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FBR ASSET INVESTMENT CORPORATION, as Lender,
and
BROOKDALE LIVING COMMUNITIES, INC., as Borrower
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LOAN AGREEMENT
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January 25, 1999
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LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into this 25th day of
January 1999, by and between Brookdale Living Communities, Inc., a Delaware
corporation (the "Borrower"), and FBR Asset Investment Corporation, a Virginia
corporation (the "Lender"), and the parties hereto agree to the following:
WHEREAS, the Borrower wishes to obtain a $5,000,000 unsecured loan as a
source of funds from the Lender to be used solely for the purposes described in
Schedule 3.03A, and the Lender wishes to extend a short-term $5,000,000 loan to
the Borrower subject to the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and promises made herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless otherwise specified, the following
terms shall have the meanings assigned to them in this Section 1.01 when used in
this Agreement.
"Accrual Period" means, (a) with respect to the initial Accrual Period,
the period commencing on the Closing Date and ending at the close of business on
the next 24th day of a month and, (b) with respect to any subsequent Accrual
Period, the period commencing on the 25th day of the month in which the
preceding Accrual Period ended and ending on the earlier of (i) the close of
business on the 24th day of the following month or (ii) the Maturity Date.
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, such Person; (b)
which directly or indirectly beneficially owns or holds ten percent (10%) or
more of the voting securities of such Person; or (c) ten percent (10%) or more
of the voting stock of which is directly or indirectly beneficially owned or
held by such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
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"Balance Sheet" means the balance sheet of the Borrower and its
consolidated subsidiaries as of September 30, 1998 which has been supplied to
the Lender as described in Section 3.03(b).
"Borrower" means Brookdale Living Communities, Inc., a Delaware
corporation.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday, nor a day on which banking institutions are authorized
or required by Law or regulation to close, in the Commonwealth of Virginia or
the city of Chicago, Illinois.
"Closing Date" means January 25, 1999.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.01(b) hereof.
"Default" means a Monetary Default, a Non-Monetary Default, or any of
the other events described in Section 7.01 hereof, which may become an Event of
Default in accordance with Section 7.01.
"Default Rate" means 25.00% per annum.
"Event of Default" has the meaning set forth in Section 7.01 hereof.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Indemnified Party" has the meaning ascribed thereto in Section 6.01(a)
of this Agreement.
"Interest Rate" means, with respect to the first two Accrual Periods,
12.00% per annum, and, with respect to the third and final Accrual Period,
15.00% per annum.
"Law" means any federal, state or local statute, law, rule, regulation,
ordinance, order, code, policy or rule of common law, now or hereafter in
effect, and in each case as amended, and any judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent, decree or judgment.
"Lender" means FBR Asset Investment Corporation, a Virginia
corporation, its successors in interest and its permitted assigns.
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"Loan" means the $5,000,000 loan loaned by the Lender to the Borrower,
together with accrued and unpaid interest thereon.
"Material Adverse Effect" means a material adverse effect on (a) the
financial condition or business operations of the Borrower and its subsidiaries
taken as a whole or (b) the ability of the Borrower to perform its obligations
under, or the validity or enforceability of, this Agreement or the Note.
"Maturity Date" means the earlier to occur of (i) April 26, 1999 or
(ii) the date of any declaration of acceleration by the Lender pursuant to
Section 7.02.
"Monetary Default" means a failure by the Borrower to pay interest due
on any Payment Date or the Maturity Date or principal or other amounts due on
the Maturity Date.
"Non-Monetary Default" means a breach of any of the representations,
warranties, covenants or other agreements contained herein, other than a
Monetary Default.
"Note" has the meaning set forth in Section 2.06.
"Obligations" means any and all indebtedness, obligations and
liabilities of the Borrower to the Lender (whether now existing or hereafter
arising, voluntary or involuntary, regardless of whether jointly owed with
others, direct or indirect, absolute or contingent, liquidated or unliquidated,
and regardless of whether from time to time decreased or extinguished and later
increased, created or incurred), arising out of or related to this Agreement or
the Note or the indebtedness evidenced hereby or thereby.
"Payment Date" means, with respect to any Accrual Period, the 24th day
of the month in which such Accrual Period ends; provided that if such day is not
a Business Day, then such Payment Date shall be the Business Day immediately
following such day.
"Person" means an individual, general partnership, limited partnership,
limited liability partnership, corporation, business trust, joint stock company,
limited liability company, trust, unincorporated association, joint venture,
Governmental Authority, or other entity of whatever nature.
"subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
subsidiaries or by such Person and one or more of its subsidiaries, or (b) any
partnership, limited liability company, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so
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owned or controlled by such Person. Unless otherwise expressly provided, all
references to a "subsidiary" shall mean a subsidiary of the Borrower.
ARTICLE II
THE LOAN
Section 2.01. The Loan; Commitment Fee.
