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EXHIBIT 2.9
FLOW OF FUNDS AGREEMENT
This Flow of Funds Agreement (the "AGREEMENT") is made as of
July 16, 1999 among ZC Specialty Insurance Company, a Texas corporation
("ZCSI"); Pita General Corporation, an Illinois corporation (the "BORROWER");
AHC Tenant, Inc., a Delaware corporation (the "LESSEE"); Alterra Healthcare
Corporation, a Delaware corporation (the "GUARANTOR"); Greenwich Capital
Financial Products, Inc., a Delaware corporation (the "LENDER") and each of the
Joint Ventures from time to time party hereto, either by execution of a
signature page hereto as of the date hereof, or by execution of a Joinder
Agreement after the date hereof (each a "JOINT VENTURE" and collectively, the
"JOINT VENTURES"), and The First National Bank of Chicago, a national banking
association with its principal corporate trust office located in Chicago,
Illinois duly established, existing and authorized to act as trustee under the
Trust Agreement (the "TRUSTEE"). Each entity which has executed a copy hereof is
hereinafter referred to individually as a "PARTY" and all such entities are
referred to collectively as the "PARTIES".
W I T N E S S E T H:
WHEREAS, the Lender has agreed to make a loan in two tranches to
Borrower in a principal amount not to cumulatively exceed $201,000,000.00 (the
"LOAN") pursuant to, among other documents, that certain Loan Agreement dated as
of even date herewith, by and among Borrower, Lessee and Lender, in order to
finance the acquisition of up to twenty eight (28) assisted living facilities to
be located on certain parcels of real property (as more particularly described
in the Loan Agreement, the "PROPERTIES"). The Loan is evidenced by that certain
Note dated as of July 16, 1999 (the "NOTE") executed by Borrower in favor of
Lender, and the Loan is secured by the Security Documents;
WHEREAS, concurrently with and as a condition to the making of the
Loan, Trustee, at the direction of Lender, is requiring ZCSI to issue to Trustee
the Surety Bond insuring the Note, and Trustee, at the direction of Lender, is
requiring Backstop Insurer to issue the Backstop Policy, to support the payments
under the Surety Bond, as set forth in the Backstop Policy. As a condition to
ZCSI providing the Surety Bond, ZCSI, Borrower and Lessee have entered into that
certain Reimbursement Agreement, under which Borrower is obligated to reimburse
ZCSI for all indebtedness, obligations and liabilities of Borrower to ZCSI
arising thereunder;
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WHEREAS, ZCSI, Lender and Borrower desire to (i) define their
respective rights with respect to the Collateral securing the Secured
Obligations, (ii) define the rights and duties of Trustee with respect to the
Collateral and the Secured Obligations and (iii) provide for other miscellaneous
duties (including, without limitation, the application of the Capital Proceeds)
and rights of Trustee in connection with the foregoing transactions. In order to
accomplish the foregoing, ZCSI, Borrower, Lender, Lessee, Trustee, Guarantor and
certain other parties are entering into the Trust Agreement;
WHEREAS, the Borrower is leasing the Properties to the Lessee which is
in turn subleasing the Properties to the Joint Ventures for ultimate use by the
individual residents. The payments made by the Residents, together with other
Revenues and the Properties constitute a significant portion of the Collateral.
In furtherance of the general objective of defining rights in the Collateral and
as a condition of issuing the Surety Bond and making the Loan, the Lender and
ZCSI have required the Joint Ventures, the Borrower, the Guarantor, the Trustee
and the Lessee to enter into this Flow of Funds Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1. DEFINITIONS. Capitalized terms used herein to the extent
not defined herein, or not defined by reference to any other agreement, shall
have the meaning set forth in the Master Glossary dated July 16, 1999.
SECTION 1.2. INTERPRETATION. In this Agreement (unless otherwise
specified), the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to statutes are to be
construed as including all statutory provisions consolidating, amending or
replacing the statute referred to; references to "writing" include printing,
typing, lithography and other means of reproducing words in a tangible, visible
form; the words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to articles, sections (or
subdivisions of sections), recitals, exhibits, annexes or schedules are those of
this Agreement unless otherwise indicated; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications to such instruments, but only to the extent such amendments
and other modifications are not prohibited by the terms of this Agreement or
specifically excluded therefrom; the phrase "and/or" shall be deemed to mean the
words both preceding and following such phrase, or either of them; references to
the parties and to Persons include their respective permitted successors and
assigns and, in the case of governmental Persons, Persons succeeding to their
respective functions and capacities; and reference to times of day shall be to
New York, New York time unless specifically provided otherwise.
