AMENDED AND RESTATED LOAN AGREEMENT
Dated as of June 8, 1995
by and among
FORUM INVESTMENTS I, L.L.C.
as Borrower,
NOMURA ASSET CAPITAL CORPORATION
as Lender
and
MIDLAND LOAN SERVICES, L.P.
as Custodian
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TABLE OF CONTENTS
-----------------
Page
ARTICLE I CERTAIN DEFINITIONS 2
Section 1.1. Definitions 2
ARTICLE II GENERAL TERMS 33
Section 2.1. Amount of the Loan;
Amounts of Advances; Pools 33
Section 2.2. Use of Proceeds 36
Section 2.3. Security for the Loan 36
Section 2.4. Borrower's Notes 36
Section 2.5. Principal and Interest 36
Section 2.6. Voluntary Prepayment 37
Section 2.7. Mandatory Prepayment 38
Section 2.8. Application of Payments 40
Section 2.9. Method and Place of Payment 40
Section 2.10. Taxes 40
Section 2.11. Release of Collateral 40
Section 2.12. Central Cash Management 41
Section 2.13. Security Agreement 50
Section 2.14. Supplemental Mortgage
Affidavits 55
Section 2.15. Securitization 55
Section 2.16. Refinancing 58
Section 2.17 Interest Rate Management. 59
ARTICLE III CONDITIONS PRECEDENT 60
Section 3.1. Conditions Precedent to
Effectiveness 60
Section 3.2. Execution and Delivery of
Agreement 61
Section 3.3. Conditions Precedent to
Disbursement of an Advance 62
Section 3.4. Acceptance of Borrowings 68
Section 3.5. Form of Loan Documents and
Related Matters 68
Section 3.6. Conversion of Collateral Loan
to an Individual Property 68
ARTICLE IV REPRESENTATIONS AND WARRANTIES 69
Section 4.1. Closing Date Borrower
Representations 69
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Section 4.2. Advance Closing Date
Borrower Representations 74
Section 4.3. Survival of Representations 84
ARTICLE V AFFIRMATIVE COVENANTS 85
Section 5.1. Borrower Covenants 85
ARTICLE VI NEGATIVE COVENANTS 99
Section 6.1. Borrower Negative Covenants 99
ARTICLE VII DEFAULTS 103
Section 7.1. Event of Default 103
Section 7.2. Remedies 106
Section 7.3. Remedies Cumulative 107
ARTICLE VIII MISCELLANEOUS 108
Section 8.1. Survival 108
Section 8.2. Lender's Discretion 108
Section 8.3. Governing Law 109
Section 8.4. Modification, Waiver in
Writing 110
Section 8.5. Delay Not a Waiver 110
Section 8.6. Notices 110
Section 8.7. Trial By Jury 111
Section 8.8. Headings 111
Section 8.9. Assignment 111
Section 8.10. Severability 112
Section 8.11. Preferences 112
Section 8.12. Waiver of Notice 112
Section 8.13. Remedies of Borrower 113
Section 8.14. Exculpation 113
Section 8.15. Exhibits Incorporated 115
Section 8.16. Offsets, Counterclaims and
Defenses 115
Section 8.17. No Joint Venture or
Partnership 115
Section 8.18. Waiver of Marshalling of
Assets Defense 115
Section 8.19. Waiver of Counterclaim 116
Section 8.20. Conflict; Construction of
Documents 116
Section 8.21. Brokers and Financial Advisors 116
Section 8.22. Counterparts 116
Section 8.23. Estoppel Certificates 116
Section 8.24. Payment of Expenses 117
Section 8.25. Bankruptcy Waiver 118
Section 8.26. Indemnification 118
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Exhibits
A - Assignment of Leases and Rents (Form)
B - Collateral Assignment of Beneficial Interest in
Mortgage and Other Documents (Form)
C - Environmental Guaranty and Indemnity Agreement
(Form)
D - Management Agreement (Form)
E - Manager's Consent and Subordination of Management
Agreement (Form)
F - Mortgage, Assignment of Rents, Security Agreement
and Fixture Filing (Form)
G - Promissory Note (Form)
H - Pledge and Security Agreement (Form)
I - Letter of Instructions and Acknowledgement (Form)
J - Required Debt Service Payment Certificate (Form)
K - Cash Collateral Account Agreement (Form)
L - True Sale/Nonconsolidation Opinion of Jones, Day,
Reavis & Pogue (Form)
M - Refinancing Terms
N - Closing Date Opinion of Jones, Day, Reavis & Pogue
(Form)
O - Intentionally Deleted
P - Advance Closing Date Financing Statements
Q - Estoppel Certificate (Form)
R - Compliance Certificate (Form)
S - Advance Closing Date Opinion of Jones, Day, Reavis
& Pogue (Form)
T - Intentionally Deleted
U - Opinion of Real Estate Counsel (Form)
V - Advance Closing Date Lien Search Reports
W - Content of Quarterly Financial Information (Form)
X - Officer's Certificate (Form)
Y - Prohibited Transferees
Z - Collateral Loan Guarantee Agreement (Form)
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, made as of
June 8, 1995, is by and among NOMURA ASSET CAPITAL CORPORATION, a
Delaware corporation, having an address at 2 World Financial
Center, Building B, New York, New York 10281-1198 ("Lender"),
FORUM INVESTMENTS I, L.L.C., a Delaware limited liability
company, having an address at 11320 Random Hills Road, Suite 400,
Fairfax, Virginia 22030 ("Borrower") and MIDLAND LOAN SERVICES,
L.P., a Missouri limited partnership, having an address at 2001
Shawnee Mission Parkway, Shawnee Mission, Kansas 66205.
RECITALS
WHEREAS, FGI Financing II Corporation, as borrower
("FFII"), Lender, as lender, and Midland Loan Services, L.P., as
custodian, are parties to that certain Loan Agreement dated as of
September 15, 1994 (the "Original Agreement");
WHEREAS, pursuant to an Assignment and Amendment to
Loan Agreement dated as of January 26, 1995, FFII assigned its
rights and obligations under the Original Agreement to Borrower
and the Original Agreement was amended in certain respects;
WHEREAS, Borrower has requested that Lender amend and
restate the Original Agreement in order, among other things, to
provide for a series of loans (each, an "Advance"; collectively,
the "Loan") from Lender in an aggregate amount of up to
$100,000,000 (the "Loan Amount") to finance (i) the acquisition,
rehabilitation and/or expansion by Borrower of properties used as
independent living facilities, assisted living facilities and/or
congregate care facilities and (ii) the acquisition of loans
secured by first mortgages on properties used as independent
living facilities, assisted living facilities and/or congregate
care facilities ("Collateral Loans");
WHEREAS, Lender is unwilling to make the Loan unless
Borrower joins in the execution and delivery of this Agreement
which shall establish the terms and conditions of the Loan and of
each Advance;
WHEREAS, Borrower and Lender contemplate that Lender's
interest in and to the Loan, or portions thereof, may be assigned
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by Lender to Trustee for the benefit of Certificateholders in
connection with one or more Securitizations (all of the foregoing
capitalized terms as hereinafter defined);
WHEREAS, Borrower has agreed to establish certain
accounts and to grant to Custodian (as hereinafter defined),
initially on behalf of Lender and after a Securitization Closing
Date (as hereinafter defined) on behalf of the Certificate
holders, a security interest therein upon the terms and condi
tions of the security agreement set forth in Section 2.13; and
WHEREAS, Midland Loan Services, L.P., in its capacity
as Custodian, is willing to join in the security agreement set
forth in Section 2.13 by execution and delivery of this Agreement
in that capacity;
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 agree that
the Original Agreement is hereby amended and restated in its
entirety as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
Section 1.1. Definitions. For all purposes of this
Agreement:
(1) 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;
(2) all accounting terms have the meanings assigned to
them in accordance with generally accepted accounting principles
in effect on the date hereof;
(3) 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
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(4) the following terms have the following meanings:
"Account Collateral" has the meaning provided in
Section 2.13(a).
"Accounts" means any of Borrower's rights to payment
(i) for goods sold or leased or for services rendered arising
from the operation of the Facilities or (ii) from the Collateral
Loans, and not evidenced by an Instrument, including, without
limitation, all accounts and accounts receivable arising from the
operation of the Facilities or from the Collateral Loans.
Accounts shall include the proceeds thereof (whether cash or non-
cash, movable or immovable, tangible or intangible) received from
the sale, exchange, transfer, collection or other disposition or
substitution thereof.
"Adjusted Net Cash Flow" means (a) with respect to a
Facility, for any period (and calculated either for a Facility or
the Facilities) the Net Cash Flow for such period reduced by (i)
an allowance for Capital Improvement Costs equal to (A) for all
Facilities that are not newly constructed or remodelled, the
greater of (x) $300 per bed or living unit per annum and (y) the
amount identified in the Engineering Report(s) as the annual
amount needed to be reserved for ongoing capital expenditures or
(B) for all Facilities that are newly constructed or remodelled,
$250 per bed or living unit per annum, (ii) annual management
fees equal to the greater of (x) actual management fees paid
pursuant to the Management Agreements and (y) 5% of Gross
Revenue, to the extent that such costs have not been included in
Operating Expenses, and (iii) an amount necessary to reflect a 5%
vacancy factor if the actual vacancy factor is less than 5% or
(b) with respect to a Collateral Loan, for any period (calculated
either for a Collateral Loan or the Collateral Loans) the Net
Cash Flow for such period. For each Facility, the initial
calculation of Adjusted Net Cash Flow and all other calculations
of Adjusted Net Cash Flow shall be made on the bases, and using
the assumptions, agreed upon by Borrower and Lender prior to the
Advance Closing Date for such Facility.
"Advance" has the meaning provided in the Recitals
hereto.
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"Advance Closing Date" means each date on which an
Advance is made hereunder with respect to a Facility or a
Collateral Loan pursuant to Section 3.3.
"Advance Interest Accrual Period" means for each
Advance, the period from the Advance Closing Date for such
Advance to and including the next Payment Date.
"Advance Interest Determination Date" means for each
Advance, the date which is two Business Days prior to the Advance
Closing Date for such Advance.
"Advisor" has the meaning provided in Section 8.21.
"Affiliate" of any specified Person means any other
Person controlling or controlled by or under common control with
such specified Person. For the purposes of this definition,
"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 "controlling" and "controlled" have the
meanings correlative to the foregoing.
"Affiliated Borrower" means an entity which is an
Affiliate of FGI but in which FGI and its subsidiaries do not own
more than a 95% interest. If there is more than one Affiliated
Borrower, at least 5% of the interests in each Affiliated
Borrower must be held by or controlled by Persons which do not
hold or control interests in the other Affiliated Borrowers.
"Agreement" means this Amended and Restated Loan
Agreement, as the same may from time to time hereafter be
modified, supplemented or amended.
"Allocated Loan Amount" means the portion of the Loan
Amount allocated to each Facility or Collateral Loan (which
initially shall be the amount of all Advances with respect to
such Facility or Collateral Loan), 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
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a prepayment of principal pursuant to Section 2.7(c) or Section
2.7(d), 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 to the Principal
Indebtedness resulting in the recalculation of the Allocated Loan
Amount. Upon each adjustment in the amount of Principal
Indebtedness due to a prepayment of principal pursuant to Section
2.7(g), the Allocated Loan Amount of the Collateral Loan for
which such payment was made shall be reduced by such amount.
When the Principal Indebtedness is reduced as a result of (x)
Lender's receipt of Net Proceeds or Loss Proceeds with respect to
a Taking or casualty affecting 100% of a Facility or (y) Lender's
receipt of Net Proceeds with respect to a Collateral Loan, the
Allocated Loan Amount for the Individual Property or Collateral
Loan with respect to which the Net Proceeds or Loss Proceeds, as
the case may be, were received shall be reduced to zero (such
Allocated Loan Amount being referred to as the "Withdrawn
Allocated Amount"), and each other Allocated Loan Amount shall
(i) if the Withdrawn Allocated Amount exceeds the Net Proceeds or
Loss 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
aggregate of all of the Allocated Loan Amounts other than the
Withdrawn Allocated Amount or (ii) if the Net Proceeds or Loss
Proceeds are greater than or equal to the Withdrawn Allocated
Amount, remain unadjusted.
"Allonge" means an allonge made by Borrower to the
promissory note(s) of the related obligor of a Collateral Loan,
collaterally endorsing such note(s) to Lender without recourse.
"Appraisals" means any appraisal with respect to a
Facility delivered to Lender at Lender's request in connection
with the first Advance for such Facility and any more recent
appraisal of any Facility delivered to Lender, each made by an
Appraiser at the request of Borrower or Lender, as any of the
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same may be updated by recertification from time to time by the
Appraiser performing such Appraisal.
"Appraised Value" of any Facility means the fair market
value of such Facility as set forth in its Appraisal.
"Appraiser" means any Independent appraiser selected by
Lender (and reasonably satisfactory to Borrower) who is a member
of the American Institute of Real Estate Appraisers with a
national practice and who has at least ten years experience with
real estate of the same type and in the geographic area of the
Facility to be appraised.
"Assignment of Leases" means, with respect to a
Facility, a first priority Assignment of Leases and Rents, in the
form attached hereto as Exhibit A, dated as of the applicable
Advance Closing Date, from Borrower, as assignor, to Lender, as
assignee, assigning to Lender Borrower's interest in and to the
Leases and the Rents with respect to such Facility as collateral
security for the Loan, as the same may thereafter from time to
time be supplemented, amended, modified or extended by one or
more agreements supplemental thereto, and "Assignments of Leases"
means all such instruments collectively.
"Bank" means Boatmen's First National Bank of Kansas
City or any successor bank hereafter selected by Lender in
accordance with the terms hereof.
"Basic Carrying Costs" means the following costs with
respect to the Mortgaged Property: (i) real property taxes and
assessments applicable to the Facilities and (ii) insurance
premiums for policies of insurance required to be maintained by
Borrower pursuant to this Agreement or the other Loan Documents.
"Basic Carrying Costs Monthly Installment" means
Lender's good faith estimate of 1/12th of the annual amount of
Basic Carrying Costs. Should the Basic Carrying Costs for the
current Fiscal Year or payment period not be ascertainable at the
time a monthly deposit is required to be made, the Basic Carrying
Costs Monthly Installment shall be Lender's good faith estimate
based on 1/12th of the aggregate Basic Carrying Costs for the
prior Fiscal Year or payment period with reasonable adjustments
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for additional Facilities and otherwise. As soon as the Basic
Carrying Costs are fixed for the 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.
"Basic Carrying Costs Sub-Account" means the Sub-
Account of the Cash Collateral Account established and maintained
pursuant to Section 2.12 relating to the payment of Basic
Carrying Costs.
"Borrower" has the meaning provided in the first
paragraph of this Agreement.
"Breakage Amount" means the product of (i) the amount
of principal repaid, (ii) the Modified Duration (determined as of
the date of repayment) and (iii) the Rate Difference.
"Breakage Date" means each date on which any principal
amount of the Loan becomes due and payable from Borrower,
including, without limitation, the Maturity Date and each date,
if any, on which any principal amount of the Loan (whether
optional or mandatory) becomes due and payable or at Lender's
option, upon an Event of Default, all without regard to whether
such principal is actually paid on such date or thereafter.
"Business Day" means any day other than (i) a Saturday
or a Sunday, and (ii) a day on which federally insured depository
institutions in (x) New York, (y) a state in which Servicer or
any Collection Account Bank is located or (z) the state in which
the Corporate Trust Office is located are authorized or obligated
by law, governmental decree or executive order to be closed.
When used with respect to the determination of LIBOR, "Business
Day" shall mean a day on which banks are open for dealing in
foreign currency and exchange in London.
"Capital Advance" has the meaning provided in
Section 2.1(a) and shall constitute an Advance for purposes of
this Agreement.
"Capital Advance Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant
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to Section 2.12 to hold the proceeds of a Capital Advance and
Borrower's related funding.
"Capital Improvement Costs" means costs incurred by
Borrower in connection with capital improvements to the
Facilities.
"Capital Reserve Amount" means, at any time, the
aggregate amount of the annual replacement reserves for capital
expenditures for each Facility which may be increased by Borrower
but may not be less than an amount equal to (A) for all
Facilities that are not newly constructed or remodelled, the
greater of (i) $300 per bed or living unit per annum and (ii) the
amount identified in the Engineering Report for such Facility as
the annual amount needed to be reserved for on-going capital
expenditures or (B) for all Facilities that are newly constructed
or remodelled, $250 per bed or living unit per annum.
"Capital Reserve Monthly Installment" means an amount
equal to 1/12th of the Capital Reserve Amount.
"Capital Reserve Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant
to Section 2.12 relating to the payment of Capital Improvement
Costs.
"Cash Collateral Account" has the meaning provided in
Section 2.12(b).
"CC Account Agreement" has the meaning provided in
Section 2.13(c).
"Certificate" has the meaning set forth in a Pooling
and Servicing Agreement.
"Certificateholder" means the Person in whose name a
Certificate is registered pursuant to a Pooling and Servicing
Agreement.
"Closing Date" means the date on which this Agreement
shall become effective pursuant to Section 3.1.
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"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, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or
final form.
"Collateral" means, collectively, each Collateral Loan,
the Land, Improvements, Equipment, Rents, Accounts (including
rights to payment from patients or private insurers arising from
the operation of each Facility, and, to the extent permitted by
applicable law, all rights to payment from Medicare and Medicaid
programs or similar state or federal programs, boards, bureaus or
agencies), General Intangibles, Instruments, Inventory, Money and
(to the full extent assignable) Permits and all Proceeds, 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 as security for the Loan.
"Collateral Assignment" means the Collateral Assignment
of Beneficial Interest in Mortgage and Other Documents, in the
form attached hereto as Exhibit B, dated as of the related
Advance Closing Date, from Borrower to Lender, as the same may
thereafter from time to time be supplemented, amended or
modified, and "Collateral Assignments" means all such instruments
collectively.
"Collateral Loans" has the meaning provided in the
Recitals hereto but shall exclude any Collateral Loans released
pursuant to Section 2.11.
"Collateral Loan Guarantee" means the Collateral Loan
Guarantee Agreement dated as of the related Advance Closing Date
from FGI to Lender in the form of Exhibit Z hereto, as the same
may be amended from time to time, and "Collateral Loan
Guarantees" means all such instruments collectively.
"Collateral Loan Property" means the real property and
any improvements thereon securing a Collateral Loan.
"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
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Leases, the Pledge and Security Agreement, the Collateral
Assignments, Collateral Loan Guarantees, any UCC-1 financing
statements filed in connection with any of the foregoing, and the
UCC Assignments, as same may be amended or modified from time to
time.
"Collection Account" has the meaning provided in
Section 2.12(a).
"Collection Account Bank" means the applicable bank for
each Facility and any successor bank hereafter selected by
Borrower and approved by Lender in accordance with the terms
hereof. Each Collection Account Bank shall be acceptable to
Borrower, Lender and Servicer.
"Condemnation Proceeds" has the meaning provided in
Section 2.12(h).
"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 pri
marily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment
of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of such primary obligation against loss in
respect thereof, except indemnities required by any title
insurance company in connection with the issuance of the Title
Insurance Policies. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determin
able amount of the primary obligation in respect of which such
Contingent Obligation is made (taking into account the non-
recourse or limited recourse nature of such Contingent Obliga
tion, if applicable) or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof
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(assuming Borrower is required to perform thereunder) as deter
mined by Lender in good faith (taking into account the non-
recourse or limited recourse nature of such Contingent
Obligation, if applicable).
"Corporate Trust Office" means the principal office of
the Trustee at which at any particular time its corporate trust
business shall be principally administered.
"Current Month" has the meaning provided in Section
2.12(g).
"Current Rate" means the Forward Rate as of the date
principal is repaid.
"Custodial Account" has the meaning provided in Section
2.12(f)(i).
"Custodian" means Midland Loan Services, L.P. or any
Person appointed by the Trustee as Servicer under the Pooling and
Servicing Agreement or such Person's successor in interest.
"Debt Service" means the principal, if any, and inter
est payments that would be due and payable in accordance with the
Notes during an applicable 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 Cash Flow for the
specified period by the Imputed Debt Service for such period.
All calculations of Debt Service Coverage Ratios shall be made by
Borrower, subject to verification by Lender and Peat Marwick &
Co. or another accounting firm acceptable to Lender (any "Big
Six" accounting firm being deemed acceptable to Lender).
"Debt Service Payment Sub-Account" means the Sub-
Account of the Cash Collateral Account established and maintained
pursuant to Section 2.12 relating to the payment of Debt Service.
"Deed of Trust Trustee" means each of the trustees, if
any, under the Mortgages.
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"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 sum of LIBOR
determined as of the immediately preceding Interest Determination
Date plus the Pricing Spread plus 3%.
"Eligible Account" means an account that is either at a
Collection Account Bank or: (i) an account maintained with a
federal or state chartered depository institution or trust
company, the long-term unsecured debt obligations of which (or,
in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the long-term
unsecured debt obligations of such holding company) are rated by
the Rating Agencies in the highest rating category at the time of
the deposit therein, or, if such depository institution or trust
company (or holding company) does not have a long-term unsecured
debt rating, the short-term unsecured debt obligations of such
depository institution or trust company (or holding company), as
the case may be, are rated by the Rating Agencies as AAA, (ii) a
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. 9.10(b), or (iii) after the
Securitization Closing Date, an account in any other insured
depository institution reasonably acceptable to Servicer and the
Trustee if the maintenance of such account in such institution
will not result in the downgrading or withdrawal of the ratings
then assigned to the Certificates by each Rating Agency.
"Engineer" means any reputable Independent engineer
licensed as such in the applicable state.
"Engineering Reports" means the structural engineering
reports with respect to each Facility and, if requested by
Lender, each Collateral Loan Property prepared by an Engineer and
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delivered to Lender in connection with the first Advance for such
Facility or Collateral Loan Property, if applicable, and any
amendments or supplements thereto delivered to Lender.
"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 or other written communication by
any Person or Governmental Authority alleging or asserting
liability with respect to Borrower or any Facility or Collateral
Loan Property, 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 or resulting from (i) the presence, Use or
Release into the environment of any Hazardous Substance
originating at or from, or otherwise affecting, a Facility or
Collateral Loan Property, (ii) any fact, circumstance, condition
or occurrence forming the basis of any violation, or alleged
violation, of any Environmental Law by Borrower or otherwise
affecting a Facility or Collateral Loan Property or (iii) any
alleged injury or threat of injury to health, safety or the
environment by Borrower or otherwise affecting a Facility or
Collateral Loan Property.
"Environmental Laws" means any and all applicable
federal, state, local and foreign laws, rules or regulations, any
judicial or administrative orders, decrees or judgments there
under, and any permits, approvals, licenses, registrations,
filings and authorizations, in each case as in effect as of the
relevant date, relating to the environment or safety, or the
Release or threatened Release of Hazardous Substances into the
indoor or outdoor environment including, without limitation,
ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata or otherwise relating to the Use of Hazardous
Substances.
"Environmental Reports" means the environmental audit
reports with respect to each Facility or Collateral Loan Property
delivered to Lender in connection with the first Advance for such
Facility or Collateral Loan Property, as applicable, and any
amendments or supplements thereto delivered to Lender.
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"Equipment" means all beds, linen, televisions, carpet
ing, telephones, cash registers, computers, lamps, glassware,
rehabilitation equipment, restaurant and kitchen equipment, and
other machinery and equipment owned by Borrower located on,
attached to or used in connection with the Facilities, provided,
however, that, with respect to any items which are leased and not
owned by Borrower, the Equipment shall include the leasehold
interest only of Borrower together with any options to purchase
any of said items and any additional or greater rights with
respect to such items which Borrower may hereafter acquire.
"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.
"Event of Default" has the meaning set forth in Section
7.1.
"Excess Cash Flow" means all available cash from the
operation of the Facilities after the monthly funding on the Sub-
Accounts pursuant to Section 2.12(g), payment of Debt Service and
Capital Improvement Costs (to the extent not paid from the Sub-
Accounts), payment of Operating Expenses and funding of addi
tional reserves at levels determined by Borrower to be prudent
for working capital, Capital Improvement Costs and other Borrower
costs.
"Exit Fee" means, with respect to a payment or
prepayment of principal (whether at the Maturity Date, as a
E-41
result of acceleration or otherwise) made pursuant to this
Agreement, an amount equal to 3% of such principal payment,
except that no such fee shall be due in connection with
prepayments pursuant to Section 2.7(b).
"Facility" means the Land, the Improvements and the
Equipment (to the extent same shall be deemed to be fixtures)
encumbered by a Related Mortgage and "Facilities" means all Land,
Improvements and Equipment (to the extent same shall be deemed to
be fixtures) covered by the Mortgages. A Collateral Loan which
has been converted to an Individual Property pursuant to Section
3.6 from and after the date of such conversion shall also be
deemed to be a Facility under this Agreement.
"FAI" means Forum Alpha Investments, Inc., a Delaware
corporation and a member of Borrower.
"FBI" means Forum Beta Investments, Inc., a Delaware
corporation and a former member of Borrower.
"FFII" has the meaning provided in the Recitals hereto.
"FGI" means Forum Group, Inc., an Indiana corporation
which, directly or indirectly, is the beneficial owner of all of
the issued and outstanding shares of capital stock of FAI.
"Fiscal Year" means the 12-month period ending on March
31st of each year or such other fiscal year of Borrower as
Borrower may select from time to time with the prior consent of
Lender (which consent shall not be unreasonably withheld).
"Forward Rate" means, as of any date, the quotient
obtained by dividing (i) the difference obtained by subtracting
(a) the product of (1) the number of days from and including such
date to, but excluding, the November 30, 1997 (the "Short
Period") and (2) the yield, as of such date, for the Short
Treasuries from (b) the product of (1) the number of days from
and including such date to, but excluding, the November 30, 2007
(the "Long Period") and (2) the Interpolated Yield as of such
date, by (ii) the difference in days obtained by subtracting the
Short Period from the Long Period.
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"GAAP" means generally accepted accounting principles
in the United States of America as of the date of the applicable
financial report.
"General Intangibles" means all intangible personal
property of Borrower arising out of or directly relating to the
Facilities and the Collateral Loans (other than Accounts, Rents,
Instruments, Inventory, Money and Permits), including, without
limitation, things in action, contract rights, refunds of real
estate taxes and assessments and other rights to payment of
Money.
"Governmental Authority" means any national or federal
government, any state, regional, local or other political subdi
vision thereof with jurisdiction and any Person with jurisdiction
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Gross Revenue" means with respect to a Facility or a
Collateral Loan, the total dollar amount of all income and
receipts whatsoever received by Borrower in the ordinary course
of its business with respect to such Facility or Collateral Loan,
including all Rents, Money and proceeds of any Accounts.
