LOAN AGREEMENT for a loan in the amount of among ESC-ARBOR PLACE, LLC, a Washington limited liability company as Borrower and GENERAL ELECTRIC CAPITAL CORPORATION as Agent and a Lender and THE OTHER FINANCIAL INSTITUTIONS WHO ARE OR HEREAFTER BECOME...
for
a loan in the amount of
$8,000,000
among
ESC-ARBOR
PLACE, LLC,
a
Washington limited liability company
as
Borrower
and
GENERAL
ELECTRIC CAPITAL CORPORATION
as
Agent and a Lender
and
THE
OTHER FINANCIAL INSTITUTIONS WHO ARE OR HEREAFTER
BECOME
PARTIES TO THIS AGREEMENT
as
Lenders
Arbor
Place Assisted Living
Dated
as of June 30, 2006
TABLE
OF CONTENTS
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Page
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ARTICLE
I INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES
|
2
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Section
1.1
|
Incorporation
of Recitals.
|
2
|
|
Section
1.2
|
Incorporation
of Exhibits and Schedules.
|
2
|
|
Section
1.3
|
Definitions.
|
2
|
|
ARTICLE
II LOAN TERMS
|
3
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||
Section
2.1
|
Disbursements.
|
3
|
|
Section
2.2
|
Interest
Rate; Late Charge.
|
3
|
|
Section
2.3
|
Payments.
|
3
|
|
Section
2.4
|
Maturity.
|
4
|
|
Section
2.5
|
Prepayment.
|
4
|
|
Section
2.6
|
Application
of Payments.
|
4
|
|
Section
2.7
|
4
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||
Section
2.8
|
Sources
and Uses.
|
5
|
|
Section
2.9
|
Defeasance.
|
5
|
|
Section
2.10
|
Security.
|
8
|
|
ARTICLE
III INSURANCE, CONDEMNATION, AND IMPOUNDS
|
8
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||
Section
3.1
|
8
|
||
Section
3.2
|
Use
and Application of Insurance Proceeds.
|
11
|
|
Section
3.3
|
Condemnation
Awards.
|
12
|
|
Section
3.4
|
Reserved.
|
12
|
|
Section
3.5
|
Real
Estate Tax Impounds.
|
12
|
|
ARTICLE
IV LEASING MATTERS
|
13
|
||
Section
4.1
|
Representations
and Warranties on Leases.
|
13
|
|
Section
4.2
|
Approval
Rights.
|
14
|
|
Section
4.3
|
Covenants.
|
14
|
|
Section
4.4
|
Tenant
Estoppels.
|
15
|
|
Section
4.5
|
Security
Deposits
|
15
|
|
ARTICLE
V REPRESENTATIONS AND WARRANTIES
|
15
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||
Section
5.1
|
Organization
and Power.
|
15
|
|
Section
5.2
|
Guarantor/Master
Tenant.
|
16
|
|
Section
5.3
|
Borrower's
Operating Agreement.
|
16
|
|
Section
5.4
|
Corporate
Documents.
|
16
|
|
Section
5.5
|
Validity
of Loan Documents.
|
17
|
|
Section
5.6
|
Liabilities;
Litigation.
|
17
|
|
Section
5.7
|
Taxes
and Assessments.
|
17
|
|
Section
5.8
|
Other
Agreements; Defaults.
|
18
|
i
TABLE
OF CONTENTS
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Page
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||
Section
5.9
|
Compliance
with Law.
|
18
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|
Section
5.10
|
Condemnation.
|
18
|
|
Section
5.11
|
Access.
|
18
|
|
Section
5.12
|
Flood
Hazard.
|
18
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|
Section
5.13
|
Property.
|
19
|
|
Section
5.14
|
Location
of Borrower.
|
19
|
|
Section
5.15
|
Margin
Stock.
|
19
|
|
Section
5.16
|
Tax
Filings.
|
19
|
|
Section
5.17
|
Solvency.
|
19
|
|
Section
5.18
|
Full
and Accurate Disclosure.
|
20
|
|
Section
5.19
|
Single
Purpose Entity.
|
20
|
|
Section
5.20
|
No
Broker.
|
20
|
|
Section
5.21
|
Reserved.
|
20
|
|
Section
5.22
|
Labor
Disputes.
|
20
|
|
Section
5.23
|
Employees.
|
20
|
|
Section
5.24
|
ERISA
(Borrower).
|
21
|
|
Section
5.25
|
Intellectual
Property.
|
21
|
|
Section
5.26
|
Anti-Terrorism
and Anti-Money Laundering Compliance.
|
21
|
|
Section
5.27
|
Master
Lease.
|
23
|
|
Section
5.28
|
Management
Agreement.
|
23
|
|
Section
5.29
|
Master
Tenant Purchase Contract.
|
23
|
|
Section
5.30
|
Approvals.
|
23
|
|
ARTICLE
VI FINANCIAL REPORTING; NOTICES
|
23
|
||
Section
6.1
|
Financial
Statements.
|
23
|
|
Section
6.2
|
Audits.
|
25
|
|
Section
6.3
|
Books
and Records/Audits.
|
25
|
|
Section
6.4
|
Notice
of Litigation or Default.
|
25
|
|
Section
6.5
|
Bank
Accounts.
|
26
|
|
ARTICLE
VII COVENANTS
|
26
|
||
Section
7.1
|
Inspection.
|
27
|
|
Section
7.2
|
Due
on Sale and Encumbrance; Transfers of Interests.
|
27
|
|
Section
7.3
|
Taxes;
Charges.
|
28
|
|
Section
7.4
|
Management.
|
29
|
|
Section
7.5
|
Operation;
Maintenance; Inspection.
|
29
|
|
Section
7.6
|
Taxes
on Security.
|
29
|
|
Section
7.7
|
Single
Purpose Entity; Legal Existence; Name, Etc.
|
29
|
|
Section
7.8
|
Affiliate
Transactions.
|
30
|
|
Section
7.9
|
Limitation
on Other Debt.
|
30
|
|
Section
7.10
|
Further
Assurances.
|
30
|
|
Section
7.11
|
Estoppel
Certificates.
|
31
|
|
Section
7.12
|
Notice
of Certain Events.
|
31
|
|
Section
7.13
|
Indemnification.
|
31
|
|
Section
7.14
|
Use
of Proceeds, Revenues.
|
31
|
|
Section
7.15
|
Payments
Under Master Lease.
|
32
|
ii
TABLE
OF CONTENTS
|
Page
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||
Section
7.16
|
Reserved.
|
32
|
|
Section
7.17
|
Reserved.
|
32
|
|
Section
7.18
|
Reserved.
|
32
|
|
Section
7.19
|
Compliance
with Laws and Contractual Obligations.
|
32
|
|
Section
7.20
|
Notice
of Money Laundering.
|
33
|
|
Section
7.21
|
Anti-Terrorism
and Anti-Money Laundering Compliance.
|
33
|
|
Section
7.22
|
Employees.
|
35
|
|
Section
7.23
|
Reserved.
|
35
|
|
Section
7.24
|
Representations
and Warranties.
|
35
|
|
Section
7.25
|
Cooperation.
|
35
|
|
Section
7.26
|
Master
Lease.
|
36
|
|
Section
7.27
|
Master
Tenant Purchase Contracts.
|
36
|
|
Section
7.28
|
Financial
Covenants.
|
36
|
|
ARTICLE
VIII Health Care Matters
|
36
|
||
Section
8.1
|
Healthcare
Laws.
|
36
|
|
Section
8.2
|
Representations,
Warranties and Covenants Regarding Healthcare Matters.
|
37
|
|
Section
8.3
|
Cooperation.
|
40
|
|
ARTICLE
IX EVENTS OF DEFAULT
|
41
|
||
Section
9.1
|
Payments.
|
42
|
|
Section
9.2
|
Certain
Covenants.
|
42
|
|
Section
9.3
|
Covenants.
|
42
|
|
Section
9.4
|
Representations
and Warranties.
|
42
|
|
Section
9.5
|
Other
Encumbrances.
|
42
|
|
Section
9.6
|
Involuntary
Bankruptcy or Other Proceeding.
|
43
|
|
Section
9.7
|
Voluntary
Petitions, etc.
|
43
|
|
Section
9.8
|
Default
Under Master Lease.
|
43
|
|
Section
9.9
|
Default
Under Management Agreement.
|
43
|
|
Section
9.10
|
False
Reports.
|
43
|
|
Section
9.11
|
Control.
|
43
|
|
Section
9.12
|
Money
Laundering.
|
44
|
|
Section
9.13
|
Loan
Documents.
|
44
|
|
Section
9.14
|
Arkansas
Loan Documents.
|
44
|
|
Section
9.15
|
Other
Defaults.
|
44
|
|
ARTICLE
X REMEDIES
|
44
|
||
Section
10.1
|
Remedies
- Insolvency Events.
|
44
|
|
Section
10.2
|
Remedies
- Other Events.
|
45
|
|
Section
10.3
|
Agent's
Right to Perform the Obligations.
|
45
|
|
ARTICLE
XI MISCELLANEOUS
|
46
|
||
Section
11.1
|
Notices.
|
46
|
|
Section
11.2
|
Amendments
and Waivers.
|
47
|
|
Section
11.3
|
Limitation
on Interest.
|
47
|
|
Section
11.4
|
Invalid
Provisions.
|
48
|
iii
TABLE
OF CONTENTS
|
Page
|
||
Section
11.5
|
Reimbursement
of Expenses; Portfolio Administration Fee.
|
48
|
|
Section
11.6
|
Approvals;
Third Parties; Conditions.
|
49
|
|
Section
11.7
|
Lender
Not in Control; No Partnership.
|
49
|
|
Section
11.8
|
Time
of the Essence.
|
50
|
|
Section
11.9
|
Successors
and Assigns.
|
50
|
|
Section
11.10
|
Renewal,
Extension or Rearrangement.
|
50
|
|
Section
11.11
|
Waivers;
Forbearance.
|
50
|
|
Section
11.12
|
Cumulative
Rights.
|
51
|
|
Section
11.13
|
Singular
and Plural.
|
51
|
|
Section
11.14
|
Phrases.
|
51
|
|
Section
11.15
|
Exhibits
and Schedules.
|
51
|
|
Section
11.16
|
Titles
of Articles, Sections and Subsections.
|
52
|
|
Section
11.17
|
Promotional
Material.
|
52
|
|
Section
11.18
|
Survival.
|
52
|
|
Section
11.19
|
WAIVER
OF JURY TRIAL.
|
52
|
|
Section
11.20
|
Waiver
of Punitive or Consequential Damages.
|
53
|
|
Section
11.21
|
Governing
Law.
|
53
|
|
Section
11.22
|
Entire
Agreement.
|
53
|
|
Section
11.23
|
Counterparts.
|
53
|
|
Section
11.24
|
Venue.
|
53
|
|
Section
11.25
|
Sale
of Loan, Participation.
|
54
|
|
Section
11.26
|
Limitation
on Liability of Agent's and Lender's Officers, Employees,
etc.
|
54
|
|
Section
11.27
|
Effectiveness
of Facsimile Documents and Signatures.
|
54
|
|
Section
11.28
|
Agency.
|
54
|
iv
LIST
OF EXHIBITS AND SCHEDULES TO LOAN AGREEMENT
Exhibits:
Exhibit
A Real
Property
Exhibit
B Form
of
Interest Holder Agreement
Exhibit
C Intellectual
Property
Exhibit
D Ownership
of Borrower
Exhibit
E Provider
Payment/Reimbursement Programs
Exhibit
F Governmental
Approvals
Exhibit
G Master
Tenant Organizational Chart
Schedules:
Schedule
2.1 Advance
Conditions
Schedule
2.3 Amortization
Schedule
Schedule
2.8 Sources
and Uses
Schedule
3.1 Insurance
Exceptions
Schedule
I Certain
Definitions
Schedule
II Calculation
of Net Operating Income
v
Adjusted
Actual Rent - Sch. II
|
9
|
Leases
- Sch. 2.1
|
3
|
|
Agent
|
1
|
Lender
|
1
|
|
Anti-Money
Laundering Laws
|
22
|
Licenses
|
37
|
|
Anti-Money
Laundering Measures
|
22
|
Lists
|
22
|
|
Anti-Terrorism
Laws
|
22
|
Management
Agreement
|
2
|
|
Arkansas
Amendment Documents
|
1
|
Master
Lease
|
2
|
|
Arkansas
Borrower
|
1
|
Master
Tenant
|
2
|
|
Arkansas
Loan
|
1
|
Master
Tenant Acquisition
|
28
|
|
Arkansas
Loan Agreement
|
1
|
Master
Tenant LLC Agreement
|
16
|
|
Arkansas
Loan Documents
|
2
|
Master
Tenant Purchase Contracts
|
28
|
|
Arkansas
Mortgage Amendments
|
1
|
Monthly
Effective Rent - Sch. II
|
9
|
|
Arkansas
Mortgages
|
1
|
Monthly
Reports
|
24
|
|
Arkansas
Note
|
1
|
Net
Operating Income - Sch. II
|
9
|
|
Assignment
Agreement
|
7
|
Note
|
1
|
|
Assignment
of Membership Interests -
|
Occupancy
|
36
|
||
Sch.
2.1
|
1
|
OFAC
|
21
|
|
Bankruptcy
Party
|
43
|
OFAC
Laws and Regulations
|
22
|
|
Borrower
|
1
|
Operating
Agreement
|
16
|
|
Borrower
Anti-Terrorism Policies
|
34
|
Other
Lists
|
21
|
|
BSA
|
22
|
Permitted
Debt
|
30
|
|
Charges
|
28
|
Prepayment
Premium
|
4
|
|
Collateral
|
8
|
Project
|
1
|
|
CON
|
37
|
Property
|
1
|
|
Defeasance
|
5
|
Release
Date
|
5
|
|
Defeasance
Deposit
|
7
|
Rent
Proceeds
|
32
|
|
Designated
Person
|
22
|
Revenue
- Sch. II
|
9
|
|
Event
of Default
|
44
|
Scheduled
Defeasance Payments
|
7
|
|
Executive
Orders
|
22
|
SDN
List
|
21
|
|
Expenses
- Sch. II
|
9
|
Secondary
Market Transactions
|
35
|
|
FIRREA
- Sch. 2.1
|
4
|
Security
Agreement
|
6
|
|
fiscal
month
|
24
|
State
Regulator
|
33
|
|
Funding
Amount
|
3
|
Subordination
Agreement - Sch. 2.1
|
1
|
|
GECC
|
1
|
Subordination
Amendment
|
1
|
|
Healthcare
Laws
|
36
|
Successor
Borrower
|
7
|
|
HIPAA
|
36
|
Tax
Impound
|
12
|
|
HIPAA
Compliance Date
|
37
|
Taxes
|
12
|
|
HIPAA
Compliance Plan
|
37
|
Terrorism
|
9
|
|
HIPAA
Compliant
|
37
|
Third-Party
Payor Programs
|
39
|
|
Improvements
|
1
|
Title
Policy - Sch. 2.1
|
2
|
|
Incorporation
Documents
|
16
|
U.S.
Obligations
|
8
|
|
Interest
Holder Agreement
|
33
|
U.S.
Publicly-Traded Entity
|
22
|
|
Interest
Rate
|
3
|
Violation
|
21
|
|
Investor
Anti-Terrorism Policies
|
34
|
Yield
Maintenance Amount
|
8
|
vi
This
Loan
Agreement is entered into as of June 30, 2006, among GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (in its individual capacity,
"GECC"
and in
its capacity as agent for the Lenders, together with its successors,
"Agent"),
the
financial institutions other than GECC who are or hereafter become parties
to
this Agreement (together with GECC collectively, or individually, as the context
may require, "Lender"),
and
ESC-ARBOR PLACE, LLC,
a
Washington limited liability company ("Borrower").
A. Lender
and Agent have agreed to make the Loan to Borrower subject to the terms and
conditions contained herein. The Loan is evidenced by that certain Promissory
Note of even date herewith in the original principal amount of Eight Million
and
No/100 Dollars ($8,000,000.00) (the Promissory Note and all amendments thereto
and substitutions therefor are hereinafter referred to collectively as the
"Note").
The
terms and provisions of the Note 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 (the "Property"),
and
the Improvements located thereon (collectively, the "Improvements"),
including, without limitation, an assisted living facility.
The Property, together with the Improvements, are referred to herein as the
"Project."
C. On
or
about December 1, 2005, Lender made a loan (the "Arkansas
Loan")
to
Emeritus Properties-Arkansas, LLC, a Delaware limited liability company
("Arkansas
Borrower")
in the
original principal amount of Fifteen Million Nine Hundred Thirty Thousand and
No/100 Dollars ($15,930,000.00). The Arkansas Loan is evidenced by, among other
things (i) that certain Promissory Note dated December 1, 2005, in the
original principal amount of Fifteen Million Nine Hundred Thirty Thousand and
No/100 Dollars ($15,930,000.00) made by Arkansas Borrower in favor of Lender
(the "Arkansas
Note"),
(ii) that certain Loan Agreement dated December 1, 2005, by and
between Arkansas Borrower, Agent and Lender (the "Arkansas
Loan Agreement"),
and
(iii) those three (3) Mortgages, Assignments of Rents and Security
Agreements dated December 1, 2005, from Arkansas Borrower in favor of Agent
(collectively, the "Arkansas
Mortgages").
Concurrently herewith, Arkansas Borrower and/or Guarantor and Agent are
executing (i) those certain First Amendments to Mortgage, Assignment of
Rents and Security Agreement (collectively, the "Arkansas
Mortgage Amendments"),
(ii) that certain First Amendment to Loan Agreement, and (iii) that
certain First Amendment to Subordination, Attornment and Security Agreement
(the
"Subordination
Amendment")
(the
First Amendment to Loan Agreement, together with the Arkansas Mortgage
Amendments, the Subordination Amendment and any other documents executed in
connection therewith are collectively referred to herein as the "Arkansas
Amendment Documents").
The
Arkansas Note, the Arkansas Loan Agreement, the Arkansas Mortgages, the Guaranty
of Payment and Performance dated December 1, 2005, from Guarantor in favor
of Agent, the Subordination, Attornment and Security Agreement dated
December 1, 2005, by and among Guarantor, Arkansas Borrower and Agent, and
any other documents evidencing or securing the
Arkansas
Loan or executed in connection therewith, as amended by the Arkansas Amendment
Documents, and any further modifications, renewals and extensions thereof,
are
referred to herein collectively as the "Arkansas
Loan Documents."
D. The
Project is master leased to Silver Lake Assisted Living LLC, a Washington
limited liability company ("Master
Tenant")
pursuant to a Lease Agreement (the "Master
Lease")
of
even date herewith between Borrower and Master Tenant. Master Tenant and
Guarantor are parties to a certain Management Agreement dated September 1,
1998 (the "Management
Agreement"),
pursuant to which Guarantor provides certain property management services to
the
Project.
E. Borrower
will use the proceeds of the Loan for the purpose of acquiring the
Project.
F. Borrower's
obligations under the Loan will be evidenced and secured by, the Loan
Documents.
ARTICLE
I
INCORPORATION
OF RECITALS, EXHIBITS AND SCHEDULES
Section
1.1 Incorporation
of Recitals.
The
foregoing preambles and all other recitals set forth herein are made a part
hereof by this reference.
Section
1.2 Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules to this Agreement are attached hereto and are
incorporated in this Agreement and expressly made a part hereof by this
reference.
Section
1.3 Definitions.
All
terms
defined in Schedule
I
or
otherwise in this Agreement shall, unless otherwise defined therein, have the
same meanings when used in any other Loan Document, or any certificate or other
document made or delivered pursuant hereto. The words "hereof", "herein", and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole.
2
ARTICLE
II
LOAN
TERMS
Section
2.1 Disbursements.
Funding.
The Loan
shall be funded in one advance and repaid in accordance with this Agreement
and
the other Loan Documents. On the Closing Date, and subject to the terms,
provisions and conditions of this Agreement (including, without limitation
Borrower's satisfaction of the conditions to initial advance described in
Schedule 2.1
attached
hereto) and the other Loan Documents, Lender shall disburse to Borrower from
the
proceeds of the Loan the amount of Eight Million and No/100 Dollars
($8,000,000.00) (the "Funding
Amount").
Section
2.2 Interest
Rate; Late Charge.
The
outstanding principal balance of the Loan (including any amounts added to
principal under the Loan Documents) shall bear interest at a rate of interest
equal to seven and two hundred twenty-nine thousandths of one percent (7.229%)
per annum (the "Interest
Rate").
Interest shall be computed on the basis of a fraction, the denominator of which
is three hundred sixty (360) and the numerator of which is the actual number
of
days elapsed from the date of the initial advance or the date on which the
immediately preceding payment was due. If Borrower fails to pay any installment
of interest or principal within five (5) days after the date on which the same
is due, Borrower shall pay to Agent a late charge on such past-due amount,
as
liquidated damages and not as a penalty, equal to the greater of
(a) interest at the Default Rate on such amount from the date when due
until paid, and (b) five percent (5%) of such amount, but not in excess of
the maximum amount of interest allowed by applicable law. While any Event of
Default exists, the Loan shall bear interest at the Default Rate.
Section
2.3 Payments.
(a) Payments
at Interest Rate.
Commencing on August 1, 2006, Borrower shall pay interest in arrears on the
first day of each month until
all
amounts due under the Loan Documents are paid in full. If the first day of
a
month is not a Business Day, then the applicable payment due hereunder shall
be
made on the first Business Day immediately following the first day of such
month.
(b) Principal
Amortization Payments.
Commencing on August 1, 2006, and on the first (1st) day of each month
thereafter until the Maturity Date, Borrower shall make a monthly principal
amortization payment in accordance with Schedule 2.3
in
addition to the interest payments required under Section
2.3(a),
above.
If the first day of a month is not a Business Day, then the applicable payment
due hereunder shall be made on the first Business Day immediately following
the
first day of such month.
(c) Credit
for Payments under Master Lease.
Agent
acknowledges and agrees that Master Tenant, in its capacity as the tenant under
the Master Lease, has been
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directed
to make its rent payments directly to Agent to be applied against the
obligations of Borrower under the Loan Agreement and the other Loan Documents
and that Borrower shall be deemed to have fulfilled its obligations under this
Section
2.3
as long
as Agent has actually received such payments from Master Tenant, in its capacity
as the tenant under the Master Lease, by the date on which any payment is due
from Borrower under this Section
2.3 and
such
payments (after application to the Indebtedness as set forth in Section 2.6
herein)
is sufficient to pay in full any amounts then due and payable under this
Section 2.3.
Section
2.4 Maturity.
Maturity
Date.
The
Loan shall mature and Borrower shall pay to Agent all outstanding principal,
accrued and unpaid interest, and any other amounts due under the Loan Documents
on June 30, 2013.
Section
2.5 Prepayment.
Borrower
may not prepay any of the outstanding principal balance of the Loan in full
or
in part at any time. If the Loan is accelerated for any reason other than
casualty or condemnation, Borrower shall pay, in addition to all other amounts
outstanding under the Loan Documents, a prepayment premium ("Prepayment
Premium")
equal
to one percent (1%) of the outstanding principal balance of the Loan. Defeasance
pursuant to Section 2.9
below
shall be available to Borrower at any time on and after July 1, 2008, as
provided herein.
Section
2.6 Application
of Payments.
All
payments received by Agent or Lender under the Loan Documents shall be applied:
first,
to any
fees, expenses and indemnification payments due to Agent or Lender under the
Loan Documents; second,
to any
Default Rate interest or late charges; third,
to
other accrued and unpaid interest; fourth,
to the
principal sum and other amounts due under the Loan Documents, and fifth
to
the Prepayment
Premium.
Section
2.7 Capital
Adequacy; Increased Costs; Illegality.
(a) If
Agent
determines that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by Lender with any request or directive
regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law), in each case, adopted after the
Closing Date, from any central bank or other governmental authority increases
or
would have the effect of increasing the amount of capital, reserves or other
funds required to be maintained by Lender and thereby reducing the rate of
return on Lender's capital as a consequence of its obligations hereunder, then
Borrower shall from time to time upon demand by Agent, pay to Lender, additional
amounts sufficient to compensate Lender for such reduction. A certificate as
to
the amount of that reduction and showing the basis of the computation thereof
submitted by Agent to Borrower shall, absent manifest error, be final,
conclusive and binding for all purposes. Lender agrees
4
that,
as
promptly as practicable after it becomes aware of any circumstances referred
to
above which would result in any such increased cost, Lender shall, to the extent
not inconsistent with such Lender's internal policies of general application,
use reasonable commercial efforts to minimize costs and expenses incurred by
it
and payable to it by Borrower pursuant to this Section
2.7(a).
(b) If,
due
to either (i) the introduction of or any change in any law or regulation
(or any change in the interpretation thereof) or (ii) the compliance with
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law), in each case adopted after the Closing
Date, there shall be any increase in the cost to Lender of agreeing to make
or
making, funding or maintaining the Loan, then Borrower shall from time to time,
upon demand by Agent, pay to Lender, additional amounts sufficient to compensate
Lender for such increased cost. A certificate as to the amount of such increased
cost, submitted to Borrower by Agent, shall be conclusive and binding on
Borrower for all purposes, absent manifest error. Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred
to
above which would result in any such increased cost, Lender shall, to the extent
not inconsistent with such Lender's internal policies of general application,
use reasonable commercial efforts to minimize costs and expenses incurred by
it
and payable to it by Borrower pursuant to this Section
2.7(b).
Section
2.8 Sources
and Uses.
The
sources and uses of funds for the contemplated transaction are as described
on
Schedule
2.8
attached
hereto. Borrower shall deliver such information and documentation as Agent
shall
request to verify that the sources and uses are as indicated on Schedule
2.8.
A
reduction in the amounts necessary for any of the uses may, at Agent's election,
result in an equal reduction in the amount of the Loan.
