CREDIT AGREEMENT
DATED as of May 1, 1997
between
HIGH YIELD PARTNERS LLC,
and
EMERITUS PROPERTIES V, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT (hereinafter
referred to as this "Agreement") is made as
of May 1, 1997, by and between HIGH YIELD
PARTNERS LLC (hereinafter referred to as the
"Lender"), a Delaware limited liability
company, x/x Xxxxxxxxx Xxxxxxxxxxx, Xxxxx
0000, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, and EMERITUS PROPERTIES V, INC.
(hereinafter referred to as the "Borrower"),
a Washington corporation, 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000.
1. DEFINITIONS
Certain capitalized terms are defined
below:
ACQUISITION COSTS: The purchase price to
be paid by the Borrower for the stock of the
corporations which own the Facilities (such
corporations to be merged into the Borrower
contemporaneously with the advance of the
Loan).
AFFILIATE: Any person or entity directly
or indirectly through one or more
intermediaries controlling, controlled by or
under common control with the subject
referenced or any successor thereto; and any
person or entity owning or controlling 10% or
more of the outstanding voting securities of
the subject referenced; and any officer,
director or member of the subject referenced.
For purposes of the Agreement, the term
"control" shall mean the possession, directly
or indirectly, of the power to direct or
cause direction of the management and
policies of such person or entity, whether
through the ownership of voting securities or
by contract or otherwise.
AGREEMENT: See preamble, which term
shall include this Agreement and the Exhibits
and Schedules hereto, all as amended and in
effect from time to time.
BENEFIT PLANS: All pension,
profit-sharing, bonus, incentive, welfare or
other employee benefit plans within the
meaning of Section 3(3) of ERISA, and related
trusts, insurance and annuity contracts,
funding media and related agreements and
arrangements, other than Multiemployer Plans.
BORROWER: See preamble.
BUDGET: See Section 7.1.3.
BUSINESS DAY: Any day on which banks in
New York, New York, are open for business
generally.
CAPITAL EVENT: The sale, exchange,
transfer, assignment or other disposition of
all or a portion of the Facilities, or any of
them, the refinancing of any mortgage loan in
the case of the Facilities, or any of them,
condemnation of all or a portion of the
Facilities, or any of them, the liquidation
of any Facility following the dissolution of
the Borrower, the receipt of proceeds of
hazard or casualty insurance in excess of
amounts expended in restoration or repair of
the Facilities, or any of them, the recovery
of condemnation or taking awards for the
condemnation or taking of all or a portion of
the Facilities, or any of them, and the
recovery from other voluntary or involuntary
conversions of the Facilities, or any of
them.
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CODE: The Internal Revenue Code of 1986,
as amended from time to time.
COLLATERAL: All of the interests in the
Borrower that are or are intended to be
subject to the security interest created by
the Security Documents, respectively.
COMMITMENT: The obligation of the Lender
to make to the Borrower the Loan evidenced by
the Note in an outstanding principal amount
equal to $7,000,000.00.
CONSENT: In respect of any person or
entity, any permit, license or exemption
from, approval, consent of, registration or
filing with any local, state or federal
governmental or regulatory agency or
authority, required under applicable law.
CONTRACT RATE: A rate of interest equal
to eighteen percent (18%) per annum.
DEFAULT: An event or act which with the
giving of notice and/or the lapse of time,
would become an Event of Default.
DEFINED BENEFIT PLAN: Any Benefit Plan
which is a "defined benefit plan" within the
meaning of Section 3(35) of ERISA.
DRAWDOWN DATE: May 1, 1997.
EC: Emeritus Corporation, a Washington
corporation.
ENVIRONMENTAL LAWS: All federal, state
or local laws, statutes, ordinances, rules,
regulations, orders or determinations of any
Governmental Authority pertaining to health
or environmental matters, including without
limitation, the Resource Conservation and
Recovery Act, the Comprehensive Environmental
Response Compensation and Liability Act of
1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal
Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, in each
case as amended, and all other environmental,
conservation or protection laws.
ERISA: The Employee Retirement Income
Security Act of 1974, as amended from time to
time, and all rules, regulations, judgments,
decrees, and orders arising thereunder, and
any successor statute of similar import,
together with the regulations promulgated
thereunder by the United States Treasury
Department, the United States Department of
Labor and/or the Pension Benefit Guaranty
Corporation and any Person succeeding to any
or all of its functions and duties under
ERISA.
EVENT OF DEFAULT: Any of the events
listed in Section 10 hereof.
FACILITIES: Those certain assisted
living facilities described on Schedule A
hereto, to be acquired by the Borrower
contemporaneously with the advance of the
Loan hereunder and operated by EC pursuant to
a Management Agreement covering all of the
Facilities.
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FINANCIALS: In respect of any period,
the balance sheet of the Borrower at the end
of such period, and the related statement of
income and statement of cash flow for such
period, each setting forth in comparative
form the figures for the previous comparable
fiscal period, all in reasonable detail with
all notes and supporting schedules and
prepared in accordance with GAAP.
FINANCING STATEMENTS: The financing
statements on Uniform Commercial Code Form
UCC-1 to be filed with the applicable
Governmental Authorities of each relevant
jurisdiction with respect to the security
interests under the Security Documents,
respectively.
GAAP: Generally accepted accounting
principles consistent with those adopted by
the Financial Accounting Standards Board and
its predecessor, (i) generally, as in effect
from time to time, and (ii) for purposes of
determining compliance by the Borrower with
its financial covenants set forth herein, as
in effect for the fiscal year therein
reported in the most recent Financials
submitted to the Lender.
GOVERNMENTAL AUTHORITY: Any federal,
state, county or municipal, or foreign,
governmental agency, board, commission,
court, tribunal, officer, official or entity
exercising executive, legislative, judicial,
regulatory or administrative functions of or
pertaining to government whose Consent is
required as a prerequisite to (i) the
continued uninterrupted operation of the
business of the Borrower, or (ii) the
performance of any act or obligation or the
observance of any agreement or condition of
the Borrower under this Agreement or the
other Loan Documents.
GUARANTY: That certain Guaranty, in the
form attached hereto as Exhibit A (together
with any amendments, extensions, supplements
or joinders as shall be satisfactory to the
Lender), pursuant to which the Guarantor
shall unconditionally guaranty the full
prompt and complete payment and performance
of the Obligations and shall subordinate to
the Obligations all Indebtedness permitted
under clause (vi) of Section 7.2.1 hereof,
duly executed by the Guarantor in favor of
the Lender, all as more fully and accurately
described therein.
GUARANTOR: Collectively, EC, any
successor to or assignee of any stock or
other interest of the Borrower held by EC and
any other entity holding any stock or other
interest in Borrower, jointly and severally.
INDEBTEDNESS: In respect of any entity,
all obligations, contingent and otherwise,
that in accordance with GAAP should be
classified as liabilities, including without
limitation:
(i) all indebtedness of such
entity with respect to money borrowed
(including, without limitation, all
notes payable and drafts accepted
representing extensions of credit, all
obligations evidenced by bonds,
debentures, notes or other similar
instruments and all obligations under
which interest charges are customarily
paid);
(ii) all indebtedness guaranteed,
directly or indirectly, in any manner by
such entity, or in effect guaranteed
directly or indirectly by such entity
through an agreement, contingent or
otherwise, to supply
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funds to or in any other manner invest
in the debtor, to purchase indebtedness,
or to purchase goods, supplies or
services for the purpose of enabling the
debtor to make payment of the
indebtedness or to assure the owner of
the indebtedness against loss, or
otherwise;
(iii) all indebtedness secured by
any Lien;
(iv) all indebtedness of such
entity created or arising under any
conditional sale or other title
retention agreement with respect to
property acquired by such person or
entity,
even though the rights and remedies of
the seller or lender under such
agreement in the event of default are
limited to repossession of such
property; and
(v) all obligations under leases
that are or should be, in accordance
with GAAP, recorded as capital leases.
INITIAL BUDGET: The Budget submitted
prior to the Drawdown Date with respect to
the Loan, pursuant to Section 6.6 hereof.
JUDICIAL PROCEEDINGS: With respect to a
Senior Payment Event of Default or a Senior
Non-Payment Event of Default, any proceedings
by one or more holders of Senior Indebtedness
of the Borrower aggregating not less than
$1,000,000 before a state or federal court
(having jurisdiction with respect thereto) to
collect the entire amount of such Senior
Indebtedness following an acceleration of the
maturity thereof as a result of such default.
LENDER: See preamble.
LIENS: Any encumbrance, mortgage,
pledge, hypothecation, charge, restriction or
other security interest of any kind securing
any obligation of any entity or person.
LOAN: The Loan made or to be made to the
Borrower pursuant to Section 2 hereof in
order to finance a portion of the Acquisition
Costs with respect to the Facilities.
LOAN DOCUMENTS: Any and all agreements,
documents, certificates and instruments
executed by the Borrower and/or delivered by
the Borrower to the Lender pursuant to and in
connection with the Loan and this Agreement
including, without limitation the Note, the
Guaranty, the Security Documents and the
Financing Statements, in each case as
amended, supplemented, restated or otherwise
modified from time to time in accordance with
the provisions thereof.
LOAN REQUEST: See Section 2.1(c).
MANAGEMENT AGREEMENT: Any lease,
management agreement, joint venture agreement
or other contract, agreement or arrangement,
whether written or oral, pursuant to which
the Borrower directly or indirectly provides
management with respect to the Facilities or
any of them.
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MATERIALLY ADVERSE EFFECT: Any
materially adverse effect on the condition,
financial or otherwise, assets, properties,
results of operations or business of the
Borrower or any impairment of the ability of
the Borrower to perform its obligations
hereunder or under any of the other Loan
Documents or of the Lender to enforce any
such obligations.
MATURITY DATE: May 1, 2000, or such
earlier date on which the Loan may become due
and payable pursuant to the terms hereof.
