1
EXHIBIT 10.15
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT (such Reimbursement Agreement as
supplemented or amended from time to time being referred to herein as this
"Agreement" or this "Reimbursement Agreement") is made as of the 31st day of
October, 1995, between American Retirement Communities, L.P. (the "Borrower"),
a Tennessee limited partnership, FIRST UNION NATIONAL BANK OF NORTH CAROLINA
("FUNB-NC"), a national banking association, and FIRST UNION NATIONAL BANK OF
TENNESSEE ("FUNB-TN"), a national banking association (FUNB-NC and FUNB-TN are
sometimes referred to hereinafter collectively as the "Credit Institution");
WITNESSETH:
WHEREAS, the Lexington-Fayette Urban County Government, a
political subdivision of the Commonwealth of Kentucky (the "Issuer"), has
financed a part of the cost of the acquisition of approximately 20 acres of
land located at the corner of Rio Dosa Drive and Man O' War Boulevard in
Lexington, Kentucky, and the renovation, development, equipping and
installation by the Borrower of 175 apartment units (the "Project"), through
the issuance, pursuant to a Trust Indenture dated as of May 1, 1985 (the "1985
Indenture") between the Issuer and Third National Bank in Nashville, a national
banking association organized and existing under the laws of the United States
of America, 000 Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, as
Trustee (the "Trustee"), of Eleven Million Dollars ($11,000,000.00) aggregate
principal amount of Issuer's Residential Facilities Revenue Bonds (Richmond
Place Associates, L.P. Project) Series 1985 (the "Series 1985 Bonds"), to one
or more bond purchasers (the "Bond Purchaser");
WHEREAS, the Richmond Place Associates, L.P. ("RPLP"), a
Delaware limited partnership and predecessor in interest to Borrower, requested
the Issuer to issue its Lexington-Fayette Urban County Government Residential
Facilities Refunding Revenue Bonds (Richmond Place Associates, L.P. Project)
Series 1987 (the "Bonds") in the aggregate principal amount of $11,000,000
issued under and pursuant to a Trust Indenture, dated as of April 1, 1987 by
and between the Issuer and the Trustee in order to reimburse the Letter of
Credit Issuer for the refunding of the Series 1985 Bonds;
WHEREAS, at the time of issuance of the Bonds, the RPLP
granted a mortgage on, and a first perfected security interest in, the Project
in favor of the Issuer, pursuant to a Loan Agreement and Mortgage by and
between the RPLP and Issuer (the "Loan Agreement"), which has been assigned to
the Trustee under the Indenture to secure payment of the Bonds; and
WHEREAS, Metropolitan Federal Savings and Loan Association
issued its irrevocable letter of credit in an aggregate maximum amount of
$11,916,667, as security for
2
payment of the principal and interest on the Bonds in order to provide for the
making of payments due from RPLP under the Loan Agreement;
WHEREAS, by Order No. 91-213, effective April 19, 1991, the
Director of the Office of Thrift Supervision ("OTS") found that Metropolitan
Federal Bank, the successor to Metropolitan Federal Savings and Loan
Association and a Federal Savings Bank, Nashville, Tennessee (the
"Association"), was in an unsafe and unsound condition to transact business
because it had substantially insufficient capital, in that it had negative
tangible capital, and that it was failing all of its capital requirements by
significant margins. On that date, the OTS ordered the Association closed and
appointed the Resolution Trust Corporation ("RTC") as Receiver for the
Association. Also on that date, pursuant to the same order, the OTS created
and chartered a new federal mutual savings association known as Metropolitan
Federal Savings and Loan Association, F.A. ("Metropolitan Federal"). The RTC
as Receiver for the Association entered into a Purchase and Assumption
Agreement with Metropolitan Federal whereby Metropolitan Federal acquired
certain assets and assumed certain liabilities of the Association. Following
entry into that Agreement, the OTS took possession of Metropolitan Federal and
appointed the RTC as Conservator of that institution, which appointment was
accepted. On March 27, 1992, pursuant to OTS Order No. CIN-92-102, the OTS
replaced the conservatorship with a receivership, and appointed the RTC as
Receiver of Metropolitan Federal, which appointment was accepted; and
WHEREAS, pursuant to a Settlement Agreement dated September
27, 1994, by and between RPLP and Resolution Trust Corporation, as Receiver for
Metropolitan Federal Bank, certain Bonds totalling $2,500,000.00 in amount were
purchased and cancelled by Resolution Trust Corporation, as Receiver for
Metropolitan Federal Bank, and the Letter of Credit previously issued by
Metropolitan Federal Savings and Loan Association was to be replaced by a
substitute letter of credit; and
WHEREAS, NationsBank of North Carolina, N.A. issued such
substitute Letter of Credit (the "NBNC Letter of Credit") in the original
stated amount of $8,176,875.00 to Trustee under the Indenture and RPLP assumed
reimbursement obligations with respect thereto pursuant to a Reimbursement
Agreement (the "NationsBank Reimbursement Agreement") dated as of November 1,
1994; and
WHEREAS, the obligations of RPLP under the NationsBank
Reimbursement Agreement were assumed by Borrower pursuant to an Amendment to
Reimbursement Agreement and Standby Note with Assumption and Release dated as
of March 31, 1995; and
WHEREAS, Borrower has requested, and FUNB-NC has agreed, to
replace the NBNC Letter of Credit by issuing its Letter of Credit in the
original stated amount of $8,176,875.00 to the Trustee under the Indenture to
secure the payment of the principal and purchase price of and interest on the
remaining Bonds upon such terms and conditions as are mutually agreed upon by
the Borrower, FUNB-NC and FUNB-TN; and
-2-
3
WHEREAS, the Borrower, FUNB-NC and FUNB-TN desire (a) to
specify the conditions precedent to the issuance of the Letter of Credit by
FUNB-NC, and (b) to provide for the payment to the Credit Institution of
certain fees for the Letter of Credit, the reimbursement by the Borrower of
amounts paid by the Credit Institution under the Letter of Credit, the
indemnity by the Borrower of the Credit Institution pursuant to the terms of
this Agreement, the security to be provided by Borrower to secure Borrower's
performance under this Agreement, and certain other matters.
NOW, THEREFORE, in consideration of the premises and the
agreements contained in this Agreement, the Borrower, FUNB-NC and FUNB-TN agree
as follows:
ARTICLE I.
DEFINITIONS
The terms "Code," "Note", "Loan Agreement", "Person,"
"Regulatory Agreement," "Remarketing Agent," "Remarketing Agreement," "Seasoned
Moneys," "Trustee" and all other capitalized terms used and not defined herein
shall have the meanings given thereto in the Indenture, as hereinafter defined.
As used in this Agreement, in addition to the terms previously defined herein
or defined in Section 1.01 of the Indenture, the following terms shall have the
meanings as provided in this Article 1. Unless otherwise provided, each of the
financial terms not specifically defined herein shall have the meaning given to
it under generally accepted accounting principles applied on a consistent
basis, and the computation of any such term is to be determined both as to
classification of items and as to amounts in accordance with generally accepted
accounting principles. Unless otherwise indicated, references to Articles or
Sections refer to those in this Agreement.
"Anniversary Date" shall mean the same day and month as the
Date of Issuance occurring in any subsequent year.
"Business Day" shall have the same meaning as provided in the
Letter of Credit.
"Collateral Agreement" shall mean the Collateral Assignment of
Accounts Receivable dated as of the date hereof by and between A.R.C.
Management Corporation and the Credit Institution, as supplemented or amended
from time to time.
"Collateral Real Estate" shall mean the fee simple interest of
Borrower in the approximately 20 acres of real property in Fayette County,
Kentucky and the fee simple interest of Borrower in the Project, conveyed
pursuant to the Mortgage as security for the obligations of the Borrower under
this Agreement.
"Credit Institution" shall mean FUNB-NC and/or FUNB-TN, as the
context may indicate, their successors and assigns.
- 3 -
4
"Date of Issuance" shall mean the date on which the Letter of
Credit is issued and becomes effective.
"Default" shall mean any condition or event which with the
giving of notice or lapse of time, or both, would constitute an Event of
Default hereunder.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) and the
Superfund Amendments and Reauthorization Act (XXXX); the Resource Conservation
and Recovery Act (RCRA); the Emergency Planning and Community Right to Know
Act; the Clean Water Act (the Federal Water Pollution Control Act); the Safe
Drinking Water Act; the Clean Air Act; the Surface Mining Control and
Reclamation Act; the Coastal Zone Management Act; the Noise Control Act; the
Occupational Safety and Health Act; the Toxic Substances Control Act (TSCA);
the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA); any so-called
"Superfund" or "Superlien" law; or any other federal, state or local statute,
law, ordinance, code, rule, regulation, order, decree or other requirement of
any governmental body regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Materials, or toxic or dangerous
chemical, waste, substance or material.
"Event of Default" shall mean any of the Events of Default as
defined in Section 5.1 hereof.
"Financing Documents" shall mean the Bonds, the Indenture, the
Loan Agreement, the Note, this Reimbursement Agreement, the Standby Note, the
Mortgage, the Security Agreement, the Collateral Agreement, the Pledge
Agreement, the Guaranty Agreements, and the Remarketing Agreement.
"Guarantors" shall mean American Retirement Corporation, a
Tennessee corporation,; A.R.C. Management Corporation, a Tennessee corporation;
American Retirement Communities, L.L.C. ("ARC, LLC"), a Tennessee limited
liability company; ARC Fort Austin Properties, Inc., a Tennessee corporation;
ARC Corpus Christi, Inc., a Tennessee corporation; ARC Oak Park, Inc., a
Tennessee corporation; ARC Equities-Lexington, Inc., a Tennessee corporation;
and ARC Chattanooga, Inc., a Tennessee corporation and their respective
successors and assigns.
