LOAN AGREEMENT (AL EXPANSION)
Exhibit
10.88
(AL
EXPANSION)
THIS
LOAN
AGREEMENT (this "Agreement")
is made
and entered into this ________ day of December, 2005, by and between ARC
BRANDYWINE, L.P., a Delaware limited partnership (hereinafter called
“Borrower”),
and
GUARANTY BANK, a federal savings bank (hereinafter called “Lender”).
W
I T N E
S S E T H:
WHEREAS,
Lender has agreed to make a Loan (as hereinafter defined) to Borrower;
and
WHEREAS,
Borrower and Lender wish to enter into this Agreement in order to set forth
the
terms and conditions of the disbursement of the Loan;
NOW
THEREFORE, in consideration of the mutual promises hereinafter contained
and of
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
DEFINITIONS
1.1. Defined
Terms. As
used in
this Agreement, the following terms shall have the meanings shown:
(a) “Architect”.
Xxxxxxx X. Xxxxxx.
(b) “Architect's
Consent, Agreement and Certification”.
The Architect's Consent, Agreement and Certification as provided for herein
and
in the form approved by Lender.
(c) “Assignment
of Leases and Rents”.
The Assignment of Leases and Rents of even date herewith from Borrower to
Lender
covering certain leases described therein, providing a source of future payment
of the Note.
(d) “Borrower's
Equity”.
Funds in the amount of $0.00 obtained by Borrower from equity contributions
or
other sources approved by Lender and which are to be applied to the payment
of
Project Costs.
(e) “Certificate
of Non Foreign Status”.
A
certificate by Borrower as required by Section 1445 of the Internal Revenue
Code
of 1986.
(f) “Collateral
Assignment of Contracts and Plans and Other Agreements Affecting Real
Estate”.
The
Collateral Assignment of Contracts and Plans and Other Agreements Affecting
Real
Estate as provided for herein and in the form approved by Lender.
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(g) “Completion
Date”.
September 1, 2006.
(h) “Continuing
Care Agreement”.
Agreement by and between a resident and any Property Related Person executed
upon resident’s purchase of a residential unit on the CCRC Property which
provides for personal care services at the CCRC Property.
(i) “Construction
Contract”.
An
agreement providing for the furnishing of labor and/or materials to be used
in
the construction and/or installation of the Improvements, including all
additions, changes and other amendments thereto.
(j) “Construction
Schedule”.
As
defined in subsection 4.1(h).
(k) “Contractor”.
Xxxxxx
Construction Company or such other party or parties who, with the prior written
approval of Lender, enter into a Construction Contract with
Borrower.
(l) “Contractor's
Consent, Agreement and Certification”.
The
Contractor's Consent, Agreement and Certification as provided for herein
and in
the form approved by Lender.
(m) “Disbursal
Schedule”.
The schedule of estimated disbursements of the proceeds of the Loan agreed
upon
in writing by Lender and Borrower or as modified from time to time upon written
approval from Lender.
(n) “Engineer”.
One or more engineers engaged with respect to the Property.
(o) “Environmental
Indemnity Agreement”.
An
Environmental Indemnity Agreement of even date herewith executed by Borrower
in
favor of Lender.
(p) “Forecast”.
As
defined in subsection 4.1(d).
(q) “Governmental
Authority”.
The
United States, the state, the county and the city or any other political
subdivision in which the CCRC Property is located, and any other political
subdivision, agency or instrumentality having jurisdiction over the CCRC
Property or any of the Property Related Persons.
(r) “Governmental
Requirements”. All
laws, ordinances, statutes, codes, rules, regulations, orders and decrees
of any
Governmental Authority applicable to any of the Property Related Persons
or the
CCRC Property.
(s) “Guarantor”.
American Retirement Corporation, a Tennessee corporation.
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(t) “Guaranty”.
The
Guaranty and Suretyship Agreement of even date herewith made by Guarantor
with
respect to all of all obligations of the Borrower contained in the Loan
Documents.
(u) “Improvements”.
A
57-unit assisted living facility expansion to the existing 48-unit healthcare
center to be constructed on the Land.
(v) “Initial
Advance”.
The
first amount of the Loan funded by the Lender to the Borrower.
(w) “Inspecting
Architect”.
The
representative of Lender designated to inspect the construction of the
Improvements on behalf of Lender.
(x) “Land”.
The real
property described in Exhibit
A attached
hereto and made a part hereof.
(y) “Loan”.
The
$11,424,000 loan made this date by Lender to Borrower and evidenced by the
Note.
(z) “Loan
Documents”.
This
Agreement and all other instruments evidencing, securing or related to the
Loan.
(aa) “Mortgagee
Title Policy”
..
As
defined in the Security Instrument.
(cc) “Note”.
The
$11,424,000 promissory note dated as of the date hereof from Borrower to
Lender.
(dd) “Plans
and Specifications”.
Plans
and specifications prepared or to be prepared by the Architect and the Engineer
for the construction of the Core Improvements listed in the Collateral
Assignment of Contracts and Plans and Other Agreements Affecting Real Estate,
including all additions, changes and other amendments thereto.
(ee) “Project
Budget”.
As
defined in subsection 4.1(a) and as attached hereto as Exhibit
B.
(ff) “Project
Costs”.
As
defined in subsection 4.1(a).
(gg) “Project
Revenues”.
As
defined in subsection 4.1(a).
(hh) “Property”.
The Land
and the Improvements.
(ii) “Purchase
Agreement”.
Agreement entered into by any resident and any Property Related Person whereby
resident agrees to purchase from the Property Related Person a life-estate
in a
residential unit located on the CCRC Property.
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(jj) “Repurchase
Agreement”.
Agreement entered into by and between any resident and any Property Related
Person whereby resident or resident’s authorized agent is required to convey
resident’s life-estate interest in the unit to the Property Related Person upon
becoming a permanent resident of the healthcare facility or when the
Continuing-Care Agreement is terminated.
(kk) “Security
Instrument”.
That
certain Open-End Mortgage, Security Agreement and Fixture Filing dated as
of the
date hereof made by Borrower for the benefit of Lender.
(ll) “Site
Plan”.
The
site plan for the Improvements attached as Exhibit E and made a part
hereof.
(mm) “Title
Company”.
Land
Services USA, Inc.
Additional
definitions are set forth in Exhibit
C - Healthcare Rider
to this
Agreement.
ARTICLE
II
THE
LOAN
2.1. The
Loan.
Subject
to and upon the terms, conditions and limitations contained in this Agreement
and relying on the representations and warranties contained in this Agreement
and the other Loan Documents, Lender agrees to lend, and Borrower agrees
to
borrow and take down, the Loan, to be evidenced by the Note. All proceeds
of the
Loan shall be advanced against the Note as provided in Article VII hereof
and
shall be used by Borrower to pay for Project Costs as contained in the Project
Budget. The principal amount actually owing on the Note from time to time
shall
be the aggregate of all advances theretofore made by the Lender against the
Note
less all payments theretofore made on the principal of the Note.
2.2. Security
for the Loan.
The
Loan, as evidenced by the Note, shall be secured, inter alia,
by the
Security Instrument, the Assignment of Leases and Rents, the Collateral
Assignment of Contracts and Plans and Other Agreements Affecting Real Estate,
the Environmental Indemnity Agreement, the Pledge Agreement and the Security
Agreement and shall be guaranteed by the Guaranty.
2.3. Schedule
of Disbursements.
Disbursement of the proceeds of the Loan is to be made by Lender to Borrower
in
accordance with the Disbursal Schedule and the Project Budget.
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ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF BORROWER
3.1. Representations,
Warranties and Covenants of Borrower.
Borrower
hereby represents, warrants and covenants to Lender that:
(a) No
Consents Necessary.
No
consent of any other party, and no consent, license, approval or authorization
of, or registration or declaration with, any Governmental Authority is required
in connection with the execution, delivery, performance, validity or
enforceability of the transactions contemplated by this Agreement or the
Loan
Documents.
(b) Availability
of Utilities.
All
utility and municipal services necessary for the proper operation of the
Improvements for their intended purpose are available at the Property, including
water supply, storm and sanitary sewer facilities, gas or electricity and
telephone facilities, or will be available at the Property when constructed
or
installed as part of the Improvements, and written permission has been or
will
be obtained from the applicable utility companies or municipalities to connect
the Improvements into each of said services, and Borrower will supply evidence
thereof satisfactory to Lender. All of such utility and municipal services
will,
to Borrower's knowledge, comply with all applicable Governmental
Requirements.
(c) Roads.
All
roads necessary for the full utilization of the Improvements for their intended
purposes have been or will be completed in connection with the completion
of the
Improvements and the necessary rights-of-way therefor have either been acquired
by the appropriate Governmental Authority or have been dedicated to the public
use and accepted by such Governmental Authority and all necessary steps have
been taken by Borrower and any such Governmental Authority to assure the
complete construction and installation thereof.
(d) Building
Permits.
All
zoning, utility, building, health and operating permits (if any) required
for
the construction and operation of the Improvements either have been obtained
or
will be obtained prior to commencement of construction of the Improvements
and
copies of same will be delivered to Lender.
(e) Condition
of Property.
The
Property is not now damaged or injured as a result of any fire, explosion,
accident, flood or other casualty.
(f) Construction
Contract.
Except
for the contracts described in Schedule II of the Collateral Assignment of
Contracts and Plans and Other Agreements Affecting Real Estate, Borrower
has not
entered into any contracts or agreements with third parties (either written
or
oral) providing for the furnishing of labor or materials to be used in the
construction or installation of the Improvements and will enter into no such
contracts or agreements, except in such form and upon such terms as shall
be
approved in writing by Lender.
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(g) No
Prior Work.
No work
or construction has been commenced on the Land and no materials have been
delivered to the Land which could, in either case, result in the imposition
of a
mechanic's or materialmen's lien on the Property prior to or on parity with
the
lien and security interest created by the Security Instrument.
(h) Sufficiency
of Funds.
Sufficient funds are available to Borrower in addition to proceeds of the
Note
and Borrower's Equity to pay all Project Costs. Upon request of Lender, Borrower
will demonstrate to Lender that such funds are available.
(i) Executive
Order 13224.
Borrower
and all persons or entities holding any legal or beneficial interest whatsoever
in Borrower are not included in, owned by, controlled by, acting for or on
behalf of, providing assistance, support, sponsorship, or services of any
kind
to or otherwise associated with, any of the persons or entities referred
to or
described in Executive Order 13224 (Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism,
as amended).
ARTICLE
IV.
COVENANTS
OF BORROWER
4.1. Covenants
of BorrowerBorrower
hereby covenants and agrees with Lender as follows:
(a) Project
Budget and Application of Loan Proceeds.
The
Project Budget includes all Project Costs (as hereinafter defined) contemplated
to be paid from disbursements of the Loan, including categories for
contingencies and the sources of funds, that is, proceeds of the Loan, Project
Revenues (as hereinafter defined) and Borrower's Equity. The Project Budget
shall be promptly supplemented to include a forecast (hereinafter called
the
“Forecast”)
of the
timing of the sources and uses of funds through the maturity date of the
Loan.
The Project Budget specifies the interest rate projections and leasing
assumptions used to determine the Project Costs. “Project
Costs”
shall
mean all costs incurred in connection with the acquisition of the Land and
the
construction, leasing and operation of the Improvements until maturity of
the
Loan, including without limitation interest expense. “Project
Revenues”
shall
mean all receipts and revenues generated by or in connection with the Property,
including without limitation rents, interest income, insurance proceeds,
condemnation awards and payments received from interest rate hedging or similar
agreements. Borrower agrees to give Lender prompt written notice of any changes
made in the Project Costs or the Forecast so that the Project Budget accurately
and realistically represents the sources and uses of funds for the Property.
In
addition, Lender may notify Borrower that, in Lender's reasonable judgment,
changes need to be made in the Project Budget. If, after consultation and
consideration of the view of Borrower and supporting documentation, Borrower
and
Lender do not agree as to what modifications need to be made in the Project
Budget, the reasonable determination of Lender shall govern. Lender shall
confirm to Borrower the most current approved Project Budget. Borrower shall
use
the proceeds of the Loan solely for the purpose of paying for the Project
Costs
as set forth in the Project Budget and shall in no event use any of the Loan
proceeds for any other purpose.
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(b) Construction
Documents.
Borrower
shall deliver to Lender a copy of the Construction Contract executed by Borrower
and the Contractor, a copy of any contract executed by Borrower and the
Architect and the Engineer and executed copies of any other contracts by
Borrower with architects and engineers. Borrower shall furnish Lender with
a
complete list of all persons, firms or entities which the Contractor proposes
to
engage to furnish labor and/or materials in constructing the Improvements
and,
upon written request of Lender, will furnish Lender with true copies of all
written agreements (including contracts, subcontracts and purchase orders)
therefor and the terms of all verbal agreements therefor. All such contracts
shall be in form and content satisfactory to Lender. If, in the sole judgment
of
Lender, such contracts and subcontracts do not cover all of the work necessary
for completion of construction of the Improvements (exclusive of Tenant
Improvements), including the installation of such fixtures and equipment
as are
required for the operation of the Improvements and including all work required
by any leases then in effect or to make any portion of the Improvements rentable
(whether to be done and paid for by Borrower or by lessees under leases),
Borrower shall cause to be furnished firm bids from responsible parties,
or
estimates and other information satisfactory to Lender, for the work not
so
covered, to enable Lender to ascertain the total estimated cost of all work
done
and to be done. The Construction Contract together with all other contracts,
subcontracts, lists, agreements and terms of verbal agreements described
in this
subparagraph shall herein be called the “Construction
Documents”.
(c) Construction
Contract.
Borrower
shall (i) permit no default under the terms of the Construction Contract,
(ii)
waive none of the obligations of the Contractor thereunder, (iii) do no act
which would relieve Contractor from its obligations to construct the
Improvements according to the Plans and Specifications, and (iv) make no
amendments to, or change orders with respect to, the Construction Contract
or
any other Construction Document, without the prior written consent of Lender,
except as permitted in Section 5.3 hereof.
(d) Construction
Schedule.
