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EXHIBIT 10.22
CONSTRUCTION LOAN AGREEMENT
This Construction Loan Agreement is entered into as of the 14th day of
March, 1997, by and between FORT AUSTIN LIMITED PARTNERSHIP ("Borrower"), a
Texas limited partnership; and FIRST UNION NATIONAL BANK OF TENNESSEE
("Lender"), a national banking association.
RECITALS
WHEREAS, Lender has agreed to extend credit to Borrower, on certain terms
and conditions, as set forth in detail in this Agreement;
NOW, THEREFORE, as an inducement to cause Lender to extend credit to
Borrower, and for other valuable consideration, the receipt and sufficiency of
which are acknowledged, it is agreed as follows:
I. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings, unless the context expressly requires otherwise:
"AFFILIATE" means, with respect to any Person, another Person that,
directly or indirectly, (i) has an equity interest in that Person, in any
degree, (ii) has common ownership with that Person, in any degree, (iii)
Controls that Person, or (iv) shares common Control with that Person.
"AGREEMENT" means this Loan Agreement (including all schedules and exhibits
hereto), as the same may be amended from time to time.
"ARC ENTITIES" means Borrower; American Retirement Communities, L.P., a
Tennessee limited partnership ("ARC, LP"), American Retirement Communities, LLC
("ARC, LLC"), a Tennessee limited liability company; American Retirement
Corporation II, formerly known as "American Retirement Corporation ("ARC"), a
Tennessee corporation; A.R.C. Management Corporation ("ARCM"), a Tennessee
corporation; ARC Chattanooga, Inc., a Tennessee corporation; ARC Fort Austin
Properties, Inc., a Tennessee corporation; ARC Corpus Christi, Inc., a Tennessee
corporation; ARC Oak Park, Inc., a Tennessee corporation; Trinity Towers Limited
Partnership, a Tennessee limited partnership; Xxxxxx Court Terrace Limited
Partnership, a _____________ limited partnership; ARCLP-Charlotte, L.L.C., a
________________ limited liability company; and all other Subsidiaries of
Borrower from time to time.
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"BANKRUPTCY CODE" means Title I of the Bankruptcy Reform Act of 1978, as it
may be amended from time to time.
"BORROWER" means Fort Austin Limited Partnership, a Texas limited
partnership, its successors and assigns. This definition does not abrogate the
requirement set forth below restricting Borrower's ability to assign its rights
under this Agreement.
"CAPITAL LEASE" means a lease that would be characterized as a financed
sale under GAAP.
"CHANGE OF CONTROL" means the occurrence, after the date of this Agreement,
of the acquisition of Control of any ARC Entity by any Person which does not
presently Control such entity.
"CLOSING DATE" means the date of this Agreement.
"COLLATERAL" means all Property now or hereafter securing the Obligations.
"CONSTRUCTION LOAN" has the meaning assigned in Article II hereof.
"CONSTRUCTION LOAN ADDENDUM" means the Construction Loan Addendum between
Borrower and Lender of even date herewith, which Addendum is an integral part of
this Agreement and is incorporated herein by this reference.
"CONSTRUCTION LOAN NOTE" means the Construction Loan Note made by Borrower
dated the date of this Agreement in the principal amount of Eleven Million Six
Hundred Thousand and 00/100 Dollars ($11,600,000.00), and all modifications,
amendments, extensions, renewals and restatements thereof.
"CONTROL" or "CONTROLLED" means that a Person has the power to conduct or
govern the policies of another Person.
"DEBT" means, with respect to any Person, all obligations, contingent or
otherwise, that would be classified under GAAP as a liability of that Person
including, but not limited to, any nonrecourse obligations secured by Property
of that Person.
"DEFAULT RATE" means the lesser of four per cent (4%) above the Prime Rate
or the highest lawful rate.
"EVENT OF DEFAULT" means the occurrence of any of the events specified in
Section 8.1 hereof, as to which any requirement for notice or lapse of time has
been satisfied.
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"ENCUMBRANCE" means any interest in Property in favor of one not the owner
thereof, whether voluntary or involuntary, including, but not limited to, (i)
the lien or security interest arising from a deed of trust, mortgage, pledge,
security agreement, conditional sale, Capital Lease, consignment, or bailment
for security purposes, and (ii) reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions.
"ENVIRONMENTAL LAWS" means the Environmental Protection Act, the Resource
Conservation and Recovery Act of 1976, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Hazardous Materials Transportation
Act and any other federal, state or municipal law, rule or regulation relating
to air emissions, water discharge, noise emissions, solid or liquid waste
disposal, hazardous or toxic waste or materials, or other environmental or
health matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of Borrower's controlled group, or under common control with Borrower,
within the meaning of Section 414 of the IRC, and the regulations promulgated
pursuant thereto and the rulings issued thereunder.