"Guaranty Agreement" shall mean collectively, the Guaranty
Agreements, dated as of the date hereof, made by the respective Guarantors in
favor of the Credit Institution, pursuant to which, among other things, the
Guarantors have agreed to guarantee all obligations of the Borrower hereunder,
under the Standby Note and under the other Financing Documents, as supplemented
or amended from time to time, subject however to such limitations (if any) as
appear in such Guaranty Agreements.
- 4 -
5
"Hazardous Materials" shall mean any hazardous, toxic or
dangerous chemical, substance, waste or material defined as such in any of the
Environmental Laws.
"Indenture" shall mean the Trust Indenture dated as of April
1, 1987 by and between the Issuer and the Trustee as revised pursuant to that
Amended and Restated Indenture between the Issuer and the Trustee dated as of
November 1, 1994.
"Letter of Credit" shall mean the Letter of Credit issued by
FUNB-NC to the Trustee pursuant to this Agreement in the form of Exhibit A
hereto, as supplemented or amended from time to time.
"Maximum Rate" shall mean the maximum rate of interest
permitted to be charged under applicable laws in effect from time to time.
"Mortgage" shall mean the Mortgage with Security Agreement and
Assignment of Rents on the Collateral Real Estate and certain personal property
of the Borrower, dated as of the date hereof, from the Borrower for the benefit
of the Credit Institution, as supplemented or amended from time to time.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
the date hereof by and between the Borrower and the Credit Institution, as
supplemented or amended from time to time.
"Prime Rate" shall mean the fluctuating rate of interest
established by FUNB-TN from time to time as its "Prime Rate," whether or not
such rate shall be otherwise published. The Prime Rate is established by
FUNB-TN as an index or base rate and may or may not at any time be the best or
lowest rate charged by FUNB-TN on any loan. If at any time or from time to time
the Prime Rate increases or decreases, then any interest rate hereunder based
on the Prime Rate shall be correspondingly increased or decreased as of the
date of the increase or decrease in the Prime Rate. In the event that FUNB-TN,
during the term hereof, shall abolish or abandon the practice of establishing a
Prime Rate, or should the same become unascertainable, the Credit Institution
shall designate a comparable reference rate which shall thereafter be deemed to
be the Prime Rate for purposes hereof.
"Reimbursement Account" shall mean the Reimbursement Account
established pursuant to Section 3.1 hereof.
"Scheduled Termination Date" shall mean the "Stated Expiration
Date" as set forth in the Letter of Credit.
"Settlement Agreement" shall mean the Settlement Agreement
dated September 27, 1994 between the Borrower and the Resolution Trust
Corporation, as Receiver for Metropolitan Federal Savings and Loan Associates.
- 5 -
6
"Standby Note" shall mean the standby promissory note of the
Borrower described in Section 3.5 hereof, as supplemented or amended from time
to time.
"Stated Amount" shall mean the face amount of the Letter of
Credit initially equal to $8,176,875.00, representing a $8,010,000.00 principal
portion and a $166,875.00 interest portion to cover 50 days' interest on the
Bonds at an assumed rate equal to fifteen percent (15%) per annum, as it may be
reduced and reinstated from time to time in accordance with the terms of the
Letter of Credit.
"Tender Drawing" shall mean any drawing under the Letter of
Credit pursuant to a drawing certificate in the form of Annex B to the Letter
of Credit.
"Termination Date" shall mean the last day a drawing is
available under the Letter of Credit.
ARTICLE II.
REPRESENTATIONS BY BORROWER;
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
SECTION 2.1. REPRESENTATIONS BY BORROWER. The Borrower makes
the following representations for the benefit of the Credit Institution (which
representations shall survive the issuance of the Letter of Credit):
(A) All representations and warranties made by the
Borrower in the Loan Agreement are incorporated herein by reference and shall
be deemed to have been made and reaffirmed by the Borrower for the benefit of
the Credit Institution as if they were fully set forth herein.
(B) The Borrower owns a fee simple estate in the real
property on which the Project is located, and the Borrower owns fee simple
title to the Project, subject only to the Permitted Encumbrances (as defined in
the Mortgage).
(C) The Borrower has the power to own its property and to
carry on its business as now being conducted, is in good standing in the
jurisdiction of its formation, and is qualified to do business in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary.
(D) The Borrower has full partnership power and authority
to enter into and execute and deliver each of the Financing Documents to which
it is a party and to incur and perform the obligations provided for herein and
therein, all of which have been duly authorized by all proper and necessary
partnership action. No consent or approval of limited partners or of any other
person or public authority or regulatory body is required as a condition to the
validity
- 6 -
7
or enforceability of any of such Financing Documents, or, if required, the same
has been duly obtained.
(E) The existing and contemplated use of the Project is
and will be in conformity with all applicable governmental laws, ordinances,
rules and regulations (including, but not limited to, the Americans with
Disabilities Act and all other environmental, health, safety and zoning laws,
ordinances, rules and regulations), and all variances and exceptions granted
with respect thereto; and there is no existing, threatened or pending action,
suit, proceeding, inquiry or investigation wherein an unfavorable decision,
ruling or finding would in any way have an adverse effect on the Project, or
its existing or intended use, or the repayment of the Bonds.
(F) The Borrower is in compliance with all applicable
governmental laws and regulations applicable to the conduct of its business and
the operation of the Project, the noncompliance with which would have a
material adverse effect on the Borrower's financial condition or operations or
the operation of the Project.
(G) The Borrower is in compliance with all applicable
governmental laws and regulations and has all necessary certificates of need
applicable to the conduct of its health agency business in Fayette County,
Kentucky and in the surrounding counties of Xxxxxxx, Xxxxx, Jesamine and
Franklin.
(H) All of the Financing Documents to which the Borrower
is a party have been duly authorized, executed and delivered by the Borrower,
constitute valid and legally binding obligations of the Borrower, and are fully
enforceable against the Borrower in accordance with their respective terms.
(I) The execution, delivery and performance by the
Borrower of the Financing Documents will not: conflict with or result in a
breach of any of the terms, conditions or provisions of the partnership
agreement or the partnership certificate of the Borrower; conflict with or
result in a breach of any governmental requirement applicable to the Borrower;
conflict with, result in a breach of or require consent under any agreement,
instrument or indenture to which the Borrower is a party, or by which it or any
of its property is bound, or conflict with, result in a breach of, or
constitute (with notice, lapse of time, or both) a default thereunder; result
in the creation or imposition of any lien (other than the lien of the Mortgage)
upon any of the property or assets of the Borrower; or result in or require the
acceleration of any indebtedness of the Borrower.
(J) There are no actions, claims, suits or proceedings
pending, or, to the knowledge of the Borrower, threatened or reasonably
anticipated against or directly involving the Borrower at law or in equity or
before or by any governmental authority and, to the best of the Borrower's
knowledge, there is no possibility of any judgment, liability or award which
may reasonably be expected to result in any material and adverse change in the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Borrower. The Borrower
- 7 -
8
has received no notice that it is in default with respect to any governmental
requirement or any judgment, order, writ, injunction, decree, rule, award or
regulation of any governmental authority.
(K) The Borrower is not in default under any contract,
agreement, commitment or other instrument which default would have a material
adverse effect on the business, properties or condition (financial or
otherwise) of the Borrower, or in the performance of any covenants or
conditions respecting any of its indebtedness. No holder of any indebtedness
of the Borrower has given notice of any asserted default thereunder. No
liquidation or dissolution of the Borrower and no receivership, insolvency,
bankruptcy, reorganization or other similar proceeding relative to the Borrower
or its properties is pending or, to the knowledge of the Borrower, is
threatened against it.
(L) Borrower is not in default in the payment of the
principal of or interest on any of its indebtedness for borrowed money, nor is
the Borrower in default under any provision of any instrument under or subject
to which any indebtedness for borrowed money has been incurred, and no event
has occurred and is continuing under the provisions of any such instrument that
with the lapse of time or the giving of notice, or both, would constitute an
event of default thereunder.
(M) No information furnished by or on behalf of the
Borrower in connection with the negotiation of the issuance of the Letter of
Credit contains any untrue statement of a material fact or omits a material
fact necessary to make such information not misleading. There is no fact that
the Borrower has not disclosed to the Credit Institution that materially
adversely affects or, so far as the Borrower can now foresee based on facts
known to it and based on opinions of the Borrower's partners, employees, agents
and advisors concerning such facts, will materially adversely affect the
properties, business, prospects, profits or condition (financial or otherwise)
of the Borrower, or the ability of the Borrower to perform its obligations
under the Financing Documents.
SECTION 2.2. LETTER OF CREDIT COMMITMENT; PARTICIPATION.
(A) Subject to the terms and conditions set forth in this
Agreement, FUNB-NC agrees to issue its Letter of Credit, in the form of Exhibit
A hereto, in the original Stated Amount.
(B) Effective on the Date of Issuance, FUNB-TN shall be
deemed to have irrevocably and unconditionally purchased and received from
FUNB-NC, without recourse or warranty and without any further action on the
part of either of them, an undivided interest and participation in all
obligations of the Borrower hereunder and any security therefor or guarantees
relating thereto. FUNB-NC shall notify FUNB-TN telephonically of the making
and amount of each drawing and confirm such notification by facsimile, promptly
after the presentation of any draft and certificate or equivalent documents in
connection with any drawing under the Letter of Credit not reimbursed by or on
behalf of the Borrower on the date such drawing is made, and
- 8 -
9
FUNB-TN shall, on or before 2:00 p.m. (Eastern time) on the date of any such
drawing unconditionally pay to FUNB-NC the full amount of such drawing,
provided that if FUNB-TN has not received such notice by 12:00 noon (Eastern
time), FUNB-TN shall reimburse FUNB-NC on the next Business Day. FUNB-NC agrees
that, for so long as FUNB-TN is not in default to FUNB- NC under this Section
2.2(B), FUNB-TN shall act as agent for FUNB-NC with respect to collection of
payments due hereunder from the Borrower, receipt of financial and other
information from the Borrower required hereunder, the declaration or waiver of
any default hereunder, the giving or withholding of any consents, instructions
or amendments hereunder or hereto, the exercise of any remedies following the
occurrence of an Event of Default, and all other matters pertaining to
relations and communications between the Borrower and the Credit Institution
hereunder. To the extent any of the Financing Documents vests such authority
in the Credit Institution, FUNB-NC agrees that it will act in accordance with
the instructions of FUNB-TN.