Borrower
shall furnish to Lender a schedule (herein called the “Construction
Schedule”)
showing
the timing of construction of the Improvements with a breakdown by
trade.
(e) Commencement
and Completion of Construction.
Borrower
has commenced construction and shall diligently pursue said construction
to
completion, and shall supply such moneys required in excess of the Loan and
Borrower's Equity and perform such duties as may be necessary to complete
the
construction of the Improvements pursuant to and in conformity with the Plans
and Specifications and in accordance with good building practice and in full
compliance with all terms and conditions of the Loan Documents, all of which
shall be accomplished on or before the Completion Date, and without liens,
claims or assessments (actual or contingent) asserted against the Property
for
any material, labor or other items furnished in connection therewith, and
all in
full compliance with all Governmental Requirements. Borrower will provide
to
Lender upon request therefor evidence of satisfactory compliance with all
of the
foregoing.
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(f) Intentionally
Omitted.
(g) Right
of Lender to Inspect Property.
During
normal business hours and upon reasonable notice, Borrower shall permit Lender
and its representatives and agents, including the Inspecting Architect, to
enter
upon the Property and to inspect the Improvements and all materials to be
used
in the construction thereof and all books, records, contracts, statements,
invoices, bills, plans and specifications, shop drawings, appraisals, title
and
other insurance, reports, lien waivers and all other instruments and documents
of any kind relating to the construction, leasing and operation of the
Improvements; shall cooperate and cause Architect, Engineer and Contractor
to
cooperate with Lender and its representatives and agents during such inspections
and shall maintain all of the foregoing for said inspections; shall permit
the
photographing of any portions of the Property or any materials thereon; and
shall, if requested by Lender or its representatives or agents, move, remove
or
uncover such materials or portions of the Improvements as shall be reasonably
necessary to fully and completely inspect the Property; provided, however,
that
this provision shall not be deemed to impose upon Lender any duty or obligation
whatsoever to undertake such inspections, to correct any defects in the
Improvements or to notify any person with respect thereto.
(h) Correction
of Defects.
Borrower
shall promptly correct any material structural defect in the Improvements
or any
material departure from the Plans and Specifications not previously approved
by
Lender and any violation of any requirement of any Governmental Authority.
The
advance of any Loan proceeds shall not constitute a waiver of Lender's right
to
require compliance with this covenant.
(i) Off-Site
Work.
To the
extent required by the Plans and Specifications, Borrower shall promptly
commence and complete any and all off-site improvements (including public
streets, walks and like areas adjoining the Improvements) as and if required
and
provide any and all utilities and other facilities required, all in accordance
with the requirements of all Governmental Authorities having jurisdiction
thereof. Unless otherwise provided for, such off-site improvements shall
be
deemed part of the work of construction of the Improvements. Borrower expressly
agrees to indemnify Lender and to hold it harmless against any claim of surety
furnishing bond for such work to the Governmental Authorities having
jurisdiction, whether such claims be founded upon existing or future liability,
and whether such liability be expressed or implied.
8
(j) Storage
of Materials.
Borrower
shall cause all materials supplied for or intended to be utilized in the
construction of the Improvements but not affixed to or incorporated into
the
Property to be stored on the Property or at such other location as may be
approved by Lender in writing, with adequate safeguards to prevent loss,
theft,
damage or commingling with other materials not intended to be utilized in
the
construction of the Improvements.
(k) Vouchers.
Borrower
shall deliver to Lender, on written demand, any contracts, bills of sale,
statements, receipted vouchers or agreements under which Borrower claims
title
to any materials, fixtures or articles incorporated in the Improvements or
otherwise subject to the lien of the Security Instrument.
(l) Encroachments.
Borrower
agrees that (i) the Improvements shall be constructed entirely on the Land;
(ii)
until the Loan is discharged, no conveyances of any portion of or interest
in
the Property will be made by Borrower which will cause any encroachment above,
on, or under the surface of the Property; (iii) such construction will not
encroach upon or overhang any easement or right-of-way upon the land of others;
(iv) the Improvements when erected shall be wholly within applicable building
restriction lines however established; and (v) upon written request Borrower
will, from time to time, furnish satisfactory evidence of the
foregoing.
(m) Liens.
Borrower
will not install nor otherwise incorporate in the Improvements any materials,
equipment or fixtures under any conditional sales agreements or security
agreement whereby the right is reserved or accrued to anyone to remove or
repossess any such items. Borrower will not cause or permit any lien or claim
for lien for any labor and/or material to be filed or to become valid or
effective against the Property; provided, however, that the existence of
any
unperfected and unrecorded mechanic's lien shall not constitute a violation
of
this subsection if payment is not yet due for the work giving rise to the
lien.
Notwithstanding the foregoing, Borrower may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien in accordance with the provisions set forth
in
the Security Instrument; provided, however, that in any event each such contest
shall be concluded and the lien, interest and costs shall be paid, bonded
around
or otherwise removed upon completion of construction of the
Improvements.
(n) Cooperation
with Inspecting Architect.
Borrower
shall cooperate with the Inspecting Architect and will cause the Architect,
the
Engineer, the Contractor and the employees of each of them to cooperate with
the
Inspecting Architect and, upon request, will furnish the Inspecting Architect
whatever he may consider necessary or useful in connection with the performance
of his duties including but not limited to permits, subcontracts, purchase
orders, lien waivers and other documents relating to the construction of
the
Improvements. Borrower acknowledges that the duties of the Inspecting Architect
run solely to Lender and that the Inspecting Architect shall have no obligations
or responsibilities whatsoever to Borrower, the Architect, the Engineer,
the
Contractor or to any of their respective agents or employees.
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(o) Sign
Regarding Construction Financing.
Borrower
shall include on any sign erected by Borrower at or near the Property setting
forth the names of the Contractor and/or any subcontractors of the construction
of the Improvements a statement in conspicuous lettering that construction
financing is being provided by Lender, all to the reasonable satisfaction
of
Lender. If such sign is not erected, Borrower shall, upon request by and
at the
expense of Lender, erect and maintain on a suitable site on the Property
a sign
indicating that construction financing is being provided by Lender, all to
the
reasonable satisfaction of Lender.
(p) Appraisal.
Borrower
shall submit from time to time, within thirty (30) days following written
request of Lender, which request may not be made earlier than one (1) year
after
the date of the Appraisal furnished in connection with the making of the
Loan
and not more often than annually thereafter (unless required by a governmental
agency having jurisdiction over Lender), an MAI appraisal of the Property
and
the proposed Improvements by a licensed appraiser satisfactory to Lender,
such
appraisal to be in form satisfactory to Lender. In lieu of obtaining an
appraisal from Borrower hereunder, but subject to the limitation set forth
in
the previous sentence, Lender may itself obtain the appraisal and Borrower
shall
pay the reasonable cost thereof to Lender within thirty (30) days following
written request of Lender.
(q) Cooperation
Regarding Financial Condition.
Borrower
shall cooperate with Lender and its representatives to the end that Lender
shall
be fully apprised regarding the continuing financial condition of Borrower
and,
upon request of Lender or any of its representatives, will furnish Lender
or
such representatives such documents, instruments, financial statements or
other
information considered necessary or useful by Lender or its representatives
in
connection with the review and understanding of the financial condition of
Borrower as it may exist from time to time. Borrower shall maintain such
documents, instruments and financial statements which relate to its financial
condition.
(r) Additional
Expenditures by Lender.
Borrower
agrees that all sums paid or expended by Lender under the terms of this
Agreement in excess of the amount of the Loan shall be considered to be an
additional loan to Borrower and the repayment thereof, together with interest
thereon at the Default Rate, shall be secured by the Security Instrument
and the
other Loan Documents and shall be immediately due and payable upon demand,
and
Borrower agrees to pay such sum upon demand. Nothing contained herein, however,
shall obligate Lender to make such advances.
(s) Indemnity
of Lender.
Borrower
shall indemnify and hold harmless Lender (for purposes of this subsection,
the
term “Lender”
shall
include the directors, officers, employees and agents of Lender and any persons
or entities owned or controlled by, owning or controlling, or under common
control or affiliated with Lender) from and against, and reimburse them for,
all
claims, demands, liabilities, losses, damages, causes of action, judgments,
penalties, costs and expenses (including, without limitation, reasonable
attorney's fees) which may be imposed upon, asserted against or incurred
or paid
by them by reason of, on account of or in connection with any bodily injury
or
death or property damage occurring in or upon or in the vicinity of the Property
through any cause whatsoever or asserted against them on account of any act
performed or omitted to be performed hereunder or on account of any transaction
arising out of or in any way connected with the Property or with this Agreement
or any other Loan Document. WITHOUT
LIMITATION, IT IS THE INTENTION OF BORROWER AND BORROWER AGREES THAT THE
FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT
TO
CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS,
PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEY'S FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
THE
NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY STRICT LIABILITY.
HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO ANY INDEMNIFIED PARTY TO THE
EXTENT
THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.
The
foregoing indemnities shall survive the termination of this Agreement, the
foreclosure of the Security Instrument or conveyance in lieu of foreclosure
and
the repayment of the Loan and the discharge and release of the Loan Documents.
Any amount to be paid hereunder shall be subject to and governed by the
provisions of Section 4.2 hereof.
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(t) Expenses
and Approval of Documents.
Borrower
shall pay all costs of closing the Loan and all expenses of Lender with respect
thereto, including but not limited to, reasonable legal fees (including legal
fees incurred by Lender subsequent to the closing of the Loan but incurred
in
connection with the disbursement, administration, collection or transfer
of the
Loan), title insurance premiums and other charges of the title company issuing
the Mortgagee Title Policy, appraisal fees, consulting architect fees,
consulting inspection fees, advances, recording expenses, surveys, intangible
taxes, expenses of foreclosure (including reasonable attorneys' fees) and
similar items, and shall allow all closing papers, Loan Documents and other
legal matters to be subject to the approval of Lender's attorneys.
(u) Additional
Documents.
Borrower
shall:
(i) Regarding
Construction-
furnish
to Lender all instruments, documents, initial surveys, footing or foundation
surveys after installation of all foundations, certificates, plans and
specifications, appraisals, title and other insurance, reports and agreements
and each and every other document and instrument required to be furnished
by the
terms of the Loan Documents, all at Borrower's expense;
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(ii) Regarding
Preservation of Security-
sign and
deliver to Lender such documents, instruments, assignments and other writings,
and to do such other acts necessary or desirable, to preserve and protect
the
collateral at any time securing or intended to secure the Note, as Lender
may
require;
(iii) Regarding
this Agreement-
do and
execute all and such further lawful and reasonable acts, conveyances and
assurances for the better and more effective carrying out of the intents
and
purposes of this Agreement as Lender shall reasonably require from time to
time;
and
(iv) Regarding
Permits and Approvals-
furnish
to Lender evidence satisfactory to Lender (x) that the Plans and Specifications
and construction pursuant thereto and the use of the Property contemplated
thereby comply with all applicable utility requirements, restrictive covenants,
Governmental Requirements and all standards and regulations of appropriate
supervising boards of fire underwriters and similar agencies, (y) that the
engineering specifications contained in the Plans and Specifications are
within
applicable environmental standards, and (z) all permits and approvals issued
by
applicable Governmental Authorities pursuant to Governmental Requirements,
approving the Plans and Specifications and the commencement of construction
of
the Improvements.
(v) Executive
Order 13224.
Neither
Borrower, nor any person or entity holding any legal or beneficial interest
whatsoever in Borrower, shall hereafter be included in, owned by, or controlled
by, or act for or on behalf of, or provide assistance, support, sponsorship,
or
services of any kind to or otherwise associated with, any of the persons
or
entities referred to or described in Executive Order 13224 (Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit
or
Support Terrorism, as amended).
(w) Authorization
to Transact Business.
Within
ninety (90) days from the date hereof, Borrower shall provide Lender
satisfactory evidence that the Borrower is authorized to transact business
in
the commonwealth of Pennsylvania.
4.2. Failure
to Perform.
If
Borrower fails to perform any act or to take any action or to pay any amount
provided to be paid by it under the provisions of any of the covenants and
agreements contained in this Agreement, Lender may but shall not be obligated
to
perform or cause to be performed such act or take such action or pay such
money,
and any expenses so incurred by Lender and any money so paid by Lender shall
be
an advance against the Note and shall bear interest from the date of making
such
payment until paid at the Default Rate and shall be secured by the Security
Instrument and the other Loan Documents, and Lender upon making any such
payment
shall be subrogated to all rights of the person, corporation or body politic
receiving such payment.
12
ARTICLE
V.
PLANS
AND SPECIFICATIONS
5.1. Plans
and Specifications.
Borrower
has furnished (or will furnish when finalized) Lender the Plans and
Specifications for construction of the Improvements, including the engineering
plans, complete architectural plans, specifications and work drawings, projected
costs and related information, site plans, proposed plat dedications and
proposed development restrictions and conditions and all requisite building
permits authorizing construction of the Improvements. Borrower has also
furnished Lender with a detailed listing of the Plans and Specifications.
The
Plans and Specifications and the Improvements constructed pursuant thereto
will
comply with all applicable restrictive covenants and Governmental Requirements
and all standards and regulations of appropriate supervising boards of fire
underwriters and similar agencies (and the engineering specifications contained
in the Plans and Specifications shall be within applicable environmental
standards). The Plans and Specifications as approved will not be modified
or
supplemented in any respect without the prior written approval of Lender
except
as permitted under Section 5.3 hereof.
5.2. Supplemental
Data.
Borrower
shall submit to Lender a statement of the projected cost of constructing
the
Improvements, including a description of all contracts let or to be let by
Borrower for the design, engineering, construction and equipping of the
Improvements, setting forth the name or names of the contractor or contractors,
the date of the contracts and of any supplements or amendments thereto, the
scope of the work covered thereby, and the aggregate amounts payable to the
contractors thereunder, and further stating whether said contract or contracts
embrace all of the work required to be done and all of the material necessary
for completion of construction, and, if not, setting forth sufficient
information to enable Lender to determine the estimated cost of any work
or
materials not so covered.
5.3 Changes
in Plans.