(a) Subject to the terms and conditions of this Agreement, the Lender
agrees to make a loan (the "Loan") in the principal amount of up to $5,000,000
to the Borrower on the Closing Date.
(b) To compensate the Lender for making the Loan hereunder, the
Borrower shall pay to the Lender, contemporaneously with the Lender's
disbursement of the Loan, a commitment fee (the "Commitment Fee") equal to 0.5%
of the amount of the Loan, or $25,000.
Section 2.02. Loan Conditions Precedent. The Lender's obligation to
make and disburse the Loan on the Closing Date is subject to the fulfillment to
the Lender's satisfaction, on or before the Closing Date, of all of the
following conditions:
(a) the Borrower shall have executed this Agreement and the Note;
(b) the Lender shall have received a certificate of the proper
officers of the Borrower certifying (i) a copy of the Borrower's organizational
documents and (ii) a copy of minutes of a meeting or a unanimous written consent
of the executive committee of the Borrower's board of directors authorizing the
Borrower to enter into this Agreement;
(c) the Lender shall have received an opinion of counsel to the
Borrower in form and substance satisfactory to the Lender;
(d) all of the representations and warranties of the Borrower in this
Agreement shall be true and correct in all material respects as of the Closing
Date; and
(e) no Default or Event of Default shall have occurred and be
continuing.
Section 2.03. Interest Payments.
(a) Interest shall accrue daily on each day during each Accrual Period
on the outstanding principal balance of the Loan (the "Loan Principal Balance")
from and
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including the Closing Date at a rate equal to the product of (i) 1/365, (ii) the
Interest Rate, and (iii) the Loan Principal Balance at the beginning of such
day. Such accrued interest for any Accrual Period shall be due and payable on
the related Payment Date and the Borrower shall pay such interest on such date.
(b) If any payment of principal or interest with respect to the Loan
which is due under the terms of this Agreement is not paid when due, or if any
Event of Default has occurred hereunder, then all interest that accrues under
this Agreement from and including the day such payment was due but not made or
on which such Event of Default occurs and continuing until the day such payment
is finally made or the Event of Default is waived or all Obligations have been
paid in full, shall be calculated at the Default Rate rather than the Interest
Rate.
(c) It is intended that the rate of interest on the Loan hereunder
shall never exceed the maximum rate, if any, which may be legally charged on
this Loan, and if the provisions for interest hereunder would result in a rate
higher than such maximum rate, interest shall nevertheless be limited to such
maximum rate and any amounts which may be paid toward interest in excess of such
maximum rate shall be applied to the reduction of principal, or, at the option
of the Lender, returned to the Borrower.
Section 2.04. Principal Payments.
(a) The Loan shall mature and the outstanding principal balance of the
Loan shall be due and payable, together, without duplication, with all interest
accrued and unpaid thereon, on the Maturity Date, and the Borrower shall pay
such principal and interest on such date.
(b) In the event that the outstanding principal balance of the Loan is
not repaid in full on the Maturity Date, the outstanding principal balance of
the Loan shall immediately become due and payable and the Lender may exercise
all rights and remedies available to it under applicable Law.
(c) The Borrower may prepay the Loan in whole or in part at any time
and from time to time prior to the Maturity Date without premium or penalty.
Section 2.05. Application of Payments. Any payment made under this
Agreement shall, unless otherwise specified herein, be applied (i) first, to pay
any unpaid fees, costs, expenses or obligations (A) which arise hereunder, (B)
which are to be paid by the Borrower, and (C) which are due and payable, (ii)
second, to pay any accrued and unpaid interest on the Loan pursuant to Section
2.03 which is due and payable on or prior to the date of such payment, and (iii)
finally, to reduce the outstanding principal balance of the Loan.
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Section 2.06. Note. The Borrower's Obligations shall be evidenced by
the promissory note of the Borrower (the "Note") dated as of the date of this
Agreement and substantially in the form of Exhibit A attached hereto. The term
"Note" shall include all extensions, renewals and modifications of the Note and
all substitutions therefor. All terms and provisions of the Note are expressly
incorporated into this Agreement.
Section 2.07. Transfer of Debt.
(a) The Borrower may neither assign its rights nor delegate its
obligation under this Agreement without the prior written consent of the Lender.
(b) The Lender may assign its rights and delegate its obligations
under this Agreement to an Affiliate of the Lender or to a third party without
the consent of the Borrower.
ARTICLE III
BORROWER REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties, as of
the date of this Agreement, as of the Closing Date, and continually throughout
the term of this Agreement.
Section 3.01. Organization, Standing, Capitalization, etc. The
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own and operate its properties and to carry on the business
described in the Borrower's Report on Form 10-Q for the quarter ended September
30, 1998 ("Form 10-Q"), and to enter into this Agreement. Attached hereto as
Schedule 3.01A is a complete and correct copy of the Restated Certificate of
Incorporation of the Borrower, and all amendments thereto, substantially as the
Restated Certificate of Incorporation, as amended, will be in effect at the
Closing Date, and attached hereto as Schedule 3.01B is a complete and correct
copy of the Amended and Restated Bylaws of the Borrower as they will be in
effect at the Closing Date.
