1
EXHIBIT 10.2
LOAN AGREEMENT
Dated as of March 31, 1998
by and between
ALS-VENTURE I, INC.
(as Borrower)
and
NOMURA ASSET CAPITAL CORPORATION
(as Lender)
2
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS........................................................................................... 1
Section 1.1. Definitions......................................................................................... 1
ARTICLE II GENERAL TERMS................................................................................................. 43
Section 2.1 Amount of the Loan................................................................................... 43
Section 2.2 Use of Proceeds...................................................................................... 44
Section 2.3 Security for the Loan................................................................................ 45
Section 2.4 Borrower's Note...................................................................................... 45
Section 2.5 Principal and Interest Payments...................................................................... 45
Section 2.6 Prepayment........................................................................................... 47
Section 2.7 Application of Payments.............................................................................. 48
Section 2.8 Payment of Debt Service, Method and Place of Payment................................................. 48
Section 2.9 Taxes................................................................................................ 49
Section 2.10 Defeasance Requirements.............................................................................. 49
Section 2.11 Central Cash Management.............................................................................. 51
Section 2.12 Security Agreement................................................................................... 60
Section 2.13 Securitization....................................................................................... 62
Section 2.14 Supplemental Mortgage Affidavits..................................................................... 65
Section 2.15. Substitution of Properties........................................................................... 65
ARTICLE III CONDITIONS PRECEDENT........................................................................................... 68
Section 3.1 Conditions Precedent to the Making of the Loan....................................................... 68
Section 3.2 Required Deliveries Prior to Stabilization Date...................................................... 74
Section 3.3 Conditions Precedent to the Earn-Out Advance......................................................... 74
Section 3.4 Form of Loan Documents and Related Matters........................................................... 76
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................................................................. 77
Section 4.1 Representations and Warranties of Borrower........................................................... 77
Section 4.2 Survival of Representations and Warranties........................................................... 90
ARTICLE V AFFIRMATIVE COVENANTS.......................................................................................... 91
Section 5.1 Borrower Covenants................................................................................... 91
ARTICLE VI NEGATIVE COVENANTS.............................................................................................108
3
Page
----
Section 6.1 Borrower Negative Covenants..........................................................................108
ARTICLE VII DEFAULTS.......................................................................................................111
Section 7.1 Event of Default.....................................................................................111
Section 7.2 Remedies.............................................................................................115
Section 7.3 Remedies Cumulative..................................................................................115
Section 7.4 Lender's Right to Perform............................................................................116
ARTICLE VIII MISCELLANEOUS..................................................................................................116
Section 8.1 Survival.............................................................................................116
Section 8.2 Lender's Discretion..................................................................................117
Section 8.3 Governing Law........................................................................................117
Section 8.4 Modification, Waiver in Writing......................................................................118
Section 8.5 Delay Not a Waiver...................................................................................118
Section 8.6 Notices..............................................................................................119
Section 8.7 TRIAL BY JURY........................................................................................120
Section 8.8 Headings.............................................................................................120
Section 8.9 Assignment...........................................................................................120
Section 8.10 Severability.........................................................................................120
Section 8.11 Preferences..........................................................................................120
Section 8.12 Waiver of Notice.....................................................................................121
Section 8.13 Remedies of Borrower.................................................................................121
Section 8.14 Exculpation..........................................................................................121
Section 8.15 Exhibits Incorporated................................................................................123
Section 8.16 Offsets, Counterclaims and Defenses..................................................................123
Section 8.17 No Joint Venture or Partnership......................................................................123
Section 8.18 Waiver of Marshalling of Assets Defense..............................................................123
Section 8.19 Waiver of Counterclaim...............................................................................124
Section 8.20 Conflict; Construction of Documents..................................................................124
Section 8.21 Brokers and Financial Advisors.......................................................................124
Section 8.22 Counterparts.........................................................................................124
Section 8.23 Estoppel Certificates................................................................................124
Section 8.24 Payment of Expenses..................................................................................125
Section 8.25 Bankruptcy Waiver....................................................................................125
Section 8.26 Entire Agreement.....................................................................................126
Section 8.27 Dissemination of Information.........................................................................126
Section 8.28 Limitation of Interest...............................................................................126
Section 8.29 Indemnification......................................................................................127
Section 8.30 Borrower Acknowledgments.............................................................................128
Section 8.31 Publicity............................................................................................128
4
Section 8.33 Cross Collateralization.......................................................................132
Section 8.34 Matters Concerning the Operators and Joint Venture............................................133
Section 8.35 Buy-Up........................................................................................134
EXHIBITS
Exhibit A - Operating Expense Certificate
Exhibit B - Additional Definitions
Exhibit C - Capital Improvements and Repair and Environmental
Remediation Exhibit
Exhibit D - Terms of Class B Equity Interests
Exhibit E - Terms of Class C Equity Interests
Exhibit F - Terms of Preferred Cash Management Agreement
Exhibit G - Underwriting NOI Criteria
5
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of March 31, 1998, is by and between
NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation, having an address at 2
World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Xxxxxxxxxxx Xxxxxxx, Telefax Number (000) 000-0000 (together, with its
successors and assigns, "Lender"), and ALS-VENTURE I, INC., a Delaware
corporation with an address of c/o Alternative Living Services, Inc., 000 Xxxxx
Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: Chief
Financial Officer, Xxxxxx X. Xxxxxx, Telefax Number (000) 000-0000 (the
"Borrower").
RECITALS
WHEREAS, Borrower desires to obtain a loan (each an "Advance" and
collectively the "Loan") from Lender in the maximum principal amount of
$31,000,000 (such amount together with the Earn-Out Advance, if any, the "Loan
Amount");
WHEREAS, Lender is willing to make the Loan on the condition that
Borrower joins in the execution and delivery of this Agreement which shall
establish the terms and conditions of the Loan; and
WHEREAS, Lender and Borrower contemplate that all or any portion
of Lender's interest in the Loan and the Loan Documents may be assigned, in
whole or in part, by Lender to another Person, including, without limitation, to
a trustee on behalf of security holders in connection with a Securitization.
NOW, THEREFORE, in consideration of the making of the Loan by
Lender, and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement:
(a) the capitalized terms defined in this Article I have the
meanings assigned to them in this Article I, and include the plural as well as
the singular;
6
2
(a) all accounting terms have the meanings assigned to them in
accordance with GAAP;
(b) the words "herein", "hereof", and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section, or other subdivision; and
(c) the following terms have the following meanings:
"Account Collateral" has the meaning provided in Section 2.12(a).
"Accounts" means all of the Accounts defined and described in the
Mortgages.
"Accrued Interest" has the meaning provided in Section 2.5(e).
"Acquisition Date" means, as to any Operator or the Joint
Venture, the date on which the Subsidiary acquires equity interests in such
Operator or Joint Venture.
"Actual Prepayment Amount" has the meaning provided in Section
8.32(c).
"Adjusted Net Operating Income" means (calculated for the
Facilities or any Facility), for any period, the Net Operating Income for such
period reduced by (i) the Capital Reserve Amount, pro rated for the applicable
period, (ii) to the extent not reflected in the Net Operating Income, annual
base management fees, pro rated for the applicable period, equal to the greater
of (y) actual base management fees paid pursuant to the applicable Management
Agreement and (z) five percent (5%) of Gross Revenues (provided, however, in no
event shall the annual base management fees included in this clause (ii) include
any management expenses, such as, but not limited to, accounting expenses,
marketing costs, regional and corporate personnel expenses and general corporate
overhead, to the extent such expenses are actually reflected in the Net
Operating Income), and (iii) an amount necessary to reflect a minimum annual
vacancy factor of five percent (5%), pro rated for the applicable period.
Notwithstanding the foregoing part of this definition of "Adjusted Net Operating
Income" to the contrary, if the period for which Adjusted Net Operating Income
is being calculated includes periods prior to the Closing Date, Adjusted Net
Operating Income shall be calculated for such period based on the applicable pro
rata portion of Base Adjusted NOI.
7
3
"Advance" has the meaning provided in the Recitals hereto and
"Advances" means each such advance, collectively.
"Advisor" means Nomura Securities International, Inc.
"Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controls", "controlling" and "controlled" have the meanings correlative
to the foregoing.
"Agreement" means this Loan Agreement, as the same may from time
to time hereafter be modified, supplemented or amended.
"Allocated Loan Amount" means (i) prior to the Stabilization
Date, the portion of the Loan Amount allocated to each Facility as set forth on
Exhibit B hereto and (ii) on and after the Stabilization Date, the portion of
the Loan allocated to each Facility by Lender as determined by Lender in its
sole discretion, in each case, as such amounts shall be adjusted from time to
time as hereinafter set forth. Upon each adjustment in the amount of Principal
Indebtedness due to either (i) a regular monthly payment of principal pursuant
to Section 2.5(c), (ii) a prepayment of principal pursuant to Section 2.6(c) or
(iii) a payment of Excess Cash Flow pursuant to Section 2.6(a), each Allocated
Loan Amount shall be decreased by an amount equal to the product of (i) the
amount of such principal payment and (ii) a fraction, the numerator of which is
the applicable Allocated Loan Amount (prior to the adjustment in question) and
the denominator of which is the total of all Allocated Loan Amounts (prior to
the adjustment in question). Notwithstanding the foregoing sentence to the
contrary, when the Principal Indebtedness is reduced as a result of Lender's
receipt of proceeds with respect to a Taking or casualty affecting one hundred
percent (100%) of a Facility, the Allocated Loan Amount for such Facility with
respect to which the proceeds were received shall, at Lender's sole discretion,
be reduced to zero (such Allocated Loan Amount prior to reduction being referred
to as the "Withdrawn Allocated Amount"), and each other Allocated Loan Amount
shall, if the Withdrawn Allocated Amount exceeds the proceeds (such excess being
referred to as the "Proceeds Deficiency"), be increased by an amount equal to
the product of (1) the Proceeds Deficiency and (2) a fraction, the numerator of
which is the applicable Allocated Loan Amount (prior to the adjustment in
question) and the denominator of which is the
8
4
aggregate of all of the Allocated Loan Amounts (prior to the adjustment in
question) other than the Withdrawn Allocated Amount. Notwithstanding the
foregoing, Lender may, on the Stabilization Date Payment Date reallocate the
Allocated Loan Amounts among or between the Facilities.
"Amortizable Amount" has the meaning provided in Section
8.32(c)(i).
"Annual Operating Budget" means an annual budget for the
operations of the Facilities (broken down on a month-by-month basis and a
Facility-by-Facility basis) prepared and submitted by Borrower to Lender (i) in
each calendar year after the Closing Date during which Preferred Equity Holder
owns an equity interest in Borrower, for the period of time commencing on the
date on which Preferred Equity Holder first owns such equity interest to and
including the last day of the calendar year in which the Preferred Equity Holder
acquired such equity interest, (ii) on the Optional Prepayment Date, for the
period of time commencing on the Optional Prepayment Date to and including the
last day of the calendar year in which the Optional Prepayment Date occurs, and
(iii) on each December 1, for each succeeding calendar year after the dates
described in clauses (i) and (ii) above, all in form and substance reasonably
satisfactory to Lender and as reasonably approved by Lender, as the same shall
be amended by Borrower from time to time, with Lender's written consent.
Lender's approval shall be deemed given if Lender does not respond to Borrower's
proposed budget within thirty (30) days of Lender's receipt thereof.
"Appraisals" means the appraisals, if any, with respect to any
Facility delivered to and approved by Lender in connection with the Loan and any
more recent appraisal of any Facility delivered to Lender or Lender's servicer,
as applicable, each made by an Appraiser at the request of Borrower or Lender,
as any of the same may be updated by recertification from time to time (and
pursuant to the terms of this Agreement) by the Appraiser performing such
Appraisal.
"Appraiser" means any reputable Independent appraiser selected by
Borrower, and reasonably satisfactory to Lender, which is (i) a member of the
Appraisal Institute with a national practice and who has at least ten (10) years
experience with real estate of the same type and in the geographic area of the
relevant Facility to be appraised or (ii) otherwise reasonably acceptable to
Lender.
9
5
"Appurtenant Rights" means all the Appurtenant Rights defined and
described in the Mortgages.
"Assignment of Agreements" means, collectively, the Assignment of
Agreements - Borrower and the Assignment of Agreements - Joint Venture.
"Assignment of Agreements - Borrower" means, (i) with respect to
each Non-Leased Facility and Leased Facility, a first priority Assignment of
Management Agreement and Agreements Affecting Real Estate, in form and substance
satisfactory to Lender, dated as of the Closing Date, from Borrower, as
assignor, to Lender, as assignee, and (ii) with respect to the Joint Venture
Facility, subsequent to Borrower acquiring the fee interest in the Joint Venture
Facility, a first priority Assignment of Management Agreement and Agreements
Affecting Real Estate, in form and substance satisfactory to Lender in Lender's
discretion, from Borrower, as assignor, to Lender, as assignee, as the same may
thereafter from time to time be supplemented, amended, modified or extended by
one or more written agreements supplemental thereto and "Assignments of
Agreements - Borrower" means all such instruments collectively.
"Assignment of Agreements - Joint Venture" means, with respect to
the Joint Venture Facility, a first priority Assignment of Management Agreement
and Agreements Affecting Real Estate, in form and substance satisfactory to
Lender, dated as of the Closing Date, from the Joint Venture, as assignor, to
Borrower, as assignee, as the same may thereafter from time to time be
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto.
"Assignments of Leases" means, collectively, the Assignments of
Leases - Borrower and Assignment of Leases - Joint Venture.
"Assignment of Leases - Borrower" means, (i) with respect to each
Non-Leased Facility and Leased Facility, a first priority Assignment of Leases
and Rents, in form and substance satisfactory to Lender, dated as of the Closing
Date from Borrower, as assignor, to Lender, as assignee, assigning to Lender all
of Borrower's right, title and interest in and to the Leases and the Rents with
respect to such Facility as security for the Loan, and (ii) with respect to the
Joint Venture Facility, subsequent to Borrower acquiring the fee interest in the
Joint Venture Facility, a first priority Assignment of Leases and Rents, in form
and substance satisfactory to Lender in Lender's discretion assigning to Lender
all of Borrower's right, title
10
6
and interest in and to the Leases and the Rents with respect to such Facility as
security for the Loan, as the same may thereafter from time to time be
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto and "Assignments of Leases" means all such instruments
collectively.
"Assignment of Leases - Joint Venture" means, with respect to the
Joint Venture Facility, a first priority Assignment of Leases and Rents, in form
and substance satisfactory to Lender, dated as of the Closing Date, from the
Joint Venture, as assignor, to Borrower, as assignee, as the same may thereafter
from time to time be supplemented, amended, modified or extended by one or more
written agreements supplemental thereto.
"Base Adjusted NOI" means the amount(s) shown on Exhibit B.
"Base Payment" has the meaning provided in Section 2.5(c).
"Basic Carrying Costs" means the following costs with respect to
each Facility: (i) real property taxes, assessments and Impositions (including,
without limitation, any payments due under any ground lease and any ground
rents) applicable to such Facility; and (ii) insurance premiums for policies of
insurance required or permitted to be maintained by Borrower, each Operator,
Manager and the Joint Venture pursuant to this Agreement or the other Loan
Documents.
"Basic Carrying Costs Monthly Installment" means, with respect to
all of the Facilities, Lender's reasonable and good faith estimate of
one-twelfth (1/12th) of the sum of the annual amounts of all of the relevant
Basic Carrying Costs (provided, that Lender may calculate reasonably and in good
faith the monthly amount to assure that funds are reserved in sufficient amounts
to enable the payment of all Impositions, including, without limitation, taxes
and insurance premiums thirty (30) days prior to their respective due dates). If
the relevant Basic Carrying Costs for the then current Fiscal Year or payment
period are not ascertainable by Lender at the time a monthly deposit is required
to be made, the Basic Carrying Costs Monthly Installment shall be Lender's
reasonable and good faith estimate based on one-twelfth (1/12th) of the relevant
aggregate Basic Carrying Costs for the prior Fiscal Year or payment period, with
reasonable adjustments as determined by Lender. As soon as the relevant Basic
Carrying Costs are fixed for the then current Fiscal Year or period, the next
ensuing Basic Carrying Costs Monthly Installment shall be adjusted to reflect
any deficiency or surplus in prior Basic Carrying Costs Monthly Installments.
11
7
"Basic Carrying Costs Sub-Account" means the Sub-Account of the
Cash Collateral Account established and maintained pursuant to Section 2.11
relating to the payment of Basic Carrying Costs.
"Borrower" has the meaning provided in the preamble to this
Agreement.
"Business Day" means any day other than (i) a Saturday or a
Sunday, and (ii) a day on which federally insured depository institutions in Xxx
Xxxx, Xxx Xxxx, Xxxxxxx, Xxxxxxxx or any jurisdiction in which any Facility, the
Cash Collateral Account or any Collection Account is located, are authorized or
obligated by law, regulation, governmental decree or executive order to be
closed.
"Capital Improvement Costs" means costs incurred by Borrower,
Operator, Joint Venture or Manager in connection with capital improvements to
the Facilities.
"Capital Reserve Amount" means, with respect to the Facilities,
an amount equal to the greater of (i) the sum of the amounts obtained by
multiplying $250 by the number of beds in the Facilities (as approved by Lender)
per annum and (ii) the sum of the amounts indicated in the Engineering Report(s)
as the annual amount required to maintain each Facility.
"Capital Reserve Monthly Installment" means, with respect to the
Facilities, an amount equal to one- twelfth (1/12th) of the Capital Reserve
Amount for all of the Facilities.
"Capital Reserve Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.11 relating
to the payment of Capital Improvement Costs.
"Cash Collateral Account" has the meaning provided in Section
2.11(b).
"Cash Collateral Account Bank" means the bank which holds the
Cash Collateral Account.
"Cash Management Event" shall mean any one or more of the
following: (i) a Late Payment; (ii) a Default (other than a Late Payment) or an
Event of Default; (iii) Borrower's failure to comply with the third or fourth
sentence of Section 2.11(a)(ii); (iv) Borrower's failure to comply with the
third or fourth sentence of Section 2.11(a)(iii);
12
8
(v) the Optional Prepayment Date; (vi) if less than ninety percent (90%) of the
Rents are deposited into the Collection Account; or (vii) the ownership of the
Preferred Equity by the Preferred Equity Holder.
"Class B Amount" has the meaning provided in Section 8.32.
"Class B Equity Interests" has the meaning set forth in Exhibit
D.
"Class C Amount" has the meaning provided in Section 8.32.
"Class C Equity Interests" has the meaning set forth in Exhibit E
hereto.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
together with applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.
"Collateral" means, collectively, the Accounts, Account
Collateral, Appurtenant Rights, Equipment, General Intangibles, goods,
Improvements, Instruments, Inventory, Leases, Land, Money, Permitted
Investments, Permits (to the full extent assignable), Rents, investment
properties, and letters of credit, and all Proceeds and products of any of the
foregoing, all whether now owned or hereafter acquired, and all other property
which is or hereafter may become subject to a Lien in favor of Lender.
"Collateral Security Instrument" means any right, document or
instrument, other than a Mortgage, given as security for the Loan (including,
without limitation, the Assignments of Leases, the Assignments of Agreements,
the Collateral Assignment and the Manager's Subordinations), in each case as the
same may hereafter from time to time be supplemented, amended, extended or
modified by one or more written agreements supplemental thereto.
"Collateral Assignment" means the Collateral Assignment of Deed
of Trust and Other Loan Documents, in form and substance satisfactory to Lender,
dated as of the Closing Date from Borrower, as assignor, to Lender as assignee,
assigning to Lender all of Borrower's right, title and interest in and to the
Joint Venture Loan Documents, as the same
13
9
may thereafter from time to time be supplemented, amended, modified or extended
by one or more written agreements supplemental thereto.
"Collection Account" has the meaning provided in Section 2.11(a).
"Collection Account Agreement" has the meaning set forth in
Section 2.11(b).
"Collection Account Bank" means, with respect to each Facility,
the collection bank for such Facility and any successor bank hereafter selected
by Borrower and approved by Lender in accordance with the Collection Account
Agreement.
"CON" has the meaning set forth in Section 4.1(al)(ii).
"Condemnation Proceeds" means all of the Condemnation Proceeds
defined and described in the Mortgages.
"Contingent Obligation" means any obligation of Borrower
guaranteeing any indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
Borrower, whether or not contingent; (i) to purchase any such primary
obligation, or any property constituting direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital of the
primary obligor; (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner or obligee under any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation; or (iv) otherwise to assure or hold harmless the owner or obligee
under such primary obligation against loss in respect thereof. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
anticipated liability in respect thereof (assuming that Borrower is required to
perform thereunder) as determined by Lender in good faith.
"Current Interest Accrual Period" has the meaning provided in
Section 2.11(g).
"Cut-Off Date" means March 1, 2000.
14
10
"Debt Service" means, for any period (and calculated either for a
Facility or for the Facilities), the aggregate of all principal, interest
payments, Default Rate interest, Late Charges and Yield Maintenance Premium that
accrue or are due and payable in accordance with the Loan Documents during such
period.
"Debt Service Coverage Ratio" means, for any period, (and
calculated either for a Facility or for the Facilities) the quotient obtained by
dividing Adjusted Net Operating Income (for the Facility or Facilities, as
applicable) for the specified period by the Debt Service (for the Facility or
Facilities, as applicable) for such period.
"Debt Service Payment Sub-Account" means the Sub-Account of the
Cash Collateral Account established and maintained pursuant to Section 2.11
relating to the payment of Debt Service.
"Debt Service Reserve Sub-Account" means the Sub-Account of the
Cash Collateral Account established and maintained pursuant to Section 2.11
relating to the payment of Debt Service Reserve.
"Deed of Trust Trustee" means each of the trustees, if any, under
the Mortgages.
"Default" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.
"Default Collateral" has the meaning provided in Section 8.14.
"Default Rate" means the per annum interest rate equal to the
lesser of (i) the Maximum Amount or (ii) the Interest Rate plus five percent
(5%).
"Defeasance Debt Service Coverage Ratio" means, in respect of any
period, the quotient obtained by dividing (i) Adjusted Net Operating Income of
the Facilities remaining after a defeasance pursuant to Section 2.10 by (ii) the
aggregate amount of the Base Payments due for such period minus the payments
Lender would have received had the relevant U.S. Obligations referred to in
Section 2.10 been held as security for the Note for such period.
"Defeasance Deposit" means the following in each of the following
circumstances:
15
11
(i) in the case of a total defeasance of the Loan
and each Facility pursuant to Section 2.10, "Defeasance
Deposit" means the amount that will be sufficient to
purchase U.S. Obligations (A) having maturity dates on or
prior to, but as close as possible to, successive
scheduled Payment Dates (after the Defeasance Release
Date) upon which Payment Dates interest and principal
payments would be required under the Note as though the
Maturity Date of the Note was the Optional Prepayment Date
and (B) in amounts sufficient to pay all scheduled
principal and interest payments on the Note as if the
Maturity Date of the Note was the Optional Prepayment Date
(but without any adjustment of the monthly amortization
schedule); or
(ii) in the case of a partial defeasance of the
Loan on a Facility-by-Facility basis pursuant to Section
2.10, "Defeasance Deposit" means the amount that will be
sufficient to purchase U.S. Obligations (A) having
maturity dates on or prior to, but as close as possible
to, the successive scheduled Payment Dates (after the date
of such voluntary defeasance) upon which Payment Dates
interest and principal payments would be required under
the Note as though the Maturity Date of the Note was the
Optional Prepayment Date and (B) in amounts sufficient to
pay all scheduled principal and interest payments on the
Note (1) as if the Maturity Date of the Note was the
Optional Prepayment Date (but without any adjustment of
the monthly amortization schedule) and (2) as if the
outstanding principal indebtedness due under the Note was
an amount equal to one hundred twenty-five percent (125%)
of the Allocated Loan Amount for the Facility being
defeased; and
(iii) in the case of a partial defeasance of the
Loan pursuant to Section 5.1(p), "Defeasance Deposit"
means the amount that will be sufficient to purchase U.S.
Obligations (A) having maturity dates on or prior to, but
as close as possible to, the successive scheduled Payment
Dates (after the date of such voluntary defeasance) upon
which Payment Dates interest and principal payments would
be required under the Note as though the Maturity Date of
the Note was the Optional Prepayment Date and (B) in
amounts sufficient to pay all scheduled principal and
interest payments on the Note (1) as if the Maturity Date
of the Note was the Optional Prepayment Date (but without
any adjustment of the monthly amortization schedule) and
(2) as if the outstanding principal indebtedness due under
the Note was an amount
16
12
equal to the amount required to be defeased pursuant to
Section 5.1(p) in connection with such partial defeasance.
"Defeasance Release Date" has the meaning provided in
Section 2.10(d).
"Difference" has the meaning provided in Section 8.32(c).
"DOH" has the meaning set forth in Section 4.1(al)(i).
"Earn-Out Advance" means the Advance (if any) made by
Lender to Borrower pursuant to Section 8.32(b).
"Eligible Account" means (i) an account maintained with a
federal or state chartered depository institution or trust company whose (x)
commercial paper, short-term debt obligations or other short-term deposits are
rated at least A-1 by each Rating Agency if the deposits in such account are to
be held in such account for thirty (30) days or less or (y) long-term unsecured
debt obligations are rated at least AA- by each Rating Agency if the deposits in
such account are to be held in such account for more than thirty (30) days; or
(ii) a segregated trust account maintained with the trust department of a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which institution or trust company is subject to regulations
regarding fiduciary funds on deposit substantially similar to 12 C.F.R. Section
9.10(b); or (iii) an account otherwise acceptable to each Rating Agency, as
confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any security issued in connection with a Securitization.
"Engineer" means any reputable Independent engineer,
properly licensed in the relevant jurisdiction and approved by Lender in
Lender's reasonable discretion.
"Engineering Reports" means the structural engineering
reports with respect to each Facility (i) prepared by an Engineer, (ii)
addressed to Lender, (iii) prepared based on a scope of work determined by
Lender in Lender's reasonable discretion, and (iv) in form and content
acceptable to Lender in Lender's reasonable discretion, together with any
amendments or supplements thereto.
"Entity" means with respect to Borrower, an Operator or
the Joint Venture, a (a) corporation, if Borrower, Operator or Joint Venture, as
applicable is listed as a corporation
17
13
in the preamble to this Agreement or, as to each Operator and Joint Venture, in
Exhibit B, (b) limited partnership, if Borrower, Operator, or Joint Venture, as
applicable, is listed as a limited partnership in the preamble to this Agreement
or, as to each Operator and Joint Venture, in Exhibit B or (c) limited liability
company, if Borrower, Operator or Joint Venture, as applicable, is listed as a
limited liability company in the preamble to this Agreement or, as to each
Operator and Joint Venture, is Exhibit B.
"Environmental Claim" means any written request for
information by a Governmental Authority, or any written notice, notification,
claim, administrative, regulatory or judicial action, suit, judgment, demand,
decree or other written communication by any Person or Governmental Authority
requiring, alleging or asserting liability with respect to Borrower, the Joint
Venture, Manager, any Operator, or any Facility, whether for damages,
contribution, indemnification, cost recovery, compensation, injunctive relief,
investigatory, response, remedial or cleanup costs, damages to natural
resources, personal injuries, fines or penalties arising out of, based on,
resulting from or related to: (i) the presence, Use, Release or threatened
Release of any Hazardous Substance originating at or from, or otherwise
affecting any Facility or any part thereof; (ii) any fact, circumstance,
condition or occurrence forming the basis of any violation, or alleged
violation, of any Environmental Law by Borrower, the Joint Venture, Manager, any
Operator or otherwise affecting any Facility or any part thereof; or (iii) any
alleged injury or threat of injury to health, safety or the environment by
Borrower, the Joint Venture, Manager, any Operator or otherwise affecting the
Facility or any part thereof.
"Environmental Guaranty" means the Environmental Indemnity
Agreement in form and substance satisfactory to Lender dated as of the Closing
Date from Parent to Lender, as the same may thereafter be from time to time
supplemented, amended, modified or extended by one or more agreements
supplemental thereto.
"Environmental Laws" means any and all applicable federal,
state, local and foreign laws, rules, regulations or ordinances, each as amended
from time to time, any judicial or administrative orders, decrees, settlement
agreements or judgments thereunder, and any Permits, approvals, licenses,
registrations, filings and authorizations, in each case as in effect as of the
relevant date, relating to the environment, health or safety, or the Release or
threatened Release, or otherwise relating to the presence or Use of Hazardous
Substances.
"Environmental Reports" means, with respect to any
Facility, environmental audit report(s) (i) prepared by a reputable
environmental Engineer approved by Lender in
18
14
Lender's reasonable discretion, (ii) addressed to Lender (iii) prepared based on
a scope of work determined by Lender in Lender's reasonable discretion, and (iv)
in form and content acceptable to Lender in Lender's reasonable discretion,
together with any amendments or supplements thereto delivered to Lender.
"Equipment" means all of the Equipment defined and
described in the Mortgages.
"Equity Interests" means with respect to Borrower and each
Operator (i) if Borrower or any Operator is a limited partnership, limited
partnership interests in Borrower or any Operator; or (ii) if Borrower or any
Operator is a limited liability company, membership interests in Borrower or any
Operator; or (iii) if Borrower or any Operator is a corporation, the share or
stock interests in Borrower or any Operator; provided, however, Equity Interests
shall not include any direct or indirect legal or beneficial ownership interest,
or any other interest of any nature or kind whatsoever, of any SPE Equity Owner
in Borrower, or in any other SPE Equity Owner, as applicable.
"Equity Pledge Agreement" means each Equity Pledge
Agreement, in form and substance satisfactory to Lender in its sole discretion,
(i) dated as of the Closing Date from Parent, as assignor, to Lender, as
assignee, and (ii) dated as of the Closing Date from the Subsidiary, as
assignor, to Lender as Assignee, as the same may thereafter from time to time be
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto and "Equity Pledge Agreements" means both of such
agreements collectively.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and, as of the relevant date, any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or
business that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code, of which Borrower is a member, and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code, of
which Borrower is a member.
19
15
"Event of Default" has the meaning set forth in Section
7.1.
"Excess Cash Flow" has the meaning set forth in Section
2.11(g).
"Extra Funds" has the meaning set forth in Section
2.11(f).
"Facility" means the Land, Improvements and Equipment and
all other Collateral subject to a Related Mortgage.
"Facilities" means, collectively every Facility.
"Final Locked Rate" means, (i) if Lender and Borrower have
entered into an interest rate lock agreement with respect to the Earn-Out
Advance, the interest rate locked pursuant thereto and (ii) in all other cases,
the Treasury Rate plus the Spread.
"Fiscal Year" means the 12-month period ending on December
31 of each year or such other fiscal year of Borrower as Borrower may select
from time to time with the prior written consent of Lender, such consent not to
be unreasonably withheld or delayed.
"GAAP" means generally accepted accounting principles
consistently applied in the United States of America as of the date of the
applicable financial report.
"General Intangibles" means all of the General Intangibles
defined and described in the Mortgages.
"Governmental Authority" means any national, federal,
state, regional or local government, or any other political subdivision of any
of the foregoing, in each case with jurisdiction over Borrower, any Operator,
the Joint Venture, Manager, any Facility, or any SPE Equity Owner, or any Person
with jurisdiction over Borrower, any Operator, the Joint Venture, Manager, any
Facility or any SPE Equity Owner, exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Gross Revenue" means, with respect to any Facility, the
total dollar amount of all income and receipts whatsoever received by Borrower,
the Joint Venture or any Operator with respect to such Facility, including,
without limitation, all Rents (but excluding security deposits) and Money.
20
16
"Guaranty" means the Guaranty and Suretyship Agreement in
form and substance satisfactory to Lender dated as of the Closing Date from the
Parent to Lender as the same may thereafter from time to time be supplemented,
amended, modified or extended by one or more written agreements supplemental
thereto.
"Hazardous Substance" means: (i) any petroleum or
petroleum products or waste oils, explosives, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), lead in
drinking water, and lead-based paint, the presence, generation, Use,
transportation, storage or disposal of or exposure to which (x) is regulated or
could lead to liability under any Environmental Law or (y) is subject to notice
or reporting requirements under any Environmental Law, (ii) any chemicals or
other materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants" or
words of similar import under any Environmental Law or (iii) any other chemical
or any other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"Impositions" means all of the Impositions defined and
described in the Mortgages.
"Improvements" means all of the Improvements defined and
described in the Mortgages.
"Indebtedness" means, at any given time, the Principal
Indebtedness, together with all accrued and unpaid interest thereon and all
other obligations and liabilities due or to become due to Lender pursuant
hereto, under the Note or in accordance with any of the other Loan Documents,
and all other amounts, sums and expenses paid by or payable to Lender hereunder
or pursuant to the Note or any of the other Loan Documents.
"Indemnified Party" shall have the meaning set forth in
Section 8.29.
"Independent" means, when used with respect to any Person,
a Person who: (i) does not have any direct financial interest or any material
indirect financial interest in Borrower, any Operator, the Joint Venture or
Manager or in any Affiliate of Borrower, any Operator, the Joint Venture or
Manager (including, without limitation, in any SPE Equity Owner), (ii) is not
connected with Borrower, any Operator, the Joint Venture or Manager or
21
17
any Affiliate of Borrower, any Operator, the Joint Venture or Manager
(including, without limitation, any SPE Equity Owner), as an officer, employee,
promoter, underwriter, trustee, partner, member, manager, creditor, director or
person performing similar functions, and (iii) is not a member of the immediate
family of a Person defined in (i) or (ii) above.
"Independent Director" means a duly appointed member of
the board of directors of the relevant entity who shall not have been, at the
time of such appointment, at any time after appointment, or at any time in the
preceding five (5) years, (i) a direct or indirect legal or beneficial owner in
such entity or any of its affiliates, (ii) a creditor, supplier, employee,
officer, director, manager or contractor of such entity or any of its
affiliates, (iii) a person who controls such entity or any of its affiliates, or
(iv) a member of the immediate family of a person defined in (i), (ii) or (iii)
above.
"Initial Basic Carrying Costs Amount" means, the amount
shown as such on Exhibit B.
"Initial Capital Reserve Amount" means the amount shown as
such on Exhibit B.
"Initial Debt Service Reserve Amount" means the amount
shown as such on Exhibit B.
"Initial Interest Rate" means 7.83% per annum.
"Initial Securitization Expense Amount" means 0.375% of
the Recalculated Loan Amount.
"Instruments" means all of the Instruments defined and
described the Mortgages.
"Insurance Proceeds" means all of the Insurance Proceeds
defined and described in the Mortgages.
"Insurance Requirements" has the meaning provided in the
Mortgages.
"Interest Accrual Period" means each period of time
running from and including the eleventh (11th) day of a calendar month to and
including the tenth (10th) day of
22
18
the following calendar month during the term of the Loan. If the Closing Date
shall occur prior to the tenth (10th) day of a calendar month, the first
Interest Accrual Period shall commence on and include the Closing Date and end
on and include the tenth (10th) day of the calendar month in which the Closing
Date occurs. If the Closing Date shall occur after the tenth (10th) day of a
calendar month, the first Interest Accrual Period shall commence on the Closing
Date and end on and include the tenth (10th) day of the calendar month following
the month in which the Closing Date occurs. If the Closing Date shall occur on
the tenth (10th) day of a calendar month, the first Interest Accrual Period
shall consist of a one (1) day period consisting of the Closing Date.
"Interest Rate" means, as applicable, (i) before the
Stabilization Date, the Initial Interest Rate (ii) commencing on the
Stabilization Date, the Stabilization Interest Rate and (iii) on and after the
Optional Prepayment Date, the Revised Interest Rate.
"Inventory" means all of the Inventory defined and
described in the Mortgages.
"Investor" has the meaning provided in Section 8.27.
"Issuer" means any issuer of securities issued in
connection with a Securitization.
"Joint Venture" means the entity identified as the "Joint
Venture" on Exhibit B attached hereto.
"Joint Venture Facility" means the Facility identified as
a "Joint Venture Facility" on Exhibit B attached hereto.
"Joint Venture Loan" means the loan from Borrower to the
Joint Venture pursuant to the Joint Venture Note.
