CREDIT AGREEMENT
EX-10.69.01
THIS
CREDIT AGREEMENT (this
"Agreement") is entered into as of January 17, 2008, by and between EMERITUS
CORPORATION, a Washington corporation ("Borrower"), and XXXXX FARGO BANK,
NATIONAL ASSOCIATION ("Bank").
RECITALS
Borrower
has requested that Bank
extend or continue credit to Borrower as described below, and Bank has agreed
to
provide such credit to Borrower on the terms and conditions contained
herein.
NOW,
THEREFORE, for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Bank and Borrower hereby agree as follows:
ARTICLE
I
CREDIT
TERMS
SECTION
1.1.
LINE OF CREDIT.
(a)
Line of
Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time up to and
including February 15, 2009, not to exceed at any time the aggregate principal
amount of Twenty Five Million Dollars ($25,000,000.00) ("Line of Credit"),
the
proceeds of which shall be used to finance Borrower’s general corporate
requirements. Borrower's obligation to repay advances under the Line
of Credit shall be evidenced by a promissory note dated as of January 17, 2008
("Line of Credit Note"), all terms of which are incorporated herein by this
reference.
(b)
Letter of Credit
Subfeature. As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an affiliate
to issue standby letters of credit for the account of Borrower to back
performance (each, a "Letter of Credit" and collectively, "Letters of Credit");
provided however, that the aggregate undrawn amount of all outstanding Letters
of Credit shall not at any time exceed Twenty Five Million Dollars
($25,000,000.00). The form and substance of each Letter of Credit
shall be subject to approval by Bank, in its sole discretion. No
Letter of Credit shall have an expiration date subsequent to the maturity date
of the Line of Credit. The undrawn amount of all Letters of Credit
shall be reserved under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall be subject to the
additional terms and conditions of the Letter of Credit agreements, applications
and any related documents required by Bank in connection with the issuance
thereof. Each drawing paid under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid by Borrower in
accordance with the terms and conditions of this Agreement applicable to such
advances; provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any drawing is paid, then Borrower shall
immediately pay to Bank the full amount drawn, together with interest thereon
from the date such drawing is paid to the date such amount is fully repaid
by
Borrower, at the rate of interest applicable to advances under the Line of
Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank for the
amount of any such drawing.
(c)
Borrowing and
Repayment. Borrower may from time to time during the term of
the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
and reborrow,
1
subject
to all of the limitations, terms and conditions contained herein or in the
Line
of Credit Note; provided however, that the total outstanding borrowings under
the Line of Credit shall not at any time exceed the maximum principal amount
available thereunder, as set forth above. Notwithstanding the
foregoing, Borrower shall maintain a zero balance on advances under the Line
of
Credit (exclusive of issued and outstanding Letters of Credit) for a period
of
at least thirty (30) consecutive days during each fiscal year.
SECTION
1.2.
INTEREST/FEES.
(a)
Interest. The
outstanding principal balance of the Line of Credit shall bear
interest , and the amount of each drawing paid under the Standby Letter of
Credit shall bear interest from the date such drawing is paid to the date such
amount is fully repaid by Borrower, at the rate of interest set forth in the
Line of Credit Note
(b)
Computation and
Payment. Interest shall be computed on the basis of a 360-day
year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.
(c)
Unused Commitment
Fee. Borrower shall pay to Bank a fee equal to a quarter
percent (0.25%) per annum (computed on the basis of a 360-day year, actual
days
elapsed) on the average daily unused amount of the Line of Credit, which fee
shall be calculated on a quarterly basis by Bank and shall be due and payable
by
Borrower in arrears within ten (10) days after each billing is sent by
Bank.
(d)
Letter of Credit
Fees. Borrower shall pay to Bank (i) fees upon the
issuance of each Letter of Credit equal to one percent (1%) per annum (computed
on the basis of a 360-day year, actual days elapsed) of the face amount thereof,
and (ii) fees upon the payment or negotiation of each drawing under any
Letter of Credit and fees upon the occurrence of any other activity with respect
to any Letter of Credit (including without limitation, the transfer, amendment
or cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.
SECTION
1.3.
COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all interest and
fees due under each credit subject hereto by charging Borrower's deposit account
number 0000000000 with Bank, or any other deposit account maintained by Borrower
with Bank, for the full amount thereof. Should there be insufficient funds
in
any such deposit account to pay all such sums when due, the full amount of
such
deficiency shall be immediately due and payable by Borrower.
