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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): DECEMBER 2, 1998
SUNRISE ASSISTED LIVING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20765 54-1746596
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation of organization) File Number) Identification No.)
9401 LEE HIGHWAY, SUITE 300
FAIRFAX, VIRGINIA 22031
(Address of principal executive offices) (Zip Code)
(703) 273-7500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 16, 1998 Sunrise Assisted Living, Inc. ("Sunrise")
entered into a letter agreement with Meditrust Corporation ("Meditrust") to
acquire four separate first trust mortgages secured by assisted living
properties owned and operated by Karrington Health, Inc., ("Karrington") and six
assisted living properties currently leased to Karrington ("Meditrust
Interests"). Meditrust had previously entered into ten separate financing
transactions with Karrington to provide construction and permanent financing for
ten assisted living facilities. Of these ten financing transactions, six were
structured as sale/leasebacks and four were structured as traditional mortgage
loans. The closing of Sunrise's acquisition of the Meditrust Interests occurred
on December 2, 1998.
Pursuant to that letter agreement, Sunrise agreed to acquire (a)
the fee simple title to the six separate assisted living facilities which were
the subject of the sale leaseback transactions (the "leased properties") and
(b) the four separate mortgage notes secured by first lien mortgages (the
"Mortgages") on the remaining four assisted living facilities (the "Mortgaged
Properties"). The purchase price of the leased properties and the Mortgages
was the sum of: (i) the total amount advanced by Meditrust under each lease,
plus (ii) the outstanding principal balance under each of the mortgage notes
plus (iii) all other amounts outstanding under the applicable documents as of
the closing date; plus (iv) one percent (1%) of the sum of the amounts
described in clauses (i), (ii) and (iii) preceding.
Pursuant to the sale leaseback transactions between Karrington and
Meditrust, Meditrust Company, L.L.C. owned the fee simple interest to assisted
living facilities located in Ann Arbor, Michigan; Bath, Ohio; Carmel, Indiana;
Charlotte, North Carolina; Gahanna, Ohio; and Poland, Ohio.
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Each of these assisted living facilities was operated by Karrington pursuant to
a net lease under which Karrington was fully responsible for all costs and
expenses of owning and operating the properties. The leases expire May 31,
2010 with respect to Ann Arbor, Bath, Carmel and Gahanna. The leases expire
May 31, 2011 with respect to Charlotte and Poland. All the facilities were
completed and operating, except for the Charlotte facility, completion of which
is anticipated by January 31, 1999. The four (4) first mortgage loans
encumbered completed assisted living facilities located in Fall Creek, Ft.
Wayne and Willow Lake, Indiana and Shaker Heights, Ohio. Each of the four
separate mortgage loans is due and payable in full on September 30, 2010.
In order to finance the acquisition of the six leased properties,
Sunrise entered into a so-called "synthetic lease" or "tax retained operating
lease" ("TROL") arrangement with NationsBank, N.A. In order to proceed with
the TROL, NationsBank entered into a Trust Agreement with First Security Bank,
National Association (Utah) whereby First Security Bank became the sole trustee
of Sunrise Trust 1998-1 ("Sunrise Trust"). The beneficiaries of Sunrise Trust
are NationsBank and other banks which agreed to participate with NationsBank
in the funding of the TROL. As of the closing date, the other banks which were
beneficiaries of Sunrise Trust along with NationsBank were Provident Bank of
Maryland and Fleet National Bank. Sunrise Midwest Leasing L.L.C. ("SML"), a
Virginia limited liability company having Sunrise Assisted Living Investments,
Inc. ("SALII"), a wholly owned subsidiary of Sunrise as its sole member, was
created to act as the lessee under the TROL while Karrington is the sublessee of
the facilities.
The total amount of the financing under the TROL transaction was
$47.0 million. NationsBank and its participants (the "Lenders") loaned $45.6
million to Sunrise Trust, pursuant to two separate notes. The A Note was in the
amount of $40.9 million and the B Note was in the amount of $4.7 million. In
addition, the Lenders invested equity in Sunrise Trust in the amount of $1.4
million.
The interest rate on the A Note and B Note is 30-day LIBOR plus 225
and 300 basis points, respectively. Upon achieving the "Minimum Equity Value"
the spread over LIBOR on the A and B Notes would be reduced to 210 and 285
basis points, respectively. Upon achieving "Stabilization," and assuming
Minimum Equity Value has been achieved, the interest rate on the A and B Notes
will be reduced to 30-day LIBOR plus 188 and 263 basis points, respectively.
In order to achieve Minimum Equity Value, Sunrise must have a minimum equity
value of $295,000,000 by June 30, 1999. Stabilization is defined as an
assisted living facility with resident occupancy of at least 85% for two
consecutive quarters and a ratio of net operating income to debt service of not
less than 1.25 to 1.0, measured for two consecutive fiscal quarters. In the
event that five of the six properties achieve Stabilization, Stabilization will
have been realized if the sixth property has a debt service coverage rate of
not less than 1.0 to 1.0 and all six leased properties in the aggregate have a
combined debt service coverage ratio of 1.35 to 1.0.
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On the closing date, SML entered into a single master Lease
Agreement with Sunrise Trust. The Lease is a triple net lease which also
requires SML to pay all property taxes, insurance costs, indemnities, owner
trustee fees, expenses, and any LIBOR breakage costs. The Lease specifies that
SML shall be considered the owner of the leased properties for Federal income
tax purposes. The term of the lease expires December 2, 2001. At least 120
days prior to the end of the lease term, SML had the option either to purchase
all, but not less than all, the leased properties for the "Termination Value,"
or to sell the leased properties. The Termination Value at any time equals the
aggregate outstanding principal amount under the TROL (initially, $47.0
million), any accrued and unpaid interest and any other outstanding amounts
funded by the Lenders. During the Lease Term, SML is obligated to make the
rental payments equal to the interest then due. SML has the right to make
modifications, renovations or improvements to the leased properties.
If SML were to exercise the sale option under the Lease, SML could
sell the leased properties to a third party. If the proceeds of sale were
greater than the Termination Value, SML would be entitled to receive the
excess. If the proceeds of sale were less than the Termination Value, SML
would be obligated to make up the difference between the sales proceeds and the
Termination Value. Sunrise guaranteed the payment of the A Note and guaranteed
all obligations of SML under the Lease Agreement.
SML, Sunrise, First Security Bank and NationsBank have entered into
a Participation Agreement whereby the relationships of the parties are set
forth. The Participation Agreement contains representations and warranties by
SML and Sunrise for the benefit of NationsBank. In addition, the Participation
Agreement sets forth certain affirmative and negative financial covenants which
are required to be met during the term of the Lease by SML and/or Sunrise,
including minimum tangible net worth of $177.5 million, liquid assets plus
availability under lines of credit in an amount of $47.0 million, and minimum
stockholders equity of $295.0 million achieved by June 30, 1999.
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The prime tenant is SML under the Lease with Sunrise Trust, and
Karrington became a subtenant of SML under each of the six separate leases
originally entered into with Meditrust. SML agreed to assume all the
obligations of Meditrust under those leases. SML indemnified Sunrise Trust
against any claim by Karrington against Sunrise Trust by virtue of SML's
failure to perform as landlord under those leases.
The acquisition of the Mortgages was funded by Sunrise from its own
cash. Title to the Mortgages was taken by Sunrise Midwest Mortgage, L.L.C.
("SMM"), a newly formed Virginia limited liability company having SALII as its
sole member. The aggregate outstanding principal balance of the four mortgages
as of the closing date was $22.2 million. The total amount paid to Meditrust
for the mortgages on the Closing Date was $21.3 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) None.
(b) None.
(c) Exhibits.
2.1 Letter dated October 16, 1998 from Sunrise
Assisted Living, Inc. to Meditrust Mortgage
Investments, Inc. setting forth terms and
conditions under which Sunrise would acquire
certain properties subject to leases and certain
mortgage loans.
2.2 Trust Agreement, dated as of December 2, 1998
between the several holders from time to time
parties hereto, as the holders, and First
Security Bank, National Association, as the Owner
Trustee (Sunrise Trust 1998-1).
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(c) Exhibits (continued)
2.3 Credit Agreement, dated as of December 2, 1998
among First Security Bank, National Association,
not individually, except as expressly stated
herein, but solely as the Owner Trustee under the
Sunrise Trust 1998-1, as the Borrower, the
several lenders from time to time parties hereto,
and Nationsbank, N.A., as the Agent.
2.4 Participation Agreement, dated as of December 2,
1998 among Sunrise Midwest Leasing, L.L.C., as
the Construction Agent and as the Lessee, Sunrise
Assisted Living, Inc., as the Guarantor, First
Security Bank, National Association, not
individually, except as expressly stated herein,
but solely as the Owner Trustee under the Sunrise
Trust 1998-1, the various banks and other lending
institutions which are parties hereto from time
to time, as the holders, the various banks and
other lending institutions which are parties
hereto from time to time, as the lenders, and
Nationsbank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the
Agent for the Lenders and the Holders, to the
extent of their interests.
2.5 Security Agreement, dated as of December 2, 1998
between First Security Bank, National
Association, not individually, but solely as the
owner trustee under the Sunrise Trust 1998-1 and
Nationsbank, N.A., as the agent for the lenders
and the holders and accepted and agreed to by
Sunrise Midwest Leasing, L.L.C.
2.6 Lease Agreement, dated as of December 2, 1998
between First Security Bank, National
Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1, as
Lessor and Sunrise Midwest Leasing, L.L.C., as
Lessee.
The Company agrees to furnish the Commission
supplementally a copy of any omitted schedule to
the foregoing exhibits upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNRISE ASSISTED LIVING, INC.
(Registrant)
Date: December 17, 1998 By: /s/ Larry E. Hulse
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Larry E. Hulse
Controller and Chief Accounting Officer
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INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit Name Page
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<S> <C>
2.1 Letter dated October 16, 1998 from Sunrise Assisted
Living, Inc. to Meditrust Mortgage Investments, Inc.
setting forth terms and conditions under which Sunrise
would acquire certain properties subject to leases and
certain mortgage loans.
2.2 Trust Agreement, dated as of December 2, 1998 between
the several holders from time to time parties hereto, as
the holders, and First Security Bank, National
Association, as the Owner Trustee (Sunrise Trust 1998-1).
2.3 Credit Agreement, dated as of December 2, 1998 among
First Security Bank, National Association, not
individually, except as expressly stated herein, but solely
as the Owner Trustee under the Sunrise Trust 1998-1, as
the Borrower, the several lenders from time to time
parties hereto, and Nationsbank, N.A., as the Agent.
2.4 Participation Agreement, dated as of December 2, 1998
among Sunrise Midwest Leasing, L.L.C., as the
Construction Agent and as the Lessee, Sunrise Assisted
Living, inc., as the Guarantor, First Security Bank,
National Association, not individually, except as expressly
stated herein, but solely as the Owner Trustee under the
Sunrise Trust 1998-1, the various banks and other lending
institutions which are parties hereto from time to time, as
the holders, the various banks and other lending
institutions which are parties hereto from time to time, as the
lenders, and Nationsbank, N.A., as the Agent for the
Lenders and respecting the Security Documents, as the
Agent for the Lenders and the Holders, to the extent of
their interests.
2.5 Security Agreement, dated as of December 2, 1998
between First Security Bank, National Association, not
individually, but solely as the owner trustee under the
Sunrise Trust 1998-1 and Nationsbank, N.A., as the agent
for the lenders and the holders and accepted and agreed to
by Sunrise Midwest Leasing, L.L.C.
</TABLE>
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INDEX OF EXHIBITS (CONTINUED)
<TABLE>
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2.6 Lease Agreement, dated as of December 2, 1998 between
First Security Bank, National Association, not
individually, but solely as the Owner Trustee under the
Sunrise Trust 1998-1, as Lessor and Sunrise Midwest
Leasing, L.L.C., as Lessee.