"Group Material Adverse Effect" means a material
adverse effect upon (i) the business or the financial position or
results of operation of Borrower, (ii) the ability of Lender to
collect the Loan or (iii) the value of the Collateral taken as a
whole.
"Guarantor" means FGI, as guarantor under the Indemnity
Agreements and the Collateral Loan Guarantees.
"Hazardous Substance" means, collectively, (i) any
petroleum or petroleum products or waste oils, explosives, radio
active 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 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
E-43
hereafter become defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous mater
ials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants,"
"pollutants" or words of similar import under any Environmental
Law and (iii) any other chemical or any other material or sub
stance, exposure to which is now or hereafter prohibited, limited
or regulated under any Environmental Law.
"Impositions" means all taxes (including, without
limitation, all ad valorem, sales (including those imposed on
lease rentals), use, single business, gross receipts, value
added, intangible transaction privilege, privilege or license or
similar taxes), assessments (including, without limitation, to
the extent not discharged prior to the applicable Advance Closing
Date, all assessments for public improvements or benefits,
whether or not commenced or completed within the term of the
Related Mortgage), ground rents, water, sewer or other rents and
charges, excises, levies, fees (including, without limitation,
license, permit, inspection, authorization and similar fees), and
all other governmental charges, in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of
every character in respect of an Individual Property, including
any Rents and Accounts (including all interest and penalties
thereon), which at any time prior to, during or in respect of the
term hereof may be assessed or imposed on or in respect of or be
a lien upon (i) Borrower (including, without limitation, all
income, franchise, single business or other taxes imposed on
Borrower for the privilege of doing business in the jurisdiction
in which such Individual Property, or any other collateral
delivered or pledged to Lender in connection with the Loan, is
located) or Lender, (ii) an Individual Property, or any other
collateral delivered or pledged to Lender in connection with the
Loan, or any part thereof or any Rents therefrom or any estate,
right, title or interest therein, or (iii) any occupancy,
operation, use or possession of, or sales from, or activity
conducted on, or in connection with such Individual Property or
the leasing or use of such Individual Property or any part
thereof, or the acquisition or financing of the acquisition of
such Individual Property by Borrower. Nothing contained in this
Agreement shall be construed to require Borrower to pay any tax,
assessment, levy or charge imposed on Lender, Servicer or any
E-44
Certificateholder in the nature of a franchise, capital levy,
estate, inheritance, succession, income or net revenue tax.
"Improvements" means all buildings, structures and
improvements of every nature whatsoever situated on the Land on
the applicable Advance Closing Date or thereafter, including, but
not limited to, to the extent of Borrower's interest therein, all
gas and electric fixtures, radiators, heaters, engines and
machinery, boilers, ranges, elevators and motors, plumbing and
heating fixtures, carpeting and other floor coverings, water
heaters, awnings and storm sashes, and cleaning apparatus which
are or shall be attached to the Land or said buildings,
structures or improvements.
"Imputed Debt Service" means for any period (and
calculated either (i) for a Facility or a Collateral Loan based
on its Allocated Loan Amount or (ii) for the Facilities and the
Collateral Loans based on the Principal Indebtedness then
outstanding) the aggregate amount of principal and interest
payments that would be due and payable during the applicable
period calculated using the greater of (x) interest on portions
of the Principal Indebtedness at the applicable Forward Rates
plus 4.25% (y) a debt constant of 10% per annum.
"Indebtedness" means the Principal Indebtedness,
together with all other obligations and liabilities due or to
become due to Lender pursuant hereto, under the Notes 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 Notes or any of the other Loan Documents.
"Indemnity Agreement" means, with respect to a
Facility, an Environmental Guaranty and Indemnity Agreement, in
the form attached hereto as Exhibit C, dated as of the first
Advance Closing Date for such Facility, from Guarantor to Lender,
and "Indemnity Agreements" means all such instruments
collectively.
"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
or in any Affiliate of Borrower, and (ii) is not connected with
E-45
Borrower or any Affiliate of Borrower as an officer, employee,
promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Individual Property" means that portion of the
Mortgaged Property located at or otherwise pertaining to one of
the Facilities. All of the "Individual Properties" collectively
comprise the Mortgaged Property. A Collateral Loan which has
been converted pursuant to Section 3.6 from and after the date of
such conversion shall also be deemed to be an Individual Property
under this Agreement.
"Initial Capital Requirement" means, with respect to
each Facility, the amount specified in the Engineering Report for
such Facility as being necessary to complete the deferred capital
improvements identified therein.
"Instruments" means all instruments, chattel paper,
documents or other writing obtained by Borrower from or in
connection with (i) the operation of the Facilities or (ii) the
ownership of the Collateral Loans, evidencing a right to the
payment of Money.
"Insurance Proceeds" has the meaning provided in
Section 2.12(h).
"Insurance Requirements" means all material terms of
any insurance policy required pursuant to this Agreement or a
Mortgage and all material regulations and then current standards
applicable to or affecting the applicable Individual Property or
any part thereof or any use or condition thereof, which may, at
any time, be recommended by the Board of Fire Underwriters, if
any, having jurisdiction over such Individual Property, or such
other body exercising similar functions.
"Interpolated Yield" means, as of any Breakage Date,
the percentage (calculated to six decimal places) obtained by
adding (i) the yield of the 10-year Treasury and (ii) the product
of (a) the difference of the yield of the 30-year Treasury and 10-
year Treasury and (b) the ratio of (1) the number of days from
and including the maturity date of the 10-year Treasury to, but
excluding, the maturity date of the Long Treasuries to (2) the
E-46
number of days from and including the maturity date of the 10-
year Treasury to, but excluding, the maturity date of the 30-year
Treasury.
"Interest Accrual Period" means each calendar month
during the term of the Loan, provided, however, that no Interest
Accrual Period shall extend beyond the Maturity Date.
"Interest Determination Date" means, with respect to
any Interest Reset Date, the date which is two Business Days
prior to such Interest Reset Date.
"Interest Reset Date" means the first day of each
calendar month, provided, however, that the first Interest Reset
Date shall be the first Advance Closing Date. Each subsequent
Interest Reset Date during the term of the Loan shall be the
first day of each subsequent calendar month during the term of
the Loan.
"Interim Servicing Agreement" means an Interim
Servicing Agreement entered into by and between Lender and
Custodian with respect to the servicing of the Loan, as the same
may be amended from time to time.
"Inventory" means all inventories of food, beverages
and other comestibles held by Borrower for sale or use at or from
the Facilities, and soap, paper supplies, medical supplies, drugs
(excluding pharmaceuticals requiring a license to distribute or
sell) and all other such goods, wares and merchandise held by
Borrower for sale to or for consumption by guests or patients of
the Facilities and all such other goods returned to or
repossessed by Borrower.
"Land" has the meaning provided in the Mortgages.
"Leases" means all leases, lettings, occupancy
agreements, tenancies and licenses (to the extent assignable) by
Borrower as landlord of a Facility or any part thereof now or
hereafter entered into, and all amendments, extensions, renewals
and guarantees thereof, and all security therefor.
E-47
"Legal Requirements" means all governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees
and injunctions of Governmental Authorities affecting an
applicable Individual Property or Collateral Loan or any part
thereof or the construction, use, alteration or operation
thereof, or any part thereof, enacted and in force as of the
relevant date, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments,
either of record or known to Borrower, at any time in force
affecting such Individual Property or any part thereof,
including, without limitation, any which may (i) require repairs,
modifications or alterations in or to such Individual Property or
Collateral Loan or any part thereof, or (ii) in any way limit the
use and enjoyment thereof.
"Lender" has the meaning provided in the first
paragraph of this Agreement.
"Lender's Title Policy" has the meaning provided in
Section 4.2(DD).
"Letters of Instructions" has the meaning provided in
Section 2.12(b).
"LIBOR" means, with respect to any Interest Reset 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 (as defined below) as of 11:00 a.m., London time, on the
applicable Interest Determination Date for such Interest Reset
Date. If such rate does not appear on Telerate Page 3750 as of
11:00 a.m., London time, on the applicable Interest Determination
Date, LIBOR will 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
LIBO Page (as defined below) as of 11:00 a.m., London time, on
such Interest Determination Date, if at least two such offered
rates so appear. If fewer than two such offered rates appear on
the Reuters Screen LIBO Page as of 11:00 a.m., London time, on
such Interest Determination Date, Lender will request the
principal London office of any four major reference banks in the
London interbank market selected by Lender to provide such bank's
E-48
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 time, on such
Interest Determination Date for amounts of not less than U.S.
$1,000,000. If at least two such offered quotations are so
provided, LIBOR will be the arithmetic mean of such quotations.
If fewer than two such quotations are so provided, Lender will
request any three major banks in New York City selected by Lender
to 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 Interest Determination Date for amounts of not
less than U.S. $1,000,000. If at least two such rates are so
provided, LIBOR will be the arithmetic mean of such rates. If
fewer than two rates are so provided, then LIBOR will be LIBOR in
effect on the preceding Interest Reset Date.
"Lien" means any mortgage, deed of trust, lien
(statutory or other), pledge, hypothecation, assignment, prefer
ence, priority, security interest, or any other encumbrance or
charge on or affecting an Individual Property or Collateral Loan
or any portion thereof or Borrower, or any interest therein,
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 Uniform Commercial Code 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.
"Loan Documents" means this Agreement, the Notes, the
Mortgages, the Assignments of Leases, the Pledge and Security
Agreement, the Indemnity Agreements, the Collateral Assignments,
the Collateral Loan Guarantees, the Allonges and the UCC
Assignments and all other agreements, instruments, certificates
and documents delivered by or on behalf of Borrower or an
Affiliate to evidence or secure the Loan or otherwise in
E-49
satisfaction of the requirements of this Agreement, the Mortgages
or the other documents listed above.
"Locked Rate" means the weighted average of the Forward
Rates for the then-outstanding Loan, which Forward Rates shall
have been determined at the time of the making of each Advance in
accordance with Section 2.17(a).
"Locked Rate Fee" means, for each Advance, a fee of 2%
per annum of the amount of the Advance payable monthly.
"Locked Rate Fee Monthly Installment" means for any
month an amount equal to .1667% of the Principal Indebtedness
outstanding on the first day of the month.
"Locked Rate Fee Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant
to Section 2.12 relating to payment of the Locked Rate Fees.
"Long Treasuries" means a synthetic U.S. Treasury
security maturing on November 30, 2007 with a 6.50% coupon. The
yield of the Long Treasuries is the Interpolated Yield.
"Loss Proceeds" has the meaning provided in Section
2.12(h).
"Management Agreement" means, with respect to a
Facility, the Management Agreement entered into between Manager
and Borrower pertaining to the management of such Facility in the
form attached hereto as Exhibit D or such other form as may be
approved by Lender (which approval shall not be unreasonably
withheld or delayed), and "Management Agreements" means all such
agreements collectively.
"Manager" means FGI, any Affiliate of an Affiliated
Borrower or any other manager approved by Lender (which approval
shall not be unreasonably withheld or delayed), or any permitted
successor or assignee (FGI is deemed to be a permitted successor
or assign), as manager of a Facility or all of the Facilities, as
the case may be.
E-50
"Manager's Subordination" means, with respect to a
Facility, the Manager's Consent and Subordination of Management
Agreement in the form attached hereto as Exhibit E, dated as of
the first Advance Closing Date for such Facility, executed by
Manager, Borrower and Lender, 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, (ii) the ability of Borrower to
perform, or of Lender to enforce, any of the Loan Documents or
(iii) the value of (x) the Collateral taken as a whole, (y) any
Facility or (z) if such material adverse effect is caused by
Borrower, any Collateral Loan.
"Maturity Date" means (i) the date which occurs
eighteen months following the date of the last Advance Closing
Date hereunder, but in no event later than November 30, 1997 or
(ii) such earlier date resulting from acceleration.
"Maximum Amount" means the maximum rate of interest
designated by applicable Legal Requirements.
"Members Agreement" means that certain Members
Agreement of Borrower amended and restated as of May 17, 1995, as
further amended from time to time, subject to the provisions of
this Agreement and the other Loan Documents.
"Modified Duration" means, for any Breakage Date, the
modified duration (calculated to six decimal places) obtained by
subtracting (i) the product of the modified duration for the
Short Treasuries and the ratio of the sum of the bond price and
accrued interest per $1 face value of the Short Treasuries to the
bond price per $1 face value of the Short Treasuries from (ii)
the product of the modified duration for the Long Treasuries and
the ratio of the sum of the bond price and accrued interest per
$1 face value of the Long Treasuries to the bond price per $1
face value of the Long Treasuries. The modified durations are
calculated by Lender using the Government Bond Price/Yield
Calculator on Bloomberg page BC1 in the Index subdirectory (as
evidenced by a copy of such Bloomberg calculation).
E-51
"Money" means all moneys, cash, rights to deposit or
savings accounts or other items of legal tender obtained from or
for use in connection with (i) the operation of the Facilities or
(ii) the ownership of the Collateral Loans (excluding any escrows
or deposits held pursuant to the Collateral Loans until
forfeited).
"Mortgage" means, with respect to a Facility, a first
priority Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing or Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, in the form attached hereto as
Exhibit F, dated as of the first Advance Closing Date for such
Facility, 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 Individual Property as security for
the Loan, as same may thereafter from time to time be supple
mented, amended, modified or extended by one or more agreements
supplemental thereto, but shall exclude any such instrument
released by Lender pursuant to Section 2.11, and "Mortgages"
means all such instruments collectively.
"Mortgaged Property" means, at any time, all the
Individual Properties encumbered by the Mortgages then
outstanding.
"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.
"Net Cash Flow" means for any period (i) with respect
to the Facilities (and calculated either for a Facility or for
the Facilities) the excess, if any, of Operating Income for such
period over Operating Expenses for such period and (ii) with
respect to a Collateral Loan, all Moneys received from the
related obligor of such Collateral Loan less all reasonable
ordinary expenses incurred in connection with the collection of
the Moneys.
"Net Proceeds" means (i) either (x) the purchase price
(at foreclosure or otherwise) actually received by Lender from a
third party purchaser with respect to one or more Individual
E-52
Properties or Collateral Loans as a result of the exercise by
Lender of its rights, powers, privileges and other remedies after
the occurrence of an Event of Default or (y) in the event that
Lender is the purchaser at foreclosure of one or more of such
Individual Properties or Collateral Loans, the fair market value
of such Individual Properties or Collateral Loans, as the case
may be, as determined by Lender in good faith, or, at Borrower's
request and expense, an Appraiser, in either case less (ii) all
reasonable costs and expenses, including, without limitation, all
attorneys' fees and disbursements and any brokerage fees, if
applicable, incurred by Lender in connection with the exercise of
such remedies; provided, however, that such costs and expenses
shall not be deducted to the extent such amounts previously have
been added to the Indebtedness in accordance with the terms of
the Mortgages or applicable law.
"Note" means and refers to, with respect to each
Advance, the promissory note, in the form attached hereto as
Exhibit G, dated the applicable Advance Closing Date, made by
Borrower to Lender pursuant to this Agreement, as such note may
be modified, amended, supplemented, extended or consolidated, and
any note(s) issued in exchange therefor or in replacement
thereof, and "Notes" means all such instruments collectively.
"Officer's Certificate" means a certificate delivered
to Lender by Borrower which is signed by an authorized officer of
Borrower.
"Original Agreement" has the meaning provided in the
recitals hereto.
"Original Closing Date" means September 15, 1994.
"Operating Expenses" means, for any period, all
expenditures by Borrower 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:
(i) expenses in connection with the cleaning, repair
and maintenance of the Facilities (or of a Facility);
E-53
(ii) wages, benefits, payroll taxes, uniforms, insur
ance costs and all other related expenses for employees of
Borrower or any Affiliate engaged in the repair, operation
and maintenance of the Facilities (or of a Facility) and
service to patients;
(iii) any management fees and expenses incurred with
respect to the Facilities (or of a Facility);
(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 (which, in the case of any
policies covering more than one Facility, shall be allocated
among the Facilities pro rata in proportion to the insured
value of the Facilities covered by such policies);
(viii) legal, accounting and other professional fees and
expenses incurred in connection with the ownership and
operation of the Facilities (or of a Facility) including,
without limitation, collection costs and expenses;
(ix) costs and expenses of security and security
systems provided to and/or installed and maintained with
respect to the Facilities (or a Facility);
(x) trash removal and exterminating costs and
expenses;
(xi) advertising and marketing costs;
(xii) costs of environmental audits and monitoring,
environmental remediation work or any other expenses
incurred with respect to compliance with Environmental Laws;
and
E-54
(xiii) all other ongoing expenses which in accordance
with GAAP should be included in Borrower's annual financial
statements as operating expenses of the Facilities (or of a
Facility).
Notwithstanding the foregoing, Operating Expenses shall not
include (w) any Capital Improvement Costs, (x) depreciation,
amortization and other non-cash charges, (y) any extraordinary
items or (z) Debt Service and other payments in connection with
the Indebtedness. Operating Expenses shall be calculated on the
accrual basis of accounting and in accordance with GAAP.
"Operating Income" means, for any period, all regular
ongoing income of Borrower during such period from the Permitted
Investments or the operation of the Facilities (or of a
Facility), including, without limitation:
(i) all amounts payable to Borrower by any Person as
rent and other amounts under Leases, license agreements,
occupancy agreements or other agreements relating to the
Facilities (or a Facility);
(ii) business interruption proceeds; and
(iii) all other amounts which in accordance with GAAP
are included in Borrower's annual financial statements as
operating income of the Facilities (or of a Facility).
Notwithstanding the foregoing, Operating Income shall not include
(v) any condemnation or insurance proceeds (other than business
interruption proceeds or condemnation proceeds with respect to a
temporary taking and, in either such case, only to the extent
allocable to such period or other applicable reporting period),
(w) any proceeds resulting from the sale, exchange, transfer,
financing or refinancing of all or any portion of one or more
Individual Properties, (x) any Rent attributable to a Lease prior
to the date on which the actual payment of Rent is required to be
made thereunder, (y) any item of income otherwise includable in
Operating Income but paid directly to a Person other than
Borrower, or (z) security deposits received from tenants until
forfeited. Operating Income shall be calculated on the accrual
basis of accounting and in accordance with GAAP.
E-55
"Other Borrowings" means, with respect to Borrower,
without duplication (but not including the Indebtedness or any
deferred fees payable in connection with the Transaction) (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 instru
ment, (iii) the face amount of all letters of credit issued for
the account of Borrower and, without duplication, all unreim
bursed 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 obliga
tions of Borrower under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps,
floors, collars or similar agreements) and similar agreements.
"Payment Date" has the meaning specified in Section
2.5.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Permits" means all licenses, permits and certificates
used in connection with the ownership, operation, use or occu
pancy of the Mortgaged Property, including, without limitation,
business licenses, state health department licenses, food service
licenses, licenses to conduct business, certificates of need and
all such other permits, licenses and rights, obtained from any
Governmental Authority or private Person concerning ownership,
operation, use or occupancy of the Mortgaged Property.
"Permitted Encumbrances" means, (a) with respect to an
Individual Property, collectively, (i) the Lien created by the
Related Mortgage or the other Loan Documents of record, (ii) all
Liens and other matters disclosed in the Title Insurance Policy
concerning such Individual Property or any part thereof, (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 Section
2.06(b) of the Mortgages, (iv) any mechanics' and materialmen's
Liens deleted from the exceptions to, or affirmatively insured
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against collection with respect to, the Individual Property under
the applicable Title Insurance Policy, (v) without limiting the
foregoing, any and all governmental, public utility and private
restrictions, covenants, reservations, easements, licenses or
other agreements of an inconsequential nature which may be
granted by Borrower after the applicable Advance Closing Date and
which do not affect (x) the marketability of title to the
Individual Property, (y) the fair market value thereof, or (z)
the use thereof as of the applicable Advance Closing Date, (vi)
deposits or pledges to secure obligations under worker's compen
sation, social security or similar laws, or under unemployment
insurance, made in the ordinary course of Borrower's business,
(vii) rights of existing and future tenants and residents as
tenants and residents, as the case may be, only pursuant to
Leases and (viii) Liens permitted pursuant to Section 6.1(C) and
(b) with respect to a Collateral Loan and related Collateral Loan
Property, (i) the Lien created by the Collateral Assignment and
other Loan Documents of record, (ii) any Liens shown of record on
the title insurance policy covering the related Collateral Loan
Property and (iii) such other Liens as Lender may hereafter
consent to in writing.
"Permitted Investments" means any one or more of the
following obligations or securities acquired at a purchase price
of not greater than par, including those issued by Lender,
Servicer, Trustee or any of their respective Affiliates:
(i) direct obligations of, or obligations fully
guaranteed as to payment of principal and interest by, (x)
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, or (y) FHLMC, FNMA,
the Federal Farm Credit System or the Federal Home Loan
Banks provided such obligations at the time of purchase or
contractual commitment for purchase are qualified by the
Rating Agencies as a Permitted Investment hereunder as
evidenced in writing;
(ii) repurchase agreements on obligations specified in
clause (i) maturing not more than two months from the date
of acquisition thereof, provided that the long-term
unsecured obligations of the party agreeing to repurchase
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such obligations are at the time rated by each Rating Agency
in its highest rating category and the short-term debt
obligations of the party agreeing to repurchase are rated at
least Duff-1+ and F-1+ or the equivalent by the Rating
Agencies;
(iii) general obligations of or obligations guaranteed
by any State of the United States or the District of
Columbia receiving the highest long-term unsecured debt
rating available for such securities by the Rating Agencies,
or such lower rating as will not result in the downgrading
or withdrawal of the rating then assigned to the Certifi
cates by any Rating Agency as evidenced in writing;
(iv) securities bearing interest or sold at a discount
that are issued by any corporation incorporated under the
laws of the United States of America or any State thereof or
the District of Columbia and rated by the Rating Agencies in
their highest long-term unsecured rating categories at the
time of such investment or contractual commitment providing
for such investment; provided, however, that securities
issued by any such corporation will not be Permitted Invest
ments to the extent that investment therein will cause the
then outstanding principal amount of securities issued by
such corporation and held as part of the Cash Collateral
Account to exceed 20% of the aggregate principal amount of
all Permitted Investments held in the Cash Collateral
Account;
(v) commercial or finance company 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) that is rated by the Rating Agencies in
their highest short-term unsecured debt rating available at
the time of such investment or contractual commitment pro
viding for such investment, and is issued by a corporation
the outstanding senior long-term debt obligations of which
are then rated by the Rating Agencies in their highest
rating available in their long-term unsecured debt ratings,
or such lower rating as will not result in the downgrading
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or withdrawal of the rating then assigned to the Certifi
cates by any Rating Agency as evidenced in writing;
(vi) guaranteed reinvestment agreements acceptable to
the Rating Agencies issued by any bank, insurance company or
other corporation rated in the highest long-term unsecured
rating levels available to such issuers by the Rating
Agencies throughout the duration of such agreements, or such
lower rating as will not result in the downgrading or with
drawal of the rating then assigned to the Certificates by
any Rating Agency as evidenced in writing;
(vii) units of taxable money market funds, which funds
are regulated investment companies, seek to maintain a
constant net asset value per share and invest solely in
obligations backed by the full faith and credit of the
United States, which funds have been designated in writing
by the Rating Agencies as Permitted Investments with respect
to this definition;
(viii) if previously confirmed in writing to Trustee, any
other demand, money market or time deposit, or any other
obligation, security or investment, that may be acceptable
to the Rating Agencies as a permitted investment of funds
backing securities having ratings equivalent to their
initial rating of the Certificates; and
(ix) prior to the Securitization Closing Date, any
other demand, money market or time deposit, or any other
obligation, security or investment, that may be acceptable
to Lender and Borrower;
provided, however, that (a) "Permitted Investment" shall not
include any investment that is not a permitted passive investment
earning a return in the nature of interest within the meaning of
Treasury Regulation Section 1.8606-2(g)(1) and (b) no instrument
or security shall be a Permitted Investment if (x) such
instrument or security evidences a right to receive only interest
payments, (y) the right to receive principal and interest
payments derived from the underlying investment provide a yield
to maturity in excess of 120% of the yield to maturity at par of
such underlying investment or (z) such investment does not mature
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by the day required pursuant to the terms of the Loan Documents
(and, if not specified, by the Maturity Date).
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, estate, trust,
unincorporated association, 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.
"Plan" means an employee benefit or other plan estab
lished or maintained by Borrower or any ERISA Affiliate and that
is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Pledge and Security Agreement" means that certain
first priority Pledge and Security Agreement, in the form
attached hereto as Exhibit H, dated as of January 27, 1995, made
by FAI and FBI, as pledgors, in favor of Lender, as pledgee, with
respect to collateral security for the Loan, together with such
instruments pursuant to which FBI's obligations under the Pledge
and Security Agreement were assumed by CDLP Partners, Ltd.
"Pool" has the meaning provided in Section 2.1(b).
"Pooling and Servicing Agreement" means a Pooling and
Servicing Agreement entered into by and among Lender, as
depositor, Servicer, as servicer, and Trustee, as trustee, on a
Securitization Closing Date, and "Pooling and Servicing
Agreements" means all such agreements collectively.
"Pricing Spread" means 3.45% (which rate includes the
Servicer's Fee).
"Principal Indebtedness" means the principal amount of
the Loan outstanding as the same may be increased, by additional
Advances or otherwise, or decreased, as a result of prepayment or
otherwise, from time to time.
"Proceeds" means all proceeds (including Insurance
Proceeds and Condemnation Proceeds), rents and profits from the
Collateral, including, without limitation, those from the sale,
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exchange, transfer, collection, loss, damage, disposition,
substitution or replacement of any of the Collateral.
"Proceeds Deficiency" has the meaning provided in the
definition of "Allocated Loan Amount".
"Rate Difference" means the percentage obtained by
subtracting (i) the Current Rate from (ii) the Locked Rate.
"Rating Agencies" means at least two of Fitch Investors
Service, Inc., Moody's Investors Service, Inc., Duff & Phelps
Credit Rating Co. and Standard & Poor's Corporation, or any
successor thereto, and any other nationally recognized financial
rating agency which may hereafter be engaged by Lender, or its
designees, to rate the Certificates.
"Recourse Distributions" has the meaning provided in
Section 8.14.
"Refinancing" has the meaning provided in Section 2.16.
"Refinancing Date" means a Payment Date on or prior to
the Maturity Date on which the Refinancing occurs.
"Refinancing Escrow Closing Date" has the meaning
provided in Section 2.16.
"Refinancing Notice" has the meaning provided in
Section 2.16.