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ARTICLE II
APPLICATION OF OPERATING REVENUE, AND LEASE PAYMENTS
SECTION 2.1. APPLICATION OF OPERATING REVENUE. On each Distribution
Date the Lessee shall determine Operating Revenues during the immediately
preceding Distribution Period, and the Lessee shall undertake a good faith
estimate of Operating Expenses during the immediately preceding Distribution
Period (the "DISTRIBUTION OPERATING EXPENSE ESTIMATE"). To the extent a
Distribution Estimate Shortfall exists, the Lessee shall supplement Operating
Revenues with other Revenues, sourced as described in Section 2.2, until the
Revenues available for distribution on such Distribution Date are sufficient to
pay in full Categories 2.1(i) to and including 2.1(xv) (or it has been
determined by the Lessee that total Revenues from all sources are insufficient
to do so). In addition, to the extent the Controlling Party directs the Trustee
to remit Supplemental Trust Funds to the Lessee for application to pay
designated Benefitted Items, the Lessee shall accept receipt of such
Supplemental Trust Funds and apply the same solely to said designated Benefitted
Items. In the case of the second and all succeeding Distribution Dates, the
Lessee shall reconcile the Distribution Operating Expense Estimate from the
immediately preceding Distribution Date against the actual Operating Expenses
for the corresponding preceding Distribution Period. To the extent that such
reconciliation reveals that any Party received more than it was entitled to on
the preceding Distribution Date, such Party (or Parties, as the case may be)
shall refund to the Lessee, as applicable, the amount of such overpayment it
received (which refund may be fully or partially effected by a debit up to the
positive amount owed to such Party on the current Distribution Date). If any
such overpayment was originally funded from Guarantee Revenues, Operating
Reserve Account Revenues, or Supplemental Trust Funds, the Lessee shall remit
the same to the Guarantor or the Trustee (for redeposit into the source Account)
as appropriate. To the extent any Party received less than the amount it was
entitled to receive on the prior Distribution Date, then the current Operating
Expenses shall be increased by the amount of such shortfall and such Party's (or
Parties') applicable portion of the current Revenues shall be increased on the
current Distribution Date in an amount equal to such shortfall. On the then
current Distribution Date the Lessee, shall apply Revenues for the immediately
preceding Distribution Period, in payment of the following items, in the
following order of priority. The Parties agree that Lessee shall be deemed to
first utilize all Operating Revenues until exhausted and then to use other
Revenues in the order specified in Section 2.2. If there are insufficient
Revenues to pay a given Category in full and if such Category does not specify
an order of payment, then the Lessee shall pay each of the Benefitted Items
within such Category pro rata based upon a fraction where the denominator is the
cumulative amount of Benefitted Items within such Category and the numerator for
a particular Benefitted Item is the amount of such Benefitted Item.
Notwithstanding the foregoing, in the case of Category 2.1 (i) below, the Lessee
(prior to the occurrence of a Springing Lockbox Event) may pay Benefitted Items
in such Category from any Revenues and in any order of priority - other than the
amounts payable to the Trustee which must be paid first - (as compared to other
Benefitted Items in this Category only) and on any day prior to the Distribution
Date. In no event shall any ZCSI Subrogation Amounts be paid except at Category
2.1(vi).
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(i) Operating Expenses, first to the Trustee until the
Trustee is fully paid, and thereafter to all other
entities entitled to the same;
(ii) to the Trustee for deposit into the Tax and Insurance
Escrow Fund, 1/12th of yearly real property tax
assessments for all of the Properties, and if an
Insurance Default has occurred, 1/12th of the yearly
insurance premiums for the insurance coverages
required to be maintained by Lessee under Section 4.4
of the Loan Agreement.
