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EXHIBIT 10.53
THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
(MASTER AGREEMENT)
SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP AND
OTHER SUBSIDIARIES OF SUNRISE ASSISTED LIVING, INC.
AS BORROWERS
BANK OF AMERICA, N.A.
AS ADMINISTRATIVE AGENT
BANK UNITED, AS SYNDICATION AGENT
FLEET NATIONAL BANK, AS DOCUMENTATION AGENT
BANC OF AMERICA SECURITIES LLC
AS SOLE LEAD ARRANGER AND BOOK MANAGER
March 14, 2000
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TABLE OF CONTENTS
THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT..........................................................1
ARTICLE I................................................................................................................3
DEFINITIONS..........................................................................................................3
Section 1.1 Certain Defined Terms...............................................................................3
Section 1.2 Accounting Terms and Other Definitional Provisions.................................................21
ARTICLE II..............................................................................................................22
BORROWING...........................................................................................................22
Section 2.1 The Loan...........................................................................................22
Section 2.2 Procedure for Advances.............................................................................23
Section 2.3 Fees...............................................................................................24
Section 2.4 Interest Rate Matters..............................................................................25
Section 2.5 Extensions.........................................................................................27
Section 2.6 The Letter of Credit Facility......................................................................27
Section 2.7 Permitted Costs....................................................................................28
Section 2.8 Requisitions Demonstrating Expenses................................................................29
Section 2.9 Co-Borrower Obligations............................................................................30
Section 2.10 Agreement Among Borrowers..........................................................................31
Section 2.11 Benefits to Borrowers..............................................................................31
Section 2.12 Guaranty...........................................................................................32
ARTICLE III.............................................................................................................35
COLLATERAL..........................................................................................................35
Section 3.1 Collateral.........................................................................................35
Section 3.2 Eligible Projects..................................................................................35
Section 3.3 Assignment of Partnership Interests................................................................36
Section 3.4 Guaranties.........................................................................................36
Section 3.5 Collateral for Obligations.........................................................................36
Section 3.6 Costs..............................................................................................36
ARTICLE IV..............................................................................................................37
GENERAL FINANCING PROVISIONS........................................................................................37
Section 4.1 Conditions Precedent to Credit Facility Closing and Addition of Deeds of Trust.....................37
Section 4.2 Conditions Precedent to Determining Availability Under Borrowing Base..............................41
Section 4.3 Conditions Under Which an Eligible Project is a Completed Facility.................................42
Section 4.4 Computation of Interest and Fees...................................................................43
Section 4.5 Liens; Setoff......................................................................................43
Section 4.6 Payment and Performance of Obligations.............................................................43
Section 4.7 Payments to Others for the Account of the Borrowers................................................44
Section 4.8 Prepayment.........................................................................................44
Section 4.9 Requisitions for the Operating Reserve.............................................................44
Section 4.10 Assignments........................................................................................45
Section 4.11 Liability of the Lenders...........................................................................45
Section 4.12 Stored Materials...................................................................................45
Section 4.13 Limitations on Advances or Readvances..............................................................45
ARTICLE V...............................................................................................................46
REPRESENTATIONS AND WARRANTIES......................................................................................46
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Section 5.1 Existence/Good Standing............................................................................46
Section 5.2 Power and Authority................................................................................46
Section 5.3 Binding Agreements.................................................................................46
Section 5.4 Litigation.........................................................................................47
Section 5.5 No Conflicting Agreements..........................................................................47
Section 5.6 Financial Information..............................................................................47
Section 5.7 No Default.........................................................................................48
Section 5.8 Taxes..............................................................................................48
Section 5.9 Place(s) of Business and Location of Collateral....................................................48
Section 5.10 Title to Properties................................................................................48
Section 5.11 Margin Stock.......................................................................................48
Section 5.12 ERISA..............................................................................................49
Section 5.13 Governmental Consent...............................................................................49
Section 5.14 Full Disclosure....................................................................................49
Section 5.15 Business Names and Addresses.......................................................................50
Section 5.16 Licenses and Certifications........................................................................50
Section 5.17 Operating Agreements and Management Contracts......................................................50
Section 5.18 Participation Agreements and Resident Agreements...................................................51
Section 5.19 Compliance with Laws...............................................................................51
Section 5.20 Presence of Hazardous Materials or Hazardous Materials Contamination...............................51
Section 5.21 Nature of Credit Facility; Usury; Disclosures......................................................52
Section 5.22 Compliance with Zoning.............................................................................52
Section 5.23 Plans and Specifications...........................................................................52
Section 5.24 Building Permits; Other Permits....................................................................52
Section 5.25 Utilities..........................................................................................52
Section 5.26 Access; Roads......................................................................................53
Section 5.27 Other Liens........................................................................................53
Section 5.28 Defaults...........................................................................................53
Section 5.29 Survival; Updates of Representations and Warranties................................................53
Section 5.30 Accounts...........................................................................................54
Section 5.31 Year 2000..........................................................................................54
Section 5.32 Development of Eligible Projects...................................................................54
ARTICLE VI..............................................................................................................55
CONDITIONS OF LENDING...............................................................................................55
Section 6.1 No Default.........................................................................................55
Section 6.2 Opinion of Counsel for the Borrowers...............................................................55
Section 6.3 Approval of Counsel for the Lenders................................................................55
Section 6.4 Supporting Documents...............................................................................55
Section 6.5 Financing Documents................................................................................56
Section 6.6 Insurance..........................................................................................56
Section 6.7 Security Documents.................................................................................56
Section 6.8 Joinder Agreement..................................................................................56
ARTICLE VII.............................................................................................................56
AFFIRMATIVE COVENANTS OF BORROWER...................................................................................56
Section 7.1 Financial Statements...............................................................................57
Section 7.2 Taxes and Claims...................................................................................58
Section 7.3 Legal Existence....................................................................................58
Section 7.4 Conduct of Business and Compliance with Laws.......................................................58
Section 7.6 Insurance..........................................................................................59
Section 7.7 Flood Insurance....................................................................................61
Section 7.8 Maintenance of Properties..........................................................................62
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Section 7.9 Maintenance of the Collateral......................................................................62
Section 7.10 Other Liens, Security Interests, etc...............................................................62
Section 7.11 Defense of Title and Further Assurances............................................................62
Section 7.12 Subsequent Opinion of Counsel as to Recording Requirements.........................................62
Section 7.13 Books and Records..................................................................................63
Section 7.14 Collections........................................................................................63
Section 7.15 Notice to Account Debtors and Escrow Account.......................................................63
Section 7.16 Business Names.....................................................................................64
Section 7.17 ERISA..............................................................................................64
Section 7.18 Change in Management...............................................................................64
Section 7.19 Management.........................................................................................64
Section 7.20 Surveys............................................................................................65
Section 7.21 Inspections; Cooperation; Payment of Inspecting Engineer...........................................65
Section 7.22 Vouchers and Receipts..............................................................................66
Section 7.23 Payments for Labor and Materials...................................................................66
Section 7.24 Correction of Construction Defects.................................................................66
Section 7.25 Fees and Expenses; Indemnity.......................................................................66
Section 7.26 Governmental Surveys or Inspections................................................................67
Section 7.27 Cost Reports......................................................................................67
Section 7.28 Updated Appraisals.................................................................................67
Section 7.29 Notification of Certain Events, Events of Default and Adverse Developments.........................67
Section 7.30 Compliance with Environmental Laws.................................................................69
Section 7.31 Hazardous Materials; Contamination.................................................................69
Section 7.32 Participation in Reimbursement Programs............................................................69
Section 7.33 Minimum Pool A Projects............................................................................70
Section 7.34 Subordination of Distributions and Management Fees.................................................70
Section 7.35 Depository Bank....................................................................................70
Section 7.36 Copies of Notices..................................................................................70
Section 7.37 Commencement of Occupancy..........................................................................71
Section 7.38 Removal of Eligible Project from Borrowing Base....................................................71
ARTICLE VIII............................................................................................................71
NEGATIVE COVENANTS OF BORROWER......................................................................................71
Section 8.1 Borrowings.........................................................................................71
Section 8.2 Deeds of Trust and Pledges.........................................................................71
Section 8.3 Sale or Transfer of Assets.........................................................................71
Section 8.4 Other Liens; Transfers; "Due-on-Sale"; etc.........................................................72
Section 8.5 Advances and Loans.................................................................................72
Section 8.6 Contingent Liabilities.............................................................................72
Section 8.7 Licenses...........................................................................................72
Section 8.8 ERISA Compliance...................................................................................72
Section 8.9 Transfer of Collateral.............................................................................73
Section 8.10 Sale of Accounts or Receivables....................................................................73
Section 8.11 Amendments; Terminations...........................................................................73
Section 8.12 Prohibition on Hazardous Materials.................................................................74
Section 8.13 Subsidiaries.......................................................................................74
Section 8.14 Distributions to Partners or Members...............................................................74
Section 8.15 Mergers or Acquisitions............................................................................74
Section 8.16 Partnership Interests..............................................................................74
Section 8.17 Impairment of Security.............................................................................75
Section 8.18 Conditional Sales..................................................................................75
Section 8.19 Changes to Plans and Specifications................................................................75
Section 8.20 Construction Contract; Construction Management.....................................................75
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ARTICLE IX..............................................................................................................75
EVENTS OF DEFAULT...................................................................................................75
Section 9.1 Failure to Pay and/or Perform the Obligations......................................................75
Section 9.2 Breach of Representations and Warranties...........................................................76
Section 9.3 Failure to Comply with Covenants...................................................................76
Section 9.4 Failure to Comply with Books and Records...........................................................76
Section 9.5 Other Defaults.....................................................................................76
Section 9.6 Default Under Other Financing Documents............................................................76
Section 9.7 Receiver; Bankruptcy...............................................................................76
Section 9.8 Judgment...........................................................................................77
Section 9.9 Execution; Attachment..............................................................................77
Section 9.10 Default Under Other Borrowings.....................................................................77
Section 9.12 Impairment of Position.............................................................................77
Section 9.13 Change in Status or Ownership......................................................................78
Section 9.14 Zoning.............................................................................................78
Section 9.15 Change in Management...............................................................................78
Section 9.16 Licenses...........................................................................................78
Section 9.17 Damage to Improvements.............................................................................78
Section 9.18 Disclosure of Contractors..........................................................................79
Section 9.19 Mechanic's Lien....................................................................................79
Section 9.20 Survey Matters.....................................................................................79
Section 9.21 General Contractor Default.........................................................................79
Section 9.22 Compliance with Law................................................................................79
Section 9.23 Failure to Commence Occupancy......................................................................79
ARTICLE X...............................................................................................................79
RIGHTS AND REMEDIES UPON DEFAULT....................................................................................79
Section 10.1 DEMAND; ACCELERATION..............................................................................80
Section 10.2 Further Advances; Immediate Acceleration..........................................................80
Section 10.3 Specific Rights With Regard to Collateral.........................................................80
Section 10.4 Performance by Lenders............................................................................82
Section 10.5 Remedies on Default...............................................................................82
Section 10.6 Uniform Commercial Code and Other Remedies........................................................83
Section 10.7 Receiver or Other Court Order.....................................................................84
Section 10.8 No Conditions Precedent to Exercise of Remedies...................................................84
Section 10.9 Remedies Cumulative and Concurrent................................................................84
Section 10.10 Strict Performance...............................................................................85
ARTICLE XI..............................................................................................................85
MISCELLANEOUS.......................................................................................................85
Section 11.1 Notices...........................................................................................85
Section 11.2 Consents and Approvals............................................................................86
Section 11.3 Remedies, etc. Cumulative.........................................................................86
Section 11.4 No Waiver of Rights by the Lenders................................................................86
Section 11.5 Entire Agreement..................................................................................87
Section 11.6 Survival of Agreement; Successors and Assigns.....................................................87
Section 11.7 Expenses..........................................................................................87
Section 11.8 Counterparts......................................................................................88
Section 11.9 Governing Law.....................................................................................88
Section 11.10 Modifications.....................................................................................88
Section 11.11 Illegality........................................................................................88
Section 11.12 Gender, etc.......................................................................................88
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Section 11.13 Headings.........................................................................................89
Section 11.14 Waiver of Trial by Jury..........................................................................89
Section 11.15 No Warranty by Lenders...........................................................................89
Section 11.16 Liability of the Lenders.........................................................................89
Section 11.17 License of Tradename.............................................................................90
Section 11.18 No Partnership...................................................................................90
Section 11.19 Third Parties; Benefit...........................................................................90
Section 11.20 Conditions; Verification.........................................................................91
Section 11.21 Signs; Publicity.................................................................................91
Section 11.22 Time of Essence..................................................................................91
Section 11.23 Replacement Note.................................................................................91
AMENDMENT TO SECOND AMENDED, RESTATED...............................................................................22
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THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
(MASTER AGREEMENT)
THIS THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT (the
"Agreement") is made this 14th of March, 2000, by and among SUNRISE EAST
ASSISTED LIVING LIMITED PARTNERSHIP, a Virginia limited partnership ("SEAL"),
SUNRISE SEAL, L.L.C., a Virginia limited liability company ("Sunrise SEAL"),
SUNRISE DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited
partnership, SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a New Jersey limited
partnership, SUNRISE BELLEVUE ASSISTED LIVING LIMITED PARTNERSHIP, a Washington
limited partnership, SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED PARTNERSHIP, a
California limited partnership, SUNRISE OAKLAND ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited partnership, SUNRISE RIVERSIDE
ASSISTED LIVING, L.P., a California limited partnership, SUNRISE HUNTCLIFF
ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership, SUNRISE
STERLING CANYON ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership, (collectively the "Original Borrowers") and SUNRISE WESTMINSTER
ASSISTED LIVING, L.L.C., a Colorado limited liability company, SUNRISE PINEHURST
ASSISTED LIVING LIMITED PARTNERSHIP, a Colorado limited partnership, SUNRISE
PARMA ASSISTED LIVING, L.L.C., a Virginia limited liability company, SUNRISE
HAMILTON ASSISTED LIVING, L.L.C., a Virginia limited liability company, SUNRISE
EDINA ASSISTED LIVING, L.L.C., a Minnesota limited liability company, SUNRISE
FARMINGTON HILLS ASSISTED LIVING, L.L.C., a Michigan limited liability company,
SUNRISE BATON ROUGE ASSISTED LIVING, L.L.C., a Louisiana limited liability
company, SUNRISE NEW ORLEANS ASSISTED LIVING, L.L.C., a Louisiana limited
liability company, SUNRISE HOLLY ASSISTED LIVING LIMITED PARTNERSHIP, a Colorado
limited partnership, SUNRISE WESTON ASSISTED LIVING LIMITED PARTNERSHIP, a
Massachusetts limited partnership, SUNRISE NORTHSHORE ASSISTED LIVING LIMITED
PARTNERSHIP, a Florida limited partnership, SUNRISE CHESTERFIELD ASSISTED
LIVING, L.L.C., a Missouri limited liability company, SUNRISE CLAREMONT ASSISTED
LIVING, L.P., a California limited partnership (the "Additional Borrowers",
collectively with the Original Borrowers and any other Additional Borrowers, as
hereinafter defined, the "Borrowers"), and BANK OF AMERICA, N.A., as
administrative agent (the "Administrative Agent") for itself and for UNITED
BANK, as syndication agent (the "Syndication Agent"), FLEET NATIONAL BANK, as
documentation agent (the "Documentation Agent") and certain additional lenders
who are or shall be from time to time participating as lenders hereunder
pursuant to the Agency Agreement, as hereinafter defined (collectively with the
Administrative Agent, the "Lenders").
RECITALS
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A. The Original Borrowers obtained from the Lenders a revolving
credit facility in the maximum principal sum of $400,000,000 (the "Credit
Facility"). The Original Credit Facility is evidenced by a Second Amended,
Restated, Consolidated and Increased Master Promissory Note dated July 29, 1999
(the "Note").
B. Advances and readvances under the Credit Facility have been
governed by the terms and conditions of the Second Amended and Restated
Financing and Security by and among the Original Borrowers and the
Administrative Agent on behalf of the Lenders dated July 29, 1999 (the "Existing
Financing Agreement").
C. From time to time since the execution of the Existing Financing
Documents, each of the Additional Borrowers has become a co-borrower with the
Original Borrowers pursuant to the terms of a Joinder Agreement (as hereinafter
defined) and granted to the Administrative Agent on behalf of the Lenders a
first lien Deed of Trust on an Eligible Project and certain other related
collateral.
D. The Borrowers have applied to the Lenders to modify certain terms
an conditions of the Existing Financing Agreement and of the Second Amended and
Restated Guaranty of Payment Agreement dated July 29, 1999 by the Guarantor (as
hereinafter defined) for the benefit of the Lenders (the "Existing Guaranty")
and the Lenders have agreed on the condition, among others that the Existing
Financing Agreement and the Existing Guaranty be amended and restated in their
entirety.
E. Except as otherwise set forth herein, advances or readvances of
the Loan may be made to the Borrowers for the general business purposes of the
Borrowers, including, but not limited to, financing the construction or purchase
of assisted living facilities or independent living facilities and the repayment
of advances to the Borrowers previously made by SALI or its Affiliates.
F. The Borrowers and the Lenders have agreed to amend the terms of
repayment of the indebtedness evidenced by the Note pursuant to that certain
Amendment to the Second Amended, Restated, Consolidated and Increased Master
Promissory Note of even date herewith (the "Note Modification").
G. The Lenders have agreed to make available the Credit Facility upon
the conditions that this Agreement amending and restating the Existing Financing
Agreement be executed and delivered to the Administrative Agent.
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AGREEMENTS
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers and the
Administrative Agent, on behalf of the Lenders, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms
As used herein, the terms defined in the Preamble and Recitals hereto
shall have the respective meanings specified therein, and the following terms
shall have the following meanings:
"Account", individually, and "Accounts", collectively, mean with respect
to any and all Facilities, all presently existing or hereafter acquired or
created accounts, accounts receivable, contract rights, notes, drafts,
instruments, acceptances, chattel paper, leases and writings evidencing a
monetary obligation or a security interest in or a lease of goods, all rights to
receive the payment of money or other consideration under present or future
contracts arising out of or relating to any and all Facilities (including,
without limitation, all rights to receive the payment of money or other
consideration from, or on behalf of, any private pay patient), or by virtue of
services rendered, loans and advances made or other considerations given, by or
set forth in, or arising out of, any present or future chattel paper, note,
draft, lease, acceptance, writing, bond, insurance policy, instrument, document
or general intangible, and all extensions and renewals of any thereof, all
rights under or arising out of present or future contracts, agreements which
gave rise to any or all of the foregoing, including all claims or causes of
action now existing or hereafter arising in connection with or under any
agreement or document or by operation of law or otherwise, all collateral
security of any kind (including real property mortgages) given by any person
with respect to any of the foregoing, including, without limitation, all rights
to receive payment of money or other consideration from, or on behalf of, any
private pay patient, all rights to receive payments under all Resident
Agreements, and all third-party payor contracts (including Medicare and Medicaid
to the extent permitted by Law), including, but not limited to, the Veterans
Administration, Participation Agreements, and any and all depository accounts
(other than resident trust accounts) into which the proceeds of all or any
portion of such accounts may be now or hereafter deposited, and all proceeds
(cash and non-cash) of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
"Act of Bankruptcy" means the filing of a petition in bankruptcy under
the Bankruptcy Code or the other commencement of a proceeding under any other
applicable law concerning insolvency, reorganization or bankruptcy, now or
hereafter in effect.
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"Additional Borrower" shall have the meaning set forth in the definition
of Joinder Agreement.
"Adjusted EBITDA" shall have the meaning set forth in Section 8.14
Distributions to Partners hereof.
"Administrative Agent" means Bank of America, N.A., its successors and
assigns.
"Affiliate" means an entity in which SALI or another entity which SALI
controls, holds an ownership interest equal to or greater than twenty-five
percent (25%).
"Agency Agreement" means that certain Second Amended and Restated Agency
Agreement dated July 29, 1999 as amended pursuant to the Modification to second
Amended and Restated Agency Agreement of even date herewith by and among the
Administrative Agent and the other Lenders, as the same may be further amended,
restated or substituted from time to time.
"Agreement" means this Second Amended and Restated Financing and Security
Agreement and all amendments, extensions, restatements, substitutions and
supplements hereto which may from time to time become effective in accordance
with the provisions of Section 11.10 Modifications hereof.
"Appraised Value" means the appraised value of a Facility as stabilized,
as reviewed by the Administrative Agent.
"Acquisition Project" means a Facility purchased by a Borrower from a
party which is not an Affiliate as a Completed Facility.
"Architect" means the architect named in the Architect's Contract, if
any, and his or its successors and permitted assigns.
"Architect's Contract" means the architect's agreement by and between any
of the Borrowers, as owner, or SDI as agent for any Borrower, and the architect
for the particular Facility, or any contract for architectural services relating
to the development of the Land and/or the construction of the Improvements for
all of the Facilities made by any of the Borrowers and an architect and approved
in writing by the Administrative Agent, as the same may be amended from time to
time with the prior written approval of the Administrative Agent.
"Assets Held for Sale" means each of the properties listed on EXHIBIT H
attached hereto, which are currently being held by SALI (or an Affiliate of
SALI) for resale.
"Banking Day" means any day that is not a Saturday, Sunday or banking
holiday in the Commonwealth of Virginia and a day on which banks are open for
the transaction of business in U.S. Dollar deposits in London, England.
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"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. 101
et seq.
"Borrowing Base" means at any time an amount equal to the lesser of (a)
the aggregate dollar amounts of the Deed of Trust Lien Amounts for each of the
Eligible Projects or, in cases where an appraisal is obtained pursuant to
Section 7.28 Updated Appraisals hereof, the lesser of the Deed of Trust Lien
Amount or 75% of the Appraised Value of such Eligible Project; or (b) (i) for
Eligible Projects constructed or being constructed by a Borrower, the aggregate
dollar amount equal to 80% of the Costs Incurred to Date for each Pool A
Project, 60% of the Costs Incurred to Date for each Pool B Project, and 40% of
the Costs Incurred to Date for each Pool C Project or (ii) for Acquisition
Projects which were owned by a Borrower for less than twelve (12) months as of
the date the Eligible Project is added to the Borrowing Base the aggregate
dollar amount equal to 80% of the Purchase Price for each Pool A Project, 60% of
the Purchase Price for each Pool B Project and 40% of the Purchase Price for
each Pool C Project; provided that for Acquisition Projects owned by a Borrower
longer than twelve (12) months the Borrowing Base for an Acquisition Project
shall be the lesser of the Deed of Trust Lien Amount or 75% of the Appraised
Value of such Eligible Project.
"Borrowing Base Deficiency" shall have the meaning set forth in Section
2.1 The Loan hereof.
"Borrowing Base Report" shall have the meaning set forth in Section 2.1
The Loan hereof.
"Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or lease of specific goods; any
returned, rejected or repossessed goods covered by any such writing or writings
and all proceeds (in any form including, without limitation, accounts, contract
rights, documents, chattel paper, instruments and general intangibles) of such
returned, rejected or repossessed goods; and all proceeds (cash and non-cash) of
the foregoing.
"Collateral" means all of the Borrowers' Accounts, Equipment, General
Intangibles, documents, Chattel Paper, Instruments and Inventory, all right,
title and interest of the Borrowers in and to the Operating Agreements and
Management Contracts (including, without limitation, the Management Agreement),
Resident Agreements, Physician Contracts, Participation Agreements, the Licenses
(whether or not designated with initial capital letters), and all other
management contracts, operating agreements, service agreements and any other
agreements pertaining to the Eligible Projects as that term is defined herein
and in the Uniform Commercial Code as presently adopted and in effect in the
Commonwealth of Virginia, and shall also cover, without limitation, (i) any and
all property specifically included in those respective terms in this Agreement
or in the Financing Documents, (ii) all right, title and interest of the
Borrowers in and to Leases or subleases, rents, royalties, issues, profits,
revenues, earnings, income or other benefits of the Property, or arising from
the use or enjoyment of the Property, or from any lease or other use and
occupancy agreement pertaining to the Property, (iii) all right, title and
interest
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of the Borrowers under all construction, architectural and design contracts and
plans and specifications, (iv) any and all property and/or collateral described
in any of the Security Documents, including, without limitation, this Agreement,
the Deeds of Trust [and the Pledge, Assignment and Security Agreement], (v) any
and all bank accounts or other deposit accounts of the Borrowers wherever
located, and (vi) all proceeds (cash and non-cash, including, without
limitation, insurance proceeds), of the foregoing.
"Collateral Assignments" means collectively the Amended and Restated
Collateral Assignment of Licenses, Participation Agreements and Resident
Agreements dated December 23, 1997 between the Borrowers and the Administrative
Agent and the Amended and Restated Collateral Assignment of Operating Agreements
and Management Contracts dated December 23, 1997 among the Borrowers, the
Management Company and the Administrative Agent each as amended and reconfirmed
pursuant to the Confirmation of and Amendment to Security Documents dated July
29, 1999.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with any of the Borrowers within the
meaning of Section 414(b) or (c) of the Internal Revenue Code of 1986, as
amended and the regulations promulgated or issued thereunder.
"Completed Facility" means an Eligible Project which has met the
conditions set forth in Section 4.3 Conditions Under Which an Eligible Project
is a Completed Facility of this Agreement.
"Completion Date" shall mean the date which is fifteen (15) months from
the recordation of the Deed of Trust on such Facility or upon the issuance of an
occupancy permit.
"Construction Contract" or "Construction Contracts" shall mean
individually or collectively the general contractor's agreements by and between
any of the Borrowers as owner, or SDI as agent for any Borrower, and a general
contractor for the development of any of the Land and/or the construction of any
of the Improvements and approved in writing by the Administrative Agent, as the
same may be amended from time to time pursuant to Section 8.19 Changes to Plans
and Specifications hereof, or otherwise with the prior written approval of the
Administrative Agent.
"Convertible Debt" means the $150,000,000 convertible subordinated notes
of SALI due 2002.
"Costs Incurred to Date" means as to an Eligible Project actual costs
expended by or on behalf of any of the Borrowers under a Total Development
Budget and reported to the Administrative Agent through the requisition process
as verified by the Administrative Agent pursuant to the provisions of this
Agreement; provided, however, no cost overruns not otherwise covered by a
contingency category in the Total Development Budget will be included in the
definition of Costs Incurred to Date without the Administrative Agent's prior
written consent.
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"Credit Facility" means the revolving line of credit in a maximum
principal sum at any one time outstanding equal to the Credit Facility Committed
Amount and the Letter of Credit Facility.
"Credit Facility Closing" shall mean the date on which the documents
evidencing and securing the Credit Facility as modified in connection herewith,
are executed and delivered to the Administrative Agent.
"Credit Facility Committed Amount" means $400,000,000 or such larger
amount which the Lenders may from time to time severally commit to lend to the
Borrowers pursuant to the terms of Agency Agreement and the Note.
"Debt Service" means for any period of determination an amount equal (i)
if the Eligible Project is not an Acquisition Project, the lesser of (a) the
Deed of Trust Lien amount or (b) 80% of an Eligible Project's Costs Incurred to
Date (if a Facility constructed or being constructed by a Borrower or its
Affiliate) or (ii) its Deed of Trust Lien Amount if an Acquisition Project, in
either case multiplied by a mortgage constant of 10%.
"Deed of Trust" or "Deeds of Trust" means, individually or collectively,
a Deed of Trust, Assignment and Security Agreement, a Mortgage, Assignment and
Security Agreement, an Indemnity Deed of Trust, Assignment and Security
Agreement or an Indemnity Mortgage, Assignment and Security Agreement or
comparable security documents covering Property and securing the Obligations as
the same may be from time to time amended, modified, restated or substituted.
"Deed of Trust Lien Amount" means the dollar amount of the first priority
Lien created by a Deed of Trust on any Borrower's fee simple interest in an
Eligible Project or on any Borrower's leasehold interest in a Qualified Ground
Lease, the lien amount being the lesser of (i) 75% of such Eligible Project's
Appraised Value, or (ii) (a) for any Eligible Project which is not a Completed
Facility or which was constructed by a Borrower or Sunrise Affiliate and has
been open less than twelve (12) months, 80% of such Eligible Project's Total
Development Budget or (b) for any Eligible Project which is an Acquisition
Project, (i) if owned for less than twelve (12) months the lesser of (aa) 80% of
its Purchase Price or (bb) 75% of its appraised value or (ii) 75% of its
appraised value if owned for more than twelve (12) months or (c) for any
Acquisition Project or for a Completed Facility open more than twelve (12)
months such lesser dollar amount as the Borrowers elect to designate with the
consent of the Lenders holding 66.67% of the pro rata shares of the Credit
Facility Committed Amount.
"Default" means, with respect to each Financing Document, a default
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default.
"Development Fee" shall have the meaning set forth in Section 2.1 The
Loan hereof.
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"EBITDA" means earnings before interest, federal and state income taxes,
depreciation, amortization, and any other non-cash and one-time, non-recurring
charges consented to by the Administrative Agent in its sole discretion
(provided that the consent of Lenders holding at least 66.67% of the pro rata
shares of the Loan shall be required for adding back charges in excess of
$5,000,000 in the aggregate in any one rolling four (4) quarter period, but
after an imputed Replacement Reserve and a Management Fee equal to the greater
of 5% of gross revenues or the actual Management Fee paid to the Management
Company. Earnings shall include income from "Assets Held for Sale" through the
date on which any such asset is actually sold and shall include the gain from
any sale of an open operating Facility owned by SALI or an Affiliate of SALI up
to but not exceeding an aggregate of twenty (20) of such sales in any twelve
(12) month period; provided, however that other one-time non-recurring gains
including those from sales of Assets Held for Sale will not be included in
EBITDA.
"EBITDAR" means EBITDA plus Rent Expense.
"Eligible Project" means any location in the United States where (a) a
Borrower proposes to construct or has constructed a Facility (unless the Lenders
also authorize inclusion of one or more Facilities acquired by a Borrower); (b)
the Administrative Agent has received and reviewed an as-built appraisal of the
Facility and a Phase I Environmental Assessment of the Property found them
acceptable; (c) using the services of a consulting engineer selected by the
Administrative Agent, the Administrative Agent has received, reviewed and found
to be acceptable the Plans and Specifications and the Total Development Budget
for the proposed Facility; (d) the Administrative Agent has received a pro forma
operating budget acceptable to the Administrative Agent; (e) a first lien Deed
of Trust has been recorded on the Property; (f) other documentation necessary to
perfect a lien on the Collateral in favor of the Lenders has been executed and
delivered to the Administrative Agent and recorded, if required; (g) a
commitment for a mortgagee title insurance policy has been issued for the
benefit of the Lenders and (h) construction has commenced or will commence
within sixty (60) days and, once commenced, is being carried on in good faith
with reasonable dispatch and is not abandoned or discontinued for a period of
more than fifteen (15) consecutive days except for delays caused by Force
Majeure. Each acceptable pro forma operating budget provided pursuant to (d)
must demonstrate that the Facility does or can satisfy the criteria for a Pool A
Project.
"Enforcement Costs" means all expenses, charges, costs and fees
whatsoever (including, without limitation, attorney's fees and expenses) of any
nature whatsoever paid or incurred by or on behalf of the Lenders in connection
with (a) the collection or enforcement of any or all of the Obligations, (b) the
preparation of or changes to this Agreement, the Note, the Security Documents
and/or any of the other Financing Documents, (c) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Collateral,
including, without limitation, those sums paid or advanced, and costs and
expenses, more specifically described in Section 7.11 Defense of Title and
Further Assurances, Section 7.25 Fees and Expenses; Indemnity, Section 10.4
Performance by Lenders and Section 11.7 Expenses, (d) the monitoring,
administration, processing, servicing of any or
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all of the Obligations and/or the Collateral (e) post-judgment enforcement or
collection actions, and (f) bankruptcy proceedings of any Borrower or the
Guarantor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Equipment" shall mean all equipment, machinery, furniture and fixtures
and supplies of every nature, presently existing or hereafter acquired or
created and wherever located, together with all accessions, additions, fittings,
accessories, special tools, and improvements thereto and substitutions therefor
and all parts and equipment which may be attached to or which are necessary for
the operation and use of such personal property, whether or not the same shall
be deemed to be affixed to real property, and all rights under or arising out of
present or future contracts relating to the foregoing and all proceeds (cash and
non-cash) of the foregoing.
"Eurodollar Period" or "Eurodollar Periods" shall have the meaning set
forth in the Note.
"Eurodollar Rate" means, for any advance under the Loan for any
Eurodollar Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London Time) two Banking Days prior to the first day
of such Eurodollar Period for a term comparable to such Eurodollar Period. If
for any reason such rate is not available, the term "Eurodollar Rate" shall
mean, for any advance under the Loan for any Eurodollar Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London Time) two Banking Days
prior to the first day of such Eurodollar Period for a term comparable to such
Eurodollar Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"Event(s) of Default" shall mean the occurrence of any one or more of the
events specified in ARTICLE IX of this Agreement or in the Deeds of Trust and
the continuance of such event beyond the applicable grace and/or cure periods
therefor, if any, set forth in ARTICLE IX.
"Expense Payments" shall have the meaning set forth in Section 10.4
Performance by Lenders hereof.
"Facility" and "Facilities" mean, individually or collectively, an
assisted living facility or independent living facility owned by one of the
Borrowers.
"Financing Documents" means at any time collectively and includes this
Agreement, the Note, the Deeds of Trust, the Guaranty Agreement, the Performance
Guaranty, any Joinder Agreements, the Management Fee Subordination Agreements,
the Security Documents, the Interest Rate Protection Documents, the Letter of
Credit Documents and any other instrument, agreement or document previously,
simultaneously or hereafter executed and delivered by any of
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the Borrowers and/or any other Person, singly or jointly with another Person or
Persons, evidencing, securing, guarantying or in connection with any of the
Obligations and/or in connection with this Agreement, the Note and/or any of the
Security Documents, as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"Fixed Charge Coverage Ratio" means starting after the first resident
takes occupancy in any given Facility (regardless of whether a Borrower then
owned the Facility or when the Facility was added to the Borrowing Base), such
Facility shall maintain a ratio of EBITDA for the Facility to Debt Service for
the Facility equal to not less than 0.6 to 1.0 as of the end of the second (2nd)
full fiscal quarter, a ratio of 1.1 to 1.0 as of the end of the third (3rd) full
fiscal quarter and a ratio of 1.25 to 1.0 as of the end of each of the fourth
(4th) through sixth (6th) full fiscal quarters and thereafter measured as of the
end of each full fiscal quarter on a rolling four-quarter basis.
"Force Majeure" shall mean events occasioned by strikes, lock-outs, labor
unrest war or civil disturbance, materials shortages, unavailability of
materials, fire, natural disaster or acts of God which cause a delay in any
Borrower's performance of an obligation; provided, however, that such Borrower
must give Notice to the Administrative Agent within ten (10) days after such
Borrower knew of or should have known of the occurrence of an event which it
believes to constitute an event of Force Majeure.
"Funded Debt" of the Guarantor, at any time means the sum at such time of
(a) indebtedness for borrowed money (including specifically but without limiting
the generality of the foregoing, the Convertible Debt), (b) any obligations in
respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of the Guarantor, (c) lease
obligations which have been or should be, in accordance with GAAP, capitalized
on the books of the Guarantor, (d) all liabilities secured by any property owned
by the Guarantor to the extent attached to the Guarantor's interest in such
property, even though the Guarantor has not assumed or become liable for the
payment thereof, and in the case of the Guarantor (e) (i) amounts payable by the
Guarantor under any terminated or defaulted interest rate protection products or
which remain outstanding or (ii) take-out commitments (excluding a refinancing
or a commitment of a third party) or purchase contracts including the deferred
purchase price of property or services in each instance if the Guarantor does
not control the incurring obligation, (f) (i) the amount of any guaranty of
indebtedness for borrowed money or (ii) other debt owed by Persons other than
the Guarantor which is in default and for which the creditor is pursuing payment
by the Guarantor, (g) any obligation of the Guarantor or a Commonly Controlled
Entity to a Multiemployer Plan (h) any synthetic lease obligations, (i) any
other lease expenses for rented real property will be accounted for as debt
based on eight times annualized lease payments (provided, however, that so long
as the Guarantor or any Affiliate shall continue to own a 50% interest in the
Facility located in Severna Park, Maryland known as "Sunrise of Severna Park",
lease expenses for Sunrise of Severna Park will be accounted for as debt based
on four times the annualized lease payments rather than eight times the
annualized lease payments and (j) other amounts considered to be debt by all of
the following: the Administrative Agent, the Syndication Agent and the
Documentation Agent in a dollar amount to be mutually agreed upon by the
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17
Administrative Agent and the Guarantor; but excluding trade and other accounts
payable in the ordinary course of business in accordance with customary trade
terms and which are not overdue (as determined in accordance with customary
trade practices) or which are being disputed in good faith by the Guarantor and
for which adequate reserves are being provided on the books of the Guarantor in
accordance with GAAP, all of the above whether recourse or non-recourse, secured
or unsecured. For purposes of the definition of Material Adverse Change in this
Agreement, the term "Guarantor" as used in this definition of Funded Debt shall
be deemed to read "Person".
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America from time to time.
"General Contractor" or "General Contractors" shall mean individually or
collectively the general contractors named in the Construction Contracts and his
or its respective successors and permitted assigns.
