LOAN NO. 07-0004017
LOAN AGREEMENT
AMONG
XXXXXX HEALTHCARE FINANCE, INC.,
A DELAWARE CORPORATION
("LENDER")
AND
EMERITUS PROPERTIES XIV, LLC
A WASHINGTON LIMITED LIABILITY COMPANY
("BORROWER")
LOAN IN THE PRINCIPAL AMOUNT
OF $8,300,000
SENIOR HOUSING FACILITY
TABLE OF CONTENTS
RECITALS 2
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ARTICLE I. The Loan 2
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ARTICLE II. Security 4
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ARTICLE III. Conditions Precedent 4
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ARTICLE IV. Representations and Warranties 6
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ARTICLE V. Affirmative Covenants 11
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ARTICLE VI. Negative Covenants 15
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ARTICLE VII. Events of Default; Acceleration of Indebtedness; Remedies 16
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ARTICLE VIII. Miscellaneous 17
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Property Description
Exhibit B Litigation
Exhibit C Security Deposits
Exhibit D Principal Payments
Exhibit E Appurtenant Easements
Exhibit F Flood Zone Information
Schedule I Index of Defined Terms
-23-
LOAN NO. 07-0004017
LOAN AGREEMENT
This LOAN AGREEMENT (this "AGREEMENT") is made this 26th day of August,
2002 by and between XXXXXX HEALTHCARE FINANCE, INC., a Delaware corporation
("LENDER"), and EMERITUS PROPERTIES XIV, LLC, a Washington limited liability
company ("BORROWER").
RECITALS
A. Lender has agreed to make a loan (the "LOAN") to Borrower in the
aggregate principal amount of Eight Million Three Hundred Thousand and No/100
Dollars ($8,300,000.00) subject to the terms and conditions contained herein.
The Loan is evidenced by that certain Promissory Note A of even date herewith in
the original principal amount of Five Million Three Hundred Ninety-Five
Thousand and No/100 Dollars ($5,395,000.00) (this promissory note and all
amendments thereto and substitutions therefor are hereinafter referred to herein
collectively as "NOTE A") and that certain Subordinated Promissory Note B of
even date herewith in the original principal amount of Two Million Nine Hundred
Five Thousand and No/100 Dollars ($2,905,000.00) (this promissory note and all
amendments thereto and substitutions therefor are hereinafter referred to herein
collectively as "NOTE B"). Note A and Note B are sometimes collectively
referred to herein as the "NOTES." The terms and provisions of the Notes are
hereby incorporated herein by reference in this Agreement.
B. On the Closing Date, Borrower will be the owner of the real property
more particularly described on Exhibit A attached hereto and commonly known
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as "THE LODGE AT XXXX XXXX" (the "PROPERTY"), and the assisted living facility
and/or other improvements located thereon (collectively called the
"IMPROVEMENTS"). The Property and the Improvements are sometimes collectively
called the "PROJECT".
C. Borrower's obligations under the Loan Documents will be secured by,
among other things, (i) the Environmental Indemnity, (ii) a first priority
mortgage of even date herewith (the "MORTGAGE"), encumbering the Project, (iii)
an assignment of leases and rents of even date herewith (the "ASSIGNMENT OF
LEASES") encumbering the Project, and (iv) the Guaranty. This Agreement, the
Notes, the Mortgage, the Assignment of Leases, the Environmental Indemnity, the
Guaranty and any other documents evidencing or securing the Loan or executed in
connection therewith (other than the "Other Loan Instruments" as defined in the
Mortgage) and any modifications, renewals and extensions thereof are
collectively referred to as the "LOAN DOCUMENTS".
D. The proceeds of the Loan will be used for, among other things, the
purpose of purchasing the Project.
E. An index of defined terms appears on the attached Schedule I.
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NOW, THEREFORE, in consideration of the foregoing and the mutual conditions
and agreements contained herein, the parties agree as follows:
ARTICLE I.
THE LOAN
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1.1. FUNDING.
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1.1.1. FUNDING. On the Closing Date, Lender shall disburse to Borrower from
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the proceeds of the Loan the sum of Eight Million Three Hundred Thousand
and No/100 Dollars ($8,300,000.00). "CLOSING DATE" means the date of
disbursement of the Loan.
1.2. LOAN TERM. The Loan shall mature on August 31, 2005 or any earlier
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date on which the Loan shall be required to be paid in full, whether by
acceleration or otherwise (the "MATURITY DATE").
1.3. INTEREST RATE. Borrower shall pay interest on the outstanding
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principal balance of the Loan at a rate equal to the greater of (i) a fixed rate
per annum equal to six and one-half percent (6.50%) and (ii) a floating rate per
annum equal to the Base Rate plus three and eighty-five one-hundredths percent
(3.85%) (the aggregate rate referred to as the "INTEREST RATE"). "BASE RATE"
shall mean the rate published each day in The Wall Street Journal for notes
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maturing three (3) months after issuance under the caption "Money Rates, London
Interbank Offered Rates (LIBOR)". The Interest Rate for each calendar month
shall be fixed based upon the Base Rate published prior to and in effect on the
first (1st) business day of such month; provided, however, the Interest Rate
from and including the Closing Date through August 31, 2002 shall be fixed based
upon the Base Rate in effect on the business day immediately preceding the
Closing Date. Interest shall be calculated based on a 360 day year and charged
for the actual number of days elapsed.
1.4. PAYMENTS.
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1.4.1. PAYMENTS AT INTEREST RATE. Borrower shall make interest payments
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monthly in arrears on the first (1st) day of each month commencing October 1,
2002 computed on the outstanding principal balance of the Loan at the Interest
Rate.
1.4.2. PRINCIPAL PAYMENTS. Commencing on October 1, 2002 and continuing
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through the Repayment Date, Borrower shall make a principal amortization payment
on the first (1st) day of each month in the amount set forth on the schedule
attached hereto as Exhibit D.
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"REPAYMENT DATE" means the date upon which the entire principal balance of
the Loan and all interest thereon and other sums due pursuant to the Loan
Documents, including, without limitation, the Exit Fee, have been paid in full.
1.5. SOURCES AND USES. The sources and uses of funds for the contemplated
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transaction are as follows:
SOURCES USES
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Loan Amount $8,300,000 Purchase Price $10,200,000
Borrower's Equity $2,083,000 Lender Fee $83,000
Closing Costs $100,000
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Total: $10,383,000 $10,383,000
Borrower shall deliver such information and documentation as Lender shall
request to verify that the sources and uses are as indicated above. A reduction
in the amounts necessary for any of the uses shall result in an equal reduction
in the amount of the Loan.
1.6. INTENTIONALLY OMITTED.
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1.7. PREPAYMENTS OF LOAN. Other than the principal payments required under
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Section 1.4.2, Borrower may not prepay the outstanding principal balance of the
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Loan in full or in part prior to February 29, 2004. Thereafter, Borrower may
prepay the outstanding principal balance of the Loan in full (but not in part)
any time; provided Borrower gives Lender at least thirty (30) days' prior
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written notice and pays the Exit Fee, if any, then due Lender.
