LOAN AGREEMENT
between
AH TEXAS SUBORDINATED, LLC
as Borrower
and
BANC ONE CAPITAL PARTNERS IV, LTD.
as Lender
Dated
June 17, 1998
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS......................................................2
1.1 Definitions......................................................2
1.2 Cross-References.................................................6
ARTICLE 2. LOAN............................................................6
2.1 Loan............................................................6
2.2 Timing of Disbursement of Loan...................................7
(a) Priority Loan..............................................7
b) Subordinate Loan...........................................7
2.3 Notes............................................................7
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(a) Term.......................................................7
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(b) Interest Rate..............................................8
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(i) Required Pay Rate of Interest........................8
(ii) Mandatory Lookback Interest..........................8
(iii) Default Interest Rate................................8
(c) Intentionally Omitted......................................8
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(d) No Principal Amortization..................................8
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(e) Optional Prepayments.......................................8
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(f) Events of Default..........................................9
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(g) Priority of Payments.......................................9
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2.4 Use of Loan Proceeds.............................................9
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2.5 Acknowledgment of Full Payment of the Loan.......................9
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2.6 Right to Make Additional Advances................................9
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ARTICLE 3. PAYMENTS, SECURITY..............................................10
3.1 Payments........................................................10
3.2 Security........................................................10
ARTICLE 4. CONDITIONS OF BORROWING.........................................11
4.1 Conditions Precedent to the Initial Disbursement................11
ARTICLE 5. REPRESENTATIONS AND WARRANTIES..................................13
5.1 Organization and Authority of Borrower..........................13
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5.2 Organization and Authority of the Owner.........................14
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5.3 Organization and Authority of the General Partner...............14
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5.4 Title to Property; Liens........................................14
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5.5 Litigation......................................................14
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5.6 Compliance with Law and Other Instruments.......................15
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5.7 Adverse Contracts; Defaults.....................................15
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5.8 Environmental Laws..............................................15
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5.9 Disclosure......................................................15
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5.10 Tax Reports; Filings............................................16
5.11 Default.............................................16
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5.12 Business of Borrower and Owner..................................16
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5.13 Liabilities.....................................................16
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ARTICLE 6. AFFIRMATIVE COVENANTS...........................................16
6.1 Covenants Relating to the Property or the Manager...............16
(a) Financial Statements and Reports..........................16
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(b) Periodic Reports..........................................17
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(c) Preparation of Tax Returns................................17
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(d) Inspection................................................17
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(e) Insurance.................................................17
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(f) Payment of Taxes and Claims...............................18
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(g) Maintenance of Property...................................18
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(h) Maintenance of Tangible Assets............................18
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(i) Records and Books of Account..............................18
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(j) Use of Proceeds...........................................18
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(k) Construction Plan.........................................18
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6.2 Covenants Relating to the Borrower, the Owner and the General
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Partner.........................................................19
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(a) Compliance with Laws......................................19
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(b) Preservation of Existence.................................19
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(c) Notices of Certain Events.................................19
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(d) Performance of Contracts..................................20
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(e) Notice of Material Litigation.............................20
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(f) Bankruptcy................................................20
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(g) Compliance with Certain Agreements........................20
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ARTICLE 7. NEGATIVE COVENANTS..............................................21
7.1 Liens and Other Encumbrances....................................21
7.2 Amendments to Operating Agreement, Management Agreement,
Development Agreement, and Senior Loan Documents................21
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7.3 Transactions with Affiliates....................................21
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7.4 Admission of New Members........................................22
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7.5 Refinancing of Senior Loan: Additional Debt.....................22
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7.6 Sale of the Property............................................22
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7.7 Limitations of Business.........................................22
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7.8 Budgets.........................................................22
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7.9 Capital Expenditures............................................22
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7.10 No Challenge to Exercise of Rights under Assignment.............23
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7.11 Limitation on Change of Ownership...............................23
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ARTICLE 8. EVENTS OF DEFAULT...............................................23
8.1 Event of Default................................................23
8.2 Consequences of Event of Default................................25
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ARTICLE 9. INDEMNIFICATION.................................................26
9.1 No Reliance; Indemnification....................................26
ARTICLE 10. MISCELLANEOUS..................................................26
10.1 Notices.........................................................26
10.2 Term of Agreement; Termination; Successors and Assigns..........28
10.3 No Implied Rights or Waivers....................................29
10.4 Applicable Law..................................................29
10.5 Modifications, Amendments or Waivers............................29
10.6 Counterparts....................................................29
10.7 Headings........................................................29
10.8 Expenses........................................................29
10.9 Accounting......................................................29
10.10 Severability....................................................30
10.11 Waiver of Jury Trial; Consent to Venue..........................30
10.12 Entire Agreement................................................30
Exhibit X-0 Xxxxxxxx Xxxxxxxxx
X-0 Xxxxxxxx of Completion
A-3 Non-Recourse Guaranty
Exhibit B-1 Priority Note
Exhibit B-2 Subordinate Note
Exhibit C Security Agreement - Pledge and Assignment of Membership Interests
Exhibit D Warrant Certificate
Exhibit E-1 Methodology of Calculation of Internal Rate of Return (Priority
Note)
Exhibit E-2 Methodology of Calculation of Internal Rate of Return
(Subordinate Note)
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LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into as of June 17,
1998, by and between AH TEXAS SUBORDINATED, LLC, an Ohio limited liability
company (the "Borrower"), and BANC ONE CAPITAL PARTNERS IV, LTD., an Ohio
limited liability company (the "
Lender").
RECITALS:
WHEREAS, AH Texas Owner Limited Partnership is an Ohio limited partnership
(the "Owner"), the sole partners of which are the Borrower and AH Texas CGP,
Inc., an Ohio corporation (the "General Partner"), which acts as the sole
general partner of the Owner;
WHEREAS, the Borrower is the sole shareholder of the General Partner;
WHEREAS, the Owner intends to develop a congregate housing facility with
an assisted living component for the elderly in Austin, Texas, which is
currently referred to as "The Heritage
at Xxxxxx Ranch" (the "Project");
WHEREAS, the Borrower estimates that the total cost of acquisition,
development and construction of the Project will be $31,097,670 (the "Estimated
Project Cost");
WHEREAS, the Borrower, on behalf of the Owner, has obtained a loan from
Nomura Asset Capital Corporation (the "Senior Lender") for the acquisition,
development and construction of the Project, in the amount of up to $24,250,000
(the "Senior Loan");
WHEREAS, the Lender has agreed to make a loan to the Borrower (as further
defined in Section 2.1 below, the " Loan") to be used as an equity contribution
to the Owner, the proceeds of which will fund a portion of the Estimated Project
Cost which will not be funded by the Senior Loan, upon the terms and conditions
herein below set forth; and
WHEREAS, in order to collateralize the Loan and induce the Lender to make
the Loan (i) AH Texas Investor, Inc., which owns one hundred percent (100%) of
the membership interests in the Borrower (the "Membership Interests") and will
derive material benefits from the Loan, has agreed to pledge and assign the
Membership Interests to the Lender and (ii) Brookdale Living Communities, Inc.,
a Delaware corporation ("Brookdale") and an Affiliate of BLC of Texas-II, L.P.,
a Delaware limited partnership and the developer and manager of the Project (the
"Manager"), which will derive material benefits from the Loan, has agreed to
guaranty certain obligations of the Borrower, to the extent described in the
Guaranties (as hereinafter defined).
NOW THEREFORE, for and in consideration of one dollar ($1.00) in hand paid
by the Borrower to the Lender and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE 1. DEFINITIONS
1.1 Definitions. The following terms shall have the meanings set forth
below:
"Affiliate" of a Person shall mean any other Person directly or
indirectly controlling, under common control with, or controlled by such Person.
For purposes of the definition of Affiliate, "control" when used with respect to
any specific person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings relative to the foregoing.
"Agreement" is defined in the preamble.
"Bankruptcy Act" shall mean Title 11 of the United States Code
entitled "Bankruptcy" as now and hereafter in effect, or any successor statute.
"Borrower" is defined in the preamble.
"Brookdale" is defined in the Recitals on Page 1 of this
Agreement.
"Brookdale Option Agreement" shall mean that certain Property Option
Agreement among Brookdale, the Borrower and the Owner of even date herewith.
"Budget" shall have the meaning set forth in the Senior Loan
Documents.
"Business Day" shall mean any day other than Saturdays, Sundays and
other legal holidays or days on which the principal office of the Lender is
closed or banks in Chicago, Illinois
are closed.
"Call Option" shall mean the option in favor of Brookdale to
purchase (i) the Property from the Owner or (ii) all of the equity interests in
the Owner and the General Partner from the Borrower, as more particularly
described in the Brookdale Option
Agreement.
"Capital Contribution" is defined in Section 4.1(r) of this
Agreement.
"Completion Guaranty" shall mean the Guaranty of Completion executed
by Brookdale in favor of Lender of even date herewith, a copy of which is
attached hereto as Exhibit A-2.
"Consent and Subordination of Manager" shall mean that certain
Consent and Subordination of Manager of even date herewith executed by the
Manager, in its capacity as property manager and as developer, in favor of
Lender.
"Construction Plan" shall be Manager's narrative description of its
plan, inclusive of time lines and budgets, for completion of construction of the
Project.
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"Default" shall mean the occurrence of an event which with the
giving of notice, passage of time, or both would become an Event of Default.
"Default Rate of Interest" is defined in Section 2.3(b)(iii) of
this Agreement.
"Development Agreement" shall mean that certain Amended and Restated
Development Agreement between the Owner and Manager dated June 17, 1998.