"ERISA EVENT" means (i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, unless the 30-day notice requirement with
respect thereto has been waived by the PBGC; (ii) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan, pursuant
to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (iii) the cessation of
operations at a facility in the circumstances described in Section 4068(f) of
ERISA; (iv) the withdrawal by Borrower or an ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in 4001(a)(2) of ERISA; (v) the failure by Borrower or any ERISA
Affiliate to make a material payment to a Plan required under Section 302(f)(1)
of ERISA; (vi) the adoption of an amendment to a Plan requiring the provision of
initial or additional security to such Plan, pursuant to Section 307 of ERISA;
or (vii) the institution by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, a Plan.
"FACILITY" means the Santa Catalina Villas Retirement Community in Tucson,
Arizona.
"FINANCIAL STATEMENTS" means the consolidated balance sheet and income
statement for ARC, L.P. and the consolidating balance sheet and income statement
for ARC, LP represented as Richmond Place, Heritage Club, Carriage Club
Charlotte, Carriage Club
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Jacksonville, ARCLP-Charlotte L.L.C. representing Carriage Club Charlotte,
Trinity Towers Limited Partnership, Borrower, Xxxxxx Court Terrace, L.P. and
ARC, dated December 31, 1996, delivered by Borrower to Lender, and all
subsequent financial statements delivered to Lender pursuant to this Agreement
as of the date hereof, including all notes thereto.
"FUNB-NC" means First Union National Bank of North Carolina, a national
banking association and the issuer of the Richmond Place Letter of Credit.
"GAAP" means generally accepted accounting principles pronounced by the
Financial Accounting Standards Board or any successor thereto, as in effect from
time to time.
"GOVERNMENTAL AUTHORITY OR AUTHORITIES" shall mean any governmental or
quasi-governmental entity, court or tribunal including, without limitation, any
department, commission, board, bureau, agency, administration, service or other
instrumentality of any foreign or domestic governmental entity.
"HAZARDOUS SUBSTANCES" means those substances included from time to time
within the definition of hazardous substances, hazardous materials, toxic
substances, or solid waste under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended, 42 U.S.C. ss. 9601 et seq.;
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6901 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq.; the
Clean Water Act, 33 U.S.C. Section 1251 et. seq.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et. seq., and in the regulations promulgated
pursuant to such acts and laws; and such other substances that are or become
regulated under any applicable local, state, or federal law or regulation
addressing environmental hazards.
"INTEREST EXPENSE" means expenses for interest (including current charges
on Capital Leases) and expenses for any interest rate swaps or similar
derivative contracts used for the management of interest expense, letter of
credit fees, remarketing and guaranty fees.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time.
"LAW" or "LAWS" means all applicable constitutional provisions, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, and requirements of all Governmental Authorities.
"LENDER" means First Union National Bank of Tennessee, its successors and
assigns.
"LOAN" means an extension of credit under the Construction Loan.
"LOAN DOCUMENTS" means, collectively, each written agreement executed and
delivered by any ARC Entity to Lender in connection with the Construction Loan.
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"MATERIAL ADVERSE CHANGE" means any material and adverse change in the
business, Properties, or operations of Borrower or ARC, LP individually or of
the ARC Entities on a consolidated basis.
"MATERIAL ADVERSE EFFECT" means any event or condition which, singly or in
the aggregate with other events or conditions, materially and adversely affects
the business, Properties, or operations of Borrower or ARC, LP individually or
of the ARC Entities on a consolidated basis.
"OBLIGATIONS" means all present and future debts and other obligations of
Borrower to Lender, whether arising by contract, tort, guaranty, overdraft, or
otherwise; whether or not the advances or events creating such debts or other
obligations are presently foreseen; and regardless of the class of the debts or
other obligations, be they otherwise secured or unsecured. Without limiting the
foregoing, the "Obligations" specifically includes the obliga tions of Borrower
under this Agreement and the other Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" means all of the following:
(a) Encumbrances securing the payment of any of the Obligations.
(b) Encumbrances securing taxes, assessments, or other governmental
charges not yet due or which are being contested in good faith by
appropriate action promptly initiated and diligently conducted,
if Borrower has made reserve therefor as required by GAAP.
(c) Mechanics', repairmen's, materialmen's, warehousemen's and other
like liens arising by operation of law securing accounts that are
not delinquent.
(d) Encumbrances on real property used by Borrower not securing
monetary obligations, provided that the Encumbrances are of a
type customarily placed on real property and do not materially
impair the value of the affected property.
(e) Pledges or deposits in the ordinary course of business to secure
nondelinquent obligations under xxxxxxx'x compensation or
unemployment laws or similar legislation or
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to secure the performance of leases or contracts entered into in
the ordinary course of business.
(f) Encumbrances described on the attached Schedule 1.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
government, governmental agency or political subdivision thereof, or any other
form of entity.
"PLAN" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by Borrower or any Subsidiary and
covered by Title IV of ERISA or to which Section 412 of the IRC applies.
"PRIME RATE" shall be that rate announced by Lender from time to time as
its Prime Rate and is one of several interest rate bases used by Lender. Lender
lends at rates both above and below Lender's Prime Rate and Borrower
acknowledges that Lender's Prime Rate is not represented or intended to be the
lowest or most favorable rate of interest offered by Lender.