MULTIEMPLOYER PLAN: Any "multiemployer
plan" within the meaning of Section 3(37) of
ERISA.
NET AVAILABLE CASH: For any period, the
amount by which gross cash receipts during
such period for the Facilities, or any of
them, howsoever derived (without limitation,
including the proceeds of any Capital Event),
exceed the sum of (i) reasonable operating
expenses for the Facilities incurred and paid
by the Borrower during such period and
contained in the Budget for the Facilities,
including, without limitation, fees under the
Management Agreement in an amount not in the
aggregate exceeding five percent of the gross
operating income of the Facilities; plus (ii)
reasonable net additions to reserves for
payment of real estate taxes, insurance,
capital improvements and other periodic
liabilities with respect to the Facilities
which are attributable to such period
contained in the Budget for the Facilities;
plus (iii) payment by the Borrower of any
scheduled amounts of principal, interest or
fees due during such period with respect to
Senior Indebtedness secured by a Lien on the
Facilities, to the extent that the Loan is
subordinate to such Indebtedness; plus (iv)
payment of any scheduled amounts of interest
on the Loan at the Pay Rate; plus (v) in the
case such receipts are generated by the sale
of any of the Facilities, reasonable
brokerage fees and other reasonable closing
costs in connection therewith, and payment of
all Senior Indebtedness secured by a Lien
upon the Facilities, as the case may be, or,
in connection with the refinancing of such
Indebtedness, after payment of any such
Indebtedness and reasonable out-of-pocket
costs and fees incurred by the Borrower.
Notwithstanding the foregoing, in calculating
Net Available Cash with respect to any
period, no deduction shall be made from gross
cash receipts for non-cash charges against
income such as depreciation and amortization
of intangibles.
NOTE: See Section 2.1.
OBLIGATIONS: All indebtedness,
obligations and liabilities of the Borrower
to the Lender, existing on the date of this
Agreement or arising thereafter, direct or
indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated
or unliquidated, secured or unsecured,
arising by contract, operation of law or
otherwise, arising or incurred under this
Agreement or any other Loan Document or in
respect of the Loan or the Note or other
instruments at any time evidencing any
thereof.
ORGANIZATION DOCUMENTS: The certificate
of incorporation and by-laws of the Borrower
and all amendments thereto, or other
constitutive documents of the Borrower.
PAY RATE: A rate of interest equal to
ten percent (10%) per annum.
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PREPAYMENT DATE: See Section 2.3.3.
REQUIREMENT OF LAW: In respect of any
person or entity, any law, treaty, rule,
regulation or determination of an arbitrator,
court, or other Governmental Authority, in
each case applicable to or binding upon such
person or entity or affecting any of its
property.
SECURITY DOCUMENTS: The collateral
assignment of interests, in the form attached
hereto as Exhibit B (together with any
amendments, extensions, supplements or
joinders as shall be satisfactory to the
Lender), pursuant to which the Guarantor
shall pledge and assign to the Lender all of
the capital stock of the Borrower to secure
the Guaranty in accordance with Section 3.1
hereof.
SENIOR INDEBTEDNESS: All Indebtedness
outstanding for money borrowed by the
Borrower from any bank or other institutional
lender not an Affiliate of the Borrower
created or evidenced by notes, bonds,
debentures or other similar instruments or by
a loan agreement or agreements under which
the indebtedness is reflected in a loan
account and which Indebtedness arises from
the Senior Loan (other than any such
indebtedness which by the terms of the
instrument creating or evidencing the same is
expressly subordinated to or made pari passu
with the Obligations).
SENIOR LENDER: See Section 6.5.
SENIOR LOAN: See Section 6.5.
SENIOR NON-PAYMENT EVENT OF DEFAULT: A
default beyond any grace period provided with
respect thereto under any Senior
Indebtedness, other than a Senior Payment
Event of Default.
SENIOR PAYMENT EVENT OF DEFAULT: A
default beyond any grace period provided with
respect thereto in the payment of principal
or interest under any Senior Indebtedness.
SUBORDINATED INDEBTEDNESS: The principal
of and interest on all Indebtedness of the
Borrower, now or hereafter issued or
outstanding, which is expressly subordinated
in right of payment to the Obligations by
terms substantially identical in effect to
the provisions contemplated under Section
2.4.
SUBSIDIARY: (i) any present or future
entity at least a majority of the outstanding
voting securities or other interest of which
shall, at the time, be owned by the Borrower,
by the Borrower and one or more Subsidiaries
of the Borrower or by one or more
Subsidiaries of the Borrower, or (ii) any
other entity which is otherwise controlled by
the Borrower and one or more Subsidiaries of
the Borrower, directly or indirectly. For
purposes hereof, outstanding voting
securities or other interest shall be deemed
to be equity of any class or classes, however
designated, having ordinary voting power for
the election of the members of the board of
directors or other governing body of such
entity.
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2. CREDIT FACILITY
2.1. COMMITMENT TO LEND.
(a) Upon the terms and subject to the
conditions of this Agreement, and provided
that no Default or Event of Default shall
have occurred and be continuing, the Lender
agrees to make to the Borrower, a Loan in the
amount of the Commitment, provided, however,
that the outstanding principal amount of the
Loan shall not exceed twenty-two percent
(22%) of the aggregate amount of the
Acquisition Costs.
(b) The Borrower shall notify the Lender
in writing, not later than 11:00 a.m. New
York time, on the Drawdown Date of the amount
of the Loan being requested (a "Loan
Request"), which Loan Request shall include:
(i) the principal amount of the Loan
requested, and (ii) all instructions
necessary to allow the deposit on the
Drawdown Date of the Loan proceeds to the
Borrower's account or to such account as the
Borrower may direct. Subject to the
Borrower's compliance with this Section 2.1,
so long as the applicable conditions set
forth in this Agreement under Section 6
hereof have been met, the Lender shall
advance the amount specified in the Loan
Request to the account specified in the Loan
Request, in immediately available funds, not
later than the close of business on the
Drawdown Date.
(c) The obligation of the Borrower to
repay to the Lender the principal amount of
the Loan so requested, plus interest accrued
thereon, shall be evidenced by a promissory
note in the form of Exhibit C hereto
(hereinafter referred to as the "Note"),
dated the Drawdown Date by the Borrower, in
an original principal amount equal to the
amount of the Commitment, such Note to be
executed and delivered by the Borrower to the
Lender or its registered assigns, in form and
substance satisfactory to the Lender. Upon
execution and delivery thereof, the Borrower
shall inscribe in the Note the principal
amount of the Note, where contemplated. The
Note shall be delivered by the Borrower to
the Lender at the time of and with the Loan
Request of the Borrower. The Borrower shall
deliver therewith all fully-executed Security
Documents required pursuant to Section 3. The
Borrower hereby authorizes the Lender, or its
duly authorized agent, to endorse on the grid
attached as Schedule A to the Note an
appropriate notation evidencing the amount of
each advance to the Borrower, which, in the
absence of manifest error, shall be
conclusive as to the outstanding principal
amount of the Loan; provided, however, that
the failure to make such notation shall not
limit or otherwise affect the obligation of
the Borrower to the Lender under this
Agreement or the Note.
(d) Upon receipt by the Borrower of
evidence satisfactory to it of the loss,
theft, destruction or mutilation of the Note,
and (in case of loss, theft or destruction)
of indemnity reasonably satisfactory to it,
and upon surrender and cancellation of such
Note, if mutilated, the Borrower, upon
reimbursement to it of all reasonable
expenses incidental thereto, shall make and
deliver to the Lender a new Note, of like
tenor, in lieu of such Note. Any Note made
and delivered in accordance with the
provisions of this Section 2.1 shall be dated
as of the date to which interest has been
paid on the Note so replaced.
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2.2. INTEREST.
2.2.1. ACCRUAL OF INTEREST. So long
as no Event of Default has occurred and is
continuing, interest on the Loan shall accrue
at a rate per annum which is equal to the
Contract Rate, from the respective dates of
borrowing thereof until final repayment in
full of the Loan.
2.2.2. SCHEDULED PAYMENTS. So long
as no Event of Default has occurred and is
continuing, the Borrower shall pay interest
accrued as aforesaid on the Loan at a rate
per annum equal to the Pay Rate, such
interest to be payable in arrears on the
first day of each calendar quarter for the
immediately preceding calendar quarter or
such portion thereof during which the Loan is
outstanding, commencing with the first such
day following the Drawdown Date, or pursuant
to the provisions of Section 2.3.1, if
earlier.
2.2.3. PAYMENT OF CONTRACT RATE
INTEREST. To the extent that interest on the
Loan accrues at the Contract Rate and is not
payable pursuant to Section 2.2.2 hereof,
such interest shall be payable in arrears
with respect to each calendar quarter or such
portion thereof during which the Loan is
outstanding (unless payable earlier pursuant
to the provisions of Section 2.3.1) on the
30th day of the immediately succeeding
calendar quarter, commencing with the first
such day following the date hereof, in an
amount calculated as one hundred percent
(100%) of Net Available Cash during such
calendar quarter; provided, that any interest
not paid as aforesaid shall cumulate and
subsequently be payable together with all
other interest payable under this Section
2.2.3. Notwithstanding the foregoing,
payments with respect to net proceeds of any
Capital Event in all cases shall be applied,
when received, to accrued interest on the
Loan pursuant to this Section 2.2.3.
2.2.4. DEFAULT INTEREST. While an
Event of Default is continuing with respect
to the Loan, the Borrower shall pay interest
on the Loan at a rate per annum which is
equal to twenty percent (20%), such interest
to be payable in arrears on the first day of
each calendar quarter for the immediately
preceding calendar quarter, commencing with
the first such day following the date of the
Event of Default, or pursuant to the
provisions of Section 2.3.1, if earlier
(compounded monthly and payable on demand in
respect of overdue amounts of such interest)
until the principal amount of the Loan is
paid in full or (as the case may be) such
Event of Default has been cured or waived in
writing by the Lender (after as well as
before judgment).