"Environmental Indemnity Agreement" shall mean that certain
Environmental Indemnity Agreement of even date herewith executed by Brookdale in
favor of
the Lender.
"Environmental Site Assessment" is defined in Section 5.8 of this
Agreement.
"Equity Option Agreement" shall mean that certain Equity Option
Agreement among
AH Texas Investor, Inc., the Owner, the Borrower, the General Partner and
Brookdale of even date
herewith.
"Equity Option" shall mean the option in favor of Brookdale to
purchase the equity interests of AH Texas Investor, Inc. in Borrower as more
particularly described in the Equity Option Agreement.
"Estimated Project Cost" is defined in the Recitals on page 1 of
this Agreement.
"Event of Default" is defined in Section 8.1 of this Agreement.
"Fair Market Value" shall mean the fair market value of the Property
as of the date in question as determined in accordance with the Brookdale Option
Agreement.
"First Mortgage" shall mean the mortgage in favor of Senior
Lender.
"General Partner" is defined in the Recitals on Page 1 of this
Agreement.
"Guaranties" shall mean the Non-Recourse Guaranty, the Completion
Guaranty, the
Guaranty of Recourse Obligations and the Environmental Indemnity Agreement.
"Guaranty of Recourse Obligations" shall mean the Guaranty Agreement
executed by Brookdale in favor of Lender, a copy of which is attached hereto as
Exhibit A-1.
"Initial Disbursement" is defined in Section 2.2(b) of this
Agreement.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement among Lender, Senior Lender, Owner, Borrower, General Partner, AH
Texas Investor, Inc., Brookdale and Manager of even date herewith as the same
may be hereafter supplemented, amended, modified or renewed.
"Lender" is defined in the preamble of this Agreement.
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"Loan" shall mean, collectively, the Priority Loan and the
Subordinate Loan.
"Loan Closing" shall be the date that the Initial Disbursement is
funded.
"Loan Documents" shall mean and include this Agreement, the Notes,
the Security Agreement and Assignment, the Guaranties, the Warrant, the Pledge
of Investment Agreement, the Consent and Subordination of Manager and other
documents and agreements evidencing and collateralizing the Loan or the
Guaranties.
"Management Agreement" shall mean the Management Agreement between
the Owner and Manager dated June 17, 1998 relating to the management of the
Property.
"Manager" is defined in the Recitals on Page 1 of this Agreement.
"Mandatory Lookback Interest" is defined in Section 2.3(b)(ii) of
this Agreement.
"Mandatory Priority Note Lookback Interest" is defined in Section
2.3(b)(ii) of this
Agreement.
"Mandatory Subordinate Note Lookback Interest" is defined in
Section 2.3(b)(ii) of
this Agreement.
"Maturity Date" is defined in Section 2.3(a) of this Agreement.
"Membership Interests" is defined in the Recitals on Page 1 of
this Agreement.
"Michigan Loan" shall mean that certain loan by the Lender to AH
Michigan Subordinated, LLC pursuant to the Michigan Loan Agreement.
"Michigan Loan Agreement" shall mean that certain Loan Agreement
between AH Michigan Subordinated, LLC and the Lender of even date herewith.
"Non-Recourse Guaranty" shall mean the Non-Recourse Guaranty
executed by Brookdale in favor of Lender of even date herewith, a copy of which
is attached hereto as Exhibit A-4.
"Notes" shall mean, together, the Priority Note and the
Subordinate Note.
"Operating Agreement" shall mean the Amended and Restated
Operating Agreement of the Borrower dated June 17, 1998.
"Owner" is defined in the Recitals on Page 1 of this Agreement.
"Person" shall mean a limited liability company, an association, a
corporation, a partnership, an organization, a business, an individual, a
government or political subdivision thereof or a governmental agency.
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"Pledge of Investment Agreement" shall mean that certain Security
Agreement Pledge and Assignment of Investment Agreement of even date herewith
between Brookdale and
Lender.
"Priority Loan" is defined in Section 2.1 of this Agreement.
"Priority Note" is defined in Section 2.3 of this Agreement and a
copy of which is attached hereto as Exhibit B-1.
"Project" is defined in the Recitals on Page 1 of this Agreement.
"Project Completion" is the circumstance evidenced by the Project
Architect's
Certificate of Substantial Completion and the issuance of all licenses and
permits required for the
full use and occupancy of the Project.
"Property" shall mean the real property described in the First
Mortgage and the Project and all other improvements, buildings and structures
and appurtenances relating thereto acquired by the Owner or owned by the Owner
and located in Xxxxxx, Xxxxxx
County, Texas.
"Recourse Guaranties" shall mean the Completion Guaranty, the
Guaranty of
Recourse Obligations and the Environmental Indemnity Agreement.
"Required Pay Rate of Interest on the Priority Note" is defined in
Section 2.3(b)(i) of this Agreement.
"Required Pay Rate of Interest on the Subordinate Note" is
defined in Section
2.3(b)(i) of this Agreement.
"Scheduled Debt Service" shall mean the monthly payments of interest
at the Default Rate of Interest or the Required Pay Rate of Interest on the
Priority Note, as applicable, as required by Section 2.3(b)(i) and Section
2.3(b)(iii) of this Agreement.
"Security Agreement and Assignment" shall mean the Security
Agreement - Pledge and Assignment of Membership Interests from AH Texas
Investor, Inc. to the Lender dated the date of the Loan Closing, a copy of which
is attached hereto as Exhibit C.
"Senior Lender" is defined in the Recitals on Page 1 of this
Agreement.
"Senior Loan" is defined in the Recitals on Page 1 of this
Agreement.
"Senior Loan Documents" shall mean the loan documents evidencing or
securing the Senior Loan.
"Special Management Interest" shall mean that certain right to
replace the manager of the Borrower granted to the Lender pursuant to Section
5.5 of the Operating Agreement.
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"Structuring Fee" means the fee of $152,230 payable by the Borrower
to Banc One Capital Markets, Inc., an Affiliate of the Lender, as follows: (a)
50% of the Structuring Fee shall be due and payable upon the earlier of (i) the
Loan Closing or (ii) the 30th day after the date on which the commitment to make
the Loan was issued by the Lender to the Borrower, and (b) the remaining 50% of
the Structuring Fee shall be due and payable at the time of the Loan Closing. A
deposit of $5,000 has been previously paid to the Lender on behalf of the
Borrower and said deposit shall be credited against the Structuring Fee at the
Loan Closing.
"Subordinate Loan" is defined in Section 2.1 of this Agreement.
"Subordinate Note" is defined in Section 2.3 of this Agreement and a
copy of which is attached hereto as Exhibit B-2.
"Title Insurance Commitment" is defined in Section 4.1(f) of this
Agreement.
"Warrant" shall mean that certain Warrant Certificate issued by
Brookdale in favor of the Lender, a copy of which is attached hereto as Exhibit
D.
"Unavoidable Delay" shall have the meaning set forth in the
Senior Loan Documents.
"15.60% IRR" shall mean an internal rate of return of 15.60% per
annum, compounded monthly, and computed using the methodology described in
Exhibit E-1 attached hereto. Upon any Event of Default, the internal rate of
return of 15.60% per annum shall be increased to 19.60% per annum from and after
the expiration of any applicable cure period following such Event of Default
until the earlier of the payment in full of the Notes or the date when such
Event of Default is cured.
"17.11% IRR" shall mean an internal rate of return of 17.11% per
annum, compounded monthly, and computed using the methodology described in
Exhibit E-2 attached hereto. Upon any Event of Default, the internal rate of
return of 17.11% per annum shall be increased to 21.11% per annum from and after
the expiration of any applicable cure period following such Event of Default
until the earlier of the payment in full of the Notes or the date when such
Event of Default is cured.
1.2 Cross-References. Anything herein to the contrary notwithstanding, any
cross-reference in the Loan Documents to a term defined in the Senior Loan
Documents shall refer to such term as defined in the Senior Loan Documents as in
effect on the date hereof.
ARTICLE 2. LOAN
2.1 Loan. The Lender, upon the terms and subject to the conditions of this
Agreement, shall lend to the Borrower (a) the principal amount of $4,466,981
($3,081,742 of which shall be disbursed to the Borrower and up to $1,385,239 of
which shall be allocated monthly to capitalized interest to be used as a source
of payment of the Scheduled Debt Service certain legal and due diligence
expenses payable at the Loan Closing, and the unpaid portion of the Structuring
Fee);
6
and (b) the principal amount of $2,915,677. The loan proceeds referred to in
(a), above, (subject to increase as set forth in Section 2.6) are sometimes
hereinafter referred to as the "Priority Loan". The loan proceeds referred to in
(b), above, are sometimes hereinafter referred to as the "Subordinate Loan". The
Priority Loan and the Subordinate Loan are sometimes hereinafter referred to
together as the "Loan".
2.2 Timing of Disbursement of Loan. The Loan shall be funded and disbursed
as follows:
(a) Priority Loan. Subject to the satisfaction of the conditions
precedent described in Section 4.1 hereof, the sum of $3,081,742 of the Priority
Loan shall be disbursed by the Lender to the Borrower on the date of the Loan
Closing. In addition, up to $1,385,239 of the principal of the Priority Loan
shall be deemed advanced and applied to pay the unpaid portion of the
Structuring Fee and certain legal and due diligence expenses payable at the Loan
Closing and the Scheduled Debt Service as it comes due. The Borrower
acknowledges that the $1,181,027 of the principal of the Priority Loan will be
insufficient to pay all Scheduled Debt Service in the event the Maturity Date is
extended as provided in Section 2.3(a), below. Brookdale has agreed to guaranty
the payment of Scheduled Debt Service during any such extension period pursuant
to its Guaranty of Recourse Obligations.