"PROPERTY" or "PROPERTIES" means any interest in any kind of property,
whether real, personal, or mixed, or tangible or intangible.
"REIMBURSEMENT AGREEMENT" means the Reimbursement Agreement dated as of
October 31, 1995 by ARC, LP in favor of Lender and FUNB-NC, pursuant to which
the Richmond Place Letter of Credit has been issued.
"RICHMOND PLACE LETTER OF CREDIT" means the Irrevocable Direct Pay Letter
of Credit issued by FUNB-NC for the account of ARC, LP to Third National Bank in
Nashville as Trustee under the Trust Indenture dated as of April 1, 1987, as
amended and restated as of November 1, 1994, governing the issuance of the
Lexington-Fayette Urban County Government Residential Facilities Refunding
Revenue Bonds (Richmond Place Associates, L.P. Project) Series 1987.
"SOLVENT" shall mean, as to any Person, that as of any date of
determination, (i) the then fair value of the assets of such Person is (a)
greater than the then total amount of liabilities (including subordinated
liabilities) of such Person and (b) greater than the amount that will be
required to pay such Person's probable liability on such Person's then existing
debts as they become absolute and matured, (ii) such Person's capital is not
unreasonably small in relation to its business, and (iii) such Person does not
intend to incur, or believe or reasonably should believe that it will incur,
debts beyond its ability to pay such debts as they become due.
"SUBSIDIARY" means any present or future corporation, partnership or other
entity at least a majority of whose outstanding voting stock shall at the time
be owned directly or indirectly by Borrower, by one or more Subsidiaries of
Borrower or a combination thereof, or any partnership in which Borrower or a
Subsidiary of Borrower is a general partner.
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"TAXES" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, which at any time may be
assessed, levied, confirmed or imposed on Borrower or on any of its properties
or assets or any part thereof or in respect of any of its franchises,
businesses, income or profits.
"UCC" means the Uniform Commercial Code as adopted in Tennessee, as it may
be amended from time to time.
"UNMATURED DEFAULT" means any event or condition that, but for the giving
of any required notice by Lender and/or the passing of time, would be an Event
of Default hereunder.
II. LOAN
2.1 Construction Loan. Concurrently with the execution of this Agreement,
Lender shall make a Construction Loan (the "Construction Loan") available to
Borrower under the following terms:
2.1.1 Amount of Construction Loan. The original principal indebtedness
of Borrower to Lender under the Construction Loan shall be Eleven Million
Six Hundred Thousand and 00/100 Dollars.
2.1.2 Use of Proceeds of Construction Loan. The proceeds of the
Construction Loan shall be used by Borrower to finance the expansion of the
Santa Catalina Retirement Community in Tucson, Arizona. Such proceeds shall
be advanced in accordance with the terms of the Construction Loan Addendum.
2.1.3 Construction Loan Note. Borrower's obligations under the
Construction Loan shall be evidenced by the Construction Loan Note.
2.1.4 Interest Rate Applicable to Construction Loan. The principal
amount of the Construction Loan outstanding shall bear interest at Lender's
Prime Rate, as it may change from time to time.
2.1.5 Calculation of Interest. Interest for Prime Rate Loans shall be
computed on the basis of a 360-day year counting the actual number of days
elapsed.
2.1.6 Default Rate. Notwithstanding the foregoing, upon the occurrence
of an Event of Default and during the continuation of such Event of Default
until it is cured or waived, interest shall be charged at the Default Rate,
regardless of whether Lender has elected to exercise any other remedies
available to Lender, including, without limitation, acceleration of the
maturity of the
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outstanding principal of the Construction Loan. All such interest shall be
paid at the time of and as a condition precedent to the curing of any such
Event of Default to the extent any right to cure is given in this
Agreement.
2.1.7 Usury Savings Provision. It is the intention of the parties that
all charges under or in connection with this Agreement and the Obligations,
however denominated, and including (without limitation) all interest,
commitment fees, late charges and loan charges, shall be limited to the
maximum lawful amount that may be assessed under Tennessee law or, if
higher, applicable federal law. Such charges shall be characterized and all
provisions of the Loan Documents shall be construed as to uphold the
validity of charges provided for therein and, all such charges shall be
spread over the entire term of the Loans to the extent permitted by law. If
for any reason whatsoever, however, any charges paid or contracted to be
paid in respect of the Construction Loan shall exceed the maximum amounts
collectible under applicable laws in effect from time to time, then, ipso
facto, the obligation to pay such interest and/or other charges shall be
reduced to the maximum lawful amount in effect from time to time, and any
amounts collected by Lender that exceed the maximum lawful amount shall be
applied to the reduction of the principal balance of the Construction Loan
and/or refunded to Borrower so that at no time shall the interest or loan
charges paid or payable in respect of the Construction Loan exceed the
maximum lawful amount. This provision shall control every other provision
herein and in any and all other agreements and instruments now existing or
hereafter arising between Borrower and Lender with respect to the
Construction Loan.
2.2 Repayment. Monthly payments of interest only shall be due during the
term of this Agreement.