"General Intangibles" shall mean any and all general intangibles of every
nature, whether presently existing or hereafter acquired or created arising out
of or relating to any or all of the Facilities, including without limitation all
books, correspondence, credit files, records, computer programs, computer tapes,
cards and other papers and documents in the possession or control of the
Borrowers claims (including without limitation all claims for income tax and
other refunds), choses in action, judgments, patents, patent licenses,
trademarks (excluding the "Sunrise", "Dignity Home Care", "Respect Home Care" or
"Karrington" trademark or tradename), trademark licenses (excluding any license
to any of the Borrowers for the "Sunrise," "Reminiscence", "Dignity Home Care",
"Respect Home Care" or "Karrington" trademarks or tradenames), licensing
agreements, rights in intellectual property, goodwill, as that term is defined
in accordance with GAAP (including all goodwill of the Borrowers' business
symbolized by, and associated with, any and all trademarks, trademark licenses,
copyrights and/or service marks), royalty payments, contractual rights, rights
as lessee under any lease of real or personal property, literary rights,
copyrights, service names, service marks, logos, trade secrets, all amounts
received as an award in or settlement of a suit in damages, deposit accounts,
interests in joint ventures or general or limited partnerships, all Licenses,
construction permits, Operating Agreements and Management Contracts,
Participation Agreements and Resident Agreements, and all proceeds (cash and
non-cash) of the foregoing.
"Governmental Authority or Authorities" shall mean any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantor" means Sunrise Assisted Living, Inc., a Delaware corporation.
"Guaranty Agreement" means the Third Amended and Restated Master Guaranty
of Payment Agreement by SALI of even date herewith.
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"Hazardous Materials" means any flammable explosives, radioactive
materials, hazardous waste, toxic substances or related materials, including,
without limitation, asbestos, polychlorinated biphenyls, urea-formaldehyde,
radon, and any substance defined as or included in the definition of (a) any
"hazardous waste" as defined by the Resource Conservation Recovery Act of 1976,
as amended from time to time, and regulations promulgated thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and
regulations promulgated thereunder; (c) any "toxic substance" as defined by the
Toxic Substances Control Act, as amended from time to time, and regulations
promulgated thereunder; (d) any hazardous or infectious medical waste including,
but not limited to, 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, microbiological laboratory wastes, sharps, chemical wastes,
infectious wastes, chemotherapeutic wastes, and radioactive wastes; (e) any
substance, the presence of which on any property now or hereafter owned,
operated or acquired by any of the Borrowers is prohibited or regulated under
any applicable Federal or state laws or regulations; and (f) any other
substance, pollutant, contaminant, chemical, or industrial toxic hazardous
substance or waste, including without limitation hazardous materials, which by
law is prohibited or is otherwise regulated as a hazardous material.
"Hazardous Materials Contamination" shall mean the contamination by,
release or spill of (whether presently existing or occurring after the date of
this Agreement), Hazardous Materials of or on any property owned, operated or
controlled by any of the Borrowers, or for which any of the Borrowers, has
responsibility, including, without limitation, improvements, facilities, soil,
ground water, air or other elements on, or of, any property now or hereafter
owned, operated or acquired by any of the Borrowers, and any other contamination
by Hazardous Materials for which any of the Borrowers is, or is claimed to be,
responsible.
"Home Healthcare Provider" means any Affiliate of SALI or of the Sunrise
Foundation which is licensed as a home health care provider in any state in
which assistance with tasks of daily living provided to a person must be
provided by a home healthcare provider licensed in such state.
"Hydric Soils" shall mean any soil category upon which building would be
prohibited or restricted under applicable governmental requirements (including,
without limitation, those imposed by the U.S. Army Corps of Engineers based upon
its guidelines as to, among other things, soil, vegetation and effect on the
ecosystem).
"Improvements" shall have the meaning given to that term in each Deed of
Trust.
"Inspecting Engineer" shall mean such person or firm as the
Administrative Agent may from time to time appoint or designate for purposes
related to the inspection of the progress of the development of any of the Land
and the construction of any of the Improvements, conformity of construction with
the applicable Plans and Specifications, and for such other purposes as the
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Administrative Agent may from time to time deem appropriate or as may be
required by the terms of this Agreement.
"Instruments" means any and all notes, notes receivable, drafts,
acceptances, and similar instruments or documents, both now owned or hereafter
created or acquired arising out of or relating to the Facility (or any part
thereof).
"Interest Rate Protection" means any or all of the interest rate
protection agreements that have been or may from time to time be entered into
between the Borrowers and the Administrative Agent or another Lender in
connection with the Credit Facility.
"Interest Rate Protection Documents" means the documents evidencing and
governing the Interest Rate Protection at any time and from time to time.
"Interest Reserve" shall have the meaning set forth in Section 2.1 The
Loan (i) hereof.
"Inventory" means any and all inventory of the Borrowers and all right,
title and interest of the Borrowers in, and to, all of its now owned and
hereafter acquired goods, merchandise and other personal property furnished
under any contract of service or intended for sale or lease arising out of or
relating to any and all Facilities, including, without limitation, all supplies
of any kind, nature or description which are used or consumed in the Borrowers'
business and all documents of title or documents representing the same and all
proceeds (cash and non-cash) and products of the foregoing.
"Joinder Agreement" means a Joinder Agreement in the form attached hereto
as EXHIBIT F executed by an additional Borrower (each an "Additional Borrower")
to acknowledge its joinder as a party to this Agreement and a co-borrower
jointly and severally liable for the Collateral Assignments and the Management
Fee Subordination Agreements of the Obligations pursuant to and in connection
with its delivery of a Deed of Trust.
"Klaassens" means Paul J. Klaassen and Teresa M. Klaassen.
"Land" shall mean the land described in the applicable Deed of Trust.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or any court or
similar entity established by any thereof.
"Lease" has the meaning set forth in a Deed of Trust.
"Lender Tax" means any present or future tax, levy, cost or charge of any
nature imposed by any Governmental Authority, excluding taxes on or measured by
the net income of any Lender imposed by any jurisdiction in which the principal
or relevant lending office of such Lender is located.
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"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.6 The Letter of Credit Facility hereof.
"Letter of Credit Agreement" means the collective reference to each
letter of credit application and agreement substantially in the form of the
Administrative Agent's or other applicable Lender's then standard form of
application for letter of credit or such other form as may be approved by the
Lender, executed and delivered by the Borrower in connection with the issuance
of a Letter of Credit, as the same may from time to time be amended, restated,
supplemented or modified and "Letter of Credit Agreements" means all of the
foregoing in effect at any time and from time to time.
"Letter of Credit Documents" means any and all drafts under or purporting
to be under a Letter of Credit, any Letter of Credit Agreement, and any other
instrument, document or agreement executed and/or delivered by the Borrower or
any other Person under, pursuant to or in connection with a Letter of Credit or
any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established by the Lenders
pursuant to Section 2.6 The Letter of Credit Facility of this Agreement.
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.6 The Letter of Credit Facility hereof.
"Letter of Credit Obligations" means all Obligations of the Borrower with
respect to the Letters of Credit and the Letter of Credit Agreements.
"Licenses" means any and all licenses, certificates of need, 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,
management, ownership and/or operation of any and all Facilities, accreditation
of any Facility, and/or the participation or eligibility for participation in
any third party payment or reimbursement programs to the extent any of the
Borrowers are participating in such programs (but specifically excluding any and
all Participation Agreements to the extent required by law), any and all
operating licenses issued by any state 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," any and all licenses relating to the operation of food or beverage
facilities or amenities, if any, and any and all certifications and eligibility
for participation in Medicare, Medicaid, Blue Cross and/or Blue Shield, or any
of the Managed Care Plans, private insurer, employee assistance programs or
other third party payment or reimbursement programs as the same may from time to
time be amended, renewed, restated, reissued, restricted, supplemented or
otherwise modified.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien or charge of
any kind, whether perfected or
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unperfected, avoidable or unavoidable, consensual or non-consensual, including,
without limitation, any conditional sale or other title retention agreement,
filed or un-filed tax liens, any lease in the nature thereof, and the filing of
or agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction.
"Liquid Assets" means cash, cash equivalents and readily marketable
securities for purposes of any covenant under the Financing Documents, Liquid
Assets held by the Borrowers to satisfy the requirements of Section 8.14
Distributions to Partners or Members hereof shall be included.
"Liquidation Costs" shall have the meaning set forth in Section 10.6
Uniform Commercial Code and Other Remedies hereof.
"Loan" shall have the meaning set forth in Section 2.1 The Loan hereof.
"Major Subcontractor" means a subcontractor under a subcontract in an
amount of $100,000 or more pertaining to any Facility.
"Managed Care Plans" means any health maintenance organization, preferred
provider organization, individual practice association, competitive medical
plan, or similar arrangement, entity, organization, or Person.
"Management Agreement" means any and all Management Agreements entered
into or to be entered into by and between any of the Borrowers and the
Management Company relating to the management of the Facilities, as the same may
from time to time be amended, restated, supplemented or otherwise modified.
"Management Company" means SALMI, its successors and assigns and any
other Person which may become the manager of the Facilities.
"Management Fees" shall have the meaning set forth in Section 7.19
Management.
"Management Fee Subordination Agreement" shall have the meaning set forth
in Section 7.19 Management hereof.
"Material Adverse Change" means a significant adverse change in a
Person's financial position or capacity including but not limited to significant
adverse changes in (a) liquidity, (b) gross revenues, (c) total expenses, (d)
such Person's net worth, or (e) ability to meet payment obligations under such
Person's Funded Debt, the Obligations and/or contingent liabilities.
"Material Lease" has the meaning set forth in a Deed of Trust.
"Minimum Occupancy Requirement" means for an Eligible Project with 77
units or fewer, a minimum Resident Occupancy of (A) 50% by the sixth (6th)
Operating Month, (B) 70%
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by the ninth (9th) Operating Month and (C) 85% by the twelfth (12th) Operating
Month and thereafter and means for an Eligible Project with 78 units or more, a
minimum Resident Occupancy of (A) 50% by the sixth (6th) Operating Month, (B)
70% by the ninth (9th) Operating Month, (C) 80% by the twelfth (12th) Operating
Month and (D) 85% by the fifteenth (15th) Operating Month and thereafter.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in SECTION 4001(a)(3) of ERISA.
"Net Operating Income" means total operating revenue less total operating
expenses (excluding interest, federal and state income taxes, depreciation and
amortization) but including a management fee to the Management Company of the
higher of five percent (5%) of gross revenues or the actual management fee for
the period in question as shown in financial information provided by the
Borrowers.
"Note" shall have the meaning set forth in Section 2.1 The Loan hereof.
"Notice" shall mean a written communication delivered as specified in
Section 11.1 Notices hereof.
"Obligations" means all present and future debts, obligations, and
liabilities, whether now existing or contemplated or hereafter arising, of the
Borrowers to the Administrative Agent or any Lender under, arising pursuant to,
in connection with and/or on account of the provisions of this Agreement, the
Note, each Joinder Agreement, the Deeds of Trust, each Security Document, and
any of the other Financing Documents, including, without limitation, the
principal of, and interest on, the Note, late charges, Enforcement Costs, and
other prepayment penalties (if any), Letter of Credit Fees or fees charged with
respect to any guaranty of any Letter of Credit, any indebtedness to the
Administrative Agent or other Lender or Lenders who make available the Interest
Rate Protection arising out of such Interest Rate Protection pursuant to the
Interest Rate Protection Documents, and also means all other present and future
indebtedness, liabilities and obligations, whether now existing or contemplated
or hereafter arising, of the Borrowers to the Lenders in connection with the
Credit Facility of any nature whatsoever regardless of whether such debts,
obligations and liabilities be direct, indirect, primary, secondary, joint,
several, joint and several, fixed or contingent, and any and all renewals,
extensions and rearrangements of any such debts, obligations and liabilities.
"Operating Agreements and Management Contracts" means any and all
contracts and agreements previously, now or at any time hereafter at any time
entered into by any of the Borrowers with respect to the acquisition,
construction or renovation of a significant nature, expansion, ownership,
operation, maintenance, use or management of any or all of the Facilities or
otherwise concerning the operations and business of any or all of the
Facilities, including, without limitation, 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
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23
provider contracts, resident agreements, food and beverage service contracts,
and other contracts for the operation and maintenance of, or provision of
services to, a Facility, as the same may from time to time be amended, restated,
supplemented, renewed, or modified.
"Operating Month" means a full calendar month after the first resident
takes occupancy in a Facility (regardless of whether the Facility was owned by a
Borrower or included in the Borrowing Base at the time of such occurrence).
"Operating Reserve" shall mean a reserve in an amount approved by the
Administrative Agent included in each Total Development Budget to cover the
costs of leasing up a Facility and initial operating deficits.
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.6 The Letter of Credit Facility hereof.
"Participation Agreements" means any and all third party payor
participation or reimbursement agreements now or at any time hereafter existing
for the benefit of any of the Borrowers relating to rights to payment or
reimbursement from, and claims against, private insurers, Managed Care Plans,
material employee assistance programs, Blue Cross and/or Blue Shield, federal,
state and local Governmental Authorities, including without limitation, Medicare
and Medicaid, and other third party payors, as the same may from time to time be
amended, restated, extended, supplemented or modified.
"Performance Guaranty" means, individually or collectively, that certain
Amended and Restated Guaranty of Completion dated December 23, 1997 as modified
and confirmed pursuant to a Confirmation of and Amendment to Master Guaranty of
Performance of dated July 29, 1999 executed by the Guarantor in favor of the
Lenders and any Guaranty of Performance which may in the future be executed and
delivered by the Guarantor in connection with any Facility Closing.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent or
which the Administrative Agent has determined in the exercise of its sole and
absolute discretion (i) are being diligently contested in good faith and by
appropriate proceedings, (ii) the applicable Borrower has the financial ability
to pay, with all penalties and interest, at all times without materially and
adversely affecting such Borrower, and (iii) are not, and will not be with
appropriate filing, the giving of notice and/or the passage of time, entitled to
priority over any Lien of the Lenders; (b) deposits or pledges to secure
obligations under workers' compensation, social security or similar laws, or
under unemployment insurance in the ordinary course of business; (c) Liens in
favor of the Lenders pursuant to the Credit Facility or the Interest Rate
Protection; (d) judgment Liens to the extent the entry of such judgment does not
constitute an Event of Default under the terms of this Agreement or result in
the sale of, or levy of execution on, any of the Collateral; (e) Liens approved
by the Administrative Agent which have been created to secure permitted
subordinated debt on a junior lien basis; and (f) such other Liens, if any, as
are identified as Permitted Encumbrances as defined in the Deed of Trust.
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"Person" shall mean and include an individual, a corporation, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated association, any Governmental Authority or any other entity.
"Plans and Specifications" shall mean any and all plans and
specifications prepared in connection with the development of the Land and/or
the construction of the Improvements for any Eligible Project and which are
approved in writing by the Administrative Agent, including but not limited to,
the plans and specifications prepared by the Architect, a copy of which have
been initialed by the applicable Borrower, or SDI as agent for such Borrower,
and the Administrative Agent for identification and delivered to the
Administrative Agent.
"Pledge, Assignment and Security Agreement" means the Amended and
Restated Pledge Assignment and Security Agreement dated July 29, 1999 executed
by the partners of the Borrower in favor of the Administrative Agent, pursuant
to which such owners of the Borrower have pledged and assigned all of their
respective partners' interests in the Borrower to the Lenders as additional
security for the Credit Facility.
"Pool A Project" means any Eligible Project for which, when the Borrowing
Base is computed at the end of a reporting period, (a) either (i) construction
has been on-going for not more than fifteen (15) months or (ii) it is a
Completed Facility not later than fifteen (15) months after the date on which
the applicable Deed of Trust was executed; or (b) after it is a Completed
Facility or for any Acquisition Project, meets the Minimum Occupancy Requirement
and Fixed Charge Coverage Ratio Requirement.
"Pool B Project" means any Eligible Project which, when the Borrowing
Base is computed at the end of any reporting period, does not meet the
definition of a Pool A Project.
"Pool C Project" means any Eligible Project which, when the Borrowing
Base is computed at the end of two or more consecutive reporting periods, does
not meet the definition of a Pool A Project.
"Post Default Rate" means the interest rate on the Note in the absence of
an Event of Default plus three percent (3%) per annum.
"Primary Borrower" means SEAL or another Borrower or a Person designated
as an attorney-in-fact for the Borrowers designated as such from time to time by
the Borrowers by written notice to the Administrative Agent.
"Property" means collectively the "Property" as that term is defined in
each of the Deeds of Trust.
"Purchase Price" means the gross purchase cost to a Borrower of an
Acquisition Project.
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"Qualified Ground Lease" means (i) any lease (a) which is a direct ground
lease (or indirect ground lease, so long as each ground lease in the chain of
title meets the following criteria) granted by the fee owner of real property,
(b) which may be transferred and/or assigned without the consent of the Lessor
(or as to which the lease expressly provides that (i) such lease may be
transferred and/or assigned with the consent of the lessor and (ii) such consent
shall not be unreasonably withheld or delayed), (c) which has a remaining term
(including any renewal terms exercisable at the sole option of the lessee) of at
least 50 years, (d) under which no material default has occurred and is
continuing, (e) with respect to which a security interest may be granted without
the consent of the lessor, and (f) which contains lender protection provisions
reasonably acceptable to the Administrative Agent including, without limitation,
provisions to the effect that (A) the lessor shall notify the Administrative
Agent of the occurrence of any default by the lessee under such lease and shall
afford the Administrative Agent the right to cure such default, and (B) in the
event that such lease is terminated, the Administrative Agent shall have the
option to enter into a new lease having terms substantially identical to those
contained in the terminated lease. Upon the submission to the Administrative
Agent of a written request for approval of the lender protection provisions and
other terms of a proposed Qualified Ground Lease, the Administrative Agent may
waive any non-compliances with the foregoing which it considers in its
reasonable judgment not to be material and adverse with respect to the
eligibility of the Facility subject to the Qualified Ground Lease, and shall use
its best efforts to accept or reject such proposal within five (5) Banking Days,
and shall accept or reject such proposal within ten (10) Banking Days, in each
case following receipt of such request.
"Receivables" means all of the Borrowers' now or hereafter owned,
acquired or created Accounts, Chattel Paper, Contract Rights, General
Intangibles and Instruments, and all cash and noncash proceeds and products
thereof.
"Rent Expense" means the actual rent expense incurred by the Borrower,
the Guarantor or any Affiliate as a tenant under leases with respect to any
Facility.
"Replacement Reserves" means $250 per year per bed in each Facility
(whether or not such Facility is stabilized).
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requisition" or "Requisitions" shall have the meaning set forth in
Section 2.8 Requisitions Demonstrating Expenses hereof.
"Resident Agreements" means any and all contracts, authorizations,
agreements and/or consents executed by, or on behalf of any resident or other
person seeking services from any Borrower pursuant to which such Borrower
provides or furnishes health or assisted living care and related services at any
and all of the Facilities, including the consent to treatment, assignment of
payment of benefits by third party, as the same may from time to time be
amended, restated, supplemented or modified.
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"Resident Occupancy" means the number of residents who are in occupancy
at a Facility and paying fees pursuant to a resident agreement divided by the
pro forma resident occupancy for such Facility as contained in the pro forma
operating budget of an Eligible Facility.
"Revolving Credit Expiration Date" means July 29, 2002 or any date to
which it may be extended from time to time pursuant to the terms of Section 2.5
Extensions hereof.
"Revolving Credit Termination Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the Credit Facility
is terminated pursuant to Section 10.5 Remedies on Default hereof or otherwise.
"SALI" means Sunrise Assisted Living, Inc., a Delaware corporation.
"SALII" means Sunrise Assisted Living Investments, Inc., a Virginia
corporation.
"SALMI" means Sunrise Assisted Living Management, Inc., a Virginia
corporation, formerly known as Sunrise Terrace, Inc.
"SDI" means Sunrise Development, Inc., a Virginia corporation.
"Security Documents" means, collectively, any assignment, including,
without limitation, any Pledge, Assignment and Security Agreement, the
Collateral Assignments and any assignment, pledge agreement, security agreement,
mortgage, deed of trust (including the Deeds of Trust), leasehold mortgage,
leasehold deed of trust, deed to secure debt, financing statement, initial
transaction statement and any similar instrument, document or agreement under or
pursuant to which a Lien is now or hereafter granted to, or for the benefit of,
the Lenders on any collateral to secure the Obligations, as the same may from
time to time be amended, restated, supplemented or otherwise modified.
"Stabilized Facility" means an Eligible Project with a Resident Occupancy
of at least 85% and a ratio of Net Operating Income to Debt Service of not less
than 1.25 to 1.00 measured for two consecutive fiscal quarters.
"Stored Materials" shall have the meaning set forth in Section 4.12
Stored Materials hereof.
"Survey" means a plat of the Land for any Facility which clearly
designates at least (i) the location of the perimeter of such Land by courses
and distances; (ii) the location of all easements, rights-of-way, alleys,
streams, waters, paths and encroachments; (iii) the location of all building
restriction lines and set-backs, however established; (iv) the location of any
streets or roadways abutting such Land; and (v) the then "as-built" location of
the Improvements located on such Land and the relation of such Improvements by
courses and distances to the perimeter of such Land, building restriction lines
and set-backs, all in conformity with the Minimum Standard
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Detail Requirements for Land Title Surveys adopted by the American Congress on
Surveying and Mapping (1992 Edition).
"Tangible Net Worth" shall have the meaning set forth in Section 3.2 of
the Guaranty.
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any of
the Borrowers or any of their properties or assets or any part thereof or in
respect of any of their franchises, businesses, income or profits.
"Total Development Budget" means the development, construction and
opening operating expense budget for an Eligible Project as reviewed and
approved by the Administrative Agent.
"Unused Commitment Amount" shall have the meaning set forth in Section
2.3 Fees hereof.
"Unused Line Fee" shall have the meaning set forth in Section 2.3 Fees
hereof.
"Wholly Owned Subsidiary" or "Wholly Owned Subsidiaries" means one or
more subsidiaries 100% owned by SALI or a Borrower or by any Wholly Owned
Subsidiary of SALI or a Borrower which is or has been created for the sole
purpose of acquiring or constructing and owning and operating a Facility which
is included in the Borrowing Base.
Section 1.2 Accounting Terms and Other Definitional Provisions
Unless otherwise defined in this Agreement, as used in this Agreement and
in any certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined in this Agreement, and accounting terms
only partly defined in this Agreement, to the extent not defined, shall have the
respective meanings given to them under GAAP. Unless otherwise defined in this
Agreement, all terms used in this Agreement which are defined by the Virginia
Uniform Commercial Code shall have the same meanings as assigned to them by the
Virginia Uniform Commercial Code unless and to the extent varied by this
Agreement. The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, Section, subsection, schedule
and exhibit references are references to sections or subsections of, or
schedules or exhibits to, as the case may be, this Agreement unless otherwise
specified. As used in this Agreement, the singular number shall include the
plural, the plural the singular and the use of the masculine, feminine or neuter
gender shall include all genders, as the context may require. Reference to any
one or more of the Financing Documents and any of the Financing Documents shall
mean the same as the foregoing may from time to time be amended, restated,
substituted, extended, renewed, supplemented or otherwise modified.
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ARTICLE II
BORROWING
Section 2.1 The Loan
(a) The Lenders agree to lend to the Borrowers pursuant to the
terms and conditions of this Agreement, and the Borrowers, jointly and
severally, agree to borrow on a revolving basis from the Lenders from time to
time the principal amount (the "Loan") not to exceed at any time outstanding the
lesser of (i) the Credit Facility Committed Amount, or (ii) the Borrowing Base
minus the aggregate face amount of all Letters of Credit outstanding.
(b) The obligation of the Borrowers to repay the Loan shall be
evidenced by the Second Amended, Restated, Consolidated and Increased Master
Note dated July 29, 1999 as amended by the Note Modification (as further
amended, restated, substituted, extended, renewed and otherwise modified from
time to time, the "Note") payable to the Administrative Agent in the form
attached hereto as EXHIBIT A. The Note shall bear interest and shall be repaid
by the Borrowers in the manner and at the times set forth in the Note.
(c) The conditions precedent for making an advance under the
Loan shall be as set forth in this Agreement. Sums borrowed and repaid may be
readvanced under the terms and conditions of this Agreement. Advances shall be
made by the Lenders on a pro rata basis based on their pro rata shares of the
Credit Facility Committed Amount.
(d) No advances may be made or be outstanding under the Credit
Facility and no Letters of Credit may be issued until and during such times as
there are at least eight (8) Eligible Projects in the Borrowing Base of which
83% must be Pool A Projects. The Borrowers will prepare a Borrowing Base Report
(each a "Borrowing Base Report") in the form attached hereto as EXHIBIT B which
must also be certified by the Borrowers listing for each of the Eligible
Projects (i) the applicable Deed of Trust Lien Amount, (ii) the Costs Incurred
to Date, and (iii) its status as of the most recent reporting date as a Pool A,
Pool B or Pool C Project within forty-five (45) days after the end of each of
the Borrowers' fiscal quarters. The Borrowing Base Report will be based on the
outcome of the requisition procedures hereinafter described, appraisals obtained
by the Administrative Agent and other information on the Eligible Projects
provided by the Borrowers or obtained by the Administrative Agent. The Borrowing
Base shall be computed based on the Borrowing Base Report most recently prepared
by the Borrowers and reviewed and accepted by the Administrative Agent. In the
event the Borrowers shall fail to furnish other current reports or information
as reasonably required by the Administrative Agent pursuant to the Financing
Documents, or in the event the Administrative Agent believes that a Borrowing
Base Report is no longer accurate, the Administrative Agent may, in its
reasonable discretion exercised from time to time and without limiting its other
rights and remedies under the Financing Documents, upon notice to the Borrowers
and the expiration of a cure period of five (5) Banking Days, designate any
Eligible Project as a Pool C Project or suspend the making of or limit advances
under the Loan. The Borrowing Base shall be subject to reduction as a result of
the following events: (i) the release of an Eligible Project from the lien of
the applicable Deed
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of Trust, (ii) by the change of any Eligible Project's status as a Pool A or B
Project to a Pool B or C Project respectively as determined by the
Administrative Agent quarterly, or (iii) the change in appraised value of an
Eligible Project pursuant to Section 7.28 Updated Appraisals. The Borrowing Base
shall be subject to increase as a result of the following events: (i) addition
of Eligible Projects, (ii) increase in the Costs Incurred to Date as determined
by the Administrative Agent quarterly, or (iii) the change of an Eligible
Project's status as a Pool B or C Project to a Pool A as determined by the
Administrative Agent quarterly. The Borrowers may request and the Requisite
Lenders (as defined in the Agency Agreement) may in their sole discretion agree
to include as an Eligible Project a Completed Facility which a Borrower has
acquired which meets the conditions precedent to including a completed Facility
as an Eligible Project.
(e) The Borrowers shall furnish to the Administrative Agent
such schedules, certificates, lists, records, reports, information and documents
as required by the Administrative Agent from time to time so that the
Administrative Agent may, in its reasonable discretion, determine the Borrowing
Base.
(f) If at any time the aggregate principal amount of the Loan
outstanding and the Outstanding Letter of Credit Obligations exceeds the
Borrowing Base, a borrowing base deficiency ("Borrowing Base Deficiency") shall
exist. Each time a Borrowing Base Deficiency exists, the Borrowers shall within
three (3) Banking Days of notice thereof from the Administrative Agent either
pay the amount and/or add Eligible Projects to increase the Borrowing Base to an
amount which is at least equal to the aggregate principal amount outstanding
under the Loan and the Outstanding Letter of Credit Obligations.
(g) The current Borrowing Base Report is attached hereto as
EXHIBIT C.
(h) As of the date hereof the Borrower has designated and the
Lenders have accepted certain Facilities into the Borrowing Base as Eligible
Projects. This Agreement shall govern the procedures for verification by the
Administrative Agent of Costs Incurred to Date on each Eligible Project. This
Agreement shall also govern the terms, conditions and procedures under which
Eligible Projects may be added to the Borrowing Base.
(i) The Borrower will give notice to the Administrative Agent
in writing in advance of its intention to add a particular Facility as an
Eligible Project under the Credit Facility. Each Total Development Budget for an
Eligible Project shall include an interest reserve (the "Interest Reserve"), and
Operating Reserve, a hard cost contingency reserve of not less than five percent
(5%) of the total budgeted construction costs and a development fee payable to
SDI (the "Development Fee") and shall demonstrate to the Agent's satisfaction in
its sole discretion that the Eligible Project will be designated as a Pool A
Project.
Section 2.2 Procedure for Advances
(a) The Administrative Agent will make advances from time to
time upon receipt of written request from the Borrowers in the form designated
by the Administrative Agent, provided that after giving effect to the Borrowers'
request, the outstanding principal
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balance of the Loan would not exceed the lesser of the Credit Facility Committed
Amount or the Borrowing Base minus the aggregate face amounts of all Letters of
Credit outstanding. Each advance under the Loan shall be in an amount of not
less than $1,000,000, and in increments of $250,000 in excess thereof. Advances
or the renewal of a Eurodollar Period shall be requested by the Borrowers orally
or in writing by 10:00 A.M. (Baltimore time) three (3) Banking Days prior to the
Banking Day on which the funds will be advanced. The Borrowers shall advise the
Administrative Agent at the time of such notice which Eurodollar Period they are
selecting. The Administrative Agent shall have no obligation to make any advance
if at the time such advance is requested and/or is proposed to be funded, there
exists an Event of Default or an event which upon notice or lapse of time or
both would constitute an Event of Default under the Financing Documents. If the
Borrowers fail to advise the Administrative Agent three (3) Banking Days in
advance of the expiration of a Eurodollar Period of its intention to either pay
off such portion of the Loan or renew the applicable Eurodollar Period, it shall
be assumed by the Administrative Agent that the Eurodollar Period is to be
renewed.
(b) In addition, if the Administrative Agent has reason to
believe a Default or an Event of Default has occurred, the Borrowers hereby
irrevocably authorize the Lenders to make advances of the Loan at any time and
from time to time, without further request from or notice to the Borrowers,
which the Lenders, in their sole and absolute discretion, deem necessary or
appropriate to protect the Lenders' interests under this Agreement or otherwise,
including, without limitation, advances of the Loan made to cover interest on
the Loan, fees, and/or Enforcement Costs, prior to, on, or after the termination
of this Agreement, regardless of whether the aggregate amount of the advances of
the Loan which the Lenders may make hereunder exceeds the Credit Facility
Committed Amount. The Lenders shall have no obligation whatsoever to make any
advance under this subsection and the making of one or more advances under this
subsection shall not obligate the Lenders to make other similar advances. Any
such advances will be evidenced by the Note secured by the Collateral and the
Deeds of Trust.
Section 2.3 Fees
The Borrowers shall pay to the Administrative Agent the following fees:
(a) Unused Line Fee. The Borrowers shall pay to the
Administrative Agent for the benefit of the Lenders beginning on the date set
forth below a quarterly revolving credit facility fee (the "Unused Line Fee") in
an amount equal to twenty-five (25) basis points per annum of the average
undisbursed portion of the "Unused Commitment Amount" for the applicable quarter
specified in the right-hand column below. The accrued and unpaid portion of the
Unused Line Fee shall be paid by the Borrower to the Administrative Agent as of
the Credit Facility Closing Date and on the first day of each fiscal quarter and
on the Revolving Credit Termination Date. For purposes hereof "Average
Outstandings" shall mean the average daily principal under the Note plus the
average daily principal amount of the aggregate face amounts of the Letters of
Credit for the quarter then ended.
Period Unused Commitment Amount
------ ------------------------
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Quarter ending 3/31/2000 $300,000,000 less the Average
Outstandings
Quarter ending 6/30/2000 $350,000,000 less the Average
Oustandings
Quarter ending 9/30/2000 and Credit Facility Committed
each fiscal quarter there- Amount less the Average
after Outstandings
(b) Appraisal Fees. Upon the receipt of an appraiser's invoice
from the Administrative Agent, the Borrowers shall pay the fee of the appraiser
for an Eligible Project.
(c) Extension Fee. In the event the Revolving Credit Expiration
Date of the Credit Facility is extended for a twelve-month period pursuant to
the terms of Section 2.5 Extensions
Section 2.4 Interest Rate Matters
(a) Lender Tax Adjustment. Each payment made by the Borrowers
under the Note shall either (i) be exempt from, and be made without reduction by
reason of, any Lender Tax or (ii) to the extent that any such payment shall be
subject to any Lender Tax, be accompanied by an additional payment by the
Borrowers of such amount as may be necessary so that the net amount received by
each Lender (after deducting all applicable Taxes) is the same as such Lender
would have received had such payment not been subject to such Lender Tax. Upon
any payment of Lender Tax by the Borrowers, the Borrowers shall promptly (and in
any event within 30 days) furnish to the Administrative Agent and applicable
Lender such tax receipts, certificates an other evidence of such payment as the
Borrowers may have or the Administrative Agent or the applicable Lender may
reasonably request.
(b) Inability to Determine Eurodollar Rate. In the event that
the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that, by reason of circumstances affecting the London
interbank market, quotation of Eurodollar Rates for any portion of the Note are
not being provided in the relevant amounts or for the relevant maturities for
the purpose of determining a Eurodollar Rate for any portion of the principal
sum, the Administrative Agent will give notice of such determination to the
Borrowers and each Lender at least one day prior to the date of an advance or
any subsequent Eurodollar Period for the Loan. If any such notice is given, no
Lender shall have any obligation to make any advance or maintain any principal
sum outstanding at a Eurodollar Rate. Until the earlier of the date any such
notice has been withdrawn by the Administrative Agent or the date when the
Lenders and the Borrowers have mutually agreed upon an alternate method of
determining the rates of interest payable on the Loan, as the case may be, the
Borrowers shall not have the right to have additional advances or maintain any
portion of the Credit Facility at a Eurodollar Rate, whereupon the Lenders and
the Borrowers shall mutually agree upon an alternate method of
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determining the rates of interest payable on the Loan or such Lender's portion
of the principal outstanding under all the Note shall be immediately due and
payable.
(c) Illegality. Notwithstanding any other provision of the
Financing Documents to the contrary, in the event that it shall become unlawful
for any Lender to obtain funds in the London interbank market or for such Lender
to maintain the Loan at the Eurodollar Rate, then, by written notice to the
Borrowers and to the Administrative Agent, such Lender may declare that advances
will not thereafter be made or the Loan maintained by such Lender hereunder at
the Eurodollar Rate, whereupon the Lenders and the Borrowers shall mutually
agree upon an alternate method of determining the rates of interest payable on
the Loan or such Lender's portion of the principal outstanding under the Note
shall be immediately due and payable.
(d) Increased Costs and Reduced Return.
(i) If any event shall occur (whether in the form of a
reserve requirement (not included in the definition of the
Eurodollar Rate), exchange control regulations, governmental
charges, compliance with any guideline or request from any central
bank or other Governmental Authority, changes in the London
interbank market or the position of any Lender in such market or
otherwise) and the result of any such event is, in such Lender's
reasonable judgment, to increase the costs which such Lender
determines are attributable to its making or maintaining the Loan
at the Eurodollar Rate in excess of those costs already in effect
as of July 1, 1999, or its obligation to make available the Loan
at the Eurodollar Rate or to reduce the amount of any sum received
or receivable by such Lender under the Note, then, within ten (10)
days after demand by such Lender, Borrowers hereby agree to pay to
such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction.
(ii) In addition to any amounts payable pursuant to Section
(i), if any Lender shall have determined that the applicability of
any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital
Standards," or the adoption after the date hereof of any other
law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any
court or any central bank or other Governmental Authority, charged
with the enforcement or interpretation or administration thereof,
or compliance by such Lender (or any lending office of such
Lender) or such Lender's holding company with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of its making or
maintaining the Loan or its incurring any obligations under this
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Agreement to a level below that which such Lender or such Lender's
holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such
Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by
such Lender to be material, then, upon demand by such Lender, the
Borrowers hereby agree to pay to such Lender from time to time
such additional amount or amounts as will compensate such Lender
or such Lender's holding company for any such reduction suffered.
(e) Notice of Amounts Payable to Lenders. If any Lender shall
seek payment of any amounts from Borrowers pursuant to this Section or under
Section 2.4 Interest Rate Matters, it shall notify the Borrowers and the
Administrative Agent of the amount payable by the Borrowers to such Lender
hereunder. A certificate of such Lender seeking payment setting forth in
reasonable detail the factual basis for and the computation of the amount
specified, shall be conclusive and binding on all parties for all purposes,
absent manifest error, as to the amounts owned. The Borrowers' obligations under
this Section shall survive the termination of this Agreement and the repayment
of the Obligations.
(f) Change in Basis Point Spread. Any change in the basis point
margin added to the Eurodollar Rate based on a change in the rating pursuant to
the terms of the Note shall take effect one (1) Banking Day following notice by
the Administrative Agent to the Lenders of such rate change.
Section 2.5 Extensions
At any time not later than thirty (30) days nor earlier than one hundred
twenty (120) days prior to the Revolving Credit Expiration Date or any
anniversary of the Facility Closing, the Borrowers may request that the
Administrative Agent and the Lenders, in their sole discretion, may agree to
extend the Revolving Credit Expiration Date one or more times for a period of
twelve (12) months each.
