EXHIBIT 10.28
LOAN NOS. 07-0004127
07-2004127
LOAN AGREEMENT
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS WHO HEREAFTER
BECOME PARTIES TO THIS AGREEMENT
AS LENDERS
AND
ALC PROPERTIES II, INC.
AND
TEXAS ALC II, INC.
AS BORROWERS
$50,000,000 LOAN
ASSISTED LIVING CONCEPTS
PORTFOLIO OF THIRTY
ASSISTED LIVING FACILITIES
TABLE OF CONTENTS
RECITALS................................................................... 1
ARTICLE I The Loan......................................................... 2
ARTICLE II Security........................................................ 10
ARTICLE III Conditions Precedent........................................... 12
ARTICLE IV Representations and Warranties.................................. 15
ARTICLE V Affirmative Covenants............................................ 23
ARTICLE VI Negative Covenants.............................................. 27
ARTICLE VII Events of Default; Acceleration of Indebtedness; Remedies...... 29
ARTICLE VIII Assignment and Participation.................................. 32
ARTICLE IX Miscellaneous................................................... 44
LIST OF EXHIBITS, SCHEDULES AND RIDERS
Exhibit A - Properties and Borrowers
Exhibit 1.1.7 - Letters of Credit
Exhibit 1.4.2 - Principal Amortization Schedule
Exhibit 4.6 - Appurtenant Easements
Exhibit 4.7 - Access
Exhibit 4.9 - Flood Hazards
Exhibit 4.12 - Litigation
Exhibit 4.20 - Security Deposits
Exhibit 4.22 - Interest Holder Certification and Agreement
Exhibit 4.23 - Deposits and Accounts
Exhibit 4.24 - Compliance with Healthcare Laws
SCHEDULE I - Index of Defined Terms
RIDER - Senior Housing Rider
EXHIBIT R-1 - Units and Beds at Each Facility
EXHIBIT R-2 - Licenses
LOAN NOS. 07-0004127
07-2004127
LOAN AGREEMENT
This LOAN AGREEMENT (this "AGREEMENT") is made as of the 23rd day of
December, 2003 between (a) ALC PROPERTIES II, INC., a Nevada corporation ("ALC
PROPERTIES"), and TEXAS ALC II, INC., a Nevada corporation ("TEXAS ALC") (each
individually a "BORROWER" and collectively the "BORROWERS"), (b) the financial
institutions who are or hereafter become parties to this Agreement as Lenders,
and (c) GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its
individual capacity, "GECC"), as Agent and a Lender.
RECITALS
A. Borrowers have requested that Lenders (as defined below) extend
term loan and revolving loan facilities to Borrowers of up to Fifty Million
Dollars ($50,000,000.00) in the aggregate (collectively, the "LOAN"), subject to
the terms and conditions contained in this Agreement and the other Loan
Documents (as defined below). The Loan is comprised of the Term Loan and the
Revolving Loan (each as defined in Section 1.1 below). The Loan is further
evidenced by the Term Notes and Revolving Notes (each as defined in Section 1.1
below).
B. As set forth on Exhibit A hereto, each Borrower is the owner of
one or more of the assisted living facilities more particularly described on
such Exhibit (collectively, the "FACILITIES"). The Title Policies (as defined in
Section 3.4 below) contain the legal descriptions of the land on which each of
the Facilities is located (collectively, the "PROPERTIES", and each
individually, a "PROPERTY"). The improvements located on the Properties are
collectively called the "IMPROVEMENTS". The Properties and the Improvements are
collectively called the "PROJECTS", and a single Property and its Improvements
are collectively called a "PROJECT".
C. Each Project which is owned by ALC Properties is leased by ALC
Properties, as landlord, to Assisted Living Concepts, Inc., a Nevada corporation
("ALC"), as tenant, and each Project which is owned by Texas ALC is leased by
Texas ALC, as landlord, to Texas ALC Partners II, L.P., a Texas limited
partnership (the "TEXAS PARTNERSHIP"), as tenant (collectively, the "ALC
Leases"). Each Borrower and either ALC or Texas Partnership, respectively, have
entered into a Subordination Agreement in favor of Agent and Lenders with
respect to their respective ALC Leases (collectively, the "SUBORDINATIONS").
D. Borrowers will use the proceeds of the Loan for the purpose of
refinancing the Projects, and for certain other uses set forth in Section 1.5
below.
E. Borrowers' obligations under the Loan will be secured by, among
other things, (a) a first priority Deed of Trust/Mortgage, Assignment of Rents
and Security Agreement (or a document of similar title) of even date herewith
(collectively, the
"MORTGAGES") encumbering each Project, (b) an Assignment of Leases and Rents of
even date herewith executed by each Borrower and an Assignment of Leases and
Rents of even date herewith executed by ALC (collectively, the "ASSIGNMENTS OF
LEASES") encumbering each Project, and (c) the Pledge encumbering 100% of the
ownership interests in each Borrower, Limited Partner and the Texas Partnership.
This Agreement, the Notes, the Mortgages, the Assignments of Leases, the
Environmental Indemnity, the Agreement of Principal, the Pledge and any other
documents evidencing or securing the Loan or executed in connection therewith,
and any modifications, renewals and extensions thereof, are referred to herein
collectively as the "LOAN DOCUMENTS."
F. "AGENT" means GECC in its capacity as agent for the Lenders under
this Agreement and each of the other Loan Documents and any successor in such
capacity appointed pursuant to Section 8.2 below. "LENDER" or "LENDERS" means
GECC in its individual capacity and its successors and permitted assigns
pursuant to Section 8.1 below and any other financial institution which is now
or hereafter becomes a party to this Agreement as a Lender.
G. An index of defined terms appears on the attached Schedule I.
NOW, THEREFORE, in consideration of the foregoing and the mutual
conditions and agreements contained herein, the parties agree as follows:
ARTICLE I
THE LOAN
1.1. DISBURSEMENTS.
1.1.1. TERM LOAN.
(a) Subject to the terms and conditions hereof, each Lender agrees
to make a term loan (collectively, the "TERM LOAN") on the Closing Date
(as defined below) to Borrowers in the amount of the applicable Lender's
Term Loan Commitment (as defined below). Each such Term Loan shall be
evidenced by a promissory note or notes (each, a "TERM NOTE" and,
collectively, the "TERM NOTES"), and all Borrowers shall jointly execute
and deliver each Term Note to the applicable Lender. Each Term Note shall
represent the obligation of Borrowers to pay each Lender's Term Loan
Commitment, together with interest thereon. The aggregate principal amount
of the Term Loan advanced to Borrowers shall be the primary obligation of
Borrowers jointly and severally. "CLOSING DATE" means the date of
disbursement of the Term Loan.
(b) "TERM LOAN COMMITMENT" means (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share (as defined in
subsection 8.1.1 below) of the Term Loan, and (b) as to all Lenders, the
aggregate commitment of all Lenders to make the Term Loan, which aggregate
commitment shall be Thirty-Five Million Dollars ($35,000,000.00) on the
Closing Date. After advancing the
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Term Loan, each reference to a Lender's Term Loan Commitment shall refer
to that Lender's Pro Rata Share of the outstanding Term Loan.
(c) Each payment of principal with respect to the Term Loan shall be
paid to Agent for the benefit of each Lender, ratably in proportion to
each Lender's respective Term Loan Commitment.
1.1.2. REVOLVING LOAN.
(a) Subject to the terms and conditions hereof, each Lender agrees
to make available to Borrowers on the Closing Date and from time to time
during the Borrowing Period (as defined below) advances (each, a
"REVOLVING CREDIT ADVANCE") in an amount not to exceed such Lender's
Revolving Loan Commitment (as defined below). Borrowers shall execute and
deliver to each Lender a promissory note to evidence the Revolving Loan
Commitment of that Lender. Each promissory note shall be in the principal
amount of the Revolving Loan Commitment of the applicable Lender (each, a
"REVOLVING NOTE" and, collectively, the "REVOLVING NOTES"). Each Revolving
Note shall represent the obligation of Borrowers to pay the amount of the
applicable Lender's Revolving Loan Commitment, together with interest
thereon. The aggregate principal amount of the Revolving Loan advanced to
Borrowers shall be the primary obligation of Borrowers jointly and
severally.
(b) "REVOLVING LOAN COMMITMENT" means (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances, and
(b) as to all Lenders, the aggregate commitment of all Lenders to make
Revolving Credit Advances, which aggregate commitment shall be Fifteen
Million Dollars ($15,000,000.00) (such aggregate commitment is also
referred to as the "REVOLVING LOAN") on the Closing Date.
(c) During the period commencing on the Closing Date and ending on
December 22, 2005 (the "REVOLVING LOAN CONVERSION DATE") (such period
referred to as the "BORROWING PERIOD"), and so long as no default of any
nature shall have occurred and be continuing, Borrowers shall have the
right to borrow an amount up to the full amount of the Revolving Loan on a
revolving basis, subject to the terms and conditions set forth below;
provided, Lenders are not obligated to make Revolving Credit Advances at
any time which would exceed the then Borrowing Availability (as defined in
subsection 1.1.2(f) below). The Revolving Loan may be repaid by Borrowers
in full or in part at any time, and any amounts repaid by Borrowers may be
reborrowed, subject to the terms of this subsection 1.1.2. After the
Borrowing Period, Borrowers may not borrow or reborrow additional amounts
under this subsection 1.1.2. The proceeds of the Revolving Loan may be
used by Borrowers and ALC (i) for general working capital purposes of
Borrowers, ALC and its Affiliates, (ii) to fund capital expenditures with
respect to assets of Borrowers, ALC and its Affiliates, (iii) to pay
closing costs with respect to the Loan, and (iv) to fund asset
acquisitions of Borrowers, ALC and its Affiliates, provided that any new
real estate that is not collateral for the Loan shall be owned by a
subsidiary of ALC other than
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either Borrower, Limited Partner or the Texas Partnership. Any other
proposed uses are subject to Agent's prior written consent, which shall
not be unreasonably withheld or delayed.
(d) Borrowers shall provide Agent with a written draw request at
least two (2) Business Days prior to the proposed draw date. Each draw
request shall be irrevocable and shall state the proposed draw date and
the amount of the draw (which shall not be less than $100,000). During the
Borrowing Period, Borrowers may make a draw request not more than once per
calendar week. Borrowers shall pay Agent, for the benefit of Lenders in
accordance with their respective Pro Rata Share of the Revolving Loan
Commitments, a quarterly non-use fee equal to three-quarters percent
(0.75%) (per annum, based upon a 360-day year) of the portion of the
Revolving Loan that would then be available to be borrowed or reborrowed
(so long as no default of any nature shall have occurred and be
continuing), calculated on a daily basis. Such non-use fee shall be
payable in arrears, due on the first (1st) day of each calendar quarter,
and computed based upon the excess, if any, of the Revolving Loan
Commitment (as it may be reduced from time to time in accordance with
Section 2.2.2) over the daily actual aggregate balance of the Revolving
Loan outstanding during such prior calendar quarter.
(e) Agent is authorized to, and at its sole election may, charge to
the Revolving Loan balance on behalf of Borrowers and cause to be paid all
Costs (as defined in Section 9.1 below) and interest and principal, other
than principal of the Revolving Loan, owing by Borrowers under this
Agreement or any of the other Loan Documents if and to the extent
Borrowers have failed to pay any such amounts as and when due, including
after any applicable grace periods. At Agent's option and to the extent
permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
(f) "BORROWING AVAILABILITY" means the lesser of (I) the aggregate
Revolving Loan Commitment of all Lenders, (II) an amount generating a
Project Yield of 16.86% based on the lesser of ANOI for the immediately
preceding twelve (12) months or the immediately preceding three (3) months
annualized, and (III) an amount generating a Debt Coverage Ratio of
1.60:1.00 based on ANOI for the immediately preceding twelve (12) months;
in each case less the sum of the aggregate balance of the Revolving Loan
then outstanding and less the outstanding amount of Letter of Credit
Obligations (as defined in Exhibit 1.1.7 hereto).
"DEBT COVERAGE RATIO" means the ratio, as reasonably determined by
Agent, of (i) ANOI from the Projects for a particular period, to (ii) the
greater of (A) actual payments of interest and principal due on the Loan for the
same period and (B) payments of interest and principal which would be due on the
Loan at an implied interest rate of 6.50% for the same period; provided,
however, for periods prior to the first anniversary of the Closing Date, Agent
shall reasonably estimate the clause (ii) amount based on a full twelve (12)
month period of debt service payments as reasonably projected by Agent.
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"PROJECT YIELD" means the quotient as reasonably calculated by Agent
of (x) the annualized ANOI from the Projects, as reasonably estimated by Agent,
divided by (y) the then-current outstanding principal balance of the Loan plus
any Borrowing Availability (if during the Borrowing Period), plus all accrued
but unpaid interest thereon, plus the outstanding amount of the Letter of Credit
Obligations.
"ANOI" means net income from the operations of the Projects by ALC
and the Texas Partnership under the Leases (but excluding rent payable to
Borrowers by ALC and the Texas Partnership under the ALC Leases) or, in the case
of calculations for periods prior to the first anniversary of the Closing Date,
by an Affiliate of ALC which owned or operated any Project during such periods,
over the previous twelve (12) month period (unless a different time period is
specified herein), calculated in accordance with generally accepted accounting
principles, in a manner consistent with how Agent has previously made such
calculations in a loan to Affiliates of ALC, excluding interest, taxes,
depreciation, amortization, rent and management fees, adjusted for a seven
percent (7%) management fee, a $360 per unit per annum replacement reserve, and
a maximum occupancy of 95%. ANOI will be reasonably estimated by Agent.
Borrowers shall (or shall cause ALC and the Texas Partnership to) provide Agent
with financial information with respect to the operations of the Projects as
Agent may reasonably request and in any event sufficient for Agent to make the
necessary calculations in this and other sections.
Upon written request by Borrowers, Agent shall promptly provide
Borrowers with the results of its most recent calculation of Debt Coverage
Ratio, Project Yield and ANOI, together with reasonably detailed supporting
documentation.
(g) EXTENSION OF REVOLVING LOAN CONVERSION DATE. Borrowers may
request an extension of the Revolving Loan Conversion Date up to three (3)
times, each for a period of twelve (12) months immediately following the
previous Revolving Loan Conversion Date. Any such request shall be in
writing and delivered to Agent not less than forty-five (45) days nor more
than one hundred twenty (120) days prior to the then scheduled Revolving
Loan Conversion Date. Agent shall either approve or decline any such
request, in Agent's sole discretion, within thirty (30) days after receipt
of such written request. Notwithstanding anything to the contrary
contained herein, in no event shall the Revolving Loan Conversion Date, as
extended, be later than the Maturity Date. If Agent declines any such
extension request, then Borrowers shall, no later than ten (10) days prior
to the Revolving Loan Conversion Date, notify Agent in writing as to
whether Borrowers elect to (i) repay the entire outstanding principal
balance of the Revolving Loan (including all outstanding Letter of Credit
Obligations) on or before the then scheduled Revolving Loan Conversion
Date; or (ii) not repay the entire outstanding principal balance of the
Revolving Loan (including all outstanding Letter of Credit Obligations) on
or before the then scheduled Revolving Loan Conversion Date, in which case
Lenders shall have no obligation to make any Revolving Credit Advances
after the Revolving Loan Conversion Date and Borrowers shall make
principal amortization payments, on the first day of each month commencing
one month after the Revolving Loan Conversion Date, on the outstanding
balance of the Revolving Loan based on a 25 year
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amortization schedule at an Interest Rate of 5.75% (in addition to the
payments of interest and principal due pursuant to subsections 1.4.1 and
1.4.2 below). If Borrowers fail to respond at least ten (10) days prior to
the Revolving Credit Conversion Date, Borrowers shall be deemed to have
elected option (ii) above.
1.1.3. RELIANCE ON NOTICES. Agent shall be entitled to rely upon,
and shall be fully protected in relying upon, any notice of a requested
Revolving Credit Advance reasonably believed by Agent to be genuine. Agent may
assume that each Person executing and delivering any notice in accordance
herewith was duly authorized, unless the responsible individual acting thereon
for Agent has actual knowledge to the contrary. Each Borrower hereby designates
ALC as its exclusive representative ("BORROWER REPRESENTATIVE") and agent on its
behalf for the purposes of issuing notices of requests for Revolving Credit
Advances, giving instructions with respect to the disbursement of the proceeds
of the Loan, giving and receiving all other notices and consents hereunder or
under any of the other Loan Documents and taking all other actions (including in
respect of compliance with covenants) on behalf of Borrowers under the Loan
Documents. The Treasurer or Assistant Treasurer, as well as any other
individuals or positions designated from time to time in a written notice from
Borrower Representative to Agent, are the only authorized persons who may act on
behalf of Borrower Representative. Agent and each Lender may regard any notice
or other communication pursuant to any Loan Document from the individuals or
positions designated by Borrower Representative as a notice or communication
from all Borrowers, and may give any notice or communication required or
permitted to be given to either Borrower hereunder to Borrower Representative on
behalf of such Borrower. Each Borrower agrees that each notice, election,
representation and warranty, covenant, agreement and undertaking made on its
behalf by Borrower Representative shall be deemed for all purposes to have been
made by such Borrower and shall be binding upon and enforceable against such
Borrower to the same extent as if the same had been made directly by such
Borrower.
1.1.4. RECEIPT OF PAYMENTS. Borrowers shall make each payment
described in this Agreement not later than 1:00 p.m. (New York time) on the day
when due in immediately available funds. All payments shall be deemed received
on the Business Day on which immediately available funds therefor are received
by Agent at or prior to 1:00 p.m. New York time, in the manner for payment set
forth in the Notes. Payments received after 1:00 p.m. New York time on any
Business Day or on a day that is not a Business Day shall be deemed to have been
received on the following Business Day.
1.1.5. LENDERS' OBLIGATIONS ARE SEVERAL, NOT JOINT. Notwithstanding
any other provision of this Article I to the contrary, each Lender's agreement
to make disbursements of the Loan under this Agreement shall be several, and not
joint, and in the amount of their respective Pro Rata Share of the amount of
such disbursement.
1.1.6. NOTES. The Term Notes and the Revolving Notes, together with
any and all amendments thereto and substitutions therefor are hereinafter
collectively referred to as the "NOTES". The terms and provisions of the Notes
are hereby incorporated herein by reference in this Agreement. In the event of
an assignment under Section 8.1 below, each
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Borrower shall, upon surrender of the assigning Lender's Notes, issue new Notes
to reflect the interests of the assigning Lender and the Person to which
interests are to be assigned.
1.1.7. LETTERS OF CREDIT. Subject to and in accordance with the
terms and conditions contained herein and in Exhibit 1.1.7 hereto, Borrowers
shall have the right to request, and Lenders agree to incur, or purchase
participations in, Letter of Credit Obligations of Borrowers. Borrowers shall
pay to Agent, for the benefit of Lenders, the Letter of Credit Fees as described
in Exhibit 1.1.7 hereto.
1.2. LOAN TERM. The Loan shall mature on December 22, 2008 or any earlier
date on which the Loan shall be required to be paid in full, whether by
acceleration or otherwise (the "MATURITY DATE").
1.3. INTEREST RATE. Borrowers shall pay interest on the outstanding
principal balance of the Loan at a floating rate per annum equal to the Base
Rate plus four percent (4.0%) (the aggregate rate is referred to as the
"INTEREST RATE"). "BASE RATE" shall mean the rate published each day in The Wall
Street Journal for notes maturing one (1) month after issuance under the caption
"Money Rates, London Interbank Offered Rates (LIBOR)". The Interest Rate for
each calendar month shall be fixed based upon the Base Rate published prior to
and in effect on the first (1st) business day of such month; provided, however,
the Interest Rate from and including the Closing Date through December 31, 2003
shall be fixed based upon the Base Rate published prior to and in effect on the
first (1st) business day prior to the Closing Date. Interest shall be calculated
based on a 360 day year and charged for the actual number of days elapsed.
Notwithstanding anything to the contrary contained herein, in no event shall the
Interest Rate at any time be less than five and three-quarters percent (5.75%).
1.4. PAYMENTS.
1.4.1. INTEREST. Borrowers shall make interest payments monthly in
arrears on the first (1st) day of each month commencing on February 1, 2004
computed on the outstanding principal balance of the Loan at the Interest Rate.
1.4.2. PRINCIPAL. Commencing on February 1, 2004, and on the first
day of each month thereafter until the Maturity Date, Borrowers shall make
monthly principal amortization payments on the Term Loan in accordance with the
principal amortization schedule set forth on Exhibit 1.4.2 hereof (plus any
additional principal payments required pursuant to subsection 1.1.2(g) above).
1.5. SOURCES AND USES. The sources and uses of funds for the contemplated
transaction are as follows:
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SOURCES USES
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Term Loan $35,000,000 GECC Refinance: $__________
Revolving Loan $15,000,000 3rd Party Refinance: $__________
Closing Costs and Fees: $ 1,050,000
Other Permitted Uses: $__________
Total: $50,000,000 Total: $50,000,000
Borrowers shall deliver such information and documentation as Agent
shall reasonably request to verify that the sources and uses are as indicated
above.