"Reimbursement Contracts" means all third party
reimbursement contracts with respect to the Facilities which are
hereafter in effect with respect to patients qualifying for
coverage under the same, including Medicare and Medicaid, and any
successor program or other similar reimbursement programs and
private insurance agreements.
"Related Mortgage" means, with respect to a particular
Individual Property, the Mortgage encumbering such Individual
Property.
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"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment,
including, without limitation, the movement of Hazardous
Substances through ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata.
"Release Price" has the meaning provided in Section
2.7(a).
"Remedial Work" has the meaning provided in Section
5.1(D)(i).
"REMIC" means "real estate mortgage investment conduit"
for federal income tax purposes.
"REMIC Trust" means a trust fund created pursuant to a
Pooling and Servicing Agreement or that portion thereof for which
a REMIC election is made under the Code.
"Rents" means all rent and other payments of whatever
nature from time to time payable pursuant to any Lease
(including, without limitation, rights to payment earned under
Leases for space in the Improvements for the operation of ongoing
retail businesses such as news stands, barber shops, beauty
shops, physicians' offices, pharmacies and specialty shops).
"Required Debt Service Payment" has the meaning
provided in Section 2.12(f).
"Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rates Service (or
such other page as may replace the LIBO page on the service for
the purpose of displaying interbank rates from London in U.S.
Dollars).
"Securitization" has the meaning provided in Section
2.15.
"Securitization Closing Date" means the date on which a
Pooling and Servicing Agreement is executed and delivered and a
Securitization is effected.
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"Security Deposit Accounts" has the meaning provided in
Section 2.12(a).
"Servicer" means Midland Loan Services, L.P., any
Person appointed as servicer under the Pooling and Servicing
Agreements or such Person's successor in interest.
"Servicer's Fee" means the fees payable to Custodian,
as servicer, pursuant to the Interim Servicing Agreement or to
Servicer pursuant to the Pooling and Servicing Agreement.
"Short Treasuries" means the 7.375% U.S. Treasury
maturing on November 15, 1997.
"Single-Purpose Entity" means a Person, other than an
individual, which (i) is formed or organized solely for the
purpose of acquiring and directly holding an ownership interest
in the Mortgaged Property or the Collateral Loans, (ii) does not
engage in any business unrelated to the Mortgaged Property or the
Collateral Loans, (iii) does not have any assets other than those
related to its interest in the Mortgaged Property and the
Collateral Loans or any indebtedness other than as permitted by
this Agreement, the Mortgages or the other Loan Documents, (iv)
has its own separate books and records and has its own accounts
(other than the Collection Accounts and the Cash Collateral
Account), in each case which are separate and apart from the
books and records and accounts (except as set forth above) of any
other Person, (v) if a corporation, at all times has an Indepen
dent director (mutually acceptable to Borrower and Lender; the
present Independent director being acceptable to Borrower and
Lender), (vi) does not commingle its assets with the assets of
any other Person, (vii) does not guarantee the obligations of any
other Person and (viii) holds itself out as being a Person
separate and apart from any other Person.
"Sub-Account" has the meaning provided in Section
2.12(c).
"Survey" means a certified title survey of an
Individual Property or Collateral Loan Property prepared by a
registered Independent surveyor satisfactory to Lender and (i)
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with respect to an Individual Property, the company issuing the
Title Insurance Policy for that Individual Property and (ii) with
respect to a Collateral Loan Property, the company issuing the
endorsement to the Lender's Title Policy for that Collateral Loan
Property.
"Taking" means a taking or voluntary conveyance during
the term hereof of all or part of a Facility or a Collateral Loan
Property, or any interest therein or right accruing thereto or
use thereof, as the result of, or in settlement of, any
condemnation or other eminent domain proceeding by any
Governmental Authority affecting a Facility or a Collateral Loan
Property or any portion thereof whether or not the same shall
have actually been commenced.
"Tax Fair Market Value" means the fair market value of
an Individual Property or Collateral Loan, 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 1.860G-2 and 1.856-3(c), and (y) shall be
reduced by the "adjusted issue price" (within the meaning of Code
1272(a)(4)) (the "Tax Adjusted Issue Price") of any
indebtedness, other than the Loan, secured by a Lien affecting
the Individual Property or Collateral Loan, which Lien is prior
to or on a parity with the Lien created under the Related
Mortgage or Collateral Assignment.
"Telerate Page 3750" means the display designated as
"Page 3750" on The Dow Jones Telerate Service (or such other page
as may replace Page 3750 on that service or such other service as
may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits).
"10-year Treasury" means the 6.50% U.S. Treasury
maturing on May 15, 2005.
"30-year Treasury" means the 7.625% U.S. Treasury
maturing on February 15, 2025.
"Title Insurance Policy" means the loan policy of title
insurance issued by any nationally recognized title insurance
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company acceptable to Lender with respect to each Individual
Property and insuring the first priority lien in favor of Lender
created by the Related Mortgage, subject only to the Permitted
Encumbrances for that Individual Property and containing such
endorsements and affirmative assurances as Lender shall
reasonably require, and "Title Insurance Policies" means all such
instruments collectively.
"Transaction Costs" means all costs and expenses paid
or payable by Borrower relating to the Transactions, including,
without limitation, the Advisor's fees of $1,000,000 which were
paid on the Original Closing Date and an amount equal to 1% of
the amount of an Advance payable on the related Advance Closing
Date, the underwriting fee payable on each Advance Closing Date
in an amount equal to 2% of the amount of the Advance made on
such Advance Closing Date, the Locked Rate Fees, appraisal fees,
legal fees and accounting fees and the costs and expenses
described in Section 8.24.
"Transactions" means each of the transactions contem
plated by the Loan Documents, including each Advance and the
Securitizations, and excluding, prior to delivery of the
Refinancing Notice, the Refinancing.
"Transfer" means any transfer, sale, assignment or
conveyance of a Facility or Collateral Loan.
"Trustee" means any Person appointed as trustee under
the Pooling and Servicing Agreements or its successor in
interest.
"UCC Assignment" means any form UCC-2 or UCC-3
financing statements required to be filed pursuant to the Uniform
Commercial Code in order to assign collaterally a related form
UCC-1 financing statement that perfects the Borrower's security
interest in a Collateral Loan Property.
"UCC Searches" has the meaning specified in Section
3.3(F).
"Use" means, with respect to any Hazardous Substance,
the generation, manufacture, processing, distribution, handling,
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use, treatment, recycling or storage of such Hazardous Substance
or transportation to or from the property of such Person of such
Hazardous Substance.
ARTICLE II
GENERAL TERMS
-------------
Section 2.1. Amount of the Loan; Amounts of Advances;
Pools. (a) From and including the Original Closing Date to and
including May 31, 1996, subject to the terms and conditions of
this Agreement, Lender shall, or, if, in Lender's determination,
required by applicable law, shall cause an accommodation lender
to, lend to Borrower a total amount of up to the Loan Amount in
one or more Advances. The amount of any Advance with respect to
the acquisition of a Collateral Loan shall be 73.0% of the
purchase price of the Collateral Loan to be acquired with the
proceeds of such Advance, including all reasonable and customary
costs of the acquisition of such Collateral Loan incurred by
Borrower and approved by Lender (which approval shall not be
unreasonably witheld or delayed) ("Borrower's Loan Purchase
Price"). The amount of any Advance with respect to the
acquisition of a Facility shall be the lesser of (1) 73.0% of (A)
the purchase price of the Facility to be acquired with the
proceeds of such Advance, including all reasonable and customary
costs of the acquisition of the Facility incurred by Borrower and
approved by Lender (which approval shall not be unreasonably
withheld or delayed) ("Borrower's Facility Purchase Price") or,
(B) if such Facility is being acquired from an Affiliate of
Borrower, the Appraised Value of such Facility and (2) the amount
such that the Debt Service Coverage Ratio with respect to such
Facility being acquired is equal to 1.30 (based on the Adjusted
Net Cash Flow for the immediately trailing twelve months and a
debt constant equal to the Forward Rate (determined as of the
Advance Closing Date) plus 4.25%) provided, however, that if the
Facility is being acquired from a third party and Borrower has a
capital improvement program for the rehabilitation and/or
expansion of the Facility approved by Lender (which approval
shall not be unreasonably withheld or delayed), the amount of the
Advance may be increased to include an amount equal to 66.67% of
the six-month budget (but such budget may not contemplate funding
beyond the Maturity Date) for such program (the "Capital
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Advance"). The Capital Advance and an amount equal to one-half
of the Capital Advance which shall be provided by Borrower shall
be funded to the Capital Advance Sub-Account and disbursed in
accordance with the provisions of Section 2.12(f)(v).
Notwithstanding the foregoing, if Borrower provides an additional
unencumbered Facility acceptable to Lender as collateral, Lender
will provide financing for the purchase of a Facility or a
Collateral Loan up to an amount equal to the lesser of (i) of the
sum of (x) 73.0% of the Appraised Value of the unencumbered
Facility and (y) 73.0% of Borrower's Facility Purchase Price (or
the Appraised Value) for the Facility (or, if less, the amount
calculated pursuant to clause (2) of the third sentence of this
Section 2.1(a)) or Borrower's Loan Purchase Price for the
Collateral Loan to be acquired and (ii) 100% of Borrower's
Facility Purchase Price for the Facility (or the Appraised Value)
or Borrower's Loan Purchase Price for the Collateral Loan to be
acquired, plus the amount of the Capital Advance, if any. No
Note would be issued by Borrower with respect to an unencumbered
Facility offered by Borrower, but all other closing deliverables
and representations would be required with respect to such
Facility. Additionally, as of any Advance Closing Date, the
aggregate principal amount of the Notes dated on or prior to such
Advance Closing Date shall not exceed the sum of (i) 73.0% of the
aggregate fair market value of the Mortgaged Property and the
Collateral Loans and (ii) the aggregate of all Capital Advances.
After any Principal Indebtedness is repaid, Lender shall have no
obligation to re-advance the amount repaid.
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(b) Provided that no Event of Default has occurred and
is continuing, Borrower may, at any time prior to the Maturity
Date and upon 30 days prior notice to Lender, elect to have the
Loan Amount split into one or two additional pools of funds (the
portion of the Loan Amount to be governed by this Agreement
following such split and the loan amounts under the other pools
each being a "Pool") with each additional Pool to be available to
an Affiliated Borrower, provided, however, that in no event shall
(i) the portion of the Loan Amount designated for any Pool be
less than $30,000,000 and (ii) the aggregate amount of all Pools
exceed the Loan Amount. It shall be a further condition to the
creation of a Pool that Borrower supply Lender with documentation
satisfactory to Lender evidencing that (i) the proposed
Affiliated Borrower satisfies the requirements contained in the
definitions of "Affiliated Borrower" and "Single-Purpose Entity"
and (ii) if the Affiliated Borrower is a partnership, each of its
general partners satisfies the requirements contained in the
definition of "Single-Purpose Entity" or if the Affiliated
Borrower is a limited liability company, the managing member
satisfies the requirements contained in the definition of Special
Purpose Entity. It will be an Event of Default under the loan
documents for a Pool if at any time the Affiliated Borrower does
not satisfy the requirements contained in the definition of
"Affiliated Borrower". Upon an Affiliated Borrower's execution
of, and compliance with, a loan agreement substantially in the
form of this Agreement, Lender shall make Advances to such
Affiliated Borrower pursuant to the terms of such agreement up to
the amount of such Pool. Upon creation of an additional Pool:
(i) This Agreement and all Loan Documents executed in
connection with this Agreement shall be amended to the
extent necessary to reflect the reduction of the Loan Amount
covered by this Agreement and the creation of the new Pool;
(ii) To the extent determined by Lender to be
necessary, Lender shall receive endorsements (in form and
substance satisfactory to Lender) to the Title Insurance
Policies relating to the Mortgages and the endorsements to
the Lender's Title Policy relating to the Collateral
Assignments delivered pursuant to this Agreement whereby the
title company insures that no adverse affect will be caused
by the modifications, if any, of the Mortgages and
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Collateral Assignments relating to the creation of the new
Pool;
(iii) Each Pool shall have a separate Cash Collateral
Account and each Advance within a Pool shall be cross-
defaulted and cross-collateralized with other Advances under
such Pool but not with Advances under another Pool, except
that any Pledge and Security Agreement by Borrower, FGI or
their wholly-owned (either directly or indirectly)
Affiliates shall be cross-collateralized and cross-defaulted
for all Pools;
(iv) All calculations of Debt Service Coverage Ratios
after the creation of a Pool shall be based upon the
Facilities that comprise each Pool and shall not include
Facilities or Collateral Loans, as the case may be, covered
by another Pool; and
(v) Borrower shall pay all of Lender's out-of-pocket
costs, including legal fees and disbursements, in connection
with the creation of a Pool.
(c) On or about May 31, 1996, the amount of any
Advance previously made with respect to a Facility may be
increased to an amount that would result in a 1.30 Debt Service
Coverage Ratio at Borrower's request made in writing at least 30
days prior to May 31, 1996, if (i) no Default exists, (ii) the
Loan Amount has not been fully funded, (iii) the Debt Service
Coverage Ratio for the Facility individually and on an aggregate
basis for all Facilities included in the Pool for the three month
period ending on May 31, 1996 is 1.30 or greater and the
projected Debt Service Coverage Ratio for the Facility
individually and on an aggregate basis for all Facilities
included in the Pool is 1.30 or greater, (iv) Borrower executes
all amendments to the Loan Documents required by Lender to
reflect such increase (including, without limitation, the Notes
and the Mortgages), (v) Borrower obtains endorsements to the
Title Insurance Policies satisfactory to Lender reflecting the
increased amount outstanding, (vi) Borrower pays any additional
mortgage recording tax or similar tax due in connection with such
funding, (vii) Borrower pays all Transaction Costs (including the
Advisor's fee and the underwriting fee) in connection with such
funding, and (viii) Borrower delivers such certificates and other
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documents, including, an updated Appraisal for the Facility,
reasonably requested by Lender and satisfies the provisions of
Section 3.3 with respect to disbursement of an Advance to the
extent required by Lender in connection with an Advance under
this Section 2.1(c).
Section 2.2. Use of Proceeds. Proceeds of each
Advance shall be used for the following purposes: (a) to pay the
purchase price for the Facility or the Collateral Loan being
acquired by Borrower and reasonable costs and expenses directly
related to such acquisition, (b) to repay all existing
indebtedness on such Facility and all related costs and expenses
of such repayment, (c) to pay to Lender and the Advisor the
financing and Securitization fees and to pay or reimburse all
other Transaction Costs, (d) to fund the Capital Reserve Sub-
Account in the amount of the Initial Capital Requirement for such
Facility and (e) to the extent of the Capital Advance, if any, to
fund the Capital Advance Sub-Account for such Facility and to pay
therefrom the budgeted capital improvement costs. There is no
restriction on the use of any proceeds in excess of the amounts
described in clauses (a), (b), (c), (d) and (e).
Section 2.3. Security for the Loan. The Notes and
Borrower's obligations hereunder and under the other Loan Docu
ments shall be secured by (a) the Mortgages, (b) the Assignments
of Leases, (c) the Pledge and Security Agreement, (d) the
security interest and Liens granted in this Agreement and in the
other Loan Documents, (e) the Collateral Assignments, (f) the
Allonges endorsing to Lender Borrower's rights under the
promissory note(s) evidencing each Collateral Loan, (g) the
Collateral Loan Guarantees and (h) the UCC Assignments.
Section 2.4. Borrower's Notes. (a) Borrower's obliga
tion to pay the principal of and interest on the Loan and the
Exit Fee, if any, shall be evidenced by the Notes, duly executed
and delivered by Borrower. The Notes shall be payable as to
principal, interest and the Exit Fee, if any, as specified in
this Agreement, with a final maturity on the Maturity Date.
(b) Lender is hereby authorized, at its option, (i) to
endorse on a schedule attached to each Note (or on a continuation
of such schedule attached to such Note and made a part thereof)
an appropriate notation evidencing the date and amount of each
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payment of principal, interest and the Exit Fee, if any, in
respect thereof, and/or (ii) to record the Allocated Loan Amounts
and such payments in its books and records. Such schedule and/or
such books and records, as the case may be, shall, absent
manifest error, constitute prima facie evidence of the accuracy
of the information contained therein.
Section 2.5. Principal and Interest. (a) Prior to
the Maturity Date, there shall be no regularly scheduled payments
of principal, but interest on the Loan shall be payable in
arrears on the first day of the month following the month in
which the first Advance Closing Date occurs, and on the first day
of each and every month thereafter, unless, in any such case,
such day is not a Business Day, in which event such interest
shall be payable on the first Business Day following such date
(such date for any particular month, the "Payment Date"). On the
Maturity Date, the entire outstanding principal balance of the
Loan, together with all accrued but unpaid interest thereon,
shall become due and payable to Lender. Interest shall be
computed on the actual number of days elapsed, based on a 360-day
year (i.e., interest for each day during which any part of the
Loan is outstanding shall be computed at said rate divided by
360). Interest shall accrue on the outstanding principal balance
of the Loan commencing upon the first Advance Closing Date. The
portion of the Loan outstanding on the first day of an Interest
Accrual Period will bear interest at a rate per annum during such
Interest Accrual Period which shall be equal to LIBOR determined
as of the Interest Determination Date immediately preceding such
Interest Accrual Period plus the Pricing Spread and any Advance
made during such Interest Accrual Period will bear interest at a
rate per annum during the Advance Interest Accrual Period for
such Advance which shall be equal to LIBOR determined as of the
Advance Interest Determination Date for such Advance plus the
Pricing Spread.
(b) Upon the occurrence of an Event of Default, the
Principal Indebtedness will bear interest at the Default Rate
from the date such Event of Default occurred until such Event of
Default is cured.
Section 2.6. Voluntary Prepayment. (a) Borrower may
voluntarily prepay the Loan (including all Pools) in whole, but
not in part, without premium or penalty; provided, however, that,
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an Exit Fee shall be paid to Lender on any such voluntary
prepayment which is not financed by Lender (through the
Refinancing or otherwise).
(b) In the event of any such voluntary prepayment,
Borrower shall give Lender written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay, which
notice shall be given at least five Business Days prior to the
date upon which prepayment is to be made and shall specify the
date and the amount of such prepayment. If any such notice is
given, the amount specified in such notice shall be due and
payable on the date specified therein (unless such notice is
revoked 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 its revocation).
(c) Any voluntary prepayment of the Loan in whole or
in part or any mandatory prepayment of a portion of the Loan
pursuant to Section 2.7(a) is required to be made on a Payment
Date.
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Section 2.7. Mandatory Prepayment. (a) Borrower may
Transfer any Individual Property or Collateral Loan at any time
on or prior to the Maturity Date; provided, however, that (i)
Borrower shall have given Lender at least 30 days' prior written
notice of the Transfer, (ii) with respect to the Transfer of a
Facility, the Debt Service Coverage Ratio of the remaining
Facilities (considered on an aggregate basis) would not be less
than the Debt Service Coverage Ratio of such Facilities
calculated immediately prior to the Transfer, (iii) the Debt
Service Coverage Ratio of the remaining Facilities (considered on
an aggregate basis) would not be less than (a) 1.27 if the
Transfer occurs in any month to and including July 1995, (b) 1.28
if the Transfer occurs in August 1995 and (c) 1.30 if the
Transfer occurs in any month from and including September 1995 to
and including the Maturity Date, (iv) if after a Securitization
Closing Date for a Securitization including the Individual
Property or Collateral Loan being transferred, Lender shall have
received an Officer's Certificate certifying that the Principal
Indebtedness, after application of the Release Price, will not,
on the date the Release Price is paid, exceed 125% of the sum of
the Tax Fair Market Values of the remaining Individual Properties
and Collateral Loans as of the Securitization Closing Date, (v)
no Default or Event of Default shall have occurred and be
continuing, (vi) Lender shall have received from Borrower
financial statements, calculations and other backup information
with respect to the matters referred to in clauses (ii), (iii),
(iv) and (v) above, all in form and substance reasonably
satisfactory to Lender and accompanied by an Officer's
Certificate stating that such statements, calculations and
information are true, correct and complete in all material
respects, and (vii) upon the date of the consummation of any such
Transfer, Borrower shall pay to Lender (unless such notice is
revoked by Borrower prior to the date specified therein in which
event Borrower shall immediately reimburse Lender for any reason
able costs incurred by Lender in connection with Borrower's
giving of such notice and its revocation): (w) interest accrued
on the portion of the Loan being prepaid; (x) in the case of any
prepayment which is not financed by Lender an amount representing
a prepayment premium equal to the Exit Fee; (y) an amount equal
to 125% of the Allocated Loan Amount for such Individual Property
or Collateral Loan (the "Release Price"); and (z) all other
amounts due under the Related Mortgage and Lender's costs and
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expenses (including attorneys' fees and disbursements) in
connection with the Transfer.
(b) If Borrower is required by Lender under the pro
visions of a Mortgage to prepay the Loan or any portion thereof
in the event of damage, destruction or a Taking of a Facility,
Servicer shall prepay a portion of the Loan (such prepayment to
be applied to the Allocated Loan Amount for such Facility) such
that the principal amount prepaid together with accrued interest
thereon to the date of prepayment exhausts the Insurance Proceeds
or the Condemnation Proceeds available for such prepayment by
advancing the Loss Proceeds from the Custodial Account. No Exit
Fee shall be payable in connection with a prepayment under this
Section 2.7(b).
(c) If the Debt Service Coverage Ratio of the
Facilities calculated as of the end of any month for the previous
3-month period based on the Principal Indebtedness then outstand
ing (such calculation to be provided to Lender within 30 days
after the end of each month) is less than (i) 1.27 for any month
to and including July 1995, (ii) 1.28 for August 1995 and (iii)
1.30 for each month from and including September 1995 to and
including the Maturity Date, then Borrower shall within five days
after delivery of such calculation make a prepayment of principal
in an amount sufficient for the Debt Service Coverage Ratio test
to be satisfied. The Exit Fee shall be payable in connection
with a prepayment under this Section 2.7(c).
(d) If Borrower fails to make any payment of principal
of or interest on the Loan when due (excluding the payment due on
the Maturity Date), Borrower shall, on each Payment Date there-
after until such amount has been paid, prepay the Loan in an
aggregate amount equal to the Excess Cash Flow for the prior
month. The Exit Fee shall be payable in connection with a
prepayment under this Section 2.7(d).
(e) Upon prepayment of the Loan in full, Borrower
shall pay to Lender, in addition to the amounts specified in
Section 2.6 or this Section 2.7, as applicable, any other amounts
then due and payable to Lender pursuant to the Loan Documents.
All prepayments made pursuant to Section 2.6 or this Section 2.7
shall be applied in accordance with the provisions of Section
2.8.
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(f) In connection with a Securitization, Borrower
shall make a prepayment of principal in an amount sufficient for
the representations required to be made by Borrower pursuant to
clause (j) of the second sentence of Section 2.15 to be true.
The Exit Fee shall be payable in connection with a prepayment
under this Section 2.7(f).
(g) Until such time as a Collateral Loan Property
becomes an Individual Property hereunder pursuant to Section 3.6,
in the event that the Net Cash Flow received from a Collateral
Loan from the 26th day of each calendar month through the 25th
day of the next calendar month exceeds the amount of interest due
on the Payment Date immediately following each such 25th day with
respect to the Allocated Loan Amount of such Collateral Loan,
such excess shall be paid to Lender to reduce the Principal
Indebtedness on such Payment Date. The Exit Fee shall be payable
in connection with prepayments under this Section 2.7(g).
Section 2.8. Application of Payments. All proceeds
(including any Net Proceeds) of any repayment, including prepay
ments, of the Loan shall be applied to pay: first, any reason
able out-of-pocket costs and expenses of Lender (including the
fees and charges of the Bank and the fees and reimbursable
expenses of the Custodian and the Servicer under the Interim
Servicing Agreement and the Pooling and Servicing Agreement) with
respect to such repayment; second, any accrued and unpaid
interest then payable with respect to the Loan or the portion
thereof being repaid; third, the outstanding principal amount of
the Loan or the portion thereof being repaid; and fourth, the
Exit Fee, if any, on the Loan or the portion thereof being
repaid.
Section 2.9. Method and Place of Payment. (a) Except
as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Notes 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 shall, for all purposes
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hereof, 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.
Section 2.10. Taxes. All payments made by Borrower
under this Agreement 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 Govern
mental Authority (other than taxes imposed on the income of
Lender).
Section 2.11. Release of Collateral.
(a) Notwithstanding any other provision of this Agreement or any
other Loan Document, upon a prepayment with respect to any
Individual Property or Collateral Loan as described in Section
2.7(a), Section 2.12(i) or Section 2.03(d) of the Mortgages,
Lender shall, simultaneously with such payment, release the Lien
of the Related Mortgage, Collateral Assignment, the related
Assignment of Leases, the Collateral Loan Guarantee, UCC
Assignment, UCC-1 financing statements and any other Liens in
favor of Lender relating to such Individual Property or
Collateral Loan, as applicable, and shall release to Borrower any
portion of the Sub-Accounts relating to such Individual Property
or Collateral Loan.
(b) If Lender (i) receives Loss Proceeds with respect
to any Facility (x) in the event of a Taking or casualty affect
ing 100% of such Facility or (y) in an amount equal to or exceed
ing the sum of the Allocated Loan Amount for such Facility and
accrued and unpaid interest thereon and (ii) applies such Loss
Proceeds to reduce the Indebtedness in accordance with Section
2.7(b), Lender shall simultaneously with such application release
the Lien of the Related Mortgage and related Assignment of Leases
and UCC-1 financing statements and any other Liens in favor of
Lender relating to such Individual Property and shall release to
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Borrower any portion of the Sub-Accounts relating to such
Facility.
(c) Upon repayment of the Loan and all other amounts
due hereunder and under the Loan Documents in full in accordance
with the terms hereof and thereof, Lender shall, as promptly as
possible after such payment, release its Liens with respect to
all Collateral.
(d) If at any time the Allocated Loan Amount for any
Facility or Collateral Loan shall be reduced to zero, Lender
shall simultaneously release the Lien of the Related Mortgage or
the related Collateral Assignment, as the case may be, and any
other Liens in favor of Lender relating to such Facility or
Collateral Loan and shall release to Borrower any portion of the
Sub-Accounts relating thereto.
Section 2.12. Central Cash Management.