Section 3.02. Qualification. The Borrower and each of its
subsidiaries is duly qualified and in good standing as a foreign corporation
authorized to transact business in each jurisdiction where the conduct of its
business or the ownership of its properties requires such qualification, or, if
not so qualified, the failure so to qualify will not have a Material Adverse
Effect and will not materially and adversely impair the right of the Borrower or
the applicable subsidiary to enforce any material agreement to which it is a
party.
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Section 3.03. Financial Statements; Use of Proceeds; Indebtedness.
The Borrower has furnished to the Lender the following financial statements:
(a) balance sheets of the Borrower and its consolidated subsidiaries
as of December 31, 1997, and statement of operations and cash flows of the
Borrower and its consolidated subsidiaries for the period commencing on May 7,
1997 and ending on December 31, 1997, and the combined statement of operations
of the "Predecessor Properties" for the period commencing on January 1, 1997 and
ending on May 6, 1997, with all appropriate footnotes, audited by the Borrower's
certified public accountants; and
(b) balance sheets of the Borrower and its consolidated subsidiaries
as of September 30, 1998 and 1997, and statements of operations and cash flows
of the Borrower and its consolidated subsidiaries for the nine-month period
ended September 30, 1998 and the period commencing on May 7, 1997 and ending on
September 30, 1997, and the combined statement of operations of the "Predecessor
Properties" for the period commencing on January 1, 1997 and ending May 6, 1997,
with all appropriate footnotes, certified by the President and the chief
financial officer of the Borrower.
Such balance sheets of the Borrower fairly present the condition of the
Borrower and its consolidated subsidiaries as at the respective dates indicated,
and in each case, to the extent required by GAAP, reflect all liabilities,
contingent or other, as at the respective dates indicated. All such financial
statements have been prepared in accordance with GAAP.
Attached hereto as Schedule 3.03A is a detailed statement of the
purposes, including dollar amounts, to which the Borrower proposes to apply the
proceeds of the Loan. The Borrower shall use the Loan proceeds only for the
purposes identified on such Schedule 3.03A.
Attached hereto as Schedule 3.03B is a detailed and complete list of
all material indebtedness for borrowed money of the Borrower, contingent or
otherwise, and any subsidiary of the Borrower for which the related creditor has
recourse to the Borrower.
Section 3.04. Changes, etc. Since September 30, 1998, there has been
no material adverse change in the business operations or financial condition of
the Borrower and its consolidated subsidiaries.
Section 3.05. Authorization; No Conflicts. All corporate action on
the part of the Borrower, its directors and stockholders necessary for the
authorization, execution, delivery and performance by the Borrower of this
Agreement and the Note and the consummation of the transactions contemplated
herein and therein has been taken. Each of this Agreement and the Note is the
valid and binding obligation of the Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy and other laws
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affecting the rights of creditors generally, and rules of law governing specific
performance, injunctive relief or other equitable remedies. The execution,
delivery and performance by the Borrower of this Agreement and the Note and
compliance herewith and therewith, will not result in any violation of and will
not conflict with, or result in a breach of any of the terms of, or constitute a
default under, any provision of federal or state law to which the Borrower or
any of its subsidiaries is subject, the Borrower's Restated Certificate of
Incorporation, the Borrower's Amended and Restated Bylaws or any mortgage,
indenture, agreement, instrument, judgment, decree, order, rule or regulation or
other restriction to which the Borrower or any of its subsidiaries is a party or
by which it is bound or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Borrower or
any of its subsidiaries pursuant to any such term.
Section 3.06. Governmental Approval. No consent, approval or
authorization of or qualification, designation, declaration or filing with any
governmental authority on the part of the Borrower or any of its subsidiaries
which has not been obtained or completed is required in connection with the
execution, delivery and performance by the Borrower of this Agreement or the
Note or the consummation of any other transactions contemplated hereby or
thereby.
Section 3.07. Title to Properties; Liens. The Borrower or a
subsidiary of the Borrower has good and marketable title to all of its
respective properties and assets, including all properties and assets reflected
in the Balance Sheet, subject only to (i) liens securing indebtedness reflected
on the Balance Sheet, (ii) liens securing the liability of subsidiaries of the
Borrower under financing lease or so-called "synthetic lease" transactions
entered into by subsidiaries of the Borrower which do not constitute liabilities
on the Balance Sheet, and (iii) other liens that do not adversely affect the
value of the properties and assets. Neither the Borrower nor any subsidiary is
in violation of any law, regulation or ordinance (including laws, regulations or
ordinances relating to building, zoning, environmental, city planning, land use
or similar matters) relating to its property or assets which violation would
have a Material Adverse Effect. All personal property and assets material to the
business, operations or financial condition of the Borrower and its
subsidiaries, and all buildings, structures and fixtures used by any of them in
the conduct of their business, are in good operating condition and repair.