1.6. PREPAYMENTS OF LOAN.
1.6.1. Borrowers may not prepay any of the outstanding principal
balance of the Term Loan prior to January 1, 2005. If Borrowers do prepay any of
the outstanding principal balance of the Term Loan (whether at maturity,
acceleration or otherwise) prior to January 1, 2005, Borrowers shall
concurrently with each such prepayment pay to Agent for the benefit of Lenders
an exit fee of one percent (1%) of the amount prepaid; in addition, Borrowers
shall pay the amount of interest which (in Agent's reasonable estimation) would
have accrued on the portion of the Term Loan being prepaid from and after the
date of the partial or complete prepayment through December 31, 2004. If
Borrowers shall prepay the Term Loan on or after January 1, 2005 but prior to
January 1, 2008 (whether a full or partial prepayment), then Borrowers shall
concurrently with each such prepayment, pay to Agent for the benefit of Lenders,
an exit fee of one percent (1%) of the amount prepaid. Thereafter, Borrowers may
prepay the outstanding principal balance of the Term Loan in full or in part at
any time without the payment of an exit fee; provided, Borrowers give Agent at
least thirty (30) days prior written notice. Except as set forth in this Section
1.6, the Revolving Loan is not subject to any exit fee or other prepayment fee
under this Section 1.6. Any exit fee specified in this Section 1.6 is
hereinafter referred to as an "EXIT FEE". Notwithstanding anything to the
contrary contained herein, no Exit Fee shall be due as a result of a prepayment
of the Term Loan made with funds generated directly from (i) a refinance by GECC
of the Loan or (ii) subject to subsections 2.2.3(a) and 2.2.3(b) below, an arms
length sale of any Project (in accordance with the terms of Section 2.2 below)
to a purchaser that is not an Affiliate of any Borrower or ALC so long as the
sale is completed and the prepayment is made with respect thereto on or after
January 1, 2006.
1.6.2. Prior to the Revolving Loan Conversion Date Borrowers may
prepay the outstanding principal balance of the Revolving Loan in whole or in
part at anytime and from time to time without payment of an Exit Fee and any
amounts so prepaid may be reborrowed by Borrowers from time to time thereafter
in accordance with the terms of, and subject to the limitations set forth in,
this Agreement. From and after the Revolving Loan Conversion Date, any portion
of the Revolving Loan which is then outstanding, may be prepaid by Borrowers in
whole or in part upon no less than thirty (30) days notice and subject to the
payment of the applicable Exit Fee calculated in the same manner set forth in
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Section 1.6.1 with respect to the prepayment of the Term Loan as of the date on
which such prepayment is being made.
1.6.3. Any notice by Borrowers to Agent with respect to the
prepayment of the Term Loan or of the Revolving Loan after the Revolving Loan
Conversion Date may be conditioned on the consummation of any sale or
refinancing transaction, the proceeds of which are intended to be used by
Borrowers as the source of the funds for such prepayment.
1.7. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY.
(a) If Agent determines that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by
Lenders with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of
law), in each case, adopted after the Closing Date, from any central bank
or other governmental authority increases or would have the effect of
increasing the amount of capital, reserves or other funds required to be
maintained by Lenders and thereby reducing the rate of return on Lenders'
capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by Agent, pay to Lenders, additional
amounts sufficient to compensate Lenders for such reduction. A certificate
as to the amount of that reduction and showing the basis of the
computation thereof submitted by Agent to Borrowers shall, absent manifest
error, be final, conclusive and binding for all purposes. Each Lender
agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased
cost, such Lender shall, to the extent not inconsistent with such Lender's
internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrowers pursuant to this Section 1.7(a).
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii)
the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), in
each case adopted after the Closing Date, there shall be any increase in
the cost to Lenders of agreeing to make or making, funding or maintaining
the Loan, then Borrowers shall from time to time, upon demand by Agent,
pay to Lenders, additional amounts sufficient to compensate Lenders for
such increased cost. A certificate as to the amount of such increased
cost, submitted to Borrowers by Agent, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees
that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased
cost, such Lender shall, to the extent not inconsistent with such Lender's
internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrowers pursuant to this Section 1.7(b).
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(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law or regulation (or any change
in the interpretation thereof) shall make it unlawful, or any central bank
or other governmental authority shall assert that it is unlawful, for
Lenders to agree to make or to make or to continue to fund or maintain any
Loan bearing interest computed by reference to LIBOR, then, unless each
Lender is able to make or to continue to fund or to maintain the Loan at
another branch or office of such Lender without, in such Lender's opinion,
adversely affecting it or its Loan or the income obtained therefrom, on
notice thereof and demand therefor by Agent to Borrowers, (i) the
obligation of Lenders to agree to make or to make or to continue to fund
or maintain the Loan shall terminate and (ii) Borrowers shall forthwith
prepay in full the Loan, together with interest accrued thereon without
penalty or any exit fee.
ARTICLE II
SECURITY
2.1. COLLATERAL. The Loan and all other indebtedness and obligations under
the Loan Documents shall be secured by the following (collectively, the
"COLLATERAL"): (a) the Mortgages, (b) the Assignments of Leases, (c) the Pledge,
and (d) any other collateral or security described in this Agreement or the
other Loan Documents.
2.2. RELEASE OF PROJECTS. Borrowers may obtain the release of any Project
or Projects (each a "RELEASED PROJECT") provided that each of the following
conditions in Sections 2.2.1 and 2.2.3, as to Pool A Projects, or Sections 2.2.2
and 2.2.3, as to Pool B Projects, has been satisfied to Agent's reasonable
approval:
2.2.1. POOL A PROJECTS. As to each Project designated on Exhibit A
as being a Pool A Project (each, a "POOL A PROJECT"), Borrowers shall have paid
to Agent, for the benefit of Lenders, an amount equal to 120% of the Allocated
Loan Amount for such Released Project as set forth on Exhibit A (the "ALLOCATED
LOAN AMOUNT"), in which case such payment shall be applied towards the
outstanding principal balance of the Term Loan. In no event, however, shall
Borrower be entitled to a release of any Pool A Project under this Section 2.2
prior to January 1, 2005. The release of a Pool A Project shall be in connection
with such Project being sold to or refinanced by an entity which is not an
Affiliate of either Borrower or ALC.
2.2.2. POOL B PROJECTS. As to each Project designated on Exhibit A
as being a Pool B Project (each, a "POOL B PROJECT"), either:
a. If the Borrowing Period has not expired, and if the then
outstanding principal balance of the Revolving Loan (excluding Letter of
Credit Obligations) is equal to or greater than the Allocated Loan Amount
for a Pool B Project, Borrowers shall have paid to Agent, for the benefit
of Lenders, an amount equal to 100% of the Allocated Loan Amount for such
Pool B Project, in which case such payment shall be applied towards the
outstanding principal balance of the Revolving Loan (excluding Letter of
Credit Obligations); in which case the Revolving Loan Commitment of the
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Lenders and the Borrowing Availability shall be automatically, immediately
and irrevocably reduced by an amount equal to 100% of the Allocated Loan
Amount for such Released Project. Such aggregate reduction in the
Revolving Loan Commitment shall reduce each Lender's Revolving Loan
Commitment proportionately based upon such Lender's Pro Rata Share of the
Revolving Loan Commitments.
b. From and after July 1, 2004, and on or prior to the expiration of
the Borrowing Period, Borrower may elect to repay the entire Revolving
Loan in full by paying to Agent, for the benefit of Lenders, (i) the
entire outstanding principal balance of the Revolving Loan, together with
all accrued interest thereon and all accrued non-use fees as provided in
Section 1.1.2(d), and (ii) if any Letters of Credit remain outstanding,
paying to Agent an amount equal to 105% of the aggregate maximum amount
then available to be drawn under any such Letters of Credit (which amount
payable under this clause (ii) shall be held and applied by Agent pursuant
to Exhibit 1.1.7); in which case all remaining Pool B Projects shall be
released, Lenders shall have no further obligation to make any further
Revolving Credit Advances, Agent and Lenders shall have no further
obligation to incur Letter of Credit Obligations, and the Revolving Loan
credit facility provided herein shall terminate.
2.2.3. ALL PROJECTS.
a. The Project Yield of the remaining Projects after the release
shall be (i) equal to or greater than 17.33% and (ii) equal to or greater
than the Project Yield of all of the Projects immediately prior to the
release. In order to achieve compliance with the foregoing, Borrowers may
elect to make an additional principal prepayment, to be applied to the
Term Loan, subject to the terms and conditions of Section 1.6 above and
the payment of the applicable Exit Fee on such additional prepayment.
b. The Debt Coverage Ratio of the remaining Projects after the
release shall be (i) equal to or greater than 1.60:1.00 and (ii) equal to
or greater than the Debt Coverage Ratio of all of the Projects immediately
prior to the release. In order to achieve compliance with the foregoing,
Borrowers may elect to make an additional principal prepayment, to be
applied to the Term Loan, subject to the terms and conditions of Section
1.6 above and the payment of the applicable Exit Fee on such additional
prepayment.
c. Unless Borrowers are then repaying the entire outstanding
principal balance of the Loan together with all accrued interest, fees and
costs, the remaining outstanding principal balance of the Loan after a
release payment shall not be less than $20,000,000.
d. At the time of the requested release, there shall not be any
Event of Default then continuing under any of the Loan Documents.
e. Borrowers shall have provided Agent with written notice of the
requested release at least thirty (30) days, as to a Pool A Project, or
ten (10) days, as
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to a Pool B Project, prior to the requested closing date which notice may
be conditioned on the closing of the sale or refinancing transaction, the
proceeds of which are intended to be used by Borrowers to prepay the Loan
in accordance with the terms hereof.
f. Neither Borrower shall continue to own any Released Project, nor
shall the Texas Partnership be the owner of, or the tenant under a lease
with respect to, any Released Project; provided, however, except in the
case of a sale of a Pool A Project, nothing herein shall be construed as
prohibiting any Released Project from being owned by ALC or an ALC
subsidiary other than either Borrower or the Texas Partnership.
g. Borrowers pay all of Agent's and Lenders' reasonable Costs
incurred in connection with the release of any Projects.
h. Subject to the receipt by Agent of the amounts required to be
paid under this Section 2.2 with respect to the release of a Project, the
release by Agent of a Project under this Section 2.2 shall include a
release of the applicable Project and the proceeds thereof; and Agent
shall provide Borrower with such release of Mortgage and UCC termination
(or partial termination, as applicable) statements, as are appropriate to
evidence such release.
2.2.4. POOL B PROJECTS AFTER THE BORROWING PERIOD HAS EXPIRED.
Notwithstanding the foregoing provisions of this Section 2.2 to the contrary, if
the Borrowing Period has expired, then the provisions of Section 2.2.2 shall no
longer apply to the release of any Pool B Project, and the provisions of Section
2.2.1 and 2.2.3 shall apply thereto, as if such Projects were Pool A Projects,
except that the Borrower's required payment of 120% of the Allocated Loan Amount
shall first be applied to reduce the outstanding principal balance of the
Revolving Loan, and thereafter to reduce the outstanding principal balance of
the Term Loan.
ARTICLE III
CONDITIONS PRECEDENT
Lenders' obligation to make the initial advance of the Loan on the
Closing Date is subject to satisfaction of all of the following conditions:
3.1. LOAN DOCUMENTS. Agent shall have received the following Loan
Documents, all in form and substance reasonably satisfactory to Agent, each
signed by the Borrowers and/or ALC, as applicable:
(a) this Agreement;
(b) the Notes;
(c) the Mortgages;
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(d) the Assignments of Leases;
(e) such Uniform Commercial Code financing statements as Agent may
require;
(f) an Agreement of Principal (the "AGREEMENT OF PRINCIPAL")
executed by ALC;
(g) a Hazardous Materials Indemnity Agreement ("ENVIRONMENTAL
INDEMNITY") executed by Borrowers and ALC;
(h) the Business Associate Agreement executed by Borrowers and ALC;
(i) an Ownership Pledge, Assignment and Security Agreement
(collectively, the "PLEDGE") executed by ALC and by the corporate general
and limited partners (the "TEXAS PARTNERS") of Texas Partnership pursuant
to which ALC pledges to Agent, for the benefit of Lenders, all of the
stock interests of each Borrower and of Nevada ALC II, Inc. (the "LIMITED
PARTNER") and the Texas Partners pledge to Agent, for the benefit of
Lenders, all of the general and limited partnership interests of the Texas
Partnership; and
(j) the Subordinations.
3.2. LEGAL OPINIONS. Borrowers shall deliver to Agent a legal opinion from
Borrowers' counsel, including Borrower's local counsel in the state where each
Project is located providing such opinions as Agent may reasonably require,
including, without limitation, that the Loan Documents are enforceable under the
laws of such state and that the applicable Borrower or ALC, as the case may be,
has obtained all licenses and permits necessary to operate its Projects as
assisted living facilities.
3.3. APPRAISAL. Agent shall obtain an appraisal report for each Project,
in form and content acceptable to Agent, prepared by an independent MAI
appraiser in accordance with the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA") and the regulations promulgated pursuant to such act.
3.4. TITLE POLICY AND ENDORSEMENTS. With respect to each Project, Agent
shall have received a commitment for title insurance issued by Chicago Title
Insurance Company ("TITLE COMPANY"), in a form and amount acceptable to Agent,
insuring marketability of title and insuring that the lien of each of the
Mortgages is a valid first lien on the respective Project, as applicable,
subject only to exceptions to title approved by Agent (collectively, the "TITLE
POLICIES"). Each Title Policy shall also contain any reinsurance and
endorsements required by Agent including without limitation creditors' rights,
zoning 3.1 with parking (or if not available in a state where a Project is
located, then as to such Project a zoning compliance letter from the applicable
governmental authority in lieu thereof), survey, access, tax parcel,
environmental, subdivision, contiguity, non-imputation, variable rate, usury,
last dollar, first loss, revolving credit, tie-in, subsequent disbursements and
extended coverage
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endorsements (Comprehensive Form 1), to the extent available in the state where
the respective Property is located.
3.5. SURVEY. Agent shall have received and approved a survey of each
Project, dated no more than ninety (90) days prior to the date of the applicable
Title Policy (unless the survey was previously delivered to and approved by
Agent in connection with a prior loan by Agent to affiliates of ALC and such
survey is sufficient for Title Company to delete the standard survey exception
from the applicable Title Policy), prepared by a registered land surveyor in
accordance with the 1999 American Land Title Association/ American Congress on
Surveying and Mapping Standards and certified in favor of Lenders and Agent and
the Title Company. The surveyor shall certify that each Property is not in a
flood hazard area as identified by the Secretary of Housing and Urban
Development. The surveys shall be sufficient for the title insurer to remove the
general survey exception in the applicable Title Policy, to the extent possible
in the applicable state.
3.6. ENVIRONMENTAL REPORT. Agent shall have received a Phase I
Environmental audit of each Project. The audit shall (i) be addressed to Agent
and Lenders; (ii) state that Agent and Lenders may rely thereon; and (iii) be
acceptable to Agent in its reasonable discretion.
3.7. LEASES. All leases, licenses and other agreements with regard to the
occupancy of each Project, including patient and resident care agreements and
service agreements which include an occupancy agreement (collectively,
"LEASES"), shall be in form and substance reasonably acceptable to Agent.
Borrowers shall submit for Agent's approval a copy of the form of residential
Lease ALC proposes to utilize at each Project, and all residential Leases
entered into after the Closing Date shall be on forms reasonably approved by
Agent without material modifications, other than modifications made in
accordance with statutory, regulatory or other legal requirements. Agent must
approve all non-residential Leases of space greater than 500 square feet. If any
non-residential Leases involving space greater than 500 square feet exist or are
hereafter entered into, upon the request of Agent, each tenant thereunder shall
execute and deliver to Agent prior to execution thereof by Borrowers or ALC, as
applicable, a subordination and attornment agreement in a form reasonably
acceptable to Agent; provided, however, if such non-residential Lease is a
sublease under an ALC Lease and expressly states that it is subject in all
respects to the ALC Lease and will terminate at the latest upon termination of
the ALC Lease, then Agent shall not require such a subordination and attornment
agreement as to such sublease.
3.8. INSURANCE. With respect to each Project, Borrowers shall have
provided Agent with and Agent shall have approved copies of certificates
evidencing the insurance policies required to be delivered pursuant to the
Mortgages.
3.9. COMPLIANCE WITH LAWS. Borrowers shall have submitted and Agent shall
have approved (a) a final certificate of occupancy (or the equivalent) for each
Project, and (b) evidence satisfactory to Agent that each Project complies in
all material respects with all applicable laws (including, without limitation,
all building, zoning, density, land use, ordinances, regulations and planning
requirements), covenants, conditions and restrictions,
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subdivision requirements (including, without limitation, parcel maps), and
environmental impact and other environmental requirements.
3.10. AUDIT REQUIREMENT. Agent shall have received an audit of ALC and/or
Borrowers which is satisfactory to Agent.
3.11. ANOI. Agent shall have determined that the ANOI of the Projects is
at least $5,688,000 after being reasonably adjusted by Agent or its auditors, if
necessary.
3.12. LICENSES. With respect to each Project, Borrowers shall obtain and
deliver to Agent evidence (which may include an opinion of Borrowers' legal
counsel) satisfactory to Agent of all licenses and permits necessary to operate
such Project as an assisted living facility or that Borrowers or ALC, as
applicable, have taken all steps required under applicable law to secure such
licenses and permits effective as of, and to lawfully operate the Projects as
of, the Closing Date. All such licenses and permits shall be issued to and in
the name of Texas ALC or ALC.
3.13. ADDITIONAL ITEMS. Agent shall have received such other items as
Agent may reasonably require, including without limitation, a physical condition
report and UCC, tax, judgment, bankruptcy and lien searches on the Borrowers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
As an inducement to Lenders to disburse the Loan, each Borrower
hereby represents and warrants to Lenders and Agent as follows, which
representations and warranties shall be true as of the date hereof and shall
remain true throughout the term of the Loan:
4.1. BORROWER EXISTENCE. Each Borrower is a corporation duly formed,
validly existing and in good standing under the laws of the State of Nevada with
its principal place of business at 1349 Empire Central, Suite 900, Dallas, Texas
75247. Each Borrower is in good standing and authorized to transact business in
the state in which its respective Projects are located. The Loan Documents have
each been duly authorized, executed and delivered and each constitutes the duly
authorized, valid and legally binding obligation of Borrowers and ALC, as the
case may be, enforceable against Borrowers and ALC, as the case may be, in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditor's rights generally or by equitable principles relating
to enforceability.
4.2. OTHER ENTITIES.
4.2.1. ALC'S EXISTENCE. ALC is a corporation duly formed, validly
existing and in good standing under the laws of the State of Nevada with its
principal place of business at 1349 Empire Central, Suite 900, Dallas, Texas
75247. ALC is in good standing and authorized to transact business in Nevada and
in each of the states in which its
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material assets are located and it is required under applicable law to be so
qualified to do business.
4.2.2. LIMITED PARTNER. Limited Partner is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Nevada with its principal place of business at 1349 Empire Central, Suite 900,
Dallas, Texas 75247.
4.2.3. TEXAS PARTNERSHIP. Texas Partnership is a limited partnership
duly formed and validly existing and in good standing under the laws of the
State of Texas with its principal place of business at 1349 Empire Central,
Suite 900, Dallas, Texas 75247
4.2.4. OWNERSHIP OF BORROWERS. ALC owns one hundred percent (100%)
of the issued and outstanding stock in each Borrower and in Limited Partner, and
the Texas Partners own one hundred percent (100%) of the issued and outstanding
partnership interests in the Texas Partnership, free and clear of all liens,
claims, encumbrances and rights of others.
4.3. AUTHORITY. ALC has the authority to appoint and remove the Directors
and officers of each Borrower and Limited Partner. The Board of Directors of
each Borrower and Limited Partner has the authority to make all material
business decisions (including a sale or refinance) for such Borrower and Limited
Partner during the term of the Loan. The sole Director of each Borrower and
Limited Partner is currently Steven Vick.
4.4. ORGANIZATIONAL DOCUMENTS.
4.4.1. CORPORATE DOCUMENTS. A true and complete copy of the articles
of incorporation and by-laws of each Borrower, Limited Partner and ALC and all
other documents creating and governing each Borrower, Limited Partner and ALC,
respectively (collectively, the "INCORPORATION DOCUMENTS") have been furnished
to Agent. There are no other agreements, oral or written, among any of the
owners of any ownership interests in each Borrower, Limited Partner or ALC with
respect to the governance of such entities. There are no other agreements to
which ALC is a party which would affect, modify or supercede the Incorporation
Documents of ALC, any Borrower or Limited Partner. The Incorporation Documents
were duly executed and delivered, are in full force and effect, and binding upon
and enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditor's rights generally or by equitable principles
relating to enforceability. The Incorporation Documents constitute the entire
understanding among the shareholders of each Borrower, Limited Partner and ALC,
respectively, with respect to the governance of such entity. No breach exists
under the Incorporation Documents and no act has occurred and no condition
exists which, with the giving of notice or the passage of time would constitute
a breach under the Incorporation Documents.
4.4.2. PARTNERSHIP DOCUMENTS. A true and complete copy of the
partnership agreement and certificate of formation of Texas Partnership and all
other documents creating and governing Texas Partnership (collectively, the
"PARTNERSHIP DOCUMENTS") have been
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furnished to Agent. There are no other agreements, oral or written, among any of
the owners of any ownership interests in Texas Partnership relating to Texas
Partnership. The Partnership Documents were duly executed and delivered, are in
full force and effect, and binding upon and enforceable in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditor's
rights generally or by equitable principles relating to enforceability. The
Partnership Documents constitute the entire understanding among the partners of
Texas Partnership with respect to the governance of such entity. No breach
exists under the Partnership Documents and no act has occurred and no condition
exists which, with the giving of notice or the passage of time would constitute
a breach under the Partnership Documents.
4.5. OTHER AGREEMENTS. Neither ALC nor either Borrower is in default under
any contract, agreement or commitment to which it is a party, which default
would reasonably be expected to have a material adverse effect on ALC or any
Borrower. The execution, delivery and compliance with the terms and provisions
of this Agreement and the Loan Documents will not (i) to the best of Borrowers'
knowledge, violate any provisions of law or any applicable regulation, order or
other decree of any court or governmental entity, or (ii) conflict or be
inconsistent with, or result in any default under, any material contract,
agreement or commitment to which either Borrower or ALC is bound. Borrowers have
delivered to Agent copies of any agreements (including leases) between each
Borrower and any Affiliate related in any way to any Project and any other
agreements or documents materially affecting the use and operation of any
Project.