(a) Collection and Security Deposit Accounts. Borrower hereby
acknowledges and agrees that all of the Rents (other than security deposits
from tenants), Money and Proceeds received from Accounts derived from
the Facilities and all of the Money and Proceeds derived from the
Collateral Loans shall be utilized first (i) to pay all amounts
to become due and payable under the Notes by funding the Debt
Service Payment Sub-Account to the extent required pursuant to
Section 2.12(g)(i), (ii) to fund the Locked Rate Fee Sub-Account
to the extent required pursuant to Section 2.12(g)(ii), (iii) to
fund the Basic Carrying Costs Sub-Account to the extent required
pursuant to Section 2.12(g)(iii), (iv) to fund the Capital
Reserve Sub-Account to the extent required pursuant to Section
2.12(g)(iv), and (v) to pay all Operating Expenses. For each
Facility, Borrower shall open and maintain at a Collection
Account Bank a demand deposit account (a "Collection Account")
and a second demand deposit account that is fully segregated and
distinct from the Collection Account (a "Security Deposit
Account"). Each Collection Account and each Security Deposit
Account shall be assigned a separate and unique identification
number by the Collection Account Banks and shall be opened and
maintained in the name "Forum Investments I, L.L.C. as Debtor and
Midland Loan Services, L.P. (as custodian) as Secured Party
pursuant to the Amended and Restated Loan Agreement dated as of
June 8, 1995". All payments constituting Rent (other than
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security deposits from tenants) or made with respect to Accounts
shall be payable to Manager. Manager shall collect all such
Rents, Money and Proceeds received from Accounts and shall
endorse all checks and deposit all such funds, within one
Business Day after receipt thereof, directly into the Collection
Account for the Facility. All security deposits shall be payable
to Manager. Manager shall collect all security deposits with
respect to a Facility and shall endorse all checks and deposit
all such funds within one Business Day after receipt thereof,
directly into the Security Deposit Account for the Facility.
Borrower may designate a new financial institution to serve as a
Collection Account Bank hereunder as provided in Section 2.13(1).
Each Collection Account shall at all times be an Eligible
Account. Borrower shall have no right of withdrawal from the
Collection Accounts or the Security Deposit Accounts except that,
prior to a Collection Account Bank's receipt of notice of the
occurrence of an Event of Default from Custodian (given at the
request of Lender or Servicer), Custodian, on written request
from Borrower with appropriate supporting materials, will direct
the applicable Collection Account Bank to release funds from the
applicable Security Deposit Account and forward such funds to
Borrower to refund or apply security deposits as required by the
Leases or by applicable Legal Requirements, and, after delivery
of such notice, Custodian, on written request from Borrower with
appropriate supporting materials, will direct the applicable
Collection Account Bank to release funds from the applicable
Security Deposit Account to refund or apply security deposits as
required by the Leases or by applicable Legal Requirements.
(b) Cash Collateral Account. Pursuant to the Letters
of Instructions to be delivered to the Collection Account Banks
(the "Letters of Instruction") in substantially the form attached
hereto as Exhibit I, Borrower will authorize and direct the
Collection Account Banks to transfer on a daily basis all funds
in excess of a specified amount not to exceed $10,000 deposited
in the Collection Accounts for the Facilities to an account at
the 10th and Baltimore, Kansas City, Missouri, branch of the Bank
entitled "Midland Loan Services, L.P. (as custodian) as Secured
Party pursuant to an Amended and Restated Loan Agreement dated as
of June 8, 1995 among Forum Investments I, L.L.C., Nomura Asset
Capital Corporation and Midland Loan Services, L.P. - Cash
Collateral Account" (the "Cash Collateral Account"). Lender may
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elect to change the financial institution at which the Cash
Collateral Account shall be maintained; provided, however, that
Lender shall give Borrower and each Collection Account Bank not
fewer than 30 days' prior notice of each change and the financial
institution to which the Cash Collateral Account may be
transferred shall be subject to Borrower's reasonable approval.
The Cash Collateral Account shall at all times be an Eligible
Account. Borrower shall direct each obligor of a Collateral Loan
in writing to make all payments pursuant to such Collateral Loan
directly into the Cash Collateral Account, which deposits shall
be allocated or disbursed in the same manner as Rent deposited
into the Cash Collateral Account. Pursuant to the applicable
Collateral Loan Guarantee, FGI shall pay any amounts due
thereunder directly into the Cash Collateral Account and such
amounts, if any, shall be allocated or disbursed in the same
manner as Rent deposited therein. Borrower has established the
Cash Collateral Account in the name of Custodian, and the Cash
Collateral Account shall be under the sole dominion and control
of Custodian. Borrower shall have no right of withdrawal in
respect of the Cash Collateral Account. If necessary to comply
with any law in any state in which an Individual Property is
located, one or more additional cash collateral accounts with
appropriate Sub-Accounts may be established by Custodian,
provided, however, that (i) all funds will continue to be
transferred to the Cash Collateral Account by the Collection
Account Banks and funds will be allocated to such additional cash
collateral accounts by Custodian, (ii) any bank at which such
additional accounts are to be held shall be acceptable to Lender
and any such bank shall execute and deliver an agreement
substantially similar to the CC Account Agreement, (iii) Borrower
shall execute all necessary UCC-1 Financing Statements, (iv) each
such cash collateral account (and each Sub-Account relating
thereto) shall be treated as a part of the Cash Collateral
Account for purposes of this Agreement, and (v) Custodian may use
another Person to hold such account but any fees or expenses of
such Person (except expenses which would constitute reimbursable
expenses under the Interim Servicing Agreement or the Pooling and
Servicing Agreement if incurred directly by Custodian) shall be
paid by Custodian.
(c) Establishment of Sub-Accounts. The Cash
Collateral Account shall contain the Debt Service Payment Sub-
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Account, the Locked Rate Fee Sub-Account, the Basic Carrying
Costs Sub-Account, the Capital Reserve Sub-Account and the
Capital Advance Sub-Account, each of which accounts
(individually, a "Sub-Account" and collectively, the "Sub-
Accounts") 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 Agreement.
(d) Permitted Investments. Upon the request of
Borrower which request may be made one time per month, Lender
shall direct the Bank to invest and reinvest any balance in the
Cash Collateral Account from time to time in Permitted Invest
ments as instructed by Borrower; provided, however, that (i) if
Borrower fails to so instruct Lender, or upon the occurrence of
an Event of Default, Lender may direct the Bank to invest and
reinvest such balance in Permitted Investments as Lender shall
determine in its sole 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 applicable 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 Custodian, and (iv)
no Permitted Investment shall be made unless Custodian shall
retain a perfected first priority Lien in such Permitted
Investment securing the Indebtedness and all filings and other
actions necessary to ensure the validity, perfection, and
priority of such Lien have been taken. It is the intention of
the parties hereto that the entire amount deposited in the Cash
Collateral Account (or as much thereof as Lender may reasonably
arrange to invest) shall at all times be invested in Permitted
Investments, and that the Cash Collateral Account shall be a so-
called "zero balance" account. All funds in the Cash Collateral
Account that are invested in a Permitted Investment are deemed to
be held in the Cash Collateral Account for all purposes of this
Agreement and the other Loan Documents. Neither Lender nor any
of its agents, including Servicer and Custodian, shall have any
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 prior to an Event
of Default) and no such loss shall affect Borrower's obligation
to fund, or liability for funding, the Cash Collateral Account
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and each Sub-Account, as the case may be. Borrower agrees that
Borrower shall include all such earnings on the Cash Collateral
Account as income of Borrower for federal and applicable state
tax purposes.
(e) Interest on Accounts. All interest paid or other
earnings on the Permitted Investments made hereunder 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 Debt Service, Basic Carrying Costs and
Capital Improvement Costs. On the first Advance Closing Date and
thereafter on or before the third Business Day of each month
during the term of the Loan commencing on the first such day
after the first Advance Closing Date, Lender shall notify Bor
rower of the Debt Service (the "Required Debt Service Payment")
that will be payable to Lender on the Payment Date in the next
calendar month. Not later than three Business Days before each
Payment Date during the term of the Loan, Lender or Servicer
shall deliver to Borrower a certificate in the form attached
hereto as Exhibit J, setting forth (i) the Required Debt Service
Payment for such Payment Date and (ii) whether sufficient funds
exist in the Cash Collateral Account to fund the Debt Service
Payment Sub-Account, the Locked Rate Fee Sub-Account, the Basic
Carrying Costs Sub-Account and the Capital Reserve Sub-Account in
the required amounts. If any such certificate states that the
funds then allocated to the Sub-Accounts are less than the amount
of funds which are required to be on deposit therein on such
Payment Date, Borrower shall be obligated to deposit funds (in
addition to Rents and Money received from Accounts) into the Cash
Collateral Account in the amount of such deficiency, and failure
to make such deposit shall be an Event of Default hereunder.
(i) Payment of Debt Service. At or before 12:00 noon,
New York City time, on each Payment Date during the term of
the Loan, Custodian shall transfer from the Debt Service
Payment Sub-Account an amount equal to the Required Debt
Service Payment for such Payment Date (x) if on or prior to
a Securitization Closing Date, to Lender, and (y) if after a
Securitization Closing Date, to the account of Servicer
established under the applicable Pooling and Servicing
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Agreement, or such other account designated by Servicer in
accordance with the applicable Pooling and Servicing Agree
ment (either of such accounts, the "Custodial Account").
Borrower shall be deemed to have timely made the Required
Debt Service Payment pursuant to Section 2.9 regardless of
the time Custodian makes such transfer as long as sufficient
funds are then on deposit in the Debt Service Payment Sub-
Account.
(ii) Payment of Locked Rate Fee. At or before 12:00
noon, New York City time, on each Payment Date during the
term of the Loan, Custodian shall transfer from the Locked
Rate Fee Sub-Account an amount equal to the Locked Rate Fee
payable on such Payment Date to Lender. Borrower shall be
deemed to have timely paid the Locked Rate Fee pursuant to
Section 2.9 regardless of the time Custodian makes such
transfer as long as sufficient funds are then on deposit in
the Locked Rate Fee Sub-Account.
(iii) Payment of Basic Carrying Costs. At least five
Business Days prior to the due date of any Basic Carrying
Cost and not more frequently than once each month, Borrower
shall notify Lender and Custodian in writing and request
that Custodian pay such Basic Carrying Cost on behalf of
Borrower on or prior to the due date thereof. Together with
each such request, Borrower shall furnish Custodian and
Lender with copies of bills and other documentation as may
be reasonably required by Custodian or Lender to establish
that such Basic Carrying Cost is then due. Custodian shall
make such payments on behalf of Borrower out of the Basic
Carrying Cost Sub-Account before same shall be delinquent to
the extent that there are funds available in the Basic
Carrying Cost Sub-Account and Custodian and Lender have
received appropriate documentation to establish the
amount(s) due and the due date(s).
(iv) Payment of Capital Improvement Costs. Not more
frequently than once each month and provided that no Event
of Default has occurred and is continuing, upon Borrower's
written request Custodian shall transfer funds to Borrower
then allocated to the Capital Reserve Sub-Account for
payment of Capital Improvement Costs. Together with each
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such request, Borrower shall furnish Custodian and Lender
with copies of bills and other documentation as may be
reasonably required by Custodian or Lender to establish that
such Capital Improvement Costs are then due.
(v) Payment for Capital Improvement Program. Not more
frequently than once each month and provided that no Event
of Default has occurred and is continuing, upon Borrower's
written request Custodian shall transfer funds to Borrower
then allocated to the Capital Advance Sub-Account for
payment of costs in connection with Borrower's initial
capital improvement program for a Facility. Together with
each such request, Borrower shall furnish Custodian and
Lender with copies of bills and other documentation as may
be reasonably required by Custodian or Lender to establish
that such costs are then due.
(g) Monthly Funding of Sub-Accounts. During each
month in the term of the Loan commencing with the month in which
the first Advance Closing Date occurs (each, the "Current
Month"), the funds in the Collection Accounts shall be trans
ferred to the Cash Collateral Account pursuant to the Letter of
Instructions referred to in Section 2.12(b), and Custodian shall
allocate all funds then on deposit in the Cash Collateral Account
among the Sub-Accounts as follows and in the following priority:
(i) first, to the Debt Service Payment Sub-Account,
until an amount equal to the Required Debt Service Payment
for the Payment Date occurring in the month following the
Current Month has been allocated to the Debt Service Payment
Sub-Account;
(ii) second, to the Locked Rate Fee Sub-Account, until
an amount equal to the Locked Rate Fee Monthly Installment
for the Payment Date occurring in the month following the
Current Month has been allocated to the Locked Rate Fee Sub-
Account;
(iii) third, to the Basic Carrying Costs Sub-Account,
until an amount equal to the Basic Carrying Costs Monthly
Installment for the Current Month has been allocated to the
Basic Carrying Costs Sub-Account; and
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(iv) fourth, to the Capital Reserve Sub-Account, until
an amount equal to the Capital Reserve Monthly Installment
for the Current Month has been allocated to the Capital
Reserve Sub-Account.
Provided that (i) no Event of Default has occurred and
is continuing and (ii) Lender has received all financial informa
tion described in Section 5.1(Q) for the most recent periods for
which the same are due, Lender agrees that in each Current Month
any amounts deposited into or remaining in the Cash Collateral
Account after the minimum amounts set forth in clauses (i), (ii),
(iii) and (iv) above have been satisfied with respect to the
Current Month and any periods prior thereto (other than amounts
in the Capital Advance Sub-Account) shall be disbursed, at
Borrower's expense, (x) once promptly following the date such
minimum amounts have been satisfied, (y) thereafter, once a week
in the then Current Month and (z) on the last Business Day of the
then Current Month, to an account specified by Borrower.
Borrower shall use any funds distributed to Borrower (or to
Manager) pursuant to the foregoing to first pay all Operating
Expenses, and, unless prepayments of the Loan from Excess Cash
Flow are then required pursuant to Sections 2.7(c) or (d), all
Excess Cash Flow may be retained by Borrower and used for, or
applied to, any purpose, including, without limitation, dividends
or other distributions. If an Event of Default has occurred and
as long as it is continuing, any amounts deposited into or
remaining in the Cash Collateral Account after Custodian has
allocated minimum amounts as hereinabove provided shall be for
the account of Lender and may be withdrawn by Lender to be
applied as provided in the Loan Documents.
If, on any Payment Date, the balance in the Debt
Service Payment Sub-Account is insufficient to make the payment
of Required Debt Service Payment, then a Default shall exist
hereunder, and Lender may (but shall not be obligated to) direct
Custodian to withdraw funds from the Locked Rate Fee Sub-Account,
the Basic Carrying Costs Sub-Account, the Capital Reserve Sub-
Account or the Capital Advance Sub-Account to pay such defi-
ciency. In the event that Lender elects to apply the proceeds of
any such Sub-Account to pay any Required Debt Service Payment,
Borrower shall, upon demand, repay to Lender the amount of such
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withdrawn funds to replenish such Sub-Account, and if Borrower
shall fail to repay such amounts within five days after such
withdrawal, an Event of Default shall exist hereunder, which
Event of Default shall not be cured unless and until Borrower
repays such amount or all Sub-Accounts have again been fully
funded from Rents or Money received from Accounts. Lender may,
at its sole option, replenish such Sub-Account out of available
Rents or Money received from Accounts in subsequent months which
Borrower would have otherwise been entitled to receive.
(h) Loss Proceeds. In the event of a casualty or
Taking with respect to a Facility, unless pursuant to the Related
Mortgage the proceeds, net of Borrower's reasonable collection
costs approved by Lender, received under any insurance policy
required to be maintained by Borrower ("Insurance Proceeds") or
the proceeds, net of Borrower's reasonable collection costs
approved by Lender, in respect of any Taking ("Condemnation
Proceeds"), as the case may be, are to be made available to
Borrower for restoration, Lender and Borrower shall cause all
such Insurance Proceeds or Condemnation Proceeds (collectively,
"Loss Proceeds") to be paid directly to the Cash Collateral
Account prior to a Securitization Closing Date and to the
Custodial Account after a Securitization Closing Date (if such
Loss Proceeds are received with respect to a Facility covered by
such Securitization), whereupon Lender or Servicer, as the case
may be, shall apply same to reduce the Indebtedness in accordance
with Section 2.7(b). If Lender agrees or is required pursuant to
the provisions hereof or of the Related Mortgage to make Loss
Proceeds available for restoration, (i) all Insurance Proceeds
received in respect of business interruption coverage and (ii)
any Condemnation Proceeds received in connection with a temporary
Taking shall be maintained in the Cash Collateral Account, to be
applied by Lender in the same manner as Rent received from
Manager with respect to the operation of such Facility; provided,
further, that in the event that the Insurance Proceeds of any
such business interruption insurance policy or Condemnation
Proceeds of such temporary Taking are paid in a lump sum in
advance, Lender shall hold such Insurance Proceeds or Condemna-
tion Proceeds in a segregated interest-bearing escrow account at
the Bank, shall estimate, in Lender's reasonable discretion, the
number of months required for Borrower to restore the damage
caused by the casualty to such Facility or that such Facility
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will be affected by such temporary Taking, as the case may be,
shall divide the aggregate business interruption Insurance Pro
ceeds or Condemnation Proceeds in connection with such temporary
Taking by such number of months, and shall disburse from such
escrow account into the Cash Collateral Account each month during
the performance of such restoration or pendency of such temporary
Taking such monthly installment of said Insurance Proceeds or
Condemnation Proceeds. In the event that Insurance Proceeds or
Condemnation Proceeds are to be applied toward restoration,
Lender shall hold such funds in a segregated interest-bearing
escrow account at the Bank and shall disburse same in accordance
with the provisions of the Related Mortgage. If any Loss
Proceeds are received by Borrower, such Loss Proceeds shall be
received in trust for Lender, shall be segregated from other
funds of Borrower, and shall be forthwith paid to the Cash
Collateral Account prior to a Securitization Closing Date and to
the Custodial Account after a Securitization Closing Date (if
such Loss Proceeds are received with respect to a Facility
covered by such Securitization), or paid to Lender to hold in a
segregated interest-bearing escrow account, in each case to be
applied or disbursed in accordance with the foregoing, except as
provided to the contrary in Sections 2.05(e) and 2.12(c) of the
Related Mortgage. Any Loss Proceeds made available to Borrower
for restoration in accordance herewith, to the extent not used by
Borrower in connection with, or to the extent they exceed the
cost of, such restoration, shall be deposited into the Cash
Collateral Account prior to a Securitization Closing Date and
into the Custodial Account after a Securitization Closing Date
(if such Loss Proceeds are received with respect to a Facility
covered by such Securitization), whereupon Lender or Servicer, as
the case may be, shall apply the same to reduce the Allocated
Loan Amount applicable to the affected Individual Property in
accordance with Section 2.7(b). Notwithstanding anything to the
contrary herein or in any Mortgage, Loss Proceeds will not be
made available to Borrower for restoration unless Borrower
furnishes Lender with an opinion of outside counsel reasonably
acceptable to Lender that any REMIC formed pursuant to a Securi
tization will not fail to maintain its REMIC status for federal
income tax purposes as a result of making the Loss Proceeds
available to Borrower for restoration.
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(i) Payment of Basic Carrying Costs. 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
Section 2.12(f), Borrower shall pay all Basic Carrying Costs with
respect to Borrower and each Individual Property in accordance
with the provisions of the Related Mortgage, subject, however, to
Borrower's rights to contest payment of same in accordance with
the Related Mortgage. Borrower's obligation to pay (or cause
Lender to pay) Basic Carrying Costs pursuant to this Agreement
shall include, to the extent permitted by applicable law, Imposi
tions 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 Allocated Loan
Amount and accrued and unpaid interest thereon with respect to
the affected Facility shall, at the option of Lender, become due
and payable, without payment of an Exit Fee, on the date that is
120 days after such change in law and failure to pay such amounts
on the date due shall be an Event of Default.) All funds
deposited in the Cash Collateral Account relating to the Basic
Carrying Costs shall be held by Lender pursuant to the provisions
of this Agreement and shall be applied in payment of the
foregoing charges when and as payable, provided that no Event of
Default shall have occurred and be continuing. Should an Event
of Default occur, the proceeds on deposit in the Basic Carrying
Costs Sub-Account may be applied by Lender in payment of any
Basic Carrying Costs for all or any portion of the Mortgaged
Property as Lender in its sole discretion may determine;
provided, however, that after a Securitization Closing Date
Lender shall not apply the proceeds of the Basic Carrying Costs
Sub-Account as aforesaid unless Lender receives notice from
Servicer or becomes aware that Servicer shall not be advancing
such shortfall pursuant to the terms of the applicable Pooling
and Servicing Agreement; and provided, further, that no such
application shall be deemed to have been made by operation of law
or otherwise until actually made by Lender as herein provided.
(j) The Bank's Reliance. The Bank may rely and shall
be protected in acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and
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believed by it to be genuine and to have been signed or presented
by the proper party or parties. The Bank may rely on notice from
Lender as to the occurrence of an Event of Default.
Section 2.13. Security Agreement. (a) Pledge of
Accounts. To secure the full and punctual payment and perform
ance of all of the Indebtedness, Borrower hereby sells, assigns,
conveys, pledges and transfers to Custodian (initially on behalf
of Lender and after a Securitization Closing Date on behalf of
the Certificateholders to the extent related to Individual
Property or Collateral Loan covered by the Securitization), and
grants to Custodian (initially on behalf of Lender and after a
Securitization Closing Date on behalf of the Certificateholders
to the extent related to Individual Property or Collateral Loan
covered by the Securitization), a first and continuing 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
Collection Accounts and all Money, if any, from time to time
deposited or held in each Collection Account;
(ii) all of Borrower's right, title and interest in the
Security Deposit Accounts and all Money, if any, from time to
time deposited or held in each Security Deposit Account;
(iii) all of Borrower's right, title and interest in the
Cash Collateral Account and all Money and Permitted Investments,
if any, from time to time deposited or held in the Cash
Collateral Account;
(iv) 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
(v) to the extent not covered by clauses (i), (ii),
(iii) or (iv) above, all proceeds (as defined under the Uniform
Commercial Code of the applicable jurisdiction) of any or all of
the foregoing.
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(b) Covenants. Borrower covenants that (i) all Rents
(other than tenant security deposits) and Money received from
Accounts with respect to the Facilities shall be deposited into
the Collection Accounts; (ii) so long as any portion of the
Indebtedness is outstanding, Borrower shall not open (nor permit
Manager to open) any other account for the collection of Rents
(other than tenant security deposits) or Money received from
Accounts, other than such replacement Collection Accounts as may
be established pursuant to Section 2.13(l); (iii) all security
deposits posted by tenants shall be deposited in the Security
Deposit Accounts; (iv) so long as any portion of the Indebtedness
is outstanding, Borrower shall not open (nor permit Manager to
open) any other account for the collection and management of such
security deposits, other than such replacement Security Deposit
Accounts as may be established pursuant to Section 2.13(l); and
(v) Borrower will instruct the obligors of any Collateral Loans
to deposit any and all payments thereunder into the Cash
Collateral Account. The Collection Accounts and the Security
Deposit Accounts shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the
Federal Reserve System and of any other banking authority or
Governmental Authority, as may now or hereafter be in effect, and
to the rules, regulations and procedures of the Collection
Account Bank relating to demand deposit accounts from time to
time in effect.
(c) Instructions and Agreements. In connection with
each Advance Closing Date with respect to a Facility, Borrower
will submit to the Collection Account Bank for the applicable
Facility a Letter of Instructions, and such Collection Account
Bank will execute and return the acknowledgement of instructions
and notice that is part of its Letter of Instructions. In
connection with the first Advance Closing Date, Borrower and the
Bank has executed and delivered that certain Cash Collateral
Account Agreement (the "CC Account Agreement"), the form of which
is attached hereto as Exhibit K. Borrower agrees that prior to
the payment in full of the Indebtedness, the CC Account Agreement
shall be irrevocable by Borrower without the prior written
consent of Lender. The Cash Collateral Account shall be subject
to such applicable laws, and such applicable regulations of the
Board of Governors of the Federal Reserve System and of any other
banking authority or Governmental Authority, as may now or
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hereafter be in effect and the rules, regulations and procedures
of the Bank relating to demand deposit accounts from time to time
in effect. All statements relating to the Cash Collateral
Account shall be issued by Bank as provided in the CC Account
Agreement.
(d) Financing Statements; Further Assurances. In
connection with the first Advance Closing Date, Borrower has
executed and delivered to Lender for filing a financing statement
or statements in connection with the Account Collateral in the
form required to properly perfect Custodian'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 and security interest granted or purported
to be granted hereby, or to enable Custodian to exercise and
enforce Custodian's rights and remedies hereunder with respect
to, any 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, 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 Custodian
under this Agreement.
(f) Custodian's Right to Perform. If Borrower fails
to perform any covenant or obligation contained in this Agreement
and such failure shall continue for a period of five Business
Days after Borrower's receipt of written notice thereof from
Custodian, Custodian may, but shall have no obligation to, itself
perform, or cause performance of, such covenant or obligation,
and the reasonable expenses of Custodian incurred in connection
therewith shall be payable by Borrower to Custodian upon demand.
Notwithstanding the foregoing, Custodian shall have no obligation
to send notice to Borrower of any such failure unless directed to
do so by Lender or Servicer.
(g) Custodian's Reasonable Care. Beyond the exercise
of reasonable care in the custody thereof, Custodian shall not
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have any duty as to any Account Collateral or any income thereon
in its possession or control or in the possession or control of
any agents for, or of Custodian, or the preservation of rights
against any Person or otherwise with respect thereto. Custodian
shall be deemed to have exercised reasonable care in the custody
of the Account Collateral in its possession if the Account Col-
lateral is accorded treatment substantially equal to that which
Custodian accords its own property, it being understood that
Custodian 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 Custodian's acknowledg
ing receipt of, any wire transfer from the Collection Account
Banks or (ii) any loss, damage or diminution in value by reason
of the act or omission of Custodian or Lender, or Custodian's or
Lender's agents, employees or bailees, except to the extent that
such loss or damage or diminution in value results from
Custodian's gross negligence or willful misconduct or the gross
negligence or willful misconduct of any such agent, employee or
bailee of Custodian.
(h) Remedies. The rights and remedies provided in
this Section 2.13 are cumulative and may be exercised indepen
dently or concurrently, and are not exclusive of any other right
or remedy provided at law or in equity. No failure to exercise
or delay by Custodian or Lender in exercising any right or remedy
hereunder or under the Loan Documents shall impair or prohibit
the exercise of any such rights or remedies in the future or be
deemed to constitute a waiver or limitation of any such right or
remedy or acquiescence therein.