Section
2.9 Defeasance.
At
any
time from and after July 1, 2008, so long as no monetary default, material
non-monetary default or Event of Default hereunder or under any of the other
Loan Documents is then continuing, Borrower may obtain the release of the
Project from the lien of the Security Document upon the satisfaction of the
following conditions precedent ("Defeasance"):
(a) not
less
than thirty (30) days prior written notice to Lender specifying the first day
of
a calendar month (or if not a Business Day, the first Business Day of such
calendar month) (the "Release
Date")
on
which the Defeasance Deposit (hereinafter defined) is to be made;
(b) the
payment to Agent on the Release Date of interest accrued and unpaid on the
principal balance of the Loan to and including the Release Date;
5
(c) the
payment to Agent on the Release Date of all other sums, not including scheduled
interest or principal payments, due under the Note, the Mortgages and the other
Loan Documents;
(d) the
payment to Agent on the Release Date of the Defeasance Deposit and a $2,500
non-refundable processing fee;
(e) the
delivery by Borrower to Agent at Borrower's sole cost and expense
of:
(i) a
security agreement in form and substance satisfactory to Lender, creating a
first priority lien in favor of Agent on the Defeasance Deposit and the U.S.
Obligations (hereinafter defined) purchased on behalf of Borrower with the
Defeasance Deposit in accordance with this Section 2.9
(the
"Security
Agreement");
(ii) releases
of the Project from the lien of the Mortgages (for execution by Lender) in
a
form appropriate for the jurisdiction in which the Project is located and
otherwise acceptable to Agent;
(iii) an
officer's certificate of Borrower certifying that the requirements set forth
in
this clause (e) have been satisfied;
(iv) an
opinion of counsel in form and substance, and rendered by counsel, satisfactory
to Agent, at Borrower's expense, stating, among other things, that Agent has
a
perfected first priority security interest in the Defeasance Deposit and the
U.S. Obligations purchased by or on behalf of Borrower and pledged to Agent
and
as to enforceability of the Assignment Agreement (as hereinafter defined),
the
Security Agreement and other documents delivered in connection therewith, and
if
required by the Agent, a substantive non-consolidation opinion with respect
to
the Successor Borrower (as hereinafter defined); and
(v) such
other certificates, documents, opinions or instruments as Agent may reasonably
request; and
(f) Agent
shall have received, at Borrower's expense, a certificate from a nationally
or
regionally recognized independent certified public accountant acceptable to
Agent, in form and substance satisfactory to Lender, certifying the amount
of
U.S. Obligations required to be purchased with the Defeasance Deposit in order
to generate sufficient sums to satisfy the obligations of Borrower under this
Agreement, the Note and this Section 2.9
as and
when such obligations become due.
In
connection with the conditions set forth above, Borrower hereby appoints Agent
as its agent and attorney-in-fact for the purpose of using the Defeasance
Deposit to purchase or cause to be purchased U.S. Obligations which provide
payments on or prior to, but as close as possible to, all successive scheduled
Payment Dates after the Release Date
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upon
which interest and principal payments are required under this Agreement and
the
Note, including the amounts due on the Maturity
Date, and
in
amounts equal to the scheduled payments due on such dates under this Agreement
and the Note plus Agent's reasonable estimate of administrative expenses and
applicable federal income taxes associated with or to be incurred by the
Successor Borrower during the remaining term of, and applicable to, the Loan
(the "Scheduled
Defeasance Payments").
Borrower, pursuant to the Security Agreement or other appropriate document,
shall authorize and direct that the payments received from the U.S. Obligations
may be made directly to Agent and applied to satisfy the obligations of Borrower
under this Agreement, the Note and this Section 2.9.
Upon
compliance with the requirements of this Section 2.9,
the
Project shall be released from the lien of the Security Document and the pledged
U.S. Obligations shall be the sole source of collateral securing the repayment
of the Loan and the Note. Any portion of the Defeasance Deposit in excess of
the
amount necessary to purchase the U.S. Obligations required by the preceding
paragraph and to otherwise satisfy the Borrower's obligations under this
Section
2.9
shall be
remitted to Borrower with the release of the Project from the lien of the
Security Document. In connection with such release, a successor entity meeting
Agent's then applicable single purpose entity requirements and otherwise
acceptable to Agent, adjusted, as applicable, for the Defeasance contemplated
by
this Section
2.9
(the
"Successor
Borrower"),
shall
be established by Borrower subject to Agent's approval (or at Agent's option,
by
Agent) and Borrower shall transfer and assign all obligations, rights and duties
under and to the Note together with the pledged U.S. Obligations to such
Successor Borrower pursuant to an assignment and assumption agreement in form
and substance satisfactory to Lender (the "Assignment
Agreement").
Such
Successor Borrower shall assume the obligations under the Note, the Security
Agreement and the other Loan Documents and Borrower shall be relieved of its
obligations thereunder, except (i) that Borrower shall be required to
perform its obligations pursuant to this Section 2.9,
including maintenance of the Successor Borrower, if applicable, and
(ii) for those obligations of Borrower which expressly survive repayment of
the Loan. Borrower shall pay $1,000.00 to any such Successor Borrower as
consideration for assuming the obligations under the Note, the Security
Agreement and the other Loan Documents pursuant to the Assignment Agreement.
Borrower shall pay all reasonable costs and expenses incurred by Agent and
Lender in connection with this Section 2.9,
including Agent's and Lender's reasonable attorneys' fees and expenses, and
any
administrative and tax expenses associated with or incurred by the Successor
Borrower, which amounts shall, as set forth above, be included when calculating
the amount of the Defeasance Deposit.
For
purposes of this Section 2.9,
the
following terms shall have the following meanings:
(x) The
term
"Defeasance
Deposit"
shall
mean an amount equal to the Yield Maintenance Amount, any costs and expenses
incurred or to be incurred in the purchase of U.S. Obligations necessary to
meet
the Scheduled Defeasance Payments (including Lender's reasonable estimate of
administrative expenses and applicable federal, state or local income taxes
associated with or to be incurred by the Successor Borrower during the remaining
term of, and applicable to, the Loan) and any revenue, documentary
7
stamp
or
intangible taxes or any other tax or charge due in connection with the transfer
of the Note or otherwise required to accomplish the agreements of this
Section 2.9,
all as
estimated by Agent.
(y) The
term
"Yield
Maintenance Amount"
shall
mean the amount estimated by Agent which will be sufficient to purchase U.S.
Obligations providing the required Scheduled Defeasance Payments;
and
(z) The
term
"U.S.
Obligations"
shall
mean "Government
Securities"
as
defined in the REMIC regulations, specifically, Treasury Regulation
§ 1.860G-2(a)(8)(i), as chosen by Agent.
Section
2.10 Security.
Collateral.
The
Loan and all other indebtedness and obligations under the Loan Documents shall
be secured by the following (collectively, the "Collateral"):
(a) the mortgaged property and other collateral as set forth in the
Security Document, (b) a first priority security interest in all of the
membership interests in Borrower pledged by all members of Borrower,
(c) any other collateral or security described in this Agreement or the
other Loan Documents.
ARTICLE
III
INSURANCE,
CONDEMNATION, AND IMPOUNDS
Section
3.1 Insurance.
Borrower
shall maintain insurance as follows:
(a) Property.
Borrower shall (or shall cause Master Tenant to) keep the Project insured
against damage by fire and the other hazards covered by a standard extended
coverage and "special perils" insurance policy (including a separate policy
for
broad form boiler and machinery coverage (without exclusion for explosion))
for
the full insurable value thereof the term "full insurable value" to mean the
actual replacement cost of the improvements and the personal property (without
taking into account depreciation or co-insurance), and shall maintain such
other
casualty insurance as reasonably required by Agent, including, without
limitation, ordinance or law coverage, in amounts and in form and with
carrier(s) approved by Agent as of the Closing Date which carrier(s), amounts
and form shall not be changed without the prior written consent of Agent.
Borrower shall keep the Project insured against loss by flood if the Project
is
located in an area identified by the Federal Emergency Management Agency as
an
area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 and the National Flood Insurance Reform Act of 1994
(and
any successor acts thereto) in an amount at least equal to the amount approved
by Agent as of the Closing Date. The proceeds of insurance paid on account
of
any damage or destruction to the Project shall be paid to Agent to be applied
as
provided in Section 3.2.
Notwithstanding anything contained in this Agreement to the contrary and without
limitation
8
of
any of
the provisions contained in this Article III,
Borrower shall at all times maintain ordinance or law coverage in amount equal
to the full replacement cost of the Project and otherwise in form and substance
and with carriers approved by Agent in Agent's reasonable
discretion.
(b) Liability.
Borrower shall maintain or shall cause Master Tenant to maintain
(a) commercial general liability insurance with respect to the Project;
(b) worker's compensation insurance and employer's liability insurance
covering employees at the Project employed by Guarantor and/or Master Tenant
(to
the extent required, and in the amounts required by applicable laws);
(c) business interruption insurance, including use and occupancy, rental
income loss and extra expense, against all periods covered by Borrower's
property insurance; (f) Umbrella liability, (g) builder's risk
insurance, as applicable, (h) professional liability insurance, and
(g) Terrorism insurance (subject to the requirements of this Section 3.1(a)).
All of
the above shall be maintained at all times during the term of the Loan with
coverages, in the amounts and forms and with limits and carrier(s) approved
by
Agent as of the Closing Date which carrier(s), amounts, limits and form shall
not be changed or reduced without the prior written consent of Agent.
Without
limiting the foregoing and notwithstanding anything to the contrary contained
in
this Agreement, if on the Closing Date, terrorism, terrorist acts or similar
perils (collectively, "Terrorism")
is an
exclusion from coverage in any such insurance policy, or, if Terrorism is an
exclusion from coverage in any such insurance policy, then Borrower shall,
upon
Agent's request, obtain a separate policy insuring specifically against
Terrorism.
(c) Other
Insurance.
Borrower shall maintain or shall cause Guarantor to maintain such other
insurance with respect to the Project as reasonably required by
Agent.
(d) Form
and Quality.
All
insurance policies shall be endorsed in form and substance acceptable to Agent
to name Agent as an additional insured, loss payee or mortgagee thereunder,
as
its interest may appear, with loss payable to Agent, without contribution,
under
a standard New York (or local equivalent) mortgagee clause. All such insurance
policies and endorsements shall be fully paid for and contain such provisions
and expiration dates and be in such form and issued by such insurance companies
licensed to do business in the State where the Project is located, with a rating
of "A-IX" or better as established by Best's Rating Guide (or an equivalent
rating approved in writing by Agent). Each policy shall provide that such policy
may not be cancelled or materially changed except upon thirty (30) days' prior
written notice of intention of non-renewal, cancellation or material change
to
Agent and that no act or thing done by Borrower shall invalidate any policy
as
against Agent. Borrower shall assign the policies or proofs of insurance to
Agent, in such manner and form that Agent and its successors and assigns shall
at all times have and hold the same as security for the payment of the Loan.
Borrower shall deliver certificates of insurance to Agent evidencing the
coverages required hereunder. The proceeds of insurance policies coming into
the
possession of Agent shall not be deemed trust funds, and Agent shall be entitled
to apply such proceeds as herein provided. Borrower shall not maintain any
separate or additional property insurance which is contributing in the event
of
loss unless it is properly endorsed and otherwise satisfactory to Agent in
all
respects.
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(e) Adjustments.
Borrower shall give immediate written notice of any loss to the insurance
carrier and, if such loss is reasonably expected by Borrower to exceed the
deductible or if such loss is reasonably likely to result in a material adverse
change, to Agent. Borrower hereby irrevocably authorizes and empowers Agent,
as
attorney-in-fact for Borrower coupled with an interest, to make proof of loss,
to adjust and compromise any claim under insurance policies, to appear in and
prosecute any action arising from such insurance policies, to collect and
receive insurance proceeds, and to deduct therefrom Agent's expenses incurred
in
the collection of such proceeds. Nothing contained in this Section 3.1,
however, shall require Agent to incur any expense or take any action
hereunder.
(f) Agent's
Right to Purchase Insurance.
In the
event Borrower fails to provide Agent with evidence of the insurance coverage
required by this Agreement, Agent may purchase insurance at Borrower's expense
to protect Agent's interests in the Project. This insurance may, but need not,
protect Borrower's interests. The coverage purchased by Agent may not pay any
claim made by Borrower or any claim that is made against Borrower in connection
with the Project. Borrower, or Agent at Borrower's request, may later cancel
any
insurance purchased by Agent, but only after providing Agent with evidence that
Borrower has obtained insurance as required by this Agreement. If Agent
purchases insurance for the Project, Borrower will be responsible for the costs
of that insurance, including interest and other charges imposed by Agent in
connection with the placement of the insurance, until the effective date of
the
cancellation or expiration of the insurance. The costs of the insurance may
be
added to the outstanding principal balance of the Loan if not paid by Borrower
within ten (10) days after receipt of a written demand for payment from Lender
accompanied by an invoice or other reasonably supporting documentation. The
costs of the insurance may be more than the cost of insurance Borrower is able
to obtain on its own.
(g) Borrower
has
advised Agent and Lender that, to
the
limited extent described on Schedule
3.1,
it is
not in compliance as of the Effective Date with certain requirements set forth
in Section 3.1.
Borrower nonetheless represents and warrants to Agent and Lender that the
policies of insurance (including the deductible or self-insured retention
provisions thereof) and risk management programs that Borrower and Guarantor
have in effect as of the date hereof are, and as may be in effect at any time
prior to the Maturity Date will be, consistent with custom, practice and prudent
management standards in the business and industry in which Borrower and
Guarantor are engaged. As and when insurance meeting the requirements set forth
in Section 3.1
(to the
extent Borrower is not in compliance with such requirements as provided in
Schedule 3.1)
becomes
generally available to operators of assisted living facilities owned by
institutional operators and similar to the Facility at commercially reasonable
rates, as determined by Agent in its reasonable judgment, Borrower shall
purchase and maintain or shall cause Master Tenant to purchase and maintain
such
insurance. Borrower's non-compliance with the requirements of Section 3.1,
as
set
forth in Schedule
3.1,
shall
not give rise to an Event of Default so long as (i) no other Event of
Default then exists, (ii) such non-compliance is limited to the matters
described on Schedule 3.1,
as it
may be amended from time to time prior to the Maturity Date with the consent
of
Agent and Lender in their sole discretion, (iii) the
representations
10
and
warranties set forth in this Section 3.1(g)
remain
true, correct and complete in all respects, and (iv) Borrower is in
compliance with the other covenants contained in this Section 3.1.
Notwithstanding anything to the contrary set forth herein, if any insurance
provided by Borrower or Master Tenant in accordance with Schedule
3.1
provides
for coverage on a "claims-made" basis, every "claims
made" renewal or replacement policy shall continue to show the first date of
claims made coverage as of the date of execution of this Loan Agreement, or
a
date prior hereto, as its prior acts/retroactive or continuity date.
Furthermore, if any "claims made" policy is cancelled or non-renewed, and not
replaced by an "occurrence" policy with "full prior acts", Borrower will
purchase or will cause Guarantor to purchase an "Extended Reporting Provision
Option" (i.e., tail coverage), for a term
equal to the then remaining term of the Loan, and if any "claims made" policy
is
subsequently replaced by an "occurrence" policy, Borrower agrees that said
"occurrence" policy will contain a "full prior acts" provision.
Section
3.2 Use
and
Application of Insurance Proceeds.
Agent
shall apply insurance proceeds to costs of restoring the Project or the Loan
as
follows:
(a) if
a loss
is less than or equal to twenty five percent (25%) of the original principal
balance of the Loan, Agent shall apply the insurance proceeds to restoration
provided that: (a) no Potential Default exists, and (b) Borrower
promptly commences and diligently pursues restoration of the
Project;
(b) if
the
loss exceeds twenty-five percent (25%) of the original principal balance of
the
Loan, but is not more than twenty-five percent (25%) of the replacement value
of
the Improvements (for projects containing multiple phases or stand alone
structures, such calculation to be based on the damaged phase or structure,
not
the Project as a whole), Agent shall apply the insurance proceeds to restoration
provided that at all times during such restoration: (a) no monetary default
or non-monetary default or Event of Default exists hereunder or under any of
the
other Loan Documents; (b) Agent determines that there are sufficient funds
available to restore and repair the Project to a condition approved by Agent;
(c) Agent determines that the Net Operating Income of the Project during
restoration plus
the
collectible proceeds of business interruption insurance plus any amounts
specifically reserved by Guarantor for the sole purpose of funding the
restoration will be sufficient to pay Debt Service as of the first measuring
period occurring after the anticipated date of completion of restoration,
(d) the Borrower will be able to satisfy the financial covenants set forth
in Sections 7.26(a)
and
(b);
(e) Agent determines that restoration and repair of the Project to a
condition approved by Agent will be completed within nine (9) months after
the
date of loss or casualty and in any event ninety (90) days prior to the Maturity
Date; and (f) Borrower promptly commences and is diligently pursuing
restoration of the Project; or
(c) if
the
conditions set forth above are not satisfied or the loss exceeds the maximum
amount specified in Subsections (b) above, in Agent's sole discretion,
Agent may apply any insurance proceeds it may receive to the payment of the
Loan
or allow all or a portion of such proceeds to be used for the restoration of
the
Project.
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Insurance
proceeds applied to restoration will be disbursed on receipt of satisfactory
plans and specifications, contracts and subcontracts, schedules, budgets, lien
waivers and architects' certificates, and otherwise in accordance with prudent
commercial construction lending practices for construction loan advances,
including, as applicable, the advance conditions under Part C of Schedule
2.1
with
respect to disbursement of insurance proceeds.
Section
3.3 Condemnation
Awards.
Borrower
shall immediately notify Agent of the institution of any proceeding for the
condemnation or other taking of the Project or any portion thereof. Agent may
participate in any such proceeding and Borrower will deliver to Agent all
instruments necessary or required by Agent to permit such participation. Where
the amount of the compensation or award is anticipated to be in excess of
$25,000 (the "Award
Threshold")
Borrower shall not, without Agent's prior consent, (a) agree to any
compensation or award, and (b) take any action or fail to take any action
which would cause the compensation to be determined. All awards and compensation
for the taking or purchase in lieu of condemnation of the Project or any part
thereof are hereby assigned to Agent as security for the obligations of Borrower
under this Agreement, all such awards and compensation below the Award Threshold
may be paid directly to Borrower so long as no Event of Default exists and
restoration or repair and the continued operation of the applicable Property
is
economically feasible (and the condemnation or other taking did not affect
in
any way the Improvements) and all such awards and compensation in excess of
the
Award Threshold shall be paid to Agent. Borrower authorizes Agent to collect
and
receive such awards and compensation in excess of the Award Threshold to give
proper receipts and acquittances therefor, and in Agent's sole discretion,
(a)
to apply the same (after deduction of Lender's reasonable costs and expenses,
if
any in collecting the same) toward the payment of the Loan in such order and
manner as Agent may elect, notwithstanding that the Loan may not then be due
and
payable, or (b) to make the same available to Borrower for the restoration
or repair of the Project. If the net proceeds of the condemnation award are
made
available to Borrower for restoration or repair, such proceeds shall be
disbursed upon satisfaction of and in accordance with the terms and conditions
set forth in Section
3.2.
Borrower, upon request by Agent, shall execute all instruments requested to
confirm the assignment of the awards and compensation to Agent, free and clear
of all liens, charges or encumbrances.
Section
3.4 Reserved.
Section
3.5 Real
Estate Tax Impounds.
At
the
time of and in addition to the monthly installment of interest, and if
applicable, principal due under the Note and this Loan Agreement, Borrower
shall
deposit with Agent's or Agent's designee, monthly, a sum of money (the
"Tax
Impound")
equal
to one-twelfth (1/12th) of the annual charges for real estate taxes,
assessments, and impositions relating to the Project (collectively, the
"Taxes").
At or
before the initial advance of the Loan, Borrower shall deposit with Agent or
Agent's designee a sum of money which together with the monthly installments
will be sufficient to make each of such payments thirty (30) days prior to
the
date any delinquency or penalty becomes due with respect to such
payments
12
and
maintain a reserve equal to approximately one-sixth (1/6th)
of the
annual taxes, assessments and charges in Agent's sole but reasonable estimation.
Deposits shall be made on the basis of Agent's estimate from time to time of
the
charges for the current year (after giving effect to any reassessment or, at
Agent's election, on the basis of the charges for the prior year, with
adjustments when the charges are fixed for the then current year). All funds
so
deposited shall be held by Agent or Agent's designee. These sums may be
commingled with Agent or Agent's designee's general funds and shall not be
deemed to be held in trust for the benefit of Borrower. So long as no Event
of
Default exists hereunder, Agent shall credit for Borrower's account interest
on
such funds held by Agent or Agent's designee from time to time at the Money
Market Rate. All interest paid on such funds shall be deemed to be a part of
the
Tax Impound and shall be applied in accordance with this Section
3.5.
Borrower hereby grants to Agent for the benefit of Lender and Agent a security
interest in all funds so deposited with Agent or Agent's designee for the
purpose of securing the Loan. While an Event of Default exists, the funds
deposited may be applied in payment of the Taxes or to the payment of the Loan
or any other charges affecting the security of Agent, as Agent may elect, but
no
such application shall be deemed to have been made by operation of law or
otherwise until actually made by Agent. Borrower shall furnish, or cause to
be
furnished, to Agent bills for the Taxes at least thirty (30) days prior to
the
date on which the Taxes first become payable. If at any time the amount on
deposit with Agent or Agent's designee, together with amounts to be deposited
by
Borrower before Taxes are payable, is insufficient to pay such Taxes and
maintain a reserve equal to approximately one-sixth (1/6th)
of the
Taxes, Borrower shall deposit any deficiency with Agent or Agent's designee
immediately upon demand. Agent shall pay such Taxes when the amount on deposit
with Agent or Agent's designee is sufficient to pay such charges and maintain
such reserve and Agent has received a xxxx for such charges. The obligation
of
Borrower to pay the Taxes, as set forth in the Security Document, is not
affected or modified by the provisions of this paragraph but shall be deemed
satisfied if the same are paid by Agent or Agent's designee pursuant to the
provisions of this paragraph.
ARTICLE
IV
LEASING
MATTERS
Section
4.1 Representations
and Warranties on Leases.
(a) Borrower
represents and warrants to Agent with respect to Leases of the Project
that,
to
its
knowledge: (i) the occupancy certificate separately delivered to Agent at
or prior to Closing, if any, is true and correct as of the date hereof, and
the
Leases are valid and in and full force and effect; (ii) the Leases
(including amendments) are in writing, and there are no oral agreements with
respect thereto; (iii) the copies of the Leases delivered to Agent are true
and complete; (iv) neither the landlord nor any tenant is in default under
any of the non-residential Leases; (v) Borrower has no knowledge of any
notice of termination or default with respect to any non-residential Lease;
(vi) Borrower has not assigned or pledged (and has not permitted Master
Tenant or Guarantor to assign or pledge) any of the Leases, the rents or any
interests therein, except to Agent; (vii) no non-residential tenant or
other party has an option to purchase all or any portion of the Project;
(viii) no tenant has the right to terminate its Lease prior to expiration
of the stated term of such Lease (unless due to
13
casualty
or condemnation of the Project); and (ix) no tenant has prepaid more than
one month's rent in advance (except for bona fide security deposits not in
excess of an amount equal to two month's rent).
(b) The
Project shall at all times be master leased to Master Tenant pursuant to the
Master Lease. The Master Lease shall, at all times during the term of the Loan,
be subordinated to the lien of the Mortgage pursuant to the terms of the
Subordination Agreement.
Section
4.2 Approval
Rights.
(a) Borrower
shall not and shall not permit Master Tenant or Guarantor to, without Agent's
prior written consent, enter into or amend (in any material respect) any Lease
or other rental or occupancy agreement or concession agreement with respect
to
the Project except as expressly permitted hereunder.
(b) Borrower
shall have the right to enter into or to permit Master Tenant or Guarantor
to
enter into, amend and/or modify non-residential Leases without Agent's consent
provided (i) the economic terms of the Lease conform to those of the market,
(ii) the form of the non-residential Lease is that of the standard lease form
approved by Agent, with no material modifications, (iii) the initial term is
not
longer than one (1) year or if longer such Lease shall be terminable by
Guarantor as landlord upon not greater than 30 days prior written notice to
the
applicable tenant, and (iv) such Lease is not a Material Non-Residential
Lease.
(c) Borrower,
Guarantor and Master Tenant shall have the right to enter into or amend any
residential Lease which has a term of no more than one (1) month and all such
residential Leases shall be at market rates on the form previously approved
by
Agent without any material modifications.
(d) Except
for the expiration of the Master Lease by its terms pursuant to Section 2
thereof, Borrower shall not suffer or permit an amendment or termination of
the
Master Lease.
Section
4.3 Covenants.
Borrower
shall and shall cause Master Tenant and Guarantor to: (a) perform the
obligations which Borrower and Master Tenant are required to perform under
the
Leases; (b) enforce the material obligations to be performed by the tenants
under the Leases; (c) promptly furnish to Agent any notice of default or
termination received by Borrower or Guarantor or Master Tenant from any
non-residential tenant, and any notice of default or termination given by
Borrower or Master Tenant or Guarantor to any non-residential tenant;
(d) not collect any rents for more than one month in advance of the time
when the same shall become due, except for bona fide security deposits not
in
excess of an amount equal to two months rent; (e) not enter into any ground
lease or master lease of any part of the Project other than the Master Lease;
(f) not further assign or encumber any Lease; (g) not,
except
14
with
Agent's prior written consent, cancel or accept surrender or termination of
any
Material Non-Residential Lease; and (h) not, except with Agent's prior
written consent, modify or amend any Material Non-Residential Lease, and any
action in violation of clauses (e), (f), (g), and (h) of this Section 4.3
shall be
void at the election of Agent. Borrower will not suffer or permit any breach
or
default to occur in any of Borrower's or Guarantor's or Master Tenant's
obligations under any of the Leases nor suffer or permit the same to terminate
by reason of any failure of Borrower or Guarantor or Master Tenant to meet
any
requirement of any Lease.