Section 3.08. Litigation, etc. There is no action, proceeding or
investigation pending or, to the knowledge of the Borrower, threatened, that
questions the validity of this Agreement or the Note, or any action taken or to
be taken pursuant hereto or contemplated hereby, or that is reasonably likely to
result, either in any case or in the aggregate, in a Material Adverse Effect.
The foregoing includes, without limiting its generality, actions pending or
threatened involving the previous employment of any employees or prospective
employees or their use in connection with the business of the
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Borrower and its subsidiaries of any information or techniques allegedly
proprietary to their former employer(s).
Section 3.09. Compliance with other Instruments, etc. Neither the
Borrower nor any subsidiary is in violation of any provision of its certificate
of incorporation or bylaws, or of any loan agreement or other material agreement
to which it is a party. Neither the Borrower nor any subsidiary is in violation
of any instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to it, including without limitation, federal or state
securities laws, zoning laws and ordinances, federal labor laws and regulations,
the federal Occupational Safety and Health Act and regulations thereunder, the
federal Employees Retirement Income Security Act, and federal, state and local
environmental protection laws and regulations, the violation of which will have
a Material Adverse Effect.
Section 3.10. Tax Returns and Payments. All of the tax returns and
reports of the Borrower and its subsidiaries required by Law to be filed have
been accurately prepared and timely filed and all taxes shown as due thereon
have been paid or adequately reserved on the Borrower's books and reflected on
the Balance Sheet.
Section 3.11. Disclosure. None of (a) the Borrower's Report on Form
10-K for the period ended December 31, 1997, (b) the Borrower's Report on Form
10-Q for the quarter ended September 30, 1998, (c) this Agreement and any
Schedule hereto or (d) any certificate or other document referenced herein or
therein and furnished to the Lender by the Borrower contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein or herein, in light of the
circumstances under which they were made, not misleading. There is no material
fact known to the Borrower relating to the business, affairs, operations,
condition or prospects of the Borrower that materially adversely affects the
same and that has not been disclosed to the Lender in writing by the Borrower.
Section 3.12. Brokers, Intermediaries and Finder's Fees. The Borrower
(i) represents that no finder, broker, agent, financial adviser or other
intermediary has acted on behalf of the Borrower in connection with the Loan or
the negotiation or consummation of this Agreement or any of the transactions
contemplated hereby, and (ii) hereby agrees to indemnify and to hold the Lender
harmless of and from any liability for commission or compensation in the nature
of a finder's fee to any broker or other person or firm representing or
allegedly representing the Borrower in this transaction and the costs and
expenses of defending against such liability or asserted liability, for which
the Borrower, or any of its employees or representatives, are responsible.
Section 3.13. Insurance. The Borrower and its subsidiaries have
commercial general liability insurance, products liability insurance (if
applicable) and workers'
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compensation insurance in such amounts as are commercially reasonable for
businesses of a similar type and size as the Borrower or the applicable
subsidiary. The Borrower and each subsidiary have fire and casualty insurance
policies with extended coverage sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged
or destroyed.
Section 3.14. Commercial Loan. The proceeds of the Loan will be used
solely for business and commercial purposes; accordingly, the Note evidences the
Borrower's obligation to repay a loan made solely to acquire or carry on a
business or commercial enterprise.
Section 3.15. Survival of Representations and Warranties. The
Borrower agrees and acknowledges that each of the representations and warranties
set forth in subsections 3.01 through 3.14 hereof (i) is important to the Lender
and being relied upon by the Lender, (ii) is true in all respects as of the date
of this Agreement, and (iii) shall survive the execution, termination and
expiration of this Agreement.
ARTICLE IV
ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION
Section 4.01. Accounting. The Borrower will maintain a system of
accounting established and administered in accordance with GAAP consistently
followed, and will set aside on its books all such proper reserves as shall be
required by GAAP.
Section 4.02. Financial Statements. For so long as the Lender holds
the Note, the Borrower will deliver to the Lender:
(a) within 45 days after the end of each of the first three quarterly
fiscal periods in each fiscal year of the Borrower, (i) a consolidated balance
sheet of the Borrower and its consolidated subsidiaries as at the end of such
period and consolidated statements of operations and cash flows of the Borrower
and its consolidated subsidiaries for each period and, in the case of the second
and third quarterly periods, for the period from the beginning of the then
current fiscal year to the end of such quarterly period, setting forth in each
case in comparative form the figures for the corresponding period of the
previous fiscal year, all in reasonable detail and certified, subject to changes
resulting from normal year-end audit adjustments and (ii) a certificate of the
President or chief financial officer stating that, to the best knowledge of such
Person after reasonable investigation, the Borrower is in compliance with the
covenants set forth in Article V herein;
(b) promptly upon the filing thereof, all reports and statements, if
any, filed by the Borrower with the Securities and Exchange Commission (or any
governmental authority
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succeeding to any of its functions) (the "Commission") or with any securities
exchange; and
(c) with reasonable promptness, such other information and data with
respect to the Borrower and its consolidated subsidiaries as from time to time
may be reasonably requested by Lender.
