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EXHIBIT 10.1
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MASTER LOAN AGREEMENT
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ALS WEST, INC.
ALTERNATIVE LIVING SERVICES, INC.
and
GUARANTY FEDERAL BANK, F.S.B., AS AGENT
and
THE LENDERS NAMED HEREIN
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$50,000,000
January 8, 1999
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TABLE OF CONTENTS
Page
MASTER LOAN AGREEMENT.............................................................................................1
ARTICLE I - Definitions and References............................................................................1
Section 1.1. Defined Terms........................................................................1
Section 1.2. Exhibits and Schedules; Additional Definitions......................................13
Section 1.3. Amendment of Defined Instruments....................................................14
Section 1.4. References and Titles...............................................................14
Section 1.5. Calculations and Determinations.....................................................14
ARTICLE II - The Loans...........................................................................................14
Section 2.1. Commitments to Lend.................................................................14
Section 2.2. Project Loans.......................................................................15
Section 2.3. Requests for Advances...............................................................15
Section 2.4. Continuations and Conversions of Existing Advances..................................16
Section 2.5. Use of Proceeds.....................................................................17
Section 2.6. Fees................................................................................18
Section 2.7. Extension of Project Loan Maturity Date.............................................18
Section 2.8. Lease and Sublease..................................................................20
ARTICLE III - Payments to Lenders................................................................................20
Section 3.1. General Procedures..................................................................20
Section 3.2. Capital Reimbursement...............................................................21
Section 3.3. Increased Cost of LIBOR Advances....................................................22
Section 3.4. Availability........................................................................22
Section 3.5. Funding Losses......................................................................23
Section 3.6. Reimbursable Taxes..................................................................23
Section 3.7. Reimbursement Requests; Replacement of Lenders......................................25
ARTICLE IV - Conditions Precedent to Lending.....................................................................25
Section 4.1. Application for a Project Loan......................................................25
Section 4.2. Additional Conditions Precedent to Initial Advance..................................26
Section 4.3. Additional Conditions Precedent.....................................................27
Section 4.4. Releases............................................................................27
ARTICLE V - Representations and Warranties.......................................................................28
Section 5.1. Organization and Good Standing......................................................28
Section 5.2. Authorization.......................................................................28
Section 5.3. No Conflicts or Consents............................................................28
Section 5.4. Enforceable Obligations.............................................................28
Section 5.5. Initial Financial Statements........................................................28
Section 5.6. Other Obligations and Restrictions. ................................................29
Section 5.7. Full Disclosure.....................................................................29
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Section 5.8. Litigation..........................................................................29
Section 5.9. ERISA Plans and Liabilities.........................................................29
Section 5.10. Names and Places of Business........................................................29
Section 5.11. Insider.............................................................................29
Section 5.12. Environmental and Other Laws........................................................30
Section 5.13. Subsidiary..........................................................................30
Section 5.14. Participation Agreements............................................................30
ARTICLE VI - Affirmative Covenants...............................................................................30
Section 6.1. Payment and Performance.............................................................30
Section 6.2. Books, Financial Statements and Reports.............................................30
Section 6.3. Other Information and Inspections...................................................32
Section 6.4. Notice of Material Events and Change of Address.....................................32
Section 6.5. Maintenance of Existence and Qualifications.........................................33
Section 6.6. Maintenance of Properties...........................................................33
Section 6.7. Payment of Expenses.................................................................33
Section 6.8. Performance on Related Person's Behalf..............................................33
Section 6.9. Insurance...........................................................................33
Section 6.10. Interest............................................................................33
Section 6.11. Evidence of Compliance..............................................................34
Section 6.12. Solvency............................................................................34
Section 6.13. Agreement to Deliver Security Documents.............................................34
Section 6.14. Bank Accounts; Offset...............................................................34
Section 6.15. Maintain Existence and Business.....................................................35
Section 6.16. Debt Coverage Ratio.................................................................35
Section 6.17. Minimum Tangible Net Worth..........................................................35
Section 6.18. Leverage Ratio......................................................................35
Section 6.19. EBITDAR.............................................................................35
Section 6.20. Capital Expenditures................................................................35
ARTICLE VII - Negative Covenants.................................................................................36
Section 7.1. Ownership...........................................................................36
Section 7.2. Limitation on Mergers, Issuances of Securities......................................36
Section 7.3. Limitation on Additional Debt.......................................................36
ARTICLE VIII - Events of Default and Remedies....................................................................36
Section 8.1. Events of Default...................................................................36
Section 8.2. Remedies............................................................................40
ARTICLE IX - Agent...............................................................................................40
Section 9.1. Appointment and Authority...........................................................40
Section 9.2. Exculpation, Agent's Reliance, Etc..................................................41
Section 9.3. Credit Decisions....................................................................42
Section 9.4. Indemnification.....................................................................42
Section 9.5. Rights as Lender....................................................................42
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Section 9.6. Sharing of Set-Offs and Other Payments..............................................43
Section 9.7. Investments.........................................................................43
Section 9.8. Benefit of Article IX...............................................................43
Section 9.9. Resignation.........................................................................44
ARTICLE X - Miscellaneous........................................................................................45
Section 10.1. Waivers and Amendments; Acknowledgments.............................................45
Section 10.2. Survival of Agreements; Cumulative Nature...........................................47
Section 10.3. Notices.............................................................................47
Section 10.4. Payment of Expenses; Indemnity......................................................48
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments.......................49
Section 10.6. Confidentiality.....................................................................51
Section 10.7. Governing Law; Submission to Process................................................51
Section 10.8. Limitation on Interest..............................................................52
Section 10.9. Termination; Limited Survival.......................................................53
Section 10.10. Severability........................................................................53
Section 10.11. Counterparts........................................................................53
Section 10.12. Waiver of Jury Trial................................................................53
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Schedules and Exhibits:
Lender Schedule
Schedule 1 - Security Schedule
Schedule 2 - Places of Business
Exhibit A - Promissory Note
Exhibit B - Request for Advance
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Financing Statement - Borrower
Exhibit F - Assignment and Acceptance Agreement
Exhibit G - Financing Statement - Lessee
Exhibit H - Financing Statement - Company
Exhibit I - Certification of Non-Foreign Status
Exhibit J - Security Agreement
Exhibit K - Guaranty
Exhibit L - Pre-Closing Document List
Exhibit M - Loan Application
Exhibit N - Mortgage
Exhibit O - Notice and Agreement
Exhibit P - Loans to One Borrower Affidavit
Exhibit Q - Collateral Assignment
Exhibit R - Project Loan Certificate
Exhibit S - Project Loan Agreement
Exhibit T - Assignment of Leases and Rents
Exhibit U - Subordination of Management Agreement
Exhibit W - Monthly/Quarterly Financial Statement and Census Data
Exhibit X - Subordination, Nondisturbance and Attornment Agreement
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MASTER LOAN AGREEMENT
THIS MASTER LOAN AGREEMENT is made as of January 8, 1999, by and among
ALS West, Inc., a Delaware corporation (herein called "BORROWER"), Alternative
Living Services, Inc., a Delaware corporation (the "Company"), Guaranty Federal
Bank, F.S.B, individually and as agent (herein called "AGENT") and the Lenders
referred to below. In consideration of the mutual covenants and agreements
contained herein the parties hereto agree as follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"ADMINISTRATIVE NOTICES" means, with respect to a Project, all (i)
Deficiency Notices, (ii) all Agency inspection reports, audits, surveys,
investigations, reviews and evaluations, and (iii) all notices and written
communications from any state or any Agency relating to material adjustments in
reimbursement amounts or to rate reviews, modifications of rates, inflation
adjustments, rate agreements, and the like.
"ADVANCES" has the meaning given it in Section 2.2.
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 50% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners or members;
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"AGENCY" means, with respect to a Project, the Health Care Financing
Administration, the Drug Enforcement Administration, the Environmental
Protection Agency, any other state or federal licensing or regulatory authority
(including any licensing or regulatory authority responsible for administering
or dispensing Medicaid or Medicare payments or any other third party payor
billing policies, procedures, limitations or restrictions), or any other public
or private agency or organization, including without limitation, any public or
private accreditation agency or organization.
"AGENT" means Guaranty Federal Bank, F.S.B, as Agent hereunder, and its
successors in such capacity.
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"AGREEMENT" means this Master Loan Agreement.
"APPLICABLE LIBOR MARGIN" means, with respect to a particular Project
Loan, (i) two and one-quarter percent (2.25%) per annum, and (ii) two percent
(2%) per annum during an Extension Period for such Project Loan provided the
Project related to the Project Loan has maintained a Debt Coverage Ratio
(computed using a 25-year amortization prior to the Second Extension Period and
a 23-year amortization thereafter) of at least 1.2 to 1 for three (3)
consecutive months.
"ASSIGNMENT OF LEASES AND RENTS" means an Assignment of Leases and
Rents substantially in the form attached as Exhibit T.
"BANK PARTIES" means Agent and all Lenders. "BANK PARTY" means any one
of the Bank Parties.
"BASE RATE" means the Agent's Prime Rate. As used in this paragraph,
Agent's "Prime Rate" means the base commercial rate of interest as announced
from time to time by Agent (which may not be the lowest, best or most favorable
rate of interest which Agent may charge on loans to its customers). If Agent's
Prime Rate changes after the date hereof the Base Rate shall be automatically
increased or decreased, as the case may be, without notice to Borrower from time
to time as of the effective time of each change in Agent's Prime Rate. The Base
Rate shall in no event, however, exceed the Highest Lawful Rate.
"BASE RATE ADVANCE" means an Advance which does not bear interest at
the LIBOR Adjusted Rate.
"BORROWER" means ALS West, Inc., a Delaware corporation.
"BORROWING" means a borrowing of new Advances of a single Type pursuant
to Section 2.3 or a continuation or conversion of existing Advances into a
single Type (and, in the case of LIBOR Advances, with the same Interest Period)
pursuant to Section 2.4.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas. Any
Business Day in any way relating to LIBOR Advances (such as the day on which an
Interest Period begins or ends) must also be a day on which, in the reasonable
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"CERTIFICATE OF OCCUPANCY" means a certificate of occupancy and use
authorizing the use and occupancy of a Project issued by the appropriate
Tribunal.
"CERTIFICATION OF NON-FOREIGN STATUS" means a certificate by Borrower
as required by Section 1445 of the Internal Revenue Code of 1986, in the form
attached as Exhibit I.
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"COLLATERAL" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"COLLATERAL ASSIGNMENT" means a Collateral Assignment substantially in
the form attached as Exhibit Q.
"COMMITMENT" means the amount of $50,000,000.
"COMMITMENT PERIOD" means the period which is twelve (12) months from
the date of this Agreement.
"COMPANY" means Alternative Living Services, Inc., a Delaware
corporation.
"CONSOLIDATED" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"CONTINUATION/CONVERSION NOTICE" means a written or telephonic request,
or a written confirmation, made by Borrower which meets the requirements of
Section 2.4.
"CURRENT ASSETS" means all cash, cash equivalents, customers' accounts
and other receivables due within one year from statement date, inventory,
deposits, marketable securities and prepaid expenses to be consumed within one
year from statement date.
"CURRENT LIABILITIES" means all amounts due or to become due within one
year from statement date.
"CURRENT RATIO" means the ratio of Current Assets to Current
Liabilities.
"DCR RATE" means, on any given date, the higher of the (i) Base Rate or
LIBOR Adjusted Rate selected by the Borrower during the applicable period, and
(ii) the Treasury Based Rate for such period.
"DEBT" means, as to any Person, (i) all obligations of such Person for
borrowed money or for the deferred purchase price of property or services (other
than accounts payable arising in the ordinary course of business) or evidenced
by bonds, notes, debentures or similar instruments, (ii) all obligations of such
Person under leases that are required to be capitalized under GAAP, (iii) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person and (iv) all Debt of others guaranteed by
such Person.
"DEBT COVERAGE RATIO" means a fraction, the numerator of which is the
Net Operating Income from a Project for the applicable calendar month and the
denominator of which is the sum of (i) an amount equivalent to interest on the
Project Loan for such Project during such
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calendar month at a per annum rate of interest equal to the DCR Rate, and (ii)
an amount determined as of the beginning of the same calendar month which, if
paid monthly, would fully amortize the outstanding principal balance of such
Project Loan on a straight-line basis in 25 years, if computed prior to the
Second Extension Period, and 23 years, in connection with calculations for
obtaining the Second Extension and during the Second Extension Period.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"DEFAULTING LENDER" is defined in Section 3.1.
"DEFICIENCY NOTICES" means, with respect to a Project, all notices and
other written communications from any Agency, Governmental Authority or agent
which licenses, regulates, certifies, accredits or evaluates the Project Related
Persons, the Project or the Project Related Persons' operation of the Project
alleging that a Project Related Person, the Project or a Project Related
Person's operation of the Project in whole or in part fails to comply or, if
corrective action is not taken, shall fail to comply, in a manner which would
cause a Material Adverse Change, with, any or all of the Agency's or
Governmental Authority's requirements for and conditions of licensing,
regulation, certification or accreditation by or participation in programs of
the Agency or Governmental Authority or otherwise relating to the continuous
operation of all or any portion of the Project or a Project Related Person's
programs or its eligibility or entitlement to receive reimbursement from any
Agency or Governmental Authority.
"EBITDAR" means for any period, for any Person (including consolidated
entities), determined in accordance with GAAP, the sum of (a) the net income (or
net loss) plus (b) all amounts treated as expenses for depreciation, Interest
Expense and the amortization of intangibles (including deferred finance charges)
of any kind to the extent included in the determination of such net income (or
loss), plus (c) all accrued taxes on or measured by income to the extent
included in the determination of such net income (or loss), plus (d) all rental
expense; all of the foregoing without duplication.
"EBITDAR COVERAGE" means EBITDAR divided by the sum of (i) all interest
expense as defined by GAAP, net of interest income, and (ii) lease expense as
defined by GAAP.
"ELIGIBLE TRANSFEREE" means a Person which either (a) is a Lender, or
(b) is consented to as an Eligible Transferee by Agent and, so long as no
Default is continuing, by Borrower, which consents in each case will not be
unreasonably withheld (provided that no Person organized outside the United
States may be an Eligible Transferee if Borrower would be required to pay
withholding taxes on interest or principal owed to such Person).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
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"EVENT OF DEFAULT" has the meaning given it in Section 8.1.
"EXTENSION PERIOD" means, with respect to a Project Loan, the First
Extension Period or Second Extension Period, as the case may be.
"FINANCING STATEMENTS - BORROWER" means financing statements
substantially in the form attached as Exhibit E.
"FINANCING STATEMENTS - COMPANY" means financing statements
substantially in the form attached as Exhibit H.
"FINANCING STATEMENTS - LESSEE" means financing statements
substantially in the form attached as Exhibit G.
"FIRST EXTENSION PERIOD" means, with respect to a Project Loan, a
period of twelve (12) months commencing on the first day after the Project Loan
Maturity Date for such Project Loan.
"FISCAL QUARTER" means a three-month period ending on the last day of
March, June, September or December of any year.