Section
4.4 Tenant
Estoppels.
At
Agent's request, Borrower shall obtain and furnish to Agent, written estoppels
in form and substance satisfactory to Agent, executed by non-residential tenants
under Leases in the Project (including the Master Tenant under the Master Lease)
and confirming the term, rent, and other provisions and matters relating to
the
non-residential Leases.
Section
4.5 Security
Deposits
Neither
Borrower nor Guarantor nor Master Tenant has collected or is in receipt of
any
security deposit from any tenant of the Project, except as described on the
occupancy summary previously provided to Agent at or prior to closing. All
resident trust funds shall be held in separate personal allowance funds (not
commingled) for the sole use of the applicable resident, and such funds shall
be
recorded on the Facility's financial records as independent
accounts.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES
Borrower
represents and warrants to Agent that:
Section
5.1 Organization
and Power.
Each
of
Borrower and Guarantor and Master Tenant is duly organized, validly existing
and
in good standing under the laws of the state of its formation or existence,
and
is in compliance with legal requirements applicable to doing business in the
state of its formation. Each of Borrower and Guarantor and Master Tenant is
in
good standing under the laws of and is in compliance with legal requirements
applicable to doing business in the state where each Project is located.
Borrower is not a "foreign person" within the meaning of § 1445(f)(3) of
the Internal Revenue Code.
Section
5.2 Guarantor/Master
Tenant.
(a) Guarantor's
principal place of business is at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000. Guarantor is the sole member of Borrower and owns one hundred
percent (100%) of the membership interests in Borrower free and clear of all
liens,
15
claims,
and encumbrances. Guarantor has full right, power and authority to execute
the
Loan Documents on its own behalf and on behalf of Borrower.
(b) Authority/Xxxx.
Guarantor shall have authority to make all material business decisions
(including a sale or refinance) for Borrower during the term of the Loan. Xxxxxx
Xxxx is the chairman of the board of directors of Guarantor.
(c) Master
Tenant's principal place of business is at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx 00000. BP Limited Partnership and Providence Health
Systems-Washington are the sole members of Master Tenant and own one hundred
percent (100%) of the membership interests in Master Tenant, free and clear
of
all liens, claims and encumbrances. The direct and indirect ownership interest
in Master Tenant is set forth on the organization chart attached hereto as
Exhibit
G.
All
such interests are free and clear of all liens, claims, encumbrances and rights
of others except as set forth on Exhibit
G.
Master
Tenant has full right, power and authority to execute the Loan Documents on
its
own behalf. Guarantor shall have the authority to make all material business
decisions for Master Tenant at all times following the closing of the Master
Tenant Acquisition.
Section
5.3 Borrower's
Operating
Agreement.
A
true
and complete copy of the operating agreement creating Borrower and any and
all
amendments thereto (collectively, the "Operating
Agreement")
has
been furnished to Agent. The Operating Agreement constitutes the entire
agreement among the members of Borrower and is binding upon and enforceable
against each of the members in accordance with its terms. There are no other
agreements, oral or written, among any of the members relating to Borrower.
No
breach exists under the Operating Agreement and no condition exists which,
with
the giving of notice or the passage of time would constitute a breach under
the
Master Tenant LLC Agreement.
Section
5.4 Corporate
Documents.
A
true
and complete copy of the articles of incorporation and by-laws of Guarantor
(collectively, the "Incorporation
Documents")
have
been furnished to Agent. The Incorporation Documents were duly executed and
delivered, are in full force and effect, and binding upon and enforceable in
accordance with their terms.
A
true
and complete copy of the operating agreement creating Master Tenant and any
and
all amendments thereto (the "Master
Tenant LLC Agreement")
has
been furnished to Agent. The Master Tenant LLC Agreement constitutes the entire
agreement among the members of Master Tenant and is binding upon and applicable
against each of the members in accordance with its terms. There are no other
agreements, oral or written, among any of the members relating to Master Tenant.
No breach exists under the Master Tenant LLC Agreement and no condition exists
which, with the giving of notice or the passage of time would constitute a
breach under the Master Tenant LLC Agreement.
16
Section
5.5 Validity
of Loan Documents.
The
execution, delivery and performance by Borrower, Master Tenant and Guarantor
of
the Loan Documents to which it or they are a party: (a) are duly authorized
and do not require the consent or approval of any other party or governmental
authority which has not been obtained; and (b) will not violate any law or
result in the imposition of any lien, charge or encumbrance upon the assets
of
any such party, except as contemplated by the Loan Documents. The Loan Documents
constitute the legal, valid and binding obligations of Borrower and Guarantor
and Master Tenant, enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, or similar laws generally
affecting the enforcement of creditors' rights.
Section
5.6 Liabilities;
Litigation.
(a) The
financial statements delivered by Borrower and Guarantor and Master Tenant
are
true and correct with no significant change since the date of preparation.
Except as disclosed in such financial statements, there are no liabilities
(fixed or contingent) affecting the Project, Borrower or Master Tenant or
Guarantor. Except as disclosed in such financial statements, there is no
litigation, administrative proceeding, investigation or other legal action
(including any proceeding under any state or federal bankruptcy or insolvency
law) pending or, to the knowledge of Borrower, threatened, against the Project,
Borrower, Master Tenant or Guarantor which if adversely determined would
reasonably be expected to have a material adverse effect on such party, the
Project or the Loan.
(b) Neither
Borrower nor Guarantor nor Master Tenant is contemplating either the filing
of a
petition by it under state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and neither
Borrower nor Master Tenant nor Guarantor has knowledge of any Person
contemplating the filing of any such petition against it.
Section
5.7 Taxes
and Assessments.
There
are
no unpaid or outstanding real estate or other taxes or assessments on or against
the Project or any part thereof, except general real estate taxes not due or
payable. Copies of the current general real estate tax bills with respect to
the
Project have been delivered to Agent. The Project is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot. Except as disclosed in the Title
Policy, there are no pending or, to Borrower's best knowledge, proposed, special
or other assessments for public improvements or otherwise affecting the Project,
nor are there any contemplated improvements to the Project that may result
in
such special or other assessments.
Section
5.8 Other
Agreements; Defaults.
Neither
the Borrower nor Guarantor nor Master Tenant is a party to any agreement or
instrument or subject to any court order, injunction, permit, or restriction
which
17
would
reasonably be expected to adversely affect the Project or the business,
operations, or condition (financial or otherwise) of Borrower or Guarantor
or
Master Tenant. Neither Borrower nor Guarantor is in violation of any agreement
which violation would reasonably be expected to have a material adverse effect
on the Project, Borrower, Master Tenant, or Guarantor or Borrower's or
Guarantor's or Master Tenant's business, properties, or assets, operations
or
condition, financial or otherwise.
Section
5.9 Compliance
with Law.
Borrower,
Guarantor and Master Tenant have all requisite licenses, permits, franchises,
qualifications, certificates of occupancy or other governmental authorizations
to own to lease and operate, the Project and carry on its business, and the
Project is in compliance with all applicable legal requirements and, to the
best
of Borrower's knowledge, is free of structural defects, and all building systems
contained therein are in good working order, subject to ordinary wear and tear.
The Project does not constitute, in whole or in part, a legally non-conforming
use under applicable legal requirements.
Section
5.10 Condemnation.
No
condemnation has been commenced or, to Borrower's knowledge, is contemplated
with respect to all or any portion of the Project or for the relocation of
roadways providing access to the Project.
Section
5.11 Access.
The
Project has adequate rights of access to public ways and is served by adequate
water, sewer, sanitary sewer and storm drain facilities. All public utilities
necessary or convenient to the full use and enjoyment of the Project is located
in the public right-of-way abutting the Project, and all such utilities are
connected so as to serve the Project without passing over other property, except
to the extent such other property is subject to a perpetual easement for such
utility benefiting the Project. All roads necessary for the full utilization
of
the Project for their current purpose have been completed and dedicated to
public use and accepted by all governmental authorities.
Section
5.12 Flood
Hazard.
The
Project is not situated in an area 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
Project.
Section
5.13 Property.
A
fee
interest in the Project is, or contemporaneously with the initial funding of
the
Loan 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 such exceptions to title as have been approved
by
Agent. To the best of Borrower's knowledge, the Project is in compliance with
all zoning requirements, building codes,
18
subdivision
improvement agreements, declarations, ground leases, and all covenants,
conditions and restrictions of record. Except as set forth in the exceptions
to
title approved by Agent, the zoning and subdivision approval of the Project
and
the right and ability to, use or operate the Project is not in any way dependent
on or related to any real estate other than the Property where the same is
to be
made. Except as previously disclosed to Agent in writing, to the best of
Borrower's knowledge, as of the date hereof, (i) there are no, nor are there
any
alleged or asserted, violations of law, regulations, ordinances, codes, permits,
licenses, declarations, ground leases, covenants, conditions, or restrictions
of
record, or other agreements relating to the Project, or any part thereof, (ii)
the Project is in good condition and repair with no deferred maintenance and
are
free from damage caused by fire or other casualty, (iii) there is no latent
or
patent structural or other significant defect or deficiency in the Project,
(iv)
design and as-built conditions of the Project are such that no drainage or
surface or other water will drain across or rest upon the Project or land of
others except in areas designated for such purpose and for which a benefiting
or
burdening easement has been established, and (v) none of the Improvements on
the
Project create an encroachment over, across or upon any of the Project's
boundary lines, rights of way or easements, and no buildings or other
improvements on adjoining land create such an encroachment.
Section
5.14 Location
of Borrower.
Borrower's
principal place of business and chief executive offices are located at the
address stated in Section 11.1.
Section
5.15 Margin
Stock.
No
part
of proceeds of the Loan will be used for purchasing or acquiring any "margin
stock" within the meaning of Regulations T, U or X of the Board of Governors
of
the Federal Reserve System.
Section
5.16 Tax
Filings.
Borrower
and Guarantor have filed (or have obtained effective extensions for filing)
all
federal, state and local tax returns required to be filed and have paid or
made
adequate provision for the payment of all federal, state and local taxes,
charges and assessments payable by Borrower and Guarantor,
respectively.
Section
5.17 Solvency.
After
giving effect to the Loan, the fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the Loan, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Borrower's assets is
and
will, immediately following the making of the Loan, be greater than Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
on its Debts as such Debts become absolute and matured. Borrower's assets do
not
constitute and, immediately following the making of the Loan will not
constitute, unreasonably small capital to carry out its business as conducted
or
as
19
proposed
to be conducted. Borrower does not intend to, nor believes that it will, incur
Debts and liabilities (including contingent liabilities and other commitments)
beyond its ability to pay such Debts as they mature (taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of obligations of such Borrower).
Section
5.18 Full
and Accurate Disclosure.
No
statement of fact made by or on behalf of Borrower, Master Tenant or Guarantor
in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary
to
make statements contained herein or therein not misleading. There is no fact
presently known to Borrower or Guarantor or Master Tenant which has not been
disclosed to Agent which adversely affects, nor as far as Borrower can
reasonably foresee, would reasonably be expected to adversely affect, the
Project or the business, operations or condition (financial or otherwise) of
Borrower, Master Tenant or Guarantor.
Section
5.19 Single
Purpose Entity.
Borrower
is and has at all times since its formation been a Single Purpose
Entity.
Section
5.20 No
Broker.
No
brokerage commission or finder's fee is owing to any broker or finder arising
out of any actions or activity of Borrower in connection with the
Loan.
Section
5.21 Reserved.
Section
5.22 Labor
Disputes.
To
the
best of Borrower's knowledge, there are no strikes, boycotts, or labor disputes
pending which would reasonably be expected to have a material adverse effect
on
the operation of the Project.
Section
5.23 Employees.
Borrower
has no employees.
Section
5.24 ERISA
(Borrower).
(a)
Neither Borrower nor Master Tenant is an "employee benefit plan" as defined
in
Section 3(3) of ERISA, or a "governmental plan" within the meaning of Section
3(32) of ERISA; (b) neither Borrower nor Master Tenant is subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; (c) the assets of Borrower and Master Tenant do not
constitute "plan assets" of one or more plans within the meaning of 29 C.F.R.
Section 2510.3-101; and (d) one or more of the following
20
circumstances
is true: (i) Equity interests in Borrower and Master Tenant are publicly
offered securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2)
or
are securities issued by an investment company registered under the Investment
Company Act of 1940; (ii) Less than twenty-five percent (25%) of the value
of
any class of equity interests in Borrower and Master Tenant are held by "benefit
plan investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(iii) Borrower and Master Tenant qualify as an "operating company", a "venture
capital operating company", or a "real estate operating company" within the
meaning of 29 C.F.R. Section 2510.3-101(c), (d) or (e). Borrower and Master
Tenant shall deliver to Agent such certifications and/or other evidence
periodically requested by Agent, in its reasonable discretion, to verify these
representations and warranties. Failure to deliver these certifications or
evidence, breach of these representations and warranties, or consummation of
any
transaction which would cause the Loan Documents or any exercise of Agent's
or
Lender's rights under the Loan Documents to (1) constitute a non-exempt
prohibited transaction under ERISA or (2) violate ERISA or any state statute
regulating governmental plans (collectively, a "Violation"),
which
failure continues for thirty (30) days after written notice, shall be an Event
of Default. Notwithstanding anything in the Loan Documents to the contrary,
no
sale, assignment, or transfer of any direct or indirect right, title, or
interest in Borrower or Master Tenant or the Project (including creation of
a
junior lien, encumbrance or leasehold interest) shall be permitted which would
negate Borrower's representations in this section or cause a Violation. At
least
fifteen (15) days before consummation of any of the foregoing, Borrower shall
obtain from the proposed transferee or lienholder (1) a certification to Agent
that the representations and warranties of this subparagraph will be true after
consummation and (2) an agreement to comply with this section.
Section
5.25 Intellectual
Property.
Except
as
set forth on Exhibit C,
Borrower has no interest in any trademarks, copyrights, patents or other
intellectual property with respect to the Project.
Section
5.26 Anti-Terrorism
and Anti-Money Laundering Compliance.
(a) Compliance
with Anti-Terrorism Laws.
Borrower represents and warrants to Agent that it is not, and, after making
due
inquiry, that no Person who owns a controlling interest in or otherwise controls
Borrower or Master Tenant is, (i) listed on the Specially Designated Nationals
and Blocked Persons List (the "SDN
List")
maintained by the Office of Foreign Assets Control ("OFAC"),
Department of the Treasury, and/or on any other similar list ("Other
Lists"
and,
collectively with the SDN List, the "Lists")
maintained by the OFAC pursuant to any authorizing statute, Executive Order
or
regulation (collectively, "OFAC
Laws and Regulations");
or
(ii) a Person (a "Designated
Person")
either
(A) included within the term "designated national" as defined in the Cuban
Assets Control Regulations, 31 C.F.R. Part 515, or (B) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg.
49079 (published September 25, 2001) or similarly designated under any related
enabling legislation or any other similar Executive Orders (collectively, the
"Executive
Orders"). The
OFAC
Laws and Regulations and the Executive Orders are collectively referred to
in
this Amendment as the "Anti-Terrorism
Laws".
21
Borrower
represents and warrants that it requires, and has taken reasonable measures
to
ensure compliance with the requirement, that no Person who owns any other direct
interest in Borrower or Master Tenant is or shall be listed on any of the Lists
or is or shall be a Designated Person.
(b) Funds
Invested in Borrower.
Borrower represents and warrants that it has taken reasonable measures
appropriate to the circumstances (and in any event as required by law), with
respect to each holder of a direct or indirect interest in Borrower and Master
Tenant, to assure that funds invested by such holders in Borrower and Master
Tenant are derived from legal sources ("Anti-Money
Laundering Measures"). The
Anti-Money Laundering Measures have been undertaken in accordance with the
Bank
Secrecy Act, 31 U.S.C. §§ 5311 et
seq.
("BSA"),
and
all applicable laws, regulations and government guidance on BSA compliance
and
on the prevention and detection of money laundering violations under 18 U.S.C.
§§ 1956 and 1957 (collectively with the BSA, "Anti-Money
Laundering Laws").
(c) No
Violation of Anti-Money Laundering Laws.
Borrower represents and warrants to Agent, to its actual knowledge after making
due inquiry, that neither Borrower nor Guarantor nor Master Tenant (i) is under
investigation by any governmental authority for, or has been charged with,
or
convicted of, money laundering under 18 U.S.C. §§ 1956 and 1957, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (ii) has been assessed civil penalties
under any Anti-Money Laundering Laws, or (iii) has had any of its funds seized
or forfeited in an action under any Anti-Money Laundering Laws.
(d) Borrower
Compliance with Anti-Money Laundering Laws.
Borrower represents and warrants to Agent that it has taken reasonable measures
appropriate to the circumstances (in any event as required by law), to ensure
that Borrower and Master Tenant are in compliance with all current and future
Anti-Money Laundering Laws and laws, regulations and government guidance for
the
prevention of terrorism, terrorist financing and drug trafficking.
(e) U.S.
Publicly-Traded Entity.
This
Section
5.26
shall
not apply to any Person to the extent that such Person's interest in the
Borrower is through a U.S. Publicly-Traded Entity. As used in this Agreement,
"U.S.
Publicly-Traded Entity"
means a
Person (other than an individual) whose securities are listed on a national
securities exchange, or quoted on an automated quotation system, in the United
States, or a wholly-owned subsidiary of such a Person.
Section
5.27 Master
Lease.
A
true,
correct and complete copy of the Master Lease, together with all amendments
thereto, has been delivered to Agent; and the Master Lease, and all amendments
thereto is in full force and effect as of the Closing Date.
22
Section
5.28 Management
Agreement.
A
true,
correct and complete copy of the Management Agreement, together with all
amendments thereto, has been delivered to Agent; and the Management Agreement,
and all amendments thereto is in full force and effect as of the Closing
Date.
Section
5.29 Master
Tenant Purchase Contract.
A
true,
correct and complete copy of the Master Tenant Purchase Contracts, together
with
all amendments thereto, have been delivered to Agent; and the Master Tenant
Purchase Contract, and all amendments thereto is in full force and effect as
of
the Closing Date.
Section
5.30 Approvals.
The
form
of the Master Lease has been submitted to the State of Washington, as required
under applicable Law.
ARTICLE
VI
FINANCIAL
REPORTING;
NOTICES
Section
6.1 Financial
Statements.
Borrower
shall furnish to Agent and shall cause Guarantor and Master Tenant to furnish
to
Agent such financial statements and other financial information as Agent may
from time to time reasonably 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 at the dates
and
for the period indicated and shall be sufficient to permit Agent to calculate
Debt Service Coverage Ratio, Project Yield and Net Operating Income. Without
limitation of the foregoing, Borrower shall furnish to Agent and shall cause
Guarantor and Master Tenant to furnish to Agent the following
statements:
(a) Monthly
Reports.
(i) Borrower
shall deliver or cause to be delivered to Agent on or prior to the last day
of
each fiscal month used by Guarantor and Master Tenant in preparing financial
reports (each, a "fiscal
month")
the
following reports in respect of the Project:
(A) For
the
preceding fiscal month, statements of the operations of the Project (including
a
current occupancy report, operating statement, delinquency report and a schedule
of delinquency of receipts and payments) as of the last day of each fiscal
month;
(B) For
the
preceding fiscal month and fiscal year-to-date (i) a cash summary detailing
all cash activity and reconciling beginning
23
and
end
cash balances, and (ii) aged accounts receivable and accounts payable;
(C) For
the
preceding fiscal month, statements of Net Operating Income.
(ii) Upon
request by Agent, Borrower shall deliver or cause to be delivered to Agent
the
following (together with the foregoing, such reports are hereinafter
collectively referred to as the "Monthly
Reports"):
(A) A
true,
correct and complete copy of the check register showing all paid invoices,
indicating date paid, amount paid and check number;
(B) A
true,
correct and complete copy of the cash disbursements journal; and
(C) Evidence
of the timely payment of all taxes and insurance premiums.
(iii) The
Monthly Reports shall (a) be certified by the chief financial
representative or other authorized accounting officer of Borrower as true,
correct and complete, (b) be derived from the books and records maintained
by Borrower and/or Guarantor and/or Master Tenant at the Project, and
(c) be accompanied with copies of supporting documentation to the extent
that Agent shall request. Notwithstanding anything contained in
clause (a)(i) above to the contrary, any Monthly Reports for a fiscal month
that coincides with the end of Guarantor's fiscal quarter shall be delivered
to
Lender within forty-five (45) days after the end of each such fiscal
quarter.
(iv) Each
financial statement, report or other information required to be delivered or
caused to be delivered by Borrower and/or Guarantor and/or Master Tenant to
Agent under this Agreement and required hereunder to be certified by the chief
financial representative of Borrower shall also certify that: (a) all of
the covenants set forth in Article
VII
are
fully performed; provided, however, as to the financial covenants set forth
in
Section
7.26
such
certification shall only be required to be made upon delivery of the applicable
financial statements corresponding to such period of determination, and
(b) the representations and warranties set forth in this Loan Agreement,
the Security Document and in the Subordination Agreement are and remain true,
correct and complete except as disclosed in writing in the certificate. Each
financial statement, report or other information required to be delivered by
Borrower to Agent under this Agreement shall show all material contingent
liabilities, shall be prepared in accordance with sound accounting practices
and
shall accurately and fairly present the results of operations and the financial
condition of the person(s) referred to therein as of the dates and for the
period indicated.
24
(b) Annual
Statements.
Within
ninety (90) days after the end of each fiscal year, Borrower shall deliver
or
cause to be delivered to Agent a balance sheet and financial statements of
Borrower and Guarantor and Master Tenant, which, in the case of Guarantor,
shall
show, if Agent requests, Guarantor's other real estate holdings, including
income and expenses, debt service requirements and occupancy thereof, certified
as true and correct in all respects, and prepared in accordance with sound
accounting practices and fairly presenting the financial condition(s) of
Borrower or Guarantor or Master Tenant, as applicable, as of the date(s)
indicated.
Section
6.2 Audits.
If
Borrower fails to furnish or cause to be furnished promptly any report required
by Section
6.1,
or if
Agent reasonably deems such reports to be unacceptable or unreliable, Agent
may
elect (in addition to exercising any other right and remedy) to conduct an
audit
of all books and records of Borrower and Guarantor which in any way pertain
to
the Project and to prepare such reports. Such audit shall be made and such
reports shall be prepared by an independent firm of certified public accountants
to be selected by Agent or another auditor of Agent's choice (which may be
an
affiliate of Agent). Borrower shall pay all reasonable expenses of the audit
and
other services, which expenses shall be immediately due and payable with
interest thereon at the Default Rate.
Section
6.3 Books
and Records/Audits.
Borrower
shall keep and maintain or cause to be kept and maintained at all times at
the
Project or at Borrower's/Guarantor's/Master Tenant's principal place of
business, or such other place as Agent may approve in writing, complete and
accurate books of accounts and records adequate to reflect the results of the
operation of the Project (including computations of Net Operating Income) and
to
provide the financial statements required to be provided to Agent pursuant
to
Section
6.1
above
and copies of all written contracts, correspondence, reports of Agent's
independent consultant, if any, and other documents affecting the Project.
Agent
and its designated agents shall have the right to inspect and copy any of the
foregoing. Additionally, Agent may audit and determine, in Agent'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 (including
the
computation of Net Operating Income) equal to or greater than the greater of:
(i) five percent (5%); or (ii) Five Thousand and No/100 Dollars ($5,000.00)
more than any computation submitted by Borrower.
Section
6.4 Notice
of Litigation or Default.
Borrower
shall promptly provide Agent with:
(a) written
notice of any litigation, arbitration, or other proceeding or governmental
investigation (including any survey results or inspection reports from any
Governmental Authority) pending or, to Borrower's or Guarantor's or Master
Tenant's knowledge, threatened against or relating to Borrower, Guarantor,
Master Tenant or the
25
Project
(but with respect to matters affecting only Guarantor (and not affecting the
Project in any respect), only such matters which would reasonably be expected
to
have a material adverse effect on the financial condition of Guarantor );
provided, that with respect to any such litigation, arbitration or other
proceeding relating solely to (i) a monetary claim of less than $100,000 (and
less than $500,000 in the aggregate) which is covered in its entirety by
insurance (and as to which the insurance carrier has not refused coverage)
and
(ii) a monetary claim of less than $50,000 (and less than $200,000 in the
aggregate) with respect to a breach of contract claim or an employee claim
for
unpaid wages, Borrower shall not be required to provide notice (written or
otherwise) of such claim in accordance with the terms of this Section
6.4.
(b) a
copy of
all notices of default and violations of laws, regulations, codes, ordinances
and the like (including, without limitation, notices of default or violation
under any license or permit necessary for the operation of the Project) not
otherwise covered by Section
6.4(a)
which
are received by Borrower or Guarantor or Master Tenant, relating to Borrower,
Master Tenant or Guarantor (but with respect to matters affecting only Guarantor
(and not affecting the Project in any respect) only such matters which would
reasonably be expected to have a material adverse effect on the financial
condition of Guarantor or the Project or result in a material adverse
change;
(c) a
copy of
all notices of default and other material correspondence sent to or received
from Master Tenant under the Master Lease.
(d) a
copy of
all notices of default and other material correspondence sent to or received
from Guarantor under the Management Agreement.
(e) a
copy of
all notices of default and other material correspondence sent to or received
from a tenant under a Lease.
(f) a
copy of
all notices of default and other material correspondence sent to or received
from Guarantor under the Master Tenant Purchase Contracts.
Section
6.5 Bank
Accounts.
Borrower
shall cause Master Tenant to provide Agent with the following information with
respect to each of the accounts from which payments will be made to Agent
pursuant to the Loan Documents: (i) bank name; (ii) bank's ABA number;
(iii) bank account number; and (iv) the name in which the bank account
is held.