(i) No Waiver. Every right and remedy granted to
Custodian under this Agreement or by law may be exercised by
Custodian at any time and from time to time, and as often as
Custodian may deem it expedient. Any and all of Custodian's
rights with respect to the pledge and security interest granted
hereunder shall continue unimpaired, and Borrower shall be and
remain obligated in accordance with the terms hereof, notwith
standing (i) any proceeding of Borrower under the United States
Bankruptcy Code or any bankruptcy, insolvency or reorganization
laws or statutes of any state, (ii) the release or substitution
of Account Collateral at any time, or of any rights or interests
therein or (iii) any delay, extension of time, renewal, compro-
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mise or other indulgence granted by Custodian in the event of any
Default with respect to the Account Collateral or otherwise here
under. No delay or extension of time by Custodian in exercising
any power of sale, option or other right or remedy hereunder, and
no notice or demand which may be given to or made upon Borrower
by Custodian, shall constitute a waiver thereof, or limit, impair
or prejudice Custodian's right, without notice or demand, to take
any action against Borrower or to exercise any other power of
sale, option or any other right or remedy.
(j) Custodian Appointed Attorney-In-Fact. Borrower
hereby irrevocably constitutes and appoints Custodian as
Borrower's true and lawful attorney-in-fact, with full power of
substitution, at any time after the occurrence and during the
continuation 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 Custodian the
rights and remedies provided for herein with respect to the
Account Collateral and to accomplish the purposes of this Agree
ment. The foregoing powers of attorney are irrevocable and
coupled with an interest.
(k) Continuing Security Interest; Termination. This
Section 2.13 shall create a continuing pledge of 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 its request and at its expense, of such of
the Account Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof, and Custodian shall execute
such instruments and documents as may be reasonably requested by
Borrower to evidence such termination and the release of the
pledge and lien hereof, provided, however, that Borrower shall
pay on demand all of Custodian's expenses in connection
therewith.
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(l) Replacement of a Collection Account Bank. So long
as no Event of Default shall have occurred and be continuing,
Borrower shall have the right at any time to designate a succes
sor Collection Account Bank to hold one or more of the Collection
Accounts or the Security Deposit Accounts upon 30 days' prior
written notice to Custodian, and Custodian's approval of the
successor, which approval shall not be unreasonably withheld or
delayed. In the event that the rating of long-term unsecured
debt obligations of any Collection Account Bank issued by a
Rating Agency is withdrawn or reduced to a rating of BBB or
lower, Borrower shall be obligated to promptly select a new
Collection Account Bank and, upon approval of such selection by
Custodian, to establish and maintain all the Collection Accounts
and the Security Deposit Accounts previously held at such Collec
tion Account Bank at said successor. Any successor selected
hereunder shall be a financial institution within reasonable
proximity of the Facility related to such Collection Account and
such Security Deposit Account and capable of offering Eligible
Accounts. No such designation shall become effective until
Borrower has (i) delivered to the successor Collection Account
Bank a written letter of instructions substantially equivalent to
the Letter of Instructions and (ii) delivered to Custodian
evidence satisfactory to Custodian that such instructions have
been delivered to the successor Collection Account Bank and
acknowledged by such successor's execution of an acknowledgement
of instructions and notice substantially in the form included in
the Letter of Instructions and such financing statements as may
be necessary or appropriate have been prepared, executed and
delivered to a filing agency.
(m) Custodian's Reliance. Custodian may rely and shall
be protected in acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and
believed by it to be genuine and to have been signed or presented
by the proper party or parties. Custodian may rely on notice from
Lender or Servicer as to the occurrence of an Event of Default.
Section 2.14. Supplemental Mortgage Affidavits. The
Lien to be created by each Mortgage is intended to encumber the
Individual Property described therein to the full extent of all
the Indebtedness. As of each Advance Closing Date, Borrower
shall have paid all state, county and municipal recording and all
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other taxes imposed upon the execution and recordation of the
Related Mortgage and all other Mortgages dated on or prior to
such Advance Closing Date. If at any time Lender determines,
based on applicable law, that Lender is not being afforded the
maximum amount of security available from any Individual Property
as a direct, or indirect, result of applicable taxes not having
been paid with respect to the Related Mortgage, Borrower agrees
that Borrower will execute, acknowledge and deliver to Lender,
immediately upon Lender's request, supplemental affidavits
increasing the amount of Indebtedness for which all applicable
taxes have been paid to an amount determined by Lender to be
equal to the lesser of (a) the greater of the fair market value
of such Individual Property (i) as of the Advance Closing Date
for such Individual Property and (ii) as of the date such
supplemental affidavits are to be delivered to Lender, and (b)
the amount of the Indebtedness, and Borrower shall, on demand,
pay any such additional taxes.
Section 2.15. Securitization. Borrower hereby
acknowledges that Lender, any of its Affiliates, its successors
or assigns, may securitize the Loan or portions thereof in one or
more transactions through the issuance of the Certificates, which
will be rated by the Rating Agencies (each, a "Securitization";
collectively, the "Securitizations"). Borrower agrees that it
shall cooperate with Lender in each Securitization including, but
not limited to, by (a) amending this Agreement (including
creating two agreements in the form of this Agreement, one
covering the Mortgaged Property and the Collateral Loans included
in the Securitization and one (with a new borrower in the same
form and with the same ownership structure as Borrower) covering
Lender's remaining funding commitment and any Mortgaged Property
and Collateral Loans not included in the Securitization) and the
other Loan Documents, and executing such additional documents, as
requested by the Rating Agencies, provided that any such
amendment (or additional documentation) does not materially
adversely affect the rights, or materially increase the
obligations, of Borrower under the Loan Documents; (b) providing
such information as may be requested in connection with the
preparation of a private placement memorandum or a registration
statement required to privately place or publicly distribute the
Certificates in a manner which does not conflict with federal or
state securities laws; (c) providing in connection with each of
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(i) a preliminary and a private placement memorandum or (ii) a
preliminary and final prospectus, as applicable, an
indemnification certificate (x) certifying that Borrower has
carefully examined such memorandum or prospectus, as applicable,
including, without limitation, the sections entitled "Special
Considerations", "Description of the Mortgage Loan" and "The
Underlying Mortgaged Properties", "The Manager", "The Borrower"
and "Certain Legal Aspects of the Mortgage Loan", and such
sections (and any other sections reasonably requested) 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, (y) indemnifying Lender and the Advisor and any of
their Affiliates for any losses, claims, damages or liabilities
(the "Liabilities") to which Lender or the Advisor or any of
their Affiliates may become subject insofar as the Liabilities
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact 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 and (z) agreeing to reimburse Lender
and the Advisor and any of their Affiliates for any legal or
other expenses reasonably incurred by Lender and the Advisor and
any of their Affiliates in connection with investigating or
defending the Liabilities; provided, however, that Borrower shall
not be obligated to indemnify or reimburse Lender or the Advisor
or any of their Affiliates in respect of any claims which are
settled or compromised by Lender or the Advisor or any of their
Affiliates without the consent of Borrower, which consent will
not be unreasonably withheld or delayed; (d) causing to be
rendered such customary opinion letters as shall be requested by
the Rating Agencies, including, without limitation, an opinion
letter substantially in the form attached hereto as Exhibit L
(subject to changes in law or fact after the date hereof) and an
opinion letter from each real estate counsel to Borrower stating
that the assignment of the Loan (or portion thereof) and the Loan
Documents to the Trustee is enforceable; (e) making such
representations, warranties and covenants with respect to
Borrower (and its Affiliates), the Mortgaged Property and the
Collateral Loans, as may be requested by the Rating Agencies, but
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which do not materially adversely affect the rights, or
materially increase the obligations, of Borrower under the Loan
Documents; (f) establishing additional reserves requested by the
Rating Agencies; provided, however, that if such reserves are in
excess of $500,000, such excess shall be funded from Net Cash
Flow; (g) providing such information regarding the Mortgaged
Property, the Collateral Loans, Manager or Borrower as may be
requested by the Rating Agencies or potential investors in
Certificates or otherwise required in connection with the
formation of the REMIC and ongoing administration and reporting
by the REMIC, including, without limitation, recertified or
updated Appraisals; (h) amending the Members Agreement or making
such other changes to the structure of Borrower required by the
Rating Agencies; (i) obtaining a comfort letter from a nationally
recognized accounting firm in connection with financial
information relating to Borrower or the Mortgaged Property and
which is, in connection with a Securitization, presented in a
private placement memorandum or prospectus; (j) representing that
as of the Securitization Closing Date (i) the Principal
Indebtedness does not exceed 125% of the Tax Fair Market Value of
the Mortgaged Property and the Collateral Loans and (ii) the fair
market value of any personal property or other property that is
part of the Mortgaged Property and the Collateral Loans that is
not "qualifying real property" within the meaning of Treasury
Regulation 1.593-11(b) does not exceed the excess, if any, of
the Tax Fair Market Value of the Mortgaged Property and the
Collateral Loans over the Principal Indebtedness, and providing
Lender with any supporting materials, including Appraisals,
reasonably requested by Lender; and (k) providing updated
Engineering Reports and Environmental Reports if requested by
Lender but, if with respect to a Collateral Loan, only to the
extent Borrower is permitted to obtain such Engineering Reports
and Environmental Reports pursuant to the related loan
documentation. Borrower hereby agrees to pay on each
Securitization Closing Date and, if earlier, at Lender's request,
all reasonable costs incurred by Lender (and not previously
reimbursed by Borrower) in connection with the Securitizations
(or any attempt to securitize the Loan), including, without
limitation, the cost of preparing a private placement memorandum
or prospectus, Rating Agency fees, reasonable legal fees and
disbursements (including, without limitation, in connection with
the rendering of legal opinions), the cost of market studies, SEC
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filing fees and printing expenses, provided, however, that the
costs of each Securitization to be reimbursed by Borrower shall
not exceed .875% of the Loan Amount securitized in such
Securitization and the total costs of all Securitizations to be
reimbursed by Borrower shall not exceed .875% of the total of all
Advances. Borrower and Lender anticipate that the
Securitizations will be done through private placements. If a
portion of the Loan is included in a Securitization, that portion
of the Loan and all of the Loan Documents and Mortgaged Property
and the Collateral Loans related thereto shall be severed from
the balance of the Loan for all purposes, except that the
Refinancing must include the entire Loan.
Section 2.16. Refinancing. Borrower shall have the
option to request that Lender refinance the Loan (including each
Pool created pursuant to Section 2.1(b)) on or prior to the
Maturity Date on the terms set forth on Exhibit M attached hereto
(the "Refinancing") provided, however, that Borrower may not
refinance any portion of the Principal Indebtedness secured by
Collateral Loans which have not been converted to Individual
Properties pursuant to Section 3.6 (unless Lender determines
otherwise at such time), provided further, however, that if, at
any time after a Securitization Closing Date, Borrower requests
that Lender refinance the Loan pursuant to this Section 2.16,
notwithstanding any other provision of this Agreement, all
references to "Lender" in this Section 2.16 shall not include
Lender's assigns. Borrower shall exercise such option by sending
Lender a notice of its request (the "Refinancing Notice") which
Refinancing Notice shall include the requested principal amount
of the refinanced loan (which must meet the guidelines set forth
under "Principal Amount" on Exhibit M attached hereto), the
proposed date that the Refinancing will close into escrow (the
"Refinancing Escrow Closing Date") which shall be not less than
30 days and not more than 45 days prior to the Refinancing Date
and the proposed Refinancing Date which must be on or prior to
the Maturity Date and shall be not less than 90 days and not more
than 120 days from the date of the Refinancing Notice. Upon
receipt of the Refinancing Notice, if the requested principal
amount of the refinanced loan exceeds the then-outstanding
Principal Indebtedness, Lender may perform a due diligence review
of Borrower, the Mortgaged Property, the Collateral Loans (if
Lender elects to include them in the Refinancing or is
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considering doing so) and any other factors deemed relevant to
Lender or the Rating Agencies, which review may, in Lender's
discretion, include receipt of updated Appraisals, Engineering
Reports and Environmental Reports (but, if with respect to a
Collateral Loan, only to the extent such documents are obtainable
by Borrower under the related loan documentation). Borrower
shall cooperate with Lender and reimburse Lender for all of its
reasonable costs and expenses, including attorneys' fees and
disbursements, in connection with such due diligence review and
the Refinancing, whether or not the Refinancing closes. Based
upon the results of such review, Lender shall determine, in its
sole discretion which must be exercised in good faith, whether or
not to proceed with the Refinancing, provided, however, that
Lender shall be obligated to proceed with the Refinancing if
(i) the Rating Agencies indicate a rating of BB/Ba or higher on
the entire issue of new certificates or notes, (ii) the proposed
principal amount meets the guidelines set forth under "Principal
Amount" on Exhibit M hereto, (iii) there is no Default or Event
of Default in effect during the period from the date of the
Refinancing Notice to and including the Refinancing Escrow
Closing Date, (iv) the principal amount of the refinanced loan
does not exceed 125% of the Tax Fair Market Value of the
Mortgaged Property and the Collateral Loans (if included in the
Refinancing) on the Refinancing Date and (v) the fair market
value of any personal property or other property that is part of
the Mortgaged Property that is not "qualifying real property"
within the meaning of Treasury Regulation 1.593-11(b) does not
exceed the excess, if any, of the Tax Fair Market Value of the
Mortgaged Property over the principal amount of the refinanced
loan. There shall be a presumption that Lender will proceed with
the Refinancing if (x) there has not been any material adverse
change to the Mortgaged Property, the Collateral Loans (if
included in the Refinancing), the operations of any Facility or
the future prospects of the operations of any Facility since the
Advance Closing Date for such Facility and (y) the Facilities
(considered on an aggregate basis) have (and are projected to
continue to have throughout the term of the refinanced loan) a
Debt Service Coverage Ratio of at least 1.3 on the proposed
principal amount of the refinanced loan. If (i) Lender agrees to
proceed with the Refinancing (or is required to so proceed pur
suant to the terms of this Section 2.16) and (ii) Borrower has
not revoked the Refinancing Notice on or prior to the Refinancing
Escrow Closing Date, on the Refinancing Escrow Closing Date,
Lender and Borrower shall enter into loan documents substantially
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similar to the Loan Documents but incorporating the terms set
forth on Exhibit M attached hereto and the Refinancing shall be
closed into escrow pending only the tender of the Certificates,
and the Loan shall be refinanced on the Refinancing Date.
Section 2.17 Interest Rate Management.
(a) In connection with each Advance Closing Date, Lender
shall notify Borrower of the Forward Rate for the amount of the Advance. On
the Advance Closing Date (if it is not the first day of a month),
Borrower shall pay Lender a pro rata portion of the Locked Rate
Fee for such Advance for the period from and including the
Advance Closing Date to and including the last day of the month
in which the Advance Closing Date occurs. From and after the
first Advance Closing Date, an amount equal to the Locked Rate
Fee Monthly Installment shall be funded to the Locked Rate Fee
Sub-Account pursuant to Section 2.12(g) and payment of the Locked
Rate Fee shall be made to Lender on each Payment Date pursuant to
Section 2.12(f).
(b) On any Breakage Date, payments shall be calculated
and made as follows: (i) if the Breakage Amount is a negative
number (i.e., the Current Rate is greater than the Locked Rate),
Lender shall pay the Breakage Amount to Borrower, (ii) if the
Breakage Amount is a positive number (i.e., the Locked Rate is
greater than the Current Rate), Borrower shall pay the Breakage
Amount to Lender, and (iii) if the Breakage Amount is equal to
zero, no payments shall be due by either party; provided,
however, that if Borrower exercises its option to refinance at
the Locked Rate pursuant to Section 2.16, then no payment of the
Breakage Amount shall be due by either party.
ARTICLE III
CONDITIONS PRECEDENT
--------------------
Section 3.1. Conditions Precedent to Effectiveness.
This Agreement shall become effective on the date that all of the
following conditions shall have been satisfied (or waived in
accordance with Section 8.4) (the "Closing Date"):
(A) Loan Agreement. Borrower shall have executed and
delivered this Agreement to Lender.
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(B) Opinions of Counsel. Lender shall have received
from Jones, Day, Reavis & Pogue, special counsel to Borrower
and FGI, its legal opinion in substantially the form
attached hereto as Exhibit N. Such legal opinion will be
addressed to Lender and dated the Closing Date. Borrower
hereby instructs such counsel to deliver to Lender such
opinion addressed to Lender.
(C) Formation Documents. Lender shall have received
the Members Agreement, certified to be true, correct and
complete as of the Closing Date in an Officer's Certificate
and a copy of Borrower's certificate of formation, certified
to be true, correct and complete by the appropriate
Secretary of State as of a date not more than 60 days prior
to the Closing Date, together with a good standing
certificate from such Secretary of State, and a good
standing certificate from the Secretaries of State (or the
equivalent thereof) of each other State in which Borrower is
required to be qualified to transact business and, if
different, each State where Mortgaged Property is located,
each to be dated a date not more than 60 days prior to the
Closing Date. Lender shall have also received with respect
to each of FAI and FGI its certificate of incorporation, as
amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by the
appropriate Secretary of State as of a date not more than 60
days prior the Advance Closing Date, together with a good
standing certificate from such Secretary of State, each to
be dated not more than 60 days prior to the Closing Date.
(D) Certified Resolutions, etc. Lender shall have
received a certificate of the secretary or assistant
secretary of each of FAI and FGI dated the Closing Date,
certifying (i) the names and true signatures of its
incumbent officers authorized to sign the applicable Loan
Documents, (ii) its by-laws as in effect on the Closing
Date, (iii) the resolutions of its board of directors
approving and authorizing the execution, delivery and
performance of all Loan Documents executed by it, and (iv)
that there have been no changes in its certificate of
incorporation since the date of the most recent
certification thereof by the appropriate Secretary of State.
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(E) Additional Matters. Lender shall have received
such other certificates, opinions, documents and instruments
relating to the Loan as may have been reasonably requested
by Lender, and all corporate and other proceedings, all
other documents (including, without limitation, all docu
ments referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Loan
shall be satisfactory in form and substance to Lender.
(F) Representations and Warranties. The representa
tions and warranties by Borrower herein shall be true and
correct in all material respects on such date both before
and after the execution and delivery of this Agreement.
(G) No Default or Event of Defaults. No Default or
Event of Default shall have occurred and be continuing on
such date either before or after the execution and delivery
of this Agreement.
(H) No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any Govern
mental Authority shall have been issued, and no litigation
shall be pending or threatened, which in the good faith
judgment of Lender would enjoin, prohibit or restrain, or
impose or result in the imposition of any material adverse
condition upon, the making or repayment of the Loan or the
consummation of the Transactions.
(I) Transaction Costs. Borrower shall have paid all
Transaction Costs for which bills have been submitted.
Section 3.2. Execution and Delivery of Agreement. The
execution and delivery by Borrower of this Agreement shall
constitute a representation and warranty by Borrower to Lender
that all of the conditions required to be satisfied under Section
3.1 have been satisfied or waived in accordance with Section 8.4.
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Section 3.3. Conditions Precedent to Disbursement of
an Advance. Borrower shall make a written request for each
Advance and shall submit with such request the items described in
paragraphs F, G, H, J, N, O, P, R, U and V of this Section 3.3.
Lender shall perform (or waive) the site inspection described in
paragraph S of this Section 3.3 (to the extent applicable).
Lender shall grant or deny Borrower's request for an Advance
within ten Business Days after its receipt of all required
information. If Lender approves such request, an Advance shall
be made on the date that all of the following conditions shall
have been satisfied (or waived in accordance with Section 8.4)
which date is expected to be within ten Business Days after
Lender's approval has been given (each, an "Advance Closing
Date"):
(A) Loan Documents.
With respect to each Advance Closing Date:
(i) Note. Borrower shall have executed and delivered
to Lender a Note in the amount of the Advance.
(ii) Mortgage. With respect to the acquisition of a
Facility, Borrower shall have executed and delivered to
Lender a Mortgage with respect to the Facility being
acquired and such Mortgage shall have been filed of record
in the appropriate filing office in the jurisdiction in
which such Facility is located or irrevocably delivered to a
title agent for such recordation.
(iii) Assignment of Leases. With respect to the
acquisition of a Facility, Borrower shall have executed and
delivered to Lender an Assignment of Leases relating to the
Facility being acquired and the Assignment of Leases shall
have been filed of record in the appropriate filing office
in the jurisdiction in which such Facility is located or
irrevocably delivered to a title agent for such recordation.
(iv) Collateral Assignment. With respect to the
acquisition of a Collateral Loan, Borrower shall have
delivered to Lender a Collateral Assignment and such
Collateral Assignment shall have been filed of record in the
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appropriate filing office in the jurisdiction in which the
Collateral Loan Property is located or irrevocably delivered
to a title agent for such recordation.
(v) Note and Allonge. With respect to the acquisition
of a Collateral Loan, Borrower shall have delivered to
Lender the original promissory note(s) of the related
obligor together with an Allonge executed by Borrower.
(vi) Loan File. With respect to the acquisition of a
Collateral Loan, Borrower shall have delivered to Lender a
certified copy of the applicable mortgage and other contents
of the related legal files (including mortgage assignments,
evidence of title, security agreements, modifications,
guarantees and assignments of leases, rents and profits) to
the extent such documentation and legal files are in
Borrower's possession.
(vii) Letter of Instructions. With respect to the
acquisition of a Facility, Borrower and the Collection
Account Bank shall have executed a Letter of Instructions
and delivered to Lender a copy thereof.
(viii) Financing Statements. Borrower shall have
executed and delivered to Lender all financing statements
specified on Exhibit P attached hereto or, in the case of a
Collateral Loan, all UCC Assignments and such financing
statements shall have been filed of record in the appropri
ate filing offices in each of the appropriate jurisdictions
or irrevocably delivered to a title agent for such
recordation.
(ix) Indemnity Agreement. With respect to the
acquisition of a Facility, FGI shall have executed and
delivered to Lender an Indemnity Agreement with respect to
the Facility being acquired.
(x) Manager's Subordination. With respect to the
acquisition of a Facility, Manager and Borrower shall have
executed and delivered to Lender a Manager's Subordination.
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(xi) Estoppel Certificate. With respect to the
acquisition of a Facility, Borrower shall have executed and
delivered to Lender an estoppel certificate with respect to
the Management Agreement for the Facility in substantially
the form attached hereto as Exhibit Q.
(xii) Compliance Certificate. Borrower shall have
executed and delivered to Lender a compliance certificate in
substantially the form attached hereto as Exhibit R and the
information disclosed in such certificate shall be satisfac
tory to Lender and its counsel.
(xiii) Collateral Loan Guarantee. With respect to the
acquisition of a Collateral Loan, FGI shall have executed
and delivered to Lender a Collateral Loan Guarantee for such
Collateral Loan.
(B) Opinions of Counsel. Lender shall have received
from Jones, Day, Reavis & Pogue, special counsel to
Borrower, a legal opinion in substantially the form attached
hereto as Exhibit S; and from real estate counsel to
Borrower, its legal opinion in substantially the form
attached hereto as Exhibit U. Each of such legal opinions
will be addressed to Lender, dated the Advance Closing Date,
and in form and substance satisfactory to Lender and its
counsel. Borrower hereby instructs such counsel to deliver
to Lender such opinions addressed to Lender.
(C) Formation Documents. Lender shall have received
the Members Agreement, certified to be true, correct and
complete as of the Advance Closing Date in an Officer's
Certificate and a copy of Borrower's certificate of forma
tion, certified to be true, correct and complete by the
appropriate Secretary of State as of a date not more than 60
days prior to the Advance Closing Date, together with a good
standing certificate from such Secretary of State, and a
good standing certificate from the Secretaries of State (or
the equivalent thereof) of each other State in which Bor
rower is required to be qualified to transact business and,
if different, each State where Mortgaged Property is
located, each to be dated a date not more than 60 days prior
to the Advance Closing Date. Lender shall have also
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received with respect to each of FAI and FGI its certificate
of incorporation, as amended, modified or supplemented to
the Advance Closing Date, certified to be true, correct and
complete by the appropriate Secretary of State as of a date
not more than 60 days prior the Advance Closing Date,
together with a good standing certificate from such
Secretary of State, each to be dated not more than 60 days
prior to the Advance Closing Date.
(D) Certified Resolutions, etc. Lender shall have
received a certificate of the secretary or assistant
secretary of each of FAI and FGI dated the Advance Closing
Date, certifying (i) the names and true signatures of its
incumbent officers authorized to sign the applicable Loan
Documents, (ii) its by-laws as in effect on the Advance
Closing Date, (iii) the resolutions of its board of
directors approving and authorizing the execution, delivery
and performance of all Loan Documents executed by it, and
(iv) that there have been no changes in its certificate of
incorporation since the date of the most recent certifica
tion thereof by the appropriate Secretary of State.
(E) Insurance. With respect to the acquisition of a
Facility, Lender shall have received certificates of
insurance demonstrating insurance coverage in respect of the
Facility of types, in amounts, with insurers and otherwise
in compliance with the terms, provisions and conditions set
forth in the Related Mortgage. Such certificates shall
indicate that Lender and Custodian are named additional
insured as their interests may appear and shall contain a
loss payee endorsement in favor of Lender and Custodian with
respect to the property policies required to be maintained
under the Mortgage. All insurance policies required to be
maintained hereunder shall be maintained from the Advance
Closing Date throughout the term of this Agreement in the
types and amounts required under the Mortgages.
(F) Lien Search Reports. Lender shall have received
satisfactory reports of UCC (collectively, the "UCC
Searches"), tax lien, judgment and litigation searches con
ducted by a search firm acceptable to Lender with respect to
the Collateral relating to the Advance, Borrower and FGI,
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such searches to be conducted in each of the locations set
forth on Exhibit V attached hereto and to be dated not more
than 45 days prior to the Advance Closing Date.
(G) Title Insurance Policy. Lender shall have
received a commitment (in form and substance satisfactory to
Lender) to issue the Title Insurance Policy or, with respect
to the acquisition of a Collateral Loan, an endorsement to
the Lender's Title Policy insuring the valid assignment of
the related mortgage to Lender and a copy of the Lender's
Title Policy.
(H) Environmental Matters. With respect to the
acquisition of a Facility, Lender shall have received an
Environmental Report with respect to the Facility, which
Environmental Report shall be acceptable to Lender and show
no adverse environmental condition on the Facility, such
Environmental Report to be conducted by an Independent
environmental engineer acceptable to Lender. With respect
to the acquisition of a Collateral Loan, Lender shall have
received from Borrower a copy of an Environmental Report
with respect to the Collateral Loan Property, if available,
and all other environmental due diligence materials in
Borrower's possession or which are reasonably obtainable by
Borrower.
(I) Consents, Licenses, Approvals, etc. Lender shall
have received copies of all consents, licenses and
approvals, if any, required in connection with the execu
tion, delivery and performance by Borrower, and the validity
and enforceability, of the Loan Documents, and such con
sents, licenses and approvals shall be in full force and
effect.