ARTICLE
II
REPRESENTATIONS
AND
WARRANTIES
Borrower
makes the following
representations and warranties to Bank, which representations and warranties
shall survive the execution of this Agreement and shall continue in full force
and effect until the full and final payment, and satisfaction and discharge,
of
all obligations of Borrower to Bank subject to this Agreement.
SECTION
2.1.
LEGAL STATUS. Borrower is a corporation, duly organized and existing and in
good
standing under the laws of Washington, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable)
in
all jurisdictions in which such
2
qualification
or licensing is required or in which the failure to so qualify or to be so
licensed could have a material adverse effect on Borrower.
SECTION
2.2.
AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract,
instrument and other document required hereby or at any time hereafter delivered
to Bank in connection herewith (collectively, the "Loan Documents") have been
duly authorized, and upon their execution and delivery in accordance with the
provisions hereof will constitute legal, valid and binding agreements and
obligations of Borrower or the party which executes the same, enforceable in
accordance with their respective terms.
SECTION
2.3.
NO VIOLATION. The execution, delivery and performance by Borrower of each of
the
Loan Documents do not violate any provision of any law or regulation, or
contravene any provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any contract, obligation,
indenture or other instrument to which Borrower is a party or by which Borrower
may be bound.
SECTION
2.4.
LITIGATION. There are no pending, or to the best of Borrower's knowledge
threatened, actions, claims, investigations, suits or proceedings by or before
any governmental authority, arbitrator, court or administrative agency which
could have a material adverse effect on the financial condition or operation
of
Borrower other than those disclosed by Borrower to Bank in writing prior to
the
date hereof.
SECTION
2.5.
CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement of Borrower
dated December 31, 2006, and all interim financial statements delivered to
Bank
since said date, true copies of which have been delivered by Borrower to Bank
prior to the date hereof, (a) are complete and correct and present fairly the
financial condition of Borrower in all material respects, (b) disclose all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) have been prepared in accordance
with
generally accepted accounting principles consistently applied. Since the dates
of such financial statements there has been no material adverse change in the
financial condition of Borrower, nor has Borrower mortgaged, pledged, granted
a
security interest in or otherwise encumbered any of its assets or properties
except in favor of Bank or as otherwise permitted by Bank in
writing.
SECTION
2.6.
INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or
adjustments of its income tax payable with respect to any year.
SECTION
2.7.
NO SUBORDINATION. There is no agreement, indenture, contract or instrument
to
which Borrower is a party or by which Borrower may be bound that requires the
subordination in right of payment of any of Borrower's obligations subject
to
this Agreement to any other obligation of Borrower.
SECTION
2.8.
PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and rights to
all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance
with
applicable law.
SECTION
2.9.
ERISA. Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
or
recodified from time to time ("ERISA"); Borrower has not violated any provision
of any defined
3
employee
pension benefit plan (as defined in ERISA) maintained or contributed to by
Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred
and is continuing with respect to any Plan initiated by Borrower; Borrower
has
met its minimum funding requirements under ERISA with respect to each Plan;
and
each Plan will be able to fulfill its benefit obligations as they come due
in
accordance with the Plan documents and under generally accepted accounting
principles.
SECTION
2.10.
OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed
money, any purchase money obligation or any other material lease, commitment,
contract, instrument or obligation.
SECTION
2.11.
ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior
to the date hereof, Borrower is in compliance in all material respects with
all
applicable federal or state environmental, hazardous waste, health and safety
statutes, and any rules or regulations adopted pursuant thereto, which govern
or
affect any of Borrower's operations and/or properties, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1981, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic
Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time. None of the operations of Borrower is the
subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of
any
toxic or hazardous waste or substance into the environment. Borrower has no
material contingent liability in connection with any release of any toxic or
hazardous waste or substance into the environment.
ARTICLE
III
CONDITIONS
SECTION
3.1.
CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend
any
credit contemplated by this Agreement is subject to the fulfillment to Bank's
satisfaction of all of the following conditions:
(a)
Approval of Bank
Counsel. All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank's counsel.
(b)
Documentation. Bank
shall have received, in form and substance satisfactory to Bank, each of the
following, duly executed:
|
|
(i)
|
This
Agreement and each promissory note or other instrument or document
required hereby.
|
|
|
(ii)
|
Corporate
Resolution: Borrowing.
|
|
|
(iii)
|
Certificate
of Incumbency.
|
|
|
(iv)
|
Such
other documents as Bank may require under any other Section of this
Agreement.
|
(c)
Financial
Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower,
nor
any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the assets
of Borrower.