2.2.1 Initial Repayment Schedule. Payments of interest only shall be
made monthly in arrears, with the entire principal balance due at the
earlier of completion of construction of the Facility or April 30, 1998.
2.2.2 All Amounts Due. All remaining principal, interest and expenses
under the Construction Loan will be due at the earlier of the date that is
thirty (30) days subsequent to the completion of construction of the
Facility (as evidenced by the issuance of a certificate of occupancy for
the new portion of the Facility) or June 30, 1998.
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2.3 Fees.
2.3.1 Construction Loan Commitment Fee. Concurrently with the
execution hereof, Borrower shall pay Lender the sum of $58,000.00 as a
commitment fee for the Construction Loan.
2.4 Release. So long as Borrower and the ARC Entities are not in default
with respect to any obligation to Lender, Lender shall release its Deed of Trust
upon payment in full of Borrower's obligations under the Construction Loan and
Borrower shall have no further obligation under this Agreement or the Loan
Documents except as expressly provided herein or therein.
III. CONDITIONS PRECEDENT
3.1 Conditions to Closing. Lender shall not be obligated to make its
initial Loan pursuant to this Agreement unless and until Borrower provides
Lender with the documents and other items required by the Construction Addendum.
IV. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that, as of the Closing Date:
4.1 Capacity. Each ARC Entity is a limited partnership, limited liability
company ("LLC") or corporation, as applicable, duly organized, validly existing
and in good standing under the laws of the state of its formation or
organization, as applicable. Each ARC Entity is qualified or authorized to do
business in all jurisdictions in which its ownership of property or conduct of
business requires such qualification or authorization. Each ARC Entity has the
power and authority to own its Properties and to carry on its business as now
being conducted and as proposed to be conducted after the execution hereof, to
execute and deliver this Agreement and/or such of the other Loan Documents as
they are required to execute, and to perform its obligations hereunder and under
such other Loan Documents. References in this Article IV to the execution,
delivery and performance by the ARC Entities shall be limited in each instance
to the ARC Entities which are parties to such documents.
4.2 Authorization. Each ARC Entity's execution, delivery and performance of
this Agreement and the other Loan Documents, as applicable, have been duly
authorized by all requisite partnership, LLC and corporate action.
4.3 Binding Obligations. This Agreement is and the other Loan Documents,
when executed and delivered to Lender, will be, legal, valid and binding upon
each ARC Entity, enforceable in accordance with their respective terms, subject
only to principles of equity and laws applicable to creditors generally,
including bankruptcy laws.
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4.4 No Conflicting Law or Agreement. Each ARC Entity's execution, delivery
and performance of the Loan Documents do not constitute a breach of or default
under, and will not violate or conflict with, any provisions of the corporate
charter of any ARC Entity; any contract, financing agreement, lease, or other
agreement to which any ARC Entity is a party or by which its Properties may be
affected; or any Law to which any ARC Entity is subject or by which its
Properties may be affected; nor will the same result in the creation or
imposition of any Encumbrance upon any Properties of any ARC Entity, other than
those contemplated by the Loan Documents.
4.5 No Consent Required. Each ARC Entity's execution, delivery, and
performance of this Agreement and the other Loan Documents do not require the
consent or approval of or the giving of notice to any Person except for those
consents which have been duly obtained and are in full force and effect on the
date hereof.
4.6 Financial Statements. The Financial Statements are complete and
correct, have been prepared in accordance with GAAP, and present fairly the
financial condition and results of operations of the ARC Entities as of the date
and for the period stated therein, subject to year-end adjustments. No Material
Adverse Change has occurred since the date of the Financial Statements. Borrower
acknowledges that Lender has advanced (or shall advance) the Loans in reliance
upon the Financial Statements.
4.7 Fiscal Year. Each ARC Entity's fiscal year ends on December 31 of each
year.
4.8 Litigation. Except as disclosed on Schedule 4.8 hereto, there is no
litigation, arbitration, legal or administrative proceeding, tax audit,
investigation, or other action or proceeding of any nature pending or, to the
knowledge of Borrower, threatened against, likely to be instituted against or
affecting any ARC Entity or any of its Properties, except any such proceeding
involving only a claim for money damages less than $100,000. No ARC Entity is
subject to any outstanding court, arbitral or administrative order, writ or
injunction. To the best of Borrower's knowledge, information and belief, no
facts exist under which third parties have unasserted claims against any ARC
Entity that would involve a claim for injunctive relief or payment of money
damages in excess of $100,000.
4.9 Taxes; Governmental Charges. Each ARC Entity has filed or caused to be
filed all tax returns and reports required to be filed. Each ARC Entity has
paid, or made adequate provision for the payment of, all Taxes that have or may
have become due pursuant to such returns or otherwise, or pursuant to any
assessment received by Borrower, except such Taxes, if any, as are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided. Borrower knows of no proposed material tax
assessment against any ARC Entity. No extension of time for the assessment of
federal, state or local taxes of borrower is in effect or has been requested,
except as disclosed in the Financial Statements. Each ARC Entity has timely made
all required remittances of withholding deposits and other assessments against
payroll expenditures.