(J) Additional Matters. Lender shall have received
such other certificates (including a certificate of
occupancy reflecting the use of the Facility as of the
Advance Closing Date), opinions, documents (including the
purchase agreement pursuant to which Borrower intends to
acquire the Facility) and instruments (including a letter
from the appropriate Governmental Authority regarding the
zoning of the Facility) relating to the Advance as may have
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been reasonably requested by Lender, and all corporate and
other proceedings, all other documents (including, without
limitation, all documents referred to herein and not
appearing as exhibits hereto) and all legal matters in
connection with the Loan shall be satisfactory in form and
substance to Lender. If requested by Lender, Lender shall
have received an Appraisal with respect to the Facility.
(K) Representations and Warranties. The representa
tions and warranties herein and in the other Loan Documents
shall be true and correct in all material respects on such
date both before and after giving effect to the making of
the Advance, except as disclosed in the compliance certifi
cate delivered by Borrower pursuant to Section 3.3(A)(xii)
and approved by Lender.
(L) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing on
such date either before or after giving effect to the making
of the Advance.
(M) No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any Govern
mental Authority shall have been issued, and no litigation
shall be pending or threatened, which in the good faith
judgment of Lender would enjoin, prohibit or restrain, or
impose or result in the imposition of any material adverse
condition upon, the making or repayment of the Advance or
the Loan or the consummation of the Transactions.
(N) Survey. Lender shall have received the Survey
with respect to the Facility or Collateral Loan Property.
(O) Engineering Report. With respect to the
acquisition of a Facility, and, if requested by Lender, with
respect to the acquisition of a Collateral Loan, Lender
shall have received the Engineering Report with respect to
the Facility prepared by a firm acceptable to Lender in its
sole discretion and showing no adverse structural condition.
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(P) Management Agreement. With respect to the
acquisition of a Facility, Lender shall have received the
Management Agreement with respect to the Facility.
(Q) Transaction Costs. Borrower shall have paid (or
agreed to pay at closing from the proceeds of the Advance)
all Transaction Costs for which bills have been submitted
and have not been previously paid.
(R) Debt Service Coverage Ratio. With respect to the
acquisition of a Facility, as evidenced in a certificate
delivered to Lender, the Facility to be acquired with the
Advance shall have a Debt Service Coverage Ratio of at least
1.30.
(S) Site Inspection. Lender shall have performed, or
caused to be performed on its behalf, an on-site due dili
gence review of the Facility or the Collateral Loan Property
to be acquired with the Advance satisfactory to Lender in
its sole discretion.
(T) Effect on Mortgaged Property and Collateral Loan
Properties. The effect on the composition of the Mortgaged
Property and Collateral Loan Properties of the inclusion of
the Facility or the Collateral Loan Property to be acquired
with the Advance shall be acceptable to Lender in its sole
discretion. (Specifically, Borrower agrees that Lender may
reject the inclusion of a Facility or Collateral Loan in
order to maintain a pool composition of 60% congregate care
facilities or independent living facilities and 40% assisted
living facilities).
(U) Financial Information. Lender shall have received
acceptable financial information relating to the Facility or
the Collateral Loan Property to be acquired with the
Advance, including, to the extent requested by Lender, but
not limited to, operating statements, census data, rent
roll, resident mix, regulatory cost reports, state surveys,
the most recent audited consolidated financial statements
and unaudited quarterly consolidated financial statements.
If a Facility was not audited, but the operations of such
Facility were included in the audited financial statements
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of another entity, a certification from the certified public
accounting firm which performed the audit to the effect that
the financial statements of such Facility are consistent
with the financial statements of such Facility included in
the audited consolidated financial statements of such entity
is acceptable in lieu of audited financial statements for
the Facility. In either case, audits must have been
performed by a "Big Six" accounting firm or another firm of
certified public accountants acceptable to Lender in its
sole discretion. If audited financial statements are not
available, Lender may specify agreed upon procedures to be
performed by a "Big Six" accounting firm or another firm of
certified public accountants acceptable to Lender in its
sole discretion to create similar information.
(V) Financial Statements. With respect to the first
Advance Closing Date, Lender has received the audited
consolidated financial statements of FGI for the fiscal year
ending March 31, 1994, and the unaudited consolidated
financial statements of FGI for the three-, six- and nine-
month periods ended on a date not more than three months
prior to the Advance Closing Date. All audited financial
statements must have been prepared by a "Big Six" certified
public accounting firm or other firm acceptable to Lender in
its sole discretion.
Section 3.4. Acceptance of Borrowings. The acceptance
by Borrower of the proceeds of an Advance shall constitute a
representation and warranty by Borrower to Lender that all of the
conditions to be satisfied under Section 3.3 in connection with
the making of the Advance have been satisfied or waived in
accordance with Section 8.4.
Section 3.5. Form of Loan Documents and Related
Matters. The Notes 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 satisfactory in form and substance to Lender
in its sole discretion (unless the form thereof is prescribed
herein).
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Section 3.6. Conversion of Collateral Loan to an
Individual Property. Upon obtaining the written consent of
Lender as required by Section 6.1(O), Borrower may foreclose
upon, or may accept a deed-in-lieu of foreclosure for, any
Collateral Loan Property, subject to the delivery to Lender of
the same items relating to an Advance Closing Date specified in
Section 3.3 for such Collateral Loan Property as if such
documents were being delivered in connection with an Advance for
the acquisition of a Facility. Upon satisfaction of such
conditions (other than the delivery of Appraisals and Engineering
Reports, which documents shall be delivered by Borrower within
six months after the date upon which Borrower obtains title to
such Collateral Loan Property), such Collateral Loan Property
shall be subject to, and given the same treatment under, this
Agreement as if such Collateral Loan Property were an Individual
Property and Facility for all purposes hereunder, including, but
not limited to, the calculation of the Debt Service Coverage
Ratio, Net Cash Flow and Adjusted Net Cash Flow, Capital Reserve
Monthly Installment and Basic Carrying Costs Monthly Installment,
provided, that for purposes of calculating the Adjusted Net Cash
Flow, Net Cash Flow and Debt Service Coverage Ratio, such
Collateral Loan Property shall not be treated as a Facility until
six months after the date upon which Borrower obtains title to
such Collateral Loan Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1. Closing Date Borrower Representations.
Borrower represents and warrants that, as of the Closing Date:
(A) Organization. Borrower (i) is a duly organized
and validly existing limited liability company in good
standing under the laws of the State of Delaware, (ii) has
the requisite power and authority to carry on its business
as now being conducted, and (iii) has the requisite power to
execute and deliver, and perform its obligations under, this
Agreement.
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(B) Authorization. The execution and delivery by
Borrower of this Agreement, Borrower's performance of its
obligations hereunder and the creation of the security
interests and liens provided for in this Agreement (i) have
been duly authorized by all requisite action on the part of
Borrower, (ii) will not violate any provision of any Legal
Requirements, any order of any court or other Governmental
Authority, the Members Agreement or any indenture or
material agreement or other instrument to which Borrower is
a party or by which Borrower is bound, and (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 such indenture or material
agreement or instrument. Other than 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 this
Agreement.
(C) Litigation. There are no actions, suits or pro
ceedings 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.
(D) Agreements. Borrower is not a party to any
agreement or instrument or subject to any restriction which
is reasonably likely to have a Material Adverse Effect.
Borrower is not in default in any material respect in the
performance, observance or fulfillment of any of the obliga
tions, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or
any Individual Property is bound.
(E) No Bankruptcy Filing. Borrower is not contemplat
ing either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of
all or a major portion of Borrower's assets or property, and
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Borrower has no knowledge of any Person contemplating the
filing of any such petition against it.
(F) Full and Accurate Disclosure. No statement of
fact made by or on behalf of Borrower in this Agreement
contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements con
tained herein or therein not misleading. There is no fact
presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can
foresee, might adversely affect the business, operations or
condition (financial or otherwise) of Borrower.
(G) Location of Chief Executive Offices. The location
of Borrower's principal place of business and chief
executive office is 11320 Random Hills Road, Suite 400,
Fairfax, Virginia 22030.
(H) Compliance. Borrower complies in all material
respects with all applicable legal requirements. Borrower
is 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.
(I) Other Debt. Borrower has not borrowed or received
other debt financing.
(J) ERISA. Each Plan, and, to the knowledge of
Borrower, each Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all
material respects 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
and is continuing as to which Borrower would be under an
obligation to furnish a report to Lender under
Section 5.1(U)(i).
(K) Solvency. None of the transactions contemplated
hereby will be or have been made with an actual intent to
hinder, delay or defraud any present or future creditors of
Borrower and, giving effect to the transactions contemplated
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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,
disputed or contingent liabilities. 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 liabilities 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 pro
posed to be conducted. Borrower does not intend to, and
does not believe that it will, incur debts and liabilities
(including, without limitation, Contingent Liabilities 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).
(L) Not Foreign Person. Borrower is not a "foreign
person" within the meaning of 1445(f)(3) of the Code.
(M) Single-Purpose Entity.
(i) Borrower at all times since its formation has
been, and will continue to be, a duly formed and existing
Delaware limited liability company and a Single-Purpose
Entity. Borrower at all times since the acquisition of each
Facility or Collateral Loan has been, and will continue to
be, duly qualified as a foreign limited liability company in
the jurisdiction in which such Facility or Collateral Loan
Property is located. FAI at all times since its formation
has been, and will continue to be, a duly formed and
existing Delaware corporation and a Single-Purpose Entity.
(ii) Borrower at all times since its formation has
complied, and will continue to comply, with the provisions
of its Members Agreement and certificate of formation and
the laws of the State of Delaware relating to limited
liability companies. FAI at all times since its formation
has complied, and will continue to comply, with the
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provisions of its certificate of incorporation and its by-
laws and the laws of the State of Delaware relating to
corporations.
(iii) All customary formalities regarding the
existence of each of Borrower and FAI have been observed at
all times since its formation and will continue to be
observed.
(iv) Each of Borrower and FAI has at all times since
its formation accurately maintained, and will continue to
accurately maintain, its financial statements, accountings
records and other limited liability company or corporate
documents separate from those of its members or its
shareholders, Affiliates of its members or its shareholders
and any other Person. Neither Borrower nor FAI has at any
time since its formation commingled, nor will it commingle,
its assets with those of its members or its shareholders,
any Affiliates of its members or its shareholders, or any
other Person. Each of Borrower and FAI has at all times
since its formation accurately maintained, and will continue
to accurately maintain, its own bank accounts and separate
books of account.
(v) Each of Borrower and FAI has at all times since
its formation paid, and will continue to pay, its own
liabilities from its own separate assets.
(vi) Each of Borrower and FAI has at all times since
its formation identified itself, and will continue to
identify itself, in all dealings with the public, under its
own name and as a separate and distinct entity. Neither
Borrower nor FAI has at any time since its formation
identified itself, nor will it identify itself, as being a
division or a part of any other entity. Neither Borrower
nor FAI has at any time since its formation identified, nor
will it identify, its members or its shareholders or any
Affiliates of its members or its shareholders as being a
division or part of Borrower.
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(vii) Each of Borrower and FAI has been at all times
since its formation and will continue to be adequately
capitalized in light of the nature of its business.
(viii) Neither Borrower nor FAI has at any time since
its formation assumed or guaranteed, nor will Borrower or
FAI assume or guarantee, the liabilities of its members or
its shareholders (or any predecessor corporation), any
Affiliates of its members or its shareholders, or any other
Persons, except for liabilities relating to the Facilities
and except as permitted by or pursuant to this Agreement.
Neither Borrower nor FAI has at any time since its formation
acquired, nor will it acquire, obligations or securities of
its members or its shareholders (or any predecessor
corporation), or any Affiliates of its members or its
shareholders. Neither Borrower nor FAI has at any time
since its formation made, nor will it make, loans to its
members or its shareholders (or any predecessor
corporation), or any Affiliates of its members or its
shareholders.
(ix) Neither Borrower nor FAI has at any time since
its formation entered into or been a party to, and, nor will
it enter into or be a party to, any transaction with its
members or its shareholders (or any predecessor corporation)
or any Affiliates of its members or its shareholders except
in the ordinary course of business of Borrower on terms
which are no less favorable to Borrower than would be
obtained in a comparable arm's length transaction with an
unrelated third party.
In the event FAI no longer serves as managing member of
Borrower, all references herein to FAI shall be deemed to be
references to such succeeding managing member.
(N) Enforceability. This Agreement is the legal,
valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, subject to
bankruptcy, insolvency and other limitations on creditors'
rights generally and to equitable principles and the other
matters described in the opinions delivered pursuant to
Section 3.1(B).
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(O) 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.
(P) Subsidiaries. Borrower has no subsidiaries.
(Q) No Defaults. No Default or Event of Default
exists under or with respect to any Loan Document.
(R) Labor Matters. Borrower has no employees.
Borrower is not a party to any collective bargaining
agreements.
Section 4.2. Advance Closing Date Borrower
Representations. As of each Advance Closing Date, Borrower shall
represent and warrant that:
(A) Organization. Borrower (i) is a duly organized
and validly existing limited liability company in good
standing under the laws of the State of Delaware, (ii) has
the requisite power and authority to own its properties
(including, without limitation, the Mortgaged Property and
the Collateral Loans) and to carry on its business as now
being conducted and is qualified to do business in every
jurisdiction in which a Facility is located, and (iii) has
the requisite power to execute and deliver, and perform its
obligations under, the Notes, the Mortgages, the Collateral
Assignments and all of the other Loan Documents to which it
is a party.
(B) Authorization. The execution and delivery by
Borrower of the Notes, the Mortgages, the Collateral
Assignments and each of the other Loan Documents, Borrower's
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performance of its obligations thereunder and the creation
of the security interests and liens provided for in this
Agreement and the other Loan Documents to which it is a
party (i) have been duly authorized by all requisite action
on the part of Borrower, (ii) will not violate any provision
of any Legal Requirements, any order of any court or other
Governmental Authority, the Members Agreement or any
indenture or material agreement or other instrument to which
Borrower is a party or by which Borrower is bound and its
members, and (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 such
indenture or material agreement or instrument. Other than
those obtained or filed on or prior to the Advance 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 execu
tion, delivery or performance of the Notes, the Mortgages ,
the Collateral Assignments or the other Loan Documents
executed and delivered by Borrower on or prior to the
applicable Advance Closing Date.
(C) Litigation. Except for claims that are fully
covered by valid policies of insurance held by Borrower, and
except as disclosed in writing to Lender, 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 or any Individual Property or
Collateral Loan, which actions, suits or proceedings, if
determined against Borrower or any Individual Property or
Collateral Loan, might result in a Material Adverse Effect
or a lower reimbursement rate under the Reimbursement
Contracts.
(D) Title to the Mortgaged Property and Collateral
Loans. Borrower owns good, marketable and insurable fee
simple title to each Facility, free and clear of all Liens,
other than the Permitted Encumbrances applicable to that
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Facility. Borrower owns the lender's interest under each
Collateral Loan free and clear of all Liens other than
Permitted Encumbrances and the Collateral Loan Property is
free and clear of all Liens other than Permitted
Encumbrances. Except as disclosed in writing to Lender,
there are no outstanding options to purchase or rights of
first refusal affecting any Facility or Collateral Loan or,
to Borrower's knowledge, Collateral Loan Property.
(E) Full and Accurate Disclosure. No statement of
fact made by or on behalf of Borrower in this Agreement or
in any of the other Loan Documents 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
adversely affects, nor as far as Borrower can foresee, might
adversely affect, any Individual Property, Collateral Loan
or the business, operations or condition (financial or
otherwise) of Borrower.
(F) Compliance. Except for matters set forth in the
Engineering Reports and in the "Summary" sections of the
Environmental Reports and except for matters described in
Section 4.2(L) (as to which the provisions of Section 4.2(L)
shall apply), Borrower, each Facility and Borrower's use
thereof and operations thereat comply in all material
respects with all applicable Legal Requirements, including,
without limitation, building and zoning ordinances and
codes. Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Govern
mental Authority, the violation of which is reasonably
likely to have a Material Adverse Effect.
(G) Use of Proceeds; Margin Regulations. Borrower
will use the proceeds of the Advance for the purposes
described in Section 2.2. No part of the proceeds of the
Advance will be used for the purpose of purchasing or
acquiring any "margin stock" within the meaning of Regula
tion 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
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Board of Governors, or for any purposes prohibited by Legal
Requirements.
(H) Financial Information. All historical financial
data concerning Borrower, the Facilities or, to Borrower's
knowledge, the Collateral Loan Properties 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 adverse change in the financial
position of Borrower, the Facilities, to Borrower's
knowledge, the Collateral Loans, or in the results of
operations of Borrower. Borrower has not incurred any obli
gation or liability, contingent or otherwise, not reflected
in such financial data which might adversely affect its
business operations or any Facility or, to Borrower's
knowledge, any Collateral Loan.
(I) Condemnation. No Taking has been commenced or, to
Borrower's knowledge, is contemplated with respect to all or
any portion of any Individual Property or Collateral Loan
Property or for the relocation of roadways providing access
to any Facility or Collateral Loan Property.
(J) Other Debt. Except for the debt to be repaid from
the proceeds of the Advance, Borrower has not borrowed or
received other debt financing whether unsecured or secured
by any Individual Property, Collateral Loan or any part
thereof.
(K) Utilities and Public Access. Each Facility and,
to Borrower's knowledge, each Collateral Loan Property has
adequate rights of access to public ways and is served by
adequate water, sewer, sanitary sewer and storm drain
facilities. Except as otherwise disclosed by the Surveys,
all public utilities necessary to the continued use and
enjoyment of each Facility and, to Borrower's knowledge,
each Collateral Loan Property 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 such Facility or Collateral Loan Property without
passing over other property. All roads necessary for the
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full utilization of each Facility and, to Borrower's
knowledge, each Collateral Loan Property 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 or
Collateral Loan Property.
(L) Environmental Compliance. Except for matters set
forth in the "Summary" sections of the Environmental Reports
delivered to Lender in connection with the Advance or prior
Advances (true, correct and complete copies of which have
been provided to Lender by Borrower):
(i) Borrower is in compliance with all
applicable Environmental Laws, which compliance
includes, but is not limited to, the possession by
Borrower of all environmental, health and safety
permits, licenses and other governmental authorizations
required in connection with the ownership and operation
of the Individual Property 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 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 Individual Property, or the Collateral
Loan Property 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 for any Use or Release of any Hazardous
Substances.
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(iii) To the knowledge of Borrower
after due inquiry, there have been and are no past or
present Releases of any Hazardous Substance that are
reasonably likely to form the basis of any
Environmental Claim against Borrower 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, without limiting the generality of the
foregoing, there is not present at, on, in or under the
Individual Property or Collateral Loan Property, PCB-
containing equipment, asbestos or asbestos containing
materials, underground 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.
(v) No liens are presently recorded
with the appropriate land records under or pursuant to
any Environmental Law with respect to the Individual
Property or Collateral Loan Property and, to Borrower's
knowledge, no Governmental Authority has been taking or
is in the process of taking any action that could
subject the Individual Property or Collateral Loan
Property to Liens under any Environmental Law.
(vi) There have been no environmental
investigations, studies, audits, reviews or other
analyses conducted by or that are in the possession of
Borrower in relation to an Individual Property or
Collateral Loan Property which have not been made
available to Lender.
(M) Solvency. None of the transactions contemplated
hereby will be or have been made with an actual intent to
hinder, delay or defraud any present or future creditors of
Borrower and, giving effect to the transactions contemplated
hereby, the fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the Advance,
exceed Borrower's total liabilities, including, without
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limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of
Borrower's assets is and will, immediately following the
making of the Advance, be greater than Borrower's probable
liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and
matured. Borrower's assets do not and, immediately follow
ing the making of the Advance will not, constitute unreason
ably 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 liabili
ties (including, without limitation, Contingent Liabilities
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).
(N) Single-Purpose Entity.
(i) Borrower at all times since its formation has
been, and will continue to be, a duly formed and existing
Delaware limited liability company and a Single-Purpose
Entity. Borrower at all times since the acquisition of each
Facility or Collateral Loan has been, and will continue to
be, duly qualified as a foreign limited liability company in
the jurisdiction in which such Facility or Collateral Loan
Property is located. FAI at all times since its formation
has been, and will continue to be, a duly formed and
existing Delaware corporation and a Single-Purpose Entity.
(ii) Borrower at all times since its formation has
complied, and will continue to comply, with the provisions
of its Members Agreement and certificate of formation and
the laws of the State of Delaware relating to limited
liability companies. FAI at all times since its formation
has complied, and will continue to comply, with the
provisions of its certificate of incorporation and its by-
laws and the laws of the State of Delaware relating to
corporations.
(iii) All customary formalities regarding the
existence of each of Borrower and FAI have been observed at
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all times since its formation and will continue to be
observed.
(iv) Each of Borrower and FAI has at all times since
its formation accurately maintained, and will continue to
accurately maintain, its financial statements, accountings
records and other limited liability company or corporate
documents separate from those of its members or its
shareholders, Affiliates of its members or its shareholders
and any other Person. Neither Borrower nor FAI has at any
time since its formation commingled, and nor will it
commingle, its assets with those of its members or its
shareholders, any Affiliates of its members or its
shareholders, or any other Person. Each of Borrower and FAI
has at all times since its formation accurately maintained,
and will continue to accurately maintain, its own bank
accounts and separate books of account.
(v) Each of Borrower and FAI has at all times since
its formation paid, and will continue to pay, its own
liabilities from its own separate assets.
(vi) Each of Borrower and FAI has at all times since
its formation identified itself, and will continue to
identify itself, in all dealings with the public, under its
own name and as a separate and distinct entity. Neither
Borrower nor FAI has at any time since its formation
identified itself, nor will it identify itself, as being a
division or a part of any other entity. Neither Borrower
nor FAI has at any time since its formation identified, nor
will it identify, its members or its shareholders or any
Affiliates of its members or its shareholders as being a
division or part of Borrower.
(vii) Each of Borrower nor FAI has been at all times
since its formation and will continue to be adequately
capitalized in light of the nature of its business.
(viii) Neither Borrower nor FAI has at any time since
its formation assumed or guaranteed, nor will Borrower or
FAI assume or guarantee, the liabilities of its members or
its shareholders (or any predecessor corporation), any
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Affiliates of its members or its shareholders, or any other
Persons, except for liabilities relating to the Facilities
and except as permitted by or pursuant to this Agreement.
Neither Borrower nor FAI has at any time since its formation
acquired, nor will it acquire, obligations or securities of
its members or its shareholders (or any predecessor
corporation), or any Affiliates of its members or its
shareholders. Neither Borrower nor FAI has at any time
since its formation made, nor will it make, loans to its
members or its shareholders (or any predecessor
corporation), or any Affiliates of its members or its
shareholders.
(ix) Neither Borrower nor FAI has at any time since
its formation entered into or been a party to, nor will it
enter into or be a party to, any transaction with its
members or its shareholders (or any predecessor corporation)
or any Affiliates of its members or its shareholders except
in the ordinary course of business of Borrower on terms
which are no less favorable to Borrower than would be
obtained in a comparable arm's length transaction with an
unrelated third party.
In the event FAI no longer serves as managing member
of Borrower, all references herein to FAI shall be deemed to
be references to such succeeding managing member.
(O) No Joint Assessment; Separate Lots. Borrower
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 the 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 the Facility as a single lien. Each
Facility and Collateral Loan Property 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.
(P) Assessments. Except as disclosed in the Title
Insurance Policies, there are no pending or, to the know-
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ledge of Borrower, proposed special or other assessments for
public improvements or otherwise affecting any Facility or
Collateral Loan Property, nor, to the knowledge of Borrower,
are there any contemplated improvements to any Facility or
Collateral Loan Property that may result in such special or
other assessments.
(Q) Mortgage and Other Liens. Each Mortgage creates a
valid and enforceable first mortgage Lien on the Individual
Property described therein, as security for the repayment of
the Indebtedness, subject only to the Permitted Encumbrances
applicable to that Individual Property. Each Collateral
Security Instrument, including each Collateral Assignment,
establishes and creates a valid, subsisting and enforceable
Lien on and a security interest in, or claim to, the rights
and property described therein. All property covered by any
Collateral Security Instrument is subject to a Uniform
Commercial Code financing statement filed and/or recorded,
as appropriate, (or irrevocably delivered to an agent for
such recordation or filing) in all places necessary to
perfect a valid first priority Lien with respect to the
rights and property that are the subject of such Collateral
Security Instrument to the extent governed by the Uniform
Commercial Code. 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.
(R) Enforceability. Each Note, each Mortgage, each
Collateral Assignment and each other Loan Document executed
by Borrower in connection with the applicable Advance,
including, without limitation, any Collateral Security
Instrument, is the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with
its terms, subject to bankruptcy, insolvency and other
limitations on creditors' rights generally and to equitable
principles and the other matters described in the opinions
delivered pursuant to Section 3.3(B). Each such Note, each
such Mortgage, each Collateral Assignment and such other
Loan Documents are, as of the Advance Closing Date, not
subject to any right of rescission, set-off, counterclaim or
defense by Borrower, including the defense of usury, nor
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will the operation of any of the terms of each such Note,
each such Mortgage, each Collateral Assignment and such
other Loan Documents, or the exercise of any right
thereunder, render any of the Mortgages unenforceable
against Borrower, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense by
Borrower, including the defense of usury, and Borrower has
not asserted any right of rescission, set-off, counterclaim
or defense with respect thereto.
(S) Fair Market Value. As of the Advance Closing
Date, (i) the fair market value of the Individual Property
or Collateral Loan with respect to which an Advance is made
is equal to or greater than the amount of such Advance and
(ii) the fair market value of the Mortgaged Property and the
Collateral Loans is equal to or exceeds the aggregate amount
of all Advances made prior to or on such Advance Closing
Date.
(T) No Prior Assignment. As of the Advance Closing
Date, (i) Lender is the assignee of Borrower's interest
under the Leases and (ii) there are no prior assignments of
the Leases or any portion of the Rent due and payable or to
become due and payable which are presently outstanding.
(U) Bed Capacity. Neither Borrower nor Manager has
granted to any third party the right to reduce the number of
licensed beds or living units in any Facility or to apply
for approval to move the right to any and all of the
licensed beds or living units to any other location.
(V) Compliance with Nursing Home Laws. To the extent
required, each Facility and, to Borrower's knowledge, each
Collateral Loan Property is duly licensed as an intermediate
care nursing home under the applicable laws of the state
where it is located. The licensed bed capacity of each
Facility as set forth in the Appraisal for such Facility is
true and correct. Borrower and Manager are in compliance in
all material respects with the applicable provisions of
nursing home, nursing facility or assisted living facility
laws, rules and regulations to which each Facility is
subject. All Reimbursement Contracts are in full force and
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effect with respect to the Facilities. Borrower and Manager
are current in payment of all so-called provider specific
taxes or other assessments with respect to such
Reimbursement Contracts.