"FISCAL YEAR" means a twelve-month period ending on December 31 of any
year.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Company
and its Consolidated subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the Initial Financial Statements. If any change in any
accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Company and
its Consolidated subsidiaries may be prepared in accordance with such change
after notice of such change is given to Agent.
"GFB" means Guaranty Federal Bank, F.S.B, in its capacity as a Lender
hereunder.
"GUARANTOR" means the Company.
"GUARANTEED DEBT" means all Debt of others guaranteed by the Company
whether by (a) a guaranty, direct or indirect, in any manner, of any part or all
of such obligation, or (b) an agreement, direct or indirect, contingent or
otherwise, the purpose of which is to insure in any way the payment or
performance (or payment of damages in the event of nonperformance) of any part
or all of such obligation.
"HAZARDOUS MATERIALS" means, with respect to a Project, in addition to
all "hazardous substances" described in the Mortgage, any hazardous or
infectious medical waste, including,
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without limitation, cultures and stocks of infectious agents and associated
biologicals, pathological wastes, human and animal blood specimens and blood
products, anatomical materials, blood, blood-soiled articles, contaminated
materials, micro-biological laboratory waste, sharps, chemical waste, infectious
waste, chemotherapeutic waste and radioactive waste.
"HIGHEST LAWFUL RATE" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Advances. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any Person to pay interest to any Lender at a rate in excess of the
Highest Lawful Rate applicable to such Lender. To the extent that Chapter 303 of
the Texas Finance Code is applicable, the "weekly ceiling" specified in such
Chapter 303 is the applicable ceiling, provided that, if any applicable law
permits greater interest, the law permitting the greater interest shall apply.
"INITIAL ADVANCE" means, with respect to each Project Loan, the first
Advance under such Project Loan.
"INITIAL FINANCIAL STATEMENTS" means, (i) the audited annual
Consolidated and consolidating financial statements of the Company and its
subsidiaries dated as of December 31, 1997 and (ii) the unaudited quarterly
Consolidated and consolidating financial statements of the Company and its
subsidiaries dated as of September 30, 1998.
"INTEREST PERIOD" means, with respect to each particular LIBOR Advance
in a Borrowing under a Project Loan, a period of 1, 2, or 3 months (or if
available, 4, 5, 6, 9 or 12 months), as specified in the Request for Advance
applicable thereto, beginning on and including the date specified in such
Request for Advance (which must be a Business Day), and ending on but not
including the same day of the month as the day on which it began (e.g., a period
beginning on the third day of one month shall end on but not include the third
day of another month), provided that each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (unless such next succeeding Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day). No Interest Period may be elected which
would extend past the Project Loan Maturity Date for such Project Loan.
"LATE PAYMENT RATE" means, at the time in question, four percent
(4.0%) per annum plus the Base Rate then in effect; provided that, with respect
to any LIBOR Advance with an Interest Period extending beyond the date such
LIBOR Advance becomes due and payable, "LATE PAYMENT RATE" shall mean four
percent (4.0%) per annum plus the related LIBOR Adjusted Rate. The Late Payment
Rate shall never exceed the Highest Lawful Rate.
"LAW" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
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"LEASE AGREEMENT" means, with respect to a Project, a lease of that
Project between Borrower, as lessor, and Lessee, as lessee.
"LENDERS" means each signatory hereto (other than Borrower) including
GFB and the successors or assignees of each such party as holder of a Note.
"LENDING OFFICE" means, with respect to any Lender, the office, branch,
or agency through which it funds its LIBOR Advances; and, with respect to Agent,
the office, branch, or agency through which it administers this Agreement.
"LESSEE" means the lessee under a Lease Agreement.
"LIABILITIES" means, as to any Person, all indebtedness, liabilities
and obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"LIBOR ADVANCE" means an Advance which is properly designated as a
LIBOR Advance pursuant to Section 2.3 or 2.4. Each LIBOR Advance shall in no
event be less than $500,000 and must be an integral multiple of $100,000.
"LIBOR ADJUSTED RATE" means, with respect to each particular LIBOR
Advance, the rate per annum (expressed as a percentage) calculated by Agent to
be equal to the sum of (a) the quotient of the LIBOR Rate for the LIBOR Advance
and Interest Period in question divided by (1 minus the Reserve Requirement),
rounded up to the nearest 1/100 of 1%, and (b) the Applicable LIBOR Margin. No
LIBOR Adjusted Rate shall ever exceed the Highest Lawful Rate.
"LIBOR REFERENCE SOURCE" means the display for eurodollar rates
provided on The Bloomberg (a data service), viewed by accessing the global
deposits segment of money market rates; or, at the option of Agent, the display
for eurodollar rates on such other service selected from time to time by Agent
and determined by Agent to be comparable to The Bloomberg, which other service
may include Reuters Monitor Money Rates Service.
"LIBOR RATE" means, the rate determined by Agent (rounded upward, if
necessary, to the nearest 1/16 of 1%) equal to the offered rate (and not the bid
rate) for deposits in U.S. Dollars of amounts comparable to the particular LIBOR
Advance and the related Interest Period, as set forth on the LIBOR Reference
Source at approximately 10:00 a.m. (Dallas, Texas time) on the first day of the
applicable Interest Period.
"LICENSES" means, with respect to a Project, any and all licenses,
certificates of need, certificate of need waivers, operating permits,
franchises, and other licenses, authorizations, certifications, permits, or
approvals, other than construction permits, issued by, or on behalf of, any
Governmental Authority now existing or at any time hereafter issued, with
respect to the acquisition, construction, renovation, expansion, leasing,
ownership and/or operation of
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the Project, accreditation of the Project, and/or the participation or
eligibility for participation in any third party payor or reimbursement programs
(but specifically excluding any and all Participation Agreements), any and all
operating licenses issued by any Governmental Authority, any and all
pharmaceutical licenses and other licenses related to the purchase, dispensing,
storage, prescription or use of drugs, medications, and other "controlled
substances," and any and all licenses relating to the operation of food or
beverage facilities or amenities, if any.
"LIEN" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Liabilities owed to him or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows him to have such
Liabilities satisfied out of such property or assets prior to the general
creditors of any owner thereof, including any lien, mortgage, security interest,
pledge, deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by Law or agreement or
otherwise, but excluding any right of offset which arises without agreement in
the ordinary course of business. "LIEN" also means any filed financing
statement, any registration of a pledge (such as with an issuer of
uncertificated securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"LOAN" has the meaning given it in Section 2.1.
"LOAN APPLICATION" means a loan application substantially in the form
of Exhibit M.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, and all other agreements, certificates, documents and instruments and
writings at any time delivered in connection herewith or therewith.
"LOANS TO ONE BORROWER AFFIDAVIT" means a Loan to One Borrower
Affidavit substantially in the form of Exhibit P to be delivered for the benefit
of GFB.
"MAJORITY LENDERS" means the Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (66 2/3 %).
"MANAGED CARE PLANS" means, with respect to a Project, any health
maintenance organization, preferred provider organization, individual practice
association, competitive medical plan, referral service or similar arrangement,
entity, organization, or Person.
"MANAGEMENT AGREEMENT" means, with respect to a Project, a Management
Agreement or Assisted Living Consultant and Operations Agreement approved by
Agent.
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"MANAGER" means, with respect to a Project, the Company or a manager
approved by Agent.
"MATERIAL ADVERSE CHANGE" means a material and adverse change to (a)
any Related Person's financial condition, (b) the operations or properties of
any Related Person, (c) any Related Person's ability to timely pay the
Obligations, or (d) the enforceability of the material terms of any Loan
Documents.
"MORTGAGE" means a Deed of Trust, Mortgage and Security Agreement or
Mortgage and Security Agreement, conveying a Project to the Trustee named
therein or Agent, as the case may be, to secure the payment of the Obligations,
substantially in the form attached as Exhibit N.
"NET OPERATING INCOME" means the gross income received from the
operation of a Project for the period in question, less expenses incurred and/or
paid in connection with the operation and maintenance of the Project that are
allocable to such period (based upon an assumed management fee of five percent
(5%) and annual capital expenditures equal to the greater of $200 per unit and
actual capital expenditures), computed without regard to and before reduction of
depreciation, amortization or debt service, but otherwise in accordance with
GAAP.
"NET WORTH" means, at any time, the sum of shareholders' equity in the
Company according to GAAP plus convertible Subordinated Debt of the Company, if
any.
"NOTES" has the meaning given it in Section 2.2. "NOTE" means any one
of the Notes.
"NOTICE AND AGREEMENT" means an instrument executed pursuant to
Subsection 26.02 of the Texas Business and Commerce Code, substantially in the
form attached as Exhibit O.
"OBLIGATIONS" means all Liabilities from time to time owing by any of
the Related Persons to any Bank Party under or pursuant to any of the Loan
Documents. "OBLIGATION" means any part of the Obligations.
"OPERATING AGREEMENTS AND MANAGEMENT CONTRACTS" means, with respect to
a Project, any and all contracts and agreements previously, now or at any time
hereafter entered into by the Project Related Persons with respect to the
acquisition, construction, renovation, expansion, ownership, operation,
maintenance, use or management of the Project or otherwise concerning the
operations and business of the Project, including, without limitation, a
Management Agreement, any and all service and maintenance contracts, any
employment contracts, any and all management agreements, any and all consulting
agreements, laboratory servicing agreements, pharmaceutical contracts,
physician, other clinician or other professional services provider contracts,
therapy referral, food and beverage service contracts, and other contracts for
the operation and maintenance of, or provision of services to, the Project.
"PARTICIPATION AGREEMENTS" means, with respect to a Project, any and
all third party payor participation or reimbursement agreements now or at any
time hereafter existing for the benefit of the Project Related Persons relating
to rights to payment or reimbursement from, and claims
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against, private insurers, Managed Care Plans, employee assistance programs,
Blue Cross and/or Blue Shield, federal, state and local Governmental
Authorities, including without limitation, Medicare, Medicaid, CAMPUS, VA and
other third party payers.
"PATIENT ADMISSION AGREEMENTS" means, with respect to a Project, any
and all contracts, authorizations, agreements and/or consents executed by, or on
behalf of any patient or other Person seeking services from the Project Related
Persons pursuant to which the Project Related Persons provide or furnish
long-term care and related services at the Project, including the consent to
treatment and assignment of the payment of benefits by a third party.
"PERCENTAGE SHARE" means, with respect to any Lender (a) when used in
Sections 2.2 or 2.6, in any Request for Advance or when no Advances are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the Lender Schedule attached hereto or any schedule delivered by Agent pursuant
to Section 10.5(c)(ii), and (b) when used otherwise, the percentage obtained by
dividing (i) the sum of the unpaid principal balance of such Lender's Advances
at the time in question, by (ii) the sum of the aggregate unpaid principal
balance of all Advances at such time.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"POST-FORECLOSURE PLAN" has the meaning given to such term in Section
9.10.
"PRESCRIBED FORMS" has the meaning given to such term in Section 3.6.
"PROJECT" and "PROJECTS" have the meaning given to such terms in
Section 2.1. Each Project shall be an assisted living facility.
"PROJECT CLOSING" has the meaning given to such term in Section 4.1.
"PROJECT COSTS" means the costs to refinance and lease up a Project.
"PROJECT LOAN" has the meaning given to such term in Section 2.1.
"PROJECT LOAN AGREEMENT" has the meaning given to such term in Section
2.2.
"PROJECT LOAN CERTIFICATE" has the meaning given to such term in
Section 2.2.
"PROJECT LOAN CLOSING DATE" means the date upon which the Initial
Advance of the Project Loan for a particular Project is made. In no event may a
Project Loan Closing Date be after the Commitment Period.
"PROJECT LOAN DOCUMENTS" means the Loan Documents executed in
connection with a particular Project Loan and the related Project.
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"PROJECT LOAN MATURITY DATE" means, with respect to a particular
Project Loan, the date which is thirty (30) months after the Project Loan
Closing Date for such Project Loan.
"PROJECT RELATED PERSONS" means, with respect to a Project, the
Borrower, the Lessee under the Lease Agreement for such Project and any
Sublessee or Manager. "PROJECT RELATED PERSON" means any one of the Project
Related Persons.
"REGISTER" has the meaning given to such term in Section 10.5(f).
"RELATED PERSONS" means the Borrower and Company. "RELATED PERSON"
means any one of the Related Persons.
"REQUEST FOR ADVANCE" means a written or telephonic request, or a
written confirmation, made by Borrower which meets the requirements of Section
2.3.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as from time to time amended or supplemented.
"RESERVE REQUIREMENT" means the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained under Regulation D by member banks of the Federal Reserve System in
New York City with deposits exceeding one billion U.S. Dollars against
"Eurocurrency Liabilities" for the applicable term of a Project Loan, as such
quoted term is used in Regulation D. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required by
the Federal Reserve System to be maintained by such member banks by reason of
any Regulation against (a) any category of liabilities which includes deposits
by reference to which the LIBOR Rate is to be determined as provided in this
Agreement or (b) any category of extensions of credit or other assets which
includes loans the interest rate on which is determined on the basis of rates
referred to in the definition of "LIBOR Rate" set forth above.
"RESIDENT AGREEMENTS" means, with respect to a Project, any and all
contracts and agreements executed by, or on behalf of any resident or other
Person seeking residency or occupancy in the Project and related services from
the Project Related Persons.
"SECOND EXTENSION PERIOD" means, with respect to a Project Loan, a
period of twelve (12) months commencing on the first day after the expiration of
the First Extension Period.
"SECURITY DOCUMENTS" means the instruments listed in the Security
Schedule with respect to each Project and all other security agreements, deeds
of trust, mortgages, chattel mortgages, pledges, guaranties, financing
statements, continuation statements, extension agreements and other agreements
or instruments now, heretofore, or hereafter delivered by or caused to be
delivered by the Related Persons to Agent or the Lenders in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of the Related
Persons' other duties and obligations under the Loan Documents.
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"SECURITY SCHEDULE" means Schedule 1 hereto.
"SENIOR DEBT" means the Consolidated Debt of the Company which is not
Subordinated Debt.
"SNDA" means a Subordination, Nondisturbance and Attornment Agreement
substantially in the form attached as Exhibit X.
"SUBLEASE AGREEMENT" means, with respect to a Project, a sublease of
that Project between a Lessee, as sublessor, and Sublessee, as sublessee.
"SUBLESSEE" means the Company.
"SUBORDINATED DEBT" means
(i) the Company's $143,750,000 aggregate original principal
amount of 5.25% convertible subordinated debentures due December 15,
2002;
(ii) the Company's $50,000,000 aggregate original principal
amount of 7.00% convertible subordinated debentures due June 1, 2004;
(iii) the Company's $35,000,000 aggregate original principal
amount of 6.75% convertible subordinated debentures due June 30, 2006;
(iv) Consolidated Debt of the Company which is subordinated to
payment of the Obligations on terms comparable to those contained in
any of the indentures related to the Subordinated Debt described in the
foregoing clauses (i), (ii) and (iii); and
(v) Consolidated Debt of the Company which is subordinated to
payment of the Obligations in a manner approved by Agent.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, association, partnership, joint venture, or other
business or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries) controlled by or owned more than
fifty percent by such Person.