"Joint Venture Loan Agreement" means the Loan Agreement,
in form and substance satisfactory to Lender, dated as of the Closing Date by
and between the Joint Venture, as borrower, and the Borrower, as lender,
pursuant to which the Joint Venture Loan is made, as the same may thereafter
from time to time be supplemented, amended, modified or extended by one or more
written agreements supplemental thereto.
23
19
"Joint Venture Loan Documents" means, collectively, the
Joint Venture Loan Agreement, the Joint Venture Note, the Joint Venture
Mortgage, the Assignment of Leases - Joint Venture, the Assignment of Agreements
- Joint Venture, the Manager's Subordinations - Joint Venture and all other
agreements, instruments, certificates and documents executed or delivered by or
on behalf of the Joint Venture or any Affiliate to evidence or secure the Joint
Venture Loan or otherwise in satisfaction of the requirements of the Joint
Venture Loan Agreement, the Joint Venture Mortgage or the other documents listed
above.
"Joint Venture Mortgage" means, as applicable, with
respect to the Joint Venture Facility, a first priority Mortgage or Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing or such other
comparable document which is customarily used by prudent lenders in the
jurisdiction in which the Joint Venture Facility is located, in form and
substance satisfactory to Lender in Lender's discretion, dated as of the Closing
Date, granted by the Joint Venture to Borrower (or, in the case of a Deed of
Trust, to Deed of Trust Trustee for the benefit of Borrower) with respect to the
Joint Venture Facility as security for the Joint Venture Note, as the same may
thereafter from time to time be supplemented, amended, modified or extended by
one or more written agreements supplemental thereto.
"Joint Venture Note" means and refers to the promissory
note, in form and substance satisfactory to Lender in Lender's discretion, dated
the Closing Date, made by the Joint Venture to Borrower pursuant to the Joint
Venture Loan Agreement as such promissory note may be modified, amended,
supplemented, extended or consolidated in writing, and any note(s) issued in
exchange therefor or in replacement thereof.
"Land" means all of the Land defined and described in the
Mortgages.
"Late Charge" means the lesser of (i) five percent (5%) of
any unpaid amount and (ii) the maximum late charge permitted to be charged under
the laws of the State of New York.
"Late Payment" means Borrower's failure to pay any amount
hereunder when due, without giving effect to any cure period, if any.
"Leased Facility" means each Facility owned in fee simple
by the Borrower as shown on Exhibit B and leased to the relevant Operator shown
on Exhibit B and "Leased Facilities" means all of such Facilities, collectively.
24
20
"Leases" means all of the Leases defined and described in
the Mortgages.
"Legal Requirements" means all statutes, laws, rules,
orders, regulations, ordinances, judgments, orders, decrees and injunctions of
Governmental Authorities affecting Borrower, any Operator, the Joint Venture,
the Manager, the Loan Documents, any Facility or any part thereof, or the
ownership, construction, use, alteration or operation thereof, or any part
thereof, enacted or entered and in force as of the relevant date, and all
Permits and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, any Operator, the Joint Venture, or Manager at any time in
force affecting any Facility or any part thereof, including, without limitation,
any which (i) may require repairs, modifications, or alterations in or to any
Facility or any part thereof, or (ii) in any way limit the use and enjoyment
thereof, and further including, without limitation, all Environmental Laws and
the Americans with Disabilities Act, as they may be amended from time to time,
together with all regulations promulgated pursuant thereto or in connection
therewith.
"Lender" has the meaning provided in the preamble to this
Agreement.
"Liabilities" has the meaning set forth in Section 2.13.
"Licenses" means all of the Licenses defined and described
in the Mortgages.
"Lien" means any mortgage, deed of trust, deed to secure
debt, lien (statutory or other), pledge, easement, restrictive covenant,
hypothecation, assignment, preference, priority, security interest, or any other
encumbrance or charge on or affecting any Facility or any portion thereof or any
Collateral or Borrower, or any interest in any of the foregoing, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing, the filing of any financing statement or similar instrument under
the UCC or comparable law of any other jurisdiction, domestic or foreign, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" has the meaning provided in the Recitals hereto.
"Loan Amount" has the meaning provided in the Recitals
hereto.
25
21
"Loan Documents" means, collectively, this Agreement, the
Note, the Mortgages, the Assignments of Leases, the Assignments of Agreements,
the Manager's Subordinations, Guaranty, the Equity Pledge Agreements, the
Environmental Guaranty, the Collection Account Agreement, the SNDAs, the
Collateral Assignment and all other agreements, instruments, certificates and
documents executed or delivered by or on behalf of Borrower, any Operator or the
Joint Venture or any Affiliate to evidence or secure the Loan or otherwise in
satisfaction of the requirements of this Agreement, the Mortgages or the other
documents listed above.
"Losses" has the meaning provided in Section 5.1(i).
"Management Agreement" means, with respect to a Facility,
(i) the Management Agreement entered into between the Manager and Borrower,
relevant Operator or Joint Venture and (ii) as to the Subleased Facilities, the
sublease entered into by and between the relevant Operator and the Manager
pertaining to the management of such Facility in the form attached to the
relevant Manager's Subordination and "Management Agreements" means all such
agreements, collectively.
"Manager" means, with respect to a Facility, Alternative
Living Services, Inc. as manager of any of the Facilities and sublessee on the
Subleased Facilities, or any successor or assignee of such Manager, provided
that each successor or assignee shall be acceptable to Lender in Lender's
discretion. "Managers" means all such Managers, collectively.
"Manager's Subordination" means, with respect to a
Facility, the Manager's Consent and Subordination of Management Agreement in
form and substance satisfactory to Lender, dated as of the Closing Date,
executed by the Lender, the relevant Manager, Borrower and/or the relevant
Operator and/or the Joint Venture, as the same may thereafter from time to time
be supplemented, amended, modified or extended by one or more written agreements
supplemental thereto and "Manager's Subordinations" means all such agreements,
collectively.
"Material Adverse Effect" means a material adverse effect
upon (i) the business or the financial position or results of operation of
Borrower, any Operator, the Joint Venture or Manager, taken as a whole, (ii) the
ability of Borrower, the Joint Venture or Manager to perform, or of Lender to
enforce, any of the Loan Documents or (iii) the value of (x) the Collateral
taken as a whole or (y) any Facility.
26
22
"Material Adverse Effect on an Aggregated Facilities
Basis" means a material adverse effect upon (i) the business or the financial
position or results of operation of Borrower, any Operator, the Joint Venture or
Manager, taken as a whole, (ii) the ability of Borrower, the Joint Venture or
Manager to perform, or of Lender to enforce, any of the Loan Documents or (iii)
the value of (x) the Collateral taken as a whole or (y) the Facilities taken as
a whole.
"Material Lease" means each Material Lease defined and
described in the Mortgages.
"Maturity Date" mean the date that is 300 months after the
Stabilization Date Payment Date or such earlier date resulting from acceleration
of the Indebtedness by Lender.
"Maximum Amount" means the maximum rate of interest
designated by applicable laws relating to payment of interest and usury.
"Maximum Facility Amount" means Thirty Six Million Dollars
($36,000,000).
"Money" means all moneys, cash, rights to deposit or
savings accounts, credit card receipts, rents or other items of legal tender
obtained from or for use in connection with the ownership or operation of any
Facility.
"Mortgage - Borrower" means, as applicable, (i) with
respect to a Leased Facility or a Non-Leased Facility, a first priority Mortgage
or Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing or
such other comparable document which is customarily used by prudent lenders in
the jurisdiction in which such Facility is located, in form and substance
satisfactory to Lender in Lender's discretion, dated as of the Closing Date,
granted by Borrower to Lender (or, in the case of a Deed of Trust, to Deed of
Trust Trustee for the benefit of Lender) with respect to such Facility as
security for the Loan, and (ii) with respect to the Joint Venture Facility, a
first priority Mortgage or Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing or such other comparable document which is
customarily used by prudent lenders in the jurisdiction in which such Facility
is located, in form and substance satisfactory to Lender in Lender's discretion,
granted by Borrower (on the Stabilization Date Payment Date) to Lender (or, in
the case of a Deed of Trust, to Deed of Trust Trustee for the benefit of Lender)
with respect to such Facility as security for the Loan, each as the same may
thereafter from time to time be supplemented, amended, modified or
27
23
extended by one or more written agreements supplemental thereto, and "Mortgages
Borrower" means all such instruments collectively.
"Mortgages" means, collectively, the Mortgages - Borrower
and Joint Venture Mortgage.
"Mortgaged Property" means collectively, as applicable,
the "Mortgaged Property" or the "Trust Estate" defined and described in the
Mortgages.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"NACC" means Nomura Asset Capital Corporation, a Delaware
corporation, and its successors and assigns.
"Net Operating Income" means for any period (as calculated
either for a Facility or all Facilities) the excess, if any, of Operating Income
for such period over Operating Expenses for such period.
"Non-Leased Facility" means each Facility identified as
such on Exhibit B attached hereto and "Non- Leased Facilities" means all such
Facilities, collectively.
"Note" means and refers to the promissory note, in form
and substance satisfactory to Lender in Lender's discretion, dated the Closing
Date, made by Borrower to Lender pursuant to this Agreement as such promissory
note may be modified, amended, supplemented, extended or consolidated in
writing, and any note(s) issued in exchange therefor or in replacement thereof.
"Officer's Certificate" means a certificate of the
Borrower which is signed by the president, any vice-president, any secretary or
the treasurer of the Borrower.
"Operating Expense Certificate" means a certificate of the
Borrower in the form attached hereto as Exhibit A.
"Operating Expense Monthly Installment" means, with
respect to a given Interest Accrual Period, the amount shown on the Annual
Operating Budget for such period.
28
24
"Operating Expense Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant to Section 2.11
relating to the payment of operating expenses, as reasonably approved by Lender.
"Operating Expenses" means, for any period, for Borrower,
Operator, the Joint Venture, or Manager (a) all expenditures by Borrower and,
without duplication, (b) all expenditures by any Operator and, without
duplication, (c) all expenditures by the Joint Venture, and, without
duplication, (d) all expenditures by Manager, as and to the extent required to
be expensed under GAAP during such period in connection with the ownership,
operation, maintenance, repair or leasing of the Facilities (or of a Facility),
including, without limitation or duplication:
(i) expenses in connection with cleaning, repair,
replacement, painting and maintenance;
(ii) wages, benefits, payroll taxes, uniforms,
insurance costs and all other related expenses for
employees of Borrower, any Operator, the Joint Venture or
any Affiliate engaged in repair, operation, maintenance of
the Facilities (or of a Facility) or service to tenants,
patrons or guests of the Facilities (or of a Facility), as
applicable;
(iii) any management fees and expenses;
(iv) the cost of all electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other
energy, utility or similar item and overtime services;
(v) the cost of cleaning supplies;
(vi) Impositions;
(vii) business interruption, liability, casualty
and fidelity insurance premiums;
(viii) legal, accounting and other professional
fees and expenses incurred in connection with the
ownership, leasing or operation of the
29
25
Facilities (or a Facility), including, without limitation,
collection costs and expenses;
(ix) costs and expenses of security and security
systems;
(x) trash removal and exterminating costs and
expenses;
(xi) advertising and marketing costs;
(xii) costs of environmental audits and monitoring,
environmental, investigation, remediation or other
response actions or any other expenses incurred with
respect to compliance with Environmental Laws; and
(xiii) all other ongoing expenses which, on an
accounting basis consistent with Parent's audited
financial statements, are required to be or are included
in Borrower's, any Operator's or the Joint Venture's
annual financial statements as operating expenses of the
Facilities (or of a Facility).
Notwithstanding the foregoing, Operating Expenses shall not include (x) any
taxes imposed on Borrower's net income, (y) depreciation or amortization of
tangibles or intangibles or (z) Debt Service and other payments in connection
with the Indebtedness (including, deposits into the Capital Reserve
Sub-Account). Operating Expenses shall be calculated in accordance with GAAP.
"Operating Income" means, for any period, for Borrower,
any Operator, and the Joint Venture (a) all regular ongoing income of Borrower
during such period from the operation of the Facilities (or of a Facility), and,
without duplication (b) all regular ongoing income of any Operator during such
period from the operation of the Facilities (or of a Facility) and, without
duplication, and (c) all regular ongoing income of the Joint Venture during such
period from the operation of the Facilities (or of a Facility), including,
without limitation:
(i) all amounts payable as Rents (other than security deposits) and all other
amounts payable under Leases or other third party agreements relating to the
ownership and operation of the Facilities (or of a Facility);
30
26
(ii) business interruption insurance proceeds; and
(iii) all other amounts which, on an accounting
basis consistent with Parent's audited financial
statements, are required to be or are included in
Borrower's, any Operator's or the Joint Venture's annual
financial statements as operating income of the Facilities
(or of a Facility).
"Operator" means each entity listed as an "Operator" on
Exhibit B attached hereto and "Operators" shall mean all such entities,
collectively.
"Operator/JV Acquisition" has the meaning set forth in
Section 8.34.
"Operator Lease" means, with respect to each Leased
Facility, that certain operator lease between the Borrower and the relevant
Operator for the lease of all or a part of such Leased Facility and, with
respect to the Facility located in Florida, the lease between Borrower and the
Parent for the lease of all or a part of such Facility, together with any
guarantees, supplements, amendments, modifications, extensions and renewals of
the same, and all additional remainders, reversions, and other rights and
estates appurtenant thereto and "Operator Leases" means all such instruments,
collectively.
"Optional Prepayment Date" means the fifteenth (15th)
anniversary of the Stabilization Date Payment Date.
"Other Borrowings" means, without duplication (but not
including the Indebtedness or any Transaction Costs payable in connection with
the Transactions), (i) all indebtedness of Borrower for borrowed money or for
the deferred purchase price of property or services, (ii) all indebtedness of
Borrower evidenced by a note, bond, debenture or similar instrument, (iii) the
face amount of all letters of credit issued for the account of Borrower and,
without duplication, all unreimbursed amounts drawn thereunder, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by Borrower
whether or not such indebtedness has been assumed, (v) all Contingent
Obligations of Borrower, and (vi) all payment obligations of Borrower under any
interest rate protection agreement (including, without limitation, any interest
rate swaps, caps, floors, collars or similar agreements) and similar agreements.
"Parent" means Alternative Living Services, Inc.
31
27
"Payment Date" means the eleventh (11th) day of each
calendar month during the term of the Loan; provided, however, that for purposes
of making payments hereunder, but not for purposes of calculating interest
accrual periods, if the eleventh (11th) day of a given month shall not be a
Business Day, then the Payment Date for such month shall be the next succeeding
Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"PCBs" has the meaning provided in the definition of
"Hazardous Substance".
"Permits" means all of the Permits defined and described
in the Mortgages.
"Permitted Encumbrances" means, with respect to a Facility
(or, as applicable, with respect to all of the Facilities), collectively, (i)
the Lien created by the Related Mortgage or the other Loan Documents, (ii) all
Liens and other matters disclosed in the applicable Title Insurance Policy
concerning such Facility, or any part thereof which have been approved by Lender
in Lender's discretion, (iii) Liens, if any, for Impositions imposed by any
Governmental Authority not yet due or delinquent or being contested in good
faith and by appropriate proceedings in accordance with the Related Mortgage,
(iv) without limiting the foregoing, any and all governmental, public utility
and private restrictions, covenants, reservations, easements, licenses or other
agreements of an immaterial nature which may be granted by Borrower or the Joint
Venture after the Closing Date and which do not materially and adversely affect
(a) the ability of Borrower to pay any of its obligations to any Person as and
when due, (b) the marketability of title to such Facility, (c) the fair market
value of such Facility, or (d) the use or operation of such Facility as of the
Closing Date and thereafter, (v) Liens in connection with a Receivables Loan
entered into pursuant to Section 6.1(c), and (vi) Liens on the Equipment or
vehicles used in the ordinary course of operating and owning the Facilities
which are the subject of a financing of such Equipment or vehicles (including
capitalized leases of such Equipment or vehicles) which financing complies with
the terms of clause (xx) of the definition of the term "Special-Purpose Entity"
"Permitted Investments" means any one or more of the
following obligations or securities payable on demand or having a scheduled
maturity on or before the Business Day immediately preceding the date upon which
the funds in the Cash Collateral Account are required to be drawn, and having at
all times the required ratings, if any, provided for in this
32
28
definition, unless each Rating Agency shall have confirmed in writing to Lender
that a lower rating would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any security
issued in connection with a Securitization:
(iv) obligations of, or obligations fully guaranteed as
to payment of principal and interest by, the United
States or any agency or instrumentality thereof
provided such obligations are backed by the full
faith and credit of the United States of America
including, without limitation, obligations of: the
U.S. Treasury (all direct or fully guaranteed
obligations), the Farmers Home Administration
(certificates of beneficial ownership), the General
Services Administration (participation
certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business
Administration (guaranteed participation
certificates and guaranteed pool certificates), the
U.S. Department of Housing and Urban Development
(local authority bonds) and the Washington
Metropolitan Area Transit Authority (guaranteed
transit bonds); provided, however, that the
investments described in this clause must (A) have
a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments
have a variable rate of interest, such interest
rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move
proportionately with that index, and (D) such
investments must not be subject to liquidation
prior to their maturity;
(v) Federal Housing Administration debentures;
(vi) obligations of the following United States
government sponsored agencies: Federal Home Loan
Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes),
the Federal Home Loan Banks (consolidated debt
obligations), the Federal National Mortgage
Association (debt obligations), the Student Loan
Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the
Resolution Funding Corp. (debt obligations);
provided, however, that the investments described
in this clause must (A) have a predetermined fixed
dollar amount of principal due at
33
29
maturity that cannot vary or change, (B) if rated
by S&P, must not have an "r" highlighter affixed to
their rating, (C) if such investments have a
variable rate of interest, such interest rate must
be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately
with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(vii) federal funds, unsecured certificates of deposit,
time deposits, bankers' acceptances and repurchase
agreements with maturities of not more than 365
days of any bank, the short term obligations of
which are rated in the highest short term rating
category by each Rating Agency (or otherwise
acceptable to each Rating Agency, as confirmed in
writing that such investment would not, in and of
itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to
any security issued in connection with a
Securitization), provided, however, that the
investments described in this clause must (A) have
a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments
have a variable rate of interest, such interest
rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move
proportionately with that index, and (D) such
investments must not be subject to liquidation
prior to their maturity;
(viii) fully Federal Deposit Insurance Corporation-insured
demand and time deposits in, or certificates of
deposit of, or bankers' acceptances issued by, any
bank or trust company, savings and loan association
or savings bank, the short term obligations of
which are rated in the highest short term rating
category by each Rating Agency (or otherwise
acceptable to each Rating Agency, as confirmed in
writing that such investment would not, in and of
itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to
any security issued in connection with a
Securitization), provided, however, that the
investments described in this clause must (A) have
a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments
have a variable rate of interest,
34
30
such interest rate must be tied to a single
interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and
(D) such investments must not be subject to
liquidation prior to their maturity;
(ix) debt obligations with maturities of not more than
365 days and rated by each Rating Agency (or
otherwise acceptable to each Rating Agency, as
confirmed in writing that such investment would
not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current
ratings assigned to any security issued in
connection with a Securitization), in its highest
long-term unsecured rating category; provided,
however, that the investments described in this
clause must (A) have a predetermined fixed dollar
amount of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (C) if
such investments have a variable rate of interest,
such interest rate must be tied to a single
interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and
(D) such investments must not be subject to
liquidation prior to their maturity;
(x) commercial paper (including both
non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or
on a specified date not more than one year after
the date of issuance thereof) with maturities of
not more than 365 days and that is rated by each
Rating Agency (or otherwise acceptable to each
Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then
current ratings assigned to any security issued in
connection with a Securitization), in its highest
short-term unsecured debt rating; provided,
however, that the investments described in this
clause must (A) have a predetermined fixed dollar
amount of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (C) if
such investments have a variable rate of interest,
such interest rate must be tied to a single
interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and
(D) such investments must not be subject to
liquidation prior to their maturity;
35
31
(xi) the Federated Prime Obligation Money Market Fund
(the "Fund") so long as the Fund is rated "AAAm" or
"AAAm-G" by S&P, or the equivalent by each other
Rating Agency (or otherwise acceptable to each
Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then
current ratings assigned to any security issued in
connection with a Securitization);
(xii) any other demand, money market or time deposit,
demand obligation or any other obligation, security
or investment, provided that each Rating Agency has
confirmed in writing to Lender, that such
investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then
current ratings assigned to any security issued in
connection with a Securitization; and
(xiii) such other obligations as are acceptable as
Permitted Investments to each Rating Agency, as
confirmed in writing to Lender, that such
obligations would not, in and of itself, result in
a downgrade, qualification or withdrawal of the
then current ratings assigned to any security
issued in connection with a Securitization;
provided, however, that, in the judgment of Lender, such instrument continues to
qualify as a "cash flow investment" pursuant to Code Section 860G(a)(6) earning
a passive return in the nature of interest and provided further that no
instrument or security shall be a Permitted Investment if (i) such instrument or
security evidences a right to receive only interest payments, (ii) the right to
receive principal and interest payments derived from the underlying investment
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment or (iii) such
investments have a maturity in excess of one
"Permitted Transfers" shall mean, provided that no Event
of Default has occurred: (i) Permitted Encumbrances; (ii) all transfers of worn
out or obsolete furnishings, fixtures or equipment that are promptly replaced
with property of equivalent value and functionality; (iii) all Leases which are
not Material Leases; (iv) all Material Leases which have been approved by Lender
in writing in Lender's discretion; (v) transfers of Equity Interests which in
the aggregate during the term of the Loan (a) do not exceed forty-nine percent
(49%) of the total interests in Borrower, any Operator or any SPE Equity Owner
and
36
32
(b) do not result in any other shareholder's, partner's, member's or other
Person's interest in Borrower, any Operator or any SPE Equity Owner exceeding
forty-nine percent (49%) of the total interests in Borrower, any Operator or any
SPE Equity Owner; (vi) any other transfer of Equity Interests in Borrower after
the Stabilization Date provided that (a) prior to any Securitization, Lender
shall have consented to such transfer or transfers (which consent shall be given
provided the net worth and financial status of the proposed transferee (after
giving effect to the transfer) are equal to or greater than the greater of (A)
Borrower's net worth on the Stabilization Date and (B) Borrower's net worth on
the date of the proposed transfer, as determined by Lender in its reasonable
discretion), (b) after any Securitization, (1) Lender shall have consented to
such transfer or transfers (which consent shall be given provided the net worth
and financial status of the proposed transferee (after giving effect to the
transfer) are equal to or greater than the greater of (A) Borrower's net worth
on the Stabilization Date and (B) Borrower's net worth on the date of the
proposed transfer, as determined by Lender in its reasonable discretion) and (2)
the Rating Agencies shall have confirmed in writing that such transfer or
transfers shall not result in a downgrade, withdrawal or qualification of any
securities issued in connection with such Securitization, (c) acceptable
opinions relating to such transfer or transfers shall have been delivered by
Borrower to Lender and the Rating Agencies (including, without limitation, tax
and bankruptcy opinions), and (d) Borrower pays all reasonable expenses incurred
by Lender in connection with such transfer or transfers up to a maximum amount
of 0.5% of the Loan Amount for the first transfer and one percent (1%) of the
Loan Amount for each subsequent transfer; (vii) a transfer after the
Stabilization Date of all the Facilities to a single purchaser provided that
prior to such transfer (a) prior to a Securitization, Lender shall have
consented to such transfer (which consent shall be given provided the net worth
and financial status of the proposed transferee (after giving effect to the
transfer) are equal to or greater than the greater of (A) Borrower's net worth
on the Stabilization Date and (B) Borrower's net worth on the date of the
proposed transfer, as determined by Lender in its reasonable discretion), (b)
after a Securitization, (1) Lender shall have consented to such transfer (which
consent shall be given provided the net worth and financial status of the
proposed transferee (after giving effect to the transfer) are equal to or
greater than the greater of (A) Borrower's net worth on the Stabilization Date
and (B) Borrower's net worth on the date of the proposed transfer, as determined
by Lender in its reasonable discretion) and (2) the Rating Agencies shall have
confirmed in writing that such transfer or transfers shall not result in a
downgrade, withdrawal or qualification of any securities issued in connection
with such Securitization, (c) acceptable opinions relating to such transfer
shall have been delivered by Borrower to Lender and to the Rating Agencies
(including without limitation tax and bankruptcy opinions), (d) the transferee
assumes in writing all obligations of the transferor under the Loan Documents
and executes and delivers
37
33
such other documentation as may be required by the Rating Agencies or reasonably
required by Lender, and (e) Borrower pays all reasonable expenses incurred by
Lender in connection with such transfer up to a maximum amount of 0.5% of the
Loan Amount for the first transfer and one percent (1%) of the Loan Amount for
each subsequent transfer; and (viii) transfers of interests in any Operator or
the Joint Venture made pursuant to and in compliance with Section 8.34.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, estate, trust, unincorporated
association, or any other entity, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.
"Physical Plant Standards" has the meaning provided in
Section 4.1(b)(al)(vii).
"Plan" means an employee benefit or other plan established
or maintained by Borrower or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Preferred Cash Collateral Account" means that certain
bank account to be established pursuant to the Preferred Cash Management
Agreement.
"Preferred Cash Collateral Account Bank" means the bank
which holds the Preferred Cash Collateral Account.
"Preferred Cash Management Agreement" means that certain
cash collateral account agreement to be executed among Borrower, Preferred
Equity Holder, the other holders of equity interests in Borrower, and the Cash
Management Collateral Account Bank (the terms of which are summarized on Exhibit
F hereto) as the same may from time to time be supplemented, amended, modified
or extended by one or more written agreements supplemental thereto.
"Preferred Equity Holder" means NACC, its designees,
successors and assigns.
38
34
"Principal Indebtedness" means the principal amount of the
entire Loan outstanding as the same may be increased or decreased, as a result
of prepayment or otherwise, from time to time.
"Proceeds" means, with respect to Borrower or the Joint
Venture, all of Borrower's or the Joint Venture's "proceeds," as such term is
defined in the UCC, and, to the extent not included in such definition, all
proceeds whether cash or non-cash, movable or immovable, tangible or intangible
(including Insurance Proceeds, Condemnation Proceeds and proceeds of proceeds),
from the Collateral, including, without limitation, those from the sale,
exchange, transfer, collection, loss, damage, disposition, substitution or
replacement of any of the Collateral and all income, gain, credit, distributions
and similar items from or with respect to the Collateral.
"Rating Agencies" means Fitch Investors Service, Inc.,
Xxxxx'x Investors Service, Inc., Duff & Xxxxxx Credit Rating Co. and S&P or any
successor thereto, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by Lender or its designees in connection with or in anticipation of a
Securitization (each, individually a "Rating Agency").
"Recalculated Loan Amount" has the meaning provided in
Section 8.32.
"Receivables Loan" has the meaning set forth in Section
6.1(c).
"Recourse Distributions" has the meaning provided in
Section 8.14.
"Related Mortgage" means, with respect to a particular
Facility, the Mortgage relating to such Facility.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment of Hazardous
Substances, including, without limitation, the movement of Hazardous Substances
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.
"Remedial Work" has the meaning provided in Section
5.1(d)(i).
39
35
"REMIC" means a real estate mortgage investment conduit as
defined under Section 860D of the Code.
"Rents means of all of the Rents defined and described in
the Mortgages.
"Request for Advance" has the meaning set forth in Section
3.3.
"Required Base Debt Service Payment" means all of the
Required Debt Service Payment except for that portion of the Required Debt
Service Payment which consists of payments of Excess Cash Flow which may be due
and payable on and after the Optional Prepayment Date.
"Required Debt Service Payment" means, on any Payment
Date, the Debt Service then due and payable by Borrower.
"Revised Interest Rate" means the greater of (i) the sum
of the Stabilization Interest Rate plus five hundred (500) basis points, and
(ii) as of the Optional Prepayment Date, the sum of the Ten Year Treasury Rate
plus (x) six hundred and ninety five (695) basis points, if the Stabilization
Interest Rate is as set forth in clauses (i) or (iii) of the definition of such
term or (y) six hundred and eighty (680) basis points, if the Stabilization
Interest Rate is as set forth in clause (ii) of the definition of such term,
such Revised Interest Rate not to exceed the Maximum Amount.
"S&P" means Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc.
"Secretary's Certificate" means, with respect to Borrower,
each general partner of each Operator, each managing member of the Joint
Venture, and the Manager, the certificate in form and substance satisfactory to
Lender in Lender's discretion dated as of the Closing Date.
"Securitization" shall have the meaning provided in
Section 2.13.
40
36
"Securitization Closing Date" means the date on which a
Securitization is effected.
"Securitization Costs" shall have the meaning set forth in
Section 2.13.
"Securitization Expense Sub-Account" means the Sub-Account
of the Cash Collateral Account established and maintained pursuant to Section
2.11.
"Security Agreement" has the meaning provided in Section
2.10(d).
"Single-Purpose Entity" means a corporation, limited
partnership, or limited liability company which, at all times since its
formation and thereafter (i) was and will be organized solely for the purpose of
(x) owning and/or operating the Facilities or (y) acting as the managing member
of the limited liability company which owns and/or operates the Facilities
(provided, such entity shall not be ALS-Venture I, Inc.) or (z) acting as the
general partner of a limited partnership which owns and/or operates the
Facilities (provided, such entity shall not be ALS-Venture I, Inc.), (ii) has
not and will not engage in any business unrelated to the (x) the ownership
and/or operation of the Facilities or (y) acting as a member of a limited
liability company which owns and/or operates the Facilities (provided, such
entity shall not be ALS-Venture I, Inc.) or (z) acting as a general partner of a
limited partnership which owns and/or operates the Facilities (provided, such
entity shall not be ALS-Venture I, Inc.), (iii) has not and will not have any
assets other than (x) those related to the Facilities or (y) its member interest
in the limited liability company which owns and/or operates the Facilities
(provided, such entity shall not be ALS-Venture I, Inc.) or (z) its general
partnership interest in the limited partnership which owns and/or operates the
Facilities (provided, such entity shall not be ALS-Venture I, Inc.), as
applicable, (iv) has not and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation or merger, and, except as
otherwise expressly permitted by this Agreement, has not and will not engage in,
seek or consent to any asset sale, transfer of partnership or membership or
shareholder interests, or amendment of its limited partnership agreement,
articles of incorporation, articles of organization, certificate of formation or
operating agreement (as applicable), (v) if such entity is a limited
partnership, has and will have as its only general partners, general partners
which are and will be Single-Purpose Entities which are corporations, (vi) if
such entity is a corporation, at all relevant times, has and will have at least
one Independent Director, (vii) the board of directors of such entity has not
taken and will not take any action requiring the unanimous affirmative vote of
100% of the members of the board of directors unless all of the directors,
including without limitation all Independent Directors, shall have participated
in such vote, (viii) has not and will not fail to correct any known
misunderstanding regarding the separate identity of such entity, (ix) if such
entity is a limited liability company, has and will have at least one member
that is and will be a Single-Purpose Entity which is and will be a corporation,
and such corporation is and will be the managing member of such limited
liability company, (x) without the unanimous consent of all of the
41
37
partners, directors (including without limitation all Independent Directors) or
members, as applicable, has not and will not with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership
interest (a) file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally; (b) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
entity or all or any portion of such entity's properties; (c) make any
assignment for the benefit of such entity's creditors; or (d) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity, (xii) has maintained and will maintain its books, records, resolutions
and agreements as official records, (xiii) has not commingled and will not
commingle its funds or assets with those of any other entity, (xiv) has held and
will hold its assets in its own name, (xv) has conducted and will conduct its
business in its name, (xvi) has maintained and will maintain its financial
statements, accounting records and other entity documents separate from any
other person or entity, (xvii) has paid and will pay its own liabilities out of
its own funds and assets, (xviii) has observed and will observe all partnership,
corporate or limited liability company formalities as applicable, (xix) has
maintained and will maintain an arms-length relationship with its affiliates,
(xx) (a) if such entity owns the Facilities, has and will have no indebtedness
other than the (A) Indebtedness and (B) unsecured trade payables in the ordinary
course of business relating to the ownership and operation of the Facilities and
financing of Equipment or vehicles used in the ordinary course of operating and
owning the Facilities (including capitalized leases of such Equipment and
vehicles) which trade payables and Equipment and vehicles financings (1) do not
exceed, at any time, a maximum amount of One Hundred Fifty Thousand Dollars
($150,000) for each Facility (provided, however, the aggregate amount for all
Facilities at any one time shall not exceed One Million Two Hundred Fifty
Thousand Dollars ($1,250,000)) and (2) trade payables are paid within thirty
(30) days of the date incurred, or (b) if such entity (provided, such entity
shall not be ALS-Venture I, Inc.) acts as the general partner of a limited
partnership which owns and/or operates the Facilities, has and will have no
indebtedness other than unsecured trade payables in the ordinary course of
business relating to acting as general partner of the limited partnership which
owns the Facilities which (1) do not exceed, at any time, Ten Thousand Dollars (
$10,000.00) and (2) are paid within thirty (30) days of the date incurred, (c)
if such entity (provided, such entity shall not be ALS-Venture I, Inc.) acts as
a managing member of a limited liability company which owns and/or operates the
Facilities, has and will have no indebtedness other than unsecured trade
payables in the ordinary course of business relating to acting as a member of
the limited liability company which owns the Facilities which (1) do not exceed,
at any time, Ten Thousand Dollars ( $10,000.00) and (2)
42
38
are paid within thirty (30) days of the date incurred, or (d) if such entity
operates the a Facility, has and will have no indebtedness other than unsecured
trade payables in the ordinary course of business relating to operating such
Facility which (1) do not exceed, at any time, Ten Thousand Dollars ($10,000.00)
and (2) are paid within thirty (30) days of the date incurred, (xxi) has not and
will not assume or guarantee or become obligated for the debts of any other
entity or hold out its credit as being available to satisfy the obligations of
any other entity except for the Indebtedness, (xxii) has not acquired and will
not acquire obligations or securities of its partners, members or shareholders,
(xxiii) has allocated and will allocate fairly and reasonably shared expenses,
including, without limitation, shared office space and uses separate stationery,
invoices and checks, (xxiv) except pursuant hereto, has not and will not pledge
its assets for the benefit of any other person or entity, (xxv) has held and
identified itself and will hold itself out and identify itself as a separate and
distinct entity under its own name and not as a division or part of any other
person or entity, (xxvi) has not made and will not make loans to any person or
entity, (xxvii) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or part of it,
(xxviii) if such entity is a limited liability company, such entity shall
dissolve only upon the bankruptcy of the managing member, and such entity's
articles of organization, certificate of formation and/or operating agreement,
as applicable, shall contain such provision, (xxix) has not entered and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or its affiliates except in the ordinary course of its business and
on terms which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arms-length transaction with an unrelated third
party, (xxx) has paid and will pay the salaries of its own employees from its
own funds, (xxxi) has maintained and will maintain adequate capital in light of
its contemplated business operations and (xxxii) if such entity is a limited
liability company or limited partnership, and such entity has one or more
managing members or general partners, as applicable, then such entity shall
continue (and not dissolve) for so long as a solvent managing member or general
partner, as applicable, exists and such entity's organizational documents shall
contain such provision. Notwithstanding the foregoing, the Borrower shall be
permitted to hold the Joint Venture Note as described below in Section 8.34.
"SNDAs" means the subordination, nondisturbance and
attornment agreements by and between the Operators and Lender and, as to the
Facility located in Florida, the Parent and Lender, which shall be in form
reasonably satisfactory to Lender.
"SPE Equity Owner" means, if Borrower is a limited
partnership, the general partner of the Borrower and, if Borrower is a limited
liability company, the managing member of Borrower.
43
39
"Spread " means 1.95%.
"Stabilization Date" means the earlier to occur of (i) the
date on which Borrower (A) has requested that Lender recalculate the aggregate
amount of the Loan, (B) provided to Lender all information required pursuant to
Section 8.32, and (C) has established, to Lender's reasonable satisfaction, that
the Recalculated Loan Amount (calculated based upon the Underwriting NOI
Criteria and in accordance with the methodology and debt service coverage ratio
tests set forth in Section 8.32(a)), will be an amount equal to or exceeding the
then outstanding Indebtedness, (ii) the Cut-Off Date and (iii) the date on which
Lender has reasonably determined that the Recalculated Loan Amount (calculated
based upon the Underwriting NOI Criteria and in accordance with the methodology
and debt service coverage ratio tests set forth in Section 8.32(a)) will be an
amount equal to or exceeding the then outstanding Indebtedness.