SECTION 2.3. CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER
OF CREDIT. It is a condition precedent to the obligation of FUNB-NC to issue
the Letter of Credit that the Credit Institution shall have received each of
the following documents or other items in form and substance satisfactory to
the Credit Institution, and, in the case of appraisals and environmental
reports, insurance and similar certifications and the like, prepared by
professionals satisfactory to the Credit Institution; or if any such item shall
be waived by the Credit Institution as a condition to the issuance of the
Letter of Credit, such item shall be furnished to the Credit Institution at or
before the time set forth in such waiver:
(A) Certified copies of the partnership agreement,
partnership certificate and consent of partners of the Borrower, and
certificate(s) of existence and incumbency certificate(s) for the Borrower's
general partner, ARC, LLC, accompanied by an opinion of Bass, Xxxxx & Xxxx,
counsel to the Borrower, in form and substance satisfactory to the Credit
Institution, including, without limitation, to the effect that the Borrower is
a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Tennessee and Kentucky and that the Financing
Documents to which the Borrower is a party have been duly authorized, executed
and delivered by the Borrower and constitute legal, valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws or equitable principles relating to or
limiting creditors' rights generally and except as rights of indemnification
relating to liability under federal and state securities laws may be limited by
applicable law;
(B) Certificates of existence, incumbency certificates,
resolutions and certified copies of the organizational documents for the
Guarantors, accompanied by an opinion of Bass, Xxxxx & Xxxx, counsel to the
Guarantors, in form and substance satisfactory to the Credit Institution,
including without limitation, to the effect that each of the Guarantors is duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and, if different, the State of its domestication, and that the
Financing Documents to which each of them
- 9 -
10
is a party have been duly authorized, executed and delivered and constitute the
legal, valid and binding obligation of each Guarantor enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws or equitable
principles relating to or limiting creditor's rights generally and except as
rights of indemnification relating to liability under federal and state
securities laws may be limited by applicable law;
(C) A copy of the fully executed Indenture;
(D) The fully executed original of the Standby Note and
fully executed originals of this Agreement, the Mortgage, the Security
Agreement, the Collateral Agreement, the Pledge Agreement and the Guaranty
Agreements;
(E) An ALTA lender's title insurance policy (the "Title
Policy") on the Collateral Real Estate from Chicago Title Insurance Company
with minimum coverage in an amount not less than the original Stated Amount of
the Letter of Credit. The Title Policy shall insure that the Mortgage in favor
of the Credit Institution is a lien on the Collateral Real Estate subject only
to such exceptions as are Permitted Encumbrances and shall contain such
endorsements and affirmative coverage as shall be requested by the Credit
Institution;
(F) An opinion of Xxxxx Xxxx & Xxxxx, Bond Counsel, in
form and substance satisfactory to the Trustee;
(G) An opinion of Boult, Cummings, Xxxxxxx & Xxxxx,
counsel to the Credit Institution, in form and substance satisfactory to the
Trustee;
(H) Evidence that the Mortgage has been recorded in the
Clerk's Office of Fayette County, Kentucky (the "Register's Office") and
evidence that financing statements perfecting the Credit Institution's security
interest in personal property have been duly filed in all required filing
offices;
(I) A certificate of a person selected by the Borrower
and knowledgeable in the insurance business, who is not a partner or employee
of the Borrower, reciting that all policies of insurance required by the Loan
Agreement to be in effect upon delivery of the Bonds are in full force and
effect and that the amounts and types of insurance evidenced thereby comply
with and satisfy all the requirements of the Loan Agreement, together with
certificates or policies evidencing insurance coverage then in effect, which
certificates and policies shall include flood insurance unless the Borrower
shall have furnished the Credit Institution with written evidence satisfactory
to the Credit Institution that the Collateral Real Estate is not located in an
area shown as having special flood hazards on a map of the boundaries of
Fayette County, Kentucky prepared by or on behalf of the U.S. Department of
Housing and Urban Development;
- 10 -
11
(J) A current survey of the Collateral Real Estate,
prepared and certified by a certified land surveyor in the form required by the
Credit Institution;
(K) A copy of the certificate of occupancy required for
the operation and occupancy of the Project by the Borrower, evidence that the
Borrower has obtained and maintains in full force and effect all permits,
licenses, certificates and authorizations needed to own and operate its home
health business and the Project (including, without limitation, certificates of
need and other regulatory approvals), and evidence that the Project complies
with all zoning and building codes and ordinances applicable thereto;
(L) A current appraisal of the Collateral Real Estate by
an appraiser engaged by the Credit Institution at the Borrower's expense,
indicating an appraised value of the Project satisfactory to the Credit
Institution, and which satisfies all applicable regulations of bank regulatory
agencies having jurisdiction over the Credit Institution;
(M) An environmental engineer's environmental screening
inspection report ("ESI") addressing environmental matters and indicating that
the Collateral Real Estate is free of hazardous wastes and toxic substances and
otherwise complying with the requirements of the Credit Institution;
(N) Payment to the Credit Institution in cash of all fees
which are due on the Date of Issuance under Section 3.2;
(O) A copy of the Management Agreement for the Project
between the Borrower and A.R.C. Management Corporation; and
(P) Such other documents as may have been reasonably
requested by the Credit Institution.
ARTICLE III.
REIMBURSEMENT OBLIGATION;
OTHER PAYMENTS; LETTER OF CREDIT FEES
SECTION 3.1. REIMBURSEMENT AND OTHER PAYMENTS.
(A) The Borrower hereby agrees to establish an interest
bearing escrow account with FUNB-TN known as the Richmond Place Reimbursement
Account (the "Reimbursement Account") and to pay to the Credit Institution (and
the Credit Institution is hereby authorized to deduct from any and all
operating accounts maintained by the Borrower with the Credit Institution) the
following amounts in the manner and at the times set forth below:
- 11 -
12
(i) All funds deposited in the Reimbursement
Account in accordance with subparagraphs (ii) and (iii) below shall be
accounted for on a first-in, first-out basis. Amounts deposited in the
Reimbursement Account shall be spent within a thirteen-month period beginning
on the date of deposit; and earnings received from investment of money held in
the Reimbursement Account shall be spent within a one-year period beginning on
the date of receipt. Moneys in the Reimbursement Account at any time may be
invested without restriction as to yield within the meaning of Section 148 of
the Code at the direction of the Borrower. Any amounts in the appropriate
subaccount of the Reimbursement Account on the date any payment is due under
any subparagraph hereof shall be credited against the amount due. Any balance
remaining in the Reimbursement Account after the Termination Date and the
payment of all obligations of the Borrower due the Credit Institution hereunder
and under all of the other Financing Documents shall be paid to the Borrower.
(ii) Not later than 11:00 a.m. (Eastern time) on
the Business Day next preceding the twenty-fifth (25th) day of each consecutive
month commencing November 24, 1995, the Borrower shall pay the Credit
Institution in collected funds for deposit in the interest subaccount of the
Reimbursement Account an amount equal to the amount of interest due and payable
to the Trustee under the Indenture on the first Business Day of the immediately
succeeding month, the same being equal to one-sixth (1/6) of the amount of
interest due and payable on the Bonds on the next succeeding Semi-Annual
Interest Payment Date. The amounts received by the Credit Institution pursuant
to this subparagraph shall be deposited in the interest subaccount of the
Reimbursement Account which shall be debited by the Credit Institution as
necessary to reimburse the Credit Institution for each drawing under the Letter
of Credit for interest on the Bonds.
(iii) Not later than the second Business Day
preceding any date on which principal is due and payable on the Bonds at
maturity or by sinking fund redemption or mandatory redemption, the Borrower
shall pay the Credit Institution in collected funds for deposit in the
principal subaccount of the Reimbursement Account the amount the Credit
Institution will be required to advance under the Letter of Credit for such
principal payment. In the event of a drawing under the Letter of Credit to pay
principal on the Bonds as a result of an optional redemption or optional
prepayment of the Bonds, the Borrower shall pay the Credit Institution in
collected funds, or make other arrangements satisfactory to the Credit
Institution pursuant to Section 4.1(B) below, to pay an amount sufficient to
reimburse the Credit Institution for each drawing before the Trustee sends
notice of redemption to the Bondholders. The principal amounts received by the
Credit Institution pursuant to this subparagraph shall be deposited in the
principal subaccount of the Reimbursement Account which shall be debited by the
Credit Institution as necessary to reimburse the Credit Institution for each
drawing under the Letter of Credit for principal on the Bonds. In the event
the Trustee credits the amount to be drawn under the Letter of Credit for any
principal payment made otherwise than from a draw on the Letter of Credit, a
corresponding credit shall be granted to the Borrower for the amounts due
hereunder.
- 12 -
13
(iv) In addition to those amounts required to be
paid by Borrower under subparagraphs (ii) and (iii) above, Borrower shall
deposit into the principal subaccount of the Reimbursement Account the amount
of $170,000, representing the current balance in Borrower's existing escrow
account. Borrower shall also pay on a quarterly basis to the Credit
Institution, the following amounts for deposit into the principal subaccount of
the Reimbursement Account on the dates indicated:
PAYMENT DATE AMOUNT
------------ ------
December 31, 1995 $36,000
March 31, 1996, June 30, 1996 and $53,750
September 30, 1996
December 31, 1996 and March 31, 1997 $60,000
(B) In the event of a Tender Drawing under the Letter of
Credit to purchase Bonds for the account of the Borrower pursuant to optional
or mandatory tenders under the provisions of the Indenture, the Borrower shall
continue to make the payments required by subparagraphs (A)(iii) and A(iv)
above, and such payments shall be applied first to redeem Bonds purchased with
the proceeds of such drawing and held for the account of the Borrower or the
Credit Institution as of any maturity date or redemption date provided for in
the Indenture. The Borrower shall cause all amounts received from the
remarketing of such Bonds prior to any maturity date or redemption date
provided for in the Indenture to be paid to the Credit Institution to reimburse
it for the amount of such drawing. On the Termination Date, the Borrower shall
pay the Credit Institution the aggregate amount of any and all such drawings
that have not been previously reimbursed, subject to a credit for any amounts
available therefor in the principal subaccount of the Reimbursement Account.
