[Xxxxxx - Pool C]
MEZZANINE LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of August ____, 2000,
by and among CAPITAL SENIOR LIVING P-C, INC., a Delaware corporation (together
with its successors and assigns, "Borrower"), CAPITAL SENIOR LIVING ILM-C, INC.,
a Delaware corporation (together with its successors and assigns, "Owner"), and
XXXXXX FINANCIAL SERVICES, INC., a Delaware corporation (together with its
successors and assigns, "Mezzanine Lender").
RECITALS
A. Borrower has requested that Mezzanine Lender make a mezzanine loan
to Borrower in the principal sum of $10,300,000.00 in order to assist Owner in
refinancing or acquiring, as the case may be, the Facilities (as defined below).
B. As a wholly owned subsidiary of Borrower, Owner will materially and
directly benefit from the making of the Loan.
C. Mezzanine Lender has agreed to make such loan on the terms and
conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS.
1.1 As used in this Agreement, the following terms shall have the
following meanings unless the context hereof shall otherwise indicate:
"Accounts" has the meaning given to that term in the First
Mortgage.
"Actual Management Fees" means actual management fees paid or
incurred in connection with the operation of the Facility.
"Affiliate" means, with respect to any Person, (a) each Person
that controls, is controlled by or is under common control with such Person, (b)
each Person that, directly or indirectly, owns or controls, whether beneficially
or as a trustee, guardian or other fiduciary, any of
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the Stock of such Person, and (c) each of such Person's officers, directors,
members, joint venturers and partners. For the purposes of this Agreement,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities or other beneficial
interests, by contact, or otherwise; and terms "controls", "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Assignment of Proceeds" means those two (2) certain
Assignment of Net Proceeds relating to the Pool C Facilities of even date
herewith executed by Owner and/or Borrower for the ultimate benefit of Mezzanine
Lender.
"Assumed Management Fees" means assumed management fees of
five percent (5%) of net resident revenues of the Facility (after applicable
Medicaid and Medicare contractual adjustments).
"Business Day" means a day, other than Saturday or Sunday and
legal holidays, when Mezzanine Lender is open for business.
"Capital Senior Properties" means Capital Senior Living
Properties, Inc., a Texas corporation.
"Closing Date" means the date on which all or any part of the
Loan is disbursed by Mezzanine Lender to or for the benefit of Borrower.
"Commitment Letter" means the commitment letter issued by
Mezzanine Lender to Guarantor dated August 3, 2000.
"Debt Service Coverage Ratio" means a ratio in which the first
number is the sum of "net pre-tax income" of Owner from normal operations of the
Pool C Facilities as set forth in the financial statements provided to Mezzanine
Lender (without deduction for Actual Management Fees or management expenses paid
or incurred in connection with the operation of the Pool C Facilities),
calculated based upon the preceding twelve (12) months, plus interest expense or
lease expense to the extent deducted in determining net income and non-cash
expenses or allowances for depreciation and amortization of the Pool C
Facilities for said period, less the greater of Actual Management Fees or
Assumed Management Fees for said period and the second number is the sum of the
principal amounts due (even if not paid) on the Loan and the First Mortgage Loan
(but which shall not include that portion associated with the balloon payment of
the Loan or the First Mortgage Loan) for the applicable period plus the interest
amount due on the Loan and on the First Mortgage Loan for the applicable period
not to exceed, with respect to the Loan and the First Mortgage Loan, an interest
amount calculated at the Strike Rate and the applicable "Strike Rate" described
in the loan documents evidencing the First Mortgage Loan. In calculating "net
pre-tax income," Extraordinary Income and Extraordinary Expenses shall be
excluded.
"Debt Reserve Fund Agreement" means that certain Debt Reserve
Fund Collateral Pledge Agreement of even date herewith by and between Mezzanine
Lender and Borrower.
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"Default" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both, would
constitute an Event of Default.
"Default Rate" has the meaning given to that term in the Note.
"Distribution Coverage Ratio" means a ratio in which the first
number is the sum of "net pre-tax income" of Owner from normal operations of the
Facilities as set forth in the financial statements provided to Mezzanine Lender
(without deduction for Actual Management Fees or management expenses paid or
incurred in connection with the operation of the Facility), calculated based
upon the preceding twelve (12) months, plus interest expense or lease expense to
the extent deducted in determining net income and non-cash expenses or
allowances for depreciation and amortization of the Facilities for said period,
less the greater of Assumed Management Fees or Actual Management Fees for said
period and the second number is the sum of the principal amounts due (even if
not paid) on the Loan and the First Mortgage Loan (but which shall not include
that portion associated with the balloon payment of the Loan or the First
Mortgage Loan) for the applicable period plus the interest due on the Loan and
the First Mortgage Loan for the applicable period, not to exceed, with respect
to the Loan and the First Mortgage Loan, an interest amount calculated at the
Strike Rate, and the applicable "Strike Rate" described in the loan documents
evidencing the First Mortgage Loan. In calculating "net pre-tax income,"
Extraordinary Income and Extraordinary Expenses shall be excluded.
"Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Land and/or the
Improvements.
"Equipment" has the meaning given to that term in the First
Mortgage.
"Event of Default" means any "Event of Default" as defined in
Article VII hereof.
"Extraordinary Income and Extraordinary Expenses" means
material items of a character significantly different from the typical or
customary business activities of Owner which would not be expected to recur
frequently and which would not be considered as recurring factors in any
evaluation of the ordinary operating processes of Owner's business, and which
would be treated as extraordinary income or extraordinary expenses under GAAP.
"Exhibit" means an Exhibit to this Agreement, unless the
context refers to another document, and each such Exhibit shall be deemed a part
of this Agreement to the same extent as if it were set forth in its entirety
wherever reference is made thereto.
"Facility" means each of the Pool C Facilities.
"First Mortgage" means those certain Mortgage/Deed of Trust
and Security Agreements of even date herewith, executed by Owner for the benefit
of First Mortgage Lender, in the aggregate principal amount of the First
Mortgage Loan, encumbering the Mortgage Property, as the same may be amended,
modified or supplemented from time to time.
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"First Mortgage Lender" shall mean GMAC Commercial Mortgage
Corporation, a California corporation.
"First Mortgage Loan" means individually and collectively
those loans in the aggregate amount of $38,350,000.00 made in connection with
the Pool C Facilities to the Owner by First Mortgage Lender on the date hereof
as more particularly identified on Exhibit "B" attached hereto.
"First Mortgage Loan Agreement" means individually and
collectively those certain Loan Agreements relating to the First Mortgage Loan,
of even date herewith, between Owner and First Mortgage Lender as the same may
be amended, modified or supplemented from time to time.
"First Mortgage Loan Documents" means, collectively, the "Loan
Documents" (as defined in the First Mortgage Loan Agreement) to evidence, secure
and guaranty all portions of the First Mortgage Loan, as such documents may be
amended, modified or supplemented from time to time.
"GAAP" means, as in effect from time to time, generally
accepted accounting principles consistently applied as promulgated by the
American Institute of Certified Public Accountants.
"Governmental Authority" means any board, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision of any of them, that has or acquires jurisdiction over the
Land and/or the Improvements or the use, operation or improvement of the Land
and/or the Facility.
"Guarantor" means Capital Senior Living Corporation, a
Delaware corporation.
"Guaranty Agreement" means that certain Payment and
Performance Guaranty of even date herewith from Guarantor to Mezzanine Lender.
"Hazardous Materials" means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground storage tanks, whether empty or containing any substance;
any substance the presence of which on the Land and/or the Improvements is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or during the term of
the Loan defined as a "hazardous substance," "hazardous material," "hazardous
waste," "toxic substance," "toxic pollutant," "contaminant," or "pollutant"
within the meaning of any Hazardous Materials Law.
"Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules, written policies and
other applicable binding governmental requirements, administrative rulings and
court judgments and decrees in effect now or in the future
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and including all amendments, that relate to Hazardous Materials and apply to
Owner, Borrower, the Land and/or the Improvements. Hazardous Materials Laws
include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic
Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33
U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, and their state analogs.
"Improvements" means all buildings, structures and
improvements of every nature whatsoever now or hereafter situated on the Land,
including but not limited to, all gas and electric fixtures, radiators, heaters,
engines and machinery, boilers, ranges, elevators and motors, plumbing and
heating fixtures, carpeting and other floor coverings, water heaters, awnings
and storm sashes, and cleaning apparatuses which are or shall be attached to the
Land or said buildings, structures or improvements.
"Indebtedness" means any (a) obligations for borrowed money,
(b) obligations, payment for which is being deferred by more than ninety (90)
days, representing the deferred purchase price of property other than accounts
payable arising in connection with the purchase of inventory customary in the
trade and in the ordinary course of Borrower's or Owner's business, as the case
may be, (c) obligations, whether or not assumed, secured by Liens or payable out
of the proceeds or production from the Accounts and/or property now or hereafter
owned or acquired, and (d) the amount of any other obligation (including
obligations under financing leases) which would be shown as a liability on a
balance sheet prepared in accordance with GAAP.
"Independent Director" means, with respect to Borrower and
Owner, a duly appointed member of the board of directors of such respective
entity, reasonably satisfactory to Mezzanine Lender, who shall not have been at
the time of such individual's appointment, and may not have been at any time
during the preceding five years, and shall not be at any time while serving as
Independent Director: (i) a direct or indirect legal or beneficial owner of, or
an officer, director, attorney, counsel, partner, member or employee of such
respective entity (other than an Independent Director thereof) or any Affiliate
thereof except for service as an Independent Director on the board of directors
of an Affiliate of Borrower, (ii) a customer or creditor of, or supplier or
contractor to, or other person who derives more than 10% of its purchases or
revenues from its activities with such respective entity or any Affiliate
thereof except for service as an Independent Director on the board of directors
of an Affiliate of Borrower, (iii) a person or other entity controlling,
controlled by or under common control with any such direct or indirect legal or
beneficial owner, officer, director, attorney, counsel, partner, member,
employee, customer, creditor, contractor supplier or other Person, or (iv) a
member of the immediate family of any such direct or indirect legal or
beneficial owner, officer, director, attorney, counsel, partner, member,
employee, customer, creditor, contractor, supplier or other person. As used
herein, the term "control:" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management, policies or activities
or a person or entity, whether through ownership of voting securities or other
beneficial interest, by contract or otherwise and the terms "controlling" and
"controlled" having meanings correlative to the foregoing.
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"Inventory" has the meaning given to that term in the First
Mortgage.
"Key Capital" means Key Corporate Capital, Inc., a Michigan
corporation.
"Land" means the land described in Exhibit "A" attached hereto
and made a part hereof.
"Leases" has the meaning given to that term in the First
Mortgage.
"Lien" means any voluntary or involuntary mortgage, security
deed, deed of trust, lien, pledge, assignment, security interest, title
retention agreement, financing lease, levy, execution, seizure, judgment,
attachment, garnishment, charge, lien or other encumbrance of any kind,
including those contemplated by or permitted in this Agreement and the other
Loan Documents.
"Loan" means the Loan in the principal sum of $10,300,000.00
made by Mezzanine Lender to Borrower as of the date hereof.
"Loan Documents" means, collectively, this Agreement, the
Commitment Letter, the Note, Assignment of Proceeds, Debt Reserve Fund
Agreement, the Guaranty Agreement, the Lockbox Agreement, Operating Deficit
Reserve Agreement, Partnership Pledge Agreement, Promissory Notes Security
Agreement, the Stock Pledge Agreement and the Subordination Agreement, together
with any and all other documents executed by Borrower, Owner, their Affiliates
or others, evidencing, securing or otherwise relating to the Loan, as the same
may be amended, modified or supplemented from time to time.
"Loan Obligations" means the aggregate of all principal and
interest owing from time to time under the Note and all expenses, charges and
other amounts from time to time owing under the Note, this Agreement or the
other Loan Documents and all covenants, agreements and other obligations from
time to time owing to, or for the benefit of, Mezzanine Lender pursuant to the
Loan Documents.
"Lockbox Agreement" means that certain Springing
Lockbox-Deposit Account Agreement of even date herewith by and among Mezzanine
Lender, Owner and Bank One, Texas, N.A.
"Managed Care Plans" means any health maintenance
organization, preferred provider organization, individual practice association,
competitive medical plan, or similar arrangement, entity, organization, or
Person.
"Management Agreement" means individually and collectively
those certain Management Agreements dated of even date herewith between Manager
and Borrower, obligating Manager to operate and manage each of the Facilities.
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"Manager" means Capital Senior Management 2, Inc., a Texas
corporation and any successor manager of the Facilities approved by Mezzanine
Lender, in its commercially reasonable discretion, in writing.
"Maturity Date" means August ___, 2002, unless Mezzanine
Lender sooner accelerates the maturity of the Loan in accordance with Section
2.4 hereof.
"Medicaid" means that certain program of medical assistance,
funded jointly by the federal government and the States, for impoverished
individuals who are aged, blind and/or disabled, and/or members of families with
dependent children, which program is more fully described in Title XIX of the
Social Security Act (42 U.S.C. xx.xx. 1396 et seq.) and the regulations
promulgated thereunder.
"Medicare" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, skilled nursing homes, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. xx.xx. 1395 et seq.) and the regulations promulgated
thereunder.
"Mortgaged Property" has the meaning given to that term in the
First Mortgage.
"Note" means the Promissory Note of even date herewith in the
principal amount of the Loan payable by Borrower to the order of Mezzanine
Lender.
"O&M Program" means a written program of operations and
maintenance established or approved in writing by Mezzanine Lender relating to
any Hazardous Materials in, on or under the Land and/or the Improvements.
"Operating Deficit Reserve Agreement" means that certain
Operating Deficit Reserve and Security Agreement of even date herewith by and
between Mezzanine Lender and Borrower.
"Partnership Pledge Agreement" means that certain Partnership
Interest Pledge and Security Agreement executed by Capital Senior Properties,
for the benefit of Mezzanine Lender.
"Permits" means all licenses, permits and certificates used or
necessary in connection with the construction, ownership, operation, use or
occupancy of the Mortgaged Property and/or the Facility, including, without
limitation, business licenses, state health department licenses, food service
licenses, licenses to conduct business, certificates of need and all such other
permits, licenses and rights, obtained from any governmental or
quasi-governmental entity or Person whatsoever concerning ownership, operation,
use or occupancy.
"Permitted Encumbrances" has the meaning given to that term in
Section 8.2 hereof.
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"Person" means any natural person, firm, trust, corporation,
partnership, limited liability company trust and any other form of legal entity.
"Pool C Facilities" means each of the facilities described in
Exhibit "B" hereto.
"Proceeds" has the meaning given to that term in the First
Mortgage.
"Promissory Notes Security Agreement" means that certain
Promissory Notes Security Agreement of even date herewith executed by Capital
Senior Properties and the Mezzanine Lender.
"Rating Agency" means Fitch Investors Services, Inc., Xxxxx'x
Investors Service, Inc., Duff & Xxxxxx Credit Rating Co. and/or Standard &
Poor's or any successor thereto, and any other nationally recognized statistical
rating organization to the extent that any of the foregoing have been or will be
engaged by Mezzanine Lender or its designees in connection with or in
anticipation of a securitization of the Loan.
"Reimbursement Contracts" means all third-party reimbursement
contracts relating to the Facility which are now or hereafter in effect with
respect to residents or patients qualifying for coverage under the same,
including Medicare and Medicaid, Managed Care Plans and private insurance
agreements, and any successor program or other similar reimbursement program
and/or private insurance agreements, now or hereafter existing.
"Rents" has the meaning given to that term in the First
Mortgage.
"Single Purpose Entity" means, with respect to Owner, a Person
which owns no interest or property other than the Mortgaged Property, and means,
with respect to Borrower, a Person which owns no interest or property other than
one hundred percent (100%) of the outstanding stock of the Owner.
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests, participations or other
equivalents (regardless of how designated) in a corporation, limited liability
company, partnership or any equivalent entity, whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Stock Pledge Agreement" means that certain Stock Pledge
Agreement of even date herewith executed by the Owner of the Pool C Facilities
for the benefit of Mezzanine Lender.
"Strike Rate" means a fixed rate of interest equal to the Note
Rate (as defined in the Note) in effect on the Closing Date plus 200 basis
points.
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"Subordination Agreement" means those certain Subordination of
Management Agreements of even date herewith by and among Borrower, Manager, and
Mezzanine Lender.
"Triad II Limited Partnership" means Triad Senior Living II,
L.P., a Texas limited partnership.
"Triad Facilities" means those three (3) separate senior
housing facilities more fully described on Exhibit "C" attached hereto and
incorporated herein.
"Triad Notes" means those three (3) Amended and Restated Draw
Promissory Notes, dated December 31, 1999 made by Triad II Limited Partnership
to the order of Capital Senior Properties.
1.2 Singular terms shall include the plural forms and vice versa,
as applicable, of the terms defined.
1.3 Terms contained in this Agreement shall, unless otherwise defined
herein or unless the context otherwise indicates, have the meanings, if any,
assigned to them by the Uniform Commercial Code in effect in the State of Texas.
1.4 All accounting terms used in this Agreement shall be construed in
accordance with GAAP, except as otherwise specified.
1.5 All references to other documents or instruments shall be deemed to
refer to such documents or instruments as they may hereafter be extended,
renewed, modified, or amended and all replacements and substitutions therefor.
1.6 All references herein to "Medicaid" and "Medicare" shall be deemed
to include any successor program thereto.
ARTICLE II
TERMS OF THE LOAN
2.1 The Loan. Borrower has agreed to borrow the Loan from Mezzanine
Lender, and Mezzanine Lender has agreed to make the Loan to Borrower, subject to
Borrower's and Owner's compliance with and observance of the terms, conditions,
covenants, and provisions of this Agreement and the other Loan Documents, and
Borrower and/or Owner, as the case may be, has made the covenants,
representations, and warranties herein and therein as a material inducement to
Mezzanine Lender to make the Loan.
2.2 Security for the Loan. The Loan will be evidenced, secured
and guaranteed by the Loan Documents.
2.3 Limitation on Interest. All agreements between Borrower and
Mezzanine Lender, whether now existing or hereafter arising and whether written
or oral, are hereby limited so that in
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no contingency, whether by reason of acceleration of the maturity of any
indebtedness governed hereby or otherwise, shall the interest contracted for,
charged or received by Mezzanine Lender exceed the maximum amount permissible
under applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to Mezzanine Lender in excess of the maximum lawful amount,
the interest payable to Mezzanine Lender shall be reduced to the maximum amount
permitted under applicable law; and, if from any circumstance the Mezzanine
Lender shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive interest
shall be applied to the reduction of the principal of the Loan and not to the
payment of interest, or, if such excessive interest exceeds the unpaid balance
of principal of the Loan, such excess shall be refunded to Borrower. All
interest paid or agreed to be paid to Mezzanine Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period until payment in full of the principal of the Loan
(including the period of any renewal or extension thereof) so that interest
thereon for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the Borrower
and Mezzanine Lender.
2.4 Acceleration of Maturity Date. Mezzanine Lender shall accelerate
the maturity date of the Loan upon the eighteen (18) month anniversary of the
Closing Date ("Acceleration Date") unless (i) no Default (as defined below)
under any of the Loan Documents has occurred and is continuing; (ii) no Default
under any of the loan documents evidencing that certain loan made by Mezzanine
Lender to Capital Senior Living P-B, Inc., a Delaware corporation, on or prior
to August 11, 2000, in the amount of $9,700,000.00 ("Pool B Loan") has occurred
and is continuing ("Pool B Loan Documents"); (iii) Mezzanine Lender determines,
based on its review of updated appraisals for the Facilities, that the loan to
value ratio for the Facilities (after taking into account the unpaid principal
balance of the Loan and the portion of the unpaid principal balance of the First
Mortgage Loan, attributable to the Facilities) is not more than ninety-five
percent (95%) ("Loan to Value Test"); and (iv) the Facilities have achieved, on
a combined basis, a Debt Service Coverage Ratio of at least 1.0 to 1.0 based on
a per annum interest rate calculated at the Strike Rate ("Interest Rate Stress
Test"). For purposes of this Agreement, "Default" means the occurrence or
existence of any event which, but for the giving of notice or expiration of time
or both, would constitute an "Event of Default" under the Loan Documents or the
Pool B Loan Documents (as the case may be). In the event the Loan to Value Ratio
Test or the Interest Rate Stress Test has not been achieved at the time of the
Acceleration Date, the Mezzanine Lender will permit the Borrower, Owner and/or
Guarantor to pay to Mezzanine Lender on or prior to the Acceleration Date, an
amount which if the same had been applied to reduce the outstanding principal
amount of the Loan, would have resulted in the achievement of the Loan to Value
Ratio Test and the Interest Rate Stress Test.
2.5 Interest Rate Protection. To protection against fluctuation in
interest rates, the Borrower shall make arrangements for an interest rate cap (a
"Cap") to be placed and maintained on or prior to the Closing Date and shall not
terminate earlier than the Maturity Date. The Cap shall be secured and
documented on terms and conditions approved by, and with a counterparty ("Cap
Provider") agreement, acceptable to Mezzanine Lender in its commercially
reasonable discretion. The Cap Provider shall agree to make certain payments to
or for the benefit of Borrower if one month LIBOR (as determined in accordance
with Section 1.4 of the Note), in effect on the Closing Date, increases by more
than two hundred (200) basis points. Borrower's right, title and interest in the
Cap
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shall be assigned to Mezzanine Lender as additional collateral for repayment of
the Loan ("Cap Assignment"). The Cap shall be evidenced by and governed by such
documents (the "Cap Documents") as shall be reasonably acceptable to, and which
shall be in form and content reasonably acceptable to Mezzanine Lender.
2.6 Liquidity Fees. In addition to any fees and expenses payable by
Borrower and/or Owner to Lender on the Closing Date, Liquidity Fees equal to (i)
one half of one percent (1/2%) of the then outstanding principal balance of the
Loan shall be earned by Mezzanine Lender and payable by Borrower upon the twelve
month anniversary of the Closing Date, and (ii) one half of one percent (1/2%)
of the then outstanding principal balance of the Loan shall be earned by
Mezzanine Lender and payable by Borrower upon the eighteen (18) month
anniversary of the Closing Date.
2.7 Prepayment Privilege. Prepayment of the Loan in full or in part
shall be permitted at any time during the Loan term upon not less than thirty
(30) days and not more than sixty (60) days prior written notice to Mezzanine
Lender, provided, however, that prepayment of the Loan in full shall be required
in the event the First Mortgage Loan is prepaid in full.
2.8 Excess Sale or Refinancing Proceeds. In the event of the sale of
any of the Facilities or refinancing of any of the Facilities, Owner shall
transfer and assign to Borrower and Borrower shall transfer and assign to
Mezzanine Lender all of Owner's right, title and interest in and to all such
sale and refinancing proceeds ("Proceeds") net of reasonable and customary
closing costs and the applicable portion of the First Mortgage Loan attributable
to the Facility or Facilities (as the case may be) in accordance with the loan
documents evidencing the First Mortgage Loan. Upon its receipt thereof,
Mezzanine Lender shall be permitted to apply the Proceeds to the outstanding
principal balance of the Loan and upon satisfaction thereof, Mezzanine Lender
shall be permitted to apply the balance of such Proceeds to the outstanding
principal balance of the Pool B Loan.
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce Mezzanine Lender to enter into this Agreement, and to make
the Loan to Borrower, Borrower represents and warrants to Mezzanine Lender as
follows:
3.1 Existence, Power and Qualification. Borrower is a duly organized
and validly existing Delaware corporation, has the corporate power to own its
properties and to carry on its business as is now being conducted, and is duly
qualified to do business and is in good standing in every jurisdiction in which
the character of the properties owned by it or in which the transaction of its
business makes its qualification necessary.
3.2 Power and Authority. Borrower has full corporate power and
authority to borrow the indebtedness evidenced by the Note and to incur the Loan
Obligations provided for herein, all of which have been authorized by all proper
and necessary action. All consents, approvals authorizations, orders or filings
of or with any court or governmental agency or body, if any, required for the
execution, delivery and performance of the Loan Documents by Borrower have been
obtained or made.
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3.3 Due Execution and Enforcement. Each of the Loan Documents to which
Borrower is a party constitutes a valid and legally binding obligation of
Borrower, enforceable in accordance with its respective terms (except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium, or other laws relating to the rights of creditors
generally and by general principles of equity) and does not violate, conflict
with, or constitute any violation of any law, government regulation, decree,
judgment, Borrower's articles of organization/ incorporation, partnership or
operating agreement or by-laws, as applicable, or any other agreement or
instrument binding upon Borrower.
3.4 Single Purpose Entity. Borrower is a Single Purpose Entity.
3.5 Pending Matters. No action or investigation is pending or, to the
best of Borrower's knowledge, threatened before or by any court or
administrative agency which might result in an Event of Default after the giving
of any required notice and the expiration of all applicable cure periods.
Borrower is not in violation of any agreement, the violation of which might
reasonably be expected to result in an Event of Default after the giving of any
required notice and the expiration of all applicable cure periods, and Borrower
is not in violation of any order, judgment, or decree of any court, and has no
knowledge of violation by the Borrower of any statute or governmental regulation
to which it is subject.
3.6 Financial Statements Accurate. All financial statements heretofore
or hereafter provided by Borrower are and will be true and complete in all
material respects as of their respective dates and fairly present the financial
condition of Borrower, and there are no material liabilities, direct or
indirect, fixed or contingent, as of the respective dates of such statements
which are not reflected therein or in the notes thereto or in a written
certificate delivered with such statements. The financial statements of Borrower
have been prepared in accordance with GAAP. There has been no material adverse
change in the financial condition of Borrower since the dates of such statements
except as fully disclosed in writing with the delivery of such statements. All
financial statements of the operations of the Facility heretofore or hereafter
provided to Mezzanine Lender are and will be true and complete in all material
respects as of their respective dates.
3.7 Compliance with Facility Laws. [Intentionally Deleted]
-----------------------------
3.8 Maintain Unit Capacity. [Intentionally Deleted]
----------------------
3.9 Independent Director. An Independent Director is a member of
the board of directors of the Borrower.