(b) Subordinate Loan. Subject to the satisfaction of the conditions
precedent described in Section 4.1 hereof, the Subordinate Loan shall be fully
funded and disbursed to the Borrower on the date of the Loan Closing. The
disbursement of the Subordinate Loan at the Loan Closing together with the
initial disbursement of the Priority Loan at the Loan Closing, (as described in
Section 2.2(a)), is sometimes hereinafter referred to as the "Initial
Disbursement".
2.3 Notes. The Priority Loan shall be evidenced by a promissory note (the
"Priority Note") in the form of Exhibit B-1 attached hereto, which shall be
executed and delivered to the Lender by the Borrower. The Subordinate Loan shall
be evidenced by a promissory note (the "Subordinate Note" and together with the
Priority Note, the "Notes") in the form of Exhibit B-2 attached hereto, which
shall be executed and delivered to the Lender by the Borrower. The Notes shall
contain the following principal terms and provisions:
(a) Term. Each Note shall be dated the date of the Loan Closing and
shall be due and payable in full on the earlier of the Conversion Date (as such
term is defined in the Senior Loan Documents) or May 11, 2001, subject to the
Lender's right to accelerate that date upon the occurrence of an Event of
Default as set forth in Section 8.2 of this Agreement and subject to Borrower's
right to extend such date as hereinafter provided (the "Maturity Date").
Borrower may extend the Maturity Date to the earlier of the Conversion Date or
the Extended Expected Conversion Date (as such term is defined in the Senior
Loan Documents) provided that (i) Borrower has provided to Lender written notice
of its election to so extend the Maturity Date at least 30 days prior to the
Original Expected Conversion Date (as such term is defined in the Senior Loan
Documents), (ii) as of the date of such notice there exists no Event of Default
or event which with notice or passage of time would constitute an Event of
Default; (iii) Borrower pays to Lender an extension fee equal to one percent
(1%) of the then outstanding principal amount of the Priority Note; and (iv) the
Original Expected Conversion Date has been extended to the Extended Expected
Conversion
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Date (as such term is defined in the Senior Loan Documents) in accordance with
the provisions of the Senior Loan Documents.
(b) Interest Rate.
(i) Required Pay Rate of Interest. Except as expressly
provided in Section 2.3(b)(iii), interest shall accrue on the unpaid principal
balance of the Priority Note at the rate ten percent (10%) per annum (the
"Required Pay Rate of Interest on the Priority Note"). The Required Pay Rate of
Interest on the Priority Note shall (A) be applied to so much of the principal
of the Priority Loan as shall be outstanding; (B) be calculated on the basis of
a 365 day year, for the actual number of days outstanding and (C) accrue and be
payable in arrears on the first business day of each month. Except as expressly
provided in Section 2.3(b)(iii), interest shall accrue on the unpaid principal
balance of the Subordinate Note at the rate of nine percent (9%) per annum,
simple interest (the "Required Pay Rate of Interest on the Subordinate Note").
The Required Pay Rate of Interest on the Subordinate Note shall (x) be applied
to so much of the principal of the Subordinate Loan as shall be outstanding; (y)
be calculated on the basis of a 365-day year, for the actual number of days
outstanding and (z) accrue and be payable on the Maturity Date.
(ii) Mandatory Lookback Interest. Upon the payment of the
outstanding principal balance of the Loan, whether at the Maturity Date or upon
earlier acceleration or permitted prepayment, the Borrower shall pay to the
Lender as additional interest on the Loan an aggregate amount equal to (A) the
amount necessary to produce a 15.60% IRR on the Priority Note after taking into
account all interest previously paid to the Lender (the "Mandatory Priority Note
Lookback Interest") plus (B) the amount necessary to produce a 17.11% IRR on the
Subordinate Note after taking into account all interest previously paid to the
Lender (the "Mandatory Subordinate Note Lookback Interest"). The Mandatory
Priority Note Lookback Interest and the Mandatory Subordinate Note Lookback
Interest are sometimes hereinafter collectively referred to as the "Mandatory
Lookback Interest".
(iii) Default Interest Rate. Upon any Event of Default, a
default rate of interest (the "Default Rate of Interest"), calculated at four
percent (4%) per annum in excess of the Required Pay Rate of Interest on the
Priority Note and the Required Pay Rate of Interest on the Subordinate Note, as
applicable, shall apply to the Loan from and after the expiration of any
applicable cure period following an Event of Default until the earlier of the
payment in full of the Notes or the date when such Event of Default is cured.
(c) Intentionally Omitted.
(d) No Principal Amortization. The outstanding principal balance of
each of the Notes is due and payable at the Maturity Date and there is no
amortization of such principal prior to the Maturity Date.
(e) Optional Prepayments. The Loan shall be closed to prepayment
except as otherwise expressly provided herein. The Loan may be prepaid in whole,
but not in part, on or after June 1, 2000, provided that: (i) the Borrower (or
Brookdale) shall provide the Lender with five (5) days prior written notice of
any such prepayment in full; (ii) Brookdale has exercised the Equity Option; and
(iii)
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any prepayment shall be accompanied by the payment of the Mandatory Lookback
Interest as required by Section 2.3(b)(ii). The Loan may also be prepaid in
whole, but not in part, at any time (whether before or after June 1, 2000) in
the event of an "Investor Default" (as such term is defined in the Equity Option
Agreement) provided that (i) Brookdale has exercised the Equity Option and (ii)
any prepayment shall be accompanied by the payment of the Mandatory Lookback
Interest as required by Section 2.3(b)(ii).
(f) Events of Default. Any Event of Default under this Agreement
shall be an event of default under the Notes.
(g) Priority of Payments. Anything herein to the contrary
notwithstanding, the payment of all amounts owing to the Lender by the Borrower
with respect to the Priority Loan (including, without limitation, all principal
under the Priority Loan, any reasonable costs of collection with respect to the
Priority Note, all Scheduled Debt Service and all Mandatory Priority Note
Lookback Interest) shall, in all events, take priority over each and every
payment by the Borrower under or with respect to the Subordinate Loan. The
subordination of the right to payment of any amounts under the Subordinate Loan
to the payment of all amounts under the Priority Loan shall be reflected on the
face of each Note.
2.4 Use of Loan Proceeds. The proceeds of the Loan shall be
disbursed as follows:
(a) All closing costs shall be paid, including, but not limited to,
reasonable legal fees and expenses, the Structuring Fee and all other reasonable
costs incurred by (i) the Lender, including the reasonable fees and expenses of
the Lender's attorneys, appraisers, accountants, environmental consultants and
other professionals, as provided for in Section 10.8 of this Agreement, and (ii)
the Borrower (if incurred by the Borrower and approved by the Lender and the
Manager) which are directly related to the closing of the Loan.
(b) The remaining proceeds of the principal amount of the
Subordinate Loan shall be used by the Borrower as a capital contribution to the
Owner to acquire, develop or construct the Property and to pay the Owner's costs
and expenses incurred in connection therewith. The remaining proceeds of the
principal amount of the Priority Loan shall be used (i) for the purposes
described in the immediately preceding sentence, (ii) to pay Scheduled Debt
Service as described in Section 2.2(a) of this Agreement, and (iii) for such
other purposes as the Lender and Manager may agree in writing.
2.5 Acknowledgment of Full Payment of the Loan. Upon payment in full of
the Loan in accordance with this Agreement, the Lender shall promptly provide to
Borrower (with a copy to Brookdale) a written acknowledgment of such payment in
full.
2.6 Right to Make Additional Advances.
(a) Anything herein to the contrary notwithstanding, the Lender
shall have the right, but not the obligation, subject to the approval of the
Manager (which shall not be unreasonably withheld), to make additional advances
to fund the payment of the income taxes resulting from the generation of any
operating income to the Owner. For all purposes of this
9
Agreement, such advances shall constitute a portion of the Priority Loan (and
thereby increase its principal balance); provided, however that the Required Pay
Rate of Interest with respect to such advances shall accrue and be payable on
the Maturity Date. Anything herein to the contrary notwithstanding, any such
advances by the Lender shall in no event create any obligation on the part of
the Owner to the Lender.
(b) Anything herein to the contrary notwithstanding, in the event
Manager or its Affiliate fails to pay to the Senior Lender the Conversion
Shortfall in accordance with the terms of the Senior Loan Documents and, as a
result, Lender makes a Subordinate Lender Conversion Shortfall Advance (as such
term is defined in the Intercreditor Agreement), such advance, at the option of
the Lender, shall constitute a portion of the Priority Loan (and thereby
increase its principal balance); provided, however, that the Required Pay Rate
of Interest with respect to such advance shall accrue and be payable on the
Maturity Date. Anything herein to the contrary notwithstanding, any such
advances by the Lender shall in no event create any obligation on the part of
the Owner to the Lender.
ARTICLE 3. PAYMENTS, SECURITY, LIABILITY FOR
THE MICHIGAN LOAN
3.1 Payments. All payments by the Borrower of all amounts due on the Notes
shall be made to the Lender in United States funds on the date they are due.
Whenever any payment to be made thereunder shall be due other than on a Business
Day, such payment shall be deemed to be due on the next succeeding Business Day
and, in such event, such extension of time shall be included in the computation
of interest thereunder.
3.2 Security. As security for payment of the Notes and for the performance
of and compliance with all of the terms, covenants, conditions, stipulations and
agreements contained in the Loan Documents (including, without limitation, the
agreement contained in Section 3.3), AH Texas Investor, Inc. shall pledge and
assign to the Lender its Membership Interests in the Borrower pursuant to the
Security Agreement and Assignment. Upon the exercise of its rights under the
Security Agreement and Assignment, the Lender or its assignee or designee, at
its election, may become a substitute member of the Borrower subject only to the
terms and conditions of the Intercreditor Agreement and the Equity Option. Upon
an Event of Default and acceleration of the Loan, the Lender or its assignee or
designee, at its election, may exercise its rights under the Special Management
Interest. In addition, Brookdale shall execute and deliver to the Lender the
Guaranties.