1.8. EXIT FEE. As additional consideration for entering into this Agreement
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and making the Loan, Borrower shall, on the date payment in full of the Loan is
made, pay to Lender the amount (the "EXIT FEE") set forth below for the
respective period in which payment in full of the Loan occurs (whether at
maturity, prepayment, acceleration or otherwise).
PERIOD IN WHICH PRINCIPAL
BALANCEOF LOAN BEING REPAID OCCURS EXIT FEE
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On or prior to February 29, 2004 The Loan may not be voluntarily prepaid
prior to March 1, 2004, other than principal payments required under Section
1.4.2. In the event the Loan is repaid for any reason, including if it is
accelerated by Lender, prior to March 1, 2004, an Exit Fee will be due equal to
the sum of (a) the interest that would have come due and payable by Borrower
through March 1, 2004 at the Interest Rate (as reasonably estimated by Lender)
minus the interest that was actually paid by Borrower, and (b) $83,000
March 1, 2004 and thereafter $83,000
ARTICLE II.
SECURITY
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2.1. COLLATERAL. The Loan and all other indebtedness and obligations under
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the Loan Documents shall be secured by the following (collectively, the
"COLLATERAL"): (a) the Mortgage, (b) the Assignment of Leases, and (c) any other
collateral or security described in this Agreement or required by Lender in
connection with the Loan.
ARTICLE III.
CONDITIONS PRECEDENT
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Lender's obligation to disburse the Loan is subject to satisfaction of all
of the following conditions:
3.1. LOAN DOCUMENTS. Lender shall have received the following Loan
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Documents, all in form and substance satisfactory to Lender:
(a) this Agreement;
(b) Note A;
(c) Note B;
(d) the Mortgage;
(e) the Assignment of Leases;
(f) such Uniform Commercial Code financing statements as Lender may require;
(g) a Guaranty executed by Emeritus Corporation, a Washington corporation
(the "GUARANTOR"), in favor of Lender (the "GUARANTY");
(h) a hazardous materials indemnity agreement ("ENVIRONMENTAL INDEMNITY"),
executed by Borrower and Guarantor;
(i) an assignment of management contract, subordination and recognition
agreement, including a waiver of property management and broker's liens,
executed by Borrower and Guarantor relating to the Management Contract (as
hereinafter defined); and
(j) an amendment to each of the mortgages or deeds of trust included in the
Other Loan Instruments executed by the mortgagor or grantee thereunder regarding
cross-collateralization to the Loan.
3.2. BORROWER'S EQUITY. On or prior to the Closing Date, Borrower shall
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have invested cash equity in the Project in an aggregate amount not less than
Two Million Eighty-Three Thousand and No/100 Dollars ($2,083,000.00)
("BORROWER'S EQUITY"). Borrower's Equity may be used to purchase the Project.
3.3. TITLE POLICY AND ENDORSEMENTS. Lender shall have received a commitment
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for title insurance in an amount and issued by a title insurance company
satisfactory to Lender. On the Closing Date, Lender shall receive a title
insurance policy for the Project (the "TITLE POLICY"), acceptable to Lender,
insuring marketability of title and insuring that the lien of the Mortgage is a
valid first lien on the Project, subject only to exceptions to title approved by
Lender. The Title Policy shall also contain any reinsurance and endorsements
required by Lender, to the extent available in the applicable jurisdiction,
including without limitation creditors' rights, zoning 3.1, survey, access,
variable rate, usury, last dollar, first loss, and extended coverage
endorsements (Comprehensive Form 1).
3.4. SURVEY. Lender shall have received and approved a survey of the
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Project, dated no more than forty-five (45) days prior to the Closing Date,
prepared by registered land surveyors in accordance with the 1999 American Land
Title Association/ American Congress on Surveying and Mapping Standards and
certified in favor of Lender and the title insurer. The surveyor shall certify
that the Property is not located in a flood hazard area as identified by the
Secretary of Housing and Urban Development (or if it does state that any
Property is in a flood hazard area, Borrower shall maintain flood insurance with
respect to such Property in amounts reasonably acceptable to Lender and
otherwise in compliance with the Loan Documents). The survey shall be
sufficient for the title insurer to remove the general survey exception from the
Title Policy.
3.5. ENVIRONMENTAL REPORT. Lender shall have received a Phase I
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Environmental audit of the Project. The audit shall (i) be addressed to Lender;
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(ii) state that Lender may rely thereon; and (iii) be acceptable to Lender in
its sole discretion.
3.6. LEASES. All leases, licenses and other agreements with regard to the
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occupancy of the Project, including patient and resident care agreements and
service agreements which include an occupancy agreement ("LEASES") shall be in
form and substance reasonably acceptable to Lender; provided Borrower need not
seek Lender's approval for any new Qualified Non-Residential Lease entered into
hereafter. Borrower shall submit for Lender's approval a copy of the form of
residential Lease Borrower proposes to utilize at the Project, and all
residential Leases entered into after the Closing Date shall be on forms
reasonably approved by Lender without material modification. Lender must
approve all non-residential Leases of any part of the Project; provided,
however, Lender's approval shall not be required for (but Borrower shall provide
Lender with a copy of) the execution, amendment, surrender or termination of any
Lease of non-residential space with an occupant thereof which provides for
market rentals and otherwise contains market terms and provisions, so long as
such Lease is not entered into with any Guarantor or any of its or Borrower's
Affiliates, does not have a term (including extension options in favor of
lessee) in excess of two (2) years and will not (in Lender's reasonable
estimation) account for Twenty-Five Thousand and No/100 Dollars ($25,000.00) or
more of gross revenue from the Project in any one (1) year period (a "QUALIFIED
NON-RESIDENTIAL LEASE"). On the Closing Date, Borrower shall deliver to Lender
a rent roll showing all existing Leases. On the Closing Date, all existing
Leases shall be in full force and effect and Borrower shall submit a revised and
recertified rent roll for the Project. If any non-residential leases, other
than Qualified Non-Residential Leases, exist or are hereafter entered into with
respect to the Project, each tenant thereunder shall execute and deliver to
Lender prior to the Closing or prior to execution thereof by Borrower, as
applicable, a Subordination and Attornment Agreement in a form acceptable to
Lender, if requested by Lender.
3.7. INSURANCE. Borrower shall have provided Lender with and Lender shall
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have approved copies of certificates evidencing the insurance policies required
to be delivered pursuant to the Loan Documents and otherwise acceptable to
Lender in form and substance.
3.8. COMPLIANCE WITH LAWS. Borrower shall have submitted and Lender shall
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have approved (a) a final certificate of occupancy (or the equivalent) for the
Project, and (b) evidence satisfactory to Lender that the Project complies in
all material respects with all applicable laws (including, without limitation,
all building, zoning, density, land use, ordinances, regulations and planning
requirements), covenants, conditions and restrictions, subdivision requirements
(including, without limitation, parcel maps), and environmental impact and other
environmental requirements.