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4.10 Title to Properties. Each ARC Entity has good and marketable title to,
or a valid leasehold interest in, its Properties, free and clear of all
Encumbrances except for Permitted Encumbrances.
4.11 No Default. No ARC Entity is in default (beyond applicable grace
and/or periods of notice and cure) in any material respect that affects its
business, Properties, operations, or condition, financial or otherwise, under
any document evidencing an obligation for the repayment of borrowed money. No
ARC Entity is in default in any respect under any other instrument to which any
ARC Entity is a party or by which its Properties are bound, except to the extent
that such default could not reasonably be expected to have a Material Adverse
Effect. To the best of Borrower's knowledge, information and belief, no other
party to any contract with any ARC Entity is in default or breach thereof and no
circumstances exist which, with the giving of notice and/or the passing of time
would constitute such default or breach which would have a Material Adverse
Effect. No Event of Default or Unmatured Default exists under this Agreement.
4.12 Casualties; Taking of Properties. Neither the business nor the
Property of any ARC Entity is presently impaired as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of property, cancellation of
contracts, permits, concessions by any domestic or foreign government or any
agency thereof, riot, activities of armed forces or acts of God or of any public
enemy.
4.13 Compliance with Laws. No ARC Entity is in violation of any Law to
which any ARC Entity, its business or any of its Properties are subject, the
violation of which would likely have a Material Adverse Effect, and there are no
outstanding citations, notices or orders of noncompliance issued to any ARC
Entity under any such Law, the violation of which would likely have a Material
Adverse Effect. Each ARC Entity has obtained all licenses, permits, franchises,
or other governmental authorizations necessary to the ownership of its
Properties or to the conduct of any ARC Entity's business.
4.14 ERISA. No ERISA Event has occurred with respect to any Plan or is
reasonably expected to occur with respect to any Plan.
4.15 Full Disclosure of Material Facts. Borrower has fully advised Lender
of all matters involving Borrower's, ARC, LP's and the consolidated ARC
Entities' financial condition, business, operations, Properties or industry that
would be reasonably expected to have a Material Adverse Effect. No information,
exhibit, or report furnished or to be furnished by Borrower to Lender in
connection with this Agreement contains, as of the date thereof, any
misrepresentation of fact or failed or will fail to state any material fact, the
omission of which would render the statements therein materially false or
misleading.
4.16 Accuracy of Projections. With respect to all business plans and other
forecasts and projections furnished by or on behalf of Borrower and made
available to Lender relating to the financial condition, business, operations,
Properties or prospects of the ARC
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Entities, to the best of Borrower's knowledge, information and belief, all facts
stated as such therein are true and complete in all material respects and all
estimates and assumptions were made in good faith and believed to be reasonable
at the time made.
4.17 Investment Company Act. No ARC Entity is an "investment company" under
the Investment Company Act of 1940, as amended.
4.18 Personal Holding Company. No ARC Entity is a "personal holding
company" as defined in Section 542 of the IRC.
4.19 Solvency. Each ARC Entity is Solvent as of the Closing Date and will
remain Solvent upon the consummation of the transactions contemplated hereby.
4.20 Chief Executive Office. The address designated herein to which notices
are to be sent under this Agreement is the chief executive office for each ARC
Entity within the meaning of Tennessee Code Annotated Section 47-9-103(3)(d).
4.21 Subsidiaries. Borrower has no Subsidiaries.
4.22 Ownership of Patents, Licenses, Etc. Each ARC Entity owns all
licenses, permits, franchises, registrations, patents, copyrights, trademarks,
trade names or service marks, or the rights to use the foregoing, that are
necessary for the continued operation of its business.
4.23 Environmental Compliance. Each ARC Entity has duly complied with, and
its Properties are owned and operated in compliance with, all Environmental
Laws, the violation of which would have a Material Adverse Effect. There have
been no citations, notices or orders of non-compliance issued to any ARC Entity
or, to Borrower's knowledge, relating to any ARC Entity's business or Properties
pursuant to any Environmental Law. Each ARC Entity has obtained all required
federal, state and local licenses, certificates or permits relating to it and
its Properties as required by applicable Environmental Laws.
4.24 Labor Matters. No ARC Entity is subject to any collective bargaining
agreements or any agreements, contracts, decrees or orders requiring it to
recognize, deal with or employ any Person. No demand for collective bargaining
has been asserted against any ARC Entity by any union or organization. No ARC
Entity has experienced any strike, labor dispute, slowdown or work stoppage due
to labor dispute and, to the best knowledge of Borrower, there is no such
strike, dispute, slowdown or work stoppage threatened against any ARC Entity.
Each ARC Entity is in compliance in all material respects with the Fair Labor
Standards Act of 1938, as amended.
4.25 OSHA Compliance. Each ARC Entity is in compliance in all material
respects with the Federal Occupational Safety and Health Act, as amended, and
all regulations under the foregoing.
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4.26 Regulation U. No ARC Entity is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System). No proceeds of any Revolving Loan will be used to purchase or carry any
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System) in violation of applicable law,
including, without limitation, Regulation U issued by the Board of Governors of
the Federal Reserve System.