3.10 Third Party Payors. [Intentionally Deleted]
------------------
3.11 Governmental Proceedings and Notices. [Intentionally Deleted]
------------------------------------
3.12 Physical Plant Standards. [Intentionally Deleted]
------------------------
3.13 Pledge of Receivables. [Intentionally Deleted]
---------------------
12
3.14 Payment of Taxes and Property Impositions. Borrower has filed all
federal, state, and local tax returns which it is required to file and has paid,
or made adequate provision for the payment of, all taxes and assessments which
are shown pursuant to such returns or are required to be shown thereon,
including, without limitation, provider taxes, which are due and owing as of the
date hereof. All such returns are complete and accurate in all respects.
3.15 Title to Mortgaged Property. [Intentionally Deleted]
---------------------------
3.16 Priority of Mortgage. [Intentionally Deleted].
--------------------
3.17 Location of Chief Executive Offices and Places of Business.
The location of Borrower's chief executive offices are set forth on Exhibit "D"
hereto.
3.18 Disclosure. All information furnished or to be furnished by
Borrower to Mezzanine Lender in connection with the Loan or any of the Loan
Documents is, or will be at the time the same is furnished, accurate and correct
in all material respects and complete insofar as completeness may be necessary
to provide Mezzanine Lender with true and accurate knowledge of the subject
matter.
3.19 Trade Names. [Intentionally Deleted]
-----------
3.20 ERISA. As of the date hereof and throughout the term of this
Agreement,
(a) Borrower is not an "employee benefit plan," as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), subject to Title I of ERISA, and none of the assets of Borrower will
constitute "plan assets" (within the meaning of Department of Labor Regulation
Section 2510.3-101) of one or more such plans, and
(b) Borrower will not be a "governmental plan" within the
meaning of Section 3(32) of ERISA, and transactions by or with Borrower will not
be subject to state statutes regulating investments of, and fiduciary
obligations with respect to, governmental plans.
The execution and delivery of the Loan Documents and the
borrowing of indebtedness hereunder do not constitute a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"). Borrower shall not engage in a non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Borrower, or in any transaction that would
cause any obligation or action taken or to be taken hereunder (or the exercise
by Mezzanine Lender of any of its rights under the Loan Documents) to be a
non-exempt prohibited transaction under ERISA.
3.21 Ownership. The ownership interests of the Persons owning Borrower
and each of the respective interests in Borrower are correctly and accurately
set forth on Exhibit "F" hereto.
3.22 Compliance With Applicable Laws. [Intentionally Deleted]
-------------------------------
13
3.23 Solvency. Borrower is currently solvent for purposes of 11
U.S.C.ss.548, and the borrowing of the Loan will not render Borrower currently
insolvent for purposes of 11 U.S.C.ss.548.
3.24 Management Agreement. [Intentionally Deleted]
--------------------
3.25 Other Indebtedness. Borrower has no outstanding Indebtedness,
secured or unsecured, direct or contingent (including any guaranties), other
than the Loan.
3.26 Other Obligations. Except as evidenced by the Loan Documents,
Borrower has no material financial obligation under any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which Borrower
is a party or by which Borrower is otherwise bound.
3.27 Fraudulent Conveyances. Borrower (a) has not entered into this
Agreement or any of the other Loan Documents with the actual intent to hinder,
delay, or defraud any creditor and (b) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, the fair saleable value of
Borrower's assets exceeds and will, immediately following the execution and
delivery of the Loan Documents, be greater than Borrower's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and mature. Borrower's assets do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to incur debts and liabilities
(including, without limitation, contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of Borrower).
3.28 No Change in Facts or Circumstances. All information in any
application for the Loan submitted by Borrower to Mezzanine Lender (the "Loan
Application") and in all financial statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application are
complete and accurate in all material respects as of the date hereof. There has
been no material adverse change in any fact or circumstance known to Borrower on
the date hereof that would cause any such information or certificates to be
incomplete or inaccurate after the date hereof.
3.29 Utilities and Public Access. [Intentionally Deleted]
---------------------------
ARTICLE IV
OWNER'S REPRESENTATIONS AND WARRANTIES
To induce Mezzanine Lender to enter into this Agreement, and to make
the Loan to Borrower, Owner represents and warrants to Mezzanine Lender as
follows:
4.1 Existence, Power and Qualification. Owner is a duly organized
and validly existing Delaware corporation, has the corporate power to own its
properties and to carry on its business as is now being conducted, and is duly
qualified to do business and is in good standing in every
14
jurisdiction in which the character of the properties owned by it or in which
the transaction of its business makes its qualification necessary.
4.2 Power and Authority. Owner has full corporate power and authority
to incur the Loan Obligations provided for herein, all of which have been
authorized by all proper and necessary action. All consents, approvals,
authorizations, orders or filings of or with any court or governmental agency or
body, if any, required for the execution, delivery and performance of the Loan
Documents by Owner have been obtained or made.
4.3 Due Execution and Enforcement. Each of the Loan Documents to which
Owner is a party constitutes a valid and legally binding obligation of Owner,
enforceable in accordance with its respective terms (except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium, or other laws relating to the rights of creditors generally and by
general principles of equity) and does not violate, conflict with, or constitute
any violation of any law, government regulation, decree, judgment, Owner's
articles of organization/ incorporation, partnership or operating agreement or
by-laws, as applicable, or any other agreement or instrument binding upon Owner.
4.4 Single Purpose Entity. Owner is a Single Purpose Entity.
---------------------
4.5 Pending Matters.
---------------
(a) Operating. No action or investigation is pending or, to
the best of Owner's knowledge, threatened before or by any court or
administrative agency which might result in an Event of Default after the giving
of any required notice and the expiration of all applicable cure periods. Owner
is not in violation of any agreement, the violation of which might reasonably be
expected to result in an Event of Default after the giving of any required
notice and the expiration of all applicable cure periods, and Owner is not in
violation of any order, judgment, or decree of any court, and has no knowledge
of violation by the Owner of any statute or governmental regulation to which it
is subject.
(b) Land and Improvements. There are no proceedings pending,
or, to the best of Owner's knowledge, threatened, to acquire through the
exercise of any power of condemnation, eminent domain or similar proceeding any
part of the Land, the Improvements or any interest therein, or to enjoin or
similarly prevent or restrict the use of the Land or the operation of the
Facility in any manner. None of the Improvements is subject to any unrepaired
casualty or other damage other than as previously disclosed to Mezzanine Lender
in writing, including without limitation anything disclosed in the written
reports of Property Solutions, Incorporated provided to Mezzanine Lender.
4.6 Financial Statements Accurate. All financial statements heretofore
or hereafter provided by Owner are and will be true and complete in all material
respects as of their respective dates and fairly present the financial condition
of Owner, and there are no material liabilities, direct or indirect, fixed or
contingent, as of the respective dates of such statements which are not
reflected therein or in the notes thereto or in a written certificate delivered
with such statements. The financial statements of Owner have been prepared in
accordance with GAAP. There has been no material adverse change in the financial
condition of Owner since the dates of such statements except as fully
15
disclosed in writing with the delivery of such statements. All financial
statements of the operations of the Owner heretofore or hereafter provided to
Mezzanine Lender are and will be true and complete in all material respects as
of their respective dates.
4.7 Compliance with Facility Laws. The Owner is the lawful owner of all
Permits for the Facility, including, without limitation, the Certificate of
Need, if applicable, which (a) are in full force and effect, (b) constitute all
of the permits, licenses and certificates required for the use, operation and
occupancy thereof, (c) have not been pledged as collateral for any other loan or
Indebtedness, except the First Mortgage Loan, (d) are held free from any
restriction or any encumbrance which would materially adversely affect the use
or operation of the Facility and (e) are not provisional or probationary in any
way. Owner and Manager, as well as the operation of the Facility, are in
compliance in all material respects with the applicable provisions of all laws,
rules, regulations and published interpretations to which the Facility is
subject. No waivers of any laws, rules, regulations, or requirements (including,
but not limited to, minimum foot requirements per unit) are required for the
Facility to operate at the current licensed unit capacity. All Reimbursement
Contracts are in full force and effect with respect to the Facility, and Owner
and Manager are in good standing with all the respective agencies governing such
applicable Facility licenses, program certification and Reimbursement Contracts.
Owner and Manager are current in the payment of all so- called provider specific
taxes or other assessments with respect to such Reimbursement Contracts. Owner
will maintain the Certificate of Need, if applicable, and/or any required
Permits in full force and effect. In the event Mezzanine Lender acquires the
Facility through foreclosure or otherwise, neither Mezzanine Lender nor a
subsequent manager, a subsequent lessee or any subsequent purchaser (through
foreclosure or otherwise) must obtain a Certificate of Need prior to applying
for and receiving a license to operate the Facility and certification to receive
Medicare and Medicaid payments (and its successor programs) for residents having
coverage thereunder provided that no service or unit complement is changed.
4.8 Maintain Unit Capacity. Neither Owner nor Manager has granted to
any third party the right to reduce the number of licensed units in the Facility
or to apply for approval to transfer the right to any or all of the licensed
Facility units to any other location.
4.9 Independent Director. An Independent Director is a member of
the board of directors of the Owner.
4.10 Third Party Payors. There is no pending or, to the best of Owner's
knowledge threatened, revocation, suspension, termination, probation,
restriction, limitation, or nonrenewal affecting Owner, Manager or the Facility
of any participation or provider agreement with any third- party payor,
including Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other
private commercial insurance managed care and employee assistance program (such
programs, the "Third- Party Payors' Programs") to which Owner or Manager
presently is subject. All Medicare (if any), Medicaid (if any) and private
insurance cost reports and financial reports submitted by Owner or Manager are
and will be materially accurate and complete and have not been and will not be
misleading in any material respects. No cost reports for the Facility remain
unsettled except as otherwise disclosed to First Mortgage Lender.
16
4.11 Governmental Proceedings and Notices. Neither Owner nor Manager
nor the Facility is currently the subject of any proceeding by any governmental
agency, and no notice of any violation has been received from a governmental
agency that would, directly or indirectly, or with the passage of time:
(a) have a material adverse impact on Owner's ability to
accept and/or retain residents or result in the imposition of a fine related to
any of the Facilities, a sanction, a lower rate certification or a lower
reimbursement rate for services rendered to eligible residents for the
Facilities;
(b) modify, limit or annul or result in the transfer,
suspension, revocation or imposition of probationary use of any of the Permits;
or
(c) affect Owner's continued participation in the Medicare or
Medicaid programs or any other Third-Party Payors' Programs, or any successor
programs thereto, at current rate certifications.
4.12 Physical Plant Standards. The Facility and the use thereof comply
in all material respects with all applicable local, state and federal building
codes, fire codes, health care, nursing/assisted living/senior housing facility
(as applicable) and other similar regulatory requirements (the "Physical Plant
Standards"), and no waivers of Physical Plant Standards exist at the Facility.
4.13 Pledge of Receivables. Owner has not pledged its Accounts as
collateral security for any loan or Indebtedness other than, if applicable, the
First Mortgage Loan.
4.14 Payment of Taxes and Property Impositions. Owner has filed all
federal, state, and local tax returns which it is required to file and has paid,
or made adequate provision for the payment of, all taxes and assessments which
are shown pursuant to such returns or are required to be shown thereon,
including, without limitation, provider taxes, which are due and owing as of the
date hereof. All such returns are complete and accurate in all respects. Owner
has paid or made adequate provision for the payment of all applicable water and
sewer charges, ground rents (if applicable) and Taxes (as defined in the First
Mortgage) with respect to the Land and/or the Improvements which are due and
owing as of the date hereof.
4.15 Title to Mortgaged Property. Owner has good and marketable title
to all of the Mortgaged Property, subject to no lien, mortgage, pledge,
encroachment, zoning violation, or encumbrance, except the First Mortgage and
Permitted Encumbrances which do not materially interfere with the current use or
operation of the Land and the Improvements or the current ability of the
Facility to generate net operating income sufficient to service the Loan. All
Improvements situated on the Land are situated wholly within the boundaries of
the Land. In addition, Owner shall obtain one or more currently dated title
policies issued by the title insurer, insuring ownership of the fee interest in
the Mortgage Property, subject to matters acceptable to the Mezzanine Lender,
with a copy of each such title policy to be delivered to Mezzanine Lender on the
Closing Date. In the event that Mezzanine Lender exercises its right to
foreclose on the ownership interests of the Owner granted under the Stock Pledge
Agreement following an Event of Default, Owner shall (and hereby covenants and
agrees that it will) execute and deliver such further affidavits and indemnities
as may
17
be required by the title insurer to issue endorsements required by Mezzanine
Lender in connection with issuance of a new owner's title policy pursuant to any
open commitment.
4.16 Priority of Mortgage. [Intentionally Deleted]
--------------------
4.17 Location of Chief Executive Offices and Places of Business.
The location of Owner's chief executive offices are set forth on Exhibit "E"
hereto. Owner has no place(s) of business other than the locations of each
Facility.
4.18 Disclosure. All information furnished or to be furnished by Owner
to Mezzanine Lender in connection with the Loan or any of the Loan Documents is,
or will be at the time the same is furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to
provide Mezzanine Lender with true and accurate knowledge of the subject matter.
4.19 Trade Names. Each Facility operates under the respective
tradename listed on Exhibit "B".
4.20 ERISA. As of the date hereof and throughout the term of this
Agreement,
(a) Owner is not an "employee benefit plan," as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), subject to Title I of ERISA, and none of the assets of Owner will
constitute "plan assets" (within the meaning of Department of Labor Regulation
Section 2510.3-101) of one or more such plans, and
(b) Owner will not be a "governmental plan" within the meaning
of Section 3(32) of ERISA, and transactions by or with Owner will not be subject
to state statutes regulating investments of, and fiduciary obligations with
respect to, governmental plans.
The execution and delivery of the Loan Documents and the
borrowing of indebtedness hereunder do not constitute a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"). Owner shall not engage in a non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Owner, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Mezzanine Lender of any of its rights under the Loan Documents) to be a
non-exempt prohibited transaction under ERISA.
4.21 Ownership. The ownership interests of the Persons owning Owner and
each of the respective interests in Owner are correctly and accurately set forth
on Exhibit "G" hereto.
4.22 Compliance With Applicable Laws. The Facility and its operations
and the Land and Improvements comply in all material respects with all covenants
and restrictions of record and applicable laws, ordinances, rules and
regulations, including, without limitation, the Americans with Disabilities Act
and the regulations thereunder, and all laws, ordinances, rules and regulations
relating to zoning, setback requirements and building codes and there are no
waivers of any building codes currently in existence for the Facility. No
proceedings are pending or to the best knowledge of
18
Owner and Guarantor, threatened, which would result in a change of zoning of the
Land and the Facility. The existing use of the Facility is consistent with the
zoning classification of the Facility or is a legal non-conforming use that is
permitted notwithstanding any inconsistency with such classification.
4.23 Solvency. [Intentionally Deleted]
--------
4.24 Management Agreement. The Management Agreement is in full
force and effect, and there are no defaults (either monetarily or
non-monetarily) by Manager or Owner thereunder.
4.25 Other Indebtedness. Owner has no outstanding Indebtedness, secured
or unsecured, direct or contingent (including any guaranties), other than (a)
the First Mortgage Loan, and (b) indebtedness which represents trade payables or
accrued expenses incurred in the ordinary course of business (based on
historical amounts and payable within 90 days of the date incurred) of owning
and operating the Mortgaged Property; no other debt incurred by Owner after the
date hereof will be secured (senior, subordinate or pari passu) by the Mortgaged
Property except the indebtedness evidenced by the First Mortgage Loan.
4.26 Other Obligations. Owner has no material financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Owner is a party or by which Owner or the Mortgaged
Property is otherwise bound, other than obligations incurred in the ordinary
course of the operation of the Mortgaged Property, other than its obligations
under the Loan Documents, and other than the obligations under the First
Mortgage Loan Documents.
4.27 Fraudulent Conveyances. Owner (a) has not entered into this
Agreement or any of the other Loan Documents with the actual intent to hinder,
delay, or defraud any creditor and (b) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, the fair saleable value of
Owner's assets exceeds and will, immediately following the execution and
delivery of the Loan Documents, be greater than Owner's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and mature. Owner's assets do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Owner does not intend to incur debts and liabilities
(including, without limitation, contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of Owner).
4.28 No Change in Facts or Circumstances. All information in any
application for the Loan submitted by Owner to Mezzanine Lender (the "Loan
Application") and in all financial statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application are
complete and accurate in all material respects as of the date hereof. There has
been no material adverse change in any fact or circumstance known to Owner on
the date hereof that would cause any such information or certificates to be
incomplete or inaccurate after the date hereof.
19
4.29 Utilities and Public Access. The Facility has adequate rights of
access to public ways and is served by adequate water, sewer, sanitary sewer and
storm drain facilities as are adequate for full utilization of the Facility for
its current purpose. Except as otherwise disclosed by the surveys delivered to
Mezzanine Lender prior to the Closing Date, all public utilities necessary to
the continued use and enjoyment of the Facility as presently used and enjoyed
are located in the public right-of-way abutting the Facility, and all such
utilities are connected so as to serve the Facility either (i) without passing
over other property or, (ii) if such utilities pass over other property,
pursuant to valid easements. All roads necessary for the full utilization of the
Facility for its current purpose have been completed and dedicated to public use
and accepted by all Governmental Authorities or are the subject of access
easements for the benefit of the Facility.
4.30 Execution of Documents. Neither the execution and delivery of the
other Loan Documents to which Owner is a party, Owner's performance thereunder,
nor the recordation of any of the Loan Documents, will adversely affect the
Permits.
4.31 Facility Condition. Except as disclosed to First Mortgage Lender
in connection with its making of the First Mortgage Loan, the Facility is in
good and habitable condition and there are no deficiencies in the repair or
maintenance of the Property that threaten the health or safety of its residents
and their invited guests. There is no material uncured violation at the Property
of any building or housing code or similar law or ordinance, and the physical
configuration of the Property is not in material violation of the Americans With
Disabilities Act.
ARTICLE V
AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees with and covenants unto Mezzanine Lender that until the
Loan Obligations have been paid in full, Borrower shall:
5.1 Payment of Loan/Performance of Loan Obligations. Duly and
punctually pay or cause to be paid the principal and interest of the Note in
accordance with its terms and duly and punctually pay and perform or cause to be
paid or performed all Loan Obligations hereunder and under the other Loan
Documents.
5.2 Maintenance of Existence. Maintain its existence as a Delaware
corporation, and, in each jurisdiction in which the character of the property
owned by it or in which the transaction of its business makes qualification
necessary, maintain good standing.
5.3 Maintenance of Single Purpose/Independent Director.
--------------------------------------------------
(a) Maintain its existence as a Single Purpose Entity; and
(b) At all times cause there to be at least one duly appointed
Independent Director as a member of the board of directors of Borrower.
20
5.4 Accrual and Payment of Taxes. During each fiscal year, make
provision for the payment in full of all current tax liabilities of all kinds
including, without limitation, federal and state income taxes, franchise taxes,
payroll taxes, all required withholding of income taxes of employees, all
required old age and unemployment contributions, and all required payments to
employee benefit plans, and pay the same when they become due.
5.5 Insurance. [Intentionally Deleted]
---------
5.6 Proceeds of Insurance or Condemnation. [Intentionally Deleted]
-------------------------------------
5.7 Financial and Other Information. Provide Mezzanine Lender, and
cause Guarantor to provide to Mezzanine Lender, at its address set forth in
Section 11.11, the following financial statements and information during the
term of the Loan:
(a) Within one hundred twenty (120) days after the end of each
fiscal year of the Guarantor, audited financial statements of the operations of
the Guarantor, Capital Senior Properties, and Borrower prepared on a
consolidated basis and in accordance with GAAP by a nationally recognized
accounting firm or independent certified public accounting firm acceptable to
the Mezzanine Lender, which statements shall include a balance sheet and a
statement of income and expenses for the year then ended. In lieu thereof,
Guarantor may submit to Mezzanine Lender, upon its filing thereof, a copy of its
Form 10-K as filed with the United States Securities and Exchange Commission.
(b) [Intentionally Deleted]
(c) Within one hundred twenty (120) days after the end of each
fiscal year of Triad II Limited Partnership, audited financial statements of the
operations of Triad II Limited Partnership, prepared in accordance with GAAP by
a regionally recognized accounting firm or independent certified public
accounting firm acceptable to Mezzanine Lender, which acceptance shall not be
unreasonably withheld, and which statements shall include a balance sheet and a
statement of income and expenses for the year then ended.
(d) [Intentionally Deleted]
(e) [Intentionally Deleted]
(f) Within forty-five (45) days after the end of each fiscal
quarter (except the last fiscal quarter) of the Borrower, unaudited interim
financial statements of the operations of the Borrower, certified as true and
correct in all material respects by a financial officer of Borrower, prepared in
accordance with GAAP, which statements shall include a balance sheet and
statement of income and expenses for the quarter then ended.
(g) Within forty-five (45) days after the end of each fiscal
quarter (except the last fiscal quarter) of Guarantor, unaudited interim
financial statements of the operations of Guarantor, certified as true and
correct in all material respects by a financial officer of Guarantor prepared in
21
accordance with GAAP, which statements shall include a balance sheet and a
statement of income and expenses for the quarter then ended. In lieu of its
obligations hereunder, Guarantor may submit to Mezzanine Lender a copy of its
Form 10-Q as filed by Guarantor with the United States Securities and Exchange
Commission.
(h) [Intentionally Deleted]
(i) [Intentionally Deleted]
(j) If requested by Mezzanine Lender, within thirty (30) days
after the filing deadline, as may be extended from time to time, copies of all
federal, state and local tax returns of Borrower (which may be consolidated into
those returns of Guarantor) and Guarantor, together with all supporting
documentation and required schedules.
(k) [Intentionally Deleted]
(l) [Intentionally Deleted]
(m) Within forty-five (45) days after the end of each fiscal
quarter of Triad II Limited Partnership, unaudited interim financial statements
of the operations of Triad II Limited Partnership and of the operations of any
assets owned by Triad II Limited Partnership, certified as true and correct in
all material respects by an officer of the general partner of Triad II Limited
Partnership, prepared in accordance with GAAP, which statements shall include a
balance sheet and statement of income and expenses for the quarter then ended.
(n) Within forty-five (45) days after the end of each fiscal
quarter of Capital Senior Properties, internally prepared interim financial
statements of operations of Capital Senior Properties, certified as true and
correct in all material respects by a financial officer of Capital Senior
Properties, prepared in accordance with GAAP, which statements shall include a
balance sheet and statement of income and expenses for the quarter then ended.
The Mezzanine Lender further reserves the right to require such other
financial information of Borrower, Guarantor, Triad II Limited Partnership
and/or Capital Senior Properties, at such other times (including monthly or more
frequently) as it shall deem necessary, in its commercially reasonable
discretion. All financial statements must be in such form and detail as the
Mezzanine Lender shall from time to time request, in its commercially reasonable
discretion.
5.8 Compliance Certificate. At the time of furnishing the quarterly
operating statements required under Section 5.7(f) herein, furnish to Mezzanine
Lender a compliance certificate in the form attached hereto as Exhibit "H"
executed by a financial officer of Borrower.
5.9 Books and Records. [Intentionally Deleted]
-----------------
5.10 Payment of Indebtedness. Duly and punctually pay or cause to
be paid all other Indebtedness now owing or hereafter incurred by Borrower in
accordance with the terms of such
22
Indebtedness, except such Indebtedness owing to those other than Mezzanine
Lender which is being contested in good faith and with respect to which any
execution against properties of Borrower has been effectively stayed and for
which reserves and collateral for the payment and security thereof have been
established in sufficient amounts as determined by Mezzanine Lender in its sole
commercially reasonable discretion.
5.11 Records of Accounts. Maintain all records, including records
pertaining to the Accounts of Borrower, at the principal place of business of
Borrower as set forth in this Agreement.
5.12 Conduct of Business. [Intentionally Deleted]
-------------------
5.13 Periodic Surveys. [Intentionally Deleted]
----------------
5.14 Debt Service Coverage Requirements. [Intentionally Deleted]
----------------------------------
5.15 Occupancy. [Intentionally Deleted]
---------
5.16 Capital Expenditure. [Intentionally Deleted]
-------------------
5.17 Management Agreement. [Intentionally Deleted]
--------------------
5.18 Updated Appraisals. [Intentionally Deleted]
------------------
5.19 Comply with Covenants and Laws. [Intentionally Deleted]
------------------------------
5.20 Taxes and Other Charges. Subject to Borrower's right to contest
the same as set forth in Section 9(c) of the First Mortgage, pay all taxes,
assessments, charges, claims for labor, supplies, rent, and other obligations
which, if unpaid, might give rise to a Lien against real or personal property of
the Borrower.
5.21 Commitment Letter. Provide all items and pay all amounts required
by the Commitment Letter. If any term of the Commitment Letter shall conflict
with the terms of this Agreement, this Agreement shall govern and control. As to
any matter contained in the Commitment Letter, and as to which no mention is
made in this Agreement or the other Loan Documents, the Commitment Letter shall
continue to be in effect and shall survive the execution of this Agreement and
all other Loan Documents.
5.22 Certificate. Upon Mezzanine Lender's reasonable written request,
furnish Mezzanine Lender with a certificate stating that Borrower, to its
knowledge, has complied with and is in compliance with all terms, covenants and
conditions of the Loan Documents to which Borrower is a party and that there
exists no Default or Event of Default or, if such is not the case, that one or
more specified events have occurred, and that the representations and warranties
contained herein are true and correct with the same effect as though made on the
date of such certificate.
5.23 Capital Improvements Escrow. [Intentionally Deleted].
---------------------------
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5.24 Notice of Fees or Penalties. Promptly notify Mezzanine Lender,
upon Borrower's knowledge thereof, of the assessment by any state or any
Medicare, Medicaid, health or licensing agency of any fines or penalties against
Borrower, Manager, or the Facility.