Section 2.6 The Letter of Credit Facility
(a) Letters of Credit. Subject to and upon the provisions of
this Agreement, and as a part of the Credit Facility Committed Amount, the
Borrower may, upon the prior approval of the Administrative Agent, obtain
standby letters of credit (as the same may from time to time be amended,
supplemented or otherwise modified, each a "Letter of Credit" and collectively
the "Letters of Credit") from any Lender selected by the Borrowers from time to
time until the Banking Day preceding the Revolving Credit Termination Date. Each
Letter of Credit shall be issued for a business purpose of any Borrower, SALI or
any Affiliate, provided that one or more Borrowers is a co-obligor with SALI or
any Affiliate for the Obligations arising under such Letter of Credit and
executes the applicable Letter of Credit Application to evidence such liability.
The Borrower will not be entitled to obtain a Letter of Credit hereunder unless
(a) after giving effect to the request, the outstanding principal balance of the
Loan and of the Letter of Credit Obligations would not exceed the lesser of (i)
the Credit Facility Amount, or (ii) the most
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current Borrowing Base and (b) the sum of the aggregate face amount of the then
outstanding Letters of Credit (including the face amount of the requested Letter
of Credit) does not exceed Ten Million Dollars ($10,000,000).
(b) Letter of Credit Fees. Prior to or simultaneously with the
opening of each Letter of Credit, the Borrower shall pay to the Administrative
Agent or the other issuing Lender for the benefit of all the Lenders, a letter
of credit fee (each a "Letter of Credit Fee" and collectively the "Letter of
Credit Fees") in an amount equal to eighty (80) basis points per annum of the
amount of the Letter of Credit and a facing fee of 1/8th of 1% of the amount of
the Letter of Credit for the benefit of the issuing Lender only. The Letter of
Credit Fee but not the facing fee will be pro-rated if the initial term of a
Letter of Credit is less than twelve (12) months. Such Letter of Credit Fees
shall be paid upon the opening of the Letter of Credit and upon each anniversary
thereof, if any. In addition, the Borrower shall pay to the Lender any and all
additional issuance, negotiation, processing, transfer or other fees to the
extent and as and when required by the provisions of any Letter of Credit
Agreement; such additional fees are included in and a part of the "Fees" payable
by the Borrower under the provisions of this Agreement.
(c) Terms of Letters of Credit. Each Letter of Credit shall (a)
be opened pursuant to a Letter of Credit Agreement, and (b) expire on a date not
later than the Banking Day preceding the Revolving Credit Expiration Date;
provided, however, if any Letter of Credit does have an expiration date later
than the Banking Day preceding the Revolving Credit Termination Date, as of the
Banking Day preceding the Revolving Credit Termination Date an advance of the
Loan shall be made by the Lender in the face amount of such Letter of Credit (or
Letters of Credit) and the proceeds thereof shall be deposited in an account
titled in the name of the Administrative Agent as trustee for the Borrower. The
proceeds of the trustee account referred to in the immediately preceding
sentence shall be held as collateral for the Letter of Credit (or Letters of
Credit) and in the event of a draw under the Letter of Credit (or Letters of
Credit), used to pay any such draw. The aggregate face amount of all Letters of
Credit at any one time outstanding and issued by the Administrative Agent or any
other Lender pursuant to the provisions of this Agreement, plus the amount of
any unpaid Letter of Credit Fees accrued or scheduled to accrue thereon, and
less the aggregate amount of all drafts issued under or purporting to have been
issued under such Letters of Credit that have been paid by the Administrative
Agent or any other Lender, is herein called the "Outstanding Letter of Credit
Obligations".
(d) Procedure for Letters of Credit. The Borrower shall give
the Administrative Agent written notice at least two (2) Banking Days prior to
the date on which a Letter of Credit is requested to be opened of their request
for a Letter of Credit. Such notice shall specify if a Lender other than the
Administrative Agent is requested to be the issuing bank for such Letter of
Credit shall be accompanied by a duly executed and delivered Letter of Credit
Agreement. Upon receipt of the Letter of Credit Agreement and the Letter of
Credit Fee, the Administrative Agent or other issuing Lender shall process such
Letter of Credit Agreement in accordance with its customary procedures and open
such Letter of Credit on the Banking Day specified in such notice.
Section 2.7 Permitted Costs
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Advances under the Borrowing Base shall be made available by the Lenders
pursuant to a Borrowing Base Report issued quarterly by the Administrative Agent
or more frequently in the Administrative Agent's discretion and certified by the
Borrowers in accordance with the terms of this Agreement. That portion of the
Borrowing Base composed of Costs Incurred to Date shall be related to
expenditures for each Eligible Facility described in the applicable Total
Development Budget. Each Total Development Budget may include the cost of (i)
the acquisition by the Borrowers of the Land which is the site of such Facility,
(ii) the construction on the Premises of a Facility containing residential units
and common facilities (iii) marketing, staffing and similar pre-opening expenses
and (iv) an Operating Reserve. Unless otherwise agreed to by the Administrative
Agent and to the extent specifically permitted by the Administrative Agent, the
process of verification of Requisitions shall confirm the payment by any of the
Borrowers of the following costs and expenses related to the development of the
Premises and the construction of the Improvements and no others may be included
in a Total Development Budget: (i) the payment of interest when due without
further authorization or consent of the Borrowers; (ii) the actual cost of the
Land and all labor, services, materials, supervision, construction fees and the
like reasonably incurred by any of the Borrowers in connection with the
construction upon the Land of the Improvements in accordance with the Plans and
Specifications; (iii) for the actual cost of pre-opening expenses, marketing
expenses and operations of the Facility to the extent of operating deficits;
(iv) for the actual cost of commitment fees, extension fees, appraisal fees,
closing or settlement costs, fees of attorneys, engineers, architects and
accountants, insurance and bond premiums, ad valorem real estate taxes and other
costs directly related to the development of the Land and the construction,
marketing, initial start-up operating of the Improvements and (v) for the
Development Fee and other pre-opening fees.
Section 2.8 Requisitions Demonstrating Expenses
Verification of the Borrowers' Costs Incurred to Date will be
administered by the Administrative Agent's Real Estate Loan Administration
Group. Requisitions for each Eligible Project shall be submitted by the
Borrowers from time to time setting forth costs incurred by or on behalf of the
Borrowers shall be in the form approved by the Administrative Agent (each a
"Requisition" collectively, the "Requisitions") signed by James S. Pope, Larry
Hulse, Christopher Slavin, Thomas B. Newell or David W. Faeder on behalf of the
Borrowers and approved by the Architect, showing the percentage of completion
and setting forth in trade breakdown form and in such detail as may be required
by the Administrative Agent the amounts expended and/or costs incurred for work
done and necessary materials incorporated in the Improvements. The Requisition
shall also show the percentage of completion of each line item on the applicable
Borrower's cost breakdown approved by the Administrative Agent. The Borrowers
shall submit with each Requisition a statement that the work completed to the
date of such Requisition is of quality consistent with the applicable Plans and
Specifications. In addition, at the time of delivery of each Requisition by the
Borrowers, the Borrowers shall furnish to the Administrative Agent such
additional information (such as paid receipts, invoices, statements of accounts,
etc.) as the Administrative Agent may reasonably require to assure that amounts
shown in the Requisition have been paid by or on behalf of the Borrowers.
Requisitions verified by the
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Real Estate Loan Administration Group during the course of a fiscal quarter will
be included in the calculation of the next Borrowing Base Report.
Section 2.9 Co-Borrower Obligations
Each Person included in the term "Borrowers", including each Additional
Borrower, hereby covenants and agrees with the Administrative Agent on behalf of
the Lendersas follows:
(a) The Obligations include all present and future
indebtedness, duties, obligations, and liabilities, whether now existing or
contemplated or hereafter arising, of any one or more of the Additional
Borrowers or the Existing Borrowers in connection with the Loan.
(b) Reference in this Agreement and the other Financing
Documents to the "Borrowers" or otherwise with respect to any one or more of the
Persons now or hereafter included in the definition of "Borrowers" shall mean
each and every such Person and any one or more of such Persons, jointly and
severally, unless the context requires otherwise.
(c) For administrative convenience, each Person included in the
term "Borrowers" hereby irrevocably appoints the Primary Borrower as the
Borrower's attorney-in-fact, with power of substitution (with the prior written
consent of the Administrative Agent in the exercise of its sole and absolute
discretion), in the name of the Primary Borrower or in the name of the Borrower
or otherwise to take any and all actions with respect to this Agreement, the
other Financing Documents, the Obligations and/or the Collateral (including,
without limitation, the proceeds thereof) as the Primary Borrower may so elect
from time to time, including, without limitation, actions to (i) request
advances under the Loan, and direct the Administrative Agent to disburse or
credit the proceeds of any advance under the Loan directly to an account of the
Primary Borrower, any one or more of such Persons or otherwise, which direction
shall evidence the making of such advance and shall constitute the
acknowledgment by each such Person of the receipt of the proceeds of the Loan,
(ii) enter into, execute, deliver, amend, modify, restate, substitute, extend
and/or renew this Agreement, any Additional Borrower Joinder Supplement, any
other Financing Documents, security agreements, mortgages, deposit account
agreements, instruments, certificates, waivers, letter of credit applications,
releases, documents and agreements from time to time, and (iii) endorse any
check or other item of payment in the name of such Person or in the name of the
Primary Borrower. The foregoing appointment is coupled with an interest, cannot
be revoked without the prior written consent of the Administrative Agent, and
may be exercised from time to time through the Primary Borrower's duly
authorized officer, officers or other Person or Persons designated by the
Primary Borrower to act from time to time on behalf of the Primary Borrower.
(d) Each Person included in the term "Borrowers" hereby
irrevocably authorizes the Administrative Agent to make advances to any one or
more or to all of such Persons, pursuant to the provisions of this Agreement
upon the written, oral or telephonic request any one or more of the Persons who
is from time to time a Responsible Officer of a Borrower under the provisions of
the most recent certificate of corporate resolutions and/or incumbency of
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the Person included in the term "Borrowers" on file with the Administrative
Agent and also upon the written, oral or telephone request of any one of
Responsible Officer.
(e) The Administrative Agent assumes no responsibility or
liability for any errors, mistakes, and/or discrepancies in the oral,
telephonic, written or other transmissions of any instructions, orders, requests
and confirmations between the Administrative Agent and any one or more of the
Persons included in the term "Borrowers", any advance under the Loan or any
other transaction in connection with the provisions of this Agreement except
those resulting from the Administrative Agent's gross negligence or willful
misconduct.
Section 2.10 Agreement Among Borrowers
Without implying any limitation on the joint and several nature of the
Obligations, the Administrative Agent agrees that, notwithstanding any other
provision of this Agreement, the Persons included in the term "Borrowers" may
create reasonable inter-company indebtedness between or among the Persons
included in the term "Borrowers" with respect to the allocation of the benefits
and proceeds of the advances under this Agreement. The Persons included in the
term "Borrowers" agree among themselves, and the Administrative Agent consents
to that agreement, that each such Person shall have rights of contribution from
all of the such Persons to the extent such Person incurs Obligations in excess
of the proceeds of the Loans received by, or allocated to purposes for the
direct benefit of, such Person. All such indebtedness and rights shall be, and
are hereby agreed by the Persons included in the term "Borrowers" to be,
subordinate in priority and payment to the indefeasible repayment in full in
cash of the Obligations, and, unless the Administrative Agent agrees in writing
otherwise, shall not be exercised or repaid in whole or in part until all of the
Obligations have been indefeasibly paid in full in cash. Each Person included in
the term "Borrowers" agrees that all of such inter-company indebtedness and
rights of contribution are part of the Collateral and secure the Obligations.
Each Person included in the term "Borrowers" hereby waives all rights of
counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. Unless otherwise consented to in
writing by the Administrative Agent, no Person included in the term "Borrowers"
shall evidence the inter-company indebtedness or rights of contribution by note
or other instrument, and shall not secure such indebtedness or rights of
contribution with any Lien or security.
Section 2.11 Benefits to Borrowers
Each Person included in the term "Borrowers" hereby represents and
warrants to the Administrative Agent that each of them will derive benefits,
directly and indirectly, from each advance under the Loan, both in their
separate capacity and as a member of the integrated group to which each such
Person belongs and because the successful operation of the integrated group is
dependent upon the continued successful performance of the functions of the
integrated group as a whole, because (i) the terms of the consolidated financing
provided under this Agreement are more favorable than would otherwise be
obtainable by such Persons individually, and (ii) the additional administrative
and other costs and reduced flexibility associated with individual
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financing arrangements which would otherwise be required if obtainable would
substantially reduce the value to such Persons of the financing.
Section 2.12 Guaranty
(a) Each Person included in the term "Borrowers" hereby
unconditionally and irrevocably, guarantees to the Administrative Agent:
(i) the due and punctual payment in full (and not merely
the collectibility) by the other Persons included in the term
"Borrowers" of the Obligations, including unpaid and accrued
interest thereon, in each case when due and payable, all according
to the terms of this Agreement, the Note and the other Financing
Documents;
(ii) the due and punctual payment in full (and not merely
the collectibility) by the other Persons included in the term
"Borrowers" of all other sums and charges which may at any time be
due and payable in accordance with this Agreement, the Note or any
of the other Financing Documents;
(iii) the due and punctual performance by the other
Persons included in the term "Borrowers" of all of the other
terms, covenants and conditions contained in the Financing
Documents; and
(iv) all the other Obligations of the other Persons
included in the term "Borrowers".
(b) The obligations and liabilities of each Person included in
the term "Borrowers" as a guarantor under this Section shall be absolute and
unconditional and joint and several, irrespective of the genuineness, validity,
priority, regularity or enforceability of this Agreement, the Note or any of the
Financing Documents or any other circumstance which might otherwise constitute a
legal or equitable discharge of a surety or guarantor. Each Person included in
the term "Borrowers" in its capacity as a guarantor expressly agrees that the
Administrative Agent may, in its sole and absolute discretion, without notice to
or further assent of such Borrower and without in any way releasing, affecting
or in any way impairing the joint and several obligations and liabilities of
such Person as a guarantor hereunder:
(i) waive compliance with, or any defaults under, or
grant any other indulgences under or with respect to any of the
Financing Documents;
(ii) modify, amend, change or terminate any provisions of
any of the Financing Documents;
(iii) grant extensions or renewals of or with respect to
this Agreement, the Note or any of the other Financing Documents;
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(iv) effect any release, subordination, compromise or
settlement in connection with this Agreement, the Note or any of
the other Financing Documents;
(v) agree to the substitution, exchange, release or
other disposition of the Collateral or any part thereof, or any
other collateral for the Loan or to the subordination of any lien
or security interest therein;
(vi) make advances for the purpose of performing any
term, provision or covenant contained in this Agreement, the Note
or any of the other Financing Documents with respect to which the
Borrower shall then be in default;
(vii) make future advances pursuant to this Agreement or
any of the other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise transfer,
the Obligations, the Note, any of the other Financing Documents or
any interest therein, all as and to the extent permitted by the
provisions of this Agreement;
(ix) deal in all respects with the other Persons included
in the term "Borrowers" as if this Section were not in effect;
(x) effect any release, compromise or settlement with
any of the other Persons included in the term "Borrowers", whether
in their capacity as a Borrower or as a guarantor under this
Section or any other guarantor; and
(xi) provide debtor-in-possession financing or allow use
of cash collateral in proceedings under the Bankruptcy Code, it
being expressly agreed by all Persons included in the term
"Borrowers" that any such financing and/or use would be part of
the Obligations.
(c) The obligations and liabilities of each Person included in
the term "Borrowers", as guarantor under this Section shall be primary, direct
and immediate, shall not be subject to any counterclaim, recoupment, set off,
reduction or defense based upon any claim that such Person may have against any
one or more of the other Persons included in the term "Borrowers", the
Administrative Agent and/or any other guarantor and shall not be conditional or
contingent upon pursuit or enforcement by the Administrative Agent of any
remedies it may have against Persons included in the term "Borrowers" with
respect to this Agreement, the Note or any of the other Financing Documents,
whether pursuant to the terms thereof or by operation of law. Without limiting
the generality of the foregoing, the Administrative Agent shall not be required
to make any demand upon any of the Persons included in the term "Borrowers", or
to sell the Collateral or otherwise pursue, enforce or exhaust its or their
remedies against the Persons included in the term "Borrowers" or the Collateral
either before, concurrently with or after pursuing or enforcing its rights and
remedies hereunder. Any one or more successive or concurrent actions or
proceedings may be brought against each Person included in the term
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"Borrowers" under this Section, either in the same action, if any, brought
against any one or more of the Persons included in the term "Borrowers" or in
separate actions or proceedings, as often as the Administrative Agent may deem
expedient or advisable. Without limiting the foregoing, it is specifically
understood that any modification, limitation or discharge of any of the
liabilities or obligations of any one or more of the Persons included in the
term "Borrowers", any other guarantor or any obligor under any of the Financing
Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against any one or more of the Persons included in the
term "Borrowers", in their respective capacities as borrowers and guarantors
under this Section, or under any of the Financing Documents shall not modify,
limit, lessen, reduce, impair, discharge, or otherwise affect the liability of
each Borrower under this Section in any manner whatsoever, and this Section
shall remain and continue in full force and effect. It is the intent and purpose
of this Section that each Person included in the term "Borrowers" shall and does
hereby waive all rights and benefits which might accrue to any other guarantor
by reason of any such proceeding, and the Persons included in the term
"Borrowers" agree that they shall be liable for the full amount of the
obligations and liabilities under this Section regardless of, and irrespective
to, any modification, limitation or discharge of the liability of any one or
more of the Persons included in the term "Borrowers", any other guarantor or any
obligor under any of the Financing Documents, that may result from any such
proceedings.
(d) Each Person included in the term "Borrowers", as guarantor
under this Section, hereby unconditionally, jointly and severally, irrevocably
and expressly waives:
(i) presentment and demand for payment of the
Obligations and protest of non-payment;
(ii) notice of acceptance of this Section and of
presentment, demand and protest thereof;
(iii) notice of any default hereunder or under the Note or
any of the other Financing Documents and notice of all
indulgences;
(iv) notice of any increase in the amount of any portion
of or all of the indebtedness guaranteed by this Section;
(v) demand for observance, performance or enforcement of
any of the terms or provisions of this Agreement, the Note or any
of the other Financing Documents;
(vi) all errors and omissions in connection with the
Administrative Agent's administration of all indebtedness
guaranteed by this Section;
(vii) any right or claim of right to cause a marshalling
of the assets of any one or more of the other Persons included in
the term "Borrowers";
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(viii) any act or omission of the Administrative Agent
which changes the scope of the risk as guarantor hereunder; and
(ix) All other notices and demands otherwise required by
law which such Person may lawfully waive.
(e) Within ten (10) days following any request of the
Administrative Agent to do so, each Person included in the term "Borrowers" will
furnish the Administrative Agent and such other persons as the Administrative
Agent may direct with a written certificate, duly acknowledged stating in detail
whether or not any credits, offsets or defenses exist with respect to this
Section.
ARTICLE III
COLLATERAL
Section 3.1 Collateral
As security for the payment of any and all of the Obligations and for the
Borrowers' performance of, and compliance with, all of the terms, covenants,
conditions, stipulations and agreements contained in the Financing Documents,
the Borrowers hereby assign, grant and convey to the Lenders, and agree that the
Lenders shall have, to the extent permitted by law a perfected, continuing
security interest in, all of the Collateral. The Borrowers further agree that
the Lenders shall have in respect of the Collateral all of the rights and
remedies of a secured party under the Virginia Uniform Commercial Code and the
Uniform Commercial Code of those other states in which the Facilities are
located, whichever is applicable, and under other applicable Laws as well as
those provided in this Agreement. The Borrowers covenant and agree to execute
and deliver such financing statements and other instruments and filings as are
necessary in the opinion of the Administrative Agent to perfect such security
interest. Notwithstanding the fact that the proceeds of the Collateral
constitute a part of the Collateral, the Borrowers may not dispose of the
Collateral, or any part thereof, other than in the ordinary course of their
business or as otherwise may be permitted by this Agreement or other Security
Agreements.
Section 3.2 Eligible Projects
The Borrowers shall from time to time designate Facilities owned by
any of the Borrowers as Eligible Projects included in the Borrowing Base
pursuant to the terms hereof. The Facilities which are currently Eligible
Projects are listed on EXHIBIT C attached hereto and incorporated herein by
reference or any future Borrowing Base Report. The Credit Facility shall be
secured by (a) the first lien Deeds of Trust on the fee simple interests of the
Borrowers in the
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Eligible Projects or on the leasehold interests of Borrowers under Qualified
Ground Leases, (b) a first lien security interest in all fixtures, building
materials and all other machinery, equipment and other personalty used or
installed by the Borrowers or each of the premises of an Eligible Project or in
the Improvements constructed thereon, and (c) all of the other Collateral
relating to the Eligible Projects. The Borrowers may release an Eligible Project
from the lien of its Deed of Trust at any time provided no Event of Default has
occurred and is continuing and provided at least eight (8) Eligible Projects
remain in the Borrowing Base of which 83% must be Pool A Projects. The
Administrative Agent may in its sole discretion agree to include a Facility
occupied pursuant to a Qualified Ground Lease; provided, however, that at no
time shall Eligible Projects subject to Qualified Ground Leases comprise more
than ten percent (10%) of the availability under the Borrowing Base at any one
time.
Section 3.3 Assignment of Partnership Interests
The Obligations are further secured by one or more Pledge, Assignment and
Security Agreements, pursuant to which the partners of each of the Borrowers
have assigned to the Administrative Agent for the benefit of the Lenders one
hundred percent (100%) of all partnership or member interests in each of the
Borrowers.
Section 3.4 Guaranties
The Obligations are the subject of the Guaranty Agreement and the
Performance Guaranty executed and delivered by the Guarantor in favor of the
Lenders.
Section 3.5 Collateral for Obligations
The Borrowers acknowledge that it is the intention of the Borrowers that
the Collateral and all the Deeds of Trust be security for all of the
Obligations, both those now existing and those hereafter created or incurred by
future loans, advances, extensions of credit or otherwise and whether or not
currently contemplated by the Borrowers and/or the Lenders on or about the date
hereof.
Section 3.6 Costs
The Borrowers agree to pay on demand, to the fullest extent permitted by
applicable laws, all reasonable fees, commissions, costs, charges, travel
expenses and other expenses incurred by the Lenders, or any of them, in
connection with the taking, perfection, preservation, protection and/or release
of any security interest or lien on any of the Collateral or Deeds of Trust. The
foregoing notwithstanding, the Borrowers shall not be obligated to pay the
travel expenses of the Lenders with the exception of travel expenses incurred in
connection with any enforcement actions following the occurrence of an Event of
Default.
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ARTICLE IV
GENERAL FINANCING PROVISIONS
Section 4.1 Conditions Precedent to Credit Facility Closing and Addition
of Deeds of Trust
(a) Conditions Precedent to Credit Facility Closing. The
following shall be conditions precedent to the Credit Facility Closing or to the
addition of an Additional Borrower and/or the addition of an Eligible Project to
the Borrowing Base (each a "Facility Closing"):
(i) The Guaranty, this Agreement and the Note
Modification shall have been properly executed and delivered to
the Administrative Agent.
(ii) The Administrative Agent shall have received and
approved a copy of each Borrower's fully executed Partnership
Agreement or Operating Agreement or Articles of Organization (if a
limited liability company) and a certified copy of the recorded
Certificate of Limited Partnership (if a limited partnership) or
Articles of Organization (if a limited liability company) or a
certificate of no changes therein since the closing on July 29,
1999. In connection with the addition of an Additional Borrower,
the Administrative Agent shall have received and approved copies
of all organizational documents, including certified copies of all
documents on record with the State in which such entity is
organized.
(iii) The Administrative Agent shall have received and
approved a certificate executed by all of the general and limited
partners or members of the Borrowers authorizing the execution and
delivery of this Agreement or any other the Financing Documents
being delivered in connection herewith and consenting to the Loan
and similar authority certificates or resolutions of any
Additional Borrower.
(iv) The Administrative Agent shall have received and
approved a current certificate of good standing or certificate of
fact from the State in which any Borrower is formed.
(v) The Administrative Agent shall have received and
approved an opinion of counsel for the Borrowers as to the
Borrowers' good standing, form, powers and authority and as to the
validity, binding effect and enforceability of the Financing
Documents such an opinion shall be issued in connection with the
execution and delivery of each Joinder Agreement.
(vi) The Administrative Agent shall have received and a
properly and fully executed Joinder Agreement.
(vii) In connection with the execution and delivery of
this Agreement, the Guaranty and the Note Modification, the
Borrowers shall pay to the
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Administrative Agent for the benefit of the Lenders an amendment
fee of 1/8 of 1% of the Credit Facility Committed Amount of
($500,000). Such Amendment fee will be in addition to and shall
not be deemed to reduce or replace any other fee due in connection
with the Credit Facility.
(b) Conditions Precedent to Accepting an Eligible Project:
(i) The Credit Facility Closing shall have been
completed.
(ii) The Administrative Agent shall have received a
certificate of authority to do business for the applicable
Borrower in each jurisdiction where a Facility is located (if
different from the state in which such Borrower was formed).
(iii) The Total Development Budget for such Eligible
Project shall have been reviewed and approved in writing by the
Administrative Agent consistent with the provision of Section 2.1
The Loan.
(iv) The Administrative Agent shall have received a paid
policy of title insurance (American Land Title Association
Standard Form "B" Loan Policy - Current Edition) covering the
Facility or a valid and enforceable commitment to issue the same,
together with such reinsurance agreements and direct access
agreements as may be required by the Administrative Agent and/or
endorsements to policies issued to the Administrative Agent in
connection with the Original Credit Facility, in the amount agreed
upon by the Administrative Agent from a company satisfactory to
the Administrative Agent and which may be endorsed or assigned to
the successors and assigns of the Lenders and to additional
Lenders without additional cost, insuring the liens of the Deeds
of Trust to be valid first liens on the Property, free and clear
of all defects, exception and encumbrances except such as the
Administrative Agent and its counsel shall have approved but
without a creditor's rights exception and (unless otherwise agreed
by the Administrative Agent) containing affirmative insurance
against mechanics liens.
(v) The Administrative Agent shall have received advice,
in form and substance and from a source satisfactory to the
Administrative Agent, to the effect that a search of the
applicable public records discloses no conditional sales
contracts, chattel mortgages, leases of personalty, financing
statements or title retention agreements filed or recorded against
the Property except such as the Administrative Agent shall have
approved.
(vi) The Administrative Agent shall have received all
policies of insurance required by the terms hereof and by the
other Financing Documents to be in effect from a company or
companies and in form and amount satisfactory to the
Administrative Agent, including without limitation, flood
insurance (in the amount or evidence that flood insurance is not
available or otherwise required
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with respect to the Property), together with written evidence, in
form and substance satisfactory to the Administrative Agent, that
all fees and premiums due on account thereof have been paid in
full.
(vii) The Administrative Agent shall have received and
accepted an appraisal of the Facility.
(viii) The Administrative Agent shall have received from
the Borrowers a complete set of the Plans and Specifications
signed and sealed by the Architect, together with written
evidence, in form and substance satisfactory to the Administrative
Agent, to the effect that the Plans and Specifications are
satisfactory to the applicable Borrowers, the General Contractor,
the Inspecting Engineer and, to the extent required by applicable
law or any effective restrictive covenant, have been approved by
all Governmental Authorities having or claiming jurisdiction and
by the beneficiary of any such restrictive covenant, respectively.
(ix) The Administrative Agent shall have received and
approved a fully executed copy of the applicable Construction
Contract, the Architect's Contract and a list of Major
Subcontractors as well as any information regarding the General
Contractor, the Architect and the Major Subcontractors which the
Administrative Agent has requested.
(x) The Administrative Agent shall have received and
approved a copy of a current Survey of the Land certified to the
Administrative Agent and to the title insurance company and any
recorded subdivision plat of the Land and otherwise complying with
the survey requirements set forth on EXHIBIT F attached hereto.
(xi) The Administrative Agent shall have received and
approved a site plan for the Improvements approved by all
appropriate Governmental Authorities.
(xii) The Administrative Agent shall have received from
the Borrowers written evidence, in form and substance satisfactory
to the Administrative Agent, from all Governmental Authorities
having or claiming jurisdiction to the effect that all building,
construction and other permits required in connection with the
development of the Land and the construction of the Improvements
have been validly issued, that all fees and bonds required in
connection therewith have been paid in full or posted, as the
circumstances may require, and that the Improvements meet zoning
requirements and all sewer and storm drain requirements.
(xiii) The Administrative Agent shall have received and
approved a report setting forth a construction progress schedule
in form and substance
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satisfactory to the Administrative Agent, calling for the
completion of the Improvements by a date no later than the
Completion Date.
(xiv) If construction work of any kind has commenced upon
the Land or materials have been placed or stored upon the Land
prior to the recordation of the Deed of Trust among the Land
Records where the Land is located, any mechanic's or materialman's
Liens or the same shall be fully insured against by the title
insurance company.
(xv) The Administrative Agent shall have received and
approved evidence that the applicable General Contractor carries
public liability and property damage insurance and workers'
compensation insurance in form and amounts and issued by companies
acceptable to the Administrative Agent.
(xvi) The Administrative Agent shall have received and
accepted a Phase I environmental audit of the applicable Facility
prepared by a person or firm acceptable to the Administrative
Agent.
(xvii) The Administrative Agent shall have received
evidence acceptable in all respects through certification by the
Architect or other source acceptable to the Administrative Agent
that the applicable Improvements, when constructed, will comply
with all legal requirements regarding access and facilities for
handicapped or disabled persons, including, without limitation and
to the extent applicable to assisted living facilities (or, if
applicable, independent living facilities), The Federal
Architectural Barriers Act (42 U.S.C. Section 4151 et seq.), The
Fair Housing Amendments Act of 1988 (42 U.S.C. Section 3601 et
seq.), The Americans With Disabilities Act of 1990 (42 U.S.C.
Section 12101 et seq.), The Rehabilitation Act of 1973 (29 U.S.C.
Section 794) and any applicable state statutes relating to access
and facilities for handicapped or disabled persons.
(xviii) The Administrative Agent shall have received and
approved soil reports which shall (i) demonstrate that the soil
conditions of the Land for the applicable Facility are suitable
for the construction of the Improvements and (ii) evidence to the
Administrative Agent's satisfaction that there are no Hydric Soils
on the Land.
(xix) The Administrative Agent shall have received and
approved copies of any executed Material Leases of the applicable
Property or of any portion thereof.
(xx) The Administrative Agent shall have received and
approved an opinion of local counsel for the Borrowers in the
jurisdiction where the applicable Facility is located that the
Financing Documents applicable to that Facility are in proper form
and enforceable in the context of a revolving credit facility of
the type represented by this Credit Facility and that the Loan is
not usurious, which
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opinion must also inform the Lenders (i) of the cost and timing of
foreclosure; (ii) of any limitations on the Lenders' right to
obtain, or the amount of, a deficiency judgment; and (iii) the
existence of and details surrounding any redemption period enjoyed
by the Borrower's following a sale at foreclosure.
(xxi) At the Administrative Agent's sole option the
Administrative Agent shall have obtained the advice of its own
local counsel in the jurisdiction where the Facility is located on
the form and enforceability of any or all of the Financing
Documents at the Borrowers' expense.
(xxii) With regard to any Deed of Trust for a Facility
located in any state having such requirement, the Administrative
Agent shall have received evidence satisfactory to the
Administrative Agent that a Certificate of Need has been issued
for such Facility.
(xxiii) No Eligible Project may be added to the Borrowing
Base if the maximum availability which could be added to the
Borrowing Base thereby would cause the Borrowing Base to exceed
the then applicable Credit Facility Committed Amount; provided,
however that in the case of an Eligible Project to be constructed
or under construction, such Eligible Project may be added to the
Borrowing Base if sufficient equity is contributed by the
Borrowers to permit the Facility to be completed within the Credit
Facility Committed Amount and if all of the equity is funded prior
to any advance of the Loan for such Eligible Project.
Section 4.2 Conditions Precedent to Determining Availability Under
Borrowing Base
The Lenders shall not be obligated to include any Requisition for an
individual Eligible Project in the calculation of the Borrowing Base unless the
conditions described in Section 4.1 Conditions Precedent to Credit Facility
Closing and Addition of Deeds of Trust and the following additional conditions
shall have been satisfied with regard to such Eligible Project to the
Administrative Agent's satisfaction:
(a) The Administrative Agent shall have received a monthly
title report on each Eligible Project which is under construction from the
applicable title insurance company, indicating that since the last preceding
report, there has been no change in the status of title and no other exceptions
not theretofore approved by the Administrative Agent, if required by the terms
of the existing title insurance policy, the Administrative Agent shall have
received an endorsement which shall have the effect of advancing the effective
date of the policy to the date of the advance then being made and increasing the
coverage of the policy by an amount equal to the Requisition being verified if
the policy does not by its terms provide for such an increase.
(b) No Default or Event of Default shall have occurred and be
continuing under any Note or any of the other Financing Documents.
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(c) The Improvements shall not have been materially damaged by
fire or other casualty unless the Administrative Agent shall have received or
reasonably anticipates receiving proceeds of insurance sufficient in the
judgment of the Administrative Agent to effect a satisfactory restoration of
such Improvements in accordance with the terms of the Deed of Trust.
(d) The Administrative Agent shall have received written
evidence, in form and substance satisfactory to the Administrative Agent, to
the effect that all work requiring inspection by Governmental Authorities
having or claiming jurisdiction has been duly inspected and approved by such
authorities and by any rating or inspection organization, bureau, association
or office having or claiming jurisdiction.
(e) The representations and warranties made in Article III of
this Agreement and in this Agreement shall be true and correct in all material
respects on and as of the date of the advance with the same effect as if made
on such date.
(f) All terms and conditions of the Financing Documents
required to be met as of the date of the applicable advance shall have been met
to the complete satisfaction of the Administrative Agent.
(g) In the reasonable judgment of the Administrative Agent,
all work completed on the applicable Property at the time of the application
for an advance has been performed in a good and workmanlike manner and all
materials and fixtures usually furnished and installed at that stage of
construction have been furnished and installed and that all costs covered by
the Requisition have been paid by the Borrowers.
(h) At least Eighty-three percent (83%) of the Eligible
Projects in the Borrowing Base shall be Pool A Projects. The Administrative
Agent shall have determined whether each Eligible Project is a Pool A, Pool B
or Pool C Project.
(i) Before verifying any Requisition, the Administrative Agent
shall require the Borrowers to obtain from the applicable General Contractor
and if required by the applicable title insurance company from all
subcontractors and material suppliers acknowledgments of payment and releases
of liens and rights to claim liens for work performed or materials delivered
covered by such Requisition. All such acknowledgments and releases shall be in
form AIA Forms G706 and G706A.
(j) The Administrative Agent's Inspecting Engineer will
inspect work performed which is covered by each Requisition being verified.
Section 4.3 Conditions Under Which an Eligible Project is a Completed
Facility
The Administrative Agent shall verify that an Eligible Project is a
Completed Facility based on the satisfaction of the following additional
conditions and all Acquisition Projects shall also satisfy the following
conditions:
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(a) The Administrative Agent shall have received the final "as
built" Survey for the applicable Property.
(b) The Administrative Agent shall have received written
evidence from a qualified third party, in form and substance satisfactory to
the Administrative Agent, to the effect that the applicable Improvements have
been substantially completed in accordance with their Plans and Specifications.
(c) The Administrative Agent shall have received written
evidence, in form and substance satisfactory to the Administrative Agent, to
the effect that requisite certificates for permanent occupancy or completion of
the Improvements have been validly issued.
(d) Final waivers of liens of the General Contractor, and if
required by the applicable title insurance company, subcontractors, laborers
and material suppliers have been furnished to the Administrative Agent or, as
to any disputed lien or claim of lien, a bond in form and substance acceptable
to the Administrative Agent has been provided or other arrangements
satisfactory to the Administrative Agent have been made.
(e) The Administrative Agent shall have received a copy of an
operating License for the Facility or other evidence satisfactory to the
Administrative Agent that the Facility may be lawfully operated as contemplated
by the Financing Documents.
Section 4.4 Computation of Interest and Fees
All applicable fees and interest shall be calculated on the basis of a
year of 365 days for the actual number of days elapsed pursuant to the terms of
the Note and interest shall be payable monthly in arrears.
Section 4.5. Liens; Setoff
The Borrowers hereby grant to the Lenders a continuing lien and security
interest for all the Obligations upon any and all monies, securities, and other
property of the Borrowers and the proceeds thereof, now or hereafter held or
received by or in transit to, the Lenders, or any affiliate of any of the
Lenders, from or for any of the Borrowers, and also upon any and all deposits
(general or special) and credits of any of the Borrowers with any of the
Lenders, if any, at any time existing. During the continuance of any Event of
Default under this Agreement, each Lender is hereby authorized by any of the
Borrowers at any time and from time to time, without notice to the Borrowers,
to set off, appropriate and apply any or all items hereinabove referred to
against all Obligations then outstanding.
Section 4.6 Payment and Performance of Obligations
The payment and performance by the Borrowers of the Obligations shall be
absolute and unconditional, irrespective of any defense or any rights of
set-off, recoupment or counterclaim it might otherwise have against the
Lenders, or any of them, and the Borrowers shall pay absolutely
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net all of the Obligations, free of any deductions and without abatement,
diminution or set-off; and until payment in full of all of the Obligations, the
Borrowers: (a) will not suspend or discontinue any payments provided for in the
Note and (b) will perform and observe all of its other agreements contained in
this Agreement, including (without limitation) all payments required to be made
to the Administrative Agent, and (c) will not terminate or attempt to terminate
this Agreement or any of the other Financing Documents to which any of the
Borrowers is a party for any cause.