ARTICLE V
OTHER COVENANTS
Section 5.01. Other Covenants. The Borrower further covenants and
agrees that, so long as any Obligations are outstanding :
(a) The Borrower shall and shall cause each of its subsidiaries (as
applicable) to:
(1) promptly make all payments or accruals of interest on the
Note and under this Agreement when due, and comply with the other
provisions hereof and the provisions of the Note;
(2) comply with all applicable federal, state and local Laws,
ordinances and regulations, to the extent failure to do so has a
Material Adverse Effect;
(3) conduct its business in the usual and ordinary course;
(4) maintain its corporate existence and right to carry on
its business and duly procure all necessary renewals and extensions
thereof and use, its best efforts to maintain, preserve and renew all
such rights, powers, privileges and franchises, to the extent failure
to do so has a Material Adverse Effect;
(5) keep and maintain all buildings, plants and other
property owned by Borrower or any subsidiary in such good condition,
repair, and working order and supplied with all such necessary
equipment as in the judgment of its Board of Directors or executive
officers may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times; provided, however, that nothing in this paragraph (5) shall
prevent the Borrower or its subsidiaries from selling, abandoning or
otherwise disposing of any building, plant or property whenever in the
opinion of their respective Boards of Directors or executive officers
the retention thereof is inadvisable or not necessary to its business;
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(6) pay and discharge promptly, or cause to be paid and
discharged promptly, all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or upon any part thereof,
as well as all claims of any kind (including claims for labor,
materials and supplies) that, if unpaid, might by law become a lien or
charge upon its property or would have a Material Adverse Effect;
provided, however, that neither the Borrower nor any subsidiary shall
be required to pay any such tax, assessment, charge, levy or claim if
the amount, applicability or validity thereof shall be contested in
good faith by appropriate proceedings and if it shall have set aside
on its books reserves (segregated to the extent required by sound
accounting practice) deemed by it adequate with respect thereto;
(7) provide or cause to be provided for itself commercial
general liability insurance, products liability insurance (if
applicable) and workers' compensation insurance in such amounts as are
commercially reasonable for businesses of similar type and size as the
Borrower and fire and casualty insurance policies with extended
coverage sufficient in amount (subject to reasonable deductibles) to
allow it to replace any of its properties that might be damaged or
destroyed;
(8) notify the Lender in writing promptly upon the occurrence
of any Event of Default as hereafter defined or any event that would
become an Event of Default upon notice or the lapse of time, or both;
and
(9) permit the Lender or any authorized representatives of
the Lender, at the Lender's expense, to visit and inspect any of the
properties of the Borrower including its books of account (and to make
copies thereof and to take extracts therefrom) and to discuss its
affairs, finances and accounts with its officers, all at such
reasonable times and upon reasonable prior notice and as often as may
be reasonably requested. The rights set forth herein shall be
exercised solely in furtherance of the proper interests of the Lender
as a Lender to the Borrower, and the Lender exercising its rights of
inspection hereunder shall maintain, and shall procure that its agents
and representatives maintain, the confidentiality of all financial and
other confidential information of the Borrower acquired by them in
exercising such rights.
(b) For so long as there are Obligations outstanding, without the
Lender's prior written consent;
(i) the Borrower shall not declare, pay or set aside for
payment any dividend or other distribution with respect to its common
stock or any other class
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of securities, or purchase or otherwise acquire any common stock or
any other class of securities, or contract for such purchase or
acquisition; and
(ii) neither the Borrower nor any subsidiary of the Borrower
shall incur, assume, guarantee or otherwise become obligated for in any
way any indebtedness for borrowed money for which the creditor has
recourse to the Borrower except as set forth in Schedule 3.03B.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification by the Borrower.
(a) If, in connection with the matters that are the subject of this
Agreement, the Lender becomes involved in any capacity in, or incurs any cost,
damage, expense or liability in connection with, any action or legal proceeding,
actual or threatened, involving claims by any third party, or to enforce any of
the Lender's rights under this Agreement or to collect any amount under this
Agreement, the Borrower shall reimburse the Lender, its Affiliates and their
respective directors, officers, employees, agents and controlling persons (each,
an "Indemnified Party") promptly upon request for all expenses (including the
reasonable fees and disbursements of legal counsel, the allocated reasonable
costs of in-house counsel acting as litigators, and the reasonable cost of
investigation and preparation) in connection with or related to such action or
legal proceedings as they are incurred.