"Stabilization Date Loan Amount" means the outstanding
Principal Indebtedness on the Stabilization Date (and before giving effect to
any recalculation of the Loan Amount on the Stabilization Date).
"Stabilization Date Payment Date" means the second Payment
Date after the Stabilization Date.
"Stabilization Interest Rate" means a rate determined by
Lender equal to (i) if no Earn-Out Advance is made and the Stabilization Optimum
Debt Service Coverage Ratio is not satisfied on the Stabilization Date, the
Initial Interest Rate, (ii) if no Earn-Out Advance is made and the Stabilization
Optimum Debt Service Coverage Ratio is satisfied, the Initial Interest Rate less
fifteen (15) basis points and (iii) if an Earn-Out Advance is made, the quotient
(expressed as a percentage) obtained by dividing (i) the sum of (A) the
Stabilization Date Loan Amount multiplied by the Initial Interest Rate, plus (B)
the amount of the Earn-Out Advance multiplied by the sum of the Final Locked
Rate by (ii) the sum of the Stabilization Date Loan Amount and the amount of the
Earn-Out Advance.
"Stabilization Optimum Debt Service Coverage Ratio" means
1.50.
"Start-Up Day" means the "start-up day," within the
meaning of Section 860G(a)(9) of the Code, of any "real estate mortgage
investment conduit," within the meaning of Section 860D of the Code that holds
the Note.
44
40
"Sub-Account" shall have the meaning provided in Section
2.11(c).
"Subleased Facility" means each Facility owned in fee
simple by the Borrower as shown on Exhibit B, leased to the relevant Operator,
and subleased to the Manager shown on Exhibit B, and "Subleased Facilities"
means all such Facilities, collectively.
"Subsidiary" means ALS-Clare Bridge, Inc., a Delaware
corporation.
"Successor Obligor" has the meaning provided in Section
2.10(h).
"Survey" means, with respect to a Facility, a survey of
such Facility reasonably satisfactory to Lender, (i) prepared by a registered
Independent surveyor reasonably satisfactory to Lender and Title Insurer, (ii)
together with a metes and bounds legal description of the land corresponding
with the survey and containing the Surveyor's Certification, and (iii) prepared
based on a scope of work determined by Lender in Lender's reasonable discretion.
"Surveyor's Certification" means a surveyor's
certification in form and substance satisfactory to Lender.
"Taking" has the meaning provided in the Mortgages.
"Tax Fair Market Value" means, with respect to a Facility,
the fair market value of such Facility, and (x) shall not include the value of
any personal property or other property that is not an "interest in real
property" within the meaning of Treasury Regulation Sections 1.860G-2 and
1.856-3(c), or is not "qualifying real property" within the meaning of Treasury
Regulation Section 1.593-11(b)(iv), and (y) shall be reduced by the "adjusted
issue price" (within the meaning of Code Section 1272(a)(4)) (the "Tax Adjusted
Issue Price") of any indebtedness, other than the Loan, secured by a Lien
affecting such Facility, which Lien is prior to or on a parity with the Lien
created under the Related Mortgage.
"Ten Year Treasury Rate" means the yield, calculated by
linear interpolation (rounded to three decimal places) of the yields of United
States Treasury Constant Maturities with terms (one longer and one shorter) most
nearly approximating that of noncallable United States Treasury obligations
having maturities as close as possible to Ten (10) years from the Optional
Prepayment Date, as determined by Lender on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury
45
41
Constant Maturities, or other recognized source of financial market information
selected by Lender for the week prior to the Optional Prepayment Date.
"Third Party Payors' Programs" has the meaning set forth
in Section 4.2.
"Title Instruction Letter" means an instruction letter in
form and substance satisfactory to Lender in Lender's discretion.
"Title Insurance Policy" means, with respect to a
Facility, the loan policy of title insurance for such Facility issued by Title
Insurer with respect to such Facility in an amount acceptable to Lender and
insuring the first priority lien in favor of Lender created by the Related
Mortgage, in each case acceptable to Lender in Lender's discretion and "Title
Insurance Policies" means all such policies collectively.
"Title Insurer" means Chicago Title Insurance Company and
any reinsurer reasonably required by Lender and/or any other nationally
recognized title insurance company acceptable to Lender in Lender's reasonable
discretion; provided, however, that the reinsurer of any Title Insurance Policy
may include, in amounts reasonably acceptable to Lender, Lawyer's Title
Insurance Company, First American Title Insurance Corporation or Xxxxxxx Title
Guaranty Company.
"Transaction Costs" means all fees, costs, expenses and
disbursements paid or payable by Borrower relating to the Transactions,
including, without limitation, all appraisal fees, legal fees, accounting fees
and the costs and expenses described in Section 8.24.
"Transactions" means the transactions contemplated by the
Loan Documents.
"Transfer" means any conveyance, transfer (including,
without limitation, any transfer of any direct legal or beneficial interest
(including, without limitation, any profit interest) in Borrower, any Operator,
or any SPE Equity Owner), sale, Lease (including, without limitation, any
amendment, extension, modification, waiver or renewal thereof), or Lien, whether
by law or otherwise, of, on or affecting any Collateral, Borrower, any Operator,
or any SPE Equity Owner, other than a Permitted Transfer.
"Treasury Rate" means the yield, calculated by linear
interpolation (rounded to three decimal places) of the yields of United States
Treasury Constant Maturities with terms (one longer and one shorter) most nearly
approximating that of noncallable United States
46
42
Treasury obligations having maturities as close as possible, to the Optional
Prepayment Date as determined by Lender on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by Lender for the week prior to the
Stabilization Date.
"UCC" means, with respect to any Collateral, the Uniform
Commercial Code in effect in the jurisdiction in which the relevant Collateral
is located.
"UCC Searches" has the meaning provided in Section 3.1.
"Underwriting NOI Criteria" is set forth in Exhibit G.
"Unpaid Excess Loan Amount" has the meaning provided in
Section 8.32(c)(ii).
"U.S. Obligations" means obligations or securities not
subject to prepayment, call or early redemption which are direct obligations of,
or obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, the
obligations of which are backed by the full faith and credit of the United
States of America.
"Use" means, with respect to any Hazardous Substance, the
generation, manufacture, processing, distribution, handling, use, treatment,
recycling or storage of such Hazardous Substance or transportation to or from
the property by any Person of any Hazardous Substance.
"Warrant" has the meaning set forth in Exhibit E hereto.
"Yield Maintenance Premium" means, if all or any portion
of the Note is accelerated, the amount determined by Lender in its discretion
(at the time immediately prior to the payment of such amount to Lender) equal to
that, when added to the amount otherwise due as a result of such acceleration,
would be sufficient to purchase U.S. Obligations (a) having maturity dates on or
prior to, but as close as possible to, successive scheduled Payment Dates (after
the date of such acceleration of the Note) upon which Payment Dates interest and
principal payments would be required under the Note as though the Maturity Date
of the Note was the Optional
47
43
Prepayment Date and (b) in amounts sufficient to pay all scheduled principal and
interest payments on the Note as if the Maturity Date of the Note was the
Optional Prepayment Date (but without any adjustment of the monthly amortization
schedule); provided, however, under no circumstances shall the Yield Maintenance
Premium be less than zero.
ARTICLE II
GENERAL TERMS
Section 2.1 Amount of the Loan. Lender shall lend to
Borrower a total aggregate amount equal to the Loan Amount.
(a) Advances Generally. Notwithstanding anything
herein to the contrary, (i) the total cumulative aggregate amount of all
Advances hereunder shall not exceed the Maximum Facility Amount, (ii) Lender
shall have no obligation whatsoever to make any Advance unless and until each of
the applicable conditions precedent to the making of such Advance set forth in
this Agreement have been satisfied and unless and until Borrower provide any
other information required by Lender in its reasonable discretion, (iii) Lender
shall be solely responsible for determining in its reasonable discretion whether
the applicable conditions precedent to the making of any Advance have been
satisfied, (iv) Lender shall have no obligation whatsoever to make any Advance
at any time after the Stabilization Date, (v) after any Principal Indebtedness
is repaid, Lender shall have no obligation whatsoever to re-advance any amount
repaid, (vi) Lender shall have no obligation whatsoever to make any Advance
hereunder after the occurrence and during the continuance of a Default or an
Event of Default, (vii) all conditions and requirements of this Agreement
relating to the obligations of Lender to make Advances are for the sole benefit
of the parties hereto, and no other person or party shall have the right to rely
on the satisfaction of such conditions and requirements by Borrower as a
condition precedent to Lender making any Advance, (viii) in connection with each
Advance and as a condition precedent to each Advance, Borrower shall execute
and/or deliver to Lender additions, amendments, modifications and supplements to
the items set forth in Article III or otherwise as required by Lender, including
without limitation, to any or all of the Loan Documents, and shall provide
Lender with the full benefit of the security intended to be provided under the
Loan Documents and without in any way limiting the foregoing, such additions,
amendments, modifications and supplements shall include those deemed desirable
by Lender's counsel in the jurisdiction in which the Facility is located, and
(ix) the submittal by Borrower of the Request for Advance and/or the making of
each Advance shall constitute, without the necessity of specifically containing
a written statement to such effect, a
48
44
confirmation, representation and warranty by Borrower to Lender that all of the
applicable conditions to be satisfied in connection with the making of such
Advance have been satisfied (unless waived by Lender in accordance with Section
8.4,) and that all of the representations and warranties of Borrower set forth
in the Loan Documents are true and correct as of the date of the relevant
Advance.
(b) Earn-Out Advance. On the Stabilization Date
Payment Date, Lender shall fund the Earn- Out Advance, if any, pursuant to and
in accordance with Section 8.32 and all other terms and conditions of this
Agreement.
Section 2.2 Use of Proceeds. Proceeds of the Loan shall be
used for the following purposes: (a) to pay the acquisition costs for the Leased
Facilities and the Non-Leased Facilities owned by Borrower and refinancing costs
of the Joint Venture Facility, (b) to fund any upfront reserves or escrow
amounts required hereunder, and (c) to pay any Transaction Costs. Any excess
will be available to Borrower and may be used for any lawful purpose.
Section 2.3 Security for the Loan. The Note and Borrower's
obligations hereunder and under the other Loan Documents shall be secured by the
Mortgages, the Guaranties, the Assignments of Leases, the Assignments of
Agreements, the Manager's Subordinations, and the security interests and Liens
granted in this Agreement and in the other Loan Documents.
Section 2.4 Borrower's Note.
(a) Borrower's obligation to pay the principal of and interest on the Loan
(including Late Charges, Default Rate interest, and the Yield Maintenance
Premium, if any), shall be evidenced by this Agreement and by the Note, duly
executed and delivered by Borrower. The Note shall be payable as to principal,
interest, Late Charges, Default Rate interest and Yield Maintenance Premium, if
any, as specified in this Agreement, with a final maturity on the Maturity Date.
Borrower shall pay all outstanding Indebtedness on the Maturity Date.
(b) Lender is hereby authorized, at its option, (i)
to endorse on a schedule attached to the Note (or on a continuation of such
schedule attached to the Note and made a part thereof) an appropriate notation
evidencing the date and amount of each payment of principal, interest, Late
Charges, Default Rate interest and Yield Maintenance Premium, if
49
45
any, in respect thereof, which schedule shall be made available to Borrower, at
Borrower's sole cost and expense on reasonable advance notice, for examination
at Lender's offices and/or (ii) to record the Allocated Loan Amounts in its
books and records.
Section 2.5 Principal and Interest Payments.
(a) Accrual of Interest before the Optional
Prepayment Date. Before the Stabilization Date Payment Date, interest shall
accrue on the outstanding principal balance of the Note and all other amounts
due to Lender under the Loan Documents at the Initial Interest Rate. On and
after the Stabilization Date, but before the Optional Prepayment Date, interest
shall accrue on the outstanding principal balance of the Note and all other
amounts due to Lender under the Loan Documents at the Stabilization Interest
Rate.
(b) Accrual of Interest on or after the Optional
Prepayment Date. Commencing on the Optional Prepayment Date, interest shall
accrue on the outstanding principal balance of the Note and all other amounts
due to Lender under the Loan Documents at the Revised Interest Rate; provided
however that in the event that the Indebtedness is paid in full on or before the
sixth (6th) Payment Date after the Optional Prepayment Date, interest shall be
deemed to have accrued at the Initial Interest Rate instead of the Revised
Interest Rate.
(c) Monthly Base Payments of Principal and
Interest. On each Payment Date (i) prior to and including the Stabilization Date
Payment Date, Borrower shall pay to Lender a monthly payment of interest only
which payment is based on the Initial Interest Rate and (ii) after the
Stabilization Date Payment Date, a monthly constant payment of principal and
interest based on the Stabilization Interest Rate and, in each case, based on an
amortization schedule of three hundred (300) months. Each payment required to be
made by Borrower pursuant to this Section 2.5(c) is hereinafter sometimes
referred to as a "Base Payment".
(d) Payments of Excess of Revised Interest Rate
Over Stabilization Interest Rate. To the extent, for any period, that accrued
interest at the Revised Interest Rate exceeds interest required to be paid
hereunder for such period at the Stabilization Interest Rate (such amount, the
"Accrued Interest"), Borrower shall only be required to pay such Accrued
Interest after the outstanding principal balance of the Note has been paid in
full. Unpaid Accrued Interest shall accrue interest at the Revised Interest Rate
and shall be computed based on the actual number of days elapsed, based on a
360-day year, compounded monthly .
50
46
(e) Payment Dates. All payments required to be made
pursuant to paragraphs (a) through (d) above shall be made beginning on the
first Payment Date immediately after the end of the second Interest Accrual
Period; provided, however, that Borrower shall pay interest for the first
Interest Accrual Period on the Closing Date.
(f) Calculation of Interest. Interest shall accrue
on the outstanding principal balance of the Loan and all other amounts due to
Lender under the Loan Documents commencing upon the Closing Date. Interest shall
accrue on Accrued Interest commencing on the first Payment Date following the
Optional Prepayment Date. Interest shall be computed on the actual number of
days elapsed in each year over a 360 day year, compounded monthly.
(g) Default Rate Interest. Upon the earlier to
occur of a Late Payment or an Event of Default, if any, the entire unpaid amount
outstanding hereunder and under the Note will bear interest at the Default Rate
for so long as such Late Payment or Event of Default remains uncured.
(h) Late Charge. If Borrower fails to make any
payment of any sums due under the Loan Documents on the date when the same is
due, and the same remains unpaid after the expiration of any applicable cure
period, if any, Borrower shall pay a Late Charge.
(i) Maturity Date. On the Maturity Date, Borrower
shall pay to Lender all amounts owing under the Loan Documents including,
without limitation, interest, principal, Late Charges, Default Rate interest,
Accrued Interest and any Yield Maintenance Premium; provided, however, Yield
Maintenance Premium shall only be due and payable if the Maturity Date occurs as
a result of acceleration of the Note.
(j) Cash Management Fees. After the occurrence of a
Cash Management Event, a fee shall accrue on the outstanding principal balance
of the Note and all other amounts due to Lender under the Loan Documents at a
rate of .015% per annum which fee shall be paid, by Borrower to Lender, on each
Payment Date, for the Interest Accrual Period immediately preceding such Payment
Date.
51
47
Section 2.6 Prepayment.
(a) On and after the earlier to occur of (i) the
Optional Prepayment Date or (ii) at Lender's election, upon the occurrence and
during the continuance of an Event of Default hereunder, any date on or after
such Event of Default and during its continuance, in addition to all other
payments required hereunder, Borrower shall pay and use all Excess Cash Flow to
prepay the Loan on each Payment Date in accordance with Section 2.11(g) and
Section 2.7 and, after payment in full of the Principal Indebtedness (but not
Accrued Interest or interest thereon) to pay Accrued Interest and interest
thereon and all other amounts then owing.
(b) If Borrower is required by Lender under the
provisions of any Mortgage to prepay the Loan or any portion thereof in the
event of damage to or destruction of, or a Taking of a Facility, Borrower shall
prepay the Loan to the full extent of the Insurance Proceeds or the Condemnation
Proceeds, as applicable, and there shall be no Yield Maintenance Premium or
penalty assessed against Borrower by reason of such prepayment.
(c) On and after the Optional Prepayment Date
(provided no Default or Event of Default has occurred and is continuing),
Borrower may voluntarily prepay the Loan in whole or in part, and there shall be
no Yield Maintenance Premium or penalty assessed against Borrower by reason of
such prepayment.
(d) All prepayments made pursuant to this Section
shall be applied in accordance with the provisions of Section 2.7.
(e) Any prepayment of the Loan by Borrower shall be
made on a Payment Date.
(f) Borrower shall not be permitted at any time to
prepay all or any part of the Loan except as expressly provided in this Section
and in Section 8.32 (regarding the Recalculated Loan Amount).
Section 2.7 Application of Payments. Prior to the
occurrence of an Event of Default, all proceeds of any repayment, including
prepayments, of the Loan shall be applied to pay: first, any costs and expenses
of Lender, including, without limitation, the Lender's reasonable attorney's
fees and disbursements actually arising as a result of such repayment or
reasonably expended by Lender to protect the Collateral; second, accrued and
unpaid interest at the Initial Interest Rate; third, to the Principal
Indebtedness (but not to
52
48
Accrued Interest or interest thereon); fourth, to Accrued Interest and interest
accrued thereon; and fifth, any other amounts then due and owing under the Loan
Documents. After the occurrence of an Event of Default, all proceeds of
repayment, including any payment or recovery on the Collateral shall, unless
otherwise provided in the Mortgage, be applied in such order and in such manner
as Lender shall elect in Lender's discretion.
Section 2.8 Payment of Debt Service, Method and Place of
Payment.
(a) Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Note shall be
made to Lender not later than 12:00 noon, New York City time, on the date when
due, and shall be made in lawful money of the United States of America in
federal or other immediately available funds to an account specified to Borrower
by Lender in writing, and any funds received by Lender after such time, for all
purposes hereof, shall be deemed to have been paid on the next succeeding
Business Day.
(b) All payments made by Borrower hereunder or by
Borrower under the other Loan Documents, shall be made irrespective of, and
without any deduction for, any set-offs or counterclaims.
(c) Prior to the occurrence of a Cash Management
Event, Borrower shall pay to the Lender or its designee, on or prior to each
Payment Date, the Required Debt Service Payment for such Payment Date, the Basic
Carrying Costs Monthly Installment for the Interest Accrual Period immediately
preceding such Payment Date and the Capital Reserve Monthly Installment for the
Interest Accrual Period immediately preceding such Payment Date. After the
occurrence of a Cash Management Event, the Collection Account Bank, shall
transfer to Lender all amounts due under the Loan Documents (and all other
amounts in the respective Collection Accounts pursuant to the various Collection
Account Agreements and Section 2.11
Section 2.9 Taxes. All payments made by Borrower under
this Agreement and under the other Loan Documents shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority.
53
49
Section 2.10 Defeasance Requirements.
(a) Provided that no Default or Event of Default
has occurred and is continuing, commencing on the date which is two (2) years
after the Start-Up Day (but only before the Optional Prepayment Date), Borrower
may voluntarily defease (A) all of the Loan or (B) part of the Loan on a
Facility-by-Facility basis, or (C) part of the Loan on a
non-Facility-by-Facility basis, but only pursuant to Section 5.1(p).
(b) Any defeasance of the Loan by Borrower shall be
made on a Payment Date.
(c) Borrower shall not be permitted at any time to
defease all or any part of the Loan except as expressly provided in this
Section.
(d) Subject to the terms and conditions of this
Agreement, Borrower may defease the Loan if Borrower: (i) provides, in the case
of a defeasance pursuant to Section 5.1(p), not less than ten (10) days, and, in
all other cases, not less than thirty (30) days prior written notice to the
Lender specifying a Payment Date (the "Defeasance Release Date") on which the
payments provided in clauses (ii) and (iii) below are to be made and the deposit
provided in clause (iv) below is to be made, (ii) pays all interest accrued and
unpaid on the Principal Indebtedness to and including the Defeasance Release
Date, (iii) pays all other sums then due and payable under the Loan Documents,
(iv) deposits with the Lender an amount equal to the Defeasance Deposit, and (v)
in the case of a defeasance in part on a Facility-by-Facility basis, provides to
Lender evidence satisfactory to Lender that the Defeasance Debt Service Coverage
Ratio for all remaining Facilities (after giving effect to the defeasance and
calculated on the basis of the prior twelve (12) calendar months) shall be equal
to or greater than the greater of (x) 1.35 and (y) the Debt Service Coverage
Ratio (calculated on the basis of the prior twelve (12) calendar months) for all
Facilities as of the Payment Date immediately preceding the Defeasance Release
Date, and (vi) delivers to the Lender (A) a security agreement, in form and
substance satisfactory to Lender, creating a first priority perfected Lien on
the deposits required pursuant to this Section and the U.S. Obligations
purchased on behalf of Borrower in accordance with this Section (the "Security
Agreement"), (B) for execution by the Lender, a release of each relevant
Mortgaged Property from the lien of the Related Mortgage in a form appropriate
for each jurisdiction in which the relevant Mortgaged Property is located, (C)
an Officer's Certificate of Borrower certifying that the requirements set forth
in this Section have been satisfied including, without limitation, that no
Default or Event of Default has occurred and is continuing, (D) an opinion of
Borrower's counsel in form and
54
50
substance satisfactory to the Lender stating, among other things, (x) that,
without qualification, the U.S. Obligations have been duly and validly assigned
and delivered to Lender and Lender has a first priority perfected security
interest in and Lien on the deposits required pursuant to this Section and a
first priority perfected security interest in and Lien on the U.S. Obligations
purchased pursuant hereto and the Proceeds thereof, and (y) that the defeasance
will not adversely affect the status of any REMIC formed in connection with a
Securitization, and (E) such other certificates, documents or instruments as the
Lender may request including, without limitation, (x) written confirmation from
the relevant Rating Agencies that such defeasance will not cause any Rating
Agency to withdraw, qualify or downgrade the then-applicable rating on any
security issued in connection with any Securitization and (y) a certificate from
an Independent certified public accountant certifying that the amounts of the
U.S. Obligations comply with all of the requirements of this Loan Agreement.
(e) The U.S. Obligations shall mature on or be
redeemable, or provide for payment thereon, on or prior to the Business Day
immediately preceding the date on which payments under the Note are due and
payable and the proceeds thereof shall be payable directly to the Lender. In
connection with the foregoing, Borrower appoints the Lender as Borrower's agent
for the purpose of applying the amounts delivered pursuant to clause (d)(iv)
above to purchase U.S. Obligations.
(f) If any notice of defeasance is given, Borrower
shall be required to defease the Loan (or a portion thereof if such defeasance
is a partial defeasance) on the specified Payment Date (unless such notice is
revoked in writing by Borrower prior to the date specified therein in which
event Borrower shall immediately reimburse Lender for any costs incurred by
Lender in connection with Borrower's giving of such notice and revocation).
(g) Upon compliance with the requirements of this
Section in the event of a total defeasance of the Loan, or a partial defeasance
of the Loan on a Facility by Facility basis, the relevant Mortgaged Property as
to which such defeasance has been consummated shall be released from the lien of
the Related Mortgage.
(h) In connection with a complete defeasance of the
Loan, Borrower shall assign to such other entity or entities established or
designated by Borrower (the "Successor Obligor") all of Borrower's obligations
under the Note, the other Loan Documents and the Security Agreements together
with the pledged U.S. Obligations. The Successor Obligor shall assume, in a
writing or writings satisfactory to Lender in Lender's discretion, all of
Borrower's obligations under the Note, the other Loan Documents and the Security
55
51
Agreements and, upon such assignment Borrower shall, except as set forth herein,
be relieved of its obligations hereunder.
(i) Nothing in this Section shall release Borrower
from any liability or obligation relating to any environmental matters arising
under Sections 4.1(v) or 5.1(d) through 5.1(i), inclusive, hereof.
Section 2.11 Central Cash Management.
(a) Collection Account.
(i) Borrower shall open and maintain at the
Collection Account Bank a trust account (the "Collection Account").
(ii) The Collection Account shall be assigned
an identification number by the Collection Account Bank and shall be opened and
maintained in the name "Nomura Asset Capital Corporation as Mortgagee of
ALS-Venture I, Inc." Borrower, each Operator, the Joint Venture and Manager
shall not have any right of withdrawal from the Collection Account. Prior to the
Stabilization Date, Borrower shall cause (A) the Operators and, in the case of
the Facility located in Florida, the Parent to deposit all lease payments under
the Operator Leases directly into the Collection Account and shall cause all
relevant checks to be made payable to the name of the Collection Account and (B)
the Joint Venture to deposit all payments under the Joint Venture Note and all
reserves payable pursuant to the Joint Venture Mortgage directly into the
Collection Account and shall cause all relevant checks to be made payable to the
name of the Collection Account. Following the Stabilization Date, the Borrower
shall cause the Manager to deposit all Rents, Moneys and other items of Gross
Revenue into the Collection Account within two (2) Business Days of receipt
thereof. Without in any way limiting Borrower's obligations pursuant to the
preceding two (2) sentences, Borrower shall deposit directly into the Collection
Account all Rents, Moneys or other items of Gross Revenue received by Borrower
in violation or contradiction of the preceding two sentences within five (5)
Business Days after receipt thereof. On a daily basis, prior to Lender's
notification to the Collection Account Bank that a Cash Management Event has
occurred, the Collection Account Bank shall transfer funds in the Collection
Account at the end of such day to an account designated by Borrower.
(iii) Borrower may designate a new financial
institution to serve as the Collection Account Bank if approved by Lender in
Lender's discretion. If the
56
52
Collection Account Bank resigns pursuant to the terms of the Collection Account
Agreement, Borrower shall replace such Collection Account Bank with a bank and
documentation acceptable to Lender prior to the date that such resignation
becomes effective pursuant to such Collection Account Agreement.
(iv) Any failure by Borrower to deposit
directly into the Collection Account less than ninety percent (90%) of all
Rents, Moneys or other items or Gross Revenue from the Facilities shall be an
Event of Default.
(b) Payments. Prior to the occurrence of a Cash
Management Event, Borrower shall pay to Lender or Lender's designee or to an
account identified by Lender or Lender's designee on or prior to each Payment
Date, the Required Debt Service Payment for such Payment Date, the Basic
Carrying Costs Monthly Installment for the Interest Accrual Period immediately
preceding such Payment Date and the Capital Reserve Monthly Installment for the
Interest Accrual Period immediately preceding such Payment Date. After the
occurrence of a Cash Management Event, pursuant to the Collection Account
Agreement among the Collection Account Bank, Borrower and Lender (the
"Collection Account Agreement"), Borrower will authorize and direct the
Collection Account Bank to transfer on a daily basis, all funds deposited in the
Collection Account for each Facility to Lender or Lender's designee to be held
in an Eligible Account established by Lender or Lender's designee (the "Cash
Collateral Account"). Notwithstanding the foregoing, in the event funds in the
Collection Account are being transferred to the Cash Collateral Account pursuant
to the foregoing sentence due to the occurrence of a Cash Management Event
described in clauses (i) through (iv) of the definition of the term "Cash
Management Event", on the date which is twelve (12) months after the cure of the
event which triggered the Cash Management Event and provided no Cash Management
Event exists on such date, the funds shall not be transferred to the Cash
Collateral Account and shall be transferred in accordance with the last sentence
of Section 2.11(a)(ii) until a Cash Management Event occurs in which event the
funds in the Collection Account shall be transferred to the Cash Collateral
Account pursuant to the foregoing sentence. The Cash Collateral Account shall be
under the sole dominion and control of Lender. Borrower, each Operator, the
Joint Venture and Manager shall have no right of withdrawal in respect to the
Cash Collateral Account.
(c) Establishment of Sub-Accounts. The Cash
Collateral Account shall contain a Debt Service Payment Sub-Account, a Basic
Carrying Costs Sub-Account, a Capital Reserve Sub-Account, a Securitization
Expense Sub-Account and an Operating Expense Sub-Account, each of which
sub-accounts (i) may be ledger or book entry accounts
57
53
and need not be actual accounts (individually, a "Sub-Account" and collectively,
the "Sub-Accounts") and (ii) shall be an Eligible Account to which certain funds
shall be allocated and from which disbursements shall be made pursuant to the
terms of this Loan Agreement.
(d) Permitted Investments. Upon the written request
of Borrower, which request may be made once per Interest Accrual Period, Lender
shall direct the Cash Collateral Account Bank to invest and reinvest any balance
in the Cash Collateral Account from time to time in Permitted Investments as
instructed by Borrower; provided, however, that: (i) if Borrower fails to so
instruct Lender, or if a Default or an Event of Default shall have occurred and
be continuing, Lender may direct the Cash Collateral Account Bank to invest and
reinvest such balance in Permitted Investments as Lender shall determine in
Lender's discretion; (ii) the maturities of the Permitted Investments on deposit
in the Cash Collateral Account shall, to the extent such dates are
ascertainable, be selected and coordinated to become due not later than the day
before any disbursements from the Sub-Accounts must be made; (iii) all such
Permitted Investments shall be held in the name and be under the sole dominion
and control of Lender; (iv) no Permitted Investment shall be made unless Lender
shall retain a first priority perfected Lien in such Permitted Investment and
all filings and other actions necessary to ensure the validity, perfection, and
priority of such Lien have been taken; (v) Lender shall only be required to
follow the written investment instructions which were most recently received by
Lender and Borrower shall be bound by such last received investment
instructions; and (vi) any request from Borrower containing investment
instructions shall contain an Officer's Certificate from Borrower (which may be
conclusively relied upon by Lender and its agents) that any such investments
constitute Permitted Investments. It is the intention of the parties hereto that
all amounts deposited in the Cash Collateral Account shall at all times be
invested in Permitted Investments. All funds in the Cash Collateral Account that
are invested in a Permitted Investment are deemed to be held in such Cash
Collateral Account for all purposes of this Agreement and the other Loan
Documents. Lender shall have no liability for any loss in investments of funds
in the Cash Collateral Account that are invested in Permitted Investments
(unless invested contrary to Borrower's request other than after the occurrence
of a Default or an Event of Default) and no such loss shall affect Borrower's
obligation to fund, or liability for funding, the Cash Collateral Account and
each Sub-Account, as the case may be. Borrower and Lender agree that Borrower
shall include all such earnings and losses (other than those for Lender's
account in accordance with the immediately preceding sentence) on the Cash
Collateral Account as income of Borrower for federal and applicable state tax
purposes. Borrower shall be responsible for any and all fees, costs and expenses
with respect to Permitted Investments.
58
54
(e) Interest on Accounts. All interest paid or
other earnings on the Permitted Investments made hereunder shall be income of
Borrower and shall be deposited into the Cash Collateral Account and shall be
subject to allocation and distribution like any other monies deposited therein.
(f) Payment of Basic Carrying Costs, Debt Service,
Capital Improvement Costs, Securitization Expenses and Operating Expenses.
(i) Payment of Basic Carrying Costs.
a. At least five (5) Business Days prior to
the due date of any Basic Carrying Cost payment, and not more frequently than
once each Interest Accrual Period, Borrower shall notify Lender in writing and
request that Lender make such Basic Carrying Cost payment on behalf of Borrower
on or prior to the due date thereof. Together with each such request, Borrower
shall furnish Lender with copies of bills and other documentation as may be
reasonably required by Lender to establish that such Basic Carrying Cost payment
is then due. Lender shall be entitled to conclusively rely on all bills or other
documentation received from Borrower, in each case without independent
investigation or verification. Lender shall make such payments out of the Basic
Carrying Cost Sub-Account before the same shall be delinquent to the extent that
there are funds available in the Basic Carrying Cost Sub-Account and Lender has
received appropriate documentation to establish the amount(s) due and the due
date(s) as and when provided above.
b. Except to the extent that Lender is
obligated to pay Basic Carrying Costs from the Basic Carrying Costs Sub-Account
pursuant to the terms of this Section, Borrower shall pay all Basic Carrying
Costs with respect to itself and the Facility in accordance with the provisions
of the Mortgage. Borrower's obligation to pay (or enable Lender to pay) Basic
Carrying Costs pursuant to this Agreement shall include, to the extent permitted
by applicable law, Impositions resulting from future changes in law which impose
upon Lender or any Deed of Trust Trustee an obligation to pay any property taxes
or other Impositions or which otherwise adversely affect Lender's or the Deed of
Trust Trustee's interests. (In the event such a change in law prohibits Borrower
from assuming liability for payment of any such Imposition, the outstanding
Indebtedness shall, at the option of Lender, become due and payable on the date
that is one hundred twenty (120) days after such change in law; and failure to
pay such amounts on the date due shall be an Event of Default.) If an Event
59
55
of Default has occurred, the proceeds on deposit in the Basic Carrying Costs
Sub-Account may be applied by Lender in any manner as Lender in its discretion
may determine.
(ii) Payment of Debt Service. At or before 12:00
noon, New York City time, on each Payment Date during the term of the Loan,
Lender shall transfer to Lender's own account from the Debt Service Payment
Sub-Account an amount equal to the Required Debt Service Payment for the
applicable Payment Date. Borrower shall be deemed to have timely made the
Required Debt Service Payment pursuant to Section 2.8 regardless of the time
Lender makes such transfer as long as sufficient funds are on deposit in the
Debt Service Payment Sub-Account at 12:00 noon, New York City time on the
applicable Payment Date.
(iii) Payment of Capital Improvement Costs. Not
more frequently than once each Interest Accrual Period, and provided that no
Default or Event of Default has occurred and is continuing, Borrower may notify
Lender in writing and request that Lender release to Borrower or its designee
funds from the Capital Reserve Sub-Account, to the extent funds are available
therein, for payment of Capital Improvement Costs. Together with each such
request, Borrower shall furnish Lender with copies of bills and other
documentation as may be reasonably required by Lender to establish that such
Capital Improvement Costs are reasonable, that the work relating thereto has
been completed and that such amounts are then due or have been paid. Lender
shall approve or disapprove such request within ten (10) Business Days after
Lender's receipt of such request and, if approved, Lender shall release the
funds to Borrower or Borrower's designee within ten (10) Business Days after
Lender's approval. Upon completion of the repairs and environmental remediation
to the Facilities itemized on Exhibit C hereto, Borrower may provide Lender with
the documentation described in this paragraph and subject to the terms set forth
in this paragraph, Lender shall release the remainder of the Initial Capital
Reserve Amount, to the extent such funds have not been released to Borrower.
(iv) Payment of Securitization Expenses. To the
extent funds are available therein to pay the amounts for which Borrower is
responsible pursuant to Section 2.13, Lender may release funds out of the
Securitization Expense Sub-Account to (a) pay such amounts or, (b) after Lender
has paid all of the amounts for which Borrower is responsible pursuant to
Section 2.13, provided no Default or Event of Default has occurred and is
continuing, refund to Borrower all amounts remaining in the Securitization
Expense Sub-Account.
60
56
(v) Payment of Operating Expenses. During each of
the following periods: (i) any period in which the Preferred Equity Holder is an
equity owner in Borrower and (ii) on and after the Optional Prepayment Date, not
more frequently than once each Interest Accrual Period and provided that no
Default or Event of Default has occurred and is continuing, Lender shall direct
the Cash Collateral Account Bank to, within five (5) Business Days after
Lender's receipt of an Operating Expense Certificate from Borrower, such
Operating Expense Certificate to be delivered by Borrower not more frequently
than once each Interest Accrual Period, transfer funds to Borrower or its
designee from the Operating Expense Sub-Account, to the extent that there are
funds available therein, in an amount not to exceed the amount stated in the
Operating Expense Certificate up to the Operating Expense Monthly Installment.
Together with each such Operating Expense Certificate, Borrower shall furnish
Lender with an Officer's Certificate stating that all operating expenses from
previous periods have been paid in full and that such amounts are then due or
have been paid.