3.9. COMMITMENT FEE. Borrower shall have paid Lender a commitment fee in
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the amount of Eighty-Three Thousand and No/100 Dollars ($83,000.00) which
commitment fee shall be nonrefundable and shall be deemed fully earned upon
receipt and which commitment fee Lender acknowledges it has received as of the
date hereof.
3.10. AUDIT REQUIREMENT. Lender shall have determined that the annualized
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Net Operating Income (as hereinafter defined) of the Project is at least One
Million One Hundred Thousand and No/100 Dollars ($1,100,000.00).
3.11. MANAGEMENT CONTRACT. Lender shall have approved the management
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contract (the "MANAGEMENT CONTRACT") between Guarantor and Borrower for the
Project.
3.12. ADDITIONAL ITEMS. Lender shall have received such other items as
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Lender may reasonably require.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
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As an inducement to Lender to disburse the Loan, Borrower hereby represents
and warrants as follows, which representations and warranties shall be true as
of the date hereof and shall remain true throughout the term of the Loan:
4.1. BORROWER EXISTENCE. Borrower is a limited liability company duly
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formed, validly existing and in good standing under the laws of the State of
Washington with its principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxxx 00000. Borrower is qualified to transact business and
in good standing under the laws of the State of Massachusetts. The Loan
Documents have each been duly authorized, executed and delivered and each
constitutes the duly authorized, valid and legally binding obligation of
Borrower and Guarantor, as the case may be, enforceable against Borrower and
Guarantor, as the case may be, in accordance with their respective terms, except
as such enforceability may be limited by creditors' rights laws and general
principles of equity.
4.2. OWNERSHIP OF BORROWER. Guarantor owns one hundred percent (100%) of
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the membership interests in Borrower free and clear of all liens, claims,
encumbrances and rights of others.
4.3. OPERATING AGREEMENT A true and complete copy of the operating
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agreement creating Borrower and any and all amendments thereto (collectively,
the "OPERATING AGREEMENT") have been forwarded to Lender. The Operating
Agreement constitutes the entire agreement among the members of Borrower and is
binding upon and enforceable against such members, in accordance with its terms,
except as such enforceability may be limited by creditors' rights laws and
general principles of equity. There are no other agreements, oral or written,
among the partners relating to the ownership or management of the corporate
business affairs of Borrower. No breach exists under the Operating Agreement
and no condition exists which, with the giving of notice or passage of time
would constitute a breach under the Operating Agreement.
4.4. BORROWER'S OTHER AGREEMENTS. Borrower is not in default under any
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contract, agreement or commitment to which it is a party. The execution,
delivery and compliance with the terms and provisions of this Agreement and the
Loan Documents will not (i) to the best of Borrower's knowledge, violate any
provisions of law or any applicable regulation, order or other decree of any
court or governmental entity by which Borrower or its Property is bound or
affected, or (ii) conflict or be inconsistent with, or result in any default
under, any contract, agreement or commitment to which Borrower is bound.
Borrower has delivered to Lender copies of any agreements (including leases)
between Borrower and any Affiliate of Borrower or Guarantor, related in any way
to the Project or any part thereof, and any other agreements or documents
materially affecting the use and operation of the Project or any part thereof.
4.5. EXISTENCE OF GUARANTOR. Guarantor is a corporation duly incorporated,
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validly existing and in good standing under the laws of the State of Washington
with its principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000.
4.6. CORPORATE DOCUMENTS. A true and complete copy of the articles of
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incorporation and by-laws of Guarantor and all other documents creating and
governing Guarantor (collectively, the "INCORPORATION DOCUMENTS") have been
furnished to Lender. There are no other agreements, oral or written, among any
of the shareholders of Guarantor relating to Guarantor. The Incorporation
Documents were duly executed and delivered, are in full force and effect, and
binding upon and enforceable in accordance with their terms. The Incorporation
Documents constitute the entire understanding among the shareholders of
Guarantor. No breach exists under the Incorporation Documents and no act has
occurred and no condition exists which, with the giving of notice or the passage
of time would constitute a breach under the Incorporation Documents.
4.7. THE PROPERTY. Fee simple title to the Property is, or on the Closing
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Date, will be, owned by Borrower, free and clear of all liens, claims,
encumbrances, covenants, conditions and restrictions, security interests and
claims of others, except only the existing Leases and such exceptions as are set
forth in the Title Policy. To the best of Borrower's knowledge, the Property
and the Improvements are in compliance with all zoning requirements, building
codes, subdivision improvement agreements, and all covenants, conditions and
restrictions of record. The zoning and subdivision approval of the Property and
the right and ability to, use or operate the Improvements thereon are not in any
way dependent on or related to any real estate other than the Property, except
as disclosed on ExhibitE attached hereto. To the best of Borrower's knowledge,
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except as have been disclosed to Lender in writing prior to the date hereof,
there are no, nor are there any alleged or asserted, violations of law,
regulations, ordinances, codes, permits, licenses, declarations, covenants,
conditions, or restrictions of record, or other agreements relating to the
Project, or any part thereof.
4.8. PROPERTY ACCESS. The Property is accessible through fully improved and
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dedicated roads accepted for maintenance and public use by the public authority
having jurisdiction.
4.9. UTILITIES. All utility services necessary and sufficient for the use
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or operation of the Project are available including water, storm, sanitary
sewer, gas, electric and telephone facilities.
4.10. FLOOD HAZARDS/WETLANDS. The Property is not situated in an area
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designated as having special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended, or as a wetlands by any governmental entity
having jurisdiction over the Property, except as disclosed on Exhibit F attached
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hereto.
4.11. TAXES/ASSESSMENTS. There are no unpaid or outstanding real estate or
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other taxes or assessments on or against the Project or any part thereof, except
general real estate taxes not yet due or payable. Copies of the current general
real estate tax bills with respect to the Project have been delivered to Lender.
Said bills cover the entire Project and do not cover or apply to any other
property. Borrower has not received notice of any pending or contemplated
action pursuant to which any special assessment may be levied against any
portion of the Project.
4.12. EMINENT DOMAIN. Borrower has not received notice of any eminent
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domain or condemnation proceeding pending and to Borrower's knowledge there are
none threatened, relating to any part of the Project.
4.13. LITIGATION. Except as set forth in Exhibit B, there is no material
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litigation, arbitration or other proceeding or governmental investigation
pending or, to the best of Borrower's knowledge, threatened against or relating
to Guarantor, Borrower or any of their property, assets, or business, including
the Project, which if decided adversely would affect the business, affairs,
assets or financial condition of Borrower, Guarantor, the Project or the
Improvements thereon or the prospects for repayment of the Loan.