4
(d)
Insurance. Borrower
shall have delivered to Bank evidence of insurance coverage on all Borrower's
property, in form, substance, amounts, covering risks and issued by companies
satisfactory to Bank, and where required by Bank, with loss payable endorsements
in favor of Bank.
SECTION
3.2.
CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each
extension of credit requested by Borrower hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following
conditions:
(a)
Compliance. The
representations and warranties contained herein and in each of the other Loan
Documents shall be true on and as of the date of the signing of this Agreement
and on the date of each extension of credit by Bank pursuant hereto, with the
same effect as though such representations and warranties had been made on
and
as of each such date, and on each such date, no Event of Default as defined
herein, and no condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of Default, shall have
occurred and be continuing or shall exist.
(b)
Documentation. Bank
shall have received all additional documents which may be required in connection
with such extension of credit.
(c)
Additional Letter
of
Credit Documentation. Prior to the issuance of each Letter of
Credit, Bank shall have received a Letter of Credit Agreement properly completed
and duly executed by Borrower.
ARTICLE
IV
AFFIRMATIVE
COVENANTS
Borrower
covenants that so long as
Bank remains committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower shall,
unless Bank otherwise consents in writing:
SECTION
4.1.
PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and
in
the manner specified therein.
SECTION
4.2.
ACCOUNTING RECORDS. Maintain adequate books and records in accordance with
generally accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower.
SECTION
4.3.
FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail
satisfactory to Bank:
(a)
not later than 120 days after and as of the end of each fiscal year, a 10K
report filed with the Securities and Exchange Commission;
(b)
not later than 45 days after and as of the end of each fiscal quarter, a 10Q
report filed with the Securities and Exchange Commission;
5
(c)
not later than 90 days after and as of the end of each fiscal year, an annual
budget and projections report;;
(d)
contemporaneously with each annual and quarterly financial statement of Borrower
required hereby, a certificate of the Senior VP of Financial Services &
Controller or chief financial officer of Borrower that said financial statements
are accurate and that there exists no Event of Default nor any condition, act
or
event which with the giving of notice or the passage of time or both would
constitute an Event of Default;
(e)
from time to time such other information as Bank may reasonably
request.
SECTION
4.4.
COMPLIANCE. Preserve and maintain all material licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; and comply with the provisions of all documents pursuant to which
Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of any
governmental authority applicable to Borrower and/or its business.
SECTION
4.5.
INSURANCE. Maintain and keep in force, for each business in which Borrower
is
engaged, insurance of the types and in amounts customarily carried in similar
lines of business, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth
all
insurance then in effect.
SECTION
4.6.
FACILITIES. Keep all properties useful or necessary to Borrower's business
in
good repair and condition, and from time to time make necessary repairs,
renewals and replacements thereto so that such properties shall be fully and
efficiently preserved and maintained.
SECTION
4.7.
TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's reasonable satisfaction, for eventual payment
thereof in the event Borrower is obligated to make such payment.
SECTION
4.8.
LITIGATION. Promptly give notice in writing to Bank of any litigation pending
or
threatened against Borrower seeking damages in excess of
$1,000,000.00.
SECTION
4.9.
FINANCIAL CONDITION. Maintain Borrower's financial condition, on a consolidated
basis, as follows using generally accepted accounting principles consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein), with compliance determined commencing
with
Borrower's financial statements for the period ending December 31,
2007:
(a)
Fixed Charge Coverage Ratio not less than 1.10 to 1.0 determined on a current
quarter basis for the quarter ending December 31, 2007, and as of each fiscal
quarter end thereafter, with “Fixed Charge Coverage Ratio” defined as Adjusted
EBITDAR divided by the sum of Fixed Charges. "Adjusted EBITDAR" is
defined as net income after taxes plus interest
6
expense,
tax expense, depreciation expense, amortization expense, and rent expense and
plus or minus mutually agreed upon adjustments for non-cash items such as lease
expense adjustments and amortization of deferred fees less the greater of
maintenance capital expenditures as detailed on management's compliance
certificate or $400 per owned unit, per year. "Fixed Charges" is
defined as the sum of current maturities of long term debt plus current portion
of capital leases plus interest expense and rent expense. For
purposes of computing fixed charge coverage ratio, adjusted EBITDAR and fixed
charges will be normalized on a pro-forma basis for any acquisitions and/or
divestitures occurring during each quarter.