(vi) Extra Funds for Operating Expenses. During
each of the following periods: (i) any period in which the Preferred Equity
Holder is an equity owner in Borrower and (ii) on and after the Optional
Prepayment Date, not more frequently than once each Interest Accrual Period and
provided that no Default or Event of Default has occurred and is continuing, if
in a given Interest Accrual Period, Borrower requires amounts in excess of the
Operating Expense Monthly Installment (such excess amounts, "Extra Funds"),
Borrower, at the time it delivers the Operating Expense Certificate, may deliver
a written request to Lender for a disbursement of Extra Funds stating the amount
of such Extra Funds and the purpose for such amount, together with copies of
bills and other documentation as may be required by Lender to establish that
such Extra Funds operating expenses are reasonable and that such amounts are
then due or expected to become due in that month. Lender shall approve or
disapprove such request within ten (10) Business Days after Lender's receipt of
such request and, if approved, Lender shall release the Extra Funds to Borrower
or its designee within ten (10) Business Days after Lender's approval.
(vii) Reconciliation. During (i) any period in
which the Preferred Equity Holder is an equity owner in Borrower and (ii) on and
after the Optional Prepayment Date, on each Payment Date Borrower shall furnish
to Lender a budget variance report reconciling the Operating Expenses shown on
the Annual Operating Budget with requested disbursements for payment of
Operating Expenses pursuant to Section 2.11(f).
(g) Monthly Funding of Sub-Accounts. During each Interest
Accrual Period and, except as provided below, during the term of the Loan
commencing with
61
57
the Interest Accrual Period in which the Closing Date occurs (each, the "Current
Interest Accrual Period"), Lender shall allocate all funds then on deposit
(irrespective of whether such funds were transferred by the Collection Account
Bank to the Cash Collateral Account Bank or by Borrower to Lender pursuant to
Section 2.8(c)) in the Cash Collateral Account among the Sub-Accounts as follows
and in the following priority:
(i) first, to the Basic Carrying Costs Sub-Account, until an amount equal to the
Basic Carrying Costs Monthly Installment for the Current Interest Accrual Period
has been allocated to the Basic Carrying Costs Sub-Account;
(ii) second, to the Debt Service Payment
Sub-Account, until an amount equal to the Required Base Debt Service Payment for
the Payment Date immediately after the Current Interest Accrual Period has been
allocated to the Debt Service Payment Sub-Account;
(iii) third, to the Capital Reserve Sub-Account,
until an amount equal to the Capital Reserve Monthly Installment for the Current
Interest Accrual Period has been allocated to the Capital Reserve Sub-Account;
(iv) fourth, to the Securitization Expense
Sub-Account; provided, however, that such Sub-Account shall only be funded on
the Stabilization Date with a deposit of the Initial Securitization Expense
Amount;
(v) fifth, during each of the following periods:
(i) any period in which the Preferred Equity Holder is an equity owner in
Borrower and (ii) on and after the Optional Prepayment Date, or at Lender's
election, upon the occurrence of an Event of Default, any date on or after the
occurrence and during the continuance of such Event of Default, to the Operating
Expense Sub-Account, until an amount equal to the Operating Expense Monthly
Installment for the Current Interest Accrual Period has been allocated to the
Operating Expense Sub-Account; and
(vi) sixth, provided that (i) no Event of Default
has occurred and is continuing and (ii) Lender has received all financial
information described in Section 5.1(Q) for the most recent periods for which
the same are due, Lender agrees that in each Current Interest Accrual Period any
amounts deposited into or remaining in the Cash Collateral Account after (A) the
minimum amounts set forth in clauses (i), (ii), (iii), (iv) and
62
58
(v) above have been satisfied with respect to the Current Interest Accrual
Period and any periods prior thereto and (B) the funding of additional reserves
at levels determined by Borrower to be prudent for working capital, Capital
Improvement Costs and other Borrower costs, which levels shall be satisfactory
to Lender, in Lender's reasonable discretion, shall be disbursed by Lender on
the first Payment Date after the end of the then Current Interest Accrual
Period, at Borrower's expense, to the Preferred Cash Collateral Account (if the
Preferred Equity Holder is an equity owner in the Borrower) or if the Preferred
Equity Holder is not an equity owner in the Borrower, to such account that
Borrower may request in writing. Lender and its agents shall not be responsible
for monitoring Borrower's use of any funds disbursed from the Cash Collateral
Account or any of the Sub-Accounts. Notwithstanding anything in this Agreement
to the contrary, on and after the Optional Prepayment Date, any amounts
deposited into or remaining in the Cash Collateral Account after (A) the minimum
amounts set forth in clauses (i), (ii), (iii), (iv) and (v) above have been
satisfied with respect to the Current Interest Accrual Period and any periods
prior thereto and (B) the funding of additional reserves at levels determined by
Borrower to be prudent for working capital, Capital Improvement Costs and other
Borrower costs, which levels shall be satisfactory to Lender, in Lender's
reasonable discretion (such remaining amounts, the "Excess Cash Flow"), shall be
allocated to the Debt Service Sub-Account and be applied by Lender on each
Payment Date in accordance with Section 2.7 and shall not be disbursed to
Borrower; and further provided, however, that if an Event of Default has
occurred and is continuing any amounts deposited into or remaining in the Cash
Collateral Account shall be for the account of Lender and may be withdrawn by
Lender to be applied in any manner as Lender may elect in Lender's discretion.
If an Event of Default has occurred and is continuing or if on
any Payment Date the balance in any Sub-Account is insufficient to make the
required payment due from such Sub-Account, Lender may, in its sole discretion,
in addition to any other rights and remedies available hereunder, withdraw funds
from any other Sub-Account to pay such deficiency; provided, however, with
respect to any Leased Facility or the Joint Venture Facility, for so long as the
Subsidiary has not acquired an equity interest in the applicable Operator or the
Joint Venture, the funds in the Basic Carrying Costs Sub-Account and the Capital
Expense Sub-Account allocable to a Leased Facility or the Joint Venture Facility
shall not be used to pay any costs other than the Basic Carrying Costs and the
Capital Expenses of the related Leased Facility or Joint Venture Facility. If
Lender elects to apply funds of any such Sub-Account to pay any Required Base
Debt Service Payment, Borrower shall, upon demand, repay to Lender the amount of
such withdrawn funds to replenish such Sub-Account, and if Borrower shall fail
to repay such amounts within three (3) Business Days after notice of such
withdrawal, an Event of Default shall exist hereunder. Notwithstanding anything
contained
63
59
herein to the contrary, on the Closing Date Borrower shall deposit (i) the
Initial Basic Carrying Costs Amount into the Basic Carrying Costs Sub-Account,
(ii) the Initial Capital Reserve Amount into the Capital Reserve Sub-Account and
(iii) the Initial Debt Service Reserve Amount into the Debt Service Reserve
Sub-Account. Notwithstanding anything contained herein to the contrary, on the
Stabilization Date, Borrower shall deposit the Initial Securitization Expense
Amount into the Securitization Expense Sub-Account.
(h) Termination of Central Cash Management. The
obligations of Borrower under Section 2.11 and Section 2.12 to maintain and fund
the Collection Account and the Cash Collateral Account shall terminate in their
entirety and be of no further force or effect upon the satisfaction of each of
the following conditions: (i) no Default or Event of Default shall have occurred
and is continuing; (ii) the total defeasance of the Loan in accordance with the
provisions of this Agreement and the other Loan Documents; (iii) the release of
the Mortgage by Lender in accordance with the provisions of this Agreement and
the other Loan Documents; and (iv) Borrower's receipt of Lender's written
acknowledgement that the conditions described in (i), (ii) and (iii) above have
been satisfied to Lender's satisfaction.
Section 2.12 Security Agreement.
(a) Pledge of Accounts. To secure the full and punctual
payment and performance of all of the Indebtedness, Borrower hereby sells,
assigns, conveys, pledges and transfers to Lender and grants to Lender a first
and continuing Lien on and security interest in and to, the following property,
whether now owned or existing or hereafter acquired or arising and regardless of
where located (collectively, the "Account Collateral"):
(i) all of Borrower's right, title and interest in
the Cash Collateral Account (including all Sub-Accounts) and all Money and
Permitted Investments, if any, from time to time deposited or held in the Cash
Collateral Account;
(ii) all of Borrower's right, title and interest in
the Collection Account and all Money, if any, from time to time deposited or
held in the Collection Account;
(iii) all interest, dividends, Money, Instruments
and other property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any of the foregoing; and
64
60
(iv) to the extent not covered by clauses (i),
(ii), or (iii) above, all Proceeds and products of any or all of the foregoing.
(b) Covenants. Borrower covenants that (i) prior to the
Stabilization Date all Rents, Money and other items of Gross Revenue payable
pursuant to the Joint Venture Note, the Joint Venture Mortgage or the Operator
Leases shall be deposited into the Collection Account, in accordance with
Section 2.11(a), (ii) after the Stabilization Date, all Rents, Money and other
items of Gross Revenue with respect to the relevant Facility shall be deposited
into the Collection Account, in accordance with Section 2.11(a), and (iii) so
long as any portion of the Indebtedness is outstanding, Borrower shall not open
(nor permit Manager or any Person to open) any other accounts for the collection
of Rents, Money or other items of Gross Revenue (to the extent such sums are
required to be deposited into the Collection Account), other than a replacement
Collection Account approved by Lender in Lender's reasonable discretion.
(c) Instructions and Agreements. On or before the Closing
Date, Borrower will submit to the Collection Account Bank, the Collection
Account Agreement to be executed by the Collection Account Bank.
(d) Financing Statements; Further Assurances. Borrower
will execute and deliver to Lender for filing a financing statement or
statements in connection with the Account Collateral in the form required to
properly perfect Lender's security interest in the Account Collateral to the
extent that it may be perfected by such a filing. Borrower agrees that at any
time and from time to time, at the expense of Borrower, Borrower shall promptly
execute and deliver all further instruments, and take all further action, that
Lender may reasonably request, in order to perfect and protect the pledge,
security interest and Lien granted or purported to be granted hereby, or to
enable Lender to exercise and enforce Lender's rights and remedies hereunder
with respect to, the Account Collateral.
(e) Transfers and Other Liens. Borrower agrees that it
will not sell or otherwise dispose of any of the Account Collateral other than
pursuant to the terms hereof and of the other Loan Documents, or create or
permit to exist any Lien upon or with respect to all or any of the Account
Collateral, except for the Lien granted to Lender under this Agreement.
(f) Lender's Reasonable Care. Beyond the exercise of
reasonable care in the custody thereof, Lender shall not have any duty as to any
Account Collateral or any income thereon in Lender's possession or control or in
the possession or control of any agents
65
61
for, or of Lender, or the preservation of rights against any Person or otherwise
with respect thereto. Lender shall be deemed to have exercised reasonable care
in the custody of the Account Collateral in Lender's possession if the Account
Collateral is accorded treatment substantially equal to that which Lender
accords Lender's own property, it being understood that Lender shall not be
liable or responsible for (i) any loss or damage to any of the Account
Collateral, or for any diminution in value thereof from a loss of, or delay in
Lender's acknowledging receipt of, any wire transfer from the Collection Account
Bank or (ii) any loss, damage or diminution in value by reason of the act or
omission of Lender, or Lender's agents, employees or bailees, other than for
gross negligence or willful misconduct of Lender, or Lender's agents, employees
or bailees.
(g) Lender Appointed Attorney-In-Fact. Borrower hereby
irrevocably constitutes and appoints Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence of an Event of Default to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of Borrower with respect to the Account Collateral, and do in the
name, place and stead of Borrower, all such acts, things and deeds for and on
behalf of and in the name of Borrower with respect to the Account Collateral,
which Borrower could or might do or which Lender may deem necessary or desirable
to more fully vest in Lender the rights and remedies provided for herein with
respect to the Account Collateral and to accomplish the purposes of this
Agreement. The foregoing powers of attorney are irrevocable and coupled with an
interest.
(h) Continuing Security Interest; Termination. This
Section shall create a continuing pledge of, Lien on and security interest in
the Account Collateral and shall remain in full force and effect until payment
in full of the Indebtedness. Upon payment in full of the Indebtedness, Borrower
shall be entitled to the return, upon Borrower's written request and at
Borrower's expense, of such of the Account Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof, and Lender shall execute
such instruments and documents as may be reasonably requested by Borrower in
writing to evidence such termination and the release of the pledge and Lien
hereof, provided, however, that Borrower shall pay on demand all of Lender's
expenses in connection therewith.
Section 2.13 Securitization. Borrower hereby acknowledges that
Lender, its successors or assigns, may sell or securitize the Loan or portions
thereof in one or more transactions through the issuance of securities, which
securities may be rated by the Rating Agencies (each, a "Securitization"; and
collectively, the "Securitizations"). Borrower agrees
66
62
that it shall cooperate with Lender and use Borrower's best efforts to
facilitate the consummation of each Securitization including, without
limitation, by: (i) amending or causing the amendment of this Agreement, the
documents evidencing the Class B Equity Interests, if any, and the Class C
Equity Interests, if any, and the other Loan Documents, and executing such
additional documents, instruments and agreements including amendments to
Borrower's organizational documents and preparing financial statements as
requested by the Rating Agencies to conform the terms of the Loan to the
terms of similar loans underlying completed or pending securitized transactions
having or seeking ratings similar to those then being sought in connection with
the relevant Securitization; (ii) promptly and reasonably providing such
information as may be requested in connection with the preparation of a private
placement memorandum, prospectus or a registration statement required to
privately place or publicly distribute the securities in a manner which does not
conflict with federal or state securities laws; (iii) providing in connection
with each of (a) a preliminary and a private placement memorandum or (b) a
preliminary and final prospectus, as applicable, an indemnification certificate
(x) certifying that Borrower has carefully examined such private placement
memorandum, prospectus or registration statement, as applicable, including,
without limitation, the sections entitled "Special Considerations", "Description
of the Mortgage Loan", "The Underlying Mortgaged Properties", "The Manager",
"Borrower" and "Certain Legal Aspects of the Mortgage Loan", and such sections
(and any other sections requested) insofar as they relate to Borrower, its
Affiliates, the Loan or the Facilities do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading; provided, however, that Borrower shall not be required to
indemnify any Indemnified Party for any losses relating to untrue statements or
omissions which Borrower identified to Lender in writing at the time of
Borrower's examination of such memorandum or prospectus, as applicable, and (y)
indemnifying each Indemnified Party, the Issuer and the Advisor for any losses,
claims, damages, costs, expenses or liabilities (including, without limitation,
all liabilities under all applicable federal and state securities laws)
(collectively, the "Liabilities") to which any of them may become subject (i)
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact relating to Borrower, its
Affiliates, the Loan, the Facilities, the Class B Equity Interests, if any, and
Class C Equity Interests, if any, any Operator, the Joint Venture, the Manager
or any aspect of the subject financing or the parties directly involved therein
contained in such sections or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
sections or necessary in order to make the statements in such sections, in light
of the circumstances under which they were made, not misleading or (ii) as a
result of any untrue statement of material fact in any of the financial
statements of Borrower
67
63
incorporated into any placement memorandum, prospectus, registration statement
or other document connected with the issuance of securities or the failure to
include in such financial statements or in any placement memorandum, prospectus,
registration statement or other document connected with the issuance of
securities any material fact relating to Borrower, its Affiliates, the
Facilities, the Class B Equity Interests, if any, and Class C Equity Interests,
if any, any Operator, the Joint Venture, the Loan, the Manager and any aspect of
the subject financing necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that Borrower shall not be required to indemnify any Indemnified Party
for any losses relating to untrue statements or omissions which Borrower
identified to Lender in writing at the time of Borrower's examination of such
memorandum or prospectus, as applicable,and (z) agreeing to reimburse Lender,
the Issuer and the Advisor for any legal or other expenses reasonably incurred
by Lender, the Issuer and the Advisor in connection with investigating or
defending the Liabilities; (iv) causing to be rendered such customary opinion
letters as shall be requested by the Rating Agencies for other securitizations
having or seeking ratings comparable to that then being sought for the relevant
Securitization; (v) making such representations, warranties and covenants, as
may be reasonably requested by the Rating Agencies and comparable to those
required in other securitized transactions having or seeking the same rating as
is then being sought for the Securitization; (vi) providing such information
regarding the Collateral as may be reasonably requested by the Rating Agencies
or otherwise required in connection with the formation of a REMIC; and (vii)
providing any other information and materials reasonably required in the
Securitization. Subject to Lender's application of funds in the Securitization
Expense Sub-Account, Borrower agrees to pay on the Securitization Closing Date
and, if earlier, within thirty (30) days after the incurrence thereof, upon
demand, all reasonable out-of-pocket costs of Lender (and not previously
reimbursed by Borrower) in connection with the Securitization (or any attempt to
securitize the Loan), including, without limitation, the cost of preparing a
private placement memorandum, prospectus or registration statement, Rating
Agency fees and expenses (including ongoing surveillance fees), legal fees and
disbursements (including, without limitation, in connection with the rendering
of legal opinions), third party due diligence expenses, including, without
limitation, appraisals, engineering reports and environmental reports, the fees
and expenses of any trustee, servicer or special servicer, including any ongoing
servicing or special servicing fees, and the cost of market studies and SEC
filing fees (collectively, "Securitization Costs"), provided, however, that
Borrower's liability for Securitization Costs shall not exceed the Initial
Securitization Expense Amount; provided, further, Borrower's costs and expenses
in complying with the terms of this Section and Borrower's liability for
Lender's costs and expenses pursuant to Sections 3.2, 3.3 and 8.32(h) shall not
exceed in the aggregate Three Hundred Seventy Five Thousand Dollars
68
64
($375,000) exclusive of the Initial Securitization Expense Amount. Borrower
acknowledges and agrees that the Lender may, at any time on or after the Closing
Date, assign its duties, rights or obligations hereunder or under any Loan
Document in whole, or in part, to a servicer and/or a trustee in Lender's
discretion. Nothing herein shall in any way limit Lender's right to sell all or
a portion of the Loan in a transaction which is not a Securitization.
Section 2.14 Supplemental Mortgage Affidavits. The Liens to be
created by Borrower's Mortgages are intended to encumber the Facility described
therein to the full extent of Borrower's obligations under the Loan Documents.
Until Borrower acquires the fee interest in the Joint Venture Facility, the
Liens to be created by the Joint Venture Mortgage relating to the Joint Venture
Facility are intended to encumber the Joint Venture Facility to the full extent
of the Joint Venture's obligations under the Joint Venture Note. As of the
Closing Date, Borrower shall have paid all state, county and municipal recording
and all other taxes imposed upon the execution and recordation of the Mortgages.
Notwithstanding anything contained herein to the contrary, if at any time Lender
determines, based on Lender's estimation of market value and applicable law,
that Lender is not being afforded the maximum amount of security available from
any Facility as a direct, or indirect, result of applicable taxes not having
been paid with respect to the Related Mortgage, Lender may request, and Borrower
agrees that it (i) will execute, acknowledge and deliver to Lender, within a
reasonable period of time after Lender's request, supplemental affidavits
increasing the amount of Indebtedness for which all applicable taxes have been
or are required to be paid under the Related Mortgage to an amount determined by
Lender, in its reasonable discretion, to be appropriate and (ii) will pay any
and all applicable recording, intangible or similar taxes.
Section 2.15. Substitution of Properties.
(a) Generally. Borrower may, subject to the conditions in
this Section, substitute one or more properties (each a "Substitute Property"
and collectively the "Substitute Properties") for a then encumbered Facility (a
"Replaced Property" and collectively, the "Replaced Properties"). From and after
the substitution of one or more Substitute Properties in accordance herewith,
each such Substitute Property shall thereafter be deemed a Facility under the
Loan Documents, and in the case of more than one Substitute Property, the sum of
the allocated loan amounts of each of the Substitute Properties plus each
Facility which is not a Replaced Facility (the "Remaining Facilities"), shall
equal the Principal Indebtedness. In the event of a substitution, the Note shall
remain in full force and effect, and new Loan Documents encumbering the
Substitute Properties (the "Substitute Loan Documents") shall be executed and
delivered by Borrower to Lender to encumber the Substitute Properties.
Concurrently with the
69
65
completion of all steps necessary to substitute properties as provided herein,
Lender shall execute or cause to be executed all such documents requested by
Borrower as are necessary or appropriate to release all Liens granted to Lender
and affecting the Replaced Property. Borrower shall prepare at its expense all
such documents.
(b) Substitute Property Requirements. To qualify as a
Substitute Property, each such property must at the time of substitution:
(1) be a property operated as an assisted living
facility as to which Borrower will hold indefeasible fee simple title
free and clear of any lien or other encumbrance except for Permitted
Encumbrances;
(2) Borrower shall deposit into the Cash Collateral
Account Sub-Accounts (a) prior to a Securitization, such reserves as
may be deemed necessary by Lender in Lender's reasonable discretion and
(b) after a Securitization, reserves in such amounts that the Rating
Agencies rating any Securitization confirm in writing will not result
in a downgrade, withdrawal or qualification any of the then applicable
ratings of the securities issued in a Securitization;
(3) have a substantially similar quality and physical
condition as the quality and physical condition of the Replaced
Facilities at the time of the substitution;
(4) when combined with the other Substitute
Properties and the Remaining Facilities (if any) results in an overall
loan to value ratio for the Loan (as evidenced by an Appraisal of the
proposed Substitute Property and the proposed Replaced Property and
those Appraisals of the other Facilities previously delivered to
Lender) equal to or less than the lesser of: (A) the loan to value
ratio on the Closing Date; and (B) the overall loan to value ratio of
the Facilities immediately prior to the substitution (as evidenced by
an Appraisal of the proposed Substitute Property and the proposed
Replaced Property and those Appraisals of the other Facilities
previously delivered to Lender).
(5) when combined with the other Substitute
Properties and the Remaining Facilities (if any) results in an overall
Debt Service Coverage Ratio (calculated as of the end of the calendar
month immediately preceding the calendar month in which the
substitution is proposed to occur on the basis of the preceding twelve
(12) calendar months) which is no less than the greater of: (A) 1:35
and (B) the
70
66
overall Debt Service Coverage Ratio of the Facilities (calculated as of
the end of the calendar month immediately preceding the calendar month
in which the substitution is proposed to occur on the basis of the
preceding twelve (12) calendar months) immediately prior to the
substitution;
(6) have an Adjusted Net Operating Income which has
not decreased from the Adjusted Net Operating Income for the
immediately prior calendar year for each of the previous years for
which the Facility has been operated, up to three (3) calendar years
immediately preceding the substitution; and
(7) be an "interest in real property" as defined in
Treasury Regulation Section 1.8606-2 or any successor provision of law.
(c) Conditions to Substitution. In addition to the conditions
in Section 2.15(b) above, substitution of any property pursuant to this Section
after the Stabilization Date shall be subject to the satisfaction of the
following, all of which shall be prepared or obtained at Borrower's expense:
(i) receipt by Lender and, if the Loan has been sold
in a Securitization, the Rating Agencies of written notice thereof from
Borrower at least sixty (60) days before the date of the proposed
substitution (the "Substitution Date"), together with (1) written
evidence that the property proposed to be a Substitute Property
complies with this Section and (2) such other information, including
financial information, as Lender (prior to a Securitization) or the
Rating Agencies (after a Securitization) may request;
(ii) if the Loan has been sold in to a
Securitization, Lender's receipt of written confirmation from the
Rating Agencies that the ratings of the securities issued in the
Securitization will not be qualified, reduced, downgraded or withdrawn
as a result of such substitution;
(iii) delivery to Lender of an opinion of counsel to
the effect that the proposed substitution will not adversely affect the
tax status of the REMIC utilized in connection with any Securitization
and that the proposed substitution will not result in a deemed exchange
pursuant to Section 1001 of the Code;
(iv) no Event of Default shall have occurred and be
continuing; and
71
67
(v) satisfaction, with respect to each Substitute
Property of all of the conditions precedent set forth in Article III
hereof, as though the property to be substituted were the Facility on
the Closing Date and such other conditions as Lender in its normal and
usual due diligence and lending activities deems applicable to the
property type being substituted.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to the Making of the Loan.
(a) As a condition precedent to the making of the
Loan, Borrower shall have satisfied the following conditions (unless waived by
Lender in accordance with Section 8.4) with respect to each Facility on or
before the Closing Date:
(A) Loan Documents.
(i) Loan Agreement. Borrower shall
have executed and delivered this Agreement to Lender.
(ii) Note. Borrower shall have
executed and delivered to Lender the Note.
(iii) Mortgages. Borrower shall have
executed and delivered to Lender the Mortgages-Borrower and the Joint Venture
shall have executed and delivered to Lender the Joint Venture Mortgage and the
Mortgages shall have been filed of record in the appropriate filing offices in
the jurisdictions in which the related Facility is located or irrevocably
delivered to an authorized title agent for the Title Insurer for such
recordation.
(iv) Supplemental Mortgage
Affidavits. The Liens to be created by each Mortgage are intended to encumber
the Facility described therein to the full extent of Borrower's and the Joint
Venture's respective obligations under the Loan Documents
72
68
and the Joint Venture Loan Documents, respectively. As of the Closing Date,
Borrower shall have paid all state, county and municipal recording and all other
taxes imposed upon the execution and recordation of each Mortgage.
(v) Assignments of Leases. Borrower shall have
executed and delivered to Lender the Assignments of Leases - Borrower, and the
Joint Venture shall have executed and delivered to Lender the Assignment of
Leases - Joint Venture and the Assignments of Leases shall have been filed of
record in the appropriate filing offices in the jurisdiction in which the
related Facility is located or irrevocably delivered to an authorized title
agent for the Title Insurer for such recordation.
(vi) Assignments of Agreements. Borrower shall
have executed and delivered to Lender the Assignments of Agreements - Borrower,
the Joint Venture shall have executed and delivered to Lender its Assignment of
Agreements - Joint Venture and the Assignments of Agreements shall, to the
extent prudent pursuant to local practice, have been filed of record in the
appropriate filing offices in the jurisdiction in which the related Facility is
located or irrevocably delivered to an authorized title agent for the Title
Insurer for such recordation.
(vii) Financing Statements. Borrower and the Joint
Venture and their respective partners or members (and their shareholders), as
applicable, and Subsidiary shall have executed and delivered to Lender all
financing statements required by Lender and such financing statements shall have
been filed of record in the appropriate filing offices in each of the
appropriate jurisdictions or irrevocably delivered to an authorized title agent
for the Title Insurer for such recordation.
(viii) Manager's Subordinations. Manager,
Borrower, each Operator and the Joint Venture, as applicable shall have executed
and delivered to Lender the Manager's Subordinations.
(ix) Environmental Guaranty. The Parent shall have
executed and delivered to Lender the Environmental Guaranty.
(x) Collection Account Agreement. Borrower and the
Collection Account Bank shall have executed and delivered the Collection Account
Agreement and shall have delivered an executed copy of such agreement to Lender.
73
69
(xi) Guaranty. The Parent shall have executed and
delivered to Lender the Guaranty.
(xiii) Equity Pledge Agreement. Each of Parent and
the Subsidiary shall have executed and delivered to Lender its Equity Pledge
Agreement.
(xiv) Collateral Assignment. Borrower shall have
executed and delivered to Lender the Collateral Assignment and the Collateral
Assignment shall have been filed of record in the appropriate filing offices in
the jurisdiction in which the Joint Venture Facility is located or irrevocably
delivered to an authorized title agent for the Title Insurer for such
recordation.
(xv) Joint Venture Note. The Joint Venture shall
have executed and delivered the Note and Borrower shall have delivered to Lender
the original executed Joint Venture Note endorsed to Lender.
(xvi) Joint Venture Loan Agreement. The Joint
Venture and the Borrower shall have executed and delivered to Lender the Joint
Venture Loan Agreement.
(B) Opinions of Counsel. Lender shall have received from
counsel satisfactory to Lender, legal opinions in form and substance reasonably
satisfactory to Lender in Lender's discretion. All such legal opinions will be
addressed to Lender and the Rating Agencies, dated as of the Closing Date, and
in form and substance satisfactory to Lender, the Rating Agencies and their
counsel. Borrower hereby instructs any of the foregoing counsel, to the extent
that such counsel represents Borrower, to deliver to Lender such opinions
addressed to Lender and the Rating Agencies.
(C) Secretary's Certificates. Lender shall have received a
Secretary's Certificate with respect to Borrower, the managing equity owner of
each Operator, the managing equity member of the Joint Venture and Manager.
(D) Insurance. Lender shall have received certificates of
insurance demonstrating insurance coverage in respect of each Facility as
required by and in accordance with the Mortgages.
74
70
(E) Lien Search Reports. Lender shall have received
satisfactory reports of UCC (collectively, the "UCC Searches"), federal tax
lien, bankruptcy, state tax lien, judgment and pending litigation searches
conducted by a search firm reasonably acceptable to Lender. Such searches shall
have been received in relation to Borrower, Manager, each owner of each Facility
immediately prior to Borrower's acquisition of such Facility, the Joint Venture,
each Operator and each equity owner in Borrower, each Operator and Joint Venture
and Manager. Such searches shall have been conducted in each of the locations
designated by Lender in Lender's reasonable discretion and shall have been dated
not more than fifteen (15) days prior to the Closing Date.
(F) Title Insurance Policies. Lender shall have received
(i) Title Insurance Policies or marked-up commitments (in form and substance
satisfactory to Lender) from Title Insurer to issue the Title Insurance Policies
and (ii) a fully executed copy of the Title Instruction Letter from the Title
Insurer.
(G) Environmental Matters. Lender shall have received an
Environmental Report with respect to each Facility.
(H) Consents, Licenses, Approvals. Lender shall have
received copies of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by Borrower and the
Joint Venture under, and the validity and enforceability of, the Loan Documents
and Joint Venture Loan Documents, and such consents, licenses and approvals
shall be in full force and effect.
(I) Additional Matters. Lender shall have received such
other Permits, certificates (including certificates of occupancy reflecting the
permitted uses of each Facility as of the Closing Date), opinions, documents and
instruments (including, without limitation, written proof from the appropriate
Governmental Authority regarding the zoning of each Facility in form and
substance reasonably satisfactory to Lender in Lender's discretion) relating to
the Loan and the Joint Venture Loan as may be required by Lender and all other
documents and all legal matters in connection with the Loan and the Joint
Venture Loan shall be satisfactory in form and substance to Lender. Borrower
shall provide Lender with information reasonably satisfactory to Lender
regarding the Basic Carrying Costs on or before the Closing Date.
75
71
(J) Representations and Warranties. The representations
and warranties herein and in the other Loan Documents and the Joint Venture Loan
Documents shall be true and correct in all material respects.
(K) No Injunction. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority shall have
been issued or entered, and no litigation shall be pending or threatened, which
in the judgment of Lender would enjoin, prohibit or restrain, or impose or
result in an adverse effect upon the making or repayment of the Loan or the
consummation of the Transactions.
(L) Survey. Lender shall have received the Survey with
respect to each Facility.
(M) Engineering Report. Lender shall have received the
Engineering Report with respect to each Facility.
(N) Appraisal. Lender shall have received an Appraisal
satisfactory to Lender with respect to each Facility which shall be (i) prepared
by an Appraiser approved by Lender in Lender's discretion, (ii) prepared based
on a scope of work determined by Lender in Lender's discretion and (iii) in form
and content acceptable to Lender in Lender's discretion.
(O) Intentionally deleted.
(P) Service Contracts and Permits. Borrower shall have
delivered to Lender true, correct and complete copies of all material contracts
and Permits relating to the Facilities.
(Q) Site Inspection. Unless waived by Lender in accordance
with Section 8.4, Lender shall have performed, or caused to be performed on its
behalf, an on-site due diligence review of the Facilities to be acquired or
refinanced with the Loan, the results of which shall be satisfactory to Lender
in Lender's discretion.
(R) Use. The Facilities shall be operating and operated
only as assisted living facilities or, in the case of the Facilities in New
York, congregate care facilities.
76
72
(S) Financial Information. Lender shall have received all
financial information (which financial information shall be satisfactory to
Lender in Lender's reasonable discretion) relating to the Facilities including,
without limitation, audited financial statements of Parent and other financial
reports requested by Lender in Lender's reasonable discretion. Such financial
information shall be (i) prepared by an accounting firm approved by Lender
(provided, however, that KPMG Peat Marwick is hereby approved) in Lender's
reasonable discretion, (ii) prepared based on a scope of work determined by
Lender in Lender's reasonable discretion and (iii) in form and content
acceptable to Lender in Lender's reasonable discretion.
(T) Management Agreement. With respect to each Facility,
Lender shall have received the relevant Management Agreement.
(U) Leases; Tenant Estoppels; Subordination,
Nondisturbance and Attornment Agreements. With respect to each Facility,
Borrower shall have delivered a true, complete and correct rent roll and a copy
of each Management Agreement, Operator Lease and the standard form of residency
agreement, and each standard form of residency agreement shall be satisfactory
to Lender in Lender's reasonable discretion. Borrower shall, among other things
and without limitation, provide (i) evidence that each Lease is in full force
and effect and (ii) originally executed tenant estoppel certificates and the
SNDA from each Operator and, in the case of the Facility in Florida, the Parent
in form and substance satisfactory to Lender in Lender's discretion.
(V) Subdivision. Evidence satisfactory to Lender
(including title endorsements) that the Land with respect to each Facility
constitutes a separate lot for conveyance and real estate tax assessment
purposes.
(W) Transaction Costs. Borrower shall have paid or caused
to be paid all Transaction Costs.
(b) Lender shall not make the Loan unless and until each of
the applicable conditions precedent set forth in this Section 3.1 is satisfied
and until Borrower provides any other information reasonably required by Lender.
(c) In connection with the Loan, Borrower shall execute and/or
deliver to Lender all additions, amendments, modifications and supplements to
the items set forth in this Article III, including, without limitation,
amendments, modifications and
77
73
supplements to the Note, any Mortgage, any Assignment of Leases, any Assignment
of Agreements, and any Manager's Subordination, if reasonably requested by
Lender to effectuate the provisions hereof, and to provide Lender with the full
benefit of the security intended to be provided under the Loan Documents.
Without in any way limiting the foregoing, such additions, modifications and
supplements shall include those deemed reasonably desirable by Lender's counsel
in each jurisdiction in which a Facility is located.
(d) The making of the Loan shall constitute, without the
necessity of specifically containing a written statement to such effect, a
confirmation, representation and warranty by Borrower to Lender that all of the
applicable conditions to be satisfied in connection with the making of the Loan
have been satisfied (unless waived by Lender in accordance with Section 8.4,)
and that all of the representations and warranties of Borrower set forth in the
Loan Documents are true and correct as of the date of the making of the Loan.
Section 3.2 Required Deliveries Prior to Stabilization Date. Prior to
the Stabilization Date, Borrower shall deliver to Lender those items referenced
in Section 3.1 and a non-consolidation opinion with respect to the Borrower in
form acceptable to Lender, including, without limitation, updates of those
deliveries of such items made prior to the Stabilization Date, to the extent
requested by Lender in its reasonable discretion and shall pay all of Lender's
Transaction Costs associated with the recalculation of the Loan Amount (subject
to the cap described in Section 2.13.)
Section 3.3 Conditions Precedent to the Earn-Out Advance. As a
condition precedent to the making of the Earn-Out Advance, Borrower shall have
satisfied (as determined by Lender in its reasonable discretion) the following
conditions (unless waived by Lender in accordance with Section 8.4) on or before
the date upon which the Earn-Out Advance is to be made:
(A) Prior Conditions. All of the conditions precedent to
the making of the Loan set forth in Section 3.1 shall have been satisfied as to
the Earn-Out Advance.
(B) Damage or Injury. The existing Improvements relating
to each Facility shall not have been materially injured or damaged by fire or
other casualty unless previously remediated by Borrower in a manner satisfactory
to Lender in Lender's reasonable discretion.
78
74
(C) Title Requirements. Title Insurer shall have issued
prior to the date of the Earn-Out Advance (1) a continuation of title showing
title to all Land and Improvements to be vested in Borrower, with no subordinate
items and with no exceptions to the title of the Land and Improvements other
than Permitted Encumbrances, and (2) an endorsement to each Title Insurance
Policy issued by the Title Insurer insuring the continued priority of the lien
of each Mortgage, subject only to Permitted Encumbrances, for the full amount of
the Earn-Out Advance and the Loan Amount. Such continuation of title shall
contain affirmative insurance that no mechanic's or supplier's liens have
attached and, if available and applicable, that neither public nor private
conditions, covenants or restrictions, if any, affecting the Land have been
violated.