5.25 Loan Closing Certification. Immediately notify Mezzanine Lender in
writing, in the event any representation or warranty contained in that certain
Loan Closing Certification of even date herewith, executed by Borrower and Owner
for the benefit of Mezzanine Lender, becomes untrue or there shall have been any
material adverse change in any such representation or warranty.
5.26 ERISA. As of the date hereof and throughout the term of this
Agreement,
(a) Borrower will not be an "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), subject to Title I of ERISA, and none of the assets of
Borrower will constitute "plan assets" (within the meaning of Department of
Labor Regulation Section 2510.3-101) of one or more such plans, and
(b) Borrower will not be a "governmental plan" within the
meaning of Section 3(32) of ERISA, and transactions by or with Borrower will not
be subject to state statutes regulating investments of, and fiduciary
obligations with respect to, governmental plans.
Borrower shall not engage in a non-exempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code, as
such sections relate to Borrower, or in any transaction that would cause any
obligation or action taken or to be taken hereunder (or the exercise by
Mezzanine Lender of any of its rights under the Loan Documents) to be a
non-exempt prohibited transaction under ERISA.
5.27 Further Assurances. Borrower shall, at Borrower's sole cost
and expense:
(a) upon Mezzanine Lender's request therefor given from time
to time after the occurrence of any Default or Event of Default, pay for reports
of Uniform Commercial Code ("UCC"), federal tax lien, state tax lien, judgment
and pending litigation searches with respect to Borrower and Guarantor;
(b) furnish to Mezzanine Lender instruments, documents,
certificates, and agreements, and each and every other document, certificate,
agreement and instrument required of Borrower to be furnished pursuant to the
terms of the Loan Documents; and
(c) do and execute, and cause Guarantor to do and execute, all
such further lawful acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents, as Mezzanine Lender shall require from time to time in its
commercially reasonable discretion.
5.28 Entity Status. Borrower will (i) continue to comply with the
provisions of all of its organizational documents, and the laws of the state in
which such entity was formed and (ii) enter into such amendments and
modifications to such organizational documents as may reasonably be required
24
by Mezzanine Lender or any Rating Agency. All customary formalities regarding
the entity existence of Borrower will continue to be observed.
5.29 Assumptions in Non-Consolidation Opinion. Borrower shall conduct
its business so that the assumptions made in that certain substantive
nonconsolidation opinion letter dated the date hereof, delivered by counsel in
connection with the Loan shall be true and correct in all material respects.
5.30 Establishment of Debt Reserve Fund. Borrower will establish at
closing and maintain during the term of the Loan, a debt reserve fund (the "Debt
Reserve Fund") in an amount equal to $566,500.00 which Debt Reserve Fund may not
be used by Borrower to make debt service payments under the Loan. The Debt
Reserve Fund shall be invested in an interest bearing investment account offered
by a financial institution approved by Mezzanine Lender in its commercially
reasonable discretion ("Debt Reserve Fund Holder"). Mezzanine Lender and
Borrower agree that all interest which shall accrue on the Debt Reserve Fund
shall remain in the Debt Reserve Fund to be disbursed quarterly to Borrower
provided that there is no outstanding Default or Event of Default. Borrower will
grant to Mezzanine Lender a first lien security interest in the Debt Reserve
Fund as collateral for repayment of the Loan. Mezzanine Lender, Borrower and the
Debt Reserve Fund Holder shall enter in a pledge agreement, the form and
substance of which must be approved by Mezzanine Lender in its sole discretion,
governing Mezzanine Lender's rights and remedies with respect to Mezzanine
Lender's first lien in the Debt Reserve Fund. Mezzanine Lender shall promptly
release its first lien security interest in the Debt Reserve Fund at such time
as the original principal balance of the Loan has been reduced by at least
$2,575,000.00 and the original principal amount of the Pool B Loan has been
reduced by at least $2,425,000.00. At the time of its release of its first lien
security interest in the Debt Reserve Fund in accordance hereof, upon Borrower's
written request, Mezzanine Lender shall direct the Debt Reserve Fund Holder to
wire transfer the Debt Reserve Fund to Borrower.
5.31 Triad II Limited Partnership Documentation. Borrower shall cause
Guarantor to provide Mezzanine Lender with (i) certified copies (by the
appropriate officer of the general partner of Triad II Partnership) of the
limited partnership agreement and certificate of limited partnership evidencing
the Triad II Limited Partnership, (ii) certified copies of any loan documents
evidencing any loan made to Triad II Limited Partnership from any source
whatsoever, including without limitation, Key Capital and Capital Senior
Properties, (iii) appraisals of the Triad Facilities as approved by Mezzanine
Lender in its commercially reasonable discretion, (iv) certified pro-forma
budgets as submitted to Key Capital in connection with its construction
financing for the Triad Facilities and (v) an estoppel certificate executed by
Key Capital certifying, among other things, the unpaid principal balance of any
construction financing relating to the Triad Facilities.
5.32 Capital Senior Properties Documentation. Borrower shall cause
Capital Senior Properties to provide to Mezzanine Lender (i) certified copies of
the Triad II Notes and any other document evidencing and/or securing the
indebtedness represented thereby (ii) certified copies of its organizational
documents and evidence of its good standing in the State of its formation and in
the State where the Triad Facilities are located and (iii) any consents and
resolutions required or deemed necessary under its organizational documents or
under the agreement governing the Triad II Limited
25
Partnership in connection with Mezzanine Lender's first lien security interest
in and assignment of (a) one hundred percent (100%) of the legal and beneficial
interests of Capital Senior Properties in the Triad II Partnership and (b) one
hundred percent (100%) of the legal and beneficial interests of Capital Senior
Properties in the Triad II Notes. Borrower shall also provide to Mezzanine
Lender, evidence satisfactory to Mezzanine Lender in its sole discretion, that
the outstanding principal balance of the Triad II Notes, in the aggregate, is
not less than $11,200,000.00. Furthermore, Borrower shall cause Capital Senior
Properties to provide to Mezzanine Lender, a certified copy of that certain
Subordination Agreement between Capital Senior Properties and Key Corporate
Capital, Inc. dated January 19, 1999 as described in the Triad Notes.
5.33 Cap Assignment: Delivery of Cap Payments. Assign the Cap in
effect from time to time pursuant to this Agreement to Mezzanine Lender pursuant
to the Cap Assignment, which Cap Assignment must be reasonably acceptable in
form and content to Mezzanine Lender.
5.34 Performance Under Cap Documents. Fully comply with, and to
otherwise perform when due, its obligations under, all Cap Documents and all
other agreements evidencing, governing or securing any Cap arrangement. The
Borrower shall not exercise, without Mezzanine Lender's prior written consent,
and shall exercise at Mezzanine Lender's direction, any rights or remedies under
any Cap Documents, including without limitation the right of termination.
ARTICLE VI
AFFIRMATIVE COVENANTS OF OWNER
Owner agrees with and covenants unto Mezzanine Lender that until the
Loan Obligations have been paid in full, Owner shall:
6.1 Performance of Loan Obligations. Duly and punctually perform
all Loan Obligations required of it under the Loan Documents.
6.2 Maintenance of Existence. Maintain its existence as a Delaware
corporation, and, in each jurisdiction in which the character of the property
owned by it or in which the transaction of its business makes qualification
necessary, maintain good standing.
6.3 Maintenance of Single Purpose.
-----------------------------
(a) Maintain its existence as a Single Purpose Entity; and
(b) At all times cause there to be at least one duly appointed
Independent Director as a member of the board of directors of Owner.
6.4 Accrual and Payment of Taxes. During each fiscal year, make
provision for the payment in full of all current tax liabilities of all kinds
including, without limitation, federal and state income taxes, franchise taxes,
payroll taxes, all required withholding of income taxes of employees, all
required old age and unemployment contributions, and all required payments to
employee benefit plans, and pay the same when they become due.
26
6.5 Insurance. Maintain, at its expense, the following insurance
coverages and policies with respect to the Mortgaged Property and the Facility,
which coverages and policies must be acceptable to Mezzanine Lender's insurance
consultant in its sole discretion and with coverage amounts acceptable to
Mezzanine Lender's insurance consultant in its commercial reasonable discretion:
(a) Comprehensive "all risk" insurance, including coverage for
windstorms and hail, in an amount equal to 100% of the full replacement cost of
the Facility, which replacement cost shall be determined by the "Insurable
Value" or "Cost Approach to Value" reflected in the most recent Mezzanine Lender
approved appraisal for the Facility, without deduction for depreciation. Such
insurance shall also include (a) agreed insurance amount endorsement waiving all
co-insurance provisions, and (b) an "Ordinance or Law Coverage" endorsement if
the Facility or the use thereof shall constitute a legal non-conforming
structure or use.
(b) Commercial general liability insurance against claims for
sexual harassment, abuse of residents, personal injury, bodily injury, death or
property damage, in or about the Facility to be on a so-called "occurrence"
basis for at least $1,000,000.00 per occurrence and $2,000,000.00 in the
aggregate with a $25,000,000.00 umbrella coverage.
(c) Professional liability insurance against claims for
personal injury, bodily injury or death, in or about the Facility to be on a
so-called "occurrence" basis for at least $1,000,000.00 per occurrence and
$2,000,000.00 in the aggregate with a $25,000,000 umbrella coverage and insuring
Borrower for acts occurring prior to the date of this Agreement.
(d) Business interruption income insurance for the Facility in
an amount equal to 100% of the net income plus carrying costs and extraordinary
expenses of the Facility for a period of twelve (12) months as projected by
Mezzanine Lender, containing a 120-day extended period of indemnity endorsement.
(e) Flood Hazard insurance if any portion of the Improvements
is located in a federally designated "special flood hazard area" and in which
flood insurance is available. In lieu thereof, Mezzanine Lender will accept
proof, satisfactory to it in its commercially reasonable discretion, that the
Improvements are not within the boundaries of a designated area.
(f) Workers' compensation insurance, if applicable and
required by state law, subject to applicable state statutory limits, and
employer's liability insurance with a limit of $1,000,000.00 per accident and
per disease per employee with respect to the Facility.
(g) Comprehensive boiler and machinery insurance, including
property damage coverage and time element coverage in an amount equal to 100% of
the full replacement cost, without deduction for depreciation, of the Facility
housing the machinery, if steam boilers, pipes, turbines, engines or any other
pressure vessels are in operation with respect to the Facility. Such insurance
coverage shall include a "joint loss" clause if such coverage is provided by an
insurance carrier other than that which provides the comprehensive "all risk"
insurance described above.
27
(h) During the period of any construction and/or renovation of
capital improvements with respect to the Facility or any new construction at the
Facility, builder's risk insurance for any improvements under construction
and/or renovation, including, without limitation, costs of demolition and
increased cost of construction or renovation, in an amount equal the amount of
the general contract plus the value of any existing purchase money financing for
improvements and materials stored on or off the Land, including "soft cost"
coverage.
(i) If the Facility is located in a seismically active area or
an area prone to geologic instability and mine subsidence, Mezzanine Lender may
require an inspection by a qualified structural or geological engineer
satisfactory to Mezzanine Lender, and at Owner's expense. The Facility must be
structurally and geologically sound and capable of withstanding normal seismic
activity or geological movement. Mezzanine Lender reserves the right to require
earthquake insurance or Maximum Probable Loss insurance on a case by case basis
in amounts determined by Mezzanine Lender.
(j) Such other insurance coverage as may be deemed necessary
and as shall be provided within such time periods as Mezzanine Lender may
determine, in each case, in the commercially reasonable discretion of Mezzanine
Lender.
All insurance policies shall have a term of not less than one year and
shall be in the form and amount and with deductibles as, from time to time,
shall be acceptable to Mezzanine Lender in its commercially reasonable
discretion. All such policies shall provide for loss payable to First Mortgage
Lender and subject to the terms of the First Mortgage Loan Documents, shall also
be payable to Mezzanine Lender and shall contain a standard "non-contributory
mortgagee" endorsement or its equivalent relating, among other things, to
recovery by Mezzanine Lender notwithstanding the negligent or willful acts or
omissions of Owner and notwithstanding (i) occupancy or use of the Facility for
purposes more hazardous than those permitted by the terms of such policy, (ii)
any foreclosure or other action taken by Mezzanine Lender pursuant to the Stock
Pledge Agreement upon the occurrence of an Event of Default thereunder, or (iii)
any change in title or ownership of the Facility.
All insurance policies must be written by a licensed insurance carrier
in the State in which the Facility is located and such insurance carrier must
have a long-term senior debt rating of at least "AA" by Standard and Poor's
Rating Service, provided, however, that Owner shall have thirty (30) days after
the Closing Date to substitute the insurance carrier providing workers'
compensation insurance for the Owner with a carrier having a long-term senior
debt rating of at least "AA" by Standard and Poor's Rating Service.
All liability insurance policies must name "GMAC Commercial Mortgage
Corporation, Xxxxxx Financial Services, Inc., and their successors and/or
assigns as their interests may appear" as additional insureds, and all property
insurance policies must name "GMAC Commercial Mortgage Corporation, Xxxxxx
Financial Services, Inc., and their successors and/or assigns" as the named
mortgage holder entitled to all insurance proceeds. Mezzanine Lender shall have
the right, without Borrower's consent, by notice to the insurance company, to
change the additional insured and named mortgagee endorsements in connection
with any sale of the Loan.
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All insurance policies for the above required insurance must provide
for thirty (30) days prior written notice of cancellation to Mezzanine Lender.
Policies or binders, together with evidence of the above required
insurance on XXXXX Form 27 or its equivalent, must be submitted to Mezzanine
Lender prior to setting the interest rate on the Loan.
With respect to insurance policies which require payment of premiums
annually, not less than thirty (30) days prior to the expiration dates of the
insurance policies obtained pursuant to this Agreement, Owner shall pay such
amount, except to the extent First Mortgage Lender or Mezzanine Lender is
escrowing sums therefor pursuant to the Loan Documents. Not less than ten (10)
days prior to the expiration dates of the insurance policies obtained pursuant
to this Agreement, originals or certified copies of renewals of such policies
(or certificates evidencing such renewals) bearing notations evidencing the
payment of premiums or accompanied by other evidence satisfactory to Mezzanine
Lender of such payment, which premiums shall not be paid by Owner through or by
any financing arrangement without Mezzanine Lender's consent (other than a
financing arrangement in effect as of the Closing Date, a copy of which has been
provided to Mezzanine Lender by Borrower), shall be delivered by Owner to
Mezzanine Lender. Owner shall not carry separate insurance, concurrent in kind
or form or contributing in the event of loss, with any insurance required under
this Section 6.5. If the limits of any policy required hereunder are reduced or
eliminated due to a covered loss, Owner shall pay the additional premium, if
any, in order to have the required limits of insurance reinstated, or Borrower
shall purchase new insurance in the same type that existed immediately prior to
the loss and in the required amount.
If Owner fails to maintain and deliver to Mezzanine Lender the original
policies or certificates of insurance required by this Agreement, Mezzanine
Lender may, at its option, procure such insurance and Owner shall pay or, as the
case may be, reimburse Mezzanine Lender for, all premiums thereon promptly, upon
demand by Mezzanine Lender, with interest thereon at the Default Rate from the
date paid by Mezzanine Lender to the date of repayment and such sum shall
constitute a part of the Loan Obligations.
The insurance required by this Agreement may, at the option of Owner,
be effected by blanket and/or umbrella policies issued to Owner or to an
Affiliate of Owner covering the Facility and the properties of such Affiliate;
provided that, in each case, the policies otherwise comply with the provisions
of this Agreement and allocate to the Facility, from time to time, the coverage
specified by this Agreement, without possibility of reduction or coinsurance by
reason of, or damage to, any other property (real or personal) named therein. If
the insurance required by this Agreement shall be effected by any such blanket
or umbrella policies, Owner shall furnish to Mezzanine Lender original policies
or certified copies thereof, with schedules attached thereto showing the amount
of the insurance provided under such policies which is applicable to the
Facility.
Neither Mezzanine Lender nor its agents or employees shall be liable
for any loss or damage insured by the insurance policies required to be
maintained under this Agreement; it being understood that (a) Owner shall look
solely to its insurance company for the recovery of such loss or damage, (b)
such insurance company shall have no rights of subrogation against Mezzanine
Lender, its agents
29
or employees, and (c) Owner shall use its best efforts to procure from such
insurance company a waiver of subrogation rights against Mezzanine Lender. If,
however, such insurance policies do not provide for a waiver of subrogation
rights against Mezzanine Lender (whether because such a waiver is unavailable or
otherwise), then Owner hereby agrees, to the extent permitted by law and to the
extent not prohibited by such insurance policies, to waive its rights of
recovery, if any, against Mezzanine Lender, its agents and employees, whether
resulting from any damage to the Facility, any liability claim in connection
with the Facility or otherwise. If any such insurance policy shall prohibit
Owner from waiving such claims, then Owner must obtain from such insurance
company a waiver of subrogation rights against Mezzanine Lender.
Owner appoints Mezzanine Lender as Owner's attorney-in-fact to cause
the issuance of an endorsement of any insurance policy to bring Owner into
compliance herewith and, as limited above, at Mezzanine Lender's sole option, to
make any claim for, receive payment for, and execute and endorse any documents,
checks or other instruments in payment for loss, theft, or damage covered under
any such insurance policy; however, in no event will Mezzanine Lender be liable
for failure to collect any amounts payable under any insurance policy. Mezzanine
Lender will use best efforts to give Owner notice prior to any action being
taken by Mezzanine Lender as Owner's attorney-in-fact, but failure to do so will
not in any way restrict Mezzanine Lender's rights under this paragraph.
6.6 Proceeds of Insurance or Condemnation. Subject to the prior rights
of the First Mortgage Lender under the First Mortgage Loan Documents, if, after
damage to or destruction of or condemnation of the Mortgaged Property (or any
part thereof), the net Proceeds of insurance or condemnation (after payment of
Mezzanine Lender's reasonable costs and expenses in connection with the
administration thereof) are (a) less than One Hundred Thousand Dollars
($100,000) or (b) One Hundred Thousand Dollars ($100,000) or more and Mezzanine
Lender agrees, at its option, to make such net Proceeds available to Owner,
satisfy the following conditions for the repair, restoration and replacement by
Owner of the Improvements, Equipment and Inventory damaged, destroyed or taken,
in which case Mezzanine Lender shall make such net Proceeds available to Owner
on the following terms:
(a) The aggregate amount of all such Proceeds shall not exceed
the aggregate amount of all such Loan Obligations;
(b) At the time of such loss or damage and at all times
thereafter while Mezzanine Lender or First Mortgage Lender is holding any
portion of such Proceeds, there shall exist no Default or Event of Default;
(c) The Improvements, Equipment, and Inventory to which loss
or damage has resulted shall be capable of being restored to its preexisting
condition and utility in all material respects with a value equal to or greater
than that which existed prior to such loss or damage and such restoration shall
be capable of being completed prior to the earlier to occur of (i) the
expiration of business interruption insurance as determined by an independent
inspector or (ii) the Maturity Date;
30
(d) Within forty-five (45) days from the date of such loss or
damage Borrower shall have given Mezzanine Lender and First Mortgage Lender a
written notice electing to have the Proceeds applied for such purpose;
(e) Within ninety (90) days following the date of notice under
the preceding subparagraph (d) and prior to any Proceeds being disbursed to
Borrower, Borrower shall have provided to Mezzanine Lender all of the following:
(i) complete plans and specifications for
restoration, repair and replacement of the Improvements, Equipment and Inventory
damaged to the condition, utility and value required by (c) above,
(ii) if loss or damage exceeds Fifty Thousand
Dollars ($50,000), fixed- price or guaranteed maximum cost bonded construction
contracts for completion of the repair and restoration work in accordance with
such plans and specifications,
(iii) builder's risk insurance for the full cost
of construction with Mezzanine Lender and if applicable, First Mortgage Lender
named under a standard mortgagee loss-payable clause
(iv) such additional funds as in Mezzanine
Lender's and if applicable, First Mortgage Lender's reasonable opinion are
necessary to complete such repair, restoration and replacement, and
(v) copies of all permits and licenses necessary
to complete the work in accordance with the plans and specifications;
(f) Mezzanine Lender may, at Borrower's reasonable expense,
retain an independent inspector to review and approve plans and specifications
and completed construction and to approve all requests for disbursement, which
approvals shall be conditions precedent to release of Proceeds as work
progresses;
(g) No portion of such Proceeds shall be made available by
Mezzanine Lender for architectural reviews or for any other purposes which are
not directly attributable to the cost of repairing, restoring or replacing the
Improvements, Equipment and Inventory to which a loss or damage has occurred
unless the same are covered by such insurance;
(h) Borrower shall diligently pursue such work and shall
complete such work prior to the earlier to occur of the expiration of business
interruption insurance or the Maturity Date; and
(i) Each disbursement by Mezzanine Lender or First Mortgage
Lender of such Proceeds and deposits shall be funded subject to conditions and
in accordance with disbursement procedures which a commercial construction
lender would typically establish in the exercise of sound banking practices and
shall be made only upon receipt of disbursement requests on an AIA G702/703 form
(or similar form approved by Mezzanine Lender and, if applicable, First Mortgage
Lender)
31
signed and certified by Borrower and, if required by Mezzanine Lender or First
Mortgage Lender, their architect or general contractor with appropriate invoices
and lien waivers as required by Mezzanine Lender or First Mortgage Lender.
In the event and to the extent that such Proceeds are One Hundred
Thousand Dollars ($100,000.00) or more and not required to be used for the
repair, restoration and replacement of the Improvements, Equipment and Inventory
to which a loss or damage has occurred, or, if the conditions set forth herein
for such application are otherwise not satisfied, then Mezzanine Lender, subject
to the prior rights of the First Mortgage Lender under the First Mortgage Loan
Documents, shall be entitled without notice to or consent from Owner to apply
such Proceeds, or the balance thereof, at Mezzanine Lender's option either (a)
to the full or partial payment or prepayment of the Loan Obligations (without
premium) in the manner aforesaid or (b) to the repair, restoration and/or
replacement of all or any part of such Improvements, Equipment and Inventory to
which a loss or damage has occurred. Any excess Proceeds after such application
by Mezzanine Lender shall be paid to Owner.
6.7 Financial and Other Information. Provide Mezzanine Lender and cause
Manager to provide to Mezzanine Lender, at its address set forth in Section 8.7,
the following financial statements and information during the term of the Loan:
(a) Within one hundred twenty (120) days after the end of each
fiscal year of the Guarantor, audited financial statements of the operations of
the Owner and Manager prepared on a consolidated basis and in accordance with
GAAP by a nationally recognized accounting firm or independent certified public
accounting firm acceptable to the Mezzanine Lender, which statements shall
include a balance sheet and a statement of income and expenses for the year then
ended. In lieu thereof, Guarantor may submit to Mezzanine Lender, upon its
filing thereof, a copy of its form 10-K, as filed with the United States
Securities and Exchange Commission.
(b) Within one hundred twenty (120) days after the end of each
fiscal year of Facility (if different from the Owner) internally prepared
financial statements of the operations of the Facility, prepared in accordance
with GAAP, which statements shall include a balance sheet and a statement of
income and expenses for the year then ended, and shall be certified as true and
correct by a financial officer of Owner.
(c) Within forty-five (45) days after the end of each fiscal
quarter of the Facility, unaudited interim financial statements of the
operations of the Facility, certified as true and correct in all material
respects by a financial officer of Borrower, prepared in accordance with GAAP,
which statements shall include a balance sheet, statement of income and expenses
for the quarter then ended.
(d) Within forty-five (45) days after the end of each fiscal
quarter (except the last fiscal quarter) of the Owner (if different from the
Facility), unaudited interim financial statements of the operations of the
Owner, certified as true and correct in all material respects by a financial
officer of Owner, prepared in accordance with GAAP, which statements shall
include a balance sheet and statement of income and expenses for the quarter
then ended.
32
(e) Within forty-five (45) days after the end of each fiscal
quarter of Manager, unaudited interim financial statements of the operations of
the Manager, certified as true and correct in all material respects by a
financial officer of Manager, prepared in accordance with GAAP, which statements
shall include a balance sheet and statement of income and expenses for the
quarter then ended.
(f) If and to the extent applicable, within forty-five (45)
days after the end of each fiscal quarter of Facility, a statement (which may be
the same statement provided to First Mortgage Lender) of the number of unit days
available and the actual resident days incurred for such quarter, together with
quarterly census information of the Facility as of the end of such quarter in
sufficient detail to show resident-mix (i.e., private, Medicare, Medicaid, and
VA) on a daily average basis for such year through the end of such quarter,
certified by a financial officer of Manager or Borrower to be true and correct,
in all material respects.
(g) If requested by Mezzanine Lender, within thirty (30) days
after the filing deadline, as may be extended from time to time, copies of all
federal, state and local tax returns of Owner (which may be consolidated into
those returns of Guarantor), together with all supporting documentation and
required schedules.
(h) Within five (5) days after receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying agencies,
including but not limited to Medicaid and/or Medicare certification, that the
Facility's license is being downgraded to a substandard category, revoked, or
suspended, or that action is pending or being considered to downgrade to a
substandard category, revoke, or suspend the Facility's license or
certification.
(i) If and to the extent applicable, within forty-five (45)
days after the end of each of Owner's and Manager's fiscal quarters, and more
frequently, if requested by Mezzanine Lender, an aged accounts payable report
and an aged accounts receivable report for the Facility in sufficient detail to
show amounts due from each class of resident-mix (i.e., private, Medicare,
Medicaid, and V.A.) By the account age classifications of 30 days, 60 days, 90
days, 120 days and over 120 days.
Mezzanine Lender reserves the right to require that the annual
unaudited financial statements of the Facility be audited and prepared by a
nationally recognized accounting firm or independent certified public accounting
firm acceptable to Mezzanine Lender, at Owner's sole cost and expense, if (i) an
Event of Default exists, (ii) if required by internal policy or by any investor
in any securities backed in whole or in part by the Loan or any rating agency
rating such securities, or (iii) if Mezzanine Lender has reasonable grounds to
believe that such unaudited financial statements do not accurately represent the
financial condition thereof.