4.6. PROPERTIES. Fee simple title to each Project is owned by each
Borrower as indicated on Exhibit A hereto, in each case free and clear of all
liens, claims, encumbrances, covenants, conditions and restrictions, security
interests and claims of others, except only such exceptions as have been
approved in writing by Agent. To the best of each Borrower's knowledge, each
Project is in compliance in all material respects with all zoning requirements,
building codes, subdivision improvement agreements, and all covenants,
conditions and restrictions of record. Except as set forth on Exhibit 4.6
attached hereto, the zoning and subdivision approval of each Project and the
right and ability to, use or operate the Improvements are not in any way
dependent on or related to any real estate other than such Project. To the best
each of Borrower's knowledge, there are no, nor are there any alleged or
asserted, violations of law, regulations, ordinances, codes, permits, licenses,
declarations, covenants, conditions, or restrictions of record, or other
agreements relating to any Project, or any part thereof.
4.7. PROPERTY ACCESS. Except as set forth on Exhibit 4.7 attached hereto,
to each Borrower's knowledge, each Project is accessible through fully improved
and dedicated roads accepted for maintenance and public use by the public
authority having jurisdiction.
4.8. UTILITIES. All utility services reasonably necessary and sufficient
for the use or operation of each Project are available including water, storm,
sanitary sewer, gas, electric and telephone facilities.
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4.9. FLOOD HAZARDS/WETLANDS. Except as set forth on Exhibit 4.9 attached
hereto, to each Borrower's knowledge, no Project is situated in an area
designated as having special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended, or as a wetlands by any governmental entity
having jurisdiction over any Project.
4.10. TAXES/ASSESSMENTS. There are no unpaid or outstanding real estate or
other taxes or assessments on or against any Project or any part thereof, except
general real estate taxes not yet due or payable. Copies of the current general
real estate tax bills with respect to each Project have been delivered to Agent.
Each such bill covers the entire applicable Property and does not cover or apply
to any other property. There is no pending or, to the best of each Borrower's
knowledge, contemplated action pursuant to which any special assessment may be
levied against any portion of any Project.
4.11. EMINENT DOMAIN. There is no eminent domain or condemnation
proceeding pending or, to the best of each Borrower's knowledge threatened,
relating to any Project.
4.12. LITIGATION. Except as set forth in Exhibit 4.12, there is no
litigation, arbitration or other proceeding or governmental investigation
pending or, to the best of each Borrower's knowledge, threatened against or
relating to either Borrower or ALC or any of their respective property, assets,
or business, including any Project, which if decided adversely would materially
and adversely affect the business, affairs, assets or financial condition of any
Borrower, ALC, any Project, or the prospects for repayment of the Loan.
4.13. ACCURACY. Neither this Agreement nor any document, financial
statement, credit information, certificate or written statement furnished to
Agent by either Borrower or ALC contains any untrue statement of a material fact
or omits to state a material fact which would affect any Lenders' decision to
make the Loan.
4.14. FOREIGN OWNERSHIP. Neither ALC nor either Borrower is or will be
held, directly or indirectly, by a "FOREIGN CORPORATION", "FOREIGN PARTNERSHIP",
"FOREIGN TRUST", "FOREIGN ESTATE", "FOREIGN PERSON", "AFFILIATE" of a "FOREIGN
PERSON" or a "UNITED STATES INTERMEDIARY" of a "FOREIGN PERSON" within the
meaning of IRC Sections 897 and 1445, the Foreign Investments in Real Property
Tax Act of 1980, the International Foreign Investment Survey Act of 1976, the
Agricultural Foreign Investment Disclosure Act of 1978, or the regulations
promulgated pursuant to such Acts or any amendments to such Acts.
4.15. SOLVENCY. Neither ALC nor either Borrower is insolvent and, except
with respect to ALC, which has filed for bankruptcy protection and emerged as a
reorganized debtor on January 1, 2002, there has been no: (i) assignment made
for the benefit of the creditors of any of them; (ii) appointment of a receiver
for any of them or for the property of any of them; or (iii) bankruptcy,
reorganization, or liquidation proceeding instituted by or against any of them.
4.16. FINANCIAL STATEMENT/NO CHANGE. ALC has heretofore delivered to Agent
copies of the financial statements dated September 30, 2003 of ALC. Said
financial statements were prepared on a basis consistent with that of preceding
years, and all of such
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financial statements present fairly the financial condition of ALC as of the
dates in question and the results of operations for the periods indicated. Since
the dates of such statements, there has been no material adverse change in the
business or financial condition of ALC. ALC has no material contingent
liabilities not provided for or disclosed in said financial statements. There
has been no material adverse change since September 30, 2003 in the business
operations, credit, prospects or financial condition of ALC or any Project.
4.17. SPECIAL PURPOSE ENTITY. Each Borrower: (i) does not hold, directly
or indirectly, any ownership interest (legal or equitable) in any real or
personal property other than the interest which it owns in its Projects, any
personal property used in connection therewith, any Leases thereof and any
contract rights with respect thereto; (ii) is not a shareholder or partner or
member of any other entity; and (iii) does not conduct any business other than
the ownership, management and operation of its Projects.
4.18. NO BROKER. No brokerage commission or finder's fee is owing to any
broker or finder arising out of any actions or activity of Borrowers in
connection with the Loan.
4.19. EMPLOYEES. Each Borrower has no employees and shall not have any
employees until after the date on which the entire principal balance of the Loan
and all interest thereon and all other sums due pursuant to the Loan Documents
have been repaid in full (the "REPAYMENT DATE").
4.20. SECURITY DEPOSITS. Neither Borrower has collected or received any
security deposit from any tenant or resident of any Project, except as described
on Exhibit 4.20 hereto.
4.21. HIPAA COMPLIANCE. To the extent that and for so long as either
Borrower or ALC becomes or remains a "covered entity" within the meaning of
HIPAA, each Borrower by March 15, 2004 (a) will undertake and cause ALC to
undertake all necessary surveys, audits, inventories, reviews, analyses and/or
assessments (including any necessary risk assessments) of all areas of its
business and operations required by HIPAA and/or that would reasonably be
expected to be materially adversely affected by the failure of each Borrower or
ALC, as applicable, to be HIPAA Compliant (as defined below); (b) will begin
development of (and cause ALC to review its HIPAA program in place currently and
develop) a detailed plan and time line for becoming HIPAA Compliant (a "HIPAA
COMPLIANCE PLAN"); and (c) will implement (and cause ALC to implement) those
provisions of such HIPAA Compliance Plan in all material respects necessary to
ensure that each Borrower or ALC, as applicable, is or becomes HIPAA Compliant.
For purposes hereof, "HIPAA Compliant" shall mean that each Borrower or ALC, as
applicable, (x) will be in compliance in all material respects with each of the
applicable requirements of the so-called "Administrative Simplification"
provisions of HIPAA, or any final rule or regulation thereunder, becomes
effective in accordance with its or their terms, as the case may be (each such
date, a "HIPAA COMPLIANCE DATE") and (y) is not and would not reasonably be
expected to become, as of any date following any such HIPAA Compliance Date, the
subject of any civil or criminal penalty, process, claim, action or proceeding,
or any administrative or other regulatory review, survey, process or proceeding
(other than routine surveys or reviews conducted by
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any government health plan or other accreditation entity) that would reasonably
be expected to result in any of the foregoing or that would reasonably be
expected to have a material adverse effect on any Borrower's business,
operations, assets, properties or condition (financial or otherwise), in
connection with any actual or potential violation by either Borrower or ALC of
the then effective provisions of HIPAA. "HIPAA" means the Health Insurance
Portability and Accountability Act of 1996, as the same may be amended, modified
or supplemented from time to time, and any successor statute thereto, and any
and all rules or regulations promulgated from time to time thereunder.
4.22. ANTI-TERRORISM AND ANTI-MONEY LAUNDERING COMPLIANCE.
4.22.1. COMPLIANCE WITH ANTI-TERRORISM LAWS. Each Borrower is not
and shall not be, and, after making due inquiry, no Person who owns a
controlling interest in or otherwise controls either Borrower is or shall be,
(i) listed on the Specially Designated Nationals and Blocked Persons List (the
"SDN LIST") maintained by the Office of Foreign Assets Control ("OFAC"),
Department of the Treasury, and/or on any other similar list ("OTHER LISTS" and,
collectively with the SDN List, the "LISTS") maintained by the OFAC pursuant to
any authorizing statute, Executive Order or regulation (collectively, "OFAC LAWS
AND REGULATIONS"); or (ii) a Person (a "DESIGNATED PERSON") either (A) included
within the term "designated national" as defined in the Cuban Assets Control
Regulations, 31 C.F.R. Part 515, or (B) designated under Sections 1(a), 1(b),
1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published
September 25, 2001) or similarly designated under any related enabling
legislation or any other similar Executive Orders (collectively, the "EXECUTIVE
ORDERS"). The OFAC Laws and Regulations and the Executive Orders are
collectively referred to in this Amendment as the "ANTI-TERRORISM LAWS". Each
Borrower also shall require, and shall take reasonable measures to ensure
compliance with the requirement, that no Person who owns any other direct
interest in such Borrower is or shall be listed on any of the Lists or is or
shall be a Designated Person. This Section 4.22.1 shall not apply to any Person
to the extent that such Person's interest in either Borrower is through a U.S.
Publicly-Traded Entity. As used in this Agreement, "U.S. PUBLICLY-TRADED ENTITY"
means a Person (other than an individual) whose securities are listed on a
national securities exchange, or quoted on an automated quotation system, in the
United States, or a wholly-owned subsidiary of such a Person.
4.22.2. COMPLIANCE BY INTEREST HOLDERS. Each Borrower shall require
each Person that proposes to become a partner, member or shareholder in such
Borrower after the date hereof and that is not a U.S. Publicly-Traded Entity to
sign, and to deliver to such Borrower (and such Borrower shall deliver to
Lender), (a) an Interest Holder Certification and Agreement, in the form of
Exhibit 4.22 hereto ("INTEREST HOLDER AGREEMENT") and (b) if requested by Agent,
each Borrower shall deliver to Agent a schedule of the name, legal domicile
address and (for entities) place of organization of each holder of a direct or
indirect legal or beneficial interest in such Borrower.
4.22.3. ANTI-TERRORISM POLICIES. To the extent required by
applicable law or governmental regulation, each Borrower agrees to adopt and
maintain adequate policies, procedures and controls to ensure that it is in
compliance with all Anti-Terrorism Laws and
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related government guidance (such policies, procedures and controls are
collectively referred to in this Amendment as "BORROWER ANTI-TERRORISM
POLICIES"). Each Borrower further agrees to make the Borrower Anti-Terrorism
Policies, and the respective policies, procedures and controls for Persons who
are or are to become partners, members or shareholders in such Borrower (such
policies, procedures and controls are collectively referred to as "INVESTOR
ANTI-TERRORISM POLICIES"), together with the information collected thereby
concerning such Borrower and such partners, members or shareholders (but not
information about indirect members that are not Controlling Persons), available
to Agent and Lenders for review and inspection by Agent and Lenders from time to
time during normal business hours and upon reasonable prior notice, and each
Borrower agrees to deliver copies of the same to Agent and/or Lenders from time
to time upon request. Agent and Lenders will keep the Borrower Anti-Terrorism
Policies and the Investor Anti-Terrorism Policies, and the information collected
thereby, confidential subject to customary exceptions for legal process,
auditors, regulators, or as otherwise reasonably required by Agent and Lenders
for enforcement of their rights and/or in connection with reasonable business
use in the management, administration and disposition of their assets and
investments. Each Borrower consents to the disclosure to U.S. regulators and law
enforcement authorities by Agent and Lenders or any of their respective
Affiliates or agents of such information about either Borrower and the owners of
direct and indirect interests in each Borrower that Agent or Lenders reasonably
deems necessary or appropriate to comply with applicable Anti-Terrorism Laws and
Anti-Money Laundering Laws.
4.22.4. FUNDS INVESTED IN BORROWERS. Each Borrower has taken, and
shall continue to take, reasonable measures appropriate to the circumstances
(and in any event as required by applicable law), with respect to each holder of
a direct or indirect interest in such Borrower, to assure that funds invested by
such holders in such Borrower are derived from legal sources ("ANTI-MONEY
LAUNDERING MEASURES"). The Anti-Money Laundering Measures have been and shall be
undertaken in accordance with the Bank Secrecy Act, 31 U.S.C. Sections 5311 et
seq. ("BSA"), and all applicable laws, regulations and government guidance on
BSA compliance and on the prevention and detection of money laundering
violations under 18 U.S.C. Sections 1956 and 1957 (collectively with the BSA,
"ANTI-MONEY LAUNDERING LAWS").
4.22.5. NO VIOLATION OF ANTI-MONEY LAUNDERING LAWS. To each
Borrower's actual knowledge neither such Borrower nor any holder of a direct or
indirect interest in such Borrower (a) is under investigation by any
governmental authority for, or has been charged with, or convicted of, money
laundering under 18 U.S.C. Sections 1956 and 1957, drug trafficking,
terrorist-related activities or otHER money laundering predicate crimes, or any
violation of the BSA, (b) has been assessed civil penalties under any Anti-Money
Laundering Laws, or (c) has had any of its funds seized or forfeited in an
action under any Anti-Money Laundering Laws.
4.22.6. BORROWER COMPLIANCE WITH ANTI-MONEY LAUNDERING LAWS. Each
Borrower has taken, and agrees that it shall continue to take, reasonable
measures appropriate to the circumstances (in any event as required by
applicable law), to ensure that such Borrower is and shall be in compliance with
all current and future Anti-Money
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Laundering Laws and applicable laws, regulations and governmental guidance for
the prevention of terrorism, terrorist financing and drug trafficking.
4.22.7. NOTIFICATION OF LENDER; QUARANTINE STEPS. Each Borrower
shall immediately notify Agent if such Borrower obtains actual knowledge that
any holder of a direct or indirect interest in such Borrower, or any director,
manager or officer of any of such holder, (a) has been listed on any of the
Lists, (b) has become a Designated Person, (c) is under investigation by any
governmental authority for, or has been charged with or convicted of, money
laundering drug trafficking, terrorist-related activities or other money
laundering predicate crimes, or any violation of the BSA, (d) has been assessed
civil penalties under any Anti-Money Laundering Laws, or (e) has had funds
seized or forfeited in an action under any Anti-Money Laundering Laws.
4.23. DEPOSIT AND OTHER ACCOUNTS. Exhibit 4.23 hereto lists all banks and
other financial institutions at which either Borrower maintains deposit or other
accounts as of the Closing Date, and such Exhibit correctly identifies the name,
address and telephone number of each depository, the name in which the account
is held, a description of the purpose of the account, and the complete account
number therefor.
4.24. COMPLIANCE WITH HEALTHCARE LAWS. Except as disclosed on Exhibit 4.24
hereto, neither Borrower has any knowledge that any Project, either Borrower,
ALC or any tenant or operator of any Project is in violation of any applicable
statute, law, ordinance, rules and regulations of any governmental authority
with respect to regulatory matters primarily relating to patient healthcare
(including without limitation Section 1128B(b) of the Social Security Act, as
amended, 42 U.S.C. Section 1320a-7(b) (Criminal Penalties Involving Medicare or
State Health Care Programs), commonly referred to as the "Federal Anti-Kickback
Statute," and the Social Security Act, as amended, Section 1877, 42 U.S.C
Section 1395nn (Prohibition Against Certain Referrals), commonly referred to as
"STARK STATUTE"). To each Borrower's knowledge, ALC or Texas ALC, as applicable,
has all licenses, permits, consents and approvals from or by, and/or has made
all required filings with, all Governmental Authorities having jurisdiction, to
the extent required for the ownership, lease, management or operation, as
applicable, of each Project as a Health Care Facility. "GOVERNMENTAL AUTHORITY"
means any nation or government, any state or other political subdivision
thereof, and any agency, department or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
4.25. CERTIFICATE OF NEED. To each Borrower's knowledge, ALC or Texas
Partnership is the lawful owner of any certificate of need and has or has
applied for any other required license for the ownership, lease, management
and/or operation of the Projects. To each Borrower's knowledge, as of the date
hereof, in the event that Agent or Lenders acquire any of the Projects through
foreclosure or otherwise, neither the Borrowers nor Agent or any Lender, nor any
purchaser of such Project (through a foreclosure or otherwise), must obtain a
certificate of need from any applicable state healthcare regulatory authority or
agency (other than giving such notice required under the applicable state law or
regulation) prior to applying for and receiving a license to operate such
Project and certification to receive
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Medicare and Medicaid payments (and any successor program) for patients having
coverage thereunder, provided that neither the services offered at the Project
nor the number of beds operated would be changed.
ARTICLE V
AFFIRMATIVE COVENANTS
5.1. INSPECTION. Subject to the rights of tenants or residents under
Leases, Agent and its authorized agents may enter upon and inspect any Project
at all reasonable times upon reasonable advance notice given orally or in
writing to Borrowers. Agent may retain one or more independent consultants to
periodically inspect the Projects and all documents, drawings, plans, and
consultants' reports relating thereto; provided, however, that such an
inspection of a particular Project shall not occur more frequently than annually
unless an Event of Default has occurred and is continuing or Agent has a good
faith reason to do so. Borrowers shall pay Agent, for the benefit of Lenders, an
inspection and loan servicing fee of $75,000 per year, which shall be payable in
equal monthly installments of $6,250 due on the first (1st) day of each month
during the term of the Loan, commencing January 1, 2004, which Agent shall use
to cover the cost of the aforesaid inspections, it being understood and agreed
that Borrowers shall have no obligation to pay for any costs of such customary
annual inspections in excess of the inspection and loan servicing fee set forth
in this Section 5.1, unless an Event of Default is continuing or such costs are
addressed in the Environmental Indemnity.
5.2. BOOKS AND RECORDS/AUDITS. Borrowers shall keep and maintain at all
times at Borrowers' address stated in Section 4.1 above, or such other place as
Agent may approve in writing, complete and accurate books of accounts and
records adequate to reflect the results of the operation of its Projects on a
Project-by-Project basis and to provide the financial statements required to be
provided to Agent pursuant to Section 5.3 below and copies of all written
contracts, correspondence, reports of Agent's independent consultant, if any,
and other documents affecting the Projects. Agent and its designated agents
shall have the right to inspect and copy any of the foregoing at all reasonable
times upon reasonable advance notice. Additionally, Agent may audit Borrower's
records and computations; provided, however, that such audits shall not occur
more frequently than annually unless an Event of Default has occurred and is
continuing or Agent has a good faith reason to do so. The reasonable costs and
expenses of the audit shall be paid by Borrowers if the audit discloses a
monetary variance in any monthly, quarterly or annual financial report or
statement or any other material financial information or computation provided or
made by Borrowers equal to or greater than the greater of: (i) five percent
(5%); or (ii) Five Thousand and No/100 Dollars ($5,000.00) more than any
computation submitted by any Borrower.
5.3. FINANCIAL STATEMENTS; BALANCE SHEETS. Each Borrower shall furnish to
Agent and shall cause ALC to furnish to Agent such financial statements and
other financial information as Agent may from time to time reasonably request.
All such financial statements shall show all material contingent liabilities and
shall accurately and fairly present the results of operations and the financial
condition of each Borrower at the dates and for the
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period indicated. Without limitation of the foregoing, each Borrower shall
furnish to Agent and shall cause ALC to furnish to Agent the following
statements:
5.3.1. MONTHLY AND ANNUAL OPERATING STATEMENTS. Statements of the
operation of each Project on a Project-by-Project basis (including monthly
operating statements and occupancy reports) as of the last day of each month, to
be delivered within thirty (30) days after the end of each month and certified
by Borrowers as true, correct, and complete in all material respects, and yearly
statements of the operation of the Project on a Project-by-Project basis, to be
delivered within one hundred twenty (120) days after the end of each fiscal year
and certified by Borrowers as true, correct, and complete in all material
respects.
5.3.2. QUARTERLY AND ANNUAL BALANCE SHEETS AND FINANCIAL STATEMENTS.
Annual audited and quarterly unaudited consolidated balance sheets and financial
statements from ALC, within one hundred twenty (120) days of the end of each
fiscal year and forty-five (45) days of the end of each fiscal quarter,
respectively, which are true and correct in all material respects, have been
prepared in accordance with generally accepted accounting principles, and fairly
present in all material respects the financial condition(s) of the person(s)
referred to therein as of the date(s) indicated.
5.3.3. AUDITS. If either Borrower fails to furnish or cause to be
furnished promptly any report required by this Section 5.3, or if Agent
reasonably deems such reports to be unacceptable, and such circumstances
continue more then ten (10) business days after Borrower's receipt of a notice
thereof from Agent setting forth in reasonable detail Agent's objections to such
report, Agent may elect (in addition to exercising any other right and remedy)
to conduct an audit of all books and records of either Borrower and/or ALC which
in any way pertain to any Project and to prepare the statement or statements
which either Borrower failed to procure and deliver. Such audit shall be made
and such statement or statements shall be prepared at Agent's option, either
internally by Agent or by an independent firm of certified public accountants to
be selected by Agent. Borrowers shall pay all reasonable costs and expenses of
the audit and other services, whether performed internally or by an independent
firm, which costs and expenses shall be immediately due and payable with
interest thereon at the default rate contained in the Notes.
5.4. USE OF PROCEEDS. Borrowers and ALC shall use the proceeds of the Loan
for proper business purposes. No portion of the proceeds of the Loan shall be
used by Borrowers or ALC in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation U, Regulation T or Regulation
X or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Act of 1933 or the Securities Exchange Act
of 1934.