(D) Request for Advance. Borrower shall submit to Lender
thirty (30) days prior to the Stabilization Date a written request for the
Earn-Out Advance signed by a duly authorized representative of Borrower and all
back-up documentation therefor all in form and substance satisfactory to Lender
in Lender's reasonable discretion (the "Request for Advance").
(E) Change. No change with respect to any Facility or
Borrower shall have occurred which would have a Material Adverse Effect.
(F) Information. Borrower shall have provided all
financial information Borrower is required to provide pursuant to Section 5.1
(q) when due and any other information requested by Lender in connection with
the Earn-Out Advance.
(G) Intentionally deleted.
(H) Transaction Costs. Borrower shall have paid (or agreed
to pay at closing from the proceeds of the Earn-Out Advance) all reasonable
Transaction Costs then due and payable which have not been previously paid
(including, without limitation, any and all costs and expenses of Lender in
connection with the Earn-Out Advance), (which Transaction Costs shall be subject
to the cap described in Section 2.13).
(I) Financial Statements. At least thirty (30) days prior
to the Stabilization Date Borrower shall have provided Lender with a statement
of property operations for the preceding twelve (12) months, upon which an
Independent accounting firm acceptable to Lender in Lender's reasonable
discretion shall have performed agreed upon specific scope procedures reasonably
acceptable to Lender in its reasonable discretion.
79
75
(J) Additional Information. Borrower shall have delivered
to Lender any and all additional information requested by Lender in Lender's
reasonable discretion.
(K) No Default. No Default or Event of Default shall have
occurred and be continuing.
(L) Customary Due Diligence. Lender shall have completed
Lender's customarily required due diligence with results satisfactory to Lender
in Lender's reasonable discretion.
(M) Amendments. Borrower shall have executed and delivered
amendments to any or all of the Loan Documents as reasonably requested by Lender
(including, without limitation, amendments to reflect changes to all interest
rates and amortization schedules) and in form and substance satisfactory to
Lender in Lender's reasonable discretion.
(N) Additional Reserves. Lender shall have established and
Borrower shall have funded such additional reserves as are established by Lender
in Lender's reasonable discretion.
(O) Third Party Reports. Borrower shall deliver all third
party reports requested by Lender in Lender's reasonable discretion.
Section 3.4 Form of Loan Documents and Related Matters. The
Loan Documents and all of the certificates, agreements, legal opinions and other
documents and papers referred to in this Article III, unless otherwise
specified, shall be delivered to Lender, and shall be in form and substance
satisfactory to Lender in Lender's reasonable discretion.
80
76
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Borrower.
(a) Organization. Each Borrower, Operator and Joint
Venture (i) is a duly organized and validly existing Entity in good standing
under the laws of the State of its formation, (ii) is duly qualified as a
foreign Entity in each jurisdiction in which the nature of its business, the
relevant Facility or any of the Collateral makes such qualification necessary or
desirable, (iii) has the requisite Entity power and authority to carry on its
business as now being conducted, and (iv) has the requisite Entity power to
execute and deliver, and perform its obligations under, the Loan Documents to
which it is a party, if any.
(b) Authorization. The execution and delivery by
Borrower of the Loan Documents, Borrower's performance of its obligations
thereunder and the creation of the security interests and Liens provided for in
the Loan Documents (i) have been duly authorized by all requisite Entity action
on the part of Borrower, (ii) will not violate any provision of any applicable
Legal Requirements, any order, writ, decree, injunction or demand of any court
or other Governmental Authority, any organizational document of Borrower or any
material indenture or agreement or other instrument to which Borrower is a party
or by which Borrower is bound, (iii) will not be in conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under, or result in the creation or imposition of any Lien of any nature
whatsoever upon any of the property or assets of Borrower pursuant to, any
material indenture or agreement or instrument, and (iv) have been duly executed
and delivered by Borrower. Except for those obtained or filed on or prior to the
Closing Date, Borrower is not required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority or other agency in connection with or as a condition to
the execution, delivery or performance of the Loan Documents. The Loan Documents
to which Borrower or any Manager is a party have been duly authorized, executed
and delivered by such parties.
81
77
(c) Single-Purpose Entity.
(i) Borrower has been, and will continue to be, a
duly formed and existing Entity, and a Single-Purpose Entity.
(ii) Each SPE Equity Owner at all times since its
formation has been, and will continue to be, a duly formed and existing
corporation in good standing under the laws of the jurisdiction of its formation
and a Single-Purpose Entity, is duly qualified as a foreign entity in each other
jurisdiction in which the nature of its business, any Facility or any of the
Collateral makes such qualification necessary or desirable, and Borrower will
take no action to cause any SPE Equity Owner not to be a duly formed and
existing corporation in good standing under the laws of the jurisdiction of its
formation and a Single-Purpose Entity.
(iii) Borrower at all times since its formation
has complied, and will continue to comply, with the provisions of all of its
organizational documents, and the laws of the state in which Borrower was formed
relating to the Entity.
(d) Litigation. There are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority or other
agency now pending and served or, to the knowledge of Borrower, threatened
against Borrower, any Operator, the Joint Venture, any SPE Equity Owner, Manager
or any Facility which, if adversely determined, is reasonably likely to have a
Material Adverse Effect on an Aggregated Facilities Basis.
(e) Agreements. None of the Borrower, any Operator,
the Joint Venture, or the Manager is a party to any agreement or instrument or
subject to any restriction which is likely to have a Material Adverse Effect.
None of the Borrower, any Operator, the Joint Venture, or the Manager is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any indenture, agreement or instrument to
which it is a party or by which Borrower, the Joint Venture, any Operator, the
Manager or any Facility is bound where such default is reasonably likely to have
a Material Adverse Effect on an Aggregated Facilities Basis.
(f) No Bankruptcy Filing. Neither Borrower nor any
Operator, the Joint Venture, or the Manager is contemplating either the filing
of a petition by such entity under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of such entity's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against any such entity.
82
78
(g) Full and Accurate Disclosure. No statement of
fact made by or on behalf of Borrower, the Joint Venture, any Operator, or the
Manager in the Loan Documents or in any other document or certificate delivered
to Lender by Borrower, the Joint Venture, any Operator or the Manager contains
any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no fact presently known to Borrower which has not been disclosed to Lender
which materially adversely affects, nor as far as Borrower can foresee, is
likely to materially adversely affect the business, operations or condition
(financial or otherwise) of Borrower, the Joint Venture, any Operator or the
Manager.
(h) Location of Chief Executive Offices. The location
of Borrower's principal place of business and the location of Borrower's chief
executive office is the address listed in the first paragraph of this Agreement,
and Borrower has no other places of business, except for the Facilities which
have the addresses shown on Exhibit B.
(i) Compliance. Borrower, the Joint Venture, each
Operator, the Manager, each Facility and Borrower's, the Joint Venture's, each
Operator's and the Manager's use thereof and operations thereat comply in all
material respects with all applicable Legal Requirements and all Insurance
Requirements. Borrower, the Joint Venture, each Operator, and the Manager are
not in default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority, the violation of which is reasonably likely to have
a Material Adverse Effect.
(j) Other Debt and Obligations. Borrower has no
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower is a party, or by
which Borrower or any Facility is bound, other than unsecured trade payables
incurred in the ordinary course of business relating to the ownership and
operation of such Facility and financing Equipment or vehicles used in the
ordinary course of owning and operating the Facility (including capitalized
leases of Equipment and vehicles) which trade payables and Equipment and
vehicles financing do not exceed a maximum amount of One Hundred Fifty Thousand
Dollars ($150,000) for each Facility (provided, however, the aggregate amount
for all Facilities at any one time shall not exceed One Million Two Hundred
Fifty Thousand Dollars ($1,250,000)) and, with respect to the trade payables,
are paid within thirty (30) days of the date incurred, and other than
obligations under the Mortgage and the other Loan Documents. Borrower has not
borrowed or received other debt financing (other than as permitted above) that
has not been heretofore repaid in full and Borrower has no known material
contingent liabilities.
83
79
(k) ERISA. Each Plan and, to the knowledge of
Borrower, each Multiemployer Plan, is in compliance with, and has been
administered in compliance with, its terms and the applicable provisions of
ERISA, the Code and any other federal or state law, and no event or condition
has occurred as to which Borrower would be under an obligation to furnish a
report to Lender under Section 5.1(s) where the lack of compliance is reasonably
likely to have a Material Adverse Effect on an Aggregated Facilities Basis.
(l) Solvency. Borrower (i) has not entered into this
Loan Agreement or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and (ii) has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated hereby, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of this
Agreement, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, or disputed liabilities or Contingent Obligations.
The fair saleable value of Borrower's assets is and will, immediately following
the execution and delivery of this Agreement, be greater than Borrower's
probable liabilities, including the maximum amount of its Contingent Obligations
or its debts as such debts become absolute and matured. Borrower's assets do not
and, immediately following the execution and delivery of this Agreement, will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur debts and liabilities (including, without
limitation, Contingent Obligations and other commitments) beyond its ability to
pay such debts as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of Borrower).
(m) Not Foreign Person. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
(n) Investment Company Act; Public Utility Holding
Company Act. Borrower is not (i) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (iii) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.
(o) No Defaults. No Default or Event of Default
exists under or with respect to any Loan Document.
84
80
(p) Labor Matters. None of Borrower, the Joint
Venture or any Operator is not a party to any collective bargaining agreements.
(q) Title to the Mortgaged Properties. Borrower owns
good, indefeasible, marketable and insurable fee simple title to each Leased
Facility, free and clear of all Liens, other than the Permitted Encumbrances
applicable to such Leased Facility. The Joint Venture owns good, indefeasible,
marketable and insurable fee simple title to the Joint Venture Facility, free
and clear of all Liens, other than Permitted Encumbrances applicable to such
Joint Venture Facility. There are no outstanding options to purchase or rights
of first refusal affecting any Facility (other than the Parent's rights (which
may be exercised by the Subsidiary) to make the Operator/JV Acquisitions). The
Permitted Encumbrances do not and will not materially and adversely affect (i)
the ability of Borrower to pay in full all sums due under the Note or any of its
other obligations in a timely manner or (ii) the use of any Facility for the use
currently being made thereof, the operation of any Facility as currently being
operated or the value of any Facility.
(r) Use of Proceeds; Margin Regulations. Borrower
will use the proceeds of the Loan for the purposes described in Section 2.2. No
part of the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any "margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by applicable Legal Requirements.
(s) Financial Information. All historical financial
data concerning Borrower, the Joint Venture, Parent and each Facility that has
been delivered by Borrower to Lender is true, complete and correct in all
material respects. Since the delivery of such data, except as otherwise
disclosed in writing to Lender, there has been no material adverse change in the
financial position of Borrower, the Joint Venture, Parent or any Facility, or in
the results of operations of Borrower. None of Borrower, the Joint Venture or
Parent has incurred any obligation or liability, contingent or otherwise, not
reflected in such financial data which is reasonably likely to have a Material
Adverse Effect on an Aggregated Facilities Basis.
(t) Condemnation. No Taking has been commenced or, to
Borrower's knowledge, is contemplated with respect to all or any material
portion of any Facility or for the relocation of roadways providing access to
any Facility.
85
81
(u) Utilities and Public Access. Each Facility has
adequate rights of access to public ways and is served by adequate water, sewer,
sanitary sewer and storm drain facilities as are adequate for full utilization
of such Facility for its current purpose. Except as otherwise disclosed by the
Surveys, all public utilities necessary to the continued use and enjoyment of
each Facility as presently used and enjoyed are located in the public
right-of-way abutting the premises, and all such utilities are connected so as
to serve each Facility either (i) without passing over other property or, (ii)
if such utilities pass over other property, pursuant to valid easements. All
roads necessary for the full utilization of each Facility for its current
purpose have been completed and dedicated to public use and accepted by all
Governmental Authorities or are the subject of access easements for the benefit
of such Facility.
(v) Environmental Compliance. Borrower represents,
warrants and covenants, as to itself, the Joint Venture, each Operator, the
Manager, and each Facility:
(i) Borrower, the Joint Venture, each Operator,
the Manager, and each Facility are in compliance with all applicable
Environmental Laws, which compliance includes, without limitation, the
possession by Borrower, the Joint Venture, each Operator, or the Manager, of and
compliance with all environmental, health and safety Permits, licenses and other
governmental authorizations required in connection with the ownership and
operation of each Facility under all Environmental Laws, except where the
failure to comply with such laws is not reasonably likely to result in a
Material Adverse Effect.
(ii) There is no Environmental Claim pending or,
to Borrower's knowledge, threatened, and no penalties arising under
Environmental Laws have been assessed, against Borrower, the Joint Venture, any
Operator, the Manager, any Facility or against any Person whose liability for
any Environmental Claim Borrower has or may have retained or assumed either
contractually or by operation of law, and no investigation or review is pending
or, to the knowledge of Borrower, threatened by any Governmental Authority,
citizens group, employee or other Person with respect to any alleged failure by
Borrower, the Joint Venture, any Operator, the Manager, or any Facility to have
any environmental, health or safety permit, license or other authorization
required under, or to otherwise comply with, any Environmental Law or with
respect to any alleged liability of Borrower, the Joint Venture, any Operator,
or the Manager, for any Use or Release of any Hazardous Substances or the
presence, Use, or Release of any Hazardous Substances at, on, in, under, or from
any Facility.
(iii) To the knowledge of Borrower after due
inquiry, there have been and are no past or present Releases or threats of
Release of any Hazardous
86
82
Substance that are likely to form the basis of any Environmental Claim against
Borrower, the Joint Venture, any Operator, the Manager, any Facility or, to
Borrower's knowledge, against any Person whose liability for any Environmental
Claim Borrower has or may have retained or assumed either contractually or by
operation of law.
(iv) To the knowledge of Borrower after due
inquiry and except as disclosed in the Environmental Reports, without limiting
the generality of the foregoing, there is not present at, on, in or under any
Facility, PCB-containing equipment, asbestos or asbestos containing materials,
underground or aboveground storage tanks or surface impoundments for Hazardous
Substances, lead in drinking water (except in concentrations that comply with
all Environmental Laws), or lead-based paint (nor have there been any
underground storage tanks present at, on, in, or under any Facility).
(v) No Liens are presently recorded with the
appropriate land records under or pursuant to any Environmental Law with respect
to any Facility and, to Borrower's knowledge, no Governmental Authority has been
taking or is in the process of taking any action that could subject any Facility
to Liens under any Environmental Law.
(vi) There have been no environmental
investigations, studies, audits, reviews or other analyses conducted by or on
behalf of Borrower, the Joint Venture, any Operator, or the Manager, that are in
the possession or control of Borrower in relation to any Facility which have not
been provided to Lender.
(vii) No conditions exist which would require
Borrower, the Joint Venture, any Operator, or the Manager, under any
Environmental Laws to place a notice on any deed to any Facility with respect to
the presence, Use or Release of Hazardous Substances at, on, in, under or from
any Facility and no Facility has any such notice in its deed.
(w) No Joint Assessment; Separate Lots. Borrower has not
and shall not suffer, permit or initiate the joint assessment of any Facility
(i) with any other real property constituting a separate tax lot, and (ii) with
any portion of such Facility which may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
such Facility as a single lien. Each Facility is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot.
87
83
(x) Assessments. Except as disclosed in the Title
Insurance Policies, there are no pending or, to the knowledge of Borrower,
proposed special or other assessments for public improvements or otherwise
affecting any Facility, nor, to the knowledge of Borrower, are there any
contemplated improvements to any Facility that may result in such special or
other assessments.
(y) Mortgage and Other Liens. Each Mortgage creates a
valid and enforceable first mortgage Lien on the relevant Facility as security
for the repayment (a) as to the Leased Facilities and the Non-Leased Facilities,
of the Indebtedness and (b) as to the Joint Venture Facility, the Loan
Obligations (as defined in the Joint Venture Mortgage), in all cases, subject
only to the Permitted Encumbrances applicable to such Facility. Each Collateral
Security Instrument establishes and creates a valid, effective, and enforceable
Lien on and a security interest in, or claim to, the rights and property
described therein. All property covered by such Collateral Security Instrument
is subject to a UCC financing statement filed and/or recorded, as appropriate,
or irrevocably delivered to an authorized agent of the Title Insurer for such
recordation or filing in all places necessary to perfect a valid first priority
Lien (except with respect to financing of Equipment or vehicles to the extent
permitted under this Loan Agreement) with respect to the rights and property
that are the subject of such Collateral Security Instrument to the extent
governed by the UCC. All continuations and any assignments of any such financing
statements have been or will be timely filed or refiled, as appropriate, in the
appropriate recording offices.
(z) Enforceability. The Loan Documents executed by each of
Borrower, the Joint Venture, or the Manager in connection with the Loan,
including, without limitation, any Collateral Security Instrument, are the
legal, valid and binding obligations of each of Borrower, the Joint Venture, or
the Manager, enforceable against each of Borrower, the Joint Venture or the
Manager, as applicable, in accordance with their terms, subject only to
bankruptcy, insolvency and other limitations on creditors' rights generally and
to equitable principles. Such Loan Documents are, as of the Closing Date, not
subject to any right of rescission, set-off, counterclaim or defense by any of
the Borrower, the Joint Venture, or the Manager, including the defense of usury,
nor will the operation of any of the terms of the Note, the Mortgages, or such
other Loan Documents, or the exercise of any right thereunder, render the
Mortgages unenforceable against each of Borrower, the Joint Venture, or the
Manager, in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense by any of the Borrower, the Joint Venture or the
Manager, including the defense of usury, and none of the Borrower, the Joint
Venture, or the Manager, has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
88
84
(aa) No Liabilities. Borrower has no liabilities or
obligations including, without limitation, Contingent Obligations (and
including, without limitation, liabilities or obligations in tort, in contract,
at law, in equity, pursuant to a statute or regulation, or otherwise) other than
those liabilities and obligations expressly permitted by this Agreement.
(bb) No Prior Assignment. As of the Closing Date, (i) Lender
is the assignee of Borrower's and the Joint Venture's interest under the Leases,
and (ii) there are no prior assignments of the Leases or any portion of the
Rents due and payable or to become due and payable which are presently
outstanding.
(cc) Certificates of Occupancy. Either Borrower or the Joint
Venture, each Operator, or the Manager, as applicable, has obtained (in
Borrower's name and/or in the name of the Joint Venture, and/or in the name of
the applicable Operator and/or in the name of the Manger, as applicable, and in
any event, in the name of the Person(s) as required by all applicable
Requirements) all material Permits necessary to use and operate the Facilities
for the uses described in Section 3.1(a)(R), and all such Permits are in full
force and effect. The use being made of each Facility is in conformity in all
material respects with the certificate of occupancy and/or Permits for such
Facility and any other restrictions, covenants or conditions affecting such
Facility. Each Facility contains all Equipment necessary to use and operate such
Facility in a first-class manner.
(dd) Flood Zone. Except as shown on the related Survey, no
Facility is located in a flood hazard area as designated by the Federal
Emergency Management Agency.
(ee) Physical Condition. Except as disclosed in the related
Engineering Reports, each Facility is free of material structural defects and
all building systems contained therein are in good working order in all material
respects subject to ordinary wear and tear.
(ff) Intellectual Property. All trademarks, trade names and
service marks that any of the Borrower, the Joint Venture, any Operator, or the
Manager owns or has pending, or under which Borrower, the Joint Venture, any
Operator or the Manager is licensed, are in good standing and uncontested. There
is no right under any trademark, trade name or service xxxx necessary to the
business of Borrower, the Joint Venture, any Operator or the Manager as
presently conducted or as Borrower, the Joint Venture, any Operator or the
Manager contemplates conducting its respective business. Borrower, the Joint
Venture, any
89
85
Operator or the Manager has not infringed, is not infringing, and has not
received notice of infringement with respect to asserted trademarks, trade names
and service marks of others. To Borrower's knowledge, there is no infringement
by others of trademarks, trade names and service marks of Borrower, the Joint
Venture, any Operator or the Manager.
(gg) Security Deposits. There are no security deposits
collected by Borrower, any Operator, the Joint Venture or Manager with respect
to any Facility.
(hh) Conduct of Business. Neither Borrower nor the Joint
Venture conducts its business "also known as", "doing business as" or under any
name other than as shown on Exhibit B attached hereto.
(ii) Title Insurance. Each Facility is covered by either an
American Land Title Association (ALTA) mortgagee's title insurance policy, or a
commitment to issue such a title insurance policy, insuring a valid first lien
on such Facility, which is in full force and effect and is freely assignable to
and will inure to the benefit of Lender and any successor or assignee of Lender,
including but not limited to the trustee in a Securitization, subject only to
the Permitted Encumbrances.
(jj) Tax Fair Market Value. Each Allocated Loan Amount with
respect to the relevant Facility does not exceed the Tax Fair Market Value of
such Facility. If the Note is significantly modified prior to the closing date
of a Securitization so as to result in a taxable exchange under Code Section
1001, Borrower will, if requested by Lender, represent that each Allocated Loan
Amount does not exceed the Tax Fair Market Value of the relevant Facility as of
the date of such significant modification.
(kk) Leases. (a) Either Borrower or the Joint Venture, as
applicable, is the sole owner of the entire lessor's interest in the Leases
(other than resident care agreements) and Borrower, the relevant Operator (as to
a Leased Facility) and/or Manager are the sole owners of the entire lessor's
interest in the resident care agreements; (b) the Leases (other than resident
care agreements) are the valid, binding and enforceable obligations of Borrower
and the applicable tenant or lessee thereunder and, with respect to the resident
care agreements, the resident care agreements are the valid, binding and
enforceable obligations of the Manager or the Joint Venture, as applicable, and
the applicable tenant or lessee thereunder; (c) the terms of all alterations,
modifications and amendments to the Leases are reflected in the certified rent
roll statements delivered to and approved by Lender; (d) none of the Rents
reserved in the Leases have been assigned or otherwise pledged or hypothecated;
(e) none of
90
86
the Rents have been collected for more than one (1) month in advance; (f) the
premises demised under the Leases have been completed and the tenants under the
Leases have accepted the same and have taken possession of the same on a
rent-paying basis; (g) there exists no offset or defense to the payment of any
portion of the Rents; (h) no Lease contains an option to purchase, right of
first refusal to purchase, expansion right, or any other similar provision; (i)
no Person has any possessory interest in, or right to occupy, any Facility
except under and pursuant to a Lease; (j) each Lease (other than resident care
agreements) is subordinate to the Loan Documents, either pursuant to its terms
or a recorded subordination agreement; and (k) no Lease has the benefit of a
non-disturbance agreement that would be considered unacceptable to prudent
institutional lenders.
(ll) Use-Specific Representations.
(i) Compliance with Laws. Borrower, each Operator, the
Joint Venture and each Facility comply in all material respects with
all applicable federal, state and local laws, regulations, quality and
safety standards, accreditation and certification standards and
requirements for assisted living facilities and, in the
Facilities in New York, as a congregate care facilities of the
applicable state and local Department of Public Health (each a "DOH")
and all other Governmental Authorities relating to the operation of an
assisted living facility and, in the Facilities in New York, as a
congregate care facilities.
(ii) Licenses. All material governmental licenses,
permits, regulatory agreements or other approvals or agreements
necessary or desirable for the use, establishment or operation of the
Facility as an assisted living facility are held by the Borrower and/or
the relevant Operator and/or Manager and/or the Joint Venture, as
applicable and in any event are held by the Person(s) required under
all applicable Legal Requirements and are in full force and effect,
including, without limitation, (a) a valid certificate of need for the
provision of assisted living services, if applicable ("CON"); (b) a
valid license to provide assisted living services, if applicable; and
(c) a valid registration of the Facility with DOH as an assisted living
facility, if applicable (collectively, the "Licenses").
(iii) Ownership of Licenses. The Licenses, including
without limitation, each, if any, CON or XXX:
91
87
(a) may not be, and have not been, transferred to
any location other than the Facility for which such License was
originally issued;
(b) have not been pledged as collateral security
for any other loan or indebtedness;
(c) are held free from restrictions or known
conflicts which would materially impair the use or operation of the
Facility as intended, and are not provisional, probationary or
restricted in any way; and
(d) have at all applicable times been, and are,
in full force and effect.
(iv) Intentionally deleted.
(v) Intentionally deleted.
(vi) Governmental Proceedings and Notices. None of
Borrower, any Operator, the Joint Venture, Manager or any Facility is
currently the subject
of any proceeding by any Governmental Authority, and no notice of any
violation has been received from a Governmental Authority that would,
directly or indirectly, or with the passage of time:
(a) (i) affect the ability of Borrower,
any Operator, the Joint Venture or Manager to accept and/or retain
tenants in such a manner which would have a Material Adverse Effect or
(ii) result in the imposition of a fine or sanction of such
significance which would have a Material Adverse Effect or (iii) result
in anything else that would have a Material Adverse Effect; or
(b) modify, limit or annul or result in
the transfer, suspension, revocation or imposition of probationary use
on any License in a manner that could have a Material Adverse Effect.
(vii) Physical Plant Standards. Each
Facility and the use thereof complies in all material respects
with all local, state and federal building codes, fire codes,
health care, and other similar regulatory requirements (the
92
88
"Physical Plant Standards") and no material waivers of
Physical Plant Standards exist at such Facility.
(viii) Past Violations. Each Facility is in material
compliance with all local, federal and state laws and regulations
relating to, assisted living facilities and no material statement of
charges or deficiencies has been made or material penalty enforcement
action has been undertaken against any Facility or against Borrower,
any Operator, the Joint Venture, Manager or any partner, member,
officer, director or stockholder of Borrower, any Operator, the Joint
Venture or Manager by any Governmental Authority with respect to any
Facility.
(ix) Intentionally deleted.
(x) Intentionally deleted.
(xi) Pledges of Receivables. Borrower,
each Operator, the Joint Venture and Manager has not pledged its
receivables as collateral security for any other loan or indebtedness.
(xii) Intentionally deleted.
(xiii) Resident Records. All resident records at each
Facility are true, complete and correct in all material respects and
have at all times and currently are maintained substantially in
accordance with all applicable Legal Requirements, including, without
limitation, with respect to retention and confidentiality.
(xiv) Management Agreements. In the event of
foreclosure or other acquisition of any Facility by the Lender, under
applicable Legal Requirements none of Borrower, Lender, any Operator,
the Joint Venture or any subsequent purchaser is required to obtain a
CON (or similar certificate, license, or approval issued by the DOH for
the requisite number of beds) prior to applying for and receiving a
license to operate such Facility.
Section 4.2 Survival of Representations and Warranties.
Borrower agrees that (i) all of the representations and warranties made by
Borrower set forth in this Agreement and in the other Loan Documents delivered
on the Closing Date are made as of the Closing Date (except as expressly
otherwise provided) and (ii) all representations and warranties made by
93
89
Borrower shall survive the delivery of the Note and continue for so long as any
amount remains owing to Lender under this Agreement, the Note or any of the
other Loan Documents; provided, however, that the representations, warranties
and covenants set forth in Section 4.1(v) and Sections 5.1(d) through 5.1(i),
inclusive, shall survive in perpetuity and shall not be subject to the
exculpation provisions of Section 8.14. All representations, warranties,
covenants and agreements made in this Agreement or in the other Loan Documents
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
Notwithstanding anything set forth in this Agreement to the contrary, if at
anytime during the term of this Loan any applicable federal, state or local
agency enacts any laws or regulations or permits the accreditation and
certification of assisted living facilities, such that Borrower elects to enter
into a participation or provider agreement with any third party payor programs
(including Medicare, Medicaid, Blue Cross and/or Blue Shield or any other
private commercial insurance managed care and employee assistant program) (such
programs the "Third Party Payors Programs") permit assisted living facilities to
participate in their programs, Borrower agrees to execute amendments of this
Agreement and the other Loan Documents as are consistent with the requirements
of loans extended by Nomura the source of payment of which includes payments
from Third Party Payers' Programs, Medicare or Medicaid and shall include such
standard representations, consents and warranties as are consistent with the
foregoing.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1 Borrower Covenants. Borrower covenants and agrees
that, from the date hereof and until payment in full of the Indebtedness:
(a) Existence; Compliance with Legal Requirements; Insurance.
Borrower shall do or cause to be done all things necessary (i) to preserve,
renew and keep in full force and effect its Entity existence, rights, licenses,
Permits and franchises materially necessary for the conduct of its business,
(ii) to comply with all Legal Requirements relating to the foregoing matters and
Environmental Laws to the extent the failure to comply is reasonably likely to
result in a Material Adverse Effect and (iii) to comply with all Insurance
Requirements. Subject to the foregoing sentence, Borrower shall do or cause to
be done all things necessary to comply in all respects with all applicable Legal
Requirements where the failure to comply is reasonably likely to have a Material
94
90
Adverse Effect on an Aggregated Facilities Basis. Borrower shall notify Lender
promptly of any written notice or order that Borrower receives from any
Governmental Authority relating (A) to Borrower's failure to comply in any
respect with any Legal Requirements relating to the matters described above in
clause (ii) to the extent they relate to any Facility and the failure to comply
therewith is reasonably likely to have a Material Adverse Effect and promptly
take any and all actions necessary to bring its operations at such Facility into
compliance with such applicable Legal Requirements (and shall fully comply in
all material respects with the requirements of such Legal Requirements that at
any time are applicable to its operations at any Facility where the failure to
comply is reasonably likely to have a Material Adverse Effect) and (B) subject
to the terms of the foregoing clause (B), Borrower's failure to comply in any
material respect with any other Legal Requirements to the extent they relate to
any Facility where the failure to comply is reasonably likely to have a Material
Adverse Effect on an Aggregated Facilities Basis and promptly take any and all
actions necessary to bring its operations at such Facility into compliance with
such applicable Legal Requirements (and shall fully comply in all respects with
the requirements of such Legal Requirements that at any time are applicable to
its operations at any Facility where the failure to comply is reasonably likely
to have a Material Adverse Effect on an Aggregated Facilities Basis); provided,
that Borrower at its expense may, after prior notice to the Lender, contest by
appropriate legal, administrative or other proceedings conducted in good faith
and with due diligence, the validity or application, in whole or in part, of any
such applicable Legal
95
91
Requirements as long as (i) neither the applicable Collateral nor any part
thereof or any interest therein, will be sold, forfeited or lost if Borrower
pays the amount or satisfies the condition being contested, and Borrower would
have the opportunity to do so, in the event of Borrower's failure to prevail in
the contest, (ii) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which Borrower has not furnished
additional security as provided in clause (iii) below, or to any risk of
criminal liability, and neither the applicable Collateral nor any interest
therein would be subject to the imposition of any Lien as a result of the
failure to comply with such Legal Requirement or of such proceeding and (iii)
Borrower shall have furnished to the Lender additional security in respect of
the claim being contested or the loss or damage that may result from Borrower's
failure to prevail in such contest in such amount as may be reasonably requested
by Lender but in no event less than one hundred twenty-five percent (125%) of
the amount of such claim. Borrower shall at all times maintain, preserve and
protect all franchises and trade names and preserve all the remainder of its
property necessary for the continued conduct of its business and keep each
Facility in good repair, working order and condition, except for reasonable wear
and use, and from time to time make, or cause to be made, all necessary repairs,
renewals, replacements, betterments and improvements thereto, all as more fully
provided in the Mortgages. Borrower shall keep each Facility insured at all
times, as provided in the Mortgages.
(b) Impositions and Other Claims. Borrower shall pay
and discharge or cause to be paid and discharged all Impositions, as well as all
lawful claims for labor, materials and supplies or otherwise, which could become
a Lien, all as more fully provided in, and subject to any rights to contest
contained in, the relevant Mortgage.
(c) Litigation. Borrower shall give prompt written
notice to Lender of any litigation or governmental proceedings pending or
threatened against Borrower, the Joint Venture, any Operator, or the Manager,
which is reasonably likely to have a Material Adverse Effect.
(d) Environmental Remediation.
(i) If any investigation, site monitoring,
cleanup, removal, abatement, restoration remedial work or other response action
of any kind or nature is required pursuant to an order, directive, decree or
settlement agreement of or with any Governmental Authority or under any
applicable Environmental Law (collectively, the "Remedial Work"), because of or
in connection with the (x) past, present or future presence, suspected presence,
Release or threatened Release of a Hazardous Substance at, on, in, under or from
any Facility or any portion thereof or (y) violation of or compliance with
applicable Environmental Laws,
96
92
Borrower shall promptly commence and diligently prosecute to completion all such
Remedial Work. In all events, such Remedial Work shall be commenced within the
time period ordered or directed by such Governmental Authority or such shorter
period as may be required under any applicable Environmental Law; provided,
however, that Borrower shall not be required to commence such Remedial Work
within the above specified time periods: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work within such time
periods would result in Borrower or such Remedial Work violating any
Environmental Law, or (z) if Borrower, at its expense and after prior notice to
Lender, is contesting by appropriate legal, administrative or other proceedings,
conducted in good faith and with due diligence, the need to perform Remedial
Work, as long as (1) Borrower is permitted by the applicable Environmental Laws
to delay performance of the Remedial Work pending such proceedings, (2) no
Facility nor any part thereof or interest therein will be sold, forfeited or
lost if Borrower performs the Remedial Work being contested, and if Borrower
fails to prevail in contest, Borrower would thereafter have the opportunity to
perform such Remedial Work, (3) Lender would not, by virtue of such permitted
contest, be exposed to any risk of any civil liability for which Borrower has
not furnished additional security as provided in clause (4) below, or to any
risk of criminal liability, and no Facility nor any interest therein would be
subject to the imposition of any Lien for which Borrower has not furnished
additional security as provided in clause (4) below, as a result of the failure
to perform such Remedial Work and (4) Borrower shall have furnished to Lender
additional security in respect of the Remedial Work being contested and the loss
or damage that may result from Borrower's failure to prevail in such contest in
such amount as may be reasonably requested by Lender but in no event less than
one hundred twenty-five percent (125%) of the cost of such Remedial Work and any
loss or damage that may result from Borrower's failure to prevail in such
contest.
(ii) All Remedial Work under clause (i) above
shall be performed by contractors, and under the supervision of a consulting
environmental Engineer, each approved in advance by Lender which approval will
not be unreasonably withheld or delayed. All costs and expenses incurred in
connection with such Remedial Work shall be paid by Borrower. If Borrower does
not timely commence and diligently prosecute to completion the Remedial Work,
Lender may (but shall not be obligated to), upon sixty (60) days prior written
notice to Borrower of its intention to do so, cause such Remedial Work to be
performed. Borrower shall pay or reimburse Lender on demand for all Advances (as
defined in the Mortgage) and expenses (including reasonable attorneys' fees and
disbursements) relating to or incurred by Lender in connection with monitoring,
reviewing or performing any Remedial Work in accordance herewith.
97
93
(iii) Unless otherwise required by law,
Environmental Laws or any Governmental Authority, Borrower shall not commence
any Remedial Work under clause (i) above, nor enter into any settlement
agreement, consent decree or other compromise relating to any Hazardous
Substances or Environmental Laws which is reasonably likely to have a Material
Adverse Effect. Notwithstanding the foregoing, if the presence or threatened
presence or Release of Hazardous Substances at, on, in, under, from or about any
Facility poses an immediate threat to the health, safety or welfare of any
Person or the environment, or is of such a nature that an immediate response is
necessary, Borrower may complete all necessary Remedial Work. In such events,
Borrower shall notify Lender as soon as practicable and, in any event, within
three (3) Business Days, of any action taken.
(e) Environmental Matters; Inspection; Material
Adverse Effect Qualifier.
(i) Borrower shall not cause, allow or authorize
a Hazardous Substance to be present at, on, in, under or to emanate from any
Facility, or migrate from adjoining property onto or into any Facility, except
under conditions permitted by applicable Environmental Laws and, in the event
that such Hazardous Substances are present at, on, in, under or emanate from any
Facility, or migrate onto or into any Facility, Borrower shall cause the
performance of Remedial Work, removal or remediation of such Hazardous
Substances, in accordance with this Agreement and Environmental Laws. Borrower
shall use best efforts to prevent, and to seek the remediation of, any migration
of Hazardous Substances onto or into any Facility from any adjoining property.
(ii) Upon prior written notice to Borrower, the
Joint Venture, any Operator, or the Manager, Lender shall have the right at all
reasonable times to enter upon and inspect all or any portion of any Facility.