The Mezzanine Lender further reserves the right to require such other
financial information of Owner, Manager and/or the Facility at such other times
(including monthly or more frequently) as it shall deem necessary, in its
commercially reasonable discretion. All financial statements must be in such
form and detail as the Mezzanine Lender shall from time to time request, in its
commercially reasonable discretion.
33
6.8 Compliance Certificate. At the time of furnishing the quarterly
operating statements required under Section 6.7(d) herein, furnish to Mezzanine
Lender a compliance certificate in the form attached hereto as Exhibit "I"
executed by a financial officer of Owner.
6.9 Books and Records. Keep and maintain at all times at the Facility
or Manager's offices, and upon Mezzanine Lender's request make available at the
Facility, complete and accurate books of account and records (including copies
of supporting bills and invoices) adequate to reflect correctly the results of
the operation of the Facility, and copies of all written contracts, leases (if
any), and other instruments which affect the Mortgaged Property, which books,
records, contracts, leases (if any) and other instruments shall be subject to
examination and inspection at any reasonable time by Mezzanine Lender (upon
reasonable advance notice, which for such purposes only shall be given in
writing, except in the case of an emergency or following an Event of Default, in
which case no advance notice shall be required); provided, however, that if an
Event of Default has occurred and is continuing, Owner shall deliver to
Mezzanine Lender upon written demand all books, records, contracts, leases (if
any) and other instruments relating to the Facility or its operation and Owner
authorizes Mezzanine Lender to obtain a credit report on Owner at any time.
6.10 Payment of Indebtedness. Duly and punctually pay or cause to be
paid all other Indebtedness now owing or hereafter incurred by Owner in
accordance with the terms of such Indebtedness, except such Indebtedness owing
to those other than Mezzanine Lender which is being contested in good faith and
with respect to which any execution against properties of Owner has been
effectively stayed and for which reserves and collateral for the payment and
security thereof have been established in sufficient amounts as determined by
Mezzanine Lender in its sole commercially reasonable discretion.
6.11 Records of Accounts. Maintain all records, including records
pertaining to the Accounts of Owner, at the principal place of business of Owner
as set forth in this Agreement.
6.12 Conduct of Business. Conduct, or cause Manager to conduct, the
operation of the Facility at all times in a manner consistent with the level of
operation of the Facility as of the date hereof, including without limitation,
the following:
(a) to maintain the standard of care for the residents of the
Facility at all times at a level necessary to ensure quality care for the
residents of the Facility in accordance with customary and prudent industry
standards;
(b) to operate the Facility in a prudent manner and in
compliance in all material respects with applicable laws and regulations
relating thereto and cause all Permits, Reimbursement Contracts, and any other
agreements necessary for the use and operation of the Facility or as may be
necessary for participation in the Medicaid, Medicare, or other applicable
reimbursement programs (if any) to remain in effect without reduction in the
number of licensed beds authorized for use in the Medicaid, Medicare, or other
applicable reimbursement programs;
(c) to maintain sufficient Inventory and Equipment of types
and quantities at the Facility to enable Borrower adequately to perform
operations of the Facility;
34
(d) to keep all Improvements and Equipment located on or used
in connection with the Facility in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all needed and
proper repairs, renewals, replacements, additions, and improvements thereto to
keep the same in good operating condition;
(e) to maintain sufficient cash in the operating accounts of
the Facility in order to satisfy the working capital needs of the Facility; and
(f) to keep all required Permits current and in full force and
effect.
6.13 Periodic Surveys. Furnish or cause Manager to furnish to Mezzanine
Lender, within twenty (20) days of receipt, a copy of any Medicare, Medicaid, or
other licensing agency survey or report and any statement of deficiencies and/or
any other report indicating that any action is pending or being considered to
downgrade the Facility to a substandard category, and within the time period
required by the particular agency for furnishing a plan of correction also
furnish or cause to be furnished to Mezzanine Lender a copy of the plan of
correction generated from such survey or report for the Facility, and correct or
cause to be corrected any deficiency, the curing of which is a condition of
continued licensure or for full participation in Medicaid, Medicare or other
reimbursement program pursuant to any Reimbursement Contract for existing
residents or for new residents to be admitted with Medicaid or Medicare
coverage, by the date required for cure by such agency (plus extensions granted
by such agency).
6.14 Debt Service Coverage Requirements. [Intentionally Deleted]
----------------------------------
6.15 Occupancy. [Intentionally Deleted]
---------
6.16 Capital Expenditure. [Intentionally Deleted]
-------------------
6.17 Management Agreement. Maintain the Management Agreement in full
force and effect and timely perform all of Owner's obligations thereunder and
enforce performance in all material respects of all obligations of Manager
thereunder and not permit the termination, amendment or assignment of the
Management Agreement unless the prior written consent of Mezzanine Lender is
first obtained, which consent may be in the sole and absolute discretion of
Mezzanine Lender, provided, however, Manager may assign the Management Agreement
to a wholly-owned subsidiary of Guarantor ("Successor Manager") without
Mezzanine Lender's consent but only with prior notice to Mezzanine Lender and
execution by Owner of a Collateral Assignment of Management Agreement and
Subordination of Management Agreement with respect to any new Management
Agreement, in form and substance acceptable to Mezzanine Lender in its
commercially reasonable discretion. Owner will cause the Successor Manager to
enter into such Collateral Assignment of Management Agreement and Subordination
of Management Agreement. Owner will not enter into any other management
agreement (other than the Management Agreement) without Mezzanine Lender's prior
written consent, which consent may be in the sole and absolute discretion of
Mezzanine Lender.
6.18 Updated Appraisals. For so long as the Loan remains
outstanding, if any Event of Default shall occur hereunder, or if, in Mezzanine
Lender's commercially reasonable judgment, a
35
material depreciation in the value of the Land and/or the Improvements shall
have occurred, then in any such event, Mezzanine Lender, may cause the Land and
Improvements to be appraised by an appraiser selected by Mezzanine Lender, and
in accordance with Mezzanine Lender's appraisal guidelines and procedures then
in effect, and Owner agrees to cooperate in all respects with such appraisals
and furnish to the appraisers all requested information regarding the Land and
Improvements and the Facility. Owner agrees to pay all reasonable costs incurred
by Mezzanine Lender in connection with such appraisal, costs shall be secured by
the Loan Documents and shall accrue interest at the Default Rate until paid.
6.19 Comply with Covenants and Laws. Comply, in all material respects,
with all applicable covenants and restrictions of record and all laws,
ordinances, rules and regulations and keep the Facility and the Land and
Improvements in compliance with all applicable laws, ordinances, rules and
regulations, including, without limitation, the Americans with Disabilities Act
and regulations promulgated thereunder, and laws, ordinances, rules and
regulations relating to zoning, health, building codes, setback requirements,
Medicaid and Medicare laws and keep the Permits for the Facility in full force
and effect.
6.20 Taxes and Other Charges. Subject to Owner's right to contest the
same as set forth in Section 9(c) of the First Mortgage, pay all taxes,
assessments, charges, claims for labor, supplies, rent, and other obligations
which, if unpaid, might give rise to a Lien against real or personal property of
the Owner, except Liens to the extent permitted by this Agreement.
6.21 Commitment Letter. Provide all items and pay all amounts required
of Owner by the Commitment Letter. If any term of the Commitment Letter shall
conflict with the terms of this Agreement, this Agreement shall govern and
control. As to any matter contained in the Commitment Letter, and as to which no
mention is made in this Agreement or the other Loan Documents, the Commitment
Letter shall continue to be in effect and shall survive the execution of this
Agreement and all other Loan Documents.
6.22 Certificate. [Intentionally Deleted].
-----------
6.23 Capital Improvements Escrow. [Intentionally Deleted].
---------------------------
6.24 Notice of Fees or Penalties. Promptly notify Mezzanine Lender,
upon Borrower's knowledge thereof, of the assessment by any state or any
Medicare, Medicaid, health or licensing agency of any fines or penalties against
Owner, Manager, or the Facility.
6.25 Loan Closing Certification. Immediately notify Mezzanine Lender in
writing, in the event any representation or warranty contained in that certain
Loan Closing Certification of even date herewith, executed by Borrower and Owner
for the benefit of Mezzanine Lender, becomes untrue or there shall have been any
material adverse change in any such representation or warranty.
6.26 ERISA. As of the date hereof and throughout the term of this
Agreement,
36
(a) Owner will not be an "employee benefit plan," as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), subject to Title I of ERISA, and none of the assets of Owner
will constitute "plan assets" (within the meaning of Department of Labor
Regulation Section 2510.3-101) of one or more such plans, and
(b) Owner will not be a "governmental plan" within the meaning
of Section 3(32) of ERISA, and transactions by or with Owner will not be subject
to state statutes regulating investments of, and fiduciary obligations with
respect to, governmental plans.
Owner shall not engage in a non-exempt prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code, as such sections
relate to Owner, or in any transaction that would cause any obligation or action
taken or to be taken hereunder (or the exercise by Mezzanine Lender of any of
its rights under the Loan Documents) to be a non-exempt prohibited transaction
under ERISA.
6.27 Further Assurances. Owner shall, at Owner's sole cost and
expense:
(a) upon Mezzanine Lender's request therefor given from time
to time after the occurrence of any Default or Event of Default, pay for reports
of Uniform Commercial Code ("UCC"), federal tax lien, state tax lien, judgment
and pending litigation searches with respect to Owner, Manager and the Mortgaged
Property;
(b) furnish to Mezzanine Lender instruments, documents,
certificates, and agreements, and each and every other document, certificate,
agreement and instrument required of Owner to be furnished pursuant to the terms
of the Loan Documents; and
(c) execute, and deliver to Mezzanine Lender such documents,
instruments, certificates, assignments and other writings and do such other acts
necessary, in Mezzanine Lender's commercially reasonable discretion, to
evidence, preserve and/or protect the Mortgaged Property at any time securing or
intended to secure the Loan, as Mezzanine Lender may require in Mezzanine
Lender's commercially reasonable discretion including, without limitation,
filing of any financing or continuation statements under the UCC with respect to
the Mortgaged Property, transferring the Mortgaged Property to Mezzanine
Lender's possession (if a security interest in such Mortgaged Property can be
perfected by possession) and endorsing to Mezzanine Lender any Mortgaged
Property which may be evidenced by an instrument and executing and delivering
any and all affidavits, certificates or similar documents required by any title
insurance company as a condition to its issuing or continuing to maintain any
insurance covering Mezzanine Lender's interest in the Mortgaged Property,
including any endorsements required by Mezzanine Lender; and
(d) do and execute, and cause Manager to do and execute, all
such further lawful acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents, as Mezzanine Lender shall require from time to time in its
commercially reasonable discretion.
37
6.28 Entity Status. Owner will (i) continue to comply with the
provisions of all of its organizational documents, and the laws of the state in
which such entity was formed and (ii) enter into such amendments and
modifications to such organizational documents as may reasonably be required by
Mezzanine Lender or any Rating Agency. All customary formalities regarding the
entity existence of Owner will continue to be observed.
6.29 Assumptions in Non-Consolidation Opinion. Owner shall conduct its
business so that the assumptions made in that certain substantive
nonconsolidation opinion letter dated the date hereof, delivered by counsel in
connection with the Loan shall be true and correct in all material respects.
6.30 Establishment of Debt Reserve Fund. [Intentionally Deleted]
----------------------------------
6.31 Triad II Limited Partnership Documentation. [Intentionally
Deleted]
6.32 Capital Senior Properties Documentation. [Intentionally
Deleted]
ARTICLE VII
NEGATIVE COVENANTS OF BORROWER
Until the Loan Obligations have been paid in full, Borrower shall not:
7.1 Assignment of Licenses and Permits. [Intentionally Deleted]
----------------------------------
7.2 No Liens; Exceptions. [Intentionally Deleted]
--------------------
7.3 Merger, Consolidation, etc. Except as otherwise provided in the
Loan Documents, consummate any merger, consolidation or similar transaction, or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions), all or substantially all of its assets (whether now or
hereafter acquired), without the prior written consent of Mezzanine Lender,
which consent may be granted or refused in Mezzanine Lender's sole discretion.
7.4 Maintain Single Purpose Entity Status.
-------------------------------------
(a) Merge into or consolidate with any Person or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets (permitted in the Loan Documents) or change
its legal structure, without in each case Mezzanine
(b) Fail to preserve its valid existence and good standing (if
applicable) under the laws of the jurisdiction of its organization or formation,
or without the prior written consent of Mezzanine Lender, amend, modify,
terminate or fail to comply with the provisions of its Articles or Certificate
of Incorporation, as same may be further amended or supplemented, if such
amendment, modification, termination or failure to comply would adversely affect
its ability to perform its obligations hereunder or under any of the other Loan
Documents;
38
(c) Commingle its assets with the assets of any of its
shareholders, Affiliates, principals or of any other Person, except for loans,
advances, dividends and distributions to shareholders of Borrower and
Affiliates;
(d) Incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Loan and trade payables
incurred in the ordinary course of business, payable within 90 days of the date
incurred, based on historical amounts;
(e) Fail to maintain its records, books of account and bank
accounts separate and apart from those of its shareholders, principals and
Affiliates and the Affiliates of any of its shareholders, principals, and any
other Person except as otherwise permitted in the Loan Documents;
(f) Enter into any contract or agreement with any of its
shareholders, principals or Affiliates, or the Affiliates of any of its
shareholders or principals, except upon terms and conditions that are
substantially similar to those that would be available on an arms-length basis
with third parties except as otherwise permitted in the Loan Documents;
(g) Seek its dissolution or winding up in whole, or in part;
(h) Maintain its assets in such a manner that it will be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any of its shareholders, principals and Affiliates, the Affiliates
of any of its shareholders, principals or any other Person;
(i) Hold itself out to be responsible for the debts of
another Person;
(j) Make any loans or advances to any third party;
(k) Fail to file its own tax returns, which may be filed by
Guarantor on a consolidated basis;
(l) Agree to, enter into or consummate any transaction which
would render it unable to confirm that (i) it is not an "employee benefit plan"
as defined in Section 3(32) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Section 3(32) of ERISA; (ii) it is not
subject to state statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (iii) less than twenty-five percent (25%) of
each of its outstanding class of equity interests are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss. 2510.3-101(f)(2);
(m) Fail either to hold itself out to the public as a legal
Person separate and distinct from any other Person or to conduct its business
solely in its own name, in order not (i) to mislead others as to the identity
with which such other party is transacting business, or (ii) to suggest that it
is responsible for the debts of any third party (including any of its
shareholders, principals or Affiliates, or any general partner, principal or
Affiliate thereof);
39
(n) Make an assignment for the benefit of creditors, file a
petition in bankruptcy, petition or apply to any tribunal for the appointment of
a custodian, receiver, trustee or other similar official for it, or for a
substantial part of its property, commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment or debt or liquidation law and/or
admit its inability to pay its debts as they become due; or
(o) Cause or permit the board of directors to take any action
which, under the terms of any certificate of incorporation, bylaws or any voting
trust agreement with respect to any common stock requires a vote of the board of
directors, unless at the time of such action there shall be at least one member
of the board of directors who is an Independent Director.
7.5 Change of Business. Make any material change in the nature of
its business as it is being conducted as of the date hereof.
7.6 Changes in Accounting. Change its methods of accounting, unless
such change is permitted by GAAP, and provided such change does not have the
effect of curing or preventing what would otherwise be an Event of Default or
Default had such change not taken place.
7.7 ERISA. Engage in any transaction which would cause any obligation,
or action taken or to be taken, hereunder (or the exercise by Mezzanine Lender
of any of its rights under this Agreement, the Note or any of the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
7.8 Transactions with Affiliates. [Intentionally Deleted].
----------------------------
7.9 Transfer of Ownership Interests. Permit a change in the ownership
interests of Borrower, unless the written consent of Mezzanine Lender is first
obtained, which consent may be granted or refused in Mezzanine Lender's sole
discretion.
7.10 Change of Use. [Intentionally Deleted]
-------------
7.11 Place of Business. Change its chief executive offices (if
applicable) without first giving Mezzanine Lender at least thirty (30) days
prior written notice thereof and promptly providing Mezzanine Lender such
information and amendatory financing statements as Mezzanine Lender may request
in connection therewith.
7.12 Acquisitions. [Intentionally Deleted]
------------
7.13 Dividends, Distributions and Redemptions. Except as otherwise
consented to by Mezzanine Lender in writing, if the Facilities do not have at
the time in question, on a combined basis, a Distribution Coverage Ratio of at
least 1.0 to 1.0, exclusive of any deposits held by First Mortgage Lender under
Section 4.14 of the First Mortgage Loan Agreement, declare or pay any dividends
to its shareholders, members or partners, as applicable, or purchase, redeem,
retire, or otherwise acquire for value, any ownership interests in Borrower now
or hereafter outstanding, return any capital to its
40
shareholders, members or partners, as applicable, or make any distribution of
assets to its shareholders, members, or partners, as applicable.
7.14 First Mortgage Loan Documents and First Mortgage Loan.
[Intentionally Deleted]
7.15 Debt Cancellation. Cancel or otherwise, forgive or release
any material claim or debt owed to Borrower by any Person, except for adequate
consideration in the ordinary course of Borrower's business.
7.16 Certain Restrictions. Enter into any agreement which expressly
restricts the ability of Borrower to enter into amendments, modifications or
waivers of any of the Loan Documents.
7.17 Identity. Change its name, identity or organizational structure in
any manner which might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of Section 9-402(7)
of the UCC (or any other applicable provision of the UCC).
ARTICLE VIII
NEGATIVE COVENANTS OF OWNER
Until the Loan Obligations have been paid in full, Owner shall not:
8.1 Assignment of Licenses and Permits. Assign or transfer any of its
interest in any Permits or Reimbursement Contracts (including rights to payment
thereunder) pertaining to the Facility subject to the rights of the First
Mortgage Lender under the First Mortgage Loan Documents, or assign, transfer, or
remove or permit any other Person to assign, transfer, or remove any records
pertaining to the Facility including, without limitation, resident records,
medical and clinical records (except for removal of such resident records as
directed by the residents owning such records), without Mezzanine Lender's prior
written consent, which consent may be granted or refused in Mezzanine Lender's
sole discretion.
8.2 No Liens; Exceptions. Create, incur, assume or suffer to exist any
Lien upon or with respect to the Facility, any of its properties, rights, income
or other assets relating thereto, including, without limitation, the Mortgaged
Property whether now owned or hereafter acquired, other than the following
permitted Liens ("Permitted Encumbrances"):
(a) Liens at any time existing in favor of First Mortgage
Lender and Mezzanine Lender;
(b) Liens which are listed in Exhibit "J" attached hereto;
(c) Leases to residents and commercial leases for resident
services incidental to the operation of the Facility (e.g. xxxxxx shop, beauty
parlor) provided such commercial leases, in the aggregate, do not generate more
than 20% of gross income of the Facility;
41
(d) Easements, rights of way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances, which
Mezzanine Lender has determined upon Owner's request, in Mezzanine Lender's
commercially reasonable discretion, will not interfere in any material respect
with the ordinary conduct of the business of the Facility or the value of the
Mortgaged Property or Mezzanine Lender's interest in the Mortgaged Property, and
Borrower pays to Mezzanine Lender, upon demand, all costs and expenses incurred
by Mezzanine Lender in connection with reviewing Owner's request;
(e) The creation of a mechanic's, materialman's, or judgment
lien against the Mortgaged Property which is fully disclosed to the Mezzanine
Lender and released of record or otherwise remedied to Mezzanine Lender's
satisfaction within thirty (30) days after Borrower has knowledge of the
creation of such Lien;
(f) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for money borrowed or
for credit received with respect to property acquired) entered into in the
ordinary course of business as presently conducted or to secure obligations for
surety or appeal bonds; and
(g) Liens for current year's taxes, assessments or
governmental charges or levies, provided payment thereof shall not be
delinquent.
8.3 Merger, Consolidation, etc. Except as otherwise provided in the
Loan Documents or First Lien Mortgage, consummate any merger, consolidation or
similar transaction, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions), all or substantially all of its
assets (whether now or hereafter acquired), without the prior written consent of
Mezzanine Lender, which consent may be granted or refused in Mezzanine Lender's
sole discretion, except leases to residents and commercial leases for resident
services incidental to the operation of the Facility (e.g. xxxxxx shop, beauty
parlor) provided such commercial leases in the aggregate do not generate more
than 20% of gross income of the Facility.
8.4 Maintain Single Purpose Entity Status. Maintain compliance
with those certain Single Purpose Entity covenants described in Section 5.4 of
the First Mortgage Loan Agreement.
8.5 Change of Business. Make any material change in the nature of
its business as it is being conducted as of the date hereof.
8.6 Changes in Accounting. Change its methods of accounting, unless
such change is permitted by GAAP, and provided such change does not have the
effect of curing or preventing what would otherwise be an Event of Default or
Default had such change not taken place.
8.7 ERISA. Engage in any transaction which would cause any obligation,
or action taken or to be taken, hereunder (or the exercise by Mezzanine Lender
of any of its rights under this Agreement, the Note or any of the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
42
8.8 Transactions with Affiliates. [Intentionally Deleted].
----------------------------
8.9 Transfer of Ownership Interests. Except as otherwise permitted
under the First Mortgage Loan Documents, permit a change in the ownership
interests of the Owner, unless the written consent of Mezzanine Lender is first
obtained, which consent may be granted or refused in Mezzanine Lender's sole
discretion.
8.10 Change of Use. Alter or change the use of the Facility or enter
into any management agreement for any Facility other than the Management
Agreement or enter into any operating lease for any Facility (except leases to
residents and commercial leases for resident services incidental to the
operation of the Facility (e.g. xxxxxx shop, beauty parlor) provided such
commercial leases in the aggregate do not generate more than 20% of gross income
of the Facility), unless Owner first notifies Mezzanine Lender and provides
Mezzanine Lender a copy of the proposed lease agreement or management agreement,
obtains Mezzanine Lender's written consent thereto, which consent may be
withheld in Mezzanine Lender's sole discretion, and obtains and provides
Mezzanine Lender with a subordination agreement in form satisfactory to
Mezzanine Lender, as determined by Mezzanine Lender in its sole discretion, from
such manager or lessee subordinating to all rights of Mezzanine Lender.
8.11 Place of Business. Change its chief executive offices (if
applicable) without first giving Mezzanine Lender at least thirty (30) days
prior written notice thereof and promptly providing Mezzanine Lender such
information and amendatory financing statements as Mezzanine Lender may request
in connection therewith.
8.12 Acquisitions. Directly or indirectly, purchase, lease, manage,
own, operate, or otherwise acquire any property or other assets (or any interest
therein) which are not used in connection with the operation of the Facilities.
8.13 Dividends, Distributions and Redemptions. Except as otherwise
consented to by Mezzanine Lender in writing, if the Facilities do not have at
the time in question, on a combined basis, a Distribution Coverage Ratio of at
least 1.0 to 1.0 (exclusive of any deposits held by First Mortgage Lender under
Section 4.14 of the Loan Agreement), declare or pay any dividends to its
shareholders, members or partners, as applicable, or purchase, redeem, retire,
or otherwise acquire for value, any ownership interests in Owner now or
hereafter outstanding, return any capital to its shareholders, members or
partners, as applicable, or make any distribution of assets to its shareholders,
members, or partners, as applicable.
8.14 First Mortgage Loan Documents and First Mortgage Loan. Without the
prior written consent of Mezzanine Lender, which consent may be withheld,
delayed or conditioned in the sole discretion of Mezzanine Lender, give its
consent or approval or agree to any of the following:
(i) (A) any refinancing of the First Mortgage Loan,
(B) any prepayment in full of the First Mortgage Loan without the prepayment in
full of the Loan, (C) any transfer of the Mortgaged Property or any portion
thereof or interest therein except as permitted under the Loan Documents, or (D)
any action in connection with or in furtherance of the foregoing;
43
(ii) placing or permitting to attach any additional
Liens on any of the Mortgaged Property (except as set forth in Section 8.2
hereof); or
(iii) any modification, amendment, consolidation,
spread, restatement or waiver of any provision of the First Mortgage Loan
Documents.
8.15 Debt Cancellation. Cancel or otherwise, forgive or release any
material claim or debt owed to Owner by any Person, except for adequate
consideration in the ordinary course of Owner's business.
8.16 Certain Restrictions. Enter into any agreement which expressly
restricts the ability of Borrower to enter into amendments, modifications or
waivers of any of the Loan Documents.
8.17 Identity. Change its name, identity or organizational
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9-402(7) of the UCC (or any other applicable provision of the UCC).
ARTICLE IX
ENVIRONMENTAL HAZARDS
9.1 Prohibited Activities and Conditions. Except for matters covered by
a written program of operations and maintenance approved in writing by Mezzanine
Lender (an "O&M Program") or matters described in Section 9.2 or matters
described in Exhibit "K" hereto, during the term of the Loan, Owner shall not
cause or permit to exist any of the following:
(a) The presence, use, generation, release, treatment,
processing, storage (including storage in above ground and underground storage
tanks), handling, or disposal-of any Hazardous Materials in, on or under the
Land, any Improvements, or any other property of Borrower that is adjacent to
the Land in violation of applicable Hazardous Materials Laws;
(b) The transportation of any Hazardous Materials to, from,
or across the Land;
(c) Any occurrence or condition on the Land or in the
Improvements or any other property of Borrower that is adjacent to the Land,
which occurrence or condition is in violation of Hazardous Materials Laws;
(d) Any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Land, the Improvements or any property
of Borrower that is adjacent to the Land; or
(e) Any Lien (whether or not such Lien has priority over the
Lien created by the First Mortgage) upon the Land or any Improvements imposed
pursuant to any Hazardous Materials Laws.
44
The matters described in clauses (a) through (d) above are referred to
collectively in this Article IX as "Prohibited Activities and Conditions" and
individually as a "Prohibited Activity and Condition."
9.2 Exclusions. Notwithstanding any other provision of Article VI to
the contrary, "Prohibited Activities and Conditions" shall not include the safe
and lawful use and storage of quantities of (a) pre-packaged supplies, medical
waste, cleaning materials and petroleum products customarily used in the
operation and maintenance of comparable facilities, (b) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for
consumer use and used by occupants of the Facility; and (c) petroleum products
used in the operation and maintenance of motor vehicles from time to time
located on the Land's parking areas, so long as all of the foregoing are used,
stored, handled, transported and disposed of in compliance with Hazardous
Materials Laws.