5.5. NOTICE OF LITIGATION OR DEFAULT. Borrowers shall within a reasonable
period of time provide Agent with:
(a) written notice of any litigation, arbitration, or other
proceeding or governmental investigation pending or, to any Borrower's or
ALC's knowledge,
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threatened against or relating to any Borrower, ALC, or any Project, which
if decided adversely, would reasonably be expected to have a material
adverse effect on any Borrower, ALC or any Project; and
(b) a copy of all notices of material default and violations of
laws, regulations, codes, ordinances and other legal requirements received
by either Borrower or ALC relating to either Borrower, ALC, the Collateral
or any Project.
5.6. AFFILIATE TRANSACTIONS. Any agreement by a Borrower with an Affiliate
pertaining to any Project, other than the ALC Leases which Agent and Lenders
acknowledge and agree provide for below market rent, shall be on terms no less
favorable to such Borrower than would be obtained from a non-Affiliate.
Borrowers shall deliver to Agent a copy of each such agreement. If requested by
Agent, such agreement shall provide Agent the right to terminate it upon Agent's
or Lenders' (or their designee's) acquisition of the Project through
foreclosure, a deed-in-lieu of foreclosure, UCC sale or otherwise.
"AFFILIATE" means with respect to any individual, trust, estate,
partnership, limited liability company, corporation or any other incorporated or
unincorporated organization (each a "PERSON"), a Person that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with either Borrower or ALC; any officer, director,
partner or shareholder of such Borrower or ALC; any relative of any of the
foregoing. The term "CONTROL" means possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
5.7. ADVERTISEMENT. Borrowers agree to allow Agent and Lenders to
advertise in the various news or financial media that Agent and Lenders have
provided financing to Borrowers.
5.8. REPLACEMENT RESERVE. Commencing on February 1, 2004, at the time of
and in addition to the monthly installments of interest and principal due under
the Notes, Borrowers shall pay to Agent, for the benefit of Lenders, an amount
equal to one twelfth of the sum of $360 per unit in the Projects (the
"REPLACEMENT RESERVE"). The Replacement Reserve funds shall be placed in an
interest bearing account, with all interest earned to be credited to Borrowers.
On the Maturity Date, the monies then remaining on deposit with Agent shall be
applied against the Indebtedness or if all Indebtedness has been indefeasibly
paid in full, returned to Borrowers. So long as no Event of Default is then
continuing, Borrowers may request not more than once per calendar month that
Agent disburse funds equal to at least $5,000.00 per request (in aggregate for
all Borrowers) from the Replacement Reserve (which request will include a
reasonably detailed description of the capital expenditures at the Projects
which Borrowers intend to pay for with such funds), which request shall not be
unreasonably denied by Agent. If requested by Agent, each disbursement request
will be accompanied by copies of purchase orders, invoices, and lien waivers and
other evidence reasonably required by Agent.
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5.9. HIPAA COMPLIANCE. Each Borrower shall cause the representations and
warranties set forth in Section 4.21 above to remain true and correct in all
material respects at all times.
5.10. INSURANCE PREMIUMS. At any time after Borrower (or ALC or its
Affiliates as applicable) no longer pays or causes to be paid its Insurance
Premiums (as defined below) annually in advance, then at the time of and in
addition to the monthly installments of principal and interest due under the
Notes, Borrowers shall pay to Agent a sum equal to one-twelfth (1/12) of the
amount estimated by Agent to be sufficient to pay all insurance premiums and
other similar charges in connection with the insurance required to be carried by
Borrowers (collectively, the "INSURANCE PREMIUMS") at least thirty (30) days
before they become due and payable. So long as no Event of Default exists
hereunder, Agent shall apply the sums to pay the Insurance Premiums. These sums
may be commingled with the general funds of Agent, and no interest shall be
payable thereon nor shall these sums be deemed to be held in trust for the
benefit of Borrowers. If Agent at any time reasonably determines that such
amount on deposit is insufficient to fully pay such Insurance Premiums,
Borrowers shall, within ten (10) days following notice from Agent, deposit such
additional sum as may be reasonably required by Agent. On the Maturity Date, the
moneys then remaining on deposit with Agent or its agent shall, at Agent's
option, be applied against the Indebtedness or, if all Indebtedness has been
indefeasibly paid in full, returned to Borrowers. The obligation of Borrowers to
pay the Insurance Premiums is not affected or modified by the provisions of this
Section 5.10.
5.11. DIRECTOR. In the event that Steven Vick resigns as Director of
either Borrower and/or Limited Partner, dies or becomes incapacitated, ALC shall
appoint a replacement Director or Directors for such Borrower and Limited
Partner within thirty (30) days thereafter, which replacement shall be either
the Chief Executive Officer of ALC at such time or another person reasonably
acceptable to Agent.
ARTICLE VI
NEGATIVE COVENANTS
6.1. NO AMENDMENTS. Borrowers shall not amend, modify or terminate, or
permit the amendment, modification or termination of any of:
(a) the Incorporation Documents (other than those of ALC) or the
Partnership Documents; or
(b) the ALC Leases; provided, however, Borrower may terminate any
ALC Lease if ALC or Texas Partnership, as applicable, elects to
voluntarily terminate its license to operate the applicable Project and
the respective Borrower simultaneously obtains such license in its own
name and there are no changes in the actual operations at the Project,
which are continued by ALC pursuant to a management agreement reasonably
acceptable to Agent, and the respective Borrower and ALC execute and
deliver Agent's form of collateral assignment of management agreement in
favor of Agent.
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6.2. NO ADDITIONAL INDEBTEDNESS Borrowers shall not, without Agent's
prior written consent, incur any indebtedness to any Person (other than Agent
and Lenders under the Loan Documents), except for (a) trade payables in the
ordinary course of business, and (b) up to $75,000 in the aggregate per Project
for purchase money debt to purchase and, capital leases of, vehicles, equipment
and other capital items to be used solely in connection with the operation of
such Project and which are reasonably related to the operation of assisted
living facilities. Other than as set forth in the Loan Documents, no Borrower
shall guarantee the obligations of any other Person.
6.3. NO COMMINGLING FUNDS. No Borrower shall commingle funds related to
any of its Projects with funds from any other property; provided, however, so
long as no Event of Default is then continuing, Borrowers may make disbursements
of funds from their separate bank accounts to ALC or any Affiliate of Borrowers.
6.4. LIENABLE WORK. No excavation, construction, earth work, site work or
any other mechanic's lienable work shall be done to or for the benefit of any
Project, without Agent's approval, which shall not be unreasonably withheld,
except for normal repair and maintenance in the ordinary course of business, the
work referenced in Section 5.8 and up to $25,000 of work annually at each
Project which does not decrease the value of such Project.
6.5. CONVERSION. Borrowers shall not, and shall not permit, any Project or
any portion thereof to be converted or take any preliminary actions which could
lead to a conversion to condominium or cooperative form or ownership.
6.6. USE OF PROPERTY. Unless required by applicable law, Borrowers shall
not permit changes in the use of any Project from the use existing at the
Closing Date. Borrowers shall not, and Borrowers shall not permit ALC to,
initiate or acquiesce in a change in the plat of subdivision, or zoning
classification of any Project without Agent's prior written consent.
6.7. TRANSFERS OF INTEREST IN ALC. Without Agent's prior written approval,
Borrowers shall not cause or permit any transaction involving a change in
control (as hereinafter defined) of ALC, any merger or consolidation of ALC with
any entity, or the liquidation, winding up or dissolution of ALC itself, or the
sale of all or substantially all of ALC's assets or ALC's stock ceasing to be
publicly traded; provided that, notwithstanding the foregoing, a change in
control of ALC (which may include taking ALC private), including, but not
limited to, by means of a merger or consolidation or a transaction involving the
sale of all or substantially all of the assets of ALC, may occur without Agent's
prior written approval, provided that:
(a) Agent shall have received reasonable prior notice thereof as
well as such documents, agreements, certificates, legal opinions and
information (in form and substance reasonably satisfactory to Agent) which
may be reasonably requested by Agent, including without limitation, an
Agreement of Principal, an Environmental Indemnity and a Pledge in the
form of those documents executed by ALC, executed by New ALC (as defined
below), if applicable;
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(b) Following any such transaction, either Bruce E. Toll, BET
Associates, LP (provided at the time thereof it is owned or controlled by
Bruce E. Toll), LTC Properties, Inc., CLC Healthcare, Inc. (provided at
the time thereof it is owned or controlled by, or under common control
with, LTC Properties, Inc.), Steven Vick, or any entity owned or
controlled by, or under common control with, any of them, or any
combination thereof, has the ability, directly or indirectly, through
ownership of voting securities or otherwise, to elect a majority of the
members of the board of directors of ALC, or of the acquiring, surviving
or successor entity ("NEW ALC"), as applicable;
(c) Following any such transaction, Steven Vick or another
individual reasonably acceptable to Agent shall be the chief executive
officer of ALC, or of New ALC, as applicable;
(d) No material adverse change in the business or financial
condition of ALC has occurred and is continuing prior to the consummation
of any such transaction or would result therefrom (which for these
purposes shall include a material adverse change in the business or
financial condition of New ALC after the consummation of any such
transaction as compared to the business or financial condition of ALC
prior to the consummation of any such transaction); provided, however, for
purposes hereof neither (i) the recapitalization of ALC or the refinancing
of ALC or the capitalization or financing of New ALC, including, but not
limited to, by means of one or more sale-leaseback transactions, done to
effect such a transaction in which Steven Vick (or an entity owned or
controlled by him) is a material investor (as hereinafter defined) or
after which transaction Steven Vick remains as the chief executive officer
of ALC or of New ALC, as applicable, nor (ii) the fact that any owners of
ALC immediately prior to such transaction cease being owners of ALC or are
not owners of New ALC, as applicable, or materially reduce their ownership
of ALC, or own a lesser interest in New ALC than they owned in ALC, as a
result of such a transaction, shall be treated as a material adverse
change to ALC or to New ALC);
(e) No Event of Default has occurred and is continuing or would
result therefrom;
(f) Borrowers shall reimburse Agent and Lenders for all reasonable
costs and expenses incurred by them in connection with the matters
described in this Section 6.7, including without limitation, any
negotiation, review and preparation of documents, legal fees, and any
transaction costs; and
(g) Following any such transaction that creates New ALC, New ALC
owns, directly or indirectly, 100% of the ownership interests in both
Borrowers and the Texas Partnership.
If Borrowers violate any provision of this Section 6.7, Agent shall have the
right but not the obligation to accelerate the Maturity Date to a date which is
not less than ninety (90) days
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after Agent provides written notice of such acceleration to Borrowers. For
purposes hereof, a change in control of ALC shall mean a change in the Person or
Persons who have the ability, directly or indirectly, through ownership of
voting securities or otherwise, to elect a majority of the members of the board
of directors of ALC. For purposes hereof, Steven Vick or an entity owned or
controlled by him shall be deemed to be a material investor of ALC or of New
ALC, if (i) in the case of ALC, Steven Vick directly or through such entity
increases his voting stock ownership in ALC as a result of such transaction by
at least five percent (5%) of the outstanding voting shares of ALC as measured
immediately after the transaction or (ii) in the case of New ALC, the percentage
of voting stock ownership or other voting equity ownership of New ALC held by
Steven Vick directly or through such entity immediately after such transaction
is greater than his voting stock ownership in ALC immediately prior to such
transaction by at least five percent (5%) of the outstanding voting shares or
other voting equity ownership of New ALC (for example, if Steven Vick owned x%
of ALC, his ownership of New ALC would need to be greater than or equal to the
sum of x% plus 5%).
ARTICLE VII
EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS; REMEDIES
7.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) Failure of Borrowers to pay, within five (5) days of the due
date, any interest or principal payment required to be made under the
Notes or this Agreement, and within five (5) days after notice, any of the
other payment obligations of Borrowers to Agent or Lenders, including any
other payment due under the Notes or this Agreement or the other Loan
Documents (all interest, principal and all other amounts coming due under
any of the Loan Documents is referred to collectively as the
"INDEBTEDNESS"); or
(b) Failure of Borrowers to strictly comply with the provisions of
Sections 4.17 (special purpose entity), 6.2 (no additional indebtedness)
or 6.7 (transfers of interest in ALC) of this Agreement; or
(c) Breach of any covenant, representation or warranty other than as
set forth in subsections (a) and (b) above which is not cured within
thirty (30) days after notice; provided, however, if such breach cannot by
its nature be cured within thirty (30) days, and Borrowers diligently
pursue the curing thereof (and then in all events cure such failure within
sixty (60) days after the original notice thereof), Borrowers shall not be
in default hereunder; provided, further that if such breach results from
the commencement of any administrative or other proceeding seeking license
revocation or suspension or limitation on admission of residents to any of
the Facilities (collectively, "REGULATORY ACTION") by any federal or state
regulatory agency, and Borrowers are unable to cure such breach within the
cure period set forth in the immediately preceding proviso, then Borrowers
shall not be in default hereunder as a result of such Regulatory Action
unless (a) Borrowers fail promptly, and in any event within thirty (30)
days following the date on which it first receives notice of such
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Regulatory Action, to commence resolution of the matter and thereafter
diligently and continuously prosecute in good faith a settlement,
dismissal or resolution of such Regulatory Action; (b) the Facility in
question fails to be continuously operated by a Borrower or ALC as an
assisted living facility; or (c) the license to operate the Facility in
question has terminated as a result of such Regulatory Action and
Borrowers or ALC have no appeal rights; or
(d) A petition under any Chapter of Title 11 of the United States
Code or any similar law or regulation is filed by or against either
Borrower or ALC (and in the case of an involuntary petition in bankruptcy,
such petition is not discharged within sixty (60) days of its filing), or
a custodian, receiver or trustee for any Project is appointed, or either
Borrower or ALC makes an assignment for the benefit of creditors, or any
of them are adjudged insolvent by any state or federal court of competent
jurisdiction, or any of them admit their insolvency or inability to pay
their debts as they become due or an attachment or execution is levied
against any Project; or
(e) The occurrence of a default and the expiration of any cure
period applicable thereto under any Loan Document; or
(f) The occurrence of a default and the expiration of any cure
period applicable thereto under any ALC Lease or the termination of any
ALC Lease; provided, however, neither such event shall constitute an Event
of Default hereunder if it was caused solely by ALC's or Texas
Partnership's, as applicable, decision to voluntarily terminate its
license to operate the applicable Project and the respective Borrower
simultaneously obtains such license in its own name and there are no
changes in the actual operations at the Project, which are continued by
ALC or Texas Partnership, as applicable, pursuant to a management
agreement reasonably acceptable to Agent, and the respective Borrower and
ALC or Texas Partnership, as applicable, execute and deliver Agent's form
of collateral assignment of management agreement in favor of Agent; or
(g) Borrowers shall default in the payment of any indebtedness in an
aggregate outstanding principal amount greater than $10,000.00 (other than
the Indebtedness), and such default is declared and is not cured within
the greater of thirty (30) days thereafter or the time, if any, specified
therefor in any agreement governing the same; or
(h) Any statement, report or certificate made or delivered to Agent
or any Lender by either Borrower or ALC is not materially true and
complete at any time; or
(i) The annualized ANOI of the Projects does not provide an
aggregate Debt Coverage Ratio of at least 1.45:1.00, to be calculated on a
quarterly basis for the immediately preceding six (6) month period,
beginning on April 1, 2004; or
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(j) The annualized ANOI of the Projects does not provide an
aggregate Project Yield of at least 15.25%, to be calculated on a
quarterly basis for the immediately preceding six (6) month period,
beginning on April 1, 2004; or
(k) Failure of Texas ALC to obtain and deliver to Agent, within
sixty (60) days of the Closing Date, evidence satisfactory to Agent that
all licenses and permits necessary to operate each of its Projects as
assisted living facilities have been issued to and in the name of Texas
Partnership;
(l) ALC ceases to own, directly or indirectly, one hundred percent
(100%) of the economic interests in each Borrower and Limited Partner; or
(m) Failure of Borrowers to comply with the provisions of Section
5.1 (inspection), which failure occurs more than three times in any
one-year period (in aggregate for all Projects), or which failure is not
cured within five (5) days after notice thereof (and in all event
Borrowers shall pay Agent's extra costs and expenses incurred as a result
of any such failure).
7.2. ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default,
at the option of Agent or at the direction of Requisite Lenders and upon written
notice (but without any further opportunity to cure) to the Borrowers, the
Indebtedness shall become immediately due and payable and Agent and Lenders
shall be entitled to all of the rights and remedies provided in the Loan
Documents or at law or in equity. Each remedy provided in the Loan Documents is
distinct and cumulative to all other rights or remedies under the Loan Documents
or afforded by law or equity, and may be exercised concurrently, independently,
or successively, in any order whatsoever.
7.3. LIMITED RECOURSE. Notwithstanding anything to the contrary contained
herein, Agent and Lenders agree that none of the shareholders of Borrowers
(collectively the "NON-RECOURSE PARTY") shall be personally liable for the
payment of any sums now or hereafter owing to Agent and Lenders under the Loan
Documents, except that such Persons shall be personally liable for the payment
and performance of their respective obligations under the Pledge, the
Subordinations, the collateral assignments of management agreements (if any),
the Environmental Indemnity and the Agreement of Principal.
ARTICLE VIII
ASSIGNMENT AND PARTICIPATION
8.1. ASSIGNMENTS AND PARTICIPATIONS.
8.1.1. ASSIGNMENTS. Each Lender may from time to time assign,
subject to the terms of an Assignment and Acceptance Agreement in a form
prescribed by Agent, its rights and delegate its obligations under this
Agreement to another Person, provided that (a) such Lender (excluding GECC)
shall first obtain the written consent of Agent, which consent shall not be
unreasonably withheld; (b) the Pro Rata Share (defined below) of the Loan being
assigned shall in no event be less than the lesser of (i) $10,000,000.00 and
(ii) the entire
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amount of the Pro Rata Share of the Loan of the assigning Lender; and (c) upon
the consummation of each such assignment the assigning Lender shall pay Agent an
administrative fee of $3,500.00 (the foregoing conditions set forth in clauses
(a), (b) and (c) may, however, be waived by Agent in its sole discretion). In
the case of an assignment authorized under this Section 8.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were an initial Lender hereunder, subject to the
applicable Assignment and Acceptance Agreement. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Pro Rata Share of the
Loan or assigned portion thereof. Borrowers hereby acknowledge and agree that
any assignment will give rise to a direct obligation of Borrowers to the
assignee and that the assignee shall be considered to be a Lender hereunder.
Except as provided in this subsection 8.1.1, and notwithstanding other
provisions of this Agreement or the other Loan Documents which may be to the
contrary, no Lender shall assign or sell participations in this Agreement, the
other Loan Documents or the Loan.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
obtained by dividing (i) the outstanding principal amount of the Loan
funded by such Lender by (ii) the outstanding principal amount of the
Loan, as such percentage may be adjusted by assignments permitted by
Section 8.1.
8.1.2. RECORDING OF ASSIGNMENTS. Agent shall maintain at its office
in Chicago, Illinois a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender pursuant to the terms hereof from time to time (the "REGISTER"). The
entries in the Register shall be presumptive evidence of the amounts due and
owing to each Lender in the absence of manifest error. Borrowers, Agent and each
Lender may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrowers and any Lender, at any
reasonable time upon reasonable prior notice.
8.1.3. ACCEPTANCE OF ASSIGNMENT BY AGENT. Upon its receipt of a duly
completed Assignment and Acceptance Agreement executed by an assigning Lender
and its assignee (together with the Notes subject to such assignment) and the
administrative fee referred to above, Agent shall (subject to the consent of
Agent to such assignment, if required) (1) accept such Assignment and Acceptance
Agreement, (2) record the information contained therein in the Register to
reflect such Assignment and Acceptance Agreement and (3) give prompt notice
thereof to Borrowers and Lenders. Upon request by Agent, Borrowers shall
promptly execute and deliver to Agent Notes evidencing the Indebtedness owed by
Borrowers to the assignee and, if applicable, the assigning Lender, after giving
effect to the assignment. Agent shall cancel the Notes delivered to it by the
assigning Lender and deliver the cancelled Notes to the Borrowers and the new
Notes to the assignee and, unless the assigning Lender has assigned all of its
interests under this Agreement, the assigning Lender.
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8.1.4. PARTICIPATIONS. GECC may sell (and buy back) participations
in all or any part of its Pro Rata Share of the Loan to (from) another Person.
All amounts payable by Borrowers hereunder shall be determined as if GECC had
not sold such participation and the holder of any such participation shall not
be entitled to require such Lender to take or omit to take any action hereunder
except action directly effecting (i) any reduction in the principal amount or
interest rate payable; (ii) any extension of the date fixed for any payment of
interest payable; or (iii) any release of all or substantially all of the
Collateral (except if the sale, disposition or release of such Collateral is
permitted hereunder or under any other Loan Document). Borrowers hereby
acknowledge and agree that any participation will give rise to a direct
obligation of Borrowers to the participant, and the participant shall for
purposes of Sections 8.4 and 9.7 be considered to be a Lender hereunder.
8.1.5. OTHER MATTERS. Except as otherwise provided in this Section
8.1, no Lender shall, as between Borrowers and that Lender, be relieved of any
of its obligations hereunder as a result of any assignment of, or granting of a
participation in, all or any part of the Loans, the Notes, the Indebtedness or
other obligations owed to such Lender. Each Lender may furnish any information
concerning Borrowers and ALC in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to the execution by any such assignee or participant (or
prospective assignee or participant) of a confidentiality agreement in the form
customarily used by Agent; provided, however, in no event shall any
confidentiality agreement be required in the event of a securitization of the
Loan. Borrowers agree that they will use commercially reasonable efforts to
assist and cooperate with Agent and any Lender in any manner reasonably
requested by Agent or such Lender to effect the sale of a participation or an
assignment described above, including without limitation assistance in the
preparation of appropriate disclosure documents or placement memoranda.