If Lender has reason to believe that Remedial Work may be required, Lender may
select or may require Borrower to select a consulting environmental Engineer
reasonably satisfactory to Lender to conduct and prepare environmental reports
assessing the environmental condition of any Facility. Lender shall be given a
reasonable opportunity to review any reports, data and other documents or
materials reviewed or prepared by the environmental Engineer. The inspection
rights granted to Lender in this Section 5.1(e) shall be in addition to, and
not in limitation of, any other inspection rights granted to Lender in the Loan
Documents, and shall expressly include the right (if Lender suspects that
Remedial Work may be required) to conduct or require Borrower to conduct soil
borings, establish ground water monitoring xxxxx and conduct other customary
environmental tests, assessments and audits.
98
94
(iii) Borrower agrees to bear and shall pay or
reimburse Lender, on demand, for all sums advanced and expenses incurred
(including reasonable attorneys' fees and disbursements, but excluding internal
overhead, administrative and similar costs of Lender) relating to, or incurred
by Lender in connection with, the inspections and reports described in this
Section 5.1(e) in the following situations:
(x) If Lender has grounds to believe, at
the time any such inspection is ordered, that there exists an
occurrence or condition that could lead to an Environmental Claim;
(y) If any such inspection reveals an
occurrence or condition that could lead to an Environmental Claim; or
(z) If an Event of Default with respect to
any Facility exists at the time any such inspection is ordered, and
such Event of Default relates to any representation, covenant or other
obligation pertaining to Hazardous Substances, Environmental Laws or
any other environmental matter.
(f) Environmental Notices. Borrower shall promptly
provide notice to Lender of:
(i) any Environmental Claim asserted or
threatened, in writing, by any Governmental Authority or other Person with
respect to any Hazardous Substance at, on, in, under or emanating from any
Facility, which could reasonably be expected to impair the value of Lender's
interests or have a Material Adverse Effect;
(ii) any Environmental Claim or proceeding,
investigation or inquiry commenced or threatened, in writing, by any
Governmental Authority or Person, against Borrower, the Joint Venture, any
Operator, or the Manager, with respect to the presence, suspected presence,
Release or threatened Release of Hazardous Substances from or onto, in or under
any property not owned by Borrower, including, without limitation, proceedings
under the Comprehensive Environmental Response, Compensation, and Liability Act,
as amended, 42 U.S.C. Section 9601, et seq., which could reasonably be expected
to impair the value of Lender's security interests or have a Material Adverse
Effect;
(iii) all Environmental Claims asserted or
threatened against Borrower, the Joint Venture, any Operator, or the Manager,
against any other party occupying
99
95
any Facility or any portion thereof which become known to Borrower, or against
any Facility, which could reasonably be expected to impair the value of Lender's
security interests or have a Material Adverse Effect;
(iv) the discovery by Borrower of any
occurrence or condition on any Facility or on any real property adjoining or in
the vicinity of any Facility which could reasonably be expected to lead to an
Environmental Claim against Borrower or Lender; and
(v) the commencement or completion of any
Remedial Work.
(g) Copies of Notices. Borrower shall immediately
transmit to Lender copies of any citations, orders, notices or other written
communications received from any Person or any Governmental Authority and any
notices, reports or other written communications submitted to any Governmental
Authority with respect to the matters described in Section 5.1(f).
(h) Environmental Claims. Lender and/or, to the
extent authorized by Lender if applicable, the relevant Deed of Trust Trustee
may join and participate in, as a party if Lender so determines, any legal or
administrative proceeding or action concerning any Facility or any portion
thereof under any Environmental Law, if, in Lender's reasonable judgment, the
interests of Lender or such Deed of Trust Trustee, will not be adequately
protected by Borrower. Borrower agrees to bear and shall pay or reimburse Lender
and such Deed of Trust Trustee on demand for all reasonable sums advanced and
reasonable expenses incurred (including reasonable attorneys' fees and
disbursements) and such Deed of Trust Trustee, incurred by Lender and such Deed
of Trust Trustee in connection with any such action or proceeding.
(i) Indemnification. Borrower agrees to indemnify,
reimburse, defend (with counsel satisfactory to Lender, at Lender's election)
and hold harmless any Indemnified Party and any Deed of Trust Trustee, for,
from, and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without limitation,
interest, penalties, consequential damages, attorneys' fees, disbursements and
expenses, and consultants' fees, disbursements and expenses, including costs of
Remedial Work (collectively, "Losses") asserted against, resulting to, imposed
on, or incurred by Lender or any Deed of Trust Trustee, directly or indirectly,
in connection with any of the following:
100
96
(i) events, circumstances, or conditions which are
alleged to, or do, form the basis for an Environmental Claim;
(ii) the presence, Use or Release of Hazardous
Substances at, on, in, under or from any Facility, which presence, Use or
Release requires or could require Remedial Work;
(iii) any Environmental Claim against Borrower, the
Joint Venture, any Operator, the Manager, Lender, any Deed of Trust Trustee or
any Person whose liability for such Environmental Claim Borrower has or may have
assumed or retained either contractually or by operation of law; or
(iv) the breach of any representation, warranty or
covenant set forth in Section 4.1(v) and Sections 5.1(d) through 5.1(i),
inclusive.
The indemnity provided in this Loan Agreement is not and shall
not be included in any exculpation of Borrower from personal liability provided
in this Loan Agreement or in any other Loan Document. Nothing in this Section
5.1(i) shall be deemed to deprive Lender of any rights or remedies provided to
it elsewhere in this Agreement or the other Loan Documents or otherwise
available to it under law. Borrower waives and releases Lender and any Deed of
Trust Trustee from any rights or defenses Borrower may have under common law or
Environmental Laws for liability arising from or resulting from the presence,
Use or Release of Hazardous Substances except to the extent directly and solely
caused by the gross negligence or willful misconduct of Lender or such Deed of
Trust Trustee.
(j) Access to Facilities. Borrower shall or shall cause
Manager, each Operator and the Joint Venture to permit agents, representatives
and employees of Lender to inspect any Facility or any part thereof at such
reasonable times as may be requested by Lender upon advance notice.
(k) Notice of Default. Borrower shall promptly advise
Lender of any material adverse change in Borrower's, Parent's, any Operator's,
Manager's or the Joint Venture's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default.
(l) Cooperate in Legal Proceedings. Except with respect to
any claim by Borrower against Lender, Borrower shall cooperate with Lender with
respect to any
101
97
proceedings before any Governmental Authority which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
Loan Documents and, in connection therewith, not prohibit Lender, at its
election, from participating in any such proceedings.
(m) Perform Loan Documents. Borrower shall observe,
perform and satisfy all the terms, provisions, covenants and conditions required
to be observed, performed or satisfied by it, and shall pay when due all costs,
fees and expenses required to be paid by it, under the Loan Documents executed
and delivered by Borrower.
(n) Insurance Benefits; Condemnation Claims. Borrower
shall cooperate with Lender in settling any insurance or condemnation claim
and/or obtaining for Lender the benefits of any Insurance Proceeds and/or
Condemnation Proceeds lawfully or equitably payable to Lender in connection with
any Facility, and Lender shall be reimbursed for any expenses incurred in
connection therewith (including reasonable attorneys' fees and disbursements)
and the payment by Borrower of the expense of an Appraisal on behalf of Lender
in case of a fire or other casualty affecting any Facility or any part thereof
out of such Insurance Proceeds and/or Condemnation Proceeds, all as more
specifically provided in the Mortgages.
(o) Further Assurances. Borrower shall, at Borrower's sole
cost and expense:
(i) upon Lender's request therefor given from time to
time after the occurrence of any Default or Event of Default pay for
(a) reports of UCC, federal tax lien, state tax lien, judgment and
pending litigation searches with respect to Borrower and (b) searches
of title to any Facility, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations
reasonably designated by Lender.
(ii) furnish to Lender all instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans
and specifications, Appraisals, title and other insurance reports and
agreements, and each and every other document, certificate, agreement
and instrument required to be furnished pursuant to the terms of the
Loan Documents;
102
98
(iii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such
other acts necessary, to evidence, preserve and/or protect the
Collateral at any time securing or intended to secure the Note, as
Lender may require in Lender's reasonable discretion; and
(iv) do and execute all and such further lawful acts,
conveyances and assurances for the better and more effective carrying
out of the intents and purposes of this Agreement and the other Loan
Documents, as Lender shall require from time to time in its reasonable
discretion.
(p) Management of Mortgaged Property. Each Facility will
be managed at all times by the Manager pursuant to the Management Agreement
unless terminated as herein provided. Any Management Agreement shall be
terminated by Borrower, the relevant Operator or the Joint Venture, as
applicable at Lender's request, upon thirty (30) days prior written notice to
Borrower and the Manager (i) upon the occurrence of an Event of Default, (ii) if
Manager commits any act which would permit termination by Borrower, the relevant
Operator or the Joint Venture, as applicable, under the Management Agreement,
(iii) in the event that, after the Stabilization Date, as of the last day of any
calendar quarter, the aggregate Debt Service Coverage Ratio for all of the
Facilities, computed on the basis of the prior twelve (12) calendar months on
the remaining outstanding balance of the Loan, is less than 1.15 and remains
less than 1.15 for three (3) consecutive months computed in each case on the
basis of the prior twelve (12) months, (iv) if after the Stabilization Date as
of the last day of any calendar quarter, such Adjusted Net Operating Income for
all of the Facilities, computed on the basis of the prior twelve (12) calendar
months, is less than eighty-five percent (85%) of the Adjusted Net Operating
Income on the Stabilization Date and remains less than eighty-five percent (85%)
of the Adjusted Net Operating Income for three (3) consecutive months computed
in each case on the basis of the prior twelve (12) calendar months or (v) upon
the occurrence of a default in any payment obligation or a breach of any other
obligation of Borrower to Preferred Equity Holder. Lender shall not have the
right to terminate any Management Agreement pursuant to clause (iii) above, if
on the first Payment Date after Lender made the determination that Lender had
the right to terminate a Manager pursuant to clause (iii) above, Borrower
defeases the Loan in accordance with the terms of Section 2.10 in an amount
sufficient to cause the Debt Service Coverage Ratio for all of the Facilities
(calculated as if such amount was actually applied to reduce the Principal
Indebtedness upon which Debt Service was paid and calculated as if the Principal
Indebtedness was reamortized on a straight-line basis (as if the reduction had
occurred) over the remaining number of months
103
99
until the Maturity Date) computed on the basis of the prior twelve (12) calendar
months, to be at least equal to 1.15. If a manager is terminated pursuant
hereto, Borrower shall immediately seek to appoint a replacement manager
acceptable to Lender in Lender's discretion, and Borrower's failure to appoint
an acceptable manager within sixty (60) days after Lender's request of Borrower
to terminate any Management Agreement shall constitute an immediate Event of
Default. Borrower may from time to time appoint a successor manager to manage
the relevant Facilities, which successor manager shall be approved in writing by
Lender in Lender's reasonable discretion. Notwithstanding the foregoing, any
successor manager selected hereunder by Lender or Borrower to serve as Manager
(i) shall be a reputable management company having at least seven (7) years'
experience in the management of commercial properties with similar uses as the
Facilities and in the jurisdictions in which the relevant Facility or Facilities
are located and (ii) shall not be paid management fees in excess of fees which
are market fees for comparable managers of comparable properties in the same
geographic area.
(q) Financial Reporting.
(i) Borrower shall keep and maintain or
shall cause to be kept and maintained, on a Fiscal Year basis, in
accordance with GAAP, books, records and accounts reflecting in
reasonable detail all of the financial affairs of Borrower, each
Operator and the Joint Venture and all items of income and expense in
connection with the operation of the Facilities and in connection with
any services, equipment or furnishings provided in connection with the
operation of each Facility. Lender, at Lender's cost and expense,
whether such income or expense may be realized by Borrower, each
Operator and the Joint Venture or by any other Person whatsoever, shall
have the right from time to time and at all times during normal
business hours upon reasonable prior written notice to Borrower to
examine such books, records and accounts at the office of Borrower or
other Person maintaining such books, records and accounts and to make
such copies or extracts thereof as Lender shall desire. After the
occurrence of an Event of Default, Borrower shall pay any reasonable
costs and expenses incurred by Lender to examine any and all of
Borrower's, each Operator's and the Joint Venture's books, records and
accounts as Lender shall determine in Lender's discretion to be
necessary or appropriate in the protection of Lender's interest.
(ii) Borrower shall furnish to Lender
annually within ninety (90) days following the end of each Fiscal Year,
a true, complete, correct and accurate
104
100
copy of Parent's financial statement audited by KPMG Peat Marwick or
other "Big Six" accounting firm or other firm acceptable to Lender in
Lender's reasonable discretion which shall (a) be presented on a
consolidated basis, (b) be in form and substance acceptable to Lender
in Lender's reasonable discretion, (c) be prepared in accordance with
GAAP, (d) include, without limitation, a statement of operations
(profit and loss), a statement of cash flows and a balance sheet, (e)
be accompanied by an Officer's Certificate from a senior executive of
Parent, as applicable, certifying as of the date thereof (x) that such
statement and the material described in clause (z) below are true,
correct, complete and accurate, and fairly reflects the results of
operations and financial condition of Parent for the relevant period,
(y) notice of whether there exists an Event of Default or Default, and
if such Event of Default or Default exists, the nature thereof, the
period of time it has existed and the action then being taken to remedy
same, and (z) attaches, as in respect to Borrower, a calculation of Net
Operating Income, an aged accounts receivable report and such other
information or reports as shall be reasonably required by Lender or any
applicable Rating Agency, to the extent not included with the Parent's
financial statement (f) be accompanied by an unqualified opinion from
an Independent certified public accountant acceptable to Lender in
Lender's discretion and (g) shall identify the unaudited financial
statements of the Borrower, Operators and Joint Venture which were
utilized to prepare such audited financial statements.
(iii) Borrower shall furnish to Lender
annually within forty-five (45) days following the end of each Fiscal
Year, true, complete, correct and accurate copy of Borrower's, each
Operator's and the Joint Venture's unaudited financial statement which
shall (a) be presented on a consolidated as well as a
Facility-by-Facility basis, (b) be in form and substance acceptable to
Lender in Lender's reasonable discretion, (c) be prepared on an
accounting basis consistent with the Parent's audited financial
statements, (d) include, without limitation, a statement of operations
(profit and loss), a calculation of Net Operating Income, a balance
sheet, an aged accounts receivable report and such other information or
reports as shall be reasonably requested by Lender or any applicable
Rating Agency and (e) be accompanied by an Officer's Certificate from a
senior executive of Borrower, the applicable Operator or the Joint
Venture certifying as of the date thereof (x) that such statement is
true, correct, complete and accurate and fairly reflects the results of
operations and financial condition of Borrower, each Operator and the
Joint Venture for the relevant period, and (y) notice of whether there
exists an Event of Default or Default, and if such Event of Default or
Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy same.
105
101
(iv) Borrower shall furnish to Lender within
twenty-five (25) days following the end of each calendar month, a true,
correct, complete and accurate monthly unaudited financial statements
for Borrower, each Operator and the Joint Venture which shall (a) be
presented on a consolidated as well as a Facility-by-Facility basis,
(b) be in form and substance acceptable to Lender in Lender's
reasonable discretion, (c) be prepared on an accounting basis
consistent with the Parent's audited financials, (d) include, without
limitation, a statement of operations (profit and loss), a calculation
of Net Operating Income, an aged accounts receivable report and such
other information or reports as shall be reasonably requested by Lender
or any applicable Rating Agency and (e) be accompanied by an Officer's
Certificate from a senior executive of Borrower, the applicable
Operator or the Joint Venture, as applicable, certifying as of the date
thereof (x) that such statement is true, correct, complete and accurate
and fairly reflects the results of operations and financial condition
of Borrower, each Operator and the Joint Venture for the relevant
period, and (y) notice of whether there exists an Event of Default or
Default, and if such Event of Default or Default exists, the nature
thereof, the period of time it has existed and the action then being
taken to remedy same.
(v) Borrower shall furnish to Lender, within
twenty-five (25) days following the end of each calendar month, a true,
complete, correct and accurate rent roll and occupancy report and such
other occupancy and rate statistics as Lender shall request in Lender's
reasonable discretion. Each such document shall (a) be presented on a
Facility-by-Facility basis, (b) be in form and substance acceptable to
Lender in Lender's reasonable discretion, and (c) be accompanied by an
Officer's Certificate from a senior executive of Borrower certifying as
of the date thereof (x) that such statement is true, correct, complete
and accurate and (y) notice of whether there exists an Event of Default
or Default, and if such Event of Default or Default exists, the nature
thereof, the period of time it has existed and the action then being
taken to remedy same.
(vi) Borrower shall furnish to Lender,
within ten (10) Business Days after request, such further information
with respect to the operation of the Facilities, and the financial
affairs of Borrower, each Operator and the Joint Venture as may be
reasonably requested by Lender including, without limitation, all
business plans prepared for Borrower, each Operator and the Joint
Venture and for the operation of the Facilities.
106
102
(vii) Borrower shall furnish to Lender,
within ten (10) Business Days after request, such further information
regarding any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA as may be reasonably
requested by Lender.
(viii) Borrower shall, concurrently with
Borrower's delivery to Lender, provide a copy of the items required to
be delivered to Lender under this Section 5.1(q) to the Rating
Agencies, the trustee, and any servicer and/or special servicer that
may be retained in conjunction with the Loan or any Securitization.
Borrower shall furnish to Lender written notice, within two (2)
Business Days after receipt by Borrower, of any Rents, Money or other
items of Gross Revenue that Borrower is not required by this Agreement
to deposit in the Collection Account or the Cash Collateral Account,
together with such other documents and materials relating to such
Rents, Money or other items of Gross Revenue as Lender requests in
Lender's discretion.
(ix) Borrower shall provide Lender with
updated information (satisfactory to Lender in Lender's reasonable
discretion) concerning the Basic Carrying Costs for the next succeeding
Fiscal Year prior to the termination of each Fiscal Year.
(x) Borrower shall furnish to Lender such
other financial information with respect to Borrower, each Operator,
the Joint Venture or the Manager as Lender may, from time to time
reasonably request (including, without limitation, in the case of a
defeasance pursuant to Section 2.10, a review by a third party
reasonably acceptable to Lender, of the calculations required to be
made pursuant to Section 2.10).
(xi) Borrower shall furnish or shall cause
to be furnished to Lender, within fifteen (15) days of the receipt by
Borrower, any Operator, the Joint Venture or Manager any and all
notices (regardless of form) from any licensing and/or certifying
agency that any License of any Facility is being downgraded to a
substandard category, revoked, or suspended, or that action is pending
or being considered to downgrade to a substandard category, revoke, or
suspend any License or certification;
(xii) Intentionally deleted; and
107
103
(xiii) Borrower shall furnish to Lender,
within fifteen (15) Business Days of receipt, a copy of any licensing
agency survey or report reflecting matters which are likely to have a
Material Adverse Effect and any statement of deficiencies which would
have a Material Adverse Effect, and within the time period required by
the particular agency for furnishing a plan of correction also shall
furnish or cause to be furnished to Lender a copy of the plan of
correction generated from such survey or report for any Facility, and
correct or cause to be corrected any deficiency, the curing of which is
a condition of continued licensure by the date required for cure by
such agency (plus extensions granted by such agency).
(r) Conduct of Business. Borrower shall cause the
operation of each Facility to be conducted at all times in a manner consistent
with the following:
(i) to maintain or cause to be maintained the
standard of operations at each Facility at all times at a level
necessary to insure a level of quality for each Facility consistent
with similar facilities in the same competitive market;
(ii) to operate or cause to be operated each
Facility in a prudent manner in compliance in all material respects
with applicable Legal Requirements and Insurance Requirements relating
thereto and cause all material licenses, Permits, and any other
agreements necessary for the continued use and operation of such
Facility to remain in effect; and
(iii) to maintain or cause to be maintained
sufficient Inventory and Equipment of types and quantities at each
Facility to enable Borrower or the relevant Manager to operate such
Facility.
(s) ERISA. Borrower shall deliver to Lender as soon
as possible, and in any event within ten (10) days after Borrower knows or has
reason to believe that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan has occurred or exists, a statement
signed by a senior financial officer of Borrower setting forth details
respecting such event or condition and the action, if any, that Borrower or its
ERISA Affiliate proposes to take with respect thereto (and a copy of any report
or notice required to be filed with or given to PBGC by Borrower or an ERISA
Affiliate with respect to such event or condition):
108
104
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with respect to
a Plan, as to which PBGC has not by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its due
date a required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the issuance
of any waivers in accordance with Section 412(d) of the Code); and any
request for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA
of a notice of intent to terminate any Plan or any action taken by
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by Borrower or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by Borrower or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the obligation
to satisfy secondary liability as a result of a purchaser default) or
the receipt by Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against Borrower or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is not
dismissed within thirty (30) days;
(vi) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of
which such Plan is a part if Borrower or an ERISA
109
105
Affiliate fails to timely provide security to the Plan in accordance
with the provisions of said Sections; and
(vii) the imposition of a lien or a security
interest in connection with a Plan.
(t) Single Purpose Entity.
(i) Borrower shall at all times be a duly formed
and existing Entity and a Single Purpose Entity.
(ii) Each SPE Equity Owner, if any, will continue
to be a duly formed and existing entity in good standing and a
Single-Purpose Entity, and Borrower will take no action to cause any
SPE Equity Owner, if any, not to be so duly formed and existing and in
good standing and a Single-Purpose Entity.
(iii) Borrower will continue to comply with the
provisions of all of its organizational documents, and the laws of the
state in which Borrower was formed relating to the Entity.
(iv) All customary formalities regarding the
Entity existence of Borrower will continue to be observed.
(v) Borrower and each Operator will continue to
be adequately capitalized in light of the nature of its business.
(u) Trade Indebtedness. Each of the Borrower, the
Joint Venture, the Operators, and the Manager, as applicable, will pay
its trade payables within thirty (30) days of the date incurred, unless
any of the Borrower, the Joint Venture, the Operators, or the Manager,
as applicable, is in good faith contesting its obligation to pay such
trade payables in a manner satisfactory to Lender (which may include
Lender's requirement that Borrower post security with respect to the
contested trade payable).
(v) Capital Improvements and Environmental
Remediation. Borrower shall, within twelve (12) months of the date
hereof, perform the repairs and environmental remediation to each
Facility itemized on Exhibit C hereto.
110
106
(w) Annual Operating Budgets. Borrower shall submit
to Lender Annual Operating Budgets at those times and in such form and
substance as set forth in the definition of "Annual Operating Budget"
in this Agreement.
(x) Intentionally deleted.
(y) Use Specific Covenants. Borrower shall:
(1) operate each Facility or cause each Facility to
be operated in compliance in all material respects with the laws
and requirements referred to in Section 4.1(b)(al)(i); and
(2) operate each Facility or cause each Facility to
be operated in a manner such that the Licenses shall remain in
full force and effect and such that any new or additional
License that may, at any time or from time to time, be required
pursuant to any Legal Requirements are timely obtained and
maintained in full force and effect.
(z) Security Deposits. In the event Borrower
determines to collect security deposits with respect to any Facility,
Borrower shall provide Lender with notice of such determination and
shall not commence the collection of such security deposits until
Borrower has executed amendments to the Loan documents as reasonably
requested by Lender to establish security deposit accounts with the
Collection Account Bank into which such security deposits shall be
deposited, to grant Lender a security interest in such security deposit
account and the proceeds thereof and to establish the procedures for
withdrawal by Borrower or funds in such security deposit accounts.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1 Borrower Negative Covenants. Borrower covenants
and agrees that, until payment in full of the Indebtedness, it will not do,
directly or indirectly any of the following unless Lender consents thereto in
writing:
111
107
(a) Liens on the Mortgaged Properties. Incur, create,
assume, become or be liable in any manner with respect to, or permit to exist,
any Lien with respect to any Facility or any portion thereof, except: (i) Liens
in favor of Lender, and (ii) the Permitted Encumbrances.
(b) Transfer. Except as expressly permitted by or
pursuant to this Agreement or any Mortgage, or except as otherwise approved by
Lender in writing in Lender's discretion, allow any Transfer to occur, terminate
or modify any Management Agreement, or enter into a Management Agreement with
respect to any Facility.
(c) Other Borrowings. Incur, except for unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of the Facilities and financing of Equipment or vehicles
used in the ordinary course of owning and operating the Facilities (including
capitalized leases of such Equipment or vehicles) which trade payables and
Equipment or vehicles financings do not exceed, at any time a maximum amount of
One Hundred Fifty Thousand Dollars ($150,000) for each Facility (provided,
however, the aggregate amount for all Facilities at any one time shall not
exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000)) for all the
Facilities and, with respect to the trade payables, are paid within thirty (30)
days of the date incurred, create, assume, become or be liable in any manner
with respect to Other Borrowings. Notwithstanding the foregoing, if any or all
of the Facilities become subject to any Legal Requirements which results in a
material delay in the Borrower's receipt of Rents from tenants or from Third
Party Payors, Borrower may enter into a revolving accounts receivables financing
relationship (a "Receivables Loan"); provided, however, the terms of such
Receivables Loan and the documents evidencing such Receivables Loan shall be
subject to the prior written approval of the Lender, not to be unreasonably
withheld and, after a Securitization, the Lender's receipt of written
confirmation from the Rating Agencies that such Receivables Loan will not result
in a downgrade, withdrawal or qualification of the then applicable ratings of
any securities issued in connection with a Securitization; and provided,
further, the Borrower shall execute such amendments to the Loan Documents as the
Lender deems reasonably necessary in connection with the Receivables Loan. The
lender making the Receivables Loan shall agree to fund all proceeds of the
Receivables Loan into the Collection Account.
(d) Change In Business. Cease to be a Single-Purpose
Entity or make any material change in the scope or nature of its business
objectives, purposes or operations, or undertake or participate in activities
other than the continuance of its present business and activities closely
related to and compatible with assisted living or, in the case of the
112
108
Facilities located in New York, congregate care; provided, however, Borrower may
offer additional services not offered on the Closing Date to the extent
permitted with respect to assisted living facilities, or with respect to the
Facilities located in New York, congregate care facilities under applicable
Legal Requirements.
(e) Debt Cancellation. Cancel or otherwise forgive or
release any material claim or debt owed to Borrower by any Person, except for
adequate consideration or in the ordinary course of Borrower's business.
(f) Affiliate Transactions. Enter into, or be a party
to, any transaction with an Affiliate of Borrower, except in the ordinary course
of business and on terms which are no less favorable to Borrower or such
Affiliate than would be obtained in a comparable arm's length transaction with
an unrelated third party, and, if the amount to be paid to the Affiliate
pursuant to the transaction or series of related transactions is greater than
Fifty Thousand Dollars ($50,000.00) (determined annually on an aggregate basis)
fully disclosed to Lender in advance.
(g) Creation of Easements. Create, or permit any
Facility or any part thereof to become subject to, any easement, license or
restrictive covenant, other than a Permitted Encumbrance. Without limiting the
generality of the immediately preceding sentence, Borrower shall not enter into,
consent to, grant, amend, modify, restate or supplement any document, instrument
or agreement affecting, related to or impacting upon the Facility, the title
thereto or any portion or aspect thereof, including, without limitation, any
easement, reciprocal easement agreement, or any declaration of easements or
covenants which would have a Material Adverse Effect.
(h) Misapplication of Funds. Distribute any Rents or
Money received from Accounts in violation of the provisions of Section 2.11.
(i) Certain Restrictions. Enter into any agreement
which expressly restricts the ability of Borrower to enter into amendments,
modifications or waivers of any of the Loan Documents.
(j) Issuance of Equity Interests. Issue or allow to
be created any stocks or shares or shareholder, partnership or membership
interests, as applicable, or other ownership interests other than the stocks,
shares, shareholder, partnership or membership interests and other ownership
interests which are outstanding or exist on the Closing Date or
113
109
any security or other instrument which by its terms is convertible into or
exercisable or exchangeable for stock, shares, shareholder, partnership or
membership interests or other ownership interests in Borrower.
(k) Assignment of Licenses and Permits. Assign or
transfer any of its interest in any Permits pertaining to any Facility, or
assign, transfer or remove or permit any other Person to assign, transfer or
remove any records pertaining to any Facility without Lender's prior written
consent which consent may be granted or refused in Lender's discretion.
(l) Place of Business. Change its chief executive
office or its principal place of business or place where its books and records
are kept without giving Lender at least thirty (30) days' prior written notice
thereof and promptly providing Lender such information as Lender may reasonably
request in connection therewith.
(m) Use Specific Negative Covenants: Borrower shall
not and shall not allow any Operator, the Joint Venture, or the Manager to do
any of the following unless Lender consents thereto in writing:
2. transfer any License to any location other than the Facility for which such
License was originally issued nor pledge any License as collateral security for
any other loan or indebtedness;
(1) rescind, withdraw, revoke, amend, modify,
supplement, or otherwise alter the nature, tenor or scope of
any License for any Facility which rescission, withdrawal,
revocation, amendment, modification, supplement or other
alteration would have a Material Adverse Effect;
(2) amend or otherwise change any Facility's
authorized bed capacity and/or the number of beds approved by
the DOH which amendment or other change would have a Material
Adverse Effect;
(3) replace or transfer all or any part of any
Facility's beds to another site or location;
114
110
(4) intentionally deleted;
(5) enter into any resident agreements with residents
or with any other persons which deviate in any material
respect from the standard form customarily used at any
Facility; or
(6) Intentionally deleted.
ARTICLE VII
DEFAULTS
Section 7.1 Event of Default. The occurrence of one or more of
the following events shall be an "Event of Default" hereunder:
(i) if on any Payment Date the funds in the
Debt Service Payment Sub-Account are insufficient to pay the Required Debt
Service Payment due on such Payment Date; provided, however, that if a Cash
Management Event has not occurred, such failure shall not constitute an Event of
Default if Borrower shall cure such failure within five (5) days after such
Payment Date;
(ii) if on any Payment Date Borrower fails
to pay the Required Debt Service Payment due on such Payment Date; provided,
however, that if a Cash Management Event has not occurred, such failure shall
not constitute an Event of Default if Borrower shall cure such failure within
five (5) days after such Payment Date;
(iii) if Borrower fails to pay the
outstanding Indebtedness on the Maturity Date;
(iv) if on any Payment Date Borrower fails
to pay the Basic Carrying Costs Monthly Installment or the Capital Reserve
Monthly Installment due on such Payment Date; provided, however, that if a Cash
Management Event has not occurred, such failure shall not constitute an Event of
Default if Borrower shall cure such failure within five (5) days after such
Payment Date;
115
111
(v) if on the date any payment of a Basic
Carrying Cost would become delinquent, the funds in the Basic Carrying Costs
Sub-Account are insufficient to make such payment;
(vi) the occurrence of the events identified
elsewhere in the Loan Documents as constituting an "Event of Default" hereunder
or thereunder;
(vii) a Transfer, unless the prior written
consent of Lender is obtained (which consent may be withheld in Lender's
discretion);
(viii) if Borrower fails to pay any other
amount payable pursuant to this Agreement or any other Loan Document when due
and payable in accordance with the provisions hereof or thereof, as the case may
be;
(ix) if any representation or warranty made
herein or in any other Loan Document, or in any report, certificate, financial
statement or other Instrument, agreement or document furnished by Borrower in
connection with this Agreement, the Note or any other Loan Document executed and
delivered by Borrower, shall be false in any material respect as of the date
such representation or warranty was made or remade;
(x) if Borrower, or any SPE Equity Owner, if
any, makes an assignment for the benefit of creditors;
(xi) if a receiver, liquidator or trustee
shall be appointed for Borrower, any of Borrower's partners, members or
shareholders, as applicable, or any SPE Equity Owner, if any, or if Borrower,
any of Borrower's partners, members or shareholders, as applicable, or any SPE
Equity Owner, if any, shall be adjudicated as bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by Borrower, any of Borrower's partners,
members or shareholders, as applicable, or any SPE Equity Owner, if any, or if
any proceeding for the dissolution or liquidation of Borrower, any of Borrower's
partners, members or shareholders, as applicable, or any SPE Equity Owner, if
any, shall be instituted; provided, however, that if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Borrower, any of Borrower's partners, members or shareholders, as applicable, or
any SPE Equity Owner, if any, as the case may be, upon the same not being
discharged, stayed or dismissed within ninety (90) days; or if Borrower, any of
Borrower's partners, members or
116
112
shareholders, as applicable, or any SPE Equity Owner, if any, shall generally
not be paying its debts as they become due;
(xii) if Borrower attempts to delegate its
obligations or assign its rights under this Agreement, any of the other Loan
Documents or any interest herein or therein;
(xiii) if any provision of any
organizational document of Borrower or any SPE Equity Owner, if any, is amended
or modified in any respect, or if Borrower, any SPE Equity Owner, if any, or any
of their respective partners, members, or shareholders as applicable, fails to
perform or enforce the provisions of such organizational documents or attempts
to dissolve Borrower or any SPE Equity Owner, if any; or if Borrower or any SPE
Equity Owner, if any, or any of their respective partners, members or
shareholders, as applicable, breaches any of the covenants set forth in Sections
5.1(t), or 6.1(d);
(xiv) if Borrower fails to (A) notify Lender
of the occurrence of a Default under any of the Loan Documents within ten (10)
days of the day on which Borrower first has knowledge of such Default or (B)
give any notice due to any Person under any Loan Document (a) within five (5)
days after such notice was due or (b) in accordance with the applicable
procedural requirements set forth in the Loan Documents;
(xv) if an event or condition specified in
Section 5.1(s) shall occur or exist with respect to any Plan or Multiemployer
Plan and, as a result of such event or condition, together with all other such
events or conditions, Borrower or any ERISA Affiliate shall incur or in the
opinion of Lender shall be reasonably likely to incur a liability to a Plan, a
Multiemployer Plan or PBGC (or any combination of the foregoing) which event or
condition is reasonably likely, in the determination of Lender, to have a
Material Adverse Effect on an Aggregated Facilities Basis;
(xvi) if without Lender's prior written
consent (A) any Manager resigns or is removed or (B) any Management Agreement is
entered into for any Facility or (C) there is any change in or termination of
any Management Agreement for any Facility;
(xvii) if Borrower shall be in default under
any of the other obligations, agreements, undertakings, terms, covenants,
provisions or conditions of this Agreement, the Note, the Mortgage or the other
Loan Documents, not otherwise referred to in
117
113
this Section 7.1, for ten (10) days after written notice to Borrower from Lender
or its successors or assigns, in the case of any default which can be cured by
the payment of a sum of money or for thirty (30) days after written notice from
Lender or its successors or assigns, in the case of any other default (unless
otherwise provided herein or in such other Loan Document); provided, however,
that if such non-monetary default under this subparagraph is susceptible of cure
but cannot reasonably be cured within such thirty (30) day period and provided
further that Borrower shall have commenced to cure such default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due diligence to cure such
default, but in no event shall such period exceed one hundred and twenty (120)
days after the original notice from Lender;
(xviii) if a Receivables Loan is entered
into pursuant to Section 6.1(c), a default or event of default under the loan
documents evidencing such Receivables Loan;
(xix) intentionally deleted.
(xx) if any default or event of default
occurs (as to any party) under any Operator Lease (subject to any applicable
notice and cure periods required under such Operator Lease);
(xxi) if Borrower, any Operator, the Joint
Venture or the Manager shall fail to
correct, within the time deadlines set by any licensing or similar agency, any
deficiency that justifies either of the following actions by such agency with
respect to any Facility and such agency commences either of the following
actions:
(i) a termination of any License;
(ii) a ban on new admissions generally; and
(xxii) if any Facility is assessed material fines or penalties
by any state licensing or similar agency having jurisdiction over Borrower, any
Operator, Manager, the Joint Venture or any Facility which are not paid within
the time frame required by such agency.
