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PARTICIPATION AGREEMENT
Dated as of December 2, 1998
among
SUNRISE MIDWEST LEASING, L.L.C.,
as the Construction Agent and as the Lessee,
SUNRISE ASSISTED LIVING, INC.,
as the Guarantor,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the Sunrise Trust 1998-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
NATIONSBANK, N.A.,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
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TABLE OF CONTENTS
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SECTION 1A. INITIAL LOANS AND HOLDER ADVANCES....................................................................................1
SECTION 1. THE LOANS............................................................................................................1
SECTION 2. HOLDER ADVANCES......................................................................................................1
SECTION 3. SUMMARY OF TRANSACTIONS..............................................................................................2
3.1. Operative Agreements.................................................................................................2
3.2. Property Purchase....................................................................................................2
3.3. Construction of Improvements; Commencement of Basic Rent.............................................................2
3.4. Ratable Interests of the Holders and the Lenders.....................................................................2
SECTION 4. THE CLOSINGS.........................................................................................................3
4.1. Initial Closing Date.................................................................................................3
4.2. Initial Closing Date; Property Closing Dates; Acquisition Advances; Construction Advances............................3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS ON
COMPLETION DATE; THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS........................................................3
5.1. General..............................................................................................................3
5.2. Procedures for Funding...............................................................................................3
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Initial
Closing Date and the Advance of Funds for the Acquisition of a Property...................................................5
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Advance
of Funds after the Acquisition Advance....................................................................................8
5.5. Additional Reporting and Delivery Requirements on Completion Date and on Construction Period
Termination Date..........................................................................................................9
5.6. The Construction Agent Delivery of Construction Budget Modifications................................................10
5.7. Restrictions on Liens...............................................................................................10
[5.8. Reserved.].........................................................................................................10
5.9. Maintenance of the Lessee as a Wholly-Owned Entity..................................................................10
5.10. Payments...........................................................................................................10
SECTION 6. REPRESENTATIONS AND WARRANTIES......................................................................................11
6.1. Representations and Warranties of the Borrower......................................................................11
6.2. Representations and Warranties of the Credit Parties................................................................12
SECTION 6B. GUARANTY...........................................................................................................16
6B.1. Guaranty of Payment and Performance................................................................................16
6B.2. Obligations Unconditional..........................................................................................16
6B.3. Modifications......................................................................................................17
6B.4. Waiver of Rights...................................................................................................17
6B.5. Reinstatement......................................................................................................18
6B.6. Remedies...........................................................................................................18
6B.7. Limitation of Guaranty.............................................................................................18
SECTION 7. PAYMENT OF CERTAIN EXPENSES..........................................................................................18
7.1. Transaction Expenses................................................................................................18
7.2. Brokers' Fees.......................................................................................................19
7.3. Certain Fees and Expenses...........................................................................................19
7.4. Administrative Fee..................................................................................................20
SECTION 8. OTHER COVENANTS AND AGREEMENTS......................................................................................20
8.1. Cooperation with the Construction Agent or the Lessee...............................................................20
8.2. Covenants of the Owner Trustee and the Holders......................................................................20
8.3. Credit Party Covenants, Consent and Acknowledgment..................................................................21
8.3B Additional Covenants of SALI........................................................................................24
8.3B.1.1 Existence.......................................................................................................24
8.3B.1.2 Further Assurances..............................................................................................24
8.3B.1.3 Financial Records - Inspection..................................................................................24
8.3B.1.4 Estoppel Certificates...........................................................................................25
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8.3B.2 Financial Covenants..............................................................................................25
8.3B.3 Negative Covenants................................................................................................27
8.4. Sharing of Certain Payments.........................................................................................28
8.5. Grant of Easements, etc.............................................................................................28
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner Trustee............................................28
8.7. Collection and Allocation of Payments and Other Amounts.............................................................29
8.8. Release of Properties, etc..........................................................................................31
8.9 Release of Residual Payment Collateral...............................................................................31
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT................................................................................31
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights...................................................31
9.2. The Construction Agent's and the Lessee's Trust Agreement Rights....................................................32
SECTION 10. TRANSFER OF INTEREST...............................................................................................32
10.1. Restrictions on Transfer...........................................................................................32
10.2. Effect of Transfer.................................................................................................33
SECTION 11. INDEMNIFICATION....................................................................................................33
11.1. General Indemnity..................................................................................................33
11.2. General Tax Indemnity..............................................................................................35
11.3. Increased Costs, Illegality, etc...................................................................................37
11.4. Funding/Contribution Indemnity.....................................................................................38
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC.............................................39
11.6. Additional Provisions Regarding Environmental Indemnification......................................................39
11.7. Additional Provisions Regarding Indemnification....................................................................39
11.8. Indemnifications Provided by the Owner Trustee in Favor of the Other Indemnified Persons...........................40
SECTION 12. MISCELLANEOUS......................................................................................................40
12.1. Survival of Agreements.............................................................................................40
12.2. Notices............................................................................................................40
12.3. Counterparts.......................................................................................................42
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters....................................................42
12.5. Headings, etc......................................................................................................43
12.6. Parties in Interest................................................................................................43
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE.............................................43
12.8. Severability.......................................................................................................44
12.9. Liability Limited..................................................................................................44
12.10. Rights of the Credit Parties......................................................................................45
12.11. Further Assurances................................................................................................45
12.12. Calculations under Operative Agreements...........................................................................45
12.13. Confidentiality...................................................................................................45
12.14. Financial Reporting/Tax Characterization..........................................................................46
12.15. Set-off...........................................................................................................46
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EXHIBITS
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - Form of Officer's Certificate - Section 5.3(z)
D- Form of Secretary's Certificate - Section 5.3(aa)
E - Form of Officer's Certificate - Section 5.3(cc)
F - Form of Secretary's Certificate - Section 5.3(dd)
G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(ee)
H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(ff)
I - Form of Officer's Certificate - Section 5.5
J - Description of Material Litigation - Section 6.2(d)
K- State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.2(i)
L- Description of Properties to be Purchased on Initial Closing Date
M - Allocated Property Cost Amounts
N - Residual Payment Collateral
Appendix A - Rules of Usage and Definitions
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of December 2, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among SUNRISE MIDWEST LEASING, L.L.C., a Virginia
limited liability company (the "Lessee" or the "Construction Agent"); SUNRISE
ASSISTED LIVING, INC., a Delaware corporation, as guarantor ("SALI" or the
"Guarantor"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (in its individual capacity, the "Trust
Company"), except as expressly stated herein, but solely as the Owner Trustee
under the Sunrise Trust 1998-1 (the "Owner Trustee", the "Borrower" or the
"Lessor"); the various banks and other lending institutions which are parties
hereto from time to time as holders of certificates issued with respect to the
Sunrise Trust 1998-1 (subject to the definition of Holders in Appendix A
hereto, individually, a "Holder" and collectively, the "Holders"); the various
banks and other lending institutions which are parties hereto from time to time
as lenders (subject to the definition of Lenders in Appendix A hereto,
individually, a "Lender" and collectively, the "Lenders"); and NATIONSBANK,
N.A., a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the
Holders, to the extent of their interests (in such capacity, the "Agent").
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in Appendix A hereto.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1A. INITIAL LOANS AND HOLDER ADVANCES.
Notwithstanding the various references in the Operative Agreements to
terms and conditions for the extension of Loans and Holder Advances subsequent
to the Initial Closing Date, the entire $45,590,000 of the Lender Commitments
and the entire $1,410,000 of the Holder Commitments will be advanced on the
Initial Closing Date upon satisfaction (on or prior to such Initial Closing
Date) of the terms and conditions set forth in the Operative Agreements for
such closing and funding (which terms and conditions include the acquisition by
the Borrower of the Properties identified on Exhibit L hereto). The provisions
hereof and of the other Operative Agreements related to Loans and Holder
Advances extended subsequent to the Initial Closing Date shall only apply in
the event each Person then a party to this Agreement, in its sole and absolute
discretion, agrees to an increase in the Lender Commitments and the Holder
Commitments.
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the
Lenders have agreed to make Loans to the Lessor from time to time in an
aggregate principal amount of up to the aggregate amount of the Commitments of
the Lenders in order for the Lessor to acquire the Properties and certain
Improvements, to develop and construct certain Improvements in accordance with
the Agency Agreement and the terms and provisions hereof and for the other
purposes described herein, and in consideration of the receipt of proceeds of
the Loans, the Lessor will issue the Notes. The Loans shall be made and the
Notes shall be issued pursuant to the Credit Agreement. Pursuant to Section 5
of this Agreement and Section 2 of the Credit Agreement, the Loans will be made
to the Lessor from time to time at the request of the Construction Agent in
consideration for the Construction Agent agreeing for the benefit of the
Lessor, pursuant to the Agency Agreement, to acquire the Properties, to acquire
the Equipment, to construct certain Improvements and to cause the Lessee to
lease the Properties, each in accordance with the Agency Agreement and the
other Operative Agreements. The Loans and the obligations of the Lessor under
the Credit Agreement shall be secured by the Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, on each
date Advances are requested to be made in accordance with Section 5 hereof,
each Holder shall make a Holder
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Advance on a pro rata basis to the Lessor with respect to the Sunrise Trust
1998-1 based on its Holder Commitment in an amount in immediately available
funds such that the aggregate of all Holder Advances on such date shall be
three percent (3%) of the amount of the Requested Funds on such date; provided,
that no Holder shall be obligated for any Holder Advance in excess of its pro
rata share of the Available Holder Commitment. The aggregate amount of Holder
Advances shall be up to the aggregate amount of the Holder Commitments. No
prepayment or any other payment with respect to any Advance shall be permitted
such that the Holder Advance with respect to such Advance is less than three
percent (3%) of the outstanding amount of such Advance, except in connection
with termination or expiration of the Term or in connection with the exercise
of remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
On the date hereof, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, the Agency Agreement, the
Credit Agreement, the Notes, the Trust Agreement, the Certificates, the
Security Agreement, each applicable Mortgage Instrument and such other
documents, instruments, certificates and opinions of counsel as agreed to by
the parties hereto.
3.2. PROPERTY PURCHASE.
On each Property Closing Date and subject to the terms and conditions
of this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement, (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement, (c) the Lessor will purchase and acquire good and marketable title
to or ground lease pursuant to a Ground Lease, the applicable Property, each to
be within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Xxxx of Sale or Ground Lease, as the case may be, and grant
the Agent a lien on such Property by execution of the required Security
Documents, (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property and (e) the Basic Term shall
commence with respect to such Property.
3.3. CONSTRUCTION OF IMPROVEMENTS; COMMENCEMENT OF BASIC RENT.
Construction Advances will be made with respect to particular
Improvements to be constructed and with respect to ongoing Work regarding the
Equipment and construction of particular Improvements, in each case, pursuant
to the terms and conditions of this Agreement and the Agency Agreement. The
Construction Agent will act as a construction agent on behalf of the Lessor
respecting the Work regarding the Equipment, the construction of such
Improvements and the expenditures of the Construction Advances related to the
foregoing. The Construction Agent shall promptly notify the Lessor upon
Completion of the Improvements and the Lessee shall commence to pay Basic Rent
as of the Rent Commencement Date.
3.4. RATABLE INTERESTS OF THE HOLDERS AND THE LENDERS.
Each Holder and Lender agrees at all times (a) to hold the same
ratable portion of the aggregate Lender Commitment for Tranche A Loans, the
aggregate Lender Commitment for Tranche B Loans, the aggregate Holder
Commitment and (b) to make advances consistent with such committed amounts
referenced in Section 3.4(a) in accordance with the requirements of the
Operative Agreements.
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SECTION 4. THE CLOSINGS.
4.1. INITIAL CLOSING DATE.
All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of Xxxxx & Xxx Xxxxx, PLLC,
Charlotte, North Carolina, or at such other location as may be determined by
the Lessor, the Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION
ADVANCES; CONSTRUCTION ADVANCES.
The Construction Agent shall deliver to the Agent a requisition (a
"Requisition"), in the form attached hereto as Exhibit A or in such other form
as is satisfactory to the Agent, in its reasonable discretion, in connection
with (a) the Transaction Expenses and other fees, expenses and disbursements
payable, pursuant to Section 7.1, by the Lessor and (b) each Acquisition
Advance pursuant to Section 5.3 and (c) each Construction Advance pursuant to
Section 5.4.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
(a) To the extent funds have been advanced to the Lessor
as Loans by the Lenders and to the Lessor as Holder Advances by the
Holders, the Lessor will use such funds from time to time in
accordance with the terms and conditions of this Agreement and the
other Operative Agreements (i) at the direction of the Construction
Agent to acquire the Properties in accordance with the terms of this
Agreement, the Agency Agreement and the other Operative Agreements,
(ii) to make Advances to the Construction Agent to permit the
acquisition, testing, engineering, installation, development,
construction, modification, design, and renovation, as applicable, of
the Properties (or components thereof) in accordance with the terms of
the Agency Agreement and the other Operative Agreements, and (iii) to
pay Transaction Expenses, fees, expenses and other disbursements
payable by the Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and
Holder Yield on the Holder Advances on any Scheduled Interest Payment
Date with respect to any Property during the period prior to the Rent
Commencement Date with respect to such Property, (i) each Lender's
Loan shall automatically be increased by the amount of interest
accrued and unpaid on such Loan for such period (except to the extent
that at any time such increase would cause such Lender's Loan to
exceed such Lender's Available Commitment, in which case the Lessee
shall pay such excess amount to such Lender in immediately available
funds on the date such Lender's Available Commitment was exceeded),
and (ii) each Holder's Holder Advance shall automatically be increased
by the amount of Holder Yield accrued and unpaid on such Holder
Advance for such period (except to the extent that at any time such
increase would cause the Holder Advance of such Holder to exceed such
Holder's Available Holder Commitment, in which case the Lessee shall
pay such excess amount to such Holder in immediately available funds
on the date the Available Holder Commitment of such Holder was
exceeded). Such increases in a Lender's Loan and a Holder's Holder
Advance shall occur without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
(a) The Construction Agent shall designate the date for
Advances hereunder in accordance with the terms and provisions hereof;
provided, however, it is understood and agreed that no more than two
(2) Advances (excluding any conversion and/or continuation of any Loan
or Holder Advance) may be requested during any calendar month. Not
less than (i) three (3) Business Days prior to the date that the first
Advance is requested hereunder and (ii) three (3) Business Days prior
to the date on which any subsequent Acquisition Advance or
Construction Advance is to be made, the Construction Agent shall
deliver to the Agent, (A) with respect to the date that the first
Advance is requested hereunder and each
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subsequent Acquisition Advance, a Requisition as described in Section
4.2 hereof (including without limitation a legal description of the
Land, if any, a schedule of the Improvements, if any, and a schedule
of the Equipment, if any, acquired or to be acquired on such date, and
a schedule of the Work, if any, to be performed, each of the foregoing
in a form reasonably acceptable to the Agent) and (B) with respect to
each Construction Advance, a Requisition identifying (among other
things) the Property to which such Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii)
request funds in an amount that is not in excess of the total
aggregate of the Available Commitments plus the Available Holder
Commitments at such time, and (iii) request that the Holders make
Holder Advances and that the Lenders make Loans to the Lessor for the
payment of Transaction Expenses, Property Acquisition Costs (in the
case of an Acquisition Advance) or other Property Costs (in the case
of a Construction Advance) that have previously been incurred or are
to be incurred on the date of such Advance to the extent such were not
subject to a prior Requisition, in each case as specified in the
Requisition.
(c) Subject to the satisfaction of the conditions
precedent set forth in Sections 5.3 or 5.4, as applicable, on each
Property Closing Date or the date on which the Construction Advance is
to be made, as applicable, (i) the Lenders shall make Loans based on
their respective Lender Commitments to the Lessor in an aggregate
amount equal to ninety-seven percent (97%) of the Requested Funds
specified in any Requisition plus any additional amount of Transaction
Expenses as referenced in Sections 7.1(a) and 7.1(b) and any
additional amount respecting any indemnity payment as referenced in
Section 11.8, unless any such funding of Transaction Expenses or any
indemnity payment is declined in writing by each Lender and each
Holder (such decision to be in the sole discretion of each Lender and
each Holder) ratably between the Tranche A Lenders and the Tranche B
Lenders with the Tranche A Lenders funding eighty-seven percent (87%)
of the Requested Funds and the Tranche B Lenders funding ten percent
(10%) of the Requested Funds), up to an aggregate principal amount
equal to the aggregate of the Available Commitments, (ii) the Holders
shall make Holder Advances based on their respective Holder
Commitments in an aggregate amount equal to three percent (3%) of the
balance of the Requested Funds specified in such Requisition plus any
additional amount of Transaction Expenses as referenced in Sections
7.1(a) and 7.1(b) and any additional amount respecting any indemnity
payment as referenced in Section 11.8, unless any such funding of
Transaction Expenses or any indemnity payment is declined in writing
by each Lender and each Holder (such decision to be in the sole
discretion of each Lender and each Holder), up to the aggregate
advanced amount equal to the aggregate of the Available Holder
Commitments; and (iii) the total amount of such Loans and Holder
Advances made on such date shall (x) be used by the Lessor to pay
Property Costs including Transaction Expenses within three (3)
Business Days of the receipt by the Lessor of such Advance or (y) be
advanced by the Lessor on the date of such Advance to the Construction
Agent or the Lessee to pay Property Costs, as applicable.
Notwithstanding that the Operative Agreements state that Advances
shall be directed to the Lessor, each Advance shall in fact be
directed to the Construction Agent (for the benefit of the Lessor) and
applied by the Construction Agent (for the benefit of the Lessor)
pursuant to the requirements imposed on the Lessor under the Operative
Agreements.
(d) With respect to an Advance obtained by the Lessor to
pay for Property Costs and/or Transaction Expenses or other costs
payable under Section 7.1 hereof and not expended by the Lessor for
such purpose on the date of such Advance, such amounts shall be held
by the Lessor (or the Agent on behalf of the Lessor) until the
applicable closing date or, if such closing date does not occur within
three (3) Business Days of the date of the Lessor's receipt of such
Advance, shall be applied regarding the applicable Advance to repay
the Lenders and the Holders and, subject to the terms hereof, and of
the Credit Agreement and the Trust Agreement, shall remain available
for future Advances. Any such amounts held by the Lessor (or the
Agent on behalf of the Lessor) shall be subject to the lien of the
Security Agreement.
(e) All Operative Agreements which are to be delivered to
the Lessor, the Agent, the Lenders or the Holders shall be delivered
to the Agent, on behalf of the Lessor, the Agent, the Lenders or the
Holders, and such items (except for Notes, Certificates, Bills of
Sale, the Ground Leases and chattel paper originals, with respect to
which in each case there shall be only one original) shall be
delivered with originals sufficient for the Lessor, the Agent, each
Lender and each Holder. All other items which are to be
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delivered to the Lessor, the Agent, the Lenders or the Holders shall
be delivered to the Agent, on behalf of the Lessor, the Agent, the
Lenders or the Holders, and such other items shall be held by the
Agent. To the extent any such other items are requested in writing
from time to time by the Lessor, any Lender or any Holder, the Agent
shall provide a copy of such item to the party requesting it.
(f) Notwithstanding the completion or any closing under
this Agreement pursuant to Sections 5.3 or 5.4, each condition
precedent in connection with any such closing may be subsequently
enforced by the Agent (unless such has been expressly waived in
writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS
AND THE HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE
ADVANCE OF FUNDS FOR THE ACQUISITION OF A PROPERTY.
The obligations (i) on the Initial Closing Date of the Lessor, the
Agent, the Lenders and the Holders to enter into the transactions contemplated
by this Agreement, including without limitation the obligation to execute and
deliver the applicable Operative Agreements to which each is a party on the
Initial Closing Date, (ii) on the Initial Closing Date of the Holders to make
Holder Advances, and of the Lenders to make Loans in order to pay Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(a) of this Agreement and (iii) on a Property Closing Date for the
purpose of providing funds to the Lessor necessary to pay the Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(b) of this Agreement and to acquire or ground lease a Property (an
"Acquisition Advance"), in each case (with regard to the foregoing Sections
5.3(i), (ii) and (iii)) are subject to the satisfaction or waiver of the
following conditions precedent on or prior to the Initial Closing Date or the
applicable Property Closing Date, as the case may be (to the extent such
conditions precedent require the delivery of any agreement, certificate,
instrument, memorandum, legal or other opinion, appraisal, commitment, title
insurance commitment, lien report or any other document of any kind or type,
such shall be in form and substance satisfactory to the Agent, in its
reasonable discretion; notwithstanding the foregoing, the obligations of each
party shall not be subject to any conditions contained in this Section 5.3
which are required to be performed by such party):
(a) the correctness of the representations and warranties
of the parties to this Agreement contained herein, in each of the
other Operative Agreements and each certificate delivered pursuant to
any Operative Agreement (including without limitation the Incorporated
Representations and Warranties) on each such date;
(b) the performance by the parties to this Agreement of
their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to each such
date;
(c) the Agent shall have received a fully executed
counterpart copy of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the
representations and warranties set forth in Section 6.2(l) hereof;
(e) the Construction Agent shall have delivered to the
Agent a good standing certificate for the Construction Agent in the
state where each such Property is located, the Deed with respect to
the Land and existing Improvements (if any), a copy of the Ground
Lease (if any), and a copy of the Xxxx of Sale with respect to the
Equipment (if any), respecting such of the foregoing as are being
acquired or ground leased on each such date with the proceeds of the
Loans and Holder Advances or which have been previously acquired or
ground leased with the proceeds of the Loans and Holder Advances and
such Land, existing Improvements (if any) and Equipment (if any) shall
be located in an Approved State;
(f) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred after giving effect to the Advance requested by
each such Requisition;
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(g) the Construction Agent shall have delivered to the
Agent title insurance commitments to issue policies respecting each
such Property, with such endorsements as the Agent deems necessary, in
favor of the Lessor and the Agent from a title insurance company
acceptable to the Agent, but only with such title exceptions thereto
as are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the
Agent an environmental site assessment respecting each such Property
prepared by an independent recognized professional acceptable to the
Agent and evidencing no pre-existing environmental condition with
respect to which there is more than a remote risk of loss;
(i) the Construction Agent shall have delivered to the
Agent a survey (with a flood hazard certification) respecting each
such Property prepared by (i) an independent recognized professional
acceptable to the Agent and (ii) in a manner and including such
information as is required by the Agent;
(j) unless such an opinion has previously been delivered
with respect to a particular state, the Construction Agent shall have
caused to be delivered to the Agent a legal opinion in the form
attached hereto as Exhibit B or in such other form as is acceptable to
the Agent with respect to local law real property issues respecting
the state in which each such Property is located addressed to the
Lessor, the Agent, the Lenders and the Holders, from counsel located
in the state where each such Property is located, prepared by counsel
acceptable to the Agent and a separate flood hazard certificate
respecting each such Property prepared by an independent recognized
professional acceptable to the Agent;
(k) the Agent shall be satisfied that the acquisition,
ground leasing and/or holding of each such Property and the execution
of the Mortgage Instrument and the other Security Documents will not
materially and adversely affect the rights of the Lessor, the Agent,
the Holders or the Lenders under or with respect to the Operative
Agreements;
(l) the Construction Agent shall have delivered to the
Agent invoices for, or other reasonably satisfactory evidence of, the
various Transaction Expenses and other fees, expenses and
disbursements referenced in Sections 7.1(a) or 7.1(b) of this
Agreement, as appropriate;
(m) the Construction Agent shall have caused to be
delivered to the Agent a Mortgage Instrument (in such form as is
acceptable to the Agent, with revisions as necessary to conform to
applicable state law), Lessor Financing Statements and Lender
Financing Statements respecting each such Property and (as of the
Initial Closing Date) the Residual Payment Collateral more
specifically identified on Exhibit N, all fully executed and in
recordable form;
(n) the Lessee shall have delivered to the Agent with
respect to each such Property a Lease Supplement and a memorandum (or
short form lease) regarding the Lease and such Lease Supplement (such
memorandum or short form lease to be in the form attached to the Lease
as Exhibit B or in such other form as is acceptable to the Agent, with
modifications as necessary to conform to applicable state law, and in
form suitable for recording);
(o) with respect to each Acquisition Advance, the sum of
the Available Commitment plus the Available Holder Commitment (after
deducting the Unfunded Amount, if any, and after giving effect to the
Acquisition Advance) will be sufficient to pay all amounts payable
therefrom;
(p) if any such Property is subject to a Ground Lease,
the Construction Agent shall have caused a lease memorandum (or short
form lease) to be delivered to the Agent for such Ground Lease and, if
requested by the Agent, a landlord waiver and a mortgagee waiver (in
each case, in such form as is acceptable to the Agent);
(q) counsel (acceptable to the Agent) for the ground
lessor of each such Property subject to a Ground Lease shall have
issued to the Lessor, the Agent, the Lenders and the Holders, its
opinion;
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(r) the Construction Agent shall have delivered to the
Agent a preliminary Construction Budget for each such Property, if
applicable;
(s) the Construction Agent shall have provided evidence
to the Agent of insurance with respect to each such Property as
provided in the Lease;
(t) the Construction Agent shall have caused an Appraisal
regarding each such Property (showing an aggregate appraised value for
the Properties identified on Exhibit L of at least $62,666,666) to be
provided to the Agent from an appraiser selected by the Agent;
(u) the Construction Agent shall cause (i) Uniform
Commercial Code lien searches, tax lien searches and judgment lien
searches regarding the Lessee to be conducted (and copies thereof to
be delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company acceptable to the
Agent and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled
in a manner satisfactory to the Agent;
(v) all taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the
Operative Agreements and/or documents related thereto shall have been
paid or provisions for such payment shall have been made to the
satisfaction of the Agent;
(w) in the opinion of the Agent and its respective
counsel, the transactions contemplated by the Operative Agreements do
not and will not subject the Lessor, the Lenders, the Agent or the
Holders to any adverse regulatory prohibitions, constraints, penalties
or fines;
(x) each of the Operative Agreements to be entered into
on such date shall have been duly authorized, executed and delivered
by the parties thereto, and shall be in full force and effect, and the
Agent shall have received a fully executed copy of each of the
Operative Agreements;
(y) since the date of the most recent audited financial
statements of the Lessee, there shall not have occurred any event,
condition or state of facts which shall have or could reasonably be
expected to have a Material Adverse Effect, other than as specifically
contemplated by the Operative Agreements;
(z) as of the Initial Closing Date only, the Agent shall
have received an Officer's Certificate, dated as of the Initial
Closing Date, of the Lessee in the form attached hereto as Exhibit C
or in such other form as is acceptable to the Agent stating that (i)
each and every representation and warranty of each Credit Party
contained in the Operative Agreements to which it is a party is true
and correct on and as of the Initial Closing Date; (ii) no Default or
Event of Default has occurred and is continuing under any Operative
Agreement; (iii) each Operative Agreement to which any Credit Party is
a party is in full force and effect with respect to it; and (iv) each
Credit Party has duly performed and complied with all covenants,
agreements and conditions contained herein or in any Operative
Agreement required to be performed or complied with by it on or prior
to the Initial Closing Date;
(aa) as of the Initial Closing Date only, the Agent shall
have received (i) a certificate of the Secretary or an Assistant
Secretary of each Credit Party, dated as of the Initial Closing Date,
in the form attached hereto as Exhibit D or in such other form as is
acceptable to the Agent attaching and certifying as to (1) the
resolutions of the Board of Directors of such Credit Party duly
authorizing the execution, delivery and performance by such Credit
Party of each of the Operative Agreements to which it is or will be a
party, (2) the articles of incorporation of such Credit Party
certified as of a recent date by the Secretary of State of its state
of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit
Party the Operative Agreements to which it is or will be a party and
(ii) a good standing certificate (or local equivalent) from the
respective states where such Credit Party is incorporated and where
the principal place of business of such Credit Party is located as to
its good standing in each such state. To the extent any Credit Party
is a partnership, a limited liability company or is otherwise
organized, such Person shall deliver to the Agent (in form and
substance satisfactory to the Agent) as of the Initial Closing Date
(A) a certificate regarding such Person and any corporate general
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partners covering the matters described in Exhibit D and (B) a good
standing certificate, a certificate of limited partnership or a local
equivalent of either of the foregoing, as applicable;
(bb) as of the Initial Closing Date only, there shall not
have occurred any material adverse change in the consolidated assets,
liabilities, operations, business or condition (financial or
otherwise) of the Credit Parties (on a consolidated basis) from that
set forth in the most recent audited consolidated financial statements
of the Credit Parties which have been provided to the Agent;
(cc) as of the Initial Closing Date only, the Agent shall
have received an Officer's Certificate of the Lessor dated as of the
Initial Closing Date in the form attached hereto as Exhibit E or in
such other form as is acceptable to the Agent, stating that (i) each
and every representation and warranty of the Lessor contained in the
Operative Agreements to which it is a party is true and correct on and
as of the Initial Closing Date, (ii) each Operative Agreement to which
the Lessor is a party is in full force and effect with respect to it
and (iii) the Lessor has duly performed and complied with all
covenants, agreements and conditions contained herein or in any
Operative Agreement required to be performed or complied with by it on
or prior to the Initial Closing Date;
(dd) as of the Initial Closing Date only, the Agent shall
have received (i) a certificate of the Secretary, an Assistant
Secretary, Trust Officer or Vice President of the Trust Company in the
form attached hereto as Exhibit F or in such other form as is
acceptable to the Agent, attaching and certifying as to (A) the
signing resolutions duly authorizing the execution, delivery and
performance by the Lessor of each of the Operative Agreements to which
it is or will be a party, (B) its articles of association or other
equivalent charter documents and its by-laws, as the case may be,
certified as of a recent date by an appropriate officer of the Trust
Company and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it
is a party and (ii) a good standing certificate from the Office of the
Comptroller of the Currency;
(ee) as of the Initial Closing Date only, counsel for the
Lessor acceptable to the Agent shall have issued to the Lessee, the
Holders, the Lenders and the Agent its opinion in the form attached
hereto as Exhibit G or in such other form as is reasonably acceptable
to the Agent;
(ff) as of the Initial Closing Date only, the Construction
Agent shall have caused to be delivered to the Agent a legal opinion
in the form attached hereto as Exhibit H or in such other form as is
acceptable to the Agent, addressed to the Lessor, the Agent, the
Lenders and the Holders, from counsel acceptable to the Agent; and
(gg) as of the Initial Closing Date only, the Construction
Agent shall cause (i) tax lien searches and judgment lien searches
regarding each Credit Party to be conducted (and copies thereof to be
delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company acceptable to the
Agent and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled
in a manner satisfactory to the Agent.