(iii) to the Lender, Loan Obligations (including amounts
equal to the difference between the Default Rate and
the Interest Rate) then due and payable, other than
principal and interest (at the Interest Rate) on the
Note;
(iv) to the Lender, principal and interest (at the
Interest Rate) then due and payable on the Note,
first to payment of interest and then to the payment
of principal;
(v) to the Trustee for deposit in the Capital
Improvements Account, an amount equal to one twelfth
of the Available Bed Capital Improvement Amount for
the current year;
(vi) to ZCSI, ZCSI Subrogation Amounts then due and
payable (other than the Termination Premium;)
(vii) to the Trustee, Base Surety Premiums then due and
payable;
(viii) to the entities entitled thereto, Allowed
Indebtedness then due and payable;
(ix) to the entities entitled to the same, amounts not
otherwise provided for in items 2.1(i) through and
including 2.1(viii), for which monies are unavailable
from the applicable Accounts under the Trust
Agreement and which have been approved by the
Controlling Party in writing (it being agreed that to
the extent such amounts are intended to be used for
Capital Improvements, such amounts shall be paid to
the Trustee for deposit into the Capital Improvements
Account under the Trust Agreement);
(x) to the Borrower, the Yield then due and payable;
(xi) to ZCSI, the Reimbursement Obligations (other than
the Termination Premiums and without duplication of
payments of ZCSI Subrogation Amounts) which are then
due and owing except to the extent such Reimbursement
Obligations are specifically provided for in another
category;
(xii) if the Distribution Date is also a Tax Distribution
Date, to the Joint Ventures, the Tax Reimbursement
Amount;
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(xiii) to the Manager, the Priority A Deferred Management
Fees;
(xiv) to the Trustee, an amount for deposit into the Lease
Reserve Account up to the Lease Reserve Cap;
(xv) to the Manager, the Priority B Deferred Management
Fees; and
(xvi) the balance, if any, to the Lessee.
If on any Distribution Date there is insufficient cash to satisfy the
applicable amount owing in any of the above Categories 2.1(i) to and including
(xiv) (the amount of any such insufficiency at any such Category, each a
"BORROWER PRIORITY CATEGORY SHORTFALL AMOUNT") then, such Borrower Priority
Category Shortfall Amount shall continue to be owed and accrue and shall be
payable from Revenue available on the next Distribution Date, subordinate in
payment to all amounts owed on the next Distribution Date in any Categories of a
higher priority. No funds shall be applied under this Section 2.1 to a
subordinate category until all current amounts and all Borrower Priority
Category Shortfall Amounts have been paid in all applicable senior Categories.
SECTION 2.2. SUPPLEMENTING OPERATING REVENUES WITH OTHER REVENUES. To
the extent a Distribution Estimate Shortfall exists the Lessee shall supplement
Operating Revenue with other Revenues in the following order of priority
(provided that, prior to the earlier of: (i) the date on which cumulative
deposits to the Operating Reserve Account equals or exceeds $17,000,000
(regardless of withdrawals therefrom) or (ii) November 17, 1999; Operating
Reserve Account Revenues shall be utilized only to the extent that after giving
effect to such utilization the balance in the Operating Reserve Account is at
least six million dollars ($6,000,000.00)):
(i) As needed to pay in full the Benefitted Items
specified in Categories 2.1(i) to and including
Category 2.1(iv), first from Operating Reserve
Account Revenues until the same is exhausted and then
from Guarantee Revenue;
(ii) As needed to pay in full Benefitted Items specified
in Category 2.1(v), first from Guarantee Revenues,
and if the same is for any reason unavailable, then
from Operating Reserve Account Revenues until the
same is exhausted;
(iii) As needed to pay in full the Benefitted Items
specified in Categories 2.1(vi) to and including
Category 2.1(viii), first from Operating Reserve
Account Revenues until the same are exhausted and
then from Guarantee Revenues;
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(iv) As needed to pay in full the Benefitted Items
specified in Categories 2.1(ix) and 2.1(x) from
either or both Operating Reserve Account Revenue or
Guarantee Revenues;
(v) As needed to pay in full the Benefitted Items
specified in Category 2.1(xi) to and including
Category 2.1(xii) first from Operating Reserve
Account Revenue until the same are exhausted and then
from Guarantee Revenues;
(vi) subsequent to the occurrence and during the
continuance of a Lessee Triggering Event, as needed
to pay in full the Benefitted Item specified in
Category 2.1(xiv) from Guarantee Revenues, it being
acknowledged that except as provided in the foregoing
clause of this Section 2.2(vi), during the Term of
this Flow of Funds Agreement, Guarantee Revenues and
Operating Reserve Account Revenues shall not be
available to fund the Benefitted Item specified in
Category 2.1(xiv);
(vii) As needed to pay in full the Benefitted Items
specified in Categories 2.1(xiii) and (xv), from
Guarantee Revenues; Operating Reserve Account
Revenues shall not be available to fund the
Benefitted Items specified in Categories 2.1 (xiii)
and (xv); and
(viii) Guarantee Revenues and Operating Reserve Account
Revenues shall not be available to fund the
Benefitted Items specified in Category 2.1(xvi).