118
114
Section 7.2 Remedies. (a) Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers and other remedies
available to Lender against Borrower under this Agreement, the Note, the
Mortgages or any of the other Loan Documents, or at law or in equity may be
exercised by Lender at any time and from time to time (including, without
limitation, the right to accelerate and declare the outstanding principal
amount, unpaid interest, Default Rate interest, Late Charges, Yield Maintenance
Premium and any other amounts owing by Borrower to be immediately due and
payable), without notice or demand, whether or not all or any portion of the
Indebtedness shall be declared due and payable, and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to any
Facility or all or any portion of the Collateral. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Lender may determine in its discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Notwithstanding anything contained to the contrary herein, the
outstanding principal amount, unpaid interest, Default Rate interest, Late
Charges, Yield Maintenance Premium and any other amounts owing by Borrower shall
be accelerated and immediately due and payable, without any election by Lender
upon the occurrence of an Event of Default described in Section 7.1(x) or
Section 7.1(xi). Notwithstanding that this Agreement may refer to a continuing
Event of Default, and without limiting Borrower's right to cure a Default which
may, with the passage of time, become an Event of Default, Borrower shall have
no right pursuant to this Agreement to cure any Event of Default unless this
Agreement is amended by Borrower and Lender in writing.
Section 7.3 Remedies Cumulative. The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Lender may have against Borrower pursuant
to this Agreement or the other Loan Documents executed by or with respect to
Borrower, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of any Default or
Event of Default shall not be construed to be a waiver of any subsequent Default
or Event of Default or to impair any remedy, right or power consequent thereon.
Any and all of Lender's rights with respect to the Collateral shall
119
115
continue unimpaired, and Borrower shall be and remain obligated in accordance
with the terms hereof, notwithstanding (i) the release or substitution of
Collateral at any time, or of any rights or interest therein or (ii) any delay,
extension of time, renewal, compromise or other indulgence granted by Lender in
the event of any Default or Event of Default with respect to the Collateral or
otherwise hereunder. Notwithstanding any other provision of this Agreement,
Lender reserves the right to seek a deficiency judgment or preserve a deficiency
claim, in connection with the foreclosure of any Mortgage on a related Facility,
to the extent necessary to foreclose on other parts of the Mortgaged Property
and/or Mortgaged Properties.
Section 7.4 Lender's Right to Perform. If Borrower fails to
perform any covenant or obligation contained herein and such failure shall
continue for a period of (5) five Business Days after Borrower's receipt of
written notice thereof from Lender, without in any way limiting Section 7.1
hereof, Lender may, but shall have no obligation to, itself perform, or cause
performance of, such covenant or obligation, and the expenses of Lender incurred
in connection therewith shall be payable by Borrower to Lender upon demand.
Notwithstanding the foregoing, Lender shall have no obligation to send notice to
Borrower of any such failure.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Survival. Subject to Section 4.2, this Agreement
and all covenants, agreements, representations and warranties made herein and in
the certificates delivered pursuant hereto shall survive the execution and
delivery of this Agreement and the execution and delivery by Borrower to Lender
of the Note, and shall continue in full force and effect so long as any portion
of the Indebtedness is outstanding and unpaid. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement contained, by or on behalf of Borrower, shall inure to the
benefit of the respective successors and assigns of Lender. Nothing in this
Agreement or in any other Loan Document, express or implied, shall give to any
Person other than the parties and the holder(s) of the Note, the Mortgages and
the other Loan Documents, and their legal representatives, successors and
assigns, any benefit or any legal or equitable right, remedy or claim hereunder.
Section 8.2 Lender's Discretion. Whenever pursuant to this
Agreement or any other Loan Document, Lender exercises any right, option or
election given to Lender to
120
116
approve or disapprove, or consent or withhold consent, or any arrangement or
term is to be satisfactory to Lender or is to be in Lender's discretion, the
decision of Lender to approve or disapprove, consent or withhold consent, or to
decide whether arrangements or terms are satisfactory or not satisfactory or
acceptable or not acceptable to Lender in Lender's discretion, shall (except as
is otherwise specifically herein provided) be in the sole and absolute
discretion of Lender.
Section 8.3 Governing Law. (a) The proceeds of the Note
delivered pursuant hereto were disbursed from New York, which State the parties
agree has a substantial relationship to the parties and to the underlying
transaction embodied hereby, and in all respects, including, without limitation,
matters of construction, validity and performance, this Agreement and the
obligations arising hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such State and any applicable law of the United States of America.
To the fullest extent permitted by law, Borrower hereby unconditionally and
irrevocably waives any claim to assert that the law of any other jurisdiction
governs this Agreement and the Note, and this Agreement and the Note shall be
governed by and construed in accordance with the laws of the State of New York
pursuant to Section 5-1401 of the New York General Obligations Law.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO Section 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW OR IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION IN
WHICH ANY COLLATERAL IS LOCATED, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000, AS ITS
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT
SAID ADDRESS (OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED BY BORROWER FROM TIME
TO TIME IN ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO BORROWER AT ITS
PRINCIPAL EXECUTIVE OFFICES, ATTENTION: GENERAL COUNSEL AND
121
117
WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER (I)
SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED
AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.
Section 8.4 Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note or any other Loan Document, or consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to or demand on Borrower shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.
Section 8.5 Delay Not a Waiver. Neither any failure nor any
delay on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Note, or of any other Loan Document, or any
other instrument given as security therefor, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 8.6 Notices. All notices, consents, approvals and
requests required or permitted hereunder or under any other Loan Document shall
be given in writing and shall be effective for all purposes if hand delivered or
sent by (a) hand delivery, with proof of attempted delivery, (b) certified or
registered United States mail, postage prepaid, (c) expedited prepaid delivery
service, either commercial or United States Postal Service, with
122
118
proof of attempted delivery, or (d) by telecopier (with answerback acknowledged)
provided that such telecopied notice must also be delivered by one of the means
set forth in (a), (b) or (c) above, addressed if to Lender at its address set
forth on the first page hereof, and if to Borrower at its designated address set
forth on the first page hereof, or at such other address and Person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section 8.6. A copy of all notices, consents, approvals and requests directed to
Lender shall be delivered concurrently to each of the following: Dechert Price &
Xxxxxx, 0000 Xxxx Xxxxxx, 0000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000,
Attention: Xxxxxx X. Xxxx, Esquire, Telefax Number 215/994-2222; Two World
Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Xxxxxxxxxxx Xxxxxxx, Telefax Number (000) 000-0000; Two World Xxxxxxxxx Xxxxxx,
Xxxxxxxx X, Xxx Xxxx, XX 00000-0000, Attention: Xxxxxx XxXxxx, Telefax Number
(000) 000-0000; and Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, XX
00000-0000, Attention: Xxxxx Xxxx, General Counsel, Telefax Number (212)
667-1206; copies of notices to Borrower shall be delivered concurrently to each
of the following: Xxxxx Xxxxxxx, Alternative Living Services, Inc., 0000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000, Telefax Number (000) 000-0000,
Xxxx X. Xxxx, Xxxxxx & Xxxxxx, 2700 International Tower, Peachtree Center, 000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Telefax Number (000) 000-0000,
and Xxxx X. Xxxxxxxxx, Alternative Living Services, Inc., 000 Xxxxx Xxxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxx 00000, Telefax Number (000) 000-0000. A
notice shall be deemed to have been given: (a) in the case of hand delivery, at
the time of delivery; (b) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (c) in the case of
expedited prepaid delivery upon the first attempted delivery on a Business Day;
or (d) in the case of telecopier, upon receipt of answerback confirmation,
provided that such telecopied notice was also delivered as required in this
Section 8.6. A party receiving a notice which does not comply with the technical
requirements for notice under this Section 8.6 may elect to waive any
deficiencies and treat the notice as having been properly given.
SECTION 8.7 TRIAL BY JURY. BORROWER AND LENDER, TO THE FULLEST
EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY
HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
123
119
Section 8.8 Headings. The Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9 Assignment. Lender shall have the right to assign
in whole or in part this Agreement and/or any of the other Loan Documents and
the obligations hereunder or thereunder to any Person and to participate all or
any portion of the Loan evidenced hereby, including without limitation, any
servicer or trustee in connection with a Securitization. Lender shall provide
Borrower with written notice of any such assignment; provided, however, that
such notice shall not be a condition of Lender's right to assign this Agreement
and/or any of the Loan Documents and the failure to deliver such notice shall
not constitute a default under this Loan Agreement.
Section 8.10 Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 8.11 Preferences. Lender shall have no obligation to
marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the obligations of Borrower pursuant to this Agreement,
the Note or any other Loan Document. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
to any portion of the obligations of Borrower hereunder. To the extent Borrower
makes a payment or payments to Lender for Borrower's benefit, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 8.12 Waiver of Notice. Borrower shall not be entitled
to any notices of any nature whatsoever from Lender except with respect to
matters for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to Borrower and except with
respect to matters for which Borrower is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower hereby
124
120
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Agreement or the other Loan Documents does not
specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 8.13 Remedies of Borrower. In the event that a claim
or adjudication is made that Lender or its agents, has acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement,
the Note, the Mortgages or the other Loan Documents, Lender or such agent, as
the case may be, has an obligation to act reasonably or promptly, Borrower
agrees that neither Lender nor its agents, shall be liable for any monetary
damages, and Borrower's sole remedies shall be limited to commencing an action
seeking injunctive relief or declaratory judgment. The parties hereto agree that
any action or proceeding to determine whether Lender has acted reasonably shall
be determined by an action seeking declaratory judgment.
Section 8.14 Exculpation. Except as otherwise set forth in
this Section 8.14 and Section 4.2 to the contrary, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in this Agreement, the Note, the Mortgages or any of the other Loan
Documents executed and delivered by Borrower except that Lender may pursue any
power of sale, bring a foreclosure action, action for specific performance,
action for money judgment, or other appropriate action or proceeding (including,
without limitation, to obtain a deficiency judgment) against Borrower or any
other Person solely for the purpose of enabling Lender to realize upon (a) the
Collateral, and (b) the Rents and Accounts arising from any Facility to the
extent (x) received by Borrower or any Manager (or any of their affiliates),
after the occurrence of an Event of Default or (y) distributed to Borrower or
any Manager, or their respective shareholders, or partners or members, as
applicable, or affiliates during or with respect to any period for which Lender
did not receive the full amounts it was entitled to receive as prepayments of
the Loan pursuant to Section 2.6, 2.11 (all Rents and Accounts covered by
clauses (x) and (y) being hereinafter referred to as the "Recourse
Distributions") and (c)) any other collateral given to Lender under the Loan
Documents ((a), (b), and (c) collectively, the "Default Collateral"); provided,
however, that any judgment in any such action or proceeding shall be enforceable
only to the extent of any such Default Collateral. The provisions of this
Section 8.14 shall not, however, (a) impair the validity of the Indebtedness
evidenced by the Loan Documents or in any way affect or impair the Liens of the
Mortgages or any of the other Loan Documents or the right of Lender to foreclose
the Mortgages following an Event of Default; (b) impair the right of Lender to
name any Person as a party defendant in any action or suit for judicial
foreclosure and sale under any of the Mortgages; (c) affect the validity or
enforceability of the Note, the Mortgages or the
125
121
other Loan Documents; (d) impair the right of Lender to obtain the appointment
of a receiver; (e) impair the right of Lender to bring suit for any damages,
losses, expenses, liabilities or costs resulting from fraud, material
misrepresentation, intentional misrepresentation, physical waste of all or any
portion of any Facility, or wrongful removal or disposal of all or any portion
of any Facility by any Person in connection with this Agreement, the Note, the
Mortgages or the other Loan Documents; (f) impair the right of Lender to obtain
the Recourse Distributions received by any Person; (g) impair the right of
Lender to bring suit with respect to any misappropriation of security deposits
or Rents collected more than one (1) month in advance; (h) impair the right of
Lender to obtain Insurance Proceeds or Condemnation Proceeds due to Lender
pursuant to the Mortgage; (i) impair the right of Lender to enforce the
provisions of Sections 4.1(v) or 5.1(d) through 5.1(i), inclusive of this
Agreement, Section 2.8 of the Mortgage or the Environmental Guaranty even after
repayment in full by Borrower of the Indebtedness; (j) prevent or in any way
hinder Lender from exercising, or constitute a defense, or counterclaim, or
other basis for relief in respect of the exercise of, any other remedy against
any or all of the Collateral securing the Note as provided in the Loan
Documents; (k) impair the right of Lender to bring suit with respect to any
misapplication of any funds; or (l) impair the right of Lender to xxx for, seek
or demand a deficiency judgment against any Person solely for the purpose of
foreclosing the Mortgaged Properties or any part thereof, or realizing upon the
Default Collateral; provided, however, that any such deficiency judgment
referred to in this clause (l) shall be enforceable only to the extent of any of
the Default Collateral. The provisions of this Section shall be inapplicable to
any Person if (i) any petition for bankruptcy, reorganization or arrangement
pursuant to federal or state law against Borrower shall be filed by or against
Borrower or consented to or acquiesced to by Borrower, (ii) if Borrower shall
institute any proceeding for the dissolution or
liquidation of Borrower, (iii) if Borrower shall make an assignment for the
benefit of creditors or (iv) if Borrower shall breach the representation and
warranty in Section 4.1(aa). Prior to the date on which the Difference and any
applicable hedging or interest rate management brokerage costs incurred by
Lender on the Stabilization Payment Date is paid to Lender, Lender's judgment in
any action or proceeding shall not be limited to the Default Collateral and the
Loan shall be fully recourse to the Borrower and the Parent.
Section 8.15 Exhibits Incorporated. The information set forth
on the cover, heading and recitals hereof, and the Exhibits attached hereto, are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 8.16 Offsets, Counterclaims and Defenses. Any assignee
of Lender's interest in and to this Agreement, the Note, the Mortgages and the
other Loan Documents shall
126
122
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to the Loan, this Agreement, the Note, the Mortgages and the other
Loan Documents which Borrower may otherwise have against any assignor, and no
such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon this
Agreement, the Note, the Mortgages and other Loan Documents and any such right
to interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower.
Section 8.17 No Joint Venture or Partnership. Borrower and
Lender intend that the relationship created hereunder be solely that of borrower
and lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Mortgaged Property other than that of
mortgagee or lender.
Section 8.18 Waiver of Marshalling of Assets Defense. To the
fullest extent that Borrower may legally do so, Borrower waives all rights to a
marshalling of the assets of Borrower, and others with interests in Borrower,
and of the Mortgaged Property, or to a sale in inverse order of alienation in
the event of foreclosure of the interests hereby created, and agrees not to
assert any right under any laws pertaining to the marshalling of assets, the
sale in inverse order of alienation, homestead exemption, the administration of
estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of any Facility
for the collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender or Deed of Trust Trustee to the payment of
the Indebtedness in preference to every other claimant whatsoever.
Section 8.19 Waiver of Counterclaim. Borrower hereby waives
the right to assert a counterclaim, other than compulsory counterclaim, in any
action or proceeding brought against Borrower by Lender or Lender's agents.
Section 8.20 Conflict; Construction of Documents. In the event
of any conflict between the provisions of this Agreement and the provisions of
the Note, the Mortgages or any of the other Loan Documents, the provisions of
this Agreement shall prevail. The parties hereto acknowledge that they were
represented by counsel in connection with the negotiation and drafting of the
Loan Documents and that the Loan Documents shall not be subject to the principle
of construing their meaning against the party which drafted same.
127
123
Section 8.21 Brokers and Financial Advisors. Borrower and
Lender hereby represent that they have dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person, that such Person acted on behalf of Borrower in
connection with the transactions contemplated herein. Lender hereby agrees to
indemnify and hold Borrower harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person, that such Person acted on behalf of Lender in
connection with the transactions contemplated herein. The provisions of this
Section shall survive the expiration and termination of this Agreement and the
repayment of the Indebtedness.
Section 8.22 Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall together constitute one and the same
instrument.
Section 8.23 Estoppel Certificates. Borrower and Lender each
hereby agree at any time and from time to time upon not less than fifteen (15)
days prior written notice by Borrower or Lender to execute, acknowledge and
deliver to the party specified in such notice, a statement, in writing,
certifying that this Agreement is unmodified and in full force and effect (or if
there have been modifications, that the same, as modified, is in full force and
effect and stating the modifications hereto), and stating whether or not, to the
knowledge of such certifying party, any Default or Event of Default has
occurred, and, if so, specifying each such Default or Event of Default;
provided, however, that it shall be a condition precedent to Lender's obligation
to deliver the statement pursuant to this Section, that Lender shall have
received, together with Borrower's request for such statement, an Officer's
Certificate stating that no Default or Event of Default exists as of the date of
such certificate (or specifying such Default or Event of Default).
Section 8.24 Payment of Expenses. Borrower shall, whether or
not the Transactions are consummated, pay all Transaction Costs, which shall
include, without limitation, reasonable out-of-pocket fees, costs, expenses, and
disbursements of Lender and its attorneys, local counsel, accountants and other
contractors in connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents and the documents and instruments referred to
therein, (ii) the creation, perfection or protection of Lender's Liens in the
Collateral (including, without limitation, fees and expenses for title and lien
searches and
128
124
filing and recording fees, intangibles taxes, personal property taxes, mortgage
recording taxes, due diligence expenses, travel expenses, accounting firm fees,
costs of the Appraisals, Environmental Reports (and an environmental
consultant), Surveys and the Engineering Reports), (iii) the negotiation,
preparation, execution and delivery of any amendment, waiver or consent relating
to any of the Loan Documents, and (iv) the preservation of rights under and
enforcement of the Loan Documents and the documents and instruments referred to
therein, including any restructuring or rescheduling of the Indebtedness.
Section 8.25 Bankruptcy Waiver. Borrower hereby agrees that,
in consideration of the recitals and mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, if Borrower (i) files with any bankruptcy court of
competent jurisdiction or be the subject of any petition under Title 11 of the
U.S. Code, as amended, (ii) is the subject of any order for relief issued under
Title 11 of the U.S. Code, as amended, (iii) files or is the subject of any
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future law
relating to bankruptcy, insolvency or other relief of debtors, (iv) has sought
or consents to or acquiesces in the appointment of any trustee, receiver,
conservator or liquidator or (v) is the subject of any order, judgment or decree
entered by any court of competent jurisdiction approving a petition filed
against such party for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency or other
relief for debtors, the automatic stay provided by the Federal Bankruptcy Code
shall be modified and annulled as to Lender, so as to permit Lender to exercise
any and all of its rights and remedies, upon request of Lender made on notice to
Borrower and any other party in interest but without the need of further proof
or hearing. Neither Borrower nor any Affiliate of Borrower shall contest the
enforceability of this Section.
Section 8.26 Entire Agreement. This Agreement, together with
the Exhibits hereto and the other Loan Documents constitutes the entire
agreement among the parties hereto with respect to the subject matter contained
in this Agreement, the Exhibits hereto and the other Loan Documents and
supersedes all prior agreements, understandings and negotiations between the
parties.
Section 8.27 Dissemination of Information. If Lender
determines at any time to sell, transfer or assign the Note, this Loan Agreement
and any other Loan Document and any or all servicing rights with respect
thereto, or to grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated
129
125
or unrated public offering or private placement, Lender may forward to each
purchaser, transferee, assignee, servicer, participant or investor in such
securities (collectively, the "Investor") or any Rating Agency rating such
securities and each prospective Investor, all documents and information which
Lender now has or may hereafter acquire relating to the Loan, Borrower, any
guarantor, any indemnitor and any Facility, which shall have been furnished by
Borrower, any guarantor, any indemnitor, or any party to any Loan Document, or
otherwise furnished in connection with the Loan, as Lender in its discretion
determines necessary or desirable.
Section 8.28 Limitation of Interest. It is the intention of
Borrower and Lender to conform strictly to applicable usury laws. Accordingly,
if the transactions contemplated hereby would be usurious under applicable law,
then, in that event, notwithstanding anything to the contrary in any Loan
Document, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is taken, reserved, contracted
for, charged or received under any Loan Document or otherwise in connection with
the Loan shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be credited to principal by
Lender (or if the Loan shall have been paid in full, refunded to Borrower); and
(ii) in the event that maturity of the Loan is accelerated by reason of an
election by Lender resulting from any default hereunder or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount of interest
allowed by applicable law, and any interest in excess of the maximum amount of
interest allowed by applicable law, if any, provided for in the Loan Documents
or otherwise shall be cancelled automatically as of the date of such
acceleration or prepayment and, if theretofore prepaid, shall be credited to
principal (or if the principal portion of the Loan and any other amounts not
constituting interest shall have been paid in full, refunded to Borrower.)
In determining whether or not the interest paid or payable
under any specific contingency exceeds the maximum amount allowed by applicable
law, Lender shall, to the maximum extent permitted under applicable law (a)
exclude voluntary prepayments and the effects thereof, and (b) amortize,
prorate, allocate and spread, in equal parts, the total amount of interest
throughout the entire contemplated term of the Loan so that the interest rate is
uniform throughout the entire term of the Loan; provided, that if the Loan is
paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence thereof
exceeds the maximum amount allowed by applicable law, Lender shall refund to
Borrower the amount of such excess, and in such event,
130
126
Lender shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the maximum amount
allowed by applicable law.
Section 8.29 Indemnification. Borrower shall indemnify and
hold Lender and each of its affiliates and their respective successors and
assigns (including their respective officers, directors, partners, employees,
attorneys, accountants, professionals and agents and each other person, if any,
controlling Lender or any of its affiliates within the meaning of either Section
15 of the Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended) (each, including Lender, an "Indemnified
Party") harmless against any and all losses, claims, damages, costs, expenses
(including the reasonable fees and disbursements of outside counsel retained by
any such person) or liabilities in connection with, arising out of or as a
result of the transactions and matters referred to or contemplated by this
Agreement, except to the extent that it is finally judicially determined that
any such loss, claim, damage, cost, expense or liability resulted directly from
the gross negligence or willful misconduct of such Indemnified Party. If any
Indemnified Party becomes involved in any action, proceeding or investigation in
connection with any transaction or matter referred to or contemplated in this
Agreement, Borrower shall periodically reimburse any Indemnified Party upon
demand therefor in an amount equal to its reasonable legal and other expenses
(including the costs of any investigation and preparation) incurred in
connection therewith to the extent such legal or other expenses are the subject
of indemnification hereunder.
Section 8.30 Borrower Acknowledgments. Borrower hereby
acknowledges to and agrees with Lender that (i) the scope of Lender's business
is wide and includes, but is not limited to, financing, real estate financing,
investment in real estate and other real estate transactions which may be viewed
as adverse to or competitive with the business of Borrower or its Affiliates and
(ii) Borrower has been represented by competent legal counsel and Borrower has
consulted with such counsel prior to executing this Loan Agreement and of the
other Loan Documents.
Section 8.31 Publicity. Lender shall have the right to issue
press releases, advertisements and other promotional materials describing
Lender's participation in the origination of the Loan or the Loan's inclusion in
any Securitization effectuated or to be effectuated by Lender. Borrower and
Parent shall have the right to issue press releases regarding the Loan, subject
to Lender's prior review and written approval not be unreasonably withheld.
131
127
Section 8.32. Recalculation of Loan Amount.
(a) On the Stabilization Date, Lender shall calculate
a new aggregate loan amount for Borrower (and new Allocated Loan Amounts for
each Facility) for the Principal Indebtedness then outstanding (the
"Recalculated Loan Amount") utilizing an underwriting cash flow methodology
(calculated by Lender in Lender's discretion) based upon the Underwriting NOI
Criteria and a debt service constant equal to the greater of the actual constant
and ten and 07/100 percent (10.07%) and a minimum Debt Service Coverage Ratio
(calculated by Lender in Lender's sole discretion) of 1.35:1; provided, however,
if a Default or an Event of Default has occurred and is continuing, Lender shall
have the right but not the obligation to calculate a new Loan Amount; and
provided, further, Lender's obligation to calculate a new Loan Amount is subject
to completion of Lender's due diligence with respect to each Facility including
receipt of the due diligence items identified in Article III hereof as of the
Stabilization Date.
(b) If the Recalculated Loan Amount is greater than
the Stabilization Date Loan Amount, then, provided that (i) no Event of Default
has occurred and is continuing, (ii) Lender determines in its discretion that
Borrower has as of the Stabilization Date (or the Stabilization Date Payment
Date, as applicable), satisfied all of the other conditions precedent set forth
in Article III and all other terms and conditions of this Agreement, and (iii)
Borrower has elected, in its sole and absolute discretion, to borrow the
Earn-Out Advance as evidenced by delivery of the Request for Advance specified
in Section 3.3(D), then Lender shall make the Earn-Out Advance on the
Stabilization Date Payment Date in an amount equal to the excess of (i) the
Recalculated Loan Amount over (ii) the Stabilization Date Loan Amount, but only
to the extent that the aggregate amount of the Loan after giving effect to the
Earn-Out Advance does not exceed the Maximum Facility Amount; and provided
further, however, that if Lender makes the Earn-Out Advance, Lender may, in
Lender's sole discretion, adjust the Allocated Loan Amount for any or all of the
Facilities as Lender determines in its reasonable discretion.
(c) If the Recalculated Loan Amount is less than the
Stabilization Date Loan Amount (the excess of the Stabilization Date Loan Amount
over the Recalculated Loan Amount, the "Difference"), then Borrower may, within
ten (10) Business Days after the Stabilization Date, notify Lender of the amount
which Borrower shall prepay on the Stabilization Date Payment Date, which amount
(the "Actual Prepayment Amount") shall equal the Difference. If Borrower fails
to provide such notice to Lender, the Actual Prepayment Amount shall be deemed
to equal zero. If the Borrower prepays the Actual Prepayment Amount on the
Stabilization Date Payment Date, Borrower shall also pay to
132
128
Lender on the Stabilization Date Payment Date any hedging losses and breakage
fees incurred by Lender. Any failure by Borrower to pay Lender the Actual
Prepayment Amount and any hedging losses and breakage fees incurred by Lender on
the Stabilization Date Payment Date shall constitute an immediate Event of
Default.
(i) If the Actual Prepayment Amount is zero or is less
than the Difference, and the Unpaid Excess Loan Amount (as hereinafter
defined) does not exceed the Amortizable Amount (as hereinafter
defined), then Lender may convert into Class B Equity Interests a
portion of the principal amount of the Loan in an amount (the "Class B
Amount") equal to the Unpaid Excess Loan Amount. As used herein, the
"Amortizable Amount" shall mean that amount which Lender determines can
be fully amortized within a five (5) year period, as calculated by
Lender in Lender's sole discretion, and using among other things, a
minimum debt service coverage ratio as determined by Lender (which
ratio shall be computed by (A) determining the product of seventy-five
percent (75%) and Lender's projection of Excess Cash Flow for a period
of time determined by Lender, and (B) dividing that product by Lender's
projection of the payments that would be due for such period of time in
respect of the Class B Amount). As used herein, the "Unpaid Excess Loan
Amount" shall mean the excess of the Difference over the Actual
Prepayment Amount. Lender (or its designee) shall receive Class B
Equity Interests in the amount of the Class B Amount pursuant to
documentation satisfactory to Lender in Lender's sole discretion, the
material terms of which are described on Exhibit D attached hereto, and
upon such conversion Lender (or its designee) shall be the "Preferred
Shareholder" in the Borrower. In addition to all other amounts due
Lender, Borrower shall pay to Lender, in addition to any amounts set
forth in the first paragraph of Section 8.32(c) above, on the
Stabilization Date Payment Date, (x) an amount equal to any hedging
losses and breakage fees incurred by Lender that Borrower would have
been required to pay had Borrower prepaid the Loan in an amount equal
to the Class B Amount, and (y) a fee equal to two percent (2%) of the
Class B Amount. Any failure by Borrower to pay to Lender any hedging
losses and breakage fees incurred by Lender and the fee in connection
with any prepayment or conversion pursuant to this Section on the
Stabilization Date Payment Date shall constitute an immediate Event of
Default.
(ii) If the Unpaid Excess Loan Amount exceeds the
Amortizable Amount, Lender may, at Lender's option exercisable by
Lender in Lender's discretion and exercisable at any time, convert a
portion of the Loan as set forth in Section 8.32(c)(i) above, and in
addition to convert a portion of the principal
133
129
amount of the Loan (in an amount (the "Class C Amount"), not to exceed
the excess of the Unpaid Excess Loan Amount over the Amortizable
Amount, into Class C Equity Interests pursuant to the documentation
satisfactory to Lender in Lender's sole discretion, the material terms
of which are described on Exhibit F. If the Lender does not elect to
exercise the option described in this subparagraph, then Borrower shall
be required to prepay the Loan on the Stabilization Date Payment Date
in an amount equal to the Difference. If Lender exercises the option
set forth herein, in addition to the Class B Equity Interests which
Lender receives pursuant to clause (i) above, Lender (or its designee)
shall receive Class C Equity Interests in an amount equal to the Class
C Amount, and Warrants in Borrower in an amount calculated in
accordance with the formula described in Exhibit E. If Lender exercises
the option described in this subparagraph, Borrower shall pay to
Lender, in addition to any amounts set forth in Section 8.32(c)(i), on
the Stabilization Date Payment Date, (x) an amount equal to any hedging
losses and brokerage fees incurred by Lender that Borrower would have
been required to pay had Borrower prepaid the Loan in an amount equal
to the Class C Amount, and (y) a fee equal to two percent (2%) of the
Class C Amount. Any failure by Borrower to pay to Lender any hedging
losses and breakage fees incurred by Lender and the fee in connection
with any prepayment or conversion pursuant to this Section on the
Stabilization Date Payment Date shall constitute an immediate Event of
Default.
(d) All prepayments made pursuant to this Section shall be
applied in accordance with the provisions of Section 2.7.
(e) Notwithstanding anything in this Section to the contrary,
if an Event of Default has occurred and is continuing, and without in any way
limiting any other right Lender may have under any Loan Document, Lender shall,
in Lender's discretion, have the right in connection with the recalculation of
the Loan Amount pursuant to this Section to require the Borrower to (i) prepay
the Loan in full, or (ii) convert a portion of the Loan into Class B Equity
Interests or (iii) convert a portion of the Loan into Class C Equity Interests
and Warrants or (iv) do any combination of (i), (ii) or (iii) above, in Lender's
sole discretion.
(f) Any failure by Borrower to provide all annual financial
information that Borrower is required to provide pursuant to Section 5.1(q) when
due shall constitute an immediate Event of Default. Any failure by Borrower to
provide any other information reasonably requested by Lender in connection with
the recalculation of the Loan amount pursuant to this Section within ten (10)
Business Days after request therefor (provided
134
130
that Borrower could reasonably provide such information within such period)
shall constitute an immediate Event of Default.
(g) If Lender exercises any option or right to acquire equity
in Borrower pursuant to this Section, Borrower agrees (i) that the form and
substance of any such equity arrangements shall be documented, at Borrower's
expense, with documents, including, without limitation, the terms described in
Exhibit D, Exhibit E and Exhibit F, in form and substance satisfactory to Lender
in Lender's sole discretion, all such documents shall be executed within ten
(10) Business Days of receipt thereof from Lender and in no event later than the
Stabilization Date Payment Date, (iii) Lender (or its designee) shall be
admitted as the Preferred Shareholder on or before the Stabilization Date
Payment Date, and (iv) any breach of (i), (ii) or (iii) shall constitute an
immediate Event of Default. In addition, in connection with any such equity
arrangements Borrower shall and Borrower causes its affiliates to provide to
Lender any additional collateral to Lender to secure such arrangements,
including without limitation, equity pledges and guaranties, as Lender may
require in Lender's sole discretion.
(h) On the Stabilization Date Payment Date, the Borrower
shall take the following actions with respect to the Leased Facilities and the
Joint Venture Facility, (i) as to Joint Venture Facility, the Borrower shall
acquire from the Joint Venture fee simple title to the Joint Venture Facility;
(ii) for the Joint Venture Facility and the Leased Facilities, the Manager shall
execute a Management Agreement (in form reasonably acceptable to Lender) with
the Borrower; (iii) for the Joint Venture Facility and the Leased Facilities,
the Borrower and the Manager shall deliver a manager's subordination agreement,
in form reasonably acceptable to Lender; (iv) the Borrower shall terminate the
Operator Lease (other than the Operator Lease with respect to the Facility
located in Florida), as applicable; (v) the Borrower shall execute such
agreements including, but not limited to amendments to the Loan Documents as are
requested by Lender and consistent with the restructuring of the Loan such that
the Facilities are all owned by the Borrower and the Operator Leases (other than
the Operator Lease with respect to the Facility located in Florida) are
terminated; (vi) as to the Joint Venture Facility, the Borrower shall deliver to
Lender (A) mortgages, assignment of leases, assignments of management
agreements, UCC-1 financing statements all in forms acceptable to Lender in its
reasonable discretion and (B) endorsements to the Title Policy issued on the
Closing Date showing fee simple title in the name of the Borrower together with
endorsements covering the foregoing described financing documents; (vii)
Borrower shall deliver to Lender such opinions of counsel as Lender shall
reasonably request; and (viii) Borrower shall pay all costs and expenses
incurred by Lender in connection with the matters
135
131
described in this paragraph (which costs and expenses shall be subject to the
cap set forth in Section 2.13).
Section 8.33 Cross Collateralization. Without limitation to
any other right or remedy provided to Lender in this Agreement or any of the
other Loan Documents, Borrower acknowledges and agrees that, to the full extent
permitted under applicable law, upon the occurrence of an Event of Default (i)
Lender shall have the right to pursue all of its rights and remedies in one
proceeding, or separately and independently in separate proceedings which it, as
Lender, in its sole and absolute discretion, shall determine from time to time,
(ii) Lender is not required to either xxxxxxxx assets, sell Collateral in any
inverse order of alienation, or be subjected to any "one action" or "election of
remedies" law or rule, (iii) the exercise by Lender of any remedies against any
Collateral will not impede Lender from subsequently or simultaneously exercising
remedies against any other Collateral, (iv) all Liens and other rights, remedies
and privileges provided to Lender in this Agreement and in the other Loan
Documents or otherwise shall remain in full force and effect until Lender has
exhausted all of its remedies against the Collateral and all Collateral has been
foreclosed, sold and/or otherwise realized upon and (v) each Facility shall be
security for the performance of all of Borrower's obligations hereunder;
provided, however, (i) so long as the Joint Venture Mortgage is outstanding,
Lender shall be entitled to exercise its rights under the Joint Venture Mortgage
and the other Loan Documents executed by the Joint Venture only upon the
occurrence of an "Event of Default" under the Joint Venture Mortgage; and (ii)
with respect to any Leased Facility or the Joint Venture Facility, until the
Subsidiary has acquired equity interests in the related Operator or the Joint
Venture, Lender shall be limited in exercising its rights with respect to the
deposits in the Basic Carrying Costs Sub-Account and Capital Expense Sub-Account
as described in the first sentence of the last paragraph of Section 2.12(g).
Section 8.34 Matters Concerning the Operators and Joint
Venture.
(a) Transfers of Equity Interests in Operators and Joint
Venture. The parties hereto acknowledge that the Parent currently owns interests
in the Operators and Joint Venture and anticipates that the Subsidiary will
acquire the remaining interests in the Operators and the Joint Venture such that
by the Cut-Off Date the Parent and the Subsidiary own one hundred percent (100%)
of the Operators and the Joint Venture. The Parent and Subsidiary each has
covenanted in the Equity Pledge Agreements (A) to cause the Subsidiary to
acquire all of the interests not owned by the Parent in the Operators and Joint
Venture (each an
136
132
"Operator/JV Acquisition" and collectively, the "Operator/JV Acquisitions") no
later than the Cut-Off Date and (B) provide Lender with five (5) days prior
written notice before the consummation of the acquisition of any interests in
any Operator or the Joint Venture.
(b) Loan to Joint Venture. The Borrower shall lend to the
Joint Venture from the proceeds of the Closing the Allocated Loan Amount for the
Joint Venture Facility (less such Joint Venture Facility's pro rata portion of
the Transaction Costs). The Joint Venture's obligations to repay such loan shall
be evidenced by the Joint Venture Note. Pursuant to the Collateral Assignment,
the Borrower shall pledge the Joint Venture Note and the other Joint Venture
Loan Documents to the Lender as collateral security for the Loan Obligations. As
described in Section 2.10, the Joint Venture shall make all payments under the
Joint Venture Note into the Collection Account.