The Borrower shall indemnify and hold each Indemnified Party harmless
against all losses, claims, damages or liabilities of any kind, joint or
several, to which such Indemnified Party may become subject in connection with,
or relating to, or arising out of, this Agreement or the Note, or any
transactions contemplated hereby; provided, however, that the Borrower shall not
be liable under the foregoing indemnity agreement in respect of any loss, claim,
damage or liability to the extent that a court having jurisdiction shall have
determined by a final judgment (not subject to further appeal) that such loss,
claim, damage or liability resulted primarily and directly from the willful
misconduct or gross negligence of such Indemnified Party. The Borrower also
shall reimburse the Lender for all the Lender's costs and expenses incurred in
connection with the enforcement or the preservation of the Lender's rights under
this Agreement and the Note, including, without limitation, the reasonable fees
and disbursements of its counsel and additional due diligence expenses incurred
after the occurrence of an Event of
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Default or in connection with any action, claim or proceeding described in this
subsection for which the Lender is entitled to indemnification.
(b) The agreements of the Borrower in this Article VI shall be in
addition to any liabilities that the Borrower may otherwise have and shall apply
whether or not the Lender or any other Indemnified Party is a formal party to
any lawsuit, claim or other proceeding. Solely for purposes of enforcing such
agreements, the Borrower hereby consents to personal jurisdiction, service and
venue in any court in which any claim or proceeding which relates to the
services or matters that are the subject of this Agreement is brought against
the Lender or other Indemnified Party.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Occurrence of an Event of Default. An "Event of
Default" shall occur:
(a) immediately upon the occurrence of a Monetary Default; provided,
however, that if the Borrower fails to pay the interest due on any Payment Date
or fails to make a payment required under Section 2.04, an "Event of Default"
shall occur only if the Borrower has not paid such interest or other payment
within one Business Day following such Payment Date or the date on which the
obligation to make such payment arose provided further, that as to any monetary
obligation other than the payment of principal or interest on the Loan, an Event
of Default shall occur if the Borrower has not made such payment within five (5)
Business Days of the date on which such payment was demanded by the Lender;
(b) except as otherwise specifically provided in this Section 7.01, 10
days after the receipt by the Borrower of written notice of a Non-Monetary
Default which is not cured within such 10-day period; provided, however, that if
it is not possible or practicable within 10 days to cure a particular material
Non-Monetary Default, an "Event of Default" shall be deemed to have occurred on
the tenth (10th) day after the occurrence of such Non-Monetary Default; except
that, if, during such 10-day period, the Borrower has commenced to cure such
Non-Monetary Default, is proceeding diligently to cure such Non-Monetary
Default, has informed the Lender of any steps it is taking to cure such
Non-Monetary Default and a likely date of cure, the Lender may consider in its
sole and absolute discretion an extension of such 10-day cure period.
(c) immediately upon, and simultaneously with, the occurrence of an
event of default (meaning a default or breach and the passage of any grace or
cure period provided
14
in such agreement without the default having been cured or waived) by the
Borrower under any agreement or other document relating to any indebtedness for
borrowed money of the Borrower or subsidiary of the Borrower or under any other
material agreement of the Borrower or subsidiary of the Borrower;
(d) immediately upon the Borrower's breach of a covenant described in
Section 5.01(b);
(e) the occurrence of any Material Adverse Effect;
(f) immediately upon the appointment of a receiver, conservator,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Borrower or of any substantial part of its property, the
ordering of the winding-up or liquidation of its affairs, or the entry of a
decree or order for relief by a court having jurisdiction in the premises in
respect of the Borrower in any involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect which such order
remains undischarged or unstayed, as the case may be, for 45 days;
(g) immediately upon commencement by the Borrower of a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Borrower to the entry of an order for
relief in an involuntary case under any such law or to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Borrower or of any substantial
part of the Borrower's property, or the making by the Borrower of any general
assignment for the benefit of creditors, or the failure of the Borrower
generally to pay its debts as such debts become due, or the taking of action by
the Borrower in furtherance of any of the foregoing; or
(h) this Agreement or the Note shall be terminated or cease to be in
full force and effect in any material respect (other than upon the expiration
thereof in accordance with the terms thereof or termination by the Borrower in
accordance with the terms thereof), or the enforceability thereof shall be
challenged by the Borrower or any Affiliate of the Borrower.
Section 7.02. Effect of Event of Default.
(a) If any such Event of Default shall occur and be continuing, the
Lender may, at the Lender's option, declare the Note to be due and payable,
whereupon the maturity of the then unpaid balance of the Note shall be
accelerated and the principal and all interest accrued thereon shall forthwith
become due and payable without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, anything contained herein or in
the Note to the contrary notwithstanding, and the Lender may exercise and shall
have any and all remedies accorded the Lender by applicable Law.
15
(b) In case any one or more Events of Default shall occur and be
continuing, the Lender may proceed to protect and enforce its rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provisions contained herein, in
the Note or in any document or instrument delivered pursuant to this Agreement,
or proceed to enforce the payment of the Note or any other legal, equitable or
statutory right or remedy.
(c) No right or remedy herein conferred upon the Lender is intended to
be exclusive of any other right or remedy contained herein, therein or in any
instrument or document delivered in connection with or pursuant to this
Agreement, and every such right or remedy contained herein and therein or now or
hereafter existing at law or in equity or by statute or otherwise may be
exercised separately or in any combination.