ARTICLE
VII
COVENANTS
Borrower
covenants and agrees with Agent as follows:
26
Section
7.1 Inspection.
Subject
to the rights of tenants under the Leases and applicable federal and state
law
(including laws governing the confidentiality of resident records), Agent and
its authorized agents may enter upon and inspect the Project at all reasonable
times upon notice given orally or in writing to Borrower. Agent, at Borrower's
expense, shall retain one or more independent consultants to periodically
inspect the Project and all documents, drawings, plans, and consultants' reports
relating thereto.
Section
7.2 Due
on
Sale and Encumbrance; Transfers of Interests.
Without
the prior written consent of Agent, Borrower shall not nor shall Borrower permit
Guarantor or Master Tenant to:
(i) except
as
otherwise permitted herein or by the Assignment of Membership Interests create,
or permit the creation of, any new direct or indirect ownership interest in
Borrower or Master Tenant, or
(ii) transfer,
or permit the transfer of (A) all or any part of the Project, or any
interest therein (other than Leases permitted hereunder), or (B) except as
otherwise permitted herein or by the Assignment of Membership Interests
any direct or indirect ownership
interest in Borrower or Master Tenant (including any interest in the profits,
losses or cash distributions in any way relating to the Project, Master Tenant
or Borrower), or
(iii) encumber,
alienate, xxxxx x Xxxx on, or grant any other interest in, the Project or any
part thereof (other than Leases permitted hereunder ) or take or fail to take
any other action which would result in a Lien against the Project or the
interest of Borrower in the Project or any ownership interest in Borrower or
Master Tenant, whether voluntarily or involuntarily except Liens in favor of
Agent for the benefit of Lender and Agent or Liens for purchase money
indebtedness expressly permitted pursuant to Section 7.9 herein or Liens which
are being duly contested by Borrower in accordance with the terms hereof,
or
(iv) enter
into any easement or other agreement granting rights in or restricting the
use
or development of the Project, or
Agent
acknowledges that Guarantor and BF Limited Partnership and Guarantor and
Providence Health Systems-Washington have entered into those certain Purchase
Contract and Sale Agreements dated March 22, 2006 and April ___, 2006,
respectively (as amended from time to time, collectively, the "Master
Tenant Purchase Contracts"),
pursuant to which Guarantor intends to purchase one hundred percent (100%)
of
the membership interests in Master Tenant.
Notwithstanding
the foregoing provisions of this Section 7.2,
the
direct ownership interests in Master Tenant may be sold to Guarantor pursuant
to
the terms of the Master Tenant Purchase Contracts so long as (i) after any
such transaction (the "Master
Tenant
27
Acquisition"),
Guarantor shall at all times own one hundred percent (100%) of the membership
interests in Master Tenant free of all liens, claims and encumbrances and
Guarantor shall have the authority to make all material business decisions
for
Master Tenant during the term of the Loan, (ii) all consents and approvals
necessary or desirable in connection with the Master Tenant Acquisition
(including, without limitation, all consents and approvals from the Washington
Department of Social and Health Services) have been obtained from the applicable
Governmental Authorities and copies thereof have been provided to Lender,
(iii) Borrower gives Agent not less than five (5) days prior written notice
of the closing of the Master Tenant Acquisition, (iv) Guarantor has
delivered to Agent a pledge of one hundred percent (100%) of the ownership
interests in Master Tenant pursuant to a pledge of membership interest
substantially similar in form and substance to the Assignment of Membership
Interests and any legal opinions required by Lender in connection therewith,
(v) Master Tenant has delivered to Agent any legal opinions required by
Lender with respect to the due authorization, execution, delivery and
enforceability of the Subordination Agreement and the perfection of liens
granted therein in favor of Agent, and (vi) Borrower executes such
documents and takes such action and causes Master Tenant and Guarantor to
execute such documents and take such action as are reasonably required by Agent
in connection with the Master Tenant Acquisition. Borrower shall pay to Agent
upon demand all costs and expenses incurred by Agent and Lender (including,
without limitation, reasonable attorney's fees and search costs) in connection
with the Master Tenant Acquisition.
Absent
a
default under this Agreement or under any of the other Loan Documents, the
Management Agreement may be terminated by Guarantor and Master Tenant solely
in
connection with the Master Tenant Acquisition. Borrower shall promptly deliver
to Lender written evidence of such termination.
Section
7.3 Taxes;
Charges.
To
the
extent not paid by Agent from the Tax Impound, Borrower shall pay before any
fine, penalty, interest or cost may be added thereto, and shall not enter into
any agreement to defer, any Taxes that may become a Lien upon the Project or
become payable during the term of the Loan, and will promptly furnish Agent
with
evidence of such payment. Borrower shall not suffer or permit the joint
assessment of the Project with any other real property constituting a separate
tax lot or with any other real or personal property. Borrower shall pay or
cause
to be paid when due all Taxes, claims and demands of mechanics, materialmen,
laborers and others which, if unpaid, might result in a Lien on the Project
(collectively, the "Charges");
however, Borrower and Guarantor may contest, in good faith by appropriate
proceedings, the amount or validity of any such Charges or Liens so long as
(a) Borrower and Guarantor have given prior written notice to Agent of the
intent to so contest or object to any such Charges or Liens, (b) such contest
stays the enforcement or collection of the Charges or any Lien created,
(c) Borrower provides Agent with a bond or other security satisfactory to
Agent (which may include an endorsement to Agent's Title Policy insuring against
such claim, demand or lien) assuring the discharge of Borrower's and/or
Guarantor's obligations for such claims, demands or lien, including interest
and
penalties, and (d) Borrower and Guarantor are diligently contesting the
same by appropriate
28
legal
proceedings in good faith and at their own expense and concludes such contest
prior to the tenth (10th) day preceding the earlier to occur of the Maturity
Date or the date on which the Project is scheduled to be sold for
non-payment.
Section
7.4 Management.
Except
as
expressly permitted by the terms of Section
7.2
herein
in connection with the Master Tenant Acquisition, Borrower shall not permit
Master Tenant to terminate or replace the Manager or amend the Management
Agreement without Agent's prior written consent. Master Tenant and/or Borrower
shall hold and maintain all necessary licenses, certifications and permits
required by law.
Section
7.5 Operation;
Maintenance; Inspection.
Borrower
shall observe and comply with (or cause observance and compliance with) all
legal requirements applicable to the ownership, use and operation of the
Project. Borrower shall maintain (or cause to be maintained) the Project in
good
condition, ordinary wear and tear excepted, and promptly after receipt or all
necessary permits and approvals, including any approvals which Borrower is
required to obtain from Agent or Lender under the terms of this Agreement or
any
of the other Loan Documents, repair any damage or casualty.
Section
7.6 Taxes
on Security.
Borrower
shall pay all taxes, charges, filing, registration and recording fees, excises
and levies payable with respect to the Note or the Liens created or secured
by
the Loan Documents, other than income, franchise and doing business taxes
imposed on Agent or Lender and other than taxes, charges and fees which are
being duly contested by Borrower in accordance with the terms of this Agreement
or any of the other Loan Documents. If there shall be enacted any law (1)
deducting the Loan from the value of the Project for the purpose of taxation,
(2) affecting any Lien on the Project, or (3) changing existing laws of taxation
of mortgages, deeds of trust, security deeds, or debts secured by real property,
or changing the manner of collecting any such taxes, Borrower shall promptly
pay
to Agent, on demand, all taxes, costs and charges for which Agent or Lender
is
or may be liable as a result thereof; however, if such payment would be
prohibited by law or would render the Loan usurious, then instead of collecting
such payment, Lender may declare all amounts owing under the Loan Documents
to
be immediately due and payable.
Section
7.7 Single
Purpose Entity; Legal Existence; Name, Etc.
Borrower
and Master Tenant shall preserve and keep in full force and effect their
existence as a Single Purpose Entity, entity status, franchises, rights and
privileges under the laws of the state of their formation, and all
qualifications, licenses and permits applicable to the ownership of the Project
and Guarantor shall preserve and keep in full force and effect its entity
status, franchises, rights and privileges under the laws of the state of its
formation and all qualifications, licenses and permits applicable to the use
and
operation of
29
the
Project. Borrower shall not, nor shall Guarantor cause or permit Borrower to,
wind up, liquidate, dissolve, reorganize, merge, or consolidate with or into,
or
convey, sell, assign, transfer, lease, or otherwise dispose of all or
substantially all of its assets, or acquire all or substantially all of the
assets of the business of any Person, or permit any subsidiary or Affiliate
of
Borrower to do so. Guarantor shall not wind up, liquidate, dissolve, convey,
sell, assign, transfer, lease or otherwise dispose of all or substantially
all
of its assets. Borrower and Master Tenant will not amend or terminate or permit
the amendment or termination of their membership agreement without the prior
written consent of Agent which consent shall not, in the case of an amendment,
be unreasonably withheld if such amendment is not reasonably anticipated to
affect Borrower's or Master Tenant's ability to perform its obligations
hereunder or under the other Loan Documents. Borrower and Master Tenant shall
conduct business only in their own name or in the names of the Project. Neither
Borrower nor Master Tenant nor Guarantor shall change its name, identity, or
organizational structure, the location of its chief executive office or
principal place of business or its state of organization unless Borrower or
Master Tenant or Guarantor, as applicable, (a) shall have given prior written
notice to Agent of such change, and (b) shall have taken all actions necessary
or requested by Agent to file or amend any financing statement or continuation
statement to assure perfection and continuation of perfection of security
interests under the Loan Documents.
Section
7.8 Affiliate
Transactions.
Without
the prior written consent of Agent, neither Borrower nor Master Tenant nor
Guarantor shall engage in any transaction affecting the Project with an
Affiliate of Borrower other than agreements which are (i) terminable by
Borrower upon thirty (30) days prior written notice (ii) on an arms-length
basis and (iii) on terms which are no less favorable to Borrower than it
could secure from an unrelated third party.
Section
7.9 Limitation
on Other Debt.
Borrower
shall not, without the prior written consent of Agent, incur any
Debt, except
for trade payables in the ordinary course of business, and up to $250,000 in
the
aggregate for purchase money debt to purchase and, capital leases of, vehicles,
equipment and other capital items to be used solely in connection with the
operation of a Project (purchase money debt not to exceed in the aggregate
$60,000 may be secured by automobiles and ordinary office equipment used in
connection with the Project) and which are reasonably related to the operation
of assisted living facilities/independent living facilities (the "Permitted
Debt").
Notwithstanding the foregoing, the amount of secured indebtedness incurred
by
Borrower pursuant to this Section 7.9
and
Master Tenant pursuant to the terms of the Subordination Agreement shall not
at
any time in the aggregate exceed $60,000.
Section
7.10 Further
Assurances.
Borrower
shall promptly (a) cure any defects in the execution and delivery of the
Loan Documents, and (b) execute and deliver, or cause to be executed and
delivered, all such other documents, agreements and instruments as Agent may
reasonably request to
30
further
evidence and more fully describe the collateral for the Loan, to correct any
omissions in the Loan Documents, to perfect, protect or preserve any liens
created under any of the Loan Documents, or to make any recordings, file any
notices, or obtain any consents, as may be necessary or appropriate in
connection therewith.
Section
7.11 Estoppel
Certificates.
Borrower,
within ten (10) days after request, shall furnish to Agent a written statement,
duly acknowledged, setting forth the amount due on the Loan, the terms of
payment of the Loan, the date to which interest has been paid, whether any
offsets or defenses exist against the Loan and, if any are alleged to exist,
the
nature thereof in detail, and such other matters as Agent reasonably may
request.
Section
7.12 Notice
of Certain Events.
Borrower
shall promptly notify Agent of (a) any Potential Default or Event of
Default known to Borrower, together with a detailed statement of the steps
being
taken to cure such Potential Default or Event of Default; (b) any notice of
default received by Borrower or Master Tenant or Guarantor other obligations
relating to the Project or otherwise material to Borrower's business, including
any notices of violations of any laws, regulations, codes or ordinances; and
in
the case of clause (b) promptly provide Agent with copies of such notices
referred to therein.
Section
7.13 Indemnification.
Borrower
shall indemnify, defend and hold Agent and Lenders harmless from and against
any
and all losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever, including the reasonable fees and expenses of Agent's and Lender's
counsel, in connection with (a) any inspection, review or testing of or
with respect to the Project conducted by Agent or Lender in accordance with
the
terms of this Agreement, (b) any investigative, administrative, mediation,
arbitration, or judicial proceeding, in which Agent or a Lender is designated
a
party thereto, commenced or threatened at any time (including after the
repayment of the Loan) in any way related to the execution, delivery or
performance of any Loan Document or to the Project, (c) any proceeding
instituted by any Person claiming a Lien against any of the Project, and
(d) any brokerage commissions or finder's fees claimed by any broker or
other party in connection with the Loan, the Project, or any of the transactions
contemplated in the Loan Documents, including those arising from the joint,
concurrent, or comparative negligence of Agent or Lender, except to the extent
any of the foregoing is caused by an indemnitee's gross negligence or willful
misconduct.
Section
7.14 Use
of
Proceeds, Revenues.
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
U,
31
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. Except as otherwise specifically provided in the Loan
Documents, proceeds from the Project, if any, received by Borrower shall be
applied to the Indebtedness then due and payable, operating expenses or
other
approved Project capital improvements, repairs or replacements before
distribution by Borrower to Guarantor.
Section
7.15 Payments
Under Master Lease.
Borrower
shall cause all rent payments by Master Tenant under the Master Lease to be
made
directly to Agent, pursuant to the terms of the Subordination
Agreement.
To
the
extent that any such funds are not sent directly to Agent as required under
this
Section 7.15
but are
received by Borrower, such amounts shall be held in trust for the benefit of
Agent and remitted to Agent within two (2) Business Days after receipt by
Borrower. All amounts from time to time held by Agent pursuant to this
Section 7.15
are
hereinafter referred to as "Rent
Proceeds."
Agent
may apply all such Rent Proceeds toward the Indebtedness then due and payable
in
such order as Agent shall determine. The Rent Proceeds may be commingled with
Agent's or Agent's designee's general funds and shall not be deemed to be held
in trust for the benefit of Borrower. Borrower hereby grants to Agent for the
benefit of Lender and Agent a security interest in the Rent Proceeds for the
purpose of securing the Loan.
Section
7.16 Reserved.
Section
7.17 Reserved.
Section
7.18 Reserved.
Section
7.19 Compliance
with Laws and Contractual Obligations.
(a) Borrower
will comply with and will cause Guarantor and Master Tenant to comply with
(i) the requirements of all applicable laws, rules, regulations and orders
of any governmental authority (including, without limitation, laws, rules,
regulations and orders relating to all building, zoning, density, land use,
covenants, conditions and restrictions, subdivision requirements, taxes,
employer and employee contributions, securities, employee retirement and welfare
benefits, environmental protection matters, employee health and safety, quality
and safety standards, accreditation standards and requirements of the applicable
state department of health or other applicable state regulatory agency (each
a
"State
Regulator"),
quality and adequacy of medical care, distribution of pharmaceuticals, rate
setting, equipment, personnel, operating policies, additions to facilities
and
services and fee splitting) as are now in effect and which may be imposed upon
Borrower, Master Tenant or Guarantor or the maintenance, use or operation of
the
Project or the provision of services to the occupants of the Project where
the
failure to so comply would reasonably be expected to result in a Material
Regulatory Violation or a material adverse change, and (ii) the
obligations, covenants and conditions contained in all other
material
32
contractual
obligations of Borrower, Master Tenant and of Guarantor, but in the case of
Guarantor only with respect to the operation of the Project; and
(b) Borrower
will maintain or obtain and will cause Master Tenant and Guarantor to maintain
or obtain all licenses, qualifications and permits now held or hereafter
required to be held by Borrower or Master Tenant or Guarantor for which the
loss, suspension, revocation or failure to obtain or renew, would reasonably
be
expected to have a material adverse effect upon the financial condition of
Borrower or Master Tenant or Guarantor or the ability to operate the Project
in
compliance with the requirements of the Loan Documents and as they have been
operated prior to the date hereof or are then operated in accordance with the
terms hereof.
Section
7.20 Notice
of Money Laundering.
If
a
tenant under any Lease is charged with crimes involving money laundering or
predicate crimes to money laundering, and such charges are not dismissed without
further investigation within thirty (30) days, then Borrower shall give notice
of such charges to Agent's and upon Agent's request, Borrower shall exclude
from
the debt service rents from said tenant or resident.
Section
7.21 Anti-Terrorism
and Anti-Money Laundering Compliance.
(a) Compliance
with Anti-Terrorism Laws.
Borrower covenants to Agent and Lender that it shall not be, and, after making
due inquiry, that no Person who owns a controlling interest in or otherwise
controls Borrower or Master Tenant shall be (i) listed on the Lists; or (ii)
a
Designated Person. Borrower also shall require, and shall take reasonable
measures to ensure compliance with the requirement, that no Person who owns
any
other direct interest in Borrower or Master Tenant shall be listed on any of
the
Lists or is or shall be a Designated Person.
(b) Compliance
by Interest Holders.
Borrower shall require each Person that proposes to become a partner, member
or
shareholder in Borrower or Master Tenant after the date hereof and that is
not a
U.S. Publicly-Traded Entity to sign, and to deliver to Borrower (and Borrower
shall deliver to Agent), (i) an Interest Holder Certification and Agreement,
substantially in the form attached as Exhibit
B
("Interest
Holder Agreement")
and
(ii) if
requested by Agent, Borrower shall deliver to Agent a schedule of the name,
legal domicile address and (for entities) place of organization of each holder
of a direct or indirect legal or beneficial interest in Borrower and Master
Tenant.
(c) Anti-Terrorism
Policies.
Borrower agrees to adopt and maintain (and cause Master Tenant to adopt and
maintain) adequate policies, procedures and controls to ensure that it is in
compliance with all applicable Anti-Terrorism Laws and related government
guidance (such policies, procedures and controls are collectively referred
to in
this Agreement as "Borrower
Anti-Terrorism Policies").
Borrower further agree to make the Borrower Anti-Terrorism Policies, and the
respective policies, procedures and controls for Persons who are or are to
become partners, members or shareholders in Borrower and
33
Master
Tenant (such policies, procedures and controls are collectively referred to
as
"Investor
Anti-Terrorism Policies"),
together with the information collected thereby concerning Borrower and Master
Tenant and such partners, members or shareholders (but not information about
indirect members that do not have the power to direct the management or policies
of Borrower or Master Tenant, whether through the ownership of voting stock,
agreement or otherwise), available to Agent for review and inspection by Agent
from time to time during normal business hours and upon reasonable prior notice,
and Borrower agrees to deliver copies of the same to Agent from time to time
upon request. Agent and Lender will keep the Borrower Anti-Terrorism Policies
and the Investor Anti-Terrorism Policies, and the information collected thereby,
confidential subject to customary exceptions for legal process, auditors,
regulators, or as otherwise reasonably required by Agent and Lender for
enforcement of its rights and/or in connection with reasonable business us
in
the management, administration and disposition of its assets and investments.
Borrower consents to the disclosure to U.S. regulators and law enforcement
authorities by Agent or Lender or any of their affiliates or agents of such
information about Borrower and Master Tenant and the owners of direct and
indirect interests in Borrower and Master Tenant that Agent or Lender reasonably
deems necessary to comply with applicable Anti-Terrorism Laws and Anti-Money
Laundering Laws.
(d) Funds
Invested in Borrower.
Borrower covenants that it will take Anti-Money Laundering Measures in
accordance with Anti-Money Laundering Laws with respect to each holder of a
direct or indirect interest in any Borrower or Master Tenant.
(e) Borrower
Compliance with Anti-Money Laundering Laws.
Borrower covenants to Agent and Lender that it shall take reasonable measures
appropriate to the circumstances (in any event as required by law), to ensure
that Borrower and Master Tenant are in compliance with all current and future
Anti-Money Laundering Laws and laws, regulations and government guidance for
the
prevention of terrorism, terrorist financing and drug trafficking.
(f) Notification
of Agent; Quarantine Steps.
Borrower shall immediately notify Agent if Borrower obtains actual knowledge
that any holder of a direct or indirect interest in Borrower or Master Tenant,
or any director, manager or officer of any of such holder, (i) has been listed
on any of the Lists, (ii) has become a Designated Person, (iii) is under
investigation by any governmental authority for, or has been charged with or
convicted of, money laundering drug trafficking, terrorist-related activities
or
other money laundering predicate crimes, or any violation of the BSA, (iv)
has
been assessed civil penalties under any Anti-Money Laundering Laws, or (v)
has
had funds seized or forfeited in an action under any Anti-Money Laundering
Laws.
(g) Exception.
This
Section
7.20
shall
not apply to any Person to the extent that such Person's interest in the
Borrower is through a U.S. Publicly-Traded Entity.
34
Section
7.22 Employees.
Neither
Borrower nor Master Tenant shall have any employees while any portion of the
Loan is outstanding.
Section
7.23 Reserved.
Section
7.24 Representations
and Warranties.
Borrower
will cause all representations and warranties set forth in this Agreement to
remain true and correct at all times during the term of this Agreement and
while
any portion of the Loan remains outstanding.
Section
7.25 Cooperation.
Borrower
acknowledges that Lender and its successors and assigns may (a) sell,
transfer or assign this Agreement, the Note and the other Loan Documents to
one
or more investors as a whole loan, in a rated or unrated public offering or
private placement, (b) participate the Loan to one or more investors in a
rated or unrated public offering or private placement, (c) deposit the Loan
Documents with a trust, which trust may sell certificates to investors
evidencing an ownership interest in the trust assets in a rated or unrated
public offering or private placement, or (d) otherwise sell the Loan or interest
therein to investors in a rated or unrated public offering or private placement
(the transactions referred to in clauses (a) through (d) are hereinafter
referred to as "Secondary
Market Transactions").
Borrower shall cooperate in good faith with Agent and Lender in effecting any
such Secondary Market Transaction and shall cooperate in good faith to implement
all requirements reasonably imposed by the participants involved in any
Secondary Market Transaction (including without limitation, an institutional
purchaser, participant or investor) including, without limitation, all
structural or other changes to the Loan, modifications to any documents
evidencing or securing the Loan, delivery of opinions of counsel reasonably
acceptable to such other purchasers, participants or investors may reasonably
require; provided,
however,
that
Borrower shall not be required to modify any documents evidencing or securing
the Loan which would (i) modify the interest rate payable under the Note, (ii)
modify the stated maturity of the Note, (iii) modify the amortization of
principal of the Note, (iv) modify or conflict with any other material terms
or
covenants of the Loan, (v) increase the Borrower's or Master Tenant's or
Guarantor's liability or obligations under the Loan Documents or
(vi) reduce the Borrower's or Master Tenant's or Guarantor's rights under
the Loan Documents, including, but not limited to, Borrower's right to defease
the Loan on the terms set forth in Section
2.9.
Borrower shall provide such information and documents relating to Borrower,
Guarantor, Master Tenant and the Project. Borrower acknowledges that certain
information regarding the Loan, Guarantor, Master Tenant and the Project may
be
included in a private placement memorandum, prospectus or other disclosure
documents.
35
Section
7.26 Master
Lease.
Borrower
shall not, without Agent's prior written consent, permit the amendment or
termination of the Master Lease.
Section
7.27 Master
Tenant Purchase Contracts.
Borrower
shall not, without Agent's prior written consent, permit the amendment of the
Master Tenant Purchase Contracts.
Section
7.28 Financial
Covenants.
(a) Commencing
on June 30, 2006, and as of the last day of each calendar quarter
thereafter during the term of the Loan, the average daily occupancy for the
Project for the immediately preceding three (3) month period shall be greater
than ninety percent (90%) of the average daily occupancy at the Project for
the
three (3) month period immediately preceding the Closing. "Occupancy"
under
this Section 7.26
(a)
shall
mean beds occupied by a resident at the Project and paying at least applicable
Medicare, Medicaid or insurance reimbursable rates.
(b) Commencing
on June 30, 2006, and as of the last day of each calendar quarter thereafter
during the term of the Loan, the Debt Service Coverage Ratio (as determined
by
Agent) shall equal or exceed 1.20:1.00 and the Project Yield (as determined
by
Agent) shall equal or exceed ten percent (10%).
ARTICLE
VIII
Health
Care Matters
Section
8.1 Healthcare
Laws.
(a) Without
limiting the generality of any other provision of this Agreement, Borrower
and
Guarantor and Master Tenant and their respective employees and contractors
(other than contracted agencies) in the exercise of their duties on behalf
of
Borrower and Master Tenant and Guarantor (with respect to its operation of
the
Project) shall be in compliance with all applicable Laws 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 and Master Tenant and Guarantor maintains in all material respects
all
records required to be maintained by any Governmental Authority or otherwise
with respect to the operations at the Project under the Healthcare Laws and
to
Borrower's actual knowledge there are no presently existing circumstances which
would result or would reasonably be expected to result in material violations
with respect to the operations at the Project of the Healthcare Laws. Borrower
and Master Tenant and Guarantor have and will maintain all Governmental
Approvals necessary under applicable Laws to own and/or operate the Project,
as
applicable (including such Governmental Approvals as are required under such
the
Healthcare Laws).
36
(b) If
(i) Borrower or Guarantor or Master Tenant is a "covered entity" within the
meaning of HIPAA or (ii) Borrower or Master Tenant or Guarantor (with
respect to its operation of the Project) is subject to the "Administrative
Simplification" provisions of HIPAA, then such Person(s) (x) have 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 would
reasonably be expected to be adversely affected by the failure of such Person(s)
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
(z) has implemented or will implement those provisions of such HIPAA Compliance
Plan in all material respects necessary to ensure that such Person(s) are or
become HIPAA Compliant. For purposes hereof, "HIPAA
Compliant"
shall
mean that Borrower and Guarantor and Master Tenant, as applicable (A) are 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")
if and
to the extent Borrower or Guarantor or Master Tenant are subjected to such
provisions, rules or regulations, and (B) are not and would 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 would reasonably be expected
to
result in any of the foregoing or that would reasonably be expected to adversely
affect Borrower's or Master Tenant's or Guarantor's business, operations,
assets, properties or condition (financial or otherwise), in connection with
any
actual or potential violation by Borrower or Guarantor or Master Tenant of
the
then effective provisions of HIPAA.