3.3 Liability for the Michigan Loan. In consideration for the making of
the Loan, the Borrower acknowledges and agrees that it shall be jointly and
severally liable for the obligations of AH Michigan Subordinated, LLC under the
Michigan Loan Agreement and consents to and agrees to the terms and conditions
of the Michigan Loan Agreement and the Loan Documents (as such term is defined
in the Michigan Loan Agreement).
10
ARTICLE 4. CONDITIONS OF BORROWING
The obligation of the Lender to disburse the principal amount of the Loan
to the Borrower provided for hereunder shall, in addition to any other
requirements set forth herein, be subject to the
following conditions.
4.1 Conditions Precedent to the Initial Disbursement. Prior to the Initial
Disbursement (i) all the representations and warranties made in Article 5 below
shall remain true and correct in all material respects, and (ii) there shall be
no event of default under any of the Senior Loan Documents. In addition, the
Borrower shall furnish, or cause to be furnished, to the Lender the following,
in form and substance reasonably satisfactory to the Lender and counsel for the
Lender:
(a) The duly executed Loan Documents;
(b) Certified copies of the resolutions of the Borrower authorizing
the execution, delivery and performance of the Borrower's obligations under the
Loan Documents to which it is a party;
(c) Evidence that the Owner or the Manager has in effect insurance
and endorsements of the character and amount described in Section 6.1(e);
(d) Evidence that the Borrower has paid or shall cause to be paid
from proceeds of the Loan all required third party fees and expenses, including
the Structuring Fee;
(e) An opinion or opinions of counsel(s) to AH Texas Investor, Inc.,
the Borrower, Manager and Brookdale, addressed to the Lender and, as to clauses
(iii), (viii) and (ix) to Brookdale, opining: (i) that the Loan Documents have
been duly authorized, executed and delivered by the Borrower, the Manager and
Brookdale, as the case may be, and are the legal, valid, and binding obligations
of the Borrower, Brookdale and the Manager, as applicable; (ii) that the Loan
Documents are in full force and effect and are in compliance with all
requirements of the Senior Lender, State law and Federal law; (iii) that the
Borrower and the Owner are duly organized and validly existing entities under
the laws of the State(s) under which they are formed, and the Owner has full
power to acquire, hold, encumber, develop, operate, sell and convey and dispose
of real property and interests therein; (iv) that the Membership Interests have
been effectively pledged and assigned to the Lender pursuant to the Security
Agreement and Assignment and that the Lender, upon proper filing, will have a
perfected security interest in the Membership Interests; (v) the Guaranties and
the Security Agreement and Assignment have been duly executed and delivered and
are the legal, valid and binding obligation of the signatories thereto; (vi)
that (A) the execution and performance by the Borrower of this Agreement, the
Notes, and the other Loan Documents to which it is a party do not conflict with
the Borrower's or the Owner's organizational documents or any other agreements
of the Borrower or the Owner known to counsel and (B) to the knowledge of
counsel, there are no administrative orders, notices, claims, litigation,
proceedings or investigations pending against the Borrower, the Owner or the
Property with respect to which an adverse decision is reasonably likely which
would materially adversely affect the Borrower's performance under the Loan
Documents to which it is a party; (vii) the Special Management Interest is a
legal, valid and binding obligation of the Borrower; (viii) the Equity Option
Agreement has been duly authorized,
11
executed and delivered by AH Texas Investor, Inc., the Borrower, the General
Partner and the Owner and is the legal, valid and binding obligation of AH Texas
Investor, Inc., the Borrower, the General Partner and the Owner; (ix) the
Brookdale Option Agreement has been duly authorized, executed and delivered by
the Borrower and the Owner and is the legal, valid and binding obligation of the
Borrower and the Owner; and (x) such other matters which the Lender or its
counsel may reasonably require (including, without limitation, choice of law and
usury). Such opinion or opinions of counsel shall be in form and substance
reasonably acceptable to the Lender and its counsel;
(f) A copy of the TLTA owner's and lender's commitments of title
insurance issued to the Owner and the Senior Lender (together, the "Title
Insurance Commitment"), and the Lender shall have the opportunity to review and
approve the same. Such Title Insurance Commitment shall be reasonably acceptable
to the Lender in all respects;
(g) The existing survey of the Property prepared by a surveyor
registered in the State of Texas. The survey shall be reasonably acceptable to
the Lender in all respects;
(h) No part of the improvements of the Property shall have been
damaged or destroyed, in whole or in material part by fire or other casualty and
no material eminent domain proceedings affecting the improvements to the
Property shall have been threatened or pending;
(i) All questions concerning the Owner's rights, title and interest
in and to the Property, the Borrower's authority to enter into the transaction
contemplated by this Agreement and the security of the pledge and assignment of
the Membership Interests to be created in connection with the Loan shall be
resolved to the reasonable satisfaction of the Lender;
(j) The Lender shall have approved the Management Agreement and the
Development Agreement, and the Lender shall receive evidence that the Management
Agreement and the Development Agreement have been fully executed by the parties
thereto;
(k) The Environmental Site Assessment addressed to the Lender, which
shall be reasonably acceptable to the Lender in all respects;
(l) A soil report for the Property, which shall be in form and
content reasonably acceptable to the Lender;
(m) Financial projections for the Property which shall be reasonably
acceptable to the Lender;
(n) An appraisal of the Property by an M.A.I. appraiser evidencing
an appraisal value of the Property of not less than $32,000,000 and otherwise
reasonably satisfactory to the Lender;
(o) The Operating Agreement, all amendments and attachments thereto,
which shall be certified by the Borrower to be true and complete and which shall
be reasonably acceptable to the Lender. The Borrower shall also provide the
Lender with any certificates filed or required
12
to be filed for the Borrower to be duly organized in the state of its formation
and any consents by other parties required for the borrowing contemplated
hereby. Additionally, the Borrower shall provide the Lender with a good standing
certificate for the Owner from the Owner's state of organization, its
certificate of limited partnership certified to be true and correct by the
Secretary of State of the state of its organization, and its agreement of
limited partnership (and all amendments and attachments thereto) certified to be
true and complete;
(p) The Lender shall have approved the terms of the Senior Loan and
be fully satisfied, in its sole and absolute judgment, that (i) the Loan is
fully authorized under the Senior Loan Documents; (ii) the Senior Lender has
full knowledge of the Loan and all of its terms and conditions; and (iii) the
Lender will be able to enforce all of its rights under the documents evidencing
the Loan, including but not limited to, the right to receive timely payment from
the Borrower (and the Property) of all amounts due under the Notes, the right to
exercise its rights under the Special Management Interest and the right to
foreclose on the Membership Interests pursuant to the Security Agreement and
Assignment, without causing an event of default under any of the Senior Loan
Documents subject, in all cases, to the provisions of the Intercreditor
Agreement;
(q) The Construction Plan for the Property and a statement of
sources and uses of funds, which shall be reasonably satisfactory to the Lender;
(r) Evidence satisfactory to the Lender that the sole member of the
Borrower has made a contribution to the capital of the Borrower of not less than
$900,000 (the "Capital
Contribution");
(s) A market study in form and content reasonably satisfactory to
Lender;
(t) A copy of the Brookdale Option Agreement and the Equity Option
Agreement, each of which shall be in a form reasonably acceptable to the Lender,
and
(u) Such other opinions, certificates, affidavits, documents and
filings as the Lender may deem reasonably necessary or appropriate.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender, which representations
and warranties shall survive the execution and delivery of this Agreement, the
Notes and the other Loan
Documents, as follows:
5.1 Organization and Authority of Borrower. The Borrower is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Ohio and has all requisite power and authority to own
and operate its property and to carry on its business as now conducted. The
Borrower is duly qualified to do business in each jurisdiction where the nature
of its operations and applicable laws require such qualification except where
the failure to be so qualified would not have a material adverse effect on the
Borrower. The execution, delivery and performance of the Loan Documents to which
the Borrower is a party, have been duly
13
authorized by all necessary organizational action. There is no prohibition in
the Operating Agreement, or in any document, instrument or agreement, or in any
law or any order, writ, injunction or decree of any court or arbitrator
presently in effect having applicability to the Borrower which in any way
prohibits or would be violated by the execution and performance of the Loan
Documents in any respect except where such violation would not have any material
adverse effect on the Borrower. The Loan Documents to which the Borrower is a
party are valid, binding and enforceable obligations of the Borrower, except as
enforcement may be limited by bankruptcy, insolvency or the laws or equitable
principles affecting the enforcement of creditors' rights generally. The
Borrower is a single purpose entity whose sole assets are the limited
partnership interests in the Owner and the stock of the General Partner.
5.2 Organization and Authority of the Owner. The Owner is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Ohio and has all requisite power and authority to own and
operate the Property and to carry on its business as now conducted. The Owner is
duly qualified to do business in each jurisdiction where the nature of its
operations and applicable laws require such qualification except where the
failure to be so qualified would not have a material adverse effect on the
Owner. There is no prohibition in the Owner's limited partnership agreement, or
in any document, instrument, or agreement, or in any law or any order, writ,
injunction or decree of any court or arbitrator presently in effect having
applicability to the Owner which in any way prohibits or would be violated by
the execution and performance of the Loan Documents in any respect except where
such violation would not have any material adverse effect on the Owner or the
Borrower. The Owner is a single purpose entity whose sole asset is the Property.