2.2.5. PAYMENTS AND COMPUTATIONS.
All computations of interest under this
Agreement and the Note shall be made on the
basis of a year of 360 days consisting of
twelve months of 30 days each. Whenever any
payment under the Note shall be due on a day
other than a Business Day, such payment shall
be made on the next succeeding Business Day,
and such extension of time shall in such case
be included in the computation of payment of
interest.
2.3. REPAYMENTS AND PREPAYMENTS.
2.3.1. REPAYMENT OF LOAN. The
Borrower hereby agrees to pay to the Lender,
upon the earlier to occur of (i) the Maturity
Date, and (ii) such date arising as a result
of the operation of Section 9 of this
Agreement, the entire outstanding principal
amount of the Loan made to the Borrower,
including
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all interest accrued thereon and any unpaid
fees and expenses due to Lender from the
Borrower in respect of the Loan. Amounts
repaid prior to the Maturity Date pursuant to
any provision of this Agreement may not be
reborrowed. All payments made by the Borrower
under this Agreement or the Note shall be
made irrespective of, and without any
reduction for, any set-off or counterclaims.
2.3.2. MANDATORY PREPAYMENT OF
LOANS. The Borrower shall further pay to the
Lender, in arrears with respect to each
calendar quarter (unless payable earlier
pursuant to the provisions of Section 2.3.1)
on the 30th day of the immediately succeeding
calendar quarter, commencing with the first
calendar quarter after the date hereof, for
application to the outstanding principal
amount of the Loan made to the Borrower, all
Net Available Cash (in each case after
payment of all accrued interest payable
hereunder at the Contract Rate), provided,
that proceeds generated pursuant to any
Capital Event shall be applied when received.
2.3.3. VOLUNTARY PREPAYMENTS. The
Borrower may elect to prepay the outstanding
principal of all or any part of the Loan in
an aggregate minimum amount of $25,000 or a
greater integral multiple of $25,000, in all
cases without premium or penalty, upon
written notice to the Lender given by 10:00
a.m. New York time at least five Business
Days prior to the date (the "Prepayment
Date"), to be specified therein, of such
prepayment, of the amount to be prepaid and
provided that each repayment or prepayment of
principal of the Loan is accompanied by
payment of the unpaid interest accrued to the
Prepayment Date on the principal being repaid
or prepaid and any unpaid fees and expenses
due to Lender from the Borrower pursuant to
this Agreement. Upon giving of notice of
prepayment as aforesaid, such Loan or portion
thereof so specified for prepayment, and all
interest accrued to the Prepayment Date, and
all unpaid fees and expenses due to Lender,
shall, on the Prepayment Date, become due and
payable, and the principal of the Loan or
portion thereof so specified for prepayment
shall be paid by the Borrower as aforesaid.
Amounts prepaid pursuant to this Section
2.3.3 may not be reborrowed.
2.3.4. ADDITIONAL MANDATORY
PREPAYMENTS. If at any time the outstanding
principal amount of the Loan shall exceed the
lesser of (i) the Commitment, and (ii) twenty-
two percent (22%) of the aggregate amount of
the Acquisition Costs, the Borrower shall
immediately pay the amount of such excess to
the Lender for application to the Loan.
2.3.5. LATE CHARGES. In the event
that any payment, including, without
limitation, interest and/or principal,
required to be made by the Borrower under
this Agreement or the Note shall not be
received by the Lender within ten days after
the same shall become due and payable, the
Lender may charge, and if so charged, such
Borrower shall pay, a late charge equal to
five cents for each dollar of such delinquent
payment for the purpose of defraying the
expense incident to the handling of such
delinquent payment.
3. COLLATERAL
3.1. COLLATERAL SECURING LOANS. The
Loan shall be guaranteed by the Guarantor
pursuant to the Guaranty, which, in turn,
shall be secured by a first priority security
interest in all of the capital stock of the
Borrower (which interests shall be pledged
and assigned pursuant to the Security
Documents).
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3.2. SUBSEQUENT LOAN DOCUMENTS,
GUARANTORS AND COLLATERAL. The parties
acknowledge and agree that each reference
under this Agreement to the Guarantor shall
refer to all stockholders of the Borrower
both at the time of the Drawdown Date and at
any time thereafter; and that each
description of Collateral pledged by the
Guarantor shall refer to all of the capital
stock of the Borrower both at the time of
delivery of the Guaranty and at any time
thereafter. In the event that, subsequent to
the Drawdown Date, any additional stockholder
shall hold any interest in the capital stock
of the Borrower, whether as a result of the
assignment of interests or otherwise, the
Borrower shall ensure that it shall within
ten business days following such event join
in the Guaranty, jointly and severally with
all other parties obligated thereunder, as
contemplated hereunder, secured as herein set
forth; and in the event that, subsequent to
delivery of the Guaranty, any additional
interests shall meet the criteria of
Collateral required to be pledged, whether
through acquisition of such interests or
otherwise, the Borrower shall ensure that
within ten days the Guaranty shall be
secured by such additional interest. Each
joinder to the Guaranty or Security
Documents, or amendment to the Guaranty or
any Security Documents, pursuant to this
Section 3.2 shall be in form and substance
satisfactory to the Lender and be accompanied
by such legal opinions, in form and substance
reasonably satisfactory to the Lender, to the
effect contemplated under Section 6.1 hereof,
and such other documentation as shall be
reasonably requested by the Lender.
3.3. DELIVERY AND RECOGNITION OF
COLLATERAL. Upon each pledge of Collateral
required hereunder, the Guarantor shall
deliver to the Lender all share certificates
representing the Collateral, duly endorsed in
blank. The Borrower shall evidence its
acknowledgment of any pledge of Collateral in
the manner set forth in Annex 1 to the
Security Documents, an original copy of which
in each case shall be delivered by the
Borrower to the Lender together with delivery
of such Security Documents and an original
copy of which shall be retained by the
Borrower.
4. REPRESENTATIONS AND WARRANTIES.
4.1. REPRESENTATIONS AND WARRANTIES OF
THE BORROWER. The Borrower represents and
warrants to the Lender on the date hereof,
that:
4.1.1. ORGANIZATION; AUTHORIZATION. It
is a corporation duly organized, validly
existing, and in good standing under the laws
of the State of Washington and is duly
qualified and in good standing in every other
jurisdiction where it is doing business, and
has full corporate power and authority to own
or hold under lease the assets and properties
material to the operation of its business as
now conducted and proposed to be conducted
and to perform all its obligations under the
agreements material to the operation of its
business to which it is a party, including,
without limitation, the Loan Documents. The
copies of the Organization Documents of the
Borrower which have been delivered to the
Lender by the Borrower are complete and
correct; and the Borrower does not have any
Subsidiaries.
4.1.2. LEGAL, VALID, BINDING
OBLIGATIONS. The execution and delivery by it
of the Loan Documents to which it is a party,
and each of them, the performance by it of
its covenants and agreements under the Loan
Documents to which it is a party, and each of
them, and the consummation by it of the
10
transactions contemplated by the Loan
Documents to which it is a party, and each of
them, have been duly authorized by all
necessary corporate action. Upon execution
and delivery thereof, each Loan Document,
shall constitute its legal, valid and binding
obligation, enforceable against it in
accordance with its terms, except as
enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or similar
laws affecting the enforcement of creditor's
rights generally as at the time in effect.
4.1.3. CONFLICTS; CONSENTS. Neither the
execution and delivery of the Loan Documents
to which it is a party, nor any of them, by
it, nor the consummation by it of the
transactions contemplated in the Loan
Documents to which it is a party, nor any of
them, nor the performance by it of its
obligations and exercise of its rights under
the Loan Documents to which it is a party,
nor any of them, by it, will violate, be in
conflict with or be prohibited or prevented
by any provision of its Organization
Documents, or any Requirement of Law or any
other law, rule, regulation, writ, judgment,
injunction, decree, determination, award or
other order of any Governmental Authority
binding upon it, or conflict with or result
in any breach of or event of termination
under any of the terms of, or the creation or
imposition of any mortgage, deed of trust,
pledge, lien, security interest or other
charge or encumbrance of any nature pursuant
to, the terms of any contract or agreement to
which it or by which it or any of its
properties or assets is bound. Without
limiting the generality of the foregoing,
none of the transactions contemplated in this
Agreement (including, without limitation, the
use of the proceeds of the Loan) violates,
shall violate or shall result in a violation
of Section 7 of the Securities Exchange Act
of 1934, as amended, or any regulations
issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve
System. Without limiting the generality of
the foregoing, all Consents required for the
execution, delivery, performance of its
obligations, and exercise of its rights under
the Loan Documents to which it is a party,
including borrowing under this Agreement,
have been obtained and copies thereof have
been furnished to the Lender.
4.1.4. TITLE TO PROPERTIES; INSURANCE.
It has good, valid and marketable title to
all its material properties and possesses all
assets, including intellectual properties,
franchises and Consents, adequate for the
conduct of its business as now conducted or
proposed to be conducted, subject only to
Liens permitted hereunder, without known
conflict with any rights of others. Without
limiting the generality of the foregoing,
contemporaneously with the advance of the
Loan hereunder the Borrower will acquire all
right, title and interest in and to the
Facilities, in each case free and clear of
all Liens, subject only to Liens permitted
hereunder. No event has occurred, or, is
alleged to have occurred, which constitutes
or with lapse of time or giving of notice or
both, would constitute a default under any
contract, agreement, mortgage, or arrangement
(written or oral) to which the Borrower is a
party or by which the Borrower or its assets
or properties may be bound, which could,
individually or in the aggregate, have a
Materially Adverse Effect. The Borrower
maintains insurance with financially
responsible insurers covering: (i) all of its
assets and properties, which, individually,
or in the aggregate, are material to the
Borrower's business or condition, and (ii) in
each case the various material occurrences
which may arise in connection with the
operation of its business and operations.