4.14. ACCURACY. Neither this Agreement nor any document, financial
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statement, credit information, certificate or statement furnished to Lender by
Borrower or Guarantor contains any untrue statement of a material fact or omits
to state a material fact which would affect Lender's decision to make the Loan.
4.15. FOREIGN OWNERSHIP. Neither Borrower nor Guarantor is or will be, and
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no legal or beneficial interest of a partner of Borrower is or will be held,
directly or indirectly, by a "FOREIGN CORPORATION", "FOREIGN PARTNERSHIP",
"FOREIGN TRUST", "FOREIGN ESTATE", "FOREIGN PERSON", "AFFILIATE" of a "FOREIGN
PERSON" or a "UNITED STATES INTERMEDIARY" of a "FOREIGN PERSON" within the
meaning of IRC Sections 897 and 1445, the Foreign Investments in Real Property
Tax Act of 1980, the International Foreign Investment Survey Act of 1976, the
Agricultural Foreign Investment Disclosure Act of 1978, or the regulations
promulgated pursuant to such Acts or any amendments to such Acts.
4.16. SOLVENCY. Neither Borrower nor Guarantor is insolvent and there has
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been no: (i) assignment made for the benefit of the creditors of any of them;
(ii) appointment of a receiver for any of them or for the property of any of
them; or (iii) bankruptcy, reorganization, or liquidation proceeding instituted
by or against any of them.
4.17. FINANCIAL STATEMENT/NO CHANGE. Borrower and Guarantor have heretofore
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delivered to Lender copies of the most current financial statements of the
Project and Guarantor. Said financial statements were prepared on a basis
consistent with that of preceding years, and all of such financial statements
present fairly the financial condition of Borrower and Guarantor as of the dates
in question and the results of operations for the periods indicated. Neither
Borrower nor any Guarantor has any material contingent liabilities not provided
for or disclosed in said financial statements. There has been no material
adverse change since March 31, 2002, as to Guarantor, or since May 31, 2002, as
to the Project, in the structure, business, operations, credit, prospects or
financial condition of Borrower, the Guarantor or the Project.
4.18. SINGLE ASSET ENTITY. Borrower does not: (i) hold, directly or
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indirectly, any ownership interest (legal or equitable) in any real or personal
property other than the interest which it owns in the Property and the
Improvements; (ii) is a shareholder or partner or member of any other entity; or
(iii) conduct any business other than the ownership, management and operation of
the Project.
4.19. NO BROKER. No brokerage commission or finder's fee is owing to any
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broker or finder arising out of any actions or activity of Borrower in
connection with the Loan.
4.20. OTHER AGREEMENTS. Guarantor is not in default in any material respect
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under any contract, agreement or commitment to which it is a party. The
execution, delivery and compliance with the terms and provisions of this
Agreement and the Loan Documents will not (i) to the best of Borrower's
knowledge, violate any provisions of law or any applicable regulation, order or
other decree of any court or governmental entity, or (ii) conflict or be
inconsistent with, or result in any default under, any contract, agreement or
commitment to which Guarantor is bound. Borrower has delivered to Lender copies
of any agreements (including leases) between Guarantor and any Affiliate related
in any way to the Project and any other agreements or documents materially
affecting the use and operation of the Project, other than copies of all
resident or patient occupancy agreements unless such agreements are requested by
Lender.
4.21. SECURITY DEPOSITS. Neither Borrower nor Guarantor has collected or is
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in receipt of any security deposit from any resident of the Project, except as
described on Exhibit C.
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4.22. COMPLIANCE WITH HEALTH CARE LAWS.
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(a) Without limiting the generality of any other provision of this
Agreement including, without limitation, any other representation or warranty
made herein, Borrower and the Project and, to Borrower's knowledge, each of
Borrower's or Guarantor's licensed employees and contractors (other than
contracted agencies) in the exercise of their respective duties on behalf of
Borrower, Guarantor (with respect to its operation of the Project) or any
portion of the Project, is in compliance with all applicable statutes, laws,
ordinances, rules and regulations of any federal, state or local governmental
authority with respect to regulatory matters primarily relating to patient
healthcare and/or patient healthcare information, including without limitation
the Health Insurance Portability and Accountability Act of 1996, as amended, and
the rules and regulations promulgated thereunder ("HIPAA") (collectively,
"HEALTHCARE LAWS")). Borrower has maintained in all material respects all
records required to be maintained by any governmental agency or authority or
otherwise under the Healthcare Laws and, to the knowledge of Borrower, there are
no presently existing circumstances which would result or likely would result in
material violations of the Healthcare Laws. Borrower and its Affiliates have
such permits, licenses, franchises, certificates and other approvals or
authorizations of governmental or regulatory authorities as are necessary under
applicable law to own their respective Properties and to conduct their
respective business in connection with the Properties (including without
limitation such permits as are required under such the Healthcare Laws).
(b) To the extent that and for so long as (i) Borrower is a "covered entity"
within the meaning of HIPAA or (ii) Borrower or Guarantor (with respect to its
operation of the Project) and/or their respective business and operations (with
respect to the Project) are subject to or covered by the so-called
"Administrative Simplification" provisions of HIPAA, Borrower (x) has undertaken
or will promptly undertake all necessary surveys, audits, inventories, reviews,
analyses and/or assessments (including any necessary risk assessments) of all
areas of its business and operations required by HIPAA and/or that could be
adversely affected by the failure of Borrower to be HIPAA Compliant (as defined
below); (y) has developed or will promptly develop a detailed plan and time line
for becoming HIPAA Compliant (a "HIPAA COMPLIANCE PLAN"); and (x) has
implemented or will implement those provisions of such HIPAA Compliance Plan in
all material respects necessary to ensure that Borrower is or becomes HIPAA
Compliant. For purposes hereof, "HIPAA COMPLIANT" shall mean that Borrower (x)
is or will be in compliance with each of the applicable requirements of the
so-called "ADMINISTRATIVE SIMPLIFICATION" provisions of HIPAA on and as of each
date that any part thereof, or any final rule or regulation thereunder, becomes
effective in accordance with its or their terms, as the case may be (each such
date, a "HIPAA COMPLIANCE DATE") and (y) is not and could not reasonably be
expected to become, as of any date following any such HIPAA Compliance Date, the
subject of any civil or criminal penalty, process, claim, action or proceeding,
or any administrative or other regulatory review, survey, process or proceeding
(other than routine surveys or reviews conducted by any government health plan
or other accreditation entity) that could result in any of the foregoing or that
could reasonably be expected to adversely affect Borrower's business,
operations, assets, properties or condition (financial or otherwise), in
connection with any actual or potential violation by Borrower of the then
effective provisions of HIPAA
ARTICLE V.