All
requests for approval of changes in the Plans and Specifications or any other
Construction Document must be in writing, signed by Borrower, and shall be
conditioned upon acceptance by Lender, which acceptance shall be subject
to such
conditions and qualifications as Lender in its sole and absolute discretion
may
reasonably prescribe. Notwithstanding the foregoing, Lender's approval shall
not
be required if all of the following conditions are satisfied:
(a)
Said
changes do not have a material effect on the structural portions or the exterior
appearance of the Improvements or the architectural design concept
thereof;
(b)
None
of
said changes increases the cost of construction by more than
$100,000;
(c)
The
aggregate of all of said changes does not increase the cost of construction
by
more than $500,000; and
13
(d)
At
the end
of each month Borrower submits to Lender copies of all change orders effecting
said changes made in such month.
ARTICLE
VI.
LOAN
FUNDING
6.1
Loan
Funding.
The
Initial Advance shall be in such amount agreed to by Borrower and Lender
and
shall take place in the offices of Lender or at such other place as Lender
may
designate.
6.2
Conditions
Precedent to Loan Funding .
Except
as otherwise provided herein, the following shall be conditions precedent
to
Lender's obligations to make the Initial Advance under the Loan and any other
funding or disbursal of the Loan:
(a) Representations
and Warranties.
On the
date of disbursal of the Loan (hereinafter called the “Loan
Funding Date”),
all of
Borrower's representations and warranties contained herein or in any other
Loan
Document shall be true and correct in all material respects.
(b) Covenants
and Agreements.
On the
Loan Funding Date, Borrower shall have performed each covenant and agreement
to
be performed by Borrower on or before the Loan Funding Date pursuant to this
Agreement, any other Loan Document within the time specified.
(c) Other
Conditions.
The
conditions to each disbursement described in Section 7.2 hereof shall be
satisfied.
(d) Due
Execution and Recording of Loan Documents.
Borrower
shall have delivered to Lender evidence, in form satisfactory to Lender,
that
the Loan Documents have each been duly executed and constitute valid, binding
documents, enforceable in accordance with their respective terms and have
been
filed or recorded, as appropriate, in all proper offices.
(e) Mortgagee
Title Policy.
Borrower
shall have furnished Lender with the Mortgagee Title Policy.
(f) Insurance.
Borrower
shall have obtained the insurance and delivered the policies and certificates
to
Lender as required by subsection 2.4 of the Security Instrument.
(g) Project
Budget.
Lender
shall have approved the Project Budget and all changes thereto.
14
(h) Final
Plans and Specifications.
Lender
shall have approved the final Plans and Specifications.
(i) Construction
Contract and Other Construction Documents.
Lender
shall have approved the Construction Contract and all other Construction
Documents and all changes to any thereof.
(j) Construction
Schedule.
Lender
shall have approved the Construction Schedule and all changes
thereto.
(k) Contractor's
Consent, Agreement and Certification.
Borrower
shall have furnished Lender with the executed Contractor's Consent, Agreement
and Certification.
(l) Architect's
Consent, Agreement and Certification.
Borrower
shall have furnished Lender with the executed Architect's Consent, Agreement
and
Certification.
(m) Intentionally
Omitted.
(n) Appraisal.
Subject
to Section 4.1(p) above, Borrower shall have furnished Lender or paid Lender's
cost of acquiring an MAI appraisal of the Property and the proposed Improvements
by a licensed appraiser satisfactory to Lender, such appraisal to be in the
form
and amount satisfactory to Lender.
(o) Survey.
Borrower
shall have furnished to Lender a certified plat of survey of the Property
made
by a licensed surveyor or civil engineer satisfactory to Lender meeting the
requirements contained in the Pre-Closing Document List furnished Borrower
by
Lender.
(p) Zoning
and Compliance With Laws.
Borrower
shall have delivered to Lender evidence, in form satisfactory to Lender,
that
the Property are zoned for the use for which the proposed Improvements are
designed and are otherwise in compliance with all applicable Governmental
Requirements, including, if applicable, all provisions of environmental
statutes.
(q) Utilities.
Borrower
shall have furnished Lender with evidence satisfactory to Lender that all
utilities services (including such utilities as are necessary to secure a
certificate of occupancy or equivalent) will in a timely manner be supplied
to
the Property upon completion of construction, including commitment letters
from
the agencies or entities supplying such services.
(r) Permits.
Borrower
shall have furnished Lender (A) copies of the building permits and any other
permits, licenses or certificates which are required in connection with
construction of the Improvements in accordance with the Plans and
Specifications, issued by the appropriate Governmental Authorities with
jurisdiction over the Property, and (B) a certificate by Borrower that no
proceedings of any kind are pending or threatened by any person, firm,
corporation or public agency with respect to the revocation or suspension
of any
permits, licenses or certificates.
15
(s) Soils
Report.
Borrower
shall have furnished Lender a soils report, prepared by a licensed soil
engineer, showing that the condition of the soil of the land is adequate
to
support the Improvements which soils report shall have been approved by
Lender.
(t) Management
Agreement.
Lender
shall have received and approved the Management Agreement. All modifications
and
amendments to the Management Agreement or any termination of the Management
Agreement must be approved by Lender; provided, however, so long as no Event
of
Default exists, Borrower may extend the term of the Management Agreement
without
Lender’s consent.
(u) Subordination
of Management Agreement.
Borrower
shall have furnished Lender with the executed Subordination of Management
Agreement.
(v) Tax
Service.
If
required by Lender, Borrower shall have furnished Lender a real estate tax
reporting service contract in form satisfactory to Lender by which Lender
shall
receive periodic notices of all taxes, assessments and bonds encumbering
the
Property.
(w) Other
Documents.
Borrower
shall have delivered to Lender such other documents and certificates as Lender
or Lender's counsel may reasonably request.
(x) Commitment
Fee.
Borrower
shall have paid to Lender the loan commitment fee in the sum of
$114,240.
(y) Borrower's
Equity.
Borrower
shall have applied Borrower's Equity to pay certain Project Costs included
in
the Project Budget approved by Lender, and Borrower shall have furnished
Lender
with a schedule showing the payment of such funds for Project Costs and evidence
of such payment.
ARTICLE
VII.
METHOD
AND
CONDITIONS OF DISBURSEMENTS
OF
LOAN
PROCEEDS
7.1
Disbursement
Procedure.
Disbursement of the proceeds of the Loan shall be made by Lender to Borrower
in
accordance with the following procedure:
(a) Certificate
for Payment.
At such
time as Borrower shall desire to obtain, subject to the requirements contained
herein, a disbursement of any portion of the Loan proceeds, Borrower shall
complete, execute and deliver to Lender a request for an advance in the form
of
the Certificate for Payment approved by the Lender (Lender hereby approving
AIA
Form G-702).
16
(b) Evidence
of Progress of Construction.
Each
Certificate for Payment shall, upon the request of Lender, be accompanied
by
evidence in form and content satisfactory to Lender, including but not limited
to certificates and affidavits of Borrower, Architect and/or Contractor or
such
other person as Lender may require, showing:
(i) The
value
of that portion of the Improvements completed at that time;
(ii) That
all
outstanding claims for labor, materials and fixtures have been paid or will
be
paid from the proceeds of such disbursement;
(iii) That
there
are no liens outstanding against the Property, except for Lender's lien and
security interest evidenced by the Security Instrument, other than inchoate
liens for property taxes not yet due;
(iv) That
Borrower has complied with all of Borrower's obligations, as of the date
thereof, under the Loan Documents;
(v) That
all
construction prior to the date of the request for an advance has been performed
and completed in accordance with the Plans and Specifications;
(vi) That
all
funds previously disbursed by Lender have been applied directly to the payment
of Project Costs, as set forth in the Project Budget or otherwise as Lender
shall have approved in writing;
(vii) That
all
change orders in any amount whatsoever shall have been approved in writing
by
Lender, and, if required by Lender, by any surety and any Guarantor, except
as
provided in Section 5.3;
(viii) In
reasonable detail but only if applicable, all tangible personal property
installed in or appurtenant to the Improvements, but not considered to be
fixtures, and the value thereof;
(ix) That
the
amount of undisbursed Loan proceeds is sufficient to pay the cost of completing
the Improvements in accordance with the Plans and Specifications;
(x) That
the
location of the Improvements will not encroach upon any adjoining properties
or
interfere with any easement;
17
(xi) That
all
of Borrower's representations and warranties contained herein or in any other
Loan Document remain true and correct in all material respects as of the
date of
such advance;
(xii) That
Borrower has performed each covenant and agreement to be performed by Borrower
pursuant to this Agreement or any other Loan Document within the time
specified;
(xiii) That,
if
payments are to be made on account of materials or equipment not incorporated
in
the work but delivered and suitably stored on the Property, or at some other
location agreed upon in writing, such payments shall be conditioned upon
submission to Lender by Borrower of bills of sale or such other procedures
satisfactory to Lender to establish Borrower's title to, and Lender's lien
upon,
such materials or equipment or otherwise protect Lender's interest;
and
(xiv) That
neither the Property nor the Improvements are the subject of any litigation
which adversely affects or could adversely affect the title thereof and/or
the
validity or priority of the Security Instrument or the right of the Borrower
to
construct the Improvements;
and
shall
be accompanied by copies of all bills or statements for expenses for which
the
advance is requested.
(c) Certificate
of Inspecting Architect.
Each
Certificate for Payment shall be accompanied by written certification from
Lender's Inspecting Architect or inspection engineer indicating the status
of
construction, compliance with the Plans and Specifications, and approval
of the
disbursement request. Borrower shall pay all reasonable fees and expenses
of
such architect or engineer for monthly inspections, or more frequently if
such
inspections result from more frequent disbursement requests from
Borrower.
(d) Continuation
of Title Insurance Coverage.
Each
Certificate for Payment shall, at the request of Lender, be accompanied by
a
satisfactory down date endorsement to the previously delivered Mortgagee
Title
Policy which endorsement shall (i) extend the effective date of the Mortgagee
Title Policy to the date of advancement and show that since the effective
date
of said Policy (or the effective date of the last such endorsement, if any)
there has been no change in the status of the title to the Property and no
new
encumbrance thereon and (ii) state the amount of coverage then existing under
the Mortgagee Title Policy which shall be the total of all disbursements
of the
Loan including the disbursement which is made concurrently with the down
date
endorsement.
7.2. Conditions
to Each Disbursement.
At no
time and in no event shall Lender be obligated to disburse funds:
18
(a) In
excess
of the amount recommended by the Lender's Inspecting Architect;
(b) If
any
Event of Default shall have occurred;
(c) If
Lender
in its reasonable discretion is not satisfied that the construction of the
Improvements will be completed on or before the date specified
herein;
(d) If
the
Loan is not “in balance” as provided in Section 7.3 following; or
(e) If
the
Property shall have been damaged by fire or other casualty and Lender shall
not
have received insurance proceeds sufficient in the sole judgment of Lender
to
effect the restoration of the Improvements in accordance with Plans and
Specifications and to permit the completion of the Improvements on or before
the
Completion Date set forth herein.
7.3. Balancing
of Loan and Borrower's Deposit.
(a) The
Loan
shall be deemed to be “in balance” only at such time as Borrower has paid a
sufficient amount of Project Costs from its own funds so that the undisbursed
portion of the Loan, together with projected Project Revenues as set forth
in
the Project Budget, are sufficient to pay all Project Costs until maturity
of
the Loan. In determining whether the Loan is in balance, Lender shall determine,
among other things, whether the amounts allocated for each category of Project
Costs in the Project Budget are sufficient and whether the timing of receipts
and expenditures set forth in the Forecast are realistic and
achievable.
(b) Within
ten
(10) days after written notice from Lender to Borrower that the Loan is not
in
balance, Borrower shall deposit with Lender sufficient funds (herein called
“Borrower's
Deposit”)
with
Lender to bring the Loan in balance. The Borrower's Deposit will be held
by
Lender in a non-interest bearing account collaterally assigned to secure
the
Loan and will be disbursed by Lender to pay Project Costs pursuant to this
Agreement, prior to the disbursement of any additional proceeds of the Loan.
Upon the occurrence of an Event of Default under this Agreement, Lender may
apply Borrower's Deposit against the unpaid indebtedness evidenced by the
Note,
principal, accrued interest or attorney's fees, in such order as Lender may
determine. Upon the payment in full of the Loan and all other obligations
of
Borrower to Lender hereunder, Lender shall return the remaining balance of
Borrower's Deposit, if any, to Borrower.
(c) Borrower
agrees to use all Project Revenues for payment of Project Costs and to provide
Lender with satisfactory evidence of such payment. Project Revenues may not
be
distributed to partners or shareholders of Borrower, or used for anything
other
than Project Costs, prior to payment in full of the Loan.
19
(d) Borrower
will provide Lender with draw request documents, satisfactory title endorsements
and other information required hereunder with respect to funds used to pay
Project Costs under subsections (b) and (c) above, on a monthly basis, as
if
such funds were disbursements of the Loan.
7.4. Retainage
and Final Disbursement.
Ten
percent (10%) of each Loan disbursement for costs of construction of the
Improvements shall be withheld by Lender, which ten percent (10%) shall be
disbursed only upon compliance with the following requirements (in addition
to
the requirements for all other disbursements):
(a) Receipt
by
Lender of satisfactory evidence of the substantial completion of the
Improvements in accordance with Plans and Specifications and approval of
such
completion by Governmental Authorities having jurisdiction and approval of
such
completion by the representative of Lender;
(b) Receipt
by
Lender of a satisfactory “as-built” blueprint or survey reflecting the location
of the Improvements on the Land in accordance with the Plans and
Specifications;
(c) Receipt
by
Lender of (i) lien waivers or lien subordinations or releases from all
contractors, subcontractors, laborers and materialmen employed in furnishing
labor or materials in connection with the construction of the Improvements
and
(ii) an endorsement to the Mortgagee Title Policy covering the Property
previously issued to Lender removing any exception with respect to liens
arising
by reason of unpaid bills or claims for work performed or materials furnished
in
connection with the Improvements;
and
(d) Receipt
by
Lender of such other certificates, assurances and opinions as Lender shall
reasonably require.
7.5.
Notice,
Frequency and Place of Disbursements.