8.2. AGENT.
8.2.1. APPOINTMENT. Each Lender hereby designates and appoints GECC
as its Agent under this Agreement and the other Loan Documents, and each Lender
hereby irrevocably authorizes Agent to execute and deliver the Loan Documents
and to take such action or to refrain from taking such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers as are set forth herein or therein, together with such
other powers as are reasonably incidental thereto. Agent is authorized and
empowered to amend, modify, or waive any provisions of this Agreement or the
other Loan Documents on behalf of Lenders subject to the requirement that
certain of Lenders' consent be obtained in certain instances as provided in this
Section 8.2 and 8.3. The provisions of this Section 8.2 are solely for the
benefit of Agent and Lenders and neither Borrowers nor any other Person shall
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, Agent shall act solely
as agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for Borrowers
or any other Person. Agent may perform any of its duties hereunder, or under the
Loan Documents, by or through its agents or employees.
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8.2.2. NATURE OF DUTIES. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of Borrowers and ALC in connection with the extension of credit
hereunder and shall make its own appraisal of the creditworthiness of Borrowers
and ALC, and Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto (other than as expressly required herein). If Agent seeks
the consent or approval of any Lenders to the taking or refraining from taking
any action hereunder, then Agent shall send notice thereof to each Lender. Agent
shall promptly notify each Lender any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
8.2.3. RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Agent shall not be liable for any apportionment
or distribution of payments made by it in good faith and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but neither Agent
nor any of its agents or representatives shall be responsible to any Lender for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of any of
Borrowers, ALC or Lenders. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of any of Borrowers, ALC or Lenders, or the existence or possible
existence of any default hereunder or Event of Default. Agent may at any time
request instructions from Lenders with respect to any actions or approvals which
by the terms of this Agreement or of any of the Loan Documents Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested, Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from any action or withholding any approval under any
of the Loan Documents until it shall have received such instructions from
Requisite Lenders or all or such other portion of the Lenders as shall be
prescribed by this Agreement. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Loan
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Documents in accordance with the instructions of Requisite Lenders and,
notwithstanding the instructions of Requisite Lenders, Agent shall have no
obligation to take any action if it believes, in good faith, that such action
exposes Agent to any liability for which it has not received satisfactory
indemnification in accordance with subsection 8.2.5 below.
"REQUISITE LENDERS" means Lenders (other than Defaulting Lenders) having
sixty-six and two-thirds percent (66-2/3%) or more of the outstanding principal
balance of the Loan of all Lenders that are not Defaulting Lenders.
8.2.4. RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, facsimile, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder. Agent shall be entitled to rely upon the advice of legal counsel,
independent accountants, and other experts selected by Agent in its sole
discretion.
8.2.5. INDEMNIFICATION. Lenders will reimburse and indemnify Agent
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against even if so directed by Requisite Lenders until such additional indemnity
is furnished. The obligations of Lenders under this subsection 8.2.5 shall
survive the payment in full of the Indebtedness and the performance in full of
all other obligations of Borrowers or ALC to Agent and/or Lenders under any of
the Loan Documents (the "OBLIGATIONS") and the termination of this Agreement.
8.2.6. GECC INDIVIDUALLY. With respect to its obligations under the
Loan, GECC shall have and may exercise the same rights and powers hereunder and
is subject to the same obligations and liabilities as and to the extent set
forth herein for any other Lender. The terms "LENDERS" (as defined above) or
"REQUISITE LENDERS" or any similar terms shall, unless the context clearly
otherwise indicates, include GECC in its individual capacity as a Lender or one
of the Requisite Lenders. GECC may lend money to, acquire equity or other
ownership interests in, and generally engage in any kind of banking, trust or
other business as if it were not acting as Agent pursuant hereto.
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8.2.7. SUCCESSOR AGENT.
(a) RESIGNATION. Agent may resign from the performance of all its
agency functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to Borrowers and the
Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to clause (b) below or as
otherwise provided below.
(b) APPOINTMENT OF SUCCESSOR. Upon any such notice of resignation
pursuant to clause (a) above, Requisite Lenders shall appoint a successor
Agent which, unless an Event of Default has occurred and is continuing,
shall be reasonably acceptable to Borrowers. If a successor Agent shall
not have been so appointed within the thirty (30) Business Day period
referred to in clause (a) above, the retiring Agent, upon notice to
Borrowers, shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as Requisite Lenders appoint a successor Agent as
provided above.
(c) SUCCESSOR AGENT. Upon the acceptance of any appointment as Agent
under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall
be discharged from its duties and obligations under the Loan Documents.
After any retiring Agent's resignation as Agent, the provisions of this
Section 8.2 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent.
8.2.8. COLLATERAL MATTERS.
(a) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without in any
manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 8.2.7 (d)
and this subsection 8.2.8(a)), each Lender agrees to confirm in writing,
upon request by Agent or Borrower, the authority to release any Collateral
conferred upon Agent. Subject to Section 2.2 above, upon receipt by Agent
of any required confirmation from the Requisite Lenders of its authority
to release any particular item or types of Collateral, and upon at least
ten (10) Business Days prior written request by Borrowers, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the liens granted
to Agent upon such Collateral; provided, however, that (i) Agent shall not
be required to execute any such document on terms which, in Agent's
opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such liens without
recourse or warranty, and (ii) subject to Section 2.2 above, such release
shall not in any manner discharge, affect or impair the Indebtedness or
Obligations or any liens upon (or obligations of any Lender, in respect
of), all interests retained by any Lender, including (without limitation)
the proceeds of any sale, all of which shall continue to constitute part
of the Collateral.
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(b) ABSENCE OF DUTY. Agent shall have no obligation whatsoever to
any Lender or any other Person to assure that the property covered by the
Loan Documents exists or is owned by Borrowers or ALC, as applicable, or
is cared for, protected or insured or has been encumbered or that the
liens granted to Agent have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or
under any duty of care, disclosure or fidelity, or to continue exercising,
any of the rights, authorities and powers granted or available to Agent in
this subsection 8.2.8 or in any of the Loan Documents, it being understood
and agreed that in respect of the property covered by the Loan Documents
or any act, omission or event related thereto, Agent may act in any manner
it may deem appropriate, in its discretion, given Agent's own interest in
property covered by the Loan Documents as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any of the other
Lenders, provided that Agent shall exercise the same care which it would
in dealing with loans for its own account.
(c) AGENCY PROVISIONS RELATING TO COLLATERAL.
(i) The Agent is hereby authorized on behalf of all Lenders,
without the necessity of any notice to or further consent from any
Lender, at any time and from time to time, to take any actions with
respect to any Collateral for the Loan or any Loan Document which
may be necessary to preserve and maintain such Collateral or to
perfect and maintain perfected the liens upon such Collateral
granted pursuant to this Agreement and the other Loan Documents.
(ii) Should the Agent commence any proceeding or in any way
seek to enforce the Agent's or the Lenders' rights or remedies under
the Loan Documents, irrespective of whether as a result thereof the
Agent shall acquire title to any Collateral, each Lender, upon
demand therefore from time to time, shall contribute its Pro Rata
Share of the reasonable costs and/or expenses of any such
enforcement or acquisition, including, but not limited to, fees of
receivers or trustees, court costs, title company charges, filing
and recording fees, appraiser's fees and fees and expenses of
attorneys to the extent not otherwise reimbursed by Borrowers.
Without limiting the generality of the foregoing, each Lender shall
contribute its Pro Rata Share of all reasonable out of pocket costs
and expenses incurred by the Agent (including reasonable attorneys'
fees and expenses but excluding any administrative fees payable to
Agent hereunder) if the Agent employs counsel for advice or other
representation (whether or not any suit has been or shall be filed)
with respect to any Collateral for the Loan or any part thereof, or
any of the Loan Documents, or the attempt to enforce any security
interest or lien on any Collateral, or to enforce any rights of the
Agent or the Lenders or any of Borrowers' or any other party's
obligations under any of the Loan Documents, but not with respect to
any dispute between any Agent and any other Lender(s). It is
understood and agreed that in the event the Agent determines
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it is necessary to engage counsel for Lenders from and after the
occurrence and during the continuance of an Event of Default, said
counsel shall be selected by the Agent and written notice of such
selection, together with a copy of such counsel's engagement letter
and fee estimate, shall be delivered to the Lenders.
(iii) In the event that all or any portion of the Collateral
for the Loan is acquired by the Agent as the result of the exercise
of any remedies hereunder or under any other Loan Document, or is
retained in satisfaction of all or any part of Borrowers'
obligations under the Loan Documents, title to any such Collateral
or any portion thereof shall be held in the name of the Agent or a
nominee or subsidiary of the Agent, as agent, for the ratable
benefit of the Agent and the Lenders. The Agent shall prepare a
recommended course of action for such Collateral (the "POST-DEFAULT
PLAN"), which shall be subject to the approval of the Requisite
Lenders. The Agent shall administer the Collateral in accordance
with the Post Default Plan, and upon demand therefore from time to
time, each Lender will contribute its Pro Rata Share of all
reasonable out of pocket costs and expenses incurred by the Agent
pursuant to the Post-Default Plan, including without limitation, any
operating losses and all necessary operating reserves. To the extent
there is net operating income from such Collateral, the Agent shall,
in accordance with the Post-Default Plan, determine the amount and
timing of distributions to Lenders. All such distributions shall be
made to Lenders in accordance with their respective Pro Rata Share.
In no event shall the provisions of this subsection or the
Post-Default Plan require any Agent or any Lender to take an action
which would cause such Lender to be in violation of any applicable
regulatory requirements.
(d) LENDER ACTIONS AGAINST BORROWERS OR THE COLLATERAL. Each Lender
agrees that it will not take any action, nor institute any actions or
proceedings, against Borrowers or any other Person hereunder or under any
other Loan Documents with respect to exercising claims against the
Borrowers or rights in any Collateral without the consent of the Requisite
Lenders. With respect to any action by the Agent to enforce the rights and
remedies of the Agent and Lenders with respect to the Borrowers and any
Collateral in accordance with the terms of this Agreement, each Lender
hereby consents to the jurisdiction of the court in which such action is
maintained.
(e) RELEASE OF COLLATERAL. Lenders hereby irrevocably authorize
Agent, at its option and in its discretion, to release any lien granted to
or held by Agent upon any Collateral (i) upon termination of the Loan and
payment and satisfaction of all Indebtedness and Obligations (other than
contingent indemnification obligations to the extent no claims giving rise
thereto have been asserted); or (ii) constituting property being
refinanced, sold or disposed or if Borrowers certify to Agent that the
refinancing, sale or disposition is made in compliance with the provisions
of this Agreement, including, without limitation, pursuant to Section 2.2
hereof (and Agent may rely in good faith conclusively on any such
certificate, without further inquiry).
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8.2.9. AGENCY FOR PERFECTION. Agent and each Lender hereby appoint
each other Lender as agent for the purpose of perfecting Agent's security
interest in assets which, in accordance with the Uniform Commercial Code in any
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such assets, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefore, shall
deliver such assets to Agent or in accordance with Agent's instructions. Each
Lender agrees that it will not have any right individually to enforce or seek to
enforce any Loan Document or to realize upon any collateral security for the
Loans unless instructed to do so by Agent, it being understood and agreed that
such rights and remedies may be exercised only by Agent.
8.2.10. NOTICE OF DEFAULT. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default except with
respect to defaults in the payment of principal, interest and fees required to
be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrowers referring to this Agreement,
describing such Event of Default and stating that such notice is a "NOTICE OF
DEFAULT". Agent will notify each Lender of its receipt of any such notice. Agent
shall take such action with respect to such Event of Default as may be requested
by Requisite Lenders in accordance with this Article VIII. Unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Event
of Default as it shall deem advisable or in the best interests of Lenders.
8.2.11. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may undertake
any of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be liable to
Lenders, except as to money or securities received by them or their authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
8.3. AMENDMENTS, CONSENTS AND WAIVERS.
8.3.1. Except as otherwise provided in Section 8.2, this Section 8.3
or in Section 9.17, and except as to matters set forth in other subsections
hereof or in any other Loan Document as requiring only Agent's consent, the
consent of Requisite Lenders and Borrowers will be required to amend, modify,
terminate, or waive any provision of this Agreement or any of the other Loan
Documents.
8.3.2. In the event Agent requests the consent of a Lender and does
not receive a written consent or denial thereof within ten (10) Business Days
after such Lender's receipt of such request, then such Lender will be deemed to
have denied the giving of such consent.
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8.4. SET OFF AND SHARING OF PAYMENTS.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, during the continuance of
any Event of Default, each Lender is hereby authorized by Borrowers at any time
or from time to time, with reasonably prompt subsequent notice to Borrowers (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (A) balances held by such Lender at any of
its offices for the account of Borrowers, and (B) other property at any time
held or owing by such Lender to or for the credit or for the account of
Borrowers, against and on account of any of the Indebtedness or Obligations;
except that no Lender shall exercise any such right without the prior written
consent of Agent. Any Lender exercising a right to set off shall purchase for
cash (and the other Lenders shall sell) interests in each of such other Lender's
Pro Rata Share of the Indebtedness or Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Shares. Borrowers agree, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Indebtedness or Obligations
and upon doing so shall deliver such amount so set off to the Agent for the
benefit of all Lenders in accordance with their Pro Rata Shares.
8.5. DISBURSEMENT OF FUNDS.
Agent may, on behalf of Lenders, disburse funds to Borrowers for
advances of the Loan requested in compliance with the provisions of this Loan
Agreement. Each Lender shall reimburse Agent on demand for all funds disbursed
on its behalf by Agent, or if Agent so requests, each Lender will remit to Agent
its Pro Rata Share of any portion of the Loan before Agent disburses same to
Borrowers. If Agent elects to require that each Lender make funds available to
Agent, prior to a disbursement by Agent to Borrowers, Agent shall advise each
Lender by telephone, facsimile or telecopy of the amount of such Lender's Pro
Rata Share of the advance requested by Borrowers no later than 1:00 p.m. Chicago
time on the funding date applicable thereto, and each such Lender shall pay
Agent such Lender's Pro Rata Share of such requested advance, in same day funds,
by wire transfer to Agent's account on such funding date. If any Lender fails to
pay the amount of its Pro Rata Share within one (1) Business Day after Agent's
demand, Agent shall promptly notify Borrowers, and Borrowers shall immediately
repay such amount to Agent. Any repayment required pursuant to this Section 8.5
shall be without premium or penalty, but with interest at the Interest Rate.
Nothing in this Section 8.5 or elsewhere in this Agreement or the other Loan
Documents, including without limitation the provisions of Section 8.6, shall be
deemed to require Agent to advance funds on behalf of any Lender or to relieve
any Lender from its obligation to fulfill its commitments hereunder or to
prejudice any rights that Agent or Borrowers may have against any Lender as a
result of any default by such Lender hereunder.
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8.6. PAYMENTS.
8.6.1. DISTRIBUTION AND APPORTIONMENT OF PAYMENTS.
(a) Subject to subsection 8.6.1(b), payments actually received by
Agent for the account of the Lenders shall be paid to them promptly after
receipt thereof by Agent, but in any event within five (5) Business Days,
provided that, if any such payments are not distributed to the Lenders
within five (5) Business Days after Agent's receipt thereof, Agent shall
pay to such Lenders interest thereon, at the lesser of (i) the overnight
cost of funds at which federal funds are made available to the Agent (such
interest rate to change automatically effective as of the date of each
change in the overnight cost of federal funds) and (ii) if the applicable
payment represents repayment of a portion of the principal of the Loan,
the Interest Rate, from the date of receipt of such funds by Agent until
such funds are paid in immediately available funds to such Lenders
provided such funds are received by Agent not later than 11:00 A.M.
(Chicago time) on the date of receipt. All payments of principal and
interest in respect of the Loan, all payments of the fees described in
this Agreement (but not in any separate fee letter except to the extent
expressly set forth therein), and all payments in respect of any other
obligations of Borrowers under the Loan Documents shall be allocated among
such of Lenders as are entitled thereto, in proportion of their respective
Pro Rata Shares or otherwise as provided herein or in the other Loan
Documents or in the Assignment and Acceptance Agreements, as the case may
be. The Agent shall distribute to each Lender at its primary address set
forth herein or in its Assignment and Acceptance Agreement, or at such
other address as a Lender may request in writing, such funds as it may be
entitled to receive, provided that the Agent shall in any event not be
bound to inquire into or determine the validity, scope or priority of any
interest or entitlement of any Lender and may suspend all payments and
seek appropriate relief (including without limitation instructions from
the Requisite Lenders, or all Lenders, as applicable, or an action in the
nature of interpleader) in the event of any doubt or dispute as to any
apportionment or distribution contemplated hereby. The order of priority
herein is set forth solely to determine the rights and priorities of the
Lenders as among themselves and may at any time or from time to time be
changed by the Lenders as they may elect, in writing, without necessity of
notice to or consent of or approval by Borrowers.
(b) If a Lender (a "DEFAULTING LENDER") defaults in making any
advance or paying any other sum payable by it hereunder, such sum together
with interest thereon at the Interest Rate from the date such amount was
due until repaid (such sum and interest thereon as aforesaid referred to,
collectively, as the "LENDER DEFAULT OBLIGATION") shall be payable by the
Defaulting Lender (i) to any Lender(s) which elect, at their sole option
(and with no obligation to do so), to fund the amount which the Defaulting
Lender failed to fund or (ii) to the Agent or any other Lender which under
the terms of this Agreement is entitled to reimbursement from the
Defaulting Lender for the amounts advanced or expended. Notwithstanding
any provision hereof to the contrary, until such time as the Defaulting
Lender has repaid the Lender
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Default Obligation in full (i) all amounts which would otherwise be
distributed to the Defaulting Lender shall instead be applied first to
repay the Lender Default Obligation (to be applied first to interest at
the Interest Rate and then to principal) until the Lender Default
Obligation has been repaid in full (whether by such application or by cure
by the Defaulting Lender) whereupon such Lender shall no longer be a
Defaulting Lender, and (ii) the Defaulting Lender's right to consent to or
approve of matters which are subject to the consent or approval of
Requisite Lenders or all Lenders shall be suspended, and for purposes of
consent and approval the definition of "REQUISITE LENDERS" and "ALL
LENDERS" shall be modified as if the Defaulting Lender were not a Lender.
Any interest collected from Borrowers on account of principal advanced by
any Lender(s) on behalf of a Defaulting Lender shall be paid to the
Lender(s) who made such advance and shall be credited against the
Defaulting Lender's obligation to pay interest on the amount advanced at
the Interest Rate. The provisions of this Section shall apply and be
effective regardless of whether an Event of Default occurs and is then
continuing, and notwithstanding (i) any other provision of this Agreement
to the contrary, (ii) any instruction of Borrowers as to their desired
application of payments or (iii) the suspension of such Defaulting
Lender's right to vote on matters which are subject to the consent or
approval of Requisite Lenders, or all Lenders. The Agent shall be entitled
to (i) withhold or set off, and to apply to the payment of the Lender
Default Obligation any amounts to be paid to such Defaulting Lender under
this Agreement, and (ii) bring an action or suit against such Defaulting
Lender in a court of competent jurisdiction to recover the Lender Default
Obligation and, to the extent such recovery would not fully compensate the
Lenders for the Defaulting Lender's breach of this Agreement, to collect
damages. In addition, the Defaulting Lender shall indemnify, defend and
hold Agent and each of the other Lenders harmless from and against any and
all claims, actions, liabilities, damages, costs and expenses (including
attorneys' fees and expenses), plus interest thereon at the Interest Rate,
for funds advanced by Agent or any other Lender on account of the
Defaulting Lender or any other damages such entities may sustain or incur
by reason of or as a direct consequence of the Defaulting Lender's failure
or refusal to abide by its obligations under this Agreement.
(c) At least five (5) Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of
America, or a state thereof, agrees that it will deliver to the Agent two
duly completed copies of United States Internal Revenue Service Form 1001
or 4224, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Lender which
so delivers a Form 1001 or 4224 further undertakes to deliver to the Agent
two additional copies of such form (or a successor form) on or before the
date that such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent forms so delivered by it,
and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Agent, in each case certifying that such
Lender is entitled to receive payments under this Agreement
-42-
and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises
the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
8.6.2. RETURN OF PAYMENTS.
(a) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received
by Agent from Borrowers and such related payment is not received by Agent,
then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind together with
interest thereon, for each day from and including the date such amount is
made available by Agent to such Lender to but excluding the date of
repayment to Agent, at the greater of the Federal Funds Rate in effect on
each such day (as determined by Agent) and a rate determined by Agent in
accordance with banking industry rules on interbank compensation.
(b) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrowers or paid to any
other Person pursuant to any requirement of law, court order or otherwise,
then, notwithstanding any other term or condition of this Agreement, Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such
amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to Borrowers or such
other Person, without set-off, counterclaim or deduction of any kind.
8.7. RESERVES. The Agent is hereby authorized on behalf of all Lenders,
without necessity of any notice to or further consent from any Lender, at any
time and from time to time (i) to disburse the inspection fees collected under
Section 5.1 to pay for the inspections referred to therein (including payment to
Agent therefor), (ii) to disburse all or any portion of any real estate tax
reserves maintained under the Mortgages, and (iii) to disburse all or any
portion of the Replacement Reserve.
8.8. SALE OF THE LOAN. Notwithstanding anything to the contrary contained
herein but subject to the exceptions listed below, so long as no Event of
Default is then continuing, no Lender shall sell or assign its interest in the
Loan without the prior written consent of Borrowers, which consent shall not be
unreasonably withheld, conditioned or delayed. The immediately preceding
sentence shall not apply to the following situations: (i) the sale (or
repurchase) by GECC of any participation(s) in all or any part of its interest
in the Loan, (ii) the sale or assignment of a Lender's interest in the Loan (or
any portion thereof) to any Person with assets of one billion dollars or more on
a consolidated basis at the time of such transaction, (iii) the sale or
assignment of a Lender's interest in the Loan (or any portion thereof) to an
affiliate of such Lender, (iv) the sale or assignment of a Lender's interest in
the
-43-
Loan (or any portion thereof) if done in connection with the sale, assignment or
other disposition of all or any substantial portion of such Lender's portfolio
of real estate or healthcare loans of a similar nature or (v) the sale or
assignment by a Lender of its interest in the Loan (or any portion thereof) to
another Lender or Agent.