Such policies are in full force and effect,
all premiums due thereon have been paid, and
the Borrower has complied in all material
aspects with the provisions of such policies.
Such insurance is of such amounts and
coverage and with such deductibles as should
be
11
maintained in accordance with good business
practice, is adequate and does not materially
differ from insurance customarily maintained
by companies in the same or similar
businesses.
4.1.5. LITIGATION. There is no
action, suit, proceeding, or claim, pending
or, to the best of the knowledge of the
Borrower, threatened, and no investigation by
any Governmental Authority, pending or, to
the best of the knowledge of the Borrower,
threatened, against the Borrower, before any
Governmental Authority, nor is there any
outstanding order, writ, judgment,
stipulation, injunction, decree,
determination, award, or other order of any
Governmental Authority against the Borrower,
in each case, which would, if adversely
determined, alone or together, have a
Materially Adverse Effect.
4.1.6. COMPLIANCE WITH AUTHORITY
DOCUMENTS; LAW; INFRINGEMENT. The Borrower is
not in violation of (i) any Organization
Document, corporate minute or resolution, or
(ii) in a manner which, individually or in
the aggregate, could have a Materially
Adverse Effect, any Requirement of Law,
including, without limitation, all applicable
federal and state tax laws, ERISA and
Environmental Laws. The Borrower is not
directly or indirectly controlled by or
acting on behalf of any party which is, an
"investment company" within the meaning of
Section 3 of the Investment Company Act of
1940, as amended. The Borrower: (i) has not
filed any notice under any Environmental Law
or any other federal, state or local law, or
regulation, indicating past or present
treatment, storage or disposal of a hazardous
waste or reporting a spill or release of a
hazardous or toxic waste, substance or
constituent, or other substance into the
environment, nor (ii) has any liability,
contingent or otherwise, under any such law
or regulation in connection with any release
of any hazardous or toxic waste, substance or
constituent, or other substance into the
environment, or the placement of any
hazardous or toxic waste, substance or
constituent, or other substance on property,
now or formerly owned (in whole or in part)
or leased by the Borrower or, except where
such liability could not, individually, or in
the aggregate, with respect to the Borrower,
have a Materially Adverse Effect. The
Borrower has not generated, treated, stored
or disposed of or placed any hazardous waste
or substance in violation of any applicable
law or regulation on any property owned (in
whole or in part) or leased by the Borrower
or on or into any waste disposal site owned
or operated by a third party. All underground
tanks on the properties owned or leased (in
whole or in part) by the Borrower have been
properly registered with or reported to the
appropriate governmental agency or agencies,
if required to be so registered or reported,
and none of such tanks leak. The use by the
Borrower of its assets and the conduct of its
business does not, to the best of the
knowledge of the Borrower, involve
infringement or claimed infringement of any
patent, trademark, servicemark, tradename,
copyright, license or similar right.
4.1.7. GUARANTY; PRIORITY OF LIENS.
The Guaranty and all Security Documents
required by this Agreement have been duly
executed and delivered to the Lender,
together with all documentation related
thereto required under Articles III or VI.
Upon execution and delivery of the Security
Documents and the filing of the documents
thereby required, the Lender shall, with
respect to the Obligations, have
first-priority perfected Liens on the
Collateral and there are no financing
statements, chattel mortgages, real estate
mortgages or similar filings on record
anywhere, or other arrangements, which
conflict with such first-priority Liens of
the Lender.
12
4.1.8. FINANCIAL STATEMENTS.
4.1.8.1 The Borrower is a
newly-formed entity and, except for
activities related to its organization, has
not had any material operations and has not
in any material respect conducted any
business prior to the date hereof; and,
except for its obligations pursuant to this
Agreement and the Senior Indebtedness, the
Borrower has no liabilities, whether accrued,
absolute, contingent, or otherwise, whether
due or to become due and whether the amount
thereof is readily ascertainable or not,
which, individually or in the aggregate,
could have a Materially Adverse Effect.
4.1.8.2 Without limiting the
generality of the foregoing, the Borrower has
not: (i) declared, set aside or made any
payment or distribution upon any Collateral,
(ii) directly or indirectly, purchased,
redeemed or otherwise acquired or disposed of
any Collateral; (iii) incurred any liability
or obligation under agreements or otherwise,
except current liabilities entered into or
incurred in the ordinary course of business
consistent with past practice, and except for
liabilities which, individually or in the
aggregate, would not have a Materially
Adverse Effect; issued any notes or other
debt securities or paid or discharged any
outstanding indebtedness, or mortgaged,
pledged or subjected to any Lien any of its
material assets or properties, except as
permitted under this Agreement in favor of
the holders of the Senior Indebtedness; (iv)
entered into any material transaction other
than in the ordinary course of business
consistent with general business practices of
entities engaged in similar businesses,
except in connection with the execution and
performance of this Agreement and the
transactions contemplated hereby (without
limitation including the occurrence of a
Capital Event); (v) suffered any damage,
destruction, or loss to any of its assets or
properties (whether or not covered by
insurance), which damage, destruction or loss
would have a Materially Adverse Effect; or
(vi) suffered any change which, individually
or in the aggregate, could have a Materially
Adverse Effect.
4.1.9. TAXES. The Borrower has
filed or caused to be filed all federal,
state, municipal, foreign and other tax
returns, reports and declarations, or
extensions therefor, required to be filed by
it, so as to prevent any valid Lien on its
assets or properties and has paid or shall
pay all taxes which have been or shall become
due with respect to the periods covered by
said returns or pursuant to any assessment
received by it in connection therewith. All
assessments and charges (including penalties
and interest, if any) related to periods,
ended on or before the end of the Borrower's
most recent fiscal year have been or will be
paid by the Borrower, including any necessary
adjustments with state and local tax
authorities, and no deficiency in payment of
any taxes for any period has been asserted by
any taxing authority which remains unsettled
at the date hereof. Adequate provision has
been made in the Financials heretofore or
herewith delivered to the Lender for the
payment of all then accrued and unpaid
federal and other taxes of the Borrower,
whether or not yet due and payable and
whether or not disputed by the Borrower.
4.1.10. EMPLOYEE BENEFIT PLANS. All
Benefit Plans and all Multiemployer Plans in
which the employees of the Borrower
participate comply in all material respects
with all requirements of the Department of
Labor and the Internal Revenue Service
promulgated under ERISA and with all other
applicable law. The Borrower has not taken or
failed to take any action with respect to the
Benefit Plans which might create any
liability on the part of the
13
Borrower which, individually or in the
aggregate, could have a Materially Adverse
Effect. Each "fiduciary" (within the meaning
of section 3(21)(A) of ERISA) as to each
Benefit Plan and, to the best of the
knowledge of the Borrower, as to each
Multiemployer Plan, has complied in all
material respects with the requirements of
ERISA and all other applicable law in respect
of each such Plan. In addition, as of the
date hereof: (i) no Defined Benefit Plan or,
to the best of the knowledge of the Borrower,
any Multiemployer Plan, has incurred an
"accumulated funding deficiency" (within the
meaning of section 412(a) of the Code),
whether or not waived; (ii) no "reportable
event" (within the meaning of section 4043 of
ERISA) has occurred with respect to any
Benefit Plan or, to the best of the knowledge
of the Borrower, any Multiemployer Plan,
there have been no terminations of any
Defined Benefit Plan or, to the best of the
knowledge of the Borrower, any Multiemployer
Plan, or any related trust, and no such
termination of any of the foregoing
reasonably can be expected to occur; (iii) no
"prohibited transaction" (within the meaning
of section 406 of ERISA or section 4975(c) of
the Code) has occurred with respect to any
Benefit Plan, or to the best of the knowledge
of the Borrower, any Multiemployer Plan; (iv)
the aggregate present value of accrued
benefits of the Defined Benefit Plans is not
more than the aggregate value of the assets
of such plans, there has been no withdrawal
liability incurred by the Borrower or any
such Land Owner with respect to any
Multiemployer Plans, and neither the Borrower
nor any such Land Owner has withdrawn
(partially or totally within the meaning of
ERISA) from any Multiemployer Plan; and (v)
other than claims in the ordinary course for
benefits with respect to any Benefit Plan,
or, to the best of the knowledge of the
Borrower, any Multiemployer Plan, there are
no actions, suits, or claims pending with
respect to any such plan or any circumstances
known to the Borrower which might give rise
to any such action, suit, or claims.
4.1.11. SENIOR LOANS. Each and
every representation and warranty of the
Borrower made to the Senior Lender in
connection with the Senior Loan, as amended
from time to time as permitted hereunder (all
of which are hereby incorporated by this
reference herein), are true and correct.
5. SUBORDINATION.
5.1. SENIOR SUBORDINATION. The
Obligations of the Borrower shall be senior
Subordinated Indebtedness, ranking pari passu
with all other Indebtedness of the Borrower
now or hereafter outstanding which is
expressly subordinated in respect of payment
to the Senior Indebtedness of the Borrower by
terms substantially identical in effect to
the provisions of Section 5.2 hereof and to
which all Subordinated Indebtedness of the
Borrower, now or hereafter outstanding, is
subordinated in right of payment.
5.2. SUBORDINATION. (a) The Obligations
of Borrower are hereby expressly made
subordinate in right of payment, to the
extent set forth in the following
sub-paragraphs (i) and (ii), to the prior
payment in full of the Senior Indebtedness of
the Borrower:
(i) In the event of insolvency or
bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar
proceedings in connection therewith, relative
to the Borrower or to any of the property of
the Borrower, or in the event of any
proceedings for voluntary liquidation,
dissolution, or other winding-up of the
Borrower, whether or not involving insolvency
or
14
bankruptcy, then the holders of the Senior
Indebtedness of the Borrower shall be
entitled to receive payment in full of all
principal of, and premium, if any, and
interest on such Senior Indebtedness before
the Lender shall be entitled to receive any
payment on account of principal or interest
on the Note issued by the Borrower, and to
that end the holders of the Senior
Indebtedness of the Borrower shall be
entitled to receive for application in
payment thereof any payment or distribution
of any kind or character, whether in cash or
property or securities, which may be payable
or deliverable in any such proceedings in
respect of such Obligations.