</TABLE>
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October 16, 1998
Mr. Michael Bushee
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Re: Karrington Health, Inc. - Outstanding Leases and Mortgages
To Meditrust
Dear Mr. Bushee:
This letter will set forth the terms and conditions under which Sunrise
Assisted Living, Inc. ("Sunrise") will acquire (i) certain properties subject
to leases and (ii) certain mortgage loans from Meditrust Corporation or its
affiliates ("Meditrust"). The terms and conditions of the offer by Sunrise are
as follows:
1. Assets to be Acquired. Sunrise will acquire (a) the fee simple title
to six (6) separate properties which are subject to leases with Karrington
Health, Inc. or its affiliates ("Karrington"), which leases are identified on
Exhibit A attached hereto (the "Leases") plus (b) four (4) separate mortgage
notes secured by first lien mortgages on the properties identified on Exhibit A
(the "Mortgages").
2 Purchase Price. The Purchase Price shall be the sum of: (i) the total
amount advanced by Meditrust under each Lease and the related lease
documentation (including any draws made thereunder since the inception of the
Leases and the amount advanced by Meditrust to acquire the applicable
property); plus (ii) the outstanding principal balance under the notes secured
by the Mortgages plus all other accounts outstanding under the applicable loan
documents as of the closing date due to additional advances under the loan
documents; plus (iii) one percent (1%) of the sum of the amounts described in
clauses (i) and (ii) above. The outstanding Lease and Mortgage obligations
will be computed as of the closing date hereunder. All cash collateral
(including, without limitation, all interest accrued thereon) currently held by
Meditrust under the lease and loan documentation will be retained by Meditrust,
but shall be credited to the purchase price at closing. Exhibit A contains the
amounts described in clauses (i) and (ii) above as of October 15, 1998).
3. Terms of Payment. Sunrise will pay the entire purchase price by wired
funds at closing.
4. Deposit. Prior to the close of business on the next business day
after Sunrise's receipt of this countersigned agreement, Sunrise will deliver a
deposit in the amount of $100,000 to Meditrust. The deposit shall be credited
to purchase price at closing.
5. Closing Date. Closing of the purchase and sale of the Leases and
Mortgages shall take place on December 2, 1999 at the offices of Nutter,
McClennen & Fish, LLP in Boston, unless the parties otherwise mutually agree in
writing.
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6. Title. Title to the properties subject to the Leases shall be good
and marketable fee simple title, insurable by a nationally recognized title
insurance company at commercially reasonable rates, free from any matter which
would materially adversely affect the right to use the properties for the uses
allowed under the applicable lease and loan documentation, but subject to any
Leases with Karrington. Sunrise acknowledges that each of the Leases contains
a right of first refusal in favor of Karrington and that this Agreement and
Meditrust's obligations hereunder (and acceptance hereof) will be subject to
compliance with the terms and conditions of such rights of first refusals. The
Mortgages shall each constitute a first lien mortgage, insured by a lender's
policy of title insurance issued by a nationally recognized title insurance
company, subject only to commercially reasonable exceptions. At closing, an
endorsement to such lender's title insurance policies shall be issued
reflecting the assignment of the Mortgages to Sunrise and changing the insured
party from Meditrust Mortgage Investments, Inc. to Sunrise. Sunrise will be
responsible for all costs of title insurance.
7. Authority. Meditrust represents and warrants to Sunrise that it is
the owner of the Leases and Mortgages and has not pledged any of the Leases or
Mortgages or any interest therein to any other party.
8. Documentation. Promptly after complete execution of this Agreement,
Meditrust will provide Sunrise with all nonproprietary information in its
possession with respect to the Leases and Mortgages, including, without
limitation, closing binders and related due diligence materials with respect to
the Leases, Mortgages and real property related thereto.
9. Obligations Pending Closing. Meditrust agrees that from the date
hereof it will maintain its relationship with Karrington in the normal and
usual manner. Meditrust will not agree to any modification or amendments to
the Leases or Mortgages without the prior consent of Sunrise, which consent
shall not be unreasonably withheld. Meditrust will not declare any default
under any Lease or Mortgage without providing Sunrise with five (5) days
written notice thereof. Meditrust will not make any additional advances or
incur any expenses under the Leases and Mortgages for which Sunrise will be
obligated to pay or reimburse Meditrust without providing two (2) business days
written notice to Sunrise.
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10. Closing Deliveries. At closing, Meditrust shall deliver to Sunrise
all reasonable documentation (in form and substance reasonably acceptable to
Sunrise and Meditrust) required to transfer and convey the Leases and Mortgages
to Sunrise, including, without limitation: (i) a deed with respect to each
property subject to the Leases, in substantially the same form as the
applicable deed conveying such property to Meditrust, (ii) an assignment of
Meditrust's interest in and to the Leases and related lease documents, with no
representation from Meditrust other than as set forth in Paragraph 7 hereof,
(iii) an assignment of the Mortgages and related loan documents in recordable
form with no representation from Meditrust other than as set forth in Paragraph
7 hereof, (iv) the original Note and original Mortgage with respect to each of
the Mortgages, (v) a certificate of Meditrust with respect to the status of
each of the Leases and Mortgages, including the outstanding obligations or
balance relating thereto, the date through which each has been paid, and a
statement of any default of which Meditrust is aware, (vi) a FIRPTA
certificate, (vii) originals of any guarantees, pledge assignments, and other
documentation executed and delivered in connection with the Leases and
Mortgages, (viii) reasonable evidence of authority of the officer executing the
documents on behalf of Meditrust and (ix) the original owner's and lender's
policies of title insurance insuring Meditrust with respect to the Leases and
Mortgages, respectively.
At closing, Sunrise will deliver to Meditrust all reasonable documentation (in
form and substance reasonably acceptable to Sunrise and Meditrust) required to
assume Meditrust's obligations under the Leases and Mortgages including,
without limitation: (i) an assumption of Meditrust's interest in and to the
Leases and the other related lease documents, (ii) an assumption of Meditrust's
obligations under the Mortgages and related loan documents in recordable form
and (iii) reasonable evidence of authority of the officer executing the
documents on behalf of Sunrise.
12. Adjustments. All lease payments and interest under the Mortgages
shall be adjusted as of the closing date. Any other items with respect to the
Leases for which Meditrust is responsible will be subject to the usual and
appropriate adjustments. Expenses of examination of title, and title insurance
policies and endorsement, shall be paid by Sunrise. All state, county and
local recording, deed stamp, transfer, mortgage and other taxes payable in
connection with the conveyance and/or assignments shall be paid by Sunrise.
13. Termination. If Sunrise breaches this Agreement, and such breach
continues for three (3) business days after written notice thereof, Meditrust
may terminate this Agreement by written notice to Sunrise and as the sole
remedy, at law or in equity, of Meditrust as a consequence of any such default
by Sunrise, Sunrise shall pay to Meditrust the sum of One Million Dollars
($1,000,000), which sum the parties fix and settle as liquidated damages. The
deposit shall be applied toward the liquidated damages.
14. Acceptance of Offer. This offer must be accepted by Meditrust and its
acceptance communicated to Sunrise prior to 5:00 p.m. Saturday, October 17,
1998 or this offer will automatically expire. Acceptance of the offer may be
communicated by facsimile to (703) 352-6661.
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15. Assignment. Sunrise may not assign its rights and obligations
hereunder to any other party; however, Sunrise may designate any one or more
nominee(s) to take title to the assets to be conveyed or assigned hereunder.
Notwithstanding any such designation, Sunrise shall not be released from any of
its obligations hereunder.
Very truly yours,
/s/ David W. Faeder
David W. Faeder
President
OFFER ACCEPTED:
Meditrust Corporation
By: /s/ Michael F. Bushee
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Date: October 16, 1998
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TRUST AGREEMENT
dated as of December 2, 1998
between
The Several Holders
from Time to Time Parties Hereto,
as the Holders,
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as the Owner Trustee
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SUNRISE TRUST 1998-1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS..................................................................1
SECTION 1.1 Definitions...........................................................1
SECTION 1.2 Interpretation........................................................2
ARTICLE II AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF TRUST BY TRUST COMPANY.......................................2
SECTION 2.1 Authority To Execute and Perform Various Documents....................2
SECTION 2.2 Declaration of Trust by Trust Company.................................2
ARTICLE III CONTRIBUTIONS AND PAYMENTS.................................................3
SECTION 3.1 Procedure for Holder Advances; Certificates...........................3
SECTION 3.2 Holder Yield..........................................................4
SECTION 3.3 Scheduled Return of Holder Advances...................................5
SECTION 3.4 Early Return of Advances..............................................5
SECTION 3.5 Payments from Trust Estate Only.......................................6
SECTION 3.6 Method of Payment.....................................................6
SECTION 3.7 Computation of Yield..................................................6
SECTION 3.8 Conversion and Continuation Options...................................7
SECTION 3.9 Notice of Amounts Payable.............................................8
ARTICLE IV COLLECTIONS AND DISTRIBUTIONS...............................................9
SECTION 4.1 Collections and Remittances by the Owner Trustee......................9
SECTION 4.2 Priority of Distributions.............................................9
SECTION 4.3 Excepted Payments.....................................................9
SECTION 4.4 Distributions after Default...........................................9
ARTICLE V DUTIES OF THE OWNER TRUSTEE.................................................10
SECTION 5.1 Notice of Certain Events.............................................10
SECTION 5.2 Action Upon Instructions.............................................10
SECTION 5.3 Indemnification......................................................10
SECTION 5.4 No Duties Except as Specified In Trust Agreement or Instructions.....11
SECTION 5.5 No Action Except Under Specified Documents or Instructions...........11
SECTION 5.6 Absence of Duties....................................................11
ARTICLE VI THE OWNER TRUSTEE..........................................................12
SECTION 6.1 Acceptance of Trust and Duties.......................................12
SECTION 6.2 Furnishing of Documents..............................................12
SECTION 6.3 No Representations or Warranties as to the Properties or Operative
Agreements.................................................................13
SECTION 6.4 No Segregation of Moneys; No Interest................................13
SECTION 6.5 Reliance; Advice of Counsel..........................................13
SECTION 6.6 Liability With Respect to Documents..................................14
</TABLE>
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<TABLE>
<S> <C>
SECTION 6.7 Not Acting In Individual Capacity....................................14
SECTION 6.8 Books and Records; Tax Returns.......................................14
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE......................................15
SECTION 7.1 Indemnification Generally............................................15
SECTION 7.2 Compensation and Expenses............................................15
ARTICLE VIII TERMINATION OF TRUST AGREEMENT...........................................15
SECTION 8.1 Termination of Trust Agreement.......................................15
SECTION 8.2 Termination at Option of the Holders.................................16
SECTION 8.3 Termination at Option of the Owner Trustee...........................16
SECTION 8.4 Actions by the Owner Trustee Upon Termination........................16
ARTICLE IX SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND
SEPARATE OWNER TRUSTEES....................................................16
SECTION 9.1 Resignation of the Owner Trustee; Appointment of Successor...........17
SECTION 9.2 Co-Trustees and Separate Trustees....................................18
SECTION 9.3 Notice...............................................................20
ARTICLE X AMENDMENTS.................................................................21
SECTION 10.1 Amendments..........................................................21
SECTION 10.2 Limitation on Amendments............................................21
ARTICLE XI MISCELLANEOUS............................................................. 21
SECTION 11.1 No Legal Title to Trust Estate in the Holders.......................21
SECTION 11.2 Sale of a Property by the Owner Trustee is Binding..................21
SECTION 11.3 Limitations on Rights of Others.....................................22
SECTION 11.4 Notices.............................................................22
SECTION 11.5 Severability........................................................22
SECTION 11.6 Limitation on the Holders' Liability................................22
SECTION 11.7 Separate Counterparts...............................................22
SECTION 11.8 Successors and Assigns..............................................22
SECTION 11.9 Headings............................................................23
SECTION 11.10 Governing Law......................................................23
SECTION 11.11 Performance by the Holders.........................................23
SECTION 11.12 Conflict with Operative Agreements.................................23
SECTION 11.13 No Implied Waiver..................................................24
SECTION 11.14 SUBMISSION TO JURISDICTION; VENUE..................................24
</TABLE>
Schedule I - Holder Commitments
EXHIBIT A - Form of Holder Certificate
EXHIBIT B - Form of Assignment and Acceptance
<PAGE> 4
TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of December 2, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, the "Trust
Agreement"), is among the several banks and other financial institutions from
time to time parties to this Trust Agreement (individually, each of the
foregoing may be referred to as a "Holder," and collectively, the foregoing
together with such other persons and entities that become holders hereunder, the
"Holders"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, in its individual
capacity ("Trust Company"), and in its capacity as owner trustee hereunder,
together with its successors and assigns (the "Owner Trustee").