ARTICLE IX
MISCELLANEOUS
9.1. EXPENDITURES AND EXPENSES. Borrowers shall promptly pay all
reasonable Costs (defined below) incurred by Agent and/or Lenders in connection
with the documentation, closing, modification, workout, collection or
enforcement of the Loan or any of the Loan Documents (as applicable), but
specifically excluding the costs incurred pursuant to Section 5.7, and all such
Costs, if not paid by Borrowers within five (5) Business Days after a demand for
payment from Agent setting forth in reasonable detail the nature of the Costs
for which payment is due, shall be included as additional Indebtedness bearing
interest at the interest rate then applicable to the Indebtedness until paid.
For the purposes hereof "COSTS" means all reasonable expenditures and expenses
which may be paid or incurred by or on behalf of Agent and/or Lenders including
reasonable repair costs, payments to remove or protect against liens, reasonable
attorneys' fees (including fees of Agent's and/or Lenders' inside counsel),
reasonable receivers' fees, engineers' fees, accountants' fees, independent
consultants fees (including environmental consultants but specifically excluding
any engineers or consultants engaged to provide the customary annual inspection
services described in Section 5.1 and for which payment is covered by the loan
and servicing fee described in Section 5.1 and are not addressed in the
Environmental Indemnity or incurred during the continuance of an Event of
Default), all reasonable costs and expenses incurred in connection with any of
the foregoing, Agent's and/or Lenders' out-of-pocket costs and expenses related
to any audit of any Project to the extent permitted by Section 5.2 above,
reasonable outlays for documentary and expert evidence, stenographers' charges,
stamp taxes, publication costs, and costs (which may be estimates as to items to
be expended after entry of an order or judgment) for procuring all such
abstracts of title, title and UCC searches, and examination, title insurance
policies, Torrens' Certificates and similar data and assurances with respect to
title as Agent may deem reasonably necessary either to prosecute any action or
to evidence to bidders at any foreclosure sale of any Project the true condition
of the title to, or the value of, any Project or any part thereof.
9.2. DISCLOSURE OF INFORMATION. Agent and/or Lenders shall have the right
(but shall be under no obligation) to make available to any party for the
purpose of granting participations in or selling, transferring, assigning or
conveying all or any part of the Loan (including any governmental agency or
authority and any prospective bidder at any foreclosure sale of any Project or
any part thereof) any and all information which Agent and/or Lenders may have
with respect to ALC, any Project and Borrowers, whether provided by Borrowers,
ALC or any third party or obtained as a result of any environmental assessments.
Agent and each Lender agree to exercise reasonable efforts to keep any
confidential information delivered in connection with the Loan Documents,
confidential from Persons other than those employed by or engaged by Agent or
such Lender and those employed by or engaged by Agent's or such Lender's
assignees or participants, or potential
-44-
assignees or participants; provided, however, this sentence shall not apply to
disclosures required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or in connection with any
dispute with ALC or a Borrower or arising out of the Loan Documents in any way.
Borrowers and ALC agree that Agent and Lenders shall have no liability
whatsoever as a result of delivering any such information to any third party,
and Borrowers and ALC, on behalf of themselves and their successors and assigns,
hereby release and discharge Agent and Lenders from any and all liability,
claims, damages, or causes of action, arising out of, connected with or
incidental to the delivery of any such information to any third party.
9.3. INTENTIONALLY OMITTED.
9.4. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Agent and/or
Lenders in exercising any right or remedy under any of the Loan Documents, or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of any right or remedy. Agent's or Lenders' acceptance of payment of
any sum secured by any of the Loan Documents after the due date of such payment
shall not be a waiver of Agent's or Lenders' right to either require prompt
payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes or other liens or charges by Agent or Lenders shall not be a waiver of
Agent's or Lenders' right to accelerate the maturity of the Loan, nor shall
Agent's or Lenders' receipt of any awards, proceeds, or damages under Section 4
of the Mortgage operate to cure or waive Borrowers' or ALC's default in payment
of sums secured by any of the Loan Documents. With respect to all Loan
Documents, only waivers made in writing by Agent, after securing any necessary
consents from the Requisite Lenders, shall be effective against Agent and
Lenders.
9.5. GOVERNING LAW; SEVERABILITY. The Loan Documents shall be governed by
and construed in accordance with the internal laws of the State of Illinois,
except that the provisions of the laws of the state in which each Mortgage is
recorded shall be applicable to the creation, perfection and enforcement of the
lien created by that Mortgage. The invalidity, illegality or unenforceability of
any provision of this Agreement shall not affect or impair the validity,
legality or enforceability of the remainder of this Agreement, and to this end,
the provisions of this Agreement are declared to be severable.
9.6. RELATIONSHIP. The relationship between Agent and Lenders, on the one
hand, and Borrowers, on the other, shall be that of creditor-debtor only. No
term in this Agreement or in the other Loan Documents and no course of dealing
between the parties shall be deemed to create any relationship of agency,
partnership or joint venture or any fiduciary duty by Agent and/or Lenders to
any other party. Nothing contained in any Loan Document and no action taken by
Agent or any Lender pursuant hereto or thereto shall be deemed to constitute
Lenders to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt. The obligation of each Lender hereunder is
several and not joint and no Lender shall be responsible for the obligation or
commitment of any other Lender hereunder. In the event that any Lender at any
time should fail to make a Loan as herein provided, the
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Lenders, or any of them, at their sole option, may make the Loan that was to
have been made by the Lender so failing to make such Loan.
9.7. INDEMNITY. Borrowers shall indemnify, protect, hold harmless and
defend Agent and Lenders, their respective successors, assigns, shareholders,
directors, officers, employees, and agents from and against any and all loss,
damage, cost, expense (including reasonable attorneys' fees), and claims arising
out of or in connection with (a) any Project, (b) the Collateral, (c) any act or
omission of any Borrower, ALC, or their respective employees or agents, whether
actual or alleged, and (d) any and all brokers' commissions or other costs of
similar type by any party in connection with the Loan, in each case except to
the extent arising from the indemnitee's gross negligence or willful misconduct.
Upon written request by an indemnitee, Borrowers will undertake, at their own
costs and expense, on behalf of such indemnitee, using counsel reasonably
satisfactory to the indemnitee, the defense of any legal action or proceeding
for which such indemnitee is entitled to be indemnified pursuant to this
section. At Agent's or Requisite Lenders' option, Agent may, at Borrowers'
expense, prosecute or defend any action involving the priority, validity or
enforceability of any of the Loan Documents.
9.8. NOTICE. Any notice or other communication required or permitted to be
given shall be in writing addressed to the respective party as set forth below
and may be personally served, telecopied or sent by overnight courier or U.S.
Mail and shall be deemed given: (a) if served in person, when served; (b) if
telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on a
Business Day or on the next Business Day if transmitted after 3:00 PM (Chicago
Time) on a Business Day or if transmitted on a non Business Day; provided that a
hard copy of such notice is also sent pursuant to (c) or (d) below; (c) if by
overnight courier, on the first business day after delivery to the courier; or
(d) if by U.S. Mail, certified or registered mail, return receipt requested on
the date of actual receipt or refusal of receipt thereof.
Notices to Borrowers: c/o Assisted Living Concepts, Inc.
1349 Empire Central
Suite 900
Dallas, Texas 75247
Attn: Chief Financial Officer
Telecopy: (214) 424-4132
with a copy to: The Nathanson Group PLLC
1520 Fourth Avenue
Sixth Floor
Seattle, Washington 98101
Attn: Randi Nathanson
Telecopy: (206) 623-1738
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and a copy to: Garvey Schubert Barer
Eleventh Floor
121 SW Morrison Street
Portland, Oregon 97204
Attn: A. Jeffery Bird
Telecopy: (503) 226-0259
Notices to Agent: General Electric Capital Corporation
Loan No. 07-0004127
2 Bethesda Metro Center, Suite 600
Bethesda, Maryland 20814
Attn: Manager, Portfolio Administration Group
Telecopy: (301) 347-3150
With a copy to: General Electric Capital Corporation
Loan No. 07-0004127
100 Congress Avenue, Suite 700
Austin, Texas 78701
Attn: Diana Pennington,
SVP & Chief Counsel, Real Estate
Telecopy: (866) 221-0433
And a copy to: General Electric Capital Corporation
Loan No. 07-0004127
500 West Monroe Street
Chicago, Illinois 60661
Attn: Kevin McMeen, Senior Vice President
Telecopy: (312) 441-6755
9.9. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
AND CAPTIONS. The covenants and agreements contained in the Loan Documents shall
bind, and the rights thereunder shall inure to, the respective successors and
assigns of Agent, Lenders and Borrowers, subject to the provisions of this
Agreement. All covenants and agreements of Borrowers shall be joint and several.
In exercising any rights under the Loan Documents or taking any actions provided
for therein, Agent and Lenders may act through their respective employees,
agents or independent contractors as authorized by Agent or Lenders,
respectively. The captions and headings of the paragraphs and sections of this
Agreement are for convenience only and are not to be used to interpret or define
the provisions hereof.
9.10. TERMS AND USAGE. As used in the Loan Documents "BUSINESS DAY" means
any day, other than a Saturday or a Sunday, when banks in Chicago, Illinois are
not required or authorized to be closed.
9.11. INTENTIONALLY OMITTED.
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9.12. TIME OF ESSENCE. Time is of the essence of this Agreement and the
other Loan Documents and the performance of each of the covenants and agreements
contained herein and therein.
9.13. VENUE. BORROWERS HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREE THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL
BE LITIGATED IN SUCH COURTS. BORROWERS EXPRESSLY SUBMIT AND CONSENT TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON
CONVENIENS. BORROWERS HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWERS BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWERS, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT.
9.14. JURY TRIAL WAIVER. BORROWERS, AGENT AND EACH LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWERS, AGENT AND EACH
LENDER, AND BORROWERS ACKNOWLEDGE THAT NEITHER LENDERS NOR AGENT NOR ANY PERSON
ACTING ON BEHALF OF THEM HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. BORROWERS, LENDERS AND AGENT ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM
HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN
THEIR RELATED FUTURE DEALINGS. BORROWERS, AGENT AND LENDERS FURTHER ACKNOWLEDGE
THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED)
IN THE SIGNING OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND IN THE MAKING
OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
9.15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and together shall
constitute the Agreement.
9.16. FINAL AGREEMENT. This Agreement (including the Senior Housing Rider
attached hereto and hereby made a part hereof), together with the other Loan
Documents, represents the entire agreement among Borrowers, ALC, Lenders and
Agent and supersedes all prior agreements among the parties with respect to the
Loan.
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9.17. AMENDMENTS. Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement, the
Notes or any of the other Loan Documents, or consent to any departure by any
party therefrom, shall in any event be effective unless the same shall be in
writing and signed by Requisite Lenders (or Agent, if expressly set forth
herein, in any Note or in any other Loan Document) and the Borrowers, if
applicable; provided, that except to the extent permitted by the applicable
Assignment and Acceptance Agreement, no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (a) increase any Lender's Pro Rata Share of the Loan; (b) reduce the
principal of or the rate of interest on the Loan or the fees payable with
respect to the Loan; (c) extend any date fixed for any payment of interest or
fees; (d) change the definition of the term Requisite Lenders or the percentage
of Lenders which shall be required for Lenders to take any action hereunder; (e)
release Collateral (except if the sale, disposition or release of such
Collateral is permitted under Section 2.2, 8.2.7(d) or 8.2.8 above or any other
Loan Document); (f) amend or waive this Section 9.17 or the definitions of the
terms used in this Section 9.17 insofar as the definitions affect the substance
of this Section 9.17; or (g) consent to the assignment, delegation or other
transfer by any party of any of its rights and obligations under any Loan
Document; and provided, further, that no amendment, modification, termination or
waiver affecting the rights or duties of Agent under any Loan Document shall in
any event be effective, unless in writing and signed by Agent, in addition to
all Lenders required to take such action. Notwithstanding anything to the
contrary in this Section 9.17, Agent and Borrowers may execute amendments to
this Agreement and the other Loan Documents for the purpose of correcting
typographical errors without the consent of Lenders. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No notice to or demand on
Borrowers or any other party in any case shall entitle Borrowers or any other
party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 9.17 shall be binding upon each holder
of the Notes at the time outstanding, each future holder of the Notes and, if
signed by a party, upon such party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused the same to be executed by their duly authorized representatives as
of the date first above written.
BORROWERS:
ALC PROPERTIES II, INC.,
a Nevada corporation
By:_________________________________
Name:_______________________________
Title:______________________________
TEXAS ALC II, INC.,
a Nevada corporation
By:_________________________________
Name:_______________________________
Title:______________________________
AGENT AND LENDER:
GENERAL ELECTRIC CAPITAL CORPORTION,
a Delaware corporation, as Agent and
a Lender
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT A
PROPERTIES AND BORROWERS
FACILITY NAME AND ADDRESS OWNER ALLOCATED LOAN AMOUNT POOL A/POOL B DESIGNATION
------------------------- ----- --------------------- -------------------------
1. Aurora House ALC Properties II, Inc. $ 1,191,664 A
675 West Broadway Road
Apache Junction, AZ 85220
2. Baldwin House ALC Properties II, Inc. $ 1,439,989 A
10401 North 79th Avenue
Peoria, AZ 85345
3. Grayson House ALC Properties II, Inc. $ 1,585,055 A
7509 East Long Look Drive
Prescott Valley, AZ 86314
4. Mondell House ALC Properties II, Inc. $ 465,559 A
15155 West Mondell Road
Surprise, AZ 85374
5. Powell House ALC Properties II, Inc. $ 1,670,054 B
806 West Longhorn Road
Payson, AZ 85541
6. Hamilton House ALC Properties II, Inc. $ 1,083,478 A
2116 Butler Road
Fort Wayne, IN 46815
FACILITY NAME AND ADDRESS OWNER ALLOCATED LOAN AMOUNT POOL A/POOL B DESIGNATION
------------------------- ----- --------------------- -------------------------
7. McKinney House ALC Properties II, Inc. $ 1,723,067 B
3901 High Street Road
Logansport, IN 46974
8. Whitlock House ALC Properties II, Inc. $ 1,179,862 A
1719 South Elm Street
Crawfordsville, IN 47933
9. Eiler House ALC Properties II, Inc. $ 1,768,648 B
920 West Garfield
Clarinda, IA 51632
10. Bailey House ALC Properties II, Inc. $ 928,472 A
650 Pershing Avenue
Bunkie, LA 71322
11. Sojourner House ALC Properties II, Inc. $ 1,981,462 B
5364 Green Meadow Drive
Kalamazoo, MI 49009
12. Pathfinder House ALC Properties II, Inc. $ 1,787,425 A
3010 North Clarkson
Fremont, NE 68025
13. Mey House ALC Properties II, Inc. $ 2,498,100 A
1999 Steelmanville Road
Egg Harbor Township, NJ 08234
-2-
FACILITY NAME AND ADDRESS OWNER ALLOCATED LOAN AMOUNT POOL A/POOL B DESIGNATION
------------------------- ----- --------------------- -------------------------
14. Cardinal House ALC Properties II, Inc. $ 1,743,956 A
163 Meadow Park Drive
Cambridge, OH 43725
15. Carlisle House ALC Properties II, Inc. $ 1,936,310 A
1721 Whetstone Street
Bucyrus, OH 44820
16. Clay House ALC Properties II, Inc. $ 1,748,759 A
3784 Frazeyburg Road
Zanesville, OH 43701
17. Bentley House ALC Properties II, Inc. $ 1,433,181 B
2400 Garden Way
Hermitage, PA 16148
18. Grainger House ALC Properties II, Inc. $ 1,815,260 A
10960 Frankstown Road
Penn Hills, PA 15234
19. Greer House ALC Properties II, Inc.. $ 1,967,290 A
22 West Clen Moore Blvd.
New Castle, PA 16105
20. Logan House ALC Properties II, Inc. $ 2,522,382 B
180 Craigdell Road
Lower Burrell, PA 15068
-3-
FACILITY NAME AND ADDRESS OWNER ALLOCATED LOAN AMOUNT POOL A/POOL B DESIGNATION
------------------------- ----- --------------------- -------------------------
21. Lowrie House ALC Properties II, Inc. $ 2,159,188 A
100 Stirling Village Drive
Butler, PA 16001
22. Marquis House ALC Properties II, Inc. $ 2,342,258 A
660 Cherry Tree Lane
Uniontown, PA 15401
23. McCullough House ALC Properties II, Inc. $ 1,431,393 B
500 Cheney Oaks Drive
Johnstown, PA 15905
24. Helena House ALC Properties II, Inc. $ 1,343,700 B
1624 Paris Avenue
Port Royal, SC 29935
25. Austin House Texas ALC II, Inc. $ 1,906,010 A
901 Oakview Drive
Nacogdoches, TX 75961
26. Bluebonnet House Texas ALC II, Inc. $ 1,128,511 B
3901 Victoria Avenue
College Station, TX 77845
27. Lakewell House Texas ALC II, Inc. $ 1,486,611 A
3005 Northeast 2nd Street
Mineral Wells, TX 76067
-4-
FACILITY NAME AND ADDRESS OWNER ALLOCATED LOAN AMOUNT POOL A/POOL B DESIGNATION
------------------------- ----- --------------------- -------------------------
28. Lucas House Texas ALC II Inc. $ 1,749,625 A
2910 Toccoa Road
Beaumont, TX 77703
29. Meredith House Texas ALC II, Inc. $ 1,912,244 A
812 West 25th Street
Pampa, TX 79065
30. Potter House Texas ALC II, Inc. $ 2,070,487 A
6800 Plum Creek Drive
Amarillo, TX 79124
$50,000,000
-5-
EXHIBIT 1.1.7
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of this Agreement,
Agent and Lenders agree to incur (on a pro rata basis based on their respective
Revolving Loan Commitment), from time to time during the Borrowing Period, upon
the request of Borrowers, Letter of Credit Obligations (defined below) by
causing Letters of Credit to be issued by a Lender, Wachovia, ABN AMRO or some
other bank or other legally authorized financial institution selected by or
acceptable to Agent in its sole discretion which has an S&P Rating of at least
"A" (each, an "L/C ISSUER") for Borrowers' account and guaranteed by Agent;
provided, that if the L/C Issuer is a Lender, then such Letters of Credit shall
not be guaranteed by Agent but rather each Lender shall, subject to the terms
and conditions hereinafter set forth, purchase (or be deemed to have purchased)
risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the lesser of (i) Five Million Dollars ($5,000,000.00) (the "L/C
SUBLIMIT"), (ii) the Revolving Loan Commitment of all Lenders less the aggregate
outstanding principal balance of the Revolving Credit Advances, and (iii) the
amount Borrowers could then borrow under the Revolving Loan. No such Letter of
Credit shall have an expiry date that is more than one (1) year following the
date of issuance thereof or that is later than ten (10) days prior to the then
scheduled Revolving Loan Conversion Date, unless otherwise approved by the Agent
in its sole discretion. No such Letter of Credit shall be issued later than
three (3) months prior to the then scheduled Revolving Loan Conversion Date.
(b) Advances Automatic; Participations.
(i) In the event that Agent or any Lender shall make any payment on
or pursuant to any Letter of Credit Obligation, such payment shall then be
deemed automatically to constitute a Revolving Credit Advance, and each Lender
shall be obligated to pay its Pro Rata Share thereof in accordance with this
Agreement. The failure of any Lender to make available to Agent for Agent's own
account its Pro Rata Share of any such Revolving Credit Advance or payment by
Agent under or in respect of a Letter of Credit shall not relieve any other
Lender of its obligation hereunder to make available to Agent its Pro Rata Share
thereof, but no Lender shall be responsible for the failure of any other Lender
to make available such other Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for any Lender to be deemed
to have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Lender, then (A) immediately and without
further action whatsoever, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation equal to such Lender's Pro Rata Share
(based on the Revolving Loan Commitments) of the Letter of Credit Obligations in
respect of all Letters of Credit then outstanding and (B) thereafter,
immediately upon issuance of any Letter of Credit, each Lender shall be deemed
to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation in such Lender's Pro Rata
Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations with respect to such Letter of Credit on the date of such issuance.
Each Lender shall fund its participation in all payments or disbursements made
under the Letters of Credit in the same manner as provided in this Agreement
with respect to Revolving Credit Advances.
(c) Cash Collateral.
(i) If Borrowers are required to provide cash collateral for any
Letter of Credit Obligations pursuant to clause (ii) below, Borrowers will pay
to Agent for the ratable benefit of itself and Lenders cash or cash equivalents
acceptable to Agent ("CASH EQUIVALENTS") in an amount equal to 105% of the
maximum amount then available to be drawn under each applicable Letter of Credit
outstanding for the benefit of such Borrower. Such funds or Cash Equivalents
shall be held by Agent in a cash collateral account (the "CASH COLLATERAL
ACCOUNT") maintained at a bank or financial institution acceptable to Agent. The
Cash Collateral Account shall be in the name of Borrowers and shall be pledged
to, and subject to the control of, Agent, for the benefit of Agent and Lenders,
in a manner satisfactory to Agent. Each Borrower hereby pledges and grants to
Agent, on behalf of itself and Lenders, a security interest in all such funds
and Cash Equivalents held in the Cash Collateral Account from time to time and
all proceeds thereof, as security for the payment of all amounts due in respect
of the Letter of Credit Obligations and other Obligations, whether or not then
due. The Agreement, including this Exhibit 1.1.7, shall constitute a security
agreement under applicable law.