(c) If
required under applicable Law, Borrower and Master Tenant and Guarantor has
and
shall maintain in full force and effect a valid certificate of need
("CON")
or
similar certificate, license, or approval issued by the State Regulator for
the
requisite number of beds and units in the Project (as shown on Exhibit
A
attached
hereto), and a provider agreement or other required documentation of approved
provider status for each provider payment or reimbursement program listed in
Exhibit E
hereto,
if applicable. All required Government Approvals necessary for operation of
the
Project are listed on Exhibit F
hereto
(collectively with the CON, if applicable, the "Licenses").
Borrower and Master Tenant and Guarantor shall operate the Project in a manner
such that the Licenses shall remain in full force and effect. True and complete
copies of the Licenses have been delivered to Agent.
Section
8.2 Representations,
Warranties and Covenants Regarding Healthcare Matters.
Borrower
represents, warrants, covenants and agrees with Agent and Lenders
that:
37
(a) Borrower,
together with Master Tenant and Guarantor, is using and operating the Project
as
an assisted living housing having the number of beds/units as set forth in
Exhibit
A
attached
hereto (as modified from time to time with Agent's consent).
(b) All
Licenses necessary or desirable for using and operating the Project for the
uses
described in Section
8.2(a)
above
are held by Master Tenant in the name of Master Tenant, as required under
applicable law, and are in full force and effect, including, if applicable,
the
CON.
(c) The
Licenses:
(i) Are
not
now and will not be pledged by Borrower or Master Tenant as collateral security
for any loan or indebtedness, other than the Loan;
(ii) Are
held
free and will remain free from restrictions (which for purposes hereof shall
include if any such licenses are provisional or probationary in any way) or
known conflicts which would materially impair the use or operation of the
Project for the uses described in Section
8.2(a)
above;
and
(iii) Borrower
and Master Tenant and Guarantor shall at all times during the term of the Loan
operate the Project in compliance with applicable Laws in order to maintain
the
Licenses free from restrictions (which for purposes hereof shall include if
any
such licenses are provisional or probationary in any way) which would materially
impair the use or operation of the Project for the uses described in
Section
8.2(a).
(d) Borrower
and Master Tenant and Guarantor shall not do (or suffer to be done) any of
the
following:
(i) Rescind,
withdraw, revoke, amend, modify, supplement, or otherwise alter the nature,
tenor or scope of the Licenses for the Project without Agent's
consent;
(ii) Amend
or
otherwise change the Project's authorized units/beds capacity and/or the number
of units/beds approved by the State Regulator;
(iii) Replace
or transfer all or any part of the Project's units or beds to another site
or
location; or
(iv) Voluntarily
transfer or encourage the transfer of any resident of the Project to any other
facility, unless such transfer is at the request of the resident or is for
reasons relating to the health, required level of medical care or safety of
the
resident to be transferred, other residents in the Project or the employees
of
the Project or is for reasons of non payment.
(e) If
and
when Borrower or Master Tenant or Guarantor (with respect to the Project),
participates in Medicare, Medicaid, Blue Cross and/or Blue Shield, and
any
38
other
private commercial insurance managed care and employee assistance program (such
programs, the "Third-Party
Payor Programs"),
Borrower shall give Agent prompt written notice thereof and such information
with respect thereto as Agent may reasonably request, and the Project will
remain in material compliance with all applicable requirements for participation
in any such Third Party Payor Programs, including the Medicare and Medicaid
Patient Protection Act of 1987, as it may be amended. The Project is and will
remain in conformance in all material respects with all insurance, reimbursement
and cost reporting requirements and, if applicable, have a current provider
agreement that is in full force and effect under Medicare and Medicaid;
provided, however, to the extent the Project is not certified to participate
in
any Third Party Payor Program as of the Closing and thereafter Borrower or
Master Tenant or Guarantor (with respect to the Project) elects to participate
therein, nothing herein shall thereafter preclude Borrower or Master Tenant
or
Guarantor (with respect to the Project) from voluntarily withdrawing from
participation in such Third Party Payor Programs.
(f) If
and to
the extent Borrower or Master Tenant or Guarantor (with respect to the Project)
at any time during the term of the Loan elects to participate in any Third
Party
Payor Programs with respect to the Project, neither Borrower nor Master Tenant
nor Guarantor shall, other than in the normal course of business, change the
term of any such Third-Party Payor Programs, or their normal billing payment
or
reimbursement policies and procedures with respect thereto (including the amount
and timing of finance charges, fees and write-offs). All Medicaid, Medicare
and
private insurance cost reports and financial reports submitted by Borrower
or
Master Tenant or Guarantor will be materially accurate and complete and have
not
been and will not be misleading in any material respects. If and to the extent
Borrower or Master Tenant or Guarantor at any time during the terms of the
Loan
elects to participate in any Third Party Payor Programs with respect to the
Project, neither Borrower nor Master Tenant nor Guarantor shall permit any
revocation, suspension, termination, probation, restriction, limitation or
non-renewal with respect thereto, except as expressly permitted by the terms
of
Section 8.2(e) above.
(g) To
Borrower's actual knowledge, none of Borrower, the Project, Master Tenant or
Guarantor is subject of any proceeding by any Governmental Authority, and no
notice of any violation has been issued by a Governmental Authority that would,
directly or indirectly, or with the passage of time:
(i) Have
a
material adverse impact on Borrower's or Master Tenant's or Guarantor's ability
to accept and/or retain patients or residents at, or operate, the Project for
their current use or result in the imposition of a fine, a sanction, or a lower
reimbursement rate for services rendered to eligible patients or
residents;
(ii) Modify,
limit or annul or result in the transfer, suspension, revocation or imposition
of probationary use of any of the Licenses; or
(iii) If
applicable, affect Borrower's or Master Tenant's or Guarantor's continued
participation at the Project in the Medicaid or Medicare
39
programs
or any other of the Third-Party Payor Programs, or any successor programs
thereto, at then current rate certifications.
(h) To
Borrower's actual knowledge, the Project has not received a "Level 1" (or
equivalent) violation, and no statement of charges or deficiencies has been
made
or penalty enforcement action has been undertaken against the Project by any
Governmental Authority during the last five calendar years.
(i) The
Project does not currently participate in Medicare, Medicaid or any other Third
Party Payor Programs. Neither Borrower or Guarantor or Master Tenant is a
participant in any federal program whereby any Governmental Authority may have
the right to recover funds by reason of the advance of federal funds, including
those authorized under the Xxxx-Xxxxxx Act (42 U.S.C. 291, et
seq.),
as it
may be amended.
(j) Neither
Borrower or Guarantor or Master Tenant will enter into any patient or resident
care agreements with patients or residents of the Project which deviate in
any
material adverse respect from the form agreements which have been delivered
to
and approved by Agent pursuant to Section 4.2
of this
Loan Agreement.
(k) In
the
event the Master Lease is terminated or in the event of foreclosure or other
acquisition of the Project by Agent or its designee or any purchaser at a
foreclosure sale or by acceptance of a deed in lieu of foreclosure, Borrower,
Agent, any subsequent tenant or any subsequent purchaser need not under the
Healthcare Laws in effect as of the Closing obtain a CON prior to applying
for
and receiving Medicare or Medicaid payments provided that neither the services
offered at the Project nor the number of beds operated would be changed, it
being understood and agreed that no representation or warranty is being made
as
to the requirements for a CON under the Healthcare Laws in effect at the time
such termination, foreclosure or acquisition occurs.
(l) All
patient or resident records at the Project, including patient or resident trust
fund accounts, are to Borrower's actual knowledge, true and correct in all
material respects, and all such records of the Project maintained or developed
by Borrower or Master Tenant or Guarantor will be true and correct in all
material respects.
Section
8.3 Cooperation.
(a) Upon
the
request of Agent during the continuance of an Event of Default hereunder or
under the other Loan Documents provided that Agent has elected as a result
of
such Event of Default to exercise its remedies on default, including its remedy
to take possession of the Project or to seek to have a receiver appointed to
assume operational responsibility for the Project, Borrower shall, and shall
cause Master Tenant and Guarantor to, complete, execute and deliver to Agent
any
applications, notices, documentation, and other information reasonably necessary
or desirable, in Agent's reasonable judgment, to permit Agent or its designee
(including a receiver) to obtain, maintain or renew any one or more of the
Licenses for the Project (or, to the extent permitted by applicable Laws, to
become the owner of the existing Licenses for the Project) and to the extent
permitted by
40
applicable
Laws to obtain any other provider agreements or Governmental Approvals then
necessary or desirable for the operation of the Project by Agent or its designee
for their then current use (including, without limitation, any applications
for
change of ownership of the existing Licenses).
(b) In
furtherance and not in limitation of the foregoing, to the extent permitted
by
applicable Laws, (i) Agent is hereby authorized (without the consent of
Borrower or Guarantor or Master Tenant) to submit any such applications,
notices, documentation or other information which Borrower caused to be
delivered to Agent in accordance with the above provisions to the applicable
Governmental Authorities, or to take such other steps as Agent may deem
advisable to obtain, maintain or renew any License or other Governmental
Approvals in connection with the operation of the Project by Agent or its
designee (including a receiver) for their then current use, and Borrower agrees
to cooperate and to cause Guarantor and Master Tenant to cooperate with Agent
in
connection with the same and (ii) Borrower, upon demand by Agent, shall
take, and shall cause Guarantor and Master Tenant to take, any action which
is
reasonably necessary or desirable, in Agent's reasonable judgment, to permit
Agent or its designee (including a receiver) to use, operate and maintain the
Project for its current use.
(c) If
Borrower fails to comply with the provisions of this Section
8.3
for any
reason whatsoever, Borrower hereby irrevocably appoints Agent and its designee
as Borrower's attorney-in-fact, with full power of substitution, to take any
action and execute any documents and instruments which are reasonably necessary
or desirable, in Agent's reasonable judgment, to permit Agent or its designee
(including a receiver) to undertake Borrower's obligations under this
Section
8.3,
including obtaining any Licenses or Governmental Approvals then required for
the
operation of the Project by Agent or its designee (including a receiver) for
their current use. The foregoing power of attorney is coupled with an interest
and is irrevocable and Agent may exercise its rights thereunder in addition
to
any other remedies which Agent may have against Borrower or Guarantor as a
result of Borrower's breach of the obligations contained in this Section
8.3.
(d) In
the
event of the exercise by Agent of the rights granted to it under this Section
8.3, Borrower shall not be deemed to be in default of its obligations or
representations under this Agreement with respect to the maintenance of the
Licenses, provider agreements or other Governmental Approvals in its name or
in
Master Tenant's or Guarantor's name nor shall Borrower or Master Tenant or
Guarantor have any liability or responsibility to any third party for any
matters arising from or related to the operation of the Project by Agent or
its
designee (including a receiver) once the Licenses, provider agreements or other
Governmental Approvals have been issued in the name of Agent or its designee
(including a receiver).
ARTICLE
IX
EVENTS
OF DEFAULT
Each
of
the following shall constitute an Event of Default:
41
Section
9.1 Payments.
Failure
of Borrower to pay within five (5) days after the date when due any of the
payment obligations of Borrower due under the Loan Documents, or Borrower's
failure to pay the Loan at the Maturity Date, whether by acceleration or
otherwise.
Section
9.2 Certain
Covenants.
Borrower's
failure to (a) maintain insurance as required under Section 3.1
of this
Agreement; (b) permit inspections as required by Section 7.1;
(c) strictly comply with the provisions of Section
7.2;
(d) maintain its status as a Single Purpose Entity as required by
Section 7.7;
(e) strictly comply with the provisions of Section
7.15
(payment
under Master Lease), Section
7.21
(employees), Section
7.26
(Master
Lease), Section 7.27
(Master
Tenant Purchase Contracts), Section 7.28
(financial covenants), Section
8.1(c)
(licenses and other matters), and Sections 8.2(b)
and
(c) (licenses).
Section
9.3 Covenants.
Borrower's
failure to perform or observe any of the agreements and covenants contained
in
this Agreement or in any of the other Loan Documents, and the continuance of
such failure for thirty (30) days after notice by Agent to Borrower; however,
subject to any shorter period for curing any failure by Borrower as specified
in
any of the other Loan Documents, Borrower shall have an additional thirty (30)
days to cure such failure if (a) such failure does not involve the failure
to make payments on a monetary obligation; (b) such failure cannot
reasonably be cured within such thirty (30) day cure period; (c) Borrower
commenced to cure such failure promptly after written notice thereof and is
diligently undertaking to cure such default, and (d) Borrower has provided
Agent with security reasonably satisfactory to Agent against any interruption
of
payment or impairment of collateral as a result of such continuing failure;
provided that the notice and cure provisions of this Section 9.3
do not
apply to the Events of Default described in any other section of this
Article
IX.
Section
9.4 Representations
and Warranties.
Any
representation or warranty made in any Loan Document proves to be untrue in
any
material respect when made or deemed made.
Section
9.5 Other
Encumbrances.
Any
default under any document or instrument, other than the Loan Documents,
evidencing or creating in the aggregate any Debt of the Borrower or the Master
Tenant in excess of $5,000 or evidencing or creating a Lien on the Project
or
any part thereof, unless such lien is being duly contested in accordance with
the express provisions of the Loan Documents.
42
Section
9.6 Involuntary
Bankruptcy or Other Proceeding.
Commencement
of an involuntary case or other proceeding against Borrower or Guarantor or
Master Tenant (each, a "Bankruptcy
Party")
which
seeks liquidation, reorganization or other relief with respect to it or its
debts or other liabilities under any bankruptcy, insolvency or other similar
law
now or hereafter in effect or seeks the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any of its property,
and such involuntary case or other proceeding shall remain undismissed or
unstayed for a period of sixty (60) days; or an order for relief against a
Bankruptcy Party shall be entered in any such case under the Federal Bankruptcy
Code.
Section
9.7 Voluntary
Petitions, etc.
Commencement
by a Bankruptcy Party of a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its Debts
or other liabilities under any bankruptcy, insolvency or other similar law
or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official for it or any of its property, or consent by a Bankruptcy
Party
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
the
making by a Bankruptcy Party of a general assignment for the benefit of
creditors, or the failure by a Bankruptcy Party, or the admission by a
Bankruptcy Party in writing of its inability to pay its debts generally as
they
become due, or any action by a Bankruptcy Party to authorize or effect any
of
the foregoing.
Section
9.8 Default
Under Master Lease.
The
termination of the Master Lease without Lender's prior written consent or the
occurrence of a default and the expiration of any cure period applicable thereto
under the Master Lease.
Section
9.9 Default
Under Management Agreement.
The
termination of the Management Agreement without Lender's prior written consent
(except as expressly permitted by the terms of Section 7.2 herein) or the
occurrence of a default and the expiration of any cure period applicable thereto
under the Master Lease.
Section
9.10 False
Reports.
Any
statement, report or certificate made or delivered to Agent by Borrower, Master
Tenant or Guarantor is not materially true and complete when made or
delivered.
Section
9.11 Control.
Guarantor
ceases at any time to, directly or indirectly, control the day-to-day management
of Borrower and at all times following the closing of the Master Tenant
Acquisition, the day-to-day management of Master Tenant.
43
Section
9.12 Money
Laundering.
(a) Borrower
or Guarantor or Master Tenant is listed on the Lists or (i) is convicted or
(ii)
pleads nolo
contendere
to
charges involving money laundering or predicate crimes to money laundering.
(b) Borrower
or Guarantor or Master Tenant is charged with crimes involving money laundering
or predicate crimes to money laundering, and Borrower or such other party does
not, within thirty (30) days, obtaining the dismissal of such charges without
further investigation.
(c) If
a
tenant under any Lease (including, without limitation, Master Tenant), Borrower
or Guarantor is listed on the Lists or (i) is convicted, or
(ii) pleads nolo
contendere
to
charges involving money laundering or predicate crimes to money laundering,
and
proceeds from the rents of such tenant are used to pay debt service and Borrower
fails to give Agent such representations and verifications as Agent shall
reasonably request that such rents are not being used to pay debt
service.
Section
9.13 Loan
Documents.
The
occurrence of a default under any of the other Loan Documents, which continues
uncured beyond any applicable notice and grace periods provided under such
Loan
Document, or the occurrence of an "Event of Default" as defined in any other
Loan Document.
Section
9.14 Arkansas
Loan Documents.
The
occurrence of a default under any of the Arkansas Loan Documents which continues
beyond any applicable notice and grace periods provided under such Arkansas
Loan
Documents or the occurrence of an "Event
of Default"
as
defined in any of the Arkansas Loan Documents.
Section
9.15 Other
Defaults.
The
occurrence of a default under any other material contract or agreement to which
Borrower or Master Tenant is a party which continues uncured beyond any
applicable notice and grace period provided under said contract or agreement
and
such default is declared and is not cured within the greater of thirty (30)
days
thereafter or the time, if any, specified therefor in any agreement governing
the same.
ARTICLE
X
REMEDIES
Section
10.1 Remedies
- Insolvency Events.
Upon
the
occurrence of any Event of Default described in Section 9.7
or
9.8,
the
obligations of Lender to advance amounts hereunder shall immediately terminate,
and all
44
amounts
due under the Loan Documents immediately shall become due and payable, all
without written notice and without presentment, demand, protest, notice of
protest or dishonor, notice of intent to accelerate the maturity thereof, notice
of acceleration of the maturity thereof, or any other notice of default of
any
kind, all of which are hereby expressly waived by Borrower; however, if the
Bankruptcy Party under Section 9.7
or
9.8
is other
than Borrower, then all amounts due under the Loan Documents shall become
immediately due and payable at Lender's election, in Agent's sole
discretion.
Section
10.2 Remedies
- Other Events.
Except
as
set forth in Section 10.1
above,
while any Event of Default exists, Agent may (a) by written notice to Borrower,
declare the entire Loan to be immediately due and payable without presentment,
demand, protest, notice of protest or dishonor, notice of intent to accelerate
the maturity thereof, notice of acceleration of the maturity thereof, or other
notice of default of any kind, all of which are hereby expressly waived by
Borrower, (b) terminate the obligation, if any, of Lender to advance amounts
hereunder, and (c) exercise all rights and remedies therefore under the Loan
Documents and at law or in equity.
Section
10.3 Agent's
Right to Perform the Obligations.
If
Borrower shall fail, refuse or neglect to make any payment or perform any act
required by the Loan Documents, then while any Event of Default exists, and
without notice to or demand upon Borrower and without waiving or releasing
any
other right, remedy or recourse Agent or Lender may have because of such Event
of Default, Agent may (but shall not be obligated to) make such payment or
perform such act for the account of and at the expense of Borrower, and shall
have the right to enter upon the Project for such purpose and to take all such
action thereon and with respect to the Project as it may deem necessary or
appropriate. If Agent shall elect to pay any sum due with reference to the
Project, Agent may do so in reliance on any xxxx, statement or assessment
procured from the appropriate governmental authority or other issuer thereof
without inquiring into the accuracy or validity thereof. Similarly, in making
any payments to protect the security intended to be created by the Loan
Documents, Agent shall not be bound to inquire into the validity of any apparent
or threatened adverse title, lien, encumbrance, claim or charge before making
an
advance for the purpose of preventing or removing the same. Additionally, if
any
Hazardous Materials (as defined in the Environmental Indemnity) affect or
threaten to affect the Project, Agent may (but shall not be obligated to) give
such notices and take such actions as it deems necessary or advisable in order
to xxxxx the discharge of any Hazardous Materials or remove the Hazardous
Materials. In exercising any rights under the Loan Documents or taking any
actions provided for therein, Agent may act through its employees, agents or
independent contractors as authorized by Agent. Borrower shall indemnify Agent
and Lender for all losses, expenses, damages, claims and causes of action,
including reasonable attorneys' fees, incurred or accruing by reason of any
acts
performed by Agent or Lender pursuant to the provisions of this Section 10.3,
including those arising from the joint, concurrent, or comparative negligence
of
Agent or Lender, except as a result of Agent or Lender's gross negligence or
willful misconduct. All reasonable sums paid by Agent or Lender pursuant to
this
Section 10.3,
and all
other reasonable sums expended by Agent or Lender to which they
45
shall
be
entitled to be indemnified, together with interest thereon at the Default Rate
from the date of such payment or expenditure until paid, shall constitute
additions to the Loan, shall be secured by the Loan Documents and shall be
paid
by Borrower to Agent upon demand.
ARTICLE
XI
MISCELLANEOUS
Section
11.1 Notices.
Any
notice required or permitted to be given under this Agreement shall be in
writing and either shall be mailed by certified mail, postage prepaid, return
receipt requested, or sent by overnight air courier service, or personally
delivered to a representative of the receiving party, or sent by telecopy
(provided an identical notice is also sent simultaneously by mail, overnight
courier, or personal delivery as otherwise provided in this Section 11.1).
All
such communications shall be mailed, sent or delivered, addressed to the party
for whom it is intended at its address set forth below.
If
to
Borrower: ESC-Arbor
Place, LLC
c/o
Emeritus
Corporation
0000
Xxxxxxx Xxxxxx, Xxxxx
000
Xxxxxxx,
Xxxxxxxxxx 00000
Attention: Xxxxxxx
X. Xxxxxxxxxx, CFO
Facsimile: (000)
000-0000
With
a
copy to: The
Xxxxxxxxx Group PLLC
One
Union Square
000
Xxxxxxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx
X.
Xxxxxxxxx, Esq.
Facsimile: (000)
000-0000
If
to
Agent: General
Electric Capital Corporation
Loan
No. 07-0004265
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Manager,
Portfolio Management Group
Facsimile: (000)
000-0000
With
a
copy to: General
Electric Capital Corporation
Loan
No. 07-0004265
000
Xxxx Xxxxxx
Xxxxxx
Xxxxxxx,
Xxxxxxxx
00000
Attention: Xxxx
Xxxx
Facsimile: (000)
000-0000
46
And
a
copy to: GE
Commercial Finance, Healthcare Financial Services
Loan
No.
07-0004265
0000
Xxxxxxxxxx
Xxxxx
Xxxxxx,
Xxxxx 00000
Attention: Xxxxx
Xxxxxxxxxx, Senior Vice President,
Chief
Counsel, Real
Estate
Facsimile: (000)
000-0000
Notices
shall be deemed given (1) when actually delivered, (2) on the first Business
Day
after deposit with an overnight air courier service for delivery on the next
Business Day, or (3) on the third Business Day after deposit in the United
States mail, postage prepaid, in each case to the address of the intended
addressee and any communication so delivered in person shall be deemed to be
given when receipted for, or actually received by, Agent or Borrower, as the
case may be. If given by telecopy, a notice shall be deemed given and received
when the telecopy is transmitted to the party's telecopy number specified above,
if confirmation of complete receipt is received by the transmitting party during
normal business hours or on the next Business Day if not confirmed during normal
business hours, and an identical notice is also sent simultaneously by overnight
courier or personal delivery as otherwise provided in this Section 11.1.
Either
party may designate a change of address by written notice to the other by giving
at least ten (10) days prior written notice of such change of
address.
Section
11.2 Amendments
and Waivers.
No
amendment or waiver of any provision of the Loan Documents shall be effective
unless in writing and signed by the party against whom enforcement is
sought.
Section
11.3 Limitation
on Interest.
It
is the
intention of the parties hereto to conform strictly to applicable usury laws.
Accordingly, all agreements between Borrower, Agent and Lender with respect
to
the Loan are hereby expressly limited so that in no event, whether by reason
of
acceleration of maturity or otherwise, shall the amount paid or agreed to be
paid to Lender or charged by Lender for the use, forbearance or detention of
the
money to be lent hereunder or otherwise, exceed the maximum amount allowed
by
law. If the Loan would be usurious under applicable law, then, notwithstanding
anything to the contrary in the Loan Documents: (a) the aggregate of all
consideration which constitutes interest under applicable law that is contracted
for, taken, reserved, charged or received under the Loan Documents shall under
no circumstances exceed the maximum amount of interest allowed by applicable
law, and any excess shall be credited on the Note the holder thereof (or, if
the
Note has been paid in full, refunded to Borrower); and (b) if maturity is
accelerated by reason of an election by Agent or Lender, or in the event of
any
prepayment, then any consideration which constitutes interest may never include
more than the maximum amount allowed by applicable law. In such case, excess
interest, if any, provided for in the Loan Documents or otherwise, to the extent
permitted by applicable law, shall be amortized, prorated, allocated and spread
from the date of advance until payment in full so that the actual rate of
interest is uniform through the term hereof. If such amortization, proration,
allocation and spreading is not permitted
47
under
applicable law, then such excess interest shall be cancelled automatically
as of
the date of such acceleration or prepayment and, if theretofore paid, shall
be
credited on the Note (or, if the Note has been paid in full, refunded to
Borrower). The terms and provisions of this Section 11.3
shall
control and supersede every other provision of the Loan Documents. The Loan
Documents are contracts made under and shall be construed in accordance with
and
governed by the laws of the State of Illinois, except that (1) if at any
time the laws of the United States of America permit Lender to contract for,
take, reserve, charge or receive a higher rate of interest than is allowed
by
the laws of the State of Illinois (whether such federal laws directly so provide
or refer to the law of any state), then such federal laws shall to such extent
govern as to the rate of interest which Lender may contract for, take, reserve,
charge or receive under the Loan Documents and (2) to the extent otherwise
specified in any of the Loan Documents.
Section
11.4 Invalid
Provisions.