(b)
Liquidity. Maintain unencumbered liquid assets (defined as cash, cash
equivalents and/or publicly traded/quoted marketable securities acceptable
to
Bank in its sole discretion) with an aggregate fair market value not at any
time
less than Twenty Million Dollars ($20,000,000.00) and (b) Borrower shall provide
to Bank, within 15 days after, and as of the end of each calendar month copies
of all Borrower’s current account statements for deposit, brokerage and other
accounts containing unencumbered liquid assets, together with such other
information as Bank may reasonably require to determine compliance with this
covenant.
SECTION
4.10.
NOTICE TO BANK. Promptly (but in no event more than five (5) days after the
occurrence of each such event or matter) give written notice to Bank in
reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower; (c) the occurrence and nature of
any Reportable Event or Prohibited Transaction, each as defined in ERISA, or
any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain,
or
any material uninsured or partially uninsured loss through liability or property
damage, or through fire, theft or any other cause affecting Borrower's
property.
ARTICLE
V
NEGATIVE
COVENANTS
Borrower
further covenants that so
long as Bank remains committed to extend credit to Borrower pursuant hereto,
or
any liabilities (whether direct or contingent, liquidated or unliquidated)
of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower will
not
without Bank's prior written consent:
SECTION
5.1.
USE OF FUNDS. Use any of the proceeds of any credit extended hereunder except
for the purposes stated in Article I hereof.
SECTION
5.2.
OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness
or
liabilities resulting from borrowings, loans or advances, whether, secured
or
unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
except (a) the liabilities of Borrower to Bank, (b) any other liabilities
of Borrower existing as of, and disclosed to Bank prior to, the date hereof,
and
(c) other indebtedness in an aggregate amount not to exceed
$1,000,000.00.
SECTION
5.3.
MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any
other entity; make any substantial change in the nature of Borrower's business
as conducted as of the date hereof; acquire all or substantially all of the
assets of any
7
other
entity; nor sell, lease, transfer or otherwise dispose of all or a substantial
or material portion of Borrower's assets except in the ordinary course of its
business.
SECTION
5.4.
GUARANTIES. Guarantee or become liable in any way as surety, endorser (other
than as endorser of negotiable instruments for deposit or collection in the
ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets of Borrower as security for, any liabilities
or
obligations of any other person or entity, except (a) any of the foregoing
in
favor of Bank and (b) any guarantees existing as of, and disclosed to Bank
prior
to, the date hereof.
SECTION
5.5.
LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments
in
any person or entity, except any of the foregoing existing as of, and disclosed
to Bank prior to, the date hereof.
SECTION
5.6.
DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution either
in
cash, stock or any other property on Borrower’s stock now or hereafter
outstanding; nor to redeem, retire, repurchase or otherwise acquire any shares
of any class of Borrower’s stock now or hereafter outstanding.
SECTION
5.7.
PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a security interest
in, or lien upon, all or any portion of Borrower's assets now owned or hereafter
acquired, except (a) any of the foregoing in favor of Bank, (b) those which
exist as of, and are disclosed to Bank in writing prior to the date hereof,
and
(c) purchase money security interests granted in connection with indebtedness
permitted under Section 5.2(c).
ARTICLE
VI
EVENTS
OF
DEFAULT
SECTION
6.1.
The occurrence of any of the following shall constitute an "Event of Default"
under this Agreement:
(a)
Borrower shall fail to pay when due any principal, or within three days of
when
due any interest, fees or other amounts payable under any of the Loan
Documents.
(b)
Any financial statement or certificate furnished to Bank in connection with,
or
any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.
(c)
Any default in the performance of or compliance with any obligation, agreement
or other provision contained herein or in any other Loan Document (other than
those referred to in subsections (a) and (b) above), and with respect to any
such default which by its nature can be cured, such default shall continue
for a
period of twenty (20) days from its occurrence.
(d)
Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract or instrument (other than
any
of the Loan Documents) pursuant to which Borrower, any guarantor hereunder
or
any general partner or joint venturer in Borrower if a partnership or joint
venture (with each such guarantor, general partner and/or joint venturer
referred to herein as a "Third Party Obligor") has incurred any debt or other
liability to any person or entity, including Bank, and, other than with respect
to any debt
8
or
other
liability to Bank, and such default has not been cured or waived within the
cure
period applicable to such default, if any.