9.3 Preventive Action. Owner shall take all appropriate steps
(including the inclusion of appropriate provisions in any Leases approved by
Mezzanine Lender which are executed after the date of this Agreement) to prevent
its employees, agents, contractors, tenants and occupants of the Facility from
causing or permitting any Prohibited Activities and Conditions.
9.4 O & M Program Compliance. If an O&M Program has been established
with respect to Hazardous Materials, Owner shall comply in a timely manner with,
and cause all employees, agents and contractors of Owner and any other Persons
(excluding trespassers) present on the Land to comply with the O&M Program. All
costs of performance of Owner's obligations under any O&M Program shall be paid
by Owner, and Mezzanine Lender's out-of-pocket costs incurred in connection with
the monitoring and review of the O&M Program and Owner's performance shall be
paid by Owner upon demand by Mezzanine Lender. Any such out-of-pocket costs of
Mezzanine Lender which Owner fails to pay promptly shall become an additional
part of the Loan Obligations.
9.5 Owner's Environmental Representations and Warranties. Owner
represents and warrants to Mezzanine Lender that, except as previously disclosed
by Owner to Mezzanine Lender in Exhibit "K" attached hereto and made a part
hereof:
(a) Owner has not at any time caused or, to its knowledge,
permitted any Prohibited Activities and Conditions on the Land.
(b) No Prohibited Activities and Conditions exist or to the
best of Owner's knowledge after due inquiry, have existed on the Land.
(c) The Land and the Improvements do not now contain any
underground storage tanks, and, to the best of Owner's knowledge after
reasonable and diligent inquiry, the Land and the Improvements have not
contained any underground storage tanks in the past. If there is an underground
storage tank located on the Land or the Improvements which has been previously
disclosed by Owner to Mezzanine Lender in writing, that tank complies with all
requirements of Hazardous Materials Laws.
45
(d) Owner has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of Hazardous
Materials relating to the Land. Without limiting the generality of the
foregoing, Owner has obtained all Environmental Permits required for the
operation of the Land and the Improvements in accordance with Hazardous
Materials Laws now in effect and all such Environmental Permits are in full
force and effect. During Owner's ownership of the Land and, to the best of
Owner's knowledge after reasonable and diligent inquiry, no event has occurred
with respect to the Land and/or Improvements that constitutes or, with the
passing of time or the giving of notice, would constitute, noncompliance with
the terms of any Environmental Permit.
(e) There are no actions, suits, claims or proceedings pending
or, to the best of Owner's knowledge after reasonable and diligent inquiry,
threatened that involves the Land and/or the Improvements and allege, arise out
of, or relate to any Prohibited Activity and Condition.
(f) Owner has not received any written complaint, order,
notice of violation or other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions or Hazardous
Materials, or any other environmental, health or safety matters affecting the
Land, the Improvements or any other property of Owner that is adjacent to the
Land. The representations and warranties in this Article IX shall be continuing
representations and warranties that shall be deemed to be made by Owner
throughout the term of the Loan evidenced by the Note and until all of the Loan
Obligations (other than future obligations of the Owner pursuant to the
provisions of this Article IX and Section 11.5 of this Agreement) have been paid
in full.
9.6 Notice of Certain Events. During the term of the Loan, Owner
shall promptly notify Mezzanine Lender in writing of any and all of the
following that may occur:
(a) Owner's actual discovery of any Prohibited Activity and
Condition.
(b) Owner's receipt of or actual knowledge of any written
complaint, order, notice of violation or other communication from any
Governmental Authority or other Person with regard to present or future alleged
Prohibited Activities and Conditions or any other environmental, health or
safety matters affecting the Land, the Improvements or any other property of
Owner that is adjacent to the Land.
(c) Any representation or warranty in this Article VI which
becomes untrue at any time after the date of this Agreement.
Any such notice given by Owner shall not relieve Owner of, or
result in a waiver of, any obligation under this Agreement, the Note, or any of
the other Loan Documents.
9.7 Costs of Inspection. Borrower and Owner shall pay promptly the
costs of any environmental inspections, tests or audits ("Environmental
Inspections") required by Mezzanine Lender in connection with any foreclosure or
deed in lieu of foreclosure or, if required by Mezzanine Lender, as a condition
of Mezzanine Lender's consent to any "Transfer" (as defined in the First
Mortgage), or required by Mezzanine Lender following a commercially reasonable
determination by Mezzanine Lender that Prohibited Activities and Conditions may
exist. Any such costs incurred by
46
Mezzanine Lender (including the reasonable fees and out-of-pocket costs of
attorneys and technical consultants whether incurred in connection with any
judicial or administrative process or otherwise) which Borrower or Owner fail to
pay promptly shall become an additional part of the Loan Obligations. The
results of all Environmental Inspections made by Mezzanine Lender shall at all
times remain the property of Mezzanine Lender, and Mezzanine Lender shall have
no obligation to disclose or otherwise make available to Borrower or Owner or
any other party such results or any other information obtained by Mezzanine
Lender in connection with its Environmental Inspections. Mezzanine Lender hereby
reserves the right, and Borrower and Owner hereby expressly authorizes Mezzanine
Lender, to make available to any prospective purchaser of the Loan or transferee
of the Mezzanine Lender's interest in and to the Loan Documents or transferee of
the Mortgaged Property under a deed in lieu of foreclosure or any prospective
bidder at a foreclosure sale of the Mortgaged Property, the results of any
Environmental Inspections made by Mezzanine Lender with respect to the Mortgaged
Property. Borrower and Owner consent to Mezzanine Lender notifying any party
(either as part of a notice of sale or otherwise) of the results of any of
Mezzanine Lender's Environmental Inspections. Borrower and Owner acknowledge
that Mezzanine Lender cannot control or otherwise assure the truthfulness or
accuracy of the results of any of its Environmental Inspections and that the
release of such results to prospective bidders at a foreclosure sale of the
Mortgaged Property may have a material and adverse effect upon the amount which
a party may bid at such sale. Borrower and Owner agree that Mezzanine Lender
shall have no liability whatsoever as a result of delivering the results of any
of its Environmental Inspections to any prospective bidder or purchaser or
transferee of the Loan or in connection with Mezzanine Lender's interest in the
Mortgaged Property, and Borrower and Owner hereby release and forever discharge
Mezzanine Lender from any and all claims, damages, or causes of action, arising
out of, connected with or incidental to the results of the delivery of any of
Mezzanine Lender's Environmental Inspections. If any investigation, site
monitoring, containment, clean-up, restoration or other remedial work ("Remedial
Work") is necessary to bring Owner into compliance with any Hazardous Materials
Law or order of any Governmental Authority that has or acquires jurisdiction
over the Land, the Improvements or the use, operation or improvement of the Land
under any Hazardous Materials Law, Owner shall, by the earlier of (a) the
applicable deadline required by Hazardous Materials Law or (b) sixty (60) days
after notice from Mezzanine Lender demanding such action, begin performing the
Remedial Work, and thereafter diligently prosecute it to completion, and shall
in any event complete such work by the time required by applicable Hazardous
Materials Law. If Owner fails to begin on a timely basis or diligently prosecute
any required Remedial Work, Mezzanine Lender may, at its option, cause the
Remedial Work to be completed, in which case Borrower and Owner shall reimburse
Mezzanine Lender on demand for the actual cost of doing so. Any reimbursement
due from Borrower and Owner to Mezzanine Lender shall become part of the Loan
Obligations. Owner shall control any and all dealings with any Governmental
Authority unless or until Mezzanine Lender causes the Remedial Work to be
completed as provided herein.
9.8 Cooperation with Governmental Authorities. Borrower and Mortgagor
shall cooperate with any inquiry by any Governmental Authority and shall comply
with any governmental or judicial order which arises from any alleged Prohibited
Activity and Condition affecting the Land and/or the Improvements.
47
9.9 Indemnity.
---------
(a) During the term of the Loan, Borrower and Owner shall hold
harmless, defend and indemnify (i) Mezzanine Lender, (ii) any prior owner or
holder of the Note, (iii) any Person who is or will have been involved in the
servicing of the Note, (iv) the officers, directors, partners, agents,
shareholders, employees and trustees of any of the foregoing, and (v) the heirs,
legal representatives, successors and assigns of each of the foregoing
(together, the "Indemnitees") from and against all proceedings, claims, damages,
losses, expenses, penalties and costs (whether initiated or sought by any
Governmental Authority or private parties), including reasonable fees and out of
pocket expenses of attorneys and expert witnesses, investigatory fees, and
remediation costs, whether incurred in connection with any judicial or
administrative process or otherwise, arising directly or indirectly from any of
the following (unless any of the following result from the gross negligence or
wilful misconduct of the Mezzanine Lender):
(i) Any breach of any representation or warranty
of Borrower or Owner in this Article IX;
(ii) Any failure by Borrower or Owner to perform
any of its obligations under this Article IX;
(iii) The existence or alleged existence of any
Prohibited Activity and Condition on the Land or in the Improvements;
(iv) The presence or alleged presence of
Hazardous Materials in, on, around or under the Land, the Improvements or any
property of Owner or Borrower that is adjacent to the Land in violation of
applicable Hazardous Materials Laws; or
(v) The actual or alleged violation of any
Hazardous Materials Laws by Borrower, Owner, their agents, invitees, licensees
or contractors or by Manager or any Affiliate or their respective duly
authorized representatives.
(b) Counsel selected by Borrower or Owner to defend
Indemnitees shall be subject to the reasonable approval of those Indemnitees.
Notwithstanding anything contained herein, any Indemnitee may elect to defend
any claim or legal administrative proceeding against said Indemnitee at
Borrower's and Owner's expense. Nothing contained herein shall prevent an
Indemnitee from employing separate counsel in any such action at any time and
participating in the defense thereof at its own expense.
(c) Borrower and Owner shall not, without the prior written
consent of those Indemnitees who are named as parties to a claim or legal or
administrative proceeding (a "Claim") settle or compromise the Claim if the
settlement (i) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Mezzanine Lender
of a written release of those Indemnitees, satisfactory in form and substance to
Mezzanine Lender; or (ii) may materially and adversely affect any Indemnitee, as
determined by such Indemnitee in its sole discretion.
48
(d) The liability of Borrower and Owner to indemnify the
Indemnitees hereunder shall not be limited or impaired by any of the following,
or by any failure of Borrower, Owner or Guarantor to receive notice of or
consideration for any of the following:
(i) Any amendment or modification of any of the
Loan Documents;
(ii) Any extensions of time for performance
required by any of the Loan Documents;
(iii) The accuracy or inaccuracy of any
representations and warranties made by Borrower or Owner under this Agreement or
any of the other Loan Documents;
(iv) The release of Borrower or Owner or any
other Person, by Mezzanine Lender or by operation of law, from performance of
any obligation under any of the Loan Documents;
(v) The release or substitution in whole or in
part of any security for the Loan Obligations; or
(vi) Mezzanine Lender's failure to properly
perfect any lien or security interest given as security for the Loan
Obligations.
(e) Borrower and Owner shall, at their own cost and
expense, do all of the following:
(i) Pay or satisfy any judgment or decree that
may be entered against any Indemnitee or Indemnitees in any legal or
administrative proceeding incident to any matters against which Indemnitees are
entitled to be indemnified under this Article IX;
(ii) Reimburse Indemnitees for any reasonable
expenses paid or incurred in connection with any matters against which
Indemnitees are entitled to be indemnified under this Article IX; and
(iii) Reimburse Indemnitees for any and all
reasonable expenses, including fees and costs of attorneys and expert witnesses,
paid or incurred in connection with the enforcement by Indemnitees of their
rights under this Article IX, or in monitoring and participating in any legal or
administrative proceeding.
(f) In any circumstances in which the indemnity under this
Article IX applies, Mezzanine Lender may employ its own legal counsel and
consultants to prosecute, defend or negotiate any claim or legal or
administrative proceeding and Mezzanine Lender, with the prior written consent
of Owner (which shall not be unreasonably withheld, delayed or conditioned) may
settle or compromise any action or legal or administrative proceeding. Borrower
and Owner shall reimburse Mezzanine Lender upon demand for all costs and
expenses incurred by Mezzanine Lender,
49
including all costs of settlements entered into in good faith, and the fees and
out of pocket expenses of such attorneys and consultants.
(g) The provisions of this Article IX shall be in addition to
any and all other obligations and liabilities that Borrower and Owner may have
under the applicable law or under the other Loan Documents, and each Indemnitee
shall be entitled to indemnification under this Article IX without regard to
whether Mezzanine Lender or that Indemnitee has exercised any rights against the
Land and/or the Improvements or any other security, pursued any rights against
Guarantor, or pursued any other rights available under the Loan Documents or
applicable law. The obligations of Owner and Borrower to indemnify the
Indemnitees under this Article IX shall be joint and several. The obligations of
Borrower and Owner to indemnify the Indemnitees under this Article IX shall
survive any repayment or discharge of the Loan Obligations, any foreclosure
proceeding and/or sale relating to Mezzanine Lender's rights under the Loan
Documents.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence of any one or more of the
following shall constitute an "Event of Default" hereunder:
(a) The failure of Borrower or Owner, as applicable, to pay
any installment of principal, interest, or other payments required under the
Note or any other Loan Document, within five (5) days after the same becomes
due;
(b) Any failure by Owner to provide and maintain in full force
and effect the insurance coverage required by Section 6.5(a) - (j), inclusive,
of this Agreement;
(c) Borrower's violation of any covenant set forth in Article
VII hereof;
(d) Owner's violation of any covenant set forth in Article
VIII hereof, with the exception of Section 8.2 of this Agreement;
(e) Borrower's or Owner's failure to deliver or cause to be
delivered the financial statements and information set forth in Section 5.7 and
Section 6.7 above within the times required or any violation of Section 8.2 of
this Agreement, and such failure is not cured within thirty (30) days following
Mezzanine Lender's written notice to Borrower or Owner, as the case may be;
(f) The failure of Borrower or Owner properly and timely to
perform or observe any covenant or condition set forth in this Agreement (other
than those specified in this Section 10.1), or the Commitment Letter or any
other Loan Document which failure is not cured within any applicable period as
set forth herein or in such other Loan Document, or if no cure period is
specified therefor, is not cured within a period of thirty (30) days after
Mezzanine Lender's notice to Borrower or Owner, as the case may be, of such
Default provided, however, that if such Default cannot be cured within such
thirty (30) day period, such cure period shall be extended for such period of
time as Mezzanine Lender deems reasonably necessary, as long as Borrower or
Owner, as the case
50
may be, is diligently and in good faith prosecuting said cure to completion and
further provided however, that such cure period shall not extend beyond the date
upon which such Default causes an Event of Default to occur under the First
Mortgage Loan Documents. However, no such notice or grace period shall apply in
the case of any such failure which could, in Mezzanine Lender's judgment, absent
immediate exercise by Mezzanine Lender of a right or remedy under this
Agreement, materially adversely affect Mezzanine Lender, or impair the Note or
any other security given under any of the Loan Documents;
(g) [Intentionally Deleted]
(h) Any exercise by any existing or further holder (other than
the Mezzanine Lender) of any debt instrument secured by a mortgage, deed of
trust, deed to secure debt or security agreement covering the Mortgaged Property
of a right to declare all amounts due under that debt instrument immediately due
and payable;
(i) The Mortgaged Property becomes part of a bankrupt debtor's
(other than the Borrower, Owner, or the Manager, if an Affiliate of Borrower)
estate pursuant to any chapter of the Federal Bankruptcy Code or the Mortgaged
Property otherwise becomes subject to any reorganization, receivership (other
than a receivership proceeding instituted by Mezzanine Lender) or insolvency
proceeding or any similar proceeding pursuant to any federal, state or foreign
law affecting debtor and creditor rights, and , in the case of an involuntary
bankruptcy, the Mortgaged Property is not removed from such bankruptcy's
debtor's estate within ninety (90) days from the date of the filing thereof or,
if a trustee, receiver or liquidator of all or any substantial part of the
Mortgaged Property has been appointed, such appointment is not vacated or stayed
within ninety (90) days after the date of such appointment;
(j) The filing by Borrower, Owner, Guarantor or Manager of a
voluntary petition, or the adjudication of any of the aforesaid Persons, or the
filing by any of the aforesaid Persons of any petition or answer seeking or
acquiescing, in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, or if any of the aforesaid
Persons should seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator for itself or of all or any substantial part of
its property or of any or all of the rents, revenues, issues, earnings, profits
or income thereof, or the mailing of any general assignment for the benefit of
creditors or the admission in writing by any of the aforesaid Persons of its
inability to pay its debts generally as they become due;
(k) The entry by a court of competent jurisdiction of an
order, judgment, or decree approving a petition filed against Borrower, Owner,
Guarantor or Manager which petition seeks any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency, or other relief for debtors, which order, judgment or
decree remains unvacated and unstayed for an aggregate of ninety (90) days
(whether or not consecutive) from the date of entry thereof, or the appointment
of any trustee, receiver or liquidator of any of the aforesaid Persons or of all
or any substantial part of its properties or of any or all of the rents,
revenues, issues, earnings,
51
profits or income thereof which appointment shall remain unvacated and unstayed
for an aggregate of ninety (90) days (whether or not consecutive);
(l) Unless otherwise permitted hereunder or under any other
Loan Documents, the sale, transfer, lease, assignment, or other disposition,
voluntarily or involuntarily, of the Mortgaged Property, or any part thereof,
except for Permitted Encumbrances as described in Section 8.2 above, or any
further encumbrance of the Mortgaged Property (except for Permitted
Encumbrances), unless the prior written consent of Mezzanine Lender is obtained;
(m) Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of Borrower, Owner,
Guarantor or Manager or any of their respective officers or directors pursuant
to or in connection with this Agreement (including, without limitation,
representations and warranties contained herein or in any Loan Documents) or as
an inducement to Mezzanine Lender to make the Loan to Borrower, (i) proves to
have been false in any material respect at the time when the facts therein set
forth were stated or certified, or (ii) proves to have omitted any substantial
contingent or unliquidated liability or claim against Borrower, Owner, Guarantor
or Manager known to them, or (iii) on the date of execution of this Agreement
there shall have been any materially adverse change in any of the facts
previously disclosed by any such certificate, statement, representation,
warranty or audit, which change shall not have been disclosed to Mezzanine
Lender in writing at or prior to the time of such execution and, in the case of
any of (i), (ii), or (iii) above, is contained in the Loan Closing
Certification;
(n) The commencement of a forfeiture action or proceeding,
whether civil or criminal, which, in Mezzanine Lender's reasonable judgment,
could result in a forfeiture of the Mortgaged Property or otherwise materially
impair the lien created by the Loan Documents or Mezzanine Lender's interest in
the Mortgaged Property;
(o) The occurrence of a default (after expiration of
applicable notice and cure periods) under or with respect to any of the First
Mortgage Loan Documents;
(p) Fraud or intentional misrepresentation or intentional
omission by Borrower, Owner or Guarantor of all or any part of the Loan
Obligations, or any of their respective officers, directors or trustees, in
connection with (i) the application for or creation of the Loan, (ii) any
financial statement, financial report, certification or other report or
information required under the Loan Agreement to be provided to Mezzanine Lender
during the term of the Loan, or (iii) any request for Mezzanine Lender's consent
to any proposed action, including a request for disbursement of funds under any
of the Loan Documents.
(q) The failure of Owner to correct or to cause Manager to
correct, within the time deadlines set by any applicable Medicare, Medicaid or
licensing agency, any deficiency which would result in the following actions by
such agency with respect to the Facility:
(i) a termination of any Reimbursement Contract
or any Permit; or
(ii) a ban on new admissions generally or on
admission of patients otherwise qualifying for Medicare or Medicaid coverage.
52
(r) A final judgment shall be rendered by a court of law or
equity (i) against Borrower or Owner in excess of $50,000.00, or (ii) against
Guarantor or Manager in excess of $200,000.00, and the same shall remain
undischarged for a period of thirty (30) days, unless such judgment in either
case is: (A) fully covered by collectible insurance and such insurer has within
such period acknowledged such coverage in writing, or (B) although not fully
covered by insurance, enforcement of such judgment has been effectively stayed,
such judgment is being contested or appealed by appropriate proceedings and
Borrower, Owner, Guarantor or Manager as the case may be, has established
reserves adequate for payment in the event such Person is ultimately
unsuccessful in such contest or appeal and evidence thereof is provided to
Mezzanine Lender;
(s) the failure of Owner to comply with the provisions of
Section 13 of the First Mortgage;
(t) The failure by Borrower or Owner, if requested, to: (a)
furnish any documentation or information, (b) execute and deliver any
documentation, (c) correct or amend any documents previously executed, or (d)
perform any acts, in each case of (a), (b), (c) or (d), as provided in
Paragraphs 1, 2, and 3 of the Agreement to Amend or Comply of even date herewith
executed by Borrower and Owner for the benefit of Mezzanine Lender;
(u) Guarantor no longer holds 51% or more of the shares of
voting stock of the Manager, unless the Manager has been replaced by an entity
other than an Affiliate of Borrower, with Mezzanine Lender's prior consent; or
(v) Any management or operating agreement for the Property is
terminated without prior written consent of Mezzanine Lender.
Notwithstanding anything in this Section, all requirements of notice
shall be deemed eliminated if Mezzanine Lender is prevented from declaring an
Event of Default by bankruptcy or other applicable law. The cure period, if any,
shall then run from the occurrence of the event or condition of Default rather
than from the date of notice.
10.2 Remedies. Upon the occurrence of any one or more of the
foregoing Events of Default, Mezzanine Lender may, at its option:
(a) Declare the entire unpaid principal of the Loan
Obligations to be, and the same shall thereupon become, immediately due and
payable, without presentment, protest or further demand or prior notice of any
kind, all of which are hereby expressly waived; and/or
(b) Proceed to protect and enforce its rights by action at law
(including, without limitation, bringing suit to reduce any claim to judgment),
suit in equity and other appropriate proceedings including, without limitation,
for specific performance of any covenant or condition contained in this
Agreement; and/or
(c) Exercise any and all rights and remedies afforded by the
laws of the United States, the states in which any of the Mortgaged Property is
located or any other appropriate
53
jurisdiction as may be available for the collection of debts and enforcement of
covenants and conditions such as those contained in this Agreement and the Loan
Documents; and/or
(d) Exercise the rights and remedies of setoff and/or banker's
lien against the interest of Borrower and/or Owner in and to every account and
other property of Borrower or Owner which is in the possession of Mezzanine
Lender or any Person who then owns a participating interest in the Loan, to the
extent of the full amount of the Loan; and/or
(e) Replace the Manager by terminating the Management
Agreement in accordance with the terms of the Subordination Agreement; and/or
(f) Exercise its rights and remedies pursuant to any
other Loan Documents.
ARTICLE XI
MISCELLANEOUS
11.1 Full Recourse to Borrower. The Loan and the Borrower's
obligations thereunder and under the Loan Documents shall be fully recourse to
Borrower.
11.2 Waiver. No remedy conferred upon, or reserved to, Mezzanine Lender
in this Agreement or any of the other Loan Documents is intended to be exclusive
of any other remedy or remedies, and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing in law or in equity. Exercise of or omission to exercise any
right of Mezzanine Lender shall not affect any subsequent right of Mezzanine
Lender to exercise the same. No course of dealing between Borrower and Mezzanine
Lender or between Owner and Mezzanine Lender or any delay on Mezzanine Lender's
part in exercising any rights shall operate as a waiver of any of Mezzanine
Lender's rights. No waiver of any Default under this Agreement or any of the
other Loan Documents shall extend to or shall affect any subsequent or any other
then existing Default or shall impair any rights, remedies or powers of
Mezzanine Lender. Any and all of Mezzanine Lender's rights with respect to the
Mortgaged Property shall continue unimpaired, and Borrower shall be and remain
obligated in accordance with the terms hereof, notwithstanding any delay,
extension of time, renewal, compromise or other indulgence granted by Mezzanine
Lender in the event of any Default or Event of Default with respect to the
Mortgaged Property or otherwise hereunder.
11.3 Costs and Expenses. Borrower and Owner will bear all taxes, fees
and expenses (including actual and commercially reasonable attorneys' fees and
expenses of counsel for Mezzanine Lender) in connection with the Loan, the Note,
the preparation of this Agreement and the other Loan Documents (including any
amendments hereafter made), and in connection with any modifications thereto and
the recording of any of the Loan Documents. If, at any time, a Default occurs or
Mezzanine Lender becomes a party to any suit or proceeding in order to protect
its interests or priority in any collateral for any of the Loan Obligations or
its rights under this Agreement or any of the Loan Documents, or if Mezzanine
Lender is made a party to any suit or proceeding by virtue of the Loan, this
Agreement or any Mortgaged Property and as a result of any of the foregoing,
54
Mezzanine Lender employs counsel to advise or provide other representation with
respect to this Agreement, or to collect the balance of the Loan Obligations, or
to take any action in or with respect to any suit or proceeding relating to this
Agreement, any of the other Loan Documents, any Mortgaged Property, Borrower,
Owner, Guarantor or Manager, or to protect, collect, or liquidate any of the
security for the Loan Obligations, or attempt to enforce any security interest
or lien granted to Mezzanine Lender by any of the Loan Documents, then in any
such events, all of the reasonable attorney's fees arising from such services,
including attorneys' fees for preparation of litigation and in any appellate or
bankruptcy proceedings, and any expenses, costs and charges relating thereto
shall constitute additional obligations of Borrower and Owner to Mezzanine
Lender payable on demand of Mezzanine Lender. Without limiting the foregoing,
Borrower and Owner have undertaken the obligation for payment of, and shall pay,
all recording and filing fees, revenue or documentary stamps or taxes,
intangibles taxes, and other taxes, expenses and charges payable in connection
with this Agreement, any of the Loan Documents, the Loan Obligations, or the
filing of any financing statements or other instruments required to effectuate
the purposes of this Agreement, and should Borrower or Owner fail, Borrower and
Owner agree to reimburse Mezzanine Lender for the amounts paid by Mezzanine
Lender, together with penalties or interest, if any, incurred by Mezzanine
Lender as a result of underpayment or nonpayment. Such amounts shall constitute
a portion of the Loan Obligations, shall be secured by the Loan Documents and
shall bear interest at the rate of interest on the Note until repaid unless
Borrower or Owner fail to repay Mezzanine Lender within thirty (30) days after
the date of written notice of such payments in which event such amounts shall
bear interest at the Default Rate (as defined in the Note) from the date
advanced until repaid.