(C) In the event of any drawing under the Letter of
Credit to make payments due on the Bonds as a result of any event or
circumstance not covered by subparagraph (A) or subparagraph (B) above, the
Borrower shall by no later than 12:00 p.m. (Nashville, Tennessee Time) on the
day of such drawing pay to the Credit Institution an amount sufficient to
reimburse the Credit Institution for such drawing to the extent funds are not
available in the principal subaccount of the Reimbursement Account to cover
such drawing reimbursement.
(D) In the event of a drawing under the Letter of Credit
pursuant to subparagraph (B) above, the Borrower shall pay the Credit
Institution interest on the entire amount of such drawing at the Prime Rate
plus one- quarter of one percent (1/4%) per annum from the date of the draw
until such amount is reimbursed in full, which interest shall be payable in
arrears on the first Business Day of each month, on the Termination Date or on
any earlier date of reimbursement pursuant to Section 3.6. In the event the
payments required by subparagraphs (A), (B) or (C) above or subparagraph (G)
below are not made on the due date thereof, the Borrower
- 13 -
14
shall pay the Credit Institution interest on such outstanding amounts from the
due date thereof until such amounts are paid in full at the Prime Rate plus two
percent (2%) per annum.
(E) In the event the Credit Institution holds Bonds as
pledgee or for its own account pursuant to a Tender Drawing and it receives
payment in full for such Bonds and for all amounts due to it under this
Agreement, the Credit Institution shall release such Bonds to the Trustee as
provided in the Indenture.
(F) In any event, if as a result of a drawing under the
Letter of Credit other than a Tender Drawing, the Credit Institution pays any
amount under the Letter of Credit in excess of the amount in the Reimbursement
Account applied to reimburse the Credit Institution therefor, the Borrower
shall upon demand immediately reimburse the Credit Institution for such amount.
Any amounts not so paid shall bear interest at the Prime Rate plus two percent
(2%) per annum, which interest shall be payable on demand.
(G) The Borrower shall pay the Credit Institution on
demand any and all reasonable charges and expenses, including legal fees (and
interest on such amounts as provided in subparagraphs (D) and (F) above), which
the Credit Institution may pay or incur relative to the Letter of Credit or in
reviewing, interpreting, administering or enforcing any of its rights or
responsibilities under this Agreement or the other Financing Documents.
SECTION 3.2. FEES.
(A) In addition to any other fees payable to the Credit
Institution, the Borrower shall pay to the Credit Institution a fee with
respect to the Letter of Credit (a "Letter of Credit Fee") equal to either (i)
1.09% per annum, payable annually in advance on the date hereof and on each
Anniversary Date thereafter; or (ii) 1.15% per annum, payable quarterly in
advance on the date hereof and on each quarterly principal payment date
described in Section 3.1(A)(iv) hereof (each such annual or quarterly payment
date is referred to herein as a "Fee Payment Date"). If the annual payment date
is chosen, the Letter of Credit Fee shall be calculated as a percentage of the
initial Stated Amount of the Letter of Credit for the first year and of the
maximum potential Stated Amount of the Letter of Credit then in effect for each
year thereafter (as it is reduced from time to time by virtue of drawings to
redeem the principal of the Bonds or to pay principal on the Bonds at maturity,
but not drawings to purchase Bonds subject to optional or mandatory tender and
as so determined on the date each fee payment is due). If the quarterly
payment date is chosen, the Letter of Credit Fee shall be calculated as a
percentage of the initial Stated Amount of the Letter of Credit for the first
quarter and of the maximum potential Stated Amount of the Letter of Credit then
in effect for each quarter thereafter (as it is reduced from time to time by
virtue of drawings to redeem the principal of the Bonds or to pay principal on
the Bonds at maturity, but not drawings to purchase Bonds subject to optional
or mandatory tender and as so determined on the date each fee payment is due).
The Letter of Credit fee shall be calculated on the basis of a 360-day year.
There shall be no refund of any portion of such prepaid fee by reason of
expiration, reduction, modification, termination, redemption or prepayment of
- 14 -
15
any of the Stated Amount, the Letter of Credit or the Bonds subsequent to the
date of receipt of such fee by the Credit Institution.
(B) Notwithstanding the foregoing, if an Event of Default
occurs hereunder and is continuing, then from and after the occurrence of such
Event of Default the Letter of Credit fee shall be simultaneously increased to
two percent (2%) per annum multiplied by the maximum potential stated amount of
the Letter of Credit on the Fee Payment Date immediately preceding such Event
of Default. The excess over any Letter of Credit fee previously paid for the
year, together with any balance of the fee for the current year, shall be due
and payable in prorated monthly installments on the first of each month for the
balance of the year. For any new year the Letter of Credit fee payable
pursuant to this Section 3.2(B) shall be payable in full on the Anniversary
Date.
(C) In addition to the fees payable pursuant to the
preceding paragraph, a $1,000 transfer fee and a fee of $100 per draw shall be
assessed against Borrower and payable on demand.
SECTION 3.3. SUPPLEMENTAL PAYMENTS.
(A) If after the Date of Issuance (i) the Credit
Institution determines, or acquiesces in the determination by a court or
administrative or governmental authority that its obligations under this
Agreement or the Letter of Credit are a deposit insured by the Federal Deposit
Insurance Corporation ("FDIC") or (ii) the Credit Institution determines that
any law or regulation, or any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (A) impose, modify or deem
applicable any insurance (including, without limitation, FDIC insurance),
reserve, capital adequacy, special deposit or similar requirement for or
against letters of credit issued or assets held by, or deposits in or for the
account of, the Credit Institution or (B) impose on the Credit Institution any
other condition regarding this Agreement or the Letter of Credit, including any
relating to capital adequacy, and the result of any event referred to in clause
(A)(i) or (ii) above shall be to increase the cost to the Credit Institution of
issuing or maintaining the Letter of Credit (which increase in cost shall be
the result of the Credit Institution's reasonable allocation of the aggregate
of such cost increases resulting from such events and shall be calculated
without giving effect to any participation granted in the Letter of Credit)
then, upon demand by the Credit Institution, the Borrower shall immediately pay
to the Credit Institution all additional amounts which are necessary to
compensate the Credit Institution for such increased cost incurred by the
Credit Institution. A certificate as to such increased cost incurred by the
Credit Institution as a result of any event referred to in clause (A)(i) or
(ii) above submitted by the Credit Institution to the Borrower shall be
conclusive, absent manifest error, as to the amount thereof.
- 15 -
16
(B) The Borrower shall also pay interest on such
increased costs at the Prime Rate plus one-quarter of one percent (1/4%) per
annum from the date the Credit Institution mails Borrower written notice of
such change until such amount is paid in full.
SECTION 3.4. COMPUTATION OF INTEREST; FORM AND PLACE OF
PAYMENT. The interest payable hereunder shall be computed on the basis of the
actual number of days elapsed over a year of 360 days. If the Prime Rate
changes, the interest rate on all amounts due hereunder shall be adjusted on
the day of each change in the Prime Rate. All payments by the Borrower to the
Credit Institution hereunder shall be made in lawful currency of the United
States and in immediately available funds on the date such payment is due at
the Credit Institution's office at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000.
SECTION 3.5. STANDBY NOTE AND SECURITY FOR REIMBURSEMENT
OBLIGATION.
(A) The Borrower shall execute and deliver the Standby
Note to the Credit Institution on the Date of Issuance. In the event any sums
are advanced under the Letter of Credit which are not immediately reimbursed to
the Credit Institution, such sums shall be deemed to be advanced under the
Standby Note.
(B) As security for the payment of all of its obligations
under this Agreement, whether now existing or hereafter arising, the Borrower
shall grant the Credit Institution a lien on, and an assignment of and security
interest in, the Collateral Real Estate, all leases of and rents derived by the
Borrower from the Collateral Real Estate, a security interest in all equipment,
inventory, accounts and other personal property located on, used in connection
with or arising from the Collateral Real Estate, pursuant to the Mortgage (in
each case subject only to Permitted Encumbrances), and the Borrower shall
execute and deliver (and cause the Guarantors and the other parties thereto to
execute and deliver) the other Financing Documents.
(C) The Borrower hereby pledges, assigns, hypothecates,
transfers and delivers to the Credit Institution all its right, title and
interest in and to the Reimbursement Account and hereby grants to the Credit
Institution a lien on, and security interest in, the Borrower's right, title
and interest in and to the Reimbursement Account and in all proceeds thereof,
and substitutions therefor, as additional collateral security for the prompt
and complete payment when due of all amounts due from the Borrower to the
Credit Institution under this Agreement and the other Financing Documents.
SECTION 3.6. ACQUISITION OF BONDS.
(A) In the event the Remarketing Agent is able to
remarket any Bonds as of the date of any Tender Drawing and the proceeds of
such remarketing are paid to the Credit Institution on the date of such
drawing, the Credit Institution shall relinquish any interest it may have had
in the Bonds purchased with the proceeds of such drawing, but only to the
extent of such
- 16 -
17
payment, and the Trustee shall deliver Bonds, in a principal amount equal to
the amount so paid, to the purchasers of such Bonds free of any claim of the
Credit Institution.