WHEREAS, in order to provide a portion of the funds for carrying out the
other transactions contemplated by the Operative Agreements, each Holder will
make its respective Holder Advances pursuant to this Trust Agreement and the
Participation Agreement (as defined below);
WHEREAS, the Holders desire to provide for the Trust to exist for the
purpose of (a) developing, acquiring, installing, constructing and testing
various Properties and leasing such Properties to Lessee and (b) carrying out
certain transactions contemplated by the Operative Agreements; and
WHEREAS, Trust Company is willing to act as trustee hereunder and to
accept the trust created hereby (the "Trust").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
For purposes of this Trust Agreement (including without limitation the
"WHEREAS" clauses set forth above), capitalized terms used in this Trust
Agreement and not otherwise defined herein shall have the meanings assigned to
them in Appendix A to that certain Participation Agreement dated as of
December 2, 1998 (as amended, modified, extended, supplemented, restated and/or
replaced from time to time in accordance with the applicable provisions thereof,
the "Participation Agreement") among Sunrise Midwest Leasing, L.L.C., as the
Lesse and the Construction Agent, Sunrise Assisted Living, Inc., as the
Guarantor, the Owner Trustee, the various banks and other lending institutions
which are parties thereto
<PAGE> 5
from time to time, as the Holders, the various banks and other lending
institutions which are parties thereto from time to time, as the Lenders, and
NationsBank, N.A., as agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests. Unless otherwise indicated, references in this Trust Agreement to
articles, sections, paragraphs, clauses, appendices, schedules and exhibits are
to the same contained in this Trust Agreement.
SECTION 1.2 INTERPRETATION.
The rules of usage set forth in Appendix A to the Participation Agreement
shall apply to this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF TRUST BY TRUST COMPANY
SECTION 2.1 AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS.
Each Holder hereby authorizes and directs the Owner Trustee (a) to
execute and deliver, as trustee for and on behalf of each such Holder, each
Operative Agreement to which the Owner Trustee is a party and any other
agreements, instruments, certificates or documents related to the transactions
contemplated hereby to which the Owner Trustee is a party, (b) to take whatever
action shall be required to be taken by the Owner Trustee by the terms of, and
exercise its rights and perform its duties under, each of the documents,
agreements, instruments and certificates referred to in clause (a) above as set
forth in such documents, agreements and certificates, and (c) subject to the
terms of this Trust Agreement, to take such other action in connection with the
foregoing as the Holders may from time to time direct.
SECTION 2.2 DECLARATION OF TRUST BY TRUST COMPANY.
(a) Trust Company hereby declares that it will hold all estate,
right, title and interest of the Owner Trustee in, to and under each
Property, each Holder Advance, the Operative Agreements, any other
property contributed by any Holder and any and all other property or
assets from time to time of the Trust, including without limitation all
amounts of Rent, insurance proceeds and condemnation awards, indemnity or
other payments of any kind (collectively, the "Trust Estate") as the
Owner Trustee upon the trusts set forth herein and for the use and
benefit of each Holder, subject, however, to the provisions of the Credit
Agreement and the Security Documents. The name of the Trust shall be
"Sunrise Trust 1998-1."
(b) The purpose of the Trust is to hold title to the Trust Estate
for the benefit of the Holders and to engage in activities ancillary and
incidental thereto as the Holders shall determine to be desirable. Except
in connection with the foregoing, the Owner Trustee shall not (i) engage
in any business activity, (ii) have any property, rights or
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interest, whether real or personal, tangible or intangible, (iii) incur
any legal liability or obligation, whether fixed or contingent, matured
or unmatured, other than in the normal course of the administration of
the Trust or (iv) subject any of its property or assets to any mortgage,
Lien, security interest or other claim or encumbrance, other than in
favor of the Lenders or the Holders pursuant to the provisions of the
Operative Agreements and this Trust Agreement. THIS TRUST IS NOT A
BUSINESS TRUST. THE SOLE PURPOSE OF THE TRUST IS TO ACQUIRE AND HOLD
TITLE TO THE TRUST ESTATE, SUBJECT TO THE RIGHTS OF THE LENDERS, FOR THE
BENEFIT OF THE HOLDERS. THE OWNER TRUSTEE MAY NOT TRANSACT BUSINESS OF
ANY KIND WITH RESPECT TO ANY PROPERTY COMPRISING THE TRUST ESTATE NOR
SHALL THIS AGREEMENT BE DEEMED TO BE, OR CREATE OR EVIDENCE THE EXISTENCE
OF A CORPORATION DE FACTO OR DE JURE, OR A MASSACHUSETTS TRUST, OR ANY
OTHER TYPE OF BUSINESS TRUST, ASSOCIATION OR JOINT VENTURE BETWEEN THE
OWNER TRUSTEE, THE HOLDERS, THE AGENT AND THE LENDERS.
ARTICLE III
CONTRIBUTIONS AND PAYMENTS
SECTION 3.1 PROCEDURE FOR HOLDER ADVANCES; CERTIFICATES.
(a) Upon receipt from Lessee by the Agent of a Requisition, and
subject to the terms and conditions of the Participation Agreement, the
Agent shall request from each Holder its pro rata share of any Advance
and each Holder shall make its pro rata share of any Advance under the
Holder Commitment of such Holder, as set forth on Schedule 1 hereto, on
each date Advances are made pursuant to Section 5 of the Participation
Agreement. The Agent may request an Advance under the Holder Commitments
during the Commitment Period on any date that an Advance may be requested
pursuant to the terms of Section 5.2(a) of the Participation Agreement,
provided, that the Agent shall give each Holder irrevocable notice (which
notice must be received by such Holder no less than three (3) Business
Days prior to the requested date of the Holder Advance) specifying (i)
the amount to be advanced (which on any date shall not be in excess of
the then Available Holder Commitment), (ii) the requested date of
advance, (iii) whether the Holder Advance is to be a Eurodollar Holder
Advance or an ABR Holder Advance or a combination thereof, (iv) if the
Holder Advance is to be a combination of Eurodollar Holder Advances and
ABR Holder Advances, the respective amounts of each type of Holder
Advance and (v) the Interest Period applicable to any Eurodollar Holder
Advances. Pursuant to the terms of the Participation Agreement, the Agent
shall be deemed to have delivered such notice upon the delivery of a
notice by the Construction Agent or Lessee containing such required
information.
(b) Upon receipt of any such notice delivered pursuant to Section
3.1(a), each Holder shall make the amount of its Advance available to the
Agent for the account of the
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Owner Trustee at the office of the Agent referred to in Section 12.2 of
the Participation Agreement (or at such other address as may be
identified by the Agent from time to time) prior to 12:00 Noon,
Charlotte, North Carolina time on the date requested by Lessee in funds
immediately available to the Owner Trustee.
(c) Holder Yield accruing on each Holder Advance during the
Construction Period with respect to any property shall, subject to the
limitations set forth in Section 5.1(b) of the Participation Agreement,
be added to the amount of the Holder Advance on the relevant Scheduled
Interest Payment Date. On such Scheduled Interest Payment Date, the
Holder Property Cost and Holder Construction Property Cost shall be
increased by the amount of Holder Yield added to the Holder Advance.
(d) The Holder Advances made by each Holder to the Trust Estate
shall be evidenced by a Certificate of the Owner Trustee, substantially
in the form of Exhibit A hereto, issued in the name of the Holder and in
an amount equal to the Holder Commitment of such Holder. Each Certificate
shall (i) be dated on or about the Initial Closing Date, (ii) be stated
to mature on the Maturity Date and (iii) bear a yield on the unpaid
Holder Amount thereof from time to time outstanding at the Holder Yield.
(e) To the extent that the Owner Trustee, in its capacity as
Borrower under the Credit Agreement, shall have elected to terminate or
reduce the amount of the Commitments pursuant to Section 2.5(a) of the
Credit Agreement, a pro rata election shall be deemed to have been made
with respect to the Holder Commitment. The Holder Commitments respecting
any particular Property shall automatically be reduced to zero (0) upon
the occurrence of the Rent Commencement Date respecting such Property. On
any date on which the Commitments shall be reduced to zero (0) as a
result of a Credit Agreement Event of Default, the Holder Commitments
shall automatically be reduced to zero (0) and the Owner Trustee shall
prepay the Certificates in full for the outstanding Holder Amount,
together with accrued but unpaid Holder Yield thereon and all other
amounts owing under the Certificates.
SECTION 3.2 HOLDER YIELD.
(a) Holder Advances shall bear yield payable by the Owner Trustee
and calculated at the rate of Holder Yield applicable from time to time.
The Owner Trustee shall pay to each Holder, from the Trust Estate, its
pro rata portion of Holder Yield on Holder Advances made hereunder.
Payment of Holder Yield to each Holder shall be made in arrears on each
Scheduled Interest Payment Date occurring after the Rent Commencement
Date or as otherwise provided herein or in Section 2.6 of the Credit
Agreement or Section 8.7 of the Participation Agreement.
(b) If (i) all or a portion of Holder Yield shall not be received
by the Holders when due (whether at the stated maturity, by acceleration
or otherwise) or (ii) (A) a replacement Construction Agent is hired in
accordance with the provisions of the Agency Agreement, (B) Completion of
all Properties has not occurred on prior to the
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Construction Period Termination Date or (C) the cost of any Property
exceeds the original Construction Budget therefor (or the applicable
Construction Budget modified in accordance with the Operative Agreements)
in each case as previously delivered to the Agent, such overdue amount
(in the case of Section 3.2(b)(i)) or all Holder Advances, Holder Yield
and all other amounts payable hereunder (in the case of Section
3.2(b)(ii)) shall, without limiting the rights of the Holders hereunder
or under any Operative Agreement, bear interest at the Holder Overdue
Rate, in each case from the date of nonpayment until paid (whether after
or before judgment) (in the case of Section 3.2(b)(i)) or (y) Completion
of all Properties (in the case of Section 3.2(b)(ii)). All such amounts
referenced in this Section 3.2(b) shall be paid upon demand.
SECTION 3.3 SCHEDULED RETURN OF HOLDER ADVANCES.
The outstanding Holder Amount shall be due in full on the Expiration
Date. On each such date and on the Expiration Date, subject to the terms of the
Participation Agreement, the Owner Trustee shall pay to each Holder its portion
of the aggregate Holder Amount then due, together with all accrued but unpaid
Holder Yield and all other amounts due to such Holders from the Owner Trustee
hereunder or under the Operative Agreements.
SECTION 3.4 EARLY RETURN OF ADVANCES.
(a) Subject to Sections 11.2(e), 11.3 and 11.4 of the
Participation Agreement, the Owner Trustee may at any time and from time
to time prepay the Certificates, in whole or in part, without premium or
penalty, upon at least three (3) Business Days' irrevocable notice to the
Agent, on behalf of the Holders, specifying the date and amount of
prepayment and whether the prepayment is of ABR Holder Advances or
Eurodollar Holder Advances or a combination thereof, and, if a
combination thereof, the amount allocable to each. Upon receipt of such
notice, the Agent shall promptly notify the Holders thereof. If such
notice is given, the amount specified in such notice shall be due and
payable on the date specified therein. Amounts prepaid shall not be
readvanced, except as set forth in Section 5.2(d) of the Participation
Agreement.