Section 4.7 Payments to Others for the Account of the Borrowers
At the option of the Lenders and without any request from the Borrowers,
and without waiving any of its rights hereunder, the Lenders may elect to cure
or avoid any default by the Borrowers under the Financing Documents by applying
amounts due hereunder or advancing the Lenders' own funds to the satisfaction
of the conditions of the Financing Documents and any amounts so applied shall
be part of the Loan and shall be secured by the Deeds of Trust and the other
Collateral. The Administrative Agent agrees to endeavor to give the Borrowers
notice of any such payment or performing such act and the amount of any payment
whether prior to or contemporaneously with its making such payment or
performance of such act; provided, however, that failure to give such notice
shall not constitute a waiver by the Lenders of, or constitute a defense to,
any of the rights of the Lenders under this Agreement or the Deeds of Trust,
including (without limitation) the right of the Lenders to repayment of the
amount of such payment.
Section 4.8 Prepayment
The Borrowers shall have the right to prepay the Loan in full or in
part, at any time and from time to time, upon five (5) days' prior written
notice to the Administrative Agent without premium or penalty. The foregoing
notwithstanding, in connection with any prepayment of a principal sum on any
day other than the last day of the Eurodollar Period applicable thereto, the
Borrowers shall pay to the Administrative Agent upon request by the
Administrative Agent, such amount as shall be sufficient to compensate any of
the Lenders for any and all losses or expenses which such Lender may sustain or
incur (including without limitation, any such loss or expense arising from the
redeployment of funds obtained by such Lender). Unless an Event of Default has
occurred, any partial prepayment shall be applied first to such breakage costs,
second to accrued and unpaid interest and third to the outstanding principal
balance of the Loan due and owing at maturity. Sums borrowed and repaid may be
readvanced. The Borrowers' obligations under this Section shall survive the
termination of this Agreement and the repayment of the Obligations.
Section 4.9 Requisitions for the Operating Reserve
No portion of any Requisition for costs included in the Operating
Reserve shall be verified until both a certificate of occupancy has been issued
by the applicable governmental authorities and, if applicable to the Facility,
an operating License has been issued for the Facility by the appropriate
Governmental Authority or Authorities. Advances from the Operating Reserve
shall be for the sole purpose of paying a portion of the Debt Service on the
Loan or net operating
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losses as shown on a monthly financial report for such Facility prepared in
accordance with the requirements set forth in this Agreement, and certified by
the Chief Financial Officer or Executive Vice President or President of the
Guarantor.
Section 4.10 Assignments
The Borrowers agree not to transfer, assign, pledge or hypothecate any
right or interest in any payment or advance due pursuant to this Agreement, or
any of the other benefits of this Agreement, without the prior written consent
of the Administrative Agent. Any assignment made or attempted by the Borrowers,
or any of them, without the prior written consent of the Administrative Agent
shall be void and of no effect. No consent by the Administrative Agent to an
assignment by the Borrowers shall release the Borrowers as the parties
primarily obligated and liable under the terms of this Agreement unless the
Borrowers shall be released specifically by the Administrative Agent in
writing. No consent by the Administrative Agent to an assignment shall be
deemed to be a waiver of the requirement of prior written consent by the
Administrative Agent with respect to each and every further assignment and as a
condition precedent to the effectiveness of such assignment.
Section 4.11 Liability of the Lenders
The Lenders shall in no event be responsible or liable to any person
other than the Borrowers for the disbursement of or failure to disburse the
Loan proceeds or any part thereof and neither the General Contractor nor any
subcontractor, laborer or material supplier shall have any right or claim
against the Lenders under this Agreement or the administration thereof. No
Lender shall be liable to the Borrowers for the failure of any other Lender to
fund its ratable portion of any advance pursuant to the Agency Agreement.
Section 4.12 Stored Materials
The Administrative Agent will permit inclusion of construction materials
(the "Stored Materials") to be included in Requisitions prior to their
incorporation into the Improvements if they have been fully paid for by or on
behalf of the applicable Borrower. The Borrowers shall securely store or cause
to be securely stored any Stored Materials.
Section 4.13 Limitations on Advances or Readvances
The following additional limitations on certain advances or readvances
of the Loan shall also apply:
(a) Interest Reserve. Except as provided in Section 2.7
Permitted Costs hereof, after the earlier of the issuance of certificate of
occupancy for a Facility or the expiration of the Construction Phase, no
further advances shall be made from the Interest Reserve in such Total
Development Budget.
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(b) Development Fee. The Development Fee will be advanced
ratably with the first twelve (12) monthly Requisitions.
(c) Operating Reserve. No advances from the Operating Reserve
shall be made until both a certificate of occupancy has been issued by the
applicable governmental authorities and, if applicable to the Facility, an
operating license has been issued for the Facility by the appropriate
Governmental Authority or Authorities. Advances from the Operating Reserve
shall be for the sole purpose of paying Debt Service or net operating losses as
shown on a monthly financial report for such Facility prepared in accordance
with the requirements set forth in this Agreement, and certified by the Chief
Financial Officer, Executive Vice President or President of the Guarantor.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to make available the Credit Facility, the
Borrowers represent and warrant to the Lenders that:
Section 5.1 Existence/Good Standing
Each Borrower is a limited partnership or a limited liability company
duly organized and existing and in good standing under the laws of the
jurisdiction of its formation, has the power to own its property and to carry
on its business as now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which each Facility owned by
such Borrower is located and in which the character of the properties owned by
it therein or in which the transaction of its business makes such qualification
necessary.
Section 5.2 Power and Authority
Each Borrower has full power and authority to execute and deliver this
Agreement and each of the other Financing Documents executed and delivered by
it, to make the borrowing hereunder, and to incur the Obligations, all of which
have been duly authorized by all proper and necessary partnership action. No
consent or approval of partners or members of, or lenders to, the Borrowers,
and no consent or approval of any Governmental Authority or any third party
payor on the part of the Borrowers, is required as a condition to the validity
or enforceability of this Agreement or any of the other Financing Documents
executed and delivered by any of the Borrowers or to the payment or performance
by the Borrowers of the Obligations.
Section 5.3 Binding Agreements
This Agreement and each of the other Financing Documents executed and
delivered by the Borrowers have been properly executed by the Borrowers,
constitute valid and legally binding obligations of the Borrowers, and are
fully enforceable against the Borrowers in accordance with their respective
terms.
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Section 5.4 Litigation
There are no proceedings pending before any court or arbitrator or
before or by any Governmental Authority which, in any one case or in the
aggregate, will cause a Material Adverse Change in any of the Borrowers or
affect the authority of any of the Borrowers to enter into this Agreement or
any of the other Financing Documents executed and delivered by any of the
Borrowers. There is no pending revocation, suspension, termination, probation,
restriction, limitation or non-renewal of any License, Participation Agreement
or any similar accreditation or approval organization or Governmental Authority
for healthcare providers, including, without limitation, the issuance of any
provisional License or other License with a term of less than twelve (12)
months, as a consequence of any sanctions imposed by any Governmental
Authority, nor is there any pending assessment of any civil or criminal
penalties by any Governmental Authority, the outcome of which, if determined
adversely to any of the Borrowers, could result in a Material Adverse Change in
any of the Borrowers. The Borrowers do not have any appeals regarding rates or
reimbursements currently pending or contemplated before any Governmental
Authority or any administrator of any third party payor or preferred provider
program or referral source, the outcome of which, if determined adversely to
any of the Borrowers, could result in a Material Adverse Change in any of the
Borrowers. There are no Medicare or Medicaid recoupments or recoupments of any
other third party payor being sought, requested or claimed, against any of the
Borrowers, the outcome of which, if determined adversely to any of the
Borrowers could materially impair any of the Borrowers' ability to pay the
Obligations, except as otherwise disclosed in writing to, and approved by, the
Administrative Agent.
Section 5.5 No Conflicting Agreements
There is (a) no provision of any Borrower's partnership agreement,
articles of incorporation or operating agreement and no provision of any
existing mortgage, indenture, contract or agreement binding on any of the
Borrower or affecting its property, and (b) to the knowledge of the Borrowers
no provision of law or order of court binding upon any of the Borrowers, which
would conflict with or in any way prevent the execution, delivery, or
performance of the terms of this Agreement or of any of the other Financing
Documents executed and delivered by any of the Borrowers, or which would be
violated as a result of such execution, delivery or performance, or, if so, all
necessary consents have been obtained.
Section 5.6 Financial Information
All financial statements or information hereto furnished to the Lenders
with respect to the Borrowers, each Facility and the Guarantor is complete and
correct in all material respects and fairly presents the financial condition of
the Borrowers and the financial condition of the Facilities. There are no
liabilities, direct or indirect, fixed or contingent, of any of the Borrowers
or the Guarantor which are not reflected in the their respective financial
statements or in the notes thereto. There has been no Material Adverse Change
in the financial condition or operations of any of the Borrowers or the
Guarantor since the financial statements dated
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December 31, 1998 (and to the Borrowers' and Guarantor's knowledge, no such
Material Adverse Change is pending), and neither any of the Borrowers nor the
Guarantor has guaranteed the obligations of, or made any investments in or
advances to, any company, individual or other entity, except as disclosed in
such information.
Section 5.7 No Default
None of the Borrowers are in default under or with respect to any
obligation under any agreement to which such Borrower is a party in any respect
which could result in a Material Adverse Change. There is no Event of Default
hereunder.
Section 5.8 Taxes
The Borrowers have filed or have caused to have been filed all federal,
state and local tax or informational returns which are required by law to be
filed, and has paid or caused to have been paid all Taxes as shown on such
returns or on any assessment received by them, to the extent that such Taxes
have become due, or which are required by law to be paid, unless and to the
extent only that such Taxes, assessments and governmental charges are currently
contested in good faith and by appropriate proceedings by the Borrowers and
adequate reserves therefor have been established as required under GAAP.
Section 5.9 Place(s) of Business and Location of Collateral
The Borrowers warrant that the address of the Borrowers' chief executive
office is as specified in EXHIBIT D attached hereto and made a part hereof and
that the address of each other place of business of any of the Borrowers, are
as disclosed in EXHIBIT D. The Collateral and all books and records pertaining
to the Collateral are and/or will be located at the addresses indicated on
EXHIBIT D. The Borrowers will immediately advise the Administrative Agent in
writing of the opening of any new place of business or the closing of any
existing place of business of any of the Borrowers, and of any change in the
location of the places where the Collateral, or any part thereof, or the books
and records concerning the Collateral, or any part thereof, are kept. EXHIBIT D
may be modified from time to time to add the locations of additional
Facilities.
Section 5.10 Title to Properties
The Borrowers have good and marketable title to all of their properties,
including, without limitation, the Property and the Collateral. The Property
and the Collateral are free and clear of mortgages, pledges, liens, charges and
other encumbrances other than the Permitted Liens.
Section 5.11 Margin Stock
None of the proceeds of the Loan will be used, directly or indirectly,
by any of the Borrowers for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring
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any indebtedness which was originally incurred to purchase or carry, any
"margin security" or "margin stock" within the meaning of Regulation U (12 CFR
ARTICLE 221), of the Board of Governors of the Federal Reserve System (herein
called "margin security" and "margin stock") or for any other purpose which
might make the transactions contemplated herein a "purpose credit" within the
meaning of said Regulation G or Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities Exchange Act of 1934 or the Small Business Investment
Act of 1958, as amended, or any rules or regulations promulgated under any of
such statutes.
Section 5.12 ERISA
With respect to any "pension plan", as defined in Section 3(2) of ERISA,
which plan is now or previously has been maintained or contributed to by any of
the Borrowers and/or by any Commonly Controlled Entity: (a) no "accumulated
funding deficiency" as defined in Code Section 412 or ERISA Section 302 has
occurred, whether or not that accumulated funding deficiency has been waived;
(b) no "reportable event" as defined in ERISA Section 4043 has occurred; (c) no
termination of any plan subject to Title IV of ERISA has occurred; (d) neither
any of the Borrowers nor any Commonly Controlled Entity has incurred a
"complete withdrawal" within the meaning of ERISA Section 4203 from any
multiemployer plan; (e) neither any of the Borrowers nor any Commonly
Controlled Entity has incurred a "partial withdrawal" within the meaning of
ERISA Section 4205 with respect to any multiemployer plan; (f) no multiemployer
plan to which any of the Borrowers or any Commonly Controlled Entity has an
obligation to contribute is in "reorganization" within the meaning of ERISA
Section 4241 nor has notice been received by any of the Borrowers or any
Commonly Controlled Entity that such a multiemployer plan will be placed in
"reorganization".
Section 5.13 Governmental Consent
Neither the nature of any of the Borrowers or of its business or
properties, nor any relationship between any of the Borrowers and any other
Person, nor any circumstance in connection with the making of the Loan, or the
offer, issue, sale or delivery of the Note is such as to require a consent,
approval or authorization of, or filing, registration or qualification with,
any Governmental Authority, on the part of any of the Borrowers, as a condition
to the execution and delivery of this Agreement or any of the other Financing
Documents, the borrowing of the principal amounts of the Loan or the offer,
issue, sale or delivery of the Note.
Section 5.14 Full Disclosure
The financial statements referred to in this ARTICLE V do not, nor does
this Agreement, nor do any written statements furnished by the Borrowers to the
Administrative Agent in connection with the making available of the Credit
Facility, contain any untrue statement of fact or knowingly omit a material
fact necessary to make the statements contained therein or herein not
materially misleading. The Borrowers have not failed to disclose any fact to
the Administrative Agent in writing which materially adversely affects or, will
or could prove to materially adversely affect the properties, business,
prospects, profits or condition (financial or
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otherwise) of any of the Borrowers or the ability of any of the Borrowers to
perform this Agreement or any of the other Financing Documents.
Section 5.15 Business Names and Addresses
The Borrowers have not conducted business under any name other than its
current names or tradenames or "Karrington" and has not conducted its business
in any jurisdiction other than those listed on EXHIBIT D. The Borrowers intend
to operate the Facilities under the names set forth on EXHIBIT D. The Borrowers
shall promptly notify the Administrative Agent of any change in the name of any
Facility.
Section 5.16 Licenses and Certifications
The Borrowers further represent and warrant to the Lenders that, with
respect to any License they possess or have applied for, (a) no Default or
Event of Default has occurred or is continuing under the terms of any of the
Licenses, or any condition to the issuance, maintenance, renewal and/or
continuance of any License, (b) the Borrowers have paid all fees, charges and
other expenses to the extent due and payable with respect to, and has provided
all information and otherwise complied with all material conditions precedent
to, the issuance, maintenance, renewal, and continuance of all Licenses, (c)
the Borrowers have not received any notice from any Governmental Authority
relating to any actual or pending suspension, revocation, restriction, or
imposition of any probationary use, of any License, nor has any License been
materially amended, supplemented, rescinded, terminated, or otherwise modified
except as otherwise disclosed in writing to, and approved by, the
Administrative Agent, (d) the Borrowers have not made any previous assignment
of any of the Licenses to any Person, and (e) no financing statement covering
any of the Licenses is on file in any public office except financing statements
in favor of the Lenders. Without implying any limitation to the other
representations and warranties contained in this Agreement, the Borrowers are
not required by any applicable Law of any state, county or city in which any of
the Facilities is located to obtain a certificate of need to operate any
Facility as an assisted living facility or, an independent living facility or
has applied for and obtained such Certificate(s) of Need. Licenses to operate
are required in all states where the Facilities are located and Certificates of
Need are also required in the State of New Jersey.
Section 5.17 Operating Agreements and Management Contracts
The Borrowers have furnished to the Administrative Agent photocopies of
all material Operating Agreements and Management Contracts entered into with
respect to the Facilities, and all amendments, supplements and modifications
thereto including, without limitation, the Management Agreement. The Borrowers
further represent and warrant to the Lenders that (a) all of the material
Operating Agreements and Management Contracts are or will be at the time of
execution and delivery thereof valid and binding on the parties thereto and in
full force and effect, (b) no Default or Event of Default has occurred or is
continuing under the terms of any of the material Operating Agreements and
Management Contracts, and no party thereto has attempted or threatened to
terminate any such Management Contract or Operating Agreement, (c) the
Borrowers have not made any previous assignment of any Operating Agreements
and
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Management Contracts to any Person, and (d) no financing statement covering any
of the Operating Agreements and Management Contracts is on file in any public
office, except financing statements in favor of the Lenders in connection with
the Credit Facility.
Section 5.18 Participation Agreements and Resident Agreements
The Borrowers have furnished to the Administrative Agent, on or before
the Facility Closing, the Borrowers' form of Resident Agreement used with
respect to all Facilities and, if requested by the Administrative Agent after
the occurrence and during the continuance of a Default, copies of all current,
executed Resident Agreements for any or all of the Eligible Projects.
(a) The Borrowers further covenant to the Lenders that, with
respect to the Participation Agreements, if any, (i) to the best of their
knowledge, all Participation Agreements will be at the time of execution and
delivery thereof valid and binding on the parties thereto and in full force and
effect, and (ii) all Participation Agreements will provide for payment to the
applicable Borrower for services rendered to residents. The Borrowers represent
and warrant that as of the date hereof it has not entered into any
Participation Agreement for any Facility.
(b) To the extent the Borrowers participates or will
participate in Medicare or Medicaid payment and reimbursement programs, the
Borrowers have complied and will comply with all notice and other requirements
under Title XVIII and Title XIX of the Social Security Act to enable the
Borrowers to participate in the Medicare and Medicaid payment and reimbursement
programs.
Section 5.19 Compliance with Laws
None of the Borrowers is in violation of any applicable laws of any
Governmental Authority pertaining to employment practices, health standards or
controls, environmental and occupational standards or controls or order of any
court or arbitrator, the violation of which, considered in the aggregate, would
result in a Material Adverse Change in any of the Borrowers. Each of the
Borrowers are in compliance with all accreditation standards and requirements
to which it is subject. Each of the Borrowers have obtained or will obtain all
Licenses necessary to the ownership of its property or to the conduct of its
activities which, if not obtained, could materially adversely affect the
ability of any of the Borrowers to conduct its activities of operating each
Facility as an assisted living facility, including, without limitation if and
as required by any Governmental Authorities for the dispensing, storage,
prescription, disposal, and use of drugs, medications and other "controlled
substances" and for the maintenance of cafeteria and other food and beverage
facilities or services or the condition (financial or otherwise) of any of the
Borrowers.
Section 5.20 Presence of Hazardous Materials or Hazardous Materials
Contamination
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None of the Borrowers has placed Hazardous Materials on any real
property owned, controlled or operated by any of the Borrowers or for which any
of the Borrowers are responsible except as described in the following sentence.
To the best of the Borrowers' knowledge, no Hazardous Materials are located on
any real property owned, controlled or operated by any of the Borrowers or for
which any of the Borrowers are responsible, except for reasonable quantities of
necessary supplies for use by the Borrowers in the ordinary course of its
current line of business and stored, used and disposed of in accordance with
applicable Laws, and no property owned, controlled or operated by any of the
Borrowers has ever been used as a manufacturing, storage, or dump site for
Hazardous Materials nor is such property affected by Hazardous Materials
Contamination.
Section 5.21 Nature of Credit Facility; Usury; Disclosures
Each of the Borrowers is a business or commercial organization, and the
Credit Facility is being made solely for the purpose of carrying on or
acquiring a business or commercial enterprise. The rate or rates of interest
charged on the Note do not, and will not, violate any usury Law or interest
rate limitation. The Credit Facility is not subject to the federal Consumer
Credit Protection Act (15 U.S.C. Section 1601 et. seq.) nor any other federal
or state disclosure or consumer protection laws. The Credit Facility is being
transacted solely for business or commercial purposes and not for personal,
family or household purposes.
Section 5.22 Compliance with Zoning
The Borrowers represent and warrant that the anticipated use of each
Eligible Project complies with applicable zoning ordinances, regulations and
restrictive covenants affecting such Land, all use requirements of any
Governmental Authority having jurisdiction have been satisfied, and no
violation of any law or regulation exists with respect thereto.
Section 5.23 Plans and Specifications
The Borrowers represent and warrant that, to the extent required by
applicable law or any effective restrictive covenant, the Plans and
Specifications for each Eligible Project have been approved by all Governmental
Authorities having or claiming jurisdiction and by any beneficiary of any such
restrictive covenant.
Section 5.24 Building Permits; Other Permits
The Borrowers represent and warrant that all building, construction and
other permits necessary or required in connection with the development of the
Land and the construction of the Improvements have been or, prior to any
advance under the Loan, will be, unless otherwise agreed to by the
Administrative Agent, validly issued and all fees and bonds required in
connection therewith have been paid or posted, as the circumstances may
require.
Section 5.25 Utilities
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The Borrowers represent and warrant that all utility services necessary
for the development of all the Land and the construction of the Improvements
for each Eligible Project and the operation thereof for their intended purpose
are or will be available at the boundaries of all the Land, including, without
limitation, telephone service, water supply, storm and sanitary sewer
facilities, natural gas (if available) and electric facilities.
Section 5.26 Access; Roads
The Borrowers represent and warrant that all roads and other accesses
necessary for the development of all the Land and the construction of all the
Improvements for all Eligible Projects and full utilization thereof for their
intended purposes have either been completed or the necessary rights of way
therefor have either been or will be acquired by the appropriate Governmental
Authorities or have been or will be dedicated to public use and accepted by
such Governmental Authorities and all necessary steps have been taken by the
Borrowers or such Governmental Authorities to assure the complete construction
and installation thereof by a date sufficient to ensure the timely completion
of the Improvements and in no event later than the Completion Date or such
Eligible Projects have access to a public road via a private road pursuant to
recorded easements satisfactory to the Administrative Agent.
Section 5.27 Other Liens
The Borrowers represent and warrant that except as otherwise provided in
the Financing Documents, the Borrowers have made no contract or arrangement of
any kind the performance of which by the other party thereto would give rise to
a lien on any Eligible Project.
Section 5.28 Defaults
The Borrowers represent and warrant that there is no default on the part
of any of the Borrowers under the Financing Documents and no event has occurred
and is continuing which, with notice or the passage of time, or both, would
constitute a default under the Note or any of the other Financing Documents.
Section 5.29 Survival; Updates of Representations and Warranties
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the date of this Agreement and the Loan made hereunder. The Lenders acknowledge
and agree that any and all representations and warranties contained in, or made
under, or in connection with, this Agreement may be amended, changed or
otherwise modified by the Borrowers at any time and from time to time after the
date of this Agreement so as to accurately reflect the matters represented and
warranted therein; provided, that such amendments, changes and/or modifications
are disclosed in writing to the Administrative Agent. The Lenders shall have no
obligation to waive any Event of Default due to any present or future
inaccuracy of such representation or warranty or to agree to any amendment,
change or modification of any such representation or warranty.
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Section 5.30 Accounts
With respect to all of the Borrowers' Accounts and to the best of the
Borrowers' knowledge (a) they are genuine, and in all respects what they
purport to be, and are not evidenced by a judgment, an instrument, or chattel
paper (unless such judgment has been assigned and such instrument or chattel
paper has been endorsed and delivered to the Administrative Agent); (b) they
represent undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in the invoices relating thereto; (c) the
services rendered which resulted in the creation of the Accounts have been
delivered or rendered to and accepted by the Account Debtor; (d) the amounts
shown on the Borrowers' books and records, with respect thereto are actually
and absolutely owing to the Borrowers and are not contingent for any reason;
(e) there are no set-offs, counterclaims or disputes known by the Borrowers or
asserted with respect thereto, and the Borrowers have made no agreement with
any Account Debtor thereof for any deduction or discount of the sum payable
thereunder except regular discounts allowed by the Borrowers in the ordinary
course of their business for prompt payment; (f) there are no facts, events or
occurrences known to any of the Borrowers which in any way impair the validity
or enforcement thereof or tend to reduce the amount payable thereunder; (g) all
Account Debtors thereof, to the best of the Borrower's knowledge, have the
capacity to contract; (h) the services furnished giving rise thereto are not
subject to any Liens other than Permitted Liens; (i) the Borrowers have no
knowledge of any fact or circumstance which would impair the validity or
collectibility thereof; and (j) there are no proceedings or actions known to
any of the Borrowers which are pending against any Account Debtor which might
result in any material adverse change in its financial condition.
Section 5.31 Year 2000.
Each Borrower has (i) completed a review and assessment of all areas
within its and each of its subsidiaries and Affiliates business and operations
that could be adversely affected by the "Year 2000 Problem" (that is, the
computer applications and devices containing imbedded microchips and other
systems will be able to perform date sensitive functions involving dates prior
to and any date after December 31, 1999), and (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, substantially completed implementation of that plan in accordance with
that timetable. Each Borrower reasonably believes that the Year 2000 Problem
will not have a material adverse effect upon its financial condition or
business operations or those of its Affiliates.
Section 5.32 Development of Eligible Projects
To the extent SDI is acting as development agent for any of the Eligible
Projects, the applicable Borrowers have entered into an oral agreement therefor
with SDI and all contacts entered into by SDI with respect thereto, including,
without limitation, the Architect's Contract and the Construction Contracts,
were executed with the knowledge and approval of and as agent for the
applicable Borrowers. In connection with such services as agent for any of the
Borrowers, SDI receives the Development Fee as and when payable pursuant to the
terms hereof.
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ARTICLE VI
CONDITIONS OF LENDING
The making of any advance under the Loan is subject to the conditions
set forth in this Agreement and the following conditions precedent:
Section 6.1 No Default
No Event of Default and no event which, with the giving of notice or the
passage of time or both, would become an Event of Default has occurred and is
existing or would result from the making of the Loan or any advance thereunder
and all representations and warranties set forth herein or in the other
Financing Documents are true and correct, both before and after the making of
the Loan or any advance thereunder.
Section 6.2 Opinion of Counsel for the Borrowers
At the Credit Facility Closing and any Facility Closing the Lenders
shall receive a written opinion of counsel for the Borrowers and the Guarantor
satisfactory in all respects to the Administrative Agent.
Section 6.3 Approval of Counsel for the Lenders
All legal matters incident to the Loan and all documents necessary in
the opinion of the Administrative Agent to make the Loan or the addition of
either an Eligible Project to the Borrowing Base or to add such Deeds of Trust
and related Collateral shall be satisfactory in all material respects to
counsel for the Lenders.
Section 6.4 Supporting Documents
The Administrative Agent shall receive at the Facility Closing and in
connection with the subsequent granting of a Lien on an Eligible Project: (a) a
certificate of the general partner or managing member of each of the Borrowers,
in a form acceptable to the Administrative Agent in all respects, dated as of
the date hereof and certifying (i) that attached thereto is a true, complete
and correct copy of resolutions duly adopted by the partners or members of each
of the Borrowers authorizing the execution and delivery of this Agreement, the
Note and the other Financing Documents, the borrowing thereunder, and the
performance of the Obligations, and (ii) as to the incumbency and specimen
signature of the authorized officer of the general partner or managing member
of the Borrowers executing this Agreement, the Note and the other Financing
Documents; (b) such other documents as the Administrative Agent may reasonably
require the Borrowers and/or the partners or members of the Borrowers to
execute, in form and substance acceptable to the Administrative Agent; and (c)
such additional information, instruments, opinions, documents, certificates and
reports as the Administrative Agent may reasonably deem necessary.
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Section 6.5 Financing Documents
All of the Financing Documents required by the Administrative Agent
whether at the Credit Facility Closing or any subsequent Facility Closing shall
be executed, delivered and, if deemed necessary by the Administrative Agent,
recorded, all at the sole expense of the Borrowers.
Section 6.6 Insurance
The Borrowers shall have satisfied the Administrative Agent that any and
all insurance required by this Agreement is in effect as of the date of this
Agreement or as of the date of the addition of a Deed of Trust and related
Collateral, and that, to the extent required by the Financing Documents, the
Lenders have been named as an insured lienholder.
Section 6.7 Security Documents
In order to perfect the lien and security interest created by this
Agreement, the Borrowers shall have executed and delivered to the
Administrative Agent all Security Documents (in form and substance acceptable
to the Administrative Agent in its sole discretion) deemed necessary by the
Administrative Agent, in a sufficient number of counterparts for recordation,
and, at the Borrowers' sole expense, shall record all such financing statements
and Security Documents, or cause them to be recorded, in all public offices
deemed necessary by the Administrative Agent.
Section 6.8 Joinder Agreement
In order to perfect the lien and security interest of the Lenders in the
Collateral related to the construction and operation of any Facility encumbered
by a Deed of Trust provided by an Additional Borrower, such Additional Borrower
shall execute and deliver to the Administrative Agent, a Joinder Agreement
joining in the Note as maker and in such assignments of Collateral and such
other Security Documents as the Administrative Agent may require or shall
execute Security Documents as the Administrative Agent may require each in
sufficient number of counterparts for recordation, if required by the
Administrative Agent, at the Borrowers' sole expense. The Borrowers or the
Administrative Agent shall record all financing statements and other Security
Documents, or cause them to be recorded, in all public offices deemed necessary
to the Administrative Agent.
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
Until payment in full and the performance of all of the Obligations
hereunder, the Borrowers shall:
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Section 7.1 Financial Statements
Furnish to the Administrative Agent:
(a) Quarterly Statements. Not later than forty-five (45) days
after the close of each of the Borrowers' fiscal quarters internally prepared,
consolidated and consolidating financial statements of the Borrowers and a
balance sheet on a year-to-date basis and as of the close of such period and an
income and expense statement for such period and a Compliance Certificate in
the form of Exhibit G attached hereto, certified by the chief financial officer
of the Borrowers' general partner or managing member unless such report is
included in the quarterly report of the Guarantor; and
(b) Annual Statements. Not later than one hundred twenty (120)
days after the close of each of the Borrowers' fiscal years, (i) a copy of the
consolidated annual financial statement of the Borrowers and its Wholly Owned
Subsidiaries in reasonable detail satisfactory to the Administrative Agent,
prepared in accordance with GAAP and audited by an independent certified public
accountant satisfactory to the Administrative Agent, which financial statement
shall include a balance sheet of the Borrowers and its Wholly Owned
Subsidiaries, as at the end of such fiscal year and the related statements of
operations and retained earnings and cash flow statements for such fiscal year
in a format acceptable to the Administrative Agent and a Compliance Certificate
in the form of EXHIBIT G attached hereto, (ii) an unqualified letter or opinion
of the accountant who examined and audited the Borrowers' financial statement
and stating whether anything in such independent accountant's examination has
revealed the occurrence of an event which constitutes an Event of Default under
the Financing Documents or which would constitute such an Event of Default with
the giving of notice or the lapse of time or both, (iii) if requested by the
Administrative Agent a copy of the Management Letter prepared by the auditor,
and (iv) the related statements of operations and retained earnings and cash
flows in a format acceptable to the Administrative Agent; and
(c) Monthly Operating Reports. Beginning with the first
Operating Month (as hereinafter defined), not later than thirty (30) days after
the last day of each such calendar month, operating statements for each
Eligible Project for such month, including an income and expense statement for
such period and census and billing reports with respect to each Eligible
Project then operating for such period;
(d) Tax Returns. Not later than thirty (30) days after the
date of filing, the federal and state income tax returns for the Borrower for
the year in question as well as any requests for extensions filed in connection
therewith; and
(e) Other Quarterly Reports. (i) Borrowing Base Reports (as
and when described in Section 2.1 The Loan (d) hereof, (ii) not later than
fifteen (15) days after the close of each of the Borrowers' fiscal quarters an
estimate of the occupancy numbers for each Eligible Project as of the end of
such quarters which report shall not be used to measure compliance with
covenants described for EXHIBIT G but will assist the Administrative Agent in
evaluating
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additional Facilities proposed for inclusion in the Borrowing Base and, (iii)
in connection with each Borrowing Base Report, a report describing each then
Pool B or Pool C Project, including its performance in the preceding quarter
and projected performance for subsequent quarters.
(f) Other Information. With reasonable promptness such
additional information, reports or statements as the Administrative Agent may
from time to time reasonably request.
(g) Certification. All required financial statements,
required pursuant to Sub-paragraphs (a) and (b) hereof shall include the
following certification:
"The undersigned as _____________ of ____________ certifies that
the financial information contained in the financial statement dated
_________, is true and complete as of this date. This statement is
provided to Bank of America, N.A. (the "Bank") as agent for the Lenders
set forth in the Third Amended and Restated Agency Agreement dated March
14, 2000 as amended, restated or substituted from time to time for the
purpose of obtaining credit or in fulfillment of the terms and
conditions of credit already provided. Accordingly, it is intended that
the Bank may rely on this information".
Section 7.2 Taxes and Claims
Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or any of its income or properties prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a lien or charge upon any of its properties; provided, however, the
Borrowers shall not be required to pay any such tax, assessment, charge, levy
or claim, the payment of which is being contested in good faith and by proper
proceedings.
Section 7.3 Legal Existence
Maintain their existence as limited partnership or limited liability
companies in good standing in the states of their formation and in each
jurisdiction where they are required to register or qualify to do business.
Section 7.4 Conduct of Business and Compliance with Laws
Do or cause to be done all things necessary to obtain, enter into,
preserve and to keep in full force and effect its material rights and its trade
names, patents, trademarks and Licenses, Participation Agreements, and
Operating Agreements and Management Contracts which are necessary for the
operation of each Facility as an adult assisted living facility (or independent
living facility, as applicable) as contemplated by the Borrowers, engage in and
continue to engage substantially only in the business of owning and operating
an adult assisted living facility (or independent living facility, as
applicable) and related services in compliance with all applicable laws of the
state in which the applicable Facility is located or any other Governmental
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Authority having jurisdiction over such Facility, and comply with all
applicable Laws, including, without limitation, regulations issued under the
Omnibus Budget Reconciliation Act of 1987 (OBRA'87) (Pub.L.No. 100-203), as
amended, and observe the valid requirements of Governmental Authorities, and
perform the terms of all Participation Agreements to which it is a party, the
noncompliance with or the nonobservance of which might materially interfere
with the performance of its Obligations or the proper or prudent conduct of its
business or the applicable Property. In addition, the Borrowers covenant and
agree that they will:
(a) obtain and maintain in full force and effect all Licenses
necessary to the acquisition and/or ownership and/or operation of each Facility
including, without limitation, Licenses and other approvals related to the
storage, dispensation, use, prescription and disposal of drugs, medications and
other "controlled substances" and, to the extent offered by the Borrowers, the
maintenance of cafeteria and other food and beverage facilities or services;
(b) administer, maintain and operate (or will cause to be
administered, maintained and operated) each Facility as a revenue-producing
assisted living facility (or independent living facility, as applicable);
(c) to the extent the Borrowers participate in any such
programs, maintain and operate each Facility to meet the standards and
requirements and to provide healthcare of such quality and in such manner as
would enable the Borrowers to participate in, and provide services in
connection with, recognized medical and healthcare insurance programs;
(d) obtain, maintain and comply with all conditions for the
continuance of, all Licenses, including without limitation, Licenses which may
at any time be required by the state in which the applicable Facility is
located or other appropriate governmental entity, necessary or desirable for
the operation of each Facility as an adult assisted living facility (or
independent living facility, as applicable); and
(e) to the extent the Borrowers presently participate or in
the future will participate in such programs, obtain, maintain and comply with
all conditions for the continuance of certification from each applicable
Governmental Authority that the Borrowers meet all conditions for participation
in the Medicare and Medicaid programs.
Section 7.5 Use of Proceeds
Use the proceeds of the Loan for the purpose or purposes set forth in
Recital E above and Section 8.1 Borrowings and Section 8.14 Distributions to
Partners herein and, without the prior written consent of the Administrative
Agent for no other purpose or purposes.
Section 7.6 Insurance
Provide or cause to be provided to the Administrative Agent and maintain
in full force and effect at all times during the term of the Loan, such
policies of insurance as may be required by the terms of the Financing
Documents from a company or companies, and in form and
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amounts satisfactory to the Administrative Agent including, by way of example
and not by way of limitation, at least the following:
(a) During any period of construction in or on an Eligible
Project, "builder's risk" insurance, including vandalism and malicious mischief
and collapse endorsements in amounts not less than the replacement cost of the
Improvements being constructed or of the Property and naming the Administrative
Agent on behalf of the Lenders as a loss payee in the mortgagee clause thereof;
(b) Casualty or physical damage insurance coverage for each
Eligible Project affording protection against loss or damage by fire or other
hazards covered by the standard all-risk fire and hazard insurance policy with
"extended coverage" endorsement and such other risks as shall be customarily
covered with respect to projects similar in construction, location and use as
the Property, or as the Administrative Agent may from time to time otherwise
require in amounts necessary to prevent the application of any co-insurance
provisions of any applicable policies up to an amount not less than the greater
of the full insurable value of the Improvements (as defined in the Deed of
Trust) or the aggregate principal amount of the Obligations; no policy of
insurance shall be written such that the proceeds thereof will produce less
than the minimum coverage required by this Section by reason of co-insurance
provisions or otherwise; the term "full insurable value" means the actual
replacement cost of the Property (as defined in the Deed of Trust) (excluding
foundation and excavation costs and costs of underground flues, pipes, drains
and other uninsurable items); and as to Eligible Projects naming the
Administrative Agent on behalf of the Lenders as loss payee in the mortgagee
clause thereof;
(c) General public liability insurance in amounts usually
carried by similar operations against claims for bodily injury or death and
property damage insurance for claims for damage to property (including loss of
use) occurring upon, in or about the Property naming the Administrative Agent
on behalf of the Lenders as loss payee thereunder, with such insurance to
afford protection to the limit of not less than $5,000,000 for the aggregate of
all occurrences during any given annual policy period for each Eligible
Project;
(d) Workers' compensation insurance in accordance with the
requirements of applicable law or regulation naming the Administrative Agent on
behalf of the Lenders as loss payee thereunder;
(e) Business interruption insurance naming the Lenders as
additional insureds with respect to each Facility once a certificate of
occupancy has been issued for such Facility in an amount equal to at least
twelve (12) months' debt service on the applicable Loan; and
(f) To the extent that healthcare professionals are employed
by any of the Borrowers or the Management Company, medical liability,
malpractice and other healthcare professional liability insurance protecting
the Borrowers and its employees against claims arising from the professional
services performed by the Borrowers or the Management Company and their
employees with limits of (i) not less than One Million Dollars ($1,000,000.00)
with respect to injury or death for each person or occurrence, and (ii) not
less than Three Million Dollars
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($3,000,000.00) in the aggregate for claims made for injury or death in any one
year, and an umbrella policy insuring against such liability in an aggregate
amount of Five Million Dollars ($5,000,000.00). In addition, the Borrowers
shall ensure that all healthcare providers with whom any of the Borrowers
contracts to provide services at any Facility are insured against claims
arising from such services with limits as set forth in clauses (i) and (ii)
above.