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS
AND THE HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE
ACQUISITION ADVANCE.
The obligations of the Holders to make Holder Advances, and the
Lenders to make Loans in connection with all requests for Advances subsequent
to the acquisition of a Property (and to pay the Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Section 7.1 of
this Agreement in connection therewith) are subject to the satisfaction or
waiver of the following conditions precedent (to the extent such conditions
precedent require the delivery of any agreement, certificate, instrument,
memorandum, legal or other opinion, appraisal, commitment, title insurance
commitment, lien report or any other document of any kind or type, such shall
be in form and substance satisfactory to the Agent, in its reasonable
discretion; notwithstanding the foregoing, the obligations of each party shall
not be subject to any conditions contained in this Section 5.4 which are
required to be performed by such party):
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(a) the correctness on such date of the representations
and warranties of the parties to this Agreement contained herein, in
each of the other Operative Agreements and in each certificate
delivered pursuant to any Operative Agreement (including without
limitation the Incorporated Representations and Warranties);
(b) the performance by the parties to this Agreement of
their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to each such
date;
(c) the Agent shall have received a fully executed
counterpart of the Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which
shall satisfy the requirements of this Agreement, the Available
Commitments and the Available Holder Commitment (after deducting the
Unfunded Amount) will be sufficient to complete the Improvements;
(e) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred after giving effect to the Construction Advance
requested by the applicable Requisition;
(f) the title insurance policy delivered in connection
with the requirements of Section 5.3(g) shall provide for (or shall be
endorsed to provide for) insurance in an amount at least equal to the
maximum total Property Cost indicated by the Construction Budget
referred to in subparagraph (d) above and there shall be no title
change or exception objectionable to the Agent;
(g) the Construction Agent shall have delivered to the
Agent copies of the Plans and Specifications for the applicable
Improvements;
(h) the Construction Agent shall have delivered to the
Agent invoices for, or other reasonably satisfactory evidence of, any
Transaction Expenses and other fees, expenses and disbursements
referenced in Section 7.1(b) that are to be paid with the Advance;
(i) the Construction Agent shall have delivered, or
caused to be delivered to the Agent, invoices, Bills of Sale or other
documents acceptable to the Agent, in each case with regard to any
Equipment or other components of such Property then being acquired
with the proceeds of the Loans and Holder Advances and naming the
Lessor as purchaser and transferee;
(j) all taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the
Operative Agreements shall have been paid or provisions for such
payment shall have been made to the satisfaction of the Agent;
(k) since the date of the most recent audited Financial
Statements of the Lessee, there shall not have occurred any event,
condition or state of facts which shall have or could reasonably be
expected to have a Material Adverse Effect, other than as specifically
contemplated by the Operative Agreements; and
(l) in the opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will
not subject the Lessor, the Lenders, the Agent or the Holders to any
adverse regulatory prohibitions, constraints, penalties or fines.
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION
DATE AND ON CONSTRUCTION PERIOD TERMINATION DATE.
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as Exhibit I or in such other form as is acceptable to the Agent
specifying (a) the address for such Property, (b) the Completion Date for such
Property, (c) the aggregate Property
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Cost for such Property, (d) detailed, itemized documentation supporting the
asserted Property Cost figures and (e) that all representations and warranties
of the Construction Agent and Lessee in each of the Operative Agreements and
each certificate delivered pursuant thereto (including without limitation the
Incorporated Representations and Warranties) are true and correct as of the
Completion Date. The Agent shall have the right to contest the information
contained in such Officer's Certificate. Furthermore, on or prior to the
Completion Date for each Property, the Construction Agent shall deliver or
cause to be delivered to the Agent (unless previously delivered to the Agent)
originals of the following, each of which shall be in form and substance
acceptable to the Agent, in its reasonable discretion: (w) a title insurance
endorsement regarding the title insurance policy delivered in connection with
the requirements of Section 5.3(g), but only to the extent such endorsement is
necessary to provide for insurance in an amount at least equal to the maximum
total Property Cost and, if endorsed, the endorsement shall not include a title
change or exception objectionable to the Agent; (x) an as-built survey for such
Property, (y) insurance certificates respecting such Property as required
hereunder and under the Lease Agreement, and (z) if requested by the Agent,
amendments to the Lessor Financing Statements executed by the appropriate
parties. In addition, on the Completion Date for such Property the Construction
Agent covenants and agrees that the recording fees, documentary stamp taxes or
similar amounts required to be paid in connection with the related Mortgage
Instrument shall be paid in an amount required by applicable law, subject,
however, to the obligations of the Lenders and the Holders to fund such costs
to the extent required pursuant to Section 7.1.
5.6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET
MODIFICATIONS.
The Construction Agent covenants and agrees to deliver to the Agent
each month notification of any modification to any Construction Budget
regarding any Property if such modification increases the cost to construct
such Property; provided no Construction Budget may be increased unless (a) the
title insurance policies referenced in Section 5.3(g) are also modified or
endorsed, if necessary, to provide for insurance in an amount that satisfies
the requirements of Section 5.4(f) of this Agreement and (b) after giving
effect to any such amendment, the Construction Budget remains in compliance
with the requirements of Section 5.4(d) of this Agreement.
5.7. RESTRICTIONS ON LIENS.
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.2(r)(i) and 6.2(r)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than Lessor Liens and such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved by the Agent).
[5.8. RESERVED.]
5.9. MAINTENANCE OF THE LESSEE AS A WHOLLY-OWNED ENTITY.
From the Initial Closing Date and thereafter until such time as all
obligations of all Credit Parties under the Operative Agreements have been
satisfied and performed in full, Sunrise Assisted Living Investments, Inc.
("SALII") shall remain the sole member of the Lessee, SALII shall retain the
Lessee as a Wholly-Owned Entity and SALI shall retain SALII as a Wholly-Owned
Entity.
5.10. PAYMENTS.
All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be made by the Construction Agent or the Lessee under this
Agreement or any other Operative Agreements (excluding Excepted Payments which
shall be paid directly to the party to whom such payments are owed) shall be
made to the Agent at the office designated by the Agent from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim. Subject to the definition of "Interest Period" in Appendix A
attached hereto, whenever any payment under this Agreement or any other
Operative Agreements shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such
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case shall be included in the computation of interest, Holder Yield and fees
payable pursuant to the Operative Agreements, as applicable and as the case may
be.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
Effective as of the Initial Closing Date and the date of each Advance,
the Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly
organized and validly existing and in good standing under the laws of
the United States of America and has the power and authority to enter
into and perform its obligations under the Trust Agreement and
(assuming due authorization, execution and delivery of the Trust
Agreement by the Holders) has the corporate and trust power and
authority to act as the Owner Trustee and to enter into and perform
the obligations under each of the other Operative Agreements to which
the Trust Company or the Owner Trustee, as the case may be, is or will
be a party and each other agreement, instrument and document to be
executed and delivered by it on or before such Closing Date in
connection with or as contemplated by each such Operative Agreement to
which the Trust Company or the Owner Trustee, as the case may be, is
or will be a party;
(b) The execution, delivery and performance of each
Operative Agreement to which it is or will be a party, either in its
individual capacity or (assuming due authorization, execution and
delivery of the Trust Agreement by the Holders) as the Owner Trustee,
as the case may be, has been duly authorized by all necessary action
on its part and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance
by it with any of the terms and provisions thereof (i) does or will
require any approval or consent of any trustee or holders of any of
its indebtedness or obligations, (ii) does or will contravene any
Legal Requirement relating to its banking or trust powers, (iii) does
or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any of its
property under, (A) its charter or by-laws, or (B) any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement or other agreement or instrument to
which it is a party or by which it or its properties may be bound or
affected, which contravention, breach, default or Lien under clause
(B) would materially and adversely affect its ability, in its
individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or
(iv) does or will require any Governmental Action by any Governmental
Authority regulating its banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement
is the legal, valid and binding obligation of the Holders, each other
Operative Agreement to which the Trust Company or the Owner Trustee,
as the case may be, is or will be a party have been, or on or before
such Closing Date will be, duly executed and delivered by the Trust
Company or the Owner Trustee, as the case may be, and the Trust
Agreement and each such other Operative Agreement to which the Trust
Company or the Owner Trustee, as the case may be, is a party
constitutes, or upon execution and delivery will constitute, a legal,
valid and binding obligation enforceable against the Trust Company or
the Owner Trustee, as the case may be, in accordance with the terms
thereof;
(d) There is no action or proceeding pending or, to its
knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental
Authority that, if adversely determined, would materially and
adversely affect its ability, in its individual capacity or as the
Owner Trustee, to perform its obligations under the Operative
Agreements to which it is a party or would question the validity or
enforceability of any of the Operative Agreements to which it is or
will become a party;
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(e) It, either in its individual capacity or as the Owner
Trustee, has not assigned or transferred any of its right, title or
interest in or under the Lease, the Agency Agreement or its interest
in any Property or any portion thereof, except in accordance with the
Operative Agreements;
(f) No Default or Event of Default under the Operative
Agreements attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative
Agreements, the proceeds of the Loans and Holder Advances shall not be
applied by the Owner Trustee, either in its individual capacity or as
the Owner Trustee, for any purpose other than the purchase and/or
lease of the Properties, the acquisition, installation and testing of
the Equipment, the construction of Improvements and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each
case which accrue prior to the Rent Commencement Date with respect to
a particular Property;
(h) Neither the Owner Trustee nor any Person authorized
by the Owner Trustee to act on its behalf has offered or sold any
interest in the Trust Estate or the Notes, or in any similar security
relating to a Property, or in any security the offering of which for
the purposes of the Securities Act would be deemed to be part of the
same offering as the offering of the aforementioned securities to, or
solicited any offer to acquire any of the same from, any Person other
than, in the case of the Notes, the Agent, and neither the Owner
Trustee nor any Person authorized by the Owner Trustee to act on its
behalf will take any action which would subject, as a direct result of
such action alone, the issuance or sale of any interest in the Trust
Estate or the Notes to the provisions of Section 5 of the Securities
Act or require the qualification of any Operative Agreement under the
Trust Indenture Act of 1939, as amended;
(i) The Owner Trustee's principal place of business,
chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement
and each other Operative Agreement are kept are located at 00 Xxxxx
Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000;
(j) The Owner Trustee is not engaged principally in, and
does not have as one (1) of its important activities, the business of
extending credit for the purpose of purchasing or carrying any margin
stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the
proceeds of the Loans or the Holder Advances will be used by it to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any such margin stock or for any
purpose that violates, or is inconsistent with, the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal
Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a
company controlled by an "investment company" within the meaning of
the Investment Company Act;
(l) Each Property is free and clear of all Lessor Liens
attributable to the Owner Trustee, either in its individual capacity
or as the Owner Trustee; and
(m) The Owner Trustee, in its trust capacity, is not a
party to any documents, instruments or agreements other than the
Operative Agreements executed by the Owner Trustee, in its trust
capacity.
6.2. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.
Effective as of the Initial Closing Date, the date of each Advance and
the Rent Commencement Date, each Credit Party represents and warrants to each
of the other parties hereto that:
(a) The Incorporated Representations and Warranties are
true and correct (unless such relate solely to an earlier point in
time) and the Lessee has delivered to the Agent the financial
statements and other reports referred to in Section 3.1 of the Master
Guaranty of Payment;
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(b) The execution and delivery by each Credit Party of
this Agreement and the other applicable Operative Agreements as of
such date and the performance by each Credit Party of its respective
obligations under this Agreement and the other applicable Operative
Agreements are within the corporate, partnership or limited liability
company (as the case may be) powers of each Credit Party, have been
duly authorized by all necessary corporate, partnership or limited
liability company (as the case may be) action on the part of each
Credit Party (including without limitation any necessary shareholder
action), have been duly executed and delivered, have received all
necessary governmental approval, and do not and will not (i) violate
any Legal Requirement which is binding on any Credit Party or any of
its Subsidiaries, (ii) contravene or conflict with, or result in a
breach of, any provision of the Articles of Incorporation, By-Laws or
other organizational documents of any Credit Party or any of its
Subsidiaries or of any agreement, indenture, instrument or other
document which is binding on any Credit Party or any of its
Subsidiaries or (iii) result in, or require, the creation or
imposition of any Lien (other than pursuant to the terms of the
Operative Agreements) on any asset of any Credit Party or any of its
Subsidiaries;
(c) This Agreement and the other applicable Operative
Agreements, executed prior to and as of such date by any Credit Party,
constitute the legal, valid and binding obligation of such Credit
Party, as applicable, enforceable against such Credit Party, as
applicable, in accordance with their terms. Each Credit Party has
executed the various Operative Agreements required to be executed by
such Credit Party as of such date;
(d) There are no material actions, suits or proceedings
pending or, to our knowledge, threatened against any Credit Party in
any court or before any Governmental Authority (nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority to set aside, restrain, enjoin or prevent the
full performance of any Operative Agreement or any transaction
contemplated thereby) that (i) concern any Property or any Credit
Party's interest therein, (ii) question the validity or enforceability
of any Operative Agreement to which any Credit Party is a party or the
overall transaction described in the Operative Agreements to which any
Credit Party is a party or (iii) have or could reasonably be expected
to have a Material Adverse Effect; provided, for purposes of
disclosure, the Credit Parties have described the litigation set forth
on Exhibit J;
(e) No Governmental Action by any Governmental Authority
or other authorization, registration, consent, approval, waiver,
notice or other action by, to or of any other Person pursuant to any
Legal Requirement, contract, indenture, instrument or agreement or for
any other reason is required to authorize or is required in connection
with (i) the execution, delivery or performance of any Operative
Agreement, (ii) the legality, validity, binding effect or
enforceability of any Operative Agreement, (iii) the acquisition,
ownership, construction, completion, occupancy, operation, leasing or
subleasing of any Property or (iv) any Advance, in each case, except
those which have been obtained and are in full force and effect;
(f) Upon the execution and delivery of each Lease
Supplement to the Lease, (i) the Lessee will have unconditionally
accepted the Property subject to the Lease Supplement and will have a
valid and subsisting leasehold interest in such Property, subject only
to the Permitted Liens, and (ii) no offset will exist with respect to
any Rent or other sums payable under the Lease;
(g) Except as otherwise contemplated by the Operative
Agreements, the Construction Agent shall not use the proceeds of any
Holder Advance or Loan for any purpose other than the purchase and/or
lease of the Properties, the acquisition, installation and testing of
the Equipment, the construction of Improvements and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each
case which accrue prior to the Rent Commencement Date with respect to
a particular Property;
(h) All information heretofore or contemporaneously
herewith furnished by each Credit Party or its Subsidiaries to the
Agent, the Owner Trustee, any Lender or any Holder for purposes of or
in connection with this Agreement and the transactions contemplated
hereby is, and all information hereafter furnished by or on behalf of
each Credit Party or its Subsidiaries to the Agent, the Owner Trustee,
any
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Lender or any Holder pursuant hereto or in connection herewith will
be, true and accurate in every material respect on the date as of
which such information is dated or certified, and such information,
taken as a whole, does not and will not omit to state any material
fact necessary to make such information, taken as a whole, not
misleading;
(i) The principal place of business, chief executive
office and office of the Construction Agent and the Lessee where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
kept are located at 0000 Xxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx and
the states of formation and the chief executive offices of each other
Credit Party are located at the places set forth in Exhibit K;
(j) The representations and warranties of each Credit
Party set forth in any of the Operative Agreements are true and
correct in all material respects on and as of each such date as if
made on and as of such date. Each Credit Party is in all material
respects in compliance with its obligations under the Operative
Agreements and there exists no Default or Event of Default under any
of the Operative Agreements which is continuing and which has not been
cured within any cure period expressly granted under the terms of the
applicable Operative Agreement or otherwise waived in accordance with
the applicable Operative Agreement. No Default or Event of Default
will occur under any of the Operative Agreements as a result of, or
after giving effect to, the Advance requested by the Requisition on
the date of each Advance;
(k) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
then being financed consists of (i) unimproved Land or (ii) Land and
existing Improvements thereon which Improvements are either suitable
for occupancy at the time of acquisition or ground leasing or will be
renovated and/or modified in accordance with the terms of this
Agreement. Each Property then being financed is located at the
location set forth on the applicable Requisition, each of which is in
one (1) of the Approved States;
(l) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, the Lessor has
good and marketable fee simple title to each Property, or, if any
Property is the subject of a Ground Lease, the Lessor will have a
valid ground leasehold interest enforceable against the ground lessor
of such Property in accordance with the terms of such Ground Lease,
subject only to (i) such Liens referenced in Sections 6.2(r)(i) and
6.2(r)(ii) on the applicable Property Closing Date and (ii) subject to
Section 5.7, Permitted Liens after the applicable Property Closing
Date;
(m) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, no portion of
any Property is located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other
applicable agency, or if any such Property is located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance has
been obtained for such Property in accordance with Section 14.2(b) of
the Lease and in accordance with the National Flood Insurance Act of
1968, as amended;
(n) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
complies with all Insurance Requirements and all standards of Lessee
with respect to similar properties owned by Lessee;
(o) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
complies with all Legal Requirements as of such date (including
without limitation all zoning and land use laws and Environmental
Laws), except to the extent that failure to comply therewith,
individually or in the aggregate, shall not have and could not
reasonably be expected to have a Material Adverse Effect;
(p) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, all utility
services and facilities necessary for the construction and operation
of
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the Improvements and the installation and operation of the Equipment
regarding each Property (including without limitation gas, electrical,
water and sewage services and facilities) are available at the
applicable Land or will be constructed prior to the Completion Date
for such Property;
(q) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, acquisition,
installation and testing of the Equipment (if any) and construction of
the Improvements (if any) to such date shall have been performed in a
good and workmanlike manner, substantially in accordance with the
applicable Plans and Specifications;
(r) (i) The Security Documents create, as security
for the Obligations (as such term is defined in the Security
Agreement), valid and enforceable security interests in, and
Liens on, all of the Collateral, in favor of the Agent, for
the ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements, and
such security interests and Liens are subject to no other
Liens other than Liens that are expressly set forth as title
exceptions on the title commitment issued under Section 5.3(g)
with respect to the applicable Property, to the extent such
title commitment has been approved by the Agent. Upon
recordation of the Mortgage Instrument in the real estate
recording office in the applicable Approved State identified
by the Construction Agent or the Lessee, the Lien created by
the Mortgage Instrument in the real property described therein
shall be a perfected first priority mortgage Lien on such real
property (or, in the case of a Ground Lease, the leasehold
estate under such Ground Lease) in favor of the Agent, for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements. To
the extent that the security interests in the portion of the
Collateral comprised of personal property can be perfected by
filing in the filing offices in the applicable Approved States
or elsewhere identified by the Construction Agent or the
Lessee, upon filing of the Lender Financing Statements in such
filing offices, the security interests created by the Security
Agreement shall be perfected first priority security interests
in such personal property in favor of the Agent, for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements;
(ii) The Lease Agreement creates, as security for
the obligations of the Lessee under the Lease Agreement, valid
and enforceable security interests in, and Liens on, each
Property leased thereunder, in favor of the Lessor, and such
security interests and Liens are subject to no other Liens
other than Liens that are expressly set forth as title
exceptions on the title commitment issued under Section 5.3(g)
with respect to the applicable Property, to the extent such
title commitment has been approved by the Agent. Upon
recordation of the memorandum of the Lease Agreement and the
memorandum of a Ground Lease (or, in either case, a short form
lease) in the real estate recording office in the applicable
Approved State identified by the Construction Agent or the
Lessee, the Lien created by the Lease Agreement in the real
property described therein shall be a perfected first priority
mortgage Lien on such real property (or, in the case of a
Ground Lease, the leasehold estate under such Ground Lease) in
favor of the Agent, for the ratable benefit of the Lenders and
the Holders, as their respective interests appear in the
Operative Agreements. To the extent that the security
interests in the portion of any Property comprised of personal
property can be perfected by the filing in the filing offices
in the applicable Approved State or elsewhere identified by
the Construction Agent or the Lessee upon filing of the Lessor
Financing Statements in such filing offices, a security
interest created by the Lease Agreement shall be perfected
first priority security interests in such personal property in
favor of the Lessor, which rights pursuant to the Lessor
Financing Statements are assigned to the Agent, for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements;
(s) The Plans and Specifications for each Property will
be prepared prior to the commencement of construction in accordance
with all applicable Legal Requirements (including without limitation
all applicable Environmental Laws and building, planning, zoning and
fire codes), except to the extent the failure to comply therewith,
individually or in the aggregate, shall not have and could not
reasonably be expected to have a Material Adverse Effect. Upon
completion of the Improvements for each Property in accordance with
the applicable Plans and Specifications, such Improvements will be
within any
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building restriction lines and will not encroach in any manner onto
any adjoining land (except as permitted by express written easements,
which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property
shall be improved in accordance with the applicable Plans and
Specifications in a good and workmanlike manner and shall be
operational;
(u) As of the Initial Closing Date, each Domestic
Subsidiary (formed prior to or on such date) shall have executed this
Agreement in its capacity as a Guarantor;
(v) As of each Property Closing Date only, each Property
has been acquired or ground leased pursuant to a Ground Lease at a
price that is not in excess of fair market value or fair market rental
value, as the case may be;
(w) Each Credit Party has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers,
vendors and customers of each Credit Party and the Subsidiaries of
each Credit Party) that could be adversely affected by the Year 2000
Problem, (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis and (iii) to date, implemented that
plan in accordance with that timetable. Based on the foregoing, each
Credit Party believes that all computer applications (including those
of suppliers, vendors and customers of each Credit Party and the
Subsidiaries of each Credit Party) that are material to its or any of
its Subsidiaries' business and operations are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions
for all dates before and after January 1, 2000 (that is, be "Year 2000
Compliant"), except to the extent that a failure to do so shall not
have and could not reasonably be expected to have a Material Adverse
Effect.
SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
Subject to Section 6B.7, the Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed. This Section 6B is a guaranty of payment and
performance and not of collection and is a continuing guaranty and shall apply
to all Guaranteed Obligations whenever arising. All rights granted to the
Financing Parties under this Section 6B shall be subject to the provisions of
Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
The Guarantor agrees that its obligations hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Operative Agreements, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety, guarantor or co-obligor, it being the intent
of this Section 6B.2 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. The Guarantor
agrees that this Section 6B may be enforced by the Financing Parties without
the necessity at any time of resorting to or exhausting any other security or
collateral and without the necessity at any time of having recourse to the
Notes, the Certificates or any other of the Operative Agreements or any
collateral, if any, hereafter securing the Guaranteed Obligations or otherwise
and each Guarantor hereby waives the right to require the Financing Parties to
proceed against the Construction Agent, the Lessee, the Borrower or any other
Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. The
Guarantor further agrees that it hereby waives any and all right of
subrogation, indemnity, reimbursement or contribution against the Lessee, the
Construction Agent, the Borrower or any other guarantor of the Guaranteed
Obligations for amounts paid under this Section 6B until such time as the
Loans, Holder Advances, accrued but unpaid interest, accrued but unpaid Holder
Yield and all other amounts owing under the
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Operative Agreements have been paid in full. Without limiting the generality
of the waiver provisions of this Section 6B, the Guarantor hereby waives any
rights to require the Financing Parties to proceed against the Construction
Agent, the Lessee, the Borrower or any co-guarantor or to require Lessor to
pursue any other remedy or enforce any other right, including without
limitation, any and all rights under N.C. Gen. Stat. Section 26-7 through 26-9.
The Guarantor further agrees that nothing contained herein shall prevent the
Financing Parties from suing on any Operative Agreement or foreclosing any
security interest in or Lien on any collateral, if any, securing the Guaranteed
Obligations or from exercising any other rights available to it under any
Operative Agreement, or any other instrument of security, if any, and the
exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any Guarantor's obligations
hereunder; it being the purpose and intent of the Guarantor that its
obligations hereunder shall be absolute, independent and unconditional under
any and all circumstances; provided that any amounts due under this Section 6B
which are paid to or for the benefit of any Financing Party shall reduce the
Guaranteed Obligations by a corresponding amount (unless required to be
rescinded at a later date). Neither the Guarantor's obligations under this
Section 6B nor any remedy for the enforcement thereof shall be impaired,
modified, changed or released in any manner whatsoever by an impairment,
modification, change, release or limitation of the liability of the
Construction Agent or the Lessee or by reason of the bankruptcy or insolvency
of the Construction Agent, the Lessee or the Borrower. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any Financing
Party upon this Section 6B or acceptance of this Section 6B. The Guaranteed
Obligations shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Section 6B. All dealings between the Construction Agent, the Lessee, the
Borrower and the Guarantor, on the one hand, and the Financing Parties, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Section 6B.
6B.3. MODIFICATIONS.
The Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Guaranteed Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the
Guaranteed Obligations or the properties subject thereto; (c) the time or place
of payment of the Guaranteed Obligations may be changed or extended, in whole
or in part, to a time certain or otherwise, and may be renewed or accelerated,
in whole or in part; (d) the Construction Agent, the Lessee, the Borrower and
any other party liable for payment under the Operative Agreements may be
granted indulgences generally; (e) any of the provisions of the Notes, the
Certificates or any of the other Operative Agreements may be modified, amended
or waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Construction Agent, the Lessee, the Borrower or any other
party liable for the payment of the Guaranteed Obligations or liable upon any
security therefor may be released, in whole or in part, at, before or after the
stated, extended or accelerated maturity of the Guaranteed Obligations, all
without notice to or further assent by the Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification, indulgence or release.
6B.4. WAIVER OF RIGHTS.
The Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Guaranteed Obligations; (c) protest and notice of dishonor or of default with
respect to the Guaranteed Obligations or with respect to any security therefor;
(d) notice of any Financing Party obtaining, amending, substituting for,
releasing, waiving or modifying any security interest, lien or encumbrance, if
any, hereafter securing the Guaranteed Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which the Guarantor
might otherwise be entitled. Notwithstanding anything to the contrary herein,
(i) the Guarantor's payments hereunder shall be due five (5) Business Days
after written demand by the Agent for such payment (unless the Guaranteed
Obligations are automatically accelerated pursuant to the applicable provisions
of the Operative Agreements in which case the Guarantor's payments shall be
automatically due) and (ii) any modification of the Operative Agreements which
has the effect of increasing the Guaranteed Obligations shall not be
enforceable against the Guarantor unless the Guarantor executes the document
evidencing such modification or otherwise reaffirms its guaranty in writing in
connection with such modification.
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6B.5. REINSTATEMENT.
The obligations of the Guarantor under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and the Guarantor agrees that it will indemnify
each Financing Party on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by any
Financing Party in connection with such rescission or restoration, including
without limitation any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
6B.6. REMEDIES.
The Guarantor agrees that, as between the Guarantor, on the one hand,
and each Financing Party, on the other hand, the Guaranteed Obligations may be
declared to be forthwith due and payable as provided in the applicable
provisions of the Operative Agreements (and shall be deemed to have become
automatically due and payable in the circumstances provided therein)
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Guaranteed Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or such Guaranteed Obligations being deemed to have
become automatically due and payable), such Guaranteed Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by the Guarantor in accordance with the applicable provisions of the Operative
Agreements.
6B.7. LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in
any of the other Operative Agreements, to the extent the obligations of the
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of the
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including without limitation
the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Guaranteed
Obligations in full, regardless of the source of payment, the Guarantor's
obligations hereunder shall be deemed satisfied, discharged and terminated
other than indemnifications set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
Each Financing Party hereby instructs the Guarantor, and the Guarantor
hereby acknowledges and agrees, that until such time as the Loans and the
Holder Advances are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released any and all Rent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. TRANSACTION EXPENSES.
(a) The Lessor agrees on the Initial Closing Date, to
pay, or cause to be paid, all Transaction Expenses arising from the
Initial Closing Date, including without limitation all reasonable
fees, expenses and disbursements of the various legal counsels for the
Lessor and the Agent in connection with the transactions contemplated
by the Operative Agreements and incurred in connection with such
Initial
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Closing Date, the initial fees and expenses of the Owner Trustee due
and payable on such Initial Closing Date, all fees, taxes and expenses
for the recording, registration and filing of documents and all other
reasonable fees, expenses and disbursements incurred in connection
with such Initial Closing Date; provided, however, the Lessor shall
pay such amounts described in this Section 7.1(a) only if funds are
made available by the Lenders and the Holders in an amount sufficient
to allow such payment and without regard to whether such amounts are
referenced in any Requisition. On the Initial Closing Date after
delivery and receipt of the Requisition referenced in Section 4.2(a)
hereof (if required) and satisfaction of the other conditions
precedent for such date, the Holders shall make Holder Advances and
the Lenders shall make Loans to the Lessor to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in this
Section 7.1(a).
(b) Assuming no Default or Event of Default shall have
occurred and be continuing and only for the period prior to the Rent
Commencement Date, the Lessor agrees on each Property Closing Date, on
the date of any Construction Advance and on the Completion Date to
pay, or cause to be paid, all Transaction Expenses including without
limitation all reasonable fees, expenses and disbursements of the
various legal counsels for the Lessor and the Agent in connection with
the transactions contemplated by the Operative Agreements and billed
in connection with such Advance or such Completion Date, all amounts
described in Section 7.1(a) of this Agreement which have not been
previously paid, the annual fees and reasonable out-of-pocket expenses
of the Owner Trustee, all fees, expenses and disbursements incurred
with respect to the various items referenced in Sections 5.3, 5.4
and/or 5.5 (including without limitation any premiums for title
insurance policies and charges for any updates to such policies) and
all other reasonable fees, expenses and disbursements in connection
with such Advance or such Completion Date including without limitation
all expenses relating to and all fees, taxes and expenses for the
recording, registration and filing of documents and during the
Commitment Period, all fees, expenses and costs referenced in Sections
7.3(a), 7.3(b), 7.3(d) and 7.4; provided, however, the Lessor shall
pay such amounts described in this Section 7.1(b) only if funds are
made available by the Lenders and the Holders in an amount sufficient
to allow such payment and without regard to whether such amounts are
referenced in any Requisition. On each Property Closing Date, on the
date of any Construction Advance or any Completion Date, after
delivery of the applicable Requisition (if required) and satisfaction
of the other conditions precedent for such date, the Holders shall
make a Holder Advance and the Lenders shall make Loans to the Lessor
to pay for the Transaction Expenses, fees, expenses and other
disbursements referenced in this Section 7.1(b).