"SUBORDINATION OF MANAGEMENT AGREEMENT" means a Subordination of
Management Agreement substantially in the form attached as Exhibit U.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
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"TANGIBLE NET WORTH" means, with respect to a Person, the remainder of
(i) all assets of the Person, other than intangible assets (including as
intangible assets such assets as patents, copyrights, licenses, franchises,
goodwill, trade names, trade secrets, leases required to be capitalized on the
Person's financial statements under GAAP, and any unallocated excess costs of
investments in subsidiaries over equity in underlying net assets at dates of
acquisition), minus (ii) all indebtedness of the Person and its subsidiaries
required to be included in the Person's balance sheet under GAAP, but excluding
obligations under capitalized leases.
"TOTAL CAPITAL" means, at any time, the sum of Net Worth and Total
Funded Debt.
"TOTAL FUNDED DEBT" means, at any time, the aggregate amount of the
Company's Senior Debt, including contingent liabilities created by way of
Guaranteed Debt.
"TREASURY NOTE RATE" means the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been so reported
as of the applicable Business Day, in Federal Reserve statistical Release
H.15(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to ten (10) years. Such
implied yield shall be determined, if necessary, by (i) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (ii) interpolating linearly between reported yields. The term
"Business Day" as used in this paragraph means a day on which banks are open for
business in New York, New York.
"TREASURY BASED RATE" means a rate per annum equal to the Treasury Note
Rate plus two and one-quarter percent (2.25%).
"TRIBUNAL" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
"TYPE" means, with respect to any Advances, the characterization of
such Advances as either Base Rate Advances or LIBOR Advances.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which definitions
are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement or any other Loan Document which refer to a particular agreement,
instrument or document also refer to and include all renewals, extensions,
supplements, modifications, amendments and restatements of such agreement,
instrument or document, provided that nothing contained in this section shall be
construed to authorize any such renewal, extension, supplement, modification,
amendment or restatement.
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Section 1.4. References and Titles. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "THIS
AGREEMENT", "THIS INSTRUMENT", "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "THIS SECTION"
and "THIS SUBSECTION" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "OR" is not exclusive,
and the word "INCLUDING" (in its various forms) means "INCLUDING WITHOUT
LIMITATION". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires. The foregoing shall apply to all Loan Documents.
Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents of interest chargeable with respect to Advances and of fees
and other charges shall be made on the basis of actual days elapsed (including
the first day but excluding the last) and a year of 360 days. Each determination
by a Bank Party of amounts to be paid under Sections 3.2 through 3.6 or with
respect to the LIBOR Adjusted Rate, LIBOR Rate, Business Day or Interest Period,
shall, in the absence of manifest error, be conclusive and binding. Unless
otherwise expressly provided herein or unless Majority Lenders otherwise consent
all financial statements and reports furnished to any Bank Party hereunder shall
be prepared and all financial computations and determinations pursuant hereto
shall be made in accordance with GAAP.
ARTICLE II - The Loans
Section 2.1. Commitments to Lend. Subject to the terms and conditions
hereof, the Lenders agree to make loans to Borrower in an amount up to
$50,000,000 in the aggregate (the "Loan") to fund the costs of financing
assisted living facilities (each such facility being referred to herein as a
"PROJECT" and collectively as the "PROJECTS"). The Loan funds allocated to
finance a particular Project and the loan of such allocated funds by Lenders
with respect to that Project are referred to herein as a "PROJECT LOAN". The
aggregate amount of all Project Loans may not exceed $50,000,000. Amounts
borrowed and repaid hereunder may not be reborrowed hereunder.
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Section 2.2. Project Loans
(a) The parties contemplate that there will be a series of
Project Loans comprising the Loan (with a Project Loan for each
Project); provided, however, no Lender shall have an obligation to make
advances hereunder with respect to a particular Project until such time
as Lenders have approved a Project Loan for such Project in accordance
with the terms hereof. Each advance made by Lenders to Borrower under a
Project Loan is referred to herein as an "ADVANCE" and collectively as
"ADVANCES". Each Lender's Advances under a Project Loan shall not
exceed such Lender's Percentage Share of the Project Loan.
(b) A Project Loan may not exceed the lesser of (1) an amount
equal to eighty percent (80%) of the Project's cash cost to reach
stabilization, or (2) an amount equal to seventy-five percent (75%) of
the stabilized appraised value of the Project. The aggregate amount of
all Advances with respect to a Project Loan may not exceed the amount
of the Project Loan. Borrower shall apply all funds from Advances under
a Project Loan to the Project Costs for the Project related to such
Project Loan.
(c) Advances will be made under a Project Loan only upon
compliance with the terms of a Project Loan Agreement (herein so
called) between Borrower, the Company and Agent substantially in the
form of Exhibit S and the terms of this Agreement.
(d) Each Project Loan shall be evidenced by one or more notes
(each herein called a "NOTE") made by Borrower payable to an individual
Lender and in an amount equal to such Lender's Percentage Share of the
Project Loan, in the form of Exhibit A. All promissory notes delivered
in connection with the Project Loans are referred to as the "NOTES").
The amount of principal owing on a Project Loan at any given time shall
be the aggregate amount of all Advances theretofore made under the
Project Loan minus all payments of principal theretofore received by
the Lenders on the Project Loan. Interest on the Project Loan shall
accrue and be due and payable as provided herein.
(e) In connection with the closing of a Project Loan, Borrower
shall deliver to Agent a Project Loan Certificate (herein so called) in
the form of Exhibit R with respect to the Project Loan.
Section 2.3. Requests for Advances. Borrower must give to Agent written
notice of any requested Advance under a Project Loan to be advanced by Lenders.
Each such notice constitutes a "REQUEST FOR ADVANCE" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of
new Base Rate Advances and the date on which such Base Rate Advances
are to be advanced, or (ii) the aggregate amount of any such Borrowing
of new LIBOR Advances and the date on which such LIBOR Advances are to
be advanced (which shall be the first day of the Interest Period which
is to apply thereto), and the length of the applicable Interest Period;
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(b) be received by Agent not later than 10:00 a.m., Dallas,
Texas time, the third Business Day preceding the day on which any such
Base Rate Advances or LIBOR Advances are to be made; and
(c) shall designate the Project Loan to which such Request for
Advance applies.
Each such written request or confirmation must be made in the form and substance
of the "REQUEST FOR ADVANCE" attached hereto as Exhibit B, duly completed. Upon
receipt of any such Request for Advance, Agent shall give each Lender prompt
notice of the terms thereof. If Agent notifies each Lender that all conditions
precedent to such new Advances have been met pursuant to the terms of the
related Project Loan Agreement, each Lender will on the date requested promptly
remit to Agent at Agent's office in Dallas, Texas the amount of such Lender's
new Advance in immediately available funds, and upon receipt of such funds,
unless to its actual knowledge any conditions precedent to such Advances have
been neither met nor waived as provided herein, Agent shall promptly make such
Advances available to Borrower. Unless Agent shall have received prompt notice
from a Lender that such Lender will not make available to Agent such Lender's
new Advance, Agent may in its discretion assume that such Lender has made such
Advance available to Agent in accordance with this section and Agent may if it
chooses, in reliance upon such assumption, make such Advance available to
Borrower. If and to the extent such Lender shall not so make its new Advance
available to Agent, such Lender agrees to pay or repay to Agent within three
days after demand the amount of such Advance together with interest thereon, for
each day from the date such amount was made available to Borrower until the date
such amount is paid or repaid to Agent, with interest at the Federal Funds Rate.
If such Lender does not pay or repay to Agent such amount within such three-day
period, Agent shall in addition to such amount be entitled to recover from such
Lender, on demand, interest thereon at the Late Payment Rate, calculated from
the date such amount was made available to Borrower. The failure of any Lender
to make any new Advance to be made by it hereunder shall not relieve any other
Lender of its obligation hereunder, if any, to make its new Advance, but no
Lender shall be responsible for the failure of any other Lender to make any new
Advance to be made by such other Lender.
Section 2.4. Continuations and Conversions of Existing Advances. With
respect to a Project Loan, Borrower may make the following elections with
respect to Advances already outstanding under such Project Loan: to convert Base
Rate Advances to LIBOR Advances, to convert LIBOR Advances to Base Rate Advances
on the last day of the Interest Period applicable thereto, or to continue LIBOR
Advances beyond the expiration of such Interest Period by designating a new
Interest Period to take effect at the time of such expiration. In making such
elections with respect to a Project Loan and Advances thereunder, Borrower may
combine existing Advances made pursuant to separate Borrowings into one new
Borrowing or divide existing Advances made pursuant to one Borrowing into
separate new Borrowings. To make any such election, Borrower must give to Agent
written notice of any such conversion or continuation of existing Advances, with
a separate notice given for each new Borrowing. Each such notice constitutes a
"CONTINUATION/CONVERSION NOTICE" hereunder and must:
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(a) specify the existing Advances which are to be continued or
converted and the Project Loan to which such Advances relate;
(b) specify (i) the aggregate amount of any Borrowing of Base
Rate Advances into which such existing Advances are to be continued or
converted and the date on which such continuation or conversion is to
occur, or (ii) the aggregate amount of any Borrowing of LIBOR Advances
into which such existing Advances are to be continued or converted, the
date on which such continuation or conversion is to occur (which shall
be the first day of the Interest Period which is to apply to such LIBOR
Advances), and the length of the applicable Interest Period; and
(c) be received by Agent not later than 10:00 a.m., Dallas,
Texas time, on the third Business Day preceding the day on which any
such continuation or conversion to LIBOR Advances is to occur.
Each such written request or confirmation must be made in the form and substance
of the "CONTINUATION/CONVERSION NOTICE" attached hereto as Exhibit C, duly
completed. Upon receipt of any such Continuation/Conversion Notice, Agent shall
give each Lender prompt notice of the terms thereof. Each Continuation/
Conversion Notice shall be irrevocable and binding on Borrower. During the
continuance of any Event of Default, Borrower may not make any election to
convert existing Advances into LIBOR Advances or continue existing Advances as
LIBOR Advances. If (due to the existence of a Default or for any other reason)
Borrower fails to timely and properly give any notice of continuation or
conversion with respect to a Borrowing of existing LIBOR Advances at least three
days prior to the end of the Interest Period applicable thereto, such LIBOR
Advances shall automatically be converted into Base Rate Advances at the end of
such Interest Period. No new funds shall be advanced by any Lender in connection
with any continuation or conversion of existing Advances pursuant to this
section, and no such continuation or conversion shall be deemed to be a new
advance of funds for any purpose; such continuations and conversions merely
constitute a change in the interest rate applicable to already outstanding
Advances. Notwithstanding anything to the contrary contained herein, Borrower
shall have no more than three (3) LIBOR tranches of Advances in effect at any
time with respect to a Project Loan.
Section 2.5. Use of Proceeds. In no event shall the funds from any
Advances be used directly or indirectly by any Person for personal, family,
household or agricultural purposes or for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any "margin stock"
or any "margin securities" (as such terms are defined respectively in Regulation
U and Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities. Borrower
represents and warrants that Borrower is not engaged principally, or as one of
Borrower's important activities, in the business of extending credit to others
for the purpose of purchasing or carrying such margin stock or margin
securities.
Section 2.6. Fees.
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(a) Master Facility Fee. In consideration of the execution of
this Agreement by Lenders, the Related Persons shall pay to Agent for
the account of the Lenders a master facility fee of $62,500 on the date
hereof.
(b) Reaffirmation Fee. Provided no Default exists, the Related
Persons may extend the Commitment Period for a period of twelve (12)
months, upon payment to Agent for the account of the Lenders of a
reaffirmation fee equal to one-eighth percent (.125%) of the unused
portion of the Commitment. This reaffirmation fee shall be due and
payable on or before the expiration of the original stated maturity of
the Commitment Period.
(c) Project Loan Commitment Fee. In consideration of the
making of a Project Loan, Borrower shall pay to Agent for the account
of Lenders a commitment fee equal to three-fourths percent (0.75%) of
the amount of such Project Loan on the Project Loan Closing Date for
such Project Loan.
(d) Modification Fees. In consideration of Lenders' review and
processing of any amendment, waiver or other modification of any Loan
Document, the Related Persons will pay to Agent, if so requested, for
the account of Lenders a modification fee in the aggregate amount of
$1,000 for each such amendment, waiver or modification, due and payable
on the effective date thereof.
Section 2.7. Extension of Project Loan Maturity Date. With respect to a
Project Loan, Borrower shall have the right and option to extend the Project
Loan Maturity Date for such Project Loan (a) to a date ending upon the
expiration of the First Extension Period, and (b) upon expiration of the First
Extension Period, to a date ending upon the expiration of the Second Extension
Period, each such extension being subject to the conditions that:
(a) Borrower shall have notified Agent in writing of its
exercise of each such extension at least thirty (30) days (x) prior to
the Project Loan Maturity Date, in the case of the first such
extension, and (y) prior to the end of the First Extension Period, in
the case of the second such extension;
(b) on the date of such written notice and on the date of
commencement of the applicable Extension Period, there shall exist no
Default or Event of Default;
(c) such written notice given pursuant to clause (a) above
shall be accompanied by a fee in the amount of three-eighths percent
(.375%) of the stated principal amount of the Project Loan for the
First Extension Period, and five-eighths percent (.625%) of such stated
principal amount for the Second Extension Period;
(d) at or before the commencement of the First Extension
Period, Borrower shall deliver to the Agent evidence satisfactory to
Agent that the operation of the Project related to the Project Loan has
achieved a Debt Coverage Ratio of at least 1.2 to 1 for a period of
three (3) consecutive months prior to the beginning of the First
Extension Period
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and at or before the commencement of the Second Extension Period,
Borrower shall deliver to the Agent evidence satisfactory to the Agent
that the operation of the Project related to the Project Loan has
achieved a Debt Coverage Ratio of at least 1.3 to 1 for a period of
three (3) consecutive months prior to the beginning of the Second
Extension Period;
(e) on the date of each such written notice, the fair market
value of the Project shall be in an amount such that the related
Project Loan is less than 75% of the appraised value of the Project and
Agent, at its option, may obtain an appraisal at Borrower's expense in
order to confirm such ratio;
(f) upon each such extension, the Related Persons shall have
executed such documents as Agent deems reasonably appropriate to
evidence such extensions and shall have delivered to Agent an
endorsement to the mortgagee policy of title insurance insuring the
lien of the Mortgage, stating that the coverage of such policy has not
been reduced or terminated by virtue of such extension; and
(g) the Company shall be the lessee under the Lease Agreement
for the Project related to the Project Loan.
provided, however, the Second Extension Period shall not come into effect unless
the First Extension Period shall have been in effect. Commencing on the first
day of the month following commencement of the First Extension Period and on the
first day of each month thereafter during the First Extension Period, Borrower
shall pay an installment of principal on the Project Loan in the amount
necessary to fully amortize the outstanding balance of the Project Loan over a
twenty-five (25) year period on a straight-line basis, which installment is in
addition to accrued interest due on each such date. Commencing on the first day
of the month following commencement of the Second Extension Period, Borrower
shall pay an installment of principal on the Project Loan in the amount
necessary to fully amortize the outstanding balance of the Project Loan over a
twenty-three (23) year period on a straight-line basis, which installment is in
addition to accrued interest due on each such date. All payments of principal
shall be credited first against principal amounts bearing interest at the Base
Rate and then toward the payment of LIBOR Advances. Payments of LIBOR Advances
shall be applied in such manner as Borrower shall select; provided, however,
that Borrower shall select LIBOR Advances to be repaid in a manner designed to
minimize any losses incurred by virtue of such payment. If Borrower shall fail
to select the LIBOR Advances to which such payments are to be applied, or if a
Default has occurred and is continuing at the time of payment, then Agent shall
be entitled to apply the payment to such LIBOR Advances in the manner it deems
appropriate. Borrower shall compensate the Bank Parties for any losses incurred
by virtue of any payment of those portions of the Project Loan accruing interest
at the LIBOR Adjusted Rate prior to the last day of the relevant Interest
Period, which compensation shall be determined in accordance with the provisions
set forth in this Agreement, and any payment received pursuant to this Section
2.7 shall be applied first to losses incurred by the Bank Parties by reason of
such payment.