(b) If on any date the Agent or the Owner Trustee shall receive
any payment in respect of (i) any Casualty, Condemnation or Environmental
Violation pursuant to Sections 15.1(a) or 15.1(g) or Article XVI of the
Lease (excluding any payments in respect thereof which are payable to
Lessee in accordance with the Lease), or (ii) the Termination Value of
any Property in connection with the delivery of a Termination Notice
pursuant to Article XVI of the Lease, or (iii) the Termination Value of
any Property or such other applicable amount in connection with the
exercise of a Purchase Option under Article XX of the Lease or the
exercise of the option of the Owner Trustee to transfer the Properties to
the Lessee pursuant to Section 20.3 of the Lease or (iv) any payment
required to be made or elected to be made by the Construction Agent to
the Owner Trustee pursuant to the Agency Agreement, then in each case,
the Holders shall receive proceeds in accordance with Section 8.7(b) of
the Participation Agreement.
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(c) Each prepayment of the Certificates pursuant to Section 3.4(a)
shall be allocated to reduce the respective Holder Property Costs of all
Properties pro rata according to the Holder Property Costs of such
Properties immediately before giving effect to such prepayment. Each
prepayment of the Certificates pursuant to Section 3.4(b) shall be
allocated to reduce the Holder Property Cost of the Property or
Properties subject to the respective Casualty, Condemnation,
Environmental Violation, termination, purchase, transfer or other
circumstance giving rise to such prepayment.
SECTION 3.5 PAYMENTS FROM TRUST ESTATE ONLY.
All payments to be made by the Owner Trustee under this Trust Agreement
(including without limitation any payments pursuant to Section 11.4 of the
Participation Agreement) shall be made only from the income and proceeds from
the Trust Estate and only to the extent that the Owner Trustee shall have
received income or proceeds from the Trust Estate to make such payments in
accordance with the terms hereof, except as specifically provided in Section
6.1. Each Holder agrees that it will look solely to the income and proceeds from
the Trust Estate to the extent available for payment as herein provided and
that, except as specially provided in any Operative Agreement, Trust Company
shall not be liable to any Holder for any amounts payable under this Trust
Agreement and shall not be subject to any liability under this Trust Agreement.
SECTION 3.6 METHOD OF PAYMENT.
All amounts payable to a Holder pursuant to this Trust Agreement shall be
paid or caused to be paid by the Owner Trustee to, or for the account of, such
Holder, or its nominee, by transferring such amount in immediately available
funds to a bank institution or banking institutions with bank wire transfer
facilities for the account of such Holder or as otherwise instructed in writing
from time to time by such Holder.
SECTION 3.7 COMPUTATION OF YIELD.
(a) Holder Yield shall be calculated on the basis of a year of
three hundred sixty-five (365) days (or three hundred sixty-six (366)
days, as the case may be) for the actual days elapsed. Any change in the
Holder Yield resulting from a change in the ABR or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business
on the day on which such change becomes effective.
(b) Pursuant to Section 12.12 of the Participation Agreement, the
calculation of Holder Yield under this Section 3.7 shall be made by the
Agent. Each determination of an interest rate by the Agent shall be
conclusive and binding on the Owner Trustee and the Holders in the
absence of manifest error.
(c) If the Eurodollar Rate cannot be determined by the Agent in
the manner specified in the definition of the term "Eurodollar Rate", the
Owner Trustee shall give or cause to be given telecopy or telephonic
notice thereof to the Holders as soon as practicable after receipt of
same from the Agent. Commencing on the Scheduled Interest
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Payment Date next occurring after the delivery of such notice and
continuing until such time as the Eurodollar Rate can be determined by
the Agent in the manner specified in the definition of such term, all
outstanding Holder Advances shall bear a yield at the ABR. Until such
time as the Eurodollar Rate can be determined by the Agent in the manner
specified in the definition of such term, no further Eurodollar Holder
Advances shall be made or shall be continued as such at the end of the
then current Interest Period nor shall the Owner Trustee have the right
to convert ABR Holder Advances to Eurodollar Holder Advances.
SECTION 3.8 CONVERSION AND CONTINUATION OPTIONS.
(a) The Owner Trustee may elect from time to time to convert
Eurodollar Holder Advances to ABR Holder Advances by giving the Agent (on
behalf of the Holders) at least three (3) Business Days' prior
irrevocable notice of such election, provided, that any such conversion
of Eurodollar Holder Advances may only be made on the last day of an
Interest Period with respect thereto, and provided, further, to the
extent an Event of Default has occurred and is continuing on the last day
of any such Interest Period, the applicable Eurodollar Holder Advance
shall automatically be converted to an ABR Holder Advance. The Owner
Trustee may elect from time to time to convert ABR Holder Advances to
Eurodollar Holder Advances by giving the Agent (on behalf of the Holders)
at least three (3) Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Holder Advances
shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice, the Agent (on behalf
of the Holders) shall promptly notify each Holder thereof. All or any
part of outstanding Eurodollar Holder Advances or ABR Holder Advances may
be converted as provided herein, provided, that (i) no ABR Holder Advance
may be converted into a Eurodollar Holder Advance after the date that is
one (1) month prior to the Maturity Date and (ii) such notice of
conversion shall contain an election by the Owner Trustee of an Interest
Period for such Eurodollar Holder Advance to be created by such
conversion and such Interest Period shall be in accordance with the terms
of the definition of the term "Interest Period" including without
limitation subparagraphs (A) through (D) thereof.
(b) Subject to the restrictions set forth in Section 3.1, any
Eurodollar Holder Advance may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Owner
Trustee giving irrevocable notice to the Agent (on behalf of the Holders)
in accordance with the notice provisions for the conversion of ABR Holder
Advances to Eurodollar Holder Advances set forth herein and the
applicable provisions of the term "Interest Period" of the length of the
next Interest Period to be applicable to such Eurodollar Holder Advances,
provided, that no Eurodollar Holder Advance may be continued as such
after the date that is one (1) month prior to the Maturity Date,
provided, further, no Eurodollar Holder Advance may be continued as such
if an Event of Default has occurred and is continuing as of the last day
of the Interest Period for such Eurodollar Holder Advance, and provided,
further, that if the Owner Trustee shall fail to give any required notice
as described above or if such continuation is
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not permitted pursuant to the preceding proviso or otherwise, such
Advances shall automatically be converted to ABR Advances on the last day
of such then expiring Interest Period.
SECTION 3.9 NOTICE OF AMOUNTS PAYABLE.
(a) In the event that any Holder becomes aware that any amounts
are or will be owed to it pursuant to Sections 11.2(e) or 11.3 of the
Participation Agreement or that it is unable to make Holder Advances
which bear a yield based on the Eurodollar Rate plus the Applicable
Percentage for Eurodollar Holder Advances, then it shall promptly notify
the Owner Trustee thereof and, as soon as possible thereafter, such
Holder shall submit to the Owner Trustee a certificate indicating the
amount owing to it and the calculation thereof. The amounts set forth in
such certificate shall be prima facie evidence of the obligations of the
Owner Trustee hereunder.
(b) In the event that any Holder delivers to the Owner Trustee a
certificate in accordance with Section 3.9(a), or any Holder is required
to make Holder Advances with Holder Yields calculated at the ABR in
accordance with Section 11.3(d) of the Participation Agreement, subject
to Section 9.2 of the Participation Agreement, the Owner Trustee may, at
the expense of Lessee and in the discretion of the Owner Trustee, (i)
require such Holder to transfer or assign, in whole or (with such
Holder's consent) in part, without recourse (in accordance with Section
11.8), all or (with such Holder's consent) part of its interests, rights
(except for rights to be indemnified for actions taken while a party
hereunder) and obligations under this Agreement to a replacement bank or
institution if the Owner Trustee (subject to Section 9.2 of the
Participation Agreement) and with the full cooperation of such Holder)
can identify a Person who is ready, willing and able to be such
replacement bank or institution with respect thereto and such replacement
bank or institution (which may be another Holder) shall assume such
assigned obligations, or (ii) during such time as no Default or Event of
Default has occurred and is continuing, terminate the Holder Commitment
of such Holder and prepay the outstanding Holder Advances of such Holder,
provided, however, that (x) subject to Section 9.2 of the Participation
Agreement, the Owner Trustee or such replacement bank or institution, as
the case may be, shall have paid to such Holder in immediately available
funds the amount of the Holder Advances and Holder Yield accrued to the
date of such payment on the Holder Advances made by it hereunder (and, if
such Holder is also a Lender, the principal and interest on all Loans
accrued and unpaid thereon) and (y) such assignment or termination of the
Holder Commitment of the Holder and prepayment of the Holder Advances do
not conflict with any law, rule or regulation or order of any court or
Governmental Authority.
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ARTICLE IV
COLLECTIONS AND DISTRIBUTIONS
SECTION 4.1 COLLECTIONS AND REMITTANCES BY THE OWNER TRUSTEE.
The Owner Trustee agrees that, subject to the provisions of this Trust
Agreement and the Operative Agreements, it will during the term of this Trust
administer the Trust Estate and, at the direction of the Holders, take steps to
collect all Rent and other sums payable to the Owner Trustee by Lessee under the
Lease. The Owner Trustee agrees to distribute, or cause to be distributed, all
proceeds received from the Trust Estate in accordance with Article III and
Sections 4.2 and 4.3. The Owner Trustee shall make, or cause to be made, such
distribution promptly upon receipt of such proceeds (provided, such proceeds are
available for distribution) by the Agent (on behalf of the Owner Trustee), it
being understood and agreed that the Owner Trustee shall not be obligated to
make, or to cause to be made, such distribution until the funds for such
distribution have been received by the Agent (on behalf of the Owner Trustee) in
cash or its equivalent reasonably acceptable to the Owner Trustee.
SECTION 4.2 PRIORITY OF DISTRIBUTIONS.
Subject to the terms and requirements of the Operative Agreements, all
payments and amounts received by Trust Company as the Owner Trustee or on its
behalf shall be distributed to the Agent for allocation by the Agent in
accordance with the terms of Section 8.7 of the Participation Agreement or, if
such payments or amounts are received by the Owner Trustee from the Agent, then
they shall be distributed forthwith upon receipt in the following order of
priority: first, in accordance with the Holder Yield protection provisions set
forth in Section 11.3 of the Participation Agreement; and, second, the balance,
if any, of such payment or amount remaining thereafter shall be distributed to
the Holders pro rata (based on the ratio of the individual Holder's Holder
Commitment to the aggregate of all the Holders' Holder Commitments).
SECTION 4.3 EXCEPTED PAYMENTS.
Anything in this Article IV or elsewhere in this Trust Agreement to the
contrary notwithstanding, any Excepted Payment received at any time by the Owner
Trustee shall be distributed promptly to the Person entitled to receive such
Excepted Payment.
SECTION 4.4 DISTRIBUTIONS AFTER DEFAULT.
Subject to the terms of Section 5.1, the proceeds received by the Owner
Trustee from the exercise of any remedy under the Lease shall be distributed
pursuant to Section 4.2 above. This Trust shall cease and terminate in
accordance with the terms set forth in Section 8.1 and upon the final
disposition by the Owner Trustee of all of the Trust Estate pursuant to this
Section 4.4.
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ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 NOTICE OF CERTAIN EVENTS.
In the event the Owner Trustee shall have knowledge of any Default or
Event of Default, the Owner Trustee shall give written notice thereof within
five (5) Business Days to each Holder, Lessee and the Agent unless such Default
or Event of Default no longer exists before the giving of such notice. Subject
to the provisions of Section 5.3 of this Trust Agreement and Sections 8.5 and
9.2 of the Participation Agreement, the Owner Trustee shall take or refrain from
taking such action as the Agent shall direct until such time as the Loans are
paid in full (and as more specifically provided in Sections 8.2(h) and 8.6 of
the Participation Agreement) and thereafter as the Majority Holders shall
direct, in each case by written instructions to the Owner Trustee. If the Owner
Trustee shall have given the Agent and the Holders (and respecting Sections 8.5
and 9.2 of the Participation Agreement, the Lessee) notice of any event and
shall not have received written instructions as above provided within thirty
(30) days after mailing notice of such event to the Agent and the Holders (and
respecting Sections 8.5 and 9.2 of the Participation Agreement, the Lessee), the
Owner Trustee may, but shall be under no duty to, and shall have no liability
for its failure or refusal to, take or refrain from taking any action with
respect thereto, not inconsistent with the provisions of the Operative
Agreements, as the Owner Trustee shall deem advisable and in the best interests
of the Lenders and the Holders. For all purposes of this Trust Agreement, in the
absence of actual knowledge of a Responsible Officer in the Corporate Trust
Department of Trust Company, the Owner Trustee shall be deemed not to have
knowledge of any Default or Event of Default unless a Responsible Officer of the
Corporate Trust Department of Trust Company receives notice thereof given by or
on behalf of a Holder, Lessee or the Agent.