(ii) If (x) the Loan is prepaid in full (together with all other
amounts then due and owing to Lenders and Agent under the Loan Documents) prior
to the Maturity Date, (y) the Loan is paid in full (together with all other
amounts then due and owing to Lenders and Agent under the Loan Documents) upon
the Maturity Date or (z) the Revolving Loan is terminated pursuant to Section
2.2.2 of the Agreement and, in the case of clauses (x) or (y), any then
remaining Projects are released from the applicable Mortgages, or in the case of
clause (z), the then remaining Pool B Projects are so released, then if any
Letter of Credit Obligations, whether or not then due and payable, shall for any
reason remain outstanding, Borrowers shall either (A) provide cash collateral
therefor in the manner described above, or (B) cause all such Letters of Credit
and guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus thirty (30) additional days) as, and in an amount equal to
105% of, the aggregate maximum amount then available to be drawn under, the
Letters of Credit to which such outstanding Letter of Credit Obligations relate
and shall be issued by a Person, and shall be subject to such terms and
conditions, as are be satisfactory to Agent in its sole discretion. If upon the
Maturity Date (whether due to acceleration of otherwise) the Loan is not repaid
in full together with all other amounts then due and owing to Lenders and Agent
under the Loan Documents, in breach of the Agreement, or if for some other
reason Agent has not released the Mortgages on the remaining Projects, then the
payments received from Borrower or ALC under their respective Loan Documents and
any proceeds of Collateral (net of Agent's and
-2-
Lender's Costs) may, at Agent's option (and notwithstanding any other provision
of the Agreement or any other Loan Document to the contrary, and prior to
application for any other purpose under the Loan Documents) be deposited into a
Cash Collateral Account as cash collateral for the Letter of Credit Obligations,
in an aggregate amount of up to 105% of the aggregate maximum amount then
available to be drawn under each outstanding Letter of Credit.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrowers, whether before or after the Revolving Loan
Conversion Date, Agent may apply such funds or Cash Equivalents then held in the
Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by Borrowers to
Agent and Lenders with respect to such Letter of Credit Obligations and, upon
the satisfaction in full of all Letter of Credit Obligations, to any other
Obligations of Borrowers then due and payable.
(iv) No Borrower nor any Person claiming on behalf of or through any
Borrower shall have any right to withdraw any of the funds or Cash Equivalents
held in the Cash Collateral Account, except that upon the termination of all
Letter of Credit Obligations and the payment of all amounts payable by Borrowers
to Agent and Lenders in respect thereof, any funds remaining in the Cash
Collateral Account shall be applied to other Obligations then due and owing and
upon payment in full of such Obligations, any remaining amount shall be paid to
Borrowers or as otherwise required by law. Interest earned on deposits in the
Cash Collateral Account shall be for the account of Borrowers.
(d) Fees and Expenses. Borrowers agree to pay to Agent for the
benefit of Lenders, as compensation to Lenders for Letter of Credit Obligations
incurred hereunder, (i) all reasonable costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, including periodic
service charges, but excluding any placement or issuance fee, and (ii) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "LETTER OF CREDIT FEE") in an amount equal to one and one-half percent
(1.50%) per annum (based upon a 360-day year) multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of Credit.
Such fee shall be paid to Agent for the benefit of the Lenders in arrears, on
the first day of each month. In addition, Borrowers shall pay to any L/C Issuer,
on demand, such reasonable fees (including all per annum fees), charges and
expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued, but excluding any placement or issuance fees.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
Representative shall give Agent at least two (2) Business Days' prior written
notice requesting the incurrence of any Letter of Credit Obligation. The notice
shall be accompanied by the form of the Letter of Credit (which shall be
acceptable to the L/C Issuer) and a completed Application for Standby Letter of
Credit. Notwithstanding anything contained herein to the contrary, Letter of
Credit applications by Borrower Representative and approvals by Agent and the
L/C Issuer may be made and transmitted pursuant to
-3-
electronic codes and security measures mutually agreed upon and established by
and among Borrower Representative, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrowers to reimburse
Agent and Lenders for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities, and the obligations of
each Lender to make payments to Agent with respect to Letters of Credit shall be
unconditional and irrevocable. Such obligations of Borrowers and Lenders shall
be paid strictly in accordance with the terms hereof under all circumstances
including the following:
(i) any lack of validity or enforceability of any Letter of Credit
or the Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, setoff, defense or other right that
any Borrower or any of their respective Affiliates or any Lender may at any time
have against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such transferee may be acting), Agent, any
Lender, or any other Person, whether in connection with the Agreement, the
Letter of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between any Borrower
or any of their respective Affiliates and the beneficiary for which the Letter
of Credit was procured); provided, however, nothing in this clause (i) shall be
construed as preventing Borrowers from bringing a separate action against Agent
or any Lender or any other person in connection with such claim or right;
(iii) except as otherwise expressly provided in paragraph (g)(ii)(C)
below, any draft, demand, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(iv) except as otherwise expressly provided in paragraph (g)(ii)(C)
below), any payment by Agent or any L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate or other
document that does not comply with the terms of such Letter of Credit or such
guaranty;
(v) any other circumstance or event whatsoever, that is similar to
any of the foregoing; or
(vi) the fact that a default or an Event of Default has occurred and
is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in this
Agreement, Borrowers hereby agree to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs
-4-
of internal counsel) that Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of Credit or
guaranty thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any
Letter of Credit or guaranty thereof as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority, except that Borrowers shall have no obligation under
this subsection to the extent that any liabilities resulted from the gross
negligence or willful misconduct of Agent or such Lender (as finally determined
by a court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrowers, Borrowers assume
all risks of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law, neither Agent nor any
Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C) failure of
the beneficiary of any Letter of Credit to comply fully with conditions required
in order to demand payment under such Letter of Credit; provided, that in the
case of any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a result of
its gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction) in determining that the demand for payment under such
Letter of Credit or guaranty thereof complies on its face with any applicable
requirements for a demand for payment under such Letter of Credit or guaranty
thereof; (D) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they may be in cipher; (E) errors in interpretation of technical terms;
(F) any loss or delay in the transmission or otherwise of any document required
in order to make a payment under any Letter of Credit or guaranty thereof or of
the proceeds thereof; (G) the credit of the proceeds of any drawing under any
Letter of Credit or guaranty thereof; and (H) any consequences arising from
causes beyond the control of Agent or any Lender. None of the above shall
affect, impair, or prevent the vesting of any of Agent's or any Lender's rights
or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand
any waivers, covenants or indemnities made by Borrowers in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and such L/C
Issuer, including a Master Standby Agreement entered into with Agent.
-5-
(h) Definitions.
"LETTER OF CREDIT OBLIGATIONS" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrowers, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of
a participation with respect to any Letter of Credit. The amount of such Letter
of Credit Obligations shall equal the maximum amount that may be payable at such
time or at any time thereafter by Agent or Lenders thereupon or pursuant
thereto.
"LETTERS OF CREDIT" means documentary or standby letters of credit
issued for the account of Borrowers by any L/C Issuer, and bankers' acceptances
issued by Borrowers, for which Agent and Lenders have incurred Letter of Credit
Obligations.
-6-
EXHIBIT 1.4.2
PRINCIPAL AMORTIZATION SCHEDULE
Loan Amount $35,000,000
Interest Rate 5.75%
Period 300
Payment ($220,187.24)
Amortization Table
Mortgage Principal
Month Balance Payment
$35,000,000
1 $34,947,521 ($52,478.91)
2 $34,894,791 ($52,730.37)
3 $34,841,808 ($52,983.04)
4 $34,788,571 ($53,236.91)
5 $34,735,079 ($53,492.01)
6 $34,681,330 ($53,748.32)
7 $34,627,325 ($54,005.87)
8 $34,573,060 ($54,264.64)
9 $34,518,535 ($54,524.66)
10 $34,463,749 ($54,785.93)
11 $34,408,701 ($55,048.44)
12 $34,353,389 ($55,312.22)
13 $34,297,811 ($55,577.25)
14 $34,241,968 ($55,843.56)
15 $34,185,857 ($56,111.14)
16 $34,129,477 ($56,380.01)
17 $34,072,827 ($56,650.16)
18 $34,015,905 ($56,921.61)
19 $33,958,711 ($57,194.36)
20 $33,901,242 ($57,468.42)
21 $33,843,498 ($57,743.79)
22 $33,785,478 ($58,020.48)
23 $33,727,179 ($58,298.49)
24 $33,668,602 ($58,577.84)
25 $33,609,743 ($58,858.53)
26 $33,550,602 ($59,140.56)
27 $33,491,179 ($59,423.94)
28 $33,431,470 ($59,708.68)
29 $33,371,475 ($59,994.78)
30 $33,311,193 ($60,282.26)
31 $33,250,622 ($60,571.11)
32 $33,189,760 ($60,861.35)
33 $33,128,607 ($61,152.97)
34 $33,067,161 ($61,446.00)
35 $33,005,421 ($61,740.43)
36 $32,943,385 ($62,036.27)
37 $32,881,051 ($62,333.52)
38 $32,818,419 ($62,632.20)
39 $32,755,487 ($62,932.32)
40 $32,692,253 ($63,233.87)
41 $32,628,716 ($63,536.86)
42 $32,564,875 ($63,841.31)
43 $32,500,727 ($64,147.22)
44 $32,436,273 ($64,454.59)
45 $32,371,509 ($64,763.43)
46 $32,306,436 ($65,073.76)
47 $32,241,050 ($65,385.57)
48 $32,175,351 ($65,698.88)
49 $32,109,338 ($66,013.68)
50 $32,043,008 ($66,330.00)
51 $31,976,360 ($66,647.83)
52 $31,909,392 ($66,967.18)
53 $31,842,104 ($67,288.07)
54 $31,774,494 ($67,610.49)
55 $31,706,559 ($67,934.46)
56 $31,638,300 ($68,259.98)
57 $31,569,712 ($68,587.06)
58 $31,500,797 ($68,915.70)
59 $31,431,551 ($69,245.92)
60 $31,361,973 ($69,577.73)
-2-
EXHIBIT 4.6
APPURTENANT EASEMENTS
PROPERTY APPURTENANT EASEMENTS
- -------- ---------------------
Grainger House, PA 20 foot drainage easement PBV 204, Pages 31-32
10 foot sanitary sewer easement PBV 204, Pages 31-21
Lowrie House, PA Utility and drainage easements under
Cross Easement Agreement recorded in RBV 2664,
Page 158, as amended and recorded in RBV 2749,
Page 772
Marquis House, PA Access via Cherry Tree Lane (50 ft right of way), DBV 1286, Page 809
30 foot utility easement PBV 52, Page 15
Mondell House, AZ Easement Right as set forth in Access Easement Agreement
recorded on February 6, 1998 in Recording No. 98-0094581.
Eiler House, IA Together with the benefits of a 20 foot
wide sewer easement as set forth in Document
dated September 25, 1997, recorded October 10,
1997 as Instrument No. 970831.
Mey House, NJ Together with Easement(s) in Deed Book 6358, Page 324 by and between Assisted
Living Concepts, Inc., dated July 13, 1998, Recorded September (storm drain
access and maintenance)
Cardinal House, OH Together with the Appurtenant Easement as set forth in the Right of Way from
William R. Duffey and Betty E. Duffey to Assisted Living Concepts, Inc., filed
for record October 25, 1996, recorded in Volume 141, Page 595 of Guernsey County.
Together with the Appurtenant Easement for a
sewer line as set forth in the Easement from
William R. Duffey and Betty E. Duffey to Assisted
Living Concepts, Inc., filed for record June 13,
1997, recorded in Volume 157, Page 915 of
Guernsey County.
EXHIBIT 4.7
ACCESS
Access to the properties set forth below is via access easements over private
roads as set forth below, which easements are reflected on the ALTA/ASCM land
surveys delivered by Borrowers and certified to Lender:
PROPERTY ACCESS EASEMENTS
- -------- ----------------
Marquis House, PA Access via Cherry Tree Lane (50 ft right of way), DBV 1286, Page 809
Mondell House, AZ Easement Right as set forth in Access Easement Agreement recorded on
February 6, 1998 in Recording No. 98-0094581.
Cardinal House, OH Together with the Appurtenant Easement as set forth in the Right of Way from
William R. Duffey and Betty E. Duffey to Assisted Living Concepts, Inc.,
filed for record October 25, 1996, recorded in Volume 141, Page 595 of
Guernsey County.
EXHIBIT 4.9
FLOOD HAZARDS/WETLANDS
The following is a list of the Projects located in an area designated as having
"special flood hazards as defied by the Flood Disaster Protection Act of 1973,
as amended", which areas are designated by the letters "A" or "V":
1. The Project located in Fremont, NE, which is located in Special
Flood Zone Area AO.
The following is a list of the Projects situated in an area designated as
"wetlands":
1. At the Project located in Port Royal, SC there is a 50 foot buffer
of wetlands along the east property line. None of the Improvements
are located in the designated wetlands.
2. At the Project located in Johnstown, PA, there is an area designated
as wetlands on the _________ portion of the land. None of the
Improvements are located in the designated wetlands.
EXHIBIT 4.12
LITIGATION
None.
EXHIBIT 4.20
SECURITY DEPOSITS
Neither of the Borrowers has collected or received any security deposit from any
tenant or resident of any Project. In the past, Assisted Living Concepts, Inc.
("ALC") collected security deposits from the residents of certain facilities,
including one or more of the Projects, which funds were maintained in a
segregated account and pledged as collateral in connection with ALC's
debtor-in-possession financing. In connection with closing on the Loan, these
security deposits will be released to ALC and maintained in its general
depository account. In lieu of security deposits, ALC now collects
non-refundable move-in fees.
EXHIBIT 4.22
INTEREST HOLDER CERTIFICATION AND AGREEMENT
To: General Electric Capital Corporation
500 West Monroe Street
Suite 1500
Chicago, Illinois 60661
Date: ____________________
Re: Loan Agreement dated as of December 23, 2003 among ALC Properties
II, Inc. and Texas ALC II, Inc. (collectively, "Borrowers"), the
financial institutions who are or hereafter become parties thereto
(collectively, "Lenders") and General Electric Capital Corporation,
a Delaware corporation, as agent and a Lender (as amended, the "Loan
Agreement")
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned represents, warrants, covenants and agrees
for the benefit of Lenders as follows:
1. The undersigned ("Owner") represents and warrants to Lender that the
Owner owns, in the aggregate, 100% of the direct ownership interests in
Borrowers, and that neither Borrowers nor Owner is or shall be and, after due
inquiry, that no Person who owns a controlling interest in or otherwise controls
Borrowers or Owner, is or shall be, (a) listed on the Specially Designated
Nationals and Blocked Persons List (the "SDN List") maintained by the Office of
Foreign Assets Control ("OFAC"), Department of the Treasury, and/or on any other
similar list ("Other Lists" and, collectively with the SDN List, the "Lists")
maintained by the OFAC pursuant to any authorizing statute, Executive Order or
regulation (collectively, "OFAC Laws and Regulations"); or (b) a Person (a
"Designated Person") either (i) included within the term "designated national"
as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (ii)
designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224,
66 Fed. Reg. 49079 (published September 25, 2001), or similarly designated under
any related enabling legislation or any other similar Executive Orders
(collectively, the "Executive Orders"). The OFAC Laws and Regulations and the
Executive Orders are collectively referred to in this Agreement as the "Anti
Terrorism Laws". Owner and Borrowers shall be required, and shall take
reasonable measures to ensure compliance with such requirement, that no Person
who owns any other direct or indirect interest in Owner or Borrowers is or shall
be listed on any of the Lists or is or shall be a Designated Person. This
Section 1 shall not apply to any Person to the extent that such Person's
interest in the Borrowers is through a U.S. Publicly-Traded Entity. As used in
this Agreement "U.S. Publicly-Traded Entity" means a Person (other than an
individual) whose securities are listed on a national securities exchange, or
quoted on an automated quotation system, in the United
States, or a wholly-owned subsidiary of such a Person. From time to time upon
the written request of Lender, Owner shall deliver to Borrowers a schedule of
the name, legal domicile address and (for entities) place of organization of
each holder of a direct or indirect legal or beneficial interest in Owner.
2. Owner represents and warrants that all evidence of identity provided by
it to Borrowers is genuine and that all related information is accurate and that
it has acquired, or is acquiring, and shall hold, its interest in Borrowers for
its own account, risk and beneficial interest and without the obligation or
intention to sell, distribute, assign or transfer all or a portion of such
interest to any other Person.
3. To the extent required by applicable law or governmental regulation,
Owner agrees to adopt and maintain adequate policies, procedures and controls to
ensure that it is in compliance with all Anti Terrorism Laws and related
government guidance (such policies, procedures and controls are collectively
referred to as "Owner Anti-Terrorism Policies"). Owner further agrees to make
its Owner Anti-Terrorism Policies and the respective policies, procedures and
controls for Persons who are or are to become stockholders, members, partners or
other investors (collectively, the "Investors") in Owner (such policies,
procedures and controls are collectively referred to as "Investor Anti-Terrorism
Policies"), together with the information collected thereby concerning Owner and
each Investor, available to Lender for its review and inspection from time to
time during normal business hours and upon reasonable prior notice, and Owner
agrees to deliver copies of the same to Lender from time to time upon request.
Lender will keep the Owner Anti-Terrorism Policies and the Investor
Anti-Terrorism Policies, and the information collected thereby, confidential
subject to customary exceptions for legal process, auditors, regulators, or as
otherwise reasonably required by Lender for enforcement of its rights and/or in
connection with reasonable business use in the management, administration and
disposition of its assets and investments. Owner consents to the disclosure to
U.S. regulators and law enforcement authorities by Borrowers, Lender and their
respective affiliates and agents of such information about Owner that Borrowers
or Lender reasonably deem necessary or appropriate to comply with applicable
Anti-Terrorism Laws and Anti-Money Laundering Laws.
4. Owner represents and warrants that it has taken, and agrees that it
shall continue to take, reasonable measures appropriate to the circumstances
(and in any event as required by law), with respect to each holder of a direct
or indirect interest in Owner and Borrowers, to assure that funds invested by
such holders in Borrowers are derived from legal sources (the "Anti Money
Laundering Measures"). The Anti Money Laundering Measures have been and shall be
undertaken in accordance with the Bank Secrecy Act, 31 U.S.C. Sections 5311 et
seq. ("BSA"), and all applicable laws, regulations and government guidance on
BSA compliance and on the prevention and detection of money laundering
violations under 18 U.S.C. Sections 1956 and 1957 (collectively, "Anti Money
Laundering Laws").
5. Owner represents and warrants, to its knowledge, that neither it nor
any holder of a direct or indirect interest in Owner or in Borrowers (a) is
under investigation by any governmental authority for, or has been charged with,
or convicted of, money laundering under 18 U.S.C. Sections 1956 and 1957, drug
trafficking, terrorist related activities, other money
-2-
laundering predicate crimes or any violation of the BSA, (b) has been assessed
civil penalties under Anti Money Laundering Laws, or (c) has had its funds
seized or forfeited in an action under any Anti Money Laundering Laws.
6. Owner shall immediately notify Lender if Owner obtains knowledge that
Borrowers, Owner, or holder of a direct or indirect interest in Borrowers or
Owner, or any director, manager or officer of any of them, (a) has been listed
on any of the Lists, (b) has become a Designated Person, (c) is under
investigation by any governmental authority for, or has been charged with or
convicted of, money laundering, drug trafficking, terrorist related activities,
other money laundering predicate crimes, or any violation of the BSA, (d) has
been assessed civil penalties under any Anti Money Laundering Laws, or (e) has
had funds seized or forfeited in an action under any Anti Money Laundering Laws.
7. Owner acknowledges and agrees that if any of the representations or
warranties of the undersigned set forth herein are false, misleading or
incorrect as of the date made, Lender, in addition to all of its other rights
and remedies, may declare that an Event of Default exists under the Loan
Agreement. Owner agrees to notify Borrowers and Lender promptly of any change in
facts or circumstances that causes any of the representations or warranties
contained herein to the untrue.
8. Owner represents and warrants that it has taken, and agrees that it
shall continue to take, reasonable measures, appropriate to the circumstances
(and in any event as required by law), to ensure that it and Borrowers are and
shall be in compliance with all current and future Anti-Money Laundering Laws,
and laws, regulations and government guidance for the prevention of terrorism,
terrorist financing and drug trafficking.
9. In addition to the representations, warranties and covenants regarding
full compliance with Anti-Terrorism Laws and Anti-Money Laundering Laws, Owner
represents and warranties that it is, and agrees that it shall remain, in
compliance in all material respects with all other laws and requirements
applicable to it, its business and its assets, the violation of which would have
a material adverse effect on its ability to perform its obligations under the
Borrowers' corporate or partnership documents or on the Borrowers' ability to
perform their obligations under the Loan Agreement.
10. Owner shall make, or shall cause to be made, all payments to Lender by
check or wire transfer drawn on an account owned by Borrowers, or by Owner or
another Person approved in writing in advance by Lender, and maintained at a
banking institution organized under the laws of the United States or one of its
constituent States, or at a federally regulated securities broker dealer.
11. If the Owner Anti-Terrorism Policies, the Investor Anti-Terrorism
Policies and the Anti-Money Laundering Measures do not provide, in Lender's
reasonable determination, adequate means to assure that Persons that are listed
on any of the Lists, or that are Designated Persons, or whose funds are not
derived from legal sources, are excluded from becoming or being Investors in
Owner or Borrowers, Lender shall notify Borrowers of its determination in
accordance with the notice provisions in the Loan Agreement. If the
-3-
inadequate Owner Anti-Terrorism Policies, Investor Anti-Terrorism Policies and
Anti-Money Laundering Measures are not modified to Lender's reasonable
satisfaction within thirty (30) days following notice to Borrowers of Lender's
determination, each of the undersigned acknowledges that Lender, in addition to
all of its other rights and remedies, may declare that an Event of Default
exists.