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Section 2.8. Lease and Sublease. (a) Borrower has informed Agent that
each Project will be subject to a Lease Agreement, Management Agreement and, in
some instances, a Sublease Agreement, each of which shall be subject and
subordinate to the Mortgage on the Project. Borrower acknowledges that each
Lease Agreement and Management Agreement (or Sublease Agreement, as the case may
be) is subject to the approval of Agent in its reasonable discretion. Assuming
Agent has approved the Lease Agreement and Management Agreement (or Sublease
Agreement, as the case may be) for a Project, Agent will enter into an SNDA with
the parties to the Lease Agreement. In addition, the parties to the Lease
Agreement and Management Agreement (or Sublease Agreement, as the case may be)
shall execute and deliver to Agent a Collateral Assignment, Subordination of
Management Agreement and Security Agreement.
(b) The Loan Documents have been prepared on the assumption that each
Project will be leased and the Lessee will enter into a Management Agreement
with Manager. If Borrower elects not to lease a Project or a Lessee elects to
sublease a Project, the Related Persons acknowledge that adjustments to the Loan
Documents may be necessary. The Related Persons agree that, in such event, the
Loan Documents will be modified, at the expense of the Related Persons, to
accommodate any such change. The modified Loan Documents must be satisfactory to
the Bank Parties in their reasonable discretion.
(c) The Bank Parties acknowledge that upon a Project achieving
stabilization, the Lease Agreement covering such Project will be assigned to the
Company and the Management Agreement terminated. The Bank Parties consent to
such assignment and termination provided the Company assumes all of the
obligations of the lessee under the Lease Agreement and any other Loan Documents
to which the lessee is a party, upon terms reasonably satisfactory to Agent and
at the expense of the Related Persons. In addition, the Company shall execute
such financing statements and other documents as shall reasonably be requested
by Agent.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Each Related Person will make each
payment which it owes under the Loan Documents to Agent for the account of the
Bank Party to whom such payment is owed. Each such payment must be received by
Agent not later than 11:00 a.m., Dallas, Texas time, on the date such payment
becomes due and payable, in lawful money of the United States of America,
without set-off, deduction or counterclaim, and in immediately available funds.
Any payment received by Agent after such time will be deemed to have been made
on the next following Business Day. Should any such payment become due and
payable on a day other than a Business Day, the maturity of such payment shall
be extended to the next succeeding Business Day, and, in the case of a payment
of principal or past due interest, interest shall accrue and be payable thereon
for the period of such extension as provided in the Loan Document under which
such payment is due. Each payment under a Loan Document shall be due and payable
at the place provided therein and, if no specific place of payment is provided,
shall be due and payable at the offices of Agent. When Agent collects or
receives money on account of the Obligations, Agent shall distribute all money
so collected or received, and each Bank Party shall apply all such money so
distributed, as follows:
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(a) first, for the payment of all Obligations which are then
due (and if such money is insufficient to pay all such Obligations,
first to any reimbursements due Agent under Section 6.7 or 10.4 and
then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Bank Parties shall otherwise
agree);
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) if so specified by
Borrower;
(c) then for the prepayment of principal on the Notes,
together with accrued and unpaid interest on the principal so prepaid;
and
(d) last, for the payment or prepayment of any other
Obligations.
Prior to an Event of Default, moneys collected or received by Agent with respect
to a particular Project shall be applied in the manner above against Obligations
under the Project Loan related to such Project. All payments applied to
principal or interest on any Note shall be applied first to any interest then
due and payable, then to principal then due and payable. All distributions of
amounts described in any of subsections (b), (c) or (d) above shall be made by
Agent pro rata to each Bank Party then owed Obligations described in such
subsection in proportion to all amounts owed to all Bank Parties which are
described in such subsection. Notwithstanding anything to the contrary contained
herein, in the event any Lender shall have failed to make an Advance as
contemplated under Section 2.3 hereof (a "DEFAULTING LENDER") and the Agent or
another Lender or Lenders shall have made such Advance, payment received by
Agent for the amount of such Defaulting Lender or Lenders shall not be
distributed to such Defaulting Lender or Lenders until such Advance or Advances
shall have been repaid in full to Agent or the Lender or Lenders who funded such
Advance or Advances.
Section 3.2. Capital Reimbursement. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects or
would affect the amount of capital required or expected to be maintained by any
Bank Party or any corporation controlling any Bank Party, then, upon demand by
such Bank Party, the Related Persons will pay to Agent for the benefit of such
Bank Party, from time to time as specified by such Bank Party, such additional
amount or amounts which such Bank Party shall determine to be appropriate to
compensate such Bank Party or any corporation controlling such Bank Party in
light of such circumstances, to the extent that such Bank Party reasonably
determines that the amount of any such capital would be increased or the rate of
return on any such capital would be reduced by or in whole or in part based on
the existence of the face amount of such Bank Party's Advances, or
participations in commitments under this Agreement.
Section 3.3. Increased Cost of LIBOR Advances. If any applicable Law
(whether now in effect or hereinafter enacted or promulgated, including
Regulation D) or any interpretation or
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administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
Law):
(a) shall change the basis of taxation of payments to any Bank
Party of any principal, interest, or other amounts attributable to any
LIBOR Advance or otherwise due under this Agreement in respect of any
LIBOR Advance (other than taxes imposed on the overall net income of
such Bank Party or any lending office of such Bank Party by any
jurisdiction in which such Bank Party or any such lending office is
located); or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any
LIBOR Advance (excluding those for which such Bank Party is fully
compensated pursuant to adjustments made in the definition of LIBOR
Adjusted Rate) or against assets of, deposits with or for the account
of, or credit extended by, such Bank Party; or
(c) shall impose on any Bank Party or the interbank
eurocurrency deposit market any other condition affecting any LIBOR
Advance, the result of which is to increase the cost to any Bank Party
of funding or maintaining any LIBOR Advance or to reduce the amount of
any sum receivable by any Bank Party in respect of any LIBOR Advance by
an amount deemed by such Bank Party to be material,
then such Bank Party shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Bank Party
for such event (on an after-tax basis, taking into account any taxes on such
compensation), whereupon (i) the Related Person shall pay such amount to Agent
for the account of such Bank Party and (ii) Borrower may elect, by giving to
Agent and such Bank Party not less than three Business Days' notice, to convert
all (but not less than all) of any such LIBOR Advances into Base Rate Advances.
Section 3.4. Availability. If (a) any change in applicable Laws, or in
the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for any
Bank Party to fund or maintain LIBOR Advances, or shall materially restrict the
authority of any Bank Party to purchase or take offshore deposits of dollars
(i.e., "eurodollars") or (b) any Bank Party determines that matching deposits
appropriate to fund or maintain any LIBOR Advance are not available to it, or
(c) any Bank Party determines that the formula for calculating the LIBOR
Adjusted Rate does not fairly reflect the cost to such Bank Party of making or
maintaining loans based on such rate, then, upon notice by such Bank Party to
Borrower and Agent, Borrower's right to elect LIBOR Advances from such Bank
Party shall be suspended to the extent and for the duration of such illegality,
impracticability or restriction and all LIBOR Advances of such Bank Party which
are then outstanding or are then the subject of any Request for Advances and
which cannot lawfully or practicably be maintained or funded shall immediately
become or remain, or shall be funded as, Base Rate Advances of such Bank Party.
The Related Persons agree to indemnify each Bank Party and hold it harmless
against all costs, expenses, claims, penalties, liabilities and damages which
may result from any such change in Law, interpretation or administration. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
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Section 3.5. Funding Losses. In addition to its other obligations
hereunder, the Related Persons will indemnify each Bank Party against, and
reimburse each Bank Party on demand for, any loss or expense incurred or
sustained by such Bank Party (including any loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by a Bank
Party to fund or maintain LIBOR Advances), as a result of (a) any payment or
prepayment (whether authorized or required hereunder or otherwise) of all or a
portion of a LIBOR Advance on a day other than the day on which the applicable
Interest Period ends, (b) any payment or prepayment, whether required hereunder
or otherwise, of an Advance made after the delivery, but before the effective
date, of a Continuation/Conversion Notice, if such payment or prepayment
prevents such Continuation/Conversion Notice from becoming fully effective, (c)
the failure of any Advance to be made or of any Continuation/Conversion Notice
to become effective due to any condition precedent not being satisfied or due to
any other action or inaction of a Related Person, or (d) any conversion (whether
authorized or required hereunder or otherwise) of all or any portion of any
LIBOR Advance into a Base Rate Advance or into a different LIBOR Advance on a
day other than the day on which the applicable Interest Period ends. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
Section 3.6. Reimbursable Taxes. The Related Persons covenant and
agree that:
(a) The Related Persons will indemnify each Bank Party against
and reimburse each Bank Party for all present and future income, stamp
and other taxes, levies, costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of this Agreement or any
LIBOR Advances (whether or not legally or correctly imposed, assessed,
levied or collected), excluding, however, any taxes imposed on or
measured by the overall net income of Agent or such Bank Party or any
lending office of such Bank Party by any jurisdiction in which such
Bank Party or any such lending office is located (all such non-excluded
taxes, levies, costs and charges being collectively called
"REIMBURSABLE TAXES" in this section). Such indemnification shall be on
an after-tax basis, taking into account any taxes imposed on the
amounts paid as indemnity.
(b) All payments on account of the principal of, and interest
on, each Bank Party's Notes, and all other amounts payable by the
Related Persons to any Bank Party hereunder, shall be made in full
without set-off or counterclaim and shall be made free and clear of and
without deductions or withholdings of any nature by reason of any
Reimbursable Taxes, all of which will be for the account of the Related
Persons. In the event of the Related Persons being compelled by Law to
make any such deduction or withholding from any payment to any Bank
Party, the Related Persons shall pay on the due date of such payment,
by way of additional interest, such additional amounts as are needed to
cause the amount receivable by such Bank Party after such deduction or
withholding to equal the amount which would have been receivable in the
absence of such deduction or withholding. If the Related Persons should
make any deduction or withholding as aforesaid, the Related Persons
shall within 60 days thereafter forward to such Bank Party
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an official receipt or other official document evidencing payment of
such deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax
with respect to any LIBOR Advance, Borrower may elect, by giving to
Agent and such Bank Party not less than three Business Days' notice, to
convert all (but not less than all) of any such LIBOR Advance into a
Base Rate Advance, but such election shall not diminish the Related
Persons' obligation to pay all Reimbursable Taxes.
(d) Notwithstanding the foregoing provisions of this section,
each of the Related Persons shall be entitled, to the extent it is
required to do so by Law, to deduct or withhold (and not to make any
indemnification or reimbursement for) income or other similar taxes
imposed by the United States of America (other than any portion thereof
attributable to a change in federal income tax Laws effected after the
date hereof) from interest, fees or other amounts payable hereunder for
the account of any Bank Party, other than a Bank Party (i) who is a
U.S. person for Federal income tax purposes or (ii) who has the
Prescribed Forms on file with Agent (with copies provided to the
Related Persons) for the applicable year to the extent deduction or
withholding of such taxes is not required as a result of the filing of
such Prescribed Forms, provided that if a Related Person shall so
deduct or withhold any such taxes, it shall provide a statement to
Agent and such Bank Party, setting forth the amount of such taxes so
deducted or withheld, the applicable rate and any other information or
documentation which such Bank Party may reasonably request for
assisting such Bank Party to obtain any allowable credits or deductions
for the taxes so deducted or withheld in the jurisdiction or
jurisdictions in which such Bank Party is subject to tax. As used in
this section, "PRESCRIBED FORMS" means such duly executed forms or
statements, and in such number of copies, which may, from time to time,
be prescribed by Law and which, pursuant to applicable provisions of
(x) an income tax treaty between the United States and the country of
residence of the Bank Party providing the forms or statements, (y) the
Internal Revenue Code of 1986, as amended from time to time, or (z) any
applicable rules or regulations thereunder, permit the Related Persons
to make payments hereunder for the account of such Bank Party free of
such deduction or withholding of income or similar taxes.
Section 3.7. Reimbursement Requests; Replacement of Lenders.
(a) Notwithstanding anything in this Agreement to the
contrary, (i) no Bank Party shall be entitled to compensation or
payment or reimbursement of other amounts under Sections 3.2 through
3.6 incurred or accruing more than ninety (90) days prior to the giving
of notice to the Company (on behalf of any Related Person) of
additional costs or other amounts of the nature described in such
Sections, and (ii) no Bank Party shall demand compensation, payment or
reimbursement under Section 3.2 if it shall not at the time be the
general policy or practice of such Bank Party to demand such
compensation, payment or reimbursement in similar circumstances under
comparable provisions of other credit agreements.
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(b) If any Bank Party seeks reimbursement for increased costs
under Sections 3.2 through 3.6, then within ninety (90) days thereafter
-- provided no Event of Default then exists -- the Related Persons
shall have the right (unless such Bank Party withdraws its request for
additional compensation) to replace such Bank Party by requiring such
Bank Party to assign its Notes and its commitments hereunder to an
Eligible Transferee reasonably acceptable to Agent and to the Related
Persons, provided that: (i) all Obligations of the Related Persons
owing to such Bank Party being replaced (including such increased
costs, but excluding principal and accrued interest on the Notes being
assigned) shall be paid in full to such Bank Party concurrently with
such assignment, and (ii) the replacement Eligible Transferee shall
purchase the Notes being assigned by paying to such Bank Party a price
equal to the principal amount thereof plus accrued and unpaid interest
thereon. In connection with any such assignment, the Related Persons,
Agent, such Bank Party and the replacement Eligible Transferee shall
otherwise comply with Section 10.5. Notwithstanding the foregoing
rights of the Related Persons under this section, however, the Related
Persons may not replace any Bank Party which seeks reimbursement for
increased costs under Section 3.2 through 3.6 unless the Related
Persons are at the same time replacing all Bank Parties which are then
seeking such compensation.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Application for a Project Loan.
(a) At such time as Borrower shall desire to obtain a Project
Loan with respect to a particular Project, Borrower shall submit to
Agent (a) a Loan Application for the Project Loan (accompanied by a
$10,000 due diligence deposit and $3,500 nonrefundable application
fee), (b) a description of the applicable Project, together with an
analysis of the local market conditions applicable thereto, and (c) a
preliminary budget of all Project Costs with respect to the Project.