The
Certificate for Payment shall be submitted to Lender at least ten (10) business
days prior to the date of the requested advance. Disbursements shall be made
no
more frequently than monthly and in amounts of not less than Twenty Five
Thousand Dollars ($25,000). All disbursements shall be made at the principal
office of Lender at Dallas, Texas or at such other place as Lender may
designate.
7.6. Deposit
of Funds Advanced.
Borrower
will immediately deposit all Loan proceeds advanced by Lender in a separate
and
exclusive account, to be withdrawn and used solely for the purposes permitted
under the provisions of this Agreement, and will promptly furnish Lender
with
evidence thereof.
7.7. Advances
to Contractor.
After an
Event of Default, Lender may make any or all advances of the Loan directly
to
Contractor for deposit in an appropriately designated special bank account
and
the execution of this Agreement by the Borrower shall, and hereby does,
constitute an irrevocable direction and authorization to so advance the funds.
No further direction or authorization from Borrower shall be necessary to
warrant such direct advances to Contractor and all such advances shall satisfy
pro tanto
the
obligations of Lender hereunder and shall be secured by the Security Instrument
and the other Loan Documents as fully as if made to Borrower, regardless
of the
disposition thereof by Contractor.
20
7.8. Advances
Do Not Constitute a Waiver.
No
advance of Loan proceeds hereunder shall constitute a waiver of any of the
conditions of Lender's obligation to make further advances nor, in the event
Borrower is unable to satisfy any such condition, shall any such advance
have
the effect of precluding Lender from thereafter declaring such inability
to be
an Event of Default hereunder.
7.9 Interest
Reserve Account.
The
amount of the Loan was determined on the basis of the Project Budget prepared
by
Borrower and submitted to Lender, setting forth, among other things, the
accrued
interest on the disbursed principal of the Note during the term of the Note,
estimated not to exceed, after the application of Project Revenues, if any,
as
provided in Section 7.10 hereof the amount set forth on the Project Budget
(hereinafter called the “Interest
Reserve Account”).
Subject to the conditions set forth in this Article VII, Lender will disburse
on
the first day of each month a portion of the Loan sufficient to pay accrued
interest then due and payable on the Note, and the amount thereof shall increase
the principal of the Note and shall reduce the balance of the Interest Reserve
Account. Under no circumstances shall the undisbursed Loan be disbursed to
pay
accrued interest thereon after depletion of the balance of the Interest Reserve
Account. In lieu of disbursing Loan proceeds to Borrower for payment of accrued
interest thereon, Lender may handle such disbursement and payment by making
appropriate entries on the books and records of Lender, whereupon a statement
summarizing such entries shall be furnished to Borrower.
7.10. Advances
of Interest.
Notwithstanding anything to the contrary contained in Section 7.9 or elsewhere
in this Agreement, at such time as the Interest Reserve Account has been
fully
funded, Lender shall have no obligation to disburse any portion of the Loan
to
pay accrued interest then due and payable on the Note. At such time as the
Interest Reserve Account has been fully funded Borrower hereby agrees to
apply
Project Revenues, to the extent available after application of the same to
the
normal operating expenses of the Property, to the payment of accrued interest
then due and payable on the Note. Borrower hereby agrees to apply all such
rents, issues and profits of the Property to payment of accrued interest
and any
installment of principal due and payable on the Note to the full extent that
such rents, issues and profits are not exhausted by payment of normal operating
expenses of the Property, regardless of the existence of any remaining balance
of the Interest Reserve Account.
7.11. Lease-Up
Reserve.
The
amount of the Loan was determined on the basis of the Borrower's projection
of
interest on the Loan and expenses of the Project anticipated after the
construction phase (the “Lease-Up Expenses”), for which Project Revenues will
not be sufficient to pay in full, which Lease-Up Expenses are estimated not
to
exceed $696,338 (such amount being referred to as the “Lease-Up Reserve”).
Borrower hereby agrees to apply Project Revenues to the payment of Lease-Up
Expenses, regardless of the existence of any remaining balance of the Lease-Up
Reserve. Borrower may only request a disbursement from the Lease-Up Reserve
to
the extent that Project Revenues are insufficient to pay Lease-Up Expenses.
At
its option, Lender may disburse on the first day of a calendar month a portion
of the Loan sufficient to pay accrued interest then due and payable on the
Note
after the construction phase, and the amount thereof shall increase the
principal of the Note and shall reduce the balance of the Lease-Up Reserve.
In
lieu of disbursing Loan proceeds to Borrower for payment of accrued interest
after the construction phase, Lender may handle such disbursement and payment
by
making appropriate entries on the books and records of Lender, whereupon
a
statement summarizing such entries shall be furnished to Borrower.
21
ARTICLE
VIII.
DEFAULTS
8.1. Event
of Default.
An
“Event
of Default”
shall
be
deemed to have occurred hereunder if:
(a) Default
Under Security
Instrument.
An Event
of Default occurs under the Security Instrument; or
(b) Failure
to Obtain an Advance.
Borrower
is unable to satisfy any condition of its right to the receipt of any advance
hereunder for a period in excess of fifteen (15) days; or
(c) Litigation.
Any suit
shall be filed against Borrower or Guarantor, which if adversely determined,
would substantially impair the ability of Borrower or Guarantor to perform
each
and every one of its obligations under and by virtue of the Loan Documents;
or
(d) Levy
Upon
the Property.
A levy
be made under any process on, or a receiver be appointed for, the Property
or
any other property of Borrower; or
(e) Noncompliance
with Laws.
The
Improvements are not constructed in compliance with all Governmental
Requirements and regulations of appropriate supervising boards of fire
underwriters and similar agencies; or
(f) Deviation
from Plans and Specifications.
There is
any substantial deviation in the work of construction from the Plans and
Specifications without the prior written approval of Lender, or there is
incorporated in the Improvements any substantially defective workmanship
or
materials, which said deviation or defect is not commenced to be corrected
within ten (10) days after written notice thereof and such correction diligently
continued to its conclusion; or
22
(g) Cessation
of Work.
Once
commenced, there occurs cessation of the work of construction prior to
completion of the Improvements for a continuous period of ten (10) days or
more
for causes other than those beyond the control of Borrower or consented to
in
writing by Lender; or
(h) Injunction.
Any
person obtains an order or decree in any court of competent jurisdiction
enjoining the construction of the Improvements or enjoining or prohibiting
Borrower or Lender from performing this Agreement, and such proceedings are
not
properly contested or such decree is not vacated within sixty (60) days after
the granting thereof; or
(i) Lapse
of Permit.
Borrower
neglects, fails, or refuses to keep in full force and effect any required
material permit or approval with respect to the construction of the
Improvements.
ARTICLE
IX.
REMEDIES
9.1 Remedies.
Upon the
occurrence of any one or more of the events of default set out in Article
VIII
hereof, Lender shall at its option be entitled to proceed to exercise any
of the
following remedies:
(a) Borrower
agrees that the occurrence of such Event of Default shall constitute a default
under each of the Loan Documents, thereby entitling Lender (i) to exercise
any
of the various remedies therein provided including the acceleration of the
indebtedness evidenced by the Note and the foreclosure of the Security
Instrument and (ii) cumulatively to exercise all other rights, options and
privileges provided by law.
(b) Lender
shall have the right:
(i) to
take
whatever action is necessary or appropriate by the use of legal proceedings
or
otherwise (a) to cause Borrower to vacate the Property and (b) to take
possession of the Property;
(ii) to
perform
or cause to be performed any and all work and labor necessary to complete
the
Improvements in accordance with Plans and Specifications;
(iii) to
employ
security watchmen to protect the Property; and
(iv) to
disburse that portion of the Loan proceeds not previously disbursed (including
any retainage) and the Borrower's Deposit to the extent necessary to complete
construction of the Improvements in accordance with the Plans and
Specifications, and if the completion requires a larger sum than the remaining
undisbursed portion of the Loan, to disburse such additional funds, all of
which
funds so disbursed by Lender shall be deemed to have been disbursed to Borrower
and shall be secured by the Security Instrument and the other Loan Documents,
and to take all actions necessary in connection therewith, including but
not
limited to the following: to use any funds of Borrower including the Borrower's
Deposit and any balance which may be held in escrow and any Loan or other
funds
which may remain unadvanced hereunder for the purpose of completing the
Improvements in the manner called for by the Plans and Specifications; to
make
such additions and changes and corrections in the Plans and Specifications
which
shall be necessary or desirable to complete the Improvements in substantially
the manner contemplated by the Plans and Specifications; to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for said purposes; to pay, settle or compromise all existing or
future
bills and claims which are or may be liens against said Property or as may
be
necessary or desirable for the completion of the Improvements or the clearance
of title to the Property; to execute all applications and certificates in
the
name of Borrower which may be required by any construction contract and to
do
any and every act with respect to the construction of the Improvements which
Borrower may do in its own behalf. In accordance therewith Borrower hereby
assigns and quitclaims to Lender upon an Event of Default, all sums to be
advanced hereunder including retainage and the Borrower's Deposit and any
sums
in escrow conditioned upon the use of said sums, if any, for the completion
of
the Improvements. Lender shall have no obligation to undertake any of the
foregoing actions and if Lender shall do so, it shall have no liability to
Borrower for the sufficiency or adequacy of any such actions taken by
Lender.
23
(c) Lender
may
declare all indebtedness secured by the Security Instrument immediately due
and
payable, and Lender shall be relieved from all obligations to Borrower under
this Agreement.
(d) Lender
shall have the right at any time and from time to time, without notice to
Borrower (any such notice being expressly waived), to set-off and apply any
and
all deposits (general or special, time or demand, provisional or final) at
any
time held, and any other indebtedness at any time owing by Lender to or for
the
credit or the account of Borrower, against any and all of the indebtedness
of
Borrower evidenced by the Note or this Agreement and/or secured by the Security
Instrument, irrespective of whether or not Lender shall have made any demand
under this Agreement or the Note and although such indebtedness may be
unmatured. Lender agrees to notify Borrower promptly after any such set-off
and
application, provided that the failure to give such notice shall not affect
the
validity of such set-off and application. The rights of Lender under this
subsection are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have under the Note
or the
other Loan Documents or otherwise.
24
ARTICLE
X.
GENERAL
CONDITIONS.
10.1. Rights
of Third Parties.
All
conditions of the obligations of Lender hereunder, including the obligation
to
make advances, are imposed solely and exclusively for the benefit of Lender
and
its successors and assigns and no other person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled
to
assume that Lender will make advances or refuse to make advances in the absence
of strict compliance with any or all thereof and no other person shall, under
any circumstances, be deemed to be a beneficiary of such conditions, any
and all
of which may be freely waived in whole or in part by Lender at any time if
in
its sole discretion it deems it desirable to do so. In particular, Lender
makes
no representations and assumes no duties or obligations as to third parties
concerning the quality of the construction by Borrower of the Improvements
or
the absence therefrom of defects. Failure to inspect the construction of
the
Improvements or any part thereof or inspection not followed by notice of
default
shall not constitute a waiver of any of Lender's rights hereunder nor shall
it
constitute a representation that there has been compliance with the Plans
and
Specifications or that the construction of the Improvements is free from
defective materials or workmanship. In this connection Borrower agrees to
and
shall indemnify Lender from any liability, claims or losses resulting from
the
disbursement of the Loan proceeds or from the condition of the Property whether
related to the quality of construction or otherwise and whether arising during
or after the term of the Loan. This provision shall survive the repayment
of the
Loan and shall continue in full force and effect so long as the possibility
of
such liability, claims or losses exists.
10.2. Waivers.
No
waiver of or consent to any departure from any provision hereof shall be
effective unless in writing and signed by Lender and shall be effective only
in
the specific instance for the purpose for which given and to the extent
specified in such writing. No advance of Loan proceeds hereunder shall
constitute a waiver of any of the conditions to Lender's obligation to make
further advances nor, in the event Borrower fails to satisfy any such condition,
shall any advance have the effect of precluding Lender from thereafter declaring
such failure to be an Event of Default. No waiver of any default hereunder
shall
affect or constitute a waiver of any later default. No delay or omission
of
Lender to exercise any right or remedy upon the happening of any Event of
Default shall impair any such right or remedy or be deemed to be a waiver
of
such Event of Default.
10.3. Evidence
of Satisfaction of Conditions.
Any
condition of this Agreement which requires the submission of evidence of
the
existence or nonexistence of a specified fact or facts implies as a condition
the existence or nonexistence, as the case may be, of such fact or facts,
and
Lender shall, at all times, be free independently to establish to its
satisfaction and in its absolute discretion such existence or
nonexistence.
10.4. Assignment
by Borrower.
Anything
to the contrary herein notwithstanding, Borrower shall have no right to assign
its rights hereunder or the proceeds of the Loan without the written consent
of
Lender and any such assignment or purported assignment shall, at Lender's
option, relieve Lender from all further obligations hereunder and shall
constitute a default under this Agreement.
25
10.5. Successors
and Assigns Included in Parties.
Whenever
in this Agreement one of the parties hereto is named or referred to, the
heirs,
legal representatives, successors and assigns of such party shall be included
and all covenants and agreements contained in this Agreement by or on behalf
of
the Borrower or by or on behalf of Lender shall bind and inure to the benefit
of
their respective heirs, legal representatives, successors and assigns, whether
so expressed or not.
10.6. Exercise
of Rights and Remedies.
All
rights and remedies of Lender hereunder or under the Note or under the Security
Instrument or under any other Loan Document shall be separate, distinct and
cumulative and no single, partial or full exercise of any right or remedy
shall
exhaust the same or preclude Lender from thereafter exercising in full or
in
part the same right or remedy or from concurrently or thereafter exercising
any
other right or remedy which Lender may have hereunder, under the Note or
Security Instrument or any other Loan Document, or at law or in equity, and
each
and every such right and remedy may be exercised at any time or from time
to
time.
10.7. Headings.
The
headings of the sections and subsections of this Agreement are for the
convenience of reference only, are not to be considered a part hereof and
shall
not limit or otherwise affect any of the terms hereof.
10.8. Applicable
Law;
Jurisdiction; Waiver of Jury Trial.