AFFIRMATIVE COVENANTS
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5.1. INSPECTION. Subject to the rights of tenants under Leases approved or
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deemed approved by Lender, Lender and its authorized agents may enter upon and
inspect the Project at all reasonable times upon reasonable notice given orally
or in writing to Borrower. Lender, at Borrower's expense, may retain one or
more independent consultants to periodically inspect the Project and all
documents, drawings, plans, and consultants' reports relating thereto. During
the term of the Loan, Borrower shall pay to Lender, in addition to all other
amounts due under the Loan Documents, the sum of Three Thousand and No/100
Dollars ($3,000.00) per year, payable in equal monthly installments of Two
Hundred and Fifty Dollars ($250) which shall be due and payable concurrently
with each payment due under Note A and which Lender shall apply against the cost
of the aforesaid inspections; provided, however, so long as no default
exists under this Agreement or any of the other Loan Documents, Borrower shall
not be obligated to pay Lender an amount greater than Three Thousand and No/100
Dollars ($3,000.00) per calendar year with respect to such inspections after the
Closing Date. Nothing contained in this Section 5.1. shall limit Borrower's
------------
obligations with respect to inspections performed pursuant to the terms of the
Environmental Indemnity, including without limitation Borrower's obligation to
pay for, perform or caused to be performed such inspections.
5.2. BOOKS AND RECORDS/AUDITS. Borrower shall keep and maintain at all
--------------------------
times at Borrower's address stated below, or at the Project, or such other place
as Lender may approve in writing, complete and accurate books of accounts and
records adequate to reflect the results of the operation of the Project and to
provide the financial statements required to be provided to Lender pursuant to
Section 5.3 below and copies of all written contracts, correspondence, reports
-----------
of Lender's independent consultant, if any, and other documents affecting the
Project. Lender and its designated agents shall have the right to inspect and
copy any of the foregoing. Additionally, after the occurrence and during the
continuance of a default or if Lender has a reasonable basis to do so, Lender
may audit and determine, in Lender's sole and absolute discretion, the accuracy
of Borrower's records and computations. The costs and expenses of the audit
shall be paid by Borrower if the audit discloses a monetary variance in any
financial information or computation of the aggregate income or expense equal to
or greater than the greater of: (i) five percent (5%); or (ii) Ten Thousand and
No/100 Dollars ($10,000.00) more than the computation of income or expense
submitted by Borrower; provided, however, if a default has occurred and is
continuing, Borrower shall pay the costs and expenses of such audit regardless
of any variance disclosed.
5.3. FINANCIAL STATEMENTS; BALANCE SHEETS. Borrower shall furnish to Lender
------------------------------------
and shall cause the Guarantor to furnish to Lender such financial statements and
other financial information as Lender may from time to time request. All such
financial statements shall show all material contingent liabilities and shall
accurately and fairly present the results of operations and the financial
condition of Borrower and/or Guarantor, as applicable, at the dates and for the
period indicated. Without limitation of the foregoing, Borrower shall furnish
to Lender and shall cause Guarantor to furnish to Lender the following
statements:
5.3.1. MONTHLY AND ANNUAL OPERATING STATEMENTS. Statements of the operation
---------------------------------------
of the Project (including a current rent roll and monthly operating
statements as of the last day of each month), to be delivered within thirty (30)
days after the end of each month and certified by Borrower as true, correct, and
complete, and yearly statements of the operation of the Project, to be delivered
within one hundred twenty (120) days after the end of each fiscal year and
certified by Borrower as true, correct, and complete.
5.3.2. ANNUAL BALANCE SHEETS AND FINANCIAL STATEMENTS. Annual balance
---------------------------------------------------
sheets and financial statements from Borrower within one hundred twenty (120)
days of the end of each fiscal year and annual balance sheets and financial
statements from the Guarantor within one hundred eighty (180) days of the end of
each fiscal year, each of which are true and correct in all respects, have been
prepared in accordance with sound accounting practices, and fairly present the
financial condition(s) of the person(s) referred to therein as of the date(s)
indicated. At Lender's request, such financial statements shall include,
specific information concerning Guarantor's other real estate holdings,
including property income and expenses, debt service requirements and occupancy.
5.3.3. AUDITS. If Borrower fails to furnish or cause to be furnished
------
promptly any report required by this Section 5.3, or if Lender reasonably deems
-----------
such reports to be unacceptable, Lender may elect (in addition to exercising any
other right and remedy) to conduct an audit of all books and records of Borrower
which in any way pertain to the Project and to prepare the statement or
statements which Borrower or Guarantor failed to procure and deliver. Such
audit shall be made and such statement or statements shall be prepared by an
independent firm of certified public accountants to be selected by Lender. If
and so long as Guarantor is not a publicly held company, Lender shall have the
right to audit Guarantor's books and records in accordance with this Section.
Borrower shall pay all reasonable expenses of such audit and other services,
which expenses shall be immediately due and payable with interest thereon at the
default rate contained in the Notes.
5.4. USE OF PROCEEDS. Borrower shall use the proceeds of the Loan for
-----------------
proper business purposes. No portion of the proceeds of the Loan shall be used
by Borrower in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Act of 1933 or the Securities Exchange Act
of 1934.
5.5. NOTICE OF LITIGATION OR DEFAULT. Borrower shall promptly provide
-----------------------------------
Lender with:
(a) written notice of any litigation, arbitration, or other proceeding or
governmental investigation pending or, to Borrower's or Guarantor's knowledge,
threatened against or relating to Borrower or the Project or any part thereof;
(b) written notice of any material litigation, arbitration, or other
proceeding or governmental investigation pending or, to Borrower's or
Guarantor's knowledge, threatened against or relating to Guarantor;
(c) a copy of all notices of default and violations of laws, regulations,
codes, ordinances and the like received by Borrower or Guarantor relating to
Borrower, the Collateral, or the Project or any part thereof; and
(d) a copy of all notices sent to or received from Guarantor under the
Management Contract.
5.6. AFFILIATE TRANSACTIONS. Prior to entering into any agreement with an
-----------------------
Affiliate pertaining to the Project or any part thereof, Borrower shall deliver
to Lender a copy of such agreement, which shall be satisfactory to Lender in its
sole reasonable discretion. If requested by Lender, such agreement shall
provide Lender the right to terminate it upon Lender's (or its designee's)
acquisition of the Project or any part thereof through foreclosure, a
deed-in-lieu of foreclosure, UCC sale or otherwise.
"AFFILIATE" means with respect to any individual, trust, estate,
partnership, limited liability company, corporation or any other incorporated or
unincorporated organization (each a "PERSON"), a Person that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with Borrower or Guarantor, or any officer, director,
partner or shareholder of Borrower or Guarantor, or any relative of any of the
foregoing. The term "CONTROL" means possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
5.7. ADVERTISEMENT. Borrower agrees to allow Lender to advertise in the
-------------
various news or financial media that Lender has provided financing to Borrower.