The Borrowers shall file with the Administrative Agent, upon its
request, a detailed list of the insurance then in effect and stating the names
of the insurance companies, the amounts and rates of the insurance, dates of
the expiration thereof and the properties and risks covered thereby. Each
policy of insurance shall (A) be issued by one or more recognized, financially
sound and responsible insurance companies approved by the Administrative Agent
and which are qualified or authorized by the laws of the state in which the
applicable Facility is located to assume the risk covered by such policy, (B)
with respect to the insurance described under the preceding subsections (a),
(b) and (f) have attached thereto standard noncontributing, non-reporting
mortgagee clauses in favor of and entitling the Lenders without contribution to
collect any and all proceeds payable under such insurance, (C) provide that
such policy shall not be canceled or modified without at least thirty (30) days
prior written notice to the Administrative Agent, and (D) provide that any loss
otherwise payable thereunder shall be payable notwithstanding any act of
negligence of any of the Borrowers which might, absent such agreement, result
in a forfeiture of all or a part of such insurance payment. Unless an escrow
account has been established for insurance premiums pursuant to the provisions
of a Deed of Trust, the Borrowers shall promptly pay all premiums when due on
such insurance and, not less than ten (10) days prior to the expiration date of
each such policy, the Borrowers will deliver to the Administrative Agent a
renewal policy or policies marked "premium paid" or other evidence of payment
satisfactory to the Administrative Agent. The Borrowers will immediately give
the Administrative Agent notice of any cancellation of, or change in, any
insurance policy. The Lenders shall not, because of accepting, rejecting,
approving or obtaining insurance, incur any liability for (i) the existence,
nonexistence, form or legal sufficiency thereof, (ii) the solvency of any
insurer, or (iii) the payment of losses.
Section 7.7 Flood Insurance
If required by applicable law or regulation, provide or cause to be
provided to the Administrative Agent a separate policy of flood insurance in
the aggregate amount of the applicable Loan or the maximum limit of coverage
available with respect to the Property, whichever is the lesser, from a company
or companies satisfactory to the Administrative Agent and written in strict
conformity with the Flood Disaster Protection Act of 1973, as amended, and all
applicable regulations adopted pursuant thereto. In the event that flood
insurance is not required by applicable law or regulation to be provided in
connection with the applicable Loan or is not otherwise available with respect
to the Property, the Borrowers shall supply the Administrative Agent with
written evidence, in form and substance satisfactory to the Administrative
Agent, to that effect. Any such policy shall provide that the policy may not be
surrendered, canceled or substantially modified (including, without limitation,
cancellation for
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nonpayment of premiums) without at least thirty (30) days' prior written notice
to any and all insureds named therein, including the Lenders.
Section 7.8 Maintenance of Properties
Keep its properties, whether owned in fee or otherwise, or leased,
including, without limitation, all of the Property, in good operating
condition; make all proper repairs, renewals, replacements, additions and
improvements thereto needed to maintain such properties in good operating
condition; comply with the provisions of all leases to which it is a party or
under which it occupies property so as to prevent any loss or forfeiture
thereof or thereunder; and comply with all laws, rules, regulations and orders
applicable to its properties or business or any part thereof.
Section 7.9 Maintenance of the Collateral
Not permit anything to be done to the Collateral which may impair the
value thereof. Any of the Lenders or an agent designated by such Lender, shall
be permitted to enter the premises of any of the Borrowers and examine, audit
and inspect the Collateral at any reasonable time and from time to time without
notice. The Lenders shall not have any duty to, and the Borrowers hereby
release the Lenders from, all claims of loss or damage caused by the delay or
failure to collect or enforce any of the Accounts or Receivables or to preserve
any rights against any other party with an interest in the Collateral.
Section 7.10 Other Liens, Security Interests, etc.
Keep the Collateral and the Property free from all liens, security
interests and claims of every kind and nature, other than Permitted Liens;
provided, the Borrowers may lease office Equipment and other Equipment in the
used in normal course of its business for the operation of a Facility provided
the total implied cost of such leased Equipment at any Eligible Project shall
not exceed $75,000 at any one time.
Section 7.11 Defense of Title and Further Assurances
At its expense defend the title to the Collateral (or any part thereof),
and promptly upon request execute, acknowledge and deliver any financing
statement, renewal, affidavit, deed, assignment, continuation statement,
security agreement, certificate or other document the Administrative Agent may
reasonably require in order to perfect, preserve, maintain, protect, continue
and/or extend any lien or security interest granted to the Lenders under this
Agreement or any of the Security Documents and its priority. The Borrowers
shall pay to the Administrative Agent, on demand all taxes, costs and expenses
incurred by any of the Lenders, in connection with the preparation, execution,
recording and filing of any such document or instrument.
Section 7.12 Subsequent Opinion of Counsel as to Recording Requirements
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Provide to the Administrative Agent a subsequent opinion of counsel as
to the filing, recording and other requirements with which any of the Borrowers
have complied to maintain the liens and security interests in favor of the
Lenders in the Collateral in the event that the Borrowers shall transfer its
principal place of business or the office where it keeps its records pertaining
to the Accounts and Receivables.
Section 7.13 Books and Records
Keep and maintain accurate books and records, make entries on such books
and records in form reasonably satisfactory to the Administrative Agent
disclosing the Lenders' assignment of, and security interest in and lien on,
the Collateral and all collections received by the Borrowers on its Accounts,
furnish to the Administrative Agent promptly upon request such information,
reports, contracts, invoices, lists of purchases of Inventory (showing names,
addresses and amount owing) and other data concerning Account Debtors and the
Borrowers' Accounts and Inventory and all contracts and collection(s) relating
thereto as the Administrative Agent may from time to time specify, unless the
Administrative Agent shall otherwise consent in writing, keep and maintain all
such books and records mentioned in (a) above only at the addresses listed in
EXHIBIT D, and permit any person designated by any of the Lenders to enter the
premises of the Borrowers and examine, audit and inspect the books and records
at any reasonable time and from time to time.
Section 7.14 Collections
Until such time as the Administrative Agent shall notify the Borrowers
of the revocation of such privilege following an Event of Default, at its own
expense have the privilege for the account of and in trust for the Lenders of
collecting its Accounts and receiving in respect thereto all items of payment
and shall otherwise completely service all of the Accounts including (i) the
billing, posting and maintaining of complete records applicable thereto, and
(ii) the taking of such action with respect to such Accounts as the
Administrative Agent may reasonably request or in the absence of such request,
as the Borrowers may deem advisable; and in its discretion, grant, in the
ordinary course of business, to any Account Debtor, any rebate, refund or
adjustment to which the Account Debtor may be lawfully entitled, and may
accept, in connection therewith, the return of goods, the sale or lease of
which shall have given rise to an Account. The Administrative Agent may, at its
option but solely in accordance with applicable law, at any time or from time
to time after the occurrence of an Event of Default hereunder, revoke the
collection privilege given to the Borrowers herein by either giving notice of
its assignment of, and lien on the Collateral, subject to the provisions of
Section 3.1 Collateral hereof, to the Account Debtors or giving notice of such
revocation to the Borrowers.
Section 7.15 Notice to Account Debtors and Escrow Account
In the event that (a) a Default or an Event of Default exists, or (b)
demand has been made for any or all of the Obligations, promptly upon the
request of the Administrative Agent in such form and at such times as
reasonably specified by the Administrative Agent, give notice of the
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Lenders' lien on the Accounts to the Account Debtors requiring those Account
Debtors which are permitted by applicable law to make payments thereon directly
to the Administrative Agent.
Section 7.16 Business Names
Immediately notify the Administrative Agent of any change in the name or
names under which they conduct their business.
Section 7.17 ERISA
With respect to any pension plan which any of the Borrowers and/or any
Commonly Controlled Entity maintains or contributes to, either now or in the
future, that: (a) such bonding as is required under ERISA Section 412 will be
maintained; (b) as soon as practicable and in any event within 15 days after
any of the Borrowers or any Commonly Controlled Entity knows or has reason to
know that a "reportable event" has occurred or is likely to occur, the
Borrowers will deliver to the Administrative Agent a certificate signed by its
chief financial officer setting forth the details of such "reportable event";
(c) neither the Borrowers nor any Commonly Controlled Entity will: (i) engage
in or permit any "prohibited transaction" (as defined in ERISA Section 406 or
Code Section 4975) to occur; (ii) cause any "accumulated funding deficiency" as
defined in ERISA Section 302 and/or Code Section 412; (iii) terminate any
pension plan in a manner which could result in the imposition of a lien on the
property of the Borrowers pursuant to ERISA Section 4068; (iv) terminate or
consent to the termination of any multiemployer plan; (v) incur a complete or
partial withdrawal with respect to any multiemployer plan within the meaning of
ERISA Sections 4203 and 4205; and (d) within 15 days after notice is received
by any of the Borrowers or any Commonly Controlled Entity that any
multiemployer plan has been or will be placed in "reorganization" within the
meaning of ERISA Section 4241, the Borrowers will notify the Administrative
Agent to that effect. Upon the Administrative Agent's request, the Borrowers
will deliver to the Administrative Agent a copy of the most recent actuarial
report, financial statements and annual report completed with respect to any
"defined benefit plan", as defined in ERISA Section 3(35).
Section 7.18 Change in Management
Notify the Administrative Agent in advance of any change of the
Management Company for any Facility.
Section 7.19 Management
(a) Subject to the terms of (i) the Management Fee Subordination
Agreement by and among SEAL, SALMI and the Administrative Agent dated December
23, 1997 as amended and confirmed pursuant to the Confirmation of and Amendment
to Security Documents dated July 29, 1999 or (ii) any Management Fee
Subordination Agreement signed in connection with a Facility Closing
(individually or collectively, the "Management Fee Subordination Agreement"),
the Borrowers shall cause SALMI to agree to subordinate payment of any and all
management fees under, or in connection with, the Management Agreement (the
"Management Fees") to
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payment of the Obligations, in accordance with the terms and conditions of one
or more subordination agreements in form and content acceptable to the
Administrative Agent in its reasonable discretion, and not amend, restate,
supplement, terminate, cancel or otherwise modify any of the terms or
conditions of such Management Agreement, in any material respect, without the
prior written consent of the Administrative Agent, and (b) terminate the
Management Agreement upon receipt of notice from the Administrative Agent
directing the Borrowers to terminate the Management Agreement after the
occurrence of an Event of Default, and, if requested to do so by the
Administrative Agent, enter into a management agreement for the management of
any Facility with an independent manager. The Management Agreement shall be
approved in writing by the Administrative Agent prior to execution. A fully
executed copy of the Management Agreement shall be delivered to the
Administrative Agent by the Borrowers promptly after it is signed.
Section 7.20 Surveys
Upon the Administrative Agent's request from time to time as
construction of a Facility progresses and upon the completion of the
construction of the Improvements, the Borrowers shall furnish the
Administrative Agent with a Survey with a current certification to the
Administrative Agent by a registered land surveyor of the jurisdiction in which
the Land is located. At any time the Borrowers are required to furnish a Survey
to the Administrative Agent pursuant to the terms of this Agreement, the
Borrower shall also furnish an original print thereof to the title insurance
company and such Survey shall not be sufficient for the purposes of this
Agreement unless and until the title insurance company shall advise the
Administrative Agent, by endorsement to the title insurance policy or
otherwise, that the Survey discloses no violations, encroachments or other
variances from applicable set-backs or other restrictions except such as the
Administrative Agent and its counsel shall approve.
Section 7.21 Inspections; Cooperation; Payment of Inspecting Engineer
The Borrowers shall permit the Lenders and their duly authorized
representatives (including, without limitation, the Inspecting Engineer) to
enter upon any of the Land, to inspect the Improvements and any and all
materials to be used in connection with the development of any of the Land
and/or the construction of the Improvements, to examine all detailed plans and
shop drawings and similar materials as well as all records and books of account
maintained by or on behalf of the Borrowers relating thereto and to discuss the
affairs, finances and accounts pertaining to any Facility and any of the
Improvements with representatives of the Borrowers. The Borrowers shall at all
times cooperate and cause the General Contractor and each and every one of its
subcontractors and materialmen to cooperate with the Lenders and their duly
authorized representatives (including, without limitation, the Inspecting
Engineer) in connection with or in aid of the performance of the Administrative
Agent's or Lenders' functions under this Agreement. The reasonable fees of any
Inspecting Engineer engaged or employed by the
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Administrative Agent in connection with or in aid of the performance of the
Administrative Agent's or the Lenders' functions under this Agreement shall be
paid by the Borrowers.
Section 7.22 Vouchers and Receipts
The Borrowers shall furnish to the Administrative Agent, promptly on
demand, any contracts, bills of sale, statements, receipted vouchers or
agreements pursuant to which any of the Borrowers has any claim of title to any
materials, fixtures or other articles delivered or to be delivered to the Land
or incorporated or to be incorporated into any of the Improvements. The
Borrowers shall furnish to the Administrative Agent, promptly on demand, a
verified written statement, in such form and detail as the Administrative Agent
may require, showing all amounts paid for labor and materials and all items of
labor and materials furnished or to be furnished for which payment has not been
made and the amounts to be paid therefor.
Section 7.23 Payments for Labor and Materials
The Borrowers shall pay when due all bills for services or labor
performed and materials supplied in connection with the development of the Land
and the construction of the Improvements. In the event any mechanics' lien or
other lien or encumbrance shall be filed or attached against the Property
without the prior written consent of the Administrative Agent in each instance,
the Borrowers covenant and agree that, within thirty (30) days after receipt of
notice from any source of the filing of such lien, the Borrowers will promptly
discharge the same by payment or filing bond or otherwise as permitted by law;
and if the Borrowers fail to do so, the Administrative Agent may, at its
option, in addition to, and not in limitation of, all other rights and remedies
of the Administrative Agent in the Event of Default by the Borrowers, and
without regard to the priority of said mechanics' lien or other lien or
encumbrance, pay the same, and all amounts expended by the Administrative Agent
for such purpose shall constitute loans to the Borrowers and shall be secured
by the Deed of Trust and the other Financing Documents, and be due and payable
forthwith by the Borrowers to the Administrative Agent with interest thereon at
the Reimbursement Rate provided for in the Deed of Trust.
Section 7.24 Correction of Construction Defects
Promptly following any demand by the Administrative Agent, the Borrowers
shall correct or cause the correction of any structural defects in the
Improvements and any material departures or deviations from the Plans and
Specifications, as determined by the Administrative Agent in its sole but
reasonable discretion, not approved in writing by the Administrative Agent.
Section 7.25 Fees and Expenses; Indemnity
Pay all reasonable fees, charges, costs and expenses required to satisfy
the conditions of the Financing Documents. The Borrowers shall hold the Lenders
harmless and indemnify the Lenders against all claims of brokers and "finders"
arising by reason of the execution and delivery of the Financing Documents or
the consummation of the transaction contemplated hereby.
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Section 7.26 Governmental Surveys or Inspections
Furnish to the Administrative Agent upon its request, within thirty (30)
days of receipt thereof, copies of any and all annual surveys or inspections
performed by any Governmental Authority or accreditation or certification
organization with respect to any Facility.
Section 7.27 Cost Reports
Prepare and file all applicable cost reports to all third-party payors,
if any, to the extent required by any such third-party payor and, within thirty
(30) days thereafter, notify the Administrative Agent of any settlement of any
cost report disclosed to the Administrative Agent as being open or unsettled as
of the Closing Date to the extent any such cost report would have a materially
adverse effect on the Borrowers.
Section 7.28 Updated Appraisals
In addition, the Administrative Agent shall have the right but not the
obligation to require annual updated appraisals of any or all the Property and
the Facilities, which appraisals shall be prepared by an appraiser or
appraisers designated by the Administrative Agent and shall be in all respects
reasonably acceptable to the Administrative Agent which appraisals shall
include, if deemed necessary by the Administrative Agent, in its reasonable
discretion, updated discounted cash flow analysis, inspections of and
commentary on the physical status of the applicable Facility and an engineering
review. The basis of the appraisal calculations shown on such appraisal reports
and all other aspects of the appraisal reports must be satisfactory to the
Administrative Agent in all material respects. The release of such appraisal
reports by the Administrative Agent to the Borrowers shall be at the
Administrative Agent's sole option if the Borrowers have not paid the cost of
such appraisal. If the Borrowers have paid the cost of the appraisal, a copy of
the appraisal will be provided to the Borrowers upon their signing of the
Administrative Agent's standard appraisal release letter provided an Event of
Default has not occurred and is not continuing. The Borrowers shall reimburse
the Administrative Agent upon demand for all costs and expenses incurred by any
of the Lenders with respect to the preparation and review of all future
appraisals required pursuant to the terms hereof, if either (i) such appraisal
is required by law or banking regulation, (ii) an event of default has occurred
under the Financing Documents, or (iii) the Administrative Agent has reason to
believe a change in value has occurred in the Facility being appraised due to
an adverse change in the Facility's occupancy status or operating performance.
Section 7.29 Notification of Certain Events, Events of Default and
Adverse Developments
Promptly give written notice to the Administrative Agent who will
forward a copy of the notice to the Lenders upon obtaining knowledge of the
occurrence of any of the following:
(a) any Event of Default under the Financing Documents;
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(b) any event, development or circumstance whereby the
financial statements furnished under the Financing Documents fail in any
material respect to present fairly, in accordance with GAAP, the financial
condition and operational results of the Borrowers;
(c) any judicial, administrative or arbitral proceeding
pending against any of the Borrowers or any judicial or administrative
proceeding known by the Borrowers to have been threatened against any of them
in a written communication which threatened proceeding, if adversely decided,
could cause a Material Adverse Change in any of the Borrowers;
(d) the revocation, suspension, probation, restriction,
limitation or refusal to renew, or any administrative procedure then in process
for the revocation, suspension, probation, restriction, limitation, or refusal
to renew, of any License, or the decertification, revocation, suspension,
probation, restriction, limitation, or refusal to renew, or the pending,
decertification, revocation, suspension, probation, restriction, limitation, or
refusal to renew or any administrative procedure then in process for any
participation or eligibility in any third party payor program in which any of
the Borrowers elects to participate, including, without limitation, Medicare,
Medicaid or other private insurer programs or any accreditation of any of the
Borrowers, or the issuance or pending issuance of any License for a period of
less than twelve (12) months, as a consequence of sanctions imposed by any
Governmental Authority, or the assessment or pending assessment, of any civil
or criminal penalties by any Government Authority, any third party payor or any
accreditation organization or Person, which could materially adversely affect
the financial condition or operations of any of the Borrowers or an Affiliate
(present or prospective) as determined by the Administrative Agent, in its sole
but reasonable discretion;
(e) any action, including, but not limited to, the filing of
any certificate of need application if required by law, the amendment of any
facility license or certification, or the issuance of any new license or
certification for any Facility, under which any of the Borrowers proposes (i)
to develop a new facility or service and/or (ii) eliminate, materially expand
or materially reduce any service;
(f) any actual contingent liability or a potential contingent
liability threatened or noticed in a written communication to any of the
Borrowers of $50,000 or more per Facility;
(g) any other development in the business or affairs of the
Borrower results in a Material Adverse Change; and
(h) in each case listed in clauses (a) through (g), inclusive,
of this Section describing in detail satisfactory to the Administrative Agent
the nature thereof and, in the case, if any, of notification under clause (a),
the action the Borrowers propose to take with respect thereto or a statement
that the Borrowers intend to take no action and an explanation of the reasons
for such inaction. In addition, the Borrowers will furnish to the
Administrative Agent immediately after receipt thereof copies of all
administrative notices material to Borrowers' business and operation of any
Facility and all responses by or on behalf of the Borrowers with respect to
such administrative notices.
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Section 7.30 Compliance with Environmental Laws
If any Hazardous Materials are used, present or generated on any real
property owned or controlled by any of the Borrowers or for which any of the
Borrowers are responsible, such Borrower shall use, process, distribute,
handle, maintain, treat, store, dispose of and transport such substance in
compliance with all applicable laws, including, but not limited to, those
regulating PCB's, underground storage tanks, radon and medical waste tracking,
as well as any laws that are enacted after the date of this Agreement.
Section 7.31 Hazardous Materials; Contamination
(a) Give notice to the Administrative Agent within five (5) Banking Days
of any of the Borrowers' acquiring knowledge of the presence of any Hazardous
Materials on any property owned or controlled by any of the Borrowers or for
which any of the Borrowers is responsible or of any Hazardous Materials
Contamination with a full description thereof, except for reasonable quantities
of necessary supplies for use by the Borrowers in the ordinary course of their
current line of business and stored, used and disposed of in accordance with
applicable Laws; (b) promptly comply with any laws requiring special handling,
maintenance, servicing, removal, treatment or disposal of Hazardous Materials
or Hazardous Materials Contamination and provide the Administrative Agent upon
request with satisfactory evidence of such compliance; (c) provide the
Administrative Agent, within thirty (30) days after a demand by the
Administrative Agent, with a bond, letter of credit or similar financial
assurance evidencing to the Administrative Agent's satisfaction that funds are
available to pay the cost of removing, treating, and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging any
lien which may be established as a result thereof on any property owned,
operated or controlled by any of the Borrowers or for which any of the
Borrowers are responsible; and (d) defend, indemnify and hold harmless the
Lenders and each of their agents, employees, trustees, successors and assigns
from any and all claims which may now or in the future (whether before or after
the termination of this Agreement) be asserted as a result of the presence of
any Hazardous Materials on any property owned, operated, controlled or managed
by any of the Borrowers for which any of the Borrowers are responsible for any
Hazardous Materials Contamination.
Section 7.32 Participation in Reimbursement Programs
In the event any of the Borrowers elects to participate in any or all
plans and/or programs for third party payment and/or reimbursement, and the
revenues derived from a single plan or program exceed ten percent (10%) of the
gross revenues of the applicable Facility, such Borrower will continue its
participation in any and all such plans and/or programs for third party payment
and/or reimbursement from, and claims against, private insurers or programs for
payment and/or reimbursement from federal, state and local governmental
agencies and/or private or quasi-public insurers, including, without
limitation, Managed Care Plans, Medicaid and Medicare and the Veterans
Administration (as determined by the Borrowers in the good faith exercise of
their prudent and commercially reasonable business judgment). While
participating in such plans, the Borrowers shall comply with any and all rules,
regulations, standards, procedures
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and decrees necessary to maintain the Borrowers' participation in any such
third party payment or reimbursement program or plan.
Section 7.33 Minimum Pool A Projects
At least 83% of the number of Eligible Projects being included in the
calculation of the Borrowing Base at any one time shall qualify as Pool A
Projects.
Section 7.34 Subordination of Distributions and Management Fees
Subordinate, and cause the partners or members of each of the Borrowers
to subordinate, all distributions of the Borrowers to principal and interest
payments on the Loan; provided, however, that the Borrowers may pay
distributions to partners or members of the Borrowers in accordance with
Section 8.14 Distributions to Partners prior to the occurrence of an Event of
Default and so long as the payment of any such distributions will not result in
the occurrence of an Event of Default. Subordinate the payment of management
fees with respect to each Facility pursuant to the terms of all Management Fee
Subordination Agreement (as the same may be modified from time to time) by and
among any of the Borrowers, the Administrative Agent and the Management
Company.
Section 7.35 Depository Bank
The Borrowers shall maintain its primary operating accounts, including
those accounts containing the Liquid Assets, if any required pursuant to
Section 8.14 Distributions to Partners
with the Administrative Agent or one of the other Lenders; provided that such
Lender shall agree that it will exercise any right of set-off against such
account to pay the Obligations (unless the exercise of such right would
prejudice other remedies of the Lenders in any jurisdiction) prior to applying
them to any other indebtedness owed to such Lender and provided such
Administrative Agent or other Lender pays commercially competitive rates on the
Borrowers' funds.
Section 7.36 Copies of Notices
Promptly following the giving or receipt by any of the Borrowers of any
notice given to or received from the General Contractor or any subcontractor or
materialman with respect to the Property, if such notice concerns any default
or failure to perform by any party, or relates to any matter requiring the
Administrative Agent's or the Lenders' approval under this Agreement, the
Borrowers shall forward to the Administrative Agent copies of any such notice.
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Section 7.37 Commencement of Occupancy
The first resident of a Completed Facility shall take occupancy within
sixty (60) days of the issuance of the occupancy permit for such Facility.
Section 7.38 Removal of Eligible Project from Borrowing Base
If the Borrowers elect either to exclude an Eligible Project from the
calculation of the Borrowing Base without releasing the Lien of the applicable
Deed of Trust or Lien on the related Collateral or to resume including such
Eligible Project in the calculation of the Borrowing Base, the Borrowers shall
so notify the Administrative Agent in writing in advance and shall immediately
submit a revised Borrowing Base Report. In connection with any such removal,
the Borrowers shall pay down the Credit Facility if a Borrowing Base Deficiency
if thereby created. If an Eligible Project is excluded from the Borrowing Base
at Borrowers' election, such Eligible Project shall not be required to comply
with any covenants hereunder while it is so excluded.
ARTICLE VIII
NEGATIVE COVENANTS OF BORROWER
Until payment in full and the performance of all of the Obligations,
without the prior written consent of the Administrative Agent as permitted
pursuant to the Agency Agreement, the Borrowers will not directly or
indirectly:
Section 8.1 Borrowings
Create, incur, assume or suffer to exist any liability for borrowed
money other than the Credit Facility, Equipment leases permitted by the terms
of this Agreement or unsecured loans from Affiliates which are fully
subordinated (either by their terms or by separate written agreement) to the
Credit Facility and bearing interest at a rate no higher than that then
applicable to the Credit Facility; provided, however, so long as no Event of
Default has occurred or will occur upon the payment of interest on such
indebtedness under the Financing Documents, the Borrowers may make scheduled
payments of interest on such debt and may, with the prior written consent of
the Administrative Agent, use proceeds of the Loan to make payments on such
loans from Affiliates if the loans were for the purpose of financing the
acquiring or constructing an Eligible Project.
Section 8.2 Deeds of Trust and Pledges
Create, incur, assume or suffer to exist any deed of trust, mortgage,
pledge, Lien or other encumbrance of any kind upon, or any security interest
in, any of its property or assets, including the Collateral, whether now owned
or hereafter acquired.
Section 8.3 Sale or Transfer of Assets
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Directly or indirectly enter into any arrangement whereby any of the
Borrowers shall sell, lease, transfer, assign or otherwise dispose of more than
$50,000 of assets in connection with any Eligible Project in any one year other
than (a) sales or other disposition of assets in the ordinary course of
business for value, provided the proceeds thereof are used to pay down one or
more of the Loans or the asset sold or disposed of is replaced by one of equal
or greater value or (b) the transfer of an Eligible Project or the sale of an
Eligible Project, in either case, in which case the Borrowing Base will be
reduced by the availability attributed to such Facility.
Section 8.4 Other Liens; Transfers; "Due-on-Sale"; etc.
The Borrowers shall not, without the prior written consent of the
Administrative Agent, create or permit to be created or remain with respect to
any of the Property or any part thereof or income therefrom, any mortgage,
pledge, lien, encumbrance or charge, or security interest, or conditional sale
or other title retention agreement, whether prior or subordinate to the lien of
the Financing Documents, other than in connection with the Financing Documents
or as otherwise provided or permitted therein. Except for any grant,
conveyance, sale, assignment or transfer in the ordinary course of the
Borrowers' business and which is specifically conditioned upon the release of
record of the lien of the Deed of Trust and the other Financing Documents as to
that portion of the Property granted, conveyed, sold, assigned or transferred,
the Borrowers shall not, without the prior written consent of the
Administrative Agent, make, create, permit or consent to any conveyance, sale,
assignment or transfer of any of the Property or any part thereof, other than
in connection with the Financing Documents or as otherwise provided or
permitted therein.
Section 8.5 Advances and Loans
Make loans or advances to any Person, including, without limitation,
Affiliates, partners and employees of the Borrowers.
Section 8.6 Contingent Liabilities
Assume, guarantee, endorse, contingently agree to purchase or otherwise
become liable upon the obligation of any Person, except by the endorsement of
negotiable instruments for deposit and collection or similar transactions in
the ordinary course of business.
Section 8.7 Licenses
Allow any Licenses, permit, right, franchise or privilege necessary for
the ownership or operation of any Facility for the purposes for which any
Facility is intended to be used to lapse, be suspended or be forfeited unless
solely due to administrative delay by the licensing authority.
Section 8.8 ERISA Compliance
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(a) Restate or amend any Plan established and maintained by the
Borrowers or any Commonly Controlled Entity and subject to the requirements of
ERISA, in a manner designed to disqualify such Plan and its related trusts
under the applicable requirements of the Code; (b) permit any partners of the
Borrowers or any Commonly Controlled Entity to materially adversely affect the
qualified tax-exempt status of any Plan or related trusts of the Borrowers or
any Commonly Controlled Entity under the Code; (c) engage in or permit any
Commonly Controlled Entity to engage in any Prohibited Transaction; (d) incur
or permit any Commonly Controlled Entity to incur any Accumulated Funding
Deficiency, whether or not waived, in connection with any Plan; (e) take or
permit any Commonly Controlled Entity to take any action or fail to take any
action which causes a termination of any Plan in a manner which could result in
the imposition of a lien on the property of the Borrowers or any Commonly
Controlled Entity pursuant to Section 4068 of ERISA; (f) fail to notify the
Administrative Agent that notice has been received of a "termination" (as
defined in ERISA) of any Multiemployer Plan to which the Borrower or any
Commonly Controlled Entity has an obligation to contribute; (g) incur or permit
any Commonly Controlled Entity to incur a "complete withdrawal" or "partial
withdrawal" (as defined in ERISA) from any Multiemployer Plan to which the
Borrower or any Commonly Controlled Entity has an obligation to contribute; or
(h) fail to notify the Administrative Agent that notice has been received from
the administrator of any Multiemployer Plan to which the Borrower or any
Commonly Controlled Entity has an obligation to contribute that any such Plan
will be placed in "reorganization" (as defined in ERISA).
Section 8.9 Transfer of Collateral
Transfer, or permit the transfer, to another location of any of the
Collateral or the books and records related to any of the Collateral; provided,
however, that the Borrowers may transfer the Collateral or the books and
records related thereto to another location if the Borrowers shall have
provided to the Administrative Agent prior to such transfer an opinion of
counsel addressed to the Administrative Agent to the effect that the Lenders'
perfected security interest shall not be affected by such move or if it shall
be affected, setting forth the steps necessary to continue the Lender's
perfected security interest together with the commencement of such steps by the
Borrowers at its expense.
Section 8.10 Sale of Accounts or Receivables
Sell, discount, transfer, assign or otherwise dispose of any of its
Accounts or Receivables of any Facility, such as accounts receivable, notes
receivable, installment or conditional sales agreements or any other rights to
receive income, revenues or moneys, however evidenced.
Section 8.11 Amendments; Terminations
Amend or terminate or agree to amend or terminate any License, the
Management Agreement, or any participation agreement which exceeds 10% of the
gross revenue of the applicable Facility, or except in the ordinary course of
business any other Management Contracts and Operating Agreements which may have
been entered into by the Borrowers with respect to
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any Facility and which exceeds 10% of its gross revenue, or consent to or waive
any material provisions thereof.
Section 8.12 Prohibition on Hazardous Materials
Place, manufacture or store or permit to be placed, manufactured or
stored, any Hazardous Materials on any property owned, controlled or operated
by the Borrowers or any Wholly Owned Subsidiary or for which the Borrowers or
any Wholly Owned Subsidiary is responsible, except for reasonable quantities of
necessary supplies for use by the Borrowers or any Wholly Owned Subsidiary in
the ordinary course of its current line of business and stored, used and
disposed of in accordance with applicable Laws.
Section 8.13 Subsidiaries
Create or otherwise acquire any subsidiaries other than Wholly Owned
Subsidiaries which are Additional Borrowers.
Section 8.14 Distributions to Partners or Members
(a) Make any distributions of net operating income to partners
or members of any of the Borrowers unless no Event of Default exists, and at
such time or times as the Borrowers have on a consolidated basis, both before
and after the distribution, at least $5,000,000 in Liquid Assets plus, at such
time or times as ten (10) or more of the Eligible Projects are not a Stabilized
Facilities, the Borrowers shall have on a consolidated basis an additional
$5,000,000 in Liquid Assets; provided, however, that after deducting the amount
of such distribution from the EBITDA (the "Adjusted EBITDA") of the Stabilized
Facilities in the aggregate, the Borrowers' consolidated ratio of Adjusted
EBITDA to Debt Service for the Stabilized Facilities in the aggregate shall not
be less than 1.0 to 1.0. For the purposes of computing EBITDA and Debt Service,
the period measured shall be on a rolling four-quarters basis. Distributions
may be made only within thirty (30) days of the end of a fiscal quarter.
(b) Make a distribution to partners or members of any of the
Borrowers from proceeds of the Loan as a repayment of equity in an Eligible
Project unless the Borrowers give advance written notice to the Administrative
Agent of the amount of such proposed distribution and the Administrative Agent
acknowledges in writing the availability of equity to make such a distribution.
Section 8.15 Mergers or Acquisitions
Enter into any merger or consolidation or amalgamation, wind up or
dissolve itself (or suffer any liquidation or dissolution), or acquire all or
substantially all of the assets of any person, firm, joint venture or
corporation except to acquire a Wholly Owned Subsidiary.
Section 8.16 Partnership Interests
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Repurchase, redeem or retire any partnership or membership interest any
of in the Borrowers.
Section 8.17 Impairment of Security
The Borrowers shall take no action which shall impair in any manner the
value of any of the Property or the validity, priority or security of any Deed
of Trust.
Section 8.18 Conditional Sales
The Borrowers shall not incorporate in the Improvements any property
acquired under a conditional sales contract, or lease, or as to which the
vendor retains title or a security interest, without the prior written consent
of the Administrative Agent.
Section 8.19 Changes to Plans and Specifications
After review and approval of a Total Development Budget by the
Administrative Agent, the Borrowers shall not permit any change order
increasing the price of the Improvements for an Eligible Project by more than
$50,000 for any one change order or by more than 10% of the total hard cost
portion of the Total Development Budget in the aggregate or materially altering
the scope of the Improvements, without the prior written consent of the
Administrative Agent which consent will not be unreasonably withheld and
provided such changes will not cause the Facility not to qualify as a Pool A
Project.
Section 8.20 Construction Contract; Construction Management
The Borrowers shall not execute any contract or agreement or become a
party to any arrangement for the construction of any Improvements or for
construction management services with respect to any Property without the prior
written consent of the Administrative Agent.
ARTICLE IX
EVENTS OF DEFAULT
The occurrence of one or more of the following events shall be "Events
of Default" under this Agreement, and the terms "Event of Default" shall mean,
whenever they are used in this Agreement, any one or more of the following
events:
Section 9.1 Failure to Pay and/or Perform the Obligations
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The Borrowers shall fail to (a) make any payment of interest on the
Note, or (b) pay any of the other Obligations including but not limited to the
Expense Payments and Liquidation Costs and such failure continues for more than
five (5) calendar days after notice thereof by the Administrative Agent, except
with regard to payment of (a) any Borrowing Base Deficiency which shall be due
as provided in Section 2.1 The Loan hereof, and (b) amounts due at maturity for
which no notice or cure period shall be required to be given.
Section 9.2 Breach of Representations and Warranties
Any material representation or warranty made in this Agreement or in any
report, certificate, opinion (including any opinion of counsel for the
Borrowers), financial statement or other instrument furnished in connection
with the Obligations or with the execution and delivery of any of the Financing
Documents, shall prove to have been false or misleading when made (or, if
applicable, when reaffirmed) in any material respect.
Section 9.3 Failure to Comply with Covenants
Default shall be made by the Borrowers in the due observance and
performance of any covenant, condition or agreement contained in Article VII
hereof (except for Section 7.8 Maintenance of Properties, Section 7.9
Maintenance of the Collateral, Section 7.10 Other Liens, Security Interests,
etc., Section 7.17 ERISA) or in ARTICLE VIII hereof.