(W) Use of Facilities and each Collateral Loan
Property. Each Facility and, to Borrower's knowledge, each
Collateral Loan Property is used exclusively as an
independent living facility, assisted living facility and/or
congregate care facility and uses ancillary thereto.
(X) Certificate of Occupancy. Borrower has obtained
all Permits necessary to use and operate each Facility and,
to Borrower's knowledge, each Collateral Loan Property for
the use described in Section 4.2(W). 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.
(Y) Flood Zone. Except as shown on the Surveys, none
of the Facilities or Collateral Loan Properties is located
in a flood hazard area as defined by the Federal Insurance
Administration.
(Z) Physical Condition. Each Facility and, to
Borrower's knowledge, each Collateral Loan Property is free
of structural defects and all building systems contained
therein are in good working order in all material respects
subject to ordinary wear and tear, except as disclosed in
the Engineering Reports.
(AA) Security Deposits. All security deposits with
respect to the Facilities on the Advance Closing Date have
been transferred to the Security Deposits Accounts on or
prior to the Advance Closing Date, and Borrower is in
compliance with all Legal Requirements relating to such
security deposits as to which failure to comply is
reasonably likely to have a Material Adverse Effect.
(BB) No Defaults. No Default or Event of Default
exists under or with respect to any Loan Document.
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(CC) Intellectual Property. All material trademarks,
trade names and service marks that Borrower owns or has
pending, or under which it is licensed, are in good standing
and uncontested. There is no right under any trademark,
trade name or service mark necessary to the business of
Borrower as presently conducted or as Borrower contemplates
conducting its business. Borrower 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 material trademarks, trade names
and service marks of Borrower.
(DD) Title Insurance. Each Collateral Loan is covered
by a valid and enforceable American Land Title Association
mortgagee title insurance policy or other form of policy of
insurance ("Lender's Title Policy"), generally acceptable to
prudent institutional lenders, insuring Borrower, its
successors and assigns, as to the first priority lien of the
mortgage in the original principal amount of the Collateral
Loan, free and clear of all liens and encumbrances having
priority over the lien of the mortgage and subject only to
Permitted Encumbrances. Each Lender's Title Policy is in
full force and effect and all premiums with respect thereto
have been paid in full. Each Lender's Title Policy is
assignable to or endorsable in favor of assignees of each
such Collateral Loan (subject to securing the required
assignment endorsement upon payment of the premium therefor,
if necessary) and (subject to the recordation of the
Collateral Assignment, the securing of the required
assignment endorsement, if any, and the payment of the
required premium therefor) will inure to the benefit of
Lender. Borrower knows of no claims have been made under
such Lender's Title Policy, and Borrower has not done, by
act or omission, anything which would impair the coverage of
such Lender's Title Policy.
Section 4.3. Survival of Representations.
(a) Borrower agrees that (i) all of the representations and
warranties of Borrower set forth in Section 4.1 and elsewhere in
this Agreement (but not in Section 4.2) and in the other Loan
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Documents delivered on the Closing Date are made as of the
Closing Date (except as expressly otherwise provided), (ii)
subject to paragraph (b) below, all of the representations and
warranties of Borrower set forth in Section 4.2 and elsewhere in
this Agreement (including in Section 4.1) and in the other Loan
Documents are made, or reaffirmed, as of each Advance Closing
Date, and (iii) all representations and warranties made by
Borrower shall survive the delivery of the Notes and making of
the Advances and continue for so long as any amount remains owing
to Lender under this Agreement, the Notes or any of the other
Loan Documents; provided, however, that the representations set
forth in Section 4.2(L) shall survive in perpetuity. All repre
sentations, 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.
(b) To the extent that any representations and
warranties of Borrower set forth in this Agreement cannot be
remade and reaffirmed as of an Advance Closing Date, Borrower
shall disclose in writing to Lender the representations or
warranties that cannot be remade or reaffirmed and the reasons
therefor and such representations and/or warranties shall be
deemed remade as modified by such disclosure. If Lender
determines that any such disclosed matters, singly or together,
have or are reasonably likely to have a Group Material Adverse
Effect, Lender shall not be obligated to make any Advance. If
Lender determines that any such disclosed matters, singly or
together, have or are reasonably likely to have a Material
Adverse Effect in respect of a Facility or Collateral Loan to
which an Advance is to be made, Lender shall not be obligated to
make an Advance with respect to such Facility or Collateral Loan,
but Lender shall be obligated to make Advances with respect to
other Facilities or Collateral Loans (if all other conditions to
the making of such Advances are satisfied or waived).
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ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
Section 5.1. Borrower Covenants. Borrower covenants
and agrees that, from the date hereof (or, to the extent such
covenants relate to a Facility or Collateral Loan Property, from
the Advance Closing Date with respect to such Facility or
Collateral Loan Property) and until payment in full of the
Indebtedness (or with respect to a particular Individual Property
or Collateral Loan, the earlier release of its Related Mortgage
or Lien):
(A) Existence; Compliance with Legal Requirements;
Insurance. Borrower shall do or cause to be done all things
necessary to preserve, renew and keep in full force and
effect its existence, rights, licenses, Permits and
franchises necessary for the conduct of its business and
comply in all material respects with all Legal Requirements
and Insurance Requirements applicable to it and each
Individual Property. 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 reason
able wear and use, and from time to time make, or cause to
be made, all reasonably necessary repairs, renewals, replace
ments, betterments and improvements thereto, all as more
fully provided in the Mortgages. Borrower shall keep each
Individual Property insured at all times, by financially
sound and reputable insurers, to such extent and against
such risks, and maintain liability and such other insurance,
as is more fully provided in the Mortgages.
(B) Impositions and Other Claims. Borrower shall pay
and discharge or cause to be paid and discharged all Imposi
tions, 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 Mortgages.
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(C) Litigation. Borrower shall give prompt written
notice to Lender of any litigation or governmental proceed
ings pending or threatened (in writing) against Borrower
which is reasonably likely to have a Material Adverse
Effect.
(D) Environmental Remediation.
(i) If any investigation, site monitoring, cleanup,
removal, restoration or other remedial work of any kind or
nature is required pursuant to an order or directive of any
Governmental Authority or under any applicable Environmental
Law (collectively, the "Remedial Work"), because of or in
connection with the current or future presence, suspected
presence, Release or suspected Release of a Hazardous
Substance on, under or from a Facility or any portion
thereof, Borrower shall promptly commence and diligently
prosecute to completion all such Remedial Work. In all
events, such Remedial Work shall be commenced within 30 days
after any demand therefor by Lender 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) neither the
Facility nor any part thereof or interest therein will be
sold, forfeited or lost if Borrower performs the Remedial
Work being contested, and Borrower would have the
opportunity to do so, in the event of Borrower's failure to
prevail in the contest, (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 neither the Facility nor any
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interest therein would be subject to the imposition of any
lien for which Borrower has not furnished additional secur
ity 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.
(ii) If requested by Lender, all Remedial Work under
clause (i) above shall be performed by contractors, and
under the supervision of a consulting Engineer, each
approved in advance by Lender which approval will not be
unreasonably withheld or delayed. All costs and expenses
reasonably 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 30
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 Mortgages) and expenses (including reasonable
attorneys' fees and disbursements, but excluding internal
overhead, administrative and similar costs of Lender)
reasonably relating to or incurred by Lender in connection
with monitoring, reviewing or performing any Remedial Work
in accordance herewith.
(iii) Borrower shall not commence any Remedial Work
under clause (i) above, nor enter into any settlement agree
ment, consent decree or other compromise relating to any
Hazardous Substances or Environmental Laws which is reason
ably likely to have a Material Adverse Effect. Notwith
standing the foregoing, if the presence or threatened
presence of Hazardous Substances on, under or about any
Individual Property 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
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and, in any event, within three Business Days, of any action
taken.
(E) Environmental Matters; Inspection.
(i) Borrower shall not authorize a Hazardous Substance
to be present on, under or to emanate from a Facility, or
migrate from adjoining property controlled by Borrower onto
or into a Facility, except under conditions permitted by
applicable Environmental Laws and, in the event that such
Hazardous Substances are present on, under or emanate from a
Facility, or migrate onto or into a Facility, Borrower shall
cause the 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 reasonable prior written notice, Lender
shall have the right at all reasonable times to enter upon
and inspect all or any portion of any Facility, provided
that such inspections shall not unreasonably interfere with
the operation or the tenants, residents or occupants of such
Facility. If Lender suspects that Remedial Work may be
required, Lender may select a consulting Engineer to conduct
and prepare reports of such inspections. Borrower shall be
given a reasonable opportunity to review any reports, data
and other documents or materials reviewed or prepared by the
Engineer, and to submit comments and suggested revisions or
rebuttals to same. 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 this Agreement, and shall expressly include the right (if
Lender suspects that Remedial Work may be required) to
conduct soil borings, establish ground water monitoring
wells and conduct other customary environmental tests,
assessments and audits.
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(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, administra
tive and similar costs of Lender) reasonably relating to, or
incurred by Lender in connection with, the inspections and
reports described in this Section 5.1(E) (to the extent such
inspections and reports relate to any Facility) in the
following situations:
(x) If Lender has reasonable 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 by any
Governmental Authority with respect to any Hazardous
Substance on, in, under or emanating from any Facility or
Collateral Loan Property, which could reasonably be expected
to impair the value of Lender's security interests hereunder
or have a Material Adverse Effect;
(ii) any proceeding, investigation or inquiry
commenced or threatened in writing by any Governmental
Authority, against Borrower, 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,
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proceedings under the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C.
9601, et seq., which could reasonably be expected to impair
the value of Lender's security interests hereunder or have a
Material Adverse Effect;
(iii) all Environmental Claims asserted or threatened
against Borrower, against any other party occupying any
Facility or Collateral Loan Property or any portion thereof
which become known to Borrower or against such Facility or
Collateral Loan Property, which could reasonably be expected
to impair the value of Lender's security interests hereunder
or have a Material Adverse Effect;
(iv) the discovery by Borrower of any occurrence or
condition on any Facility or Collateral Loan Property or on
any real property adjoining or in the vicinity of such
Facility or Collateral Loan Property which could reasonably
be expected to lead to an Environmental Claim against
Borrower or Lender which such Environmental Claim is
reasonably likely to have a Material Adverse Effect; and
(v) the commencement or completion of any Remedial
Work with respect to a Facility or a Collateral Loan
Property.
(G) Copies of Notices. Borrower shall transmit to
Lender copies of any citations, orders, notices or other
written communications received from any Person 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, Deed of Trust Trustee, Trustee,
Custodian and/or Servicer, may join and participate in, as a
party if Lender so determines, any legal or administrative
proceeding or action concerning a Facility, Collateral Loan
Property or any portion thereof under any Environmental Law,
if, in Lender's reasonable judgment, the interests of
Lender, Deed of Trust Trustee, Trustee, Custodian or
Servicer will not be adequately protected by Borrower.
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Borrower agrees to bear and shall pay or reimburse Lender,
Deed of Trust Trustee, Trustee, Custodian and/or Servicer,
on demand for all reasonable sums advanced and expenses
incurred (including reasonable attorneys' fees and
disbursements, but excluding internal overhead,
administrative and similar costs of Lender, Deed of Trust
Trustee, Trustee, Custodian and Servicer) incurred by
Lender, Deed of Trust Trustee, Trustee, Custodian and/or
Servicer, in connection with any such action or proceeding.
(I) Indemnification. Borrower agrees to indemnify,
reimburse, defend, and hold harmless Lender, Deed of Trust
Trustee, Servicer, Custodian and Trustee for, from, and
against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and
expenses, including, without limitation, interest, penal
ties, consequential damages, reasonable attorneys' fees,
disbursements and expenses, and reasonable consultants'
fees, disbursements and expenses (but excluding internal
overhead, administrative and similar costs of Lender, Deed
of Trust Trustee, Servicer, Custodian and Trustee), asserted
against, resulting to, imposed on, or incurred by Lender,
Deed of Trust Trustee, Servicer, Custodian and Trustee,
directly or indirectly, in connection with any of the follow
ing, except to the extent same are directly and solely
caused by Lender's, Deed of Trust Trustee's, Servicer's,
Custodian's or Trustee's negligence or willful misconduct:
(i) events, circumstances, or conditions which
are alleged to, or do, form the basis for an Environmental
Claim;
(ii) any Environmental Claim against any Person
whose liability for such Environmental Claim Borrower has or
may have assumed or retained either contractually or by
operation of law; or
(iii) the breach of any representation, warranty or
covenant set forth in Section 4.2(L) and Sections 5.1(D)
through 5.1(I), inclusive.
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The indemnity provided in this Section 5.1(I) shall not
be included in any exculpation of Borrower or Guarantor from
personal liability provided in this Agreement or in any of
the other Loan Documents. 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.
(J) Access to Facilities. Borrower shall permit
agents, representatives and employees of Lender to inspect
each Facility, Collateral Loan Property or any part thereof
at such reasonable times as may be requested by Lender upon
reasonable advance notice, subject, however, to the rights
of the tenants, occupants and residents of the Facility or
Collateral Loan Property or the obligor under the Collateral
Loan and provided that Borrower is permitted to do so under
the loan documentation for such Collateral Loan.
(K) Notice of Default. Borrower shall promptly advise
Lender of any material adverse change in Borrower's
condition, financial or otherwise, or of the occurrence of
any Event of Default, or of the occurrence of any Default.
(L) Cooperate in Legal Proceedings. Except with
respect to any claim by Borrower against Lender, Borrower
shall cooperate fully with Lender with respect to any
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. Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any Insurance
Proceeds lawfully or equitably payable to Lender in connec-
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tion with each Individual Property, and Lender shall be
reimbursed for any expenses reasonably incurred in connec
tion therewith (including 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 such Individual Property or any part thereof, but
excluding internal overhead, administrative and similar
costs of Lender) out of such Insurance 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 (but, other than in connection with the Advance
Closing Dates, a Securitization or the Refinancing, in no
event more often than once every two years during the term
of this Agreement), pay for (a) reports of UCC, tax lien,
judgment and litigation searches with respect to Borrower
and (b) searches of title to each Facility, each such search
to be conducted by search firms designated by Lender in each
of the locations designated by Lender;
(ii) furnish to Lender all instruments, documents,
boundary surveys, footing or foundation surveys, certifi
cates, 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;
(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 Notes, as Lender may reasonably
require; and
(iv) do and execute all and such further lawful
and reasonable 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 reasonably require from time to time.
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(P) Management of Mortgaged Property. Each of the
Facilities will be managed at all times by Manager pursuant
to a Management Agreement until terminated as herein pro
vided. Pursuant to each Manager's Subordination, Manager
will agree that the applicable Management Agreement is
subject and subordinate in all respects to the Lien of the
Related Mortgage. Each Management Agreement may be termi
nated by Lender upon 30 days prior written notice to
Borrower and Manager (i) upon the occurrence of an Event of
Default of the type described in clause (i) or (ii) of
Section 7.1, or (ii) if Manager commits any act which would
permit termination under the Management Agreement and all
applicable notice and cure periods have expired; provided,
however, that after a Securitization Closing Date, Servicer
shall not terminate a Management Agreement relating to a
Facility included in such Securitization unless at least 51%
in interest of each class of the Certificateholders shall
vote in favor of the termination of such Management
Agreement. Borrower may from time to time appoint a
successor manager to manage the Facilities or any of the
Facilities with Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed,
provided, however, that if a Manager is an Affiliate of
Borrower and Borrower has a right to terminate its
Management Agreement pursuant to its terms, Borrower may
terminate such Management Agreement and appoint FGI as the
successor manager without Lender's prior written consent as
long as FGI enters into a Management Agreement and a
Manager's Subordination. Notwithstanding the foregoing, any
successor property manager selected hereunder by Lender or
Borrower to serve as Manager shall be a reputable management
company having at least seven years' experience in the
management of independent living facilities, assisted living
facilities and/or congregate care facilities (as the case
may be) in the state in which the Facility is located, shall
enter into a Management Agreement and Manager's
Subordination and shall, if after a Securitization Closing
Date, (i) have qualifications such that the then current
ratings of no class of the Certificates would be downgraded
or withdrawn by the Rating Agencies upon such an appointment
and (ii) be reasonably acceptable to Servicer. Borrower
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further covenants and agrees that Manager (including any
successor property manager serving as Manager) shall at all
times during the term of the Loan after the first Advance
maintain worker's compensation insurance as required by
Governmental Authorities.
(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 (or such other accounting basis reason
ably acceptable to Lender) consistently applied, books,
records and accounts reflecting in reasonable detail all of
the financial affairs of Borrower and all items of income
and expense in connection with the operation of each Facil
ity and ownership of the Collateral Loans and in connection
with any services, equipment or furnishings provided in
connection with the operation of each Facility, whether such
income or expense may be realized by Borrower or by any
other Person whatsoever. Lender shall have the right from
time to time 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 with
respect to Borrower or any Facility or Collateral Loan,
Borrower shall pay any costs and expenses incurred by Lender
to examine Borrower's accounting records with respect to
such Facility or Collateral Loan, as Lender shall reasonably
determine to be necessary or appropriate in the protection
of Lender's interest.
(ii) After the first Advance, Borrower shall
furnish to Lender annually, within 90 days following the end
of each Fiscal Year, a complete copy of Borrower's financial
statement audited by an Independent certified public accoun
tant acceptable to Lender (Lender hereby agreeing that any
"Big Six" certified public accounting firm shall be
acceptable to Lender) in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender)
consistently applied covering Borrower's financial position
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and results of operations, including consolidated and
consolidating balance sheets for each Facility, for such
Fiscal Year and containing a statement of revenues and
expenses, a statement of assets and liabilities and a
statement of Borrower's equity.
Together with Borrower's annual financial statements,
Borrower shall furnish to Lender an Officer's Certificate
certifying as of the date thereof (x) that the annual finan
cial statements present fairly in all material respects the
results of operations and financial condition of Borrower
all in accordance with GAAP consistently applied, and (y)
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.
(iii) After the first Advance, Borrower shall
furnish to Lender, within 45 days following the end of each
Fiscal Year quarter, in the form attached hereto as
Exhibit W, (x) a true, complete and correct cash flow
statement with respect to each Facility for that quarter,
and (y) census information for each Facility as of the end
of that quarter in sufficient detail to show by patient-mix
(i.e., private, Medicare, Medicaid (if applicable) and
V.A.), the average monthly census of the Facility and
statements of occupancy rates, together with an Officer's
Certificate in substantially the form attached hereto as
Exhibit X.
(iv) After the first Advance, Borrower shall
furnish to Lender, within 45 days after the end of each
Fiscal Year quarter, an aged accounts receivable report from
each Facility in sufficient detail to show amounts due from
each class of patient-mix by the account age classifications
of 30 days, 60 days, 90 days, 120 days, and over 120 days,
accompanied by an Officer's Certificate.
(v) Borrower shall furnish to Lender, within
three Business Days after the receipt by Borrower or a
Facility, any and all written notices (regardless of form)
from any licensing and/or certifying agency that the
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Facility's license or the Medicare or Medicaid certification
of the Facility is being revoked or suspended, or that
action is pending or being considered to revoke or suspend
the Facility's license or such certification.
(vi) Borrower shall furnish to Lender, within ten
days after the date of the required filing of cost reports
for each Facility with the Medicaid agency or the date of
actual filing of such cost report of the Facility with such
agency, whichever is earlier, a complete and accurate copy
of the annual Medicaid cost report for each Facility, which
will be prepared by Manager or by an Independent certified
public accountant or by an experienced cost report preparer
acceptable to Lender (any "Big Six" accounting firm being
deemed acceptable to Lender), and promptly furnish Lender
any amendments filed with respect to such reports and all
responses, audit reports or inquiries with respect to such
reports.
(vii) Borrower shall furnish to Lender copies of
all SEC filings by Borrower or FGI, other than Registration
Statements on Form S-8 and reports under Sections 13(d) and
16(a) of the Securities Exchange Act of 1934, as amended.
(viii) Borrower shall furnish to Lender, within 15
Business Days after request, such further information with
respect to the operation of any Facility and the financial
affairs of Borrower as may be reasonably requested by
Lender, including all business plans prepared for Borrower.
(ix) Borrower shall furnish to Lender, within 15
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.
(x) Borrower shall furnish Lender, within 15 days
following receipt by Borrower, copies of all financial
reports delivered to Borrower by each obligor under a
Collateral Loan.
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(xi) After a Securitization Closing Date, Borrower
shall also furnish to Trustee a copy of each report, state
ment and other information provided to Lender under this
Section 5.1(Q).
(R) Conduct of Business. Borrower shall cause the
operation of each Facility to be conducted at all times in a
manner consistent with at least the level of operation of
such Facility as of the applicable Advance Closing Date,
including, without limitation, the following:
(i) to maintain or cause to be maintained the
standard of care for the patients of each Facility at all
times at a level necessary to insure a level of quality care
for the patients of such Facility not lower than that
typically provided at facilities managed by Manager as of
the Closing Date;
(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 licenses,
Permits, Reimbursement Contracts and any other agreements
necessary for the continued use and operation of each
Facility or as may be necessary for participation in the
Medicare, Medicaid or other applicable reimbursement
programs 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 Manager to operate
such Facility.
(S) Periodic Surveys. Borrower shall furnish (or
cause Manager to furnish) to Lender within ten Business Days
after receipt, a copy of any Medicare, Medicaid or other
licensing agency annual licensing certificate, survey or
report and any statement of deficiencies, and within the
time period required by the particular agency for furnishing
a plan of correction also furnish or cause to be furnished
to Lender a copy of the plan of correction generated from
such survey or report for the Facility, and correct or cause
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to be corrected any deficiency, the curing of which is a
condition of continued licensure or for full participation
in Medicare and Medicaid for existing patients or for new
patients to be admitted with Medicare or Medicaid coverage,
by the date required for cure by such agency (plus
extensions granted by such agency).
(T) Environmental Matters Relating to Collateral
Loans; Inspection. (i) Prior to acquisition by Borrower of
title to any Collateral Loan Property (whether as a result
of, or in lieu of, foreclosure or otherwise) after the
related Advance Closing Date, Borrower shall obtain an
Environmental Report of such Collateral Loan Property and
deliver a copy of same to Lender; Borrower shall not acquire
title to any Collateral Loan Property after the related
Advance Closing Date unless (A) Lender has delivered to
Borrower its written approval to such acquisition or
(B) Borrower has delivered to Lender an Environmental Report
for the Collateral Loan Property which complies with the
preceding clause and Lender has not objected to such
acquisition in writing within 10 Business Days of receipt of
such Environmental Report.
(ii) Borrower shall not obtain title to a Collateral
Loan Property as a result of, or in lieu of, foreclosure or
otherwise, and shall not otherwise acquire possession of any
Collateral Loan Property, if as a result of any such
actions, Borrower or Lender would be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Collateral Loan Property
within the meaning of Environmental Laws unless Borrower has
previously determined, based on an Environmental Report that
meets the requirements of clause (i) above that: (A) such
Collateral Loan Property is in material compliance with
applicable Environmental Laws and (B) there are no known
circumstances present at such Collateral Loan Property
relating to the use, treatment, storage or disposal of any
Hazardous Substances for which investigation, testing,
monitoring, containment, clean-up or remediation reasonably
could be required under any Environmental Law.
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(iii) Upon reasonable prior notice, Lender shall have
the right at all reasonable times to enter upon and inspect
all or any portion of a Collateral Loan Property and to
inspect and make extracts from the Borrower's loan files and
records with respect to each Collateral Loan, provided that
(A) such inspections shall not unreasonably interfere with
the operation or the occupants or tenants of such Collateral
Loan Property and (B) Borrower has the right to do so under
the related mortgage. Lender may select a consulting
engineer at the Lender's expense to conduct and prepare
reports of such inspections. Borrower shall be given a
reasonable opportunity to review any reports, data and other
documents or materials reviewed or prepared by the engineer,
and to submit comments and suggested revisions or rebuttals
to same.
(U) ERISA. Borrower shall deliver to Lender as soon
as possible, and in any event within ten 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 pro
poses 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):
(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
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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 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
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.
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ARTICLE VI
NEGATIVE COVENANTS
------------------
Section 6.1. Borrower Negative Covenants. Borrower
covenants and agrees that, until payment in full of the Indebt
edness (or, with respect to any particular Individual Property,
the earlier release of the Related Mortgage or with respect to a
Collateral Loan, the release of the related Collateral
Assignment), it will not do, directly or indirectly, any of the
following unless Lender consents thereto in writing:
(A) Liens on the Mortgaged Property and Collateral
Loan. Incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Lien with
respect to any Individual Property or Collateral Loan,
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 the Mortgages, allow any
Transfer to occur, terminate the Management Agreements, or
enter into a management contract with respect to any
Facility. Any member may transfer its interest in Borrower
to one or more Persons, as long as (i) each transferee
enters into a pledge and security agreement in substantially
the form attached hereto as Exhibit H (or assumes the
obligations of the transferor under the Pledge and Security
Agreement) and delivers UCC financing statements and other
documents satisfactory to Lender, (ii) after a
Securitization Closing Date, a substantive nonconsolidation
opinion satisfactory to Lender and its counsel is delivered
by such transferee's counsel, (iii) if such transfer occurs
after a Securitization Closing Date, each Rating Agency
confirms in writing that such transfer will not result in a
downgrade or withdrawal of the ratings on the Certificates
and (iv) if such transfer occurs after a Securitization
Closing Date, any other requirements of the Rating Agencies
in connection with such transfer are satisfied. After any
transfer by a member of its interest in Borrower pursuant to
this Section 6.1, the form of the non-consolidation opinion
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attached hereto as Exhibit L shall be updated by Borrower's
counsel to include such transfer.
(C) Other Borrowings. Incur, create, assume, become
or be liable in any manner with respect to Other Borrowings,
except that (i) Borrower may incur secured or unsecured
indebtedness relating solely to financing or leasing of
Equipment and costs associated with such indebtedness (x)
which does not exceed $150,000 in aggregate at any Facility
or $1,000,000 in the aggregate at all the Facilities, and
(y) the proceeds of which are not distributed to Borrower
except as reimbursement for monies expended by Borrower to
fund the financing or leasing of such Equipment and (ii) FGI
may make loans to Borrower provided that such loans are
unsecured, subordinate to the Loan and on terms satisfactory
to Lender.