Section 8.35 Buy-Up. On the Stabilization Date Payment Date,
regardless of the amount of the Recalculated Loan Amount, Lender shall have the
option in Lender's reasonable discretion to change the amortization schedule and
to decrease the Loan Amount (after giving effect to the resizing in Section
8.32) in consideration for which Lender will agree to pay Borrower a buy-up
payment. All such changes shall be determined by Lender in Lender's discretion
and Borrower hereby agrees to be bound by any and all of such changes, provided
that such changes shall generally result in (i) an interest rate approximating
the Stabilization Date Interest Rate, (ii) an amortization schedule equal to the
300 months from the Stabilization Date Payment Date to the Maturity Date, (iii)
a Loan Amount (after giving effect to any changes in this Section 8.32) that
would result in an outstanding Principal Indebtedness at the Optional Prepayment
Date (assuming all payments are timely made) equal to the outstanding Principal
Indebtedness at the Optional Prepayment Date (assuming all payments are timely
made) as if none of the changes required by this Section 8.35 had been made, and
(iv) a buy up payment payable to Borrower equal to the excess of (a) the Loan
Amount on the Stabilization Date Payment Date (prior to giving effect to any
changes required by this Section 8.35) over (b) the Loan Amount on the
Stabilization Date Payment Date (after giving effect to any changes required by
this Section 8.35). Notwithstanding the foregoing, Lender shall not be entitled
to exercise the option described in this Section 8.35 if to do so would
adversely affect Parent's or Borrower's GAAP or tax accounting reporting.
Borrower shall not be required to pay any Transaction Costs incurred by Lender
in connection with this Section 8.35. Borrower hereby agrees to make any and all
amendments, modifications and other changes to the Loan Documents as required by
Lender in Lender's reasonable discretion in connection with this Section 8.35.
137
133
[Signatures on the following pages]
138
134
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
LENDER:
NOMURA ASSET CAPITAL CORPORATION, a
Delaware corporation
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[Signatures continue on the following page]
139
135
ALS-VENTURE I, INC., a Delaware
corporation
By:
------------------------------------------
Xxxxx Xxxxxxx
Vice President
140
EXHIBIT A
Operating Expense Certificate
Nomura Asset Capital Corporation
2 World Financial Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxxxx Xxxxxxx
Re: Loan Agreement (the "Loan Agreement") dated as of
_____________, 1998 between ALS-Venture I, Inc.
("Borrower") and Nomura Asset Capital Corporation
(together with its successors and assigns "Lender")
Ladies and Gentlemen:
This certificate is delivered in accordance with Section
2.11(f) of the Loan Agreement. All capitalized terms not defined herein shall
have the meanings ascribed to them in the Loan Agreement.
Borrower hereby certifies that the Operating Expenses for the
Interest Accrual Period from ______________, ____ to ______________, ____ are
______________________ Dollars ($_________) and that such Operating Expenses are
equal to or less than the Operating Expenses for such period set forth on the
Operating Budget.
_____________________, a _____________
By: _________________________________,
a___________, its ______________
141
EXHIBIT B
Additional Definitions
Base Adjusted NOI
Initial Basic Carrying Costs Amount $ 48,678.42*
Initial Capital Reserve Amount $ 14,843.75**
ALLOCATED LOAN AMOUNTS
1. Clare Bridge
Tallahassee, Florida $ 2,894,000.00
2. Clare Bridge
Tempe, Arizona $ 4,214,000.00
3. Clare Bridge
Winston-Salem, North Carolina $ 3,014,000.00
4. Crossings
Colorado Springs, Colorado $ 4,615,000.00
5. Crossings
Pueblo, Colorado $ 3,839,000.00
6. Crossings
Twin Falls, Idaho $ 4,408,000.00
7. WovenHearts
Blaine, Minnesota $ 1,032,000.00
8. WovenHearts
Inver Grove Heights, Minnesota $ 1,039,000.00
9. Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxx, Xxx Xxxx $ 1,760,000.00
10. Summer Field Village
Syracuse, New York $ 4,185,000.00
142
LEASED FACILITIES OPERATOR ADDRESS
----------------- -------- -------
Clare Bridge Clare Bridge of 0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx, XX Tempe, L.P. Xxxxx, XX 00000
Crossings Crossings of Colorado 0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX Springs L.P. Xxxxxxxx Xxxxxxx, XX 00000
Crossings Crossings of 0000 Xxxxxxxx Xxxx
Xxxxxx, XX Pueblo, L.P. Xxxxxx, XX 00000
Crossings Crossings of Twin Falls 0000 Xxxxxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX L.P. Xxxx Xxxxx, XX 00000
WovenHearts WovenHearts of Blaine 0000 Xxxx Xxxxxxx
Xxxxxx, XX L.P. Xxxxxx, XX 00000
WovenHearts WovenHearts of Inver 0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx Xxxxxxx, XX Grove Heights L.P. Xxxxx Xxxxx Xxxxxxx, XX 00000
NON LEASED FACILITIES ADDRESS
--------------------- -------
Clinton Village 000 Xxxxxxxxxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxx, XX Xxxxxxxx, XX 00000
Summer Field Village 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX Xxxxxxx, XX 00000
Clare Bridge 0000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX Xxxxxxxxxxx, XX 00000
JOINT VENTURE FACILITY JOINT VENTURE ADDRESS
---------------------- ------------- -------
Clare Bridge Clare Bridge of Winston- 000 Xxxxx Xxxxx Xxxxx Xxxx
Xxxxxxx-Xxxxx, XX Salem, LLC Xxxxxxx-Xxxxx, XX 00000
Subleased Facilities: the Facility in Arizona
143
*The Initial Basic Carrying Costs are allocated among the Facilities as follows:
Real Estate Insurance
Taxes Premiums
1. Clare Bridge
Tallahassee, FL $ 4,750.00 $ 638.08
2. Clare Bridge
Tempe, Arizona $ 3,050.00 $ 635.00
3. Clare Bridge
Winston-Salem, NC $ 3,291.67 $ 638.08
4. Crossings
Colorado Springs, CO $ 4,600.00 $ 640.00
5. Crossings
Pueblo, CO $ 4,600.00 $ 640.00
6. Crossings
Twin Falls, ID $ 5,250.00 $ 640.00
7. WovenHearts
Blaine, MN $ 1,400.00 $ 196.67
8. WovenHearts
Inver Grove Heights, MN $ 1,400.00 $ 195.63
9. Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxx, XX $ 4,750.00 $ 638.00
10. Summer Field Village
Syracuse, NY $ 9,675.00 $ 1,050.00
** The Initial Capital Reserve Amount is allocated as follows:
Clinton Village $ 10,625.00
Summer Field Village $ 4,218.75
144
Doing Business As Names:
Crossings at Summerfield
Crossings at Xxxxxxx Xxxxx
Xxxxx Bridge of Tempe
Crossings at Twin Falls
Crossings at Colorado Springs
Crossings at Pueblo
WovenHearts of Blaine
WovenHearts of Inver Grove Heights
Clare Bridge of Xxxxxxx-Xxxxx
Xxxxx Bridge of Tallahassee
Please note - the license for (i) the Facility in Arizona is issued in the name
of Clare Bridge House of Tempe, (ii) for the Facility located in Anoka County,
Minnesota is issued in the name of ALS/Woven Hearts, Inc. - Blaine and (iii) for
the Facility located in Dakota County, Minnesota is issued in the name of
ALS-Woven Hearts of Inver Grove Heights.
145
EXHIBIT C
Capital Improvement and Repair and Environmental Remediation Exhibit
146
EXHIBIT D
In the event Lender is converting the Unpaid Excess Loan
Amount into Class B Equity Interests and/or Class C Equity Interests, within ten
(10) days of receipt thereof from Lender (and in no event later than the
Stabilization Date Payment Date), the Secretary (or other authorized Officer) of
the Company will deliver to Lender amended and restated articles of
incorporation for the Company (the "Articles"), enforceable against the Company
and the other then existing shareholders in the Company (the "Other
Shareholders") in form and substance satisfactory to Lender in Lender's sole
discretion, provided, however, that (i) in the event the Company is a limited
partnership or limited liability company, the Company will deliver to Lender an
amended and restated limited partnership agreement or an amended and restated
limited liability company agreement (each an "Agreement"), in form and substance
satisfactory to Lender in Lender's sole discretion, and (ii) notwithstanding
anything to the contrary set forth herein, nothing contained in any such
Articles or Agreement shall change the economic provisions establishing (x) the
Preferred Rate and Adjusted Preferred Rate set forth in this Exhibit, (y) the
methodology for calculating the Initial Capital Amount set forth in this Exhibit
or Section 8.32 of the Loan Agreement or (z) the distribution priorities and
amounts set forth in this Exhibit. The Articles will contain, inter alia, the
following terms (conformed if appropriate for a limited partnership agreement or
limited liability company agreement):
1. Issuance of Preferred Stock. The consent and agreement of the Other
Shareholders to the issuance of preferred shares of stock in the Company (each,
a "Class B Share") to the Preferred Shareholder in an amount equal to the Class
B Amount. Each Class B Share shall have a par value of $5,000.00. The Company
may issue fractional Class B Shares.
2. Class A Shares. The total equity ownership interest of the Other
Shareholders in the Company shall consist of ____ shares of common stock in the
Company (each, a "Class A Share").
3. Purpose. Until the Loan has been paid in full and the Class B Shares
have been redeemed in full, the Company shall at all times be a Single Purpose
Entity.
4. Independent Director. Until the Loan has been paid in full and the
Class B Shares have been redeemed in full, (a) no Independent Director may be
removed unless a successor Independent Director (which meets the requirements to
be an Independent Director) has been approved by the Preferred Shareholder (such
approval not to be unreasonably withheld), and (ii) in the event of a
resignation, death or incapacity of the Independent Director, or such position
is otherwise vacated, no action requiring the unanimous affirmative vote of the
board of directors of the Company shall be taken until a successor Independent
Director (which meets the requirements to be an Independent Director and has
been approved by the Preferred Shareholder) (such approval not to be
unreasonably withheld) has been appointed.
147
5. Dividends. On each Distribution Date, after the Company has made all
payments required on such Distribution Date under the Loan Documents in
accordance with the terms thereof, and prior to making any distributions to the
Other Shareholders (except as provided hereunder), the Company shall distribute,
to the extent of available funds the following amounts in the following
priority:
(a) First, to the Preferred Shareholder, all Monthly Preferred
Yield Amounts (or portions thereof) with respect to prior Distribution Dates
that have not previously been paid (in the order of the Distribution Dates to
which such amounts relate, amounts with respect to the earliest Distribution
Dates being paid first) plus additional yield thereon at the Adjusted Preferred
Rate accruing from the Distribution Date on which the unpaid Monthly Preferred
Yield Amount would have been distributed had there been funds available to make
such distribution in the Preferred Cash Collateral Account;
(b) Second, to the Preferred Shareholder, the Monthly
Preferred Yield Amount with respect to the current Distribution Date;
(c) Third, to the Preferred Shareholder, all Monthly
Redemption Amounts (or portions thereof) with respect to prior Distribution
Dates that have not previously been paid (in the order of the Distribution Dates
to which such amounts relate, amounts with respect to the earliest Distribution
Dates being paid first);
(d) Fourth, to the Preferred Shareholder, the Monthly
Redemption Amount with respect to the current Distribution Date; and
(e) Fifth, provided all amounts due and payable to the Lender
pursuant to the Loan Documents and to the Preferred Shareholder hereunder have
been paid, and provided further that no Breach exists, in the sole discretion of
the Company, to the Other Shareholders pro rata in respect of the Class A Shares
owned by each.
6. Liquidation Event Distributions. On the first Business Day after the
Company receives any Liquidation Proceeds, the Company shall cause the
distribution of the Net Liquidation Proceeds After Debt Service to make the
following payments:
(a) All amounts described in paragraph 5(a)-(d) hereof for all
Distribution Dates occurring on or prior to such Business Day that have not
previously been paid, in the priority set forth in such clause;
(b) An amount equal to the sum of all Daily Preferred Yield
Amounts for each day occurring since the last Distribution Date on or prior to
such Business Day;
(c) In redemption of the Class B Shares at their par value;
and
-2-
148
(d) To the Other Shareholders in accordance with the number of
Class A Shares owned by each of the Other Shareholders.
7. Redemption of Class B Shares.
(a) Upon each distribution by the Company of the Monthly
Redemption Amount or any other amounts in redemption of any Class B Shares,
including fractions thereof, Class B Shares having a par value equal to such
dividends shall automatically be transferred and surrendered by the Preferred
Shareholder to the Company and canceled.
(b) On any Distribution Date, in addition to the amounts
referred to herein, the Company in its sole discretion may make additional
distributions to the Preferred Shareholder to redeem its Class B Shares, and
upon receipt of such distributions the Preferred Shareholder's Class B Shares
having a par value equal to such distributions shall be redeemed and
automatically canceled.
8. Preferred Shareholder's Consent. The consent of the Preferred
Shareholder shall be necessary to approve:
(a) The payment of any Affiliated Party Expense or entering
into any contract, agreement or other obligation that provides for the payment
of any Affiliated Party Expense;
(b) The distribution to the Shareholders of any Company
property other than cash or any accumulation of cash in the Company in excess of
the operating needs of the Company, which cash would in the ordinary course of
the business of the Company be distributable to the Shareholders;
(c) The making of any prepayment of the Loan other than any
mandatory prepayment required by the Loan Documents, or any refinance of the
Loan except as otherwise permitted under the Loan Documents;
(d) Any replacement or change in the Officers of the Company
or the Manager of any Facility;
(e) Any amendment of any of the Loan Documents, the Management
Agreement or the Articles;
(f) Any: (A) improvement, renovation or refurbishment of any
Facility to a materially higher standard or level than that of comparable
properties in the same geographic area and in the same market segment; (B)
removal, demolition or alteration of the improvements or the equipment (other
than routine replacement of such equipment) on any Facility to the extent that
any such action would require the incurrence of an expenditure in excess of
$50,000; or (C) material increase in the square footage or gross leasable area
of the
-3-
149
improvements on any Facility if any of the expenses in connection therewith are
paid or incurred by the Company;
(g) Any material change in the present method of conducting
the business or affairs of the Company;
(h) The issuance of any Shares or other evidence of interests
in the Company other than the Shares (or other evidence of interests)
outstanding on the date hereof;
(i) Such other matters as may reasonably be determined by
Preferred Shareholder.
9. Termination of Manager. The Preferred Shareholder shall have
the same right to terminate the Manager as is held by Lender pursuant to Section
5.1(p) of the Loan Agreement (regardless of whether the Loan is outstanding). In
addition, in the event of a Breach, in addition to all other rights of the
Preferred Shareholder, the Preferred Shareholder shall have the right to
terminate the Manager and designate a replacement manager acceptable to
Preferred Shareholder in its sole discretion.
10. Financial Reports. The Company will furnish to the Preferred
Shareholder (i) a monthly report showing the Monthly Redemption Amount and the
Class B Shares redeemed from the Preferred Shareholder in form and substance
reasonably satisfactory to the Preferred Shareholder; (ii) copies of all
financial reports required to be provided Lender under Section 5.1(Q) of the
Loan Agreement (regardless of whether the Loan is outstanding); and (iii) such
additional calculations, statements, data and other information regarding the
Company and its assets, as the Preferred Shareholder may reasonably request.
11. Rights of Preferred Shareholder to Transfer. The Preferred
Shareholder shall be entitled to Transfer any of the Shares held by it to any
Person without the consent of the Company or the Other Shareholders. Any such
transferee or assignee shall be admitted to the Company as a substitute
Preferred Shareholder.
12. Representations and Warranties. The Articles shall contain
such representations and warranties of the Company and the Other Shareholders as
Preferred Shareholder reasonably shall require.
13. Covenants. The Articles shall contain such covenants of the
Company and the Other Shareholders as Preferred Shareholder shall reasonably
require.
14. Definitions. As used herein, all capitalized terms not
otherwise defined shall have the meanings ascribed to them in the Loan
Agreement, and in addition, the following terms shall have the following
meanings:
-4-
150
"Adjusted Preferred Rate" means the lesser of: (i) a rate per annum
(adjusted on the first day of each Yield Accrual Period) equal to LIBOR plus
seven hundred (700) basis points, and (ii) the maximum rate permitted by
applicable law.
"Admittance Date" means the date on which the Preferred Shareholder
acquires Class B Shares in the Company pursuant hereto.
"Affiliate" means with respect to any Person, a second Person which is
controlled by, controls or is under common control with such first Person.
"Affiliated Party Expense" means any expense incurred pursuant to any
contract or otherwise with any Affiliate of the Company, or any constituent
party of the Company, but excluding property management fees or expenses payable
pursuant to management agreements previously approved in writing by Preferred
Shareholder.
"Articles" has the meaning set forth in the recitals hereof.
"Breach" means that any of the following have occurred:
(i) Failure of the Company to pay any amount when due;
(ii) Failure of the Company to pay to the Preferred
Shareholder any amount due to the Preferred Shareholder (regardless of
availability of funds, including without limitation, the occurrence of a
Nonpayment Breach);
(iii) A default in the performance or breach of any
covenant by the Company to the Preferred Shareholder;
(iv) Any representation or warranty of the Company or any
Other Shareholder to the Preferred Shareholder shall have been false or
misleading in any material respect when made;
(v) (A) A bankruptcy, receivership or assignment for the
benefit of creditors by or against, or (B) the insolvency of the Company;
(vi) An Event of Default; and
(vii) The Preferred Cash Management Agreement shall cease
to be in full force and effect, or the Company or any Officer thereof shall so
assert in writing.
"Breach Period" means upon the occurrence of any Nonpayment Breach, a
period of time equal to the greater of the period of time from and after the
Distribution Date that caused
-5-
151
the occurrence of a Nonpayment Breach until the entire Preferred Amount has been
redeemed and all other amounts due to the Preferred Shareholder hereunder have
been paid in full.
"Class B Amount" means ________________ Dollars ($_________).
"Company" means ALS-Venture I, Inc.
"Daily Preferred Yield Amount" means, with respect to any day, the
product of: (i) the Preferred Rate on such day; (ii) the Preferred Capital
Amount on such day (after giving effect to any distributions in respect of the
Preferred Capital Amount made on such day), increased by any Monthly Preferred
Yield Amounts (or portions thereof) with respect to Distribution Dates occurring
on or prior to such day that remain unpaid on such day; and (iii) 1/360.
"Distribution Date" means the 11th day of each month, or, if such day
shall not be a Business Day, the next succeeding Business Day.
"Excess Cash Flow" means, with respect to any Distribution Date, an
amount equal to the greater of: (a) (i) the amount disbursed to the Company
pursuant to Section 2.11(g) of the Loan Agreement during the Yield Accrual
Period ended in the month in which such Distribution Date occurs minus (ii) any
amounts payable to the Preferred Shareholder as described in Paragraph 5 (a) or
(b) hereof with respect to such Yield Accrual Period; and (b) zero.
"Initial Preferred Capital Amount" shall mean an amount equal to the
Class B Amount.
"LIBOR" means, with respect to each Yield Accrual Period following the
Admittance Date, the rate (expressed as a percentage per annum) for deposits in
U.S. dollars for a one-month period that appears on Telerate Page 3750 (or the
successor thereto) as of 11:00 a.m., London, England time, on the related
Determination Date. If such rate does not appear on Telerate Page 3750 as of
11:00 a.m., London, England time, on such Determination Date, LIBOR shall be the
arithmetic mean of the offered rates (expressed as a percentage per annum) for
deposits in U.S. dollars for a one-month period that appear on the Reuters
Screen LIBOR Page as of 11:00 a.m., London, England time, on such Determination
Date, if at least two such offered rates so appear. If fewer than two such
offered rates appear on the Reuters Screen LIBOR Page as of 11:00 a.m., London,
England time, on such Determination Date, NACC shall request the principal
London, England office of any four major reference banks in the London interbank
market selected by NACC to provide such bank's offered quotation (expressed as a
percentage per annum) to prime banks in the London interbank market for deposits
in U.S. dollars for a one-month period as of 11:00 a.m., London, England time,
on such Determination Date for amounts approximately equal to the Preferred
Amount. If at least two such offered quotations are so provided, LIBOR shall be
the arithmetic mean of such quotations. If fewer than two such quotations are so
provided, the Preferred Shareholder shall request any three major banks in New
York City selected by the Preferred Shareholder to
-6-
152
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
dollars to leading European banks for a one month period as of approximately
11:00 a.m., New York City time on the applicable Determination Date for amounts
approximately equal to the Preferred Amount. If at least two such rates are so
provided, LIBOR shall be the arithmetic mean of such rates. If fewer than two
rates are so provided, then LIBOR for the applicable Yield Accrual Period shall
be LIBOR that was in effect for the next preceding Yield Accrual Period. LIBOR
shall be determined in accordance with this section by the Preferred Shareholder
or its agent.
"Liquidation Event" means: (i) any sale, transfer or other disposition
or liquidation of any Facility or any portion thereof (including a foreclosure
sale); (ii) any casualty to any Facility or any portion thereof; (iii) any
condemnation of any Facility or any portion thereof; or (iv) any refinancing of
any Facility or the Loan.
"Liquidation Proceeds" means, with respect to any Liquidation Event,
all amounts paid to or received by or on behalf of the Company on or after the
Admittance Date in connection with such Liquidation Event, including, without
limitation, proceeds of any sale, refinancing or other disposition or
liquidation, the amount of any award or payment in connection with any
condemnation or taking by eminent domain, and the amount of any insurance
proceeds paid in connection with any casualty loss, as applicable, other than,
in the case of a casualty loss or condemnation award, amounts required by the
terms of the Loan Documents to be applied to the restoration or repair of any
Facility or to repayment of the Loan.
"Monthly Preferred Yield Amount" means, with respect to each
Distribution Date, the sum of the Daily Preferred Yield Amounts for each day in
the related Yield Accrual Period.
"Monthly Redemption Amount" means, with respect to each Yield Accrual
Period, an amount equal to:
(i) Except as provided in clause (ii) below, the product of
(A) 75% and (B) the Excess Cash Flow for such period; or
(ii) After the occurrence and during the continuance of any
Breach Period, the product of (A) 100% and (B) the Excess Cash Flow for such
period.
"Net Liquidation Proceeds" means all Liquidation Proceeds less: (i) in
the case of a sale other than a foreclosure sale under the Loan, such reasonable
and customary costs and expenses of sale (including brokerage commissions) as
shall be approved by the Preferred Shareholder; (ii) in the case of a
foreclosure sale, such costs and expenses incurred by the Lender under the Loan
Documents as the Lender shall be entitled to receive reimbursement for under the
terms of the Loan Documents or under applicable law; (iii) in the case of a
casualty loss or condemnation, such costs and expenses of collection of the
related insurance proceeds or condemnation award as shall be approved by the
Lender, or if the Loan has been paid in
-7-
153
full, by the Preferred Shareholder in its sole discretion; and (iv) in the case
of a refinancing of the Loan, or any Facility, such costs and expenses of such
refinancing as shall be approved by the Preferred Shareholder.
"Net Liquidation Proceeds After Debt Service" means, with respect to
any Liquidation Event, the Net Liquidation Proceeds with respect thereto other
than any portion thereof applied to the payment of the Loan under the terms of
the Loan Documents.
"Nonpayment Breach" means the failure of the Company to pay, on any
Distribution Date, the minimum amount necessary to amortize the Class B Amount
on a straight line basis over a sixty (60) month period, together with interest
thereon at the Preferred Rate.
"Officers" means the duly appointed officers of the Company, appointed
pursuant to the Articles.
"Other Shareholders" has the meaning set forth in the recitals hereof.
"Preferred Amount" at any date means the sum of: (i) the sum of all
Monthly Preferred Yield Amounts for all Distribution Dates on or prior to such
date that have not previously been paid; (ii) the sum of all Daily Preferred
Yield Amounts for each day occurring in the period from the last Distribution
Date on or prior to such date (or if no Distribution Date has yet occurred, from
the Admittance Date) to such date; and (iii) the Preferred Capital Amount.
"Preferred Capital Amount" means the Initial Preferred Capital Amount
less all distributions made to the Preferred Shareholder in redemption of the
Class B Preferred Shares pursuant hereto, plus any additional contributions of
capital made by the Preferred Shareholder.
"Preferred Cash Collateral Account" means the account established
pursuant to the Preferred Cash Management Agreement.
"Preferred Cash Management Agreement" means a Preferred Cash Management
Agreement to be entered into by the Company, Lender and the Cash Collateral
Account Bank, the material terms of which are described in Exhibit F.
"Preferred Rate" means: (i) at any time when a Breach has occurred and
is continuing or during a Breach Period, the Adjusted Preferred Rate and (ii) at
any other time, a per annum rate equal to LIBOR plus five hundred (500) basis
points adjusted on the first day of each Yield Accrual Period. Each
determination of the Preferred Rate by the Preferred Shareholder pursuant to the
provisions of this Article shall be binding on the Company, absent manifest
error.
-8-
154
"Preferred Shareholder" means NACC or its successors, assigns,
designees or transferees.
"Secretary" means the secretary of the Company, as appointed in
accordance with the Articles.
"Shareholders" means the holders of the Shares.
"Shares" means Class A Shares and Class B Shares, collectively.
"Yield Accrual Period" means: (i) with respect to the first
Distribution Date occurring after the Admittance Date, the period commencing on
the Admittance Date and ending on the tenth (10th) day of the month in which
such Distribution Date occurs; and (ii) in the case of each subsequent
Distribution Date, the period from and including the eleventh (11th) day of the
month immediately preceding the month in which such Distribution Date occurs up
to and including the tenth (10th) day of the month in which such Distribution
Date occurs.
-9-
155
EXHIBIT E
The documentation evidencing Lender's right to be a Preferred
Shareholder in the Company in accordance with Section 8.32(c)(ii) of the Loan
Agreement shall be based on the termsheet for the Amended and Restated Articles
of Incorporation of the Company (the "Articles") attached to the Loan Agreement
as Exhibit D and the termsheet for the Preferred Cash Management Agreement
attached to the Loan Agreement as Exhibit F, with such changes as Lender shall
require in Lender's sole and absolute discretion provided, however that
notwithstanding anything to the contrary set forth herein, nothing contained in
such documentation shall change the economic provisions establishing (x) the
Preferred Rate and Adjusted Preferred Rate set forth in this Exhibit, (y) the
methodology for calculating the Initial Capital Amount set forth in this Exhibit
or Section 8.32 of the Loan Agreement or (z) the distribution priorities and
amounts set forth in this Exhibit. These changes may include, but shall not be
limited to, the following (conformed if appropriate for a limited partnership
agreement or limited liability company agreement):
1. The Articles shall be amended to add an additional class of Shares
(the "Class C Shares") to reflect the preferred shares of the Company to be
received by the Preferred Shareholder described in Section 8.32(c)(ii) of the
Loan Agreement, which Class C Shares shall be senior to the Class A Shares and
junior to the Class B Shares (except as provided herein).
2. The Articles shall be amended and restated (in a manner satisfactory
to Lender in Lender's sole discretion) to reflect (i) the creation of Class C
Shares, and (ii) the receipt by Lender of Class A Shares.
3. The "Preferred Rate" with respect to the Class C Shares (provided
that a Breach has not occurred and is continuing) shall be a per annum rate
equal to LIBOR (as defined in the Articles) plus seven hundred (700) basis
points adjusted on the first day of each Yield Accrual Period.
4. The "Adjusted Preferred Rate" with respect to the Class C Shares
shall mean the lesser of: (i) a rate per annum adjusted on the first day of each
Yield Accrual Period) equal to LIBOR plus nine hundred (900) basis points and
(ii) the maximum rate permitted by applicable law.
5. The Company shall pay dividends in the following priority:
(i) First, to the Preferred Shareholder, all Monthly Preferred Yield
due with respect to the Class B Shares (or portions thereof) for prior
Distribution Dates that have not previously been paid (in the order of the
Distribution Dates to which such amounts relate, amounts with respect to the
earliest Distribution Dates being paid first) plus additional yield thereon at
the Adjusted Preferred Rate accruing from the Distribution Date on which the
156
unpaid Monthly Preferred Yield Amount would have been distributed had there been
funds available to make such distribution in the Preferred Cash Collateral
Account;
(ii) Second, to the Preferred Shareholder, the Monthly
Preferred Yield Amount due with respect to Class B Shares for the current
Distribution Date;
(iii) Third, to the Preferred Shareholder, all Monthly
Preferred Yield Amounts due with respect to the Class C Shares (or portions
thereof) for prior Distribution Dates that have not previously been paid (in the
order of the Distribution Dates to which such amounts relate, amounts with
respect to the earliest Distribution Dates being paid first) plus additional
yield thereon at the relevant Adjusted Preferred Rate accruing from the
Distribution Date on which the unpaid Monthly Preferred Yield Amount would have
been distributed had there been funds available to make such distribution in the
Preferred Cash Collateral Account;
(iv) Fourth, to the Preferred Shareholder, the Monthly
Preferred Yield Amount due with respect to Class C Shares for the current
Distribution Date;
(v) Fifth, to the Preferred Shareholder, all Monthly
Redemption Amounts due with respect to Class C Shares (or portions thereof) for
prior Distribution Dates that have not previously been paid (in the order of the
Distribution Dates to which such amounts relate, amounts with respect to the
earliest Distribution Dates being paid first);
(vi) Sixth, to the Preferred Shareholder, the Monthly
Redemption Amount with respect to the Class C Shares for the current
Distribution Date;
(vii) Seventh, to the Preferred Shareholder, all Monthly
Redemption Amounts due with respect to Class B Shares (or portions thereof) for
prior Distribution Dates that have not previously been paid (in the order of the
Distribution Dates to which such amounts relate, amounts with respect to the
earliest Distribution Dates being paid first);
(viii) Eighth, to the Preferred Shareholder, the Monthly
Redemption Amount with respect to the Class B Shares for the current
Distribution Date; and
(ix) Ninth to the Other Shareholders (including, without
limitation to Preferred Shareholder), in accordance with the number of Class A
Shares owned by each of the Other Shareholders.
6. The Liquidation Event Distribution provisions will be amended to
provide for the redemption of the Class C Shares at their par value, after the
redemption of the Class B Shares but prior to any distribution to the Other
Shareholders.
7. The "Monthly Redemption Amount" with respect to Class C Shares shall
be the product of (A) 100% and (B) the Excess Cash Flow for such period.
-2-
157
8. Upon any distribution by the Company of the Monthly Redemption
Amount with respect to Class C Shares, or any other amounts in redemption of
Class C Shares, Class C Shares having a par value equal to such redemption
amount shall be redeemed and otherwise cancelled.
9. At the time Lender receives its Class C Shares, Lender also shall
receive equity options ("Warrants")in the Company, granting Lender the right to
receive Class A Shares in the Company (without payment of additional
consideration) equal to the lesser of (a) eighty percent (80%) of the total
equity in the Company and (b) a percentage of the then outstanding Class A
Shares in the Company, such percentage to be derived by (i) dividing the Class C
Amount by the sum of the Equity Value of the Company and the Class C Amount, and
(ii) multiplying the result by eighty percent (80%). In no event shall the Class
A Shares owned by the Lender be less than thirty-five percent (35%) of the total
equity in the Company. As used herein, the "Equity Value of the Company" shall
be calculated by multiplying ten percent (10%) by the underwriting net operating
income of the Facilities, based on the Underwriting NOI Criteria calculated by
Lender in Lender's reasonable discretion for the preceding twelve (12) calendar
months (for which Lender has been provided the financial information required by
Section 5.1(o) of the Loan Agreement) or such other methodology as is
satisfactory to Lender in its reasonable discretion, of the Property and
subtracting therefrom the sum of (i) the then outstanding Principal Indebtedness
together with any other amounts due on the Loan, (ii) the Class B Amount and
(iii) the Class C Amount. Notwithstanding anything to the contrary set forth
herein, in no event shall the Equity Value of the Company be less than zero.
10. Whenever distributions, including without limitation, liquidation
distributions, are made to any Class A Shares, Lender shall receive a
distribution equal to Lender's percentage ownership of Class A Shares in the
Company.
11. As the holder of its respective percentage of Class A Shares,
Lender may obtain such additional control rights as Lender requires in Lender's
reasonable discretion.
12. The Preferred Cash Management Agreement shall be modified (in
Lender's reasonable discretion) to provide for payment to Lender in respect of
its Class C and Class A Shares.
13. All capitalized terms not otherwise defined herein shall have the
meanings ascribed on Exhibit D or the Loan Agreement as applicable.
-3-
158
EXHIBIT F
Lender and the Company will enter into a Preferred Cash
Management Agreement in form and substance satisfactory to Lender in its sole
discretion, which will contain, inter alia, the following terms:
1. The Preferred Cash Collateral Account Bank shall maintain the
Preferred Cash Collateral Account, and shall maintain on a ledger-entry basis
the following sub-accounts thereof:
(i) the Company Sub-Account; and
(ii) the Preferred Disbursement Sub-Account.
2. The Preferred Cash Collateral Account Bank shall deposit into the
Preferred Cash Collateral Account the distributions (the "Company
Distributions") received from the Cash Collateral Account Bank (as defined in
the Loan Agreement) for deposit into the Preferred Cash Collateral Account.
3. During each Collection Period (as defined in the Loan Agreement) in
which Lender is an equity owner in the Company, Lender shall direct the
Preferred Cash Collateral Account Bank to disburse amounts from the Preferred
Cash Collateral Account in the following order and priority:
(a) First, to the Preferred Disbursement Sub-Account, an
amount equal to all amounts due the Preferred Shareholder in respect of its
Class B Shares and Class C Shares (if any), in the order and priority set forth
in the Articles;
(b) Second, to the Preferred Disbursement Sub-Account, an
amount equal to all amounts due Preferred Shareholder (if any) in respect of its
Class A Shares pursuant to the Articles;
(c) Third to the Company Sub-Account, any remaining funds.
4. Amounts in the Preferred Disbursement Sub-Account will be disbursed
to Preferred Shareholder and amounts in the Company Sub-Account will be
disbursed to the Company.
5. The Company will pay the banking fees and expenses of the Preferred
Cash Collateral Account Bank.
6. The Preferred Cash Collateral Account shall be an Eligible Account
(as defined in the Loan Agreement).
159
7. In the event that a Liquidation Event occurs, the Company shall
deposit into the Preferred Cash Collateral Account any Net Liquidation Proceeds
After Debt Service to be applied in accordance with the Articles.
8. All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them on Exhibit D.
-2-
160
EXHIBIT G
UNDERWRITING NOI
At the Stabilization Date, Lender shall determine the
Adjusted Net Operating Income of the Facilities (as determined in accordance
with the terms of this Exhibit) on a trailing 12-month basis (based on the
consecutive 12-month period ending in the month immediately preceding the
Stabilization Date).
Adjusted Net Operating Income will be calculated
based on the revenues based on the trailing twelve (12) month period subject to
adjustments for:
(a) all Operating Expenses, including without
limitation, a management fee equal to the
greater of actual management fees or five
percent (5.0%) of Gross Revenue (provided,
however, in no event shall the annual base
management fees included in this clause (a)
include any management expenses, such as,
but not limited to, accounting expenses,
marketing costs, regional and corporate
personnel expenses and general corporate
overhead, to the extent such expenses are
actually reflected in the Net Operating
Income);
(b) a reserve for capital expenditures and
capital replacements equal to at least $250
per bed (or such greater amount as shall be
indicated in the independent engineering
reports);
(c) an adjustment for a vacancy allowance equal
to the greater of actual vacancy or five
percent (5%);
(d) reserves for Basic Carrying Costs and
Capital Improvement Costs;
(e) verification of all sources of other income
to determine whether such income is
recurring; and
(f) any other factors or matters that may have
an impact on the Adjusted Net Operating
Income as reasonably determined by Lender.
The expenses will be based on the trailing twelve
(12) month period preceding the Stabilization Date as adjusted for any items
that are non-recurring or not supported by historical statements and for
anticipated increases.
161
In determining Adjusted Net Operating Income, all pro
forma adjustments to revenue and expenses shall be approved by Lender in
Lender's reasonable discretion and shall be subject to Lender's full due
diligence.
The above underwriting assumes that there is no
material adverse change anticipated in the operations of any Facility or in the
Adjusted Net Operating Income of any Facility from the Closing Date to and
including the Stabilization Date.
Other adjustments as determined by Lender in its
discretion consistent with its due diligence findings and prevailing market
conditions.
All capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Agreement.
-2-