The Bank Parties shall review the Loan Application and accompanying
information, and Borrower shall supply Agent with such additional
information regarding the acquisition, development, construction or
operation of the Project as Agent may reasonably require. Approval or
disapproval of the requested Project Loan shall be at the sole
discretion of the Lenders. If the Project Loan is approved, the
Borrower and the Bank Parties shall then pursue a closing (the "PROJECT
CLOSING") of the Project Loan in accordance with the terms and
conditions of this Agreement.
(b) Once a Project Loan has been approved for a Project, no
Lender has an obligation to make the Initial Advance under the Project
Loan unless Agent shall have received (1) all items described on the
Pre-Closing Document List attached as Exhibit L with respect to the
Project (including an appraisal and environmental report) and each of
such items shall be satisfactory to the Bank Parties in their sole
discretion, and (2) all of the following, at Agent's office in Dallas,
Texas, duly executed and delivered and in form, substance and date
satisfactory to the Bank Parties with respect to the Project:
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(1) each of the Security Documents;
(2) favorable opinion of counsel for the Related
Persons; and
(3) in addition to the Security Documents, all
documents, agreements and instruments required under Section
5.1 of the Project Loan Agreement, each in form satisfactory
to the Bank Parties in their sole discretion.
(c) Unusual State Requirements. Agent may employ counsel in
each state in which a Project is located to advise Agent on local law
matters and to revise the Loan Documents to conform to local law and
customary practice of sophisticated lenders in such state. Agent will,
however, inform its local counsel that the form of the Loan Documents
has already been negotiated and local counsel is to limit its comments
accordingly. Nevertheless, in the event local counsel advises Agent
that certain revisions to the Loan Documents are necessitated by local
law issues, the Loan Documents will be revised accordingly. Further, in
the event local counsel advises Agent that because of local law issues
(such as a one-action rule) it is advisable to execute Loan Documents
in a form different from that previously negotiated, the Related
Persons shall, as a further condition to Borrower obtaining the
affected Project Loan, execute or cause to be executed such documents
as are reasonably proposed by Agent and modify where necessary existing
and future Loan Documents to recognize issues raised by such local law
issues.
Section 4.2. Additional Conditions Precedent to Initial Advance. Once a
Project Loan has been approved for a Project, no Lender has any obligation to
make the Initial Advance under the Project Loan unless the following conditions
precedent have been satisfied:
(a) In the event more than sixty (60) days shall have passed
since the Bank Parties' approval of the Project Loan for the Project,
Borrower shall have provided Agent such information as Agent may
reasonably request with respect to matters provided Agent in connection
with the Loan Application which may no longer be current and such
updated information shall be satisfactory to the Bank Parties in all
respects.
Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Advance under a Project Loan unless the following
conditions precedent have been satisfied:
(a) All representations and warranties made by the Related
Persons in any Loan Document shall be true on and as of the date of
such Advance (except to the extent that the facts upon which such
representations are based have been changed by the extension of credit
hereunder) as if such representations and warranties had been made as
of the date of such Advance.
(b) No Default shall exist at the date of such Advance.
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(c No Material Adverse Change shall have occurred to, and no
event or circumstance shall have occurred that could cause a Material
Adverse Change to, either of the Related Persons' financial condition
or businesses.
(d Each of the Related Persons shall have performed and
complied with all agreements and conditions required in the Loan
Documents to be performed or complied with by it on or prior to the
date of such Advance.
(e The making of such Advance shall not be prohibited by any
Law and shall not subject any Lender to any penalty or other onerous
condition under or pursuant to any such Law.
(f With respect to a particular Project, the Project Related
Persons shall have satisfied all material conditions set forth in the
Project Loan Agreement for such Project.
(g Payment of all commitment, facility, agency and other fees
then due and required to be paid to any Bank Party pursuant to any Loan
Documents or any commitment agreement heretofore entered into.
Section 4.4. Releases. In the event Borrower intends to pay a Project
Loan in full and desires to obtain a release of the lien of the Mortgage and any
other Security Document filed against the Project related to such Project Loan,
Borrower shall give Agent fifteen (15) days prior written notice thereof. Upon
payment in full of the Project Loan together with all other obligations
thereunder including interest accrued thereon, Agent, at Borrower's expense,
will release the lien of the Mortgage and any other Security Document filed
against the Project related to such Project Loan provided (i) no Default exists
on the date of release, and (ii) the collective Debt Coverage Ratio for the
other Projects on the date of release is at least 1.15 to 1, if the requested
release is on or before January 1, 2000, at least 1.25 to 1, if the requested
release is after January 1, 2000 but before January 1, 2001, and at least 1.3 to
1 if the requested release is after January 1, 2001.
ARTICLE V - Representations and Warranties
To confirm each Bank Party's understanding concerning the Related
Persons and the Related Persons' businesses, properties and obligations and to
induce each Bank Party to enter into this Agreement and to extend credit
hereunder, the Related Persons represent and warrant to each Bank Party that:
Section 5.1. Organization and Good Standing. Each Related Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
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Section 5.2. Authorization. Each Related Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.3. No Conflicts or Consents. The execution and delivery by
the Related Persons of the Loan Documents to which it is a party, the
performance of its obligations under such Loan Documents, and the consummation
of the transactions contemplated by the various Loan Documents, do not and will
not (i) conflict with any provision of (1) any Law, (2) the organizational
documents of the Related Persons, or (3) any agreement, judgment, license, order
or permit applicable to or binding upon the Related Persons, (ii) result in the
acceleration of any Debt owed by the Related Persons, or (iii) result in or
require the creation of any Lien upon any assets or properties of the Related
Persons except as expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any Tribunal or
third party is required in connection with the execution, delivery or
performance by the Related Persons of any Loan Document or to consummate any
transactions contemplated by the Loan Documents.
Section 5.4. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Related Person which is a party hereto or thereto,
enforceable in accordance with their terms except as such enforcement may be
limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights and general principles of
equity and except as enforcement of a Collateral Assignment and Security
Agreement may be limited by or subject to laws applicable to healthcare
providers and healthcare facilities.
Section 5.5. Initial Financial Statements. The Initial Financial
Statements fairly present the Company's Consolidated financial position at the
respective dates thereof. Between the date of the Initial Financial Statements
and the date hereof, no Material Adverse Change has occurred with respect to the
Company, except as reflected in the quarterly Initial Financial Statements. All
Initial Financial Statements were prepared in accordance with GAAP.
Section 5.6. Other Obligations and Restrictions. No Related Person has
any outstanding Liabilities of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to the Related Person or material with respect to the
Related Person's financial condition and not disclosed in writing to the Bank
Parties. Except as disclosed in writing to the Bank Parties, no Related Person
is subject to or restricted by any franchise, contract, deed, charter
restriction, or other instrument or restriction which could cause a Material
Adverse Change.
Section 5.7. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Related Person to any Bank
Party in connection with the negotiation of this Agreement or in connection with
any transaction contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact known to the Related Persons (other
than industry-wide risks normally associated with the types of businesses
conducted by the Related
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Persons) necessary to make the statements contained herein or therein not
misleading as of the date made or deemed made. There is no fact known to the
Related Persons that has not been disclosed to Agent in writing which could
cause a Material Adverse Change.
Section 5.8. Litigation. Except as disclosed in writing to Agent: (i)
there are no actions, suits or legal, equitable, arbitrative or administrative
proceedings pending, or to the knowledge of the Related Persons threatened,
against the Related Persons before any Tribunal which could cause a Material
Adverse Change, and (ii) there are no outstanding judgments, injunctions, writs,
rulings or orders by any such Tribunal against the Related Persons which could
cause a Material Adverse Change.
Section 5.9. ERISA Plans and Liabilities. The Related Persons have not
in the past and do not presently maintain any "employee benefit plan" as defined
in Section 3(3) of ERISA.
Section 5.10. Names and Places of Business. Except as disclosed on
Schedule 2, no Related Person has, during the preceding five years, had, been
known by, or used any other trade or fictitious name with respect to a Project.
The chief executive office and principal place of business of the Related
Persons is and has been since formed located at the address of the Related
Persons set out on Schedule 2.
Section 5.11. Insider. No Related Person or any Person having "control"
(as that term is defined in 12 U.S.C. ss. 375b(9) or in regulations promulgated
pursuant thereto) of a Related Person is a "director" or an "executive officer"
or "principal shareholder" (as those terms are defined in 12 U.S.C. ss. 375b(8)
or (9) or in regulations promulgated pursuant thereto) of any Bank Party, of a
bank holding company of which any Bank Party is a Subsidiary or of any
Subsidiary of a bank holding company of which any Bank Party is a Subsidiary.
Section 5.12. Environmental and Other Laws. (i) The Related Persons are
conducting their businesses in material compliance with all applicable federal,
state or local laws, including those pertaining to environmental matters; (ii)
none of the operations or properties of any Related Person is the subject of
federal, state or local investigation evaluating whether any material remedial
action is needed to respond to a release of any hazardous or toxic waste,
substance or constituent into the environment or to the improper storage or
disposal (including storage or disposal at offsite locations) of any such waste,
substance, or constituent; (iii) no Related Person (and to the best knowledge of
the Related Persons, no other Person) has filed any notice under any federal,
state or local law indicating that any Related Person is responsible for the
improper release into the environment, or the improper storage or disposal, of
any material amount of any hazardous or toxic waste, substance or constituent or
that any such waste, substance or constituent has been improperly released, or
is improperly stored or disposed of, upon any property of any Related Person;
and (iv) no Related Person otherwise has any known material contingent liability
in connection with the release into the environment, or the storage or disposal,
of any such waste, substance or constituent.
Section 5.13. Subsidiary. Borrower is a wholly-owned Subsidiary of the
Company.
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Section 5.14. Participation Agreements. No Project Related Person is a
party to any Participation Agreements.
ARTICLE VI - Affirmative Covenants
To conform with the terms and conditions under which each Bank Party is
willing to have credit outstanding to Borrower, and to induce each Bank Party to
enter into this Agreement and extend credit hereunder, each Related Person
warrants, covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
Section 6.1. Payment and Performance. Each Related Person will pay all
amounts due under the Loan Documents in accordance with the terms thereof and
will observe, perform and comply in all material respects with every covenant,
term and condition expressed or implied in the Loan Documents.
Section 6.2. Books, Financial Statements and Reports. Each Related
Person will at all times maintain full and accurate books of account and
records. The Company will maintain and will cause its Subsidiaries to maintain a
standard system of accounting and will furnish the following statements and
reports to Agent at the Company's expense:
(i) As soon as available, and in any event within one
hundred twenty (120) days after the end of each Fiscal Year,
complete Consolidated financial statements of the Company and
its Subsidiaries together with all notes thereto and all
consolidating working papers, prepared in reasonable detail in
accordance with GAAP, together with an opinion based on an
audit using generally accepted auditing standards, by a "Big
Five" accounting firm, or other independent certified public
accountants selected by the Company and reasonably acceptable
to Agent, stating that such Consolidated financial statements
have been so prepared. The financial statements shall contain
a Consolidated balance sheet as of the end of such Fiscal Year
and Consolidated statements of operations, owner's equity and
cash flows for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding
Fiscal Year. Such financial statements shall be accompanied by
an unaudited consolidating financial statement.
(ii) Intentionally Omitted.
(iii) As soon as available, and in any event within
forty-five (45) days after the end of each of the first three
Fiscal Quarters of each Fiscal Year, an internally prepared
Consolidated balance sheet of the Company and its Subsidiaries
as of the end of such Fiscal Quarter and Consolidated
statements of the Company's and its Subsidiaries' income for
the period from the beginning of the then current Fiscal Year
to the end of such Fiscal Quarter, all in reasonable
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detail and prepared in accordance with GAAP and accompanied by
a consolidating financial statement, subject to changes
resulting from normal year-end adjustments.
(iv) Once each month within thirty (30) days after month
end, unaudited monthly financial statements of the operations
of the Project, prepared in accordance with GAAP by the
Company, in its role as Manager, Lessee or Sublessee, as the
case may be, which statements shall include an operating
statement for the month then ended, together with census data
of the Project as of the end of such month, certified by a
representative of the Company to be true and correct to the
best of the representative's knowledge and belief. Such
statements shall also be prepared on a "rolling" quarterly
basis. Such statements of the Project shall be accompanied by
the Summary of Financial Statements and Census Data (in the
form attached hereto as Exhibit W) and certified by a
representative of the Company to be true and correct. Within
thirty (30) days after the end of each Fiscal Year, Company
shall submit a certified rent roll for the Project.
(v) The Company will, together with each such set of
financial statements delivered pursuant to clause (i), (iii)
or (iv) above, furnish a certificate in the form of Exhibit D
signed by the chief financial officer of the Company stating
that such financial statements present fairly in all material
respects in accordance with GAAP the Consolidated financial
condition of the Company as at the date of such financial
statements and its consolidated results of operation and cash
flows for 1the period covered thereby stating that he has
reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal
Quarter with the requirements of Sections 6.16 - 6.20, and
stating that no Default exists at the end of such Fiscal
Quarter or at the time of such certificate or specifying the
nature and period of existence of any such Default.
(vi) The Agent further reserves the right to require such
other financial information of Borrower, the Company, the
Lessee, and/or the Project, in such form and at such other
times (including monthly or more frequently) as Agent shall
deem reasonably necessary, and the Related Person agree
promptly to provide or to cause to be provided, such
information to Agent. All financial statements must be in the
form and detail as Agent may from time to time reasonably
request.
(vii) Such other statements and reports as shall be
required by a Project Loan Agreement.
Section 6.3. Other Information and Inspections. Each Related Person
will request in writing concerning any covenant, provision or condition of the
Loan Documents or any matter in connection with the Related Persons' businesses
and operations. Subject to the privacy rights of
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residents of the Projects, each Related Person will permit representatives
appointed by Agent, including independent accountants, auditors, agents,
attorneys, appraisers and any other Persons, to visit and inspect during normal
business hours any of such Related Person's property, including its books of
account, other books and records, and any facilities or other business assets,
and to make extra copies therefrom and photocopies and photographs thereof, and
to write down and record any information such representatives obtain, and each
Related Person shall permit Agent or its representatives to investigate and
verify the accuracy of the information furnished to Agent or any Lender in
connection with the Loan Documents and to discuss all such matters with its
officers, employees and representatives.
Section 6.4. Notice of Material Events and Change of Address Each
Related Person will promptly notify each Bank Party in writing, stating that
such notice is being given pursuant to this Agreement, of:
(a any Material Adverse Change in such Related Person's
financial condition,
(b the occurrence of any Default,
(c the filing of any suit or proceeding against any Related
Person in which an adverse decision could cause a Material Adverse
Change.
Upon the occurrence of any of the foregoing, such Related Person will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change or Default, to protect against any such adverse claim, to defend any such
suit or proceeding, and to resolve all controversies on account of any of the
foregoing. Each Related Person will also notify Agent and Agent's counsel in
writing at least twenty (20) Business Days prior to the date that such Related
Person changes its name or the location of its chief executive office or
principal place of business or the place where it keeps its books and records
concerning the Collateral, furnishing with such notice any necessary financing
statement amendments or requesting Agent and its counsel to prepare the same.