(B) Subject to the provisions of this Agreement, in the
event that as of the date of any Tender Drawing the Remarketing Agent has been
unable to remarket any or all Bonds, a principal amount of Bonds equal to the
amount owed the Credit Institution for such Tender Drawing shall immediately as
of such date become, and be deemed to be, owned and held by the Credit
Institution as pledgee of the Borrower (or, at the option of the Credit
Institution upon prior written notice to the Borrower and the Trustee, for its
own account), and the Borrower hereby and pursuant to the Pledge Agreement
pledges to the Credit Institution, and grants the Credit Institution a security
interest in, all Bonds so purchased for the account of the Borrower with the
proceeds of a Tender Drawing.
(C) Upon notice to the Credit Institution that any of the
Bonds held by the Credit Institution as pledgee or for its own account are to
be remarketed and upon payment to the Credit Institution of the proceeds
thereof and all accrued interest which is due the Credit Institution on the
Tender Drawing used to purchase such Bonds, the Credit Institution shall
release to the Trustee, for delivery to the purchasers thereof a principal
amount of Bonds equal to the principal amount of such payment from the proceeds
of the remarketing thereof, free of any pledge or ownership interest of the
Credit Institution.
(D) The obligations of the Credit Institution hereunder
shall remain in effect until the Termination Date.
(E) All amounts paid to the Credit Institution by the
Borrower on Bonds held by the Credit Institution as pledgee or for its own
account shall be credited against amounts due from the Borrower under Section
3.1(B) and (D).
ARTICLE IV.
COVENANTS OF THE BORROWER; OTHER AGREEMENTS
SECTION 4.1. INCORPORATED COVENANTS OF BORROWER. All
covenants of the Borrower in the other Financing Documents, to the extent not
inconsistent herewith, are incorporated herein by reference and shall be deemed
to have been made and reaffirmed by the Borrower for the benefit of the Credit
Institution as if they were fully set forth herein. The Borrower hereby
further covenants and agrees that until the Termination Date and payment to the
Credit Institution of all amounts due and performance of all other obligations
of the Borrower under the Financing Documents, it shall comply with the
following additional affirmative and negative covenants, unless the Credit
Institution shall otherwise consent in writing:
(A) ACCESS TO PROJECT AND RECORDS. The Borrower shall at
any reasonable time and from time to time permit the Credit Institution or any
agents or representatives thereof, (i) to
- 17 -
18
examine and make copies of and abstracts from all relevant records and books of
account of the Borrower, (ii) to discuss all relevant affairs, finances and
accounts of the Borrower with any of its partners or employees, and (iii) to
inspect the Project. ANY INSPECTIONS OF THE PROJECT BY THE CREDIT INSTITUTION
SHALL IN NO WAY CONSTITUTE A WARRANTY TO THE BORROWER OR ANY THIRD PARTY AS TO
THE STRUCTURAL, SOIL OR ENVIRONMENTAL CONDITIONS OF THE PROJECT OR OF THE LAND
ON WHICH THE PROJECT IS LOCATED.
(B) PREPAYMENT OF LOAN OBLIGATIONS. The Borrower may
cause, at any time, any optional prepayment of the Note as may be permitted
under the Loan Agreement and Indenture and direct any corresponding optional
redemption of Bonds as may be permitted under the Indenture by providing the
Credit Institution with notice of the desired prepayment and by making
satisfactory arrangements with the Credit Institution for reimbursing the
Credit Institution in full for the drawing on the Letter of Credit necessary to
effect such redemption of the Bonds by no later than the date on which the
Trustee first sends notice thereof to the owners of the Bonds. Thereupon the
Credit Institution shall notify the Trustee to begin redemption proceedings and
to request the Trustee to draw on the Letter of Credit as required by the
Indenture.
(C) GOOD STANDING. The Borrower shall maintain its
status at all times as a limited partnership validly existing and in good
standing under the laws of the State of Tennessee.
(D) TAX EXEMPT STATUS OF BONDS. The Borrower shall not
take, fail to take or, to the extent it exercises any control, permit to be
taken, any action if such action or failure to act would adversely affect the
exclusion from gross income for federal income tax purposes of interest on the
Bonds and will perform all of its obligations under the Financing Documents to
prevent or cure any default by the Borrower which would adversely affect such
exclusion.
(E) BOOKS AND RECORDS. The Borrower shall keep or cause
to be kept proper books of record and account, in which full and correct
entries shall be made in accordance with generally accepted accounting
principles, consistently applied, of all its business and affairs, and such
books of record and account shall be kept at either (i) the principal place of
business of the A.R.C. Management Corporation, or (ii) at the Borrower's
principal place of business, being 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx.
The Borrower shall not change its principal place of business or the location
of its books and records relating to the Project without giving prior written
notice of such change to the Credit Institution.
(F) FINANCIAL STATEMENTS. The Borrower shall furnish or
cause to be furnished at its expense to the Credit Institution (i) all such
financial and other data required to be furnished to FUNB-TN under the Loan
Agreement of even date herewith executed by Borrower and FUNB-TN (the "FUNB-TN
Loan Agreement"), (ii) promptly after receipt, copies of any and all deficiency
or other notices, complaints, attempts to seek injunctive relief or attempts to
seek injunctive remedies issued by any regulatory agency or authority having
jurisdiction or authority over the Project, and (iii) promptly upon a request
from the Credit Institution, such additional
- 18 -
19
information, reports and statements as the Credit Institution may from time to
time reasonably request.
(G) NOTICE OF DEFAULTS. The Borrower shall promptly
notify the Credit Institution of any default by the Borrower under any of the
Financing Documents or any filing by or against the Borrower of any petition in
bankruptcy or any similar insolvency proceeding.
(H) NOTICE OF LITIGATION. The Borrower shall promptly
inform the Credit Institution of any litigation, the adverse determination of
which might materially prejudice the payment of the Bonds, the performance of
its obligations under the Financing Documents, or the operation of the Project.
(I) GOVERNMENTAL LICENSES. The Borrower shall take all
steps necessary to maintain in full force and effect all permits, licenses,
certificates of need, and other authorizations and accreditations necessary for
the Borrower to own and operate the Project as a 175 unit residential
retirement community substantially as currently owned and operated and to own
and operate its home health agency business as currently owned and operated in
Fayette County and in each of the four surrounding counties of Xxxxxxx, Xxxxx,
Jesamine, and Franklin.
(J) COMPLIANCE WITH LAWS; PAYMENT OF OBLIGATIONS. The
Borrower shall comply with all valid and applicable statutes, rules and
regulations, and shall pay all taxes, assessments, governmental charges, claims
for labor, supplies and rent, and other obligations which, if unpaid, might
become a lien against the Project (except liabilities being contested in good
faith and against which, if requested by the Credit Institution, the Borrower
shall set up reserves satisfactory to the Credit Institution).
(K) RESERVE ACCOUNTS. The Borrower shall maintain
with FUNB-TN (i) a capital expenditure reserve account in an amount not less
than $88,000 for the Project; and (ii) an operating expense reseve account in
an amount equal to at least 14 times the annual average daily operating
expenses for the Project. These reserve accounts shall be pledged to the Credit
Institution as security for the obligations of Borrower hereunder.
(L) SECURITY DEPOSIT ACCOUNTS. To the extent required by
applicable law, Borrower shall maintain a segregated security deposit account
for the Project and shall advise the Credit Institution of its location.
(M) MERGER, ACQUISITION OR SALE OF ASSETS. The Borrower
shall not merge or consolidate with, or sell or transfer all or substantially
all of its property or assets to any person, firm, corporation or other entity.
(N) COPIES OF NOTICES OR COMPLAINTS ISSUED BY REGULATORY
AGENCIES; DEFICIENCY REPORTS. The Borrower shall promptly after receipt,
provide the Credit Institution with copies of any and all notices, complaints,
attempts to seek injunctive relief and attempts to
- 19 -
20
seek injunctive remedies issued by regulatory agencies having authority over
the Project. Without limiting the foregoing, if the Borrower shall:
(1) receive written notice that any violation of
any Environmental Laws may have been committed or is about to be committed by
the Borrower;
(2) receive written notice that any
administrative or judicial complaint or order has been filed or is about to be
filed against the Borrower alleging any material violation of any Environmental
Laws or requiring the Borrower to take any action in connection with the
release or threatened release of Hazardous Materials or solid waste into the
environment; or
(3) receive written notice from a federal, state,
foreign or local governmental agency or private party alleging that the
Borrower is liable or responsible for costs associated with the response to
cleanup, stabilization or neutralization of any environmental activity;
then it shall provide the Credit Institution with a copy of such notice within
two Business Days of the Borrower's receipt thereof. Within ten days of the
date the Borrower shall have learned of the enactment or promulgation of any
Environmental Laws which may have a material adverse effect on the business,
property, condition (financial or otherwise) or results of operations of the
Borrower, taken as a whole, or which might materially impair the value of the
Project, the Borrower shall provide the Credit Institution with notice thereof.
(O) SALE OR LEASE OF PROJECT. The Borrower shall not
sell, lease or otherwise assign any interest in the Project or any portion
thereof, except for residential leases signed in the ordinary course of
business.
(P) NO FURTHER ENCUMBRANCES. The Borrower shall not
mortgage, pledge or otherwise encumber, either directly or indirectly, or
permit or suffer to exist any lien, security interest or encumbrance upon the
Project or any of its other property except for (i) existing liens as of the
date of this Agreement which are approved by the Credit Institution and are
disclosed in the title policy delivered to the Credit Institution on the Date
of Issuance, (ii) liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, (iii) easements, rights-of-way, and
other minor defects and irregularities in the title to the Project which do not
impair the use of the Project or such other property or adversely affect the
value thereof, and (iv) other liens and encumbrances approved by the Credit
Institution.
(Q) NO PAYMENTS TO RELATED PARTIES. Without the prior
written consent of the Credit Institution, the Borrower shall not directly or
indirectly, except as permitted in the FUNB-TN Loan Agreement, enter into or
permit the payment by the Borrower of any fee, service charge or other
compensation or form of reimbursement to any Person or entity related to the
Borrower, American Retirement Corporation, A.R.C. Management Corporation, or
American Retirement Communities, LLC ("ARC-LLC") or any Person directly or
indirectly controlled by or under
- 20 -
21
common control with any one or more of them; provided however, so long as no
Event of Default has occurred hereunder, the Credit Institution does consent to
the payment of management fees to A.R.C. Management Corporation.