12. No transfer of any direct or indirect controlling interest in
Borrowers or Owner shall be effective unless and until the transferee has
provided a written certification by the transferee to Borrowers that, after
making due inquiry, (a) the transferee or any Person who owns a controlling
interest in, or otherwise controls, the transferee is not listed on any of the
Lists and is not a Designated Person, and the transferee has taken reasonable
measures to assure that no holder of any other direct or indirect interest in
the transferee is so listed or is so designated; provided, however, that none of
the foregoing shall apply to any Person which is, or to the extent that such
interest is through, a U.S. Publicly-Traded Entity, and (b) the funds for
investment in Owner or Borrowers are derived from legal sources.
13. Owner acknowledges and agrees that if at any time Borrowers or Lender
reasonably believes that Owner has breached its representations and warranties
or its agreements set forth herein, Borrowers have the right or may be obligated
to block Owner's investment in Borrowers, to prohibit additional investments, to
segregate the assets constituting such Owner's the investment in accordance with
applicable Anti-Terrorism Laws, to decline any redemption request or to redeem
the Investor's investment. Owner further acknowledges that it will have no claim
against Borrowers or Lender or any of their respective affiliates or agents for
any form of damages as a result of any of the foregoing actions.
14. Owner shall require each Person that proposes to become a holder of
any interest in Borrowers to sign an agreement substantially in the form of this
Agreement and to deliver the same to Borrowers.
15. Capitalized terms used in this Agreement and not defined in this
Agreement shall have the meanings assigned to them in the Loan Agreement. Any
notice sent to Lender under this Agreement shall be sent in accordance with the
notice provisions set forth in the Loan Agreement.
16. The undersigned acknowledges that (a) Lender is relying on this
Agreement and its rights hereunder in maintaining the Loan Agreement and in
continuing to advance proceeds of the Loan, and (b) any terms hereof applying to
more than one of the undersigned are made on a joint and several basis
hereunder. This Agreement may be executed in counterparts.
SIGNATURE PAGE FOLLOWS
-4-
IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Agreement as of the date set forth above.
OWNER:
EXHIBIT 4.23
DEPOSITS AND OTHER ACCOUNTS
Depository Address Account Name Purpose Account No.
- ---------- ------- ------------ ------- -----------
Bank One, NA 100 E. Broad Street ALC Lockbox Cash Receipts 618754212
Columbus, OH 43271-0201 Collection
614-248-5178
Bank One, NA 100 E. Broad Street ALC Properties II General Corporate 638760579
Columbus, OH 43271-0201 Purposes
614-248-5178
Bank One, NA 100 E. Broad Street Texas ALC II, Inc. General Corporate 656521507
Columbus, OH 43271-0201 Purposes
614-248-5178
EXHIBIT 4.24
COMPLIANCE WITH HEALTHCARE LAWS
None.
SCHEDULE I
INDEX OF DEFINED TERMS
DEFINED TERM PAGE
- ------------ ----
Affiliate....................................... 25
Agent........................................... 2
Agreement....................................... 1
Agreement of Principal.......................... 13
ALC............................................. 1
ALC Leases...................................... 1
ALC Properties.................................. 1
Allocated Loan Amount........................... 10
ANOI............................................ 5
Anti-Money Laundering Laws...................... 22
Anti-Money Laundering Measures.................. 21
Anti-Terrorism Laws............................. 20
Assignments of Leases........................... 2
Base Rate....................................... 7
Borrower........................................ 1
Borrower Anti-Terrorism Policies................ 21
Borrower Representative......................... 6
Borrowers....................................... 1
Borrowing Availability.......................... 4
Borrowing Period................................ 3
BSA............................................. 22
business day.................................... 48
Cash Collateral Account......................... 2
Cash Equivalents................................ 2
Closing Date.................................... 2
Collateral...................................... 10
control......................................... 25
Costs........................................... 44
Debt Coverage Ratio............................. 5
Defaulting Lender............................... 42
Designated Person............................... 20
Environmental Indemnity......................... 13
Event of Default................................ 29
Executive Orders................................ 20
Exit Fee........................................ 8
Facilities...................................... 1
FIRREA.......................................... 13
GECC............................................ 1
HIPAA........................................... 20
HIPAA Compliance Date........................... 20
HIPAA Compliance Plan........................... 20
Improvements.................................... 1
Incorporation Documents......................... 16
Indebtedness.................................... 30
Interest Holder Agreement....................... 21
Interest Rate................................... 7
Investor Anti-Terrorism Policies................ 21
L/C Issuer...................................... 1
L/C Sublimit.................................... 1
Leases.......................................... 14
Lender.......................................... 2
Lender Default Obligation....................... 42
Lenders......................................... 2, 1
Letter of Credit Fee............................ 3
Letter of Credit Obligations.................... 6
Letters of Credit............................... 6
Limited Partner................................. 13
Lists........................................... 20
Loan............................................ 1
Loan Documents.................................. 2
Maturity Date................................... 7
Mortgages....................................... 2
New ALC......................................... 28
Note............................................ 7
Obligations..................................... 36
OFAC............................................ 20
OFAC Laws and Regulations....................... 20
Other Lists..................................... 20
Owner........................................... 1
Partnership Documents........................... 17
Person.......................................... 25
Pledge.......................................... 13
Pool A Project.................................. 10
Pool B Project.................................. 10
Post-Default Plan............................... 38
Pro Rata Share.................................. 32
Project......................................... 1
Project Yield................................... 5
Projects........................................ 1
Properties...................................... 1
Property........................................ 1
Register........................................ 33
Regulatory Action............................... 30, 3
Released Project................................ 10
Repayment Date.................................. 19
Replacement Reserve............................. 26
Requisite Lenders............................... 35
Revolving Credit Advance........................ 3
Revolving Loan.................................. 3
Revolving Loan Commitment....................... 3
Revolving Note.................................. 3
Revolving Notes................................. 3
SDN List........................................ 20
Stark Statute................................... 23
Subordinations.................................. 1
Term Loan....................................... 2
Term Loan Commitment............................ 3
Term Note....................................... 2
Term Notes...................................... 2
Texas ALC....................................... 1
Texas Partners.................................. 13
Title Company................................... 14
Title Policies.................................. 14
U.S. Publicly-Traded Entity..................... 21
-2-
SENIOR HOUSING RIDER
THIS SENIOR HOUSING RIDER is attached to and made a part of that
certain Loan Agreement dated as of the 23rd day of December, 2003, among ALC
PROPERTIES II, INC., a Nevada corporation, and TEXAS ALC II, INC., a Nevada
corporation (collectively, "BORROWER"); the financial institutions who are or
hereafter become parties to the Loan Agreement as Lenders and GECC HEALTHCARE
FINANCE, INC., a corporation organized and existing under the laws of Delaware
(in its individual capacity, "GECC"), as the "AGENT" and a Lender (as "Agent"
and "Lender" are defined in the Loan Agreement). To the extent of any conflict
between the terms and provisions of this Rider and the terms and provisions of
the Loan Agreement, the terms and provisions of this Rider shall govern and
control the rights and obligations of the parties.
R-1. All terms not defined in this Rider shall have the meanings
ascribed to such terms as set forth in the Loan Agreement.
R-2. The following representations, warranties and covenants are
hereby added to the representations, warranties and covenants contained in the
Loan Agreement
Borrower represents, covenants, and warrants, as of the date hereof
and through the term of Loan, as follows:
(a) Borrower or its tenants, ALC and the Texas Partnership (each an
"OPERATOR") is using and operating the Properties and Improvements
(collectively, the "FACILITIES") as assisted living facilities, with the
number of units specified on Exhibit R-1 hereto (as modified from time to
time with Agent's consent, which consent Agent may grant or withhold in
its reasonable discretion, the "LICENSED USE"). The Operator and Borrower
comply and throughout the term of the Loan will comply in all material
respects with all federal, state and local laws, regulations, quality and
safety standards, accreditation standards and requirements applicable to
use and operation of the Facilities of the applicable state regulatory
authority (each a "DOH") and all other federal, state or local
governmental authorities including those relating to the quality and
adequacy of medical care, distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies, additions to facilities and
services and fee splitting. The Facilities which are owned, leased or
operated by Borrower or Operator shall be operated at all times in
compliance with such laws and requirements.
(b) All governmental licenses, permits, regulatory agreements or
other approvals or agreements necessary for the Licensed Use of the
Facilities are held by Borrower and/or Operator in the name of the
Borrower and/or Operator as required under applicable law and are in full
force and effect or have been duly applied for and Borrower and/or
Operator is authorized to operate the Facilities under applicable law
prior to the issuance thereof, including a valid certificate of need
("CON"), if applicable or similar certificate, license, or approval issued
by the DOH for the requisite number of units and beds in the Facilities,
and a provider agreement or other required documentation of approved
provider status for each provider payment or
reimbursement program listed on Exhibit R-2 hereto (collectively, the
"LICENSES"). So long as the Loan remains outstanding, Borrower shall
operate the Facilities or cause the Facilities to be operated in a manner
such that the Licenses shall remain in full force and effect. True and
complete copies of the Licenses have been delivered to Agent.
(c) The Licenses, including without limitation, the CON, if
applicable:
(i) May not be, and have not been, and will not be transferred
to any location other than the Facilities;
(ii) Are not and will not be pledged as collateral security
for any other loan or indebtedness; and
(iii) Are held, and will remain, free from restrictions or
known conflicts which would materially impair the use or operation
of the Facilities for the Licensed Use, and shall not be
provisional, probationary or restricted in any way other than
restrictions generally applicable to facilities such as the
Facilities, such as restrictions on the type or condition of the
residents who can be admitted to the Facilities or the care which
can be provided to the residents of the Facilities (but any such
restrictions shall not be materially more restrictive than on the
Closing Date).
(d) Neither Borrower nor Operator shall:
(i) Rescind, withdraw or revoke the Licenses for the
Facilities, or amend, modify, supplement, or otherwise alter the
nature, tenor or scope of the Licenses for the Facilities;
(ii) Amend or otherwise change the Facilities' authorized
units or beds capacity and/or the number of units or beds approved
by the DOH;
(iii) Replace or transfer all or any part of the Facilities'
units or beds to another site or location; or
(iv) Voluntarily transfer or encourage the transfer of any
resident of the Facilities to any other Facilities unless such
transfer is for reasons relating to the health or safety of the
resident to be transferred, employees, guests and other persons or
for non payment.
(e) In the event Borrower or Operator elects in its sole discretion
to participate in Medicare or Medicaid, each Facility so participating
will be and thereafter will remain, in compliance in all material respects
with all requirements for participation in Medicare and Medicaid, as
applicable, including the Medicare and Medicaid Patient Protection Act of
1987 for so long as Borrower or Operator elects to participate in such
program. Such Facilities will be and will thereafter remain for so long as
Borrower or Operator elect to participate in Medicare or Medicaid or third
-2-
party provider programs, in conformance in all material respects with all
insurance, reimbursement and cost reporting requirements, and will have a
provider agreement in full force and effect under Medicare and Medicaid,
as applicable. As of the date hereof, none of the Facilities participates
in Medicare.
(f) There is no and during the term of the Loan shall be no
existing, pending or to Borrower's or Operator's knowledge, threatened
revocation, suspension, termination, probation, restriction, limitation,
or nonrenewal affecting Borrower, Operator or the Facilities of any
participation or provider agreement with any third-party payor, including
Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other private
commercial insurance managed care and employee assistance program (such
programs, the "THIRD-PARTY PAYORS' PROGRAMS") to which Borrower or
Operator presently or at any time hereafter is subject; provided, further
that in the event of the commencement of any administrative or other
proceeding seeking to limit the Borrower's or Operator's participation in
any Third-Party Payor Programs (collectively, "PAYOR Action") by any
federal or state regulatory agency, Borrower and/or Operator shall not be
in default hereunder as a result of such Payor Action unless (a) Borrower
or Operator fails promptly, or in any event, within thirty (30) days
following the date on which it first receives notice of such Payor Action,
to commence resolution of the matter and thereafter diligently and
continuously prosecutes in good faith a settlement, dismissal or
resolution of such Payor Action; (b) the Facility in question fails to be
continuously operated by Borrower or Operator as an assisted living
facility; (c) the license to operate the Facility in question is
terminated as a result of such Payor Action and Borrower or Operator has
no appeal rights; or (d) Borrower and/or Operator otherwise lose the right
to participate in any Third-Party Payors' Program. All Medicaid, Medicare,
and private insurance cost reports and financial reports submitted by
Borrower or Operator are and will be materially accurate and complete and
have not been and will not be misleading in any material respects. The
Facilities are not currently paid under any Third-Party Payor Programs
through the submission of cost reports but any such reports which are
currently submitted for the Facilities are to satisfy informational
requirements of the applicable Third-Party Payor.
(g) Except as otherwise disclosed to Agent before the Closing Date,
none of Borrower, Operator or the Facilities is or will be the subject of
any proceeding by any governmental agency, and no notice of any violation
has been or will be issued by a governmental agency that would, directly
or indirectly, or with the passage of time:
(i) Materially impact Borrower's or Operator's ability to
accept and/or retain patients at a Facility; or
(ii) Have a material adverse effect on Borrower's or
Operator's ability to accept and/or retain patients or operate the
Facilities for the Licensed Use or result in the imposition of a
fine or sanction or a lower rate certification or a lower
reimbursement rate for services rendered to eligible patients;
-3-
(iii) Modify, limit or annul or result in the transfer,
suspension, or revocation or imposition of probationary use of any
of the Licenses; or
(iv) Affect Borrower's or Operator's continued participation
in the Medicaid or Medicare programs or any other of the Third-Party
Payors' Programs, or any successor programs thereto, at then current
rate certifications.
(h) The Facilities and the use thereof comply and will continue to
comply, in all material respects with all applicable local, state and
federal building codes, fire codes, health care, senior housing and other
regulatory requirements (the "PHYSICAL PLANT STANDARDS") and no waivers of
Physical Plant Standards exist at the Facilities.
(i) No Facility has received a "Level A" (or equivalent) violation
under Medicare or Medicaid, as applicable, and no statement of charges or
deficiencies has been made or penalty enforcement action has been
undertaken against the Facilities, Operator or Borrower, or against any
officer or director, of Operator, or Borrower by any governmental agency
during the last three calendar years, and there have been no violations
over the past three years which would threaten the Facilities', any
Operator's or Borrower's certification for participation in Medicare or
Medicaid or the other Third-Party Payors' Programs.
(j) There are no current, pending or outstanding Medicaid, Medicare
or Third-Party Payors' Programs reimbursement audits or appeals pending at
the Facilities, and there are no years that are subject to audit.
(k) There are no current or pending Medicaid or Medicare or
Third-Party Payors' Programs recoupment efforts at the Facilities. Neither
Borrower nor Operator is a participant in any federal program, other than
Medicaid, whereby any governmental agency may have the right to recover
funds by reason of the advance of federal funds, including those
authorized under the Hill-Burton Act (42 U.S.C. 291, et seq.).
(l) Neither Borrower nor Operator will pledge its receivables
related to the Facilities as collateral security for any other loan or
indebtedness.
(m) There are no and there will remain no patient or resident care
agreements with patients or residents or with any other persons which
deviate in any material adverse respect from the standard form customarily
used at the Facilities as of the date hereof, a copy of which standard
form agreement has been delivered to Agent.
(n) All patient or resident records at the Facilities, including
patient or resident trust fund accounts, are true and correct in all
material respects, and will remain true and correct in all material
respects.
-4-
(o) Any agreement relating to the management or operation of the
Facilities (each a "MANAGEMENT AND OPERATING AGREEMENT") and the manager
or operator thereunder shall be subject to Lender's reasonable approval
and no Management and Operating Agreement shall be modified, amended or
terminated without Agent's and Requisite Lenders' prior consent, which
consent shall not be unreasonably withheld. In the event any Management
and Operating Agreement is terminated or in the event of foreclosure or
other acquisition of the Facilities by Agent or its designee or any
purchaser at a foreclosure sale, as of the date hereof, under applicable
law, none of Borrower, Agent, any subsequent operator or any subsequent
purchaser need not obtain a CON prior to applying for and receiving
Medicare or Medicaid payments, as applicable.
(p) None of Borrower, the Facilities, or Operator shall, other than
in the normal course of business, change the terms of any of the
Third-Party Payors' Programs now or hereinafter in effect or their normal
billing payment or reimbursement policies and procedures with respect
thereto (including the amount and timing of finance charges, fees and
write-offs).
(q) On or before the Closing Date and from time to time thereafter,
upon the request of Agent, and during the continuance of an Event of
Default, Borrower shall, and shall cause Operator to complete, execute and
deliver to Lender any applications, notices, documentation, and other
information necessary or desirable, in Agent's sole judgment, to permit
Agent or its designee (including a receiver) to obtain, maintain or renew
any one or more of the Licenses for the Facilities (or to become the owner
of the existing Licenses for the Facilities) and to obtain any other
provider agreements, licenses or governmental authorizations then
necessary or desirable for the operation of the Facilities by Lender or
its designee for the Licensed Use (including, without limitation, any
applications for change of ownership of the existing Licenses or change of
control of the owner of the existing Licenses). Upon an occurrence and
during the continuance of an Event of Default, (i) Agent is hereby
authorized (without the consent of Borrower or Operator) to submit any
such applications, notices, documentation or other information which
Borrower caused to be delivered to Agent in accordance with the above
provisions to the applicable governmental authorities, or to take such
other steps as Agent may deem advisable to obtain, maintain or renew any
License or other license or governmental authorization in connection with
the operation of the Facilities for the Licensed Use, and Borrower agrees
to cooperate and to cause Operator to cooperate with Agent in connection
with the same and (ii) Borrower, upon demand by Agent, shall take any
action and cause Operator to take any action necessary or desirable, in
Agent's sole judgment, to permit Agent or its designee (including a
receiver) to use, operate and maintain the Facilities for the Licensed
Use; provided, however, Borrower or Operator, as applicable, shall have no
obligation to permit Agent or its designee to operate the Facilities under
Borrower's or Operator's license until Borrower or Operator, as
applicable, has received written confirmation from the applicable DOH that
doing so has been authorized by said DOH and Agent's designated operator
has provided an indemnity
-5-
to Borrower or Operator, as applicable, in form reasonably acceptable to
both Borrower or Operator, as applicable, and such operator designated by
Agent, pursuant to which such operator designated by Agent (or another
party reasonably acceptable to Borrower or Operator (excluding Agent or
Lenders)) indemnifies Borrower or Operator, as applicable, with respect to
losses, claims, expenses and damages arising from the Agent's designated
operator's operations at the Projects under Borrower's or Operator's
License. If Borrower fails to comply with the provisions of this
subsection (q) for any reason whatsoever, Borrower hereby irrevocably
appoints Agent and its designee as Borrower's attorney-in-fact, with full
power of substitution, to take any action and execute any documents and
instruments necessary or desirable in Agent's sole judgment to permit
Agent or its designee to undertake Borrower's obligations under this
subsection (q), including without limitation, obtaining any licenses or
governmental authorizations then required for the operation of the
Facilities by Agent or its designee for the Licensed Use. The foregoing
power of attorney is coupled with an interest and is irrevocable and Agent
may exercise its rights thereunder in addition to any other remedies which
Agent may have against Borrower or ALC as a result of Borrower's breach of
the obligations contained in this subsection (q).
(r) Borrower and Operator shall at all times fully comply in all
material respects with all obligations under the contracts and leases with
residents of the Facilities, and Borrower shall not commit or permit any
default by Borrower or Operator thereunder which, if a cure period with
respect thereto is provided therein, is not cured within any such cure
period. Borrower hereby indemnifies and holds harmless Agent and Lenders
and agrees to defend Agent and Lenders (with counsel acceptable to Agent
and Lenders) from and against any (i) claims, proceedings or causes of
action brought by any resident of the Facilities, and (ii) loss, damage,
cost or expense, including reasonable attorneys' fees, incurred or
suffered by Agent and/or Lender as a result of any (x) breach by Borrower
or Operator of any contract or lease with a resident of the Facilities or
(y) violation of any license or any federal, state or local law governing
the Facilities or the use, operation or maintenance thereof for the
Licensed Use, in each case except to the extent arising from such
indemnitee's gross negligence or willful misconduct.
-6-
EXHIBIT R-1
UNITS AND BEDS AT EACH FACILITY
Facility City State Units
- -------- ---- ----- -----
Logan Lower Burrell PA 39
Greer New Castle PA 39
Mey Egg Harbor NJ 39
Marquis Uniontown PA 39
Lowrie Butler PA 39
Carlisle Bucyrus OH 35
Meredith Pampa TX 36
Potter Amarillo TX 50
Grainger Penn Hills PA 39
Baldwin Peoria AZ 50
Clay Zanesville OH 39
Pathfinder Fremont NE 39
Powell Payson AZ 39
Eiler Clarinda IA 35
Austin Nacogdoches TX 30
Cardinal Cambridge OH 39
Grayson Prescott Valley AZ 39
McKinney Logansport IN 39
Sojourner Kalamazoo MI 39
Lucas Beaumont TX 50
Whitlock Crawfordsville IN 39
Bentley Hermitage PZ 39
Lakewell Mineral Wells TX 30
Aurora Apache Junction AZ 48
Bluebonnett College Station TX 39
Bailey Bunkie LA 39
McCullough Johnstown PA 39
Helena Port Royal SC 39
Mondell Surprise AZ 50
Hamilton Fort Wayne IN 39
TOTAL 1194
EXHIBIT R-2
LICENSES
CERTAIN OF THE PROJECTS PARTICIPATE IN MEDICAID.
-2-