Section 6.5. Maintenance of Existence and Qualifications. Each Related
Person will maintain and preserve its existence in full force and effect and
will qualify to do business in all states or jurisdictions where required by
applicable Law.
Section 6.6. Maintenance of Properties. Each Related Person will
maintain, preserve, protect, and keep all property used or useful in the conduct
of its business in good condition, ordinary wear and tear excepted, and in
compliance with all applicable laws, rules and regulations, and will from time
to time make all repairs, renewals and replacements needed to enable the
business and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.
Section 6.7. Payment of Expenses. Each Related Person will promptly
(and in any event, within 30 days after any invoice or other statement or
notice) pay all reasonable costs and expenses incurred by or on behalf of Agent
(including reasonable attorneys' fees) in connection with (i) the negotiation,
preparation, execution and delivery of the Loan Documents, and any and
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all consents, waivers or other documents or instruments relating thereto, (ii)
the filing, recording, refiling and re-recording of any Loan Documents and any
other documents or instruments or further assurances required to be filed or
recorded or refiled or re-recorded by the terms of any Loan Document, and (iii)
the defense or enforcement of the Loan Documents or the defense of Agent's
exercise of its rights thereunder.
Section 6.8. Performance on Related Person's Behalf. If any Related
Person fails to pay any taxes, insurance premiums, expenses, attorneys' fees or
other amounts it is required to pay under any Loan Document, Agent, after thirty
(30) days notice to such Related Person (except no notice is required with
respect to the payment of insurance premiums), may pay the same. Such Related
Person shall immediately reimburse Agent for any such payments and each amount
paid by Agent shall constitute an Obligation owed hereunder which is due and
payable on the date such amount is paid by Agent.
Section 6.9. Insurance. Each Related Person will keep or cause to be
kept contractual liability coverage which insures contractual liability under
the indemnifications of the Bank Parties by each Related Person herein (but such
coverage or amount shall in no way limit such indemnifications). Each Related
Person will maintain the additional insurance coverage as described in the
respective Security Documents.
Section 6.10. Interest. Each Related Person hereby promises to each
Bank Party to pay interest at the Late Payment Rate on all Obligations
(including Obligations to pay fees or to reimburse or indemnify any Bank Party)
which such Related Person has in this Agreement promised to pay to such Bank
Party and which are not paid when due. Such interest shall accrue from the date
such Obligations become due until they are paid.
Section 6.11. Evidence of Compliance. Each Related Person will furnish
to each Bank Party at such Related Person's expense all evidence which Agent
from time to time reasonably requests in writing as to the accuracy and validity
of or compliance with all representations, warranties and covenants made by each
Related Person in the Loan Documents, the satisfaction of all conditions
contained therein, and all other matters pertaining thereto.
Section 6.12. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation of
the transactions contemplated hereby, Borrower will be solvent (as such term is
used in applicable bankruptcy, liquidation, receivership, insolvency or similar
laws).
Section 6.13. Agreement to Deliver Security Documents. Each Related
Person agrees to deliver, to further secure the Obligations, whenever requested
by Agent in its sole and absolute discretion, security agreements, financing
statements and other Security Documents in form and substance satisfactory to
Agent for the purpose of granting, confirming, and perfecting first and prior
liens or security interests in any real or personal property which is at such
time Collateral or which was intended to be Collateral pursuant to any Security
Document previously executed and not then released by Agent. Each Related Person
will from time to time deliver to Agent any financing statements, continuation
statements, extension agreements and other documents, properly completed and
executed (and acknowledged when required) by each Related Person in
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form and substance satisfactory to Agent, which Agent requests for the purpose
of perfecting, confirming, or protecting any Liens or other rights in Collateral
securing any Obligations.
Section 6.14. Bank Accounts; Offset. To secure the repayment of the
Obligations each Related Person hereby grants to each Bank Party a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interests, liens, and rights of any Bank Party at common law, under
the Loan Documents, or otherwise, and each of which shall be upon and against
(a) any and all moneys, securities or other property (and the proceeds
therefrom) of each Related Person now or hereafter held or received by or in
transit to any Bank Party from or for the account of each Related Person,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
(b) any and all deposits (general or special, time or demand, provisional or
final) of each Related Person with any Bank Party, and (c) any other credits and
claims of Borrower at any time existing against any Bank Party, including claims
under certificates of deposit. At any time and from time to time after the
occurrence of any Event of Default, each Bank Party is hereby authorized to
foreclose upon, or to offset against the Obligations then due and payable (in
either case without notice to the Related Persons), any and all items
hereinabove referred to. The remedies of foreclosure and offset are separate and
cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other.
Section 6.15. Maintain Existence and Business. Borrower will conduct
and operate its business in substantially the same manner in which it operates
on the date of this Agreement. On the date of this Agreement, the business of
Borrower is the development and ownership of senior living facilities and
related health services.
Section 6.16. Debt Coverage Ratio. With respect to a Project, during
the First Extension Period of the Project Loan related to such Project, the
Project shall continuously maintain a Debt Coverage Ratio of 1.2 to 1. During
the Second Extension Period of the Project Loan, the Project shall continuously
maintain a Debt Coverage Ratio of 1.3 to 1. Each of the foregoing shall be
measured on a "rolling" quarterly basis.
Section 6.17. Minimum Tangible Net Worth. The Tangible Net Worth of the
Company at the end of each Fiscal Quarter will not be less than the sum of (i)
$105,000,000, plus (ii) fifty percent (50%) of the Consolidated net income (but
only if a positive number) for the period beginning on October 1, 1998 and
ending on the last day of such Fiscal Quarter, plus (iii) 75% of the aggregate
amount of equity or proceeds of "equity equivalent" security offerings (after
expenses) received by the Company after the date hereof.
Section 6.18. Leverage Ratio. At the end of each Fiscal Quarter, the
ratio of Total Funded Debt to Total Capital shall not be greater than seventy
percent (70%).
Section 6.19. EBITDAR. The Company shall continuously maintain EBITDAR
Coverage of 1.2 to 1 in 1998 and 1.50 to 1 thereafter.
Section 6.20. Capital Expenditures. Commencing on the date which is two
(2) years after issuance of the Certificate of Occupancy for a Project, Lessee
shall make minimum capital expenditures for such Project, in the amount of
$200.00 per unit (in the aggregate for the Project)
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per year (which such capital expenditures may include ordinary repairs needed to
maintain or improve the conditions of the Project), and within forty-five (45)
days of the end of the Fiscal Year, provide evidence thereof satisfactory to
Agent. In determining whether or not such requirement has been met, the excess
amount of capital expenditures above $200 per unit in any year shall be carried
forward to the next year(s). In the event that Lessee shall fail to do so,
Borrower shall, upon Agent's written request, immediately establish and maintain
a capital expenditures reserve fund with Agent equal to the difference between
the required amount per unit and the amount per unit actually spent by the
Lessee. Borrower grants to Agent a right of setoff against all moneys in the
capital expenditures reserve fund, and Borrower shall not permit any other Lien
to exist upon such fund. The proceeds of such capital expenditures reserve fund
will be disbursed upon Agent's receipt of satisfactory evidence that Lessee has
made the required capital expenditures. Upon Lessee's failure to adequately
maintain the Project in good condition, Agent may, but shall not be obligated
to, make such capital expenditures and may apply the moneys in the capital
expenditures reserve fund for such purpose. To the extent there are insufficient
moneys in the capital expenditures reserve fund for such purposes, all funds
advanced by Agent to make such capital expenditures shall constitute a portion
of the Project Loan for such Project, shall be secured by the Security Documents
and shall accrue interest at the Late Payment Rate until paid. Upon an Event of
Default, Agent may apply any moneys in the capital expenditures reserve fund to
the Project Loan in accordance with the terms hereof. Routine maintenance and
repair expenses which are necessary to improve or maintain the physical
condition of the Project shall count toward the capital expenditures
requirement.
ARTICLE VII - Negative Covenants
To conform with the terms and conditions under which each Bank Party is
willing to have credit outstanding to Borrower, and to induce each Bank Party to
enter into this Agreement and make the Project Loans, each Related Person
warrants, covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
Section 7.1. Ownership The Related Persons shall not permit a direct
change in the ownership interests of Borrower without the prior written consent
of Agent, which consent may be withheld in Agent's sole discretion.
Section 7.2. Limitation on Mergers, Issuances of Securities No Related
Person will liquidate or merge or consolidate with or into any other business
entity, unless the Related Person is a surviving entity in such merger or
consolidation.
Section 7.3. Limitation on Additional Debt Borrower shall not create,
assume, incur or suffer to exist any Liabilities other than
(i) the Obligations;
(ii) trade payables and accrued expenses, each arising in the
ordinary course of business; and
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(iii) Liabilities incurred to finance up to 100% of the purchase
price of equipment or vehicles to be used in connection with a
Project and capitalized lease obligations relating to
equipment or vehicles used in connection with such Project,
provided the aggregate principal amount (or capitalized lease
obligation) of all such Liabilities outstanding at any time
does not exceed $100,000 per Project.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default Each of the following events constitutes
an Event of Default under this Agreement:
(a Borrower fails to pay any installment of principal, interest or
other charges required under the Notes within five (5) days after the same
becomes due and payable; or
(b Any Related Person fails to pay any Obligation (other than the
Obligations in clause (a) above) when due and payable, whether at a date for the
payment of a fixed installment or as a contingent or other payment becomes due
and payable or as a result of acceleration or otherwise, within ten (10) days
after written notice that the same is due; or
(c Any Related Person fails to timely and properly observe, keep
or perform any material covenant, agreement, warranty or condition herein or in
any other Loan Document required to be observed, kept or performed, other than
those referred to in any other subsection of this Section 8.1 except this
subsection (c), if such failure continues for thirty (30) days after receipt by
such Related Person of written notice and demand for the performance of such
covenant, agreement, warranty or condition, provided that if such Related Person
shall within such thirty (30) day period commence action to cure such failure
but is unable, by reason of the nature of the performance required, to cure same
within such period, and if such Related Person continues such action thereafter
diligently and without unnecessary delays, no default shall exist under this
Section 8.1(c) until the expiration of a period of time as may be reasonably
necessary to cure such failure, provided further that in any event such Related
Person shall be in default under this Section 8.1(c) if such failure is not
cured on or before ninety (90) days after receipt by such Related Person of the
above described written demand for performance; or
(d Any representation contained herein or in any other Loan
Document is false or misleading in any material respect and such representation
remains false or misleading thirty (30) days after written notice thereof from
Agent to the Related Persons; or
(e Any Related Person or a Lessee:
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or hereafter in
effect, including the federal Bankruptcy Code, as from time to time
amended, or has any
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such proceeding commenced against it which remains undismissed for a
period of ninety (90) days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended; or
applies for or consents to the entry of an order for relief in an
involuntary case under any such Law; or makes a general assignment for
the benefit of creditors; or fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated by
it, and such appointment or taking possession is neither made
ineffective nor discharged within ninety (90) days after the making
thereof, or such appointment or taking possession is at any time
consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $100,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is discharged
within thirty (30) days after the date of entry thereof or an appeal or
appropriate proceeding for review thereof is taken within such period
and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or released
within sixty (60) days after the entry or levy thereof or after any
stay is vacated or set aside; or
(f Any Related Person or Lessee is adjudged in a final
administrative decision to have committed fraud or abuse against Medicare,
Medicaid or any other governmental health care program; or
(g The holder of any Lien on a Project or any portion thereof
(without hereby implying the consent of the Agent to the existence or creation
of such Lien) institutes foreclosure proceedings for the enforcement of its
remedies thereunder and foreclosure may occur within thirty (30) days; or
(h A default occurs under any of Sections 6.16 through 6.19; or
(i) In connection with any Project, the Project Related Persons or
the Project shall be assessed fines or penalties by any state health or
licensing agency having jurisdiction over such Persons or the Project in excess
of $100,000 which are not paid within the time period imposed by such agency; or
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(j) In connection with any Project, a Management Agreement is
terminated without the prior written approval of Agent; or
(k) A Project or any part thereof is taken on execution or other
process of law in any action against a Project Related Person; or
(l) A Project Related Person abandons all or a portion of a
Project; or
(m) Without the prior written consent of the Agent (which consent
may be withheld for any reason or for no reason), Borrower sells, leases (except
as expressly provided in the Assignment of Leases and Rents), exchanges, assigns
, transfers, conveys or otherwise disposes of, all or any part of a Project or
any interest therein (except for the disposition of worn-out or obsolete
personal property or fixtures under the circumstances described in subparagraph
2.2(g) of the Mortgage), or legal or equitable title to the Project, or any part
thereof or any interest therein (except under circumstances described in
subparagraph of the Mortgage), is vested in any other party, in any manner
whatsoever, by operation of law or otherwise, whether any of the foregoing is
voluntary or involuntary, it being understood that the consent of the Agent
required hereunder may be refused by the Agent in its sole and absolute
discretion or may be predicated upon any terms, conditions and covenants deemed
advisable or necessary in the sole and absolute discretion of the Agent,
including but not limited to the right to change the interest rate, date of
maturity or payments of principal and/or interest on the related Project Loan,
to require payment of any amount as additional consideration as a transfer fee
or otherwise and to require assumption of the obligations under the Loan
Documents; or
(n) Without the prior written consent of the Agent (which consent
may be withheld for any reason or for no reason), Borrower creates, places or
permits to be created or placed, or through any act or failure to act,
acquiesces in the placing of, or allows to remain, any deed of trust, mortgage,
voluntary or involuntary lien, whether statutory, constitutional or contractual
(except for the lien for ad valorem taxes on a Project which are not delinquent
and any lien being contested pursuant to the provisions of subparagraph 2.2(c)
of the Mortgage), security interest, encumbrance or charge, or conditional sale
or other title retention document, against or covering a Project, or any part
thereof, other than encumbrances securing Liabilities permitted under Section
7.3(iii) and encumbrances permitted by the Agent, regardless of whether the same
are expressly or otherwise subordinate to the lien or security interest created
herein or in any other Loan Document, or acquires any fixtures, equipment or
other property forming a part of the Project pursuant to a lease, license or
similar agreement, it being understood that the consent of the Agent required
hereunder may be refused by the Agent in its sole and absolute discretion or for
any reason or may be predicated upon any terms, conditions and covenants deemed
advisable or necessary in the sole and absolute discretion of the Agent
including but not limited to the right to change the interest rate, date of
maturity or payments of principal and/or interest on the related Project Loan,
to require payment of any amount as a fee or other consideration and to require
a payment on the principal of the Project Loan; or
(o) The failure of Borrower to provide or maintain any insurance
coverages required by a Mortgage or a Project Loan Agreement and such failure
continues for three (3) Business Days after receipt by Borrower of written
notice of such failure; or
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(p) Any Related Person dissolves or liquidates or merges or
consolidates, except as otherwise expressly permitted herein, or any interest in
Borrower is sold, assigned, transferred, mortgaged, pledged, encumbered, or
otherwise disposed of, voluntarily or involuntarily, without the prior written
consent of Agent; or
(q) A default occurs under a Security Agreement, Collateral
Assignment or SNDA as a result of an act or omission thereunder by a party
thereto, which default remains uncured beyond any cure period with respect
thereto; or
(r) The failure of any Project Related Person to correct, within
the time deadlines set by any applicable licensing agency, any deficiency which
would result in the following actions by such agency with respect to a Project:
(1) a termination of any License; or
(2) a ban on new admissions generally.