V. AFFIRMATIVE COVENANTS
Borrower covenants that, during the term of this Agreement (and thereafter
where such covenants expressly require), it will observe and cause the other ARC
Entities to observe the affirmative covenants set forth in Article V of the Loan
Agreement dated October 31, 1995, between Lender and ARC, LP, as the same may be
amended from time to time. This obligation shall survive the repayment of the
obligations evidenced by the October 31, 1995, Loan Agreement.
VI. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Lender's prior written consent,
neither it nor any of the other ARC Entities will violate any of the negative
covenants contained in Article VI of the Loan Agreement dated October 31, 1995,
between Lender and ARC, LP, as the same may be amended from time to time. This
obligation shall survive the repayment of the obligations evidenced by the
October 31, 1995, Loan Agreement.
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VII. FINANCIAL COVENANTS
Borrower acknowledges that certain of the ARC Entities are subject to
financial covenants in other agreements that they have entered into with Lender,
and covenants with Lender that it will cause such entities to comply with those
financial covenants; this obligation shall survive the repayment of the
obligations evidenced by those other agreements so long as the Construction Loan
is outstanding. Borrower further covenants with Lender as follows:
7.1 Debt Service Coverage Ratio. On a rolling 4 quarter basis, tested
quarterly, Borrower shall maintain a debt service coverage ratio of no less than
1.35:1. This ratio shall be determined as follows:
NIBT + D/A + INT. EXP. + LEASE EXP.
-----------------------------------
INT. EXP. (incl. Letter of Credit, Remarketing & Guaranty fees, as appl.) +
CURRENT MATURITIES OF LTD (including required escrow payments) + LEASE EXP.
As used in the formula above, NIBT means net income plus tax expense; D/A means
expenses for depreciation and amortization, and other non-cash items; INT.EXP
means Interest Expense; LEASE EXP. means expenses under leases other than
Capital Leases; LTD means long-term Debt and CURRENT MATURITIES OF LTD means
principal and escrow payments actually due and payable within the applicable
test period.
7.2 Security Deposit Escrows. Borrower shall maintain tenant security
deposits in full compliance with its contractual agreements and all applicable
laws.
VIII. EVENTS OF DEFAULT
8.1 Events of Default. Any of the following events shall be considered an
Event of Default under this Agreement:
8.1.1 Payments. Borrower's failure to make payment of any installment
of principal, interest or expenses to Lender within 10 days of the date
when due.
8.1.2 Representations and Warranties. Lender's determination that any
material representation or warranty made by any Borrower or any other ARC
Entity in any Loan Document was incorrect in any material respect as of the
date thereof.
8.1.3 Negative Covenants. The failure of Borrower or any other ARC
Entity to comply in any material respect with any of the material
requirements of Article VI hereof.
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8.1.4 Reporting Requirements. The failure of Borrower or any other
party to timely perform all covenants in the Loan Documents requiring the
furnishing of notices, financial reports or other information to Lender.
8.1.5 Other Covenants. The failure of Borrower or any other ARC Entity
to observe or perform any covenant contained in any Loan Document, which
covenant is not subject to any specific provision in this Article VIII;
provided, however, as to any such breach that is reasonably susceptible to
being cured (a "Curable Default"), the occurrence of such Curable Default
shall not constitute an Event of Default hereunder if such Curable Default
is fully cured and/or corrected within thirty days (five (5) days, if such
Curable Default may be cured by the payment of a sum of money) after the
earlier of Borrower's knowledge of the facts giving rise thereto or
Lender's written notice thereof to Borrower given in accordance with the
provisions hereof.
8.1.6 Involuntary Bankruptcy or Receivership Proceedings. The
appointment of a receiver, custodian, liquidator, or trustee for Borrower
or any other ARC Entity, or for any of its Property, by the order or decree
of any court or agency or supervisory authority having jurisdiction; or
Borrower's or any other ARC Entity's adjudication as being bankrupt or
insolvent; or the sequestering of any of the Property of Borrower or any
other ARC Entity by court order or the filing of a petition against
Borrower or any other ARC Entity under any state or federal bankruptcy,
reorganization, debt arrangement, insolvency, readjustment of debt,
dissolution, liquidation, or receivership law of any jurisdiction, whether
now or hereafter in effect, if such involuntary proceedings are not
dismissed within 60 days.
8.1.7 Voluntary Petitions. Borrower's or any other ARC Entity's filing
of a petition in voluntary bankruptcy or to seek relief under any provision
of any bankruptcy, reorganization, debt arrangement, insolvency,
receivership, readjustment of debt, dissolution, or liquidation law of any
jurisdiction, whether now or hereafter in effect, or its consent to the
filing of any petition against it under any such law.
8.1.8 Discontinuance of Business. Borrower's or any other ARC Entity's
discontinuance of its usual business or its dissolution.