(ii) In the event that the Lender
shall have received written notice that any
Senior Indebtedness of the Borrower has been
declared due and payable prior to its stated
maturity, by reason of the occurrence of an
event of default thereunder (under
circumstances in which the provisions of the
foregoing sub-paragraph (i) are not
applicable), then all principal of and
premium, if any, and interest on the Senior
Indebtedness of the Borrower outstanding at
the time of such declaration shall first be
paid in full, before any payment on account
of principal or interest is made upon the
Note.
(b) Upon the happening of a Senior
Payment Event of Default (other than in
circumstances when the provisions of
Paragraph (a) immediately preceding are
applicable), then, unless and until such
Senior Payment Event of Default shall have
been remedied or waived or shall have ceased
to exist, or the Senior Indebtedness shall
have been paid in full, no direct or indirect
payment (in cash, property or securities or
by set-off or otherwise) shall be made or
agreed to be made on account of the Note, or
as a sinking fund for the Note, or in respect
of any redemption, retirement, purchase or
other acquisition of the Note, during any
period commencing on the date that any one or
more of the holders of the Senior
Indebtedness shall have given written notice
of such Senior Payment Event of Default to
the Borrower and ending on the date 180 days
after such notice shall have been given or,
if later, the date on which any Judicial
Proceedings theretofore commenced shall no
longer be pending in respect of such Senior
Payment Event of Default or are no longer
pursued in good faith by the holder or
holders of the Senior Indebtedness of the
Borrower; provided, however, that, upon the
expiration of any such period a subsequent
such period shall not commence with respect
to a Senior Payment Event of Default
attributable to the same facts and
circumstances that gave rise to such expired
period until the 365th day after the last day
of such expired period.
(c) During the continuance of any
Senior Non-Payment Event of Default (other
than in circumstances in which the provisions
of Paragraph (a) immediately preceding are
applicable), unless and until such Senior
Non-Payment Event of Default shall have been
remedied or waived or shall have ceased to
exist, or the Senior Indebtedness shall have
been paid in full, no direct or indirect
payment (in cash, property or securities or
by set-off or otherwise) shall be made or
agreed to be made on account of the Note, or
as a sinking fund for such Note, or in
respect of any redemption, retirement,
purchase or other acquisition of the Note,
during any period commencing on the date that
any one or more of the holders of the Senior
Indebtedness shall have given written notice
of such Senior Non-Payment Event of Default
to the Borrower and ending on the date 90
days after such notice shall have been given,
or, if later, the date on which any Judicial
Proceedings theretofore commenced shall no
longer be pending in respect of such Senior
Non-Payment Event of Default or are no longer
pursued in good faith by
15
the holder or holders of the Senior
Indebtedness; provided, however, that upon
the expiration of any such period a
subsequent such period shall not commence
with respect to a Senior Non-Payment Event of
Default attributable to the same facts and
circumstances that gave rise to such expired
period until the 365th day after the last day
of such expired period.
(d) If any payment or distribution of
any character, whether in cash, securities or
other property, shall be received by the
Lender in contravention of any of the terms
of this Section 5.2 and before all the Senior
Indebtedness shall have been paid in full,
such payment or distribution or security
shall be received in trust for the benefit
of, and shall be paid over or delivered and
transferred to, the holders of the Senior
Indebtedness at the time outstanding in
accordance with the priorities then existing
among such holders for application to the
payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all
such Senior Indebtedness in full. The Lender
shall not take action inconsistent with the
rights of the holders of any Senior
Indebtedness hereunder.
5.3. SUBROGATION. Subject to the prior
payment in full of the Senior Indebtedness,
the Lender shall be subrogated to the rights
of the holders of the Senior Indebtedness to
receive payments or distributions of any kind
or character, whether in cash or property or
securities of the Borrower, applicable to the
Senior Indebtedness, until the Obligations of
the Borrower shall be paid in full, and no
such payments or distributions to the Lender
otherwise distributable in respect of the
Senior Indebtedness shall, as between the
Borrower, its creditors other than the
holders of the Senior Indebtedness, and the
Lender, be deemed to be a payment by such
Borrower on account of the Note.
5.4. UNCONDITIONAL OBLIGATION;
SUBORDINATION AGREEMENT .
(a) The provisions of this Section 5
are for the purpose of defining the relative
rights of the holders of Senior Indebtedness
on the one hand and the Lender on the other
hand, against Borrower, and its property; and
nothing herein shall impair, as between the
Borrower and the Lender, the obligation of
the Borrower, which is unconditional and
absolute, to pay to the Lender all
Obligations of the Borrower in accordance
with the terms and the provisions hereof; nor
shall anything herein prevent the Lender from
exercising all remedies otherwise permitted
by applicable law or hereunder upon default
under this Agreement, subject to the rights,
if any, under this Section 5 of the holders
of the Senior Indebtedness to receive cash,
property, stock or obligations otherwise
payable or deliverable to the Lender.
(b) The parties acknowledge that,
contemporaneously with the advance of the
Loan, the Lender shall enter into a
Subordination and Standstill Agreement with
the holder of the Senior Indebtedness, and
that the provisions of such Agreement shall
not be limited in any manner by the
provisions of this Article V.
16
6. CONDITIONS PRECEDENT.
In addition to the making of the
foregoing representations and warranties and
the delivery of the Loan Documents and such
other documents and the taking of such
actions as the Lender may reasonably require
at or prior to the time of executing this
Agreement, the obligations of the Lender
hereunder including the obligation of Lender
to advance the Loan contemplated by Article
II hereof, are subject to the satisfaction of
the following conditions precedent prior to
such advance to the Borrower hereunder, any
or all of which may be waived by the Lender
in its sole discretion, and each of which the
Borrower hereby agrees to use its best
efforts to satisfy:
6.1. OPINION OF COUNSEL. The Lender
shall, prior to the Drawdown Date, have
received an opinion of counsel to the
Borrower, and to the Guarantor, in form and
substance satisfactory to the Lender and its
counsel, to the effect set forth in,
respectively, Exhibits D-1 and D-2 annexed
hereto.
6.2. SATISFACTORY PROCEEDINGS. All
proceedings in connection with the
transactions contemplated hereby (including,
without limitation, the Loan) shall be in
form and substance satisfactory to the
Lender, and the Lender shall have received
from the Borrower its fully-executed Note,
and the required Guaranty (completed to
inscribe the name of the Guarantor and the
Guarantor's notice information, where
contemplated) and Security Documents
(completed to inscribe the name of the
Assignor [as defined in Exhibit B hereto] and
such Assignor's notice information, where
contemplated), each dated no later than the
Drawdown Date, and the related Financing
Statements, together with any other Loan
Documents and all other information and
documents as the Lender may have reasonably
requested.
6.3. NO CHANGE OF LAWS. No change shall
have occurred in any law or regulation or in
the interpretation thereof that in the
reasonable opinion of the Lender would make
it unlawful for the Lender to make the Loan.
6.4. REPRESENTATIONS TRUE. Each of the
representations and warranties of the
Borrower to the Lender herein, in any of the
other Loan Documents or any documents,
certificate or other paper or notice in
connection herewith shall be true and correct
as of the time made or claimed to have been
made and as of the time of the advance of the
Loan with the same effect as though all such
representations and warranties were made at
and as of the time of such advance, and the
Borrower shall have complied with all of its
covenants contained in the Loan Documents;
there shall not exist any fact or
circumstance which constitutes a Default or
Event of Default under the Loan Documents, or
any of them, with respect to the Borrower;
and the Borrower shall have delivered to the
Lender its certificate in form and substance
satisfactory to the Lender with respect to
the foregoing matters.
6.5. SENIOR LOAN. An institutional
lender reasonably satisfactory to the Lender
(the "Senior Lender") shall have entered into
final acquisition loan documents, reasonably
satisfactory to the Lender, with respect to
the Facilities, and each of them, and all
conditions to the funding of loans thereunder
shall have been satisfied. The loans to be
provided pursuant to such acquisition loan
facility shall be in a principal amount not
less than seventy-eight percent (78%) of the
amount of the Acquisition Costs (such
acquisition loan facility is hereinafter
referred to as
17
the ["Senior Loan"]). On the Drawdown Date,
the Senior Loan shall be in full force and
effect and there shall not exist any fact or
circumstance which constitutes, or, with
notice or passage of time or otherwise would
constitute, a default or breach under the
Senior Loan.
6.6. INITIAL BUDGET. The Lender shall
have confirmed the Initial Budget with
respect to the Loan.
6.7. CERTIFIED AUTHORIZATION. The
Lender shall have received a certificate from
the Secretary of the Borrower in form and
substance satisfactory to the Lender, with
respect to the authorization by the Borrower
of this Agreement and the other Loan
Documents and the consummation of the
transactions contemplated hereby and thereby,
and stating that attached thereto is a true
and complete copy of the Organization
Documents of the Borrower in the form
approved by the Lender (which approval shall
not unreasonably have been withheld), and the
documents evidencing the Senior Loan and the
Management Agreement, and that none of the
same have been modified and all are in full
force and effect.
6.8. LITIGATION. No action, suit or
proceeding against the Borrower relating to
the consummation of any of the transactions
contemplated by this Agreement or the other
Loan Documents nor any action of any
Governmental Authority seeking to delay or
enjoin any such transactions shall be pending
or, to the best of the Borrower's knowledge,
threatened.
7. COVENANTS.
7.1. AFFIRMATIVE COVENANTS. The Borrower
agrees that, from and after the date hereof
until the payment and satisfaction in full of
all the Obligations, the Borrower will comply
with its obligations as set forth throughout
this Agreement and covenants and agrees that:
7.1.1. PAYMENTS. The Borrower shall
punctually pay or cause to be paid the
principal of and interest on the Loan and any
other fees and expenses due according to the
terms hereof, of the Note and any other Loan
Documents.