Upon the occurrence of an Event of Default described in subsection (e)(i),
(e)(ii) or (e)(iii) of this section, all of the Obligations shall thereupon be
immediately due and payable, without demand, presentment, notice of demand or of
dishonor and nonpayment, protest, notice of protest, notice of intention to
accelerate, declaration or notice of acceleration, or any other notice or
declaration of any kind, all of which are hereby expressly waived by the Related
Persons. Upon any such acceleration, any obligation of any Lender to make any
further Advances shall be permanently terminated. During the continuance of any
other Event of Default, Agent at any time and from time to time may (and upon
written instructions from Majority Lenders, Agent shall), without notice to the
Related Persons, do either or both of the following: (1) terminate any
obligation of Lenders to make Advances hereunder, and (2) declare any or all of
the Obligations immediately due and payable, and all such Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
the Related Persons.
Section 8.2. Remedies. If any Event of Default shall occur and be
continuing, each Bank Party may protect and enforce its rights under the Loan
Documents by any appropriate proceedings, including proceedings for specific
performance of any covenant or agreement contained in any Loan Document, and
each Bank Party may enforce the payment of any Obligations due it or enforce any
other legal or equitable right which it may have. All rights, remedies and
powers conferred upon Bank Parties under the Loan Documents shall be deemed
cumulative and not exclusive of any other rights, remedies or powers available
under the Loan Documents or at Law or in equity. Notwithstanding the foregoing,
no Lender may exercise any right or remedy granted to Agent. Further, no Lender
will exercise any rights, remedies or powers available to it without having
first provided the Agent fifteen (15) days prior written notice of its intent
with respect thereto.
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ARTICLE IX - Agent
Section 9.1. Appointment and Authority. Each Lender which becomes a
party to this Agreement hereby irrevocably authorizes Agent, and Agent hereby
undertakes, to receive payments of principal, interest and other amounts due
hereunder as specified herein and to take all other actions and to exercise such
powers under the Loan Documents as are specifically delegated to Agent by the
terms hereof or thereof, together with all other powers reasonably incidental
thereto. The relationship of Agent to the other Bank Parties is only that of one
commercial lender acting as administrative agent for others, and nothing in the
Loan Documents shall be construed to constitute Agent a trustee or other
fiduciary for any holder of any of the Notes or of any participation therein nor
to impose on Agent duties and obligations other than those expressly provided
for in the Loan Documents. With respect to any matters not expressly provided
for in the Loan Documents and any matters which the Loan Documents place within
the discretion of Agent, Agent shall not be required to exercise any discretion
or take any action, and it may request instructions from Lenders with respect to
any such matter, in which case it shall be required to act or to refrain from
acting (and shall be fully protected and free from liability to all Lenders in
so acting or refraining from acting) upon the instructions of Majority Lenders
(including itself), provided, however, that Agent shall not be required to take
any action which exposes it to a risk of personal liability that it considers
unreasonable or which is contrary to the Loan Documents or to applicable Law.
Upon receipt by Agent from Borrower of any communication calling for action on
the part of Lenders or upon notice from any other Bank Party to Agent of any
Default or Event of Default, Agent shall promptly notify each other Bank Party
thereof.
Section 9.2. Exculpation, Agent's Reliance, Etc.
(a) Neither Agent nor any of its directors, officers, agents,
attorneys, or employees shall be liable for any action taken or omitted to be
taken by any of them under or in connection with the Loan Documents, INCLUDING
THEIR NEGLIGENCE OF ANY KIND, except that each shall be liable for its own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, Agent (a) may treat the payee of any Note as the holder thereof until
Agent receives written notice of the assignment or transfer thereof in
accordance with this Agreement, signed by such payee and in form satisfactory to
Agent; (b may consult with legal counsel (including counsel for the Related
Persons), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any other Bank Party and shall not be
responsible to any other Bank Party for any statements, warranties or
representations made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of the Loan Documents on the part of
the Related Persons or to inspect the property (including the books and records)
of the Related Persons; (e) shall not be responsible to any other Bank Party for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Loan Document or any instrument or document furnished in
connection therewith; (f) may rely upon the representations and warranties of
the Related Persons and the Lenders in exercising its powers hereunder; and (g)
shall incur no liability under or in
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respect of the Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (including any telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper Person or Persons.
(b) Agent shall have no obligation whatsoever to any Lender or to
any other Person to assure that any Collateral exists or is owned by the Related
Persons or is cared for, protected or insured or has been encumbered or that the
Liens granted to Agent herein or in any of the other Loan Documents or pursuant
hereto or thereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority.
Section 9.3. Credit Decisions. Each Bank Party acknowledges that it has
independently and without reliance upon any other Bank Party, made its own
analysis of the Related Persons and the transactions contemplated hereby and its
own independent decision to enter into this Agreement and the other Loan
Documents. Each Bank Party also acknowledges that it will, independently and
without reliance upon any other Bank Party and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents.
Section 9.4. Indemnification. Each Lender agrees to indemnify Agent (to
the extent not reimbursed by the Related Persons within ten (10) days after
demand) from and against such Lender's Percentage Share of any and all
liabilities, obligations, claims, losses, damages, penalties, fines, actions,
judgments, suits, settlements, costs, expenses or disbursements (including
reasonable fees of attorneys, accountants, experts and advisors) of any kind or
nature whatsoever (in this section collectively called "liabilities and costs")
which to any extent (in whole or in part) may be imposed on, incurred by, or
asserted against Agent growing out of, resulting from or in any other way
associated with any of the Collateral, the Loan Documents and the transactions
and events (including the enforcement thereof) at any time associated therewith
or contemplated therein (including any violation or noncompliance with any
Applicable Environmental Laws (as such term is defined in the Mortgage) by any
Person or any liabilities or duties of any Person with respect to hazardous
substances found in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrower under
Section 10.4(a) to the extent that Agent is not timely reimbursed for such
expenses by the Related Persons as provided in such section. As used in this
section the term "Agent" shall refer not only to the Person designated as such
in Section 1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
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Section 9.5. Rights as Lender. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with the Related Persons or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section 9.6. Sharing of Set-Offs and Other Payments. Each Bank Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against the
Related Persons or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Agent under Section 3.1, causes such Bank Party to have received more than it
would have received had such payment been received by Agent and distributed
pursuant to Section 3.1, then (a) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the Obligations as
necessary to cause all Bank Parties to share all payments as provided for in
Section 3.1, and (b) such other adjustments shall be made from time to time as
shall be equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 3.1; provided, however, that nothing herein
contained shall in any way affect the right of any Bank Party to obtain payment
(whether by exercise of rights of banker's lien, set-off or counterclaim or
otherwise) of indebtedness other than the Obligations. Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
Law exercise any and all rights of banker's lien, set-off, or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this section is thereafter recovered from the seller under this
section which received the same, the purchase provided for in this section shall
be deemed to have been rescinded to the extent of such recovery, together with
interest, if any, if interest is required pursuant to Tribunal order to be paid
on account of the possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Bank Parties, and no other Person,
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including the Related Persons, shall be entitled to rely on any such provision
or assert any such provision in a claim or defense against any Bank Party. Bank
Parties may waive or amend such provisions as they desire without any notice to
or consent of the Related Persons or any other Person.
Section 9.9. Resignation. Agent may resign at any time by giving sixty
(60) days prior written notice thereof to Lenders and the Related Persons. Each
such notice shall set forth the date of such resignation. Upon any such
resignation Lenders having aggregate Percentage Shares of at least sixty-six and
two thirds percent (66 2/3%) shall have the right to appoint a successor Agent.
A successor must be appointed for any retiring Agent, and such Agent's
resignation shall become effective when such successor accepts such appointment.
If, within thirty days after the date of the retiring Agent's resignation, no
successor Agent has been appointed and has accepted such appointment, then the
retiring Agent, subject to Borrower's approval provided no Default exists and
which approval may not be unreasonably withheld, may appoint a successor Agent,
which shall be a commercial bank organized or licensed to conduct a banking or
trust business under the Laws of the United States of America or of any state
thereof. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents and the successor
Agent shall assume the duties and obligations of Agent under this Agreement and
the other Loan Documents. After any retiring Agent's resignation hereunder, the
provisions of this Article IX shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
Section 9.10. Exercise of Remedies.
(a) Should Agent commence any proceeding or in any way seek to
enforce its rights or remedies under the Loan Documents, irrespective of whether
as a result thereof Agent shall acquire title to any Collateral or part thereof,
either through foreclosure, deed in lieu of foreclosure, or otherwise, each
Lender, upon demand therefor from time to time, shall contribute its share
(based on its Percentage Share) of the reasonable costs and/or expenses of any
such enforcement or acquisition, including, but not limited to, fees of
receivers or trustees, court costs, title company charges, filing and recording
fees, appraisers' fees and fees and expenses of attorneys to the extent not
otherwise reimbursed by the Related Persons. Without limiting the generality of
the foregoing, each Lender shall contribute its share (based on its Percentage
Share) of all reasonable costs and expenses incurred by Agent (including
reasonable attorneys' fees and expenses) if Agent employs counsel for advice or
other representation (whether or not any suit has been or shall be filed) with
respect to any Collateral or any part thereof, or any of the Loan Documents, or
the attempt to enforce any security interest or Lien on any of the Collateral,
or to enforce any rights of Agent or any of the Related Persons' or any other
party's obligations under any of the Loan Documents, but not with respect to any
dispute between Agent and any other Lender(s). Any loss of principal and
interest resulting from any Event of Default shall be shared by Lenders in
accordance with their respective Percentage Shares.
(b) In the event that all or any portion of the Collateral is
acquired by Agent as the result of a foreclosure or the acceptance of a deed or
assignment in lieu of foreclosure, or is
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retained in satisfaction of all or any part of the Obligations, title to any
such Collateral or any portion thereof shall be held in the name of Agent or a
nominee or subsidiary of Agent, as agent, for the ratable benefit of Agent and
Lenders. Agent shall prepare a recommended course of action for such Collateral
(the "POST-FORECLOSURE PLAN"), which shall be subject to the approval of the
Majority Lenders. In the event that Majority Lenders do not approve such
Post-Foreclosure Plan, any Lender shall be permitted to submit an alternative
Post-Foreclosure Plan to Agent and Agent shall submit any and all such
additional Post-Foreclosure Plans to the Lenders for evaluation and the approval
of Majority Lenders. Agent shall manage, operate, repair, administer, complete,
construct, restore or otherwise deal with the Collateral acquired and administer
all transactions relating thereto, including, without limitation, employing a
management agent, leasing agent and other agents, contractors and employees,
including agents for the sale of such Collateral, and the collecting of rents
and other sums from such Collateral and paying the expenses of such Collateral.
Upon demand therefor from time to time, each Lender will contribute its share
(based on its Percentage Share) of all reasonable costs and expenses incurred by
Agent pursuant to the Post-Foreclosure Plan in connection with the construction,
operation, management, maintenance, leasing and sale of such Collateral. In
addition, Agent shall render or cause to be rendered by the managing agent, to
each of the Lenders, monthly, an income and expense statement for such
Collateral, and each of the Lenders shall promptly contribute its Percentage
Share of any operating loss for such Collateral, and such other expenses and
operating reserves as Agent shall deem reasonably necessary pursuant to and in
accordance with the Post-Foreclosure Plan. To the extent there is net operating
income from such Collateral, Agent shall, in accordance with the
Post-Foreclosure Plan, determine the amount and timing of distributions to
Lenders. All such distributions shall be made to Lenders in accordance with
their respective Percentage Shares. Lenders acknowledge that if title to any
Collateral will not be held as a permanent investment but will be liquidated as
soon as practicable. Agent shall undertake to sell such Collateral or portion
thereof, at such price and upon such terms and conditions as the Majority
Lenders shall determine to be most advantageous. Any purchase money mortgage or
deed of trust taken in connection with the disposition of such Collateral or
portion thereof in accordance with the immediately preceding sentence shall name
Agent, as agent for Lenders, as the beneficiary or mortgagee. In such case,
Agent and Lenders shall enter into an agreement with respect to such purchase
money mortgage defining the rights of Lenders in the same Percentage Shares as
provided hereunder, which agreement shall be in all material respects similar to
this Agreement insofar as this Agreement is appropriate or applicable.
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
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(a) Waivers and Amendments. No failure or delay (whether by course
of conduct or otherwise) by any Bank Party in exercising any right, power or
remedy which such Bank Party may have under any of the Loan Documents shall
operate as a waiver thereof or of any other right, power or remedy, nor shall
any single or partial exercise by any Bank Party of any such right, power or
remedy preclude any other or further exercise thereof or of any other right,
power or remedy. No waiver of any provision of any Loan Document and no consent
to any departure therefrom shall ever be effective unless it is in writing and
signed as provided below in this section, and then such waiver or consent shall
be effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. No notice to or demand on any
Related Person shall in any case of itself entitle any Related Person to any
other or further notice or demand in similar or other circumstances. This
Agreement and the other Loan Documents set forth the entire understanding
between the parties hereto with respect to the transactions contemplated herein
and therein and supersede all prior discussions and understandings with respect
to the subject matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective against any party hereto unless the same
is in writing and signed by (i) if such party is a Related Person, by such
Related Person, (ii) if such party is Agent, by Agent, and (iii) if such party
is a Lender, by such Lender or by Agent on behalf of such Lender with the
written consent of Majority Lenders (which consent has already been given as to
the termination of the Loan Documents as provided in Section 10.9). Anything to
the contrary herein notwithstanding, Agent shall not, without the prior consent
of each individual Lender, execute and deliver on behalf of such Lender any
waiver or amendment which would: (1) increase the commitment of such Lender or
subject such Lender to any additional obligations, (2) reduce any fees payable
to such Lender hereunder, or the principal of, or interest on, such Lender's
Notes, (3) postpone any date fixed for any payment of any such fees, principal
or interest, (4) release Borrower from its obligation to pay such Lender's Notes
or (5) release Guarantor from its obligation under any Guaranty.
(b) Acknowledgments and Admissions. Each Related Person hereby
represents, warrants, acknowledges and admits that (i) it has been advised by
counsel in the negotiation, execution and delivery of the Loan Documents to
which it is a party, (ii) it has made an independent decision to enter into this
Agreement and the other Loan Documents to which it is a party, without reliance
on any representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Bank Party as to the Loan Documents except as expressly set
out in this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) no Bank Party has any fiduciary obligation toward any Related
Person with respect to any Loan Document or the transactions contemplated
thereby, (v) the relationship pursuant to the Loan Documents between a Related
Person, on one hand, and each Bank Party, on the other hand, is and shall be
solely that of debtor and creditor, respectively, (vi) no partnership or joint
venture exists with respect to the Loan Documents between any Related Person and
any Bank Party, (vii) Agent is not any Related Person's Agent, but Agent for
Lenders, (viii) should an Event of Default or Default occur or exist, each Bank
Party will determine in its sole discretion and for its own reasons what
remedies and actions it will or will not exercise or take at that time, (ix)
without limiting any of the foregoing, no Related Person is relying upon any
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representation or covenant by any Bank Party, or any representative thereof, and
no such representation or covenant has been made, that any Bank Party will, at
the time of an Event of Default or Default, or at any other time, waive,
negotiate, discuss, or take or refrain from taking any action permitted under
the Loan Documents with respect to any such Event of Default or Default or any
other provision of the Loan Documents, and (x) all Bank Parties have relied upon
the truthfulness of the acknowledgments in this section in deciding to execute
and deliver this Agreement and to become obligated hereunder.