8.1.9 Default on Other Debt. Borrower or any other ARC Entity shall
fail to make any payment due from it on any indebtedness or other security
for borrowed money in excess of $100,000.00 beyond any applicable cure
period (whether its liability therefor is direct or contingent), or if any
other event (other than the mere passage of time) or any other condition in
respect of any indebtedness or other security for borrowed money of
Borrower or any other ARC Entity in a principal amount in excess of
$100,000 (whether its liability therefor
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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.
8.1.10 Undischarged Judgments. Any judgment against Borrower or any
other ARC Entity or any attachment or levy against the property of Borrower
any other ARC Entity with respect to a claim for an amount in excess of
$25,000 not adequately insured or indemnified against, remains unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of
twenty (20) days.
8.1.11 Insolvency. Borrower's or any ARC Entity's no longer being
Solvent. For purposes of making the determination of solvency hereunder,
Borrower or any ARC Entity may include funds available from Borrower or any
other ARC Entity to the extent permitted under the terms of this Agreement.
8.1.12 Attachment. The issuance of an attachment or other process
against any Property of Borrower or any other ARC Entity, unless removed
(by bond or otherwise) within twenty (20) days.
8.1.13 Insurance. Borrower's or any other ARC Entity's failure to
maintain any insurance required in the Construction Loan Addendum or in any
other Loan Document.
8.1.14 Other Event. The occurrence of any event or condition which, in
Lender's reasonable discretion, materially and adversely affects the
ability of Borrower to perform the Obligations.
8.1.15 Cross-Default. The occurrence of an Event of Default under (i)
the Reimbursement Agreement or (ii) any document evidencing or securing
obligations of any of the ARC Entities to Lender or its affiliates.
8.2 Remedies. Upon the happening of any Event of Default:
8.2.1 Default Rate. Lender may declare the Obligations to thereafter
bear interest at the Default Rate.
8.2.2 Acceleration. Lender may declare the entire principal amount of
all Obligations then outstanding, including interest accrued thereon, to be
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immediately due and payable without presentment, demand, protest, notice of
protest, or dishonor or other notice of default of any kind, all of which
are hereby expressly waived.
8.2.3 Exercise of Setoff. Lender may exercise its right of setoff
against Borrower.
8.2.4 Other Remedies. Lender may exercise its remedies under any or
all of the Loan Documents and all other rights afforded a creditor under
applicable law.
IX. GENERAL PROVISIONS
9.1 Notices. All communications relating to this Agreement or any of the
other Loan Documents shall be in writing and shall effective when be delivered
by mail, overnight courier, special courier or otherwise to the following
addresses:
if to Borrower:
Fort Austin Limited Partnership
Attn: Mr. W.E. Sheriff
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
With a Copy To:
Bass, Xxxxx & Xxxx
Attn: T. Xxxxxx Xxxxx, Esq.
First American Center
Xxxxxxxxx, Xxxxxxxxx 00000
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if to Lender:
First Union National Bank of Tennessee
Attn: Xxxxxx X. Xxxxxxxx
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
With a Copy To:
Boult, Cummings, Xxxxxxx & Xxxxx
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Any party may change its address for receipt of notice by written direction
to the other parties hereto.
9.2 Renewal, Extension, or Rearrangement. All provisions of this Agreement
relating to Obligations shall apply with equal force and effect to each and all
promissory notes executed hereafter which in whole or in part represent a
renewal, extension for any period, increase, or rearrangement of any part of the
Obligations originally represented by any part of such other Obligations.
9.3 Application of Payments. Amounts received with respect to the
Obligations shall be applied (i) first, to any expenses due Lender, (ii) second,
to accrued interest under any of the Obligations, and (iii) third, to reduce
principal of the Obligations, in such manner as determined by Lender.
9.4 Computations; Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, such determination or calculation,
to the extent applicable and except as otherwise specified in this Agreement,
shall be made in accordance with GAAP.
9.5 Counterparts. This Agreement may be executed in counterparts with all
signatures or by counterpart signature pages, and it shall not be necessary that
the signatures of all parties be contained on any one counterpart. Each
counterpart shall be deemed an original, but all of them together shall
constitute one and the same instrument.
9.6 Negotiated Document. This Agreement and the other Loan Documents have
been negotiated by the parties with full benefit of counsel and should not be
construed against any party as author.
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9.7 Consent to Jurisdiction; Exclusive Venue. Borrower hereby irrevocably
consents to the jurisdiction of the United States District Court for the Middle
District of Tennessee and of all Tennessee state courts sitting in Davidson
County, Tennessee, for the purpose of any litigation to which Lender may be a
party and which concerns this Agreement or the Obligations. It is further
agreed, subject to the provisions of Section 9.26, that venue for any such
action shall lie exclusively with courts sitting in Davidson County, Tennessee,
except for matters relating to the Property, which may be heard in a court
sitting in the State of Arizona, unless Lender agrees to the contrary in
writing.
9.8 Not Partners; No Third Party Beneficiaries. The relationship of Lender
and Borrower and the other ARC Entities is that of lender and borrower only, and
neither is a fiduciary, partner or joint venturer of the other for any purpose.
Except as described in the immediately succeeding sentence, this Agreement has
been executed for the sole benefit of Lender, and no third party is authorized
to rely upon Lender's rights or duties hereunder.