If
any
provision of any Loan Document is held to be illegal, invalid or unenforceable,
such provision shall be fully severable; the Loan Documents shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part thereof; the remaining provisions thereof shall remain in
full
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance therefrom; and in lieu of such illegal, invalid
or
unenforceable provision there shall be added automatically as a part of such
Loan Document a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible to be legal, valid and
enforceable.
Section
11.5 Reimbursement
of Expenses; Portfolio Administration Fee.
(a) Borrower
shall pay all expenses incurred by Agent and Lenders in connection with the
Loan, including, without limitation, (i) reasonable out-of-pocket costs and
expenses of Agent and Lender in connection with (a) the negotiation,
preparation, execution and delivery of the Loan Documents and the documents
and
instruments referred to therein; (b) due diligence with respect to the
Collateral and the creation, perfection or protection of Agent's liens on the
Collateral (including, without limitation, fees and expenses for title and
lien
searches, premiums for title insurance and endorsements thereto, amended or
replacement Security Document, Uniform Commercial Code financing statements
or
other collateral security instruments, title insurance premiums and filing
and
recording fees, third party due diligence expenses for the Project plus travel
expenses, accounting firm fees, costs of the appraisals and Site Assessments
(and the environmental consultant), the engineering reports, audit costs and
costs and fees incurred in connection with arranging, setting up, servicing
any
pledged accounts or similar collateral); (c) the negotiation, preparation,
execution and delivery of any amendment, waiver, restructuring, workout or
consent relating to any of the Loan Documents, (d) the settlement of any dispute
regarding condemnation and casualty awards and (e) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein, including any communications or discussions relating to
any
action that Borrower shall from time to time request Agent to take, as well
as
any restructuring or rescheduling of the Loan, (ii) the reasonable fees,
expenses and other charges of counsel to Agent and the Lender in
48
connection
with all of the foregoing, (iii) all reasonable fees and expenses of any
servicer appointed by Agent to service and administer the Loan and its counsel,
and (iv) Agent's or Lender's reasonable travel and other out-of-pocket expenses
in connection with site visits to the Project. Borrower shall, upon request,
promptly reimburse Agent and Lender for all reasonable amounts expended,
advanced or incurred by Agent and Lender to collect the Note, or to enforce
the
rights of Agent and Lender under this Agreement or any other Loan Document,
or
to defend or assert the rights and claims of Agent and Lender under the Loan
Documents or with respect to the Project (by litigation or other proceedings),
which amounts will include all reasonable court costs, attorneys' fees and
expenses, fees of auditors and accountants, and investigation expenses as may
be
incurred by Agent and Lender in connection with any such matters (whether or
not
litigation is instituted), together with interest at the Default Rate on each
such amount from the date of disbursement until the date of reimbursement to
Agent, all of which shall constitute part of the Loan and shall be secured
by
the Loan Documents.
(b) Borrower
shall also pay to Agent on the first (1st) day of each month during the term
of
the Loan, in addition to all other amounts due under the Loan Documents, the
sum
of Three Hundred and No/100 Dollars ($300.00), which Agent shall apply against
the cost of the administration of the Loan.
Section
11.6 Approvals;
Third Parties; Conditions.
All
approval rights retained or exercised by Agent with respect to leases,
contracts, plans, studies and other matters are solely to facilitate Lender's
credit underwriting, and shall not be deemed or construed as a determination
that Agent or Lender has passed on the adequacy thereof for any other purpose
and may not be relied upon by Borrower or any other Person. This Agreement
is
for the sole and exclusive use of Agent, Lender and Borrower and may not be
enforced, nor relied upon, by any Person other than Agent, Lender and Borrower.
All conditions of the obligations of Agent or Lender hereunder, including the
obligation to make advances, are imposed solely and exclusively for the benefit
of Agent and Lender, and their respective successors and assigns, and no other
Person shall have standing to require satisfaction of such conditions or be
entitled to assume that Lender will refuse to make advances in the absence
of
strict compliance with any or all of such conditions, and no other Person shall,
under any circumstances, be deemed to be a beneficiary of such conditions,
any
and all of which may be freely waived in whole or in part by Agent or Lender,
as
applicable, at any time in Agent's or Lender's sole discretion.
Section
11.7 Lender
Not in Control; No Partnership.
None
of
the covenants or other provisions contained in this Agreement shall, or shall
be
deemed to, give Agent or Lender the right or power to exercise control over
the
affairs or management of Borrower, the power of Agent and Lender being limited
to the right to exercise the remedies referred to in the Loan Documents. The
relationship between Borrower, on the one hand, and Agent and Lender, on the
other hand, is, and at all times shall remain, solely that of debtor and
creditor. No covenant or provision of the Loan Documents is intended, nor shall
it be deemed or construed, to create a partnership, joint
49
venture,
agency or common interest in profits or income between Agent and Lender, on
the
one hand, and Borrower, on the other hand, or to create an equity in the Project
in Lender or Agent. Neither Agent nor Lender either undertakes or assumes any
responsibility or duty to Borrower or to any other person with respect to the
Project or the Loan, except as expressly provided in the Loan Documents; and
notwithstanding any other provision of the Loan Documents (a) Neither Agent
nor Lender is nor shall be construed as, a partner, joint venturer, alter ego,
manager, controlling person or other business associate or participant of any
kind of Borrower or its stockholders, members, or partners and neither Agent
nor
Lender intends to ever assume such status; (b) Neither Agent nor Lender
shall in any event be liable for any Debts, expenses or losses incurred or
sustained by Borrower; and (c) Neither Agent nor Lender shall be deemed
responsible for or a participant in any acts, omissions or decisions of Borrower
or its stockholders, members, or partners. Agent, and Lender, on the one hand,
and Borrower, on the other hand, disclaim any intention to create any
partnership, joint venture, agency or common interest in profits or income
between Agent and Lender, on the one hand, and Borrower, on the other hand,
or
to create an equity in the Project in Agent or Lender, or any sharing of
liabilities, losses, costs or expenses.
Section
11.8 Time
of the Essence.
Time
is
of the essence with respect to this Agreement.
Section
11.9 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of Agent, Lender and
Borrower and the respective successors and assigns of Agent, Lender and
Borrower, provided that, except as expressly provided herein, neither Borrower
nor Guarantor shall, without the prior written consent of Agent, assign any
rights, duties or obligations hereunder.
Section
11.10 Renewal,
Extension or Rearrangement.
All
provisions of the Loan Documents shall apply with equal effect to each and
all
promissory notes and amendments thereof hereinafter executed which in whole
or
in part represent a renewal, extension, increase or rearrangement of the Loan.
For portfolio management purposes, Agent and Lender may elect to divide the
Loan
into two or more separate loans evidenced by separate promissory notes so long
as the payment and other obligations of Borrower are not effectively increased
or otherwise modified. Borrower agrees to cooperate with Agent and to execute
such documents as Agent reasonably may request to effect such division of the
Loan.
Section
11.11 Waivers;
Forbearance.
No
advance of Loan proceeds hereunder shall constitute a waiver of any of the
conditions to Lender's obligation to make advances nor, in the event Borrower
is
unable to satisfy any such condition, shall any such advance have the effect
of
precluding Lender or Agent from thereafter requiring such condition to be
satisfied prior to any future advance to
50
which
such condition otherwise applies. No course of dealing on the part of Agent
or
Lender, or their respective officers, employees, consultants or agents, nor
any
failure or delay by Agent or Lender with respect to exercising any right, power
or privilege of Agent or Lender under any of the Loan Documents, shall operate
as a waiver thereof. Any forbearance by Agent or 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.
Agent'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 Agent's or Lender's
right to either require prompt payment when due of all other sums so secured
or
to declare a Potential Default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges
by
Agent or Lender shall not be a waiver of Agent's or Lender's right to accelerate
the maturity of the Loan, nor shall Agent's or Lender's receipt of any awards,
proceeds, or damages under this Agreement or the Security Document operate
to
cure or waive Borrower's, Master Tenant's or Guarantor's Potential
Default in payment of sums secured by any of the Loan Documents.
Section
11.12 Cumulative
Rights.
Rights
and remedies of Agent and Lender under the Loan Documents shall be cumulative,
and the exercise or partial exercise of any such right or remedy shall not
preclude the exercise of any other right or remedy.
Section
11.13 Singular
and Plural.
Words
used in this Agreement and the other Loan Documents in the singular, where
the
context so permits, shall be deemed to include the plural and vice versa. The
definitions of words in the singular in this Agreement and the other Loan
Documents shall apply to such words when used in the plural where the context
so
permits and vice versa.
Section
11.14 Phrases.
When
used
in this Agreement and the other Loan Documents, the phrase "including" shall
mean "including, but not limited to," the phrase "satisfactory to Agent" or
"satisfactory to Lender" shall mean "in form and substance satisfactory to
Agent
in all respects" or "in form and substance satisfactory to Lender in all
respects" (as applicable), the phrase "with Agent's consent", "with Agent's
approval", "with Lender's consent" or "with Lender's approval" shall mean such
consent or approval at Agent's or Lender's discretion (as applicable), and,
unless otherwise specifically provided to the contrary herein, the phrase
"acceptable to Agent" or "acceptable to Lender" shall mean "acceptable to Agent
at Agent's sole discretion" or "acceptable to Lender at Lender's sole
discretion" (as applicable).
Section
11.15 Exhibits
and Schedules.
The
exhibits and schedules attached to this Agreement are incorporated herein and
shall be considered a part of this Agreement for the purposes stated
herein.
51
Section
11.16 Titles
of Articles, Sections and Subsections.
All
titles or headings to articles, sections, subsections or other divisions of
this
Agreement and the other Loan Documents or the exhibits hereto and thereto are
only for the convenience of the parties and shall not be construed to have
any
effect or meaning with respect to the other content of such articles, sections,
subsections or other divisions, such other content being controlling as to
the
agreement between the parties hereto.
Section
11.17 Promotional
Material.
Borrower
authorizes Agent and Lender to issue press releases, advertisements and other
promotional materials in connection with Lender's own promotional and marketing
activities, and describing the Loan in general terms and Lender's and Agents
participation in the Loan; provided, however, Agent and Lender shall be required
to secure Borrower's approval of such materials prior to the issuance or
distribution thereof, which approval shall not be unreasonably withheld. All
references to Lender or Agent contained in any press release, advertisement
or
promotional material issued by Borrower or Affiliate of Borrower shall be
approved in writing by Agent in advance of issuance.
Section
11.18 Survival.
All
of
the representations, warranties, covenants, and indemnities hereunder, and
under
the indemnification provisions of the other Loan Documents shall survive the
repayment in full of the Loan and the release of the liens evidencing or
securing the Loan, and shall survive the transfer (by sale, foreclosure,
conveyance in lieu of foreclosure or otherwise) of any or all right, title
and
interest in and to the Project to any party, whether or not an Affiliate of
Borrower.
Section
11.19 WAIVER
OF JURY TRIAL.
TO
THE
MAXIMUM EXTENT PERMITTED BY LAW, BORROWER, AGENT AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
OF
ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY OR ANY
EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR
IN
ANY WAY RELATING TO THE LOAN OR THE PROJECT (INCLUDING, WITHOUT LIMITATION,
ANY
ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING
THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE).
THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER AND BORROWER TO ENTER THIS
AGREEMENT.
52
Section
11.20 Waiver
of Punitive or Consequential Damages.
Neither
Agent, Lender nor Borrower shall be responsible or liable to the other or to
any
other Person for any punitive, exemplary or consequential damages which may
be
alleged as a result of the Loan or the transaction contemplated hereby,
including any breach or other Potential Default by any party
hereto.
Section
11.21 Governing
Law.
The
laws
of the State of Illinois and of the United States of America shall govern the
rights and duties of the parties hereto and the validity, construction,
enforcement and interpretation of the Loan Documents, except to the extent
otherwise specified in any of the Loan Documents.
Section
11.22 Entire
Agreement.
This
Agreement and the other Loan Documents embody the entire agreement and
understanding between Agent, Lender and Borrower and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements among the
parties. If any conflict or inconsistency exists between the Commitment and
this
Agreement or any of the other Loan Documents, the terms of this Agreement and
the other Loan Documents shall control.
Section
11.23 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall
constitute an original, but all of which shall constitute one
document.
Section
11.24 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
AGENT OR 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.
53
Section
11.25 Sale
of Loan, Participation.
Lender
or
Agent, at any time and without the consent of Borrower, Guarantor, or Master
Tenant 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. Subject to the limitations of
applicable Laws, including, but not limited to, Laws governing the rights of
the
residents of the Project and the confidentiality of the records of those
residents, Agent and 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) any and all
information which Agent or Lender may have with respect to the Project and
Borrower, whether provided by Borrower, Guarantor or any third party or obtained
as a result of any environmental assessments. Borrower, Master Tenant and
Guarantor agree that, absent gross negligence or willful misconduct, Agent
and
Lender shall have no liability whatsoever as a result of delivering any such
information to any third party, and Borrower, Guarantor and Master Tenant,
on
behalf of themselves and their successors and assigns, hereby release and
discharge Agent and 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 absent gross negligence or willful
misconduct.
Section
11.26 Limitation
on Liability of Agent's and Lender's Officers, Employees, etc.
Any
obligation or liability whatsoever of Agent or Lender which may arise at any
time under this Agreement or any other Loan Document shall be satisfied, if
at
all, out of the Agent's or Lender's assets only. No such obligation or liability
shall be personally binding upon, nor shall resort for the enforcement thereof
be had to, the property of any of Agent's or Lender's shareholders, directors,
officers, employees or agents, regardless of whether such obligation or
liability is in the nature of contract, tort or otherwise.
Section
11.27 Effectiveness
of Facsimile Documents and Signatures.
The
Loan
Documents may be transmitted and/or signed by facsimile. The effectiveness
of
any such documents and signatures shall, subject to applicable law, have the
same force and effect as manually signed originals and shall be binding on
all
parties to the Loan Documents. Agent may also require that any such documents
and signatures be confirmed by a manually signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.
Section
11.28 Agency.
Both
GECC
and the other Lenders agree that GECC shall act as agent for each Lender in
all
dealings with Borrower, Guarantor and Master Tenant under or in
connection
54
with
this
Loan Agreement and each of the other Loan Documents, including without
limitation, granting any consents or waivers, taking any enforcements actions,
sending or receiving notices, dealing with collateral, granting releases,
accepting payments or otherwise. Borrower, Guarantor and Master Tenant may
rely
without question upon any document signed by GECC as agent for each Lender
hereunder or under any other Loan Documents. References to "Lender" in this
Agreement and in the other Loan Documents shall refer to each of GECC and the
other financial institutions who are or hereafter become parties to this
Agreement as Lenders, individually, or to all of GECC and the other financial
institutions who are or hereafter become parties to this Agreement,
collectively, as the context may require; provided any and all grants of
security interests to a Lender under this Agreement or any other Loan Document
shall be deemed to be a grant to GECC as agent for each Lender.
55
EXECUTED
as of the date first written above.
LENDER:
GENERAL
ELECTRIC CAPITAL CORPORATION,
a
Delaware corporation
By:
/s/
X. XxXxxxx
Name:
Xxx XxXxxxx
Its:
Vice President & Duly Authorized Signatory
|
BORROWER:
ESC-ARBOR
PLACE, LLC,
a
Washington limited liability company
|
||
By:
|
EMERITUS
CORPORATION, a Washington corporation, its sole member
|
|
By:/s/
Xxxxxxx X. Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxxx
Its:Vice
President of Finance
|
AGENT:
GENERAL
ELECTRIC CAPITAL CORPORATION,
a
Delaware corporation
By:/s/
X. XxXxxxx
Name:Xxx
XxXxxxx
Its:Vice
President & Duly Authorized
Signatory
|
EXHIBIT
A-1
The
Project
Name
of Facility:
|
Arbor
Place
|
Address
of Land:
|
00000
Xxxxxxxx-Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx
|
Number
of Independent/Assisted Living Beds/Units:
|
100
units (assisted living)
|
Number
of Parking Spaces:
|
66
|
Legal
Description of Land:
|
See
Attached
|
Exhibit
X-0
Xxxx
0
XXXXX
XXXXX
XXXXX
DESCRIPTION
PARCEL
A:
XXX
0,
XXXXXXXXXX XXXXXXX XXXXXX XXXXXXX XXXX XXXX FILE NO. 01-107895 BG RECORDED
UNDER
AUDITOR’S FILE NUMBER 200208155006, BEING A PORTION OF THE SOUTHEAST QUARTER OF
THE SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, X.X.,
RECORDS OF SNOHOMISH COUNTY, WASHINGTON.
PARCEL
B:
A
NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY
PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
UNDER
FILE NO. 200208155006, UPON AND SUBJECT TO THE PROVISIONS THEREIN CONTAINED,
BEING A PORTION OF XXX 0 XX XXXX XXXXXXX XXXX XXXX, XXX XXX EXCLUSIVE EASEMENTS
FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY INSTRUMENTS RECORDED
UNDER
AUDITOR’S FILE NO.’S 200005040193 AND 200005040194, UPON AND SUBJECT TO THE
PROVISIONS THEREIN CONTAINED, ALL LOCATED IN THE SOUTHEAST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, X.X., RECORDS
OF SNOHOMISH COUNTY, WASHINGTON.
SITUATE
IN THE COUNTY OF SNOHOMISH, STATE OF WASHINGTON
Exhibit
A-1
Page
2
EXHIBIT
B
Interest
Holder Certificate and Agreement
To: General
Electric Capital Corporation, as Agent
000
Xxxx
Xxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxxx 00000
Date:
_________________
Re:
|
Loan
Agreement dated as of ___________ ____, 20__ among
_______________________ ("Borrower"),
and General Electric Capital Corporation, a Delaware corporation,
as Agent
and, in its individual capacity as a Lender, "GECC",
and the other financial institutions who are or become parties to
said
Loan Agreement as lenders (collectively with GECC, the "Lender"),
(as it may be amended from time to time, the "Loan
Agreement")
|
To
induce
Agent and Lender to enter into the Loan Agreement with Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned represents, warrants, covenants and agrees for
the
benefit of Agent and Lender as follows:
1. The
undersigned [members] [partners]
(collectively, "Owners"
and in
their individual capacity, "Owner")
represent and warrant to Agent and Lender that the Owners own, in the aggregate,
100% of the direct ownership interests in Borrower, and that neither Borrower
nor any Owner is or shall be and, after due inquiry, that no Person who owns
a
controlling interest in or otherwise controls Borrower or any Owner, is or
shall
be, (a) listed on the Specially Designated Nationals and Blocked Persons List
(the "SDN
List")
maintained by the Office of Foreign Assets Control ("OFAC"),
Department of the Treasury, and/or on any other similar publicly-available
United States government list ("Other
Lists"
and,
collectively with the SDN List, the "Lists")
maintained by the OFAC pursuant to any authorizing statute, Executive Order
or
regulation (collectively, "OFAC
Laws and Regulations");
or
(b) a Person (a "Designated
Person")
either
(i) included within the term "designated national" as defined in the Cuban
Assets Control Regulations, 31 C.F.R. Part 515, or (ii) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg.
49,079 (published September 25, 2001),
or
similarly designated under any related enabling legislation or any other similar
Executive Orders (collectively, the "Executive
Orders").
The
OFAC Laws and Regulations and the Executive Orders are collectively referred
to
in this Agreement as the "Anti
Terrorism Laws".
Each
Owner and Borrower shall be required, and shall take reasonable measures to
ensure compliance with
Exhibit
B
Page
1
such
requirement, that no Person who owns any other direct interest in any Owner
or
Borrower is or shall be listed on any of the Lists or is or shall be a
Designated Person. This Section 1 shall not apply to any Person to the extent
that such Person's interest in Borrower is through a U.S. Publicly-Traded
Entity. As used in this Agreement "U.S.
Publicly-Traded Entity"
means a
Person (other than an individual) whose securities are listed on a national
securities exchange, or quoted on an automated quotation system, in the United
States, or a wholly-owned subsidiary of such a Person. From time to time upon
the written request of Agent, each Owner shall deliver to Borrower a schedule of
the name, legal domicile address and (for entities) place of organization of
each holder of a controlling ownership interest in such Owner.
2. Each
Owner represents and warrants that all evidence of identity provided by it
to
Borrower is genuine and that all related information is accurate and that it
has
acquired, or is acquiring, and shall hold, its interest in Borrower for its
own
account, risk and beneficial interest and without the obligation or intention
to
sell, distribute, assign or transfer all or a portion of such interest to any
other Person.
3. Each
Owner represents and warrants that it has taken, and agrees that it shall
continue to take, reasonable measures appropriate to the circumstances (and
in
any event as required by law), with respect to each holder of a controlling
ownership interest in such Owner and Borrower, to assure that funds invested
by
such holders in Borrower are derived from legal sources (the "Anti
Money Laundering Measures").
The
Anti Money Laundering Measures have been and shall be undertaken in accordance
with the Bank Secrecy Act, 31 U.S.C. §§ 5311 et
seq. ("BSA"),
to the extent applicable and all applicable laws, regulations and government
guidance on BSA compliance and on the prevention and detection of money
laundering violations under 18 U.S.C. §§ 1956 and 1957 (collectively,
"Anti
Money Laundering Laws").
4. Each
Owner represents and warrants, to its knowledge after making due inquiry, that
neither it nor any holder of a controlling ownership interest in any Owner
or in
Borrower (a) is under investigation by any governmental authority for, or has
been charged with, or convicted of, money laundering under 18 U.S.C.
§§ 1956 and 1957, drug trafficking, terrorist related activities, other
money laundering predicate crimes or any violation of the BSA, (b) has been
assessed civil penalties under Anti Money Laundering Laws, or (c) has had its
funds seized or forfeited in an action under any Anti Money Laundering
Laws.
5. Each
Owner shall immediately notify Agent if such Owner obtains actual knowledge
that
Borrower, any Owner, or any holder of a direct or indirect interest in Borrower
or any Owner, or any director, manager or officer of any of them, (a) has been
listed on any of the Lists, (b) has become a Designated Person, (c) is under
investigation by any governmental authority for, or has been charged with or
convicted of, money laundering, drug trafficking, terrorist related activities,
other money laundering predicate crimes, or any violation of the BSA, (d) has
been assessed civil penalties under any Anti Money Laundering Laws, or (e)
has
had funds seized or forfeited in an action under any Anti Money Laundering
Laws.
Exhibit
B
Page
2
6. Each
Owner acknowledges and agrees that if any of the representations or warranties
of the undersigned set forth herein are false, misleading or incorrect in any
material respect as of the date made, Agent, in addition to all of its other
rights and remedies, may declare that an Event of Default exists under the
Loan
Agreement. Each Owner agrees to notify Borrower and Agent promptly of any change
in facts or circumstances that causes any of the representations or warranties
contained herein to the untrue.
7. Each
Owner represents and warrants that it has taken, and agrees that it shall
continue to take, reasonable measures, appropriate to the circumstances (and
in
any event as required by law), to ensure that it and Borrower are and shall
be
in compliance with all current and future applicable Anti-Money Laundering
Laws,
and other applicable laws, regulations and government guidance for the
prevention of terrorism, terrorist financing and drug trafficking.
8. In
addition to the representations, warranties and covenants regarding full
compliance with Anti-Terrorism Laws and Anti-Money Laundering Laws, each Owner
represents and warranties that it is, and agrees that it shall remain, in
compliance in all material respects with all other laws and requirements
applicable to it, its business and its assets, the violation of which would
have
a material adverse effect on its ability to perform its obligations under the
Borrower's operating agreement or on the Borrower's ability to perform its
obligations under the Loan Agreement.
9. Each
Owner shall cause to be made, all payments owed by Borrower to Agent by check
or
wire transfer drawn on an account owned by Borrower, or by an Owner or another
Person approved in writing in advance by Agent, and maintained at a banking
institution organized under the laws of the United States or one of its
constituent States, or at a federally regulated U.S. branch or agency of a
foreign bank, or at a federally regulated securities broker dealer.
10. If
the
applicable Anti-Money Laundering Measures do not provide, in Agent's reasonable
determination, adequate means to assure that Persons that are listed on any
of
the Lists, or that are Designated Persons, or whose funds are not derived from
legal sources, are excluded from becoming or being direct or indirect investors
in any Owner or Borrower, Agent shall notify Borrower of its determination
in
accordance with the notice provisions in the Loan Agreement. If such inadequate
Anti-Money Laundering Measures are not modified in a commercially reasonable
manner to Agent's reasonable satisfaction within thirty (30) days following
notice to Borrower of Agent's determination, each of the undersigned
acknowledges that Agent, in addition to all of its other rights and remedies,
may declare that an Event of Default exists.
11. No
transfer of any direct interest in Borrower or of any controlling ownership
interest in Owner shall be effective unless and until the transferor has
provided a written certification to Borrower that, after making due inquiry,
(a) the transferee or any Person who owns a controlling interest in, or
otherwise controls, the transferee is not listed on any of the Lists and is
not
a Designated Person, and the transferee has taken reasonable measures
to
Exhibit
B
Page
3
assure
that no holder of any other controlling ownership interest in the transferee
is
so listed or is so designated; provided, however, that none of the foregoing
shall apply to any Person which is, or to the extent that such interest is
through, a U.S. Publicly-Traded Entity, and (b) the funds for investment in
Owner or Borrower are derived from legal sources.
12. Each
Owner acknowledges and agrees that if at any time Borrower or Agent reasonably
believes that such Owner has breached its representations and warranties or
its
agreements set forth herein, Borrower has the right or may be obligated to
block
such Owner's investment in Borrower, to prohibit additional investments, to
segregate the assets constituting such Owner's the investment in accordance
with
applicable Anti-Terrorism Laws, to decline any redemption request or to redeem
the Investor's investment. Each Owner further acknowledges that it will have
no
claim against Borrower, Lender or Agent or any of their respective affiliates
or
agents for any form of damages as a result of any of the foregoing
actions.
13. Each
Owner shall require each Person that proposes to become a holder of any direct
interest in Borrower or of any controlling ownership interest in Owner to sign
an agreement substantially in the form of this Agreement and to deliver the
same
to Borrower.