(R) SUBSTITUTE LETTER OF CREDIT. The Borrower shall not
provide a Substitute Letter of Credit for the Bonds except (i) during the sixty
(60) day period ending immediately prior to the then Scheduled Termination Date
of the Letter of Credit if the Borrower and the Credit Institution have been
unable to reach an agreement upon the extension of the Letter of Credit beyond
its then Scheduled Termination Date, or (ii) at any time after the Credit
Institution fails to honor a valid draft under the Letter of Credit, or (iii)
in connection with a conversion of the Interest Rate on the Bonds to a Fixed
Rate.
(S) CERTIFICATE AS TO NO DEFAULT. The Borrower shall
furnish to the Credit Institution within ninety (90) days after the close of
each of its fiscal years a certificate signed by an officer of the general
partner of the Borrower, stating that during such fiscal year and as of the
date of such certificate no event or condition has happened or existed, or is
happening or existing, which constitutes a Default or an Event of Default under
the Financing Documents, or if such an event or condition has occurred or is
occurring, specifying the nature and period of such event or condition and what
action the Borrower has taken, is taking or proposes to take with respect
thereto.
(T) MANAGEMENT OR OPERATING AGREEMENT. The Borrower
shall not enter into any management or operating agreement for the Project with
any person other than A.R.C. Management Corporation. The Borrower shall not
modify or amend its management agreement with A.R.C. Management Corporation
without the prior written consent of the Credit Institution.
(U) GENERAL PARTNER. ARC-LLC shall at all times be the
sole general partner of Borrower, and Borrower shall not change or remove said
general partner or add additional general partners to its partnership without
the prior written consent of the Credit Institution.
(V) AMENDMENT OF FINANCING DOCUMENTS. The Borrower shall
not amend or consent to the amendment of any of the Financing Documents, the
FUNB-TN Loan Agreement, or any other document executed in connection therewith.
SECTION 4.2. CONTINUOUS OBLIGATIONS; OBLIGATIONS ABSOLUTE.
This Agreement is a continuing obligation and shall (a) be binding upon the
Borrower, its successors and assigns, and (b) inure to the benefit of and be
enforceable by the Credit Institution and its successors, transferees and
assigns; provided, the Borrower may not assign all or any part of this
Agreement without the prior written consent of the Credit Institution. The
obligations of the Borrower under this Agreement shall be paid or performed
strictly in accordance with the terms of this Agreement under all circumstances
whatsoever, and shall be absolute, irrevocable, and unconditional.
- 21 -
22
SECTION 4.3. TRANSFER OF LETTER OF CREDIT. The Letter of
Credit may be transferred in accordance with the provisions set forth therein
and upon any transfer the Borrower shall pay the Credit Institution a transfer
fee of $1,000.
SECTION 4.4. REDUCTION AND REINSTATEMENT OF STATED AMOUNT OF
LETTER OF CREDIT. The reduction and reinstatement of the Stated Amount by
virtue of drawings under the Letter of Credit shall be as provided therein.
SECTION 4.5. EXTENSION OF THE SCHEDULED TERMINATION DATE.
The Credit Institution, at its sole option, may extend the Scheduled
Termination Date for purposes of this Agreement and the Letter of Credit for
one or more years at a time. No exercise by the Credit Institution of such
option shall obligate the Borrower to accept and pay any commission on the
extension of this Agreement and the Letter of Credit unless the Borrower shall
consent to such extension. If the Scheduled Termination Date is extended by
agreement of the parties as provided herein, then the Credit Institution shall
as soon as practicable thereafter give notice to the Trustee of such extension
in the form of Exhibit G to the Letter of Credit.
SECTION 4.6. EVIDENCE OF DEBT. The Credit Institution shall
maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower resulting from each drawing under
the Letter of Credit and the amounts of principal and interest payable and paid
from time to time hereunder. In any legal action or proceeding in respect of
this Agreement, the entries made in such account or accounts shall be
conclusive evidence of the existence and amounts of the obligations of the
Borrower therein recorded.
SECTION 4.7. OBLIGATIONS ABSOLUTE. The payment obligations
of the Borrower under this Agreement shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any of the
Financing Documents;
(ii) any amendment or waiver of or any consent to
departure from all or any of the Financing Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower or the Guarantor may have at any time against the
Trustee or any other beneficiary or any transferee of the Letter of Credit (or
any persons for whom the Trustee, any such beneficiary or any such transferee
may be acting), the Credit Institution, or any other person whether in
connection with this Agreement, the transactions contemplated hereby or by any
and all other Financing Documents or any unrelated transaction;
- 22 -
23
(iv) any statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the Credit Institution under the Letter of
Credit against presentation of a draft or certificate which does not strictly
comply with the terms of the Letter of Credit; or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, the Borrower.
ARTICLE V.
DEFAULTS AND REMEDIES
SECTION 5.1. EVENTS OF DEFAULT. Unless waived by the Credit
Institution pursuant to Section 5.2 hereof, each of the following shall
constitute an Event of Default under this Agreement:
(A) Any representation or warranty made in this
Agreement, in any certificate, report or opinion (including legal opinion),
financial statement or other instrument furnished in connection with this
Agreement or any of the other Financing Documents proves to have been untrue or
incomplete in any material respect when made;
(B) The Borrower fails to pay on the date on which the
same is due and payable as herein provided any payment required by this
Agreement and/or the Standby Note to be paid by the Borrower and the same is
not cured within two (2) Business Days;
(C) If, for any reason (other than release by the Credit
Institution), the Mortgage, the Security Agreement, the Collateral Agreement,
the Pledge Agreement or any Guaranty Agreement ceases to be in full force and
effect;
(D) The Borrower is dissolved;
(E) Any judgment against the Borrower or any attachment
or levy against the property of the Borrower with respect to a claim for an
amount in excess of $100,000 not adequately insured or indemnified against,
remains unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of twenty (20) days;
(F) A default or an event of default occurs and continues
beyond any applicable cure period under the Mortgage, the Security Agreement,
the Collateral Agreement, the Pledge
- 23 -
24
Agreement, any Guaranty Agreement, the Loan Agreement, or any of the other
Financing Documents;
(G) A default or an event of default occurs and continues
beyond any applicable cure period under the FUNB-TN Loan Agreement or any other
document evidencing indebtedness of the Borrower to FUNB-NC and/or FUNB-TN;
(H) The Borrower shall fail to make any payment due from
it on any indebtedness or other security for borrowed money beyond any
applicable cure period (whether its liability therefor is direct or
contingent), or if any event (other than the mere passage of time) or any
condition in respect of any indebtedness or other security for borrowed money
of the Borrower (whether its liability therefor is direct or contingent) or
under any agreement securing or relating to such indebtedness or other security
for borrowed money shall occur the effect of which, after the giving of any
required notice and the expiration of any applicable cure period, is to cause
(or permit any holder of such indebtedness or other security or a trustee to
cause) such indebtedness or other security, or a portion thereof, to become due
prior to its stated maturity or prior to its regularly scheduled dates of
payment, or if any such indebtedness or other security for borrowed money
otherwise is accelerated and becomes due prior to its stated maturity or prior
to its regularly scheduled dates of payment;
(I) The determination by the Credit Institution in good
faith that a material adverse change has occurred in the financial condition of
any Guarantor which will impair such Guarantor's ability to comply with its
obligations under its Guaranty Agreement; provided, however, that any such
material adverse change shall not constitute an Event of Default hereunder
until thirty (30) days following written notice from the Credit Institution to
the Borrower of such material adverse change;
(J) (i) Failure of the Borrower to pay generally its
debts as they become due, (ii) commencement by the Borrower of a voluntary case
under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
(iii) consent by the Borrower to the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official for the
Borrower or any substantial part of its property, or to the taking possession
by any such official of any substantial part of the property of the Borrower,
(iv) making by the Borrower of any assignment for the benefit of creditors or
(v) taking of action by the Borrower in furtherance of any of the foregoing;
(K) The (i) entry of any decree or order for relief by a
court having jurisdiction over the Borrower or its property in an involuntary
case under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
(ii) appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Borrower or any substantial part of
its property or (iii) entry of any order for the termination or liquidation of
the Borrower or its affairs;
- 24 -
25
(L) Failure of the Borrower within thirty (30) days after
the commencement of any proceedings against it under the federal bankruptcy
laws or any other applicable federal or state bankruptcy, insolvency or other
similar law, to have such proceedings dismissed or stayed;
(M) Notwithstanding the provisions of Section 6.8 hereof,
any material provision of this Agreement at any time for any reason ceases to
be valid and binding on the Borrower, or is declared to be null and void, or
the validity or enforceability thereof is contested by the Borrower or any
governmental agency or authority, or the Borrower denies that it has any or
further liability or obligation under this Agreement or any of the other
Financing Documents;
(N) The Borrower at any time shall not hold or shall fail
to renew any certificates of need, material operating licenses or accreditation
documents necessary to operate the Project or its related home health agency
business;
(O) The Credit Institution, at any time, shall not hold a
valid, perfected security interest or lien in any of the collateral described
in Section 3.5 and in Section 3.6(B) hereof (subject only to Permitted
Encumbrances) or any subordinate liens will be placed against any of such
collateral, including, but not limited to, any liens for any delinquent taxes
whatsoever, except for a tax lien that is being contested in good faith and for
which Borrower provides additional security satisfactory in all respects to the
Credit Institution and except for Permitted Encumbrances; or
(P) The Borrower defaults in the due and punctual
observance or performance of any other term, covenant or agreement herein
contained (other than as specified elsewhere in this Section 5.1), which
default remains unremedied for thirty (30) days (or such other cure period as
may be specified herein) after the earlier of (i) written notice from the
Credit Institution to the Borrower of such breach or (ii) Borrower's knowledge
of the occurrence of such breach.
