or by operation of law) of, or the
granting or creating of a lien, encumbrance or security interest in,
any estate, rights, title or interest in a Mortgaged Property, or any
portion thereof. Transfer does not include a conveyance of a Mortgaged
Property at a judicial or non-judicial foreclosure sale under any
security instrument or the Mortgaged Property becoming part of a
bankruptcy estate by operation of law under the United States
Bankruptcy Code.
"Unused Capacity" means, for any month, the sum of the daily
average during such month of the undrawn amount of the Commitment
available under Article I of the Agreement for the making of Advances,
without regard to any unclosed Requests or to the fact that a Request
must satisfy conditions precedent.
"Valuation" means, for any specified date, with respect to a
Multifamily Residential Property, (a) if an Appraisal of the
Multifamily Residential Property was more recently obtained than a Cap
Rate for the Multifamily Residential Property, the Appraised Value of
such Multifamily Residential Property, or (b) if a Cap Rate for the
Multifamily Residential Property was more recently obtained than an
Appraisal of the Multifamily Residential Property, the value derived by
dividing--
(i) the Net Operating Income of such Multifamily Residential
Property, by
(ii) the most recent Cap Rate determined by Lender.
Notwithstanding the foregoing, any Valuation for a Multifamily
Residential Property calculated for a date occurring before the first
anniversary of the date on which the Multifamily Residential Property
becomes a part of the Collateral Pool shall equal the Appraised Value
of such Multifamily Residential Property, unless Lender determines that
changed market or property conditions warrant that the value be
determined as set forth in the preceding sentence.
"Variable Advance" means a loan made by Lender to Borrower
under the Variable Facility Commitment.
"Variable Facility" means the agreement of Lender to make
Variable Advances to Borrower pursuant to Section 1.01.
"Variable Facility Availability Period" means the period
beginning on the Initial Closing Date and ending on the 30th day before
the Variable Facility Termination Date.
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"Variable Facility Commitment" means an aggregate amount of
$60,000,000, which shall be evidenced by the Variable Facility Note in
the form attached hereto as Exhibit C, plus such amount as Borrower may
elect to add to the Variable Facility Commitment in accordance with
Article 4, less such amount as Borrower may elect to convert from the
Variable Facility Commitment to the Fixed Facility Commitment in
accordance with Section 1.08, and less such amount by which Borrower
may elect to reduce the Variable Facility Commitment in accordance with
Article V.
"Variable Facility Fee" means (i) 120 basis points per annum
for a Variable Advance drawn from the Variable Facility Commitment
initially available under the Agreement, (ii) if the Variable Facility
Termination Date is extended pursuant to Section 1.07, for any Variable
Advance drawn from any portion of the Variable Commitment after the
original Variable Facility Availability Period, the number of basis
points per annum determined by Lender as the Variable Facility Fee for
such period, which fee shall be set by Lender not less than 30 days
prior to the commencement of such period, and (iii) for any Variable
Advance drawn from any portion of the Variable Facility Commitment
increased under Article 4, the number of basis points per annum
determined at the time of such increase by Lender as the Variable
Facility Fee for such Variable Advance.
"Variable Facility Note" means, individually and collectively,
promissory notes, each in the form attached as Exhibit C to the
Agreement, which have been issued by Borrower to Lender to evidence
Borrower's obligation to repay Variable Advances.
"Variable Facility Termination Date" means the date five years
after the Initial Closing Date unless extended pursuant to Section
1.07.
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