SECTION 2.3. REPORTING. Within forty five (45) days after the
Distribution Date the Lessee shall deliver to the Trustee, the Lender, the
Borrower and ZCSI a report containing a description of all amounts disbursed
under Sections 2.1 and 2.2.
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ARTICLE III
REMEDIES; ACTIONS RELATED TO REVENUES
SECTION 3.1. EXERCISE OF REMEDIES; ACTIONS RELATED TO REVENUE. Each of
the Parties hereto agrees that it shall not exercise any right or remedy such
Party may have with regard to the Revenues except as permitted in the Trust
Agreement. Each of the Parties agrees that any proceeds of any casualty
insurance policy with respect to any of the Properties and any condemnation
awards with respect to any of the Properties shall, subject to any rights of
Lessee set forth in the Lease, be applied in accordance with Section 3.5 of the
Trust Agreement, and subsequent to the Term of this Flow of Funds Agreement
Revenues (including without limitation in the event of the liquidation or sale
of the assets of Borrower or Lessee by reason of any Insolvency Proceeding
against Borrower or Lessee) shall be applied as set forth in Section 4.2 of the
Trust Agreement. Nothing contained in this Flow of Funds Agreement shall prevent
any Party from raising any defenses in any action in which it has been made a
party defendant or has been joined as a third party and controlling the
litigation of such defense, except that Trustee shall direct and control any
defense directly relating to the Revenues, or any one or more of the Security
Documents, as directed by a Written Direction and in accordance with the
provisions of the Trust Agreement
SECTION 3.2. SUBORDINATION; ACCOUNTING; ADJUSTMENTS.
(a) Each Party agrees that its right to receive payment of any of the
Benefitted Items specified in any of the Categories owed to it will be
subordinate to the rights of the Parties with a superior right to payment as set
forth in Article II of this Flow of Funds Agreement or Section 4.2 of the Trust
Agreement. Such subordination shall be accomplished by the application of
Revenues on each Distribution Date in the order described in Article II of this
Flow of Funds Agreement and Section 4.2 of the Trust Agreement and by the other
terms of the Trust Agreement.
(b) Each of the Parties agrees that to the extent any payment of any
Benefitted Item specified in any of the Categories is made to it hereunder, or
otherwise (other than from the Excluded Collateral), it shall, unless the
Parties which are entitled to receive payment in higher priority to such Party
have been paid all Benefitted Items then entitled to higher priority, hold such
funds in trust for the benefit of such other Parties and shall promptly (and in
any case, within three (3) Business Days) pay such funds to the Trustee to be
applied by the Trustee to payment of the appropriate Party as directed by the
Controlling Party.
(c) Each of the Parties agrees that all Liens created or arising
pursuant to the Lease Documents shall be subordinate to all Liens created or
arising pursuant to the Loan Documents.
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SECTION 3.3. CONTESTING LIENS OR SECURITY INTERESTS; NO PARTITIONING OR
MARSHALLING OF REVENUES.
(a) No Party shall contest the validity, perfection, priority or
enforceability of or seek to avoid, have declared fraudulent or have set aside
any Lien granted or assigned to Trustee or any interest in or involving the
Excluded Collateral whether arising pursuant to the Excluded Collateral
Agreement or otherwise and each Party hereby agrees to cooperate in the defense
of any action contesting the validity, perfection, priority or enforceability of
such Liens.