(c) All fees payable pursuant to the Operative Agreements
shall be calculated on the basis of a year of three hundred sixty five
(365) days for the actual days elapsed.
7.2. BROKERS' FEES.
The parties hereto acknowledge that there are no brokers' fees payable
in connection with the transactions contemplated by this Agreement and the
other Operative Agreements.
7.3. CERTAIN FEES AND EXPENSES.
The Lessee agrees to pay or cause to be paid (a) the initial and
annual Owner Trustee's fee and all reasonable expenses of the Owner Trustee and
any co-trustees (including without limitation reasonable counsel fees and
expenses) or any successor owner trustee and/or co-trustee, for acting as the
owner trustee under the Trust Agreement, (b) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in entering into any Lease Supplement and any future amendments,
modifications, supplements, restatements and/or replacements with respect to
any of the Operative Agreements, whether or not such Lease Supplement,
amendments, modifications, supplements, restatements and/or replacements are
ultimately entered into, or giving or withholding of waivers of consents hereto
or thereto, which have been requested by any Credit Party, the Agent, the
Lenders, the Holders or the Lessor, (c) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in connection with any exercise of remedies under any Operative
Agreement or any purchase of any Property by the Construction Agent, the Lessee
or any third party and (d) all reasonable costs and expenses incurred by the
Credit Parties, the Agent, the Lenders, the Holders or the Lessor in
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connection with any transfer or conveyance of any Property, whether or not such
transfer or conveyance is ultimately accomplished.
7.4. ADMINISTRATIVE FEE.
The Lessee shall pay or cause to be paid an administrative fee to the
Agent (for its individual account) on the terms and conditions set forth in the
engagement letter dated November 13, 1998 addressed to Xx. Xxxxx X. Xxxxxx,
President and Chief Financial Officer, Sunrise Assisted Living, Inc., 0000 Xxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000 from Xxxxxxx X. Xxxx, Managing Director
of NationsBanc Xxxxxxxxxx Securities LLC and Xxxxxx X. Xxxx, Senior Vice
President of NationsBank, N.A.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
Each of the Owner Trustee and the Holders hereby agrees that so long
as this Agreement is in effect:
(a) Neither the Owner Trustee (in its trust capacity or
in its individual capacity) nor any Holder will create or permit to
exist at any time, and each of them will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, all Lessor Liens on the Properties
attributable to it; provided, however, that the Owner Trustee and the
Holders shall not be required to so discharge any such Lessor Lien
while the same is being contested in good faith by appropriate
proceedings diligently prosecuted so long as such proceedings shall
not materially and adversely affect the rights of the Lessee under the
Lease and the other Operative Agreements or involve any material
danger of impairment of the Liens of the Security Documents or of the
sale, forfeiture or loss of, and shall not interfere with the use or
disposition of, any Property or title thereto or any interest therein
or the payment of Rent;
(b) Without prejudice to any right under the Trust
Agreement of the Owner Trustee to resign (subject to the requirement
set forth in the Trust Agreement that such resignation shall not be
effective until a successor shall have agreed to accept such
appointment), or the Holders' rights under the Trust Agreement to
remove the institution acting as the Owner Trustee (after consent to
such removal by the Agent as provided in the Trust Agreement), each of
the Owner Trustee and the Holders hereby agrees with the Lessee and
the Agent (i) not to terminate or revoke the trust created by the
Trust Agreement except as permitted by Article VIII of the Trust
Agreement, (ii) not to amend, supplement, terminate or revoke or
otherwise modify any provision of the Trust Agreement in such a manner
as to adversely affect the rights of any such party without the prior
written consent of such party and (iii) to comply with all of the
terms of the Trust Agreement, the nonperformance of which would
adversely affect such party;
(c) The Owner Trustee or any successor may resign or be
removed by the Holders as the Owner Trustee, a successor Owner Trustee
may be appointed and a corporation may become the Owner Trustee under
the Trust Agreement, only in accordance with the provisions of Article
IX of the Trust Agreement and, with respect to such appointment, with
the consent of the Lessee (so long as there shall be
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no Lease Event of Default that shall have occurred and be continuing),
which consent shall not be unreasonably withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner
Trustee under the Trust Agreement, and not in its individual capacity,
shall not contract for, create, incur or assume any Indebtedness, or
enter into any business or other activity or enter into any contracts
or agreements, other than pursuant to or under the Operative
Agreements;
(e) The Holders will not instruct the Owner Trustee to
take any action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i)
commence any case, proceeding or other action with respect to the
Owner Trustee under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (ii)
seek appointment of a receiver, trustee, custodian or other similar
official with respect to the Owner Trustee or for all or any
substantial benefit of the creditors of the Owner Trustee; and neither
any Holder nor the Owner Trustee shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any
of the acts set forth in this paragraph;
(g) The Owner Trustee shall give prompt notice to the
Lessee, the Holders and the Agent if the Owner Trustee's principal
place of business or chief executive office, or the office where the
records concerning the accounts or contract rights relating to any
Property are kept, shall cease to be located at 00 Xxxxx Xxxx Xxxxxx,
Xxxx Xxxx Xxxx, Xxxx 00000, or if it shall change its name; and
(h) The Owner Trustee shall take or refrain from taking
such actions and grant or refrain from granting such approvals with
respect to the Operative Agreements and/or relating to any Property in
each case as directed in writing by the Agent (until such time as the
Loans are paid in full, and then by the Majority Holders) or, in
connection with Sections 8.5 and 9.2 hereof, the Lessee; provided,
however, that notwithstanding the foregoing provisions of this
subparagraph (h) the Owner Trustee, the Agent, the Lenders and the
Holders each acknowledge, covenant and agree that neither the Owner
Trustee nor the Agent shall act or refrain from acting, regarding each
Unanimous Vote Matter, until such party has received the approval of
each Lender and each Holder affected by such matter.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
(a) Each Credit Party acknowledges and agrees that the
Owner Trustee, pursuant to the terms and conditions of the Security
Agreement and the Mortgage Instruments, shall create Liens respecting
the various personal property, fixtures and real property described
therein in favor of the Agent. Each Credit Party hereby irrevocably
consents to the creation, perfection and maintenance of such Liens.
Each Credit Party shall, to the extent reasonably requested by any of
the other parties hereto, cooperate with the other parties in
connection with their covenants herein or in the other Operative
Agreements and shall from time to time duly execute and deliver any
and all such future instruments, documents and financing statements
(and continuation statements related thereto) as any other party
hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and
each Credit Party hereby acknowledges and agrees, that until such time
as the Loans and the Holder Advances are paid in full and the Liens
evidenced by the Security Agreement and the Mortgage Instruments have
been released (i) any and all Rent (excluding Excepted Payments which
shall be payable to each Holder or other Person as appropriate) and
any and all other amounts of any kind or type under any of the
Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments
which shall be payable to each Holder or other Person as appropriate)
or as the Agent may direct from time to time for allocation and
distribution in accordance with the procedures set forth in Section
8.7 hereof, (ii) all rights of the Lessor under the Lease shall be
exercised by the Agent and (iii) each Credit Party shall cause all
notices,
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certificates, financial statements, communications and other
information which are delivered, or are required to be delivered, to
the Lessor, to also be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any
amendment, supplement or other modification of the terms or provisions
of any Operative Agreement except in accordance with Section 12.4 of
this Agreement.
(d) Each Credit Party hereby covenants and agrees that,
except for amounts payable as Basic Rent, any and all payment
obligations owing from time to time under the Operative Agreements by
any Person to the Agent, any Lender, any Holder or any other Person
shall (without further action) be deemed to be Supplemental Rent
obligations payable by the Lessee and guaranteed by the other Credit
Parties. Without limitation, such obligations of the Credit Parties
shall include without limitation arrangement fees, administrative
fees, unused fees, breakage costs, indemnities, trustee fees and
transaction expenses incurred by the parties hereto in connection with
the transactions contemplated by the Operative Agreements.
(e) The Lessee hereby covenants and agrees to cause an
Appraisal or reappraisal (in form and substance satisfactory to the
Agent and from an appraiser selected by the Agent) to be issued
respecting any Property as requested by the Agent from time to time
(i) at each and every time as such shall be required to satisfy any
regulatory requirements imposed on the Agent, the Lessor, the Trust
Company, any Lender and/or any Holder and (ii) after the occurrence of
an Event of Default.
(f) The Lessee hereby covenants and agrees that, except
for amounts payable as Basic Rent, any and all payment obligations
owing from time to time under the Operative Agreements by any Person
to the Agent, any Lender, any Holder or any other Person shall
(without further action) be deemed to be Supplemental Rent obligations
payable by the Lessee. Without limitation, such obligations of the
Lessee shall include the Supplement Rent obligations pursuant to
Section 3.3 of the Lease, arrangement fees, administrative fees,
participation fees, commitment fees, unused fees, prepayment
penalties, breakage costs, indemnities, trustee fees and transaction
expenses incurred by the parties hereto in connection with the
transactions contemplated by the Operative Agreements.
(g) At any time the Lessor or the Agent is entitled under
the Operative Agreements to possession of a Property or any component
thereof, each of the Construction Agent and the Lessee hereby
covenants and agrees, at its own cost and expense, to assemble and
make the same available to the Agent (on behalf of the Lessor).
(h) The Lessee hereby covenants and agrees that,
respecting each Property, Non-Integral Equipment financed under the
Operative Agreements may constitute up to, but shall not exceed, ten
percent (10%) of the aggregate Advances extended at or prior to such
time with respect to such Property.
(i) [RESERVED].
(j) The Lessee hereby covenants and agrees that it shall
give prompt notice to the Agent if the Lessee's principal place of
business or chief executive office, or the office where the records
concerning the accounts or contract rights relating to any Property
are kept, shall cease to be located at 0000 Xxx Xxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx or if it shall change its name.
(k) Unless the Agent otherwise agrees in writing, the
Lessee hereby covenants and agrees that the aggregate Property Cost of
Non-Integral Equipment purchased for any reason by the Lessee prior to
the Expiration Date shall not exceed ten percent (10%) of the
aggregate Property Cost for all Properties funded during the
Commitment Period.
(l) [RESERVED]
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(m) The Lessee hereby covenants and agrees that the
rights of the Lessee under this Agreement and the Lease shall not
impair or in any way diminish the obligations of the Construction
Agent and/or the rights of the Lessor under the Agency Agreement.
(n) [RESERVED].
(o) Each Credit Party shall promptly notify the Agent, or
cause the Agent to be promptly notified, upon such Credit Party
gaining knowledge of the occurrence of any Default or Event of Default
which is continuing at such time.
(p) Until all of the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in
full and the Commitments and the Holder Commitments terminated unless
consent has been obtained from the Majority Secured Parties, each
Credit Party will:
(i) preserve and maintain its separate legal
existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and
remain qualified as a foreign corporation (or partnership,
limited liability company or other such similar entity, as the
case may be) and authorized to do business in each
jurisdiction in which the failure to do so qualify would have
a Material Adverse Effect;
(ii) pay and perform all obligations of the Credit
Parties under the Operative Agreements and pay and perform (A)
all taxes, assessments and other governmental charges that may
be levied or assessed upon it or any of its property, and (B)
all other indebtedness, obligations and liabilities in
accordance with customary trade practices, which if not paid
would have a Material Adverse Effect; provided that any Credit
Party may contest any item described in this Section
8.3(p)(ii) in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a
Material Adverse Effect, observe and remain in compliance with
all applicable Laws and maintain in full force and effect all
Governmental Actions, in each case applicable to the conduct
of its business; keep in full force and effect all licenses,
certifications or accreditations necessary for any Facility to
carry on its business; and not permit the termination of any
insurance reimbursement program available to any Facility; and
(iv) provided that the Agent, the Lenders and the
Holders use reasonable efforts to minimize disruption to the
business of the Credit Parties permit representatives of the
Agent or any Lender or Holder, from time to time and upon
reasonable notice to the Lessee, to visit and inspect its
properties; inspect, audit and make extracts from its books,
records and files, including without limitation management
letters prepared by independent accountants; and discuss with
its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of
operations and business prospects.
(q) Lessee shall perform any and all obligations of
Lessor under, and cause Lessor to otherwise remain in full compliance
with, the terms and provisions of each Ground Lease, if any.
(r) Promptly after obtaining any required architectural
approvals by any business park or any other applicable entity with
oversight responsibility for the applicable Improvements, the
Construction Agent shall deliver to the Agent copies of the same.
(s) Each Credit Party will promptly notify the Agent in
the event such Credit Party discovers or determines that any computer
application (including those of any supplier, vendor or customer of
such Credit Party or any Subsidiary of such Credit Party) that is
material to such Credit Party's or any of its Subsidiaries' business
and operations will not be Year 2000 Compliant, except to the extent
that such failure shall not have and could not reasonably be expected
to have a Material Adverse Effect.
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(t) SALI and the Lessee will provide to the Agent and the
Lenders:
(i) within 45 days after the end of each fiscal
month, consolidating operating statements for each of the
Properties and each of the Residual Payment Collateral
properties, including an income and expense statement and an
occupancy report, with comparative information against budget,
in form and detail satisfactory to the Agent;
(ii) within 45 days after the end of each fiscal
quarter, consolidated operating statements for the Properties
and the Residual Payment Collateral properties, respectively,
including a balance sheet, an income and expense statement and
an occupancy report, with comparative information against
budget, in form and detail satisfactory to the Agent; and
(iii) within 30 days after the end of each fiscal
year, an operating budget for the Properties and the Residual
Payment Collateral properties, respectively, including an
income and expense statement and an occupancy report, in form
and detail satisfactory to the Agent.
(u) Each Credit Party covenants and agrees that it will
either (i) cause Completion with respect to the Charlotte Property to
occur on or before March 1, 1999, or (ii) cause SALI or any of its
Affiliates to purchase the Charlotte Property for the amount set forth
on Exhibit M on or before March 1, 1999.
(v) The Lessee will deliver to the Agent on or before
March 31, 1999 an Appraisal for the Residual Payment Collateral
located in Bluebell, Pa. (plus any other Residual Payment Collateral
approved by the Lenders subsequent to the Initial Closing Date)
showing an appraised value for such property or properties of at least
$15,000,000.
(w) If any Credit Party enters into a Management
Agreement pursuant to which a Credit Party is obligated to pay a
management fee with respect to any of the Properties, such obligation
of the Credit Party to pay such management fee shall be subordinated
to the obligations of such Credit Party under the Operative
Agreements.
8.3B ADDITIONAL COVENANTS OF SALI.
8.3B.1 SALI hereby covenants and agrees as follows:
8.3B.1.1 EXISTENCE.
Without limiting the provisions of Section 8.3(p)(i) which shall apply
with equal effect, SALI shall maintain its existence in good standing in the
jurisdiction in which it is organized and in each other jurisdiction where it
is required to register or qualify to do business if the failure to do so in
such other jurisdiction might have a material adverse effect on the ability of
SALI to perform the obligations under the Basic Documents, on the conduct of
SALI's operations, on SALI's financial condition, or on the value of, or the
ability of the Lenders to realize upon, the Collateral.
8.3B.1.2 FURTHER ASSURANCES.
SALI will make, execute, acknowledge and deliver all and every such
further acts and assurances as the Lenders shall from time to time require for
confirming or carrying out the intentions or facilitating the performance of
the terms of this Agreement.
8.3B.1.3 FINANCIAL RECORDS - INSPECTION.
SALI will (a) maintain or cause to be maintained full, complete,
accurate and adequate records and books of account in accordance with generally
accepted accounting principles consistently applied; (b) permit the Agent, the
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Lenders, the Holders and their duly authorized agents, attorneys and
accountants to inspect, examine, and copy its records and books of account at
all reasonable times; (c) (i) as soon as available, but in no event more than
one hundred twenty (120) days after the close of SALI's fiscal years, provide
the Agent, the Lenders and the Holders with copies of (1) SALI's consolidated
financial statements for the year in question, in form and detail satisfactory
to the Agent, prepared in accordance with generally accepted accounting
principles, consistently applied, and audited by an independent certified
public accountant satisfactory to the Agent, which financial statements shall
include a balance sheet as of the end of such fiscal year, (2) the related
statements of operations and retained earnings and cash statements for such
fiscal year in a format acceptable to the Agent, and (3) an unqualified letter
or opinion of the independent accountant; (ii) as soon as available, but in no
event more than forty-five (45) days after the end of SALI's fiscal quarters,
provide the Agent with copies of internally prepared consolidated and
consolidating financial statements of SALI on a year-to-date basis and as of
the close of such period and income and expense statements for SALI for such
period, each certified as to accuracy by the chief financial officer of SALI;
and (iii) as soon as available but in no event more than thirty (30) days after
the date of filing, provide the Agent with copies of the federal and state
income tax returns for SALI for the year in question as well as any requests
for extensions, schedules and exhibits filed in connection therewith; (d) SALI
shall provide to the Agent copies of each 10K or 10Q reports as soon as
possible, but in no event more than thirty (30) days after filing such report
with the Securities and Exchange Commission; (e) promptly deliver to the Agent
such other information with respect to the financial statements of SALI as the
Lenders and Holders may from time to time require; and (f) all required
financial statements shall be accompanied by a certificate of compliance with
the financial covenants set forth in this Agreement (and shall include SALI's
computation of such covenants) signed by SALI's Chief Financial Officer and a
representation whether or not there has occurred a Default or Event of Default
under the Basic Documents and, if so, stating the facts with respect thereto.
All financial statements will include the following certification:
"The undersigned as __________________ of
___________________ certifies that the financial information
contained in the financial statements dated ________________,
is true and complete as of this date. This statement is
provided to NationsBank, N.A., as agent for the Lenders (in
such capacity, the "Agent"), set forth in the Participation
Agreement dated December 2, 1998 as amended, restated or
substituted from time to time for the purpose of obtaining
credit or in fulfillment of the terms and conditions of credit
already provided. Accordingly, it is intended that the Agent
and the Lenders (as referenced and defined in the
Participation Agreement) may rely on this information".
8.3B.1.4 ESTOPPEL CERTIFICATES.
Within ten (10) days following any request of the Agent so to do, SALI
will furnish the Agent and such other persons as the Agent may direct with a
written certificate, duly acknowledged stating in detail whether or not any
credits, offsets or defenses exist with respect to this Agreement.
8.3B.2 FINANCIAL COVENANTS.
SALI hereby covenants and agrees as follows:
(a) Minimum Tangible Net Worth. SALI shall maintain, on
a consolidated basis with all Subsidiaries, at all times measured quarterly
beginning with the quarter ending December 31, 1998, a minimum Tangible Net
Worth of not less than the sum of a $171,514,850 plus 75% of SALI's net income
(if positive) for each quarter ending after September 30, 1998 plus 85% of the
net proceeds to SALI of any equity capital transaction received during such
quarter.
(b) Minimum Liquidity. SALI shall maintain at all times,
measured quarterly, on an individual basis (i.e. SALI only), Liquid Assets plus
availability under all lines of credit of SALI and its Subsidiaries in an
amount equal to $47,000,000. Upon reaching the Minimum Equity Value covenant
in subsection (d) hereof, the Minimum Liquidity covenant will be the greater of
$25,000,000 of Liquid Assets or 90 days of debt service on all of the SALI's
direct and contingent liabilities.
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(c) Funded Debt to EBITDAR. SALI shall maintain as of
the end of each fiscal quarter (beginning with the fiscal quarter ending March
31, 2001) a ratio of Funded Debt as of such date to EBITDAR for SALI on a
consolidated basis for the period of four consecutive fiscal quarters ending as
of such date, of not more than:
March 31, 2001 5.0:1.0
(d) Minimum Equity Value. SALI shall achieve a minimum
shareholder's equity (determined in accordance with GAAP) of $290 million by
June 30, 1999. Once this equity value is achieved, this covenant shall no
longer be applicable.
(e) Aggregate Adjusted EBITDAR to Debt Service for the
Properties. Maintain as of the end of the fiscal quarters shown below a ratio
(for all Properties in the aggregate) of Adjusted Properties EBITDAR for the
period of four consecutive fiscal quarters then ended to Annual Properties Debt
Service of not less than:
Fiscal Quarter Ending
---------------------
December 31, 1999 1.0:1.0
March 31, 2000 1.2:1.0
June 30, 2000 and each fiscal quarter thereafter 1.35:1:0
(f) Minimum NOI for Residual Payment Collateral. The
Residual Payment Collateral shall have a combined NOI of at least $1.1 million
for the twelve month period ending on the last day of each fiscal quarter.
(g) Minimum Occupancy for Residual Payment Collateral.
As of the end of each fiscal quarter, the Resident Occupancy Rate for each
property comprising the Residual Payment Collateral shall be not less than 85%.
(h) Notification of Certain Events. Promptly notify the
Agent upon obtaining knowledge of the occurrence of any of the following:
(i) any Event of Default under the Basic
Documents;
(ii) any event, development or circumstance
whereby the financial statements furnished under the Basic Documents fail in
any material respect to present fairly, in accordance with GAAP, the financial
condition and operational results of SALI or the Lessee;
(iii) any judicial, administrative or arbitral
proceeding pending against SALI in any judicial or administrative proceeding
known by SALI to have been threatened in a written communication against it
which, if adversely decided, could materially adversely affect its financial
condition or operations (present or prospective);
(iv) (A) the revocation, suspension,
probation, restriction, limitation or refusal to renew, or the pending,
revocation, suspension, probation, restriction, limitation, or refusal to
renew, of any License held by SALI, the Lessee, the Management Company, their
Subsidiaries or affiliates, or (B) the decertification, revocation, suspension,
probation, restriction, limitation, or refusal to renew, or the pending,
decertification, revocation, suspension, probation, restriction, limitation, or
refusal to renew any participation or eligibility in any third party payor
program in which SALI, the Lessee, Management Company, their Subsidiaries or
affiliates elects to participate which exceeds 10% of the gross revenue of a
Facility, including, without limitation, Medicare, Medicaid, or private
insurer, or any accreditation of SALI, the Lessee, the Management Company,
their Subsidiaries or affiliates, or (C) of the issuance or pending issuance of
any License for a period of less than twelve (12) months, as a consequence of
sanctions imposed by any governmental issuance of any License for a period of
less than twelve (12) months, as a consequence of sanctions imposed by any
governmental authority, or (D) the assessment or pending assessment, of any
civil or criminal penalties by any government authority, any third party
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payor or any accreditation organization or Person, if any, which could
materially adversely affect the financial condition or operations of SALI, the
Lessee, the Management Company, their Subsidiaries or affiliates; and
(v) any other development in the business or
affairs of SALI or the Management Company which may be a Material Adverse
Effect; and
(vi) any actual contingent liability or a
potential contingent liability threatened or noticed in a written communication
of SALI of $1,000,000 or more,
in each case described in (i) through (vi) above, such notification shall
describe in detail satisfactory to the Agent the nature thereof and, in the
case of notification under this clause (iii), the action SALI, the Lessee or
the Management Company proposes to take with respect thereto or a statement
that SALI, the Lessee or the Management Company intends to take no action and
an explanation of the reasons for such inaction. In addition, SALI, the Lessee
or the Management Company will furnish to the Agent immediately after receipt
thereof copies of all administrative notices material to SALI's, the Lessee's,
the Management Company's, their Subsidiaries' or affiliates' business and
operations of any Facility and all responses by or on behalf of SALI, the
Lessee, the Management Company, their Subsidiaries or affiliates with respect
to such administrative notices.
8.3B.3 NEGATIVE COVENANTS.
SALI hereby covenants and agrees that it will not:
(a) Mergers or Acquisitions. Enter into any merger or
consolidation or amalgamation, wind up or dissolve itself (or suffer any
liquidation or dissolution), or acquire all or substantially all of the assets
of any person, firm, joint venture or corporation. The foregoing
notwithstanding, SALI shall be permitted to enter into any merger,
consolidation or acquisition pursuant to which SALI retains its corporate
identity and Xxxx X. Xxxxxxxx or Xxxxxx X. Xxxxxxxx remains the Chairman of the
Board and Chief Executive Officer with responsibility for managing the
businesses of SALI and such merger, consolidation or acquisition does not
result in either a Material Adverse Effect or a breach of any covenant under
any of the Basic Documents.
(b) Sale of Assets. Sell, lease or otherwise dispose of
any substantial portion of its assets (except for customary political and
charitable contributions and assets disposed of in the ordinary course of
business) unless such disposition is in exchange for not less than fair market
value and does not result in either a Material Adverse Effect or a breach of
any covenant under any of the Basic Documents.
(c) Subsidiaries. Except for the purpose of acquiring
real property to construct an assisted living facility or acquiring an existing
assisted living facility, create or otherwise acquire any subsidiaries if such
creation or acquisition will result in a Material Adverse Effect.
(d) Additional Stock and Transfers of Stock. SALI may
issue or grant options or rights to purchase its capital stock and there shall
be no limitations on the right of shareholders of SALI to pledge, assign,
transfer or encumber any of their stock in SALI provided, (1) SALI is an entity
whose common equity is registered under an applicable Federal Securities Act
and is traded on a National Securities Exchange or NASDAQ national market, and
(2) either Xxxx X. Xxxxxxxx or Xxxxxx X. Xxxxxxxx is the Chief Executive
Officer and Chairman of the Board with responsibility for managing the
businesses of SALI; and provided, that, SALI shall provide written notice to
the Agent of transfer of stock in SALI under such circumstances and in such
manner as SALI is required to give notice thereof to the Securities Exchange
Commission.
(e) ERISA Compliance. (A) Restate or amend any Plan
established and maintained by SALI or any Commonly Controlled Entity and
subject to the requirements of ERISA, in a manner designed to disqualify such
Plan and its related trusts under the applicable requirements of the Code; (B)
permit any Commonly Controlled Entity to take any action or fail to take any
action which causes a termination of any Plan in a manner which could result in
the imposition of a lien on the property of SALI or any Commonly Controlled
Entity pursuant to Section 4068 of ERISA; (F) fail to notify the Agent that
notice has been received of a "termination" (as defined in ERISA) of any
Multiemployer Plan to which SALI or any Commonly Controlled Entity has an
obligation to contribute; (G)
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incur or permit any Commonly Controlled Entity to incur a "complete withdrawal"
or "partial withdrawal" (as defined in ERISA) from any Multiemployer Plan to
which SALI or any Commonly Controlled Entity has an obligation to contribute;
or (H) fail to notify the Agent that notice has been received from the
administrator of any Multiemployer Plan to which SALI or administrator of any
Multiemployer Plan to which SALI or any Commonly Controlled Entity has an
obligation to contribute that any such Plan will be placed in "reorganization"
(as defined in ERISA).
(f) Amendments; Termination. Without the prior written
consent of the Agent, the Lenders and the Holder, SALI will not, nor will it
permit any Subsidiary or affiliate to, amend or terminate or agree to amend or
terminate any License, Reimbursement-Participation Agreement or any Management
Agreement, relating to any of the Properties, except for amendments or
modifications making allowances in the ordinary course of business and which
are not, in the aggregate, materially adverse to SALI or the Lessee, directly
or indirectly, or the Lenders and Holders
8.4. SHARING OF CERTAIN PAYMENTS.
Except for Excepted Payments, the parties hereto acknowledge and
agree that all payments due and owing by any Credit Party to the Lessor under
the Lease or any of the other Operative Agreements shall be made by such Credit
Party directly to the Agent as more particularly provided in Section 8.3
hereof. The Lessor, the Holders, the Agent, the Lenders and the Credit Parties
acknowledge the terms of Section 8.7 of this Agreement regarding the allocation
of payments and other amounts made or received from time to time under the
Operative Agreements and agree, that all such payments and amounts are to be
allocated as provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
The Agent, the Lenders and the Holders hereby agree that, so long as
no Event of Default shall have occurred and be continuing, the Owner Trustee
shall, from time to time at the request of the Lessee (and with the prior
consent of the Agent), in connection with the transactions contemplated by the
Agency Agreement, the Lease or the other Operative Agreements, (i) grant
easements and other rights in the nature of easements with respect to any
Property, (ii) release existing easements or other rights in the nature of
easements which are for the benefit of any Property, (iii) execute and deliver
to any Person any instrument appropriate to confirm or effect such grants or
releases, and (iv) execute and deliver to any Person such other documents or
materials in connection with the acquisition, development, construction,
testing or operation of any Property, including without limitation reciprocal
easement agreements, construction contracts, operating agreements, development
agreements, plats, replats or subdivision documents; provided, that each of the
agreements referred to in this Section 8.5 shall be of the type normally
executed by the Lessee in the ordinary course of the Lessee's business and
shall be on commercially reasonable terms so as not to diminish the value of
any Property in any material respect.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE
OWNER TRUSTEE.