SECTION 5.2 ACTION UPON INSTRUCTIONS.
Subject to the provisions of Sections 5.1 and 5.3, upon the written
instructions of the Agent or the Majority Holders (as applicable), the Owner
Trustee will take or refrain from taking such action or actions as may be
specified in such instructions.
SECTION 5.3 INDEMNIFICATION.
The Owner Trustee shall not be required to take or refrain from taking
any action under this Trust Agreement or any other Operative Agreement (other
than the actions specified in the first sentence of Section 5.1 and in the last
sentence of Section 5.4) unless Trust Company shall have been indemnified by
Lessee or, at their election, by the Holders and the Lenders against any
liability, fee, cost or expense (including without limitation reasonable
attorneys' fees and expenses) that may be incurred or charged in connection
therewith, other than such as may result from the willful misconduct or gross
negligence of the Owner Trustee. The Owner Trustee shall not be required to take
any action under any Operative Agreement if the Owner Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is likely to
result in personal liability for which the Owner Trustee has not been and will
not be adequately
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indemnified or is contrary to the terms hereof or of any Operative Agreement to
which the Owner Trustee is a party or is otherwise contrary to law. The Owner
Trustee shall be under no liability with respect to any action taken or omitted
to be taken by the Owner Trustee in accordance with instructions of the Agent or
the Majority Holders pursuant to Section 5.2.
SECTION 5.4 NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS.
The Owner Trustee shall not have any duty or obligation to manage,
control, use, make any payment in respect of, register, record, insure, inspect,
sell, dispose of or otherwise deal with any Property or any other part of the
Trust Estate, or to otherwise take or refrain from taking any action under or in
connection with any Operative Agreement to which the Owner Trustee is a party,
except as expressly provided by the terms of this Trust Agreement or any other
Operative Agreement or in written instructions from the Agent and/or the
Majority Holders, as applicable, received pursuant to Sections 5.1, 5.2 or 8.4
of this Trust Agreement or Sections 8.2(h) or 8.6 of the Participation Agreement
or from the Lessee pursuant to Sections 8.5 or 9.2 of the Participation
Agreement; and no implied duties or obligations shall be read into this Trust
Agreement against the Owner Trustee. The Owner Trustee shall have no duty or
obligation to supervise or monitor the performance of the Construction Agent
pursuant to the Agency Agreement which for all purposes shall be an independent
contractor. The Owner Trustee nevertheless agrees that it will (in its
individual capacity and at its own cost and expense), promptly take all action
as may be necessary to discharge any Lessor Liens on any part of the Trust
Estate.
SECTION 5.5 NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS.
The Owner Trustee agrees that it will not manage, control, use, sell,
dispose of or otherwise deal with any Property or any other part of the Trust
Estate except (a) as required by the terms of the Operative Agreements, (b) in
accordance with the powers granted to, or the authority conferred upon, it
pursuant to this Trust Agreement, (c) in accordance with the express terms
hereof or with written instructions from the Agent and/or the Majority Holders,
as applicable, pursuant to Sections 5.1, 5.2 or 8.4 or (d) from the Lessee
pursuant to Sections 8.5 or 9.2 of the Participation Agreement.
SECTION 5.6 ABSENCE OF DUTIES.
(a) Except in accordance with written instructions furnished
pursuant to Sections 5.1, 5.2 or 8.4, and without limitation of the
generality of Section 5.4, the Owner Trustee shall not have any duty to
(i) file, record or deposit any Operative Agreement or any other
document, or to maintain any such filing, recording or deposit or to
refile, rerecord or redeposit any such document; (ii) obtain insurance on
any Property or effect or maintain any such insurance, other than to
receive and forward to each Holder and the Agent any notices, policies,
certificates or binders furnished to the Owner Trustee pursuant to the
Lease; (iii) maintain any Property; (iv) pay or discharge any Tax or any
Lien owing with respect to or assessed or levied against any part of the
Trust Estate,
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except as provided in the last sentence of Section 5.4, other than to
forward notice of such Tax or Lien received by the Owner Trustee to each
Holder and the Agent; (v) confirm, verify, investigate or inquire into
the failure to receive any reports or financial statements of Lessee or
any other Person; (vi) inspect any Property any time or ascertain or
inquire as to the performance or observance of any of the covenants of
Lessee or any other Person under any Operative Agreement with respect to
any Property; or (vii) manage, control, use, sell, dispose of or
otherwise deal with any Property or any part thereof or any other part of
the Trust Estate, except as provided in Section 5.5.
(b) The Owner Trustee, in the exercise or administration of the
trusts and powers hereunder, including without limitation its obligations
under Section 5.2, may, at the expense of Lessee, employ agents,
attorneys, accountants, and auditors and enter into agreements with any
of them and the Owner Trustee shall not be liable, either in its
individual capacity or in its capacity as the Owner Trustee, for the
default or misconduct of any such agents, attorneys, accountants or
auditors if such agents, attorneys, accountants or auditors shall have
been selected by it in good faith.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 ACCEPTANCE OF TRUST AND DUTIES.
The Owner Trustee accepts the trust and duties hereby created and agrees
to perform the same, but only upon the terms of this Trust Agreement. The Owner
Trustee agrees to receive, manage and disburse all moneys constituting part of
the Trust Estate actually received by it as the Owner Trustee in accordance with
the terms of this Trust Agreement. The Owner Trustee shall not be answerable or
accountable under any circumstances, except for (i) its own willful misconduct
or gross negligence, (ii) the inaccuracy of any of its representations or
warranties contained in Section 6.3 of this Trust Agreement or Section 6.1 of
the Participation Agreement, (iii) its failure to perform obligations expressly
undertaken by it in the last sentence of Section 5.4 of this Trust Agreement or
in Section 8.2(a) of the Participation Agreement, (iv) Taxes based on or
measured by any fees, commissions or compensation received by it for acting as
the Owner Trustee in connection with any of the transactions contemplated by the
Operative Agreements, or (v) its failure to use ordinary care to receive, manage
and disburse moneys actually received by it in accordance with the terms of the
Operative Agreements.
SECTION 6.2 FURNISHING OF DOCUMENTS.
The Owner Trustee will furnish to each Holder and to the Agent, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, opinions, certificates, financial statements and any other instruments
or writings furnished to the Owner Trustee hereunder or under the Operative
Agreements, unless by the express terms of any Operative Agreement a copy of the
same is required to be furnished by some other Person directly to the
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Holders and/or the Agent, or the Owner Trustee shall have determined that the
same has already been furnished to the Holders and the Agent.
SECTION 6.3 NO REPRESENTATIONS OR WARRANTIES AS TO THE PROPERTIES OR
OPERATIVE AGREEMENTS.
THE OWNER TRUSTEE MAKES (i) NO REPRESENTATION OR WARRANTY, EITHER EXPRESS
OR IMPLIED, AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND THE OWNER TRUSTEE SHALL NOT BE
LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF ANY
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT except that
the Owner Trustee hereby represents, warrants and covenants to each Holder that
it will comply with the last sentence of Section 5.4, and (ii) no representation
or warranty as to the validity or enforceability of any Operative Agreement or
as to the correctness of any statement made by a Person other than the Owner
Trustee or the Owner Trustee contained in any thereof, except that the Owner
Trustee represents, warrants and covenants to each Holder that this Trust
Agreement has been and each of the other Operative Agreements which contemplates
execution thereof by the Owner Trustee has been or will be executed and
delivered by its officers who are, or will be, duly authorized to execute and
deliver documents on its behalf.
SECTION 6.4 NO SEGREGATION OF MONEYS; NO INTEREST.
Except as otherwise provided herein or in any of the other Operative
Agreements, moneys received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, and neither
Trust Company nor the Owner Trustee shall be liable for any interest thereon,
except as may be agreed to in writing by the Owner Trustee or the Trust Company.
SECTION 6.5 RELIANCE; ADVICE OF COUNSEL.
The Owner Trustee shall not incur any liability to any Person in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it in good faith to be signed by the proper party or
parties. The Owner Trustee may accept and rely upon a certified copy of a
resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on an Officer's Certificate of
the relevant party, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon. In the administration of
the trusts hereunder, the Owner Trustee may execute
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any of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may consult with counsel,
accountants and other skilled Persons to be selected and employed by it, and the
Owner Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled Persons and not contrary to this Trust Agreement.
SECTION 6.6 LIABILITY WITH RESPECT TO DOCUMENTS.
The Owner Trustee, either in its trust or individual capacities, shall
not incur any liability to any Person for or in respect of the recitals herein,
the validity or sufficiency of this Trust Agreement or for the due execution
hereof by each Holder or for the form, character, genuineness, sufficiency,
value or validity of any Property or for or in respect of the validity or
sufficiency of any of the Operative Agreements and the Owner Trustee, either in
its trust or individual capacities, shall in no event assume or incur any
liability, duty or obligation to any Person or to any Holder, other than as
expressly provided for herein or in any of the other Operative Agreements.
SECTION 6.7 NOT ACTING IN INDIVIDUAL CAPACITY.
All Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by the Operative Agreements shall look only to the
Trust Estate (or a part thereof, as the case may be) for payment or satisfaction
thereof, except as specifically provided in this Article VI and except to the
extent that the Owner Trustee shall otherwise expressly agree in any Operative
Agreement to which it is a party, including without limitation Section 6.1 and
Section 8.2(a) of the Participation Agreement and the last sentence of Section
5.4 hereof.
SECTION 6.8 BOOKS AND RECORDS; TAX RETURNS.
(a) The Owner Trustee shall be responsible for the keeping of all
appropriate books and records relating to the receipt and disbursement of
all moneys that it may receive hereunder, or under any other Operative
Agreement. The Owner Trustee shall, at the expense of Lessee, file an
application with the Internal Revenue Service for a taxpayer
identification number with respect to the trust created hereby. The Owner
Trustee shall, at the expense of Lessee, prepare or cause to be prepared
and the Owner Trustee shall sign and/or file the federal fiduciary tax
return with respect to Taxes due and payable by the trust created hereby
in connection with the transactions contemplated hereby and by any other
Operative Agreement. Each Holder shall furnish the Owner Trustee with all
such information as may be reasonably required from such Holder (as such
is requested in writing by the Owner Trustee) in connection with the
preparation of such tax returns. The Owner Trustee shall keep copies of
all returns delivered to or filed by it.
(b) The Owner Trustee, either in its trust or individual
capacities, shall be under no obligation to appear in, prosecute or
defend any action, which in its opinion may require it to incur any
out-of-pocket expense or any liability unless the Owner Trustee shall be
furnished with such reasonable security and indemnity by Lessee (or, at
the
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election of the Majority Secured Parties, by the Holders and the Lenders)
against such expense or liability as it may require. The Owner Trustee
may, but shall be under no duty to, undertake such action as it may deem
necessary at any and all times, without any further action by the Agent
or any Holder to protect one (1) or more of the Properties and the rights
and interests of the Holders pursuant to the terms of this Trust
Agreement; provided, however, that the Owner Trustee may obtain
reimbursement for the out-of-pocket expenses and costs of such actions,
undertakings or proceedings from Lessee.
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 INDEMNIFICATION GENERALLY.
The Owner Trustee is indemnified for matters related to the transactions
described herein by Lessee pursuant to Section 11 of the Participation
Agreement. Except as may be specifically provided from time to time hereafter in
writing by the Holders, the Owner Trustee shall not have any right of
indemnification from any Holder with respect to the transactions described
herein or in any of the other Operative Agreements.
SECTION 7.2 COMPENSATION AND EXPENSES.