14. Capitalized
terms used in this Agreement and not defined in this Agreement shall have the
meanings assigned to them in the Loan Agreement. Any notice sent to Agent under
this Agreement shall be sent in accordance with the notice provisions set forth
in the Loan Agreement.
15. The
undersigned acknowledges that (a) Lender is relying on this Agreement and
its rights hereunder in entering into the Loan Agreement and in advancing
proceeds of the Loan, and (b) any terms hereof applying to more than one of
the undersigned are made on a joint and several basis hereunder. This Agreement
may be executed in counterparts.
Exhibit
B
Page
4
OWNER:
Exhibit
B
Page
5
EXHIBIT
C
INTELLECTUAL
PROPERTY
None
but
Guarantor holds or has applied for registration of the following service marks,
some of all of which may be used by Guarantor, Borrower and/or Master Tenant
in
connection with the ownership and operation of the Project:
XXXX
|
STATUS
|
REG.
NO.
|
REG.
DATE
|
APP.
NO.
|
EMERITUS
|
Registered
|
2333116
|
March
21, 2000
|
75725728
|
EMERITUS
ASSISTED LIVING COMMUNITIES SUPPORT ALZHEIMER'S EDUCATION & AWARENESS
& DESIGN
|
Pending
|
78530077
|
||
EMERITUS
SIGNATURE SERVICES
|
Registered
|
2840150
|
May
11, 2004
|
78191071
|
FLEXASSIST
|
Registered
|
2041109
|
February
25, 1997
|
74614956
|
JOIN
THEIR JOURNEY
|
Registered
|
2979178
|
July
26, 2005
|
78292378
|
XXXXXXXX
PLACE
|
Registered
|
2283749
|
October
5, 1999
|
75304451
|
LOYALTON
|
Registered
|
2443087
|
April
10, 2001
|
75534864
|
THE
START OF SOMETHING WONDERFUL
|
Registered
|
2249729
|
June
1, 1999
|
75503469
|
EXHIBIT
D
OWNERSHIP
OF BORROWER
Guarantor
is the sole member of Borrower and accordingly owns 100% of the membership
interests in Borrower.
EXHIBIT
E
PROVIDER
PAYMENT/REIMBURSEMENT PROGRAMS
NONE
EXHIBIT
F
GOVERNMENTAL
APPROVALS
[TO
BE INSERTED]
EXHIBIT
G
MASTER
TENANT ORGANIZATIONAL CHART

*To
be
terminated upon Emeritus' purchase of Silver Lake Assisted Living
LLC
SCHEDULE
2.1
ADVANCE
CONDITIONS
Part
A -
Conditions to Initial Advance
Part
B -
Application of Insurance Proceeds
PART
A
The
initial advance of the Loan shall be subject to the terms of the Term Sheet,
and
Agent's receipt, review, approval and/or confirmation of the following items
set
forth in Part A of this Schedule
2.1,
at
Borrower's cost and expense, each in form and content satisfactory to Agent
in
its sole discretion:
1. |
Loan
Documents.
The following Loan Documents:
|
(a) |
the
Loan Agreement executed by Borrower
|
(b) |
Promissory
Note
|
(c) |
the
Security Document executed by
Borrower
|
(d) |
such
Uniform Commercial Code financing statements as Agent may
require
|
(e) |
an
Environmental Indemnity Agreement executed by Borrower and
Guarantor
|
(f) |
the
Business Associate Agreement executed by Borrower, Guarantor and
Master
Tenant
|
(g) |
a
Payment and Performance Guaranty executed by
Guarantor
|
(h) |
the
Assignment of Membership Interests ("Assignment
of Membership Interests")
|
(i)
|
the
Subordination, Attornment and Security Agreement ("Subordination
Agreement")
|
2. |
Loan
Origination Fee.
The loan origination fee of $80,000, which fee shall be non-refundable
and
shall be deemed fully earned upon receipt.
|
3. |
Title
Insurance Policy.
An ALTA (or equivalent) mortgagee policy or policies of title insurance
in
the maximum amount of the Loan, with reinsurance and endorsements
as Agent
may require, containing no exceptions to title (printed or otherwise)
which are unacceptable to Agent, and insuring that the
Security
|
Schedule
2.1 -
1
Document
is a first-priority Lien on the Project and related collateral (the
"Title
Policy").
4. |
Organizational
and Authority Documents.
Certified copies of all documents evidencing the formation, organization,
valid existence, good standing, and due authorization of and for
Borrower,
Master Tenant and Guarantor for the execution, delivery, and performance
of the Loan Documents by Borrower, Master Tenant and Guarantor, as
applicable.
|
5. |
Legal
Opinions.
Legal opinions issued by counsel for Borrower, Guarantor, and Master
Tenant, opining as to the due organization, valid existence and good
standing of Borrower, Guarantor and Master Tenant, and the due
authorization, execution, delivery, enforceability and validity of
the
Loan Documents with respect to Borrower, Guarantor and Master Tenant
that
the Loan, as reflected in the Loan Documents is not usurious; and
as to
such other matters as Agent and Agent's counsel reasonably may
specify.
|
6. |
Searches.
Current Uniform Commercial Code, tax, judgment lien and litigation
searches for Borrower, Master Tenant, Guarantor and the immediately
preceding owners of the Project.
|
7. |
Insurance.
Evidence of insurance as required by this Agreement, and conforming
in all
respects to the requirements of
Agent.
|
8. |
Survey.
Three (3) originals of a current "as-built" survey of the Project,
dated
or updated to a date not earlier than forty-five (45) days prior
to the
Closing Date, prepared by a registered land surveyor in accordance
with
the American Land Title Association/ American Congress on Surveying
and
Mapping Standards and containing Agent's approved form of certification
in
favor of Agent and the title insurer. The surveyor shall certify
that no
portion of the Project is in a flood hazard area as identified by
the
Secretary of Housing and Urban Development (or, if any portion of
the
Project is in such a flood hazard area, then the survey shall certify
to
the hazard designation of the affected portion of the property,)
and shall
conform to Agent's current survey requirements. The survey shall
be
sufficient for the title insurer to remove the general survey
exception.
|
9. |
Property
Condition Report.
A
current engineering report or architect's certificate with respect
to the
Project, covering, among other matters, inspection of heating and
cooling
systems, roof and structural details and showing no failure of compliance
with building plans and specifications, applicable legal requirements
(including requirements of the Americans with Disabilities Act) and
fire,
safety and health standards. As requested by Agent, such report shall
also
include an assessment of each Project's tolerance for earthquake
and
seismic activity.
|
10. |
Environmental
Reports.
A
current Site Assessment for the
Project.
|
Schedule 2.1
-
2
11. |
Occupancy
Summary.
A
current occupancy summary of the Project, certified by Borrower or
the
current owner of the Project. Such occupancy summary shall include
the
following information: (a) tenant names and, if applicable, guarantor
names but only to the extent such names can be disclosed by Borrower
without violating applicable Laws governing the confidentiality of
resident records/information including, but not limited to, HIPAA;
(b) unit/suite numbers; (c) for non-residential tenants, area of
each demised premises and total area of the Project (stated in net
rentable square feet); (d) rental rate (including escalations)
(stated in gross amount and in amount per net rentable square foot
per
year); (e) for non-residential tenants, lease term (commencement,
expiration and renewal options); (f) for non-residential tenants,
expense pass-throughs; (g) for non-residential tenants,
cancellation/termination provisions; (h) security deposit; and
(i) for non-residential tenants, material operating covenants and
co-tenancy clauses. All leases of, subleases of and occupancy agreements
affecting the Project or any part thereof now existing or hereafter
executed (including all patient and resident care agreements and
service
agreements which include an occupancy agreement) and all amendments,
modifications or supplements thereto ("Leases")
shall be in form and substance, with tenants and for uses acceptable
to
Agent; provided, however, this requirement shall be met with respect
to
residential tenants provided Borrower uses the form of residential
Lease
submitted to, and approved by, Agent prior to the Closing Date without
material modification, other than modifications made in accordance
with
statutory, regulatory or other legal requirements; and, provided,
further,
with respect to non-residential tenants (excluding the tenant under
the
Master Lease) to whom Borrower or Master Tenant has leased less than
500
square feet, no such approval shall be required. On the Closing Date:
(a)
all Leases shall be in full force and effect; and (b) Borrower shall
have
submitted a revised and recertified occupancy
summary.
|
12. |
Master
Lease.
A
copy of the Master Lease, certified by Borrower as being true, correct
and
complete.
|
13. |
A
copy of the Management Agreement, certified by Borrower as being
true,
correct and complete.
|
14. |
Tax
Impounds.
Borrower's deposit with Agent of the amount required by Agent to
impound
for Taxes and to fund any other required escrows or reserves.
|
15. |
Compliance
With Laws.
Evidence that the Project and the operation thereof comply with all
legal
requirements, including that all requisite certificates of occupancy,
building permits, and other licenses, certificates, approvals or
consents
required of any governmental authority have been issued without variance
or condition and that there is no litigation, action, citation, injunctive
proceedings, or like matter pending or threatened with respect to
the
validity of such matters. If title insurance with respect to the
Project
described in item
|
Schedule 2.1
-
3
3
above
does not include a Zoning 3.1 (with parking) endorsement because such an
endorsement is not available in the State where the Project is located, then
Borrower shall furnish to Agent a zoning letter from the applicable municipal
agency with respect to the Project. Borrower shall, upon request of Agent,
furnish Agent with utility letters from applicable service
providers.
16. |
No
Casualty or Condemnation.
No condemnation or adverse zoning or usage change proceeding shall
have
occurred or shall have been threatened against the Project; the Project
shall not have suffered any significant damage by fire or other casualty
which has not been repaired; no law, regulation, ordinance, moratorium,
injunctive proceeding, restriction, litigation, action, citation
or
similar proceeding or matter shall have been enacted, adopted, or
threatened by any governmental authority, which would, in Agent's
reasonable judgment, result in a Material Adverse
Change.
|
17. |
Audit
Requirement.
The annualized Net Operating Income of the Project equals or exceeds
$865,000 for the three month period ending April 30,
2006.
|
18. |
Reserved.
|
19. |
Broker's
Fees.
All fees and commissions payable to real estate brokers, mortgage
brokers,
or any other brokers or agents in connection with the Loan or the
acquisition of the Project have been paid, such evidence to be accompanied
by any waivers or indemnifications deemed necessary by
Agent.
|
20. |
Costs
and Expenses.
Payment of Agent's costs and expenses in underwriting, documenting,
and
closing the transaction, including fees and expenses of Agent's inspecting
engineers, consultants and counsel.
|
21. |
Representations
and Warranties.
The representations and warranties contained in this Loan Agreement
and in
all other Loan Documents are true and correct in all material
respects.
|
22. |
No
Defaults.
No Potential Default or Event of Default or default under any of
the Loan
Documents shall have occurred or
exist.
|
23. |
Appraisal.
Agent shall obtain an appraisal report for the Project, in form and
content acceptable to Agent, prepared by an independent MAI appraiser
in
accordance with the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA")
and the regulations promulgated pursuant to such
act.
|
24. |
Acquisition
Documents.
Agent shall have reviewed and approved the purchase contract for
the
Project and the closing statements with respect thereto (the "Acquisition
Documents").
|
25. |
Agent
shall have received such other items as Agent may reasonably
require.
|
Schedule 2.1
-
4
PART
B
Insurance
proceeds applied to restoration will be advanced in accordance with Section
3.2
and on
the following terms and conditions:
1. Each
request for such an advance shall specify the amount requested, shall be on
forms satisfactory to Agent, and shall be accompanied by appropriate invoices,
bills paid affidavits, lien waivers, title updates, endorsements to the title
insurance, and other documents as may be required by Agent. Such advances may
be
made, at Agent's election, either: (a) in reimbursement for expenses paid
by Borrower, or (b) for payment of expenses incurred and invoiced but not
yet paid by Borrower, or (c) with respect to non-residential tenant
restorations, by funding allowances for tenant improvements undertaken to be
constructed by non-residential tenants and completed in accordance with Leases.
Agent, at its option and without further direction from Borrower, may disburse
any restorations advance to the Person to whom payment is due or through an
escrow satisfactory to Agent. Borrower hereby irrevocably directs and authorizes
Agent to so advance the insurance proceeds. Agent may, at Borrower's expense,
conduct an audit, inspection, or review of the Project to confirm the amount
of
the requested restoration advance.
2. Borrower
shall have submitted and Agent shall have approved, which approval shall not
be
unreasonably withheld, (a) the restorations to be completed, (b) the
plans and specifications for such restorations, which plans and specifications
may not be changed in any material respect without Agent's prior written
consent, which consent shall not be unreasonably withheld and (c) if
requested by Agent, each contract or subcontract for an amount in excess of
Fifty Thousand Dollars ($50,000) for the performance of labor or the furnishing
of materials for such restorations.
3. Borrower
shall have submitted and Agent shall have approved the time schedule for
completing the restorations, which approval shall not be unreasonably withheld.
After Agent's approval of a detailed budget, such budget may not be changed
in
any material respect without Agent's prior written consent, which consent shall
not be unreasonably withheld. If the estimated cost of such restorations exceeds
the unadvanced portion of the amount allocated for such restorations in the
approved budget, then Borrower shall comply with the requirements of Section
9
hereof.
4. All
restorations constructed by Borrower prior to the date a restorations advance
is
requested shall be completed to the satisfaction of Agent and Agent's engineer
and in accordance with the plans and budget for such restorations, as approved
by Agent in accordance with the terms hereof, and all legal
requirements.
5. Borrower
shall not use any portion of any restorations advance for payment of any other
cost except as specifically set forth in a request for advance approved by
Agent
in writing.
Schedule 2.1
-
5
6. Each
restorations advance, except for a final restorations advance, shall be in
the
amount of actual costs incurred less
ten
percent (10%) of such costs as retainage to be advanced as part of a final
restorations advance.
7. Agent
shall not under any circumstances be obligated to make any restorations advance
after nine (9) months after the casualty or ninety (90) days prior to the
Maturity Date.
8. No
funds
will be advanced for materials stored at the Project unless Borrower furnishes
Agent satisfactory evidence that such materials are properly stored and secured
at the Project.
9. Borrower
shall have delivered evidence satisfactory to Agent, in its sole discretion,
that the amount remaining to be disbursed for such restorations is sufficient
to
complete the restorations or, if insufficient, Borrower shall have deposited
with Agent funds necessary to complete the restorations (Borrower's deposit
to
be disbursed before any balance of the additional advance).
Schedule 2.1
-
6
SCHEDULE
2.3
AMORTIZATION
SCHEDULE
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
Closing
Date
|
7/1/2006
|
Payment
|
-$57,716.36
|
|||||||||||||||||||||||
|
First
Payment Date
|
8/1/2006
|
Coupon
|
300
|
|
|||||||||||||||||||||||
Original
Balance
|
$8,000,000
|
Int
Conv
|
Actual/360
|
|
||||||||||||||||||||||||
Maturity
Date
|
Int
Only Period
|
0
|
Months
|
|||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Annual
Summary
|
|
Days
|
Ending
Balance
|
Payment
|
Interest
|
Principal
|
Prepayment
|
Balloon
Amount
|
||||||||||||||||||||
Year
1
|
365
|
7,890,213.97
|
692,596
|
582,810
|
109,786
|
0
|
0
|
|||||||||||||||||||||
Year
2
|
366
|
7,773,715.70
|
692,596
|
576,098
|
116,498
|
0
|
0
|
|||||||||||||||||||||
Year
3
|
365
|
7,646,775.78
|
692,596
|
565,656
|
126,940
|
0
|
0
|
|||||||||||||||||||||
Year
4
|
365
|
7,510,212.94
|
692,596
|
556,033
|
136,563
|
0
|
0
|
|||||||||||||||||||||
Year
5
|
365
|
7,363,297.71
|
692,596
|
545,681
|
146,915
|
0
|
0
|
|||||||||||||||||||||
Year
6
|
366
|
7,206,742.40
|
692,596
|
536,041
|
156,555
|
0
|
0
|
|||||||||||||||||||||
Year
7
|
365
|
0.00
|
634,880
|
480,193
|
154,687
|
0
|
7,052,055.62
|
|||||||||||||||||||||
Year
8
|
365
|
0.00
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Year
9
|
365
|
0.00
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Year
10
|
366
|
0.00
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Period
|
Date
|
Days
|
Ending
Balance
|
Payment
|
Interest
|
Principal
|
Prepayment
|
Balloon
Amount
|
||||||||||||||||||||
0
|
7/1/2006
|
8,000,000.00
|
||||||||||||||||||||||||||
1
|
8/1/2006
|
31
|
7,992,083.42
|
57,716.36
|
49,799.78
|
7,916.58
|
0.00
|
0.00
|
||||||||||||||||||||
2
|
9/1/2006
|
31
|
7,984,117.56
|
57,716.36
|
49,750.50
|
7,965.86
|
0.00
|
0.00
|
||||||||||||||||||||
3
|
10/1/2006
|
30
|
7,974,498.85
|
57,716.36
|
48,097.65
|
9,618.71
|
0.00
|
0.00
|
||||||||||||||||||||
4
|
11/1/2006
|
31
|
7,966,423.52
|
57,716.36
|
49,641.03
|
8,075.33
|
0.00
|
0.00
|
||||||||||||||||||||
5
|
12/1/2006
|
30
|
7,956,698.23
|
57,716.36
|
47,991.06
|
9,725.30
|
0.00
|
0.00
|
||||||||||||||||||||
6
|
1/1/2007
|
31
|
7,948,512.09
|
57,716.36
|
49,530.23
|
8,186.13
|
0.00
|
0.00
|
||||||||||||||||||||
7
|
2/1/2007
|
31
|
7,940,275.00
|
57,716.36
|
49,479.27
|
8,237.09
|
0.00
|
0.00
|
||||||||||||||||||||
8
|
3/1/2007
|
28
|
7,927,203.28
|
57,716.36
|
44,644.64
|
13,071.72
|
0.00
|
0.00
|
||||||||||||||||||||
9
|
4/1/2007
|
31
|
7,918,833.54
|
57,716.36
|
49,346.62
|
8,369.74
|
0.00
|
0.00
|
||||||||||||||||||||
10
|
5/1/2007
|
30
|
7,908,821.55
|
57,716.36
|
47,704.37
|
10,011.99
|
0.00
|
0.00
|
||||||||||||||||||||
11
|
6/1/2007
|
31
|
7,900,337.38
|
57,716.36
|
49,232.19
|
8,484.17
|
0.00
|
0.00
|
||||||||||||||||||||
12
|
7/1/2007
|
30
|
7,890,213.97
|
57,716.36
|
47,592.95
|
10,123.41
|
0.00
|
0.00
|
||||||||||||||||||||
13
|
8/1/2007
|
31
|
7,881,613.98
|
57,716.36
|
49,116.36
|
8,600.00
|
0.00
|
0.00
|
||||||||||||||||||||
14
|
9/1/2007
|
31
|
7,872,960.44
|
57,716.36
|
49,062.83
|
8,653.53
|
0.00
|
0.00
|
||||||||||||||||||||
15
|
10/1/2007
|
30
|
7,862,672.11
|
57,716.36
|
47,428.03
|
10,288.33
|
0.00
|
0.00
|
||||||||||||||||||||
16
|
11/1/2007
|
31
|
7,853,900.67
|
57,716.36
|
48,944.92
|
8,771.44
|
0.00
|
0.00
|
||||||||||||||||||||
17
|
12/1/2007
|
30
|
7,843,497.51
|
57,716.36
|
47,313.21
|
10,403.15
|
0.00
|
0.00
|
||||||||||||||||||||
18
|
1/1/2008
|
31
|
7,834,606.71
|
57,716.36
|
48,825.55
|
8,890.81
|
0.00
|
0.00
|
||||||||||||||||||||
19
|
2/1/2008
|
31
|
7,825,660.56
|
57,716.36
|
48,770.21
|
8,946.15
|
0.00
|
0.00
|
||||||||||||||||||||
20
|
3/1/2008
|
29
|
7,813,515.84
|
57,716.36
|
45,571.65
|
12,144.71
|
0.00
|
0.00
|
Schedule
2.3 - 1
21
|
4/1/2008
|
31
|
7,804,438.40
|
57,716.36
|
48,638.92
|
9,077.44
|
0.00
|
0.00
|
|||||||||||||||||
22
|
5/1/2008
|
30
|
7,793,737.28
|
57,716.36
|
47,015.24
|
10,701.12
|
0.00
|
0.00
|
|||||||||||||||||
23
|
6/1/2008
|
31
|
7,784,536.72
|
57,716.36
|
48,515.80
|
9,200.56
|
0.00
|
0.00
|
|||||||||||||||||
24
|
7/1/2008
|
30
|
7,773,715.70
|
57,716.36
|
46,895.35
|
10,821.01
|
0.00
|
0.00
|
|||||||||||||||||
25
|
8/1/2008
|
31
|
7,764,390.51
|
57,716.36
|
48,391.16
|
9,325.20
|
0.00
|
0.00
|
|||||||||||||||||
26
|
9/1/2008
|
31
|
7,755,007.26
|
57,716.36
|
48,333.12
|
9,383.24
|
0.00
|
0.00
|
|||||||||||||||||
27
|
10/1/2008
|
30
|
7,744,008.36
|
57,716.36
|
46,717.46
|
10,998.90
|
0.00
|
0.00
|
|||||||||||||||||
28
|
11/1/2008
|
31
|
7,734,498.24
|
57,716.36
|
48,206.24
|
9,510.12
|
0.00
|
0.00
|
|||||||||||||||||
29
|
12/1/2008
|
30
|
7,723,375.78
|
57,716.36
|
46,593.91
|
11,122.45
|
0.00
|
0.00
|
|||||||||||||||||
30
|
1/1/2009
|
31
|
7,713,737.22
|
57,716.36
|
48,077.80
|
9,638.56
|
0.00
|
0.00
|
|||||||||||||||||
31
|
2/1/2009
|
31
|
7,704,038.66
|
57,716.36
|
48,017.80
|
9,698.56
|
0.00
|
0.00
|
|||||||||||||||||
32
|
3/1/2009
|
28
|
7,689,638.69
|
57,716.36
|
43,316.39
|
14,399.97
|
0.00
|
0.00
|
|||||||||||||||||
33
|
4/1/2009
|
31
|
7,679,790.12
|
57,716.36
|
47,867.79
|
9,848.57
|
0.00
|
0.00
|
|||||||||||||||||
34
|
5/1/2009
|
30
|
7,668,338.09
|
57,716.36
|
46,264.34
|
11,452.02
|
0.00
|
0.00
|
|||||||||||||||||
35
|
6/1/2009
|
31
|
7,658,356.92
|
57,716.36
|
47,735.19
|
9,981.17
|
0.00
|
0.00
|
|||||||||||||||||
36
|
7/1/2009
|
30
|
7,646,775.78
|
57,716.36
|
46,135.22
|
11,581.14
|
0.00
|
0.00
|
|||||||||||||||||
37
|
8/1/2009
|
31
|
7,636,660.39
|
57,716.36
|
47,600.97
|
10,115.39
|
0.00
|
0.00
|
|||||||||||||||||
38
|
9/1/2009
|
31
|
7,626,482.03
|
57,716.36
|
47,538.00
|
10,178.36
|
0.00
|
0.00
|
|||||||||||||||||
39
|
10/1/2009
|
30
|
7,614,708.87
|
57,716.36
|
45,943.20
|
11,773.16
|
0.00
|
0.00
|
|||||||||||||||||
40
|
11/1/2009
|
31
|
7,604,393.86
|
57,716.36
|
47,401.35
|
10,315.01
|
0.00
|
0.00
|
|||||||||||||||||
41
|
12/1/2009
|
30
|
7,592,487.63
|
57,716.36
|
45,810.14
|
11,906.22
|
0.00
|
0.00
|
|||||||||||||||||
42
|
1/1/2010
|
31
|
7,582,034.30
|
57,716.36
|
47,263.02
|
10,453.34
|
0.00
|
0.00
|
|||||||||||||||||
43
|
2/1/2010
|
31
|
7,571,515.89
|
57,716.36
|
47,197.95
|
10,518.41
|
0.00
|
0.00
|
|||||||||||||||||
44
|
3/1/2010
|
28
|
7,556,370.80
|
57,716.36
|
42,571.27
|
15,145.09
|
0.00
|
0.00
|
|||||||||||||||||
45
|
4/1/2010
|
31
|
7,545,692.64
|
57,716.36
|
47,038.20
|
10,678.16
|
0.00
|
0.00
|
|||||||||||||||||
46
|
5/1/2010
|
30
|
7,533,432.79
|
57,716.36
|
45,456.51
|
12,259.85
|
0.00
|
0.00
|
|||||||||||||||||
47
|
6/1/2010
|
31
|
7,522,611.84
|
57,716.36
|
46,895.41
|
10,820.95
|
0.00
|
0.00
|
|||||||||||||||||
48
|
7/1/2010
|
30
|
7,510,212.94
|
57,716.36
|
45,317.47
|
12,398.89
|
0.00
|
0.00
|
|||||||||||||||||
49
|
8/1/2010
|
31
|
7,499,247.45
|
57,716.36
|
46,750.87
|
10,965.49
|
0.00
|
0.00
|
|||||||||||||||||
50
|
9/1/2010
|
31
|
7,488,213.70
|
57,716.36
|
46,682.61
|
11,033.75
|
0.00
|
0.00
|
|||||||||||||||||
51
|
10/1/2010
|
30
|
7,475,607.59
|
57,716.36
|
45,110.25
|
12,606.11
|
0.00
|
0.00
|
|||||||||||||||||
52
|
11/1/2010
|
31
|
7,464,426.68
|
57,716.36
|
46,535.45
|
11,180.91
|
0.00
|
0.00
|
|||||||||||||||||
53
|
12/1/2010
|
30
|
7,451,677.27
|
57,716.36
|
44,966.95
|
12,749.41
|
0.00
|
0.00
|
|||||||||||||||||
54
|
1/1/2011
|
31
|
7,440,347.39
|
57,716.36
|
46,386.48
|
11,329.88
|
0.00
|
0.00
|
|||||||||||||||||
55
|
2/1/2011
|
31
|
7,428,946.99
|
57,716.36
|
46,315.96
|
11,400.40
|
0.00
|
0.00
|
|||||||||||||||||
56
|
3/1/2011
|
28
|
7,413,000.29
|
57,716.36
|
41,769.67
|
15,946.69
|
0.00
|
0.00
|
|||||||||||||||||
57
|
4/1/2011
|
31
|
7,401,429.65
|
57,716.36
|
46,145.72
|
11,570.64
|
0.00
|
0.00
|
|||||||||||||||||
58
|
5/1/2011
|
30
|
7,388,300.74
|
57,716.36
|
44,587.45
|
13,128.91
|
0.00
|
0.00
|
|||||||||||||||||
59
|
6/1/2011
|
31
|
7,376,576.35
|
57,716.36
|
45,991.97
|
11,724.39
|
0.00
|
0.00
|
|||||||||||||||||
60
|
7/1/2011
|
30
|
7,363,297.71
|
57,716.36
|
44,437.73
|
13,278.63
|
0.00
|
0.00
|
|||||||||||||||||
61
|
8/1/2011
|
31
|
7,351,417.68
|
57,716.36
|
45,836.32
|
11,880.04
|
0.00
|
0.00
|
|||||||||||||||||
62
|
9/1/2011
|
31
|
7,339,463.69
|
57,716.36
|
45,762.37
|
11,953.99
|
0.00
|
0.00
|
|||||||||||||||||
63
|
10/1/2011
|
30
|
7,325,961.48
|
57,716.36
|
44,214.15
|
13,502.21
|
0.00
|
0.00
|
|||||||||||||||||
64
|
11/1/2011
|
31
|
7,313,849.03
|
57,716.36
|
45,603.91
|
12,112.45
|
0.00
|
0.00
|
|||||||||||||||||
65
|
12/1/2011
|
30
|
7,300,192.51
|
57,716.36
|
44,059.85
|
13,656.51
|
0.00
|
0.00
|
|||||||||||||||||
66
|
1/1/2012
|
31
|
7,287,919.65
|
57,716.36
|
45,443.50
|
12,272.86
|
0.00
|
0.00
|
|||||||||||||||||
67
|
2/1/2012
|
31
|
7,275,570.38
|
57,716.36
|
45,367.10
|
12,349.26
|
0.00
|
0.00
|
|||||||||||||||||
68
|
3/1/2012
|
29
|
7,260,222.30
|
57,716.36
|
42,368.27
|
15,348.09
|
0.00
|
0.00
|
|||||||||||||||||
69
|
4/1/2012
|
31
|
7,247,700.62
|
57,716.36
|
45,194.68
|
12,521.68
|
0.00
|
0.00
|
|||||||||||||||||
70
|
5/1/2012
|
30
|
7,233,645.62
|
57,716.36
|
43,661.36
|
14,055.00
|
0.00
|
0.00
|
|||||||||||||||||
71
|
6/1/2012
|
31
|
7,220,958.50
|
57,716.36
|
45,029.24
|
12,687.12
|
0.00
|
0.00
|
Schedule
2.3 - 2
72
|
7/1/2012
|
30
|
7,206,742.40
|
57,716.36
|
43,500.26
|
14,216.10
|
0.00
|
0.00
|
|||||||||||||||||
73
|
8/1/2012
|
31
|
7,193,887.81
|
57,716.36
|
44,861.77
|
12,854.59
|
0.00
|
0.00
|
|||||||||||||||||
74
|
9/1/2012
|
31
|
7,180,953.20
|
57,716.36
|
44,781.75
|
12,934.61
|
0.00
|
0.00
|
|||||||||||||||||
75
|
10/1/2012
|
30
|
7,166,496.10
|
57,716.36
|
43,259.26
|
14,457.10
|
0.00
|
0.00
|
|||||||||||||||||
76
|
11/1/2012
|
31
|
7,153,390.98
|
57,716.36
|
44,611.24
|
13,105.12
|
0.00
|
0.00
|
|||||||||||||||||
77
|
12/1/2012
|
30
|
7,138,767.84
|
57,716.36
|
43,093.22
|
14,623.14
|
0.00
|
0.00
|
|||||||||||||||||
78
|
1/1/2013
|
31
|
7,125,490.11
|
57,716.36
|
44,438.63
|
13,277.73
|
0.00
|
0.00
|
|||||||||||||||||
79
|
2/1/2013
|
31
|
7,112,129.73
|
57,716.36
|
44,355.98
|
13,360.38
|
0.00
|
0.00
|
|||||||||||||||||
80
|
3/1/2013
|
28
|
7,094,401.71
|
57,716.36
|
39,988.34
|
17,728.02
|
0.00
|
0.00
|
|||||||||||||||||
81
|
4/1/2013
|
31
|
7,080,847.81
|
57,716.36
|
44,162.45
|
13,553.91
|
0.00
|
0.00
|
|||||||||||||||||
82
|
5/1/2013
|
30
|
7,065,787.65
|
57,716.36
|
42,656.21
|
15,060.15
|
0.00
|
0.00
|
|||||||||||||||||
83
|
6/1/2013
|
31
|
7,052,055.62
|
57,716.36
|
43,984.33
|
13,732.03
|
0.00
|
0.00
|
|||||||||||||||||
84
|
7/1/2013
|
30
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
7,052,055.62
|
Schedule
2.3 - 2
SCHEDULE
2.8
SOURCES
AND USES
SOURCES
|
USES
|
||||||
Loan: $8,000,000
|
Purchase
Price:
|
$
|
5,100,000
|
||||
Borrower
Equity: $3,030,000
|
Debt
Payoff:
|
$
|
5,600,000
|
||||
Closing
Costs:
|
$
|
250,000
|
|||||
Application
Fee:
|
$
|
80,000
|
|||||
Total: $11,030,000
|
Total:
|
$
|
11,030,000
|
SCHEDULE
3.1
INSURANCE
EXCEPTIONS
1. |
Borrower
does not maintain a separate boiler and machinery policy. Rather
such
coverage is included within Borrower's property insurance
policy.