(b) Except as provided in the Trust Agreement, no Party shall have the
right, as against any other Party, to have any of the Revenues partitioned, or
to file a complaint or institute any proceeding at law or in equity to have any
of the Revenues partitioned, and each Party hereby waives any such right. Each
Party hereby waives any and all rights, as against any other Party, to have the
Revenues, or any part thereof, marshaled upon any foreclosure of any of the
Liens securing the Secured Obligations.
(c) No Party shall contest the validity or enforceability of or seek to
avoid, have declared fraudulent or have set aside any Secured Obligations. In
the event any Secured Obligations are invalidated, avoided, declared fraudulent
or set aside for the benefit of Borrower or Lessee, each Party agrees that such
Secured Obligations shall nevertheless be considered to be outstanding for all
purposes of this Flow of Funds Agreement and the Trust Agreement.
SECTION 3.4. SUBROGATION. Each of the Parties acknowledges and consents
to ZCSI's subrogation rights contained in Section 9.19 of the Loan Agreement,
and each further acknowledges and agrees that ZCSI shall be subrogated to all
rights of Lender and Lender's rights against the Borrower and the Lessee in and
to the Revenues to the extent of any payments made by ZCSI under the Surety Bond
in connection with the Loan; provided, however, all such subrogation rights are
subordinate in payment and priority to the rights of Lender as contained in the
Trust Agreement and this Flow of Funds Agreement. Nothing in this Flow of Funds
Agreement shall limit or affect the rights of ZCSI as a subrogee of any Secured
Obligation, or as assignee of the Holder of any Secured Obligation, or any other
rights ZCSI has apart from this Flow of Funds Agreement or the Trust Agreement
by virtue of subrogation resulting from a payment made by ZCSI under the Surety
Bond; provided, however, ZCSI shall not enforce any of its subrogation rights
against Borrower, Lessee, Guarantor or the Revenues until such time as the Loan
Obligations have been repaid in full. The parties hereto acknowledge that to the
extent payments are made by ZCSI or Backstop Insurer under, respectively, the
Surety Bond or the Backstop Policy, such payments shall not reduce the principal
balance of the Note, or interest thereon, for which Borrower is obligated to
repay, even though they may reduce the Surety Bond Amount for which ZCSI is
liable under the Surety Bond and for which Backstop Insurer is liable under the
Backstop Policy; provided, however, ZCSI shall not collect any sum outstanding
under the Note which it has already collected under the Reimbursement Agreement,
and ZCSI shall not collect any sum outstanding under the Reimbursement Agreement
which it has already collected under the Note.
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SECTION 3.5. FLOW OF FUNDS AGREEMENT ABSOLUTE AND UNCONDITIONAL.
(a) This Flow of Funds Agreement shall be a continuing, absolute and
unconditional agreement (subject only to its own terms), and shall remain in
full force and effect through the Term of this Flow of Funds Agreement;
(b) This Flow of Funds Agreement shall in no wise be affected or
impaired by any sale, pledge, surrender, compromise, settlement, release,
renewal, extension, indulgence, alteration, substitution, exchange, change in,
modification, amendment to or other disposition of any of the Benefitted Items
or any of the Transaction Documents or any obligation, liability or
indebtedness, created or evidenced by the Transaction Documents, either express
or implied. This Flow of Funds Agreement shall in no wise be affected or
impaired by any acceptance by any Party of any security for, or other guarantors
upon, any of the Benefitted Items or by any failure, neglect or omission on the
part of any Party to realize upon or protect any of the Benefitted Items, or any
collateral or security therefor, or to exercise any Lien upon or right of
appropriation of any moneys, credits or property toward the liquidation of the
Benefitted Items, or by any application of payments or credits thereon.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. NOTICES. Unless otherwise specifically provided herein,
any notice, direction, instruction or other communication required or permitted
to be given shall be in writing addressed to the respective Party as set forth
next to its signature on the execution pages hereto (including the execution
pages of any Joinder Agreement) and shall be personally served, telecopied, sent
by facsimile or delivered by a nationally recognized overnight courier service
and shall be deemed to have been received: (A) if delivered in person, when
delivered, (B) if delivered by telecopy or facsimile, on the date of
transmission if transmitted on a Business Day before 6:00 p.m. (New York time),
or, if not, on the next succeeding Business Day, or (C) if delivered by a
nationally recognized overnight courier service, one Business Day after delivery
to such courier properly addressed. Any Party may change its address for notices
by written notice to Trustee. Trustee shall disseminate the new address
information to the other Parties. all notices for purposes of indicating a
change of address shall take effect thirty (30) days following Trustee's receipt
thereof.