The Holders hereby appoint the Agent to act as collateral agent for
the Holders in connection with the Lien granted by the Security Documents to
secure the Holder Amount. The Lenders and the Holders acknowledge and agree
and direct that the rights and remedies of the beneficiaries of the Lien of the
Security Documents shall be exercised by the Agent on behalf of the Lenders and
the Holders as directed from time to time by the Majority Secured Parties or,
pursuant to Sections 8.2(h) and 12.4, all of the Lenders and the Holders, as
the case may be; provided, in all cases, the Agent shall allocate payments and
other amounts received in accordance with Section 8.7. The Agent is further
appointed to provide notices under the Operative Agreements on behalf of the
Owner Trustee (as determined by the Agent, in its reasonable discretion), to
receive notices under the Operative Agreements on behalf of the Owner Trustee
and (subject to Sections 8.5 and 9.2) to take such other action under the
Operative Agreements on behalf of the Owner Trustee as the Agent shall
determine in its reasonable discretion from time to time. The Agent hereby
accepts such appointments. For purposes hereof, the provisions of Section 7 of
the Credit Agreement, together with such other terms and provisions of the
Credit Agreement and the other Operative Agreements as required for the full
interpretation and operation of Section 7 of the Credit Agreement are hereby
incorporated by reference as if restated herein for the mutual benefit of the
Agent and each Holder as if each Holder were a Lender thereunder. Outstanding
Holder Advances and outstanding Loans shall each be taken into account for
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purposes of determining Majority Secured Parties. Further, the Agent shall be
entitled to take such action on behalf of the Owner Trustee as is delegated to
the Agent under any Operative Agreement (whether express or implied) as may be
reasonably incidental thereto. The parties hereto hereby agree to the
provisions contained in this Section 8.6. Any appointment of a successor agent
under Section 7.9 of the Credit Agreement shall also be effective as an
appointment of a successor agent for purposes of this Section 8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
(a) Each Credit Party has agreed pursuant to Section 5.8
and otherwise in accordance with the terms of this Agreement to pay to
(i) the Agent any and all Rent (excluding Excepted Payments) and any
and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person and (ii) each Person
as appropriate the Excepted Payments. Promptly after receipt, the
Agent shall apply and allocate, in accordance with the terms of this
Section 8.7, such amounts received from any Credit Party and all other
payments, receipts and other consideration of any kind whatsoever
received by the Agent pursuant to the Security Agreement or otherwise
received by the Agent, the Holders or any of the Lenders in connection
with the Collateral, the Security Documents or any of the other
Operative Agreements. Ratable distributions among the Lenders and the
Holders under this Section 8.7 shall be made based on (in the case of
the Lenders) the ratio of the outstanding Loans to the aggregate
Property Cost and (in the case of the Holders) the ratio of the
outstanding Holder Advances to the aggregate Property Cost. Ratable
distributions among the Tranche A Lenders under this Section 8.7 shall
be made based on the ratio of the individual Tranche A Lender's
Commitment for Tranche A Loans to the aggregate of all the Tranche A
Lenders' Commitments for Tranche A Loans. Ratable distributions among
the Tranche B Lenders under this Section 8.7 shall be made based on
the ratio of the individual Tranche B Lender's Commitment for Tranche
B Loans to the aggregate of all the Tranche B Lenders' Commitments for
Tranche B Loans. Ratable distributions among the Lenders (in
situations where the Tranche A Lenders are not differentiated from the
Tranche B Lenders) shall be made based on the ratio of the individual
Lender's Commitment to the aggregate of all the Lenders' Commitments.
Ratable distributions among the Holders under this Section 8.7 shall
be based on the ratio of the individual Holder's Holder Commitment to
the aggregate of all the Holders' Holder Commitments.
(b) Payments and other amounts received by the Agent from
time to time in accordance with the terms of subparagraph (a) shall be
applied and allocated as follows (subject in all cases to Section
8.7(c)):
(i) Any such payment or amount identified as or
deemed to be Basic Rent shall be applied and allocated by the
Agent first, ratably to the Lenders and the Holders for
application and allocation to the payment of interest on the
Loans and thereafter the principal of the Loans which is due
and payable on such date and to the payment of accrued Holder
Yield with respect to the Holder Advances and thereafter the
portion of the Holder Advances which is due on such date; and
second, if no Default or Event of Default is in effect, any
excess shall be paid to such Person or Persons as the Lessee
may designate; provided, that if a Default or Event of Default
is in effect, such excess (if any) shall instead be held by
the Agent until the earlier of (I) the first date thereafter
on which no Default or Event of Default shall be in effect (in
which case such payments or returns shall then be made to such
other Person or Persons as the Lessee may designate) and (II)
the Maturity Date or the Expiration Date, as the case may be
(or, if earlier, the date of any Acceleration), in which case
such amounts shall be applied and allocated in the manner
contemplated by Section 8.7(b)(iv).
(ii) If on any date the Agent or the Lessor shall
receive any amount in respect of (A) any Casualty or
Condemnation pursuant to Sections 15.1(a) or 15.1(g) of the
Lease (excluding any payments in respect thereof which are
payable to the Lessee in accordance with the Lease), or (B)
the Termination Value in connection with the delivery of a
Termination Notice pursuant to Article XVI of the Lease, or
(C) the Termination Value in connection with the exercise of
the Purchase Option under Section 20.1 of the Lease or the
exercise of the option of the Lessor to transfer the
Properties to the Lessee pursuant to Section 20.3 of the
Lease, or (D) any payment required to be
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made or elected to be made by the Construction Agent to the
Lessor pursuant to the terms of the Agency Agreement, then in
each case, the Lessor shall be required to pay such amount
received (1) if no Acceleration has occurred, to prepay the
principal balance of the Loans and the Holder Advances, on a
pro rata basis, a portion of such amount to be distributed to
the Lenders and the Holders or (2) if an Acceleration has
occurred, to apply and allocate the proceeds respecting
Sections 8.7(b)(ii)(A) through 8.7(b)(ii)(D) in accordance
with Section 8.7(b)(iii) hereof.
(iii) An amount equal to any payment identified as
proceeds of the sale or other disposition (or lease upon the
exercise of remedies) of the Properties or any portion
thereof, whether pursuant to Article XXII of the Lease or the
exercise of remedies under the Security Documents or
otherwise, the execution of remedies set forth in the Lease
and any payment in respect of excess wear and tear pursuant to
Section 22.3 of the Lease (whether such payment relates to a
period before or after the Construction Period Termination
Date) shall be applied and allocated by the Agent first,
ratably to the payment of the principal and interest of the
Tranche B Loans then outstanding, second, ratably to the
payment to the Holders of the outstanding principal balance of
all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, third, to the
extent such amount exceeds the maximum amount to be returned
pursuant to the foregoing provisions of this paragraph (iii),
ratably to the payment of the principal and interest of the
Tranche A Loans then outstanding, fourth, to any and all other
amounts owing under the Operative Agreements to the Lenders
under the Tranche B Loans, fifth, to any and all other amounts
owing under the Operative Agreements to the Holders, sixth, to
any and all other amounts owing under the Operative Agreements
to the Lenders under the Tranche A Loans, and seventh, to the
extent moneys remain after application and allocation pursuant
to clauses first through sixth above, to the Owner Trustee for
application and allocation to any and all other amounts owing
to the Holders or the Owner Trustee and as the Holders shall
determine; provided, where no Event of Default shall exist and
be continuing and a prepayment is made for any reason with
respect to less than the full amount of the outstanding
principal amount of the Loans and the outstanding Holder
Advances, the proceeds shall be applied and allocated ratably
to the Lenders and to the Holders.
(iv) An amount equal to (A) any such payment
identified as a payment pursuant to Section 22.1(b) of the
Lease (or otherwise) of the Maximum Residual Guarantee Amount
(and any such lesser amount as may be required by Section
22.1(b) of the Lease) in respect of the Properties and (B) any
other amount payable upon any exercise of remedies after the
occurrence of an Event of Default not covered by Sections
8.7(b)(i) or 8.7(b)(iii) above (including without limitation
any amount received in connection with an Acceleration which
does not represent proceeds from the sale or liquidation of
the Properties) and (C) any other amount payable by any
Guarantor pursuant to Section 6B shall be applied and
allocated by the Agent first, ratably, to the payment of the
principal and interest balance of Tranche A Loans then
outstanding, second, ratably to the payment of the principal
and interest balance of the Tranche B Loans then outstanding,
third, ratably to the payment of the principal balance of all
Holder Advances plus all outstanding Holder Yield with respect
to such outstanding Holder Advances, fourth, to the payment of
any other amounts owing to the Lenders hereunder or under any
of the other Operative Agreement, and fifth, to the extent
moneys remain after application and allocation pursuant to
clauses first through fourth above, to the Owner Trustee for
application and allocation to Holder Advances and Holder Yield
and any other amounts owing to the Holders or the Owner
Trustee as the Holders shall determine.
(v) An amount equal to any such payment
identified as Supplemental Rent shall be applied and allocated
by the Agent to the payment of any amounts then owing to the
Agent, the Lenders, the Holders and the other parties to the
Operative Agreements (or any of them) (other than any such
amounts payable pursuant to the preceding provisions of this
Section 8.7(b)) as shall be determined by the Agent in its
reasonable discretion; provided, however, that Supplemental
Rent received upon the exercise of remedies after the
occurrence and continuance of an Event of Default in lieu of
or in substitution of the Maximum Residual Guarantee Amount or
as a partial payment thereon shall be applied and allocated as
set forth in Section 8.7(b)(iv).
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(vi) The Agent in its reasonable judgment shall
identify the nature of each payment or amount received by the
Agent and apply and allocate each such amount in the manner
specified above.
(c) Upon the payment in full of the Loans, the Holder
Advances and all other amounts then due and owing by the Owner Trustee
hereunder or under any Credit Document and the payment in full of all
other amounts then due and owing to the Lenders, the Holders, the
Agent, the Owner Trustee and the other Financing Parties pursuant to
the Operative Agreements, any moneys remaining with the Agent shall be
returned to the Lessee. In the event of an Acceleration it is agreed
that, prior to the application and allocation of amounts received by
the Agent in the order described in Section 8.7(b) above or any
distribution of money to the Lessee, any such amounts shall first be
applied and allocated to the payment of (i) any and all sums advanced
by the Agent in order to preserve the Collateral or to preserve its
Lien thereon, (ii) the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Agent of its rights under the
Security Documents, together with reasonable attorneys' fees and
expenses and court costs and (iii) any and all other amounts
reasonably owed to the Agent under or in connection with the
transactions contemplated by the Operative Agreements (including
without limitation any accrued and unpaid administration fees).
8.8. RELEASE OF PROPERTIES, ETC.
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to prepay the Loans, Holder Advances and all other amounts owing to
the Lenders and the Holders under the Operative Agreements, the Agent is hereby
authorized and directed to release such Properties from the Liens created by
the Security Documents to the extent of its interest therein. In addition,
upon the termination of the Commitments and the Holder Commitments and the
payment in full of the Loans, the Holder Advances and all other amounts owing
by the Owner Trustee and the Lessee hereunder or under any other Operative
Agreement the Agent is hereby authorized and directed to release all of the
Properties from the Liens created by the Security Documents to the extent of
its interest therein. Upon request of the Owner Trustee following any such
release, the Agent shall, at the sole cost and expense of the Lessee, execute
and deliver to the Owner Trustee and the Lessee such documents as the Owner
Trustee or the Lessee shall reasonably request to evidence such release.
8.9 RELEASE OF RESIDUAL PAYMENT COLLATERAL.
The Residual Payment Collateral will be promptly released, at the
request and expense of SALI, at any time after the ratio of Adjusted EBITDAR
for the Properties to Annual Properties Debt Service shall be equal to or
greater than 1.50:1.0 as of the end of at least two (2) consecutive fiscal
quarters, provided that no Default or Event of Default shall then exist and be
continuing. The Agent is specifically authorized and directed by the Lenders
and the Holders to take such action as is necessary or appropriate to give
effect to such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT AGREEMENT
RIGHTS.
Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Holders, the Construction Agent, the
Credit Parties and the Owner Trustee hereby agree that, prior to the occurrence
and continuation of any Default or Event of Default, the Construction Agent or
the Lessee, as the case may be, shall have the following rights:
(a) the right to designate an account to which amounts
funded under the Operative Agreements shall be credited pursuant to
Section 2.3(a) of the Credit Agreement;
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(b) the right to terminate or reduce the Commitments
pursuant to Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation
options pursuant to Section 2.7 of the Credit Agreement;
(d) the right to receive any notice and any certificate,
in each case issued pursuant to Section 2.11(a) of the Credit
Agreement;
(e) the right to replace any Lender pursuant to Section
2.11(b) of the Credit Agreement;
(f) the right to approve any successor agent pursuant to
Section 7.9 of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to
which the Lessor has the right to consent pursuant to Section 9.8 of
the Credit Agreement.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT
RIGHTS.
Notwithstanding anything to the contrary contained in the Trust
Agreement, the Credit Parties, the Owner Trustee and the Holders hereby agree
that, prior to the occurrence and continuation of any Default or Event of
Default, the Construction Agent or the Lessee, as the case may be, shall have
the following rights:
(a) the right to exercise the conversion and continuation
options pursuant to Section 3.8 of the Trust Agreement;
(b) the right to receive any notice and any certificate,
in each case issued pursuant to Section 3.9(a) of the Trust Agreement;
(c) the right to replace any Holder pursuant to Section
3.9(b) of the Trust Agreement;
(d) the right to exercise the removal options contained
in Section 9.1 of the Trust Agreement; provided, however, that no
removal of the Owner Trustee and appointment of a successor Owner
Trustee by the Holders pursuant to Section 9.1 of the Trust Agreement
shall be made without the prior written consent (not to be
unreasonably withheld or delayed) of the Lessee.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
Each Lender may participate, assign or transfer all or a portion of
its interest hereunder and under the other Operative Agreements to an Eligible
Assignee in accordance with Sections 9.7 and 9.8 of the Credit Agreement;
provided, each participant, assignee or transferee must obtain the same ratable
interest in Tranche A Loans, Tranche A Commitments, Tranche B Loans, Tranche B
Commitments (and to the extent the selling Lender is also a Holder (or an
Affiliate of a Holder), each such participant, assignor or transferee must also
obtain the same ratable interest in and to the Holder Advances, Holder
Commitments and the Trust Estate); provided further, that each Lender that
participates, assigns or transfers all or a portion of its interest hereunder
and under the other Operative Agreements shall deliver to the Agent a copy of
each Assignment and Acceptance (as referenced in Section 9.8 of the Credit
Agreement) for purposes of maintaining the Register and notice of such
assignment to the Lessee. The Holders may, directly or indirectly, assign,
convey or otherwise transfer any of their right, title or interest in or to the
Trust Estate or the Trust Agreement to an Eligible Assignee and in accordance
with the terms of Section 11.8(b) of the Trust Agreement; provided, to the
extent the selling Holder is also a Lender (or an Affiliate of a Lender), each
such assignee, receiver of a conveyance or other transferee must also obtain
the same ratable interest in and to the Tranche A Loans, Tranche A Commitments,
Tranche B Loans and Tranche B Commitments. The Owner Trustee may, subject to
the rights of the Lessee under the Lease and the other Operative Agreements and
to the Lien of the
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applicable Security Documents but only with the prior written consent of the
Agent (which consent may be withheld by the Agent in its sole discretion) and
(provided, no Default or Event of Default has occurred and is continuing) with
the consent of the Lessee, directly or indirectly, assign, convey, appoint an
agent with respect to enforcement of, or otherwise transfer any of its right,
title or interest in or to any Property, the Lease, the Trust Agreement and the
other Operative Agreements (including without limitation any right to
indemnification thereunder), or any other document relating to a Property or
any interest in a Property as provided in the Trust Agreement and the Lease.
The provisions of the immediately preceding sentence shall not apply to the
obligations of the Owner Trustee to transfer Property to the Lessee or a third
party purchaser pursuant to Article XXII of the Lease upon payment for such
Property in accordance with the terms and conditions of the Lease. No Credit
Party may assign any of the Operative Agreements or any of their respective
rights or obligations thereunder or with respect to any Property in whole or in
part to any Person without the prior written consent of the Agent, the Lenders,
the Holders and the Lessor.
10.2. EFFECT OF TRANSFER.
From and after any transfer effected in accordance with this Section
10, the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein
to the transferor shall thereafter be deemed a reference to such transferee for
all purposes, except as provided in the preceding sentence. Notwithstanding
any transfer of all or a portion of the transferor's interest as provided in
this Section 10, the transferor shall be entitled to all benefits accrued and
all rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
Subject to and limited by in all respects the provisions of Sections
11.6 through 11.8 and whether or not any of the transactions contemplated
hereby shall be consummated, the Indemnity Provider hereby assumes liability
for and agrees to defend, indemnify and hold harmless each Indemnified Person
on an After Tax Basis from and against any Claims, which may be imposed on,
incurred by or asserted against an Indemnified Person by any third party,
including without limitation Claims arising from the negligence of an
Indemnified Person (but not to the extent such Claims arise from the gross
negligence or willful misconduct of such Indemnified Person itself, as
determined by a court of competent jurisdiction, as opposed to gross negligence
or willful misconduct imputed to such Indemnified Person) in any way relating
to or arising or alleged to arise out of the execution, delivery, performance
or enforcement of this Agreement, the Lease or any other Operative Agreement or
on or with respect to any Property or any component thereof, including without
limitation Claims in any way relating to or arising or alleged to arise out of
(a) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, construction, refurbishment, development, delivery, acceptance,
nondelivery, leasing, subleasing, possession, use, occupancy, operation,
maintenance repair, modification, transportation, condition, sale, return,
repossession (whether by summary proceedings or otherwise), or any other
disposition of any Property or any part thereof, including without limitation
the acquisition, holding or disposition of any interest in the Property, lease
or agreement comprising a portion of any thereof; (b) any latent or other
defects in any Property or any portion thereof whether or not discoverable by
an Indemnified Person or the Indemnity Provider; (c) a violation of
Environmental Laws, Environmental Claims or other loss of or damage to any
property or the environment relating to the Property, the Lease, the Agency
Agreement or the Indemnity Provider; (d) the Operative Agreements, or any
transaction contemplated thereby; (e) any breach by the Indemnity Provider of
any of its representations or warranties under the Operative Agreements to
which the Indemnity Provider is a party or failure by the Indemnity Provider to
perform or observe any covenant or agreement to be performed by it under any of
the Operative Agreements; (f) the transactions contemplated hereby or by any
other Operative Agreement, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA; (g) personal injury, death or property damage,
including without limitation Claims based on strict or absolute
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liability in tort; and (h) any fees, expenses and/or other assessments by any
business park or any other applicable entity with oversight responsibility for
the applicable Property.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including
without limitation a written notice of such proceeding), for any Claim, such
Indemnified Person shall promptly notify the Indemnity Provider in writing and
shall not take action with respect to such Claim without the consent of the
Indemnity Provider for thirty (30) days after the receipt of such notice by the
Indemnity Provider; provided, however, that in the case of any such Claim, if
action shall be required by law or regulation to be taken prior to the end of
such period of thirty (30) days, such Indemnified Person shall endeavor to, in
such notice to the Indemnity Provider, inform the Indemnity Provider of such
shorter period, and no action shall be taken with respect to such Claim without
the consent of the Indemnity Provider before seven (7) days before the end of
such shorter period; provided, further, that the failure of such Indemnified
Person to give the notices referred to in this sentence shall not diminish the
Indemnity Provider's obligation hereunder except to the extent such failure
precludes in all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person shall, at the expense of the Indemnity Provider, in good
faith conduct and control such action (including without limitation by pursuit
of appeals) (provided, however, that (A) if such Claim, in the Indemnity
Provider's reasonable discretion, can be pursued by the Indemnity Provider on
behalf of or in the name of such Indemnified Person, the Indemnified Person, at
the Indemnity Provider's request, shall allow the Indemnity Provider to conduct
and control the response to such Claim and (B) in the case of any Claim (and
notwithstanding the provisions of the foregoing subsection (A)), the
Indemnified Person may request the Indemnity Provider to conduct and control
the response to such Claim (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not to be
unreasonably withheld; provided, however, that any Indemnified Person may
retain separate counsel at the expense of the Indemnity Provider in the event
of a conflict of interest between such Indemnified Person and the Indemnity
Provider)) by, in the sole discretion of the Person conducting and controlling
the response to such Claim (1) resisting payment thereof, (2) not paying the
same except under protest, if protest is necessary and proper, (3) if the
payment be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings, or (4) taking such other
action as is reasonably requested by the Indemnity Provider from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the
controlling party. The parties agree that an Indemnified Person may at any
time decline to take further action with respect to the response to such Claim
and may settle such Claim if such Indemnified Person shall waive its rights to
any indemnity from the Indemnity Provider that otherwise would be payable in
respect of such Claim (and any future Claim, the pursuit of which is precluded
by reason of such resolution of such Claim) and shall pay to the Indemnity
Provider any amount previously paid or advanced by the Indemnity Provider
pursuant to this Section 11.1 by way of indemnification or advance for the
payment of an amount regarding such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed
to pay and shall pay to such Indemnified Person on demand and on an After Tax
Basis all reasonable costs, losses and expenses that such Indemnified Person
actually incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed
by the Indemnity Provider), the Indemnity Provider shall have agreed that the
Claim is an indemnifiable Claim hereunder, (B) in the case of a Claim that must
be pursued in the name of an Indemnified Person (or an Affiliate thereof), the
amount of the potential indemnity (taking into account all similar or logically
related Claims that have been or could be raised for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified
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Person), (C) the Indemnified Person shall have reasonably determined that the
action to be taken will not result in any material danger of sale, forfeiture
or loss of the Property, or any part thereof or interest therein, will not
interfere with the payment of Rent, and will not result in risk of criminal
liability, (D) if such Claim shall involve the payment of any amount prior to
the resolution of such Claim, the Indemnity Provider shall provide to the
Indemnified Person an interest-free advance in an amount equal to the amount
that the Indemnified Person is required to pay (with no additional net
after-tax cost to such Indemnified Person) prior to the date such payment is
due, (E) in the case of a Claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall have
provided to such Indemnified Person an opinion of independent counsel selected
by the Indemnity Provider and reasonably satisfactory to the Indemnified Person
stating that a reasonable basis exists to contest such Claim (or, in the case
of an appeal of an adverse determination, an opinion of such counsel to the
effect that the position asserted in such appeal will more likely than not
prevail) and (F) no Event of Default shall have occurred and be continuing. In
no event shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person shall not be required to contest any Claim in its name (or that of an
Affiliate) if the subject matter thereof shall be of a continuing nature and
shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnity Provider and
reasonably acceptable to the Indemnified Person stating that as a result of
such change in law (or interpretation thereof), it is more likely than not that
the Indemnified Person will prevail in such contest. In no event shall the
Indemnity Provider be permitted to adjust or settle any Claim without the
consent of the Indemnified Person to the extent any such adjustment or
settlement involves, or is reasonably likely to involve, any performance by or
adverse admission by or with respect to the Indemnified Person.
11.2. GENERAL TAX INDEMNITY.
(a) Subject to and limited by in all respects the
provisions of Sections 11.6 through 11.8, the Indemnity Provider shall
pay and assume liability for, and does hereby agree to indemnify,
protect and defend each Property and all Indemnified Persons, and hold
them harmless against, all Impositions on an After Tax Basis, and all
payments pursuant to the Operative Agreements shall be made free and
clear of and without deduction for any and all present and future
Impositions.
(b) Notwithstanding anything to the contrary in Section
11.2(a) hereof, the following shall be excluded from the indemnity
required by Section 11.2(a) (collectively, the "Excluded Taxes"):
(i) Taxes (other than Taxes that are, or are in
the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Indemnified Person
(other than the Lessor, the Owner Trustee and the Trust) by
the United States federal government that are based on or
measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person;
provided, that this clause (i) shall not be interpreted to
prevent a payment from being made on an After Tax Basis if
such payment is otherwise required to be so made;
(ii) Taxes (other than Taxes that are, or are in
the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on any Indemnified Person
(other than the Lessor, the Owner Trustee and the Trust) by
any state or local jurisdiction or taxing authority within any
state or local jurisdiction and that are based upon or
measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person;
provided that such Taxes shall not be excluded under this
subparagraph (ii) to the extent such Taxes would have been
imposed had the location, possession or use of any Property
in, the location or the operation of the Lessee in, or the
Lessee's making payments under the Operative Agreements from,
the jurisdiction imposing such Taxes been the sole connection
between such Indemnified Person and the jurisdiction imposing
such Taxes; provided, further, that this clause (ii) shall not
be interpreted to prevent a payment from being made on an
After Tax Basis if such payment is otherwise required to be so
made;
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(iii) any Tax to the extent it relates to any act,
event or omission that occurs after the termination of the
Lease and redelivery or sale of the Property in accordance
with the terms of the Lease (but not any Tax that relates to
such termination, redelivery or sale and/or to any period
prior to such termination, redelivery or sale); and
(iv) any Taxes which are imposed on an Indemnified
Person as a result of the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by
a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Indemnified
Person), but not Taxes imposed as a result of ordinary
negligence of such Indemnified Person;
(c) (i) Subject to the terms of Section 11.2(f), the
Indemnity Provider shall pay or cause to be paid all
Impositions directly to the taxing authorities where feasible
and otherwise to the Indemnified Person, as appropriate, and
the Indemnity Provider shall at its own expense, upon such
Indemnified Person's reasonable request, furnish to such
Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no
contest is conducted pursuant to Section 11.2(f) and which the
Indemnity Provider pays directly to the taxing authorities,
the Indemnity Provider shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which the
Indemnity Provider reimburses an Indemnified Person, the
Indemnity Provider shall do so within thirty (30) days after
receipt by the Indemnity Provider of demand by such
Indemnified Person describing in reasonable detail the nature
of the Imposition and the basis for the demand (including
without limitation the computation of the amount payable),
accompanied by receipts or other reasonable evidence of such
demand. In the case of Impositions for which a contest is
conducted pursuant to Section 11.2(f), the Indemnity Provider
shall pay such Impositions or reimburse such Indemnified
Person for such Impositions, to the extent not previously paid
or reimbursed pursuant to subsection (a), prior to the latest
time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under Section
11.2(f).
(iii) At the Indemnity Provider's request, the
amount of any indemnification payment by the Indemnity
Provider pursuant to subsection (a) shall be verified and
certified by an independent public accounting firm mutually
acceptable to the Indemnity Provider and the Indemnified
Person. The fees and expenses of such independent public
accounting firm shall be paid by the Indemnity Provider unless
such verification shall result in an adjustment in the
Indemnity Provider's favor of fifteen percent (15%) or more of
the payment as computed by the Indemnified Person, in which
case such fee shall be paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for
preparing and filing any real and personal property or ad valorem tax
returns in respect of each Property and any other tax returns required
for the Owner Trustee respecting the transactions described in the
Operative Agreements. In case any other report or tax return shall be
required to be made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a) and of which the
Indemnity Provider has knowledge or should have knowledge, the
Indemnity Provider, at its sole cost and expense, shall notify the
relevant Indemnified Person of such requirement and (except if such
Indemnified Person notifies the Indemnity Provider that such
Indemnified Person intends to prepare and file such report or return)
(A) to the extent required or permitted by and consistent with Legal
Requirements, make and file in the Indemnity Provider's name such
return, statement or report; and (B) in the case of any other such
return, statement or report required to be made in the name of such
Indemnified Person, advise such Indemnified Person of such fact and
prepare such return, statement or report for filing by such
Indemnified Person or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the
Indemnity Provider under or arising out of subsection (a), provide
such Indemnified Person at the Indemnity Provider's expense with
information sufficient to permit such return, statement or report to
be properly made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a). Such Indemnified
Person shall,
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upon the Indemnity Provider's request and at the Indemnity Provider's
expense, provide any data maintained by such Indemnified Person (and
not otherwise available to or within the control of the Indemnity
Provider) with respect to each Property which the Indemnity Provider
may reasonably require to prepare any required tax returns or reports.
(e) As between the Indemnity Provider on one hand, and
each Financing Party on the other hand, the Indemnity Provider shall
be responsible for, and the Indemnity Provider shall indemnify and
hold harmless each Financing Party (without duplication of any
indemnification required by subsection (a)) against, any obligation by
a Financing Party to pay any Lender Tax with respect to amounts
payable to a Financing Party under any of the Operative Agreements.
To the extent that any payment owing under any Operative Agreement
shall be subject to any Lender Tax, such payment be accompanied by an
additional payment by the Indemnity Provider of such amount as may be
necessary so that the net amount received by each Financing Party
(after deducting all applicable Taxes) is the same as such Financing
Party would have received had such payment not been subject to such
Lender Tax. Upon any payment of Lender Tax by the Indemnity Provider,
the Indemnity Provider, the Indemnity Provider shall promptly (and in
any event within 30 days) furnish to the Agent and applicable
Financing Party such tax receipts, certificates an other evidence of
such payment as the Indemnity Provider may have or the Agent or the
applicable Financing Party may reasonably request.
(f) If a written Claim is made against any Indemnified
Person or if any proceeding shall be commenced against such
Indemnified Person (including without limitation a written notice of
such proceeding), for any Impositions, the provisions in Section 11.1
relating to notification and rights to contest shall apply; provided,
however, that the Indemnity Provider shall have the right to conduct
and control such contest only if such contest involves a Tax other
than a Tax on net income of the Indemnified Person and can be pursued
independently from any other proceeding involving a Tax liability of
such Indemnified Person.
11.3. INCREASED COSTS, ILLEGALITY, ETC.
(a) In the event that the Agent determines (which
determination shall be conclusive absent manifest error) that, by
reason of circumstances affecting the London interbank market,
quotations of the Eurodollar Rate are not being provided in the
relevant amounts or for the relevant maturities for the purpose of
determining a Eurodollar Rate for any portion of the Loans or Holder
Advances, the Agent will give notice of such determination to the
Lessee and each Financing Party at least one day prior to the date of
an advance or any subsequent Interest Period for a Loan or Holder
Advance. If any such notice is given, no Financing Party shall have
any obligation to make any advance or maintain any Loan or Holder
Advance outstanding at a Eurodollar Rate. Until the earlier of the
date any such notice has been withdrawn by the Agent or the date when
the Financing Parties and the Lessee have mutually agreed upon an
alternate method of determining the rates of interest payable on the
Loans and Holder Advances, as the case may be, the Lessee shall not
have the right to have additional advances or maintain any portion of
Loans or Holder Advances at a Eurodollar Rate, whereupon the Financing
Parties and the Lessee shall mutually agree upon an alternate method
of determining the rates of interest payable on the Loans and the
Holder Advances or such Financing Party's portion of the principal
outstanding under all the Loans and Holder Advances shall be
immediately due and payable.