|
2. |
Borrower
only maintains terrorism insurance with respect to property damage
and not
with respect to the type of claims covered under its general liability
insurance policy. Further, Borrower anticipates that if and when
the
federal legislation which requires insurers to provide terrorism
insurance
expires and such insurance is no longer required and/or subsidized
by the
federal government that the same will either not be available or
not be
available on commercially reasonable terms and thus, subject to the
immediately following sentence, will not be maintained by the Borrower.
Notwithstanding anything contained in this Schedule 3.1
or
anywhere in this Loan Agreement, terrorism coverage in amounts and
with a
carrier acceptable to Lender in its sole discretion if such terrorism
coverage (i) is customarily obtained by owners of property similar to
the Project in use, character and geographic location, and (ii) is
readily available at a cost, which in Agent's opinion, is commercially
reasonable.
|
3. |
The
Professional Liability Insurance is carried by an unrated captive
insurance carrier in such amounts and against such risks as is customarily
maintained by similar businesses and by operators of similar assisted
living facilities in the same geographic area; provided,
however,
that Borrower contribute (or cause Master Tenant to contribute) to
its
established insurance captive on an annual basis an amount equal
to the
greatest of: (a) the amount required by any applicable insurance
rules, regulations or laws existing now or hereafter under the
jurisdiction in which the captive has been organized, and (b) the
amounts
required pursuant to the Master
Lease.
|
Schedule
3.1
Page
1
SCHEDULE
I
CERTAIN
DEFINITIONS
As
used
herein, the following terms have the meanings indicated:
"Acquisition
Documents"
has the
meaning assigned to such term in Schedule 2.1.
"Affiliate"
means
(a) any entity, including, but not limited to, any corporation, general or
limited partnership, joint venture, limited liability company or limited
liability partnership, which Borrower or Guarantor or Master Tenant, directly
or
indirectly, controls, (b) any trust as to which Borrower is the trustee or
beneficiary, (c) any Person which controls, directly or indirectly,
Guarantor, including, but not limited to, any director or executive officer
of
Guarantor, (d) any Person related by birth, adoption or marriage to any director
or executive officer of Guarantor, or (e) Guarantor; provided, however, an
Affiliate shall not include any entity, other than Borrower or Guarantor, which
is an Affiliate solely as a result of the fact that such entity and Guarantor
are both controlled by Xxx Xxxx or by an Affiliate of Xxx Xxxx.
"Agent"
has the
meaning assigned to such term in the introductory paragraph of this
Agreement.
"Agreement"
means
this Loan Agreement, as amended from time to time.
"Anti-Money
Laundering Laws"
has the
meaning assigned to such term in Sections
5.26(b).
"Anti-Money
Laundering Measures"
has the
meaning assigned to such term in Section
5.26(b).
"Anti-Terrorism
Laws"
has the
meaning assigned to such term in Section
5.26(a).
"Assignment
Agreement"
has the
meaning assigned to such term in Section 2.9.
"Assignment
of Membership Interests"
shall
mean that certain Assignment of Membership Interests executed by Guarantor
with
respect to the membership interests in Borrower.
"Bankruptcy
Party"
shall
have the meaning assigned to such term in Section
9.7.
Schedule
I
Page
1
"Borrower"
has the
meaning assigned to such terms in the introductory paragraph of this
Agreement.
"Borrower
Anti-Terrorism Policies"
has the
meaning assigned to such term in Section
7.20(c).
"Borrower's
Equity"
has the
meaning assigned to such term in Part A of Schedule 2.1.
"Business
Associate Agreement"
has the
meaning assigned to such term in Part A of Schedule
2.1.
"Business
Day"
means a
day other than a Saturday, a Sunday, or a legal holiday on which national banks
located in the City of Chicago are not open for general banking
business.
"BSA"
has the
meaning assigned to such term in Section
5.26(b).
"Closing Date"
shall
be the date on which the Loan is closed and the Initial Funding Amount is
funded.
"Collateral"
has the
meaning assigned to such term in Section
2.10.
"Collateral
Assignments"
has the
meaning assigned to such term in Part A of Schedule
2.1.
"CON"
has the
meaning assigned to such term in Section 8.1(c).
"Control"
or
"controls":
When
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities or other beneficial interests, by contract
or
otherwise; and the terms "Controlling" and "Controlled" have the meaning
correlative to the foregoing.
"Debt"
means,
for any Person, without duplication, the aggregate of: (a) all indebtedness
of such Person for borrowed money, for amounts drawn under a letter of credit,
or for the deferred purchase price of property for which such Person or its
assets is liable, (b) all unfunded amounts under a loan agreement, letter
of credit, or other credit facility for which such Person would be liable,
if
such amounts were advanced under the credit facility, (c) all amounts
required to be paid by such Person as a guaranteed payment to partners or a
preferred or special dividend, including any mandatory redemption of shares
or
interests, (d) all indebtedness guaranteed by such Person, directly or
indirectly, (e) all obligations under leases that constitute capital leases
for which such Person is liable, and (f) all obligations of such Person
under interest rate swaps, caps, floors, collars and other interest hedge
agreements, in each case whether such Person is liable contingently or
otherwise, as
Schedule
I
Page
2
obligor,
guarantor or otherwise, or in respect of which obligations such Person otherwise
assures a creditor against loss.
"Debt
Service"
means
the aggregate interest, principal, and other payments due under the Loan, and
on
any other outstanding permitted Debt relating to the Project (if any) for the
period of time for which calculated.
"Debt
Service Coverage Ratio"
means
the ratio of (i) Net Operating Income (calculated in accordance with
Schedule
II attached
hereto) from the Project,
taken
as
a whole, for a particular period, to (ii) payments of interest due on the Loan
for the same period plus principal amortization due during the same
period.
"Default
Rate"
means
the lesser of (a) the maximum rate of interest allowed by applicable law,
and (b) five percent (5%) per annum in excess of the Interest
Rate.
"Defeasance"
has the
meaning assigned to such term in Section 2.9.
"Defeasance
Deposit"
has the
meaning assigned to such term in Section 2.9.
"Designated
Person"
has the
meaning assigned to such term in Section
5.26(a).
"Event
of Default"
has the
meaning assigned to such term in Article IX.
"Executive
Orders"
has the
meaning assigned to such term in Section
5.26(a).
"Expenses""
has
the meaning assigned to such term in Schedule
II.
"Federal
Bankruptcy Code"
shall
mean Chapter 11 of Title II of the United States Code (11 U.S.C. § 101,
et
seq.),
as
amended.
"FIRREA"
has the
meaning assigned to such term in Part A of Schedule 2.1.
"Funding
Amount"
has the
meaning assigned to such term in Section
2.1(a).
"GECC"
has the
meaning assigned to such term in the introductory paragraph of this
Agreement.
"Governmental
Approvals"
means,
collectively, all consents, licenses and permits and all other authorizations
or
approvals required from any Governmental Authority to operate the
Project.
"Governmental
Authority"
means
any federal, state, county or municipal government or political subdivision
thereof, any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body (including,
without limitation, the State Regulator), or any court, administrative tribunal,
or public body, including but not limited to all such authorities relating
to
the quality and
Schedule
I
Page
3
adequacy
of medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies, additions to facilities and services and fee
splitting.
"Guarantor" means
Emeritus Corporation, a Washington corporation.
"Guaranty"
means
that certain Guaranty of Payment and Performance of even date herewith executed
by Guarantor in favor of Agent.
"Hazardous
Materials"
has the
definition given to such term in the Environmental Indemnity.
"HIPAA"
has the
meaning assigned to such term in Section 8.1(a).
"HIPAA
Compliance Plan"
has the
meaning assigned to such term in Section 8.1(b).
"HIPAA
Compliance Date"
has the
meaning assigned to such term in Section 8.1(b).
"HIPAA
Compliant"
has the
meaning assigned to such term in Section 8.1(b).
"Healthcare
Laws"
has the
meaning assigned to such term in Section
8.1(a).
"Improvements"
has the
meaning assigned to such term in Recital
B.
"Indebtedness"
means
all payment obligations of Borrower, Master Tenant or Guarantor to Agent and/or
Lender under the Loan or any of the Loan Documents.
"Insurance
Impound"
has the
meaning assigned to such term in Section
3.4.
"Interest
Rate"
has the
meaning assigned to such term in Section
2.2.
"Interest
Holder Agreement"
has the
meaning assigned to such term in Section
7.20(b).
"Investor
Anti-Terrorism Policies"
has the
meaning assigned to such term in Section 7.20(c).
"Laws"
means,
collectively, all federal, state and local laws, statutes, codes, ordinances,
orders, rules and regulations and guidances and judicial opinions or
presidential authority in the applicable jurisdiction, including but not limited
to quality and safety standards, accreditation standards and requirements of
the
State Regulator, each as it may be amended from time to time.
"Leases"
has the
meaning assigned to such term in Part A of Schedule 2.1.
"Licenses"
has the
meaning assigned to such term in Section
8.1(c).
Schedule
I
Page
4
"Lien"
means
any interest, or claim thereof, in the Project securing an obligation owed
to,
or a claim by, any Person other than the owner of the Project, whether such
interest is based on common law, statute or contract, including the lien or
security interest arising from a deed of trust, mortgage, assignment,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a
lease, consignment or bailment for security purposes. The term "Lien"
shall
include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting the Project.
"Lists"
has the
meaning assigned to such term in Section
5.26(a).
"Loan"
means
the loan to be made by Lender to Borrower under this Agreement and all other
amounts payable under the Loan Documents, including the Prepayment
Premium.
"Loan
Documents"
means:
(a) this Agreement, (b) the Note, (c) the Guaranty, (d) any
letter of credit provided to Agent in connection with the Loan, (e) the
Security Document, (f) the Environmental Indemnity Agreement,
(g) Uniform Commercial Code financing statements, (h) such assignments
of management agreements, contracts and other rights as may be required under
the Commitment or otherwise requested by Agent, (i) all other
documents evidencing, securing, governing or otherwise pertaining to the Loan,
and (j) all amendments, modifications, renewals, substitutions and
replacements of any of the foregoing.
"Material
Adverse Change"
or
"material
adverse change"
means,
in Agent's reasonable discretion, the business prospects, operations or
financial condition of Borrower or Guarantor or Master Tenant, as applicable,
or
the Project, taken as a whole, has changed in a manner which would reasonably
be
expected to impair the value of Agent's and Lender's security for the Loan,
prevent timely repayment of the Loan or otherwise prevent Guarantor or Borrower
or Master Tenant, as applicable, from timely performing any of its material
obligations under the Loan Documents.
"Material
Non-Residential Lease"
means
any non-residential Lease of space at a Project with respect to which base
rent
is equal to or greater than $2,500/month or $30,000/per annum.
"Material
Regulatory Violation"
means
any of the following: (i) revocation of any license, permit, approval or
other Governmental Approval (including, without limitation, any CON) required
for the lawful operation of the Project, or (ii) other circumstances under
which (a) a Borrower is, or in Lender's judgment is reasonably likely to be
required by a determination of any Governmental Authority to cease or suspend
operation of the Project or (b) any then existing certification of Master
Tenant, Guarantor or the Borrower under any Third Party Payor Program in which
Guarantor or Borrower or the Project then participates, is, or in Agent's
judgment is reasonably likely to be terminated, in whole or in part, prior
to
the expiration of the term thereof, (iii) the Project receives a
Schedule
I
Page
5
Level 4/immediate
jeopardy finding that is not removed, as determined by the applicable surveying
agency, within ten (10) days from the date the immediate jeopardy designation
went into effect, (iv) the Project is at any time assessed material fines
or penalties (whether monetary (e.g. fines or penalties in an aggregate amount
in excess of $2,500) or non-monetary) by any Governmental Authority having
jurisdiction over Guarantor, Borrower or such Project, (v) the Project
continues to have a substandard quality of care designation for a consecutive
period of ten days (10) days after receipt by Guarantor or Borrower of notice
from the Governmental Authority or any other Person of the original substandard
quality of care determination; or (vi) the commencement of any State or
Federal remedy imposing a ban on new admissions or denying payment for new
admissions that is not removed within thirty (30) days of that remedy going
into
effect.
"Maturity
Date" means (a) June 30, 2013, or (b) any earlier date on
which the entire Loan is required to be paid in full, whether at maturity,
by
acceleration or otherwise, under this Agreement or any of the other Loan
Documents, or any later date to which the same may be extended in accordance
with the terms of the Loan Agreement.
"Money
Market Rate"
has the
meaning assigned to such term in Section
3.4.
"Monthly
Reports"
has the
meaning assigned to such term in Section
6.1(a).
"Net
Operating Income"
has the
meaning assigned to such term in Schedule II.
"Note"
has the
meaning assigned to such term in Recital
A.
"OFAC"
has the
meaning assigned to such term in Section 5.26(a).
"OFAC
Laws and Regulations"
has the
meaning assigned to such term in Section
5.26(a).
"Operating
Agreement"
has the
meaning assigned to such term in Section 5.3.
"Other
Lists"
has the
meaning assigned to such term in Section
5.26(a).
"Permitted
Debt"
has the
meaning assigned to such term in Section
7.9.
"Person"
means
any individual, corporation, partnership, joint venture, association, joint
stock company, trust, trustee, estate, limited liability company, limited
partnership, limited liability, partnership, limited partnership, unincorporated
organization, real estate investment trust, government or any agency or
political subdivision thereof, or any other form of entity.
"Potential
Default"
means
the occurrence of any event or condition which, with the giving of notice,
the
passage of time, or both, would constitute an Event of Default.
Schedule
I
Page
6
Prepayment
Premium"
has the
meaning assigned to such term in Section 2.5.
"Project"
has the
meanings assigned to such terms in Recital
B.
"Project
Yield"
means
the ratio, expressed as a percentage, of (a) annualized Net Operating
Income from the Project, taken as a whole, as determined by Agent for a
particular period, to (b) the outstanding principal balance of the
Loan.
"Property"
has the
meaning assigned to such term in Recital
B.
"Regulatory
Action"
has the
meaning assigned to such term in Section
9.3.
"Release
Date"
has the
meaning assigned to such term in Section 2.9(a).
"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 Prepayment Premium, in any, have been paid
in
full.
"Revenue"
has the
meaning assigned to such term in Schedule
II.
"Scheduled
Defeasance Payments"
has the
meaning assigned to such term in Section 2.9.
"Security
Agreement"
has the
meaning assigned to such term in Section 2.9(e).
"Security
Deposits"
means
any security deposit from any tenant or occupant of the Project collected or
held by Borrower or Guarantor.
"Security
Document"
means
that certain first priority Deed of Trust, Assignment of Rents and Security
Agreement executed by Borrower for the benefit of Agent, encumbering the
Project.
"Single
Purpose Entity"
means a
Person (other than an individual, a government, or any agency or political
subdivision thereof), which exists solely for the purpose of owning and
operating the Project, conducts business only in its own name or in the name
of
the Project, does not engage in any business or have any assets unrelated to
the
Project, does not have any Debt other than as permitted by this Agreement,
has
its own separate books, records, and accounts (with no commingling of assets)
holds itself out as being a Person separate and apart from any other Person,
and
observes corporate, partnership or limited liability company, as the case may
be, formalities independent of any other Person, and which otherwise constitutes
a single purpose entity as determined by Agent. Without limiting the foregoing,
a Single Purpose Entity (i) does not hold, directly or indirectly, any
ownership interest (legal or equitable) in any real or personal property other
than the interest which it owns in its respective Project and (ii) is not a
shareholder or partner or member of any other entity.
Schedule
I
Page
7
"Site
Assessment"
means
that certain Property Condition Assessment Report prepared by EMG dated
May 16, 2006, Project No. 77515.06R-001.042.
"SND
List"
has the
meaning assigned to such term in Section
5.26(a).
"State
Regulator"
has the
meaning assigned to such term in Section
7.18(a).
"Successor
Borrower"
has the
meaning assigned to such term in Section 2.9.
"Taxes"
has the
meaning assigned to such term in Section
3.5.
"Tax
Impound"
has the
meaning assigned to such term in Section
3.5.
"Tenant"
means
any tenant or occupant of the Project under a Lease.
"Term
Sheet"
means
that certain term Sheet dated April 19, 2006, addressed to Xxxx Xxxxxxxxxx,
Emeritus Corporation, and signed by Xxxxx Xxxxxx.
"Terrorism"
has the
meaning assigned to such term in Section
3.1(b).
"Third
Party Payor Programs"
has the
meaning assigned to such term in Section
8.2(f).
"Title
Company"
means
Chicago Title Insurance Company or such other national title insurance company
approved by Agent and Lender in their sole and absolute discretion.
"Title
Policy"
has the
meaning assigned to such term in Schedule
2.1
Part
A.
"U.S.
Obligations"
has the
meaning assigned to such term in Section 2.9.
"U.S.
Publicly-Traded Entity"
has the
meaning assigned to such term in Section
5.26(a).
"Violation"
has the
meaning assigned to such term in Section
5.24.
"Yield
Maintenance Amount"
has the
meaning assigned to such term in Section 2.9.
Schedule
I
Page
8
Code
definitions for Index.
SCHEDULE
II
CALCULATION
OF NET OPERATING INCOME
"Net
Operating Income"
means
annualized Revenue less
Expenses, all as reasonably determined by Agent's audit (or otherwise reasonably
estimated by Agent) and at Borrower's expense.
"Revenue"
for a
period means the lesser of (i) annualized Adjusted Actual Rent for such period
or (ii) annualized Monthly Effective Rent, excluding in each case, rent payable
under the Master Lease. In determining Revenue, the occupancy factor utilized
shall be the lesser of (a) actual occupancy of the Project, ignoring for this
purpose the Master Lease, or (b) an assumed ninety-five percent (95%) occupancy
rate.
"Adjusted
Actual Rent"
means
(a) all amounts collected by or on behalf of Guarantor, in its capacity as
the
operator of the Project under the terms of the Master Lease from tenants of
the
Project, taken as a whole (excluding amounts due to Borrower under the Master
Lease for the period in question (and if none specified, then for the most
current twelve
(12) months, excluding nonrecurring
income and non-property related income (as determined by Agent in its reasonable
discretion) and income from tenants (i) that are thirty (30) or more days
delinquent, (ii) that are in bankruptcy (even if current), (iii) non-residential
tenants whose leases terminate within six (6) months (as adjusted for space
re-leased upon terms acceptable to Agent in its reasonable discretion) and
(iv) that have been delinquent two (2) or more times during the past twelve
(12) months, and (b) other revenue for such period not to exceed ten
percent (10%) of the amounts included in clause (a) above for laundry, vending,
parking and other occupancy payments (but excluding late fees and interest
income) based upon collections for such period.
"Monthly
Effective Rent"
means
an amount equal to (x) total rent due over the term of the Leases with respect
to the Project, taken as a whole (excluding rent due under the Master Lease)
less
any
payments or concessions which Agent, in its reasonable discretion, deems to
be a
rent concession, divided
by
(y) the
total number of months in the Leases with respect to the Project taken as a
whole.
"Expenses"
means
actual and customary operating expenses, whether incurred by Borrower or by
Guarantor in its capacity as the operator of the Project, related to the
Project, taken as a whole, on a stabilized accrual basis for the previous twelve
(12) month period (as reasonably adjusted by Agent), including: (i) recurring
expenses (e.g., tenant improvements, leasing commissions, carpeting
replacement, appliance and drapery replacement and such others as determined
by
Agent in its reasonable discretion), (ii) real estate taxes, (iii) management
fees (whether paid or not) in an amount not less than five percent (5%) of
effective gross income, and (iv) a replacement reserve (whether reserved or
not)
of not less than Three Hundred Fifty and No/100 Dollars ($350.00) per
unit.