Section 9.4 Failure to Comply with Books and Records
Default shall be made by the Borrowers in the due observance or
performance of Section 7.13 Books and Records, which default shall remain
unremedied, and the Borrowers shall cure such default promptly, but in no event
more than ten (10) days after written notice thereof to the Borrowers by the
Administrative Agent.
Section 9.5 Other Defaults
Default shall be made by the Borrowers in the due observance or
performance of any other term, covenant or agreement other than as set forth in
this Article IX, which default shall remain unremedied for more than thirty
(30) days after written notice thereof to the Borrowers by the Administrative
Agent, unless the nature of the failure is such that (a) it cannot be cured
within the thirty (30) day period, and (b) the Borrowers institute corrective
action within the thirty (30) day period and (c) the Borrowers diligently
pursue such action and complete the cure within ninety (90) days.
Section 9.6 Default Under Other Financing Documents
A Default shall occur under any of the other Financing Documents, and
such Default is not cured within any applicable grace period provided therein.
Section 9.7 Receiver; Bankruptcy
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An Act of Bankruptcy occurs with respect to the Borrowers or any of the
Borrowers becomes generally unable to pay its debts as they become due;
provided, however, if a proceeding with respect to an Act of Bankruptcy is
filed or commenced against any of the Borrowers, the same shall not constitute
an Event of Default if such proceeding is dismissed within sixty (60) days from
the date of such Act of Bankruptcy.
Section 9.8 Judgment
Any judgment against any of the Borrowers of $250,000 or more or any
attachment or other levy against any property of any of the Borrowers remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of thirty (30) days after the same shall have been issued.
Section 9.9 Execution; Attachment
Any execution or attachment shall be levied against the Collateral, or
any part thereof, and such execution or attachment shall not be set aside,
discharged or stayed within thirty (30) days after the same shall have been
levied.
Section 9.10 Default Under Other Borrowings
(a) Default which continues beyond any applicable grace period
shall be made under any obligation of or guaranteed by any of the Borrowers
equal to or greater than $250,000, if the effect of such default is to
accelerate the maturity of such obligation or to permit the holder or obligee
thereof to cause such obligation to become due prior to its stated maturity.
(b) Default shall be made under any obligation equal to or
greater than $1,000,000 of a consolidated Affiliate, which is otherwise
non-recourse to the Borrowers if the holder or obligee of such obligation has
commenced action on any of the remedies available to it under the obligation.
Section 9.11 Material Adverse Change
If the Administrative Agent in its reasonable discretion determines that
a Material Adverse Change has occurred in the financial condition of any of the
Borrowers; provided, however, that such Default may be cured if only one
Borrower is affected, such Borrower owns only one Eligible Project and such
Eligible Project is excluded from the calculation of the Borrowing Base.
Section 9.12 Impairment of Position
If the Administrative Agent in its reasonable discretion determines that
an event has occurred which impairs the prospect of payment of the Obligations
and/or the value of the Facilities or the Collateral.
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Section 9.13 Change in Status or Ownership
Any of the Borrowers is dissolved, merged, consolidated or reorganized,
or any change occurs in the ownership of any of the Borrowers or any Subsidiary
without the prior written consent of the Administrative Agent.
Section 9.14 Zoning
Any change in any zoning ordinance or any other public restriction is
enacted, limiting or defining the uses which may be made of any of the Property
or a part thereof, such that the use of any of the Property, as specified
herein, would be in material violation of such restriction or zoning change
unless the Borrowers exclude the affected Eligible Project from the calculation
of the Borrowing Base.
Section 9.15 Change in Management
The Management Agreement is terminated without the prior written consent
of the Administrative Agent.
Section 9.16 Licenses
The involuntary, imposed or required revocation, suspension, probation,
restriction, limitation or refusal to renew, or the pending revocation,
suspension, probation, restriction, limitation, of, or refusal to renew, of any
License; other than in the ordinary course of business or to the extent that
the Borrowers deem such action to be, in the exercise of prudent business
judgment, in the best interest of Borrowers, the decertification, revocation,
suspension, probation, restriction, limitation, or refusal to renew, or the
pending decertification, revocation, suspension, probation, restriction,
limitation, or refusal to renew any participation or eligibility in any third
party payor program in which the Borrowers elect to participate, including,
without limitation, the Medicaid or Medicare programs; or the issuance or
pending issuance of any License for a period of less than twelve (12) months as
a consequence of any sanctions imposed by any Governmental Authority; or the
assessment or pending assessment, of any civil or criminal penalties by any
Governmental Authority, any third party payor or any accreditation organization
or person. Without limiting the generality of the foregoing, the failure of the
Borrowers to obtain an operating license for any Facility within sixty (60)
days of the issuance of the certificate of occupancy for such Facility.
Section 9.17 Damage to Improvements
At any time prior to the issuance of a certificate of occupancy or
completion therefor, any of the Improvements are substantially damaged or
destroyed by fire or other casualty and the Administrative Agent determines in
good faith that such Improvements cannot be restored and completed in
accordance with the terms and provisions of the Deed of Trust unless the
Borrowers exclude the affected Eligible Project from the Borrowing Base.
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Section 9.18 Disclosure of Contractors
The Borrowers shall fail to disclose to the Administrative Agent, upon
demand, the names of all persons with whom the Borrowers have contracted or
intends to contract for the construction of the Improvements or for the
furnishing of labor or materials therefor.
Section 9.19 Mechanic's Lien
A lien for the performance of work or the supply of materials which is
perfected against any of the Land remains unsatisfied or un-bonded or for which
no other arrangements satisfactory to the Administrative Agent have been made
for a period of thirty (30) days after notice to the Borrowers from any source
of the filing of such Lien unless the Borrowers exclude the affected Eligible
Project from the Borrowing Base.
Section 9.20 Survey Matters
Any Survey required by the Lenders during the period of construction
shows any matters not approved by the Administrative Agent and such matters not
approved are not removed within 30 days after Notice thereof by the
Administrative Agent to the Borrowers unless the Borrower excludes the affected
Eligible Project from the Borrowing Base.
Section 9.21 General Contractor Default
The General Contractor shall have defaulted under any Construction
Contract, which default the Administrative Agent, in its sole discretion, shall
deem substantial, and the Borrowers, after thirty (30) days Notice from the
Administrative Agent, shall fail to commence exercising any resulting right or
remedy to which it may be entitled thereunder and diligently pursue such right
or remedy unless the Borrower excludes the affected Eligible Project from the
Borrowing Base.
Section 9.22 Compliance with Law
The Borrowers fail to comply with any requirement of any Governmental
Authority having jurisdiction within the time required by such Governmental
Authority; or any proceeding is commenced or action taken to enforce any remedy
for a violation of any requirement of a Governmental Authority or any
restrictive covenant affecting the Property or any part thereof.
Section 9.23 Failure to Commence Occupancy
Any failure to comply with Section 7.37 Commencement of Occupancy
unless the Borrowers exclude the affected Eligible Project from the calculation
of the Borrowing Base.
ARTICLE X
RIGHTS AND REMEDIES UPON DEFAULT
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Section 10.1 DEMAND; ACCELERATION
THE OCCURRENCE OR NONOCCURRENCE OF AN EVENT OF DEFAULT UNDER THIS
AGREEMENT SHALL IN NO WAY AFFECT OR CONDITION THE RIGHT OF THE LENDERS TO
DEMAND PAYMENT AT ANY TIME OF ANY OF THE OBLIGATIONS WHICH ARE PAYABLE ON
DEMAND REGARDLESS OF WHETHER OR NOT AN EVENT OF DEFAULT HAS OCCURRED. Upon the
occurrence of an Event of Default, and in every such event and at any time
thereafter, the Administrative Agent may declare the Obligations due and
payable, without presentment, demand, protest, or any notice of any kind, all
of which are hereby expressly waived, anything contained herein or in any of
the other Financing Documents to the contrary notwithstanding.
Section 10.2 Further Advances; Immediate Acceleration
Following an Event of Default the Administrative Agent may from time to
time without notice to the Borrowers suspend, terminate or limit any further
advances under the Loan or other extensions of credit under this Agreement and
under any of the other Financing Documents. Further, upon the occurrence of an
Event of Default or Default specified in Section 9.7 Receiver; Bankruptcy
above, the unpaid principal amount of the Note (with accrued interest thereon)
and all other Obligations then outstanding, shall immediately become due and
payable without further action of any kind and without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrowers.
Section 10.3 Specific Rights With Regard to Collateral
Following an Event of Default, in addition to all other rights and
remedies provided hereunder or as shall exist at law or in equity from time to
time, the Administrative Agent may, without notice to the Borrowers and subject
to the terms of the Agency Agreement:
(a) assign any and all Operating Agreements and Management
Contracts to any Person designated by the Administrative Agent, and/or exercise
all rights and privileges of the Borrowers under such contracts and agreements
for the purpose of realizing on the Collateral and to the extent and for the
time required to realize the value of the Collateral;
(b) to the extent permitted by applicable law, assume such
management, operation and control of the Property to the extent and for the
time necessary to realize the value of the Collateral;
(c) cause the Borrowers to engage, contract with, and/or hire
qualified service, billing, collection and other such agents, organizations and
companies acceptable to the Administrative Agent to collect and/or realize upon
any or all of the Collateral and to remit the proceeds to the Administrative
Agent;
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(d) subject to applicable state and federal laws pertaining to
resident confidentiality, request any Account Debtor obligated on any of the
Accounts to make payments thereon directly to the Administrative Agent to the
extent permitted by applicable law, with the Administrative Agent taking
control of the cash and non-cash proceeds thereof and/or direct the Borrowers
to (and the Borrowers shall) turn over to the Administrative Agent immediately
following receipt all payments with respect to the Collateral in the form
received (with the addition of all necessary endorsements) and not to deposit,
negotiate or otherwise deal with those payments;
(e) compromise, extend or renew any of the Collateral or deal
with the same as it may deem advisable;
(f) make exchanges, substitutions or surrenders of all or any
part of the Collateral;
(g) remove from any of the Borrowers' places of business all
books, records, ledger sheets, correspondence, invoices and documents, relating
to or evidencing any of the Collateral or without cost or expense to the
Lenders, make such use of the Borrowers' place of business as may be reasonably
necessary to administer, control and collect the Collateral;
(h) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
(i) institute and prosecute legal and equitable proceedings to
enforce collection of, or realize upon, any of the Collateral;
(j) settle, renew, extend, compromise, compound, exchange or
adjust claims in respect of any of the Collateral or any legal proceedings
brought in respect thereof;
(k) endorse the name of any of the Borrowers upon any items of
payment relating to the Collateral or on any Proof of Claim in Bankruptcy
against an Account Debtor; and
(l) notify the Post Office authorities to change the address
for the delivery of mail to the Borrowers to such address or Post Office Box as
the Administrative Agent may designate and receive and open all mail addressed
to the Borrowers.
In addition, the Borrowers shall, following an Event of Default
promptly, upon request, execute and deliver to the Administrative Agent written
assignments, to the extent permitted by applicable law, in form and content
acceptable to the Administrative Agent, of specific Accounts or groups of
Accounts; provided, however, that the lien and/or security interest granted to
the Lenders under this Agreement shall not be limited in any way to or by the
inclusion or exclusion of Accounts within such assignments. Such Accounts shall
secure payment of the Obligations and are not sold to the Lenders whether or
not any assignment thereof, which is separate from this Agreement, is in form
absolute.
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Following an Event of Default, the Lenders may also direct the Borrowers
to appoint a manager for any or all of the Facilities and enter into a
management agreement with one or more management companies approved by the
Lenders, the terms of which agreement shall be approved by the Lenders.
Section 10.4 Performance by Lenders
Following an Event of Default, the Administrative Agent without the
necessity of prior notice to or demand upon the Borrowers and without waiving
or releasing any of the Obligations or any Event of Default, may (but shall be
under no obligation to) at any time thereafter make such payment or perform
such act for the account and at the expense of the Borrowers, and may enter
upon the premises of the Borrower for that purpose and take all such action
thereon as the Administrative Agent may consider necessary or appropriate for
such purpose. The Administrative Agent will give the Borrowers notice, at least
subsequently, of any such performance by the Administrative Agent. All sums so
paid or advanced by the Administrative Agent and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred in connection therewith (the "Expense Payments") together with
interest thereon from the date of payment, advance or incurring until paid in
full at the Post-Default Rate shall be paid by the Borrowers to the
Administrative Agent on demand and shall constitute and become a part of the
Obligations.
Section 10.5 Remedies on Default
The Administrative Agent shall have the right, upon the happening of any
Event of Default, to terminate this Agreement by Notice from the Administrative
Agent to the Borrowers and, in addition to any rights or remedies available to
them under the Deed of Trust or any of the other Financing Documents, to enter
into possession of any of the Property and perform any and all work and labor
necessary to complete the development of such Land and the construction of the
Improvements thereon (whether or not in accordance with the Plans and
Specifications therefor) and to employ watchmen to protect the Property and the
Improvements. All sums expended by the Lenders for such purposes shall be
deemed to have been advanced to the Borrowers under the Note and shall be
secured by the Deeds of Trust and the Collateral. For this purpose, the
Borrowers hereby constitute and appoint the Lenders, or the Administrative
Agent on behalf of the Lenders, its true and lawful attorney-in-fact with full
power of substitution to complete work on any Eligible Project in the name of
the Borrowers, and hereby empowers said attorney or attorneys as follows:
(a) To use any funds of any of the Borrowers including any
balance which may be held in escrow and any funds which may remain un-advanced
under any of the Loan for the purpose of completing the development of any of
the Land and the construction of any of the Improvements, whether or not in the
manner called for in the Plans and Specifications;
(b) To make such additions and changes and corrections to any
of the Plans and Specifications which shall be necessary or desirable in the
judgment of the Administrative
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Agent to complete the development of any of the Land and the construction of
any of the Improvements;
(c) To employ such contractors, subcontractors, agents,
architects and inspectors as shall be necessary or desirable for said purpose;
(d) To pay, settle or compromise all existing bills and claims
which are or may be liens against any of the Property, or may be necessary or
desirable for the completion of the work or the clearance of title to any of
the Property;
(e) To execute all applications and certificates which may be
required in the name of any of the Borrowers; and
(f) To do any and every act with respect to the development of
the Land and the construction of the Improvements which any of the Borrowers
may do in its own behalf.
It is understood and agreed that this power of attorney shall be deemed
to be a power coupled with an interest which cannot be revoked. Said
attorney-in-fact shall also have the power to prosecute and defend all actions
or proceedings in connection with the development of the Land and the
construction of the Improvements and to take such actions and to require such
performance as the Lenders may deem necessary.
Section 10.6 Uniform Commercial Code and Other Remedies
Upon the occurrence of an Event of Default (and in addition to all of
its rights, powers and remedies under this Agreement), the Lenders shall have
all of the rights and remedies of a secured party under the applicable Uniform
Commercial Code and other applicable laws, and the Lenders are authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of the Borrowers now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, any of the Lenders; and upon demand by the
Administrative Agent, the Borrowers shall assemble the Collateral and make it
available to the Lenders, at a place designated by the Administrative Agent;
and the Lenders or their agents may enter upon the Borrowers' premises to take
possession of the Collateral, to remove it, to render it unusable, or to sell
or otherwise dispose of it.
Any written notice of the sale, disposition or other intended action by
the Lenders with respect to the Collateral which is sent by regular mail,
postage prepaid, to the Borrowers at the address set forth in Article XI
hereof, or such other address of the Borrowers which may from time to time be
shown on the Lenders' records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute reasonable notice to the
Borrowers. The Borrowers shall pay on demand all costs and expenses, including,
without limitation, attorney's fees and expenses, incurred by or on behalf of
the Lenders, or any of them, in preparing for sale or other disposition,
selling, managing, collecting or otherwise disposing of, the Collateral. All of
such costs and expenses (the "Liquidation Costs") together with interest
thereon from the date
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incurred until paid in full at the Post-Default Rate, shall be paid by the
Borrowers to the Administrative Agent on demand and shall constitute and become
a part of the Obligations. Any proceeds of sale or other disposition of the
Collateral will be applied by the Lenders to the payment of the Liquidation
Costs and Expense Payments, and any balance of such proceeds will be applied by
the Lenders to the payment of the balance of the Obligations in such order and
manner of application as the Lenders may from time to time in its sole
discretion determine. After such application of the proceeds, any balance shall
be paid to the applicable Borrowers or to any other party entitled thereto.
Section 10.7 Receiver or Other Court Order
Following an Event of Default, as a matter of right, following ten (10)
days notice and without regard to the adequacy of the security, and upon
application to a court of competent jurisdiction, the Lenders shall be entitled
to the immediate appointment of a receiver for all or any part of the
Collateral, and of the payments and proceeds thereof and therefrom, whether
such receivership be incidental to a proposed sale of the Collateral or
otherwise, and the Borrowers hereby consent to the appointment of such a
receiver and to an order of court directing that payments, including Medicare
and Medicaid payments, be made directly to the receiver. The Borrowers will pay
to the Beneficiary, upon demand, all expenses, including receiver's fees,
attorney's fees, costs and agents compensation, advanced by the Borrowers and
incurred pursuant to the provisions contained in this Section.
Section 10.8 No Conditions Precedent to Exercise of Remedies
The Borrowers shall not be relieved of any obligation by reason of the
failure of the Lenders to comply with any request of the Borrowers or of any
other person to take action to foreclose on the Property under the Deed of
Trust or otherwise to enforce any provision of the Financing Documents, or by
reason of the release, regardless of consideration, of all or any part of the
Property, or by reason of any agreement or stipulation between any subsequent
owner of the Property and the Lenders extending the time of payment or
modifying the terms of the Financing Documents without first having obtained
the consent of the Borrowers; and in the latter event, the Borrowers shall
continue to be liable to make payments according to the terms of any such
extension or modification agreement, unless expressly released and discharged
in writing by the Lenders.
Section 10.9 Remedies Cumulative and Concurrent
No remedy herein conferred upon or reserved to the Lenders or the
Administrative Agent is intended to be exclusive of any other remedies provided
for in the Financing Documents, and each and every such remedy shall be
cumulative, and shall be in addition to every other remedy given hereunder, or
under the Financing Documents, or now or hereafter existing at law or in equity
or by statute. Every right, power and remedy given by the Financing Documents
to the
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Lenders or the Administrative Agent shall be concurrent and may be pursued
separately, successively or together against any or all of the Borrowers or the
Property or any part thereof, and every right, power and remedy given by the
Financing Documents may be exercised from time to time as often as may be
deemed expedient by the Lenders or the Administrative Agent.
Section 10.10 Strict Performance
No delay or omission of the Lenders or the Administrative Agent to
exercise any right, power or remedy accruing upon the happening of an Event of
Default shall impair any such right, power or remedy or shall be construed to
be a waiver of any such Event of Default or any acquiescence therein. No delay
or omission on the part of the Lenders or the Administrative Agent to exercise
any option for acceleration of the maturity of the Obligations, or any of them,
or for foreclosure of the Deeds of Trust, or any of them, following any Event
of Default as aforesaid, or any other option granted to the Lenders hereunder
in any one or more instances, or the acceptance by the Lenders of any partial
payment on account of the Obligations shall constitute a waiver of any such
Event of Default and each such option shall remain continuously in full force
and effect.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices
All notices, certificates or other communications hereunder shall be
deemed given when delivered by hand or courier, or three (3) Banking Days after
being mailed by certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Administrative Agent BANK OF AMERICA, N.A.
or the Lenders: 10 Light Street
Baltimore, Maryland 21202
Attn: Leslie M. Zuga
Senior Vice President
with a courtesy copy to: Mays & Valentine, L.L.P.
8201 Greensboro Drive
Suite 800
McLean, Virginia 22102
Attn: Margaret Ann Brown, Esq.
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if to the Borrowers: c/o SUNRISE EAST ASSISTED LIVING
LIMITED PARTNERSHIP
c/o Sunrise Assisted Living
Investments, Inc.
7902 Westpark Drive
McLean, Virginia 22102
Attention to each of the
following
separately delivered or mailed:
David W. Faeder
Thomas B. Newell, Esq.
James S. Pope
with a courtesy Wayne G. Tatusko, Esquire
copy to: Watt, Tieder, Hoffar & Fitzgerald
7929 Westpark Drive
McLean, Virginia 22102
Section 11.2 Consents and Approvals
If any consent, approval, or authorization of any Governmental Authority
or of any Person having any interest therein, should be necessary to effectuate
any sale or other disposition of the Collateral, the Borrowers agree to execute
all such applications and other instruments, and to take all other action, as
may be required in connection with securing any such consent, approval or
authorization.
Section 11.3 Remedies, etc. Cumulative
Each right, power and remedy of the Lenders as provided for in this
Agreement or in any of the other Financing Documents or now or hereafter
existing at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Agreement or in any of the other Financing Documents or
now or hereafter existing at law or in equity, by statute or otherwise, and the
exercise or beginning of the exercise by the Lenders of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later
exercise by the Lenders of any or all such other rights, powers or remedies. In
order to entitle the Lenders to exercise any remedy reserved to it herein, it
shall not be necessary to give any notice, other than such notice as may be
expressly required in this Agreement.
Section 11.4 No Waiver of Rights by the Lenders
No failure or delay by the Administrative Agent or the Lenders to insist
upon the strict performance of any term, condition, covenant or agreement of
this Agreement or of any of the other Financing Documents, or to exercise any
right,
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power or remedy consequent upon a breach thereof, shall constitute a waiver of
any such term, condition, covenant or agreement or of any such breach or
preclude the Administrative Agent or the Lenders from exercising any such
right, power or remedy at any later time or times. By accepting payment after
the due date of any amount payable under this Agreement or under any of the
other Financing Documents, neither the Administrative Agent nor the Lenders
shall be deemed to waive the right either to require prompt payment when due of
all other amounts payable under this Agreement or under any of the other
Financing Documents, or to declare a default for failure to effect such prompt
payment of any such other amount.
Section 11.5 Entire Agreement
The Financing Documents shall completely and fully supersede all other
agreements, both written and oral, between the Lenders and any of the Borrowers
relating to the Obligations. Neither the Lenders nor the Borrowers shall
hereafter have any rights under such prior agreements but shall look solely to
the Financing Documents for definition and determination of all of their
respective rights, liabilities and responsibilities relating to the
Obligations.
Section 11.6 Survival of Agreement; Successors and Assigns
All covenants, agreements, representations and warranties made by the
Borrowers herein and in any certificate, in the Financing Documents and in any
other instruments or documents delivered pursuant hereto shall survive the
making by the Lenders of the Loan and the execution and delivery of the Note,
and shall continue in full force and effect so long as any of the Obligations
are outstanding and unpaid. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrowers which are contained in this Agreement shall inure to
the benefit of the respective successors and assigns of each of the Lenders,
and all covenants, promises and agreements by or on behalf of the Lenders which
are contained in this Agreement shall inure to the benefit of the permitted
successors and permitted assigns of the Borrowers, but this Agreement may not
be assigned by the Borrowers without the prior written consent of the Lenders.
Section 11.7 Expenses
The Borrowers agree to pay all reasonable out-of-pocket expenses of the
Lenders and Banc of America Securities LLC (excluding travel expenses but
including the reasonable fees and expenses of the legal counsel of the
Administrative Agent or any other Lender) in connection with the preparation of
this Agreement, the issuance of the Loan hereunder, the recordation of all
financing statements and such other instruments as may be required by the
Administrative Agent at the time of, or subsequent to, the execution of this
Agreement to secure the Obligations (including any and all recordation tax and
other costs and taxes incident to recording), the administration of the Credit
Facility (not otherwise contemplated by any fee paid by the Borrowers), any
future modification of the Financing Documents, the addition of Eligible
Projects to the Borrowing Base or the enforcement of any provision of this
Agreement and the collection of the Obligations. The Borrowers agree to
indemnify and save harmless the Lenders from any liability resulting from the
failure to pay any required recordation tax, transfer taxes, recording costs or
any other expenses incurred by the Lenders in connection with the Obligations.
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The provisions of this Section shall survive the execution and delivery of this
Agreement and the repayment of the Obligations. The Borrowers further agree to
reimburse the Lenders upon demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and legal expenses and travel expenses)
incurred by the Lenders, or any of them, in enforcing any of the Obligations or
any security therefor or incurred in connection with any bankruptcy proceeding
or in any post-judgment enforcement or collection action, together with
interest at the Post-Default Rate which agreement shall survive the termination
of this Agreement and the repayment of the Obligations.
Section 11.8 Counterparts
This Agreement may be executed in any number of counterparts all of
which together shall constitute a single instrument.
Section 11.9 Governing Law
This Agreement and all of the other Financing Documents shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia; provided, however, any Deed of Trust and any financing statements
covering fixtures securing such Loan shall be governed by, and construed in
accordance with, the laws of the state in which the applicable Facility is
located.
Section 11.10 Modifications
No modification or waiver of any provision of this Agreement or of any of
the other Financing Documents, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on the Borrowers in any case shall entitle the Borrowers
to any other or further notice or demand in the same, similar or other
circumstance.
Section 11.11 Illegality
If fulfillment of any provision hereof or any transaction related hereto
or to any of the other Financing Documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provisions herein
contained other than the provisions hereof pertaining to repayment of the
Obligations operates or would prospectively operate to invalidate this
Agreement in whole or in part, then such clause or provision only shall be
void, as though not herein contained, and the remainder of this Agreement shall
remain operative and in full force and effect; and if such provision pertains
to repayment of the Obligations, then, at the options of the Lenders, all of
the Obligations of the Borrowers to the Lenders shall become immediately due
and payable.
Section 11.12 Gender, etc.
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Whenever used herein, the singular number shall include the plural, the
plural the singular and the use of the masculine, feminine or neuter gender
shall include all genders.
Section 11.13 Headings
The headings in this Agreement are for convenience only and shall not
limit or otherwise affect any of the terms hereof.
Section 11.14 Waiver of Trial by Jury
THE BORROWER AND THE LENDERS HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH ANY OF THEM MAY BE PARTIES, NOT
GOVERNED BY THE ARBITRATION PROVISIONS OF THE NOTE OR THE GUARANTIES ARISING
OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING
DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS,
INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the
Borrowers and the Lenders, and the Borrowers and the Lenders hereby represent
that no representations of fact or opinion have been made by any individual to
induce this waiver of trial by jury or to in any way modify or nullify its
effect. The Borrowers and the Lenders further represent that they have been
represented in the signing of this Agreement and in the making of this waiver
by independent legal counsel, selected of their own free will, and that they
have had the opportunity to discuss this waiver with counsel.
Section 11.15 No Warranty by Lenders
By accepting or approving anything required to be observed, performed or
fulfilled by the Borrowers or to be given to the Administrative Agent or the
Lenders pursuant to this Agreement, including, without limitation, any
certificate, balance sheet, statement of profit and loss or other financial
statement, Survey, receipt, appraisal or insurance policy, the Lenders shall
not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof and any such acceptance or approval thereof shall not be or
constitute any warranty or representation with respect thereto by the Lenders.
Section 11.16 Liability of the Lenders
No Lender shall be liable for another Lender's failure to fund its
ratable share of any advance under the Loan. The Lenders shall not be liable
for any other act or omission by the Lenders, or any of them, pursuant to the
provisions of this Agreement in the absence of fraud or gross negligence. The
Lenders shall incur no liability to the Borrowers or any other party in
connection with the acts or omissions of any of the Lenders in reliance upon
any certificate or
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other paper believed by the Lenders to be genuine or with respect to any other
thing which the Lenders may do or refrain from doing, unless such act or
omission amounts to fraud or gross negligence. The Borrowers hereby agree that
the Lenders shall not be chargeable for any negligence, mistake, act or
omission of any accountant, examiner, agency or attorney employed by the
Lenders, or any of them, (except for the gross negligence or willful misconduct
of any person, corporation, partnership or other entity employed by any of the
Lenders) in making examinations, investigations or collections, or otherwise in
perfecting, maintaining, protecting or realizing upon any lien or security
interest or any other interest in the Collateral or other security for the
Obligations. The Borrowers, jointly and severally, shall indemnify, defend and
hold the Lenders and their successors and assigns harmless from and against any
and all claims, demands, suits, losses, damages, assessments, fines, penalties,
costs or other expenses (including reasonable attorney's fees and court costs)
arising from or in connection with this Agreement. Any indemnity provision for
the benefit of the Lenders set forth herein or in any of the Financing
Documents shall extend to any other lender who becomes a Lender under the
Credit Facility. The provisions of this Section shall survive the termination
of the Credit Facility.
Section 11.17 License of Tradename
The Borrowers do hereby grant to each of the Lenders and their
affiliates and any trustee under a Deed of Trust and their management company a
license to use the name of any Borrower and the name "Sunrise", "Dignity Home
Care", "Respect Home Care" or "Karrington" and any marks associated therewith
in the operation of a Facility upon such Lender's or trustee's taking of
possession or taking over management of a Facility or acquiring title thereto
at a foreclosure sale which license shall be in effect for a period of thirty
(30) months from the date thereof. The Borrowers further agree that a
third-party purchaser of a Facility may continue to operate the Facility under
the name of any Borrower unless such Borrower objects in writing thereto.
Section 11.18 No Partnership
Nothing contained in this Agreement shall be construed in a manner to
create any relationship between the Borrowers and the Lenders other than the
relationship of borrower and lender and the Borrowers and the Lenders shall not
be considered partners or co-venturers for any purpose on account of this
Agreement.
Section 11.19 Third Parties; Benefit
All conditions to the obligation of the Lenders to make advances
hereunder are imposed solely and exclusively for the benefit of the Lenders and
their assigns and no other persons shall have standing to require satisfaction
of such conditions in accordance with their terms or be entitled to assume that
the Lenders will refuse to make advances in the absence of strict compliance
with any or all thereof and no other person shall, under any circumstances, be
deemed to be the beneficiary of such conditions, any or all of which may be
freely waived in whole or in part by the Administrative Agent at any time in
the sole and absolute exercise of its discretion pursuant to its agreements
with the Lenders. The terms and provisions of this
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Agreement are for the benefit of the parties hereto and, except as herein
specifically provided, no other person shall have any right or cause of action
on account thereof.
Section 11.20 Conditions; Verification
Any condition of this Agreement which requires the submission of
evidence of the existence or non-existence of a specified fact or facts implies
as a condition to the existence or non-existence, as the case may be, of such
fact or facts that the Lenders shall, at all times, be free independently to
establish to their satisfaction and in its absolute discretion such existence
or non-existence.
Section 11.21 Signs; Publicity
At the Administrative Agent's request, but at the expense of the
Administrative Agent, the Borrowers shall place a sign acceptable to the
Borrowers at a location on each of the Eligible Projects under construction
satisfactory to the Administrative Agent, which sign shall recite, among other
things, that the Lenders are financing the development of the Land and the
construction of the Improvements. The Borrowers expressly authorize the
Administrative Agent to prepare and to furnish to the news media for
publication from time to time news releases with respect to the Credit Facility
and each Eligible Project, specifically to include but not limited to, releases
detailing the Administrative Agent's and the Lenders' involvement with the
Credit Facility and the financing of any Eligible Project, all subject to prior
review by the Borrowers.
Section 11.22 Time of Essence
Time shall be of the essence for each and every provision of this
Agreement of which time is an element.
Section 11.23 Replacement Note
In the event any Joinder Agreement is ever lost or destroyed, the
Borrowers covenant and agree that they will execute and deliver to the
Administrative Agent upon demand a replacement original thereof.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
WITNESS/ATTEST: SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP,
a Virginia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE SEAL, L.L.C., a Virginia limited
liability company
By: Sunrise Development, Inc., Managing Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE DECATUR ASSISTED LIVING LIMITED
PARTNERSHIP, a Georgia limited partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
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99
SUNRISE FAIRFIELD ASSISTED LIVING, L.P.,
a New Jersey limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE BELLEVUE ASSISTED LIVING
LIMITED PARTNERSHIP, a Washington limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE WALNUT CREEK ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE OAKLAND ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
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100
SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a
California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE HUNTCLIFF ASSISTED LIVING
LIMITED PARTNERSHIP, a Georgia limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE STERLING CANYON ASSISTED
LIVING LIMITED PARTNERSHIP, a California
limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
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101
SUNRISE WESTMINSTER ASSISTED
LIVING, L.L.C., a Colorado limited liability
company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE PINEHURST ASSISTED LIVING
LIMITED PARTNERSHIP, a Colorado limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE PARMA ASSISTED LIVING, L.L.C.,
a Virginia limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE HAMILTON ASSISTED LIVING,
L.L.C., a Virginia limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE EDINA ASSISTED LIVING, L.L.C.,
a Minnesota limited liability company
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102
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE FARMINGTON HILLS ASSISTED
LIVING, L.L.C., a Michigan limited liability
company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE BATON ROUGE ASSISTED LIVING,
L.L.C., a Louisiana limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE NEW ORLEANS ASSISTED
LIVING, L.L.C., a Louisiana limited liability
company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE HOLLY ASSISTED LIVING LIMITED
PARTNERSHIP, a Colorado limited partnership
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103
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE WESTON ASSISTED LIVING
LIMITED PARTNERSHIP, a Massachusetts
limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE NORTHSHORE ASSISTED LIVING
LIMITED PARTNERSHIP, a Florida limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE CHESTERFIELD ASSISTED LIVING,
L.L.C., a Missouri limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE CLAREMONT ASSISTED LIVING,
L.P., a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
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104
General Partner
By:/s/ James S. Pope (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
WITNESS: BANK OF AMERICA, N.A.,
as Administrative Agent for the Lenders
By: /s/ Leslie M. Zuga (SEAL)
- --------------------------- --------------------------------
Leslie M. Zuga
Senior Vice President
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LIST OF EXHIBITS
A Form of Note
B Form of Borrowing Base Report
C Current Borrowing Base Report
D Places of Business
E Form of Joinder Agreement
F Survey Requirements
G Form of Compliance Certificate
H List of Assets Held for Sale
EXHBIT A-1
106
EXHIBIT A
FORM OF NOTE
SECOND AMENDED, RESTATED
AND INCREASED MASTER PROMISSORY NOTE
THIS SECOND AMENDED, RESTATED AND INCREASED MASTER PROMISSORY NOTE is
made this 29th day of July, 1999, by (i) SUNRISE EAST ASSISTED LIVING LIMITED
PARTNERSHIP ("SEAL"), a Virginia limited partnership, (ii) SUNRISE SEAL, L.L.C.
("Sunrise SEAL"), a Virginia limited liability company, (iii) SUNRISE RIVERSIDE
ASSISTED LIVING, L.P., a California limited partnership, SUNRISE HUNTCLIFF
ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership, SUNRISE
STERLING CANYON ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership, SUNRISE PARAMUS ASSISTED LIVING LIMITED PARTNERSHIP, a New Jersey
limited partnership, SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a New Jersey
limited partnership, SUNRISE BELLEVUE ASSISTED LIVING LIMITED PARTNERSHIP, a
Washington limited partnership, SUNRISE OAKLAND ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE WALNUT CREEK ASSISTED
LIVING LIMITED PARTNERSHIP, a California limited partnership and SUNRISE
DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership
(collectively, the "SEAL Affiliates") (SEAL, Sunrise SEAL and the SEAL
Affiliates sometimes referred to herein collectively as the "Borrowers") and
BANK OF AMERICA, N.A., d/b/a NATIONSBANK, N.A., its successors and assigns,
successor by merger to NationsBank, N.A., as administrative agent (the
"Administrative Agent") for itself and for certain additional lenders
(collectively with the Administrative Agent, the "Lenders") who are or shall be
from time to time participating in a bank group pursuant to a Second Amended
and Restated Agency Agreement of even date herewith (as amended, restated or
substituted from time to time, the "Agency Agreement").
RECITALS
A. The Lenders have provided a credit facility (such credit
facility, as modified, increased, extended, restated or substituted, is
referred to hereinafter as the "Credit Facility" or the "Loan") in the maximum
principal sum of $250,000,000. Advances or readvances have been made pursuant
to, and secured by, the provisions of that certain Amended and Restated
Financing and Security Agreement dated December 23, 1997 by and between the
Administrative Agent and SEAL (as amended, restated or substituted from time to
time, the "Existing Financing Agreement") and that certain Amended and Restated
Master Construction Loan Agreement dated December 23, 1997 by and between the
Administrative Agent and SEAL (as amended, restated or substituted from time to
time, the "Construction Agreement").
B. The Loan is evidenced by that certain Amended, Restated,
Consolidated and Increased Master Promissory Note dated December 23, 1997
payable by SEAL to Administrative Agent on behalf of the Lenders as amended
pursuant to the First Amendment to Amended,
EXHBIT A-2
107
Restated, Consolidated and Increased Promissory Note and Additional Borrower
Joinder Supplement by and among SEAL, Sunrise SEAL and the Administrative Agent
(collectively, the "Original Note").
C. As of December 30, 1998, the Credit Facility was amended by
adding Sunrise SEAL as a co-borrower pursuant to amendments to the Original
Note, the Existing Financing Agreement and certain other Financing Documents
executed in connection therewith.
D. The Lenders have agreed to increase the Credit Facility Committed
Amount to $400,000,000. In connection with such increase and other
modifications to the Credit Facility, the Existing Financing Agreement and the
Construction Agreement are being amended, restated and consolidated pursuant to
the Second Amended and Restated Financing and Security Agreement of even date
herewith (as amended, restated or substituted from time to time the "Financing
Agreement").