11.4 Performance of Mezzanine Lender. At its option, upon Borrower's or
Owner's failure to do so, Mezzanine Lender may make any payment or do any act on
Borrower's or Owner's behalf that Borrower, Owner or others are required to do
to remain in compliance with this Agreement or any of the other Loan Documents,
and Borrower and Owner agrees to reimburse Mezzanine Lender, on demand, for any
payment made or expense incurred by Mezzanine Lender pursuant to the foregoing
authorization, including, without limitation, reasonable attorneys' fees, and
until so repaid any sums advanced by Mezzanine Lender shall constitute a portion
of the Loan Obligations, shall be secured by the Loan Documents and shall bear
interest at the Default Rate (as defined in the Note) from the date advanced
until repaid.
11.5 Indemnification. Borrower and Owner shall, at its sole cost and
expense, protect, defend, indemnify and hold harmless the Indemnified Parties
from and against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive
damages, of whatever kind or nature (including but not limited to reasonable
attorneys' fees and other costs of defense) imposed upon or incurred by or
asserted against Mezzanine Lender by reason of (a) ownership of the Note and the
other Loan Documents, (b) the Mortgaged Property or any interest therein or
receipt of any Rents, (c) any amendment to, or restructuring of, the Loan
Obligations and/or any of the Loan Documents, (d) any and all lawful action that
may be taken by Mezzanine Lender in connection with the enforcement of the
provisions of the Note or any of the other Loan Documents, whether or not suit
is filed in connection with same, or in connection with Borrower, Guarantor,
Owner, Manager and/or any partner, joint venturer, member or shareholder thereof
becoming a party to a voluntary or
55
involuntary federal or state bankruptcy, insolvency or similar proceeding, (e)
any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Land, the Improvements or any part thereof or on
the adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways, (f) any use, nonuse or condition in, on or about the Land, the
Improvements or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways, (g) any failure on the part
of Borrower, Guarantor, Owner or Manager to perform or comply with any of the
terms of this Agreement or any of the other Loan Documents, (h) any claims by
any broker, Person or entity claiming to have participated in arranging the
making of the Loan evidenced by the Note, (i) any failure of the Land and/or
Improvements to be in compliance with any applicable laws, (j) performance of
any labor or services or the furnishing of any materials or other property with
respect to the Land, the Improvements or any part thereof, (k) the failure of
any Person to file timely with the Internal Revenue Service an accurate Form
1099-b, statement for recipients of proceeds from real estate, broker and barter
exchange transactions, which may be required in connection with the Loan
Documents, or to supply a copy thereof in a timely fashion to the recipient of
the proceeds of the transaction in connection with which the Loan is made, (l)
any misrepresentation made to Mezzanine Lender in this Agreement or in any of
the other Loan Documents, (m) any tax on the making and/or recording of the Note
or any of the other Loan Documents; (n) the violation of any requirements of the
Employee Retirement Income Security Act of 1974, as amended, (o) any fines or
penalties assessed or any corrective costs incurred by Mezzanine Lender if the
Facility or any part of the Land and/or Improvements is determined to be in
violation of any covenants, restrictions of record, or any applicable laws,
ordinances, rules or regulations, or (p) the enforcement by any of the
Indemnified Parties of the provisions of this Section 11.5. Any amounts payable
to Mezzanine Lender by reason of the application of this Section 11.5, shall
become immediately due and payable, and shall constitute a portion of the Loan
Obligations, shall be secured by the Loan Documents and shall accrue interest at
the Default Rate(as defined in the Note). The obligations and liabilities of
Borrower and Owner under this Section 11.5 shall be joint and several and shall
survive any termination, satisfaction, assignment, entry of a judgment of
foreclosure or exercise of a power of sale relating to Mezzanine Lender's rights
under the Loan Documents. For purposes of this Section 11.5, the term
"Indemnified Parties" means Mezzanine Lender and any Person who is or will have
been involved in the origination of the Loan, any Person who is or will have
been involved in the servicing of the Loan, any Person in whose name the
encumbrance created by the Loan Documents is or will have been recorded, any
Person who may hold or acquire or will have held a full or partial interest in
the Loan (including, without limitation, any investor in any securities backed
in whole or in part by the Loan) as well as the respective directors, officers,
shareholder, partners, members, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including, without limitation, any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan or the Mortgaged Property, whether during
the term of the Loan Documents or as a part of or following a foreclosure of the
Loan and including, without limitation, any successors by merger, consolidation
or acquisition of all or a substantial portion of Mezzanine Lender's assets and
business). Notwithstanding anything herein to the contrary, the Indemnified
Parties shall not be indemnified against matters caused by their own gross
negligence or wilful misconduct.
56
11.6 Preferences. Mezzanine Lender shall have no obligation to marshal
any assets in favor of Borrower, Owner or any other party or against or in
payment of any or all of the obligations of Borrower or Owner pursuant to this
Agreement, the Note or any of the other Loan Documents. Mezzanine Lender shall
have the continuing and exclusive right to apply or reverse and reapply any and
all payments by Borrower or Owner to any portion of the obligations of such
parties hereunder. To the extent Borrower or Owner makes a payment or payments
to Mezzanine Lender for Borrower's or Owner's benefit, which payment or receipt
of proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Mezzanine Lender.
11.7 Remedies of Borrower. [Intentionally Deleted]
--------------------
11.8 Headings. The headings of the Sections of this Agreement are for
convenience of reference only, are not to be considered a part hereof, and shall
not limit or otherwise affect any of the terms hereof.
11.9 Offsets, Counterclaims and Defenses. [Intentionally Deleted]
-----------------------------------
11.10 Survival of Covenants. All covenants, agreements, representations
and warranties made herein and in certificates or reports delivered pursuant
hereto shall be deemed to have been material and relied on by Mezzanine Lender,
notwithstanding any investigation made by or on behalf of Mezzanine Lender, and
shall survive the execution and delivery to Mezzanine Lender of the Note and
this Agreement.
11.11 Notices, etc. Any notice or other communication required or
permitted to be given by this Agreement or the other Loan Documents or by
applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery (to the person or department if one is
specified below) with receipt acknowledged by the recipient thereof, (b) three
(3) Business Days following the date deposited in U.S. mail, certified or
registered, with return receipt requested, or (c) one (1) Business Day following
the date deposited with Federal Express or other national overnight carrier, and
in each case addressed as follows:
If to Borrower or Owner:
Capital Senior Living P-C, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
57
with a copy to:
Xxxxxxx X. Xxxx, XX, Esq.
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
If to Mezzanine Lender:
Xxxxxx Financial Services, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Servicing Department
with a copy to:
Xxxxx X. Xxxxx, Esquire Xxxxxxx Xxxxx Xxxxxxx &
Ingersoll, LLP 000 00xx Xxxxxx, XX, Xxxxx 0000 Xxxxx
Xxxxxxxxxx, X.X. 00000-0000
Either party may change its address to another single address
by notice given as herein provided, except any change of address notice must be
actually received in order to be effective.
11.12 Benefits. All of the terms and provisions of this Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns. No Person other than Borrower, Owner or Mezzanine Lender
shall be entitled to rely upon this Agreement or be entitled to the benefits of
this Agreement.
11.13 Assignments and Participation. Borrower and Owner acknowledge
that Mezzanine Lender may on or after the Closing Date sell and assign
participation interests in and to the Loan, or pledge, hypothecate or encumber,
or sell and assign all or any portion of the Loan, to or with such domestic or
foreign banks, insurance companies, pension funds, trusts or other institutional
lenders or other Persons, parties or investors (including, without limitations
grantor trusts, owner trusts, special purpose corporations, REMICs, FASITs, real
estate investment trusts or other similar or comparable investment vehicles) as
may be selected by Mezzanine Lender in its sole and absolute discretion and on
terms and conditions satisfactory to Mezzanine Lender in its sole and absolute
discretion. Mezzanine Lender will endeavor to give Borrower reasonable notice of
such assignment. Borrower, Owner and all other Persons associated or connected
with the Loan or the Mortgaged Property shall cooperate in all respects with
Mezzanine Lender in connection with the sale of participation interests in, or
the pledge, hypothecation or encumbrance or sale of all or any portion of, the
Loan, and upon Mezzanine Lender's notice to Borrower and Owner thereof, shall,
in connection therewith, execute and deliver such estoppels, certificates,
instruments and documents as may be requested by Mezzanine Lender in its
commercially reasonable discretion. Borrower and
58
Owner grant to Mezzanine Lender the right to distribute financial and other
information concerning Borrower, Owner, the Mortgaged Property, and all other
pertinent information with respect to the Loan to any Person who has purchased a
participation interest in the Loan, or who has purchased the Loan, or who has
made a loan to Lender secured by the Loan or who has expressed an interest in
purchasing a participation interest in the Loan, or expressed an interest in
purchasing the Loan or the making of a loan to Mezzanine Lender secured by the
Loan.
11.14 Effect of Assignment. From and after the effective date of any
assignment of all or any portion of the Loan to any Person (an "Assignee") and
Mezzanine Lender's notice thereof to Borrower and Owner (a) such Assignee shall
be a party hereto and to each of the other Loan Documents to the extent of the
applicable percentage or percentages assigned to such Assignee and, except as
otherwise specified herein, shall succeed to the rights and obligations of
Mezzanine Lender hereunder in respect of such applicable percentage or
percentages and (b) Mezzanine Lender shall relinquish its rights and be released
from its obligations hereunder and under the Loan Documents to the extent of
such applicable percentage or percentages. The liabilities of Mezzanine Lender
and each of the other Assignees shall be separate and not joint and several.
Neither Mezzanine Lender nor any Assignee shall be responsible for the
obligations of any other Assignee.
11.15 Privity of Contract. This Agreement is being entered into by
Mezzanine Lender individually and as agent for all present and future Assignees,
and privity of contract is hereby created among Mezzanine Lender and all present
and future Assignees, on the one hand, and Borrower and Owner, on the other
hand.
11.16 Dissemination of Information. If Mezzanine Lender determines at
any time to sell, transfer or assign the Note, the Loan Agreement and any of the
other Loan Documents and any or all servicing rights with respect thereto, or to
grant participating interests therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement, Mezzanine Lender may forward to
each purchaser, transferee, assignee, servicer, participant or investor in such
securities (collectively, the "Investor") or any Rating Agency rating such
securities and each prospective Investor, all documents and information which
Mezzanine Lender now has or may hereafter acquire relating to the Loan,
Borrower, Guarantor and the Mortgaged Property, which shall have been furnished
by or on behalf of Borrower, Guarantor, or any party to any of the Loan
Documents, or otherwise furnished in connection with the Loan, as Mezzanine
Lender in its commercially reasonable discretion determines necessary or
desirable.
11.17 Supersedes Prior Agreements; Counterparts. This Agreement and the
instruments referred to herein supersede and incorporate all representations,
promises and statements, oral or written, made by Mezzanine Lender in connection
with the Loan. This Agreement may not be varied, altered, or amended except by a
written instrument executed by an authorized officer of Mezzanine Lender, Owner
and Borrower, respectively. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but such counterparts shall together constitute one and the same instrument.
11.18 Loan Agreement Governs - Construction of Documents. The Loan
is governed by the terms and provisions set forth in this Loan Agreement and the
other Loan Documents and in
59
the event of any irreconcilable conflict between the terms of the other Loan
Documents and the terms of this Loan Agreement, the terms of this Loan Agreement
shall control; provided, however, that in the event that there is any apparent
conflict between any particular term or provision which appears in both this
Loan Agreement and the other Loan Documents and it is possible and reasonable
for the terms of both this Loan Agreement and the Loan Documents to be performed
or complied with, then, notwithstanding the foregoing, both the terms of this
Loan Agreement and the other Loan Documents shall be performed and complied
with. The parties hereto acknowledge that they were represented by counsel in
connection with the negotiation and drafting of the Loan Documents and that the
Loan Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.
11.19 CONTROLLING LAW. THE PARTIES HERETO AGREE THAT THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND THE PARTIES
HERETO SUBMIT (AND WAIVE ALL RIGHTS TO OBJECT) TO NON-EXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF TEXAS, FOR THE ENFORCEMENT OF ANY AND ALL
OBLIGATIONS UNDER THE LOAN DOCUMENTS EXCEPT THAT IF ANY SUCH ACTION OR
PROCEEDING ARISES UNDER THE CONSTITUTION, LAWS OR TREATIES OF THE UNITED STATES
OF AMERICA, OR IF THERE IS A DIVERSITY OF CITIZENSHIP BETWEEN THE PARTIES
THERETO, SO THAT IT IS TO BE BROUGHT IN A UNITED STATES DISTRICT COURT, IT SHALL
BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS OR ANY SUCCESSOR FEDERAL COURT HAVING ORIGINAL JURISDICTION.
11.20 WAIVER OF JURY TRIAL. BORROWER, MORTGAGOR AND MEZZANINE LENDER
HEREBY WAIVES ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM,
COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN, OR (B) IN ANY WAY CONNECTED WITH
OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF MEZZANINE LENDER,
MORTGAGOR AND/OR BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR IN CONNECTION
WITH THIS AGREEMENT OR THE EXERCISE OF SUCH PARTY'S RIGHTS AND REMEDIES UNDER
THIS AGREEMENT OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES
60
HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER AND MORTGAGOR
AGREE THAT LENDER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF EACH SUCH PARTIES
IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT OF LENDER TO
MAKE THE LOAN, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE
OR CONTROVERSY WHATSOEVER (WHETHER OR NOT MODIFIED HEREIN) BY AND AMONG
BORROWER, MORTGAGOR AND MEZZANINE LENDER, OR ANY COMBINATION THEREOF, SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT
A JURY.
61
IN WITNESS WHEREOF, Owner, Borrower and Mezzanine Lender have
caused this Agreement to be properly executed by their respective duly
authorized representatives as of the date first above written.
WITNESS: OWNER:
CAPITAL SENIOR LIVING ILM-C, INC., a
Delaware corporation
By: (SEAL)
--------------------------- ---------------------------
Xxxxxxxx X. Xxxxx
Chief Executive Officer
---------------------------
[Print Name]
WITNESS: BORROWER:
CAPITAL SENIOR LIVING P-C, INC., a
Delaware corporation
By: (SEAL)
--------------------------- ---------------------------
Xxxxxxxx X. Xxxxx
Chief Executive Officer
---------------------------
[Print Name]
62
WITNESS: LENDER:
XXXXXX FINANCIAL SERVICES, INC.,
a Delaware corporation
By: (SEAL)
-------------------------- -----------------------
Name:
-------------------------- -------------------
[Print Name]
Title:
-------------------
63
LIST OF EXHIBITS
Exhibit A - Legal Description
Exhibit B - Pool C Facilities
Exhibit C - Description of Triad Facilities
Exhibit D - Borrower's Chief Executive Office
Exhibit E - Owner's Chief Executive Office
Exhibit F - Ownership Interests in Borrower
Exhibit G - Ownership Interest in Owner
Exhibit H - Borrower's Compliance Certificate
Exhibit I - Owner's Compliance Certificate
Exhibit J - Permitted Liens
Exhibit K - Exceptions to Environmental Representations and Warranties
64
EXHIBIT "A"
DESCRIPTION OF LAND
The following described real property located in Forsyth County, North
Carolina:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
A-1
The following described real property located in Xxxxxx County,
Michigan:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
A-2
The following described real property located in Wake County, North
Carolina:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
A-3
The following described real property located in Peoria County,
Illinois:
A-4
EXHIBIT "B"
DESCRIPTION OF POOL C FACILITIES
AND APPLICABLE PORTION OF FIRST MORTGAGE LOAN
Property Name & Location Address Description of First Mortgage
Facility Loan Amount
------------------------ ------- -------------- --------------
Independence Village of Peoria 0000 Xxxx Xxxxxxxxx Xxxx 157-unit independent $9,800,000
Peoria, Illinois Xxxxxx, XX 00000 living facility
Independence Village 0000 Xxxxxxx Xxxx 155-unit independent $8,600,000
of Xxxx Xxxxxxx Xxxx Xxxxxxx, XX 00000 living facility
East Lansing, Michigan
Independence Village of Raleigh 3113 Xxxxxxx X. Xxxx 164-unit independent $11,500,000
Raleigh, North Carolina Xxxxxxx, XX 00000 living facility
Xxxxxxxxxxxx Xxxxxxx 0000 Xxxxxxxx Xxxx 156-unit independent $8,450,000
of Xxxxxxx-Xxxxx Xxxxxxx-Xxxxx, XX 00000 living facility
Winston-Salem, North Carolina
B-1
EXHIBIT "C"
DESCRIPTION OF TRIAD FACILITIES
Property Name & Location Address Description of Facility
------------------------ ------- -----------------------
The Wellington at Oklahoma 0000 XX 000xx Xxxxxx A 120-unit independent
Oklahoma City, Oklahoma Oklahoma City Oklahoma living facility.
The Waterford At Fairfield Intersection of Xxxxxx Drive and Corydale Drive A 000-xxxx xxxxxxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxx living facility.
The Waterford at Plano NWC Premier Drive and Ruisseau Drive A 00-xxxx xxxxxxxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxx living and 45-unit assisted
living facility.
C-1
EXHIBIT "D"
BORROWER'S CHIEF EXECUTIVE OFFICES
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
D-1
EXHIBIT "E"
OWNER'S CHIEF EXECUTIVE OFFICES
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
E-1
EXHIBIT "F"
Capital Senior Living Properties, Inc. 100%
F-1
EXHIBIT "G"
OWNERSHIP INTERESTS IN OWNER
Capital Senior Living P-C, Inc. 100%
G-1
EXHIBIT "H"
BORROWER'S COMPLIANCE CERTIFICATE
Xxxxxx Financial Services, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Servicing Department
Re: Mezzanine Loan Agreement dated as of August ___, 2000 (together
with amendments, if any, the "Loan Agreement"), by and among
Xxxxxx Financial Services, Inc., as Mezzanine Lender, Capital
Senior Living P-C, Inc., as Borrower, and Capital Senior Living
ILM-C, as Owner
The undersigned officer of the above named Borrower, does
hereby certify that for the quarterly financial period ending
__________________:
1. No Default or Event of Default has occurred or exists except
_____________.
2. All representations and warranties made by Borrower in the Loan
Agreement and in other Loan Documents are true and correct in all
material respects as though given on the date hereof, except
________________________.
3. All information provided herein is true and correct.
4. Capitalized terms not defined herein shall have the meanings
given to such terms in the Loan Agreement.
Dated this ______ day of _____________________, _______.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
H-1
EXHIBIT "I"
OWNER'S COMPLIANCE CERTIFICATE
Xxxxxx Financial Services, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Servicing Department
Re: Mezzanine Loan Agreement dated as of August ___, 2000 (together
with amendments, if any, the "Loan Agreement"), by and among
Xxxxxx Financial Services, Inc., as Mezzanine Lender, Capital
Senior Living P-C, Inc., as Owner, and Capital Senior Living
ILM-C, as Owner
The undersigned officer of the above named Owner, does hereby
certify that for the quarterly financial period ending __________________:
1. No Default or Event of Default has occurred or exists except
_____________.
2. All representations and warranties made by Owner in the Loan
Agreement and in other Loan Documents are true and correct in all
material respects as though given on the date hereof, except
________________________.
3. All information provided herein is true and correct.
4. Capitalized terms not defined herein shall have the meanings
given to such terms in the Loan Agreement.
Dated this ______ day of _____________________, _______.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
I-1
EXHIBIT "J"
PERMITTED LIENS
The following described encumbrances associated with the real property
located in Forsyth County, North Carolina:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
J-1
The following described encumbrances associated with the real property
located in Xxxxxx County, Michigan:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
J-2
The following described encumbrances associated with the real property
located in Wake County, North Carolina:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
J-3
The following described encumbrances associated with the real property
located in Peoria
County, Illinois:
[DESCRIPTION CONTINUES ON FOLLOWING PAGE]
J-4
EXHIBIT "K"
EXCEPTIONS TO ENVIRONMENTAL
REPRESENTATIONS AND WARRANTIES
Those matters disclosed in the environmental reports prepared by Property
Solutions, Incorporated for the benefit of First Mortgage Lender in connection
with the closing of First Mortgage Loan.
K-1
(Mezzanine Loan - Pool C)
PROMISSORY NOTE
$10,300,000.00 August 15, 2000
FOR VALUE RECEIVED, the undersigned CAPITAL SENIOR LIVING P-C, INC., a
Delaware corporation, having an address at 00000 Xxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000 (the "Borrower"), hereby promises to pay to the order of
XXXXXX FINANCIAL SERVICES, INC., having an address at 0000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, XX 00000 (the "Lender"), its successors and assigns as
holder of this Note or, if this Note has then been endorsed "to bearer," to the
bearer of this Note (the Lender, its said successors and assigns, and any such
bearer, being hereinafter sometimes referred to collectively as the "Holder"),
at the Lender's said address or at such other place or to such other person as
may be designated in writing to Borrower by the Lender, the principal sum of Ten
Million Three Hundred Thousand and No/100 Dollars ($10,300,000.00) (the "Loan"),
together with interest on the unpaid balance thereof at the rate hereinafter set
forth.
ON THE TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set
forth:
Section 1. Interest Rate and Payment Dates.
-------------------------------
1.1 Initial Rate and Initial Payment. Interest shall accrue on the
outstanding balance of the principal amount outstanding hereunder from time to
time from and after the date hereof at the rate of 12.11878% per annum until the
first Rate Adjustment Date (as defined below). On each successive Rate
Adjustment Date, the rate of interest at which interest accrues shall be
adjusted to the then applicable Note Rate (as defined in Section 1.4). Interest
for the period beginning on the date of this Note and ending on and including
the last day of the month in which this Note is dated shall be payable on the
date hereof. Thereafter, interest shall be paid in arrears and shall be computed
on the basis of a 360-day year and actual number of days elapsed for any whole
or partial month in which interest on the Loan is being calculated and shall be
charged on the principal balance outstanding from time to time. In no event
shall Holder compute the interest in a manner that would cause Holder to
contract for, charge or receive interest that would exceed the Maximum Lawful
Rate (as defined in Section 1.9) or the Maximum Lawful Amount (as defined in
Section 1.9).
1.2 Rate Adjustment Date and Payment Adjustment Dates. The rate of
interest on the outstanding principal balance hereof from time to time shall be
adjusted on the following dates (each being a "Rate Adjustment Date"): the first
Rate Adjustment Date shall be on September 1, 2000, and subsequent Rate
Adjustment Dates shall fall on the first day of each calendar month thereafter.
The first payment adjustment date shall be October 1, 2000, and subsequent
payment adjustment dates shall fall on the first day of each calendar month
thereafter during the term of the Loan.
1.3 Default Interest Rate. If Borrower fails to make any payment
of principal, interest or fees on the date on which such payment becomes due and
payable (including applicable grace periods)
1
whether at maturity or by acceleration or on any other date, such payment shall
accrue interest from the date on which such payment was due (and not the date of
the payment default) until paid at the fluctuating rate ("Default Rate") which
is the lesser of (a) five percent (5%) per annum above the then applicable Note
Rate and (b) the maximum rate permitted by applicable law, but in either case
never more than the Maximum Lawful Rate or at a rate that would cause the total
interest contracted for, charged or received by Lender to exceed the Maximum
Lawful Amount.
1.4 Note Rate. The "Note Rate" shall mean the average of London
Interbank Offered Rates ("LIBOR") for a term of one month determined solely by
Holder as of each Rate Adjustment Date plus five hundred fifty (550) basis
points per annum, determined in the following manner: on each Rate Adjustment
Date, Holder will obtain the one month LIBOR (in U.S. Dollar deposits) from the
appropriate Bloomberg display page available as of the close of business
announced on the last business day of the month immediately preceding the Rate
Adjustment Date; in the event Bloomberg ceases publication or ceases to publish
the one month LIBOR, Holder shall select a comparable publication to determine
the one month LIBOR and provide prompt notice thereof to Borrower; LIBOR may or
may not be the lowest rate based upon the market for U.S. Dollar deposits in the
London Interbank Eurodollar Market at which Holder prices loans on the date on
which the Note Rate is determined by Holder as set forth above.
1.5 Note Rate Adjustments. This Note shall bear interest at the rate
set forth above and, after adjustment in accordance with the terms hereof, or at
the applicable Note Rate until a new Note Rate is determined on each Rate
Adjustment Date in accordance with the provisions hereof; provided, however,
that, if Holder at any time determines, in the sole but reasonable exercise of
its discretion that it has miscalculated the amount of the monthly payment of
principal and/or interest (whether because of a miscalculation of the Note Rate
or otherwise), Holder shall give notice to Borrower of the corrected amount of
such monthly payment (and the corrected amount of the Note Rate, if applicable)
and (a) if the corrected amount of such monthly payment represents an increase
thereof, Borrower shall, within ten (10) calendar days following receipt of such
notice, pay to Holder any sums that Borrower would have otherwise been obligated
under this Note to pay to Holder had the amount of such monthly payment not been
miscalculated or (b) if the corrected amount of such monthly payment represents
a decrease thereof and an Event of Default (as defined in Section 8.1) under any
of the terms and provisions of the Note or the Loan Agreement of even date
herewith by and between Borrower and Lender (the "Loan Agreement") has not
occurred and is not continuing, Borrower shall, within ten (10) calendar days
following receipt of such notice, be paid the sums that Borrower would not have
otherwise been obligated to pay to Holder had the amount of such monthly payment
not been miscalculated.