(b) Notwithstanding any other provision of the Operative
Agreements to the contrary, in the event that it shall become unlawful
for any Financing Party to obtain funds in the London interbank market
or for such Financing Party to maintain a Loan or Holder Advance at
the Eurodollar Rate, then, by written notice to the Lessee and to the
Agent, such Financing Party may declare that advances will not
thereafter be made or the existing Loans or Holder Advances thereafter
maintained by such Financing Party hereunder at the Eurodollar Rate,
whereupon the Financing Parties and the Lessee shall mutually agree
upon an alternate method of determining the rates of interest payable
on the Loans and the Holder Advances or such Financing Party's portion
of the principal outstanding under the Loans and the Holder Advances
shall be immediately due and payable.
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(c) (i) If any event shall occur (whether in the form
of a reserve requirement (not included in the definition of
the Eurodollar Rate), exchange control regulations,
governmental charges, compliance with any guideline or request
from any central bank or other Governmental Authority, changes
in the London interbank market or the position of any
Financing Party in such market or otherwise) and the result of
any such event is, in such Financing Party's reasonable
judgment, to increase the costs which such Financing Party
determines are attributable to its making or maintaining any
Loan or Holder Advance at the Eurodollar Rate, or its
obligation to make available any Loan or Holder Advance at the
Eurodollar Rate or to reduce the amount of any sum received or
receivable by such Financing Party under the Operative
Agreements, then, within ten (10) days after demand by such
Financing Party, Lessee hereby agrees to pay to such Financing
Party such additional amount or amounts as will compensate
such Financing Party for such increased cost or reduction.
(ii) In addition to any amounts payable pursuant
to Section 11.3(c)(i), if any Financing Party shall have
determined that the applicability of any law, rule, regulation
or guideline adopted pursuant to or arising out of the July
1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards," or the adoption
after the date hereof of any other law, rule, regulation or
guideline regarding capital adequacy, or any change in any of
the foregoing or in the enforcement or interpretation or
administration of any of the foregoing by any court or any
central bank or other Governmental Authority, charged with the
enforcement or interpretation or administration thereof, or
compliance by such Financing Party (or any lending office of
such Financing Party) or such Financing Party's holding
company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such
Financing Party's capital or on the capital of such Financing
Party's holding company, if any, as a consequence of its
making or maintaining Loans and/or Holder Advances or its
incurring any obligations under the Operative Agreements to a
level below that which such Financing Party or such Financing
Party's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into
consideration such Financing Party's policies and the policies
of such Financing Party's holding company with respect to
capital adequacy) by an amount deemed by such Financing Party
to be material, then, upon demand by such Financing Party, the
Lessee hereby agrees to pay to such Financing Party from time
to time such additional amount or amounts as will compensate
such Financing Party or such Financing Party's holding company
for any such reduction suffered.
(d) If any Financing Party shall seek payment of any
amounts from Lessee pursuant to this Section 11.3, it shall notify the
Lessee and the Agent of the amount payable by the Lessee to such
Financing Party hereunder. A certificate of such Financing Party
seeking payment, setting forth in reasonable detail the factual basis
for and the computation of the amount specified, shall be conclusive
and binding on all parties for all purposes, absent manifest error, as
to the amounts owned. The Lessee's obligations under this Section
shall survive the termination of the Operative Agreements and the
repayment of the Obligations.
11.4. FUNDING/CONTRIBUTION INDEMNITY.
Subject to the provisions of Section 2.11(a) of the Credit Agreement
and 3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof
has been given in accordance with the provisions of the Operative Agreements or
(c) the making of a voluntary or involuntary payment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification shall be
in an amount equal to the excess, if any, of (x) the amount of interest or
Holder Yield, as the case may be, which would have accrued on the amount so
paid, or not so borrowed, accepted, converted or continued for the period from
the date of such
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payment or of such failure to borrow, accept, convert or continue to the last
day of such Interest Period (or, in the case of a failure to borrow, accept,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable Eurodollar Rate plus the
Applicable Percentage for such Loan or Holder Advance, as the case may be, for
such Interest Period over (y) the amount of interest (as determined by such
Financing Party in its reasonable discretion) which would have accrued to such
Financing Party on such amount by (i) (in the case of the Lenders) reemploying
such funds in loans of the same type and amount during the period from the date
of payment or failure to borrow to the last day of the then applicable Interest
Period (or, in the case of a failure to borrow, the Interest Period that would
have commenced on the date of such failure) and (ii) (in the case of the
Holders) placing such amount on deposit for a comparable period with leading
banks in the relevant interest rate market. This covenant shall survive the
termination of the Operative Agreements and the payment of all other amounts
payable hereunder.
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT
LIABILITY, ETC.
SUBJECT TO AND LIMITED BY IN ALL RESPECTS THE PROVISIONS OF SECTION
11.6 THROUGH 11.8 AND WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION
PROVISIONS OF ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING
INDEMNIFICATION OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER
EXPRESSLY RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS
FOR LOSS OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR
OMISSION ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY
NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH
BENEFICIARY, AND INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
CLAIMS, LOSSES, COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT
LIMITATION ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH
BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE
ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR
CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY.
11.6. ADDITIONAL PROVISIONS REGARDING ENVIRONMENTAL INDEMNIFICATION.
Each and every Indemnified Person shall at all times have the rights
and benefits, and the Indemnity Provider shall have the obligations, in each
case provided pursuant to the Operative Agreements with respect to
environmental matters, violations of any Environmental Law, any Environmental
Claim or other loss of or damage to any property or the environment relating to
any Property, the Lease, the Agency Agreement or the Indemnity Provider
(including without limitation the rights and benefits provided pursuant to
Section 11.1(c).
11.7. ADDITIONAL PROVISIONS REGARDING INDEMNIFICATION.
Notwithstanding the provisions of Sections 11.1, 11.2 and 11.5 (other
than with respect to matters concerning environmental indemnification
referenced in Section 11.6), (a) the Owner Trustee shall be the only
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5 (again,
subject to the immediately preceding parenthetical phrase) with respect to each
Property during the Construction Period for such Property and (b) such limited
rights of indemnification referenced in Section 11.7(a) (to the extent relating
to third-party claims) shall be limited to third-party claims caused by or
resulting from the Indemnity Provider's acts or omissions and/or all other
Persons acting by, through or under the Indemnity Provider. After the
Construction Period for a Property, each Indemnified Person shall be a
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5.
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11.8. INDEMNIFICATIONS PROVIDED BY THE OWNER TRUSTEE IN FAVOR OF THE
OTHER INDEMNIFIED PERSONS.
To the extent the Indemnity Provider is not obligated to indemnify
each Indemnified Person with respect to the various matters described in this
Section 11.8, the Owner Trustee shall provide such indemnities (but only to the
extent amounts sufficient to pay such indemnity are funded by the Lenders and
the Holders) in favor of each Indemnified Person in accordance with this
Section 11.8 and shall pay all such amounts owed with respect to this Section
11.8 with amounts advanced by the Lenders and the Holders (a) to the extent,
but only to the extent, amounts are available therefor with respect to the
Available Commitments and the Available Holder Commitments and (b) unless each
Lender and each Holder has declined in writing to fund such amount.
Notwithstanding any other provision in any other Operative Agreement to the
contrary, all amounts so advanced shall be deemed added (ratably, based on the
ratio of the Property Cost for each Property individually to the Aggregate
Property Cost of all Properties at such time) to the Property Cost of all
Properties then subject to the terms of the Operative Agreements.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Owner Trustee hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person or breach of such Indemnified Person's obligations
under this Agreement, the Lease or any other Operative Agreement) in any way
relating to or arising or alleged to arise out of the execution, delivery,
performance or enforcement of this Agreement, the Lease or any other Operative
Agreement or on or with respect to any Property or any component thereof,
including without limitation Claims in any way relating to or arising or
alleged to arise out of the matters set forth in Sections 11.1(a) through
11.1(h).
The Owner Trustee shall pay and assume liability for, and does hereby
agree to indemnify, protect and defend each Property and all Indemnified
Persons, and hold them harmless against, all Impositions on an After Tax Basis,
and all payments pursuant to the Operative Agreements shall be made free and
clear of and without deduction for any and all present and future Impositions.
Notwithstanding anything to the contrary in this paragraph, the Excluded Taxes
shall be excluded from the indemnity provisions afforded by this paragraph.
THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO
THIS SECTION 11.8 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY
REFERENCED IN SECTION 12.9.
SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
The representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest
of the Owner Trustee in any Property or any interest of the Holders in the
Trust Estate, the payment of the Notes and any disposition thereof and shall be
and continue in effect notwithstanding any investigation made by any party and
the fact that any party may waive compliance with any of the other terms,
provisions or conditions of any of the Operative Agreements. Except as
otherwise expressly set forth herein or in other Operative Agreements, the
indemnities of the parties provided for in the Operative Agreements shall
survive the expiration or termination of any thereof.
12.2. NOTICES.
All notices required or permitted to be given under any Operative
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage paid with return receipt requested; by private courier, prepaid;
by telex, facsimile, or other telecommunication device capable of transmitting
or creating a written record; or
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personally. Mailed notices shall be deemed delivered five (5) days after
mailing, properly addressed. Couriered notices shall be deemed delivered when
delivered as addressed, or if the addressee refuses delivery, when presented
for delivery notwithstanding such refusal. Telex or telecommunicated notices
shall be deemed delivered when receipt is either confirmed by confirming
transmission equipment or acknowledged by the addressee or its office.
Personal delivery shall be effective when accomplished. Unless a party changes
its address by giving notice to the other party as provided herein, notices
shall be delivered to the parties at the following addresses:
If to the Construction Agent or the Lessee, to such entity at
the following address:
Sunrise Midwest Leasing, L.L.C.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Guarantor, to it at the following address:
Sunrise Assisted Living, Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx X. Xxxxx,
Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Holders, to each such Holder at the address set
forth for such Holder on Schedule I of the Trust Agreement.
If to the Agent, to it at the following address:
NationsBank, N.A.
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
NationsBank, N.A.
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
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Telecopy: (000) 000-0000
If to any Lender, to it at the address set forth for such
Lender in Schedule 2.1 of the Credit Agreement.
From time to time any party may designate additional parties
and/or another address for notice purposes by notice to each of the
other parties hereto. Each notice hereunder shall be effective upon
receipt or refusal thereof.
12.3. COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one (1) and
the same instrument.
12.4. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE
MATTERS.
Each Basic Document may be terminated, amended, supplemented, waived
or modified only by an instrument in writing signed by, subject to Article VIII
of the Trust Agreement regarding termination of the Trust Agreement, the
Majority Secured Parties and each Credit Party (to the extent such Credit Party
is a party to such Basic Document); provided, to the extent no Default or Event
of Default shall have occurred and be continuing, the Majority Secured Parties
shall not amend, supplement, waive or modify any provision of any Basic
Document in such a manner as to adversely affect the rights of any Credit Party
without the prior written consent (not to be unreasonably withheld or delayed)
of such Credit Party. Each Operative Agreement which is not a Basic Document
may be terminated, amended, supplemented, waived or modified only by an
instrument in writing signed by the parties thereto and (without the consent of
any other Financing Party) the Agent. In addition, the Unanimous Vote Matters
shall require the consent of each Lender and each Holder affected by such
matter.
Notwithstanding the foregoing, no such termination, amendment,
supplement, waiver or modification shall, without the consent of the Agent and,
to the extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) increase or reduce the amount of any Note or any
Certificate, extend the scheduled date of maturity of any Note, extend the
scheduled Expiration Date, extend any payment date of any Note or Certificate,
reduce the stated rate of interest payable on any Note, reduce the stated
Holder Yield payable on any Certificate (other than as a result of waiving the
applicability of any post-default increase in interest rates or Holder Yields),
modify the priority of any Lien in favor of the Agent under any Security
Document, subordinate any obligation owed to any Lender or Holder, reduce any
Lender Unused Fees or any Holder Unused Fees payable under this Participation
Agreement, extend the scheduled date of payment of any Lender Unused Fees or
any Holder Unused Fees, fund any Advance referenced in Section 2.1 of the
Agency Agreement in excess of the then current aggregate sum of the Available
Commitments and the Available Holder Commitments, elect to decline the funding
of any Transaction Expense with respect to Sections 7.1(a) or 7.1(b), elect to
decline the funding of any indemnity payment by the Owner Trustee with respect
to Section 12.9 or increase the amount or extend the expiration date of any
Lender's Commitment or the Holder Commitment of any Holder, or (ii) terminate,
amend, supplement, waive or modify any provision of this Section 12.4 or reduce
the percentages specified in the definitions of Majority Lenders, Majority
Holders or Majority Secured Parties, or consent to the assignment or transfer
by the Owner Trustee of any of its rights and obligations under any Credit
Document or release any portion of the Collateral (except in accordance with
Section 8.8) or release any Credit Party from its obligations under any
Operative Agreement or otherwise alter any payment obligations of any Credit
Party to the Lessor or any Financing Party under the Operative Agreements, or
(iii) terminate, amend, supplement, waive or modify any provision of Section 7
of the Credit Agreement (which shall also require the consent of the Agent), or
(iv) eliminate the automatic option under Section 5.3(b) of the Agency
Agreement requiring that the Construction Agent pay certain liquidated damages
in exchange for the conveyance of a Property to the Construction Agent, or (v)
permit the extension of the Construction Period beyond the date that is two (2)
years from the Initial Closing Date, or (vi) consent to the modification or
amendment of any Sublease in any material respect, unless and until SALI or the
Lessee shall have purchased or otherwise acquired 100% of the outstanding stock
of Karrington. Any such termination, amendment, supplement, waiver or
modification shall apply equally to each of the Lenders and the Holders and
shall be binding upon all the parties to
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this Agreement. In the case of any waiver, each party to this Agreement shall
be restored to its former position and rights under the Operative Agreements,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall
continue, the Defaulting Lender shall (unless the Lessee and the Majority
Lenders, determined as if the Defaulting Lender were not a "Lender", shall
otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Loans, shall not be treated as a "Lender" when
performing the computation of Majority Lenders or Majority Secured Parties, and
shall have no rights under this Section 12.4; provided that any action taken
pursuant to the second paragraph of this Section 12.4 shall not be effective as
against the Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority
Secured Parties, and shall have no rights under this Section 12.4; provided
that any action taken pursuant to the second paragraph of this Section 12.4
shall not be effective as against the Defaulting Holder.
12.5. HEADINGS, ETC.
The Table of Contents and headings of the various Articles and
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof.
12.6. PARTIES IN INTEREST.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF VIRGINIA. Any
legal action or proceeding with respect to this Agreement or any other
Operative Agreement may be brought in the courts of the State of
Virginia in Fairfax County or of the United States for the Eastern
District of Virginia, and, by execution and delivery of this
Agreement, each of the parties to this Agreement hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the nonexclusive jurisdiction of such courts. Each
of the parties to this Agreement further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 12.2, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by
Law or to commence legal proceedings or to otherwise proceed against
any party in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW,
WAIVES TRIAL BY JURY IN
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ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER
OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the parties to this Agreement hereby
irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other
Operative Agreement brought in the courts referred to in subsection
(a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
12.8. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9. LIABILITY LIMITED.
(a) The Lenders, the Agent, the Credit Parties, the Owner
Trustee and the Holders each acknowledge and agree that the Owner
Trustee is (except as otherwise expressly provided herein or therein)
entering into this Agreement and the other Operative Agreements to
which it is a party (other than the Trust Agreement and to the extent
otherwise provided in Section 6.1 of this Agreement), solely in its
capacity as trustee under the Trust Agreement and not in its
individual capacity and that the Trust Company shall not be liable or
accountable under any circumstances whatsoever in its individual
capacity for or on account of any statements, representations,
warranties, covenants or obligations stated to be those of the Owner
Trustee, except for its own gross negligence or willful misconduct and
as otherwise expressly provided herein or in the other Operative
Agreements.
(b) Anything to the contrary contained in this Agreement,
the Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in
any respect for any liability or obligation arising hereunder or in
any other Operative Agreement including without limitation the payment
of the principal of, or interest on, the Notes, or for monetary
damages for the breach of performance of any of the covenants
contained in the Credit Agreement, the Notes, this Agreement, the
Security Agreement or any of the other Operative Agreements. The
Lenders, the Holders and the Agent agree that, in the event any
remedies under any Operative Agreement are pursued, neither the
Lenders, the Holders nor the Agent shall have any recourse against any
Exculpated Person, for any deficiency, loss or Claim for monetary
damages or otherwise resulting therefrom and recourse shall be had
solely and exclusively against the Trust Estate (excluding Excepted
Payments) and the Credit Parties (with respect to the Credit Parties'
obligations under the Operative Agreements); but nothing contained
herein shall be taken to prevent recourse against or the enforcement
of remedies against the Trust Estate (excluding Excepted Payments) in
respect of any and all liabilities, obligations and undertakings
contained herein and/or in any other Operative Agreement.
Notwithstanding the provisions of this Section, nothing in any
Operative Agreement shall: (i) constitute a waiver, release or
discharge of any indebtedness or obligation evidenced by the Notes
and/or the Certificates arising under any Operative Agreement or
secured by any Operative Agreement, but the same shall continue until
paid or discharged; (ii) relieve any Exculpated Person from liability
and responsibility for (but only to the extent of the damages arising
by reason of): active waste knowingly committed by any Exculpated
Person with respect to any Property, any fraud, gross negligence or
willful misconduct on the part of any Exculpated Person; (iii) relieve
any Exculpated Person from liability and responsibility for (but only
to the extent of the moneys misappropriated, misapplied or not turned
over) (A) except for Excepted Payments, misappropriation or
misapplication by the Lessor (i.e., application in a manner contrary
to any of the Operative Agreements) of any insurance proceeds or
condemnation award paid or delivered to the Lessor by any Person other
than the Agent, (B) except for Excepted Payments, any deposits or any
escrows or amounts owed by the Construction Agent under the Agency
Agreement held by the Lessor or (C) except for Excepted Payments, any
rent or other income
44
49
received by the Lessor from any Credit Party that is not turned over
to the Agent; or (iv) affect or in any way limit the Agent's rights
and remedies under any Operative Agreement with respect to the Rents
and rights and powers of the Agent under the Operative Agreements or
to obtain a judgment against the Lessee's interest in the Properties
or the Agent's rights and powers to obtain a judgment against the
Lessor or any Credit Party (provided, that no deficiency judgment or
other money judgment shall be enforced against any Exculpated Person
except to the extent of the Lessor's interest in the Trust Estate
(excluding Excepted Payments) or to the extent the Lessor may be
liable as otherwise contemplated in clauses (ii) and (iii) of this
Section 12.9(b)).
12.10. RIGHTS OF THE CREDIT PARTIES.
If at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents and the other Operative Agreements and
(ii) of the Credit Parties under the Operative Agreements have in each case
been satisfied or discharged in full, then the Credit Parties shall be entitled
to (a) terminate the Lease and guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a), the Lessor shall transfer to
the Lessee all of its right, title and interest free and clear of the Lien of
the Lease, the Lien of the Security Documents and all Lessor Liens in and to
any Propert ies then subject to the Lease and any amounts or proceeds referred
to in the foregoing clause (b) shall be paid over to the Lessee.
12.11. FURTHER ASSURANCES.
The parties hereto shall promptly cause to be taken, executed,
acknowledged or delivered, at the sole expense of the Lessee, all such further
acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and
the transactions contemplated hereby and thereby (including without limitation
the preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be
filed or effected). The Lessee, at its own expense and without need of any
prior request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to
execute such instruments of conveyance as may be reasonably required in
connection therewith.
12.12. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Owner Trustee
shall be made by the Agent and that such calculations and determinations shall
be conclusive and binding on the parties hereto in the absence of manifest
error.
12.13. CONFIDENTIALITY.
Each Financing Party agrees to keep confidential any information
furnished or made available to it by any Credit Party or any of its
Subsidiaries pursuant to this Agreement that is marked confidential; provided
that nothing herein shall prevent any Financing Party from disclosing such
information (a) to any other Financing Party or any Affiliate of any Financing
Party, or any officer, director, employee, agent, or advisor of any Financing
Party or Affiliate of any Financing Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Financing Party other than as a result
of a disclosure by any Financing Party prohibited by this Agreement, (g) in
connection with any litigation to which such Financing Party or any of its
Affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Operative Agreement,
and (i) subject to provisions substantially similar to those contained in this
Section, to any actual or proposed participant or assignee.
45
50
12.14. FINANCIAL REPORTING/TAX CHARACTERIZATION.
Lessee agrees to obtain advice from its own accountants and tax
counsel regarding the financial reporting treatment and the tax
characterization of the transactions described in the Operative Agreements.
Lessee further agrees that Lessee shall not rely upon any statement of any
Financing Party or any of their respective Affiliates and/or Subsidiaries
regarding any such financial reporting treatment and/or tax characterization.
12.15. SET-OFF.
In addition to any rights now or hereafter granted under applicable
Law and not by way of limitation of any such rights, upon and after the
occurrence of any Event of Default and during the continuance thereof, the
Lenders, the Holders, their respective Affiliates and any assignee or
participant of a Lender or a Holder in accordance with the applicable
provisions of the Operative Agreements are hereby authorized by the Credit
Parties at any time or from time to time, without notice to the Credit Parties
or to any other Person, any such notice being hereby expressly waived, to
set-off and to appropriate and to apply any and all deposits (general or
special, time or demand, including without limitation indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Lenders, the Holders, their
respective Affiliates or any assignee or participant of a Lender or a Holder in
accordance with the applicable provisions of the Operative Agreements to or for
the credit or the account of any Credit Party against and on account of the
obligations of any Credit Party under the Operative Agreements irrespective of
whether or not (a) the Lenders or the Holders shall have made any demand under
any Operative Agreement or (b) the Agent shall have declared any or all of the
obligations of any Credit Party under the Operative Agreements to be due and
payable and although such obligations shall be contingent or unmatured.
Notwithstanding the foregoing, neither the Agent nor any other Financing Party
shall exercise, or attempt to exercise, any right of setoff, banker's lien, or
the like, against any deposit account or property of any Credit Party held by
the Agent or any other Financing Party, without the prior written consent of
the Majority Secured Parties, and any Financing Party violating this provision
shall indemnify the Agent and the other Financing Parties from any and all
costs, expenses, liabilities and damages resulting therefrom. The contractual
restriction on the exercise of setoff rights provided in the foregoing sentence
is solely for the benefit of the Agent and the Financing Parties and may not be
enforced by any Credit Party.
[signature pages follow]
46
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
CONSTRUCTION AGENT
------------------
AND LESSEE: SUNRISE MIDWEST LEASING, L.L.C., as the Construction
----------
Agent and as the Lessee
by Sunrise Assisted Living Investments, Inc., as Sole Member
By: /s/ XXXXX X. XXXX
-----------------------------------------------
Name: Xxxxx X. Xxxx
---------------------------------------------
Title: Senior Vice President
--------------------------------------------
GUARANTOR: SUNRISE ASSISTED LIVING, INC., as Guarantor
---------
By: /s/ XXXXX X. XXXXXX
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: President and Chief Financial Officer
--------------------------------------------
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------------
Title: Executive Vice President
--------------------------------------------
OWNER TRUSTEE AND
-----------------
LESSOR: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
------
not individually, except as expressly stated herein, but solely
as the Owner Trustee under the Sunrise Trust 1998-1
By: /s/ XXX X. XXXXX
-----------------------------------------------
Name: Xxx X. Xxxxx
---------------------------------------------
Title: Vice President
--------------------------------------------
[signature pages continued]
AGENT, LENDERS AND HOLDERS: NATIONSBANK, N.A., as a Lender, as a Holder and as the Agent
--------------------------
By: /s/ XXXXXX X. XXXX
-----------------------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------------------
Title: Senior Vice President
--------------------------------------------
FLEET NATIONAL BANK, as a Lender and as a Holder
By: /s/ XXXXXXXX XXXXXXXXX
-----------------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
---------------------------------------------
Title: Vice Presidnet
--------------------------------------------
52
PROVIDENT BANK OF MARYLAND, as a Lender and as a Holder
By: /s/ XXXXXX M.A. XXXXXXXXXX
-----------------------------------------------
Name: Xxxxxx M.A. XxXxxxxxxx
---------------------------------------------
Title: Vice President
--------------------------------------------
53
EXHIBIT A
REQUISITION FORM
(Pursuant to Sections 4.2, 5.2, 5.3 and 5.4 of the Participation Agreement)
SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability company
(the "Company") hereby certifies as true and correct and delivers the following
Requisition to NATIONSBANK, N.A., as the agent for the Lenders (hereinafter
defined) and respecting the Security Documents, as the agent for the Lenders
and the Holders (hereinafter defined), to the extent of their interests (the
"Agent"):
Reference is made herein to that certain Participation Agreement dated
as of December 2, 1998 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Participation Agreement") among the
Company, in its capacity as the Lessee and as the Construction Agent, the
various parties thereto from time to time, as the guarantors (the
"Guarantors"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders"), and the Agent. Capitalized terms used herein but not otherwise
defined herein shall have the meanings set forth therefor in the Participation
Agreement.
Check one:
____ INITIAL CLOSING DATE: _________________
(three (3) Business Days prior notice required for Advance)
____ PROPERTY CLOSING DATE:_________________
(three (3) Business Days prior notice required for Advance)
____ CONSTRUCTION ADVANCE DATE:_____________
(three (3) Business Days prior notice required for Advance)
1. Transaction Expenses and other fees, expenses and disbursements under
Sections 7.1(a) or 7.1(b) of the Participation Agreement and any and
all other amounts contemplated to be financed under the Participation
Agreement including without limitation any Work, broker's fees, taxes,
recording fees and the like (with supporting invoices or closing
statement attached):
Party to Whom Amount Owed
Amount is Owed (in U.S. Dollars)
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
2. Description of Land (which shall be a legal description of the Land in
connection with an Advance to pay Property Acquisition Costs):
See attached Schedule 1
3. Description of Improvements: See attached Schedule 2
4. Description of Equipment: See attached Schedule 3
5. Description of Work: See attached Schedule 4
6. Aggregate Loans and Holder Advances requested since the Initial
Closing Date with respect to each Property for which Advances
are requested under this Requisition (listed on a Property by
Property basis), including
A-1
54
without limitation all amounts requested under this Requisition:
[IDENTIFY ON A PROPERTY BY PROPERTY BASIS]
$______________ [Property]
In connection with this Requisition, the Company hereby requests that
the Lenders make Loans to the Lessor in the amount of $______________ and that
the Holders make Holder Advances to the Lessor in the amount of
$________________. The Company hereby certifies (i) that the foregoing amounts
requested do not exceed the total aggregate of the Available Commitments plus
the Available Holder Commitments and (ii) each of the provisions of the
Participation Agreement applicable to the Loans and Holder Advances requested
hereunder have been complied with as of the date of this Requisition.
The Company requests the Loans be allocated as follows:
$______________ ABR Loans
$______________ Eurodollar Loans
The Company requests the Holder Advances be allocated as follows:
$______________ ABR Holder Advances
$______________ Eurodollar Holder Advances
The Company has caused this Requisition to the executed by its duly
authorized officer as of this _____ day of __________, ______.
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living Investments, Inc., as Sole Member
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
A-2
55
Schedule 1
Description of Land
(Legal Description and Street Address)
A-3
56
Schedule 2
Description of Improvements
A-4
57
Schedule 3
Description of Equipment
=============================================================================================
General Description Make Model Serial Number
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
=============================================================================================
A-5
58
Schedule 4
Work
Work Performed for which the Advance is requested:
--------------------------------------------------------------------
--------------------------------------------------------------------
A-6
59
EXHIBIT B
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(j) of the
Participation Agreement)
____________, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing Provided in favor of Sunrise Midwest
Leasing, L.L.C.
Dear Sirs:
We have acted as special counsel to Sunrise Midwest Leasing, a Virginia limited
liability company (the "Lessee"), and Sunrise Assisted Living, Inc., a Delaware
corporation, as guarantor (the "Guarantor"; individually, the Lessee and the
Guarantor may be referred to herein as a "Credit Party" or collectively, as the
"Credit Parties"), in connection with certain transactions contemplated by the
Participation Agreement dated as of December 2, 1998 (the "Participation
Agreement"), among the Lessee, the Guarantor, First Security Bank, National
Association, as the Owner Trustee (the "Owner Trustee"), the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as lenders (the "Lenders") and
NationsBank, N.A., as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent"). This opinion is delivered pursuant to Section 5.3(j) of
the Participation Agreement. All capitalized terms used herein, and not
otherwise defined herein, shall have the meanings assigned thereto in Appendix A
to the Participation Agreement.
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of [IDENTIFY THE APPLICABLE OPERATIVE AGREEMENTS,
INCLUDING EACH MORTGAGE INSTRUMENT, RELATED UCC FIXTURE FILINGS, ADDITIONAL UCCS
(HEREINAFTER DEFINED), DEEDS AND MEMORANDA OF LEASE] and such other corporate
documents and records of the Credit Parties, certificates of public officials
and representatives of the Credit Parties as to certain factual matters, and
such other instruments and documents which we have deemed necessary or advisable
to examine for the purpose of this opinion. With respect to such examination, we
have assumed (i) the statements of fact made in all such certificates, documents
and instruments are true, accurate and complete; (ii) except as to the Credit
Parties, the due authorization, execution and delivery of the Operative
Agreements by the parties thereto; (iii) the genuineness of all signatures
(except as to the Credit Parties), the authenticity and completeness of all
documents, certificates, instruments, records and corporate records submitted to
us as originals and the conformity to the original instruments of all documents
submitted to us as copies, and the authenticity and completeness of the
originals of such copies; (iv) except as to the Credit Parties, that all parties
have all requisite corporate power and authority to execute, deliver and perform
the Operative Agreements; and (v) except as to the Credit Parties, the
enforceability of the Mortgage Instrument, the Memorandum of Lease and the UCC
financing statements against all parties thereto.
Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:
(a) The Mortgage Instrument and Memorandum of Lease are enforceable
in accordance with their respective terms, except as limited by laws generally
affecting the enforcement of creditors' rights, which laws will not materially
prevent the realization of the benefits intended by such documents.
(b) Each form of Mortgage Instrument and UCC fixture filing relating
thereto, attached hereto as Schedules 1 and 2, respectively, is in proper form
for filing and recording with the offices of [IDENTIFY THE RECORDING
B-1
60
OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED].
Upon filing of each Mortgage Instrument and UCC fixture filing in [IDENTIFY THE
RECORDING OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE
LOCATED], the Agent will have a valid, perfected lien and security interest in
that portion of the Collateral described in such Mortgage Instrument or UCC
fixture filing to the extent such Collateral is comprised of real property
and/or fixtures.
(c) The forms of UCC financing statements relating to the Security
Documents, attached hereto as Schedule 3 (the "Additional UCCs"), are in proper
form for filing and recording with the offices of [IDENTIFY (I) THE RECORDING
OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED
AND (II) THE SECRETARY OF STATE WHERE THE PROPERTIES ARE TO BE LOCATED]. Upon
filing of the Additional UCCs in [IDENTIFY (I) THE RECORDING OFFICES OF THE
RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED AND (II) THE
SECRETARY OF STATE WHERE THE PROPERTIES ARE TO BE LOCATED], the Agent will have
a valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by filing UCC-1 financing statements under Article 9 of
the UCC.
(d) Each form of Deed and Memorandum of Lease is in appropriate form
for filing and recording with the [IDENTIFY THE RECORDING OFFICES OF THE
RESPECTIVE COUNTY CLERKS FOR THE COUNTIES WHERE THE PROPERTIES ARE TO BE
LOCATED].
(e) Each Memorandum of Lease, when filed and recorded with the
[IDENTIFY THE RECORDING OFFICES OF THE RESPECTIVE COUNTY CLERKS FOR THE COUNTIES
WHERE THE PROPERTIES ARE TO BE LOCATED], will have been filed and recorded in
all public offices in the State of [__________] in which filing or recording is
necessary to provide constructive notice of the Lease to third Persons and to
establish of record the interest of the Lessor thereunder as to the Properties
described in each such Memorandum of Lease.
(f) Title to the Properties located in the State of [___________]
may be held in the name of the Owner Trustee as follows: First Security Bank,
National Association, not individually, but solely as the Owner Trustee under
the Sunrise Trust 1998-1.
(g) The execution and delivery by First Security Bank, National
Association, individually or as the Owner Trustee, as the case may be, of the
Operative Agreements to which it is a party and compliance by First Security
Bank, National Association, individually or as the Owner Trustee, with all of
the provisions thereof do not and will not contravene any law, rule or
regulation of [IDENTIFY THE STATE].
(h) By reason of their participation in the transaction contemplated
under the Operative Agreements, none of the Agent, the Lenders, the Holders or
the Owner Trustee has to (a) qualify as a foreign corporation in [IDENTIFY THE
STATE], (b) file any application or any designation for service of process in
[IDENTIFY THE STATE] or (c) pay any franchise, income, sales, excise, stamp or
other taxes of any kind to [IDENTIFY THE STATE].
(i) The provisions in the Operative Agreements concerning Rent,
interest, fees, prepayment premiums and other similar charges do not violate the
usury laws or other similar laws regulating the use or forbearance of money of
[IDENTIFY THE STATE].
(j) If the transactions contemplated by the Operative Agreements are
characterized as a lease transaction by a court of competent jurisdiction, the
Lease and the applicable Lease Supplement shall demise to the Lessee a valid
leasehold interest in the Properties described in such Lease Supplement.
(k) If the transactions contemplated by the Operative Agreements are
characterized as a loan transaction by a court of competent jurisdiction, the
combination of the Mortgage Instruments, the Deeds, the Lease and the applicable
Lease Supplements (and the other Operative Agreements incorporated therein by
reference) are sufficient to create a valid, perfected lien or security interest
in the Properties therein described, enforceable as a mortgage in [IDENTIFY THE
STATE].
B-2
61
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein. This opinion is based on
and is limited to the laws of the State of [___________] and the federal laws of
the United States of America. Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.
This opinion is for the sole benefit of the Lessee, the Construction Agent, the
Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns and may not be relied upon by any other person
other than such parties and their respective successors and assigns without the
express written consent of the undersigned. The opinions expressed herein are as
of the date hereof and we make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions.
Very truly yours,
[LESSEE'S OUTSIDE COUNSEL]
B-3
62
Distribution List
NationsBank, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Sunrise Midwest Leasing, L.L.C., as the Construction Agent and the Lessee
Sunrise Assisted Living, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
B-4
63
Schedule 1
Form of Mortgage Instrument
B-5
64
Schedule 2
Forms of UCC Fixture Filings
B-6
65
Schedule 3
Forms of UCC Financing Statements
B-7
66
EXHIBIT C
SUNRISE MIDWEST LEASING, L.L.C.
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(z) of the Participation Agreement)
SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability
company (the "Company"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of each
Credit Party contained in the Operative Agreements to
which it is a party is true and correct on and as of the
date hereof.
2. No Default or Event of Default has occurred and is
continuing under any Operative Agreement.
3. Each Operative Agreement to which any Credit Party is a
party is in full force and effect with respect to it.
4. Each Credit Party has duly performed and complied with
all covenants, agreements and conditions contained in
the Participation Agreement (hereinafter defined) or in
any Operative Agreement required to be performed or
complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of December 2, 1998 among the Company, as the Lessee and as
the Construction Agent, Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders") and NationsBank, N.A., as the agent for the Lenders and respecting
the Security Documents, as the agent for the Lenders and the Holders, to the
extent of their interests (the "Agent").
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this _____ day of __________, ______.
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living
Investments, Inc., as Sole Member
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
C-1
67
EXHIBIT D
[NAME OF CREDIT PARTY]
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(aa) of the Participation Agreement)
[NAME OF CREDIT PARTY], a [__________] [corporation or limited
liability company] (the "Company") DOES HEREBY CERTIFY as follows:
1. Attached hereto as Schedule 1 is a true, correct and
complete copy of the resolutions of the Board of
Directors of the Company duly adopted by the Board of
Directors of the Company on __________. Such resolutions
have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as
of the date hereof.
2. Attached hereto as Schedule 2 is a true, correct and
complete copy of the Articles of [Incorporation or
Organization/Formation] of the Company on file in the
Office of the Secretary of State of __________. Such
Articles of [Incorporation or Organization/Formation]
have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as
of the date hereof.
3. Attached hereto as Schedule 3 is a true, correct and
complete copy of the [Bylaws or Operating Agreement] of
the Company. Such [Bylaws or Operating Agreement have or
has] not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as
of the date hereof.
4. The persons named below now hold the offices set forth
opposite their names, and the signatures opposite their
names and titles are their true and correct signatures.
Name Office Signature
------------------- ----------------------- -------------------------
------------------- ----------------------- -------------------------
IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.
[NAME OF CREDIT PARTY]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
D-1
68
Schedule 1
Board Resolutions
D-2
69
Schedule 2
Articles of Incorporation
X-0
00
Xxxxxxxx 0
Xxxxxx
X-0
71
EXHIBIT E
FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(cc) of the Participation Agreement)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (except with respect to paragraph 1 below, to the
extent any such representations and warranties are made in its individual
capacity) but solely as the owner trustee under the Sunrise Trust 1998-1 (the
"Owner Trustee"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of the Owner
Trustee contained in the Operative Agreements to which
it is a party is true and correct on and as of the date
hereof.
2. Each Operative Agreement to which the Owner Trustee is a
party is in full force and effect with respect to it.
3. The Owner Trustee has duly performed and complied with
all covenants, agreements and conditions contained in
the Participation Agreement (hereinafter defined) or in
any Operative Agreement required to be performed or
complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of December 2, 1998 among Sunrise Midwest Leasing, L.L.C., as
the Lessee and as the Construction Agent, Sunrise Assisted Living, Inc., as
guarantor (the "Guarantor"), the Owner Trustee, the various banks and other
lending institutions which are parties thereto from time to time, as holders
(the "Holders"), the various banks and other lending institutions which are
parties thereto from time to time, as lenders (the "Lenders") and NationsBank,
N.A., as the agent for the Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent of their interests (the
"Agent").
IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to
be duly executed and delivered as of this _____ day of __________, ______.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually,
except as expressly stated herein,
but solely as the Owner Trustee
under the Sunrise Trust 1998-1
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
X-0
00
XXXXXXX X
FIRST SECURITY BANK, NATIONAL ASSOCIATION
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(dd) of the Participation Agreement)
CERTIFICATE OF ASSISTANT SECRETARY
I, ______________________, duly elected and qualified Assistant
Secretary of the Board of Directors of First Security Bank, National Association
(the "Association"), hereby certify as follows:
1. The Association is a National Banking Association duly organized,
validly existing and in good standing under the laws of the United States. With
respect thereto the following is noted:
A. Pursuant to Revised Statutes 324, et seq., as amended,
12 U.S.C. 1, et seq., the Comptroller of the Currency
charters and exercises regulatory and supervisory
authority over all National Banking Associations;
B. On December 9, 1881, the First National Bank of Ogden,
Utah was chartered as a National Banking Association
under the laws of the United States and under Charter
No. 2597;
C. On October 2, 1922, in connection with a consolidation
of The First National Bank of Ogden, Ogden, Utah, and
The Utah National Bank of Ogden, Ogden, Utah, the title
was changed to "The First & Utah National Bank of
Ogden"; on January 18, 1923, The First & Utah National
Bank of Ogden changed its title to "First Utah National
Bank of Ogden"; on January 19, 1926, the title was
changed to "First National Bank of Ogden"; on February
24, 1934, the title was changed to "First Security Bank
of Utah, National Association"; on June 21, 1996, the
title was changed to "First Security Bank, National
Association"; and
D. First Security Bank, National Association, Ogden, Utah,
continues to hold a valid certificate to do business as
a National Banking Association.
2. The Association's Articles of Association, as amended, are in
full force and effect, and a true, correct and complete copy is attached hereto
as Schedule A and incorporated herein by reference. Said Articles were last
amended October 20, 1975, as required by law on notice at a duly called special
meeting of the shareholders of the Association.
3. The Association's By-Laws, as amended, are in full force and
effect; and a true, correct and complete copy is attached hereto as Schedule B
and incorporated herein by reference. Said By-Laws, still in full force and
effect, were adopted September 17, 1942, by resolution, after proper notice of
consideration and adoption of By-Laws was given to each and every shareholder,
at a regularly called meeting of the Board of Directors with a quorum present.
4. Pursuant to the authority vested in it by an Act of Congress
approved December 23, 1913 and known as the Federal Reserve Act, as amended, the
Federal Reserve Board (now the Board of Governors of the Federal Reserve System)
has granted to the Association now known as "First Security Bank, National
Association" of Ogden, Utah, the right to act, when not in contravention of
State or local law, as trustee, executor, administrator, registrar of stocks and
bonds, guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State banks, trust
companies or other corporations which come into competition with
F-1
73
National Banks are permitted to act under the laws of the State of Utah; and
under the provisions of applicable law, the authority so granted remains in full
force and effect.
5. Pursuant to authority vested by Act of Congress (12 X.X.X. 00x
xxx 00 X.X.X. 000, as amended) the Comptroller of the Currency has issued
Regulation 9, as amended, dealing, in part, with the Fiduciary Powers of
National Banks, said regulation providing in subparagraph 9.7 (a) (1-2):
(1) The board of directors is responsible for the proper
exercise of fiduciary powers by the Bank. All matters
pertinent thereto, including the determination of
policies, the investment and disposition of property
held in fiduciary capacity, and the direction and review
of the actions of all officers, employees, and
committees utilized by the Bank in the exercise of its
fiduciary powers, are the responsibility of the board.
In discharging this responsibility, the board of
directors may assign, by action duly entered in the
minutes, the administration of such of the Bank's
fiduciary powers as it may consider proper to assign to
such director(s), officer(s), employee(s) or
committee(s) as it may designate.
(2) No fiduciary account shall be accepted without the prior
approval of the board, or of the director(s),
officer(s), or committee(s) to whom the board may have
designated the performance of that responsibility. . . .
6. A Resolution relating to Exercise of Fiduciary Powers was adopted
by the Board of Directors at a meeting held July 26, 1994 at which time there
was a quorum present; said resolution is still in full force and effect and has
not been rescinded. Said resolution is attached hereto as Schedule C and
incorporated herein by reference.
7. A Resolution relating to the Designation of Officers and
Employees to Exercise Fiduciary Powers was adopted by the Trust Policy Committee
at a meeting held February 7, 1996 at which time a quorum was present; said
resolution is still in full force and effect and has not been rescinded. Said
resolution is attached hereto as Schedule D and is incorporated herein by
reference.
8. Attached hereto as Schedule E and incorporated herein by
reference, is a listing of facsimile signatures of persons authorized (herein
"Authorized Signatory or Signatories") on behalf of the Association and its
Trust Group to act in exercise of its fiduciary powers subject to the
resolutions in Paragraphs 6 and 7, above.
9. The principal office of the First Security Bank, National
Association, Trust Group and of its departments, except for the St. Xxxxxx,
Utah, Ogden, Utah, and Provo, Utah, branch offices, is located at 00 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 and all records relating to fiduciary
accounts are located at such principal office of the Trust Group or in storage
facilities within Salt Lake County, Utah, except for those of the Ogden, Utah,
St. Xxxxxx, Utah, and Provo, Utah, branch offices, which are located at said
office.
10. Each Authorized Signatory (i) is a duly elected or appointed,
duly qualified officer or employee of the Association; (ii) holds the office or
job title set forth below his or her name on the date hereof; (iii) and the
facsimile signature appearing opposite the name of each such officer or employee
is a true replica of his or her signature.
F-2
74
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Association this __________ day of _________________, ______.
(SEAL)
----------------------------------------
R. Xxxxx Xxxxxxxxx
Senior Vice President
Assistant Secretary
F-3
75
Schedule A
Articles of Association
F-4
76
Schedule B
Bylaws
F-5
77
Schedule C
Resolution Relating to
Exercise of Fiduciary Powers
F-6
78
Schedule D
Resolution Relating to the
Designation of Officers and Employees
To Exercise Fiduciary Powers
F-7
79
Schedule E
Authorized Signatory or Signatories
F-8
80
EXHIBIT G
[Outside Counsel Opinion for the Owner Trustee]
(Pursuant to Section 5.3(ee) of the
Participation Agreement)
December ___, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Trust Agreement dated as of December 2, 1998
Dear Sirs:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("FSB")
and in its capacity as trustee (the "Owner Trustee") under the Trust Agreement
dated as of December 2, 1998 (the "Trust Agreement") by and among it and the
various banks and other lending institutions which are parties thereto from time
to time, as holders (the "Holders"), in connection with the execution and
delivery by the Owner Trustee of the Operative Agreements to which it is a
party. Except as otherwise defined herein, the terms used herein shall have the
meanings set forth in Appendix A to the Participation Agreement dated as of
December 2, 1998 (the "Participation Agreement") by and among Sunrise Midwest
Leasing, L.L.C. (the "Lessee"), Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the Holders, the various banks and other lending institutions which are parties
thereto from time to time, as lenders (the "Lenders") and NationsBank, N.A., as
the agent for the Lenders and respecting the Security Documents, as the agent
for the Lenders and the Holders, to the extent of their interests (the "Agent").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or advisable for the purpose of
rendering this opinion.
Based upon the foregoing, we are of the opinion that:
1. FSB is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America and
each of FSB and the Owner Trustee has under the laws of the State of Utah and
federal banking law the power and authority to enter into and perform its
obligations under the Trust Agreement and each other Operative Agreement to
which it is a party.
2. The Owner Trustee is the duly appointed trustee under the Trust
Agreement.
3. The Trust Agreement has been duly authorized, executed and
delivered by one (1) of the officers of FSB and, assuming due authorization,
execution and delivery by the Holders, is a legal, valid and binding obligation
of the Owner Trustee (and to the extent set forth therein, against FSB),
enforceable against the Owner Trustee (and to the extent set forth therein,
against FSB) in accordance with its terms, and the Trust Agreement creates under
the laws of the State of Utah for the Holders the beneficial interest in the
Trust Estate it purports to create and is a valid trust under the laws of the
State of Utah.
4. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by FSB, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding obligations of FSB, enforceable against FSB in accordance with
their respective terms.
5. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by the Owner Trustee, and, assuming due
authorization, execution and delivery by the other parties thereto, are legal,
81
valid and binding obligations of FSB, enforceable against FSB in accordance with
their respective terms.
5. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by the Owner Trustee, and, assuming due
authorization, execution and delivery by the other parties thereto, are legal,
valid and binding obligations of the Owner Trustee, enforceable against the
Owner Trustee in accordance with their respective terms. The Notes and
Certificates have been duly issued, executed and delivered by the Owner Trustee,
pursuant to authorization contained in the Trust Agreement, and the Certificates
are entitled to the benefits and security afforded by the Trust Agreement in
accordance with its terms and the terms of the Trust Agreement.
6. The execution and delivery by each of FSB and the Owner Trustee
of the Trust Agreement and the Operative Agreements to which it is a party, and
compliance by FSB or the Owner Trustee, as the case may be, with all of the
provisions thereof do not and will not contravene any Laws applicable to or
binding on FSB, or as the Owner Trustee, or contravene the provisions of, or
constitute a default under, its charter documents or by-laws or, to our
knowledge after due inquiry, any indenture, mortgage contract or other agreement
or instrument to which FSB or Owner Trustee is a party or by which it or any of
its property may be bound or affected.
7. The execution and delivery of the Operative Agreements by each of
FSB and the Owner Trustee and the performance by each of FSB and the Owner
Trustee of their respective obligations thereunder does not require on or prior
to the date hereof the consent or approval of, the giving of notice to, the
registration or filing with, or the taking of any action in respect of any
Governmental Authority or any court.
8. Assuming that the trust created by the Trust Agreement is treated
as a grantor trust for federal income tax purposes within the contemplation of
Section 671 through 678 of the Internal Revenue Code of 1986, there are no fees,
taxes, or other charges (except taxes imposed on fees payable to the Owner
Trustee) payable to the State of Utah or any political subdivision thereof in
connection with the execution, delivery or performance by the Owner Trustee, the
Agent, the Lenders, the Lessee or the Holders, as the case may be, of the
Operative Agreements or in connection with the acquisition of any Property by
the Owner Trustee or in connection with the making by any Holder of its
investment in the Trust or its acquisition of the beneficial interest in the
Trust Estate or in connection with the issuance and acquisition of the
Certificates, or the Notes, and neither the Owner Trustee, the Trust Estate nor
the trust created by the Trust Agreement will be subject to any fee, tax or
other governmental charge (except taxes on fees payable to the Owner Trustee)
under the laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts, net income
or value of the Trust Estate by reason of the creation or continued existence of
the trust under the terms of the Trust Agreement pursuant to the laws of the
State of Utah or the Owner Trustee's performance of its duties under the Trust
Agreement.
9. There is no fee, tax or other governmental charge under the laws
of the State of Utah or any political subdivision thereof in existence on the
date hereof on, based on or measured by any payments under the Certificates,
Notes or the beneficial interest in the Trust Estate, by reason of the creation
of the trust under the Trust Agreement pursuant to the laws of the State of Utah
or the Owner Trustee's performance of its duties under the Trust Agreement
within the State of Utah.
10. Upon the filing of the financing statement on form UCC-1 in the
form attached hereto as Schedule 1 with the Utah Division of Corporation and
Commercial Code, the Agent's security interest in the Trust Estate, for the
benefit of the Lenders and the Holders, will be perfected, to the extent that
such perfection is governed by Article 9 of the Uniform Commercial Code as in
effect in the State of Utah (the "Utah UCC").
Your attention is directed to the Utah UCC, which provides, in part,
that a filed financing statement which does not state a maturity date or which
states a maturity date of more than five (5) years is effective only for a
period of five (5) years from the date of filing, unless within six (6) months
prior to the expiration of said period a continuation statement is filed in the
same office or offices in which the original statement was filed. The
continuation statement must be signed by the secured party, identify the
original statement by file number and state that the original statement is still
effective. Upon the timely filing of a continuation statement, the effectiveness
of the original financing statement is continued for five (5) years after the
last date to which the original statement was effective. Succeeding continuation
statements may be filed in the same manner to continue the effectiveness of the
original statement.
The foregoing opinions are subject to the following assumptions, exceptions and
qualifications:
82
A. We are attorneys admitted to practice in the State of Utah and in
rendering the foregoing opinions we have not passed upon, or purported to pass
upon, the laws of any jurisdictions other than the State of Utah and the federal
banking law governing the banking and trust powers of FSB. In addition, without
limiting the foregoing we express no opinion with respect to (i) federal
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, (iii) the
Federal Communications Act of 1934, as amended, or (iv) state securities or blue
sky laws. Insofar as the foregoing opinions relate to the legality, validity,
binding effect and enforceability of the documents involved in these
transactions, which by their terms are governed by the laws of a state other
than Utah, we have assumed that the laws of such state (as to which we express
no opinion), are in all material aspects identical to the laws of the State of
Utah.
B. The opinions set forth in paragraphs 3, 4, and 5 above are
subject to the qualification that enforceability of the Trust Agreement and the
other Operative Agreements to which FSB and the Owner Trustee are parties, in
accordance with their respective terms, may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, receivership or similar laws affecting
enforcement of creditors' rights generally, and (ii) general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
C. As to the documents involved in these transactions, we have
assumed that each is a legal, valid and binding obligation of each party
thereto, other than FSB or the Owner Trustee, and is enforceable against each
such party in accordance with their respective terms.
D. We have assumed that all signatures, other than those of the
Owner Trustee or FSB, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
as copies conform with the originals, which facts we have not independently
verified.
E. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment or property involved in these transactions.
F. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment or property
involved in these transactions or the priority of any mortgage or security
interest.
G. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. In addition to any other limitation by operation of law upon the
scope, meaning, or purpose of this opinion, the opinions expressed herein speak
only as of the date hereof. We have no obligation to advise the recipients of
this opinion (or any third party) and make no undertaking to amend or supplement
such opinions if facts come to our attention or changes in the current law of
the jurisdictions mentioned herein occur which could affect such opinions the
legal analysis, a legal conclusion or any information confirmation herein.
83
I. This opinion is for the sole benefit of the Lessee, the
Construction Agent, the Guarantor, the Owner Trustee, the Holders, the Lenders,
the Agent and their respective successors and assigns in matters directly
related to the Participation Agreement or the transaction contemplated
thereunder and may not be relied upon by any other person other than such
parties and their respective successors and assigns without the express written
consent of the undersigned. The opinions expressed in this letter are limited to
the matter set forth in this letter, and no other opinions should be inferred
beyond the matters expressly stated.
Very truly yours,
RAY, XXXXXXX & XXXXXXX
M. Xxxx Xxxxxx
84
Distribution List
NationsBank, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Sunrise Midwest Leasing, L.L.C., as the Construction Agent and the Lessee
Sunrise Assisted Living, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
85
EXHIBIT H
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(ff) of the Participation Agreement)
December ____, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing Provided in favor of Sunrise Midwest
Leasing, L.L.C.
Dear Sirs:
We have acted as special counsel to Sunrise Midwest Leasing, L.L.C., a Virginia
limited liability company (the "Lessee") and the Guarantors (hereinafter
defined) in connection with certain transactions contemplated by the
Participation Agreement dated as of December 2, 1998 (the "Participation
Agreement"), among the Lessee, Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee
(the "Owner Trustee"), the various banks and other lending institutions which
are parties thereto from time to time, as holders (the "Holders"), the various
banks and other lending institutions which are parties thereto from time to
time, as lenders (the "Lenders") and NationsBank, N.A., as the agent for the
Lenders and respecting the Security Documents, as the agent for the Lenders and
the Holders, to the extent of their interests (the "Agent"). This opinion is
delivered pursuant to Section 5.3(ff) of the Participation Agreement. All
capitalized terms used herein, and not otherwise defined herein, shall have the
meanings assigned thereto in Appendix A to the Participation Agreement.
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of the Operative Agreements, and such other
corporate, partnership or limited liability company documents and records of the
Credit Parties, certificates of public officials and representatives of the
Credit Parties as to certain factual matters, and such other instruments and
documents which we have deemed necessary or advisable to examine for the purpose
of this opinion. With respect to such examination, we have assumed (i) the
statements of fact made in all such certificates, documents and instruments are
true, accurate and complete; (ii) the due authorization, execution and delivery
of the Operative Agreements by the parties thereto other than the Credit
Parties; (iii) the genuineness of all signatures (other than the signatures of
persons signing on behalf of the Credit Parties), the authenticity and
completeness of all documents, certificates, instruments, records and corporate
records submitted to us as originals and the conformity to the original
instruments of all documents submitted to us as copies, and the authenticity and
completeness of the originals of such copies; (iv) that all parties other than
the Credit Parties have all requisite corporate power and authority to execute,
deliver and perform the Operative Agreements; and (v) the enforceability of the
Operative Agreements against all parties thereto other than the Credit Parties
and respecting the opinion set forth below in section (i), First Security Bank,
National Association, individually or as the Owner Trustee, as the case may be.
We have further assumed that the laws of the States of [STATE OF LAWYER'S
ADMISSION] and [GOVERNING LAW OF PARTICIPATION AGREEMENT] are substantively
identical.
Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:
(a) Each Credit Party is a [CORPORATION, PARTNERSHIP OR LIMITED
LIABILITY COMPANY] duly [INCORPORATED OR ORGANIZED], validly existing and in
good standing under the laws of the state of its [INCORPORATION/FORMATION] and
has the power and authority to conduct its business as presently conducted and
to execute, deliver and perform its obligations under the Operative Agreements
to which it is a party. Each Credit Party is duly qualified to do business in
all jurisdictions in which its failure to so qualify would materially impair its
ability
86
to perform its obligations under the Operative Agreements to which it is a party
or its financial position or its business as now and now proposed to be
conducted.
(b) The execution, delivery and performance by each Credit Party of
the Operative Agreements to which it is a party have been duly authorized by all
necessary [CORPORATE] action on the part of each Credit Party and the Operative
Agreements to which each Credit Party is a party have been duly executed and
delivered by each Credit Party.
(c) The Operative Agreements to which each Credit Party is a party
constitute valid and binding obligations of each Credit Party enforceable
against each Credit Party in accordance with the terms thereof, subject to
bankruptcy, insolvency, liquidation, reorganization, fraudulent conveyance, and
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
(d) The execution and delivery by each Credit Party of the Operative
Agreements to which it is a party and compliance by each Credit Party with all
of the provisions thereof do not and will not (i) contravene the provisions of,
or result in any breach of or constitute any default under, or result in the
creation of any Lien (other than Permitted Liens and Lessor Liens) upon any of
its property under, its [ARTICLES OF INCORPORATION BY-LAWS, OPERATING AGREEMENT,
PARTNERSHIP AGREEMENT OR OTHER SIMILAR DOCUMENT OF FORMATION] or any indenture,
mortgage, chattel mortgage, deed of trust, lease, conditional sales contract,
bank loan or credit agreement or other agreement or instrument to which any
Credit Party is a party or by which any Credit Party or any property of any
Credit Party may be bound or affected, or (ii) contravene any Laws or any order
of any Governmental Authority applicable to or binding on any Credit Party.
(e) No Governmental Action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery or
performance by any Credit Party of any of the Operative Agreements to which any
Credit Party is a party or for the acquisition, ownership, construction and
completion of the Properties, except for those which have been obtained.
(f) Except as set forth on Schedule 1 hereto, there are no actions,
suits or proceedings pending or to our knowledge, threatened against any Credit
Party in any court or before any Governmental Authority, that concern the
Properties or the interest of any Credit Party therein or that question the
validity or enforceability of any Operative Agreement to which any Credit Party
is a party or the overall transaction described in the Operative Agreements to
which any Credit Party is a party.
(g) Neither the nature of the Properties, nor any relationship
between any Credit Party and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Operative
Agreements to which any Credit Party is a party is such as to require any
approval of stockholders of, or approval or consent of any trustee or holders of
indebtedness of, any Credit Party, except for such approvals and consents which
have been duly obtained and are in full force and effect.
(h) The Security Documents which have been executed and delivered as
of the date of this opinion create, for the benefit of the Agent, the security
interests in the Collateral described therein which by their terms such Security
Documents purport to create. Upon filing of the UCC-1 financing statements
(attached hereto as Schedule 2) relating to the Security Documents in the
recording offices of (A) the respective county clerk where the principal place
of business of the Lessee is located and (B) the Secretary of State where the
principal place of business of the Lessee is located, the Agent will have a
valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by the filing of UCC-1 financing statements under Article
9 of the UCC in [IDENTIFY THE STATE].
(i) The Operative Agreements to which First Security Bank, National
Association, individually or as the Owner Trustee, is a party constitute valid
and binding obligations of such party and are enforceable against First Security
Bank, National Association, individually or as the Owner Trustee, as the case
may be, in accordance with the terms thereof, subject to bankruptcy, insolvency,
liquidation, reorganization, fraudulent conveyance, and similar
87
laws affecting creditors, rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
(j) The issuance, sale and delivery of the Notes and the issuance
and delivery of the Certificates under the circumstances contemplated by the
Participation Agreement do not, under existing law, require registration of the
Notes or the Certificates being issued on the date hereof under the Securities
Act of 1933, as amended, or the qualification of the Loan Agreement under the
Trust Indenture Act of 1939, as amended.
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein. This opinion is based on
and is limited to the laws of the States of [__________], and the federal laws
of the United States of America. Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.
This opinion is for the sole benefit of the Lessee, the Construction Agent, the
Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns and may not be relied upon by any other person
other than such parties and their respective successors and assigns without the
express written consent of the undersigned. The opinions expressed herein are as
of the date hereof and we make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions.
Very truly yours,
[LESSEE'S OUTSIDE COUNSEL]
88
Distribution List
NationsBank, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Sunrise Midwest Leasing, L.L.C., as the Construction Agent and the Lessee
Sunrise Assisted Living, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
89
Schedule 1
(Litigation)
90
Schedule 2
(UCC-1 Financing Statements)
91
EXHIBIT I
SUNRISE MIDWEST LEASING, L.L.C.