(e)
The filing of a notice of judgment lien against Borrower or any Third Party
Obligor; or the recording of any abstract of judgment against Borrower or any
Third Party Obligor in any county in which Borrower or such Third Party Obligor
has an interest in real property; or the service of a notice of levy and/or
of a
writ of attachment or execution, or other like process, against the assets
of
Borrower or any Third Party Obligor; or the entry of a judgment against Borrower
or any Third Party Obligor, in each case under this clause (e) where such lien,
writ or judgment is not insured by an insurance carrier which has acknowledged
coverage in the amount of the claim without any reservation of rights or which
has been ordered by a court of competent jurisdiction to pay such claim, and
the
judgment is not satisfied, released, discharged, vacated, fully bonded or stayed
within 60 days after such judgment, writ, attachment or similar proceeding
is
entered.
(f)
Borrower or any Third Party Obligor shall become insolvent, or shall suffer
or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay
its
debts as they become due, or shall make a general assignment for the benefit
of
creditors; Borrower or any Third Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform
Act,
Title 11 of the United States Code, as amended or recodified from time to time
("Bankruptcy Code"), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Third Party Obligor, or Borrower
or any Third Party Obligor shall file an answer admitting the jurisdiction
of
the court and the material allegations of any involuntary petition and either
(i) such proceeding or petition shall continue undismissed for sixty (60) days
or (ii) an order for relief or decree approving or ordering any of the foregoing
shall be entered; or Borrower or any Third Party Obligor shall be adjudicated
a
bankrupt, or an order for relief shall be entered against Borrower or any Third
Party Obligor by any court of competent jurisdiction under the Bankruptcy Code
or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
(g)
The dissolution or liquidation of Borrower or any Third Party Obligor if a
corporation, partnership, joint venture or other type of entity; or Borrower
or
any such Third Party Obligor, or any of its directors, stockholders or members,
shall take action seeking to effect the dissolution or liquidation of Borrower
or such Third Party Obligor.
(h)
The occurrence of any of the following:
(i)
an acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of 30% or more of either (i) the
then outstanding shares of common stock of Borrower (the “Outstanding Borrower
Common Shares”), or (ii) the combined voting power of the then outstanding
voting securities of Borrower entitled to vote generally in the election of
directors (the “Outstanding Borrower Voting Securities”); or
(ii)
individuals who, as of the date of this Agreement, constitute the Board of
Directors of Borrower (the “Incumbent Board”) cease for any reason to constitute
at least a
9
majority
of such Incumbent Board; provided, however, that any individual who becomes
a
member of such Incumbent Board subsequent to the effective date of this
agreement, whose election, or nomination for election by Borrower’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; but provided further, that
any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended) or other actual or threatened solicitation of proxies or consents
by or
on behalf of a Person other than the Incumbent Board shall not be so considered
as a member of the Incumbent Board.
SECTION
6.2.
REMEDIES. Upon the occurrence of any Event of Default: (a) all indebtedness
of Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank's option and without notice become immediately
due and payable without presentment, demand, protest or notice of dishonor,
all
of which are hereby expressly waived by Borrower; (b) the obligation, if
any, of Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for
any
credit subject hereto and to exercise any or all of the rights of a beneficiary
or secured party pursuant to applicable law. All rights, powers and
remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by
law
or equity.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.1.
NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as
a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any
other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, permit, consent or approval of any kind by Bank of any breach of
or
default under any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.
SECTION
7.2.
NOTICES. All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must
be
in writing delivered to each party at the following address:
BORROWER:
Emeritus Corporation
0000
Xxxxxxx Xxxxxx, Xxxxx
000
Xxxxxxx,
XX 00000
Attn:
Chief Financial Officer or
Controller
BANK:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
000
000xx
XXX XX,
0xx
Xxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000-0000
or
to
such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given
or made as follows: (a) if sent by hand
10
delivery,
upon delivery; (b) if sent by mail, upon the earlier of the date of receipt
or three (3) days after deposit in the U.S. mail, first class and postage
prepaid; and (c) if sent by telecopy, upon receipt.
SECTION
7.3.
COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank immediately
upon
demand the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel fees and all
allocated costs of Bank's in-house counsel), expended or incurred by Bank in
connection with (a) the negotiation and preparation of this Agreement and
the other Loan Documents, Bank's continued administration hereof and thereof,
and the preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any amounts
which become due to Bank under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with
any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.