E. Certain Eligible Projects owned by Sunrise Riverside Assisted
Living, L.P., Sunrise Huntcliff Assisted Living Limited Partnership, Sunrise
Sterling Canyon Assisted Living Limited Partnership, Sunrise Paramus Assisted
Living Limited Partnership, Sunrise Fairfield Assisted Living, L.P., Sunrise
Bellevue Assisted Living Limited Partnership, Sunrise Oakland Assisted Living
Limited Partnership, Sunrise Walnut Creek Assisted Living Limited Partnership,
and Sunrise Decatur Assisted Living Limited Partnership (collectively, the
"SEAL Affiliates") have been financed under the Credit Facility, and the SEAL
Affiliates have guaranteed the Credit Facility but have not been added as
borrowers under the Credit Facility.
F. In connection with the increase to the Credit Facility, (i) the
SEAL Affiliates, and (ii) every other entity beneficially owned, in whole or in
part, directly or indirectly, by Sunrise Assisted Living, Inc. which hereafter
pledges an Eligible Property as collateral for the Credit Facility and enters
into a Joinder Agreement pursuant to the terms of the Financing Agreement
(collectively, the "Additional SEAL Affiliates") are to be added as borrowers
under the Credit Facility.
G. The Note, the Deeds of Trust (as defined in the Financing
Agreement), the Financing Agreement, the Security Documents (as defined in the
Financing Agreement), and all other documents evidencing or securing the Loan
are hereinafter referred to collectively as the "Financing Documents."
H. All capitalized terms used and not defined herein shall have the
meaning given to such terms in the Financing Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Administrative Agent and the Borrower covenant and agree as
follows:
EXHBIT A-3
108
1. The above Recitals are incorporated herein by reference.
2. The Original Note is hereby amended and restated in its entirety
as follows:
$400,000,000 July 29, 1999
FOR VALUE RECEIVED, SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP, a
Virginia limited partnership, SUNRISE SEAL, L.L.C., a Virginia limited
liability company, SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a California
limited partnership, SUNRISE HUNTCLIFF ASSISTED LIVING LIMITED PARTNERSHIP, a
Georgia limited partnership, SUNRISE STERLING CANYON ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited partnership, SUNRISE FAIRFIELD
ASSISTED LIVING, L.P., a New Jersey limited partnership, SUNRISE BELLEVUE
ASSISTED LIVING LIMITED PARTNERSHIP, a Washington limited partnership, SUNRISE
OAKLAND ASSISTED LIVING LIMITED PARTNERSHIP, a California limited partnership,
SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership and SUNRISE DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia
limited partnership (collectively referred to herein as the "Borrower"),
promises to pay to the order of BANK OF AMERICA, N.A., d/b/a NATIONSBANK, N.A.,
successor by merger to NationsBank, N.A. its successors and assigns (the
"Administrative Agent") as administrative agent for itself and the other
lenders who are or shall be from time to time participating as lenders
(collectively with the Administrative Agent, the "Lenders") hereunder pursuant
to the Second Amended and Restated Agency Agreement of even date herewith, (as
amended, restated or substituted from time to time, the "Agency Agreement"),
the maximum principal sum of FOUR HUNDRED MILLION AND NO/100 DOLLARS
($400,000,000) (the "Principal Sum") or such greater amount as the Lenders may
from time commit to lend pursuant hereto and to the Agency Agreement, or so
much thereof as may be advanced or readvanced to or for the account of the
Borrower pursuant to the terms and conditions of the Financing Agreement (as
hereinafter defined), together with interest thereon at the rate or rates
hereinafter provided. All defined terms not otherwise defined herein shall have
the meaning set forth in the Financing Agreement.
1. Interest. Interest on portions of the outstanding Principal Sum
shall accrue and be payable for periods of thirty (30) days each or periods of
seven (7) days each (each a "Eurodollar Period") at a fixed rate for such
Eurodollar Period equal to the sum of (i) Eurodollar Rate (as defined in the
Financing Agreement), which rate shall be adjusted for any Federal Reserve
Board reserve requirements imposed upon the Administrative Agent or any of the
Lenders from time to time, plus (ii) that certain number of basis points per
annum (the "Spread") applicable pursuant to the conditions set forth below. The
Eurodollar Rate determined pursuant to the preceding sentence shall be in
effect to the end of the applicable Eurodollar Period. Interest payable
hereunder shall also be subject to the conditions set forth in Section 2.4 of
the Financing Agreement.
No more than six (6) different Eurodollar Periods may be in effect at any one
time provided that
EXHBIT A-4
109
not more than one (1) Eurodollar Period may be a seven day Eurodollar Period.
Interest shall be computed for the actual number of days which have elapsed
from the date of each advance of a portion of the Principal Sum calculated on
the basis of a 365-day year.
For any Eurodollar Period commencing on a date when one or more of SEAL,
Sunrise SEAL or Guarantor (as defined in the Financing Agreement) has a senior
secured debt rating from each of Moody's and Standard & Poors and not lower,
respectively, than BBB- and Baa3, the Spread shall be determined according to
the following grid based on the lower rating, if any, of either Moody's or
Standard & Poors.
STANDARD & POORS MOODY'S
SENIOR SECURED DEBT RATING Senior Secured Debt Rating SPREAD
-------------------------- -------------------------- ------
A- A3 100
BBB+ Baa1 110
BBB Baa2 120
BBB- Baa3 130
If a senior secured debt rating is not available from both Standard & Poors and
Moody's, an implied senior secured debt rating will be used. The implied senior
secured debt rating for both Standard & Poors and Moody's will be equivalent to
the lower of either (A) one level above the lower of Standard & Poors and
Moody's senior unsecured debt rating, or (B) two levels above Standard & Poors
and Moody's subordinated debt rating.
In all cases where a Spread based on an actual or implied secured debt rating
is not available or is lower than above, the Spread shall be one hundred fifty
(150) basis points.
2. Payments and Maturity.
(a) Interest only on the outstanding principal balance of the Loan
shall be due and payable on the fifteenth (15th) day of the first (1st) month
following the date hereof and on the fifteenth (15th) day of each and every
month thereafter for a total of thirty-six (36) consecutive months unless
otherwise extended pursuant to the terms of the Financing Agreement; and
(b) Principal sums repaid prior to the Maturity Date (as hereinafter
defined) may be reborrowed pursuant to the terms of the Financing Documents.
(c) The outstanding principal balance of the Loan and all accrued and
unpaid interest thereon shall be due and owing at the Maturity Date.
(d) The Loan shall mature and the entire principal balance of the
Loan, together with all accrued and unpaid interest thereon, shall be due and
payable on the date (the "Maturity Date") referred to in the Financing
Agreement as the Revolving Credit Termination Date.
EXHBIT A-5
110
The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Financing Agreement will not affect the continuing
validity of this Note or the Financing Agreement, and the balance may be
increased to the Principal Sum after any such reduction to zero.
3. Default Interest. Upon the occurrence of an Event of Default (as
hereinafter defined), the unpaid Principal Sum shall bear interest thereafter
until such Event of Default is cured at a rate which is at all times equal to
three percent (3%) per annum in excess of the rate or rates of interest
otherwise payable hereunder.
4. Late Charges. In the event that any payment due hereunder is not
received by the Administrative Agent within fifteen (15) days of the date such
payment is due (inclusive of the date when due), the Borrower shall pay to the
Administrative Agent on demand a late charge equal to four percent (4%) of such
payment.
5. Application and Place of Payments. Unless an Event of Default (as
hereinafter defined) has occurred, all payments made on account of this Note,
including prepayments, shall be applied in the following order:
(a) First, to all Enforcement Costs and other expenses of the
Administrative Agent and/or the Lenders;
(b) Second, to all amounts due to the Administrative Agent (in
its capacity as Administrative Agent) from the Borrowers or the Lenders;
(c) Third, to the Lenders, in accordance with their respective
pro rata shares of the Loan, for the past due interest on the Note;
(d) Fourth, to the payment of any prepayment penalty due under
Section 4.8 of the Financing Agreement.
EXHBIT A-6
111
(e) Fifth, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for principal of the Note in the order hereinafter
provided plus the pro rata share of the settlement payments due to the
Administrative Agent or other Lender who provided the Interest Rate Protection
(as defined in the Financing Agreement) to the Borrowers (the "Settlement
Payments");
(f) Sixth, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for past due fees required under the Financing
Documents;
(g) Seventh, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for all other amounts owed the Lenders pursuant to the
provisions of the Financing Agreement, this Agreement or the Financing
Documents, including but not limited to any unpaid Commitment Fees; and
(h) Eighth, to the Administrative Agent, in payment or reimbursement
of any over-drafts in any account of the Borrowers.
The application of payments after an Event of Default shall be determined by
the Administrative Agent. All payments on account of this Note shall be paid in
lawful money of the United States of America in immediately available funds
during regular business hours of the Administrative Agent at its principal
office in Baltimore, Maryland or at such other times and places as the
Administrative Agent may at any time and from time to time designate in writing
to the Borrower. Any payment received after 2:30 p.m. (Baltimore Time) shall be
deemed to have been received on the next Banking Day.
6. Prepayment. The Borrower shall have the right to prepay
the Principal Sum in full or in part, at any time and from time to time in
accordance with Section 4.8 of the Financing Agreement. Sums repaid may be
reborrowed.
7. Financing Agreement and Other Financing Documents. This
Note is the Note described in the Second Amended and Restated Financing and
Security Agreement of even date by and among the Borrowers and the
Administrative Agent (as amended or otherwise modified from time to time, the
"Financing Agreement"). The term "Financing Documents" as used in this Note
shall mean collectively this Note, the Financing Agreement, all Deeds of Trust
(as further amended or otherwise modified from time to time), all of the other
Financing Documents (as defined in the Financing Agreement) and any other
instrument, agreement, or document previously, simultaneously, or hereafter
executed and delivered by the Borrower and/or any other person, singularly or
jointly with any other person, evidencing, securing, guaranteeing, or in
connection with the Credit Facility or the Loan.
8. Security. This Note is secured by, among other things,
certain deeds of trust or mortgages (each as amended, restated or substituted
from time to time, a "Deed of Trust" collectively, the "Deeds of Trust"),
covering that real estate owned by the Borrower and the
EXHBIT A-7
112
improvements thereon more particularly described in the Deeds of Trust
identified on any Borrowing Base Report or listing of Optional Collateral and
all other property, real and personal, more particularly described in the Deeds
of Trust (collectively, the "Property").
9. Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an "Event
of Default" and collectively, the "Events of Default") under the terms of this
Note:
(a) The failure of the Borrower to pay to the Administrative
Agent when due any and all amounts payable by the Borrower to the Lenders under
the terms hereunder and such failure continues for five (5) calendar days after
notice thereof by the Administrative Agent, except with regard to payment of
amounts due at maturity for which no notice or cure period shall be required to
be given and except for a Borrowing Base Deficiency (as defined in the
Financing Agreement) which shall be payable as provided in the Financing
Agreement; or
(b) The occurrence of a Default or an Event of Default (as
those terms are defined in the Financing Agreement) under the terms and
conditions of any of the other Financing Documents, which Default or Event of
Default remains uncured beyond any applicable grace and/or cure period provided
therefor.
10. Remedies. Upon the occurrence of an Event of Default, at the
option of the Lenders, all amounts payable by the Borrower to the Lenders under
the terms hereof shall immediately become due and payable by the Borrower to
the Lenders without notice to the Borrower or any other person, and the Lenders
shall have all of the rights, powers, and remedies available under the terms of
this Note, any of the other Financing Documents and all applicable laws. The
Borrower and all endorsers, guarantors, and other parties who may now or in the
future be primarily or secondarily liable for the payment of the indebtedness
under the Loan hereby severally waive presentment, protest and demand, notice
of protest, notice of demand and of dishonor and non-payment of this Note and
expressly agree that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of the Borrower,
guarantors and endorsers. The Borrower and all endorsers, guarantors, and other
parties who may now or in the future be liable for payment of the Obligations
hereby acknowledge that all advances under the Loan will be made under and will
be evidenced by this Note.
11. Mandatory Arbitration. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or
relating to this Note or any related agreements or instruments, including any
claim based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), as promulgated from time to time by the
Rules of Practice and Procedure for the Arbitration of Commercial Disputes of
Judicial Arbitration and Mediation Services, Inc., predecessor in interest to
Endispute, Inc., doing business as "J.A.M.S./Endispute" and the "Special Rules"
set forth below. In the event of any inconsistency, the Special Rules shall
control. Judgment upon any arbitration award may be entered in any court having
jurisdiction.
EXHBIT A-8
113
Any party to this Note may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this
agreement applies in any court having jurisdiction over such action. The
foregoing notwithstanding, in a claim pertaining to a Deed of Trust or
Collateral located in a state with "one-action" rule which might limit to
Lenders' remedies, the Administrative Agent shall have the right in its sole
discretion to restrict the application of this arbitration provision to the
extent that it would otherwise result in a limitation on the Lenders' remedies
in such state.
(i) Special Rules. The arbitration shall be conducted in
Fairfax County, Virginia and administered by J.A.M.S./Endispute who will
appoint an arbitrator pursuant to its rules of practice and procedure; if
J.A.M.S./Endispute is unable or legally precluded from administering the
arbitration, then the American Arbitration Association will serve. All
arbitration hearings will be commenced within ninety (90) calendar days of the
demand for arbitration; further, the arbitrator shall only, upon a showing of
cause, be permitted to extend the commencement of such hearing for up to an
additional sixty (60) calendar days.
(ii) Reservations of Rights. Nothing in this Note shall be
deemed to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Note; or (ii) be a
waiver by Administrative Agent of the protection afforded to it by 12 U.S.C.
Sec. 91 or any substantially equivalent state law; or (iii) limit the right of
the Administrative Agent or the Lenders (A) to exercise self help remedies such
as (but not limited to) setoff, or (B) to foreclose against any real or
personal property collateral, or (C) to obtain from a court provisional or
ancillary remedies such as (but not limited to) injunctive relief or the
appointment of a receiver. The Administrative Agent or the Lenders may exercise
such self help rights, foreclose upon such property, or obtain such provisional
or ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Note. At the Administrative Agent's or the
Lenders' option, foreclosure under a deed of trust or mortgage may be
accomplished by any of the following: the exercise of a power of sale under the
deed of trust or mortgage, or by judicial sale under the deed of trust or
mortgage, or by judicial foreclosure. Neither the exercise of self help
remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in any such action, to arbitrate the merits of
the controversy or claim occasioning resort to such remedies. Notwithstanding
the foregoing, in the event that the Administrative Agent or the Lenders
exercise such self help remedies or other actions, the Borrower has not waived
any of its rights to seek legal or equitable relief to defend against the
Administrative Agent's or the Lenders' exercise of such self help remedies or
other actions. No provision in the Financing Documents regarding submission to
jurisdiction and/or venue in any court is intended or shall be construed to be
in derogation of the provisions in any Financing Document for arbitration of
any controversy or claim.
(iii) Confidentiality. Any arbitration proceeding, award,
findings of fact, conclusions of law, or other information concerning such
arbitration matters shall be held in confidence by the parties and shall not be
disclosed except to each party's employees or agents as shall be reasonably
necessary for such party to conduct its business; provided, however, that
EXHBIT A-9
114
either party may disclose such information for auditing purposes by independent
certified public accountants, for complying with applicable governmental laws,
regulations or court orders, or that is or becomes part of the public domain
through no breach of this Note.
12. Consent to Jurisdiction. The Borrower irrevocably submits to the
jurisdiction of any state or federal court sitting in the Commonwealth of
Virginia over any suit, action, or proceeding arising out of or relating to
this Note. The Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that the Borrower may now or hereafter have to the laying
the venue of any such suit, action, or proceeding brought in any such court and
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action, or proceeding brought in any such court shall be conclusive and binding
upon the Borrower and may be enforced in any court in which the Borrower is
subject to jurisdiction by a suit upon such judgment provided that service of
process is effected upon the Borrower as provided in this Note or as otherwise
permitted by applicable law.
13. Service of Process.
(a) The Borrower hereby irrevocably designates and appoints
Wayne G. Tatusko, Esquire of Watt, Tieder, Hoffar & Fitzgerald, 7929 Westpark
Drive, McLean, Virginia 22102, as the Borrower's authorized agent to accept and
acknowledge on the Borrower's behalf service of any and all process that may be
served in any suit, action, or proceeding instituted in connection with this
Note in any state or federal court sitting in the Commonwealth of Virginia. If
such agent shall cease so to act, the Borrower shall irrevocably designate and
appoint without delay another such agent in the Commonwealth of Virginia
satisfactory to the Lenders and shall promptly deliver to the Administrative
Agent evidence in writing of such agent's acceptance of such appointment and
its agreement that such appointment shall be irrevocable.
(b) The Borrower hereby consents to process being served in
any suit, action, or proceeding instituted in connection with this Note by (i)
the mailing of a copy thereof by certified mail, postage prepaid, return
receipt requested, to the Borrower and (ii) serving a copy thereof upon the
agent hereinabove designated and appointed by the Borrower as the Borrower's
agent for service of process. The Borrower irrevocably agrees that such service
shall be deemed to be service of process upon the Borrower in any such suit,
action, or proceeding. Nothing in this Note shall affect the right of the
Lenders to serve process in any manner otherwise permitted by law and nothing
in this Note will limit the right of the Lenders otherwise to bring proceedings
against the Borrower in the courts of any jurisdiction or jurisdictions.
14. WAIVER OF TRIAL BY JURY. THE BORROWER AND THE LENDERS HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING NOT REQUIRED TO BE ARBITRATED
PURSUANT TO THE TERMS HEREOF TO WHICH THE BORROWER AND THE LENDERS, OR ANY OF
THEM, MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS NOTE,
(B) THE OTHER FINANCING DOCUMENTS OR (C) ANY OF THE PROPERTY. IT IS AGREED AND
EXHBIT A-10
115
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS NOTE. THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY MADE BY THE BORROWER, AND THE BORROWER HEREBY REPRESENTS THAT
NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. THE BORROWER FURTHER REPRESENTS THAT IT HAS BEEN REPRESENTED IN THE
SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
15. Expenses. The Borrower promises to pay to the Administrative
Agent on demand by the Administrative Agent all costs and expenses incurred by
the Lenders in connection with the collection and enforcement of this Note,
including, without limitation, all reasonable attorneys' fees and expenses and
all court costs.
16. Notices. Any notice, request, or demand to or upon the Borrower
or the Lenders shall be deemed to have been properly given or made when
delivered in accordance with Section 11.1 of the Financing Agreement.
17. Miscellaneous. Each right, power, and remedy of the Lenders as
provided for in this Note or any of the other Financing Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative
and concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lenders of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lenders
of any or all such other rights, powers, or remedies. No failure or delay by
the Lenders to insist upon the strict performance of any term, condition,
covenant, or agreement of this Note or any of the other Financing Documents, or
to exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude the Lenders from exercising any such right, power,
or remedy at a later time or times. By accepting payment after the due date of
any amount payable hereunder, the Lenders shall not be deemed to waive the
right either to require prompt payment when due of all other amounts payable
under the terms hereof or to declare an Event of Default for the failure to
effect such prompt payment of any such other amount. No course of dealing or
conduct shall be effective to amend, modify, waive, release, or change any
provisions of this Note.
18. Partial Invalidity. In the event any provision of this Note (or
any part of any provision) is held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision (or remaining part of
the affected provision) of this Note; but this Note shall be construed as if
such
EXHBIT A-11
116
invalid, illegal, or unenforceable provision (or part thereof) had not been
contained in this Note, but only to the extent it is invalid, illegal, or
unenforceable.
19. Captions. The captions herein set forth are for convenience only
and shall not be deemed to define, limit, or describe the scope or intent of
this Note.
20. Governing Law. The provisions of this Note shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of
Virginia as the same may be in effect from time to time.
3. It is expressly understood and agreed that the indebtedness
evidenced by the Original Note has not been extinguished or discharged hereby
and is consolidated herein. The Borrower and/or the Administrative Agent agree
that the execution of this Note is not intended and shall not cause or result
in a novation with regard to the Original Note.
4. This Note may be executed in one or more counterparts each of
which shall constitute an original for all purposes; provided, however, that
all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the Borrowers and the Administrative Agent have
caused this Second Amended, Restated and Increased Master Promissory Note to be
executed, under seal, by their duly authorized representatives, as of the date
first written above.
BORROWERS:
WITNESS OR ATTEST: SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP,
a Virginia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE SEAL, L.L.C., a Virginia limited
liability company
EXHBIT A-12
117
By: Sunrise Development, Inc.,
- --------------------------- Managing Member
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a
California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE HUNTCLIFF ASSISTED LIVING LIMITED
PARTNERSHIP, a Georgia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE STERLING CANYON ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE PARAMUS ASSISTED LIVING LIMITED
EXHBIT A-13
118
PARTNERSHIP, a New Jersey limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a New
Jersey limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE BELLEVUE ASSISTED LIVING LIMITED
PARTNERSHIP, a Washington limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE OAKLAND ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
--------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited
EXHBIT A-14
119
partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
SUNRISE DECATUR ASSISTED LIVING LIMITED
PARTNERSHIP, a Georgia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
- --------------------------- its general partner
By: (SEAL)
----------------------------
James S. Pope
Vice President
ADMINISTRATIVE AGENT:
WITNESS: BANK OF AMERICA, N.A., d/b/a NATIONSBANK, N.A.,
successor by merger to NationsBank, N.A., as
Administrative Agent for itself and the Other
Lenders
By: (SEAL)
----------------------------
Sabina Kelly
Senior Vice President
EXHBIT A-15
120
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise East Assisted Living Limited Partnership, a Virginia limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Development, Inc., a Virginia corporation, the sole member of Sunrise SEAL,
L.L.C., a Virginia limited liability company, who executed the foregoing
instrument, personally appeared before me and acknowledged said Instrument to
be his act and deed that he executed said Instrument for the purposes therein
contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
EXHBIT A-16
121
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Riverside Assisted Living Limited Partnership, a California limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Huntcliff Assisted Living Limited Partnership, a Georgia limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
EXHBIT A-17
122
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Sterling Canyon Assisted Living Limited Partnership, a California
limited partnership, who executed the foregoing instrument, personally appeared
before me and acknowledged said Instrument to be his act and deed that he
executed said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Paramus Assisted Living Limited Partnership, a New Jersey limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
EXHBIT A-18
123
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Fairfield Assisted Living Limited Partnership, a New Jersey limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Bellevue Assisted Living Limited Partnership, a Washington limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
EXHBIT A-19
124
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Oakland Assisted Living Limited Partnership, a California limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the
jurisdiction aforesaid, do hereby certify that James S. Pope as Vice President
of Sunrise Assisted Living Investments, Inc., a Virginia corporation, the
general partner of Sunrise Walnut Creek Assisted Living Limited Partnership, a
California limited partnership, who executed the foregoing instrument,
personally appeared before me and acknowledged said Instrument to be his act and
deed that he executed said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
EXHBIT A-20
125
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Decatur Assisted Living Limited Partnership, a Georgia limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed
said Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:
I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that Sabina Kelly, a Senior Vice President of Bank
of America, N.A., d/b/a NationsBank, N.A., successor by merger to NationsBank,
N.A., who executed the foregoing instrument, personally appeared before me and
acknowledged said Instrument to be her act and deed that she executed said
Instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
------------------------------
Notary Public
My Commission Expires:
EXHBIT A-21
126
AMENDMENT TO SECOND AMENDED, RESTATED
AND INCREASED MASTER PROMISSORY NOTE
THIS AMENDMENT TO SECOND AMENDED, RESTATED AND INCREASED PROMISSORY NOTE
(this "Agreement") is made this 14th day of March, 2000, by and among SUNRISE
EAST ASSISTED LIVING LIMITED PARTNERSHIP, a Virginia limited partnership
("SEAL"), SUNRISE SEAL, L.L.C., a Virginia limited liability company ("Sunrise
SEAL"), SUNRISE DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited
partnership, SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a New Jersey limited
partnership, SUNRISE BELLEVUE ASSISTED LIVING LIMITED PARTNERSHIP, a Washington
limited partnership, SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED PARTNERSHIP,
a California limited partnership, SUNRISE OAKLAND ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited partnership, SUNRISE RIVERSIDE
ASSISTED LIVING, L.P., a California limited partnership, SUNRISE HUNTCLIFF
ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership, SUNRISE
STERLING CANYON ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership, (collectively the "Original Borrowers") and SUNRISE WESTMINSTER
ASSISTED LIVING, L.L.C., a Colorado limited liability company, SUNRISE
PINEHURST ASSISTED LIVING LIMITED PARTNERSHIP, a Colorado limited partnership,
SUNRISE PARMA ASSISTED LIVING, L.L.C., a Virginia limited liability company,
SUNRISE HAMILTON ASSISTED LIVING, L.L.C., a Virginia limited liability company,
SUNRISE EDINA ASSISTED LIVING, L.L.C., a Minnesota limited liability company,
SUNRISE FARMINGTON HILLS ASSISTED LIVING, L.L.C., a Michigan limited liability
company, SUNRISE BATON ROUGE ASSISTED LIVING, L.L.C., a Louisiana limited
liability company, SUNRISE NEW ORLEANS ASSISTED LIVING, L.L.C., a Louisiana
limited liability company, SUNRISE HOLLY ASSISTED LIVING LIMITED PARTNERSHIP, a
Colorado limited partnership, SUNRISE WESTON ASSISTED LIMITED PARTNERSHIP, a
Massachusetts limited partnership, SUNRISE NORTHSHORE ASSISTED LIVING LIMITED
PARTNERSHIP, a Florida limited partnership, SUNRISE CHESTERFIELD ASSISTED
LIVING, L.L.C., a Missouri limited liability company, and SUNRISE CLAREMONT
ASSISTED LIVING, L.P., a California limited partnership (the "Additional
Borrowers", collectively with the Original Borrowers and any other Additional
Borrowers, as hereinafter defined, the "Borrowers"), and BANK OF AMERICA, N.A.,
as administrative agent (the "Administrative Agent") for itself and for UNITED
BANK, as syndication agent (the "Syndication Agent"), FLEET NATIONAL BANK, as
documentation agent (the "Documentation Agent") and certain additional lenders
who are or shall be from time to time participating as lenders hereunder
pursuant to the Agency Agreement, as hereinafter defined (collectively with the
Administrative Agent, the "Lenders").
INTRODUCTORY STATEMENT
A. As evidenced by the terms of the Second Amended, Restated and
Increased Promissory Note dated July 29, 1999, from the Borrowers other than
the Additional Borrowers
EXHBIT A-22
127
(as hereinafter defined), jointly and severally, as makers, to the Lender, as
payee (such Second Amended, Restated and Increased Promissory Note, together
with all modifications thereto, extensions or renewals thereof and
substitutions therefor being hereinafter referred to as the "Note"), the
Borrowers other than the Additional Borrowers became indebted unto the Lender
for a loan in the maximum principal amount at any one time outstanding of
$400,000,000 (the "Credit Facility" or the "Loan"). Pursuant to their
respective Additional Borrower Joinder Supplements each of the Additional
Borrowers became co-borrowers under the Note and jointly and severally liable
with the other Borrowers for the obligations under the Loan.
B. The Loan is advanced pursuant to the terms of and secured as
provided in the Second Amended and Restated Financing and Security Agreement
dated July 29, 1999 executed by the Borrowers (the "Existing Financing
Agreement").
C. The Borrowers have applied to the Lenders to modify certain terms
an conditions of the Existing Financing Agreement and of the Second Amended and
Restated Guaranty of Payment Agreement dated July 29, 1999 by Sunrise Assisted
Living, Inc. (the "Guarantor") for the benefit of the Lenders (the "Existing
Guaranty"). The Lenders have agreed on the condition, among others that the
Existing Financing Agreement and the Existing Guaranty be amended and restated
in their entirety pursuant to the terms of the Third Amended and Restated
Financing and Security Agreement of even date herewith by and among the
Borrowers and the Administrative Agent (as amended, modified, restated, renewed
or substituted, the "Financing Agreement") and the Third Amended and Restated
Guaranty of Payment Agreement of even date herewith by the Guarantor for the
benefit of the Lenders (as amended, modified, restated, renewed or substituted,
the "Guaranty").
D. The Lenders have agreed to make available the Credit Facility
upon the conditions that this Agreement amending the interest rate applicable
to the Note be executed and delivered to the Administrative Agent.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for the sum of One
Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the Borrowers and the Lender do
hereby mutually covenant and agree as follows:
1. Incorporation of Recitals. The parties hereto acknowledge and
agree that the recitals hereinabove set forth are true and correct in all
respects and that the same are incorporated herein and made a part hereof.
2. Outstanding Obligations. The parties hereto acknowledge and agree
(a) that the outstanding principal balance of the Note as of March 14, 2000 is
$238,200,000, and (b) that the unpaid principal balance of the Note, together
with accrued and unpaid interest thereon, is due and owing subject to the terms
of repayment hereinafter set forth, without defense or offset.
EXHBIT A-23
128
3. Interest Rate. Paragraph 1 (Interest) on page 3 of the Note is
hereby amended and restated in its entirety as follows and shall be effective
as of the date first above written:
1. Interest. Interest on portions of the outstanding
Principal Sum shall accrue and be payable for periods of thirty (30) days each
or periods of seven (7) days each (each a "Eurodollar Period") at a fixed rate
for such Eurodollar Period equal to the sum of (i) Eurodollar Rate (as defined
in the Financing Agreement), which rate shall be adjusted for any Federal
Reserve Board reserve requirements imposed upon the Administrative Agent or any
of the Lenders from time to time, plus (ii) one hundred seventy five (175)
basis points per annum. The Eurodollar Rate determined pursuant to the
preceding sentence shall be in effect to the end of the applicable Eurodollar
Period. Interest payable hereunder shall also be subject to the conditions set
forth in Section 2.4 of the Financing Agreement.
No more than six (6) different Eurodollar Periods may be in effect at any one
time provided that not more than one (1) Eurodollar Period may be a seven day
Eurodollar Period. Interest shall be computed for the actual number of days
which have elapsed from the date of each advance of a portion of the Principal
Sum calculated on the basis of a 365-day year.
4. Continuation of Loan Terms. Except as otherwise expressly set
forth below, the outstanding principal balance of the Note shall continue to be
repaid on the terms and subject to the conditions set forth in the Note and the
other documents evidencing the Loan. All capitalized terms used but not defined
in this Agreement shall have the meaning given to such terms in the Financing
Documents.
5. Continuing Agreements; Novation. Except as expressly modified
hereby and by the Financing Agreement and the Guaranty, the parties hereto
ratify and confirm each and every provision of the Note, and each of the other
Financing Documents as if the same were set forth herein. In the event that any
of the terms and conditions in the Note or in any of the other Financing
Documents conflict in any way with the terms and provisions hereof, the terms
and provisions hereof shall prevail. The parties hereto covenant and agree that
the execution of this Agreement is not intended to and shall not cause or
result in a novation with regard to the Note, the Financing Agreement, the
Guaranty and/or the other Financing Documents and that the existing
indebtedness of the Borrowers to the Lender evidenced by the Note is
continuing, without interruption, and has not been discharged by a new
agreement.
6. Entire Agreement. NO STATEMENTS, AGREEMENTS OR REPRESENTATIONS,
ORAL OR WRITTEN, WHICH MAY HAVE BEEN MADE TO ANY OF THE BORROWERS OR TO ANY
EMPLOYEE OR AGENT OF THE BORROWERS, EITHER BY THE LENDER OR BY ANY EMPLOYEE,
AGENT OR BROKER ACTING ON THE LENDER'S BEHALF, WITH RESPECT TO THE MODIFICATION
OF THE LOAN, SHALL BE OF ANY FORCE OR EFFECT, EXCEPT TO THE EXTENT STATED IN
THIS AGREEMENT, AND ALL PRIOR AGREEMENTS AND REPRESENTATIONS WITH RESPECT TO
THE MODIFICATION OF THE LOAN ARE MERGED HEREIN.
EXHBIT A-24
129
7. Captions. The captions herein set forth are for convenience only
and shall not be deemed to define, limit or describe the scope or intent of
this Agreement.
8. Governing Law. The provisions of this Agreement shall be
construed, interpreted and enforced in accordance with the laws of the
Commonwealth of Virginia as the same may be in effect from time to time.
[SIGNATURES ON FOLLOWING PAGE]
EXHBIT A-25
130
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
BORROWERS:
WITNESS/ATTEST: SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP,
a Virginia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE SEAL, L.L.C., a Virginia limited
liability company
By: Sunrise Development, Inc., Managing Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE DECATUR ASSISTED LIVING LIMITED
PARTNERSHIP, a Georgia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE FAIRFIELD ASSISTED LIVING, L.P.,
EXHBIT A-26
131
a New Jersey limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE BELLEVUE ASSISTED LIVING
LIMITED PARTNERSHIP, a Washington limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE WALNUT CREEK ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE OAKLAND ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited
EXHBIT A-27
132
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE RIVERSIDE ASSISTED LIVING, L.P.,
a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE HUNTCLIFF ASSISTED LIVING
LIMITED PARTNERSHIP, a Georgia limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE STERLING CANYON ASSISTED
LIVING LIMITED PARTNERSHIP, a California
limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE WESTMINSTER ASSISTED
LIVING, L.L.C., a Colorado limited liability
EXHBIT A-28
133
company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE PINEHURST ASSISTED LIVING
LIMITED PARTNERSHIP, a Colorado limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE PARMA ASSISTED LIVING, L.L.C.,
a Virginia limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE HAMILTON ASSISTED LIVING,
L.L.C., a Virginia limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE EDINA ASSISTED LIVING, L.L.C.,
a Minnesota limited liability company
By: Sunrise Assisted Living Investments, Inc.,
EXHBIT A-29
134
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE FARMINGTON HILLS ASSISTED
LIVING, L.L.C., a Michigan limited liability
company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE BATON ROUGE ASSISTED LIVING,
L.L.C., a Louisiana limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE OF NEW ORLEANS ASSISTED
LIVING, L.L.C., a Louisiana limited liability
company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE HOLLY ASSISTED LIVING LIMITED
PARTNERSHIP, a Colorado limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
EXHBIT A-30
135
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE WESTON ASSISTED LIVING
LIMITED PARTNERSHIP, a Massachusetts
limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE NORTHSHORE ASSISTED LIVING
LIMITED PARTNERSHIP, a Florida limited
partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE CHESTERFIELD ASSISTED LIVING,
L.L.C., a Missouri limited liability company
By: Sunrise Assisted Living Investments, Inc.,
Sole Member
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
SUNRISE CLAREMONT ASSISTED LIVING L.P., a
California limited partnership
EXHBIT A-31
136
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: (SEAL)
- --------------------------- ----------------------------
James S. Pope
Vice President
ADMINISTRATIVE AGENT:
WITNESS: BANK OF AMERICA, N.A.,
as Administrative Agent for the Lenders
By: (SEAL)
- --------------------------- ----------------------------
Leslie M. Zuga
Senior Vice President
EXHBIT A-32
137
EXHIBIT B
FORM OF BORROWING BASE REPORT
EXHBIT B-1
138
EXHIBIT C
CURRENT BORROWING BASE REPORT
EXHBIT C-1
139
EXHIBIT D
PLACES OF BUSINESS
AS OF MARCH 14, 2000
The Borrowers' Chief Executive
Office and Principal Place of Business is:
7900 Westpark Drive
McLean, VA 22102
Locations of Collateral:
9401 Lee Highway, Suite 300
Fairfax, VA 22031
Fairfax County
7902 Westpark Drive
McLean, VA 22102
Fairfax County
Sunrise of Decatur
920 Clairemont Avenue
Decatur, GA
Dekalb County
Sunrise of Lafayette Hills (Whitemarsh)
429 Ridge Pike
Lafayette Hills, PA
Montgomery County
Sunrise of Fairfield
115 Greenbrook Road
Township of Fairfield, NJ
Essex County
Sunrise of Bellevue
15928 NE 8th Street
Bellevue, WA
King County
Sunrise of Walnut Creek
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140
2175 Ygnacio Valley Road
Walnut Creek, CA
Contra Costa County
Sunrise of Oakland Hills
11889 Skyline Boulevard
Oakland, CA
Alameda County
Sunrise of Paoli
324 Lancaster Avenue
Malvern, PA
Chester County
Sunrise of Paramus
571 Paramus Road
Paramus, NJ
Bergen County
Sunrise of Riverside
5265 Chapalla Drive
Riverside, CA
Riverside County
Sunrise of Northville
16100 Haggerty Road
Northville, MI
Wayne County
Sunrise of Bloomingdale
129 E. Lake Street
Bloomingdale, IL
DuPage County
Sunrise of Huntcliff
8480 Roswell Road
Atlanta, GA
Fulton County
Sunrise of Mount Vernon
160 West Lincoln Avenue
EXHBIT D-2
141
Mt. Vernon, NY
Westchester County
Sunrise of Wall Township
2600 Allaire Road
Township of Wall, NJ
Monmouth County
Sunrise of Smithtown
30 Route 111
The Branch
Smithtown, NY
Suffolk County
Sunrise of Willowbrook
301 3rd Street
Clarendon Hills, IL
DuPage County
Sunrise of Wilton
96 Danbury Road
Wilton, CT
Town of Wilton
Sunrise of Huntcliff Summit I
8490 Roswell Road
Atlanta, GA
Fulton County
Sunrise of Sterling Canyon
25815 McBean Parkway
Valencia, CA
Los Angeles County
Sunrise of Flossmoor
19715 South Governor's Highway
Flossmoor, IL
Cook County
Sunrise of San Mateo
955 South El Camino Real
San Mateo, CA
EXHBIT D-3
142
San Mateo County
Sunrise of Parma
7766 Broadview Road
Cleveland, OH
Cuyahoga County
Sunrise of Hamilton
496 NW Washington Blvd.
Hamilton, OH
Butler County
Sunrise of Edina
7128 France Avenue South
Edina, MN
Hennepin County
Sunrise of Farmington Hills
Twelve Mile Road
Farmington Hills, MI
Oakland County
Sunrise of Chesterfield
1880 Clarkson Road
Chesterfield, MO
St. Louis County
Sunrise of Holly
8975 South Holly Street
Littleton, CO
Arapahoe County
Sunrise of Westminster
North Sheridan Blvd.