5.3 Organization and Authority of the General Partner. The General Partner
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio and has all requisite power and authority to own and
operate its property and to carry on its business as now conducted and has the
requisite authority to act as the general partner of the Owner. The General
Partner is duly qualified to do business in each jurisdiction where the nature
of its operations require such qualification except where the failure to be so
qualified would not have a material adverse effect on the General Partner or the
Owner. There is no prohibition in the General Partner's Articles of
Incorporation, or in any document, instrument, or agreement, or in any law or
any order, writ, injunction or decree of any court or arbitrator presently in
effect having applicability to the General Partner which in any way prohibits or
would be violated by the execution and performance of the Loan Documents in any
respect except where such violation would not have any material adverse effect
on the General Partner or the Borrower. The General Partner is a single purpose
entity whose sole purpose is to act as the general partner of the Owner and
whose sole asset is the general partnership interest in the Owner.
5.4 Title to Property; Liens. To Borrower's actual knowledge, the Owner
has good and marketable title to the Property, free and clear of mortgages,
pledges, liens, charges or other encumbrances except such as are not prohibited
by Section 7.1 and the Brookdale Option Agreement.
5.5 Litigation. To Borrower's actual knowledge, (a) there is no court
action, other proceeding or investigation pending, or to the knowledge of the
Borrower, threatened which
14
questions the validity of or enforceability of the Loan Documents, or any action
taken pursuant thereto, and (b) there is no court action, other proceeding or
investigation pending or, to the knowledge of the Borrower, threatened with
respect to which an adverse decision is reasonably likely and which would
result, either separately or in the aggregate, in any materially adverse change
in the business, operations, affairs or condition of the Borrower or the Owner
or which would materially and adversely affect the Property or the Owner's
ownership thereof.
5.6 Compliance with Law and Other Instruments. Neither the Borrower, the
General Partner nor the Owner is in violation of, and the execution, delivery
and performance of the Loan Documents do not and will not result in a violation
of, conflict with or cause a default under, any agreement, instrument, judgment,
decree, order, statute or governmental rule or regulation applicable to the
Borrower, the General Partner or the Owner, or by which Borrower, the General
Partner or the Owner may be bound, which now or in the future may materially
adversely affect the business, operations, affairs or condition of the Borrower,
the General Partner or the Owner.
5.7 Adverse Contracts; Defaults. The Borrower is not a party to any
agreement or instrument other than the Loan Documents, the Intercreditor
Agreement, the Limited Partnership Agreement of the Owner, the Brookdale Option
Agreement, the Equity Option Agreement and all documents executed in connection
with the interim closing effective March 31, 1998. The Owner is not a party to
any agreement or instrument other than the Senior Loan Documents, the Management
Agreement, the Development Agreement, the Intercreditor Agreement, the Equity
Option Agreement, the Brookdale Option Agreement and all the documents executed
in connection with the interim closing, effective March 31, 1998 or executed
directly in connection with its status as owner of the Property. Neither the
Borrower nor the Owner is in default in any respect in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any agreement or instrument to which it is a party,
which default would materially and adversely affect the ability of Borrower to
perform its obligations under this Agreement.
5.8 Environmental Laws. Except as disclosed in the Environmental Site
Assessment prepared by Maxim Technologies, Inc., dated February 20, 1997 (the
"Environmental Site Assessment"), to Borrower's actual knowledge, no release,
emission, or discharge into the environment of hazardous substances, as defined
under the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, or hazardous waste as defined under the Solid Waste Disposal Act, as
amended, or air pollutants as defined under the Clean Air Act, or toxic
pollutants as defined under the Clean Air Act, or the Toxic Substances Control
Act, has occurred or is presently occurring on or with respect to the Property,
in excess of federally permitted releases or reportable quantities, or other
concentrations, standards of limitations under the foregoing laws or under any
other federal, state or local laws or regulations. To Borrower's actual
knowledge, there are no past or existing violations of any environmental laws,
ordinances or regulations issued by any federal, state or local governmental
authority with respect to the Property and, no underground storage tanks exist
on the Property.
5.9 Disclosure. To the best of Borrower's knowledge, no information,
exhibit or report furnished by the Borrower to the Lender in connection with the
negotiation of this Agreement contained any material misstatement of fact or
omitted to state a material fact necessary to make the statements contained
therein not materially misleading.
15
5.10 Tax Reports; Filings. All of the Borrower's and the Owner's federal,
state and other tax returns and reports, including reports to any governmental
authority, for the proper maintenance and operation of its or their property,
assets and business, as may be required by law to be filed or paid, have been
(or will be) filed, and all federal, state and other taxes, assessments, fees
and other governmental charges (other than those presently payable, without
penalty) imposed upon them or their property or assets, which are due and
payable, have been fully paid unless the same are being contested by the
Borrower or the Owner, as appropriate, in the ordinary course of business for
which it has provided adequate reserves.
5.11 Default. To Borrower's actual knowledge, there does not exist
any Event of Default
or Default hereunder.
5.12 Business of Borrower and Owner. The Borrower is engaged, and since
its formation has engaged, in no business other than owning the limited
partnership interests in the Owner and the stock of the General Partner. The
General Partner is engaged, and since its formation has engaged, in no business
other than acting as general partner of the Owner.
The Owner is engaged,
and since its formation has engaged, in no business other than owning,
constructing and operating the Property.
5.13 Liabilities. The Borrower has no liabilities other than the Loan
except for unsecured liabilities related to the closing of the Loan and the
continuing administration of its business in the ordinary course and liabilities
incurred in connection with the Intercreditor Agreement, the Brookdale Option
Agreement and the Equity Option Agreement. The Owner has no liabilities other
than liabilities incurred in connection with (i) the Senior Loan Documents, (ii)
the Management Agreement, (iii) the Development Agreement, (iv) the Brookdale
Option Agreement , (v) the Equity Option Agreement, (vi) liabilities relating to
the construction of the Project, (vii) the Permitted Encumbrances (as defined in
the Senior Loan Documents), and (viii) the ordinary course of owning,
constructing and operating the Property. The General Partner has no liabilities
other than liabilities incurred in the ordinary course of acting as the general
partner of the Owner.
ARTICLE 6. AFFIRMATIVE COVENANTS
Until payment in full of the Notes and performance of all other
obligations of the Borrower hereunder:
6.1 Covenants Relating to the Property or the Manager.
(a) Financial Statements and Reports. Not later than one hundred
twenty (120) days following the end of each fiscal year, the Borrower shall
cause the Owner or the Manager, as the case may be, to provide, to the Lender
the following items in form and substance reasonably satisfactory to the Lender:
(i) An income and cash flow statement and balance sheet of
the Owner as of the end of such fiscal year;
16
(ii) A rent roll for the Property or other occupancy report
as may be reasonably required by the Lender;
(iii) Such other financial information and reports as may be
reasonably requested by the Lender; and
(iv) To the extent reasonably requested by the Lender, the
Borrower shall cause the Owner to provide the Lender
with audited reports confirming any of the foregoing
financial statements and presentations.
(b) Periodic Reports. The Borrower shall cause the Owner or the
Manager, as the case may be, to provide, the following items in form and
substance reasonably satisfactory to
the Lender:
(i) Unaudited income and cash flow statements and balance
sheets of the Owner for the period and fiscal year to
date;
(ii) A rent roll for the Property or other occupancy report
as may be reasonably required by the Lender; and
(iii) Such other financial information and records as may be
reasonably requested by the Lender including without
limitation, construction progress reports (i.e., Senior
Lender draw requests).
The foregoing information shall be provided not later than forty
five (45) days following the end of each fiscal quarter except for rent rolls
and construction progress reports which, at the request of Lender, shall be
provided on a monthly basis.
(c) Preparation of Tax Returns. The Borrower shall cause the Manager
to prepare the necessary tax returns for the Owner, at the Project's expense, to
the extent permitted by the
Senior Loan Documents.
(d) Inspection. Upon the reasonable request of the Lender , subject
to the rights of any tenants or residents, the Borrower shall cause the Owner or
the Manager, as the case may be, to make available for inspection to
representatives of the Lender the Project itself, as well as, at the offices of
the Manager, any of the books and records relating to the Project and shall
furnish to the Lender information regarding the business affairs and financial
condition of the Project within a reasonable time after receipt of written
request therefor.
(e) Insurance. The Borrower shall cause the Owner or the Manager, as
the case may be, to maintain "extended coverage" insurance against loss by fire,
not less than six (6) months of business interruption, public liability, theft
and other casualty on its insurable real and personal property in such amounts
and otherwise in form and substance and with such companies as are required by
Senior Lender under the Senior Loan Documents and against liability on account
of
17
damage to persons or property and as required under all applicable Workers'
Compensation Laws.
Copies of all insurance policies or certificates evidencing the same shall be
furnished to the Lender.
(f) Payment of Taxes and Claims. The Borrower shall cause the Owner
or the Manager, as the case may be, to pay all taxes, assessments and other
governmental charges imposed upon the Property or assets of the Owner or in
respect of any of the franchises, business, income or profits of the Owner
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have become a lien or charge
upon any of the Property or assets of Owner provided that no such tax,
assessment, charge or claim need be paid if the amount, applicability or
validity thereof is currently being contested in accordance with the provisions
of the Senior Loan Documents.