Sections
5.30 - 5.32 of the Security Instrument are incorporated herein by
reference.
10.9. Usury.
Section
8 of the Note is incorporated herein by reference.
10.10.
Invalid
Provisions to Affect No Others.
If
fulfillment of any provision hereof or any transaction related hereto at
the
time performance of such provisions shall be due, shall involve transcending
the
limit of validity prescribed by law, then ipso facto,
the
obligation to be fulfilled shall be reduced to the limit of such validity;
and
if any clause or provisions herein contained operates or would prospectively
operate to invalidate this Agreement in whole or in part, then such clause
or
provision only shall be held for naught, as though not herein contained,
and the
remainder of this Agreement shall remain operative and in full force and
effect.
10.11.
Number
and Gender.
Whenever
the singular or plural number, masculine or feminine or neuter gender is
used
herein, it shall equally include the other.
10.12.
Amendments.
Neither
this Agreement nor any provision hereof may be changed, waived, discharged
or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination
is
sought.
26
10.13. Notice.
Any
notice or communication required or permitted hereunder shall be given in
writing in the manner set forth in the Security Instrument.
10.14. Legal
Proceedings.
Lender
shall have the right to commence, appear in, or to defend any action or
proceeding purporting to affect the rights or duties of the parties hereunder
or
the payment of any funds, and in connection therewith pay necessary expenses,
employ counsel and pay its reasonable fees. Any such expenditures shall be
considered additional advances hereunder and shall bear interest at the rate
payable under the Note for installments of principal and/or interest after
maturity shall be secured by the Loan Documents and shall be paid by Borrower
to
Lender upon demand.
10.15. Assignment
by Lender.
Lender
shall have the right to assign any portion of this Agreement and/or the Loan
and
to disseminate to such assignee any information it has pertaining to the
Loan,
including without limitation, complete and current credit information on
Borrower, any of its principals and any Guarantor. In the event of such an
assignment, Borrower will agree to such modifications to this Agreement as
will
facilitate such assignment, provided that such modifications will not materially
add to the obligations of Borrower. It is understood that any assignment
by
Lender will not result in additional cash expense to Borrower. Neither the
shareholders, nor the trustees of a real estate investment trust assignee
shall
be personally liable for the obligations of such trust and Borrower will
agree
to look solely to the trust property for the payment of any claim
hereunder.
10.16. Lender
Not a Joint Venturer.
Notwithstanding anything to the contrary herein contained, Lender, by entering
into this Agreement or by any action taken pursuant hereto, will not be deemed
a
partner or joint venturer with Borrower, and Borrower will indemnify and
hold
Lender harmless from any and all damages resulting from such a construction
of
the parties and their relationship.
10.17. Survival
of Covenants.
All
covenants of either party contained herein shall continue and survive until
the
Loan has been fully paid and discharged.
10.18. Time
Is
of the Essence.
Time is
of the essence of this Agreement.
10.19. Loan
Participation.
Borrower
acknowledges and agrees that Lender may, from time to time, sell or offer
to
sell interests in the Loan and Loan Documents to one or more participants.
Borrower authorizes Lender to disseminate to such participant or prospective
participant, any information it has pertaining to the Loan, including without
limitation, complete and current credit information on Borrower, any of its
principals and Guarantor. Upon request, Borrower shall execute and deliver
new
or replacement promissory notes to Lender and the assignee of Lender evidencing
their respective prorata share of the Loan.
10.20. USA
Patriot Act.
Lender
hereby notifies Borrower that pursuant to the requirements of the USA Patriot
Act, Lender is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and
other
information that will allow Lender to identify Borrower in accordance with
the
USA Patriot Act.
27
10.21. Exhibits.
All
Exhibits attached to this Agreement are hereby incorporated by reference
and
made a part of this Agreement for all purposes.
10.22. Confidential
Information. During the term of the Loan, Lender, its agents or employees
may encounter individually identifiable healthcare information or
other
confidential
information relating to the residents at the Facility or the CCRC Property
(collectively, the "Confidential
Information").
Unless
otherwise required by law, Lender, its agents and employees shall not disclose,
compile, aggregate, remove from the Facility, the Improvements or record
in any
manner any Confidential Information, and shall not cause Borrower, any Property
Related Person, the Facility, the Improvements or the CCRC Property to violate
any laws, regulations or ordinances intended to protect the privacy rights
of
the residents at the Property, including, without limitation, HIPAA or its
implementing regulations.
IN
WITNESS
WHEREOF, Borrower and Lender have hereunto caused these presents to be executed
on the date first above written.
REMAINDER
OF PAGE INTENTIONALLY BLANK
SIGNATURE
PAGES FOLLOW
28
SIGNATURE PAGE OF BORROWER TO
CONSTRUCTION
LOAN AGREEMENT
ARC
BRANDYWINE, L.P., a Delaware limited
partnership
|
||
|
|
|
By: | ARC
Brandywine GP, LLC, a Tennessee
limited
liability company, its general partner
|
|
By:
Name:
Title:
|
SIGNATURE
PAGE OF LENDER TO
CONSTRUCTION
LOAN AGREEMENT
GUARANTY BANK, a federal savings bank | ||
|
|
|
By: | ||
Name:
Title:
|
EXHIBITS
TO
EXHIBIT
A
|
-
|
Land
|
EXHIBIT
B
|
-
|
Project
Budget
|
EXHIBIT
C
|
-
|
Healthcare
Rider
|
EXHIBIT
D
|
-
|
CCRC
Property
|
EXHIBIT
E
|
-
|
Site
Plan
|
EXHIBIT
A
LEGAL
DESCRIPTION FOR THE
HEALTHCARE EXPANSION
Commercial
Unit “3” as defined in the Amended and Restated Declaration of Condominium for
Freedom Village II at Brandywine Condominium of record in Record Book 6463,
page1155, records of Xxxxxxx County, Pennsylvania, being a proposed expansion
of
the health care facility comprising Commercial Unit “1” as defined in said
Declaration. Commercial Unit “3” is to be constructed upon the following
described land:
ALL
THAT CERTAIN
piece of
ground situated in the Township of West Brandywine, County of Xxxxxxx,
Commonwealth of Pennsylvania being a portion of Freedom Village at Brandywine
and shown on a "Condominium Plat of Freedom Village at Brandywine", prepared
by
Xxxxxxxxxx Engineering Associates Nashville, Tennessee, dated March 30, 2005
and
being a more fully described as follows:
BEGINNING
at an
interior point in the lands of the now or late Freedom Village at Brandywine
said point being the easterly most point of this herein described piece of
ground and being measures the following two (2) courses and distances from
a
spike found in the bed of Caln Meeting House road (T-413) along the extension
of
the line common to the lands of said Freedom Village at Brandywine to the
west
and the lands of the now or late Xxxxxxx X. Conquest to the east:
(1) |
along
said common line of said Freedom Village at Brandywine and said
Conquest,
said line being the dividing line between East Brandywine Township
and
West Brandywine Township, South 00 degrees 21 minutes 14 seconds
West
361.08 feet;
|
(2) |
over
the lands of said Freedom Village at Brandywine, North 89 degrees
38
minutes 46 seconds East 97.08 feet;
|
thence
from the point of beginning over the lands of said Freedom Village at Brandywine
the following six (6) courses and distances:
(1) |
South
34 degrees 08 minutes 56 seconds West 204.17 feet to a
point;
|
(2) |
North
55 degrees 51 minutes 04 seconds West 230.71 feet to the
point;
|
(3) |
North
34 degrees 08 minutes 56 seconds East 81.17 feet to a
point;
|
(4) |
South
55 degrees 51 minutes 04 seconds East 52.83 feet to a
point;
|
(5) |
North
34 degrees 08 minutes 56 seconds East 122.75 feet to a point;
|
(6) |
partly
along the exterior wall of an existing building, South 55 degrees
55
minutes 51 seconds East 177.88 feet to a point and place of beginning.
|
CONTAINING:
40,584
square feet (0.932 acres) of land be the same, more or less.
1
EXHIBIT
B
|
||||||||||||||||||||||||||||
PROJECT
BUDGET
|
||||||||||||||||||||||||||||
FVB
- AL Expansion
|
||||||||||||||||||||||||||||
Brandywine,
PA
|
||||||||||||||||||||||||||||
55,800
S.F.
|
||||||||||||||||||||||||||||
57
Units
|
||||||||||||||||||||||||||||
|
Equity/
|
Loan
|
|
|||||||||||||||||||||||||
Category
|
Cost
|
$
|
/Unit
|
$
|
/PSF
|
Exposure
|
Budget
|
$
|
/Unit
|
$
|
/PSF
|
|||||||||||||||||
Land
|
$
|
0
|
$
|
0
|
|
$
|
0.00
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0.00
|
|||||||||||||
Construction:
|
|
|
|
|
|
|
||||||||||||||||||||||
Hard
Costs
|
$
|
8,775,821
|
$
|
153,962
|
$
|
157.27
|
$
|
0
|
$
|
8,775,821
|
$
|
153,962
|
$
|
157.27
|
||||||||||||||
FF&E
|
$
|
400,000
|
$
|
7,018
|
$
|
7.17
|
$
|
0
|
$
|
400,000
|
$
|
7,018
|
$
|
7.17
|
||||||||||||||
Hard
Cost Contingency
|
$
|
925,000
|
$
|
16,228
|
$
|
16.58
|
$
|
0
|
$
|
925,000
|
$
|
16,228
|
$
|
16.58
|
||||||||||||||
Sitework
|
$
|
0
|
$
|
0
|
$
|
0.00
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0.00
|
||||||||||||||
Sub-Total
Construction
|
$
|
10,100,821
|
$
|
177,207
|
$
|
181.02
|
$
|
0
|
$
|
10,100,821
|
$
|
177,207
|
$
|
181.02
|
||||||||||||||
Soft
Cost:
|
||||||||||||||||||||||||||||
Financing
Costs
|
$
|
110,000
|
$
|
1,930
|
$
|
1.97
|
$
|
4,240
|
$
|
105,760
|
$
|
1,855
|
$
|
1.90
|
||||||||||||||
Permits
& Fees
|
$
|
0
|
$
|
0
|
$
|
0.00
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0.00
|
||||||||||||||
Developer
Fees
|
$
|
0
|
$
|
0
|
$
|
0.00
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0.00
|
||||||||||||||
Architecture/Engineering
|
$
|
610,000
|
$
|
10,702
|
$
|
10.93
|
$
|
433,584
|
$
|
176,416
|
$
|
3,095
|
$
|
3.16
|
||||||||||||||
Pre
Opening/Mrktg
|
$
|
115,000
|
$
|
2,018
|
$
|
2.06
|
$
|
0
|
$
|
115,000
|
$
|
2,018
|
$
|
2.06
|
||||||||||||||
Taxes
& Insurance
|
$
|
0
|
$
|
0
|
$
|
0.00
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0.00
|
||||||||||||||
Lease
Up Reserve (3mos)
|
$
|
0
|
$
|
0
|
$
|
0.00
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0.00
|
||||||||||||||
Construction
Interest
|
$
|
225,424
|
$
|
3,955
|
$
|
4.04
|
$
|
0
|
$
|
225,424
|
$
|
3,955
|
$
|
4.04
|
||||||||||||||
Operating
Deficit Reserve
|
$
|
696,338
|
$
|
12,216
|
$
|
12.48
|
$
|
0
|
$
|
696,338
|
$
|
12,216
|
$
|
12.48
|
||||||||||||||
Total
Project Cost
|
$
|
11,857,583
|
$
|
208,028
|
$
|
212.50
|
$
|
437,824
|
$
|
11,419,759
|
$
|
200,347
|
$
|
204.66
|
||||||||||||||
Borrower's
Budget
|
$
|
11,857,583
|
$
|
208,028
|
$
|
212.50
|
$
|
437,824
|
$
|
11,419,759
|
$
|
200,347
|
$
|
204.66
|
||||||||||||||
1
EXHIBIT
C
HEALTHCARE
RIDER
THIS
HEALTHCARE RIDER (this "Rider")
is
attached to and made a part of that certain Loan Agreement (the "Loan
Agreement")
between
ARC BRANDYWINE, L.P., a Delaware limited partnership, and GUARANTY BANK.
Terms
used but not defined herein are defined in the Loan Agreement and shall have
the
meaning given such terms in the Loan Agreement.
DEFINITIONS
1.1. Defined
Terms.
As used
in this Healthcare Rider and the Loan Agreement, the following terms shall
have
the meanings shown:
“Agency”.
The
Health Care Financing Administration, the Drug Enforcement Administration,
the
Environmental Protection Agency, any other state or federal licensing or
regulatory authority (including any licensing or regulatory authority
responsible for administering or dispensing Medicaid or Medicare payments
or any
other third party payor billing policies, procedures, limitations or
restrictions), or any other public or private agency or organization, including
without limitation, any public or private accreditation agency or
organization.
“CCRC
Property”.
The
continuing care retirement community which includes the Facility as well
as the
other facilities located on the property described on Exhibit D
attached
hereto and made a part hereof.
“Deficiency
Notices”.
All
notices and other written communications from any Agency or Governmental
Authority which licenses, regulates, certifies, accredits or evaluates the
Property Related Persons, the Property or the operation of the Property by
the
Property Related Persons alleging that the Property Related Persons, the
Property or the operation of the Property by the Property Related Persons
in
whole or in part fails to comply or, if corrective action is not taken, shall
fail to comply with, any or all of the Agency's or Governmental Authority's
requirements for and conditions of licensing, regulation, certification or
accreditation by or participation in programs of the Agency or Governmental
Authority or otherwise relating to the continuous operation of all or any
portion of the Property or the programs of the Property Related Persons or
the
eligibility or entitlement of the Property Related Persons to receive
reimbursement from any Agency or Governmental Authority.
“Facility”.
The 57
unit assisted living facility located upon the Property, which is an expansion
of the healthcare facility on adjacent property.
“GAAP”.
Generally accepted accounting principles, as from time-to-time in effect
in the
United States of America, or such alternative accounting standard as may
be
acceptable to the Lender, consistently applied.
“General
Partner”
ARC
Brandywine GP, LLC, a Tennessee limited liability company.