Upon the occurrence of an Event of Default under this
Agreement, the Credit Institution, by notice to the Borrower (except that such
notice to the Borrower shall not be required in the case of any Event of
Default under Section 5.1(E), (J), (K) (L) or (M) above), may in its sole
discretion, but shall not be obligated to (i) declare all amounts outstanding
and payable by the Borrower under this Agreement to be forthwith due and
payable, and the same shall thereupon become immediately due and payable
without demand, presentment, protest or further notice of any kind, all of
which are hereby expressly waived, and (ii) pursue any other remedy permitted
to the Credit Institution under the Financing Documents, under any other
collateral agreements securing the Borrower's obligations hereunder, or at law
or in equity, including but not limited to directing the Trustee to accelerate
the Bonds and the Trustee to make a drawing under the Letter of Credit to pay
or purchase the Bonds in accordance with Section 702 of the Indenture. In the
event the Credit Institution determines to exercise its right to direct the
Trustee to accelerate the Bonds and the Trustee to make a drawing under the
Letter of Credit to pay or purchase the Bonds in accordance with Section 702 of
the Indenture as a result of a covenant default hereunder, the Credit
Institution shall give the Trustee the notice pursuant to
- 25 -
26
Section 702(c) of the Indenture. Upon the occurrence of an Event of Default
hereunder, the Credit Institution may also exercise any right of a secured
party under the Uniform Commercial Code as to (i) any Bonds held by it as
pledgee pursuant to a Tender Drawing, (ii) the collateral in the Reimbursement
Account, and (iii) the fixtures, equipment and other personal property located
on, used in connection with or arising from the Collateral Real Estate and the
collateral provided in the Collateral Agreement; and, in addition to all
remedies available to the Credit Institution at law or in equity, pursuant to
any claim of subrogation by reason of any payment made pursuant to the Letter
of Credit, the Credit Institution in accordance with the Indenture shall be
entitled to enforce the rights of the owners of the Bonds under the Indenture
and the other Financing Documents against the Borrower notwithstanding any
payment, satisfaction or discharge thereof, irrespective of whether such
payment, satisfaction or discharge shall have been entered as a matter of
record in any court or other office wherein liens, mortgages, deeds of trust or
financing statements are filed pursuant to law.
SECTION 5.2. NO WAIVER; REMEDIES CUMULATIVE. No failure by
the Credit Institution to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other further
exercise thereof or the exercise of any other right. No waiver under this
Agreement shall be valid unless in writing signed by the Borrower and the
Credit Institution, and, unless otherwise specified in such waiver, shall be
effective only in the specific instance and for the specific purpose for which
given and shall not preclude the right of the Credit Institution to require
strict compliance with the terms hereof in any subsequent instance, whether
similar or dissimilar. The remedies in this Agreement are cumulative and not
exclusive of any remedies provided by law.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1. RIGHT OF SET-OFF. In addition to any other,
right or remedy that the Credit Institution may have by operation of law or
otherwise, upon the occurrence of any Event of Default under this Agreement,
the Credit Institution shall be entitled to exercise its banker's lien upon and
its right to set-off against any and all balances, credits, deposits, accounts
or moneys at any time held and other indebtedness at any time owing by the
Credit Institution to or for the credit or account of the Borrower and apply
the same against the payment of any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or any of the other Financing
Documents.
SECTION 6.2. LIABILITIES. All acts, including any failure to
act, relating to the Project and the issuance of the Bonds and the Letter of
Credit by any director, officer, employee, agent, representative or designee of
the Credit Institution are performed solely for the benefit of the Credit
Institution to assure repayment of the Borrower's obligations to the Credit
Institution hereunder and under the other Financing Documents and are not for
the benefit of the Borrower
- 26 -
27
or the benefit of any other person. Under no circumstances whatsoever shall
the Credit Institution, its directors, officers or employees, be deemed to
assume any responsibility for, or obligation or duty with respect to, any part
or all of the collateral of any nature or kind whatsoever, or in any matter or
proceedings arising out of or relating thereto. The Credit Institution shall
not be required to take any action of any kind to collect or protect any
interest in the collateral, including but not limited to, the collection of the
Loan, or to take any action necessary to preserve the Credit Institution's or
the Borrower's rights against prior parties to any of the collateral. To the
extent permitted by law, the Credit Institution shall not be liable or
responsible in any way for the safekeeping, care or custody of any of the
collateral, for any loss or damage thereto or for any diminution in the value
thereof, or for any act or default of the Borrower or any of its agents or any
third party, but the same shall be at the Borrower's sole risk at all times.
Neither the Credit Institution nor any of its directors, officers or employees
shall be liable or responsible for: (a) the use which may be made of the Letter
of Credit or moneys drawn thereunder or for any acts or omissions of the
Trustee and any beneficiary in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (c) payment by the Credit Institution
against presentation of documents provided such documents on their face appear
to be in order and in compliance with the Letter of Credit; and (d) any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit, except only that the Borrower shall have a claim against the Credit
Institution, and the Credit Institution shall be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrower which the Borrower proves were caused by (i)
the Credit Institution's willful misconduct or gross negligence in determining
whether documents presented under the Letter of Credit comply with the terms of
the Letter of Credit or (ii) the Credit Institution's willful failure to pay
under the Letter of Credit after the presentation to it by the Trustee or a
successor trustee of a sight draft and certificate strictly complying with the
terms and conditions of the Letter of Credit (absent issuance of a court order
purporting to enjoin such payment). In furtherance and not in limitation of
the foregoing, the Credit Institution may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary. Except as otherwise
provided in this paragraph, the Borrower hereby releases the Credit Institution
from any claims, causes of action and demands at any time arising out of or
with respect to this Reimbursement Agreement and any actions taken or omitted
to be taken by the Credit Institution with respect thereto, and the Borrower
hereby agrees to hold the Credit Institution harmless from and with respect to
any and all such claims, causes of action and demands.
The Borrower further agrees that the Credit Institution shall
not be chargeable for any negligence, mistake, act or omission of any
accountant, examiner, agent, attorney, receiver or operator contracted for by
the Credit Institution in making examinations or investigations, or otherwise
in perfecting, maintaining, protecting or realizing upon any security for the
Borrower's obligations hereunder and selected with reasonable care by the
Credit Institution; provided,
- 27 -
28
however, the Credit Institution shall be liable for the gross negligence or
wilful misconduct of any such accountant, examiner, agent, attorney, receiver
or operator.
SECTION 6.3. ESTOPPEL CERTIFICATE. The Borrower will, upon
not less than ten (10) days' request by the Credit Institution, execute,
acknowledge and deliver to the Credit Institution or to such other person(s) as
the Credit Institution shall identify a statement in writing, certifying (a)
that this Agreement is unmodified and in full force and effect and the payments
required by this Agreement to be paid by the Borrower have been paid, and (b)
the then unpaid principal balance of the Bonds; and stating whether or not to
the knowledge of the signer of such certificate any party to any of the
Financing Documents is in default in the performance of any covenant, agreement
or condition contained therein and, if so, specifying each such default of
which the signer may have knowledge, it being intended that any such statement
delivered pursuant to this section may be relied upon by the Credit Institution
and such other person(s) to whom such statement is made.
SECTION 6.4. MODIFICATIONS. No modification or waiver of any
provision of this Agreement nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be approved in
writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on the Borrower not provided for herein in any case shall entitle the Borrower
to any other or further notice or demand not provided for herein in the same,
similar or other circumstance.
SECTION 6.5. SUCCESSORS; TERM. This Agreement shall inure to
the benefit of and shall be binding upon each successor or assign of each
party. This Agreement shall continue in full force and effect until the Credit
Institution shall no longer be bound to fund under the Letter of Credit and the
Borrower shall have paid all amounts due hereunder and under the other
Financing Documents and complied with all other provisions and conditions of
this Agreement.
SECTION 6.6. FEES AND EXPENSES; EXPENSES OF COLLECTION. The
Borrower shall pay all fees of the Issuer, the Trustee, the Placement Agent,
the Remarketing Agent and the Credit Institution and shall pay all fees and
expenses of, or reimburse the Credit Institution for amounts therefor paid by
it to, all appraisers (regardless of whether engaged by the Borrower or the
Credit Institution), engineers, surveyors, environmental auditors, architects,
title insurers and counsel performing services for the Issuer, the Trustee, the
Borrower, the Placement Agent, the Remarketing Agent and the Credit Institution
and Bond Counsel with respect to or in any way connected with the Bonds, the
Financing Documents and the transactions contemplated thereby. The Borrower
agrees to pay all expenses, including reasonable attorneys fees, which are
incurred or paid by the Credit Institution in administering this Agreement,
determining its rights and responsibilities hereunder and under the other
Financing Documents and collecting any amounts due it or protecting or
enforcing any of its rights hereunder and thereunder, and notwithstanding any
disposition of any collateral securing the Credit Institution hereunder and
thereunder, the Borrower shall pay to the Credit Institution any deficiencies
which remain after such disposition. In addition, the Borrower shall pay any
and all stamp, recording, transfer and other taxes and fees
- 28 -
29
payable or determined to be payable in connection with the execution, delivery,
filing and any recording of any Financing Documents and agrees to save the
Credit Institution harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees. The Borrower shall pay any brokerage fees or commissions arising
from the issuance of the Bonds and the Letter of Credit and shall defend,
indemnify, and hold the Credit Institution harmless against any and all
expenses, liabilities and losses arising from such claims in connection
therewith.
SECTION 6.7. NOTICES. All demands, notices, approvals,
consents, requests and other communications provided for hereunder shall be in
electronic, telephonic or written (including bank wire, telegram, telecopier,
telex or similar writing) form and shall be given to the party to whom sent,
addressed to it, at its address or telephone or telecopier number set forth
below or such other address or telephone or telecopier number as such party may
hereafter specify for the purpose by notice to the other party set forth below.