SECTION 4.2. AMENDMENTS AND WAIVERS. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by each of the Parties.
SECTION 4.3. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of each of the Parties and their
respective successors and assigns.
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SECTION 4.4. GOVERNING; LAW, SUBMISSION TO JURISDICTION.
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ILLINOIS CHOICE
OF LAW PRINCIPLES.
(B) EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM. ANY JUDICIAL PROCEEDING BY ANY
PARTY HERETO AGAINST ZCSI OR ANY AFFILIATE OF ZCSI INVOLVING, DIRECTLY, OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
SECTION 4.5. COUNTERPARTS; INTEGRATION. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement supersedes any and all prior agreements and understandings, oral
or written, relating to the subject matter hereof.
SECTION 4.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE RELATED DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 4.7. RATIFICATION OF OBLIGATIONS. Nothing in this Agreement
shall limit, restrict, modify or alter the obligations of Lessee, Borrower and
Guarantor under the Transaction Documents to pay Rent, Reimbursement Obligations
and the Loan Obligations, respectively, strictly in accordance with the terms
thereof.
SECTION 4.8. WAIVER OF POSTING BOND. To the extent permitted by law,
each of the Parties hereby waives any requirements under the unauthorized
insurance or similar laws of any jurisdiction or otherwise that ZCSI or the
Backstop Insurer post funds, securities or other security as a condition to its
appearance or filing of pleadings in any proceeding involving or arising with
this Flow of Funds Agreement.
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SECTION 4.9. TERM OF THE FLOW OF FUNDS AGREEMENT. This Agreement shall
terminate upon (i) the occurrence of an "Event of Default" as defined in the
Trust Agreement and (ii) delivery of written notice declaring the Agreement
terminated by the Controlling Party to the Parties (the "TERMINATION DATE"). In
furtherance thereof, the Parties agree that upon such termination the priority
of payment provisions contained in Article II hereof shall, as to all Revenues
not previously thereto distributed in accordance with said Article II, be
inoperative and void. Notwithstanding the foregoing the True Up Provisions shall
remain operative (excluding any provision thereof relating to the application of
Revenues after the Termination Date to pay underestimated Operating Expenses) as
to all Revenues distributed prior to the Termination Date. In addition Article
III, Sections 4.1, 4.4, 4.5, 4.6, 4.7, 4.8 and Article V shall remain effective
subsequent to the Termination Date.
SECTION 4.10. SPRINGING LOCKBOX EVENT. Notwithstanding any other
provision hereof, subsequent to the occurrence of a Springing Lockbox Event, the
provisions of Section 3.4 of the Trust Agreement shall control to the extent the
same differ from the provisions of this Flow of Funds Agreement.
SECTION 4.11. TRUSTEE. The Parties hereto acknowledge and agree that
Trustee is acting hereunder not in its individual capacity, but solely in its
capacity as Trustee under the Trust Agreement, and that where there is any
reference herein to Trustee performing any activity, making any decision or
determination, approving or consenting to any matter, exercising any rights,
fulfilling any obligation, exercising any discretion or otherwise acting in any
capacity, Trustee will not take such action unless it is specifically authorized
or directed to do so in each instance pursuant to the Trust Agreement.
ARTICLE V
JOINT VENTURES
SECTION 5.1. JOINT VENTURES AND JOINDER AGREEMENTS. Each of the
Parties acknowledge and agree that on or prior to the Additional Properties
Closing Date, new Joint Ventures will be formed which will have an interest in
the Properties financed on such Additional Properties Closing Date, and as a
condition to such funding, such new Joint Ventures will be, and will be required
to become a party to this Flow of Funds Agreement by execution of a Joinder
Agreement in the form of Exhibit A hereto (the "JOINDER AGREEMENT") By its
execution hereof, each Party consents to such new Joint Ventures becoming a
Party to this Flow of Funds Agreement in accordance with the provision of this
Section 5.1.