“Healthcare
Information Laws”.
As
defined in Section 3.1(i) of this Healthcare Rider.
“HIPAA”.
As
defined in Section 3.1(i) of this Healthcare Rider.
“Licenses”.
Any and
all licenses, operating permits, franchises, and other licenses, authorizations,
certifications, permits, or approvals, other than construction permits, issued
by, or on behalf of, any Governmental Authority now existing or at any time
hereafter issued, with respect to the acquisition, construction, renovation,
expansion, leasing, ownership and/or operation of the CCRC Property,
accreditation of the CCRC Property, any and all operating licenses issued
by any
Governmental Authority, any and all pharmaceutical licenses and other licenses
related to the purchase, dispensing, storage, prescription or use of drugs,
medications, and other “controlled substances,” and any and all licenses
relating to the operation of food or beverage facilities or amenities, if
any.
“Managed
Care Plans”.
Any
health maintenance organization, preferred provider organization, individual
practice association, competitive medical plan, referral service or similar
arrangement, entity, organization, or Person.
“Management
Agreement”.
The
Management Agreement by and between Manager and the Borrower, applicable
to the
Facility, as the same may be amended from time to time.
“Manager”.
ARC
Management, LLC, a Tennessee limited liability company, and any successor
manager of the Facility approved by Lender in writing.
“Material
Adverse Change”.
As to
the specified Person, a material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of such Person
and, in
addition, as to the Borrower, any material adverse change in (i) the ability
of
the Borrower to perform its obligations under this Agreement or any of the
other
Loan Documents or (ii) the validity or enforceability of this Agreement or
any
of the other Loan Documents or the rights or remedies of the Lender hereunder
or
thereunder.
“Net
Operating Income”.
The
gross income received by Borrower from the operation of the CCRC Property
for
the calendar quarter in question, less expenses incurred and/or paid by Borrower
in connection with the operation and maintenance of the CCRC Property that
are
allocable to such period (other than management fee expenses), computed on
an
accrual basis without regard to depreciation or debt service, but otherwise
in
accordance with generally accepted accounting principles consistently applied.
Included within the expenses shall be annual capital expenditures equal to
$300
per Unit. Documentation of Net Operating Income and expenses shall be certified
by an officer of Borrower with detail satisfactory to Lender and shall be
subject to the approval of Lender.
“Operating
Agreements and Management Contracts”.
Any and
all contracts and agreements previously, now or at any time hereafter entered
into by the Property Related Persons with respect to the acquisition,
construction, renovation, expansion, ownership, operation, maintenance, use
or
management of the CCRC Property or otherwise concerning the operations and
business of the CCRC Property, including, without limitation, the Management
Agreement, any and all service and maintenance contracts, any employment
contracts, any and all management and operating agreements, any and all
consulting agreements, laboratory servicing agreements, pharmaceutical
contracts, physician, other clinician or other professional services provider
contracts, therapy referral, food and beverage service contracts, and other
contracts for the operation and maintenance of, or provision of services
to, the
CCRC Property.
“Participation
Agreements”.
Any and
all third party payor participation or reimbursement agreements now or at
any
time hereafter existing for the benefit of the Property Related Persons relating
to rights to payment or reimbursement from, and claims against, private
insurers, Managed Care Plans, employee assistance programs, Blue Cross and/or
Blue Shield, federal, state and local Governmental Authorities, including
without limitation, Medicare, Medicaid, TRICARE, VA and other third party
payors.
“Person”.
An
individual, a general or limited partnership, a limited liability company,
a
limited liability partnership, a corporation, a business trust, a joint stock
company, a trust, an unincorporated association, a joint venture, a Governmental
Authority or other entity of whatever nature.
“Pledge
Agreement”.
Collectively, the Pledge Agreements dated as of the date hereof made by
Guarantor, ARCPI Holdings, Inc., a Delaware corporation, and General Partner,
for the benefit of Lender.
“Property
Related Persons”.
Borrower, Manager and General Partner.
“Replacement
Reserve Escrow Account”.
As
defined in Section 3.1(j) of this Healthcare Rider.
“Resident
Agreements”.
Any and
all contracts and agreements executed by, or on behalf of any resident or
other
Person seeking residency or occupancy in the CCRC Property and related services
from the Property Related Person. The term Resident Agreements shall also
include any and all contracts, authorizations, agreements and/or consents
executed by, or on behalf of any patient or other Person seeking services
from
the Property Related Persons pursuant to which the Property Related Persons
provide or furnish long-term care and related services at the CCRC Property,
including the consent to treatment and assignment of the payment of benefits
by
a third party.
“Security
Agreement”.
The
Security Agreement dated as of the date hereof made by Borrower, Manager
and
General Partner for the benefit of Lender.
“Unit”.
A fully
constructed unit at the CCRC Property, for which a certificate of occupancy
has
been issued by the applicable Governmental Authority.
“Work
Inspector”.
As
defined in Section 3.1(j) of this Healthcare Rider.
Capitalized
terms not otherwise defined herein have the meaning assigned such terms in
the
Security Instrument or the Note, as the case may be.
REPRESENTATIONS
AND WARRANTIES
2.1. Representations
and Warranties of the Borrower.
To
induce the Lender to make the Loan, the Borrower hereby represents and warrants
to the Lender as of the date hereof as follows:
(a) Litigation.
With respect to the CCRC Property, there is no threatened or pending revocation,
suspension, termination, probation, restriction, limitation or non-renewal
of
any material License or any similar accreditation or approval by or from
any
organization or Governmental Authority for healthcare providers, including,
without limitation, the issuance of any provisional License or other License
with a term of less than twelve (12) months, as a consequence of any sanctions
imposed by any Governmental Authority. There is no threatened or pending
assessment of any civil or criminal penalties by any Governmental
Authority.
(b) Compliance
with Laws. No Property Related Person is in violation of any Governmental
Requirement pertaining to the operation of the CCRC Property, patient rights,
resident rights, employment practices, health standards or controls. Except
as
disclosed to the Lender prior to the date hereof, the Property Related Persons
are in compliance with all accreditation standards and requirements to which
each is subject. The Property Related Persons have obtained or applied for
all
Licenses necessary to the ownership of their property and to the conduct
of
their activities which, if not obtained, could materially adversely affect
the
ability of the Property Related Persons to conduct the activities of the
CCRC
Property, including, without limitation, as appropriate, the dispensing,
storage, prescription, disposal, and use of drugs, medications and other
“controlled substances” and the maintenance of cafeteria and other food and
beverage facilities or services. To the extent the Property Related Persons
have
applied for any required Licenses which have not yet been issued, the operation
and conduct of the CCRC Property by the Property Related Persons is nonetheless
in compliance with all Governmental Requirements. The Property Related Persons
currently have obtained all Licenses materially necessary under Governmental
Requirements for the operation of the Facility.
(c) Licenses
and Certifications. With respect to each License the Property Related
Persons possess or have applied for, (i) no material default has occurred
or is
continuing under the terms thereof, and no event has occurred which, with
the
giving of notice or the lapse of time, or both, would constitute a material
breach of any condition to the issuance, maintenance, renewal and/or continuance
thereof, (ii) the Property Related Persons have paid all fees, charges and
other
expenses to the extent due and payable with respect to, and have provided
all
information and otherwise complied with all material conditions precedent
to,
the issuance, maintenance, renewal, and continuance of such License, (iii)
none
of the Licenses are conditional, provisional, probationary or restricted
in any
material way, (iv) the Property Related Persons have not received any notice
from any Governmental Authority relating to any actual or pending suspension,
revocation, restriction, or imposition of any probationary use of such License,
nor has any License been materially amended, supplemented, rescinded,
terminated, or otherwise modified except as otherwise disclosed in writing
to,
and approved by, the Lender, (v) no Property Related Person has made any
previous assignment of any of the Licenses to any Person, except as security
for
loans and other financial accommodations, if any, which are to be paid with
the
proceeds of the Loan and are to be terminated promptly following the date
hereof, (vi) no financing statement covering any of the Licenses has been
executed by a Property Related Person or is on file in any public office,
except
for those financing statements relating to loans and other financial
accommodations, if any, which are to be paid with the proceeds of the Loan
and
are to be terminated promptly following the date hereof, and (vii) each License
has been issued for a period of at least twelve (12) months from the date
of
issuance or for such lesser time to the extent the issuance for less than
twelve
(12) months is not the consequence of any sanctions imposed by any Governmental
Authority.
(d) Certain
Payments. Neither the Borrower nor any director, officer, member, partner,
employee or agent of the Borrower acting for or on behalf of the Borrower
has
knowingly and willfully paid or caused to be paid, directly or indirectly,
in
connection with the business of the Borrower:
(i) any
bribe,
kickback or similar payment to any Governmental Authority or any agent of
any
supplier; or
(ii) any
contribution to any political party or candidate (other than personal funds
of
directors, officers, members, partners, employees or agents not reimbursed
by
their respective employers or as otherwise permitted by applicable
laws).
To
the
best of Borrower's knowledge, the above representation is true and correct
with
respect to the other Property Related Persons.
(e) Operating
Agreements and Management Contracts. The Borrower has furnished to the
Lender photocopies of all material Operating Agreements and Management Contracts
entered into with the Property Related Persons, and all amendments, supplements
and modifications thereto. With respect to each such Operating Agreement
and
Management Contract, (i) such Operating Agreement and Management Contract
is or
will be at the time of execution and delivery thereof valid and binding on
the
parties thereto and in full force and effect, (ii) no material default has
occurred or is continuing under the terms thereof, and no event has occurred
which, with the giving of notice or the lapse of time, or both, would constitute
a material default thereunder, and no party thereto has attempted or threatened
to terminate any such Operating Agreement and Management Contracts, (iii)
the
Property Related Persons have not made any previous assignment of the Operating
Agreements and Management Contracts to any Person, except as security for
loans
and other financial accommodations, if any, which are to be paid with the
proceeds of the Loan and are to be terminated promptly following the date
hereof, and (iv) no financing statement covering any of the Operating Agreements
and Management Contracts is on file in any public office, except for those
financing statements relating to loans and other financial accommodations
which
are to be paid with the proceeds of the Loan and are to be terminated promptly
following the date hereof.
(f) Participation
Agreements. The Borrower hereby represents that the CCRC Property is a
private pay retirement community and as such, no Property Related Person
has
entered into any Participation Agreement with respect to the CCRC
Property.
(g) Xxxx-Xxxxxx
Act. The Borrower has not, nor to the best of the Borrower's knowledge,
has
any prior owner of the CCRC Property during the twenty (20) year period
immediately preceding the date hereof, received any funds to finance the
construction and/or acquisition of the CCRC Property pursuant to Title VI
of the
Public Health Service Act (commonly referred to as the Xxxx-Xxxxxx Act) or
Title
XVI of the Public Health Service Act.
(h) Fraud
and Abuse. To the Borrower's knowledge, each Property Related Person, its
directors, officers and employees have not engaged in any activities which
are
in violation of Sections 1128A, 1128C or 1877 of the Social Security Act
(42
U.S.C. §§ 1320a-7a, 1320a-7c and 1395nn), the False Claims Act (31 U.S.C. § 3729
et seq.), the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. § 3801 et
seq.) or other federal or state laws and regulations, including, but not
limited
to, the following:
(i) knowingly
and willfully making or causing to be made a false statement or representation
of a material fact in any application for any benefit or payment;
(ii) knowingly
and willfully making or causing to be made a false statement or representation
of a material fact for use in determining rights to any benefit or
payment;
(iii) failing
to
disclose knowledge of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf
of
another, with intent to fraudulently secure such benefit or
payment;
(iv) knowingly
and willfully offering, paying, soliciting, or receiving any remuneration
(including any kickback, bribe or rebate), directly or indirectly, overtly
or
covertly, in cash or in kind (A) in return for referring an individual to
a
Person for the furnishing or arranging for the furnishing of any item or
service, (B) in return for purchasing, leasing or ordering, or arranging
for or
recommending, purchasing, leasing or ordering any good, facility, service
or
item; or
(v) billing
a
patient, resident or payor for health services specified in 42 U.S.C. § 1395nn
or any other similar or comparable federal or state laws, or providing such
health services to a patient or resident, upon a referral from a physician
where
such physician has a financial relationship with the Property Related Person
to
which no exception applies under each of the applicable laws.
(i) Certificate
of Need Conditions. The Borrower covenants that it has developed and operated
the CCRC Property and is providing services in a manner consistent with the
representations made in the certificate of need application filed in connection
with the CCRC Property and within the project scope and the conditions placed
on
the certificate of need, if any.
COVENANTS
AND WARRANTIES
3.1. Affirmative
Covenants of the Borrower.
The
Borrower agrees as follows:
(a) Resident
Agreements. The Borrower will submit to the Lender when requested by the
Lender, all information requested by the Lender with respect to all Resident
Agreements, excluding, however any medical information or other protected
health
information as defined in 45 CFR §160-103.
(b) Conduct
of Business and Compliance with Laws. The Borrower covenants and agrees that
it or the Property Related Persons will (i) materially comply with all
Governmental Requirements, including, without limitation, the Occupational
Safety and Health Act of 1970, regulations issued under the Omnibus Budget
Reconciliation Act of 1987, any Governmental Requirement relating to “informed
consents” and rights of patients and residents, qualifications of staff,
staffing requirements and delivery of services in a manner sufficient to
protect
the health and safety of patients and residents, (ii) maintain in full force
and
effect all Licenses necessary to the ownership and/or operation of the CCRC
Property, including, without limitation, the license to operate the CCRC
Property, Licenses and other approvals related to the storage, dispensation,
use, prescription and disposal of drugs, medications and other “controlled
substances” and, to the extent offered by the Borrower, the maintenance of
cafeteria and other food and beverage facilities or services, (iii) maintain
or
cause to be maintained the standard of care for the patients and residents
of
the CCRC Property at all times at a level necessary to ensure a level of
quality
care and services for the patients and residents of the CCRC Property no
less
than prudent industry standard for a similar facility, (iv) maintain or cause
to
be maintained a standard of care in the storage, use, transportation and
disposal of all medical equipment, medical supplies, medical products and
medical waste, of any kind and in any form, that is in accordance with, at
least, that of the prudent industry standard and in conformity with all
Governmental Requirements, (v) operate or cause to be operated the CCRC Property
in a prudent manner in material compliance with Governmental Requirements
relating thereto and cause all Licenses, permits, certificates of need, and
any
other agreements materially necessary for the use and operation of the CCRC
Property remain in effect, (vi) correct or cause to be corrected any deficiency
set forth in any Agency statement of deficiencies, the curing of which is
a
condition of continued licensure or for accreditation of the CCRC Property,
(vii) maintain or cause to be maintained sufficient inventory and equipment
of
types and quantities at the CCRC Property to enable the Property Related
Persons
to operate the CCRC Property adequately and in a manner which will enable
the
Borrower to comply with the provisions of the Loan Documents, and (viii)
maintain or cause to be maintained all deposits, including, without limitation,
deposits relating to residents, patients or Resident Agreements in accordance
with customary and prudent business practices and all Governmental
Requirements.