7.1.2. REPORTING REQUIREMENTS. The
Borrower shall furnish the Lender:
(i) as soon as available but in
any event within one hundred twenty (120)
days after the close of each fiscal year, its
unaudited Financials, for such fiscal year,
consisting of an internally-generated balance
sheet of the Borrower as of the end of such
year and internally-generated statements of
operations, cash flows and changes in
stockholders' equity for such year (all in
reasonable detail and with all appropriate
notes and supporting schedules), certified by
a senior officer of the Borrower as
presenting fairly the financial condition of
the Borrower, as of the dates and for the
periods indicated and as having been prepared
in accordance with GAAP consistently applied;
(ii) as soon as available but in
any event within forty-five (45) days after
the end of each fiscal quarter its unaudited
Financials, for such quarter, consisting of
an internally-generated balance sheet of the
Borrower as of
18
the end of such quarter and
internally-generated statements of
operations, cash flows and changes in
stockholders' equity for such quarter and for
the period commencing at the end of the
previous fiscal year and ending with the end
of such quarter (all in reasonable detail and
with all notes and supporting schedules),
certified by a senior officer of the Borrower
as presenting fairly the financial condition
of the Borrower as of the dates and for the
periods indicated and as having been prepared
in accordance with GAAP consistently applied;
(iii) together with the Borrower's
annual unaudited Financials, a certificate
executed by a senior officer of the Borrower
stating that no Default or Event of Default
then exists hereunder (or identifying any
such Default or Event of Default, the
circumstances thereof and the steps being
taken to remedy the same);
(iv) together with each payment of
interest under Section 2.2.3, and with each
prepayment of principal under Section 2.3.2,
a statement setting forth in reasonable
detail the basis for such payment (without
limitation, specifying the amount of Net
Available Cash during the relevant period),
accompanied by the certificate of a senior
officer of the Borrower with respect to the
accuracy and completeness thereof; and
(v) promptly upon their becoming
available, copies of all financial
statements, reports, notices, proxy
statements and other communications sent by
the Borrower to security holders or to the
holder of any Senior Indebtedness, and such
other information relevant to the financial
condition, properties and operations of the
Borrower as the Lender may from time to time
reasonably request.
7.1.3. BUDGETS. Prior to the
Drawdown Date, the Borrower shall prepare and
submit to the Lender the Initial Budget,
which for purposes hereof shall be comprised
of its five-year operating budget setting
forth the Borrower's projection of its cash
receipts, together with a detailed summary of
its operating expenses in connection with the
operation and ownership of the Facilities,
including costs under or by virtue of any
Management Agreement. The Borrower shall not
incur any expenses other than those projected
in such budget submitted by the Borrower to
the Lender pursuant to this Section 7.1.3, as
the same may be amended from time to time in
accordance with the terms hereof, if such
expenses would result in a material variance
in Net Available Cash from the amounts set
forth in the Initial Budget, unless the
Lender's consent (which shall not
unreasonably be withheld or delayed) to such
variance shall have first been obtained. From
time to time, the Borrower may submit to the
Lender one or more supplements to or
revisions of the Initial Budget which shall
be deemed to amend the Initial Budget,
subject to the consent of the Lender (which
shall not unreasonably be withheld or
delayed) if such supplement or revision would
result in a material variance in Net
Available Cash from the amounts theretofore
set forth.. Such budget, as may be
supplemented or revised as aforesaid, is
called herein the "Budget". The Borrower
shall operate the Facilities in accordance
with such Budget and the Senior Loan.
7.1.4. BOOKS AND RECORDS. The
Borrower shall keep true and accurate books
of account in accordance with GAAP, maintain
its current fiscal year and shall permit the
Lender or its designated representatives,
upon reasonable prior notice, to inspect the
Borrower's premises during normal business
hours, to examine and be advised by the
Borrower as to such or other business
19
records upon the request of the Lender, to
make copies thereof and take extracts
therefrom and to permit the Lender's finance
examiners to conduct periodic finance
examinations, in each case subject to
applicable confidentiality laws with respect
to resident records.
7.1.5. MAINTENANCE OF BUSINESS;
COMPLIANCE WITH LAW. The Borrower shall:
(i) do or cause to be done all things
necessary or appropriate to preserve and keep
in full force and effect its legal existence,
rights and franchises, and use its best
efforts to qualify as a foreign corporation
entitled to do business in every jurisdiction
wherein it is required to be so qualified,
and maintain its business, its properties and
its assets in good working order and
condition so as to avoid any Materially
Adverse Effect, (ii) keep its business,
properties and assets adequately insured with
sound and reputable insurers to the extent
and against such risks (including fire and
other risks commonly insured against by
extended coverage) as should be maintained in
accordance with good business practice, so as
not materially to differ from insurance
customarily maintained by companies in the
same or similar businesses and maintain in
full force and effect public liability
insurance against claims for personal injury
or death or property damage occurring upon,
in, about or in connection with the use of
any properties owned, occupied or controlled
by the Borrower, (iii) maintain its chief
executive office in the United States, (iv)
continue to engage in the same lines of
business, and (v) comply with all
Requirements of Law, including all
Environmental Laws and ERISA, and take all
action with respect to each pension,
profit-sharing, bonus incentive, welfare or
other employee benefit plan within the
meaning of Section 3(3) of ERISA in which its
employees participate required by the
Department of Labor and the Internal Revenue
Service under said act and by all other
applicable law, in each case under this
clause (v) unless duly contested in good
faith by appropriate proceedings in
accordance with the provisions of the Senior
Loan.
7.1.6. TAXES. The Borrower shall
pay and discharge promptly, or cause to be
paid and discharged promptly all taxes,
assessments and governmental charges or
levies imposed upon it or upon its income or
upon any of its property, real, personal or
mixed, or upon any part thereof, as well as
all claims of any kind (including claims for
labor, materials and supplies which, if
unpaid, might by law become a lien or charge
upon its property), provided, however, that
the Borrower shall not be required to pay any
such tax, assessment, charge, levy or claim
if the amount, applicability or validity
thereof shall currently be contested in good
faith by appropriate proceedings, and, if
required under GAAP, if the Borrower shall
have set aside on its books reserves
(segregated to the extent required by sound
accounting practice) reasonably deemed by it
adequate with respect thereto.
7.1.7. NOTICES. The Borrower shall
notify the Lender promptly in writing of (i)
the occurrence of any Default or Event of
Default hereunder, (ii) the occurrence of any
default (including, without limitation, any
default which is subject to cure under the
terms thereof) under any Senior Indebtedness,
(iii) any noncompliance with ERISA or any
Environmental Law or proceeding in respect
thereof which could have a Materially Adverse
Effect with respect to it, (iv) any change of
address, (v) any pending litigation or, to
the extent the Borrower has knowledge of any
threatened litigation, such threatened
litigation, or similar proceeding affecting
the Borrower, or any material change in any
such litigation or proceeding previously
reported, in each case which would
20
reasonably be expected to have a Materially
Adverse Effect with respect to it, (vi)
claims against any assets or properties of
the Borrower which could have a Materially
Adverse Effect with respect to it or any
other circumstances or event which has had or
is reasonably likely to have a Materially
Adverse Effect with respect to it, together
with a specification of each of the foregoing
under clauses (i) through (vi) immediately
preceding and the steps if any being taken to
remedy the same.
7.1.8. USE OF PROCEEDS. The
Borrower shall use the proceeds of the Loan
made to the Borrower solely to finance up to
twenty-two percent (22%) of the Acquisition
Costs of the Facilities.
7.1.9. COOPERATION. The Borrower
shall cooperate with the Lender, take such
action, execute such documents, and provide
such information as the Lender may from time
to time reasonably request in order further
to effect the transactions contemplated by
and the purposes of the Loan Documents.
7.1.10. COMPLIANCE WITH OTHER
AGREEMENTS. The Borrower shall: (i) do or
cause to be done all things necessary or
appropriate to comply in all material
respects with all of the terms and conditions
of the Senior Loan or any Management
Agreement to which it is a party; and (ii)
not amend, modify or alter any documents
evidencing such Senior Loan, or waive any
rights thereunder, in any manner which would,
directly or indirectly, adversely affect the
interests of the Lender; and (iii) not enter
into any Management Agreement other than a
Management Agreement with the Guarantor which
provides for a management fee of no more than
5% of the gross operating income of the
Facilities, or amend, modify or alter any
Management Agreement or waive any rights
thereunder, in any material respect or in any
manner which would adversely affect the
interests of the Lender; and (iv) not assign,
subcontract, transfer, hypothecate or
otherwise dispose of or encumber any interest
in any of the agreements identified under
this Section 7.1.10, in each case without the
prior written approval of the Lender (which
approval shall not unreasonably be withheld).
7.2. NEGATIVE COVENANTS. The Borrower
agrees that, from and after the date hereof
until the payment and satisfaction in full of
all the Obligations:
7.2.1. RESTRICTIONS ON
INDEBTEDNESS. The Borrower will not create,
incur or assume or become obligated for any
Indebtedness other than (i) Indebtedness to
the Lender, (ii) the Senior Loan, (iii)
unsecured Indebtedness to trade creditors,
carriers, warehousemen, mechanics and
materialmen (or Indebtedness to trade
creditors secured by purchase money Liens or
Indebtedness to carriers, warehousemen,
mechanics and materialmen secured by Liens
permitted by Section 7.2.2(iv)) constituting
current liabilities of the Borrower incurred
in the ordinary course of business, and not
incurred through the borrowing of money or
the obtaining of credit except credit on an
open account customarily extended in the
ordinary course of business, (iv)
Indebtedness in respect of taxes or other
governmental charges contested in good faith
and by appropriate proceedings and for which
adequate reserves have been taken and set
aside on the Borrower's books (segregated to
the extent required by sound accounting
practice); (v) Subordinated Indebtedness not
included above with respect to which the
Lender gives its written consent; (vi)
unsecured loans from
21
the Guarantor, fully subordinated pursuant to
the Guaranty, the proceeds of which
are used solely to pay costs related to the
Facilities; and (vii) Indebtedness for leased
or financed furniture, fixtures or equipment
used in connection with the operation of the
Facilities where the aggregate payments due
thereunder do not exceed $200,000 during any
fiscal year.