SECTION 5.2. CONFIRMATORY GRANT. Each of the Joint Ventures hereby
acknowledges that it has granted a lien and security interest in the Revenues,
including any portion of the Revenues deposited in any Account, and any other
monies held by the Trustee as part of the Trust Estate (to the extent that it
has any right, title or interest in the same) pursuant to that certain Joint
Assignment of Leases and Rents dated as of July 16, 1999 (the "JOINT
ASSIGNMENT"). In order to further perfect and assure such grants, and not in
limitation thereof, each Joint Venture hereby grants to the Trustee a lien and
security interest in all Revenues
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including all Revenues deposited into any Account and all monies held by the
Trustee as part of the Trust Estate, and all proceeds thereof, to secure
indebtedness, obligations and liabilities otherwise secured by the Joint
Assignment.
SECTION 5.3. JOINT VENTURE AGREEMENTS. Each of the Joint Ventures shall
transmit directly to the Trustee all monies to be funded from time to time to
the Joint Venture by its partners pursuant to the Joint Venture Agreements for
deposit by the Trustee into the Operating Reserve Account. Each Joint Venture
agrees that such direction is absolute and unconditional, coupled with an
interest and irrevocable. The Joint Ventures agree to not reduce such amounts
payable by its partners or members by agreement or by setoff. Each of the Joint
Ventures agrees that monies deposited into the Operating Reserve Account shall
be disbursed by the Trustee in accordance with the Trust Agreement. Each of the
Joint Ventures agree that it has no right title or interest, legal or equitable,
in any monies in the Operating Reserve Account, or any other Account except as
may be specifically provided in the Trust Agreement.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of date first above written:
"BORROWER":
Address: PITA GENERAL CORPORATION,
Pita General Corporation an Illinois corporation
c/o SELCO Service Corporation
127 Public Square
Cleveland, Ohio 44114 By: /s/ Mindy Berman
Attention: Robert Bowes, Esq. ---------------------------------------
Fax: (216) 689-5681 Name: Mindy Berman
Telephone: (216) 689-5089 Title: Vice President
"GUARANTOR":
Address: ALTERRA HEALTHCARE CORPORATION,
Alterra Healthcare Corporation a Delaware corporation
450 N. Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005 By: /s/ Mark Ohlendorf
Attention: Mark Ohlendorf --------------------------------------
Senior Vice President Finance Name: Mark Ohlendorf
Telephone: (414) 641-7432 Title: Senior Vice President
Facsimile: (414) 789-6182
"ZCSI":
Address: ZC SPECIALTY INSURANCE COMPANY,
ZC Specialty Insurance Company a Texas corporation
One Exchange Place, Suite 1000
Jersey City, New Jersey 07302 By: /s/ Lynn Finkel
Attention: General Counsel --------------------------------------
Facsimile: (201) 309-3040 Name: Lynn Finkel
Confirmation: (201) 332-1400 Title: Vice President
"LENDER"
Address: GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
Greenwich Capital Financial Products, Inc. a Delaware corporation
600 Steamboat, Level 2
Greenwich, Connecticut 06830 By: /s/ Warren Ashenmil
Attention: Paul Nidenberg --------------------------------------
Senior Vice President Name: Warren Ashenmil
Telephone: (203) 618-2347 Title: Senior Vice President
Facsimile: (203) 618-2052
13
14
"JOINT VENTURE"
Address:
c/o Alterra Healthcare Corporation CLARE BRIDGE OF CITRUS HEIGHTS L.P., CLARE BRIDGE OF
450 N. Sunnyslope Road, Suite 300 COBB COUNTY L.P., CLARE BRIDGE OF COLORADO SPRINGS
Brookfield, Wisconsin 53005 L.P., CLARE BRIDGE OF DECATUR L.P., CLARE BRIDGE OF
Attention: Mark Ohlendorf EAST MESA L.P., CLARE BRIDGE OF OVERLAND PARK L.P.,
Senior Vice President Finance CLARE BRIDGE OF PEORIA L.P., CLARE BRIDGE OF RENO
Telephone: (414) 641-7432 L.P., CLARE BRIDGE OF ROANOKE L.P., CLARE BRIDGE OF
Facsimile: (414) 789-6182 SOUTH PARK L.P., CLARE BRIDGE OF SUN CITY WEST DEER
VALLEY L.P., WYNWOOD OF BOYNTON BEACH WEST L.P., WYNWOOD
OF BREA L.P., WYNWOOD OF DUNEDIN L.P., WYNWOOD OF
EMERSON L.P., WYNWOOD OF TUCSON L.P., WYNWOOD OF
WAYNE L.P., WYNWOOD OF WESTLAKE L.P., WYNWOOD OF WEST
ORANGE, L.P. AND WYNWOOD OF WHITTIER
L.P.