9.9 No Reliance on Lender's Analysis. Borrower acknowledges and represents
that, in connection with the Obligations, Borrower has not relied upon any
financial projection, budget, assessment or other analysis by Lender or upon any
representation by Lender as to the risks, benefits or prospects of Borrower's
business activities or present or future capital needs incidental thereto, all
such considerations having been examined fully and independently by Borrower.
9.10 No Marshalling of Assets. Lender may proceed against collateral
securing the Obligations and against parties liable therefor in such order as it
may elect, and neither Borrower nor any surety or guarantor for Borrower nor any
creditor of Borrower shall be entitled to require Lender to marshal assets. The
benefit of any rule of law or equity to the contrary is hereby expressly waived.
9.11 Impairment of Collateral. Lender may, in its sole discretion, release
any collateral securing the Obligations or release any party liable therefor.
The defenses of impairment of collateral and impairment of recourse and any
requirement of diligence on Lender's part in collecting the Obligations are
hereby waived.
9.12 Business Days. If any payment date under the Obligations falls on a
day that is not a Business Day, or if the last day of any notice period falls on
such a day, the payment shall be due and the notice period shall end on the next
following Business Day.
9.13 Participations. Lender may, from time to time, in its sole discretion,
and without notice to Borrower or any other Person, sell participations in any
credit subject hereto to such other investors or financial institutions as it
may elect. Lender may from time to time disclose to any participant or
prospective participant such information as Lender may have regarding the
financial condition, operations, and prospects of Borrower.
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9.14 Standard of Care; Limitation of Damages. Lender shall be liable to the
Borrower only for matters arising from this Agreement or otherwise related to
the Obligations resulting from Lender's gross negligence or willful misconduct,
and liability for all other matters is hereby waived. Lender shall not in any
event be liable to Borrower for special or consequential damages arising from
this Agreement or otherwise related to the Obligations.
9.15 Incorporation of Schedules. All Schedules and Exhibits referred to in
this Agreement are incorporated herein by this reference.
9.16 Indulgence Not Waiver. Lender's indulgence in the existence of a
default hereunder or any other departure from the terms of this Agreement shall
not prejudice Lender's rights to declare a default or otherwise demand strict
compliance with this Agreement.
9.17 Cumulative Remedies. The remedies provided Lender in this Agreement
are not exclusive of any other remedies that may be available to Lender under
any other document or at law or equity.
9.18 Amendment and Waiver in Writing. No provision of this Agreement can be
amended or waived, except by a statement in writing signed by the party against
whom enforcement of the amendment or waiver is sought.
9.19 Assignment. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of Borrower and Lender, except
that Borrower shall not assign any rights or delegate any obligations arising
hereunder without the prior written consent of Lender. Any attempted assignment
or delegation by Borrower without the required prior consent shall be void.
9.20 Entire Agreement. This Agreement and the other written agreements
between the Borrower and Lender represent the entire agreement between the
parties concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein. Provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision in this Agreement shall control.
9.21 Severability. Should any provision of this Agreement be declared
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
9.22 Time of Essence. Time is of the essence of this Agreement, and all
dates and time periods specified herein shall be strictly observed.
9.23 Applicable Law. The validity, construction and enforcement of this
Agreement and all other documents executed with respect to the Obligations shall
be determined according to the laws of Tennessee applicable to contracts
executed and performed entirely within
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that state, except for the Deed of Trust, which the parties have agreed shall be
governed by the laws of the State of Arizona.
9.24 Gender and Number. Words used herein indicating gender or number shall
be read as context may require.
9.25 Captions Not Controlling. Captions and headings have been included in
this Agreement for the convenience of the parties, and shall not be construed as
affecting the content of the respective Sections.
9.26 Arbitration. Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Loan Agreement and other Loan
Documents ("Disputes") between or among parties to this Loan Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Loan Agreement.
Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in the city in which the office of Bank
first stated above is located. The expedited procedures set forth in Rule 51 et
seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court having jurisdiction. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted or if such person is not
available to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to swap agreements.
9.27 Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, Bank and Grantor agree to preserve, without
diminution, certain remedies that any party hereto may employ or exercise
freely, independently or in connection with an arbitration proceeding or after
an arbitration action is brought. Bank and Grantor shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under Loan Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and
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filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute. Grantor and Bank agree that they shall not have a
remedy of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they have now
or which may arise in the future in connection with any Dispute whether the
Dispute is resolved by arbitration or judicially.
9.28 Federal Reserve. Nothing in this or other documents with respect to
this transaction shall prohibit Lender from pledging or assigning the
obligations evidencing this transaction including the collateral securing those
obligations to any Federal reserve Bank in accordance with applicable law.
Executed as of the date first written above.
FORT AUSTIN LIMITED PARTNERSHIP
By: ARC Fort Austin Properties, Inc.
General Partner
By:____________________________________
Title:_________________________________
FIRST UNION NATIONAL BANK OF TENNESSEE,
Lender
By:____________________________________
Title:_________________________________
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