OFFICER'S CERTIFICATE
(Pursuant to Section 5.5 of the Participation Agreement)
SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability
company (the "Company") DOES HEREBY CERTIFY as follows:
1. The address for the subject Property is ____________________________
____________________________________________.
2. The Completion Date for the construction of Improvements at the
Property occurred on ______________.
3. The aggregate Property Cost for the Property was $___________.
4. Attached hereto as Schedule 1 is the detailed, itemized
documentation supporting the asserted Property Cost figures.
5. All representations and warranties of the Company in each Operative
Agreement and in each certificate delivered pursuant thereto
(including without limitation the Incorporated Representations and
Warranties) are true and correct as of the Completion Date.
Capitalized terms used in this Officer's Certificate and not otherwise defined
have the respective meanings ascribed thereto in the Participation Agreement
dated as of December 2, 1998 among the Company, as the Lessee and as the
Construction Agent, Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders"), NationsBank, N.A., as the agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders, to the extent
of their interests.
[The remainder of this page has been intentionally left blank.]
92
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this ____ day of ______________, ______.
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living
Investments, Inc., as Sole Member
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
93
Schedule I
(Itemized Documentation in Support of Asserted Property Cost)
94
EXHIBIT J
[Description of Material Litigation]
(Pursuant to Section 6.2(d) of the Participation Agreement)
1. Xxxxxxxxx Xxxxxx, Administratrix of the Estate of Xxxxxx X. Xxxxxx,
Xx. v. Sunrise Terrace, Inc., Sunrise Assisted Living, Inc., and
Xxxx Xxx(s), (Cir. Ct. Loudon County, VA) At Law No. 17896.
2. Xxxxxxxx X. Torberf v. Sunrise Assisted Living, Inc., et al.,
(Superior Ct., Muscogee County, GA) Civil Action File No. SU
98CU-4302.
3. Xxxxxx XxXxxxxxxx v. Sunrise Terrace, Inc. and Sunrise East Assisted
Living Limited Partnership, (Xxxxxxxxxx County Ct. of Common Pleas,
Civil Division, PA) Civil Action File No. SU98U-4302.
4. Rosemaray Xxxxxxx v. Sunrise Retirement Homes, Sunrise Terrace,
Inc., Sunrise Retirement Homes and Communities, Inc., Sunrise
Assisted Living, Inc. and Sunrise Incorporated, (Cir. Ct. Fairfax
County, VA) At Law No. 52579 (On appeal).
5. Xxxxxxx Xxxxxxx v. Sunrise Assisted Living, (Superior Ct. of
Washington for King County) (On appeal).
95
EXHIBIT K
[States of Incorporation/Formation and Principal Place of Business of Guarantor]
(Pursuant to Section 6.2(i) of the Participation Agreement)
GUARANTORS STATE OF STATE OF PRINCIPAL PLACE OF
---------- -------- ---------------------------
INCORPORATION/FORMATION BUSINESS
----------------------- --------
Sunrise Assisted Living, Inc. Delaware Virginia
96
EXHIBIT L
Description of Permitted Facilities to be purchased on Initial Closing Date
Washtenaw County (Xxx Arbor), Michigan
Mahoning County (Poland), Ohio
Mecklenburg County (Charlotte), North Carolina
Summit County (Bath), Ohio
Xxxxxxxx County (Carmel), Indiana
Franklin County (Gahanna), Ohio
97
EXHIBIT M
Allocated Property Cost Amounts
Allocated Allocated Portion of
Property Annual Properties
Property Name Cost Debt Service
------------- --------- ------------------------
Washtenaw County ( Xxx Arbor), Michigan $7,340,000 15.617%
Mahoning County (Poland), Ohio $7,230,000 15.383%
Mecklenburg County (Charlotte), North Carolina $10,517,000 22.377%
Summit County (Bath), Ohio $7,560,000 16.085%
Xxxxxxxx county (Carmel), Indiana $7,780,000 16.553%
Franklin County (Gahanna), Ohio $6,573,000 13.985%
Total $47,000,000 100%
98
EXHIBIT N
Residual Payment Collateral
Xxxxxxxxxx County (Blue Xxxx), Pennsylvania
99
--------------------------------------------------------------------------------
Appendix A
Rules of Usage and Definitions
--------------------------------------------------------------------------------
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set
forth herein or in any other document shall be equally applicable to the
singular and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any
document to articles, sections, paragraphs, clauses, annexes, appendices,
schedules or exhibits are references to articles, sections, paragraphs, clauses,
annexes, appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute a part
of any such document nor shall they affect the meaning, construction or effect
of any provision thereof.
(d) References to any Person shall include such Person, its
successors, permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any
agreement means such agreement as amended, modified, extended, supplemented,
restated and/or replaced from time to time in accordance with the applicable
provisions thereof.
(f) Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or regulations
issued thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the allocated cost
of in-house counsel.
(j) Each of the parties to the Operative Agreements and their
counsel have reviewed and revised, or requested revisions to, the Operative
Agreements, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall be inapplicable in the construction
and interpretation of the Operative Agreements and any amendments or exhibits
thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
have the meaning so ascribed to such term in the applicable Operative Agreement.
100
II. Definitions
"ABR" shall mean, for any day, a rate per annum equal to the greater
of (a) the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate which the Agent
announces from time to time as its prime lending rate as in effect from time to
time. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Any Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate. The Prime Lending Rate shall change automatically and
without notice from time to time as and when the prime lending rate of the Agent
changes. "Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members or the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Lending Rate or the Federal Funds Effective
Rate shall be effective as of the opening of business on the effective day of
such change in the Prime Lending Rate or the Federal Funds Effective Rate,
respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder
Yield based on the ABR.
"ABR Loans" shall mean Loans the rate of interest applicable to
which is based upon the ABR.
"Acceleration" shall have the meaning given to such term in Section
6 of the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in
Section 5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Incorporated Terms" shall have the meaning given to such
term in Section 28.1 of the Lease.
"Adjusted Properties EBITDAR" means, for the Properties for any
period, earnings before interest, federal and state income taxes, depreciation,
amortization, rent, but after an imputed replacement reserve of $250 per year
per bed in each facility and a management fee equal to the greater of 5% for
gross revenues or the actual management fee paid to the Management Company.
"Advance" shall mean a Construction Advance or an Acquisition
Advance.
"Affiliate" shall mean, with respect to any Person, any Person or
group acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid by the recipient calculated at the then
maximum marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated on or
about the Initial Closing Date between the Construction Agent and the Lessor.
Appendix A-2
101
"Agency Agreement Event of Default" shall mean an "Event of Default"
as defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean NationsBank, N.A. as agent for the Lenders
pursuant to the Credit Agreement, or any successor agent appointed in accordance
with the terms of the Credit Agreement and respecting the Security Documents,
for the Lenders and the Holders, to the extent of their interests.
"Allocated Portion of Annual Properties Debt Service", as used in
the definition of Requisite Stabilization Ratio", shall mean with respect to any
Property acquired on the Initial Closing Date, the Annual Properties Debt
Service multiplied by the percentage applicable for such Property as set forth
on Exhibit M hereto.
"Annual Properties Debt Service" means the annual principal and
interest payments (with the interest rate equal to 9%) required to amortize a
$47,000,000 loan over 25 years.
"Applicable Percentage" shall mean for Loans and Holder Advances,
the appropriate applicable percentages as set out below:
Applicable Percentage
---------------------
Tranche A Loan Tranche B Loan Holder Advances
-------------- -------------- ---------------
Eurodollar ABR Eurodollar ABR Eurodollar ABR
Loans Loans Loans Loans Advances Advances
----- ----- ----- ----- -------- --------
Initial Pricing Level from the Initial Closing
Date 2.25% 1.25% 3.00% 2.00% 3.75% 2.75%
After achievement by SALI of Minimum Equity Value
provided in Sec. 8.3B.2(d) 2.10% 1.10% 2.85% 1.85% 3.60% 2.60%
After achievement by SALI of Minimum Equity Value
provided in Sec. 8.3B.2(d) and achievement of
the Requisite Stabilization Threshold 1.88% 0.88% 2.63% 1.63% 3.38% 2.38%
The Applicable Percentage shall remain at the initial pricing level
until receipt by the Agent of notice of a circumstances warranting a change in
the pricing level and a certificate from a responsible officer of SALI in a form
satisfactory to the Agent certifying (i) attainment of the requisite levels
justifying a change in the pricing level hereunder and (ii) that no Default or
Event of Default then exists and is continuing. Any adjustment in the Applicable
Percentage shall be applicable to all existing Eurodollar Loans and Eurodollar
Holder Advances as well as any new Eurodollar Loans and Eurodollar Holder
Advances made or issued.
"Appraisal" shall mean, with respect to any Property, an appraisal
to be delivered in connection with the Participation Agreement or in accordance
with the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
"Appraisal Procedure" shall have the meaning given such term in
Section 22.4 of the Lease.
Appendix A-3
102
"Approved State" shall mean each of the following: Ohio, Michigan,
Indiana, North Carolina and any other state within the continental United States
proposed by the Lessee and consented to in writing by the Agent.
"Appurtenant Rights" shall mean (a) all agreements, easements,
rights of way or use, rights of ingress or egress, privileges, appurtenances,
tenements, hereditaments and other rights and benefits at any time belonging or
pertaining to the Land underlying the Improvements or the Improvements,
including without limitation the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land and (b)
all permits, licenses and rights, whether or not of record, appurtenant to such
Land or the Improvements.
"Assignment and Acceptance" shall mean the Assignment and Acceptance
in the form attached to the Credit Agreement as Exhibit B.
"Available Commitment" shall mean, as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Commitment over (b) the aggregate principal amount of all Loans made by such
Lender as of such date after giving effect to Section 5.2(d) of the
Participation Agreement (but without giving effect to any other repayments or
prepayments of any Loans hereunder).
"Available Holder Commitments" shall mean an amount equal to the
excess, if any, of (a) the aggregate amount of the Holder Commitments over (b)
the aggregate amount of the Holder Advances made since the Initial Closing Date
after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Basic Documents" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b)
the Lessor Basic Rent, calculated as of the applicable date on which Basic Rent
is due.
"Basic Term" shall have the meaning specified in Section 2.2 of the
Lease.
"Basic Term Commencement Date" shall have the meaning specified in
Section 2.2 of the Lease.
"Basic Term Expiration Date" shall have the meaning specified in
Section 2.2 of the Lease.
"Benefitted Lender" shall have the meaning specified in Section
9.10(a) of the Credit Agreement.
"Xxxx of Sale" shall mean a Xxxx of Sale regarding Equipment in form
and substance satisfactory to the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual
capacity but as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans hereunder.
"Budgeted Total Property Cost" shall mean, at any date of
determination with respect to any Construction Period Property, an amount equal
to the aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
Appendix A-4
103
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or any other
states from which the Agent, any Lender or any Holder funds or engages in
administrative activities with respect to the transactions under the Operative
Agreements are authorized or required by law to close; provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.
"Capitalized Lease" shall mean, as applied to any Person, any lease
of property (whether real, personal, tangible, intangible or mixed of such
Person) by such Person as the lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Capital Stock" shall mean any nonredeemable capital stock of any
Credit Party or any of its Subsidiaries, whether common or preferred.
"Casualty" means any act or occurrence of any kind or nature that
results in damage, loss or destruction to any Property.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section.9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of each Holder
regarding the Holder Commitment of such Holder issued pursuant to the terms and
conditions of the Trust Agreement in favor of each Holder.
"Charlotte Property" means the Property located in Charlotte, North
Carolina as more particularly described on Exhibit L hereto.
"Chattel Paper" shall have the meaning given to such term in Section
1 of the Security Agreement.
"Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses (including
without limitation reasonable attorney's fees and expenses) of any nature
whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 together with
rules and regulations promulgated thereunder, as amended from time to time, or
any successor statute thereto.
"Collateral" shall mean all assets of the Lessor, the Construction
Agent and the Lessee, now owned or hereafter acquired, upon which a Lien is
purported to be created by one or more of the Security Documents.
"Commitment" shall mean, as to any Lender, the obligation of such
Lender to make the portion of the Loans to the Lessor in an aggregate principal
amount at any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.1 of the Credit Agreement, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements.
"Commitment Percentage" shall mean, as to any Lender at any time,
the percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Loans then outstanding constitutes of the aggregate principal amount of all of
the Loans then outstanding), and such Commitment Percentage shall take into
account both the Lender's Tranche A Commitment and the Lender's Tranche B
Commitment.
"Commitment Period" shall mean the period from and including the
Initial Closing Date to and including the Construction Period Termination Date,
or such earlier date as the Commitments shall terminate as provided in the
Credit Agreement or the Holder Commitment shall terminate as provided in the
Trust Agreement.
Appendix A-5
104
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with SALI within the meaning of
Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended and the
regulations promulgated or issued thereunder.
"Completion" shall mean, with respect to a Property, such time as
the acquisition, installation, testing and final completion of the Improvements
on such Property has been achieved in accordance with the Plans and
Specifications, the Agency Agreement and/or the Lease, and in compliance with
all Legal Requirements and Insurance Requirements and a certificate of occupancy
has been issued with respect to such Property by the appropriate governmental
entity (except if non-compliance, individually or in the aggregate, shall not
have and could not reasonably be expected to have a Material Adverse Effect). If
the Lessor purchases a Property that includes existing Improvements that are to
be immediately occupied by the Lessee without any improvements financed pursuant
to the Operative Agreements, the date of Completion for such Property shall be
the Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the
earlier of (a) the date on which Completion for such Property has occurred or
(b) the Construction Period Termination Date.
"Condemnation" shall mean, with respect to any Property or any
Residual Payment Collateral, any taking of title, of use, or of any other
property interest under the exercise of the power of eminent domain, whether
temporarily or permanently, by any Governmental Authority or by any Person
acting under Governmental Authority.
"Condemnation Awards" shall mean any and all judgments, awards of
damages (including, but not limited to, severance and consequential damages),
payments, proceeds, settlements, amounts paid for a taking in lieu of
Condemnation, or other compensation heretofore or hereafter made, including
interest thereon, and the right to receive the same, as a result of, or in
connection with, any Condemnation or threatened Condemnation.
"Consolidated Subsidiary" shall mean, as to any Person, any
Subsidiary of such Person which under the rules of GAAP consistently applied
should have its financial results consolidated with those of such Person for
purposes of financial accounting statements.
"Construction Advance" shall mean an advance of funds to pay
Property Costs pursuant to Section 5.4 of the Participation Agreement.
"Construction Agent" shall mean Sunrise Midwest Leasing, L.L.C., a
Virginia limited liability company, as the construction agent under the Agency
Agreement.
"Construction Agent Options" shall have the meaning given to such
term in Section 2.1 of the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition,
installation, testing, constructing and developing any Property as determined by
the Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to
Improvements, the date on which construction of such Improvements commences
pursuant to the Agency Agreement.
"Construction Contract" shall mean any contract entered into between
the Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement.
Appendix A-6
105
"Construction Period" shall mean, with respect to a Property, the
period commencing on the Construction Commencement Date for such Property and
ending on the Completion Date for such Property.
"Construction Period Property" means, at any date of determination,
any Property as to which the Rent Commencement Date has not occurred on or prior
to such date.
"Construction Period Termination Date" shall mean (a) the earlier of
(i) the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as may be
agreed to by the Majority Secured Parties.
"Contractor" shall mean each entity with whom the Construction Agent
or the Lessee contracts to construct any Improvements or any portion thereof on
the Property.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2
of the Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated on or
about the Initial Closing Date, among the Lessor, the Agent and the Lenders, as
specified therein.
"Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or
condition defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the
Agency Agreement, the Credit Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the Lessee and
the Guarantor.
"Deed" shall mean a warranty deed regarding the Land and/or
Improvements in form and substance satisfactory to the Agent.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Holder" shall have the meaning given to such term in
Section 12.4 of the Participation Agreement.
"Defaulting Lender" shall have the meaning given to such term in
Section 12.4 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b)
of the Lease Agreement.
"Documents" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"EBITDAR" means, for any period, earnings before interest, federal
and state income taxes, depreciation, amortization, and rent.
Appendix A-7
106
"Election Notice" shall have the meaning given to such term in
Section 20.1 of the Lease.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other Person approved by the Agent; provided, however,
that neither the Lessee nor an Affiliate of the Lessee shall qualify as an
Eligible Assignee.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit
plan (within the meaning of Section 3(3) of ERISA, including without limitation
any Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of the
Code and as interpreted by the Internal Revenue Service and the Department of
Labor in rules, regulations, releases or bulletins in effect on any Closing
Date.
"Environmental Claims" shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial, or private in nature) arising (a) pursuant to, or in
connection with, an actual or alleged violation of, any Environmental Law, (b)
in connection with any Hazardous Substance, (c) from any abatement, removal,
remedial, corrective, or other response action in connection with a Hazardous
Substance, Environmental Law, or other order of a Tribunal or (d) from any
actual or alleged damage, injury, threat, or harm to health, safety, natural
resources, or the environment.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires remediation under
any Environmental Law and is not remediated during any grace period allowed
under such Environmental Law) to violate or results in or threatens (if the
threat requires remediation under any Environmental Law and is not remediated
during any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings
and personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements,
including but without limiting the generality of the foregoing, all equipment
described in the Appraisal including without limitation all heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description.
"Equipment Schedule" shall mean (a) each Equipment Schedule attached
to the applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean each entity required to be aggregated
with any Credit Party pursuant to the requirements of Section 414(b) or (c) of
the Code.
"Eurocurrency Reserve Requirements" shall mean for any day as
applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal) of reserve requirements in effect on
Appendix A-8
107
such day (including without limitation basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed on eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D) maintained by a member bank of the
Federal Reserve System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a
Holder Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable
to which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan or Eurodollar
Holder Advance comprising part of the same borrowing or advance (including
without limitation conversions, extensions and renewals), for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan or Eurodollar Holder Advance for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). As used herein,
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks) ("RMMRS"). In the event the RMMRS is not then quoting such
offered rates, "Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance comprising part of the same
borrowing or advance (including without limitation conversions, extensions and
renewals), the average (rounded upward to the nearest one sixteenth (1/16) of
one percent (1%)) per annum rate of interest determined by the office of the
Agent (each such determination to be conclusive and binding) as of two (2)
Business Days prior to the first day of such Interest Period, as the effective
rate at which deposits in immediately available funds in U.S. dollars are being,
have been, or would be offered or quoted by the Agent to major banks in the
applicable interbank market for Eurodollar deposits at any time during the
Business Day which is the second Business Day immediately preceding the first
day of such Interest Period, for a term comparable to such Interest Period and
in the amount of the requested Eurodollar Loan and/or Eurodollar Holder Advance.
If no such offers or quotes are generally available for such amount, then the
Agent shall be entitled to determine the Eurodollar Rate by estimating in its
reasonable judgment the per annum rate (as described above) that would be
applicable if such quote or offers were generally available.
"Event of Default" shall mean a Lease Event of Default, an Agency
Agreement Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation
indemnity payments made pursuant to Section 11 of the Participation
Agreement), whether made by adjustment to Basic Rent or otherwise,
to which the Owner Trustee, any Holder or any of their respective
Affiliates, agents, officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination
Value) payable under any Operative Agreement to reimburse the Owner
Trustee, any Holder or any of their respective Affiliates (including
without limitation the reasonable expenses of the Owner Trustee, the
Trust Company and the Holders incurred in connection with any such
payment) for performing or complying with any of the obligations of
any Credit Party under and as permitted by any Operative Agreement;
Appendix A-9
108
(c) any amount payable to a Holder by any transferee of
such interest of a Holder as the purchase price of such Holder's
interest in the Trust Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to
risks self-insured or policy deductibles) under liability policies
other than such proceeds or payments payable to the Agent or any
Lender;
(e) any insurance proceeds under policies maintained by
the Owner Trustee or any Holder;
(f) Transaction Expenses or other amounts, fees,
disbursements or expenses paid or payable to or for the benefit of
the Owner Trustee or any Holder;
(g) all right, title and interest of any Holder or the
Owner Trustee to any Property or any portion thereof or any other
property to the extent any of the foregoing has been released from
the Liens of the Security Documents and the Lease pursuant to the
terms thereof;
(h) upon termination of the Credit Agreement pursuant to
the terms thereof, all remaining property covered by the Lease or
Security Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent
attributable to payments referred to in clauses (a) through (i)
above; and
(k) any rights of either the Owner Trustee or the Trust
Company to demand, collect, xxx for or otherwise receive and enforce
payment of any of the foregoing amounts, provided that such rights
shall not include the right to terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the Termination Value paid by the Lessee pursuant
to the Lease with respect to such Casualty or Condemnation.
"Excluded Taxes" shall have the meaning given to such term in
Section 11.2(b) of the Participation Agreement.
"Exculpated Persons" shall mean the Trust Company (except with
respect to the representations and warranties and the other obligations of the
Trust Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to the
Trust Agreement), the Holders (except with respect to the obligations of the
Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their officers,
directors, shareholders and partners.
"Exempt Payments" shall have the meaning specified in Section
11.2(e) of the Participation Agreement.
"Expenses" shall mean all costs and expenses of any nature
whatsoever incurred at any time and from time to time (whether before or after
an Event of Default) by the Agent, the Lessor, the Holders or the Lenders in
exercising or enforcing any rights, powers and remedies provided in the Lease or
any of the other Operative Agreements, including, without limitation, attorney's
fees, court costs, receiver's fees, management fees and costs incurred in the
repair, maintenance and operation of, or taking possession of, or selling, of
any Property or any Residual Payment Collateral.
"Expiration Date" shall mean either (a) the Basic Term Expiration
Date or (b) the last day of the applicable Renewal Term; provided, in no event
shall the Expiration Date be later than the annual anniversary of the Initial
Appendix A-10
109
Closing Date occurring in the year 2001, unless such later date has been
expressly agreed to in writing by each of the Lessor, the Lessee, the Agent, the
Lenders and the Holders.
"Facility" or "Facilities" means, individually or collectively, an
assisted living facility or independent living facility owned or operated by
SALI, a subsidiary or affiliate.
"Fair Market Sales Value" shall mean, with respect to any Property,
the amount, which in any event, shall not be less than zero (0), that would be
paid in cash in an arms-length transaction between an informed and willing
purchaser and an informed and willing seller, neither of whom is under any
compulsion to purchase or sell, respectively, such Property. Fair Market Sales
Value of any Property shall be determined based on the assumption that, except
for purposes of Section 17 of the Lease, such Property is in the condition and
state of repair required under Section 10.1 of the Lease and each Credit Party
is in compliance with the other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such
term in the definition of ABR.
"Financing Parties" shall mean the Lessor, the Owner Trustee, in its
trust capacity, the Agent, the Holders and the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements,
including without limitation all components thereof, located in or on the
Improvements, together with all replacements, modifications, alterations and
additions thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including without
limitation strikes or lockouts (but only when the Construction Agent is legally
prevented from securing replacement labor or materials as a result thereof),
adverse soil conditions, acts of God, adverse weather conditions, inability to
obtain labor or materials after all possible efforts have been expended by the
Construction Agent, governmental activities, civil commotion and enemy action;
but excluding any event, cause or condition that results from the Construction
Agent's financial condition.
"Funded Debt" means for SALI on a consolidated basis at any time the
sum at such time of (a) indebtedness for borrowed money or for the deferred
purchase price of property or services, (b) any obligations in respect of
letters of credit, banker's or other acceptances or similar obligations issued
or created for the account of the SALI, (c) lease obligations which have been or
should be, in accordance with GAAP, capitalized on the books of the SALI, (d)
all liabilities secured by any property owned by the SALI to the extent attached
to the SALI's interest in such property, even though the SALI has not assumed or
become liable for the payment thereof, and in the case of the SALI, (e) any
obligation of the SALI or a commonly controlled entity to a multi-employer Plan;
but excluding trade and other accounts payable in the ordinary course of
business in accordance with customer trade terms and which are not overdue (as
determined in accordance with customary trade practices) or which are being
disputed in good faith by the SALI and for which adequate reserves are being
provided on the books of the SALI in accordance with GAAP, (f) any synthetic
lease obligations, and (g) any other lease expenses for rented real property
will be accounted for as debt based on eight times annualized lease payments.
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the accounting principles board of the
American Institute of Certified Public Accountants, and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, that are applicable to the circumstances as of the
date of determination.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operating of the Property.
Appendix A-11
110
"Governmental Authority or Authorities" shall mean any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Ground Lease" shall mean a ground lease (in form and substance
satisfactory to the Agent) respecting any Property (a) owned by any Credit Party
(or a parent corporation or any Subsidiary of any Credit Party) and leased to
the Lessor where such lease has at least a ninety-nine (99) year term and
payments set at no more than $1.00 per year, or (b) where such lease is subject
to such other terms and conditions as are satisfactory to the Agent.
"Guaranteed Obligations" shall mean (a) the obligations of Sunrise
Midwest in any and all capacities (including without limitation in its capacity
as Lessee and as Construction Agent) under and with respect to the Operative
Agreements and each Property and (b) any and all amounts now or hereafter owing
with respect to the Tranche A Loans and the Tranche A Notes to the Lenders under
the Credit Agreement and the other Operative Agreements.
"Guarantor" shall mean Sunrise Assisted Living, Inc., its successors
and assigns, as guarantor of the Guaranteed Obligations.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract.
"Hazardous Substance" shall mean any of the following: (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or hazardous
to the environment or human health or safety as determined in accordance with
any Environmental Law; or (c) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"Holder Advance" shall mean any advance made by any Holder to the
Owner Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of
Holder Advances made by each Holder to the Trust Estate pursuant to Section 2 of
the Participation Agreement and Section 3.1 of the Trust Agreement less any
payments of any Holder Advances received by the Holders pursuant to Section 3.4
of the Trust Agreement.
"Holder Commitments" shall mean $1,410,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Holder, the
Holder Commitment of each Holder shall be as set forth in Schedule I to the
Trust Agreement as such Schedule I may be amended and replaced from time to
time.
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
the outstanding Holder Advances made with respect thereto under the Trust
Agreement.
"Holder Overdue Rate" shall mean the lesser of (a) the then current
rate of Holder Yield respecting the particular amount in question plus four
percent (4%) and (b) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property an
amount equal to the outstanding Holder Advances with respect thereto.
"Holder Yield" shall mean with respect to Holder Advances from time
to time either the Eurodollar Rate plus the Applicable Percentage or the ABR
plus the Applicable Percentage as elected by the Owner Trustee from
Appendix A-12
111
time to time with respect to such Holder Advances in accordance with the terms
of the Trust Agreement; provided, however, (a) upon delivery of the notice
described in Section 3.7(c) of the Trust Agreement, the outstanding Holder
Advances of each Holder shall bear a yield at the ABR applicable from time to
time from and after the dates and during the periods specified in Section 3.7(c)
of the Trust Agreement, and (b) upon the delivery by a Holder of the notice
described in Section 11.3(f) of the Participation Agreement, the Holder Advances
of such Holder shall bear a yield at the ABR applicable from time to time after
the dates and during the periods specified in Section 11.3(f) of the
Participation Agreement.
"Holders" shall mean NationsBank, N.A. and shall include the other
banks and financial institutions which may be from time to time holders of
Certificates in connection with the Sunrise Trust 1998-1.
"Impositions" shall mean any and all liabilities, losses, expenses,
costs, charges and Liens of any kind whatsoever for fees, taxes, levies,
imposts, duties, charges, assessments or withholdings ("Taxes") including but
not limited to (i) real and personal property taxes, including without
limitation personal property taxes on any property covered by the Lease that is
classified by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii)
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes and
documentary recording taxes and fees; (v) taxes that are or are in the nature of
franchise, income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including without
limitation all assessments for public Improvements or benefits, whether or not
such improvements are commenced or completed within the Term; and (vii) taxes,
Liens, assessments or charges asserted, imposed or assessed by the PBGC or any
governmental authority succeeding to or performing functions similar to, the
PBGC; and in each case all interest, additions to tax and penalties thereon,
which at any time prior to, during or with respect to the Term or in respect of
any period for which the Lessee shall be obligated to pay Supplemental Rent, may
be levied, assessed or imposed by any Governmental Authority upon or with
respect to (a) any Property or any part thereof or interest therein; (b) the
leasing, financing, refinancing, demolition, construction, substitution,
subleasing, assignment, control, condition, occupancy, servicing, maintenance,
repair, ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, sale, transfer of title, return or other disposition of
such Property or any part thereof or interest therein; (c) the Notes, other
indebtedness with respect to any Property, or the Certificates, or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Property or any part thereof or interest therein; (e) the Operative
Agreements, the performance thereof, or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to any Property
or any part thereof or interest therein upon the sale or disposition thereof;
(g) any contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; (h) the issuance of the Notes or the Certificates; (i) the Owner
Trustee, the Trust or the Trust Estate; or (j) otherwise in connection with the
transactions contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction,
renovations and/or Modifications on any Land, all buildings, structures,
Fixtures, and other improvements of every kind existing at any time and from
time to time on or under the Land purchased or otherwise acquired using the
proceeds of the Loans or the Holder Advances or which is subject to a Ground
Lease, together with any and all appurtenances to such buildings, structures or
improvements, including without limitation sidewalks, utility pipes, conduits
and lines, parking areas and roadways, and including without limitation all
Modifications and other additions to or changes in the Improvements at any time,
including without limitation (a) any Improvements existing as of the Property
Closing Date as such Improvements may be referenced on the applicable
Requisition and (b) any Improvements made subsequent to such Property Closing
Date.
"Incorporated Representations and Warranties" shall have the meaning
given to such term in Section 28.1 of the Lease.