Lessee has agreed to pay the fees and expenses of the Owner Trustee and
the Holder Unused Fees as provided in Sections 7.3 and 7.4, respectively, of the
Participation Agreement.
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.1 TERMINATION OF TRUST AGREEMENT.
This Trust Agreement and the trusts created hereby shall terminate and
the Trust Estate shall, subject to the provisions of the Participation
Agreement, the other Operative Agreements and Article IV of this Trust
Agreement, be distributed pro rata to the Holders, and this Trust Agreement
shall be of no further force or effect, upon the earliest of (a) the joint
written request of the Majority Holders following the sale or other final
disposition by the Owner Trustee of all property constituting part of the Trust
Estate and the final distribution by the Owner Trustee of all moneys or other
property or proceeds constituting part of the Trust Estate in accordance with
the terms hereof; provided, however, that (except as provided for in the
Operative Agreements) the Trust Estate shall not be subject to sale or other
final disposition by the Owner Trustee prior to the payment in full and
discharge of the Loans and all other indebtedness secured by the Credit
Documents and the release of the Credit Documents and the Liens granted thereby
and the
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payment in full of the Holder Amount and Holder Yield thereon and all other
amounts owing to the Holders under any of the Operative Agreements and (b) fifty
(50) years after the date hereof.
SECTION 8.2 TERMINATION AT OPTION OF THE HOLDERS.
Notwithstanding Section 8.1, this Trust Agreement and the trusts created
hereby shall terminate and the Trust Estate shall be distributed pro rata to the
Holders, and this Trust Agreement shall be of no further force and effect, upon
the joint election of the Holders by notice to the Owner Trustee, if such notice
shall be accompanied by the written agreement of each Holder assuming all the
obligations of the Owner Trustee under or contemplated by the Operative
Agreements and all other obligations of the Owner Trustee incurred by it as
trustee hereunder; provided, however, that each Holder agrees for the express
benefit of the Agent and the Lenders, that without the consent of the Majority
Lenders, no such election shall be effective until the Liens and security
interests of the Security Documents on the Collateral shall have been released
and until full payment of the principal of, and interest on the Loans and all
other sums due to the Lenders shall have been made. Such written agreement shall
be reasonably satisfactory in form and substance to the Owner Trustee and shall
release the Owner Trustee from all further obligations of the Owner Trustee
hereunder and under the agreements and other instruments mentioned in the
preceding sentence.
SECTION 8.3 TERMINATION AT OPTION OF THE OWNER TRUSTEE.
At any time that the Lease shall no longer be in full force and effect
and the Agent shall have confirmed in writing to the Owner Trustee that the
Lenders have received payment in full of the principal of and interest on the
Loans and that all other sums due to the Agent and the Lenders under the
Operative Agreements shall have been made, then the Holders hereby authorize the
Owner Trustee to: (a) terminate this Trust Agreement and the trusts created
hereby and (b) distribute and convey the Trust Estate pro rata to the Holders by
executing the necessary transfer documents as contemplated by Section 8.4. The
exercise of such option by the Owner Trustee shall cause this Trust Agreement to
be of no further force and effect and shall release the Owner Trustee from all
further obligations of the Owner Trustee hereunder and under the agreements and
other instruments mentioned in the preceding sentence.
SECTION 8.4 ACTIONS BY THE OWNER TRUSTEE UPON TERMINATION.
Upon termination of this Trust Agreement and the trusts created hereby
pursuant to Sections 8.1, 8.2 or 8.3, the Owner Trustee shall upon notice of
such event take such action as may be necessary or as may be requested by the
Majority Holders to transfer the Trust Estate pro rata to the Holders, including
without limitation the execution of instruments of transfer or assignment with
respect to any of the Operative Agreements to which the Owner Trustee is a
party.
ARTICLE IX
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SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 RESIGNATION OF THE OWNER TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Owner Trustee may resign at any time without cause by
giving at least thirty (30) days' prior written notice to each Holder,
the Agent and Lessee; provided, however, that such resignation shall not
be effective until the acceptance of appointment by a successor Owner
Trustee under Section 9.1(b). The Owner Trustee may be removed with or
without cause at any time by the Majority Holders upon consent to such
removal by the Agent and with sixty (60) days' prior written notice to
the Owner Trustee, a copy of which notice shall be concurrently delivered
by the Majority Holders to the Agent and Lessee. Any such removal shall
be effective upon the acceptance of appointment by a successor Owner
Trustee under Section 9.1(b). In case of the resignation or removal of
the Owner Trustee, the Holders may appoint a successor Owner Trustee by
an instrument signed by the Majority Holders; provided, however, that
such successor Owner Trustee must be approved by the Agent. In the event
the Owner Trustee shall be an individual, his death or incapacity, or
termination of employment (whether voluntary or involuntary) with First
Security Bank, National Association (or a successor corporate Owner
Trustee) shall be treated as a resignation hereunder and shall be
effective immediately. If a successor Owner Trustee shall not have been
appointed within thirty (30) days after the giving of written notice of
such resignation or the delivery of the written instrument with respect
to such removal, the Owner Trustee or any Holder may apply to any court
of competent jurisdiction to appoint a successor Owner Trustee to act
until such time, if any, as a successor shall have been appointed and
shall have accepted its appointment as above provided. Any successor
Owner Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Owner Trustee appointed as
above provided within one (1) year from the date of the appointment by
such court.
(b) Any successor Owner Trustee, however appointed, shall execute
and deliver to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further
act shall become vested with all the estates, properties, rights, powers,
duties and trusts of the predecessor Owner Trustee in the trusts
hereunder with like effect as if originally named an Owner Trustee
herein; but nevertheless, upon the written request of such successor
Owner Trustee such predecessor Owner Trustee shall execute and deliver an
instrument transferring to such successor Owner Trustee, upon the trusts
herein expressed, all the estates, properties, rights, powers, duties and
trusts of such predecessor Owner Trustee, and such predecessor Owner
Trustee shall duly assign, transfer, deliver and pay over to such
successor Owner Trustee all moneys or other property then held by such
predecessor Owner Trustee upon the trusts herein expressed.
(c) Any successor Owner Trustee, however appointed, shall be a
bank or trust company incorporated and doing business within the United
States of America and
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having a combined capital and surplus of at least $50,000,000, if there
be such an institution willing, able and legally qualified to perform
the duties of the Owner Trustee hereunder upon reasonable or customary
terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Owner Trustee shall be a party, or any corporation to which
substantially all the corporate trust business of the Owner Trustee may
be transferred, shall, subject to the terms of Section 9.1(c), be the
Owner Trustee under this Trust Agreement without further act.
SECTION 9.2 CO-TRUSTEES AND SEPARATE TRUSTEES.
Whenever the Owner Trustee or the Majority Holders shall deem it
necessary or prudent in order either (a) to conform to any law of any
jurisdiction in which all or any part of the Trust Estate shall be situated or
to which it may be subject or to make any claim or bring any suit with respect
to the Trust Estate or any Operative Agreement, (b) shall be advised by counsel
satisfactory to it that it is so necessary or prudent, or (c) the Owner Trustee
shall have been directed to do so by the Majority Holders and the Agent, the
Owner Trustee and the Holders shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements, and shall take all
other action, necessary or proper to constitute one (1) or more Persons who need
not meet the requirements of Section 9.1(c) (and the Owner Trustee may appoint
one (1) or more of its officers) either as co-trustee or co-trustees (the
"Co-Owner Trustee"), jointly with the Owner Trustee, of all or any part of the
Trust Estate, or as separate trustee or separate trustees of all or any part of
the Trust Estate, and to vest in such Persons, in such capacity, such title to
the Trust Estate or any part thereof and such rights or duties as may be
necessary or desirable, all for such period and under such terms and conditions
as are satisfactory to the Owner Trustee and the Holders. In accordance with the
foregoing:
(i) The Owner Trustee shall appoint a Co-Owner Trustee
hereunder in part so that if, under any present or future law of any
state where any Property is located or of any jurisdiction in which it
may be necessary to perform any act in carrying out the trusts herein
created, the Owner Trustee or any of its successors may be incompetent or
unqualified or incapacitated or unwilling to perform certain acts as such
Owner Trustee, then upon the written request of the Owner Trustee of any
of its successors received by any Co-Owner Trustee, all of such acts
required to be performed in such jurisdiction in the execution of the
trust hereby created, shall and will be performed by any Co-Owner
Trustee, or any of his successors, in trust acting alone, as if he or
such successor had been specifically authorized so to do or had been the
sole Owner Trustee hereunder. Any Co-Owner Trustee shall continue to
perform such acts until otherwise directed in writing by the Owner
Trustee or any of its successors. Any request in writing by the Owner
Trustee or any of its successors to the Co-Owner Trustee shall be
sufficient warrant for him to take such action as may be so requested.
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(ii) Except as it may be deemed necessary for any Co-Owner
Trustee or any of his successors solely or jointly to execute the trusts
herein created, the Owner Trustee or any of its successors shall solely
have and exercise the powers, and shall be solely charged with the
performance of the duties, hereinbefore declared on the part of the Owner
Trustee to be had, exercised and performed; and any Co-Owner Trustee
shall not be liable therefor. Any Co-Owner Trustee or any successor to
him may delegate to the Owner Trustee or its successor hereunder the
exercise of any power, discretion or otherwise, conferred by any
provision of this Trust Agreement.
(iii) Any act of the Owner Trustee herein required or authorized
shall and will be jointly or separately performed by the Owner Trustee or
its successors hereunder and by any Co-Owner Trustee or any of his
successors appointed hereunder, if such joint performance or separate
performance shall be necessary to the legality of such act and when so
acting all references herein to "First Security Bank, National
Association" shall be deemed to be references to such Co-Owner Trustee in
its individual capacity and all references to "Owner Trustee" shall be
deemed to be references to any Co-Owner Trustee, and such Co-Owner
Trustee shall be entitled to all the protection, indemnification,
immunity and compensation herein provided to the Owner Trustee acting
singly in reference to such acts (subject to the limitations to such a
protection, indemnification, immunity and compensation set forth herein).
(iv) The Owner Trustee or its successor in trust shall have and
is hereby given the power at any time by an instrument in writing duly
executed by a Vice President, to remove any Co-Owner Trustee or his
successor, from his position as Co-Owner Trustee hereunder. In the case
of death, resignation, removal, incapacity or inability to act hereunder
of the Co-Owner Trustee, or his successor as Co-Owner Trustee, any adult
citizen of the United States of America may be appointed Co-Owner Trustee
hereunder by the person who shall at the time be a Vice President of the
corporation then acting as the Owner Trustee hereunder by an instrument
in writing duly executed, and under its corporate seal, and, subject to
its right to revoke such appointment or to appoint another person, the
Owner Trustee shall appoint a successor Co-Owner Trustee, such
appointment to be immediately effective in case of the death,
resignation, removal or inability or incapacity to act hereunder of the
Co-Owner Trustee. In the event a vacancy occurs in the office of the
Co-Owner Trustee, either by reason of resignation, removal, incapacity or
inability to act and no successor is appointed pursuant to the foregoing
provisions within thirty (30) days after such vacancy occurs, the Holders
and the Agent may jointly appoint a successor to the Co-Owner Trustee in
the same manner as is provided for the appointment of a successor to the
Co-Owner Trustee hereunder.
(v) At any time or times, for the purposes of meeting the legal
requirements of any jurisdiction in which any part of the Trust Estate
hereunder may at the time be located, or to avoid any violation of law or
imposition of taxes not otherwise imposed on the Owner Trustee, or if the
Owner Trustee shall deem it desirable for its own protection, the Owner
Trustee shall have power to appoint one (1) or more persons (who may be
officers of the Owner Trustee either to act as an additional co-trustee,
jointly with the
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Owner Trustee) of all or any part of the Trust Estate hereunder, or of
any property constituting part thereof, or to act as separate trustee of
any part of the Trust Estate in either case with such powers as may be
provided in the instrument of appointment and are consistent with the
terms hereof, and to vest in such person or persons in the capacity as
aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the remaining provisions of this Section 9.2.