(c)
Insurance.
The Borrower shall ensure that all healthcare providers with whom the Property
Related Persons contract to provide services at the CCRC Property are insured
against claims arising from such services (including, without limitation,
malpractice coverage) with the same limits, if any, as applicable to the
Borrower pursuant to the Loan Documents or otherwise acceptable to the
Lender.
(d) Notices.
The Borrower shall promptly notify the Lender in writing upon obtaining
knowledge of the occurrence of:
(i) the
receipt by any Property Related Person of any notice, claim or demand from
any
Governmental Authority which alleges that a Property Related Person is in
violation of any of the terms of, or has failed to comply with any material
Governmental Requirement regulating its operation and business, including,
but
not limited to, the Health Care Financing Administration or any division
thereof, the Occupational Safety and Health Act and the Environmental Protection
Act;
(ii) the
actual, threatened or pending (A) revocation, suspension, probation,
restriction, limitation, forfeiture or refusal to renew of any material License,
or (B) the issuance or pending issuance of any material License for a period
of
less than twelve (12) months, as a consequence of sanctions imposed by any
Governmental Authority, or (C) the assessment or threatened or pending
assessment, of any civil or criminal penalties by any Governmental Authority
or
agent, or any accreditation organization;
(iii) any
action, including, but not limited to the amendment of any License, or the
issuance of any new License or certification for the CCRC Property, under
which
a Property Related Person proposes (A) to develop a new facility or service,
(B)
change any existing facility or service, or (C) to eliminate any existing
or
proposed service, which action requires the Property Related Person to seek
either a certificate of need approval or exemption from certificate of need
review or which requires amendment of any License or the issuance of any
new
License or certificate for the CCRC Property;
(iv) any
other
development in the business or affairs of the Property Related Persons which
could have a Material Adverse Change; or
(v) any
actual, threatened or pending litigation with respect to the CCRC Property
or
the Property Related Persons;
in
each
case describing in detail satisfactory to the Lender in its reasonable
discretion the nature thereof and the action the Borrower proposes to take
with
respect thereto.
(e) Deficiency
Notices. Without implying any limitation on any other provisions of this
Agreement or any of the other Loan Documents, the Borrower will furnish or
cause
to be furnished to the Lender reasonably promptly after receipt thereof copies
of all (A) Deficiency Notices, (B) Agency inspection reports, audits, surveys,
investigations, reviews or evaluations, (C) relevant notices and written
communications from any state or any Agency relating to material adjustments
in
reimbursement amounts or to rate reviews, modifications of rates, inflation
adjustments, rate agreements or the like, and (D) responses by, or on behalf
of,
the Property Related Persons with respect to any of the foregoing. The Borrower
shall or shall cause the Property Related Persons to promptly commence and
diligently pursue the correction of the subject of each Deficiency Notice,
and
shall correct the subject of the Deficiency Notice promptly, but in any event
prior to the expiration of any period allowed by the Agency for correction.
The
Borrower shall, at the Lender's request, promptly provide from time to time
such
cost estimates, reports and other information as the Lender may require to
demonstrate to the Lender's satisfaction that the Property Related Persons
have
the financial and other ability to effect the correction and are taking the
actions required by this Section.
(f) Census
Report and Surveys. To the extent permitted by all laws governing the
privacy and confidentiality of individually identifiable information, the
Borrower will furnish to the Lender promptly following the request of the
Lender
reports of the CCRC Property periodic patient or resident census with a
breakdown with respect to the source of payment, licensure survey results,
accreditation survey results and such other information relating to the
operation of the CCRC Property as may reasonably be requested by the Lender
from
time to time.
(g) Renewal
of Agreements. The Borrower will or will cause the Property Related Persons
to take any and all steps necessary to renew all Resident Agreements, and
Operating Agreements and Management Contracts, except to the extent that
the
Borrower deems such renewal to be, in the exercise of prudent business judgment,
contrary to the best interests of the Borrower.
(h) Financial
Statements. The Borrower shall provide Lender the following financial
statements and information on a continuing basis during the term of the
Loan:
(i) Within
one
hundred twenty (120) days after the end of each calendar year, unaudited
financial statements of Borrower and audited financial statements of Guarantor,
prepared by a nationally recognized accounting firm or independent certified
public accountant acceptable to Lender, which statements shall be prepared
in
accordance with GAAP, and shall include a balance sheet and statement of
income
and expenses for the year then ended. Lender reserves the right to require,
after an Event of Default, annual audited financial statements of
Borrower.
(ii) Within
thirty (30) days after the end of each calendar month, unaudited monthly
financial statements of the operations of the CCRC Property, prepared in
accordance with GAAP, which statements shall include a balance sheet and
statement of income and expenses for the calendar month then ended, together
with a rent roll/census of the CCRC Property as of the end of such month,
certified by a representative of Borrower to be true and correct to the best
of
the representative's knowledge and belief.
(iii) Within
forty-five (45) days of the end of each calendar quarter, a balance sheet
and
statement of income and expenses of Borrower and Guarantor for the quarter
then
ended, certified by a representative of Borrower and Guarantor, as applicable,
to be true and correct.
(iv) The
Lender
further reserves the right to require such other financial information of
Borrower, Guarantor and/or the CCRC Property in such form and at such other
times (including monthly or more frequently) as Lender shall reasonably deem
necessary, and Borrower agrees promptly to provide or to cause to be provided,
such information to Lender. All financial statements must be in the form
and
detail as Lender may from time to time reasonably request.
(v) Within
forty-five (45) days after the end of each calendar quarter, a Compliance
Certificate in the form of Schedule I attached hereto and certified by a
representative of the Borrower to be true and correct to the best of the
representative's knowledge and belief.
(i) Compliance
with Healthcare Information Laws. Without limiting the generality of any
other provision of this Agreement including, without limitation, any other
representation or warranty made herein, each of the Property Related Persons
and
the CCRC Property is in material compliance with all applicable statutes,
laws,
ordinances, rules and regulations of any federal, state or local governmental
authority primarily relating to the confidentiality of patient healthcare
information, including without limitation the Health Insurance Portability
and
Accountability Act of 1996, as amended, and the rules and regulations
promulgated thereunder (“HIPAA”)
(collectively, “Healthcare
Information Laws”).
The
Property Related Persons have maintained in all material respects all records
required to be maintained by any governmental agency or authority or otherwise
under the Healthcare Information Laws and there are presently no material
violations of the Healthcare Information Laws. Throughout the term of the
Loan,
the Property Related Persons will comply in all material respects with the
Healthcare Information Laws.
(j) Replacement
Reserve Escrow Account. As additional security for the Loan, upon request of
Lender, Borrower shall establish and maintain a capital repair reserve (the
“Replacement
Reserve Escrow Account”)
with
Lender for payment of certain non-recurring types of costs and expenses incurred
by Borrower for interior and exterior work to the Facility, including, without
limitation, performance of work to the roofs, chimneys, gutters, downspouts,
paving, curbs, driveways, ramps, balconies, porches, patios, exterior walls,
exterior doors and doorways, floor coverings, windows, elevators and mechanical
and HVAC equipment (collectively, the “Repairs”)
provided such costs and expenses are incurred for repairs (A) not incurred
for
ordinary wear and tear at the Facility and (B) categorized under generally
accepted accounting principles as a capital expense and not as an operating
expense. Upon Lender's request that the Replacement Reserve Escrow Account
be
established and on each and every monthly payment date thereafter under the
Note
until the Note is fully paid and performed, Borrower shall deposit in the
Replacement Reserve Escrow Account concurrently with and in addition to the
monthly payment due under the Note a deposit to the Replacement Reserve Escrow
Account in an amount equal to one twelfth (1/12th) of $300 per Unit at the
Facility per annum.
All
sums
in the Replacement Reserve Escrow Account shall be held by Lender in the
Replacement Reserve Escrow Account to pay the costs and expenses of the Repairs
and Lender shall, to the extent funds are available for such purpose in the
Replacement Reserve Escrow Account, disburse to Borrower the amount incurred
and
paid by Borrower in performing such Repairs within 10 days following: (A)
the
receipt by Lender of a written request from Borrower for disbursement from
the
Replacement Reserve Escrow Account and a certification by Borrower that the
applicable item of Repair has been completed; (B) the delivery to Lender
of paid
invoices, receipts or other evidence satisfactory to Lender, verifying the
cost
and payment of performing the Repairs; (C) for disbursement requests in excess
of $10,000, the delivery to Lender of (1) affidavits, lien waivers or other
evidence reasonably satisfactory to Lender showing that all materialmen,
laborers, subcontractors and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished material
or
labor to the Facility have been paid all amounts due for labor and materials
furnished to the Facility; and (2) a certification from an inspecting architect,
engineer or other consultant reasonably acceptable to Lender (the “Work
Inspector”)
describing the completed Repairs and verifying the completion of the Repairs
and
the value of the completed Repairs.
Lender
shall not be required to make advances from the Replacement Reserve Escrow
Account more frequently than once in any 30 day period or in an amount less
than
the lesser of $5,000 or the total cost of the Repairs for which the disbursement
is requested. In making any payment from the Replacement Reserve Escrow Account,
Lender shall be entitled to rely on such request from Borrower without any
inquiry into the accuracy, validity or contestability of any such
amount.
The
Replacement Reserve Escrow Account shall not, unless otherwise explicitly
required by applicable law, be or be deemed to be escrow or trust funds.
The
Replacement Reserve Escrow Account shall be held in a separate account. Interest
on the funds contained in the Replacement Reserve Escrow Account shall be
paid
by Lender to Borrower upon payment in full of the Loan.
Upon
the
occurrence of an Event of Default, Lender may, but shall not be obligated,
to
apply at any time the balance then remaining in the Replacement Reserve Escrow
Account against the Loan in whatever order Lender shall subjectively determine,
together with the Make-Whole Breakage Amount arising on account of such payment.
Upon full payment of the Loan in accordance with its terms or at such earlier
time as Lender may elect, the balance of the Replacement Reserve Escrow Account
plus all interest thereon then in Lender's possession shall be paid over
to
Borrower and no other party shall have any right or claim thereto. Lender
shall
have a perfected security interest in the Replacement Reserve Escrow Account
as
additional security to secure payment of the Note and Borrower shall execute
and
deliver to Lender such further financing statements and take such other action
as Lender may require to evidence and/or perfect its security interest in
the
Replacement Reserve Escrow Account, including, without limitation, the execution
and delivery to Lender of a pledge and security agreement in form reasonably
satisfactory to Lender.
Funds
held
in the Replacement Reserve Escrow Account are solely for the protection of
Lender and entail no responsibility on Lender's part beyond the payment of
the
respective items for which they are held following receipt of bills, invoices
or
statements therefor in accordance with the terms hereof and beyond the allowing
of due credit for the sums actually received. Upon assignment of the Loan
by
Lender, any funds in the Replacement Reserve Escrow Account shall be turned
over
to the assignee and any responsibility of Lender, as assignor, with respect
thereto shall terminate.
(k) Management
of the CCRC Property. The management of the CCRC Property shall be by
either: (i) Borrower or an entity affiliated with Borrower approved by Lender
for so long as Borrower or said affiliated entity is managing the CCRC Property
in a first class manner; or (ii) a professional property management company
approved by Lender. Such management by an affiliated entity or a professional
property management company shall be pursuant to a written agreement approved
by
Lender. Any management agreement shall provide for a maximum allowable
management fee of 5% of gross revenues. In no event shall any manager be
removed
or replaced or the terms of any management agreement modified or amended
without
the prior written consent of Lender. After an Event of Default or a default
under any management agreement then in effect, which default is not cured
within
any applicable grace or cure period, Lender shall have the right to terminate,
or to direct Borrower to terminate, such management agreement upon 30 days'
notice and to retain, or to direct Borrower to retain, a new management agent
approved by Lender. It shall be a condition of Lender's consent to any
management agreement, whether with an affiliate of Borrower or otherwise,
that
such manager enter into an agreement with Lender whereby the manager
acknowledges and agrees to the aforesaid rights of Lender and as to such
other
matters as Lender may reasonably require.
(l) Net
Operating Income Test. Subject to the cure rights set forth below, it shall
be an immediate Event of Default if the Net Operating Income is less than
$1,000,000, to be tested as of the end of each calendar quarter. Borrower
may
cure a default under this Section 3.1(n) upon payment to the Lender, within
45
days of the end of the calendar quarter upon which the default occurs, of
(i) in
the case of the first such default, (x) $100,000, which amount shall be applied
to reduce the outstanding principal balance of the Note (as defined in the
Security Instrument), in such order as Lender shall determine, and (y) $10,000,
which amount shall be paid to Lender as a waiver fee and shall not be applied
to
payment of the Note, and (ii) in the case of the second such default, (x)
$500,000, which amount shall be applied to reduce the outstanding principal
balance of the Note (as defined in the Security Instrument), in such order
as
Lender shall determine, and (ii) $20,000, which amount shall be paid to Lender
as a waiver fee and shall not be applied to payment of the Note. No cure
shall
be available in the case of the third such default. Borrower will provide
Lender
with satisfactory evidence confirming compliance with the provisions of this
Section 3.1(n) within forty-five (45) days after the close of each calendar
quarter in the form of the Compliance Certificate attached hereto as Schedule
I.