(g) Maintenance of Property. The Borrower shall cause the Owner or
the Manager, as the case may be, to operate and manage the Property in a
commercially reasonable manner. The Borrower shall cause all amounts paid by the
Borrower, the Owner or any of their respective Affiliates to Brookdale, the
Manager or any of their respective Affiliates, to be commercially reasonable and
to not exceed the prevailing market rate for such services except as otherwise
described in the Budget. All such payments shall be identified in the financial
reports required by Section 6.1(a) and (b) of this Agreement. The Borrower shall
cause the Owner or the Manager, as the case may be, to notify the Lender, in
writing, as to the existence of any such contracts with, or any services or
materials being provided by, an Affiliate of Brookdale or the Manager, which are
not otherwise disclosed in the Budget.
(h) Maintenance of Tangible Assets. The Borrower shall cause the
Owner or the Manager, as the case may be, to maintain, keep and preserve its
buildings and property and every part thereof in good repair, working order, and
condition.
(i) Records and Books of Account. The Borrower shall cause the Owner
and the Manager to keep adequate records and books of account in a manner
appropriate to permit the preparation of the financial statements required by
Sections 6.1(a) of this
Agreement.
(j) Use of Proceeds. The Borrower shall cause the Owner and the
Manager to use all proceeds of the Loan disbursed pursuant to this Agreement for
legal and proper purposes and as described in Section 2.4 of this Agreement, and
such uses shall be consistent with all applicable laws and the provisions of
this Agreement.
(k) Construction Plan. The Borrower shall cause the Owner and the
Manager, as the case may be, to diligently commence and pursue to completion the
construction contemplated by the Construction Plan. Subject to Unavoidable
Delay, the Project Completion shall be achieved not later than fourteen (14)
months from the date of the closing of the Senior Loan.
(l) Compliance with Laws. The Borrower shall cause the Owner and the
Manager, as the case may be, to comply in all respects with all applicable
statutes, laws, ordinances and governmental rules, regulations and orders which
are applicable to the construction, development, management or operation of the
Project if noncompliance therewith would have a
18
material adverse affect on the Project, the Owner or the Borrower including, but
not limited to, all applicable federal, state, regional, county or local laws,
statutes, rules, regulations or ordinances concerning public health, safety or
the environment; provided that the Owner or the Manager, as the case may be,
need not so comply if any such statute, law, ordinance, or governmental rule,
regulation or order is currently being contested in accordance with the Senior
Loan Documents.
(m) Operating Expenses and Debt Service under Senior Loan Documents.
The Borrower shall cause the Owner to pay (unless Guarantor or other party shall
have paid) when due all Operating Expenses and Debt Service (whether or not
Operating Income is sufficient to pay them). For purposes of this Section
6.1(m), the terms "Operating Expenses," "Debt Service" and "Operating Income"
shall have the meanings ascribed to them in the Senior Loan Documents.
(n) Completion. The Borrower shall cause the Owner to observe,
fulfill and perform (unless Guarantor or other party shall have observed,
fulfilled or performed) all obligations of the Owner and the Manager under or
pursuant to the Building Loan Agreement solely with respect to (i) the
construction of the Required Improvements, including, the obligations of Owner
to construct, equip and complete the Required Improvements in accordance with
Section 7.1 of the Building Loan Agreement, and (ii) the payment when due of all
Costs in accordance with the Building Loan Agreement. For purposes of this
Section 6.1(n), the terms "Required Improvements," "Building Loan Agreement" and
"Costs" shall have the meanings ascribed to them in the Senior Loan Documents.
6.2 Covenants Relating to the Borrower, the Owner and the General Partner.
(a) Compliance with Laws. The Borrower shall, and shall cause the
Owner and the General Partner to, comply in all respects with all applicable
statutes, laws, ordinances and governmental rules, regulations and orders which
are applicable to its business, property and assets if noncompliance therewith
would have a material adverse affect on such business, including, but not
limited to, all applicable federal, state, regional, county or local laws,
statutes, rules, regulations or ordinances concerning public health, safety or
the environment; provided that the Borrower, the Owner and the General Partner
need not so comply if any such statute, law, ordinance, or governmental rule,
regulation or order is currently being contested in accordance with the Senior
Loan Documents.
(b) Preservation of Existence. The Borrower shall, and shall cause
the Owner and the General Partner to, preserve and maintain their respective
legal existence, rights, franchises and privileges in the jurisdiction of its
formation, or in any other jurisdiction it shall select, and qualify and remain
qualified in each jurisdiction in which such qualification is necessary or
desirable in view of their business and operations or the ownership of its
property.
(c) Notices of Certain Events. The Borrower shall promptly
give notice to the
Lender of:
(i) Any Default or Event of Default known to Borrower;
19
(ii) Any notice of any "default" or "Event of Default"
received by the Owner from the Senior Lender under the
Senior Loan Documents;
(iii) Any notice of default or event of default received under
any other contract, agreement or undertaking of the
Borrower, the Owner or the General Partner, where the
total value of the contract, agreement or undertaking is
in excess of One Hundred Thousand Dollars ($100,000.00);
or
(iv) A materially adverse change in the business, operations,
affairs or condition (financial or otherwise) of the
Borrower or
the Owner.
(d) Performance of Contracts. The Borrower shall, and shall cause
the Owner and the General Partner to, perform and comply with each and every
material contract, agreement or instrument now or hereafter binding upon it,
except to the extent that it shall contest the provisions thereof in good faith
and by proper proceedings.
(e) Notice of Material Litigation. The Borrower shall promptly
notify the Lender in writing of any litigation, arbitration proceeding or
administrative investigation, inquiry or other proceeding to which the Borrower,
the Owner or the General Partner may hereafter become a party with respect to
which an adverse decision is reasonably likely and which would involve a
material risk of judgment or liability not fully covered by insurance or which
would otherwise result in a material adverse change of the business, operations,
affairs or condition (financial or otherwise) of the Borrower, the Owner or the
General Partner or which would materially impair the ability of the Borrower to
perform its obligations under the Loan Documents or any other agreement or
instrument contemplated hereby or thereby.
(f) Bankruptcy. The Borrower shall not, and shall not permit the
General Partner or the Owner to, file a voluntary petition in bankruptcy without
the
consent of the Lender.
The Borrower shall, and shall cause the Owner and the General Partner to, use
its best efforts to contest any involuntary petition filed against it.
(g) Compliance with Certain Agreements. The Borrower shall comply,
and, as applicable, shall cause the General Partner and the Owner to comply,
with all of the terms, conditions and obligations of the Borrower, the Owner and
the General Partner under the Management Agreement, the Development Agreement,
the Equity Option Agreement, the Brookdale Option Agreement, the Senior Loan
Documents and the Intercreditor Agreement.
(h) Tax Returns. Not later than thirty (30) days following the
applicable filing date (including any extensions authorized by the applicable
taxing authority), the Borrower shall provide to the Lender a copy of the
Borrower's and the Owner's federal income tax returns.
(i) Payment of Taxes and Claims. The Borrower shall pay all taxes,
assessments and other governmental charges imposed upon its property or assets
or in respect of any of its franchises, business, income or profits before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
20
have become due and payable and which by law have become a lien or charge upon
any of its property or assets, provided that no such tax, assessment, charge or
claim need be paid if the amount, applicability or validity thereof is currently
being contested in good faith and if an appropriate reserve or cash escrow shall
have been made therefor.
ARTICLE 7. NEGATIVE COVENANTS
Until payment in full of the Notes and the performance of all other
obligations of the Borrower under the Loan Documents, the Borrower may not take
the following actions without the prior written approval of the Lender:
7.1 Liens and Other Encumbrances. The Borrower shall not, and shall not
permit the Owner to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien or other encumbrance of any nature whatsoever
on the Property, except (i) encumbrances meeting the description in items (a)
through (d) of the definition of "Permitted Encumbrances" in the Senior Loan
Documents (ii) the Brookdale Option Agreement and (iii) all other liens and
encumbrances to which Lender has given its prior written consent.
7.2 Amendments to Operating Agreement, Management Agreement, Development
Agreement, and Senior Loan Documents. The Borrower shall not (i) amend the
Operating Agreement or any of its organizational documents, (ii) amend any of
the organizational documents of the Owner or the General Partner, (iii) permit
the General Partner to amend any of the organizational documents of the Owner,
or (iv) permit the Owner to amend or waive any provision of the Management
Agreement, the Development Agreement, the Brookdale Option Agreement, the Equity
Option Agreement, the Budget (other than changes for which Manager funds the
additional amounts owed or those changes resulting in a decrease in the Budget)
or the Senior Loan Documents (other than those modifications, if any, which do
not require the consent of Senior Lender, the Owner or the Manager) in any
respect, or to terminate the Management Agreement or the Development Agreement.
7.3 Transactions with Affiliates. Except for the Brookdale Option
Agreement, the Equity Option Agreement, the Development Agreement and the
Management Agreement, or except as expressly contemplated by the Budget, the
Borrower shall not permit the Owner to: (i) enter into any transaction,
including without limitation, the purchase, sale or exchange of any part of the
Property or the rendering of any services with respect to the Property, with the
Manager, Brookdale or any of their respective Affiliates or any manager, officer
or director thereof, (ii) enter into, assume or suffer to exist any employment
or consulting contract with the Manager, Brookdale or any of their respective
Affiliates or any manager, officer or director thereof unless such agreement,
transaction or contract is in the ordinary course of its business and is upon
fair and reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate; or (iii) pay
any fees or expenses to, or reimburse or assume any obligation for the
reimbursement of any expenses incurred by, the Manager, Brookdale or any of
their respective Affiliates or any manager, officer or director thereof except
as may be permitted in accordance with the preceding clause of this Section.
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7.4 Admission of New Members. The Borrower shall not issue any additional
membership interests in the Borrower on or after the date hereof. The Borrower
shall not permit the Owner to issue any additional partnership interests in
Owner on or after the date hereof. The Borrower shall not permit the General
Partner to issue any additional stock of the General Partner on or after the
date hereof.