SECTION
7.4.
SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may
not
assign or transfer its interests or rights hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate
or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank
may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, or
any
collateral required hereunder.
SECTION
7.5.
ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each
credit subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only in writing signed by each party
hereto.
SECTION
7.6.
NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the
sole protection and benefit of the parties hereto and their respective permitted
successors and assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan Documents to which
it
is not a party.
SECTION
7.7.
TIME. Time is of the essence of each and every provision of this Agreement
and
each other of the Loan Documents.
SECTION
7.8.
SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of
this
Agreement.
11
SECTION
7.9.
COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each
of which when executed and delivered shall be deemed to be an original, and
all
of which when taken together shall constitute one and the same
Agreement.
SECTION
7.10.
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington.
SECTION
7.11.
ARBITRATION.
(a)
Arbitration. The
parties hereto agree, upon demand by any party, to submit to binding arbitration
all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether
in tort, contract or otherwise in any way arising out of or relating to (i)
any
credit subject hereto, or any of the Loan Documents, and their negotiation,
execution, collateralization, administration, repayment, modification,
extension, substitution, formation, inducement, enforcement, default or
termination; or (ii) requests for additional credit.
(b)
Governing
Rules. Any arbitration proceeding will (i) proceed in a
location in Washington selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with
the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein as applicable, as the
“Rules”). If there is any inconsistency between the terms hereof and
the Rules, the terms and procedures set forth herein shall
control. Any party who fails or refuses to submit to arbitration
following a demand by any other party shall bear all costs and expenses incurred
by such other party in compelling arbitration of any dispute. Nothing
contained herein shall be deemed to be a waiver by any party that is a bank
of
the protections afforded to it under 12 U.S.C. §91 or any similar applicable
state law.
(c)
No Waiver of
Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after
the
pendency of any arbitration proceeding. This exclusion does not
constitute a waiver of the right or obligation of any party to submit any
dispute to arbitration or reference hereunder, including those arising from
the
exercise of the actions detailed in sections (i), (ii) and (iii) of this
paragraph.
(d)
Arbitrator
Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award
of
greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be
a neutral attorney licensed in
12
the
State
of Washington or a neutral retired judge of the state or federal judiciary
of
Washington, in either case with a minimum of ten years experience in the
substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In
any
arbitration proceeding the arbitrator will decide (by documents only or with
a
hearing at the arbitrator's discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. The arbitrator shall resolve all disputes in
accordance with the substantive law of Washington and may grant any remedy
or
relief that a court of such state could order or grant within the scope hereof
and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of
all costs and fees, to impose sanctions and to take such other action as the
arbitrator deems necessary to the same extent a judge could pursuant to the
Federal Rules of Civil Procedure, the Washington Rules of Civil Procedure or
other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of
a
provisional or ancillary remedy shall not constitute a waiver of the right
of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial
relief.
(e)
Discovery. In
any arbitration proceeding, discovery will be permitted in accordance with
the
Rules. All discovery shall be expressly limited to matters directly
relevant to the dispute being arbitrated and must be completed no later than
20
days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery
is
essential for the party's presentation and that no alternative means for
obtaining information is available.
(f)
Class Proceedings
and
Consolidations. No party hereto shall be entitled to join or
consolidate disputes by or against others in any arbitration, except parties
who
have executed any Loan Document, or to include in any arbitration any dispute
as
a representative or member of a class, or to act in any arbitration in the
interest of the general public or in a private attorney general
capacity.
(g)
Payment Of Arbitration
Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding.
(h)
Miscellaneous. To
the maximum extent
practicable, the AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days of the filing
of
the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary course
of its business or by applicable law or regulation. If more than one
agreement for arbitration by or between the parties potentially applies to
a
dispute, the arbitration provision most directly related to the Loan Documents
or the subject matter of the dispute shall control. This arbitration
provision shall survive termination, amendment or expiration of any of the
Loan
Documents or any relationshipbetween the
parties.
ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
13
IN
WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as of the day and year first
written above.
XXXXX
FARGO BANK,
EMERITUS
CORPORATION
NATIONAL ASSOCIATION
By:
_/s/
Xxx X. Xxxxxx
__________________
By: _/s/ _Gloria Nemechek________________________
Xxx
X. Xxxxxx, Xx. VP of
Financial Xxxxxx
Xxxxxxxx, Vice
President
Services,
Controller
14