1.6 LIBOR Unascertainable. If on any date on which the Note Rate would
otherwise be set, Holder shall have determined in good faith (which
determination shall be conclusive and binding on Borrower in the absence of
manifest error) that (a) adequate and reasonable means do not exist for
ascertaining the one month LIBOR, or (b) a contingency has occurred which
materially and adversely affects the London Interbank Eurodollar Market, and, as
a result, adversely affects how the Holder prices loans on the date on which the
Note Rate is determined by Holder as set forth above, then, and in any such
event, Holder may notify Borrower of such determination. Upon such date as shall
be specified in such notice (which shall not be earlier than the date such
notice is given) the obligation of Holder to charge interest to Borrower at the
Note Rate shall be suspended and the one
2
month LIBOR shall automatically be converted to the "Index" of the weekly
average yield on United States Treasury Securities adjusted to a constant
maturity of one year, as made available by the Federal Reserve Board forty-five
(45) days prior to the Rate Adjustment Date (the "Index"). Computation of the
Note Rate based on the Index shall continue until Holder notifies Borrower that
the circumstances which prompted the foregoing notice to Borrower no longer
exist.
1.7 U.S. Treasury Securities [Intentionally Deleted].
------------------------
1.8 Reimbursement for Increased Costs. If any law or guideline or
interpretation or application thereof by any governmental authority charged with
the interpretation or administration thereof or compliance with any request or
directive of any governmental authority (whether or not having the force of law)
now existing or hereafter adopted (a) subjects Holder to any tax or changes the
basis of taxation with respect to this Note, the Loan or payments by Borrower of
principal, interest or other amounts due from Borrower hereunder or thereunder
(except for taxes on the overall net income or overall gross receipts of Holder
imposed as a result of a present or former connection between the jurisdiction
of the governmental authority imposing such tax on Holder, provided that this
exclusion shall not apply to a connection arising solely from Holder having
executed, delivered, performed its obligations under, or received a payment
under, or enforced, any of the Loan Documents (as defined in Section 8.1.1
below)), or (b) imposes upon Holder any other condition or expense with respect
to this Note, the Loan or its making, maintenance or funding of any part of the
Loan or any security therefor, and the result of any of the foregoing is to
increase the cost to, reduce the income receivable by, or impose any expense
(including, without limitation, loss of margin) upon, Holder with respect to the
Note, or the making, maintenance or funding of any part of the Loan, by an
amount which Holder reasonably deems to be material, Holder may from time to
time notify Borrower of the amount determined in good faith (using any averaging
and attribution methods) by Holder (which determination shall be conclusive
absent manifest error) to be necessary to compensate Holder for such increase,
reduction or imposition and, if Borrower is by law prohibited from paying any
such amount which is material, Holder may elect to declare the unpaid principal
balance hereof and all interest accrued thereon immediately due and payable.
Such amount shall be due and payable by Borrower to Holder thirty (30) days
after such notice is given.
1.9 Additional Interest Rate Provisions.
-----------------------------------
(a) Maximum Lawful Interest: The term "Maximum
Lawful Rate" means the maximum rate of interest, and the term "Maximum Lawful
Amount" means the maximum amount of interest, that are permissible under
applicable state or federal law for the type of loan evidenced by this Note. If
applicable state or federal law does not permit a higher interest rate, the
"weekly ceiling" (as defined in Chapter 303 of the Texas Finance Code) shall be
the interest rate ceiling applicable to this Note and shall be the basis for
determining the Maximum Lawful Rate in effect from time to time during the term
of this Note. If applicable state or federal law allows a higher interest rate
or federal law preempts the state law limiting the rate of interest, then the
foregoing interest rate ceiling shall not be applicable to this Note. If the
interest rate ceiling is increased by statute or other governmental action
subsequent to the date of this Note, then the new interest rate ceiling shall be
applicable to this Note from the effective date thereof, unless otherwise
prohibited by applicable law.
3
(b) Spreading of Interest: Because of the
possibility of irregular periodic balances of principal, premature payment, and
the fluctuating nature of the Note Rate, the total interest that will accrue
under this Note cannot be determined in advance. Lender does not intend to
contract for, charge or receive more than the Maximum Lawful Rate or Maximum
Lawful Amount permitted by applicable state or federal law, and to prevent such
an occurrence Lender and Borrower agree that all amounts of interest, whenever
contracted for, charged or received by Lender, with respect to the loan of money
evidenced by this Note, shall be spread, prorated or allocated over the full
period of time this Note is unpaid, including the period of any renewal or
extension of this Note. If demand for payment of this Note is made by Lender
prior to the full stated term, the total amount of interest contracted for,
charged or received to the time of such demand shall be spread, prorated or
allocated along with any interest thereafter accruing over the full period of
time that this Note thereafter remains unpaid for the purpose of determining if
such interest exceeds the Maximum Lawful Amount.
(c) Excess Interest: At maturity (including
maturity due to Lender's acceleration of the Note) or on earlier final payment
of this Note, Lender shall compute the total amount of interest that has been
contracted for, charged or received by Lender or payable by Borrower under this
Note and compare such amount to the Maximum Lawful Amount that could have been
contracted for, charged or received by Lender. If such computation reflects that
the total amount of interest that has been contracted for, charged or received
by Lender or payable by Borrower exceeds the Maximum Lawful Amount, then Lender
shall apply such excess to the reduction of the principal balance and not to the
payment of interest; or if such excess interest exceeds the unpaid principal
balance, such excess shall be refunded to Borrower. This provision concerning
the crediting or refund of excess interest shall control and take precedence
over all other agreements between Borrower and Lender so that under no
circumstances shall the total interest contracted for, charged or received by
Lender exceed the Maximum Lawful Amount.
Section 2. Interest Payments Only. Commencing on October 1, 2000, and
continuing on the first day of each calendar month thereafter through and
including the Maturity Date (defined below), interest only payments on the
unpaid principal balance of this Note, calculated in arrears at the then
effective Note Rate shall be due and payable.
Section 3. Application of Payments. Payments made by Borrower on
account hereof shall be applied, first, toward any Late Fees (hereinafter
defined) and other fees, expenses, costs and charges due under any of the Loan
Documents, second, toward payment of any interest due at the Default Rate,
third, toward payment of any interest due at the then applicable Note Rate set
forth in Section 1.4 above, and fourth, toward payment of principal.
Notwithstanding the foregoing, if any advances made by Holder under the terms of
any instruments securing this Note have not been repaid, any payments made may,
at the option of Holder, be applied, first, to repay such advances and interest
thereon, with the balance, if any, applied as set forth in the preceding
sentence. Neither Holder's acceptance of an amount which is less than the amount
then due and payable nor Holder's application of such payment in the manner set
forth in this Section 3 shall constitute or be deemed to constitute either a
waiver of the unpaid amounts or an accord and satisfaction.
Section 4. Maturity Date. Unless sooner paid, and except to the
extent that payment thereof is sooner accelerated in accordance with Section 2.4
of the Loan Agreement, the entire unpaid
4
balance of the principal amount hereof and all interest accrued thereon
(including interest at the Default Rate), to and including the Maturity Date (as
defined below), and all Late Fees (as defined below) shall become due and
payable on August 15, 2002.
Section 5. Prepayment. Any full or partial prepayment of the Loan shall
be permitted upon not less than thirty (30) and not greater than sixty (60) days
prior written notice to Holder specifying the date on which prepayment is to be
made. Any prepayment shall be credited, first, toward any Late Fees due
hereunder and other fees, expenses, costs and charges due under any of the Loan
Documents, second, toward payment of any accrued and unpaid interest due
hereunder at the Default Rate, third, toward payment of any accrued and unpaid
interest due hereunder at the Note Rate, and fourth, toward payment of the
outstanding principal balance hereof. Notwithstanding the foregoing, if any
advances made by Holder under the terms of any instruments securing this Note
have not been repaid, any payments made may, at the option of Holder, be
applied, first, to repay such advances, and interest thereon, with the balance,
if any, applied as set forth in the preceding sentence.
Section 6. Method of Payment.
-----------------
Each payment of the Loan Obligations (as defined in the Loan Agreement)
shall be paid directly to Holder in lawful tender of the United States of
America. Each such payment shall be paid by 1:00 p.m. Denver, Colorado, time on
the date such payment is due, except if such date is not a Business Day (as
defined in the Loan Agreement) such payment shall then be due on the first
Business Day after such date, but interest shall continue to accrue until the
date payment is received. Any payment received after 1:00 p.m. Denver, Colorado,
time shall be deemed to have been received on the immediately following Business
Day for all purposes, including without limitation, the accrual of interest and
principal.
Section 7. Security.
--------
The debt evidenced by this Note is to be secured by, among other
things, a Payment and Performance Guaranty Agreement of even date herewith (the
"Guaranty Agreement"), given by Capital Senior Living Corporation, a Delaware
corporation ("Guarantor"), for the benefit of Lender.
Section 8. Default.
-------
8.1 Events of Default. Anything in this Note to the contrary
notwithstanding, on the occurrence of any of the following events (each of which
is referred to herein as an "Event of Default"), Holder may, in the exercise of
its sole and absolute discretion, accelerate the debt evidenced by this Note, in
which event the entire outstanding principal balance and all interest and fees
accrued thereon shall immediately be and become due and payable without further
notice:
(a) Borrower fails in making any payment to the
Holder of any or all sums due hereunder within five (5) days after such payment
becomes due or on the Maturity Date; or
(b) there exists an uncured "Event of Default"
as set forth and defined in any of the Loan Documents (defined in Section 8.2
below).
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8.2 No Impairment of Rights. Nothing in this Section shall be deemed in
any way to alter or impair any right which the Holder has under this Note, the
Mezzanine Loan Agreement between Borrower and Lender of even date herewith
("Loan Agreement") or any other document or instrument evidencing or securing
the Loan (collectively, the "Loan Documents") or at law or in equity, to
accelerate such debt on the occurrence of any other Event of Default provided
herein or therein, whether or not relating to this Note.
8.3 Late Fees. Without limiting the generality of the foregoing
provisions of this Section, if any payment of interest or principal is not made
within five (5) calendar days after the date on which such payment becomes due,
Borrower shall thereupon automatically become obligated immediately to pay to
the Holder a late payment charge, for each month during which a payment
delinquency exists, equal to the lesser of five percent (5%) of the amount of
such payment or the maximum amount permitted by applicable law ("Late Fees") to
defray the expenses incurred by Holder in handling and processing such
delinquent payment and to compensate Holder for the loss of use of such
delinquent payment.
Section 9. Costs of Enforcement.
--------------------
Borrower shall pay to Holder on demand the amount of any and all
expenses incurred by Holder (a) in enforcing its rights hereunder or under the
Loan Documents, (b) as the result of the occurrence of an Event of Default by
Borrower in performing its obligations under this Note, including but not
limited to the expense of collecting any amount owed hereunder, and of any and
all commercially reasonable attorneys' fees incurred by Holder in connection
with such Event of Default, whether suit be brought or not, and (c) in
protecting the security for the Loan and all obligations under the Loan
Documents. Such expenses shall be added to the principal amount hereof, shall be
secured by the Loan Documents and shall accrue interest at the Default Rate.
Section 10. Borrower's Waiver of Certain Rights.
-----------------------------------
Borrower and any endorser, guarantor or surety hereby waives the
exercise of any and all exemption rights which it holds at law or in equity with
respect to the debt evidenced by this Note, and of any and all rights which it
holds at law or in equity to require any valuation, appraisal or marshalling, or
to have or receive any presentment, protest, demand and notice of dishonor,
protest, demand and nonpayment as a condition to the Holder's exercise of any of
its rights under this Note or the Loan Documents.
6
Section 11. Extensions.
----------
The Maturity Date and/or any other date by which any payment is
required to be made hereunder may be extended by the Holder from time to time in
the exercise of its sole discretion, without in any way altering or impairing
Borrower's or Guarantor's liability hereunder.
7
Section 12. General.
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12.1 Applicable Law.
--------------
(a) This Note shall be given effect and construed
by application of the laws of the State of Texas (without regard to the
principles thereof governing conflicts of laws), and any action or proceeding
arising hereunder, and each of Holder and Borrower submits (and waives all
rights to object) to non-exclusive personal jurisdiction in the State of Texas,
for the enforcement of any and all obligations under the Loan Documents except
that if any such action or proceeding arises under the Constitution, laws or
treaties of the United States of America, or if there is a diversity of
citizenship between the parties thereto, so that it is to be brought in a United
States District Court, it shall be brought in the United States District Court
for the Northern District of Texas or any successor federal court having
original jurisdiction.
(b) Chapter 346 of the Texas Finance Code relating
to certain revolving credit loan accounts is not applicable to this Note.
12.2 Headings. The headings of the Sections, subsections, paragraphs
and subparagraphs hereof are provided herein for and only for convenience of
reference, and shall not be considered in construing their contents.
12.3 Construction. As used herein, (a) the term "person" means a
natural person, a trustee, a corporation, a limited liability company, a
partnership and any other form of legal entity, and (b) all references made (i)
in the neuter, masculine or feminine gender shall be deemed to have been made in
all such genders, (ii) in the singular or plural number shall be deemed to have
been made, respectively, in the plural or singular number as well, and (iii) to
any Section, subsection, paragraph or subparagraph shall, unless therein
expressly indicated to the contrary, be deemed to have been made to such
Section, subsection, paragraph or subparagraph of this Note.
12.4 Severability. No determination by any court, governmental body or
otherwise that any provision of this Note or any amendment hereof is invalid or
unenforceable in any instance shall affect the validity or enforceability of (a)
any other such provision or (b) such provision in any circumstance not
controlled by such determination. Each such provision shall be valid and
enforceable to the fullest extent allowed by, and shall be construed wherever
possible as being consistent with, applicable law.
12.5 No Waiver. The Holder shall not be deemed to have waived the
exercise of any right which it holds hereunder unless such waiver is made
expressly and in writing. No delay or omission by the Holder in exercising any
such right (and no allowance by the Holder to Borrower of an opportunity to cure
a default in performing its obligations hereunder) shall be deemed a waiver of
its future exercise. No such waiver made as to any instance involving the
exercise of any such right shall be deemed a waiver as to any other such
instance, or any other such right. Further, acceptance by Holder of all or any
portion of any sum payable under, or partial performance of any covenant of,
this Note, the Mortgage or any of the other Loan Documents, whether before, on,
or after the due date of such payment or performance, shall not be a waiver of
Holder's right either to require prompt and
8
full payment and performance when due of all other sums payable or obligations
due thereunder or hereunder or to exercise any of Holder's rights and remedies
hereunder or thereunder.
12.6 Waiver of Jury Trial; Service of Process; Court Costs. BORROWER
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BORROWER AND
THE HOLDER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY
PERTAINING TO, THIS NOTE AND/OR ANY OF THE OTHER LOAN DOCUMENTS. IT IS AGREED
AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL
CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY BORROWER, UPON CONSULTATION WITH COUNSEL OF
BORROWER'S CHOICE, AND BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF
FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER
REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE
AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS
OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL. BORROWER AGREES THAT SERVICE UPON ITS REGISTERED AGENT IN THE STATE OF
TEXAS SHALL BE VALID REGARDLESS OF BORROWER'S WHEREABOUTS AT THE TIME OF SUCH
SERVICE AND REGARDLESS OF WHETHER BORROWER RECEIVES A COPY OF SUCH SERVICE,
PROVIDED THAT THE HOLDER SHALL HAVE MAILED A COPY TO BORROWER IN ACCORDANCE WITH
THE NOTICE PROVISIONS HEREIN. BORROWER AGREES TO PAY ALL COURT COSTS AND
REASONABLE ATTORNEY'S FEES INCURRED BY HOLDER IN CONNECTION WITH ENFORCING ANY
PROVISION OF THIS NOTE. NOTWITHSTANDING THE FOREGOING, HOLDER AGREES TO USE
REASONABLE EFFORTS TO PROVIDE BORROWER WITH NOTICE OF THE FILING OF ANY LAWSUIT
BY HOLDER AGAINST BORROWER.
12.7 Offset. Upon the occurrence of an Event of Default, the Holder may
set-off against any principal and interest owing hereunder, any and all credits,
money, stocks, bonds or other security or property of any nature whatsoever on
deposit with, or held by, or in the possession of, the Holder, to the credit of
or for the account of Borrower, without notice to or consent of Borrower or
Guarantor.
12.8 Non-Exclusivity of Rights and Remedies. None of the rights and
remedies herein conferred upon or reserved to Holder is intended to be exclusive
of any other right or remedy contained herein or in any of the other Loan
Documents and each and every such right and remedy shall be cumulative and
concurrent, and may be enforced separately, successively or together, and may be
exercised from time to time as often as may be deemed necessary or desirable by
Holder.
12.9 Incorporation by Reference. All of the agreements, conditions,
covenants and provisions contained in each of the Loan Documents are hereby made
a part of this Note to the same extent and with the same force and effect as if
they were fully set forth herein.
9
12.10 Joint and Several Liability. If Borrower consists of more than
one person and/or entity, each such person and/or entity agrees that its
liability hereunder is joint and several.
12.11 Business Purpose. Borrower represents and warrants that the Loan
evidenced by this Note is being obtained solely for the purpose of acquiring or
carrying on a business, professional or commercial activity and is not for
personal, agricultural, family or household purposes.
12.12 Interest Limitation. Borrower agrees that for the purpose of
determining Maximum Lawful Interest described in Section 1.9(a) above, any
non-principal payment (including, without limitation, Late Fees and other fees)
shall be deemed, to the extent permitted by law, to be an expense, fee or
premium rather than interest.
12.13 Modification. This Note may be modified, amended, discharged or
waived only by an agreement in writing signed by the party against whom
enforcement of such modification, amendment, discharge or waiver is sought.
12.14 Time of the Essence. Time is strictly of the essence of this
Note.
12.15 Negotiable Instrument. Borrower agrees that this Note shall be
deemed a negotiable instrument, even though this Note may not otherwise qualify,
under applicable law, absent this paragraph, as a negotiable instrument.
12.16 Interest Rate After Judgment. If judgment is entered against
Borrower on this Note, the amount of the judgment entered (which may include
principal, interest, fees, Late Fees and costs) shall bear interest at the
Default Rate, to be determined on the date of the entry of the judgment.
12.17 Relationship. Borrower and Holder intend that the relationship
between them shall be solely that of creditor and debtor. Nothing contained in
this Note or in any of the other Loan Documents shall be deemed or construed to
create a partnership, tenancy-in-common, joint tenancy, joint venture or
co-ownership by or between Borrower and Holder.
12.18 Waiver of Automatic Stay. TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, BORROWER HEREBY AGREES THAT, IN CONSIDERATION OF LENDER'S
AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT THE FOLLOWING COVENANT IS A
MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN, IN THE EVENT THAT BORROWER
SHALL (A) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT JURISDICTION OR BE THE
SUBJECT OF ANY PETITION UNDER ANY SECTION OR CHAPTER OF TITLE 11 OF THE UNITED
STATES CODE, AS AMENDED (THE "BANKRUPTCY CODE"), OR SIMILAR LAW OR STATUTE; (B)
BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE OR
SIMILAR LAW OR STATUTE; (C) FILE OR BE THE SUBJECT OF ANY PETITION SEEKING ANY
REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS; (D) HAVE
SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT
10
OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR; OR (E) BE THE SUBJECT OF
AN ORDER, JUDGMENT OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION
APPROVING A PETITION FILED AGAINST ANY BORROWER FOR ANY REORGANIZATION,
ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR
RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO
BANKRUPTCY, INSOLVENCY OR RELIEF FOR DEBTORS, THEN, TO THE EXTENT PERMITTED BY
APPLICABLE LAW AND SUBJECT TO COURT APPROVAL, HOLDER SHALL THEREUPON BE ENTITLED
AND BORROWER HEREBY IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND AGREES TO
STIPULATE TO RELIEF FROM ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED BY
SECTION 362 OF THE BANKRUPTCY CODE, OR SIMILAR LAW OR STATUTE (INCLUDING,
WITHOUT LIMITATION, RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION 1121
OF THE BANKRUPTCY CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS
AND REMEDIES OTHERWISE AVAILABLE TO HOLDER AS PROVIDED IN THE LOAN DOCUMENTS,
AND AS OTHERWISE PROVIDED BY LAW, AND BORROWER HEREBY IRREVOCABLY WAIVES ITS
RIGHTS TO OBJECT TO SUCH RELIEF.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, Borrower has executed and sealed this Note or
caused it to be executed and sealed on its behalf by its duly authorized
representative, the day and year first above written, and the obligations under
this Note shall be binding upon Borrower's successors and assigns.
WITNESS: BORROWER:
CAPITAL SENIOR LIVING P-C, INC., a Delaware
corporation
By: (SEAL)
------------------------------ ----------------------------------
[Print name] Xxxxxxxx X. Xxxxx
Chief Executive Officer
12
(Mezzanine Loan - Pool C)
PAYMENT AND PERFORMANCE GUARANTY AGREEMENT
THIS PAYMENT AND PERFORMANCE GUARANTY AGREEMENT (this "Guaranty") is
made as of the ____ day of August, 2000, by CAPITAL SENIOR LIVING CORPORATION, a
Delaware corporation ("Guarantor"), for the benefit of XXXXXX FINANCIAL
SERVICES, INC., a Delaware corporation (including its successors, transferees
and assigns, "Lender").
RECITALS
A. CAPITAL SENIOR LIVING P- C INC., a Delaware corporation (together
with its successors and assigns "Borrower"), has borrowed the sum of TEN MILLION
THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($10,300,000.00) (the "Loan") from
Lender, evidenced by Borrower's Promissory Note of even date herewith (the
"Note") and that certain Mezzanine Loan Agreement by and among Lender, Borrower
and Capital Senior Living ILM-C, Inc., a Delaware corporation ("Owner") of even
date herewith (the "Loan Agreement"), and secured by, among other things, a
pledge of one hundred percent of the capital stock of Owner which owns those
four (4) senior housing facilities described on Exhibit "A" attached hereto and
incorporated herein (each individually a "Facility" and collectively the
"Facilities").
B. The Note, the Loan Agreement and the other documents, certificates,
instruments and agreements executed by Borrower and/or Owner in connection with
the Loan or to otherwise evidence or secure the Loan, and all renewals,
supplements, or amendments thereto or a part thereof, are collectively referred
to as the "Loan Documents".
C. As a condition of making the Loan, Guarantor has agreed to guaranty,
absolutely and unconditionally, payment of the Guaranty Obligations (as defined
below), subject to the terms and conditions set forth in this Guaranty.
AGREEMENT
NOW THEREFORE, in consideration of the above and as an inducement to
Lender to make the Loan evidenced by the Note and the Loan Agreement, and as
security for the payment of the Loan and all interest from time to time accrued
and unpaid thereon, and all expenses, fees, charges and other amounts from time
to time due and owing to Lender under the Note, and the other Loan Documents,
and for the performance of all covenants, agreements and other obligations from
time to time owing to, or for the benefit of, Lender pursuant to the Loan
Documents, including, without limitation, the payment and performance of all of
Borrower's and Owner's obligations pursuant to Article IX of the Loan Agreement
(collectively referred to herein as the "Guaranty Obligations"), Guarantor,
intending to be legally bound, hereby covenants, agrees, represents and warrants
as follows:
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1. Guaranty. Guarantor hereby absolutely and unconditionally guarantees
to the Lender the full, regular and punctual payment and performance of the
Guaranty Obligations within seven (7) days of the receipt of the Lender's
written demand therefor after the passage of actual notice and cure periods
provided in the Loan Documents. Without limiting the generality of the
foregoing, "Guaranty Obligations" is used herein in its most comprehensive sense
to include all debts, obligations and indebtedness described in the Loan
Documents, whether now or hereafter made, incurred, or created, voluntary or
involuntary, due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined. In addition, Guarantor guarantees the full payment
of, and agrees to reimburse Lender for, all costs of collection incurred by
Lender in enforcing the Guaranty Obligations and pursuing any remedies set forth
in the Loan Documents and/or the Guaranty, including, without limitation, court
costs and commercially reasonable attorneys' fees (including, but not limited
to, fees in any bankruptcy or appellate proceeding).
2. Payments. All payments to be made by Guarantor to Lender hereunder
shall be made in lawful money of the United States of America, in immediately
available funds, at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000, or
such other location designated by Lender in writing, and shall be accompanied by
a notice from Guarantor stating that such payments are made under this Guaranty.
All payments available to Lender for application in payment or reduction of the
Guaranty Obligations may be applied by Lender in such manner and in such amount,
and at such time or times and in such order and priority as provided for in the
Note.
3. Subsequent Acts by Lender. Lender may, in its sole discretion and
without notice to Guarantor, take any action which might otherwise be deemed a
legal or equitable release or discharge of Guarantor's obligations hereunder
without either impairing or affecting the liability of Guarantor for payment of
the Guaranty Obligations, which actions might include, by way of illustration
and not limitation:
(a) at any time or from time to time, the time for Borrower's
and/or Owner's performance of or compliance with any provision of the Loan
Documents may be extended or such performance or compliance may be waived by
Lender;
(b) the acceptance of partial payment of the Guaranty
Obligations;
(c) any of the acts permitted in the Loan Documents may be
performed;
(d) the Loan Documents may from time to time be amended and/or
renewed by Borrower and/or Owner and Lender for the purpose of adding any
provisions thereto or changing in any manner the rights of Lender or of Borrower
and/or Owner thereunder;
(e) the maturity date of the Note may be changed or renewed in
whole or in part;
(f) the maturity of the Note may be accelerated in accordance
with the terms of the Loan Documents or any future agreement between Borrower
and/or Owner and Lender or the holder of such Note;
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(g) any collateral security for all or any part of the
Guaranty Obligations may be exchanged, released, compromised, consolidated,
surrendered or otherwise dealt with, and Lender's interest therein may be
released and may or may not be perfected;
(h) the settlement, release, compounding, compromise,
cancellation, rearrangement or consolidation of any of the Guaranty Obligations;
(i) the collection of or other liquidation of any claims
Lender may have in respect to the Guaranty Obligations;
(j) the granting of indulgences, forbearance, compromises,
extensions or adjustments in respect to any covenant or agreement under the Loan
Documents; and/or
(k) the release from liability of any other Guarantor and/or
any additional parties who may guarantee payment of the Guaranty Obligations or
any portion thereof.