7.5 Refinancing of Senior Loan: Additional Debt. Except to the extent
provided for by the Senior Loan Documents, the Borrower shall not permit the
Owner to refinance the Senior Loan prior to its maturity or increase the amount
of the Senior Loan. The Borrower shall not permit the Owner to incur any
additional debt (other than in the ordinary course of the Owner's business and
then in an amount not in excess of $100,000 in the aggregate and amounts owing
under the Development Agreement and the Management Agreement). The Borrower
shall not incur any debt other than the Loan.
7.6 Sale of the Property. The Borrower shall not consent to, or otherwise
permit, a sale of all or any material part of the Property except in connection
with a prepayment in accordance with the requirements of Section 2.3(e) of this
Agreement.
7.7 Limitations of Business. The Borrower shall not (i) invest in,
organize or participate in the organization of or in the creation of any
business entity other than the Owner and the General Partner and the Borrower
shall not merge, transfer, acquire or consolidate with or into any other entity,
change ownership, dissolve and/or transfer or sell any assets except as
contemplated by the Brookdale Option Agreement or (ii) permit the Owner to
invest in, organize or participate in the organization of or the creation of any
business entity other than the Project, and the Borrower shall not permit the
Owner to merge, transfer, acquire or consolidate with or into any other entity,
change ownership, dissolve and/or transfer or sell any assets outside of the
ordinary course of business except in accordance with Section 7.6 of this
Agreement and except as contemplated by the Brookdale Option Agreement or (iii)
permit the General Partner to invest in, organize or participate in the
organization of or the creation of any business entity other than the Owner, and
the Borrower shall not permit the General Partner to merge, transfer, acquire or
consolidate with or into any other entity, change ownership, dissolve and/or
transfer or sell any assets outside the ordinary course of business except in
accordance with Section 7.6 of this Agreement and except as contemplated by the
Brookdale Option Agreement..
7.8 Budgets. The Borrower shall cause the Manager to (i) submit the
operating and capital budgets proposed by the Manager under the Management
Agreement in advance to the Lender, (ii) meet with the Lender at least annually,
if so requested by the Lender, to discuss the Lender's recommendations with
respect to such proposed budgets, and (iii) duly consider, in good faith, the
implementation of any such recommendations.
7.9 Capital Expenditures. Except for capital expenditures provided for in
the Construction Plan, the Budget or as otherwise permitted under the Senior
Loan Documents (provided that, if such expenditures are in excess of $100,000 in
the aggregate and are not expressly contemplated by the Construction Plan or the
Budget, the consent of Lender has been obtained), the Borrower shall not permit
the Owner to make any capital expenditures.
22
7.10 No Challenge to Exercise of Rights under Assignment. As an inducement
to the Lender to make the Loan, the Borrower has assured the Lender that, upon
the occurrence of an Event of Default and the acceleration of the Loan as
provided in Section 8.2(a) or (b), one of the remedies available to the Lender,
at its election, will be to foreclose its security interest in, or at Lender's
option to retain as undisputed, absolute owner, the Membership Interests under
the Security Agreement and Assignment in satisfaction of the obligations under
the Notes and the Loan Documents or, at the Lender's option, to exercise its
rights under the Special Management Interest. Accordingly, the Borrower hereby
acknowledges that any such election to foreclose its security interest in,
and/or retain as undisputed, absolute owner, the Membership Interests is
reasonable under the circumstances and the Borrower hereby waives and releases
any right it may have to demand a sale of the Membership Interests or to
otherwise oppose or challenge the foreclosure or retention of the Membership
Interests by the Lender or the exercise of its rights under the Special
Management Interest if an Event of Default and acceleration of the Loan has
occurred and if it makes such an election following such Event of Default and
acceleration. Anything herein or in the Loan Documents to the contrary
notwithstanding and without limiting the generality of the foregoing, the
Borrower covenants and agrees to fully cooperate to the fullest extent permitted
under applicable law in any measures taken by the Lender to implement such an
election of remedies and, if an Event of Default and acceleration of the Loan
has occurred, not to challenge the Lender's exercise of the rights granted
hereunder.
7.11 Limitation on Change of Ownership. Except as contemplated under the
Brookdale Option Agreement or the Equity Option Agreement, the Borrower shall
not permit any transfer of (i) the Membership Interests, (ii) any of the stock
of the General Partner or (iii) the partnership interests in the Owner.
ARTICLE 8. EVENTS OF DEFAULT
8.1 Event of Default. Event of Default shall mean the occurrence of one or
more of the following described events following the expiration of any cure
period relating thereto:
(a) The Borrower fails to pay any amount required under this
Agreement when due and such failure continues for a period of five (5) Business
Days after written notice to Borrower (other than payments due on the Maturity
Date for which no notice of late payment shall be required), unless such failure
is caused by the Lender's failure to advance up to $1,385,239 of the principal
of the Priority Loan to pay the Structuring Fee, certain legal and due diligence
expenses or the Scheduled Debt Service as it comes due as contemplated by
Section 2.2(a) of this Agreement;
(b) The Borrower defaults in the performance or observation of any
covenant, condition or agreement made or required to be observed or performed by
the Borrower under any of the Loan Documents, and such default shall continue
without cure for thirty (30) days after the date upon which written notice
thereof shall have been given to the Borrower,
by the Lender,
provided that if any such default shall take more than thirty (30) days to cure,
such thirty (30) day period shall be extended by the time necessary to cure
same, not to exceed an additional ninety (90)
23
days, provided further that Borrower has promptly commenced efforts to cure the
default and continues to diligently pursue such efforts;
(c) The Owner refinances the Senior Loan prior to its maturity or
increases the amount of the Senior Loan;
(d) A material breach of the representations and warranties
contained in Article 5 hereof on the date as of which made which breach has a
materially adverse effect on the business, affairs or condition of the Borrower,
the Owner, the General Partner or the Property and which breach is not cured
within thirty (30) days after the date upon which written notice thereof is
provided to the Borrower;
(e) Any representation or warranty made by the Borrower, the Manager
or Brookdale in any of the other Loan Documents or in any report, certificate or
writing furnished in connection with or pursuant to this Agreement shall be
false or inaccurate in any material respect on the date as of which made;
provided that, in the case of any false or materially inaccurate representation
by the Borrower, such falsehood or inaccuracy has a materially adverse effect on
the business affairs or condition of the Borrower, the Owner, the General
Partner or the Property and is not cured within thirty (30) days after the date
upon which written notice thereof is provided to Borrower;
(f) Any of the Borrower, the General Partner, the Owner, the Manager
or Brookdale makes an assignment for the benefit of creditors;
(g) Any of the Borrower, the General Partner, the Owner, the Manager
or Brookdale petitions or applies to any tribunal for the appointment of a
trustee or receiver for itself,
or of any substantial part of its assets or any of the Borrower, the General
Partner, the Owner, the Manager or Brookdale commences any proceeding relating
to it under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation under the laws of any
jurisdiction whether now or hereafter in effect;
(h) Any petitions or applications are filed, or any proceedings are
commenced against any of the Borrower, the General Partner, the Owner, the
Manager or Brookdale seeking the adjudication of it as bankrupt and the Borrower
, the General Partner, the Owner, the Manager or Brookdale as applicable, by any
act indicates its admission or consent thereto, or acquiescence therein, or any
order is entered appointing a trustee or receiver, or adjudicating any of the
Borrower, the General Partner, the Owner, the Manager or Brookdale, bankrupt or
insolvent, or approving the petition in any such proceedings and such order
remains unstayed or undischarged for more than ninety (90) days;
(i) Any order is entered in any proceeding against any of the
Borrower, the General Partner, the Owner, the Manager or Brookdale decreeing the
dissolution of the Borrower, the General Partner, the Owner, the Manager or
Brookdale and such order remains unstayed or undischarged for more than ninety
(90) days;
(j) A final non-appealable judgment or judgments for the payment of
money in excess of an aggregate of $100,000 shall be rendered against the
Borrower, the General Partner or
24
the Owner and such judgment or judgments shall remain undischarged for a period
of sixty (60) consecutive days during which the execution shall not be
effectively stayed (unless a reserve of available funds is made therefor);
(k) An Event of Default occurs under the Senior Loan Documents which
remains uncured beyond any applicable grace or cure period or beyond the period
during which the Senior Lender has agreed to refrain from the exercise of its
rights and remedies under Article VIII of the Loan Agreement of even date
herewith among the Owner, the Manager and the Senior Lender pursuant to Section
8.3 thereof;
(l) A default beyond any applicable grace or cure period under the
Security Agreement and Assignment, the Guaranties or any of the other Loan
Documents;
(m) The withdrawal of the General Partner, or the General Partner's
failure to serve as the sole general partner of the Owner, without the prior
written approval of the Lender;
(n) An event of default by the Manager under the Management
Agreement or the Development Agreement, which remains uncured beyond any
applicable grace or cure period;
(o) Subject to Unavoidable Delay, the Borrower's failure to cause
the Owner to achieve Project Completion by the "Outside Completion Date" (as
such term is defined in the Senior Loan Documents).
(p) A breach by Brookdale of any of its obligations under the
Warrant which remains uncured beyond any applicable grace or cure period;
(q) Any change in the chief executive officer of Brookdale unless
within thirty (30) days thereafter Brookdale has provided to the Lender a
management succession plan acceptable to the Lender in its reasonable
discretion;
(r) A breach by Brookdale or Manager of any of its obligations to
Lender under the Intercreditor Agreement or the Consent and Subordination of
Manager and which remains
uncured beyond any applicable grace or cure period;
(s) An Event of Default under the Michigan Loan Agreement;
(t) Brookdale's failure to maintain a Net Worth (as such term is
defined in the Senior Loan Documents) in excess of $110,000,000;
(u) Brookdale's failure to maintain an EBITDAR (as such term is
defined in the Senior Loan Documents) in excess of $5,000,000, which shall be
tested on a quarterly basis; or
(v) Brookdale's failure to maintain Liquid Assets (as such term is
defined in the Senior Loan Documents) having a market value of at least
$5,000,000, which shall be tested on a quarterly basis.