(vi) Notwithstanding any provision of this Trust Agreement to
the contrary, any additional co-trustee shall act upon and be subject to
the following terms and conditions:
All rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed
solely upon and solely exercised and performed by the Owner
Trustee except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed the Owner Trustee or the Owner Trustee shall be
incompetent or unqualified to perform such act or acts or to avoid
any violation of law or imposition of taxes not otherwise imposed
on the Owner Trustee, or if the Owner Trustee shall deem it
desirable for its own protection, in which event such rights,
powers, duties and obligations shall be exercised and performed by
such co-trustee or Co-Owner Trustee.
(vii) No power granted by this Trust Agreement to, or which this
Trust Agreement provides may be exercised by, the Owner Trustee in
respect of the custody, control and management of moneys may be exercised
by any Co-Owner Trustee or any subsequently appointed co-trustee except
jointly with, or with the consent in writing of, the Owner Trustee for
disbursement or application in accordance with the terms hereof.
(viii) All moneys which may be received or collected by any
Co-Owner Trustee or such subsequently appointed co-trustees shall be paid
over to the Owner Trustee to be distributed in accordance with this Trust
Agreement and the other Operative Agreements.
(ix) Any Co-Owner Trustee, or any subsequently appointed
co-trustee to the extent permitted by law, does hereby constitute the
Owner Trustee or its successors hereunder his or her agent or attorney in
fact, with full power and authority to do any and all acts and things and
exercise any and all discretion authorized or permitted by the Co-Owner
Trustee or such subsequently appointed co-trustee, in its behalf or in
its name.
(x) No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
SECTION 9.3 NOTICE.
At all times that a successor Owner Trustee is appointed pursuant to
Section 9.1, an Owner Trustee resigns pursuant to Section 9.1 or the Co-Owner
Trustee, a co-trustee or separate trustee, is appointed pursuant to Section 9.2,
the Holders shall give joint notice of such fact
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within thirty (30) days of its occurrence to (x) Lessee, if the Lease is then in
effect and (y) the Agent, if the Credit Agreement is in effect.
ARTICLE X
AMENDMENTS
SECTION 10.1 AMENDMENTS.
This Trust Agreement may be terminated, amended, supplemented, waived or
modified in accordance with Section 12.4 of the Participation Agreement.
SECTION 10.2 LIMITATION ON AMENDMENTS.
Notwithstanding Section 10.1, the Owner Trustee shall not, without the
consent of the Agent execute any amendment that might result in the trusts
created hereunder being terminated prior to the satisfaction and discharge of
the Lien and security interest of the Security Documents on the Collateral or
prior to the payment in full of the principal of, and interest on the Loans and
other than in accordance with the terms of the Credit Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 NO LEGAL TITLE TO TRUST ESTATE IN THE HOLDERS.
The Holders shall not have legal title to any part of the Trust
Estate; provided, however, that each Holder has a pro rata beneficial interest
in the Trust Estate. No transfer, by operation of law or otherwise, of any
right, title or interest of a Holder in and to the Trust Estate or hereunder
shall operate to terminate this Trust Agreement or the Trust or the trusts
hereunder or entitle any successor or transferee to an accounting or to the
transfer to it of legal title to any part of the Trust Estate.
SECTION 11.2 SALE OF A PROPERTY BY THE OWNER TRUSTEE IS BINDING.
Any sale, transfer, or other conveyance of any Property or any part
thereof by the Owner Trustee made pursuant to the terms of this Trust Agreement
or any other Operative Agreement shall bind the Holders and shall be effective
to sell, transfer and convey all right, title and interest of the Owner Trustee
and the Holders in and to such Property or any part thereof. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Owner Trustee.
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SECTION 11.3 LIMITATIONS ON RIGHTS OF OTHERS.
Nothing in this Trust Agreement whether express or implied, shall be
construed to give to any Person, other than the Owner Trustee and each Holder,
any legal or equitable right, remedy or claim under or in respect of this Trust
Agreement, any covenants, conditions or provisions contained herein or in the
Trust Estate; but this Trust Agreement shall be held for the sole and exclusive
benefit of the Owner Trustee and the Holders. The Agent shall have the right to
enforce the provisions of Sections 5.1, 5.2, 5.3, 5.4, 6.2, 6.8, 8.1, 8.2, 8.3,
9.1, 9.2, 9.3, 10.1 and 10.2 prior to the payment in full of the principal of
and interest on the Loans and such other amounts due and payable to the Lenders
or the Agent under the Operative Agreements.
SECTION 11.4 NOTICES.
Unless otherwise expressly specified or permitted by the terms hereof,
all notices hereunder shall be given as provided in Section 12.2 of the
Participation Agreement.
SECTION 11.5 SEVERABILITY.
Any provision of this Trust Agreement that may be determined by competent
authority to be 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, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6 LIMITATION ON THE HOLDERS' LIABILITY.
No Holder shall have any liability for the performance of this Trust
Agreement except as expressly set forth herein.
SECTION 11.7 SEPARATE COUNTERPARTS.
This Trust Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
SECTION 11.8 SUCCESSORS AND ASSIGNS.
(a) All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, Trust Company, the Owner Trustee and
its successors and assigns and each Holder and its successors and
assigns, all as herein provided. Any request, notice, direction, consent,
waiver or other instrument or action by a Holder shall bind the
successors and assigns of such Holder.
(b) Any Holder may transfer or assign all or any portion of its
right, title and interest in the Trust Estate, this Trust Agreement and
the Certificate of such Holder in
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accordance with the requirements of Section 10.1 of the Participation
Agreement and pursuant to an assignment agreement in substantially the
form of Exhibit B, which assignment agreement shall provide, without
limitation, that the assignee undertakes and assumes all obligations and
covenants of a Holder under this Trust Agreement and the other Operative
Agreements. The Holder proposing the transfer or assignment shall notify
the Owner Trustee, the Agent and Lessee in writing of the effective date
of the transfer or assignment, which effective date shall be at least
three (3) Business Days after the date of such notification. The Owner
Trustee shall maintain a register showing the Holders and their
respective interests in the Trust Estate and, upon the occurrence of a
permitted assignment pursuant to this Section 11.8(b), shall issue a
Certificate to the assignee and, if the assigning Holder is maintaining
an interest hereunder, a new Certificate to such assigning Holder
representing its revised interest in the Trust Estate. The Owner Trustee
shall not recognize any purported assignment or transfer by a Holder that
does not comply with the terms of this Section 11.8 and any such
attempted transfer or assignment by a Holder in violation of the terms of
this Section 11.8 shall be null and void and of no effect.
SECTION 11.9 HEADINGS.
The headings of the various articles and sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 11.10 GOVERNING LAW.
THIS TRUST AGREEMENT HAS BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW
OF, THE STATE OF UTAH.
SECTION 11.11 PERFORMANCE BY THE HOLDERS.
Any obligation of the Owner Trustee hereunder or under any Operative
Agreement or other document contemplated herein may be performed by the Holders
(or by one (1) of them with the written consent of the other) and any such
performance shall not be construed as a revocation of the trusts created hereby.
SECTION 11.12 CONFLICT WITH OPERATIVE AGREEMENTS.
If this Trust Agreement (or any instructions given by a Holder pursuant
hereto) shall require that any action be taken with respect to any matter and
any other Operative Agreement (or any instructions duly given in accordance with
the terms thereof) shall require that a different action be taken with respect
to such matter, and such actions shall be mutually exclusive, the provisions of
such other Operative Agreement, in respect thereof, shall control.
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SECTION 11.13 NO IMPLIED WAIVER.
No term or provision of this Trust Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing entered
into as provided in Section 10.1; and any such waiver of the term hereof shall
be effective only in the specific instance and for the specific purpose given.
SECTION 11.14 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the date set forth above.
HOLDERS:
NATIONSBANK, N.A.
By: /s/ LESLIE M. ZUGA
------------------------------
Name: Leslie M. Zuga
----------------------------
Title: Senior Vice President
---------------------------
FLEET NATIONAL BANK
By: /s/ PATRICIA MARINELLI
------------------------------
Name: Patricia Marinelli
----------------------------
Title: Vice President
---------------------------
PROVIDENT BANK OF MARYLAND
By: /s/ FRIEDA M.A. McWILLIAMS
------------------------------
Name: Frieda M.A. McWilliams
----------------------------
Title: Vice President
---------------------------
OWNER TRUSTEE:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION
By: /s/ VAL T. ORTON
------------------------------
Name: Val T. Orton
----------------------------
Title: Vice President
---------------------------
(Sunrise Trust 1998-1)
<PAGE> 29
SCHEDULE I
HOLDER COMMITMENTS
<TABLE>
<CAPTION>
Holder Commitment
-----------------
Name of Holder Amount/Percentage
-------------- -----------------
<S> <C>
NATIONSBANK, N.A. $510,000.00 / 36.1702127659574%
10 Light Street
MD4-302-20-05
Baltimore, MD 21202-1499
FLEET NATIONAL BANK $450,000.00 / 31.9148936170213%
75 State Street
MA BO FIIC
Boston, MA 02109
PROVIDENT BANK OF MARYLAND $450,000.00 / 31.9148936170213%
114 East Lexington Street
5th Floor
Baltimore, MD 21202
TOTAL $1,410,000.00 / 100%
</TABLE>
<PAGE> 30
EXHIBIT A
FORM OF HOLDER CERTIFICATE
FIRST SECURITY BANK, NATIONAL ASSOCIATION
TRUSTEE UNDER
TRUST AGREEMENT DATED AS OF DECEMBER 2, 1998
HOLDER CERTIFICATE
SUNRISE TRUST 1998-1
___________, 1998
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as trustee (herein in such
capacity called the "Owner Trustee") under that certain Trust Agreement dated as
of December 2, 1998 (herein called the "Trust Agreement", the defined terms
therein not otherwise defined herein being used herein with the same meanings),
among the several banks and other financial institutions from time to time
parties to the Trust Agreement as the Holders and the Owner Trustee, hereby
certifies for the benefit of [HOLDER] as follows: (i) this Holder Certificate is
a Holder Certificate referred to in Section 3.1(d) of the Trust Agreement, which
Holder Certificate has been issued by the Owner Trustee pursuant to the Trust
Agreement and (ii) subject to the prior payment of Notes to the extent provided
for in Section 8.7 of the Participation Agreement, and to the assignment, pledge
or mortgage of the Trust Estate to secure the Notes as set forth in the
applicable Operative Agreements, the holder of this Holder Certificate has an
undivided beneficial interest in properties of the Owner Trustee constituting
part of the Trust Estate and is entitled to receive as provided in the Trust
Agreement, a portion of the Rent received or to be received by the Owner Trustee
for the Properties, as well as a portion of certain other payments which may be
received by the Owner Trustee pursuant to the terms of the Operative Agreements
as more particularly set forth therein.
All amounts payable hereunder and under the Trust Agreement shall be paid
only from the income and proceeds from the Trust Estate and only to the extent
that the Owner Trustee (or the Agent on behalf of the Owner Trustee) shall have
received sufficient income or proceeds from the Trust Estate to make such
payments in accordance with the terms of the Trust Agreement, except as
specifically provided in Section 6.1 of the Trust Agreement; and the holder
hereof, by its acceptance of this Holder Certificate, agrees that it will look
solely to the income and proceeds from the Trust Estate to the extent available
for distribution to the holder hereof as provided in the Trust Agreement and
that, except as specifically provided in the Trust
A-1
<PAGE> 31
Agreement, the Owner Trustee is not personally liable to the holder hereof for
any amount payable under this Holder Certificate or the Trust Agreement.
The amounts payable to the holder hereof pursuant to the Trust Agreement
shall be paid or caused to be paid by the Owner Trustee to, or for the account
of, such Holder, or its nominee, by transferring such amount in immediately
available funds to a bank institution or banking institutions with bank wire
transfer facilities for the account of such Holder or as otherwise instructed in
writing from time to time by such Holder.
This Holder Certificate shall mature, and all amounts payable to the
holder hereof pursuant to the Trust Agreement shall be due and payable, on the
Maturity Date.