4. Certain Rights, Subordination, Etc.
----------------------------------
(a) Lender may pursue its rights and remedies under this
Guaranty and shall be entitled to payment hereunder notwithstanding any other
guaranty of all or any part of the Guaranty Obligations, and notwithstanding any
action taken by Lender to enforce any of its rights or remedies under such other
guaranty, or any payment received thereunder (but in no event shall Lender
collect more than the aggregate amount of the Guaranty Obligations).
(b) Any obligation or debt of Borrower or Owner now or
hereafter held by Guarantor is hereby subordinated to the Guaranty Obligations
and Guarantor shall not enforce or collect any such indebtedness from Borrower
or Owner, as the case may be. Nevertheless, upon request by Lender, Guarantor
shall collect, enforce and receive such indebtedness of Borrower to Guarantor or
of Owner to Guarantor, as the case may be. Any sums collected at Lender's
request or collected in contravention of the prohibition set forth herein shall
be held by Guarantor as trustee for Lender and shall be paid over to Lender on
account of the Guaranty Obligations; provided, however, that such payments shall
not impair or affect in any manner the liability of Guarantor under the other
provisions of this Guaranty.
(c) Guarantor agrees that if any "Event of Default" exists
under the Loan Documents ("Event of Default") and is continuing, (i) Guarantor
shall not accept payment from any other guarantor of any Guaranty Obligations by
way of contribution or similar rights on account of any payment made hereunder
by Guarantor to Lender, all of which rights are hereby subordinated to
Guarantor's obligations hereunder to Lender, (ii) Guarantor will not take any
action to exercise or enforce any rights to such contribution, and (iii) if
Guarantor should receive payment, satisfaction or security for any indebtedness
of Borrower or Owner to Lender, the same shall be delivered to Lender in the
form received, endorsed or signed as may be appropriate for application on
account of or as security for the indebtedness of Borrower to Lender and, until
so delivered, shall be held in trust for Lender as security for the indebtedness
of Borrower to Lender.
3
(d) In the event of any Event of Default with respect to the
Guaranty Obligations, Guarantor agrees to pay or perform on written demand the
Guaranty Obligations. Lender shall not be under a duty to protect, secure or
insure or be required to liquidate any security or lien provided for in the Loan
Documents or other such collateral held by Lender prior to making such demand.
(e) Notwithstanding any payment or payments made by Guarantor
under this Guaranty, Guarantor expressly, irrevocably and unconditionally waives
and releases any and all "claims" (as that term is defined in the Bankruptcy
Reform Act of 1978, as amended, 11 U.S.C. Sections 101 et seq., and the
regulations adopted and promulgated pursuant thereto (collectively, the
"Bankruptcy Code")) it may now or hereafter have against Borrower or Owner, and
shall not be entitled to, and hereby expressly waives, any and all rights of
subrogation, reimbursement, indemnity, exoneration and contribution against
Borrower or Owner, which Guarantor may now or hereafter have against Borrower or
Owner without regard to whether any such right or claim arises expressly;
provided, that such waiver and release shall not be effective as to any such
claim or entitlement or such subrogation and other rights that accrue after the
indefeasible payment, performance or other satisfaction in full of the Guaranty
Obligations.
5. Representations and Warranties. Guarantor represents and
warrants to Lender that:
(a) Existence, Power and Qualification. Guarantor is a duly
organized and validly existing corporation, has the corporate power to own its
properties and to carry on its business as is now being conducted, and is duly
qualified to do business and is in good standing in every jurisdiction in which
the character of the properties owned by it or in which the transaction of its
business makes its qualification necessary.
(b) Power and Authority. Guarantor has full corporate power
and authority to incur the Guaranty Obligations provided for herein, all of
which have been authorized by all proper and necessary action.
(c) Financial Condition. The financial statements of the
Guarantor heretofore furnished to Lender are complete and correct and fairly
present the financial condition of the Guarantor as of the date thereof. Since
the date of said financial statements there has been no material adverse change
in the financial condition or operations, or the business taken as a whole, of
Guarantor from that set forth therein.
(d) Litigation. There are no legal or arbitral proceedings or
any proceedings by or before any governmental or regulatory authority or agency
now pending or, to the best of Guarantor's knowledge, threatened against
Guarantor, in which an adverse decision could materially and adversely affect
the financial condition of Guarantor.
(e) No Breach. The execution and delivery of this Guaranty,
the consummation of the transactions herein contemplated and compliance with the
terms and provisions hereof will not (i) conflict with or result in a breach of,
or require any consent (not heretofore obtained prior to the representation is
made) under, any applicable law, administrative proceeding or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which Guarantor is a party or by which
Guarantor is bound or to which Guarantor
4
is subject, (ii) constitute a default under any such agreement or instrument or
under Guarantor's articles of incorporation, by-laws or any other agreement or
instrument binding upon Guarantor, or (iii) result in the creation or imposition
of any lien upon any of the revenues or assets of Guarantor pursuant to the
terms of any such agreement or instrument.
(f) Approvals. To the best of Guarantor's knowledge, no
authorizations, approvals, or consents of (other than those heretofore obtained
and in full force and effect), and no filings or registrations with (other than
those heretofore obtained and in full force and effect), any governmental or
regulatory authority or agency are necessary for the execution, delivery or
performance by Guarantor of this Guaranty or for the validity or enforceability
thereof.
(g) Taxes, etc. Guarantor has filed all United States federal
and state tax returns and all other tax returns that are required to be filed by
Guarantor and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by Guarantor, except such taxes, the payment of which is not
yet due, or which if due, is not yet delinquent or is being contested in good
faith or which has not been finally determined.
(h) Benefit. The making of the Loan by Lender to Borrower will
directly benefit Guarantor.
6. Financial Covenants and Other Information. Guarantor shall
provide Lender the following financial statements and information on a
continuing basis during the term of the Loan:
(a) Within one hundred twenty (120) days after the end of the
fiscal year of the Guarantor, audited consolidated financial statements of the
operations of the Guarantor, prepared in accordance with generally accepted
accounting principles consistently applied ("GAAP") by a nationally recognized
accounting firm or independent certified public accounting firm acceptable to
the Lender, which statements shall include a balance sheet and a statement of
income and expenses for the year then ended. In lieu of its obligations
hereunder, Guarantor may submit to Lender, upon its filing thereof, a copy of
its Form 10-K as filed with the United States Securities and Exchange
Commission.
(b) Within forty-five (45) days after the end of each fiscal
quarter (except the last fiscal quarter of each fiscal year) of Guarantor,
unaudited interim financial statements of the operations of Guarantor, certified
as true and correct in all material respects by a financial officer of Guarantor
prepared in accordance with GAAP, which statements shall include a balance sheet
and a statement of income and expenses for the quarter then ended. In lieu of
its obligations hereunder, Guarantor may submit to Lender a copy of its Form
10-Q as filed by Guarantor with the United States Securities and Exchange
Commission
(c) As soon as available, but in no event more than thirty
(30) days after the filing deadline, as may be extended from time to time,
copies of all federal, state and local tax returns of Guarantor, together with
all supporting documentation and required schedules.
5
(d) Within forty-five (45) days after the end of each fiscal
quarter of Guarantor, a certificate of the chief financial officer of Guarantor
confirming compliance with the covenants and requirements set forth above.
The Lender reserves the right to require such other financial
information of Guarantor in such form and at such other times (including monthly
or more frequently) as Lender shall deem necessary, in its commercially
reasonable discretion, and Guarantor agrees promptly to provide or to cause to
be provided, such information to Lender. All financial statements must be in
form and detail as Lender may from time to time request in its commercially
reasonable discretion, unless such Financial Statements are prepared in
accordance with GAAP.
7. Guaranty is a Continuing Obligation. The obligations of the
Guarantor under this Guaranty shall be continuing, absolute, irrevocable and
unconditional under all circumstances, and shall remain in full force and effect
or be reinstated, until all of the Guaranty Obligations shall have been paid and
performed in full, irrespective of the bankruptcy, insolvency, merger,
reorganization, termination, discontinuation or dissolution of the Borrower or
Owner or any assignment for the benefit of creditors by the Borrower or the
Owner. The Guarantor acknowledges and agrees that Guarantor's obligations
hereunder shall apply to and continue with respect to any of the obligations of
the Borrower under the Loan Documents which are subsequently recovered from the
Lender for the reasons set forth below. In the event that any payment by or on
the behalf of the Borrower to Lender is held to constitute a preference,
fraudulent transfer or other voidable payment under any bankruptcy, insolvency
or similar law, or if for any other reason the Lender is required to refund such
payment or pay the amount thereof to any other party, including, without
limitation, as a result of the appointment of a receiver, intervenor, or
conservator of, or trustee or similar officer for, the Borrower or the Owner or
of any substantial part of their property or otherwise, such payment by the
Borrower or any other party to the Lender shall not constitute a release of the
Guarantor from any liability hereunder, and this Guaranty shall continue to be
effective or shall be reinstated (notwithstanding any prior release, surrender
or discharge by the Lender of this Guaranty or of the Guarantor), as the case
may be, with respect to, and this Guaranty shall apply to, any and all amounts
so refunded by the Lender or paid by the Lender to another party (which amounts
shall constitute part of the Guaranty Obligations), and any interest paid by the
Lender and any attorneys' fees, costs and expenses paid or incurred by the
Lender in connection with any such event. It is the intent of the Guarantor and
the Lender that the obligations and liabilities of the Guarantor hereunder are
absolute and unconditional under any and all circumstances and that until the
Guaranty Obligations are fully and finally paid and performed, and not subject
to refund or disgorgement, the obligations and liabilities of the Guarantor
hereunder shall not be discharged or released, in whole or in part, by any act
or occurrence that might, but for the provisions of this Guaranty, be deemed a
legal or equitable discharge or release of a guarantor. The Lender shall be
entitled to continue to hold this Guaranty in its possession for a period of one
year from the later of (a) the date the Guaranty Obligations are paid and
performed in full, or (b) if not paid in accordance with the Guaranty
Obligations, the expiration or termination of the Loan, and for so long
thereafter as may be necessary to enforce any obligation of the Guarantor
hereunder and/or to exercise any right or remedy of the Lender hereunder.
8. Waiver and Release. Guarantor shall have no right of
subrogation in or under the Guaranty Obligations, and no rights of
reimbursement, indemnity or contribution from the Borrower
6
or Owner or any other rights by law, equity, statute or contract that would give
rise to a creditor- debtor relationship between Guarantor and the Borrower or
Guarantor and the Owner. Guarantor shall have no security interests, liens, or
other similar interests and collection rights related thereto, in any way in any
of the collateral which is conveyed under the Loan Documents as security for the
Guaranty Obligations, until after such time as the Guaranty Obligations are
satisfied in full. Guarantor hereby explicitly waives and releases any of the
above-described rights of subrogation, reimbursement, indemnity, contribution
(until such time as the Guaranty Obligations are satisfied in full), and any
right to require the marshaling of Borrower's or Owner's assets under any
circumstances.
9. Continuing Validity. Guarantor further agrees that the validity of
this Guaranty and the obligations of Guarantor hereunder shall in no way be
terminated, affected or impaired (a) by reason of the assertion by Lender of any
rights or remedies which it may have under or with respect to either the Note or
the other Loan Documents, against any person obligated thereunder or against the
Owner,(b) by reason of any failure to file or record any of such instruments or
to take or perfect any security intended to be provided thereby, (c) by reason
of the commencement of a case under the Bankruptcy Code by or against any person
obligated under the Note or the other Loan Documents, or the death of any
Guarantor, or (d) by reason of any payment made on the Guaranty Obligations or
any other indebtedness arising under the Note or the other Loan Documents,
whether made by Borrower or Guarantor or any other person, which is required to
be refunded pursuant to any bankruptcy or insolvency law; it being understood
that no payment so refunded shall be considered as a payment of any portion of
the Guaranty Obligations, nor shall it have the effect of reducing the liability
of Guarantor hereunder. It is further understood, that if Borrower or Owner
shall have taken advantage of, or be subject to the protection of, any provision
in the Bankruptcy Code, the effect of which is to prevent or delay Lender from
taking any remedial action against Borrower or Owner, including the exercise of
any option Lender has to declare the Guaranty Obligations due and payable on the
happening of any default or event by which under the terms of the Note or the
other Loan Documents, the Guaranty Obligations shall become due and payable,
Lender may, as against Guarantor, nevertheless, declare the Guaranty Obligations
due and payable and enforce any or all of its rights and remedies against
Guarantor provided for herein.
10. Notice. All notices given under this Guaranty shall be in
writing and shall be either hand delivered or mailed, by certified U.S. mail,
return receipt requested, first class postage prepaid, to the other party, at
its address set forth below or at such other address as such party may designate
by notice to the other party:
(a) If to Guarantor:
Capital Senior Living Corporation
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
7
with a copy to:
Xxxxxxx X. Xxxx XX, Esq.
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
(b) If to Lender:
Xxxxxx Financial Services, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Servicing Department
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
000 00xx Xxxxxx, XX, Xxxxx 0000 Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
11. No Waiver by Lender; Remedies. No failure on the part of Lender or
the holder of the Note to exercise, and no delay in exercising, any right
hereunder or thereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right. Guarantor hereby
agrees that all rights and remedies that Lender is afforded by reason of this
Guaranty are separate and cumulative and may be pursued separately,
successively, or concurrently, as Lender deems advisable. In addition, all such
rights and remedies are non-exclusive and shall in no way limit or prejudice
Lender's ability to pursue any other legal or equitable rights or remedies that
may be available. Failure of Lender to insist upon strict performance or
observance of any of the terms, provisions and covenants hereof or to exercise
any right herein contained shall not be construed as a waiver or relinquishment
of the right to demand strict performance at another time. Receipt by Lender of
any payment or performance on the Guaranty Obligations shall not be deemed a
waiver of the breach of any provision hereof or of any of the Loan Documents.
Without limiting the generality of the foregoing, Guarantor agrees that in any
action by Lender by reason of the Guaranty Obligations, Lender, at its election,
may proceed (a) against Guarantor together with Borrower, (b) against Guarantor
and Borrower, individually, or (c) against Guarantor only without having
commenced any action against, or having obtained any judgment against, Borrower.
12. Certain Waivers by Guarantor. AS A FURTHER INDUCEMENT TO LENDER
TO MAKE THE LOAN AND IN CONSIDERATION THEREOF, GUARANTOR FURTHER COVENANTS AND
AGREES THAT SERVICE OF ANY SUMMONS AND COMPLAINT OR OTHER PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE MADE IN ACCORDANCE WITH SECTION 15 BELOW. GUARANTOR
HEREBY WAIVES NOTICE OF THE ACCEPTANCE HEREOF, PRESENTMENT, DEMAND FOR PAYMENT,
PROTEST,
8
NOTICE OF PROTEST, OR ANY AND ALL NOTICE OF NON-PAYMENT, NON- PERFORMANCE OR
NON-OBSERVANCE, OR OTHER PROOF, OR NOTICE OR DEMAND.
THE GUARANTOR FURTHER WAIVES AND AGREES NOT TO ASSERT: (A) ANY RIGHT TO
REQUIRE LENDER TO PROCEED AGAINST BORROWER OR OWNER OR TO PROCEED AGAINST ANY
OTHER GUARANTOR, OR TO PROCEED AGAINST OR EXHAUST ANY SECURITY FOR THE GUARANTY
OBLIGATIONS, OR TO PURSUE ANY OTHER REMEDY AVAILABLE TO LENDER, OR TO PURSUE ANY
REMEDY IN ANY PARTICULAR ORDER OR MANNER, (B) THE BENEFIT OF ANY STATUTE OF
LIMITATIONS AFFECTING GUARANTOR'S LIABILITY HEREUNDER OR THE ENFORCEMENT HEREOF,
(C) NOTICE OF THE EXISTENCE, CREATION OR INCURRING OF NEW OR ADDITIONAL
INDEBTEDNESS OF BORROWER OR OWNER TO LENDER, (D) THE BENEFITS OF ANY STATUTORY
PROVISION LIMITING THE LIABILITY OF A SURETY, (E) ANY DEFENSE ARISING BY REASON
OF ANY DISABILITY OR OTHER DEFENSE OF BORROWER OR OWNER OR BY REASON OF THE
CESSATION FROM ANY CAUSE WHATSOEVER (OTHER THAN PAYMENT IN FULL) OF THE
LIABILITY OF BORROWER OR OWNER FOR THE GUARANTY OBLIGATIONS, (F) THE BENEFITS OF
ANY STATUTORY PROVISION LIMITING THE RIGHT OF LENDER TO RECOVER A DEFICIENCY
JUDGMENT, OR TO OTHERWISE PROCEED AGAINST ANY PERSON OR ENTITY OBLIGATED FOR
PAYMENT OF THE GUARANTY OBLIGATIONS, AFTER ANY FORECLOSURE OR TRUSTEE'S SALE OF
ANY SECURITY FOR THE GUARANTY OBLIGATIONS, AND (G) ANY OTHER DEFENSE OR
CIRCUMSTANCE WHICH MAY CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OF GUARANTOR'S
LIABILITY HEREUNDER, ARISING FROM OR OUT OF THE LOAN, THE LOAN DOCUMENTS AND/OR
THE FACILITY.
13. Waiver of Automatic Stay. GUARANTOR HEREBY AGREES THAT, IN
CONSIDERATION OF LENDER'S AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT THE
FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN, IN THE
EVENT THAT GUARANTOR SHALL (A) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT
JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER ANY SECTION OR CHAPTER OF
TITLE 11 OF THE UNITED STATES CODE, AS AMENDED ("BANKRUPTCY CODE"), OR SIMILAR
LAW OR STATUTE, (B) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE
BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE, (C) FILE OR BE THE SUBJECT OF ANY
PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT,
LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL
OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR
DEBTORS, (D) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY
TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR, OR (E) BE THE SUBJECT OF AN
ORDER, JUDGEMENT OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION
APPROVING A PETITION FILED AGAINST GUARANTOR FOR ANY REORGANIZATION,
ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR
RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO
BANKRUPTCY, INSOLVENCY OR RELIEF FOR DEBTORS, THEN, TO THE EXTENT
9
PERMITTED BY APPLICABLE LAW AND SUBJECT TO COURT APPROVAL, LENDER SHALL
THEREUPON BE ENTITLED AND GUARANTOR HEREBY IRREVOCABLY CONSENTS TO, AND WILL NOT
CONTEST, AND AGREES TO STIPULATE TO RELIEF FROM ANY AUTOMATIC STAY OR OTHER
INJUNCTION IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR SIMILAR LAW OR
STATUTE (INCLUDING, WITHOUT LIMITATION, RELIEF FROM ANY EXCLUSIVE PERIOD SET
FORTH IN SECTION 1121 OF THE BANKRUPTCY CODE) OR OTHERWISE, ON OR AGAINST THE
EXERCISE OF THE RIGHTS AND REMEDIES OTHERWISE AVAILABLE TO LENDER AS PROVIDED IN
THIS AGREEMENT AND/OR THE LOAN DOCUMENTS, AND AS OTHERWISE PROVIDED BY LAW, AND
GUARANTOR HEREBY IRREVOCABLY WAIVES GUARANTOR'S RIGHTS TO OBJECT TO SUCH RELIEF.
14. Guaranty of Payment. This is a guaranty of payment and not of
collection and upon any Event of Default under the Loan Documents which is
continuing, Lender may, at its option, proceed promptly against Guarantor to
collect and recover the full amount of the liability hereunder or any portion
thereof, without proceeding against Borrower, Owner or any other person, or
foreclosing upon, selling, or otherwise disposing of or collecting or applying
against any of the Facilities or other collateral for the Loan.
(a) Joint and Several Liability. [Intentionally Deleted]
---------------------------
(b) Assignment. Lender may assign this Guaranty or any rights
or powers hereunder, in whole or in part, in connection with the sale of the
Note and assignment of any of the Mortgages and shall notify Guarantor of any
such assignment. The duties and obligations of Guarantor may not be delegated or
transferred by Guarantor without the prior written consent of Lender which may
be withheld in its absolute discretion. Each reference herein to Lender shall be
deemed to include its successors and assigns, to whose favor the provisions of
this Guaranty shall also inure. Each reference herein to Guarantor shall be
deemed to include the heirs, executors, administrators, legal representatives,
successors and assigns of Guarantor, all of whom shall be bound by the
provisions of this Guaranty. If any party hereto shall be a partnership or a
limited liability company, the agreements and obligations on the part of
Guarantor herein contained shall remain in force and application notwithstanding
any changes in the individuals or entities composing the partnership or the
limited liability company, and the term "Guarantor" shall include any altered or
successive partnerships and any altered or successive limited liability
companies but the predecessor partnerships and their partners, and the
predecessor limited liability companies and their members, shall not thereby be
released from any obligations or liability hereunder.
15. Waiver of Trial by Jury; Service of Process. GUARANTOR HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE GUARANTOR AND THE
LENDER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY
PERTAINING TO, THIS AGREEMENT AND/OR ANY OF THE OTHER LOAN DOCUMENTS. IT IS
AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY THE GUARANTOR, AND THE GUARANTOR HEREBY
10
REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. THE GUARANTOR FURTHER REPRESENTS AND WARRANTS THAT GUARANTOR
HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED BY GUARANTOR OF GUARANTOR'S OWN
FREE WILL, AND THAT GUARANTOR HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL. GUARANTOR AGREES THAT SERVICE UPON ITS REGISTERED AGENT IN THE
STATE OF TEXAS SHALL BE VALID REGARDLESS OF GUARANTOR'S WHEREABOUTS AT THE TIME
OF SUCH SERVICE AND REGARDLESS OF WHETHER GUARANTOR RECEIVES A COPY OF SUCH
SERVICE, PROVIDED THAT THE LENDER SHALL HAVE MAILED A COPY TO GUARANTOR IN
ACCORDANCE WITH THE NOTICE PROVISIONS HEREIN. GUARANTOR AGREES TO PAY ALL COURT
COSTS AND REASONABLE ATTORNEY'S FEES INCURRED BY LENDER IN CONNECTION WITH
ENFORCING ANY PROVISION OF THIS NOTE. NOTWITHSTANDING THE FOREGOING, LENDER
AGREES TO USE REASONABLE EFFORTS TO PROVIDE GUARANTOR WITH NOTICE OF THE FILING
OF ANY LAWSUIT BY LENDER AGAINST GUARANTOR.
16. Power and Authority. Guarantor (and its representative,
executing below, if any) has full corporate power, authority and legal right to
execute this Guaranty and to perform all its obligations under this Guaranty.
17. Complete Agreement; Modification; Waiver. All understandings,
representations and agreements heretofore had with respect to this Guaranty are
merged into this Guaranty which are incorporated herein which alone fully and
completely expresses the agreement of Guarantor and Lender. In no event shall
any modification or waiver of the provisions of this Guaranty be effective
unless in writing executed by Lender. Any waiver granted by Lender shall be
applicable only in the specific instance for which it is given.
18. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE
FEDERAL LAW.
19. Counterparts; Construction. This Guaranty may be executed in any
number of counterparts, all of which when taken together shall constitute one
and the same instrument. Words of any gender used in this Guaranty shall be held
and construed to include the other gender, and words in the singular shall be
held and construed to include the plural, and words in the plural shall be held
and construed to include the singular, unless this Guaranty or the context
otherwise requires.
20. Review by Guarantor. GUARANTOR HAS RECEIVED COPIES OF, AND HAS HAD
THE OPPORTUNITY TO REVIEW, ALL OF THE LOAN DOCUMENTS REFERRED TO IN THIS
GUARANTY. GUARANTOR HAS DISCUSSED THIS GUARANTY WITH GUARANTOR'S LEGAL COUNSEL,
AND GUARANTOR UNDERSTANDS THE NATURE AND EXTENT AND THE LEGAL AND PRACTICAL
CONSEQUENCES OF GUARANTOR'S LIABILITY UNDER THIS GUARANTY.
11
21. No Oral Agreement. To the extent allowed by law, Guarantor agrees
to be bound by the terms of the following notice:
NOTICE: THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE
A WRITTEN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES RELATING TO THE LOAN.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of the day and year first written above.
WITNESS: GUARANTOR:
CAPITAL SENIOR LIVING CORPORATION, a
Texas corporation
By: (SEAL)
-------------------------- ---------------------------
Xxxxxxxx X. Xxxxx
Chief Executive Officer
--------------------------
Name [Please print]
DISTRICT OF COLUMBIA )
On this _____ day of August, 2000, before me, the undersigned
officer, personally appeared Xxxxxxxx X. Xxxxx, who, I am satisfied, is the
individual named in the foregoing instrument as Chief Executive Officer of
Capital Senior Living Corporation, the Guarantor, and, did on behalf of Capital
Senior Living Corporation acknowledge that he signed, sealed and delivered the
foregoing instrument as his voluntary act and deed as Chief Executive Officer of
Capital Senior Living Corporation, on behalf of said corporation, as Guarantor,
for the purposes therein contained.
------------------------------
Notary Public
[SEAL]
My Commission expires:
-------------------------------
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EXHIBIT A
Pool C Facilities
Property Name/Location Address Description of Facility
--------------------------------------------------------------------------------------------------------------
Independence Village of Peoria 0000 Xxxx Xxxxxxxxx Xxxx 157-unit independent living
Peoria, Illinois Xxxxxx, XX 00000 facility
Independence Village of East Lansing 0000 Xxxxxxx Xxxx 155-unit independent living
Xxxx Xxxxxxx, Xxxxxxxx Xxxx Xxxxxxx, XX 00000 facility
Independence Village of Raleigh 3113 Xxxxxxx X. Xxxx Wynd 164-unit independent living
Raleigh, North Carolina Xxxxxxx, XX 00000 facility
Independence Village of Winston- 0000 Xxxxxxxx Xxxx 156-unit independent living
Salem Xxxxxxx-Xxxxx, XX 00000 facility
Winston-Salem, North Carolina
14