(d) No course of dealing between the Borrower and the Lender or any
failure or delay on the Lender's part in exercising any rights or remedies
hereunder shall operate as a waiver of any of the Lender's rights or remedies
and no single or partial exercise of any rights or remedies hereunder shall
operate as a waiver or preclude the exercise of any other rights or remedies
hereunder.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Cooperation, Confidentiality, Etc.
(a) Upon reasonable notice the Borrower shall furnish the Lender with
all information and data reasonably requested by the Lender in connection with
its activities on the Borrower's behalf to carry out the terms of this
Agreement, and shall provide the Lender reasonable access to the Borrower's
officers, directors, employees and professional advisers.
(b) Subject to Section 8.01(c) below, the Borrower recognizes and
confirms that the Lender in acting pursuant to this Agreement may use
information in reports and other information provided by others, including,
without limitation, information provided by the Borrower, and that the Lender
does not assume responsibility for and may rely, without independent
verification, on the accuracy and completeness of any such reports and
information. The Borrower agrees that any advice or information rendered by the
Lender in connection with this Agreement is for the confidential use of the
Borrower only and, except as otherwise required by Law, the Borrower will not,
and will not permit any third party to, disclose such advice or information to
others or summarize or refer to such
16
advice or information or to the Lender's role hereunder without, in each case,
the Lender's prior written consent.
(c) Each party shall use commercially reasonable efforts to keep
confidential the existence and terms of this Agreement and the transactions
contemplated hereby except (1) such written or oral information as shall be
consistent with information approved by the other parties hereto as permissible
to be so communicated or information that has become public through other
disclosure, (2) oral or written information to the disclosing party's lawyers,
accountants, lenders and other Persons with a need to know such information by
reason of their relationship or prospective relationship to the disclosing
party, (3) to the extent disclosure thereof is required by court order or other
legal process or by law (provided that, prior to disclosure pursuant to such an
order or legal process, the disclosing party shall notify the other parties
hereto so that such other parties may pursue a protective order with respect to
such information), and (4) to the extent disclosure thereof is required in
conjunction with the filing of applications, responses, reports, statements or
other documents and compilations with any governmental entities, including the
Securities and Exchange Commission.
Section 8.02. Waiver of Trial by Jury. Each party hereto waives the
right to trial by jury in any action, suit, proceeding or counterclaim of any
kind arising out of or related to this Agreement. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
Section 8.03. Amendment; Waivers. This Agreement may be amended from
time to time only by written agreement of the parties. No failure on the part of
the Lender to exercise, and no delay in exercising, any right, power, or remedy
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. No term or provision of
this Agreement may be waived or modified unless such waiver or modification is
in writing and signed by the party against whom such waiver or modification is
sought to be enforced.
Section 8.04. Other Transactions. The Borrower acknowledges that the
Lender and its Affiliates may now or in the future have business dealings with
parties other than the Borrower, which parties compete, directly or indirectly,
with the Borrower. Although the Lender and its Affiliates may, in their normal
course of business, acquire information about the housing market, particular
transactions or such other parties, the Lender shall have no obligation to
disclose such information to the Borrower. The Borrower acknowledges that the
Lender and its Affiliates may engage in their businesses and otherwise compete
with the Borrower without regard to their relationship to the Borrower
hereunder.
17
Section 8.05. Costs and Expenses. The Borrower will be responsible
for and bear all of the reasonable fees and expenses incurred in connection with
the preparation, negotiation, and execution of this Agreement and the Note and
any amendments thereof and any reasonable expenses incurred in the enforcement
hereof or thereof and the transactions contemplated thereby, including, without
limitation reasonable fees and expenses of legal counsel for the Lender.
ARTICLE IX
CONSTRUCTION
Section 9.01. Entire Agreement. This Agreement, together with the
Note, including the Exhibits and the Schedules hereto, contains the entire
agreement of the parties with respect to the subject matters thereof, and
supersedes all prior agreements between them, whether oral or written, of any
nature whatsoever with respect to the subject matter hereof.
Section 9.02. Severability Clause. Any part or provision of this
Agreement that is prohibited or that is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part or provision of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable Law, the parties
hereto waive any provision of Law that prohibits or renders void or
unenforceable any provision hereof. If the invalidity of any part or provision
of this Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good-faith, to
develop a structure, the economic effect of which is as close as possible to the
economic effect of this Agreement, without regard to such invalidity.