7.2.2. PERMITTED LIENS. The
Borrower will not create, incur or allow any
Liens on any of its property or assets except
(i) Liens securing taxes or other
governmental charges not yet due; (ii)
necessary deposits or pledges made in
connection with social security obligations;
(iii) Liens of carriers, warehousemen,
mechanics and materialmen as to obligations
not yet due which, individually and in the
aggregate, could not have a Materially
Adverse Effect; (iv) easements,
rights-of-way, zoning restrictions and
similar minor Liens which, individually and
in the aggregate, do not have a Materially
Adverse Effect; (v) Liens on the Facilities
securing the Senior Loan; and (vi) Liens on
assets described under clause (vii) of
Section 7.2.1 hereof incurred in connection
with the Indebtedness described thereunder.
7.2.3. PERMITTED INVESTMENTS. The
Borrower will not make any investments other
than investments in (i) marketable
obligations of the United States maturing
within one (1) year, (ii) certificates of
deposit, bankers' acceptances and time and
demand deposits at United States banks having
total assets in excess of $1,000,000,000 or
(iii) such other investments as the Lender
may from time to time approve in writing
(such approval not to be unreasonably
withheld or delayed).
7.2.4. DISTRIBUTIONS. The Borrower
will not: (i) make any distributions to its
stockholders or on or in respect of its
capital or otherwise of any nature
whatsoever; or (ii) exchange or expend in
redemption or purchase of any of its capital
or any interest in the Borrower, any cash or
property; or (iii) make any loans, advances
or extensions of credit to any Affiliate (or
to any other person or entity except in the
ordinary course of business); or (iv)
guaranty, endorse or otherwise be or become
contingently liable in connection with any
amounts incurred by any Affiliate; or (v)
enter into any transaction with any Affiliate
except upon fair and reasonable terms no less
favorable to the Borrower than the Borrower
would obtain in a comparable arms-length
transaction with a person not an Affiliate;
provided, however, that any transaction with
any Affiliate entailing any management or
similar fee with respect to the Facilities or
the Borrower shall be subject to compliance
with such standards regarding the effect
thereof on Net Available Cash as shall have
been agreed to by the Lender prior to
effectuation of any such arrangement.
7.2.5. MERGERS; DISPOSITION OF
ASSETS. The Borrower will not: (i) consummate
any merger or sale-leaseback transaction
unless the proceeds of any such sale and
leaseback transaction are applied
concurrently with such consummation to the
satisfaction in full of the Obligations; or
(ii) effect any disposition of assets,
whether by sale, assignment, lease, transfer
or otherwise, other than in the ordinary
course; or (iii) purchase, lease or otherwise
acquire assets other than in the ordinary
course or as specifically permitted by
Sections 7.2.1 or 7.2.2 hereof.
7.2.6. SUBSIDIARIES. The Borrower
shall not create or hold any interest in any
Subsidiary.
22
7.2.7. CHANGE IN CIRCUMSTANCES;
CONFLICTS. The Borrower will not cause or
permit a change in the nature of its
business, or, in any material respect (except
as may be required by GAAP) in its accounting
principles or practices. The Borrower will
not enter into any agreement containing any
provisions that would be violated by the
performance by the Borrower of its
obligations under this Agreement, the
Borrower's Note or any other Loan Document.
The Borrower will not amend its Organization
Documents in any manner that is adverse to
the interests of the Lender.
7.2.8. TRANSFER OF INTERESTS. The
Borrower shall not recognize or permit or
suffer the assignment of any shares of its
capital stock or other interest therein, by
operation of law or otherwise, except
pursuant to the Security Documents, nor shall
the Borrower create or permit or suffer the
creation of any additional interest therein,
or issue any shares of its capital stock,
unless the intended assignee or holder
thereof, as the case may be, shall have
joined in the Guaranty and executed to the
Lender the Security Documents in accordance
with the provisions of Section 3.2 hereof.
8. LIMITATIONS ON RECOURSE.
Anything contained in this Agreement or
the Loan Documents, or in any governmental
regulation, constitution, statute or rule of
law, or by the enforcement of any assessment
or penalty, or otherwise notwithstanding, the
Borrower hereby agrees that none of the
members or managers past, present or future,
of the Lender, nor any incorporator, manager,
member, stockholder, officer or director of
any predecessor or successor entity, shall be
personally liable for any agreement or
obligation of the Lender hereunder, all such
liability being hereby waived and released.
9. EVENTS OF DEFAULT; ACCELERATION.
If any of the following events ("Events
of Default") shall occur:
(a) the Borrower shall fail to pay when
due and payable any principal of the Loan
when the same becomes due;
(b) the Borrower shall fail to pay
interest on the Loan or any other sum due
under any of the Loan Documents within five
(5) Business Days after the date on which the
same shall have first become due and payable;
(c) the Borrower shall fail to perform
any other term, covenant or agreement
contained in the Loan Documents within
fifteen (15) days after the Lender has given
written notice of such failure to the
Borrower or, if such failure is not
reasonably capable of cure within such
period, within 45 days after such notice
(provided the Borrower shall have initiated
and is diligently pursuing action to cure
such failure during and after such 15-day
period);
(d) any representation or warranty of
the Borrower or the Guarantor in the Loan
Documents or in any certificate or notice
given in connection therewith shall have been
false, incorrect or misleading in any
material respect at the time made or deemed
to have been made;
23
(e) the Borrower shall be in default
(and shall not have cured such default within
any applicable period of grace or cure): (x)
under any agreement or agreements creating,
securing or evidencing Indebtedness owing to
the Lender or any Affiliates of the Lender,
or (y) under any agreement or agreements
evidencing any Senior Indebtedness, or
evidencing any Indebtedness in excess of
$200,000.00 in aggregate principal amount
(provided, however, that it shall not be an
Event of Default hereunder in the event (I)
such default under this clause (y) does not
involve any payment under any Indebtedness
described under this clause (y) and (II) the
holder of such Indebtedness shall promptly
have waived such default or breach and (III)
the default or breach so waived is not
reasonably likely to have a Materially
Adverse Effect;
(f) any of the Loan Documents shall
cease to be in full force and effect, or the
Guarantor shall purport that the Guaranty or
Security Documents shall no longer relate to
the Loan hereunder made;
(g) the Borrower, or any stockholder of
the Borrower (i) shall make an assignment for
the benefit of creditors, (ii) shall be
adjudicated bankrupt or insolvent, (iii)
shall seek the appointment of, consent to or
be the subject of an order appointing, a
trustee, liquidator or receiver of itself as
to all or part of its assets, or assuming
custody or control of such Borrower, (iv)
shall commence, answer, approve or consent
to, any case or proceeding under any
bankruptcy, insolvency, reorganization or
similar law and, in the case of an
involuntary case or proceeding, such case or
proceeding is not dismissed within 90 days
following the commencement thereof, or (vi)
shall be the subject of an order for relief
in an involuntary case under Federal
bankruptcy law if not stayed or dismissed
within 90 days following the commencement
thereof;
(h) the Borrower shall be unable to pay
its debts as they mature;
(i) there shall remain undischarged for
more than sixty (60) days any final judgment
or execution action against the Borrower
that, together with other outstanding claims
and execution actions against the Borrower
exceeds $200,000.00 in the aggregate;
(j) if the Borrower shall be indicted
for any crime; or
(k) if any change, as a result of any
transaction or series of transactions, in the
possession, directly or indirectly, of the
power to direct or cause the direction of the
management or policies of the Borrower,
whether by contract or otherwise, shall
occur;
THEN, or at any time thereafter:
(1) In the case of any Event of Default
under clause (g) or (h) (for any reason
whatsoever and whether such Event of Default
shall be voluntary or involuntary or come
about or be effected by operation of law or
pursuant to or in compliance with any
judgment, decree or order of any court or any
order, rule or regulation of any admini
strative or governmental body), the entire
unpaid principal amount of the Loan, all
interest accrued and unpaid thereon, and all
other amounts payable thereunder and under
the other Loan Documents shall automatically
become forthwith due and payable, without
presentment, demand, protest or notice of any
kind, all of which are hereby expressly
waived by the Borrower; and
24
(2) In the case of any Event of Default
other than under clauses (g) or (h) (for any
reason whatsoever and whether such Event of
Default shall be voluntary or involuntary or
come about or be effected by operation of law
or pursuant to or in compliance with any
judgment, decree or order of any court or any
order, rule or regulation of any admini
strative or governmental body), the Lender
may, by written notice to the Borrower,
declare the unpaid principal amount of the
Loan, all interest accrued and unpaid
thereon, and all other amounts payable
hereunder and under the other Loan Documents
to be forthwith due and payable, without
presentment, demand, protest or further
notice of any kind, all of which are hereby
expressly waived by the Borrowers, and each
of them.
No remedy herein conferred upon the
Lender is intended to be exclusive of any
other remedy and each and every remedy shall
be cumulative and in addition to every other
remedy hereunder, now or hereafter existing
at law or in equity or otherwise. In the case
any one or more of the Events of Default
shall have occurred and be continuing, the
Lender may proceed to protect and enforce its
rights either by suit in equity and/or by
action at law, whether for the specific
performance of any covenant or agreement
contained in this Agreement, any Note or any
other Loan Document, or the Lender may
proceed to enforce the payment of all
Obligations or to enforce any other legal or
equitable right of the Lender. In the event
an Event of Default shall have occurred and
the Lender shall employ attorneys, or incur
other costs and expenses for the collection
of payments due or to become due, or for the
enforcement or performance or observance of
any obligation or agreement of any Borrower,
such Borrower agrees that it will pay to the
Lender, on demand, the reasonable fees of
such attorney together with all other costs
and expenses incurred by the Lender.