(D) Dissolution. Dissolve, terminate, liquidate,
merge with or consolidate into another Person, except as
expressly permitted pursuant to the Members Agreement;
provided, however, that the surviving Person(s) must be a
Single-Purpose Entity.
(E) 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.
(F) 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.
(G) 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 $250,000, are fully disclosed
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to Lender in advance; provided, however, that Lender hereby
agrees that, provided no Event of Default shall have
occurred and be continuing with respect to Borrower or any
Individual Property or Collateral Loan, and subject to the
provisions of Sections 5.1(P) and 5.1(Q), nothing contained
in the foregoing shall prohibit payment by Borrower of any
fees or expenses to Manager in accordance with the terms of
the Management Agreements, and Lender hereby consents to
Manager serving as manager of the Facilities; provided,
further, however, that the management fees charged by
Manager shall not be more than the amounts provided for in
each Management Agreement as of the Advance Closing Date
with respect to the Facility covered by such Management
Agreement.
(H) Creation of Easements. Create, or permit any
Facility, or, subject to Borrower's rights under the loan
documentation of the related Collateral Loan, any Collateral
Loan Property or any part thereof to become subject to, any
easement, license or restrictive covenant, other than a
Permitted Encumbrance. Lender agrees that it will join in
and subordinate the Liens of the Mortgages to any easement,
license or restrictive covenant (i) which arises after the
date hereof and (ii) that Lender, (A) in Lender's reasonable
discretion, deems to constitute a Permitted Encumbrance or
(B) in Lender's sole discretion, deems not to adversely
affect the value of a Facility or Collateral Loan.
(I) Misapplication of Funds. Distribute any Rents or
Moneys received from Accounts in violation of the provisions
of Section 2.12, or fail to deliver any security deposit to
Manager for deposit into the Security Deposit Accounts, or
misappropriate any security deposit or portion thereof.
(J) 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.
(K) Admission of Members. Admit any Person as a
member of Borrower, unless the Person(s) who is so admitted
pledges its membership interest to Lender pursuant to an
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agreement in the form of Exhibit H attached hereto and
delivers UCC-1 financing statements and such other documents
as to the satisfaction of Lender.
(L) Assignment of Licenses and Permits. Assign or
transfer any of its interest in any Permits, certificates of
need, or Reimbursement Contracts (including rights to
payment thereunder) 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
including, without limitation, patient records, medical and
clinical records (except for removal of records (i) in the
ordinary course of business, (ii) as directed by the
patients owning such records or (iii) pursuant to court
order or Legal Requirements) without Lender's prior written
consent, which consent may be granted or refused in Lender's
sole discretion.
(M) Place of Business. Change its chief executive
office or its principal place of business without giving
Lender at least 30 days' prior written notice thereof and
promptly providing Lender such information as Lender may
reasonably request in connection therewith.
(N) Leases. Enter into, amend or cancel Leases,
except as permitted by or pursuant to the Mortgages.
(O) Modification of Agreements. Prior to obtaining
the written consent of Lender and subject to the
satisfaction of any conditions with respect to obtaining
such consent Lender may impose, Borrower shall not (i)
amend, modify, release, compromise, settle, realize judgment
upon or terminate a Collateral Loan or any loan documents
relating thereto, (ii) waive any "default" or "event of
default" under a Collateral Loan, or (iii) take title to a
Collateral Loan Property (whether by foreclosure, deed-in-
lieu of foreclosure or by operation of law); provided,
however, the foregoing shall not restrict Borrower's right
in any manner to send default notices to the obligor of a
Collateral Loan pursuant to the loan documents, commence and
prosecute actions for foreclosure or otherwise under the
loan documents; provided, further, that Borrower shall
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notify Lender in a timely manner of the commencement of, and
all developments with respect to any negotiations between
Borrower and the obligor of the Collateral Loan, any legal
actions or proceedings, including, without limitation,
foreclosure actions, and Borrower shall under no
circumstances enter a judgment for foreclosure upon any
Collateral Loan Property or accept a deed-in-lieu of
foreclosure for such Collateral Loan Property. Lender shall
give or deny its consent as to any of the foregoing within
10 Business Days after its receipt of a written request for
such consent by Borrower.
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 (x) the funds in the Debt
Service Payment Sub-Account are insufficient to pay the
Required Debt Service Payment due on such Payment Date or
(y) the funds in the Locked Rate Fee Sub-Account are insuf
ficient to pay the Locked Rate Fee Monthly Installment due
on such Payment Date;
(ii) if Borrower fails to pay the outstanding Indebt
edness on the Maturity Date;
(iii) if on the date any payment of a Basic Carrying
Cost would become delinquent, the funds in the Basic Carry
ing Costs Sub-Account required to be reserved pursuant to
Section 2.12(g), if any, together with any funds in the Cash
Collateral Account not allocated to another Sub-Account
(excluding all funds which are utilized in the calculation
in clause (i) above to prevent the determination of an Event
of Default thereunder) are insufficient to make such
payment;
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(iv) the occurrence of the event identified in
Sections 2.12(f), 2.12(g) or 2.12(i) as constituting an
"Event of Default";
(v) 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, and such failure continues for
30 days after Lender delivers written notice thereof to
Borrower;
(vi) 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 Notes 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;
(vii) if Borrower, Guarantor or any managing member of
Borrower makes an assignment for the benefit of creditors;
(viii) if a receiver, liquidator or trustee shall be
appointed for Borrower, Guarantor or any managing member of
Borrower or if Borrower, Guarantor or any managing member of
Borrower shall be adjudicated a 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, Guarantor or any managing member
of Borrower or if any proceeding for the dissolution or
liquidation of Borrower, Guarantor or any managing member of
Borrower shall be instituted; provided, however, that if
such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, Guarantor or
any managing member of Borrower, as the case may be, upon
the same not being discharged, stayed or dismissed within 90
days, or if Borrower, Guarantor or any managing member of
Borrower, shall generally not be paying its debts as they
become due;
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(ix) 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, or if any
Transfer occurs other than in accordance with the Mortgages
or any other Loan Document;
(x) if any provision of the Members Agreement
affecting the purpose for which Borrower is formed is
amended or modified in any material respect which may
adversely affect Lender, Servicer, Custodian, Trustee or any
of the Certificateholders, or if Borrower or either of its
members fails to perform or enforce the provisions of such
organizational documents or attempts to dissolve Borrower,
or if Borrower breaches any of its representations,
warranties or covenants set forth in Sections 4.1(M), 4.2(N)
or 6.1(E);
(xi) if an Event of Default as defined or described in
the Notes, the Mortgages or any other Loan Document occurs,
whether as to Borrower or any Individual Property or
Collateral Loan or all or any portion of the Mortgaged
Property;
(xii) if Borrower shall continue to be in Default
under any of the other terms, covenants or conditions of
this Agreement, the Notes, the Mortgages or the other Loan
Documents, for ten days after 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 (other
than Events of Default pursuant to clauses (i), (ii), (iii)
and (iv) above as to which no grace period is applicable),
or for 30 days after 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 is susceptible of
cure but cannot reasonably be cured within such 30 day
period and provided further that Borrower shall have
commenced to cure such Default within such 30 day period and
thereafter diligently and expeditiously proceeds to cure the
same, such 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
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period exceed 180 days after the original notice from
Lender;
(xiii) if Borrower fails to correct within the time
deadline set by any Medicare, Medicaid or licensing agency,
any deficiency that justifies either of the following
actions by such agency with respect to any Facility:
(x) a termination of Borrower's Medicare con
tract, Medicaid contract or nursing home license; or
(y) a ban on new admissions generally or on
admission of patients otherwise qualified for Medicare
or Medicaid coverage;
(xiv) if the representation made in connection with a
Securitization that the Principal Indebtedness does not
exceed 125% of the Tax Fair Market Value of the Mortgaged
Property or Collateral Loan shall be false as of the
Securitization Closing Date, unless (x) REMIC status of any
REMIC formed in connection with a Securitization is
maintained or regained due to corrective actions taken by
Borrower within any applicable cure period under the Code or
otherwise, and (y) Borrower furnishes Lender with an opinion
of outside counsel reasonably acceptable to Lender stating
that each REMIC Trust is a valid REMIC for federal income
tax purposes; or
(xv) if an event or condition specified in Section
5.1(U) shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or con
dition, 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 would constitute, in the
determination of Lender, a Material Adverse Effect;
then, upon the occurrence of any such Event of Default and at any
time thereafter, Lender or its successors or assigns, may, in
addition to any other rights or remedies available to it pursuant
to this Agreement, the Notes, the Mortgages, the Collateral
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Assignment and the other Loan Documents, or at law or in equity,
take such action, without notice or demand, as Lender or its
successors or assigns, deems advisable to protect and enforce its
rights against Borrower and in and to all or any portion of the
Mortgaged Property and Collateral Loans, including, without
limitation, declaring the entire Indebtedness to be immediately
due and payable and may enforce or avail itself of any or all
rights or remedies provided in the Loan Documents against
Borrower and/or the Mortgaged Property and Collateral Loans,
including, without limitation, all rights or remedies available
at law or in equity.
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 Notes, the Mortgages, the
Collateral Assignments or any of the other Loan Documents executed by or
with respect to Borrower, or at law or in equity may be exercised
by Lender at any time and from time to time, 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 Individual Property or all or any portion of the Mortgaged
Property and Collateral Loans. 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 sole
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.
(b) In the event of the foreclosure or other action by
Lender to enforce its remedies in connection with one or more of
the Individual Properties and Collateral Loans or all or any
portion of the Mortgaged Property and Collateral Loans, whether
such foreclosure sale (or other remedy) yields Net Proceeds in an
amount less than, equal to or more than the Allocated Loan Amount
of such Individual Property or Collateral Loan or Mortgaged
Property, Lender shall apply all Net Proceeds received to repay
the Indebtedness in accordance with Section 2.8, Allocated Loan
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Amounts shall be adjusted (or not adjusted) in accordance with
the definition of "Allocated Loan Amount", the Indebtedness shall
be reduced to the extent of such Net Proceeds and the remaining
portion of the Indebtedness shall remain outstanding and secured
by the Mortgages and Collateral Assignments and the other Loan
Documents, it being understood and agreed by Borrower that
Borrower is liable for the repayment of all the Indebtedness and
that any "excess" foreclosure proceeds are part of the cross-
collateralized and cross-defaulted security granted to Lender
pursuant to the Mortgages and Collateral Assignments; provided,
however, that any Note shall be deemed to have been accelerated
only to the extent of the Net Proceeds actually received by
Lender with respect to any Individual Property or Collateral Loan
and applied in reduction of the Indebtedness evidenced by such
Note in accordance with the provisions of such Note, after
payment by Borrower of all transaction costs and expenses and
costs of enforcement.
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 other
wise, at such time and in such order as Lender may determine in
Lender's sole 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 exer
cised 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. 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 a Mortgage on an Individual Property or collateral assignment
of a Collateral Loan pursuant to a Collateral Assignment, to the
extent necessary to foreclose on other parts of the Mortgaged
Property or Collateral Loan.
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ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1. Survival. 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, the making by
Lender of each Advance hereunder and the execution and delivery
by Borrower to Lender of each Note, and shall continue in full
force and effect so long as any portion of the Indebtedness is
outstanding and unpaid; provided, however, that upon a prepayment
with respect to a particular Individual Property or Collateral
Loan as described in Section 2.7(a) and upon satisfaction of the
other conditions set forth in Section 2.11, Borrower shall be
released of all liability under this Agreement (other than any
liability with respect to environmental matters arising under
Sections 4.2(L) or 5.1(D) - (I), inclusive, hereof), the
applicable Note, the Related Mortgage, the applicable Assignment
of Lease, and the other Loan Documents insofar as they concern
such Individual Property or Collateral Loan, and Borrower's
members shall be released of all liability under the Pledge and
Security Agreement with respect to such Individual Property.
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 Notes, the Mortgages, Collateral
Assignments 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, Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise
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specifically herein provided) be in the sole discretion of Lender
and shall be final and conclusive.
Section 8.3. Governing Law.
(a) This Agreement was negotiated in New York, and made
by Lender and accepted by Borrower in the State of New York, and the
proceeds of the Notes 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 construc
tion, validity and performance, this Agreement and the obliga
tions 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, except that at all times the
provisions for the creation, perfection and enforcement of the
liens and security interests created pursuant to the Mortgages,
Collateral Assignments and the other Loan Documents shall be
governed by and construed according to the law of the State in
which the applicable Facility or Collateral Loan Property is
located, it being understood that, to the fullest extent
permitted by law of such States, the law of the State of New York
shall govern the validity and the enforceability of all Loan
Documents, and the Indebtedness or obligations arising hereunder
or thereunder. 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 Notes, and this Agreement and the Notes shall be governed by
and construed in accordance with the laws of the State of New
York pursuant to 5-1401 of the New York General Obligations
Law.
(b) Any legal suit, action or proceeding against
Lender or 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 5-1402 of the New York General Obliga
tions Law, 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 juris
diction of any such court in any suit, action or proceeding.
Borrower does hereby designate and appoint Jones, Day, Reavis &
Pogue, 599 Lexington Avenue, New York, New York 10022, Attention:
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Robert A. Profusek, Esq., 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 in New York, New York, and agrees that
service of process upon said agent at said address (or at such
other office in New York, New York 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 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 in the State of New York. 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 with an office in New
York, New York (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 in
New York, New York 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 Notes 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 Notes, or of any other Loan Document, or any other
instrument given as security therefor, shall operate as or consti
tute 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
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not by way of limitation, by accepting payment after the due date
of any amount payable under this Agreement, the Notes 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 Notes 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)
certified or registered United States mail, postage prepaid, or
(b) expedited prepaid delivery service, either commercial or
United States Postal Service, with proof of attempted delivery,
and by telecopier (with answerback acknowledged), addressed if to
Lender at its address set forth on the first page hereof, if to
Custodian at its address set forth on the first page hereof, and
if to Borrower at its 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 to
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New
York, New York 10005, Attention: Geoffrey K. Hurley and
Servicer, at the address set forth in the Pooling and Servicing
Agreement, and a copy of all notices, consents, approvals and
requests directed to Borrower (other than statements setting
forth the monthly amount payable under the Notes) shall be
delivered to Jones, Day, Reavis & Pogue, 599 Lexington Avenue,
New York, New York 10022, Attention: Robert A. Profusek, Esq. A
notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery on
a Business Day; or in the case of expedited prepaid delivery and
telecopy, upon the first attempted delivery on a Business Day. 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.
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SECTION 8.7. TRIAL BY JURY. BORROWER, TO THE FULLEST
EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES 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 NOTES OR THE OTHER LOAN DOCUMENTS.
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 this Agreement and/or any of the other Loan Documents
and the obligations hereunder to any Person, except that (x) the
Notes and, in connection with an initial offering under a Securi
tization only, the Certificates may not be assigned, transferred
or sold to any Person listed on Exhibit Y attached hereto or
their Affiliates and (y) if such assignment or Securitization
occurs prior to the earlier of (i) the date the Loan is fully
advanced and (ii) May 31, 1996, Lender shall continue to be
obligated to make Advances pursuant to this Agreement and to make
all decisions with respect to such Advances, notwithstanding such
assignment or Securitization. The parties hereto acknowledge
that Lender expects to sell, transfer and assign this Agreement,
the Notes, the Mortgages, Collateral Assignments and the other
Loan Documents to Trustee in connection with one or more
Securitizations. All references to "Lender" hereunder shall be
deemed to include the assigns of Lender and the parties hereto
acknowledge that actions taken by Lender hereunder may be taken
(x) by Custodian on Lender's behalf (to the extent provided in
the Interim Servicing Agreement) or (y) after a Securitization
Closing Date and with respect to the Individual Properties and/or
Collateral Loans included in such Securitization, by Servicer
pursuant to the Pooling and Servicing Agreement on behalf of
Trustee. Following the assignment of this Agreement, the Notes,
the Mortgages and the other Loan Documents by Nomura Asset
Capital Corporation ("NACC") in connection with a Securitization,
in addition to providing notices to Lender's assignee in
accordance with instructions received from such assignee,
Borrower shall continue to send copies of all notices and other
communications to NACC at the address set forth in Section 8.6 or
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to such other address as may be designated by NACC pursuant to
Section 8.6.
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 Notes 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 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.
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Section 8.13. Remedies of Borrower. In the event that
a claim or adjudication is made that Lender or its agents, includ
ing, without limitation, Servicer and Custodian, has acted
unreasonably or unreasonably delayed acting in any case where by
law or under this Agreement, the Notes, 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, including, without
limitation, Servicer and Custodian, 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. Notwithstanding anything
herein or in any other Loan Document to the contrary, except as
otherwise set forth in this Section 8.14 to the contrary, Lender
shall not enforce the liability and obligation of Borrower to
perform and observe the obligations contained in this Agreement,
the Notes, the Mortgages or any of the other Loan Documents
executed and delivered by Borrower by any action or proceeding
wherein a money judgment shall be sought against Borrower or its
members, except that Lender may bring a foreclosure action,
action for specific performance, or other appropriate action or
proceeding (including, without limitation, to obtain a deficiency
judgment) solely for the purpose of enabling Lender to realize
upon (i) Borrower's interest in the Mortgaged Property and the
Collateral Loans, (ii) the Rents and Accounts arising from the
Facilities and the Collateral Loans to the extent (x) received by
Borrower after the occurrence of an Event of Default or
(y) distributed to Borrower or its members 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
Sections 2.7(c), (d) or (g) (all Rents and Accounts covered by
clauses (x) and (y) being hereinafter referred to as the
"Recourse Distributions") and (iii) any other collateral given to
Lender under the Loan Documents ((i), (ii) and (iii),
collectively, the "Default Collateral"); provided, however, that
any judgment in any such action or proceeding shall be enforce
able against Borrower only to the extent of any such Default
Collateral. The provisions of this Section 8.14 shall not,
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however, (a) impair the validity of the Indebtedness evidenced by
the Notes or in any way affect or impair the Liens of the Mort
gages 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 Borrower 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 Notes, the Mortgages or the other Loan Documents; (d) impair
the right of Lender to obtain the appointment of a receiver;
(e) impair the enforcement of the Assignments of Leases or the
Pledge and Security Agreement (subject to the nonrecourse pro
visions thereof); (f) impair the right of Lender to bring suit
for actual damages, losses and costs resulting from fraud or
intentional misrepresentation by Borrower or any other Person in
connection with this Agreement, the Notes, the Mortgages or the
other Loan Documents; (g) impair the right of Lender to obtain
the Recourse Distributions received by Borrower, including,
without limitation, the right to proceed against Borrower's
members to the extent any such Recourse Distributions have
actually theretofore been distributed to Borrower's members; (h)
impair the right of Lender to bring suit with respect to
Borrower's misappropriation of security deposits or Rents
collected more than one month in advance; (i) impair the right of
Lender to obtain Insurance Proceeds or Condemnation Proceeds due
to Lender pursuant to the Mortgages; (j) impair the right of
Lender to enforce the provisions of Sections 4.2(L) or 5.1(D)-(I)
even after repayment in full by Borrower of the Indebtedness; (k)
prevent or in any way hinder Lender from exercising, or consti
tute 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 Notes as provided in the Loan
Documents; (l) impair the right of Lender to bring suit with
respect to any misapplication of any funds; (m) impair the right
of Lender to enforce the Indemnity Agreements even after repay
ment in full by Borrower of the Indebtedness; or (n) impair the
right of Lender to sue for, seek or demand a deficiency judgment
against Borrower solely for the purpose of foreclosing the
Mortgaged Property, Collateral Assignment or any part thereof, or
realizing upon the Default Collateral; provided, however, that
any such deficiency judgment referred to in this clause (n) shall
be enforceable against Borrower only to the extent of any of the
Default Collateral. The provisions of this Section 8.14 shall be
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inapplicable to Borrower if any petition for bankruptcy,
reorganization or arrangement pursuant to federal or state law
shall be filed by, consented to or acquiesced in by or with
respect to Borrower, or if Borrower shall institute any
proceeding for the dissolution or liquidation of Borrower, or if
Borrower shall make an assignment for the benefit of creditors,
in which event Lender shall have recourse against all of the
assets of Borrower and the interests in Borrower owned by, and
the Recourse Distributions received by, Borrower's members (but
excluding the other assets of Borrower's members to the extent
Lender would not have had recourse against such assets other than
in accordance with the provisions of this Section 8.14).
Notwithstanding the foregoing, in the event an Individual
Property is released from the lien created by the Related
Mortgage, Borrower shall be released in all respects from any
further liability with respect to the Loan other than any further
liability for certain kinds of environmental matters arising
under Sections 4.2(L) or 5.1(D)-(I) as the same applies to such
Individual Property.
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
Notes, the Mortgages and the other Loan Documents shall take the
same free and clear of all offsets, counterclaims or defenses
which are unrelated to this Agreement, the Notes, the Mortgages
and the other Loan Documents which Borrower may otherwise have
against any assignor or this Agreement, the Notes, the Mortgages
and the other Loan Documents, 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 Notes, 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.
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Section 8.17. No Joint Venture or Partnership.
Borrower and Lender intend that the relationship created here
under 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 or
Collateral Loans other than that of mortgagee or lender.
Section 8.18. Waiver of Marshalling of Assets Defense.
To the fullest extent Borrower may legally do so, Borrower waives
all rights to a marshalling of the assets of Borrower, FGI and
others with interests in Borrower, and of the Mortgaged Property
or Collateral Loans, 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 the
Individual Property or Collateral Loan 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 out of the Net Proceeds of the
Individual Property or Collateral Loan 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 it by
Lender or its agents, including, without limitation, Servicer.
Section 8.20. Conflict; Construction of Documents. In
the event of any conflict between the provisions of this Agree
ment and the provisions of the Notes, the Mortgages or any of the
other Loan Documents, the provisions of this Agreement shall
prevail. The parties hereto acknowledge that they were repre
sented 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.
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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 except for Nomura Securities
International, Inc. (the "Advisor"). Borrower has paid all
amounts required to be paid to the Advisor pursuant to that
certain engagement letter dated October 21, 1993, between FGI and
the Advisor. Borrower and Lender hereby agree to indemnify and
hold the other and Custodian 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 (other than
the Advisor) that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein.
The provisions of this Section 8.21 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 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 Agree
ment 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 is then continuing,
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 8.23, 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). If requested by Borrower, Lender's statement shall
confirm the amount still available to be advanced under this
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Agreement and acknowledge that to the extent of the undisbursed
Loan Amount, Lender will provide financing to Borrower as long as
all conditions to an Advance are met.
Section 8.24. Payment of Expenses. Borrower shall,
whether or not the Transactions are consummated, pay all Trans
action Costs on demand, which shall include, without limitation,
(a) reasonable out-of-pocket costs and expenses of Lender in
connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents and the documents and instruments
referred to therein, including expenses of up to $1,000 per
Advance of a mortgage banker used to originate any Advance at
Lender's request, (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 filing and
recording fees, third party due diligence expenses of up to
$2,000 for each Facility plus travel expenses, accounting firm
fees, costs of the Appraisals, Environmental Reports (and an
environmental consultant), and the Engineering Reports), (iii)
the negotiation, preparation, execution and delivery of any
amendment, waiver or consent relating to any of the Loan Docu
ments, (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, (v) the Securitizations, subject to the limitations
set forth in Section 2.15, (vi) the Refinancing and (vii) the
creation of Pools, (b) the reasonable fees, expenses and
disbursements of counsel to Lender in connection with all of the
foregoing, (c) after a Securitization Closing Date, the cost of
an annual rating review by the Rating Agencies and all fees of
Trustee, and (d) the fees and charges of the Bank and the fees
and reimbursable expenses of the Custodian and the Servicer under
the Interim Servicing Agreement and the Pooling and Servicing
Agreement. Prior to retention of third parties, Lender shall
consult with Borrower regarding the services required and the
third parties selected to assure that costs will be reasonable in
scope and amount.
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
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acknowledged, in the event Borrower shall (i) file 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) be
the subject of any order for relief issued under Title 11 of the
U.S. Code, as amended, (iii) file or be the subject of any
petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
any present or law relating to bankruptcy, insolvency or other
relief of debtors, (iv) have sought or consented to or acquiesced
in the appointment of any trustee, receiver, conservator or
liquidator or (v) be 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 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 8.25.
Section 8.26. Indemnification. Borrower shall
indemnify and hold harmless Lender, and each of its directors,
officers, employees, attorneys, agents (including, without
limitation, Custodian and Servicer), successors and assigns (the
"Indemnified Parties"), from and against all damages,
liabilities, claims, actions, penalties and fines (collectively
and severally, "Losses") assessed against any of them resulting
from the claims of any party relating to or arising out of
Borrower's failure to comply with any of the Loan Documents,
except for Losses caused by the gross negligence or willful
misconduct of any Indemnified Party, and reimburse each
Indemnified Party for any expenses (including the reasonable
attorneys' fees and disbursements) reasonably incurred in
connection with the investigation of, preparation for or defense
of any actual or threatened claim, action or proceeding arising
therefrom (including any such costs of responding to discovery
requests or subpoenas), regardless of whether Lender or such
other Indemnified Party is a party thereto. With reference to
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the provisions set forth above in this Section 8.26 for payment
by Borrower of reasonable attorneys' fees incurred by the
Indemnified Parties in any action or claim brought by a third
party, Borrower shall diligently defend such Indemnified Party
and diligently conduct such defense, and, provided Borrower
demonstrates to the reasonable satisfaction of the applicable
Indemnified Party its ability to pay for any settlement amount
agreed to by Borrower, Borrower may settle any such action or
claim or consent to an entry of any judgment related thereto
without the prior written consent of any Indemnified Party to the
extent such judgment or claim is for the payment of money. If
the Indemnified Party desires to engage separate counsel, it may
do so at its own expense; provided, however, that such limitation
on the obligation of Borrower to pay the fees of separate counsel
for such Indemnified Party shall not apply if such Indemnified
Party has retained such separate counsel because of a reasonable
belief (based upon reasonable inquiry) that Borrower is not
diligently defending it and/or not diligently conducting the
defense and so notifies Borrower. The Loan shall not be
considered to have been paid in full unless all obligations of
Borrower under this Section 8.26 shall have been fully performed
(except for contingent indemnification obligations for which no
claim has actually been made pursuant to this Agreement).
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
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:
BORROWER:
FORUM INVESTMENTS I, L.L.C.,
a Delaware limited liability company
By:
Forum Alpha Investments, Inc.,
its managing member
By:
Name:
Title:
CUSTODIAN:
MIDLAND LOAN SERVICES, L.P.,
a Missouri limited partnership
By: Midland Data Systems, Inc.
its general partner
By:
Name:
Title:
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