By: Alterra Healthcare Corporation, the sole
general partner of each of the foregoing limited
partnerships
By: /s/ Mark Ohlendorf
-----------------------------------------------------
Mark Ohlendorf
Senior Vice President
By: TPI-HCR, LLC, the sole limited partner of
each of the foregoing limited partnerships
By: Twin Oaks Capital, L.L.C., its managing member
By: /s/ Ronald G. Kenny
--------------------------------------------
Ronald G. Kenny
President
15
"LESSEE":
AHC TENANT, INC.,
Address: a Delaware corporation
c/o Alterra Healthcare Corporation
450 N. Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005 By: /s/ Mark Ohlendorf
-----------------------------------------
Attention: Mark Ohlendorf Name: Mark Ohlendorf
Senior Vice President Finance Title: Vice President
Telephone: (414) 641-7432
Facsimile: (414) 789-6182
"TRUSTEE"
Address: THE FIRST NATIONAL BANK OF CHICAGO, as Trustee
The First National Bank of Chicago
One First National Plaza, Suite 0126 By: /s/ Jeffrey L. Kinney
Chicago, Illinois 60670-0126 -----------------------------------------
Attention: Corporate Trust Services Division Name: Jeffrey L. Kinney
Telephone: (312) 407-0192 Title: Vice President
Facsimile: (312) 407-1708
16
SCHEDULE I
BASE SURETY FEE AMOUNT
From the Closing Date to but not including the first anniversary thereof: 1.38%
From the Closing Date to but not including the second anniversary thereof: 1.65%
From the Closing Date to but not including the third anniversary thereof: 1.93%
From the Closing Date to but not including the fourth anniversary thereof: 2.22%
From the Closing Date to but not including the fifth anniversary thereof: 2.51%
From the Closing Date to but not including the sixth anniversary thereof: 2.82%
From the Closing Date to but not including the seventh anniversary thereof: 2.87%
From the Closing Date to but not including the eighth anniversary thereof: 2.92%
From the Closing Date to but not including the ninth anniversary thereof: 2.98%
Thereafter: 3.05%
17
EXHIBIT A
JOINDER AGREEMENT
Date:
----------------------
Reference is hereby made to that certain Flow of Funds Agreement dated
as of July ___, 1999, ZC Specialty Insurance Company, a Texas corporation; Pita
General Corporation, an Illinois corporation; AHC Tenant, Inc., a Delaware
corporation; Alterra Healthcare Corporation, a Delaware corporation; Greenwich
Capital Financial Products, Inc., a Delaware corporation, and the other "Joint
Ventures" from time to time party thereto (as amended and supplemented from time
to time, the "FLOW OF FUNDS AGREEMENT"). All capitalized terms not otherwise
defined herein shall have the same meaning herein as in the Flow of Funds
Agreement or as incorporated therein.
The below named Joint Venture (the "JOINT VENTURE") agrees that
effective as of the date of the acceptance hereof by the Controlling Party, the
Joint Venture shall for all purposes be a Party to the Flow of Funds Agreement
and bound by all the terms and provisions thereof.
As of the above stated date, the Joint Venture reconfirms the grant of
lien and security interest contained in Section 5.2 of the Flow of Funds
Agreement.
Joint Venture agrees that this Joinder Agreement shall be a supplement
to the Flow of Funds Agreement only for the purpose of binding Joint Venture and
shall not alter the terms of the Flow of Funds Agreement for any other "Party"
as defined therein.
Joint Venture's Name: "JOINT VENTURE":
--------------------
Joint Venture's Address: [NAME OF THE LIMITED PARTNER OF
----------------- EACH JOINT VENTURE]
-----------------
Attention:
Telephone: ------- By:
------------------------------- -----------------------------
Telecopier: Name:
------------------------------- -----------------------------
Title:
--------------------------
18
Accepted as of :
-----------------
[CONTROLLING PARTY]
By:
----------------------------
Its:
------------------------