Each such notice, request or communication shall be effective (a) if given by
telephone, telex, telecopier or other electronic means, when such communication
is transmitted to the address specified below and any appropriate answerback is
received, (b) if given by mail, three (3) Business Days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (c) if given by any other means, when delivered at the
address specified below:
(i) If to the Borrower:
American Retirement Communities, L.P.
x/x Xxxxxxxx Xxxxxxxxxx Xxxxxxxxxxx
Xxxxx 000, 000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) If to the Credit Institution:
First Union National Bank of Tennessee
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
or (iii) in either of the foregoing cases, at such other address or telex,
telecopier, bank wire or telephone number as the addressee may hereafter
specify for the purpose in a notice to the other party specifically captioned
"Notice of Change of Address Pursuant to Section 6.7 of the Reimbursement
Agreement."
- 29 -
30
SECTION 6.8. ILLEGALITY. If fulfillment of any provision
hereof at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity; and
if any clause or provisions herein contained other than the provisions hereof
pertaining to reimbursement of amounts drawn under the Letter of Credit and
payment of Letter of Credit fees operates or would prospectively operate to
invalidate this Agreement in whole or in part, then such clause or provision
only shall be void, as though not herein contained, and the remainder of this
Agreement shall remain operative and in full force and effect; and if such
provision impairs reimbursement of any amounts drawn under the Letter of Credit
or payment of fees due hereunder, then, at the option of the Credit
Institution, all amounts due from the Borrower under this Agreement shall
become immediately due and payable.
SECTION 6.9. ASSIGNMENT. This Agreement may not be assigned
by the Borrower without the prior written consent of the Credit Institution.
SECTION 6.10. PARTICIPATIONS. The Borrower recognizes that
the Credit Institution or a participant may sell and transfer interests in the
Letter of Credit to one or more participants or subparticipants and that all
documentation, financial statements, appraisals and other data, or copies
thereof, relevant to the Borrower or the Letter of Credit may be exhibited to
and retained by any such participant or subparticipant whether actual or
prospective.
SECTION 6.11. COUNTERPARTS. This Agreement may be executed
in multiple counterparts or copies, each of which shall be deemed an original
hereof for all purposes. One or more counterparts or copies of this Agreement
may be executed by one or more of the parties hereto, and some different
counterparts or copies executed by other parties. Each counterpart or copy
hereof executed by any party hereto shall be binding upon the party executing
same even though other parties may execute one or more different counterparts
or copies and all counterparts or copies hereof so executed shall constitute
but one and the same instrument. Each party hereto ("Signing Party"), by
execution of a counterpart or copy hereof, expressly authorizes and directs any
other party hereto to detach the signature pages and/or acknowledgment,
attestation, witness, jurat or similar pages thereto from the counterpart or
copy hereof executed by Signing Party and affix same to another identical
counterpart or copy hereof such that upon execution of multiple counterparts or
copies hereof by all parties hereto, there shall be one counterpart or copy
hereof to which the attached signature pages containing signatures of all
parties hereto together with any such acknowledgment, attestation, witness,
jurat or similar pages relating thereto.
SECTION 6.12. RULE OF CONSTRUCTION. As to the rights and
obligations of the Borrower and the Credit Institution against and to each
other, the provisions of this Agreement and the Mortgage shall control to the
extent they are inconsistent with the provisions of the Indenture, the Loan
Agreement or any other Financing Documents.
SECTION 6.13. GOVERNING LAW. This Agreement shall be
governed by the internal laws of the State of Tennessee without reference to
choice of law principles.
- 30 -
31
SECTION 6.14. INDENTURE. The Borrower acknowledges and
consents to the provisions of the Indenture.
SECTION 6.15. CONSENT TO SERVICE; WAIVER OF JURY.
(A) The Borrower agrees that any suit, action or
proceeding arising out of or relating to this Reimbursement Agreement, the
Standby Note, the other Financing Documents or any related documents may be
instituted against it in any Tennessee court or in any U.S. District Court
sitting in the State of Tennessee (assuming such latter court has jurisdiction
over such suit, action or proceeding), at the option of the person or entity
bringing such suit, action or proceeding, and the Borrower waives any objection
which it may have to the laying of the venue of any such suit, action or
proceeding, and irrevocably submits to the jurisdiction of any such court in
any such suit, action or proceeding. Nothing herein shall affect the right of
the Credit Institution to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
(B) TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS REIMBURSEMENT AGREEMENT, THE STANDBY NOTE
OR THE OTHER FINANCING DOCUMENTS.
SECTION 6.16. ACTION BY CREDIT INSTITUTION THROUGH AND
RELIANCE UPON OTHERS. The Credit Institution may execute and perform any of
the duties or powers required of it hereunder by or through attorneys,
receivers or agents, shall be entitled to advice of counsel concerning all
matters with respect to its duties hereunder, and shall not be answerable for
the default or negligence of any such attorney, receiver or agent selected by
it with reasonable care, or for the exercise of any discretion or power under
this Agreement except only for its own gross negligence or willful misconduct,
or that of its attorneys, receivers or agents.
SECTION 6.17. CREDIT INSTITUTION MAY RELY UPON INSTRUMENTS.
Absent its own gross negligence or willful misconduct, the Credit Institution
shall be protected and shall incur no liability in acting or proceeding in good
faith upon any resolution, notice, telegram, request, consent, waiver,
certificate, statement, affidavit, voucher, bond, requisition or other paper or
document which it shall in good faith believe to be genuine and to have been
passed or signed by the proper person or to have been prepared and furnished
pursuant to any of the provisions of this Agreement, and the Credit Institution
shall be under no duty to make any investigation or inquiry as to any
statements contained or matters referred to in any such instrument, but may
accept and rely upon the same as evidence of the truth and accuracy of such
statements.
SECTION 6.18. ENTIRE AGREEMENT. The Financing Documents
shall completely and fully supersede all other prior commitments, both written
and oral, between the Credit Institution
- 31 -
32
and the Borrower relating to the obligations of the Borrower thereunder, and
neither the Credit Institution nor the Borrower shall hereafter have any rights
under such other prior commitments but shall look solely to the Financing
Documents for definition and determination of all of their respective rights,
liabilities and responsibilities relating to the obligations of the Borrower
thereunder.
SECTION 6.19. GENDER. Whenever used herein, the singular
number shall include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender shall include all genders.
SECTION 6.20. HEADINGS. The headings in this Agreement are
for convenience only and shall not limit or otherwise affect any of the terms
hereof.
WITNESS the following signatures, all as of the date first
above written.
American Retirement Communities, L.P.,
a Tennessee limited partnership
By: American Retirement Communities,
LLC, a Tennessee limited
liability company, its sole
general partner
By: /s/____________________________
Its:_______________________________
FIRST UNION NATIONAL BANK OF TENNESSEE,
a national banking association
By /s/__________________________________
Its_____________________________________
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a national banking association
By /s/__________________________________
Its_____________________________________
- 32 -
33
FIRST AMENDMENT TO
REIMBURSEMENT AGREEMENT
This First Amendment to Reimbursement Agreement ("Amendment")
is entered into as of the 18th day of February, 1997 by FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association; FIRST UNION NATIONAL
BANK OF TENNESSEE, a national banking association (these two banks are referred
to herein collectively as the "Credit Institution"); and AMERICAN RETIREMENT
COMMUNITIES, L.P. ("Borrower"), a Tennessee limited partnership.
RECITALS:
WHEREAS, the Credit Institution and Borrower have previously
entered into that Reimbursement Agreement (the "Reimbursement Agreement") dated
as of October 31, 1994 (capitalized terms not otherwise defined herein shall
have the meaning assigned in the Reimbursement Agreement); and
WHEREAS, the parties wish to amend the Reimbursement Agreement
in certain respects;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. The Reimbursement Agreement is hereby amended by
revising the table of required deposits set forth in Section 3.1(A)(iv) thereof
to provide in full as follows:
Payment Date Amount
------------ ------
March 31, 1997, $60,000.00
June 30, 1997 and
September 30, 1997
December 31, 1997 $65,000.00
2. The Reimbursement Agreement is hereby amended by
revising the definition of "Letter of Credit" on page 5 thereof to read in full
as follows:
"Letter of Credit" shall mean the Letter of Credit
issued by FUNB-NC to the Trustee pursuant to this Agreement in
the form of Exhibit A hereto, as supplemented, modified,
extended, restated or amended from time to time.
34
3. The Reimbursement Agreement is hereby amended by
revising the definition of "Scheduled Termination Date" on page 5 thereof to
read in full as follows:
"Scheduled Termination Date" shall mean the "Stated
Expiration Date" as set forth in the Letter of Credit from time to time.
4. The Reimbursement Agreement is hereby amended by
revising the reference to "Exhibit G" in the last sentence of Section 4.5
thereof to be a reference to "Annex D".
5. Pursuant to Section 3.2(A) of the Reimbursement
Agreement, Borrower hereby elects the quarterly payment option of Section
3.2(A)(ii) at the rate of 1.15%, as provided therein.
6. Concurrently with the execution hereof, the Credit
Institution shall issue and deliver to the Trustee an extension of the Stated
Expiration Date to March 31, 1998 in the form annexed to the Letter of Credit
as Annex D.
7. Concurrently with the execution of this Amendment,
Borrower shall pay to the Credit Institution a renewal fee in the amount of
$10,221.13 (1/8% of the stated amount of the Letter of Credit).
8. As amended hereby, the Reimbursement Agreement
remains in full effect, and all agreements among the parties with respect to
the subject hereof are represented fully in this Amendment and the other
written documents among the parties. The validity, construction and
enforcement hereof shall be determined according to the substantive laws of the
State of Tennessee.
Dated as of the date stated above.
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/__________________________
Title:___________________________
FIRST UNION NATIONAL BANK OF
TENNESSEE
By: /s/__________________________
Title:___________________________
- 2 -
35
AMERICAN RETIREMENT COMMUNITIES,
L.P.
BY: AMERICAN RETIREMENT
COMMUNITIES, L.L.C., G.P.
By: /s/__________________________
Title:___________________________
- 3 -