"Indebtedness" of a Person shall mean, without duplication, such
Person's:
(a) obligations for borrowed money;
Appendix A-13
112
(b) obligations representing the deferred purchase price
of Property (whether real, personal, tangible, intangible or mixed)
or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the
trade);
(c) obligations, whether or not assumed, secured by
liens or payable out of the proceeds or production from property now
or hereafter owned or acquired by such Person;
(d) obligations which are evidenced by notes,
acceptances or other instruments;
(e) Capitalized Lease obligations;
(f) net liabilities under interest rate swap, exchange
or cap agreements; and
(g) contingent obligations.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in
its individual and its trust capacity, the Trust, the Trust Company, the Agent,
the Holders, the Lenders and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the
Lessee.
"Initial Closing Date" shall mean December 2, 1998.
"Initial Construction Advance" shall mean any initial Advance to pay
for: (a) Property Costs for construction of any Improvements; and (b) the
Property Costs of restoring or repairing any Property which is required to be
restored or repaired in accordance with Section 15.1(e) of the Lease.
"Instruments" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Interest Period" shall mean (a) during the Commitment Period and
thereafter as to any Eurodollar Loan or Eurodollar Holder Advance (i) with
respect to the initial Interest Period, the period beginning on the date of the
first Eurodollar Loan and Eurodollar Holder Advance and ending one (1) month,
two (2) months or three (3) months thereafter, as selected by the Lessor (in the
case of a Eurodollar Loan) or the Owner Trustee (in the case of a Eurodollar
Holder Advance) in its applicable notice given with respect thereto and (ii)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan or Eurodollar Holder Advance
and ending one (1) month, two (2) months or three (3) months thereafter, as
selected by the Lessor by irrevocable notice to the Agent (in the case of a
Eurodollar Loan) or by the Owner Trustee (in the case of a Eurodollar Holder
Advance) in each case not less than three (3) Business Days prior to the last
day of the then current Interest Period with respect thereto; provided, however,
that all of the foregoing provisions relating to Interest Periods are subject to
the following: (A) if any Interest Period would end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business Day falls in the
next succeeding calendar month, then on the next preceding Business Day), (B) no
Interest Period shall extend beyond the Maturity Date or the Expiration Date, as
the case may be, (C) where an Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall end on the last Business Day of
such calendar month, (D) there shall not be more than four (4) Interest Periods
outstanding at any one (1) time.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, together with the rules and regulations promulgated
thereunder.
Appendix A-14
113
"Joinder Agreement" shall mean a joinder agreement, in the form of
Exhibit J to the Participation Agreement, executed from time to time between a
Domestic Subsidiary of any Credit Party and the Agent.
"Karrington" means Karrington Acquisition, Inc., an Ohio
corporation.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing Date
relating to such parcel and (b) the schedules to each applicable Lease
Supplement executed and delivered in accordance with the requirements of Section
2.4 of the Lease.
"Law" shall mean any statute, law, ordinance, regulation, rule,
directive, order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on
or about the Initial Closing Date, between the Lessor and the Lessee, together
with any Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the
lapse of time or the giving of notice, or both, would constitute a Lease Event
of Default.
"Lease Event of Default" shall have the meaning specified in Section
17.1 of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in
the form of Exhibit A to the Lease, together with all attachments and schedules
thereto.
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101 et. seq.,
and any other similar federal, state or local laws or ordinances and the
regulations promulgated thereunder) and any that may relate to environmental
requirements (including without limitation all Environmental Laws), and all
permits, certificates of occupancy, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments which are either of record or known to any Credit
Party affecting any Property or the Appurtenant Rights.
"Lender Commitments" shall mean $45,590,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Lender, the
Lender Commitment of each Lender shall be as set forth in Schedule 2.1 to the
Credit Agreement as such Schedule 2.1 may be amended and replaced from time to
time.
"Lender Financing Statements" shall mean UCC financing statements
and fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lender Tax" shall mean any present or future tax, levy, cost or
charge of any nature imposed by any Governmental Authority, excluding taxes on
or measured by the net income of any Financing Party imposed by any jurisdiction
in which the principal or relevant lending office of such Financing Party is
located.
"Lenders" shall mean NationsBank, N.A. and shall include the other
banks and financial institutions which may be from time to time party to the
Participation Agreement and the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessor" shall mean the Owner Trustee, not in its individual
capacity, but as the Lessor under the Lease.
Appendix A-15
114
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the
Holder Advances on any Scheduled Interest Payment Date pursuant to the Trust
Agreement (but not including interest on (a) any such scheduled Holder Yield due
on the Holder Advances prior to the Rent Commencement Date with respect to the
Property to which such Holder Advances relate or (b) overdue amounts under the
Trust Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements
and fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Lessor or
the Trust Company, in its individual capacity, not resulting from the
transactions contemplated by the Operative Agreements, (b) any act or omission
of the Lessor or the Trust Company, in its individual capacity, which is not
required by the Operative Agreements or is in violation of any of the terms of
the Operative Agreements, (c) any claim against the Lessor or the Trust Company,
in its individual capacity, with respect to Taxes or Transaction Expenses
against which the Lessee is not required to indemnify the Lessor or the Trust
Company, in its individual capacity, pursuant to Section 11 of the Participation
Agreement or (d) any claim against the Lessor arising out of any transfer by the
Lessor of all or any portion of the interest of the Lessor in the Properties,
the Trust Estate or the Operative Agreements other than the transfer of title to
or possession of any Properties by the Lessor pursuant to and in accordance with
the Lease, the Credit Agreement, the Security Agreement or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Article XVII
of the Lease.
"Licenses" means any and all licenses, certificates of need,
operating permits, franchises, and other licenses, authorizations,
certifications, permits, or approvals, other than construction permits, issued
by, or on behalf of, any Governmental Authority now existing or at any time
hereafter issued, with respect to the acquisition, construction, renovation,
expansion, leasing, management, ownership and/or the participation or
eligibility for participation in any third party payment or reimbursement
programs to the extent SALI or its subsidiary or affiliate is participating in
such programs (but specifically excluding any and all
Reimbursement-Participation Agreements to the extent required by law), any and
all operating licenses issued by any state Governmental Authority, any and all
pharmaceutical licenses and other licenses related to the purchase, dispensing,
storage, prescription or use of drugs, medications, and other "controlled
substances," any and all licenses relating to the operation of food or beverage
facilities or amenities, if any, and any and all certifications and eligibility
for participation in Medicare, Medicaid, Blue Cross and/or Blue Shield, or any
of the Managed Care Plans, private insurer, employee assistance programs or
other third party payment or reimbursement programs as the same may from time to
time be amended, renewed, restated, reissued, restricted, supplemented or
otherwise modified.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, option or charge of any kind.
"Limited Recourse Amount" shall mean with respect to all the
Properties on an aggregate basis, an amount equal to the sum of the Termination
Values with respect to all the Properties on an aggregate basis on each Payment
Date, less the Maximum Residual Guarantee Amount as of such date with respect to
all the Properties on an aggregate basis.
"Liquid Assets" means cash, cash equivalents and readily marketable
securities.
"Loan Basic Rent" shall mean the scheduled interest due on the Loans
on any Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
with respect to the Property to which such Loan relates or (b) any overdue
amounts under Section 2.8(c) of the Credit Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at
any date of determination, an amount equal to (a) the aggregate principal amount
all Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
aggregate amount of prepayments or repayments as the case may be of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement.
Appendix A-16
115
"Loans" shall mean the loans extended pursuant to the Credit
Agreement and shall include both the Tranche A Loans and the Tranche B Loans.
"Majority Holders" shall mean at any time, Holders whose Holder
Advances outstanding represent at least sixty-six and two thirds percent (66
2/3%) of (a) the aggregate Holder Advances outstanding or (b) to the extent
there are no Holder Advances outstanding, the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders whose Loans
outstanding represent at least sixty-six and two thirds percent (66 2/3%) of (a)
the aggregate Loans outstanding or (b) to the extent there are no Loans
outstanding, the aggregate of the Lender Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and
Holders whose Loans and Holder Advances outstanding represent at least sixty-six
and two thirds percent (66 2/3%) of (a) the aggregate Advances outstanding or
(b) to the extent there are no Advances outstanding, the sum of the aggregate
Holder Commitments plus the aggregate Lender Commitments.
"Managed Care Plans" shall mean any health maintenance organization,
preferred provider organization, individual practice association, competitive
medical plan, or similar arrangement, entity, organization, or Person.
"Management Agreement" shall mean any and all Management Agreements
entered into or to be entered into by and between SALI or any of its
Subsidiaries or affiliates and the Management Company relating to the management
of the Properties, as the same may from time to time be amended, restated and
supplemented or otherwise modified.
"Management Company" means XXXXX, its successors and assigns and any
other Person which may become the manager of the Facilities.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice
in accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
"Master Guaranty of Payment" means that Amended and Restated Master
Guaranty of Payment Agreement dated as of December 23, 1997, as amended,
modified, supplemented, restated and/or replaced, given by SALI, as guarantor,
for the benefit of NationsBank, N.A., as agent for itself and other lenders
under a $250 million Amended and Restated Financing and Security Agreement dated
as of December 23, 1997 among Sunrise East Assisted Living Limited Partnership,
a Virginia limited partnership, as borrower, the lenders identified therein and
NationsBank, N.A., as Agent, as referenced therein.
"Master Guaranty of Payment Event of Default" shall mean an Event of
Default as defined in Section 1.7 of the Master Guaranty of Payment.
"Material Adverse Effect" shall mean (a) a significant adverse
change in a Person's financial position or capacity including but not limited to
significant adverse changes in (i) liquidity, (ii) gross revenues, (iii) total
expenses, (iv) such Person's net worth, or (v) ability to meet payment
obligations under such Person's Funded Debt, the obligations under the Operative
Agreements and/or contingent obligations, and (b) a material adverse effect on
(i) the validity or enforceability of any Operative Agreement or the rights and
remedies of the Agent, the Lenders, the Holders, or the Lessor thereunder, (ii)
the validity, priority or enforceability of any Lien on any Property created by
any of the Operative Agreements, or (iii) the value, utility or useful life of
any Property or the use, or ability of the Lessee to use, any Property for the
purpose for which it was intended.
"Material Sublease" means a Sublease that generates $15,000 per year
or more in revenue for a Property.
"Maturity Date" shall mean the Expiration Date.
Appendix A-17
116
"Maximum Amount" shall mean (a) one hundred percent (100%) of the
cost of the Land or the Ground Lease (as the case may be) for all, but not less
than all, the Properties (collectively, the "Land Cost"), plus (b) the product
of eighty-nine and nine tenths percent (89.9%) multiplied by the following: (the
aggregate Termination Value for all, but not less than all, the Properties,
minus the Land Cost, minus all structuring fees payable in connection with the
transactions evidenced by the Operative Agreements to NationsBanc Xxxxxxxxxx
Securities LLC, NationsBank, N.A. and/or any Affiliates of either of the
foregoing, minus accrued, unpaid Holder Yield respecting any and all
Construction Period Properties) minus (c) the accreted value (calculated at a
rate of seven and forty-three hundreths percent (7.43%) per annum) of any
payments previously made by the Construction Agent or the Lessee regarding any
and all Construction Period Properties and not reimbursed.
"Maximum Residual Guarantee Amount" shall mean an amount equal to
the product of the aggregate Property Cost for all of Properties times
eighty-seven percent (87%).
"Modifications" shall have the meaning specified in Section 11.1(a)
of the Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any
other instrument executed by the Owner Trustee and the Lessee (or regarding any
Property subject to a Ground Lease, the applicable Affiliate of the Lessee) in
favor of the Agent (for the benefit of the Lenders and the Holders) and
evidencing a Lien on the Property, in form and substance reasonably acceptable
to the Agent.
"Multiemployer Plan" shall mean any plan described in Section
4001(a)(3) of ERISA to which contributions are or have been made or required by
any Credit Party or any of its Subsidiaries or ERISA Affiliates.
"Multiple Employer Plan" shall mean a plan to which any Credit Party
or any ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.
"Net Proceeds", when used with respect to any Condemnation Awards or
insurance proceeds allocable to the Properties, shall mean the gross proceeds
from any Casualty or Condemnation remaining after payment of all expenses
(including attorneys' fees) incurred in the collection of such gross proceeds.
"New Facility" shall have the meaning given to such term in Section
28.1 of the Lease.
"NOI" means, for the Properties or the Residual Payment Collateral,
as appropriate, for any period, the total operating revenue less total operating
expenses (excluding interest, federal and state income taxes, depreciation and
amortization) but after an imputed replacement reserve of $250 per year per bed
in each facility), and including a management fee to the Management Company of
the higher of five percent (5%) of gross revenues or the actual management fee
for the period in question as shown in financial information provided by the
SALI.
"Non-Integral Equipment" shall mean Equipment which (a) is personal
property that is readily removable without causing material damage to the
applicable Property and (b) is not integral or necessary, respecting the
applicable Property, for compliance with Section 8.3 of the Lease or otherwise
to the structure thereof, the mechanical operation thereof, the electrical
systems thereof or otherwise with respect to any aspect of the physical plant
thereof.
"Notes" shall mean those notes issued to the Lenders pursuant to the
Credit Agreement and shall include both the Tranche A Notes and the Tranche B
Notes.
"Obligations" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Officer's Certificate" with respect to any person shall mean a
certificate executed on behalf of such person by a Responsible Officer who has
made or caused to be made such examination or investigation as is necessary to
enable such Responsible Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.
Appendix A-18
117
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), each Sublease, the Security Agreement, the Mortgage Instruments, the
other Security Documents, the Ground Leases, the Deeds and the Bills of Sale and
any and all other agreements, documents and instruments executed in connection
with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such
term in Section 5 of Exhibit A to the Lease.
"Overdue Interest" shall mean any interest payable pursuant to
Section 2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent,
and any other amount owed under or with respect to the Credit Agreement or the
Security Documents, the rate specified in Section 2.8(b) of the Credit
Agreement, (b) with respect to the Lessor Basic Rent, the Holder Yield and any
other amount owed under or with respect to the Trust Agreement, the Holder
Overdue Rate, and (c) with respect to any other amount, the amount referred to
in clause (y) of Section 2.8(b) of the Credit Agreement.
"Owner Trustee," "Borrower" or "Lessor" shall mean First Security
Bank, National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the Sunrise
Trust 1998-1, and any successor, replacement and/or additional Owner Trustee
expressly permitted under the Operative Agreements.
"Participant" shall have the meaning given to such term in Section
9.7 of the Credit Agreement.
"Participation Agreement" shall mean the Participation Agreement
dated on or about the Initial Closing Date, among the Lessee, the Guarantors,
the Owner Trustee, not in its individual capacity except as expressly stated
therein, the Holders, the Lenders and the Agent.
"Payment Date" shall mean any Scheduled Interest Payment Date and
any date on which interest or Holder Yield in connection with a prepayment of
principal on the Loans or of the Holder Advances is due under the Credit
Agreement or the Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created
by Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined
in section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Facility" shall mean each of the properties identified on
Exhibit L hereto, plus any other property approved by the Lenders and the
Holders in their sole discretion which is of a type and size customarily used
and operated by the Lessee in its ordinary course of business as of the Initial
Closing Date.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties
to the Operative Agreements as provided in the Operative Agreements;
(b) the rights of any sublessee or assignee under a
sublease or an assignment expressly permitted by the terms of the
Lease for no longer than the duration of the Lease;
Appendix A-19
118
(c) Liens for Taxes that either are not yet due or are
being contested in accordance with the provisions of Section 13.1 of
the Lease;
(d) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens relating to the construction of
the Improvements or in connection with any Modifications or arising
in the ordinary course of business for amounts that either are not
more than thirty (30) days past due or are being diligently
contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 13.1 of the Lease;
(e) Liens of any of the types referred to in clause (d)
above that have been bonded for not less than the full amount in
dispute (or as to which other security arrangements satisfactory to
the Lessor and the Agent have been made), which bonding (or
arrangements) shall comply with applicable Legal Requirements, and
shall have effectively stayed any execution or enforcement of such
Liens;
(f) Liens arising out of judgments or awards with
respect to which appeals or other proceedings for review are being
prosecuted in good faith and for the payment of which adequate
reserves have been provided as required by GAAP or other appropriate
provisions have been made, so long as such proceedings have the
effect of staying the execution of such judgments or awards and
satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease; and
(g) Liens in favor of municipalities to the extent
agreed to by the Lessor.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, governmental authority or any other entity.
"Plan" shall mean a Pension Plan.
"Plans and Specifications" shall mean, with respect to Improvements,
the plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Prime Lending Rate" shall have the meaning given to such term in
the definition of ABR.
"Property" shall mean, with respect to each Permitted Facility that
is (or is to be) acquired, constructed and/or renovated pursuant to the terms of
the Operative Agreements, the Land and each item of Equipment and the various
Improvements, in each case located on such Land, including without limitation
each Construction Period Property, each Property subject to a Ground Lease and
each Property for which the Basic Term has commenced.
"Property Acquisition Cost" shall mean the cost to the Lessor to
purchase a Property on a Property Closing Date.
"Property Closing Date" shall mean the date on which the Lessor
purchases a Property or, with respect to the first Advance, the date on which
the Lessor seeks reimbursement for Property previously purchased by the Lessor
(it being understood and agreed that the Property Closing Date for the
Properties identified on Exhibit L hereto shall be the Initial Closing Date).
"Property Cost" shall mean with respect to a Property the aggregate
amount (and/or the various items and occurrences giving rise to such amounts) of
the Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
and 7.1(b) and indemnity payments pursuant to Section 11.8, in each case of the
Participation Agreement).
"Purchase Option" shall have the meaning given to such term in
Section 20.1 of the Lease.
Appendix A-20
119
"Purchasing Lender" shall have the meaning given to such term in
Section 9.8(a) of the Credit Agreement.
"Register" shall have the meaning given to such term in Section
9.9(a) of the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Reimbursement-Participation Agreement" means any and all third
party payor participation or reimbursement agreements now or at any time
hereafter existing for the benefit of SALI or its subsidiaries or affiliates
relating to rights to payment or reimbursement from, and claims against, private
insurers, Managed Care Plans, material employee assistance programs, Blue Cross
and/or Blue Shield, federal, sate and local Governmental Authorities, including
without limitation, Medicare and Medicaid, and other third party payors, as the
same may be from time to time be amended, restated, extended, supplemented or
modified.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date (it being understood and agreed that the Rent Commencement Date
for each of the Properties identified on Exhibit L shall be the Initial Closing
Date).
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee or
the Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requisite Stabilization Threshold" shall have been achieved if
either
(i) with respect to each of the six (6) Properties
identified on Exhibit L hereto, (A) each such Property shall have
achieved a Resident Occupancy Rate of at least 85% for at least two
(2) consecutive fiscal quarters, and (B) the ratio of the NOI for
each such Property to the Allocated Portion of the Annual Properties
Debt Service for such Property shall be not less than 1.25:1.0 as of
the end of at least two (2) consecutive fiscal quarters; or
(ii) (A) at least five (5) of the Properties identified
on Exhibit L hereto shall have achieved a Resident Occupancy Rate of
at least 85% for at least two (2) consecutive fiscal quarters, (B)
the ratio of NOI to the Allocated Portion of the Annual Properties
Debt Service for each of five of the six Properties shall be not
less than 1.25:1.0, (C) the ratio of NOI to the Allocated Portion of
the Annual Properties Debt Service for each Property shall be not
less than 1.0:1.0, and (D) the combined ratio of NOI for all six of
the Properties to the Annual Properties Debt Service shall be not
less than 1.35:1.0.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Resident Agreement" means any and all contracts, authorizations,
agreements and/or consents executed by, or on behalf of any resident or other
person seeking services from Karrington or any Karrington subsidiary or SALI or
any SALI subsidiary pursuant to which Karrington or any Karrington subsidiary or
SALI or any SALI subsidiary provides or furnishes health or assisted living care
and related services at any and all of the assisted living facilities, including
the consent to treatment, assignment of payment of benefits by third party, as
the same may from time to time be amended, restated, supplemented or modified.
Appendix A-21
120
"Resident Occupancy Rate" means a percentage derived by dividing (i)
the number of residents who are in occupancy at an assisted living facility and
paying fees pursuant to a Resident Agreement by (ii) the pro forma resident
occupancy for such assisted living facility as contained in the annual pro forma
operating budget of such assisted living facility to be reviewed by the Agent.
"Residual Payment Collateral" means those properties, in addition to
the Properties, pledged to secure the Loans and obligations hereunder. Exhibit N
sets out the properties comprising the Residual Payment Collateral as of the
Initial Closing Date. The foregoing schedule will be updated periodically to
reflect the addition or substitution of properties comprising the Residual
Payment Collateral.
"Responsible Officer" shall mean the Chairman or Vice Chairman of
the Board of Directors, the Chairman or Vice Chairman of the Executive Committee
of the Board of Directors, the President, any Senior Vice President or Executive
Vice President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Sale Date" shall have the meaning given to such term in Section
22.1(a) of the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection
with the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section
20.1 of the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the
proceeds of a sale described in Section 22.1 of the Lease are less than the
Limited Recourse Amount with respect to the Properties if it has been determined
that the Fair Market Sales Value of the Properties at the expiration of the term
of the Lease has been impaired by greater than ordinary wear and tear during the
Term of the Lease.
"SALI" means Sunrise Assisted Living, Inc., a Delaware corporation,
its successors and permitted assigns.
"XXXXX" means Sunrise Assisted Living Management, Inc., a Virginia
corporation, formerly known as Sunrise Terrace, Inc.
"Scheduled Interest Payment Date" shall mean (a) as to any
Eurodollar Loan or Eurodollar Holder Advance, the last day of the Interest
Period applicable to such Eurodollar Loan or Eurodollar Holder Advance, (b) as
to any ABR Loan or any ABR Holder Advance, the fifteenth day of each month,
unless such day is not a Business Day and in such case on the next occurring
Business Day and (c) as to all Loans and Holder Advances, the date of any
voluntary or involuntary payment, prepayment, return or redemption, and the
Maturity Date or the Expiration Date, as the case may be.
"Secured Parties" shall have the meaning given to such term in the
Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or
about the Initial Closing Date between the Lessor and the Agent, for the benefit
of the Secured Parties, and accepted and agreed to by the Lessee.
"Security Documents" shall mean the collective reference to the
Security Agreement, the Mortgage Instruments, (to the extent the Lease is
construed as a security instrument) the Lease, the UCC Financing Statements and
all other security documents hereafter delivered to the Agent granting a lien on
any asset or assets of any Person
Appendix A-22
121
to secure the obligations and liabilities of the Lessor under the Credit
Agreement and/or under any of the other Credit Documents or to secure any
guarantee of any such obligations and liabilities.
"Soft Costs" shall mean all costs which are ordinarily and
reasonably incurred in relation to the acquisition, development, installation,
construction, improvement and testing of the Properties other than Hard Costs,
including without limitation structuring fees, administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations, title
insurance, document recordation, surveys, environmental site assessments,
geotechnical soil investigations and similar costs and professional fees
customarily associated with a real estate closing, the Lender Unused Fee, the
Holder Unused Fee, fees and expenses of the Owner Trustee payable or
reimbursable under the Operative Agreements and costs and expenses incurred
pursuant to Sections 7.3(a) and 7.3(b) of the Participation Agreement.
"Sublease" shall have the meaning given to such term in Section
17.1(q) of the Lease.
"Sublease Default" shall have the meaning given to such term in
Section 17.1(q) of the Lease.
"Subsidiary" shall mean, as to any Person, any corporation of which
at least a majority of the outstanding stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person, or by
one (1) or more Subsidiaries, or by such Person and one (1) or more
Subsidiaries.
"Sunrise Midwest" shall mean Sunrise Midwest Leasing, L.L.C., a
Virginia corporation, and its successors and permitted assigns.
"Sunrise Trust 1998-1" shall mean the grantor trust created pursuant
to the terms and conditions of the Trust Agreement.
"Supplemental Amounts" shall have the meaning given to such term in
Section 9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Basic Rent) which the Lessee assumes or agrees to pay to
the Lessor, the Trust Company, the Holders, the Agent, the Lenders or any other
Person under the Lease or under any of the other Operative Agreements including
without limitation payments of the Termination Value and the Maximum Residual
Guarantee Amount and all indemnification amounts, liabilities and obligations.
"Tangible Net Worth" means, at any time, the sum at such time of Net
Worth (as defined by GAAP) less the total of (i) all assets which would be
classified as intangible assets under GAAP, including goodwill (except for the
minority interest in the Park Ridge, Ill. property and except for deferred taxes
recorded as goodwill), trademarks, trademark applications, trade names, service
marks, patent applications and licenses, and deferred charges, (ii) any
revaluation or other write-up in book value of assets subsequent to the date of
the most recent financial statements delivered to the Agent, (iii) the amount of
all loans and advances to, or investments in, any person of entity, excluding
cash equivalents and deposit accounts maintained by SALI with any financial
institution, (iv) advances or loans made to or receivables from any
unconsolidated affiliates (excluding subordinated debt of unconsolidated
subsidiaries and affiliates of SALI) of which SALI owns less than fifty percent
(50%) or any stockholder of SALI or any affiliate and (v) the amount of all
loans and advances to, or investments in, any person or entity, excluding loans
to Karrington and its affiliates, cash equivalents and deposit accounts
maintained by SALI with any financial institutions, certain mortgage revenue
bonds issued by the Bucks County, Pennsylvania Industrial Development Authority
and investments of less than $2,500,000 individually (not to exceed $10,000,000
in the aggregate).
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall mean the Basic Term and each Renewal Term, if any.
Appendix A-23
122
"Termination Date" shall have the meaning specified in Section
16.2(a) of the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan,
the occurrence of a Reportable Event or an event described in Section 4062(e) of
ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan, (c) the distribution of a notice of intent to
terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A
of ERISA, (d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section
16.1 of the Lease.
"Termination Value" shall mean the sum of (a) either (i) with
respect to all Properties, an amount equal to the aggregate outstanding Property
Cost for all the Properties, in each case as of the last occurring Payment Date,
or (ii) with respect to a particular Property, an amount equal to the Property
Cost allocable to such Property (as identified on Exhibit M hereto with respect
to the Properties acquired on the Initial Closing Date), plus (b) respecting the
amounts described in each of the foregoing subclause (i) or (ii), as applicable,
any and all accrued but unpaid interest on the Loans and any and all Holder
Yield on the Holder Advances related to the applicable Property Cost, plus (c)
to the extent the same is not duplicative of the amounts payable under clause
(b) above, all other Rent and other amounts then due and payable or accrued
under the Agency Agreement, Lease and/or under any other Operative Agreement
(including without limitation amounts under Sections 11.1 and 11.2 of the
Participation Agreement and all costs and expenses referred to in clause FIRST
of Section 22.2 of the Lease).
"Tranche A Commitments" shall mean the obligation of the Tranche A
Lenders to make the Tranche A Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche A Lender's name on Schedule 2.1 to the
Credit Agreement, as such amount may be increased or reduced from time to time
in accordance with the provisions of the Operative Agreements; provided, no
Tranche A Lender shall be obligated to make Tranche A Loans in excess of such
Tranche A Lender's share of the Tranche A Commitments as set forth adjacent to
such Tranche A Lender's name on Schedule 2.1 to Credit Agreement.
"Tranche A Lenders" shall mean NationsBank, N.A. and shall include
the several banks and other financial institutions from time to time party to
the Credit Agreement that commit to make the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche
A Commitment.
"Tranche A Note" shall have the meaning given to it in Section 2.2
of the Credit Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B
Lenders to make the Tranche B Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche B Lender's name on Schedule 2.1 to the
Credit Agreement, as such amount may be increased or reduced from time to time
in accordance with the provisions of the Operative Agreements; provided, no
Tranche B Lender shall be obligated to make Tranche B Loans in excess of such
Tranche B Lender's share of the Tranche B Commitments as set forth adjacent to
such Tranche B Lender's name on Schedule 2.1 to Credit Agreement.
"Tranche B Lenders" shall mean NationsBank, N.A. and shall include
the several banks and other financial institutions from time to time party to
the Credit Agreement that commit to make the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitment.
"Tranche B Note" shall have the meaning given to it in Section 2.2
of the Credit Agreement.
Appendix A-24
123
"Transaction Expenses" shall mean all Soft Costs and all other costs
and expenses incurred in connection with the preparation, execution and delivery
of the Operative Agreements and the transactions contemplated by the Operative
Agreements including without limitation all costs and expenses described in
Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative
Agreements and the other transaction documents, preparing for the
closings under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Agreements;
(b) the reasonable fees, out-of-pocket expenses and
disbursements of accountants for any Credit Party in connection with
the transaction contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other
amounts payable to the Lenders, the Agent, the Holders, the Owner
Trustee or any broker which arises under any of the Operative
Agreements;
(d) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any
of the other transaction documents; and
(e) any and all Taxes and fees incurred in recording or
filing any Operative Agreement or any other transaction document,
any deed, declaration, mortgage, security agreement, notice or
financing statement with any public office, registry or governmental
agency in connection with the transactions contemplated by the
Operative Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Trust" shall mean the Sunrise Trust 1998-1.
"Trust Agreement" shall mean the Trust Agreement dated on or about
the Initial Closing Date between the Holders and the Owner Trustee.
"Trust Company" shall mean First Security Bank, National
Association, in its individual capacity, and any successor owner trustee under
the Trust Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of
the Trust Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender
Financing Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section
12.4 of the Participation Agreement.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of
the Agency Agreement.
"Unfunded Liability" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Company or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.
"Uniform Commercial Code" and "UCC" shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
Appendix A-25
124
"United States Bankruptcy Code" shall mean Title 11 of the United
States Code.
"U.S. Person" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"U.S. Taxes" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Wholly-Owned Entity" shall mean a Person all of the shares of
capital stock or other ownership interest of which are owned by Sunrise Assisted
Living, Inc. and/or one of its wholly-owned Subsidiaries or other wholly-owned
entities.
"Withholdings" shall have the meaning specified in Section 11.2(e)
of the Participation Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
"Year 2000 Compliant" shall have the meaning specified in Section
6.2(w) of the Participation Agreement.
"Year 2000 Problem" shall mean the risk that computer applications
used by any Credit Party, any Subsidiary of any Credit Party or any supplier,
vendor or customer of any Credit Party or any Subsidiary of any Credit Party may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999.
Appendix A-26