Westminster, CO
Adams County
Sunrise of Baton Rouge
8502 Jefferson Hwy.
Baton Rouge, LA
East Baton Rouge Parish
EXHBIT D-4
143
Sunrise of New Orleans
5958 St. Bernard Avenue
New Orleans, LA
Orleans Parish
Sunrise of Weston
135 North Avenue
Weston, MA
Middlesex South County
Sunrise of Northshore
939 Beach Drive NE
St. Petersburg, FL
Pinellas County
Sunrise of Pinehurst
5195 West Quincy Avenue
Pinehurst, CO
Denver County
Sunrise of Claremont
4353 N. Towne Avenue
Claremont, California
Los Angeles County
EXHBIT D-5
144
EXHIBIT E
FORM OF JOINDER AGREEMENT
JOINDER AGREEMENT
(___________, _______)
THIS JOINDER AGREEMENT (this "Agreement") is made this ___ day of
_________, 200_ by ________________________________, a ____________________
organized under the laws of ______________, d/b/a "Sunrise of _____________"
(the "Additional Borrower") in favor of each of the Lenders under the Agency
Agreement (as hereinafter defined) and BANK OF AMERICA, N.A., successor to
NationsBank, N.A., as administrative agent for the Lenders (the "Administrative
Agent").
NOW, THEREFORE, for value received the undersigned agrees as follows:
1. Reference is hereby made to the Second Amended and Restated
Financing and Security Agreement dated July 29, 1999 (as amended, modified,
restated, substituted, extended and renewed at any time and from time to time,
the "Financing Agreement") by and among Sunrise East Assisted Living Limited
Partnership, Sunrise SEAL, L.L.C., certain other affiliated borrowing entities
(collectively, the "Borrower") and the Administrative Agent, who together with
certain additional lenders (collectively with the Administrative Agent, the
"Lenders") are participating in a bank group pursuant to the Second Amended and
Restated Agency Agreement by and among the Lenders party thereto dated July 29,
1999 (as amended, restated or substituted from time to time, the "Agency
Agreement"). Capitalized terms not otherwise defined in this Agreement shall
have the meanings given to them in the Financing Agreement.
2. Pursuant to the Financing Agreement, the Lenders have agreed to
extend to the Borrower a credit facility in the maximum principal amount of
$400,000,000 or such greater amount as the Lenders may from time to time commit
to lend pursuant to the Agency Agreement (the "Credit Facility") for the
purposes set forth in the Financing Agreement. The Loans and all other
obligations relating to the Credit Facility are evidenced by the Second Amended,
Restated and Increased Master Promissory Note dated July 29, 1999 made by the
Borrower to the Administrative Agent in the maximum principal amount of
$400,000,000 (as amended, restated or substituted from time to time, the
"Note"). The Credit Facility is subject to the terms and conditions of the
Financing Agreement.
3. As a condition precedent to extending the Credit Facility to the
Borrower, the Lenders required that any Wholly Owned Subsidiary or any other
entity affiliated with the Borrower which owns a Facility to be encumbered with
a Deed of Trust to secure the Credit Facility execute this Agreement to evidence
its agreement to the terms of the Financing Documents as applicable.
4. The Additional Borrower hereby acknowledges, confirms and agrees
that on and
EXHBIT E-1
145
as of the date of this Agreement, the Additional Borrower has or will receive
the benefit of certain advances made under the Credit Facility and has granted a
[Mortgage/Deed of Trust], Assignment and Security Agreement of even date
herewith (the "Deed of Trust") covering its Facility located in _____________,
________ and known as "Sunrise of _________" (the "Property") to secure the
Obligations, and as such shall be liable, as provided in the Financing
Documents, for all Obligations (whether incurred or arising prior to, on, or
subsequent to the date hereof) and otherwise bound by all of the terms,
provisions and conditions of the Financing Documents. Without in any way
implying any limitation on any of the provisions of this Agreement, the
Additional Borrower (i) represents and warrants that all of the representations
and warranties contained in the Financing Documents are true and correct on and
as the date hereof as if made on and as of the date hereof, both before and
after giving effect to this Agreement, and that no Event of Default or Default
has occurred and is continuing or exists, or would occur or exist after giving
effect to this Agreement, (ii) promises to pay, jointly and severally with the
Borrower, all sums due or to become due under the Note and the other Financing
Documents, and acknowledges that this Agreement shall constitute an allonge or
other modification to the Note for the purposes of adding the Additional
Borrower as a Borrower, jointly and severally liable with all other Borrowers;
(iii) acknowledges, confirms and agrees that from and after the date hereof
Additional Borrower shall be liable for all Obligations under the Financing
Documents; and (iv) acknowledges, confirms and agrees that from and after the
date hereof the term Borrower as such term (or any similar or related term) is
used in the Note, Financing Agreement, this Agreement or any other Financing
Document shall include the Additional Borrower.
5. The Additional Borrower hereby represents and warrants to the
Administrative Agent and the Lenders that it will derive benefits, directly and
indirectly, from each advance of the Credit Facility, both in its individual
capacity and as a member of the integrated group of entities which together
comprise the Borrower, and the successful operation of the integrated group is
dependent upon the continued successful performance of the functions of the
integrated group as a whole. Additional Borrower acknowledges and agrees that
the terms of the consolidated financing provided under the Financing Agreement
are more favorable than would otherwise would be obtainable by the Additional
Borrower individually, and the Additional Borrower's additional administrative
and other costs and reduced flexibility associated with individual financing
arrangements which would otherwise be required if obtainable would substantially
reduce the value to the Additional Borrower of the financing.
6. For administrative convenience, the Additional Borrower hereby
irrevocably appoints Sunrise Assisted Living Investments, Inc. ("SALII") as the
Additional Borrower's attorney-in-fact, with power of substitution (with the
prior written consent of the Administrative Agent in the exercise of its sole
and absolute discretion), in the name of SALII or in the name of the Additional
Borrower or otherwise to take any and all actions with respect to the this
Agreement, the other Financing Documents, the Obligations and/or the Collateral
(including, without limitation, the proceeds thereof) as SALII may so elect from
time to time, including, without limitation, actions to (a) request advances
under the Credit Facility and direct the Administrative Agent to disburse or
credit the proceeds of any Loan directly to an account of
EXHBIT E-2
146
SALII, any one or more of the other entities comprising the Borrower, the
Additional Borrower or otherwise, which direction shall evidence the making of
such Loan and shall constitute the acknowledgement by the Borrower of the
receipt of the proceeds of such Loan, (b) enter into, execute, deliver, amend,
modify, restate, substitute, extend and/or renew this Agreement, any other
Financing Documents, security agreements, mortgages, deposit account agreements,
instruments, certificates, waivers, letter of credit applications, releases,
documents and agreements from time to time, and (c) endorse any check or other
item of payment in the name of the Additional Borrower or in the name of SALII.
The foregoing appointment is coupled with an interest, cannot be revoked without
the prior written consent of the Administrative Agent, and may be exercised from
time to time through SALII's duly authorized officer, officers or other Person
or Persons designated by SALII to act from time to time on behalf of SALII.
7. The Additional Borrower hereby irrevocably authorizes each of the
Lenders to make Loans to any one or more of the entities comprising the Borrower
pursuant to the provisions of the Financing Agreement upon the written, oral or
telephone request any one or more of the Persons who is from time to time a
Responsible Officer of SALII under the provisions of the most recent certificate
of authorization and/or incumbency of SALII on file with the Administrative
Agent.
8. The Additional Borrower acknowledges that neither the
Administrative Agent nor any of the Lenders assumes any responsibility or
liability for any errors, mistakes, and/or discrepancies in the oral,
telephonic, written or other transmissions of any instructions, orders, requests
and confirmations between the Administrative Agent and SALII or the
Administrative Agent and any of the Lenders in connection with the Credit
Facility or any other transaction in connection with the provisions of this
Agreement. The Additional Borrower acknowledges that the Borrowers have agreed
among themselves, and the Administrative Agent and the Lenders have consented to
that agreement, that each Borrower shall have rights of contribution from all of
the other of them to the extent any Borrower incurs Obligations in excess of the
proceeds of the Loans received by, or allocated to, or advanced for the direct
benefit of, such Borrower. The Additional Borrower acknowledges that all such
indebtedness and rights shall be subordinate in priority and payment to the
indefeasible repayment in full in cash of the Obligations, and, unless the
Administrative Agent agrees in writing otherwise, shall not be exercised or
repaid in whole or in part until all of the Obligations have been indefeasibly
paid in full in cash. The Additional Borrower agrees that all of such
inter-company indebtedness and rights of contribution are part of the Collateral
and secure the Obligations. The Additional Borrower hereby waives all rights of
counterclaim, recoupment and offset between or among the Borrowers arising on
account of that indebtedness and otherwise. The Additional Borrower shall not
evidence the inter-company indebtedness or rights of contribution by note or
other instrument, and shall not secure such indebtedness or rights of
contribution with any Lien or security.
9. Without in any way implying any limitation on any of the
provisions of this Agreement, the Financing Agreement, or any of the other
Financing Documents, the Additional Borrower hereby assigns, pledges and grants
to the Administrative Agent, for the ratable benefit of the Lenders as security
for the Obligations, and agrees that the Administrative Agent, for the
EXHBIT E-3
147
ratable benefit of the Lenders, shall have a perfected and continuing security
interest in, and Lien on, (a) all of the Additional Borrower's Accounts,
Equipment, General Intangibles, documents, Chattel Paper, Instruments and
Inventory, all right title and interest of the Additional Borrower in and to the
Operating Agreements and Management Contracts (including, without limitation,
the Management Agreement), Resident Agreements, Physician Contracts,
Participation Agreements, the Licenses (whether or not designated with initial
capital letters), and all other management contracts, operating agreements,
service agreements and any other agreements pertaining to the Property as those
terms are defined in the Uniform Commercial Code as presently adopted and in
effect in the Commonwealth of Virginia (b) any and all property specifically
included in those respective terms in the Financing Agreement or in the
Financing Documents, (c) all right, title and interest of the Additional
Borrower in and to Leases or subleases, rents, royalties, issue, profits,
revenues, earnings, income or other benefits of the Property or arising from the
use or enjoyment of the Property, or from any lease or other use and occupancy
agreement pertaining to the Property, (d) all right, title and interest of the
Additional Borrower under all construction, architectural and design contracts
and plans and specifications, (e) any and all property and/or collateral
described in any of the Security Documents, including, without limitation, the
Financing Agreement and the Deed of Trust, (f) any and all bank accounts or
other deposit accounts of the Additional Borrower wherever located, and (g) all
proceeds (cash and non-cash, including, without limitation, insurance proceeds),
of the foregoing. The Additional Borrower further agrees that the Administrative
Agent, shall have in respect thereof all of the rights and remedies of a secured
party under the Uniform Commercial Code as well as those provided in this
Agreement, under each of the other Financing Documents and under applicable
Laws.
10. Without in any way implying any limitation on any of the
provisions of this Agreement, the Additional Borrower agrees to execute such
financing statements, instruments, and other documents as the Administrative
Agent may require.
11. Additional Borrower hereby covenants and agrees with the
Administrative Agent and the Lenders that the Obligations include all present
and future indebtedness, duties, obligations, and liabilities, whether now
existing or contemplated or hereafter arising, of the Borrower.
12. Without in any way implying any limitation on any of the
provisions of this Agreement, the Additional Borrower agrees to the provisions
of this Section 12.
(a) Additional Borrower hereby unconditionally and irrevocably,
guarantees to the Administrative Agent and the Lenders:
(i) the due and punctual payment in full (and not merely
the collectibility) by the Borrower of the Obligations, including unpaid and
accrued interest thereon, in each case when due and payable, all according to
the terms of this Agreement, the Note and the other Financing Documents;
(ii) the due and punctual payment in full (and not merely
the
EXHBIT E-4
148
collectibility) by the Borrower of all other sums and charges which may at any
time be due and payable in accordance with this Agreement, the Note or any of
the other Financing Documents;
(iii) the due and punctual performance by the Borrower of
all of the other terms, covenants and conditions contained in the Financing
Documents; and
(iv) all the other Obligations of the Borrower.
(b) The obligations and liabilities of the Additional Borrower
under this Section 12 shall be absolute and unconditional, irrespective of the
genuineness, validity, priority, regularity or enforceability of this Agreement,
the Note or any of the Financing Documents or any other circumstance which might
otherwise constitute a legal or equitable discharge of a surety or guarantor.
The Additional Borrower expressly agrees that the Administrative Agent may, in
its sole and absolute discretion, without notice to or further assent of the
Additional Borrower without in any way releasing, affecting or in any way
impairing the obligations and liabilities of the Additional Borrower hereunder:
(i) waive compliance with, or any defaults under, or
grant any other indulgences under or with respect to any of the Financing
Documents;
(ii) modify, amend, change or terminate any provisions of
any of the Financing Documents;
(iii) grant extensions or renewals of or with respect to
the Credit Facility, the Note or any of the other Financing Documents;
(iv) effect any release, subordination, compromise or
settlement in connection with this Agreement, the Note or any of the other
Financing Documents;
(v) agree to the substitution, exchange, release or
other disposition of the Collateral or any part thereof, or any other collateral
for the Credit Facility or to the subordination of any lien or security interest
therein;
(vi) make advances for the purpose of performing any
term, provision or covenant contained in this Agreement, the Note or any of the
other Financing Documents with respect to which the Borrower shall then be in
default;
(vii) make future advances pursuant to the Financing
Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise transfer
the Obligations, the Note, any of the other Financing Documents or any interest
therein, all as and to the extent permitted by the provisions of this Agreement;
EXHBIT E-5
149
(ix) deal in all respects with any one or more entities
comprising the Borrower as if this Section 12 were not in effect;
(x) effect any release, compromise or settlement with
any one or more entities comprising the Borrower; and
(xi) provide debtor-in-possession financing or allow use
of cash collateral in proceedings under the Bankruptcy Code, it being expressly
agreed by the Additional Borrower that any such financing and/or use would be
part of the Obligations.
(c) The obligations and liabilities of the Additional Borrower,
as guarantor under this Section 12 shall be primary, direct and immediate, shall
not be subject to any counterclaim, recoupment, set off, reduction or defense
based upon any claim that Additional Borrower may have against any one or more
of the entities comprising the Borrower, the Administrative Agent and the
Lenders, and shall not be conditional or contingent upon pursuit or enforcement
by the Administrative Agent of any remedies it may have against the Borrower
with respect to this Agreement, the Note or any of the other Financing
Documents, whether pursuant to the terms thereof or by operation of law. Without
limiting the generality of the foregoing, the Administrative Agent shall not be
required to make any demand upon any one or more entities comprising the
Borrower, or to sell the Collateral or otherwise pursue, enforce or exhaust its
remedies against any one or more entities comprising the Borrower or the
Collateral either before, concurrently with or after pursuing or enforcing its
rights and remedies hereunder. Any one or more successive or concurrent actions
or proceedings may be brought against Additional Borrower under this Section 12,
either in the same action, if any, brought against the Borrower, or in separate
actions or proceedings, as often as the Administrative Agent may deem expedient
or advisable. Without limiting the foregoing, it is specifically understood that
any modification, limitation or discharge of any of the liabilities or
obligations of any one or more entities comprising the Borrower under any of the
Financing Documents, arising out of, or by virtue of, any bankruptcy,
arrangement, reorganization or similar proceeding for relief of debtors under
federal or state law initiated by or against such entities, in any capacity
under this Section 12, or under any of the Financing Documents, shall not
modify, limit, lessen, reduce, impair, discharge, or otherwise affect the
liability of the Additional Borrower under this Section 12, in any manner
whatsoever, and this Section 12 shall remain and continue in full force and
effect. It is the intent and purpose of this Section 12 that the Additional
Borrower shall and does hereby waive all rights and benefits which might accrue
to any one or more entities comprising the Borrower by reason of any such
proceeding, and the Additional Borrower agrees that it shall be liable for the
full amount of the obligations and liabilities under this Section 12 regardless
of any modification, limitation or discharge of the liability of any individual
Borrower under any of the Financing Documents, that may result from any such
proceedings.
(d) The Additional Borrower, as guarantor under this
Section 12, hereby unconditionally, irrevocably and expressly waives:
(i) presentment and demand for payment of the
Obligations and
EXHBIT E-6
150
protest of non-payment;
(ii) notice of acceptance of this Section 12 and of
presentment, demand and protest thereof;
(iii) notice of any default hereunder or under the Note or
any of the other Financing Documents and notice of all indulgences;
(iv) notice of any increase in the amount of any portion
of or all of the indebtedness guaranteed by this Section 12;
(v) demand for observance, performance or enforcement of
any of the terms or provisions of this Section 12, the Note or any of the other
Financing Documents;
(vi) all errors and omissions in connection with the
Administrative Agent's administration of all indebtedness guaranteed by this
Section 12;
(vii) any right or claim of right to cause a marshalling
of the assets of any one or more of the entities comprising the Borrower;
(viii) any act or omission of the Administrative Agent
which changes the scope of the risk as guarantor hereunder; and
(ix) all other notices and demands otherwise required by
law which Additional Borrower may lawfully waive.
(e) Within ten (10) days following any request of the
Administrative Agent so to do, the Additional Borrower will furnish the
Administrative Agent and such other persons as the Administrative Agent may
direct with a written certificate, duly acknowledged stating in detail whether
or not any credits, off-sets or defenses exist with respect to this Section 12.
13. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Virginia, without regard to
principles of choice of law.
14. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original for all purposes, and all of which
shall constitute, collectively, one agreement.
WITNESS the due execution hereof as of the day and year first written
above.
WITNESS OR ATTEST:
-----------------------------------
EXHBIT E-7
151
By:
-------------------------------
its
----------------------
By: (SEAL)
- ---------------------------- ------------------------------
James S. Pope
Vice President
BANK OF AMERICA, N.A.
By: (SEAL)
- ---------------------------- ------------------------------
Leslie M. Zuga
Senior Vice President
EXHBIT E-8
152
EXHIBIT F
SURVEY REQUIREMENTS
1. Field Note Description. The Survey shall contain a certified metes
and bounds description complying with the following: (a) the beginning point
shall be established by a monument located at the beginning point, or by
reference to a nearby monument; (b) the sides of the Land shall be described by
giving the distances and bearings of each; (c) the distances, bearings, and
angles shall be taken from an instrument survey by a registered professional
engineer or registered professional land surveyor; (d) curved sides shall be
described by data including: length of arc, central angle, radius of circle for
the arc and chord distance, and bearing; (e) the description shall be a single
perimeter description of the entire Land, if and as instructed, there shall also
be a separate metes and bounds description of one or more constituent tracts out
of the Land; (f) the description shall include a reference to all streets,
alleys, and other rights-of-way that abut the Land, and the width of all
rights-of-way mentioned shall be given the first time these rights-of-way are
referred to; (g) for each boundary line abutting a street, road, alley or other
means of access, the description must, in calling the boundary line, state that
the boundary line and the right-of-way line are the same; (h) if the Land has
been recorded on a map or plat as part of an abstract or subdivision, reference
to such recording data shall be made; and (i) the total acreage and square
footage of the Land shall be certified.
2. Lot and Block Description. If the Land consists of one or more
complete lots or blocks included within a properly established recorded
subdivision or addition, then a lot and block description will be an acceptable
substitute for a metes and bounds description, provided that the lot and block
description must completely and properly identify the name or designation of the
recorded subdivision or addition and give the recording information therefor.
3. Map or Plat. The Survey shall also contain a certified map or plat
clearly showing the following: (a) the Land; (b) the relation of the point of
beginning of the Land to the monument from which it is fixed; (c) all easements,
streets, roads, alleys and rights-of-way on or abutting the Land, showing
recording information therefor by volume and page; (d) if the Land has been
recorded on a map or plat as part of an abstract or subdivision, all survey
lines must be shown, and all lot and block lines (with distances and bearings)
and numbers, must be shown; (e) the established building setback lines, if any,
including those by restrictive covenant, recorded plat and zoning ordinance
(identifying the source in each case, by volume and page reference if
applicable); (f) all easements appurtenant to said Land, with recording
information by volume and page; (g) the boundary lines of the street or streets
abutting the Land and the width of said streets and the width of the
rights-of-way therefor; (h) the distance from the nearest intersecting street or
road to the Land; (i) all structures and improvements on the Land (with
designation and dimensions of each party wall, if any) with horizontal lengths
of all sides and the relation thereof by distances to (1) all boundary lines of
the Land, (2) easements, (3) established building lines, and (4) street lines;
(j) the types of materials comprising the exterior walls and roofs of all
buildings; (k) all street addresses of improvements on the Land; (l) all curb
cuts, driveways, fences, sidewalks, stoops and landscaping; (m) the number of
stories of all multistory structures;
EXHBIT F-1
153
(n) the location, type and size of all utility lines as they service the Land
and Improvements (sewer, water, gas, electric and telephone); (o) all
encroachments and protrusions, if any, from or upon the Land or any improvements
thereon or upon any easement, building setback line or other restricted area,
with exact measurements; (p) all parking and paved areas, including the number
of vehicles that may be parked; (q) all distances, angles and other calls
contained in the legal description; (r) the location, type and size of all
monuments, and as to each monument, indication whether it was found or placed by
the surveyor; (s) the boundaries of any flood hazard area or flood plain area in
which any part of the Land lies, with the map number, date and source
(governmental authority) of each flood map shown; (t) all surface water bodies
or courses; (u) the date of any revisions subsequent to the initial survey
prepared pursuant to these requirements; (v) a legend explaining the meaning of
all symbols used on the plat; and (w) the scale of all distances and dimensions
on the plat.
4. Certification. The certification for the property description and
the map or plat shall be addressed to Lender, Borrower and the Title Insurer,
signed by the surveyor (a registered professional land surveyor or registered
professional engineer), bearing current date, registration number, and seal, and
shall be in the following form or its substantial equivalent:
5. This is to certify to Lender, Borrower and Title Insurer that this
map or plat and the survey on which it is based were made in accordance with
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys" jointly
established and adopted by ALTA and ACSM in 1997, and pursuant to the Accuracy
Standards (as adopted by ALTA and ACSM) of an Urban Survey. The undersigned
further certifies to Lender, Borrower and the Title Insurer that (a) this survey
is true and correct and was made on the ground under my supervision as per the
field notes shown hereon and correctly shows the boundary lines and dimensions
and area of the land indicated hereon and each individual parcel thereof
indicated hereon; (b) all monuments shown hereon actually exist, and the
location, size and type of such monuments are correctly shown; (c) this survey
correctly shows the size, location and type of all buildings, structures, other
improvements and visible items on the subject Property; (d) this survey
correctly shows the location and dimensions of all alleys, streets, roads,
rights-of-way, easements, building setback lines and other matters of record of
which the undersigned has been advised affecting the subject Property according
to the legal description in such easements and other matters (with instrument,
book, and page number indicated); (e) except as shown, there are no visible (1)
improvements, easements, rights-of-way, party walls, drainage ditches, streams,
uses, discrepancies or conflicts, (2) encroachments onto adjoining premises,
streets, or alleys by any of said buildings, structures, or other improvements,
(3) encroachments onto the subject Property by buildings, structures, or other
improvements on adjoining premises, or (4) encroachments on any easement,
building setback line or other restricted area by any buildings, structures or
other improvements on the subject property; (f) the distance from the nearest
intersecting street or road is as shown hereon; (g) the subject property abuts a
dedicated public street or road as shown hereon; and (h) except as shown, no
part of the Property is located in a 100 year Flood Plain or in an identified
"flood prone area," as defined pursuant to the Flood Disaster Protection Act of
1973, as amended, as reflected by Flood Insurance Rate Map Panel #_dated , which
such map panel covers the area in which the Property is situated. The
undersigned has received and examined a copy of the title
EXHBIT F-2
154
insurance commitment no. issued by the Title Insurer for the Property as well as
a copy of each instrument listed therein.
EXHBIT F-3
155
EXHIBIT G
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to (i) Section 7.1 of
the Third Amended and Restated Financing and Security Agreement dated as of
March 14, 2000 (together with all amendments and modifications, if any, from
time to time made thereto, the "Financing Agreement") between Sunrise East
Assisted Living Limited Partnership, Sunrise SEAL, L.L.C. and certain affiliated
borrowing entities (collectively, the "Borrowers") and Bank of America, N.A. as
Administrative Agent, and (ii) Section 3.1 of the Third Amended and Restated
Master Guaranty of Payment Agreement dated as of March 14, 2000 (together with
all amendments and modifications, if any, from time to time made thereto, the
"Guaranty") by Sunrise Assisted Living, Inc. ("Guarantor") and Bank of America,
N.A. as Administrative Agent. Unless otherwise defined, terms used herein
(including the attachments hereto) have the meanings provided in the Financing
Agreement.
BORROWER CERTIFICATE
The undersigned, one of the Borrowers as of the date hereof, hereby
certifies and warrants that:
1. It is authorized to execute this certificate on behalf of all
Borrowers.
2. As of the (fiscal quarter) (fiscal year) ending as of
________________, ____:
(a) No Borrower was in default under any of the provisions of
the Financing Agreement during the period to which this
Compliance Certificate relates;
(b) As of the end of this reporting period: (i) the number of
Eligible Projects was ____ [minimum number required 8];
(ii) the number of Eligible Projects that qualify as Pool A
Projects is ____; (iii) the ratio of Pool A Projects to
Eligible Projects is ____% [minimum required percentage
83%].
(c) The attached Borrowing Base Report accurately represents
the status of each Eligible Project with regard to any and
all applicable covenants set forth in the Financing
Agreement (including the ratio of Net Operating Income to
Debt Service for such reporting period and the Minimum
Occupancy Requirement and actual occupancy as of the end of
such reporting period).
(d) As of the end of this reporting period: (i) the number of
Eligible Projects that are not Stabilized Facilities is
____; (ii) the amount of Liquid Assets held by the Borrower
on a consolidated basis, after taking into account any
distributions ("Distributions") of net operating income to
partners or members of any of the Borrowers made less than
30 days prior to the end of such reporting period, is
$____________ [minimum required $5,000,000 plus an
additional $5,000,000 if 10 or more Eligible Projects are
not Stabilized Facilities]; (iii) if there have been any
Distributions, then the ratio of Adjusted EBITDA to Debt
Service (calculated on a rolling four-quarter basis), for
the Stabilized Facilities in the aggregate, is _____
[minimum required 1.0].
EXHBIT G-1
156
SUNRISE EAST ASSISTED LIVING
LIMITED PARTNERSHIP, on behalf of all Borrowers
By: Sunrise Assisted Living Investments, Inc.
its general partner
By: (SEAL)
--------------------------------
James S. Pope
Vice President
EXHBIT G-2
157
GUARANTOR CERTIFICATE
The undersigned, being the duly elected, qualified and acting Chief
Financial Officer of the Guarantor, on behalf of the Guarantor, hereby certifies
and warrants that:
1. He is the Chief Financial Officer of the Guarantor and that, as
such, he is authorized to execute this certificate on behalf of the Guarantor.
2. As of the (fiscal quarter) (fiscal year) ending as of
________________, ____:
(a) The Guarantor is not in default under any of the provisions
of the Guaranty;
(b) The Guarantor's Tangible Net Worth was $_______________ as
computed on Attachment 1 hereto;
(c) The Guarantor's ratio (on a consolidated basis with all
subsidiaries) of Funded Debt (as defined in the Guaranty)
to EBITDAR was ______ as computed on Attachment 2 hereto;
(d) The Guarantor's ratio (on a consolidated basis with all
subsidiaries) of EBITDAR to the sum of Interest Expense (as
defined in the Guaranty) and Rent Expense (as defined in
the Guaranty) was __________ as computed on Attachment 3
hereto;
(e) The value of the Guarantor's Minimum Liquid Assets was
$_____ as computed on Attachment 4 hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate, this ______ day of ______________, 200__.
SUNRISE ASSISTED LIVING, INC.
By: (SEAL)
--------------------------------
Christian B.A. Slavin
Chief Financial Officer
EXHBIT G-1
158
ATTACHMENT 1
Period Ending: ____________, _______
Tangible Net Worth
1. net worth (defined by GAAP),
plus the leasehold value associated with the properties which
are the subject of synthetic lease transactions which are
otherwise characterized as intangible assets $___________ less
2. (a) all intangible assets (except for deferred taxes
recorded as goodwill and except for the goodwill
purchased in connection with the acquisition of
Karrington Health, Inc. in the approximate amount of
$32,000,000 subject to adjustment for final audited
calculations as of December 31,1999 and as may be
further adjusted as reported in future Form 10Q Reports
of the Guarantor). $_____________
(b) write-up in book value of assets subsequent to most
recent financial statement $_____________
(c) loans and advances to, or investments in, any person or
entity (except: (i) cash equivalents or deposit accounts
at financial institutions; (ii) mortgage revenue bonds
issued by Bucks County, PA Industrial Development
Authority; and (iii) individual investments less than
$2,500,000, but not exceeding $10,000,000 in the
aggregate) $________________
(d) advances or loans to, or receivables from, unconsolidated
affiliates (except subordinated debt or loans of
unconsolidated subsidiaries and affiliates of Guarantor
which are parties to development and management
contracts with Sunrise Development, Inc. and Sunrise
Assisted Living Management, Inc.) $______________
Actual Tangible Net Worth = $_______________
Required Tangible Net Worth equal to the sum of :
(i) Guarantor's net worth
as of September 30, 1999 $258,003,069
(ii) Guarantor's net income (if positive)
for each quarter subsequent
to September 30, 1999 x 75% = $____________
(iii) Net proceeds received by Guarantor
EXHBIT G-2
159
of any equity capital transaction
during each quarter subsequent
to September 30, 1999 x 85% = $____________
TOTAL $____________
EXHBIT G-3
160
ATTACHMENT 2
Period Ending: ____________, _____
Ratio of Funded Debt to EBITDAR
1. Funded Debt $____________*
2. EBITDAR (as calculated
on Attachment 3) $_____________
Actual Ratio: ____
Required Ratio**:
---------------------------------------------------------
PERIOD ENDING MAXIMUM RATIO
---------------------------------------------------------
December 31, 1999 8.75 to 1.00
---------------------------------------------------------
March 31, 2000 8.75 to 1.00
---------------------------------------------------------
June 30, 2000 8.75 to 1.00
---------------------------------------------------------
September 30, 2000 8.75 to 1.00
---------------------------------------------------------
December 31, 2000 7.75 to 1.00
---------------------------------------------------------
March 31, 2001 7.75 to 1.00
---------------------------------------------------------
June 30, 2001 7.75 to 1.00
---------------------------------------------------------
September 30, 2001 7.75 to 1.00
---------------------------------------------------------
December 31, 2001
and thereafter 7.00 to 1.00
---------------------------------------------------------
* "Funded Debt" means the sum of the following but shall exclude trade and other
accounts payable in the ordinary course of business in accordance with customary
trade terms and which are not overdue (as determined in accordance with
customary trade practices) or which are being disputed in good faith by the
Guarantor and for which adequate reserves are being provided on the books of the
Guarantor in accordance with GAAP:
(a) indebtedness for borrowed money (including the 5 1/2 % convertible
subordinated notes issued by the Guarantor) $____________
(b) obligations in respect of letters of credit, banker's or other
acceptances or similar obligations issued or created for the account of
the Guarantor $____________
(c) (i) lease obligations which have been or should be, in accordance with
GAAP, capitalized on the books of the Guarantor, plus (ii) the product of
Rent Expense (as defined in the Guaranty), with respect to operating
leases, multiplied by 8 $____________
EXHBIT G-4
161
(d) liabilities secured by any property owned by the Guarantor, to the extent
attached to the Guarantor's interest in such property, even though
Guarantor is not liable for the payment thereof $____________
(e) (i) amounts payable by Guarantor under any terminated, defaulted or
outstanding interest rate protection products, or (ii) take-out
commitments (excluding a refinancing or a commitment of a third party) or
purchase contracts including the deferred purchase price of property or
services in each instance if the Guarantor does not control the incurring
obligation $____________
(f) (i) the amount of any guaranty of indebtedness for borrowed, or (ii)
other debt owned by Persons other than the Guarantor which is
in default and for which the creditor is pursuing payment by the
Guarantor $____________
(g) any obligation of the Guarantor or a Commonly Controlled Entity to a
Multiemployer Plan $____________
(h) any synthetic lease obligations, (i) any other lease expenses for rented
real property will be accounted for as debt based on eight times
annualized lease payments (provided, however, that so long as the
Guarantor or any Affiliate shall continue to own a 50% interest in the
Facility located in Severna Park, Maryland known as "Sunrise of Severna
Park", lease expenses for Sunrise of Severna Park will be accounted for
as debt based on four times the annualized lease payments rather than
eight times the annualized lease payments $____________
(h) other amounts considered to be debt by the Administrative Agent, the
Syndication Agent and the Documentation Agent in a dollar amount to be
mutually agreed upon by the Administrative Agent and the Guarantor
(excluding trade and other accounts payable in the ordinary course of
business in accordance with customary trade terms which are not overdue
or which are being disputed in good faith by the Guarantor and for which
adequate reserves are being provided on the books of Guarantor in
accordance with GAAP) $____________
** After the sale of more than ten (10) or more Facilities (other than Assets
Held for Sale) during fiscal year 2000, the foregoing maximum ratio will be
reduced to 7.75 to 1.00 effective as of the end of the fiscal quarter in which
the closing of the sale of the tenth Facility occurred.
EXHBIT G-5
162
ATTACHMENT 3
Period Ending: ____________, ______
Ratio of EBITDAR to Interest Expense plus Rent Expense
1. EBITDAR $_____________ (calculated as follows)
Net Income $_____________
Plus Interest $_____________
Plus Taxes $_____________
Plus Depreciation $_____________
Plus Amortization $_____________
Plus other non-cash
Items* $_____________
Plus Rent Expense $_____________ (actual rent expense
incurred by Borrower,
Guarantor or any Affiliate
as a tenant under leases
for any senior living
facility)
Plus Actual
Management Fees $_____________ (equal to actual Management
Fees)
Plus Gains from the
sale of open operating
Facilities (not to exceed
20 per 12 month
period) $_____________
Minus Replacement
Reserve $_____________ ($250/year/bed for each
Facility)
Minus Management
Fees $_____________ (equal to the greater of 5%
of gross revenues or actual
Management Fees)
2. Interest Expense $_____________ (actual interest expense
incurred by Guarantor and
its subsidiaries on all
debt owed to unaffiliated
third parties, including
5 1/2% convertible
subordinated notes)
3. Rent Expense $_____________
Interest Expense $_____________
Sum of Rent Expense
and Interest Expense $_____________
EXHBIT G-6
163
Actual Ratio: _____
Required Ratio:
--------------------------------------------------------
PERIOD ENDING MINIMUM RATIO
--------------------------------------------------------
December 31, 1999 2.00 to 1.00
--------------------------------------------------------
March 31, 2000 2.00 to 1.00
--------------------------------------------------------
June 30, 2000 2.00 to 1.00
--------------------------------------------------------
September 30, 2000 2.00 to 1.00
--------------------------------------------------------
December 31, 2000 2.25 to 1.00
--------------------------------------------------------
March 31, 2001 2.25 to 1.00
--------------------------------------------------------
June 30, 2001 2.25 to 1.00
--------------------------------------------------------
September 30, 2001 2.25 to 1.00
--------------------------------------------------------
December 31, 2001
and thereafter 2.50 to 1.00
--------------------------------------------------------
*Other non-cash and one-time non-recurring items which may be added back to
EBITDAR require the consent of the Administrative Agent and if they exceed
$5,000,000 in any year require consent of 66.67% of the Lenders by pro rata
shares of the Loan.
EXHBIT G-7
164
ATTACHMENT 4
Period Ending: ____________, ______
Minimum Liquid Assets
Value of unrestricted cash, cash equivalents and marketable securities
$_______________
Required Value: not less than the greater of (a) 90 days of Debt Service, or (b)
$25,000,000.
EXHBIT G-8
165
EXHIBIT H
LIST OF ASSETS HELD FOR SALE
as of March 14, 2000
Sunrise of Fremont, OH
Sunrise of Shahawn (Tiffen), OH
Sunrise of Rochester, MN
Sunrise of Bismark Commons, ND
Sunrise of Bismark Cottages, ND
Sunrise of Buffalo Cottages, MN
Sunrise of Waterloo, IA
Sunrise of Mankato, MN
Sunrise of Park Ridge, IL
Sunrise Regional Office Building, Columbus, OH
EXHIBIT H-1