No Make-Whole Breakage Amount shall be due on account of the payments under
this
Section 3.1(l).
(m) State
Mandated Reserve Account. Borrower shall maintain with Lender at all times
while the Loan is outstanding, the State of Pennsylvania mandated reserve
account (the “State
Mandated Reserve Account”)
for the
CCRC Property.
(n) Transfer
of License.
Borrower
shall apply to the State of Pennsylvania to transfer the current Certificate
of
Licensure, issued by the Pennsylvania Department of Health, from ARC Brandywine
GP, LLC, the current license holder, to Borrower and shall provide Lender
a copy
of the new license upon issuance, but in any case, no later than June 30,
2006.
Such transfer shall not require the consent of Lender.
3.2. Negative
Covenants of the Borrower. The Borrower agrees as follows:
(a) Licenses.
The Borrower will not allow any breach, withdrawal, rating reduction,
restriction, suspension, probation, failure to renew, cancellation, rescission,
termination, lapse or forfeiture of any License, permit, right, franchise
or
privilege materially necessary for the ownership or operation of the CCRC
Property for the purposes for which the CCRC Property is intended.
(b) Agreements.
The Borrower will not allow any breach, withdrawal, restriction, suspension,
probation, failure to renew, cancellation, rescission, termination, lapse,
alteration, forfeiture or modification of any material Operating Agreements
and
Management Contracts.
(c)
Participation
Agreements. Neither the Borrower nor any Property Related Persons will be
a
party to a Participation Agreement with respect to the CCRC
Property.
(d) Amendments;
Terminations. The Borrower will not amend or terminate or agree to amend
or
terminate any material License or consent to a waiver of, or waive, any material
provisions thereof or amend or terminate or agree to amend or terminate,
any
material Operating Agreements and Management Contracts.
EVENTS
OF DEFAULT
4.1. Events
of Default. Each of the following shall be an Event of Default under the
Loan Agreement:
(a) Any
involuntary, imposed, required, actual, threatened or pending revocation,
suspension, termination, probation, restriction, limitation, forfeiture or
refusal to renew, any License necessary or material to the operation of the
CCRC
Property.
(b) If
the
United States Department of Health and Human Services, Office of the Inspector
General, or any federal, state or local Agency brings a claim, demand or
cause
of action against a Property Related Person or any shareholders, partners,
members, directors, officers, employees or agents of a Property Related Person
for violation of Section 1128A, 1128C or 1877 of the Social Security Act
(42
U.S.C. §§ 1320a-7a, 1320a-7c and 1395nn), the False Claims Act (31 U.S.C. § 3729
et seq.), or the Program Fraud Civil Remedies Act of 1986 (31 X.X.X. §0000 et
seq.).
(c)
The
occurrence of a default under Section 3.1(l) of this Healthcare Rider that
is
not cured pursuant to the terms set forth in such Section.
(e) The
occurrence of a default under the Pledge Agreement or Security Agreement
which
remains uncured after any applicable notice and cure periods.
SCHEDULE
I
COMPLIANCE
CERTIFICATE
Quarterly
Net Operating Income Test
Guaranty
Bank
0000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX
00000
Attn:
Healthcare Finance Lending Division
RE:
|
Loan
Agreement dated December ___, 2005 (the “Agreement”),
by and between ARC Brandywine, L.P. (the “Borrower”),
and Guaranty Bank
|
The
undersigned officer of Borrower does hereby certify, to the best of his
knowledge and belief, that for the calendar quarter ending ____________,
20___(the “Calendar
Quarter”):
1. No
Event
of Default has occurred or exists except ____________________
___________________________________________.
2. The
CCRC
Property quarterly Net Operating Income was:
Required:
|
$1,000,000
|
Actual:
|
$__________
|
3. The
financial statements of Borrower and the CCRC Property and the rent roll/census
attached hereto are true and correct. Copies of the financial statements
of
Guarantor are attached.
4. Attached
hereto are copies of all matters with respect to which Borrower is required
to
give Lender notice under Section 3.1(d) of the Healthcare Rider to the Loan
Agreement.
5. Capitalized
terms not defined herein shall have the meanings given to such terms in the
Agreement.
6. The
manner
of calculation of the above is attached.
ARC
BRANDYWINE, L.P., a Delaware limited
partnership
|
||
|
|
|
By: |
ARC
Brandywine GP, LLC, a Tennessee
limited
liability company, its general partner
|
|
By:
Title:
Name: |
EXHIBIT
D
LEGAL
DESCRIPTION
CCRC
PROPERTY
PREMISES
A
ALL
THAT
CERTAIN LOT OR PIECE OF GROUND SITUATE IN WEST BRANDYWINE TOWNSHIP, XXXXXXX
COUNTY, PENNSYLVANIA, BOUNDED AND DESCRIBED ACCORDING TO ALTA/ASCM LAND TITLE
SURVEY FOR FREEDOM VILLAGE AT BRANDYWINE, PREPARED BY XXXXXX X. XXXXX AND
ASSOCIATES, INC., 000 XXXXXX XXXXX XXXX, XXXXXXXXX XXXXXXXXXXXX XXXXXX, XXXXX,
XX, DATED MAY 16, 2005, AS FOLLOWS:
BEGINNING
AT A SPIKE ON THE TITLE LINE IN THE BED OF CALN MEETINGHOUSE ROAD (T-413),
A
CORNER OF LANDS NOW OR FORMERLY OF XXXXXXX X. XXXXXXX AND XXXXX X. XXXXXXX,
HIS
WIFE; THENCE EXTENDING ALONG SAID TITLE LINE IN THE BED OF SAID ROAD THE
SIX (6)
FOLLOWING COURSES AND DISTANCES: (1) SOUTH 83 DEGREES 00 MINUTES 14 SECONDS
EAST
101.67 FEET TO A PK NAIL; (2) SOUTH 81 DEGREES 46 MINUTES 14 SECONDS EAST
160.73
FEET TO A PK NAIL: (3) SOUTH 72 DEGREES 08 MINUTES 14 SECONDS EAST 180.25
FEET
TO A PK NAIL; (4) SOUTH 70 DEGREES 14 MINUTES 14 SECONDS EAST 179.80 FEET
TO A
PK NAIL; (5) SOUTH 69 DEGREES 21 MINUTES 14 SECONDS EAST 295.20 FEET TO A
PK
NAIL; (6) SOUTH 71 DEGREES 03 MINUTES 57 SECONDS EAST 431.61 FEET TO A SPIKE
ON
THE LINE DIVIDING EAST BRANDYWINE AND WEST BRANDYWINE TOWNSHIPS; THENCE
EXTENDING THE ALONG SAME, CROSSING THE SOUTHERLY SIDE OF CALN MEETINGHOUSE
ROAD
AND ALONG LANDS NOW OR FORMERLY OF XXXXX AND XXXXX X. XXXXX AND XXXXXXX X.
XXXXXXXXXXX, RESPECTIVELY, SOUTH 00 DEGREES 21 MINUTES 14 SECONDS WEST 609.79
FEET, TO A REBAR IN THE NORTH LINE OF LANDS NOW OR FORMERLY OF XXXXXXX X.
XXXXXXX AND XXXXX X. XXXXXXX; THENCE EXTENDING ALONG SAID LANDS THE THREE
(3)
FOLLOWING COURSES AND DISTANCES: (1) LEAVING THE TOWNSHIP DIVIDING LINE,
SOUTH
85 DEGREES 10 MINUTES 24 SECONDS WEST 15.86 FEET TO A REBAR; (2) SOUTH 04
DEGREES 49 MINUTES 36 SECONDS EAST 174.90 FEET TO AN IRON PIN; (3) SOUTH
85
DEGREES 11 MINUTES 30 SECONDS WEST 1161.31 FEET TO A CORNER OF LANDS NOW
OR
FORMERLY OF COATESVILLE HOSPITAL CORPORATION; THENCE EXTENDING ALONG SAME,
ALONG
LANDS OF PREMISES "B" - TRACT I (AS SHOWN ON SAID PLAN), AND ALONG LANDS
NOW OR
FORMERLY OF XXXXXXX X. AND XXXXX X. XXXXXXX, NORTH 05 DEGREES 30 MINUTES
14
SECONDS WEST, CROSSING A DRAINAGE EASEMENT AND RECROSSING THE SOUTHERLY SIDE
OF
CALN MEETINGHOUSE ROAD, 1284.26 FEET TO THE FIRST MENTIONED POINT AND PLACE
OF
BEGINNING. CONTAINING: 29.368 ACRES OF LAND, BE THE SAME MORE OR LESS.
PREMISES
B
ALL
THOSE
CERTAIN LOTS OR PIECES OF GROUND SITUATE IN WEST BRANDYWINE TOWNSHIP, XXXXXXX
COUNTY, PENNSYLVANIA, BOUNDED AND DESCRIBED ACCORDING TO AN ALTA/ASCM LAND
TITLE
SURVEY FOR FREEDOM VILLAGE AT BRANDYWINE, PREPARED BY XXXXXX X. XXXXX AND
ASSOCIATES, INC.,125 XXXXXX XXXXX XXXX, XXXXXXXXX XXXXXXXXXXXX XXXXXX, XXXXX,
XX, DATED MAY 16, 2005, AS FOLLOWS:
TRACT
I
BEGINNING
AT A MAG NAIL SET ON THE TITLE LINE IN THE BED OF REECEVILLE ROAD (S.R. 4005),
THE SOUTHWESTERLY CORNER OF LANDS NOW OR FORMERLY OF XXXX AND XXXX X. MAX;
THENCE EXTENDING ALONG SAID LANDS AND CROSSING THE EASTERLY SIDE OF SAID
ROAD,
ALONG THE SOUTHERLY SIDE OF A SIGN/GRADING EASEMENT, NORTH 84 DEGREES 48
MINUTES
04 SECONDS EAST CROSSING A MONUMENT AT 30.14 FEET, A TOTAL DISTANCE OF 240.05
FEET TO A POINT 0.60' SOUTHWEST OF A MONUMENT FOUND, A CORNER OF LANDS NOW
OR
FORMERLY OF XXXXXXX X. XXXXXXX AND XXXXX X. XXXXXXX; THENCE EXTENDING ALONG
SAME, CROSSING A 20 FOOT WIDE WATER EASEMENT, NORTH 84 DEGREES 46 MINUTES
59
SECONDS EAST 509.84 FEET TO A REBAR SET IN THE WEST LINE OF PREMISES A,
HEREINABOVE DESCRIBED; THENCE EXTENDING ALONG SAID LANDS, SOUTH 05 DEGREES
30
MINUTES 14 SECONDS EAST 60.00 FEET TO A REBAR SET, A CORNER OF LANDS NOW
OR LATE
OF COATESVILLE HOSPITAL CORPORATION; THENCE EXTENDING ALONG SAID LANDS, THE
FOLLOWING TWO (2) COURSES AND DISTANCES: (1) RECROSSING SAID WATER EASEMENT,
SOUTH 84 DEGREES 46 MINUTES 59 SECONDS WEST 512.44 FEET TO AN IRON PIN; (2)
ALONG THE NORTHERLY SIDE OF A SIGN/GRADING EASEMENT, SOUTH 84 DEGREES 48
MINUTES
04 SECONDS WEST, CROSSING OVER A MAG NAIL SET ON THE EASTERLY SIDE OF PREMISES
B
- TRACT II HEREINBELOW DESCRIBED, ALONG THE NORTHERLY LINE OF THE SAME, CROSSING
OVER ANOTHER MAG NAIL SET ON THE EASTERLY SIDE OF SAID REECEVILLE ROAD, 239.05
FEET TO A MAG NAIL SET ON THE TITLE LINE IN THE BED OF SAID ROAD; THENCE
EXTENDING ALONG SAME, NORTH 03 DEGREES 58 MINUTES 08 SECONDS WEST 60.01 FEET
TO
THE FIRST MENTIONED POINT AND PLACE OF BEGINNING.
CONTAINING:
1.034 ACRES OF LAND, BE THE SAME MORE OR LESS.
TRACT
II
BEGINNING
AT A MAG NAIL SET ON THE EASTERN LEGAL RIGHT-OF-WAY LINE OF REECEVILLE ROAD
(S.R. 4005), 40 FEET WIDE AND ON THE SOUTH LINE OF TRACT I, HEREINABOVE
DESCRIBED; THENCE FROM SAID POINT OF BEGINNING, ALONG TRACT I, NORTH 84 DEGREES
48 MINUTES 04 SECONDS EAST 10.00 FEET TO A MAG NAIL SET; THENCE LEAVING SAID
LINE OF TRACT I, ALONG LANDS NOW OR LATE OF XXXXXXX X. AND XXXX X. XXXXXXXXX,
THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) IN A SOUTHERLY DIRECTION,
SOUTH
03 DEGREES 58 MINUTES 08 SECONDS EAST 250.00 FEET TO AN IRON PIN; (2) SOUTH
84
DEGREES 48 MINUTES 04 SECONDS WEST 10.00 FEET TO A POINT ON THE EASTERN LEGAL
RIGHT-OF-WAY LINE OF REECEVILLE ROAD (S.R. 4005) 40 FEET WIDE; THENCE CONTINUING
ALONG SAID RIGHT-OF-WAY LINE IN A NORTHERN DIRECTION, NORTH 03 DEGREES 58
MINUTES 08 SECONDS WEST250.00 FEET TO THE POINT AND PLACE OF BEGINNING.
CONTAINING:
2,500 SQUARE FEET OF LAND, BE THE SAME MORE OR LESS.
BEING:
XXXXXXX COUNTY TAX PARCEL 29-7-172
EXCEPTING
THEREOUT AND THEREFROM: ALL THOSE LIFE ESTATE INTERESTS CONVEYED IN CONDOMINIUM
UNITS (FREEDOM VILLAGE AT BRANDYWINE, A CONDOMINIUM) IN VARIOUS DEEDS OUT
OF
FREEDOM VILLAGEAT BRANDYWINE LIMITED PARTNERSHIP (DECLARANT).
EXHIBIT
E
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