(c) Representation by Lenders. Each Lender hereby represents that
it will acquire its Notes for its own account in the ordinary course of its
lending business; however, the disposition of such Lender's property shall at
all times be and remain within its control and, in particular and without
limitation, such Lender may sell or otherwise transfer its Notes, any
participation interest or other interest in its Notes, or any of its other
rights and obligations under the Loan Documents.
(d) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of the
Related Persons' various representations, warranties, covenants and agreements
in the Loan Documents shall survive the execution and delivery of this Agreement
and the other Loan Documents and the performance hereof and thereof, including
the making or granting of the Project Loans and the delivery of the Notes and
the other Loan Documents, and shall further survive until all of the Obligations
are paid in full to each Bank Party and all of Bank Parties' obligations to
Borrower are terminated. All statements and agreements contained in any
certificate or other instrument delivered by any Related Person to any Bank
Party under any Loan Document shall be deemed representations and warranties by
such Related Person or agreements and covenants of the Related Person under this
Agreement. The representations, warranties, indemnities, and covenants made by
the Related Persons in the Loan Documents, and the rights, powers, and
privileges granted to Bank Parties in the Loan Documents, are cumulative, and,
except for expressly specified waivers and consents, no Loan Document shall be
construed in the context of another to diminish, nullify, or otherwise reduce
the benefit to any Bank Party of any such representation, warranty, indemnity,
covenant, right, power or privilege. In particular and without limitation, no
exception set out in this Agreement to any representation, warranty, indemnity,
or covenant herein contained shall apply to any similar representation,
warranty, indemnity, or covenant contained in any other Loan Document, and each
such similar representation, warranty, indemnity, or covenant shall be subject
only to those exceptions which are expressly made applicable to it by the terms
of the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless
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otherwise specifically provided in such Loan Document (provided that Agent may
give telephonic notices to the other Bank Parties), and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telecopy
or telex, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower at the address of
Borrower specified on the signature pages hereto and to each Bank Party at its
address specified on the signature pages hereto (unless changed by similar
notice in writing given by the particular Person whose address is to be
changed). Any such notice or communication shall be deemed to have been given
(a) in the case of personal delivery or delivery service, as of the date of
first attempted delivery during normal business hours at the address provided
herein, (b) in the case of telecopy or telex, upon receipt, or (c) in the case
of registered or certified United States mail, three (3) days after deposit in
the mail; provided, however, that no Request for Advance or
Continuation/Conversion Notice shall become effective until actually received by
Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, the Related Persons will
promptly (and in any event, within 30 days after any invoice or other statement
or notice) pay: (i) all transfer, stamp, mortgage, documentary or other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein, (ii) all reasonable costs and expenses
incurred by or on behalf of Agent (including reasonable attorneys' fees,
consultants' fees and engineering fees, travel costs and miscellaneous expenses)
in connection with (1) the negotiation, preparation, execution and delivery of
the Loan Documents, and any and all consents, waivers or other documents or
instruments relating thereto, (2) the filing, recording, refiling and
re-recording of any Loan Documents and any other documents or instruments or
further assurances required to be filed or recorded or refiled or re-recorded by
the terms of any Loan Document, and (3) the borrowings hereunder, and (iii) all
reasonable costs and expenses incurred by or on behalf of any Bank Party
(including reasonable attorneys' fees, consultants' fees and accounting fees) in
connection with the defense or enforcement of any of the Loan Documents
(including this section) (other than enforcement or defense against another Bank
Party) or the defense of any Bank Party's exercise of its rights thereunder
(other than enforcement or defense against another Bank Party). Nothing
contained herein shall alter or diminish the obligations of the Related Persons
under a Project Loan Agreement as regards the payment of expenses.
(b) Indemnity. The Related Persons agree to indemnify each Bank
Party, upon demand, from and against any and all liabilities, obligations,
claims, losses, damages, penalties, fines, actions, judgments, suits,
settlements, costs, expenses or disbursements (including reasonable fees of
attorneys, accountants, experts and advisors) of any kind or nature whatsoever
(in this section collectively called "liabilities and costs") which to any
extent (in whole or in part) may be imposed on, incurred by, or asserted against
such Bank Party growing out of, resulting from or in any other way associated
with any of the Collateral, the Loan Documents or the transactions and events
(including the enforcement or defense thereof) at any time associated therewith
or contemplated therein.
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THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY BANK PARTY,
provided only that no Bank Party shall be entitled under this section to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment. If any Person (including a Related Person or
any of its Affiliates) ever alleges such gross negligence or willful misconduct
by any Bank Party, the indemnification provided for in this section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as a court of competent jurisdiction enters a final judgment as
to the extent and effect of the alleged gross negligence or willful misconduct.
As used in this section the term "Bank Parties" shall refer not only to the
Persons designated as such in Section 1.1 but also to each director, officer,
agent, attorney, employee, representative and Affiliate of such Persons.
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments. (a) All Obligations which are incurred by two or more Persons shall
be their joint and several obligations and liabilities. All grants, covenants
and agreements contained in the Loan Documents shall bind and inure to the
benefit of the parties thereto and their respective successors and assigns;
provided, however, that no Related Person may assign or transfer any of its
rights or delegate any of its duties or obligations under any Loan Document
without the prior consent of Agent. No Related Person nor any Affiliates of a
Related Person shall directly or indirectly purchase or otherwise retire any
Obligations owed to any Lender nor will any Lender accept any offer to do so,
unless each Lender shall have received substantially the same offer with respect
to the same Percentage Share of the Obligations owed to it. If a Related Person
or any Affiliate of a Related Person at any time purchases some but less than
all of the Obligations owed to all Bank Parties, such purchaser shall not be
entitled to any rights of any Bank Party under the Loan Documents unless and
until the Related Person or its Affiliates have purchased all of the
Obligations.
(b) No Lender shall sell any participation interest in its
commitment hereunder or any of its rights under the Loan Documents to any Person
other than an Eligible Transferee, and then only if the agreement between such
Lender and such participant at all times provides: (i) that such participation
exists only as a result of the agreement between such participant and such
Lender and that such transfer does not give such participant any right to vote
as a Lender or any other direct claims or rights against any Person other than
such Lender, (ii) that such participant is not entitled to payment from a
Related Person under Sections 3.2 through 3.6 of amounts in excess of those
payable to such Lender under such sections (determined without regard to the
sale of such participation), and (iii) that such participant shall not be
entitled to require such Lender to take any action under any Loan Document or to
obtain the consent of such participant prior to taking any action under any Loan
Document, except for actions which would require the consent of all Lenders
under the next-to-last sentence of subsection (a) of Section 10.1. No Lender
selling such a participation shall, as between the other parties hereto and such
Lender, be relieved of any of its
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obligations hereunder as a result of the sale of such participation. Each Lender
which sells any such participation to any Person (other than an Affiliate of
such Lender) shall give prompt notice thereof to Agent and the Related Persons.
(c) Except for sales of participations under the immediately
preceding subsection (b), no Lender shall make any assignment or transfer of
any kind of its commitments or any of its rights under the Notes or under the
Loan Documents, except for assignments to an Eligible Transferee, and then only
if such assignment is made in accordance with the following requirements:
(i) Each such assignment shall apply to all Obligations owing
to the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Notes and be committed to make that Percentage Share of
all future Advances, the assignee shall have a fixed Percentage Share
in such Notes and be committed to make that Percentage Share of all
future Advances.
(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in the
form of Exhibit F, appropriately completed, together with the Notes
subject to such assignment and a processing fee payable to Agent of
$2,500. Upon such execution, delivery, and payment and upon the
satisfaction of the conditions set out in such Assignment and
Acceptance, then (i) Borrower shall issue new Notes to such assignor
and assignee upon return of the old Notes to Borrower, and (ii) as of
the "Effective Date" specified in such Assignment and Acceptance the
assignee thereunder shall be a party hereto and a Lender hereunder and
Agent shall thereupon deliver to Borrower and each Lender a schedule
showing the revised Percentage Shares of such assignor Lender and such
assignee Lender and the Percentage Shares of all other Lenders.
(iii) Each assignee Lender which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended) for Federal income tax purposes, shall (to
the extent it has not already done so) provide Agent and Borrower with
the Prescribed Forms.
(d) Nothing contained in this section shall prevent or prohibit
any Lender from assigning or pledging all or any portion of its Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with the Related
Persons, Agent and each other Lender hereunder that such assignee understands
and agrees to the terms hereof, including Article IX hereof.
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(f) Agent shall maintain a copy of each Assignment and Acceptance
and a register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Obligations owing to, each
Lender from time to time (in this section called the "REGISTER"). The entries in
the Register shall be conclusive, in the absence of manifest error, and Borrower
and each Bank Party may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes. The Register shall be available for
inspection by the Related Persons or any Bank Party at any reasonable time and
from time to time upon reasonable prior notice.
Section 10.6. Confidentiality. Each Bank Party agrees that it will take
all reasonable steps to keep confidential any proprietary information given to
it by the Related Persons; provided, however, that this restriction shall not
apply to information which (i) has at the time in question entered the public
domain, (ii) is required to be disclosed by Law (whether valid or invalid) of
any Tribunal, (iii) is disclosed to any Bank Party's Affiliates, auditors,
attorneys, or agents, (iv) is furnished to any other Bank Party or to any
purchaser or prospective purchaser of participations or other interests in any
Loan or Loan Document, or (v) is disclosed in the course of enforcing its rights
and remedies during the existence of an Event of Default.
Section 10.7. Governing Law; Submission to Process. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF
THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS SITTING IN THE STATE OF TEXAS AND AGREES AND CONSENTS
THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING RELATING TO
THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS ALLOWED UNDER TEXAS OR
FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO ANY OF
THE LOAN DOCUMENTS SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, TO
THE EXTENT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE IN THE TEXAS
DISTRICT COURTS SITTING IN DALLAS COUNTY, TEXAS. THE PARTIES HERETO HEREBY WAIVE
AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY
SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND FURTHER AGREE TO A TRANSFER OF ANY SUCH PROCEEDING TO A FEDERAL
COURT SITTING IN THE STATE OF TEXAS TO THE EXTENT THAT IT HAS SUBJECT MATTER
JURISDICTION, AND OTHERWISE TO A STATE COURT IN DALLAS, TEXAS. IN FURTHERANCE
THEREOF, THE RELATED PERSONS AND BANK PARTIES EACH HEREBY ACKNOWLEDGE AND AGREE
THAT IT WAS NOT INCONVENIENT FOR THEM TO NEGOTIATE AND RECEIVE FUNDING OF THE
TRANSACTIONS CONTEMPLATED BY THIS
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AGREEMENT IN SUCH COUNTY AND THAT IT WILL BE NEITHER INCONVENIENT NOR UNFAIR TO
LITIGATE OR OTHERWISE RESOLVE ANY DISPUTES OR CLAIMS IN A COURT SITTING IN SUCH
COUNTY.
Section 10.8. Limitation on Interest. Bank Parties, the Related Persons
and any other parties to the Loan Documents intend to contract in strict
compliance with applicable usury law from time to time in effect. In furtherance
thereof such Persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by applicable law from time
to time in effect. Neither any Related Person nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable for payment of
any Obligation shall ever be liable for unearned interest thereon or shall ever
be required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under applicable law from time to time in effect, and the
provisions of this section shall control over all other provisions of the Loan
Documents which may be in conflict or apparent conflict herewith. The Bank
Parties expressly disavow any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or (c)
any Bank Party or any other holder of any or all of the Obligations shall
otherwise collect moneys which are determined to constitute interest which would
otherwise increase the interest on any or all of the Obligations to an amount in
excess of that permitted to be charged by applicable law then in effect, then
all sums determined to constitute interest in excess of such legal limit shall,
without penalty, be promptly applied to reduce the then outstanding principal of
the related Obligations or, at such Bank Party's or holder's option, promptly
returned to the payor thereof upon such determination. In determining whether or
not the interest paid or payable, under any specific circumstance, exceeds the
maximum amount permitted under applicable law, the Bank Parties and the Related
Persons (and any other payors thereof) shall to the greatest extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee or premium rather than as interest, (ii) exclude voluntary prepayments and
the effects thereof, and (iii) amortize, prorate, allocate, and spread the total
amount of interest throughout the entire contemplated term of the instruments
evidencing the Obligations in accordance with the amounts outstanding from time
to time thereunder and the maximum legal rate of interest from time to time in
effect under applicable law in order to lawfully charge the maximum amount of
interest permitted under applicable law. As used in this section the term
"applicable Law" means the Laws of the State of Texas or the Laws of the United
States of America, whichever Laws allow the greater interest, as such Laws now
exist or may be changed or amended or come into effect in the future.
Section 10.9. Termination; Limited Survival. In their sole and absolute
discretion, the Related Persons may at any time that no Obligations are owing
elect in a written notice delivered to Agent to terminate this Agreement. Upon
receipt by Agent of such a notice, if no Obligations are then owing this
Agreement and all other Loan Documents shall thereupon be terminated and the
parties thereto released from all prospective obligations thereunder.
Notwithstanding the foregoing or anything herein to the contrary, any waivers or
admissions made by any Related Person in any Loan Document, any Obligations
under Sections 3.2 through 3.6, and any
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obligations which any Person may have to indemnify or compensate any Bank Party
shall survive any termination of this Agreement or any other Loan Document. At
the request and expense of the Related Persons, Agent shall prepare and execute
all necessary instruments to reflect and effect such termination of the Loan
Documents. Agent is hereby authorized to execute all such instruments on behalf
of all Lenders, without the joinder of or further action by any Lender.
Section 10.10. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same agreement.
Section 10.12. Waiver of Jury Trial. THE RELATED PERSONS AND BANK
PARTIES HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE RELATED PERSONS AND BANK
PARTIES ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK
PARTIES TO ENTER INTO THIS AGREEMENT.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
ALS WEST, INC., a Delaware corporation
By: /s/ Mark W. Ohlendorf
---------------------
Name: Mark W. Ohlendorf
Title: Vice President
Address:
450 N. Sunnyslope Rd.
Suite 300
Brookfield, WI 53005
ALTERNATIVE LIVING SERVICES, INC, a
Delaware corporation
By: /s/ Mark W. Ohlendorf
---------------------
Name: Mark W. Ohlendorf
Title: Senior Vice President
Address:
450 N. Sunnyslope Rd.
Suite 300
Brookfield, WI 53005
GUARANTY FEDERAL BANK, F.S.B., a federal
savings bank, Agent and Lender
By: /s/ Deborah M. Zaycock
----------------------
Name: Deborah M. Zaycock
Title: Vice President
Address:
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Commercial Real Estate Lending
Division