10. MISCELLANEOUS.
10.1. INDEMNIFICATION. The Borrower
agrees to indemnify and hold harmless the
Lender and its officers, employees,
affiliates, agents, and controlling persons
from and against, and shall promptly
reimburse such parties for, all claims,
damages, liabilities and losses of every kind
(including, without limitation, reasonable
counsel's fees) relating to or arising out of
or in connection with the Loan Documents or
the transactions contemplated thereby,
including without limitation, against those
in respect of the application of
Environmental Laws to the Borrower, absent
the gross negligence or willful misconduct of
the Lender, not including liabilities of
Lender for taxes based upon net income
arising out of or in connection with the Loan
Documents.
10.2. EXPENSES. The Borrower shall from
time to time pay to the Lender promptly on
demand all reasonable out-of-pocket costs and
expenses (including any taxes and reasonable
legal and other professional fees and
expenses and fees and expenses of its finance
examiner) incurred by the Lender in
connection with the preparation, negotiation,
execution, amendment, administration or
enforcement of any of the Loan Documents.
10.3. NOTICES. All notices, requests or
instructions hereunder shall be in writing
and delivered personally or sent by
registered or certified mail, postage
prepaid, or by telecopy (or like
transmission), as follows:
25
(1) if to the Borrower:
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X.
Xxxxxxxxxx
Telecopy Number: (206) 301-
4500
with a copy to:
Xxxxx Xxxxxxxxx, Esq.
The Xxxxxxxxx Group
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Telecopy Number: (206) 623-
1738
(2) if to the Lender:
000 Xxxx Xxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Telecopy Number: (212) 223-
2425
with a copy to:
Xxxxxx Xxxxxx, Esq.
Krugman Xxxxxxxx &
Grimshaw LLP
Park 00 Xxxx - Xxxxx
Xxx
Xxxxxx Xxxxx, Xxx
Xxxxxx 00000
Telecopy Number: (201) 845-
9627
Any notice so addressed and mailed shall be
deemed to be given five Business Days after
deposit in the mails. Any notices addressed
and otherwise delivered shall be deemed to be
given when actually received by the
addressee. Any of the above addresses or
telecopy numbers may be changed at any time
by notice given as provided above; provided,
however, that any such notice of change of
address shall be effective only upon receipt.
10.4. REGISTRATION OF NOTES. The
Borrower shall keep at its principal
executive office a register for the
registration and registration of transfers of
the Note. The name and address of each holder
of the Note, each transfer thereof and the
name and address of each transferee of the
Note shall be registered in such register.
Upon surrender of any Note at the principal
executive office of the Borrower for
registration of transfer (duly endorsed or
accompanied by a written instrument of
transfer duly executed by the registered
holder of the Note or its attorney duly
authorized in writing and accompanied by the
address for notices of each transferee of the
Note), the Borrower shall execute and
deliver, at its expense,
26
a new Note in exchange therefor, in an
aggregate principal amount equal to the
unpaid principal amount of the surrendered
Note, registered in the name of the
transferee.
10.5. SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to
the benefit of each party hereto and its
successors and assigns, but the Borrower may
not assign its rights or obligations
hereunder or under the other Loan Documents.
10.6. AMENDMENTS. No modification,
amendment or waiver of any provision of, nor
any consent required by, this Agreement, nor
any consent to any departure by the Borrower
therefrom, shall in any event be effective
unless the same shall be in writing and
signed by the Lender and the Borrower and
then such modification, amendment, waiver or
consent shall be effective only in the
specific instance and for the purpose which
given. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any
other or further notice or demand in the
same, similar or other circumstances, except
to the extent specifically required by the
terms hereof.
10.7. NO WAIVER. No failure or delay by
the Lender to insist upon the strict
performance of any term, condition, covenant
or agreement of this Agreement or the other
Loan Documents, or to exercise any right,
power or remedy hereunder or thereunder or
consequent upon a breach hereof or thereof,
shall constitute a waiver of any such term,
condition covenant, agreement, right, power
or remedy or of any such breach, or preclude
the Lender from exercising any such right,
power or remedy at any later time or times,
nor shall any single or partial exercise of
any right, power or remedy preclude any other
right, power or remedy.
10.8. SEVERABILITY; ENTIRE AGREEMENT.
(a) The provisions of this Agreement are
severable and if any one provision hereof
shall be held invalid, illegal or
unenforceable in whole or in part in any
jurisdiction, such invalidity, illegality or
unenforceability shall affect only such
provision in such jurisdiction, and this
Agreement shall be construed as if such
invalid, illegal or unenforceable provision
had never been contained herein. This
Agreement and the other Loan Documents,
together with all exhibits hereto and
thereto, expresses the entire understanding
of the parties with respect to the
transactions contemplated hereby and thereby.
This Agreement and any amendment hereto may
be executed in several counterparts, each of
which shall be deemed an original, and all of
which shall constitute one agreement. In
proving this Agreement, it shall not be
necessary to produce more than one such
counterpart executed by the party to be
charged.
(b) Without limiting the generality of
the foregoing and notwithstanding anything to
the contrary contained in this Agreement or
any other Loan Document, the Borrower shall
not be obligated to pay, and the Lender shall
not charge, reserve, collect or receive
interest (which shall be calculated as the
aggregate of all charges which constitute
interest under applicable law) in excess of
the maximum non-usurious interest rate, as in
effect from time to time, which may be
charged, reserved, received or collected by
the Lender in connection with this Agreement
or any Loan Document. During any period of
time in which the interest rates specified
herein exceed the maximum rate as aforesaid,
interest shall accrue and be payable at such
maximum rate; provided, however, that if the
interest rate payable hereunder declines
below the maximum rate as aforesaid, interest
shall continue to
27
accrue and be payable at such maximum rate
until the interest that has been paid by the
Borrower hereunder and under the other Loan
Documents equals the amount of interest that
would have been paid if interest had at all
times accrued and been payable at the
applicable interest rate specified in this
Agreement and the other Loan Documents. In
the event that the Lender shall collect from
the Borrower any amount which is deemed to
constitute interest at a rate in excess of
the maximum rate as aforesaid, all such
excess amounts shall be credited to the
payment of outstanding principal advanced to
the Borrower pursuant to this Agreement and
the other Loan Documents.
10.9. REMEDIES CUMULATIVE, ETC. No
right, power or remedy herein conferred upon
or reserved to the Lender is intended to be
exclusive of any other right, power or remedy
or remedies, and each and every right, power
and remedy of the Lender pursuant to this
Agreement, or the other Loan Documents, now
or hereafter existing at law or in equity or
by statute or otherwise shall, to the extent
permitted by law, be cumulative and
concurrent and shall be in addition to every
other right, power or remedy pursuant to this
Agreement, or the other Loan Documents, or
now or hereafter existing at law or in equity
or by statute or otherwise, and the exercise
or beginning of the exercise by the Lender of
any one or more of such rights, powers or
remedies shall not preclude the simultaneous
or later exercise by the Lender of any or all
such other rights, powers or remedies.
10.10. GOVERNING LAW; WAIVER OF JURY
TRIAL. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED AS CONTRACTS
MADE AND TO BE PERFORMED UNDER THE LAWS OF
THE STATE OF NEW YORK AND SHALL BE
INTERPRETED IN ACCORDANCE THEREWITH AND
GOVERNED THEREBY. THE BORROWER AGREES THAT
ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR ANY FEDERAL COURT
SITTING THEREIN. THE BORROWER AND THE LENDER
EACH HEREBY WAIVE ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION ARISING DIRECTLY
OR INDIRECTLY IN CONNECTION WITH ANY LOAN
DOCUMENT. IT IS INTENDED THAT SAID WAIVER
SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS,
AND/OR COUNTERCLAIMS IN ANY ACTION OR
PROCEEDING.
10.11. SURVIVAL OF REPRESENTATIONS.
Each representation, warranty, covenant and
agreement of the parties hereto herein
contained shall survive the execution hereof
and the Loan, notwithstanding any
investigation at any time made by or on
behalf of any party hereto.
10.12. ACCOUNTING PRINCIPLES. Where the
character or amount of any asset or liability
or item of income or expense is required to
be determined or any consolidation or other
accounting computation is required to be made
for the purposes of this Agreement or the
Note, it shall be done in accordance with
GAAP at the time in effect, to the extent
applicable, except where such principles are
inconsistent with the requirements of this
Agreement or the Note.
10.13. CAPTIONS. The captions appearing
herein are for the convenience of the parties
only and shall not be construed to affect the
meaning of the provisions of this Agreement.
28
10.14. COUNTERPARTS. This Agreement may
be executed in counterparts, each of which
shall be deemed an original, but all of which
taken together shall constitute one and the
same instrument.
* * * * *
29
IN WITNESS WHEREOF, the undersigned have
duly executed this Credit Agreement as a
sealed instrument as of the date first above
written.
HIGH YIELD PARTNERS LLC
By: Hanseatic
Corporation,
Managing Member
By: /s/ Xxxx X.
Xxxxxxxxx
-------------------------------------
Name: Xxxx X.
Xxxxxxxxx
Title: Treasurer
c/o Hanseatic
Corporation
000 Xxxx Xxxxxx -
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx
00000
Tel: (000) 000-0000
Fax: (000) 000-0000
EMERITUS PROPERTIES
V, INC.
By: /s/ Xxxxxxx X.
Xxxxxxxxxx
--------------
-------------------------
Name: Xxxxxxx X.
Xxxxxxxxxx
Title: President
Address:
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx
00000
Tel: (000) 000-0000
Fax: (000) 000-0000
30