25
8.2 Consequences of Event of Default.
(a) If any Event of Default specified under subsections (a), (b),
(d), (e) or (j) through (v) of Section 8.1 above shall occur and be continuing,
the Lender may, by written notice to the Borrower, declare the unpaid balance of
all principal and interest accrued on the Notes and all other obligations of the
Borrower hereunder, or under any of the other Loan Documents, to be immediately
due and payable, without presentment, demand, protest, notice of default (except
as expressly required in the Loan Documents), notice of intent to accelerate or
other notice of any kind, all of which are hereby expressly waived.
(b) If any Event of Default specified under subsections (f) through
(i) of Section 8.1 above shall occur, the unpaid balance of all principal and
interest accrued on the Notes and all other obligations of the Borrower
hereunder, or under any of the other Loan Documents shall be immediately and
automatically due and payable, without presentment, demand, protest, notice of
default, notice of intent to accelerate or other notice of any kind, all of
which are hereby expressly waived.
(c) Upon an Event of Default and the acceleration of the Loan in
accordance with Sections 8.2(a) or (b), the Lender shall have the right to
enforce its remedies under the Security Agreement and Assignment, the Guaranties
and the Special Management Interest, and to pursue any other remedy available to
it under law or equity.
ARTICLE 9. INDEMNIFICATION
9.1 No Reliance; Indemnification. The Borrower acknowledges that it has
independently investigated the legal, economic, tax, accounting and other
consequences of the Loan and the transactions contemplated by the Loan Documents
and has not received or relied in any way on any advice of the Lender or any of
its Affiliates as to such consequences. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and save harmless the Lender and
its Affiliates, its members, officers, agents and employees for, from and
against any and all liability, expense or damage of any kind or nature and for,
from and against any suits, claims or demands, including reasonable legal fees
and expenses, arising out of this Agreement or in any way related to the Loan
except to the extent of any such liability, expense or damage arising from the
action of or a failure to act of Lender. Upon receiving knowledge of any suit,
claim or demand asserted by a third party that Lender believes is covered by
this indemnity, Lender shall give Borrower notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel reasonably satisfactory to Lender. Lender may also require Borrower to
so defend the matter. The obligations on the part of Borrower under this Article
9 shall survive the Loan Closing and the repayment of the Loan.
ARTICLE 10. MISCELLANEOUS
10.1 Notices. All notices, requests and demands to or upon the parties
hereto to be effective shall be in writing or by facsimile transmissions and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand or one Business
26
Day following delivery to an overnight delivery service guaranteeing next
business day delivery, delivery charge prepaid, or, in the case of facsimile
transmission, when sent (only if sent on a Business Day), receipt by addressee
acknowledged, addressed as follows in the case of the Borrower and the Lender or
to such other address as may be hereafter notified by the parties hereto:
The Borrower: AH Texas Subordinated, LLC
000 Xxxx xx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx
Attention: Xxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
With a copy to:
Squire, Xxxxxxx & Xxxxxxx, L.L.P.
00 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Fax No.: (000) 000-0000
27
With a copy to:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
Xxxxxx X. Xxxxxx, Esq.
Fax No. 000-000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Fax No. 000-000-0000
The Lender: BANC ONE CAPITAL PARTNERS IV, LTD.
000 Xxxx Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxx
Fax No.: (000) 000-0000
with a copy to:
BANC ONE CAPITAL MARKETS, INC.
000 Xxxx Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Legal Department
Fax No.: (000) 000-0000
10.2 Term of Agreement; Termination; Successors and Assigns. This
Agreement and all covenants, agreements, representations and warranties made
herein and in the reports, certificates and other writings delivered pursuant
hereto shall survive the execution and delivery of this Agreement, the making by
the Lender of the Loan and the execution and delivery to the Lender of the Loan
Documents and shall continue in full force and effect until terminated. This
Agreement shall terminate at such time as the Lender has received payment in
full of all amounts owing to the Lender hereunder and under the Loan Documents.
In this Agreement whenever any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such parties;
and all terms and provisions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, whether so expressed or not; provided, however, that the Borrower may
not assign or transfer its rights or duties under this Agreement to any Person
without the prior written consent of the Lender. The Lender may assign,
negotiate, pledge or otherwise hypothecate all or any portion of the Loan or
grant participations therein, or in any of its rights and security hereunder and
under the other Loan Documents, and the
28
Borrower shall accord full recognition thereto. The Lender may deliver copies to
any potential participant or assignee or transferee of financial statements and
other information from time to time furnished to Lender pursuant hereto or in
connection therewith.
10.3 No Implied Rights or Waivers. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in the same, similar and other circumstances. Neither any failure nor any delay
on the part of the Lender in exercising any right, power or privilege hereunder
or under the Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of the
same or the exercise of any other right, power or privilege.
10.4 Applicable Law. This Agreement was negotiated in the State of Ohio,
accepted by the Lender in the State of Ohio, and the proceeds of the Loan
evidenced hereby were or are to be disbursed by Lender from the State of Ohio.
The Borrower and Lender agree that the State of Ohio has a substantial
relationship to the transaction evidenced hereby and agree that this Agreement
and the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of Ohio (without giving
effect to principles of conflicts of law).
10.5 Modifications, Amendments or Waivers.
(a) The Lender and the Borrower may from time to time enter into
written agreements amending or changing any provision of this Agreement or the
rights of the Lender or the Borrower hereunder or give waivers or consents to a
departure from the due performance of the obligations of the Borrower hereunder
or under the other Loan Documents.
(b) In the case of any such waiver or consent relating to any
provision hereof or thereof, the parties shall be restored to their former
positions and rights thereunder, and any Default or Event of Default so waived
or consented to shall be deemed to be cured and not continuing; but no such
waiver or consent shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon.
10.6 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature thereto were upon the same
instrument.
10.7 Headings. The headings of the Articles and Sections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
10.8 Expenses. The Borrower shall pay or cause to be paid and save the
Lender harmless against liability for the payment of all reasonable
out-of-pocket expenses, including counsel fees and disbursements, incurred or
paid by the Lender in connection with (i) the negotiation, preparation (if
requested by Brookdale), and execution of the Loan Documents; (ii) any
amendments, waivers or consents (if requested by Brookdale) pursuant to the
provisions hereof and thereof; and (iii) the enforcement of the Loan Documents
including such expenses as may be incurred by the Lender in collection of the
Notes and the enforcement of all obligations of the Borrower hereunder.
29
10.9 Accounting. All financial reports required under this Agreement shall
be prepared in accordance with Project budgets previously submitted to Lender.
10.10 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or effecting the validity or enforceability of such
provisions in any other jurisdiction.
10.11 Waiver of Jury Trial; Consent to Venue. The Borrower and the Lender,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right any of them may have to
a trial by jury in any litigation based upon or arising out of this Agreement,
the other Loan Documents, or any of the transactions contemplated by this
Agreement, or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. Neither the Borrower nor the Lender shall
seek to consolidate, by counterclaim or otherwise, any action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived unless failure to so consolidate would result in a mandatory
loss of such claim. In the event of a dispute under this Agreement, the parties
hereby agree that exclusive jurisdiction and venue lies in a court of competent
jurisdiction in Franklin County, Ohio. These provisions shall not be deemed to
have been modified in any respect or relinquished by either of the Borrower or
the Lender except by a written instrument executed by all of them.
10.12 Entire Agreement. This Agreement, the Exhibits hereto and the Loan
Documents reflect the entire understanding of the parties with respect to their
respective subject matters and supersede all prior agreements or understandings
with respect thereto in
their entirety.
10.13 Intercreditor Agreement. THE LOAN, THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER, ALL RIGHTS AND REMEDIES OF LENDER WITH
RESPECT
TO THE LOAN AND ANY AND ALL COLLATERAL THEREFOR ARE EACH AND ALL SUBJECT TO THE
TERMS AND CONDITIONS OF THE INTERCREDITOR AGREEMENT.
00.00.Xxxxxxx Recourse. Notwithstanding any provision in this Agreement or
in any of the other Loan Documents to the contrary, in no event shall any
officer, director, incorporator, member, manager, shareholder or agent of
Borrower be personally liable to Lender for any of the obligations of the
Borrower under this Agreement or under any of the other Loan Documents including
without limitation the obligation to pay any amount due on the Notes.
30
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
AH TEXAS SUBORDINATED, LLC, an Ohio
limited liability company
By: AH Texas Investor, Inc., an Ohio
corporation, its Manager
By:
Name: Xxxxx X. Xxxxxxx
Title: President
BANC ONE CAPITAL PARTNER IV, LTD., an
Ohio limited liability company
By: BOCP Holdings Corporation, its
Manager
By:
Name: Xxxxxxx X. Xxxx
Title: Authorized Signer
31
EXHIBIT A-1
Guaranty Agreement
EXHIBIT A-2
Guaranty of Completion
EXHIBIT A-3
Non-Recourse Guaranty
EXHIBIT B-1
Priority Note
EXHIBIT B-2
Subordinate Note
EXHIBIT C
Security Agreement - Pledge and Assignment of Membership Interests
EXHIBIT D
Warrant Certificate
EXHIBIT E
Methodology of Calculation of Internal Rate of Return