Section 9.03. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
Section 9.04. Governing Law; Consent to Forum; Immunities. This
Agreement and the Note shall be governed by and construed in accordance with the
Laws of the Commonwealth of Virginia, without giving effect to the conflict of
laws rules therein. The parties hereto hereby consent and agree that the Circuit
Court of Arlington County, Virginia, or, at the Lender's option, the United
States District Court for the Eastern
18
District of Virginia, shall have exclusive jurisdiction to hear and determine
any claims or disputes between the parties hereto pertaining to this Agreement
and the Note or to any matter arising out of or related to this Agreement and
the Note. The parties hereto expressly submit and consent in advance to such
jurisdiction in any action or suit commenced in any such court, and hereby waive
any objection which it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens and hereby consent to the granting of
such legal or equitable relief as is deemed appropriate by such court. Each
party hereto irrevocably consents to the service of process by registered or
certified mail, postage prepaid, to it at its address given pursuant to Section
10.01 hereof. Nothing in this Agreement or the Note shall be deemed or operate
to affect the right of the Lender to serve legal process in any other manner
permitted by applicable Law, or to preclude the enforcement by the Lender of any
judgment or order obtained in such forum or the taking of any action under this
Agreement or the Note to enforce same in any other appropriate forum or
jurisdiction.
To the extent that the Borrower has or may hereafter acquire any
immunity from the jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to the Borrower or the
Borrower's property, the Borrower hereby irrevocably waives such immunity in
respect of its obligations under this Agreement.
To the extent permitted by applicable Law, each party hereto
irrevocably waives any right such party may have to consequential or punitive
damages from any other party and hereby agrees not to assert any claim for such
damages.
Section 9.05. No Agency; No Partnership; No Joint Venture. Neither
the Lender nor the Borrower is the agent or representative of the other, and
nothing in this Agreement shall be construed to make either the Lender or the
Borrower liable to any third party for services performed by such third party or
for debts or claims accruing to such third party against either the Lender or
the Borrower. This Agreement is intended by the parties hereto to constitute a
loan agreement and nothing contained herein nor the acts of the parties hereto
shall be construed to create a partnership, agency, equity investment, profit
sharing agreement, joint venture or sale of receivables between the Lender and
the Borrower. The parties agree that they will not file any federal, state or
local income tax return that is inconsistent with such intended treatment.
Section 9.06. Judicial Interpretation. Should any provision of this
Agreement or the Note require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Person by reason of the rule
of construction that a document is to be construed more strictly against the
Person who itself or through its agent prepared the
19
same, it being agreed that all the parties hereto have participated in the
preparation of this Agreement.
Section 9.07. Recitals. The recitals of this Agreement are not
intended to constitute substantive provisions hereof.
Section 9.08. Rules of Interpretation. Except as otherwise expressly
provided in this Agreement, the following rules shall apply hereto:
(a) the singular includes the plural and the plural includes the
singular;
(b) "include" and "including" are not limiting;
(c) a reference to any agreement or other contract includes permitted
supplements, amendments and other modifications;
(d) a reference to a law (or Law) includes any amendment or
modification of such law (or Law) and the rules or regulations issued
thereunder;
(e) a reference to a Person includes its permitted successors and
assigns in the applicable capacity;
(f) a reference in this Agreement to an Article, Section, clause,
recital or Exhibit is to the Article, Section, clause, recital or Exhibit of
this Agreement unless otherwise expressly provided;
(g) words such as "hereunder", "hereto", "hereof", and "herein" and
other words of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of this Agreement and not to any particular
Article, Section or clause hereof;
(h) any right in this Agreement may be exercised at any time and from
time to time in accordance with the terms of this Agreement;
(i) the headings of the Articles and Sections are for convenience and
shall not affect the meaning of this Agreement; and
(j) time is of the essence in performing all obligations.
20
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices. All demands, notices, requests for consent and
other communications hereunder shall be in writing and personally delivered,
mailed by certified mail, return receipt requested, and telecopied, and shall be
deemed to have been duly given upon transmission and confirmation of receipt;
if to the Borrower:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxx, Xx.
Executive Vice President
and Chief Financial Officer
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
with a copy to:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
and to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
if to the Lender:
21
FBR Asset Investment Corporation
Potomac Tower
0000 Xxxxxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Hunton & Xxxxxxxx
Riverfront Plaza - East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
or, as to any party, at such other address or telecopy number as shall be
designated by such party in a written notice to each other party.
Section 10.02. Further Agreements. The Borrower and the Lender each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
Section 10.03. Third-Party Rights. This Agreement is for the exclusive
benefit of the parties hereto and their respective successors and assigns and
shall not be deemed to give any legal or equitable right to any other Person.
Section 10.04. Advice from Independent Counsel. The parties hereto
understand that this Agreement and the Note are legally binding agreements that
may affect such party's rights. Each party represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and the Note and that it is satisfied with its
legal counsel and the advice received from it.
Section 10.05. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such
22
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
[signature page follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first written above.
THE BORROWER: BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
THE LENDER: FBR ASSET INVESTMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
24
EXHIBITS AND SCHEDULES
Exhibit A Note
Schedule 3.01A Restated Certificate of Incorporation
Schedule 3.01B Amended and Restated Bylaws
Schedule 3.03A Use of Loan Proceeds
Schedule 3.03B Indebtedness