5.8. REPLACEMENT RESERVE. At the time of and in addition to the monthly
--------------------
installments of interest and, if applicable, principal, due under the Notes,
Borrower shall pay to Lender an amount equal to Three Thousand Two Hundred Forty
and No/100 Dollars ($3,240.00) (the "REPLACEMENT RESERVE"). The Replacement
Reserve may be commingled with the general funds of Lender, and these sums shall
not be deemed to be held in trust for the benefit of Borrower. So long as no
default exists hereunder or under any of the other Loan Documents, Lender shall
credit for Borrower's account interest in such funds contained in the
Replacement Reserve (if any) at the money market account rate announced by a
national banking association selected by Lender. On the Maturity Date (as it
may be extended), the monies then remaining on deposit with Lender shall, at
Lender's option, be applied against the Indebtedness or if no Event of Default
is continuing, returned to Borrower. So long as there is no Event of Default,
Borrower may request Lender to disburse funds from the Replacement Reserve
(which request will include a reasonably detailed description of the capital
expenditures at the Project, Borrower intends to pay for with such funds), which
request shall not be unreasonably denied by Lender. If requested by Lender,
each disbursement request will be accompanied by copies of invoices or purchase
orders, lien waivers and other evidence reasonably required by Lender.
5.9. FINANCIAL COVENANTS. Commencing on the Closing Date and continuing
--------------------
through June 30, 2003, (a) the Project Yield for the Project for the trailing
three (3) months shall be greater than or equal to twelve percent (12%) and (b)
the Debt Coverage Ratio for the Project for the trailing three (3) months shall
be greater than or equal to 1.4. Commencing on July 1, 2003 and continuing
through June 30, 2004, the Project Yield for the Project for the trailing three
(3) months shall be greater than or equal to thirteen percent (13%) and (b) the
Debt Coverage Ratio for the Project for the trailing three (3) months shall be
greater than or equal to 1.5. Commencing on July 1, 2004 and continuing through
the Maturity Date, the Project Yield for the Project for the trailing three (3)
months shall be greater than or equal to fourteen percent (14%) and (b) the Debt
Coverage Ratio for the trailing three (3) months shall be greater than or equal
to 1.6.
"PROJECT YIELD" means the quotient of (x) the Net Operating Income from the
Project, as determined by Lender's audit (or otherwise reasonably estimated by
Lender), at Borrower's expense, divided by (y) the then current outstanding
principal balance of the Loan plus all accrued but unpaid interest thereon.
"DEBT COVERAGE RATIO" means the ratio of (i) Net Operating Income from the
Project for the preceding three (3) months, to (ii) payments of interest due on
the Loan for such three (3) month period.
"NET OPERATING INCOME" means the Effective Rental Income (as reasonably
determined by Lender and excluding non-recurring and non-Property related
income) less Expenses. Calculation of "EFFECTIVE RENTAL INCOME" shall be based
----
on the lesser of:
(a) the rent rolls from the most recent three months annualized (adjusted
for concessions); or
(b) an assumed 93% occupancy rate for the same period annualized.
Effective Rental Income shall not include receipts from any other sources
including, but not limited to, late fees and interest income. Calculation of
"EXPENSES" shall mean the actual customary operating expenses of the Project, on
a stabilized accrual basis, for the previous twelve (12) month period,
including, but not limited to, recurring expenses, real estate taxes and
assessments, a management fee (whether or not paid) equal to the greater of five
percent (5%) of effective gross revenue or the amount actually paid by Borrower,
a replacement reserve in an amount equal to Three Hundred and No/100 Dollars
($300.00) per unit.
5.10. DEUTSCHE BANK DEBT. On or prior to April 15, 2003, (a) the maturity
--------------------
date of the Deutsche Bank Debt shall be extended to a date which is thirty (30)
days beyond the Maturity Date, (b) the Deutsche Bank Debt shall be refinanced
with a loan having a maturity date at least thirty (30) days beyond the Maturity
Date or (c) Guarantor shall have a binding loan commitment for the
refinance of the Deutsche Bank Debt with a loan having a maturity date at least
thirty (30) days beyond the Maturity Date.
ARTICLE VI.
NEGATIVE COVENANTS
-------------------
6.1. NO AMENDMENTS. Borrower shall not amend, modify or terminate, or
--------------
permit the amendment, modification or termination of:
(a) Operating Agreement or Certificate of Formation of Borrower;
(b) the Management Contract.
6.2. NO ADDITIONAL INDEBTEDNESS. Borrower shall not, without Lender's prior
--------------------------
written consent, incur additional indebtedness, except for (a) trade
payables in the ordinary course of business, (b) management fees due to
Guarantor if and to the extent the same are accrued and unpaid as a result of
the requirement that the same be subordinated to the payments due to Lender, and
(c) up to Seventy-Five Thousand and No/100 Dollars ($75,000.00) of additional
indebtedness for purchase money indebtedness, capital leases or operating leases
for equipment or vehicles (such amounts to be determined in the case of
operating leases on the basis of what the book value of the property subject to
such lease would be if such property had been purchased on the commencement date
of such lease). Capital or operating leases of equipment or vehicles shall be
deemed to be additional indebtedness for borrowed money and shall require
Lender's prior written consent unless such lease would not require Lender's
consent under clause (c) above.
6.3. NO COMMINGLING FUNDS. Borrower shall not commingle the funds related
----------------------
to the Project with funds from any other property or venture.
6.4. PROPERTY MANAGER. Borrower shall not change or permit the change in
-----------------
Guarantor's status as manager of the Project or amend or terminate the
Management Contract without Lender's prior written consent, which shall not be
unreasonably withheld.
6.5. LIENABLE WORK. No excavation, construction, earth work, site work or
--------------
any other mechanic's lienable work shall be done to or for the benefit of the
Project or any part thereof, without Lender's approval (which approval will not
be unreasonably withheld), except for (a) normal repair and maintenance in the
ordinary course of business and (b) work related to the alteration, replacement,
repair and maintenance to the Property not estimated to have an aggregate cost
in excess of Seventy-Five Thousand and No/100 Dollars ($75,000.00).
6.6. CONVERSION. Borrower shall not, and shall not permit, the Project or
----------
any portion thereof to be converted or take any preliminary actions which could
lead to a conversion to condominium or cooperative form or ownership.
6.7. USE OF PROJECT. Unless required by applicable law, Borrower shall not
---------------
permit changes in the use of any part of the Project from the use existing at
the Closing Date or other uses reasonably incidental thereto. Borrower shall
not initiate or acquiesce in a change in the plat of subdivision, or zoning
classification of the Property without Lender's prior written consent.
ARTICLE VII.
EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS; REMEDIES
---------------------------------------------------------------
7.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following
------------------
events shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) Failure of Borrower to pay, within ten (10) days of the due date, any of
the payment obligations of Borrower to Lender ("INDEBTEDNESS"), including
any payment due under the Notes, this Agreement or the other Loan Documents; or
(b) Failure of Borrower to strictly comply with the provisions of Section
-------
4.18 (single asset entity) or 5.1 (inspection) or 5.9 (financial covenants); or
-- --- ---
(c) Breach of any covenant, representation or warranty other than as set
forth in subsections (a) and (b) above which is not cured within thirty (30)
-------------------------
days after notice; provided, however, if such breach cannot by its nature be
cured within thirty (30) days, and Borrower diligently pursues the curing
thereof (and then in all events cures such failure within sixty (60) days after
the original notice thereof), Borrower shall not be in default hereunder; or
(d) A petition under any Chapter of Title 11 of the United States Code or
any similar law or regulation is filed by or against Borrower or Guarantor (and
in the case of an involuntary petition in bankruptcy, such petition is not
discharged within sixty (60) days of its filing), or a custodian, receiver or
trustee for any of the Project is appointed, or Borrower or Guarantor makes an
assignment for the benefit of creditors, or any of them are adjudged insolvent
by any state or federal court of competent jurisdiction, or any of them admit
their insolvency or inability to pay their debts as they become due or an
attachment or execution is levied against any of the Project; or
(e) The occurrence of a default and the expiration of any cure period
applicable thereto under any Loan Document; or
(f) Borrower shall default in the payment of any indebtedness (other than
the Indebtedness) and such default is declared and is not cured within the time,
if any, specified therefor in any agreement governing the same; or
(g) Any statement, report or certificate made or delivered to Lender by
Borrower or Guarantor is not materially true and complete at any time; or
(h) The occurrence of a default under the Management Contract which
continues beyond the expiration of any applicable cure period thereunder; or
(i) There shall occur a material adverse change in the financial condition
or business prospects of Borrower or Guarantor; or
(j) If under the Deutsche Bank Debt or the loan refinancing the Deutsche
Bank Debt an event of default occurs and such loan is accelerated, or the
Deutsche Bank Debt or the loan refinancing the Deutsche Bank Debt matures or
otherwise comes due and Deutsche Bank or the refinance lender, as applicable,
takes any action to collect the debt.
7.2. ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default at
-----------------------
the option of Lender, the Indebtedness shall become immediately due and payable
without notice to Borrower and Lender shall be entitled to all of the rights and
remedies provided in the Loan Documents or at law or in equity. Each
remedy provided in the Loan Documents is distinct and cumulative to all other
rights or remedies under the Loan Documents or afforded by law or equity, and
may be exercised concurrently, independently, or successively, in any order
whatsoever.
ARTICLE VIII.
MISCELLANEOUS
-------------
8.1. EXPENDITURES AND EXPENSES. Borrower shall promptly pay all reasonable
--------------------------
Costs (defined below) incurred by Lender in connection with the documentation,
modification, workout, collection or enforcement of the Loan or any of the Loan
Documents (as applicable) and all such Costs shall be included as additional
Indebtedness bearing interest at the Default Rate set forth in the Notes until
paid. For the purposes hereof "COSTS" means all expenditures and expenses which
may be paid or incurred by or on behalf of Lender including repair costs,
payments to remove or protect against liens, attorneys' fees (including fees of
Lender's inside counsel), receivers' fees, engineers' fees, accountants' fees,
independent consultants' fees (including environmental consultants), all costs
and expenses incurred in connection with any of the foregoing, Lender's
out-of-pocket costs and expenses related to any audit or inspection of the
Project, outlays for documentary and expert evidence, stenographers' charges,
stamp taxes, publication costs, and costs (which may be estimates as to items to
be expended after entry of an order or judgment) for procuring all such
abstracts of title, title and UCC searches, and examination, title insurance
policies, Torrens' Certificates (if applicable) and similar data and assurances
with respect to title as Lender may deem reasonably necessary either to
prosecute any action or to evidence to bidders at any foreclosure sale of the
Project or any part thereof the true condition of the title to, or the value of,
the Project or any part thereof.
8.2. DISCLOSURE OF INFORMATION. Lender shall have the right (but shall be
---------------------------
under no obligation) to make available to any party for the purpose of granting
participations in or selling, transferring, assigning or conveying all or any
part of the Loan (including any governmental agency or authority and any
prospective bidder at any foreclosure sale of the Project or any part thereof)
any and all information which Lender may have with respect to the Project, any
Borrower or any Guarantor or any of their Affiliates, whether provided by
Borrower, Guarantor or any third party or obtained as a result of any
environmental assessments. Borrower and Guarantor agree that Lender shall have
no liability whatsoever as a result of delivering any such information to any
third party, and each Borrower and Guarantor, on behalf of themselves and their
successors and assigns, hereby release and discharge Lender from any and all
liability, claims, damages, or causes of action, arising out of, connected with
or incidental to the delivery of any such information to any third party.
8.3. SALE OF LOAN. Lender, at any time and without the consent of Borrower
-------------
or Guarantor, may grant participations in or sell, transfer, assign and convey
all or any portion of its right, title and interest in and to the Loan, this
Agreement and the other Loan Documents, any guaranties given in connection with
the Loan and any collateral given to secure the Loan.
8.4. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Lender in
---------------------------------------
exercising any right or remedy under any of the Loan Documents, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. Lender's acceptance of payment of any sum secured by any
of the Loan Documents after the due date of such payment shall not be a waiver
of Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Loan, nor shall Lender's receipt of any awards, proceeds, or damages under
Section 4 of any Mortgage operate to cure or waive Borrower's or Guarantor's
-----
default in payment of sums secured by any of the Loan Documents. With respect
to all Loan Documents, only waivers made in writing by Lender shall be effective
against Lender.
8.5. GOVERNING LAW; SEVERABILITY. The Loan Documents shall be governed by
-----------------------------
and construed in accordance with the internal laws of the State of Illinois,
except that the provisions of the laws of the State where the Project is located
shall be applicable to the creation, perfection and enforcement of the lien
created by the Mortgages. The invalidity, illegality or unenforceability of any
provision of this Agreement shall not affect or impair the validity, legality or
enforceability of the remainder of this Agreement, and to this end, the
provisions of this Agreement are declared to be severable.
8.6. RELATIONSHIP. The relationship between Lender and Borrower shall be
------------
that of creditor-debtor only. No term in this Agreement or in the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any relationship of agency, partnership or joint venture or any fiduciary duty
by Lender to any other party.
8.7. INDEMNITY. Borrower shall indemnify, protect, hold harmless and defend
---------
Lender, its successors, assigns, shareholders, directors, officers, employees,
and agents (each, an "INDEMNITEE") from and against any and all loss, damage,
cost, expense (including attorneys' fees), and claims arising out of or in
connection with (a) the Project, (b) the Collateral, (c) any act or omission of
any Borrower, Guarantor, or their respective employees or agents, whether actual
or alleged, and (d) any and all brokers' commissions or other costs of similar
type by any party in connection with the Loan, in each case except to the extent
arising from the indemnitee's gross negligence or willful misconduct. Upon
written request by an Indemnitee, Borrower will undertake, at its own cost and
expense, on behalf of such Indemnitee, using counsel satisfactory to the
Indemnitee, the defense of any legal action or proceeding whether or not such
Indemnitee shall be a party and for which such Indemnitee is entitled to be
indemnified pursuant to this section. At Lender's option, Lender may, at
Borrower's expense, prosecute or defend any action involving the priority,
validity or enforceability of any of the Loan Documents.
8.8. NOTICE. Any notice or other communication required or permitted to be
------
given shall be in writing addressed to the respective party as set forth below
and may be personally served, telecopied or sent by overnight courier or U.S.
Mail and shall be deemed given: (a) if served in person, when served; (b) if
telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on a
business day; provided that a hard copy of such notice is also sent pursuant to
--------
(c) or (d) below; (c) if by overnight courier, on the first business day after
delivery to the courier; or (d) if by U.S. Mail, certified or registered mail,
return receipt requested on the fourth (4th) day after deposit in the mail
postage prepaid.
Emeritus Properties XIV, LLC
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, CFO
Notices to Borrower: Facsimile No. (000) 000-0000
The Xxxxxxxxx Group PLLC
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
With a copy to: Facsimile No. (000) 000-0000
Xxxxxx Healthcare Finance, Inc.
Loan No. 07-0004017
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxx 00000
Attn: Manager, Portfolio Management Group
Notices to Lender: Telecopy: (000) 000-0000
Xxxxxx Healthcare Finance, Inc.
Loan No. 07-0004017
000 Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxxxx, Vice President and Chief Counsel, Senior Living
Group
With a copy to: Telecopy: (000) 000-0000
Xxxxxx Healthcare Finance, Inc.
Loan No. 07-0004017
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx XxXxxx, Senior Vice President
And a copy to: Telecopy: (000) 000-0000
8.9. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS; AND
-----------------------------------------------------------------------
CAPTIONS. The covenants and agreements contained in the Loan Documents shall
--------
bind, and the rights thereunder shall inure to, the respective successors and
--
assigns of Lender, Borrower and Guarantor, subject to the provisions of this
--
Agreement. All covenants and agreements of each Borrower and Guarantor shall be
--
joint and several. In exercising any rights under the Loan Documents or
taking any actions provided for therein, Lender may act through its employees,
agents or independent contractors as authorized by Lender. The captions and
headings of the paragraphs and sections of this Agreement are for convenience
only and are not to be used to interpret or define the provisions hereof.
8.10. TERMS AND USAGE. As used in the Loan Documents "BUSINESS DAY" means
-----------------
any day, other than a Saturday or a Sunday, when banks in Chicago, Illinois are
not required or authorized to be closed.
8.11. INTENTIONALLY OMITTED.
-----------------------
8.12. TIME OF ESSENCE. Time is of the essence of this Agreement and the
-----------------
other Loan Documents and the performance of each of the covenants and agreements
contained herein and therein.
8.13. VENUE. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
-----
FEDERAL COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER,
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE
TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
8.14. JURY TRIAL WAIVER. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE
------------------
RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO,
THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE
BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND LENDER, AND BORROWER
ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS
TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER AND
LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH OF THEM
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER
AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
8.15. COUNTERPARTS. This Agreement may be executed in multiple
------------
counterparts, each of which shall constitute an original, and together shall
--
constitute the Agreement.
8.16. FINAL AGREEMENT/MODIFICATION. This Agreement (including the Senior
-----------------------------
Housing Rider attached hereto and hereby made a part hereof), together with the
other Loan Documents, represents the entire agreement among Borrower, Guarantor
and Lender and supersedes all prior agreements among the parties with respect to
the Loan. This Agreement and the other Loan Documents may only be modified by
written instrument executed by the applicable parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or has
caused the same to be executed by their duly authorized representatives as of
the date first above written.
BORROWER:
EMERITUS PROPERTIES XIV, LLC, a Washington limited liability company
By Emeritus Corporation, a Washington corporation, its sole member
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Name Xxxxxxx X. Xxxxxxxxxx
Its CFO
LENDER:
XXXXXX HEALTHCARE FINANCE, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxx
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Name Xxxxxxx X. Xxxxxxxx
Its Vice President
EXHIBIT A
Property: The Lodge at Xxxx Xxxx
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Number of Units: 108 Units
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Legal Description:
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EXHIBIT B
LITIGATION
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None
EXHIBIT C
SECURITY DEPOSITS
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None
EXHIBIT D
PRINCIPAL PAYMENTS
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Attached.
EXHIBIT E
APPURTENANT EASEMENTS
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1. A Drainage, Utility and Access Easement Agreement by and between Auburn
Land LC and LM Auburn Assisted Living LLC, dated April 26, 1996 and recorded May
1, 1996 in Book 17872, Page 321 for the purposes of drainage, utility and
access.
2. A Deed of Easement from LM Auburn Assisted Living LLC and Auburn Land LLC
to Auburn Water District, dated April 26, 1996 and recorded May 1, 1996 in Book
17872, Page 398 for the purposes of installing, maintaining, repairing and
replacing one or more underground pipelines for the delivery of water.
EXHIBIT F
FLOOD ZONE INFORMATION
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The Survey, prepared by Xxxxx and Xxxxxx, Inc., dated July 2002, reflects a
portion of the Property that is located in a 100 Year Flood Plain or in an
identified "flood prone area," as defined by the U.S. Department of Housing and
Urban Development, pursuant to the Flood Disaster Protection Act of 1973, as
amended, as reflected by Flood Insurance Rate Map, Town of Auburn, CPN 250292
0005C, dated June 3, 1991, which such map panel covers the area in which the
Property is located. The building located on the Property is not located in a
100 Year Flood Plain or in an identified "flood prone area."
SCHEDULE I
INDEX OF DEFINED TERMS
DEFINED TERM PAGE DEFINED TERM PAGE
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Administrative Simplification 11
Affiliate 13
Agreement 2
Assignment of Leases 2
Base Rate 2
Borrower 2
Borrower's Equity 5
business day 21
Closing Date 2
Collateral 4
control 13
Costs 18
Debt Coverage Ratio 14
Effective Rental Income 15
Environmental Indemnity 4
Event of Default 16
Exit Fee 3
Expenses 15
Guarantor 4
Guaranty 4
Healthcare Laws 10
HIPAA 10
HIPAA Compliance Date 11
HIPAA Compliance Plan 11
HIPAA Compliant 11
Improvements 2
Indebtedness 16
Indemnitee 19
Interest Rate 2
Leases 5
Lender 2
Loan 2
Loan Documents 2
Management Contract 6
Maturity Date 2
Mortgage 2
Net Operating Income 15
Note A 2
Note B 2
Notes 2
Operating Agreement 7
Person 13
Project 2
Project Yield 14
Property 2
Qualified Non-Residential Lease 5
Repayment Date 2
Replacement Reserve 14
The Lodge at Xxxx Xxxx 2
Title Policy 5