This Holder Certificate shall bear a yield on the unpaid amount hereof
from time to time outstanding hereunder and under the Trust Agreement at the
Holder Yield as provided in the Trust Agreement. The Holder Yield on this Holder
Certificate shall be computed as provided in the Trust Agreement and shall be
payable at the rates, at the times and from the dates specified in the Trust
Agreement.
From and after the execution of the Participation Agreement, the rights
of the holder of this Holder Certificate under the Trust Agreement as well as
the beneficial interest of the holder of this Holder Certificate in and to the
properties of the Owner Trustee constituting part of the Trust Estate, are
subject and subordinate to the rights of the holders of the Notes to the extent
provided in the applicable Operative Agreements. The Trust Estate has been or
will be assigned, pledged and mortgaged to the Agent, on behalf of the Lenders
and the Holders, as security for the Notes and the Holder Certificates.
Reference is hereby made to the Trust Agreement, the Participation Agreement,
the Credit Agreement, the Security Agreement and the Notes for statements of the
rights of the holder of this Holder Certificate and of the rights of the holders
of, and the nature and extent of the security for, the Notes, as well as for a
statement of the terms and conditions of the trusts created by the Trust
Agreement, to all of which terms and conditions the holder hereof agrees by its
acceptance of this Holder Certificate.
The holder hereof, by its acceptance of this Holder Certificate, agrees
not to transfer this Holder Certificate except in accordance with the terms of
the Trust Agreement and the other Operative Agreements.
THIS HOLDER CERTIFICATE SHALL BE INTERPRETED AND ENFORCED AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF UTAH. WHENEVER POSSIBLE EACH PROVISION OF THIS
HOLDER CERTIFICATE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS HOLDER CERTIFICATE
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
A-2
<PAGE> 32
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS HOLDER CERTIFICATE.
[The remainder of this page has been intentionally left blank.]
A-3
<PAGE> 33
IN WITNESS WHEREOF, the undersigned authorized officer of the Owner
Trustee has executed this Holder Certificate as of the date first set forth
above.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, except as expressly set forth herein, but
solely as the Owner Trustee under the Sunrise Trust
1998-1
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
A-4
<PAGE> 34
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Trust Agreement, dated as of December 2, 1998
(as amended, supplemented or otherwise modified from time to time, the "Trust
Agreement"), among FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity except as stated therein, but solely as the Owner Trustee
under the Sunrise Trust 1998-1 (the "Owner Trustee" or the "Owner Trustee") and
the Holders named therein. Unless otherwise defined herein, terms defined in the
Trust Agreement (or pursuant to Section 1 of the Trust Agreement, defined in
other agreements) and used herein shall have the meanings given to them in or
pursuant to the Trust Agreement.
[____________________] (the "Assignor") and [____________________] (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a [___%] interest (the "Assigned Interest")
in and to the Assignor's rights and obligations under the Trust Agreement with
respect to the facility contained in the Trust Agreement as are set forth on
Schedule 1 hereto (the "Assigned Facility"), in a principal amount for the
Assigned Facility as set forth on Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Trust Agreement or any other Operative
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Trust Agreement, any other Operative Agreement or
any other instrument or document furnished pursuant thereto, other than that it
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Owner Trustee or any other obligor or
the performance or observance by the Owner Trustee, or any other obligor of any
of their respective obligations under the Trust Agreement or any other Operative
Agreement or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Certificate held by it evidencing the Assigned
Facility and requests that the Owner Trustee exchange such Certificate for a new
Certificate payable to the Assignee and (if the Assignor has retained any
interest in the Assigned Facility) a new Certificate payable to the Assignor in
the respective amounts which reflect the assignment being made hereby (and after
giving effect to any other assignments which have become effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
copies of the Operative Agreements, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Agent, any other Holder or the
B-1
<PAGE> 35
Owner Trustee and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Trust Agreement, the other Operative Agreements or
any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Agent and the Owner Trustee, respectively, to take
such action as agent on its behalf and to exercise such powers and discretion
under the Trust Agreement, the other Operative Agreements or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Agent and the Owner Trustee, respectively, by the terms thereof, together
with such powers as are incidental thereto; and (e) agrees that it will be bound
by the provisions of the Trust Agreement and the other Operative Agreements to
which Assignee is a party and will perform in accordance herewith all the
obligations which by the terms of the Trust Agreement and the other Operative
Agreements to which Assignee is a party are required to be performed by it as a
Holder including without limitation, if it is organized under the laws of a
jurisdiction outside the U.S., its obligation pursuant to Section 11.2(e) of the
Participation Agreement.
4. The effective date of this Assignment and Acceptance shall be
[________, 19__] (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Owner Trustee for
acceptance by it and recording by the Owner Trustee pursuant to Section 11.8(b)
of the Trust Agreement, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Owner Trustee, be earlier than five (5)
Business Days after the date of such acceptance and recording by the Owner
Trustee).
5. Upon such acceptance and recording, from and after the Effective Date,
the Owner Trustee shall make, or cause to be made, all payments in respect of
the Assigned Interest (including without limitation payments of Holder Advance,
yield, fees and other amounts) to the Assignee whether such amounts have accrued
prior to the Effective Date or accrue subsequent to the Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in payments by
the Owner Trustee for periods prior to the Effective Date or with respect to the
making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Trust Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Operative Agreements and shall be bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Trust
Agreement and the other Operative Agreements.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH.
B-2
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
[_____________________]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
[_____________________]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Consented To:
SUNRISE MIDWEST LEASING, L.L.C., as the
Construction Agent and as the Lessee
by Sunrise Assisted Living, Inc., as Sole
Member
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
NATIONSBANK N.A., as the Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the Sunrise Trust 1998-1
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
B-3
<PAGE> 37
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE TRUST AGREEMENT,
DATED AS OF DECEMBER 2, 1998, (THE "TRUST AGREEMENT")
AMONG
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT INDIVIDUALLY EXCEPT AS STATED THEREIN,
BUT SOLELY AS THE OWNER TRUSTEE,
AND
THE HOLDERS NAMED THEREIN
Name of Assignor: [_______________]
Name of Assignee: [_______________]
Effective Date of Assignment: [_______________]
<TABLE>
<CAPTION>
Trust Agreement Holder Advance Commitment
Facility Assigned Amount Assigned Percentage Assigned
----------------- --------------- -------------------
<S> <C> <C>
Holder Commitment [$___________] [__________%] of the
Amount pursuant to aggregate Holder Commitment
above-referenced Trust (which is [___%] of the Assignor's
Agreement Holder Commitment)
</TABLE>
[_________________________]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
[_________________________]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 1
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of December 2, 1998
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as
expressly stated herein,
but solely as the Owner Trustee
under the Sunrise Trust 1998-1,
as the Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
NATIONSBANK, N.A.,
as the Agent
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . .. . . . . . . . . . . . . . . 1
1.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . . . . . . . . 1
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . 2
2.4 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Termination or Reduction of Commitments . . . . . . . . . . . . 3
2.6 Prepayments and Payments . . . . . . . . . . . . . . . . . . . . 4
2.7 Conversion and Continuation Options . . . . . . . . . . . . . . 4
2.8 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . 5
2.9 Computation of Interest . . . . . . . . . . . . . . . . . . . . 6
2.10 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . 6
2.11 Notice of Amounts Payable; Mandatory Assignment . . . . . . . . 7
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 8
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . 8
4.2 Conditions to Each Loan. . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Other Activities . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Ownership of Properties, Indebtedness . . . . . . . . . . . . . 9
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . 9
5.4 Compliance with Operative Agreements . . . . . . . . . . . . . . 9
5.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Discharge of Liens . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . 14
7.4 Reliance by the Agent . . . . . . . . . . . . . . . . . . . . . 14
7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 15
7.6 Non-Reliance of the Agent and Other Lenders . . . . . . . . . . 15
i
<PAGE> 3
7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 15
7.8 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 16
7.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 16
7.10 Actions of the Agent on Behalf of Holders . . . . . . . . . . . 17
7.11 The Agent's Duty of Care . . . . . . . . . . . . . . . . . . . 17
SECTION 8. MATTERS RELATING TO PAYMENT AND COLLATERAL . . . . . . . . . . . 17
8.1 Collection and Allocation of Payments and Other Amounts. . . . . 17
8.2 Certain Remedial Matters . . . . . . . . . . . . . . . . . . . . 17
8.3 Excepted Payments . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 18
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 18
9.4 Survival of Representations and Warranties . . . . . . . . . . . 18
9.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . 19
9.6 Successors and Assigns; Participations and Assignments . . . . . 19
9.7 Participations . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.8 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.9 The Register; Disclosure; Pledges to Federal Reserve Banks . . . 21
9.10 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . 21
9.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.13 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.14 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.15 SUBMISSION TO JURISDICTION; VENUE . . . . . . . . . . . . . . . 23
9.16 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . 23
9.17 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 23
9.18 Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.19 USURY SAVINGS PROVISION . . . . . . . . . . . . . . . . . . . . 24
SCHEDULES
Schedule 2.1 Commitments and Addresses of Lenders
EXHIBITS
Exhibit A-1 Form of Tranche A Note
Exhibit A-2 Form of Tranche B Note
Exhibit B Form of Assignment and Acceptance
ii
<PAGE> 4
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 2, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
the "Agreement") is among FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, except as expressly stated herein, but solely as the Owner
Trustee under the Sunrise Trust 1998-1 (the "Owner Trustee" or the "Borrower"),
the several banks and other financial institutions from time to time parties to
this Agreement (the "Lenders") and NATIONSBANK, N.A., a national banking
association, as a Lender and as the agent for the Lenders (the "Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINITIONS.
For purposes of this Agreement, capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned to
them in Appendix A to that certain Participation Agreement dated as of December
2, 1998 (as amended, modified, extended, supplemented, restated and/or replaced
from time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among Sunrise Midwest Leasing, L.L.C., as the Lessee
and the Construction Agent, Sunrise Assisted Living, Inc., as the Guarantor,
the Borrower, the various banks and other lending institutions which are
parties thereto from time to time, as the Holders, the various banks and other
lending institutions which are parties thereto from time to time, as the
Lenders, and NationsBank, N.A., as agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders, to the extent
of their interests. Unless otherwise indicated, references in this Agreement
to articles, sections, paragraphs, clauses, appendices, schedules and exhibits
are to the same contained in this Agreement.
1.2 INTERPRETATION.
The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Agreement.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 COMMITMENTS.
(a) Subject to the terms and conditions hereof, each of the
Lenders severally agrees to make the portion of the Tranche A Loans and the
Tranche B Loans to the Borrower from time to time during the Commitment Period
in an amount up to such Lender's Commitment as is set
<PAGE> 5
forth adjacent to such Lender's name in Schedule 2.1 hereto for the purpose of
enabling the Borrower to purchase the Properties and to pay Property
Acquisition Costs, Property Costs and Transaction Expenses, provided, that the
aggregate principal amount at any one (1) time outstanding with respect to each
of the Tranche A Loans and the Tranche B Loans shall not exceed the amount of
the Tranche A Commitments and the Tranche B Commitments respectively. Any
prepayments of the Loans, whether mandatory or at the Borrower's election,
shall not be subject to reborrowing except as set forth in Section 5.2(d) of
the Participation Agreement.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii)
ABR Loans, or (iii) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with Sections 2.3 and 2.7. In the event
the Borrower fails to provide notice pursuant to Section 2.3, the Loan shall be
an ABR Loan. Further, any Loans by the Lenders on a given date in an aggregate
amount less than $100,000 shall be ABR Loans, unless the remaining Available
Commitment for the Lenders in the aggregate is less than $100,000, in which
case, the Borrower may elect a Eurodollar Loan for such remaining amount.
(c) The Commitment of each Lender to make Tranche A Loans and
Tranche B Loans shall be pro rata.
2.2 NOTES.
The Loans made by each Lender shall be evidenced by promissory notes
of the Borrower, substantially in the form of Exhibit A-1 in the case of the
Tranche A Loans (each, a "Tranche A Note") or Exhibit A-2 in the case of the
Tranche B Loans (each, a "Tranche B Note," and with the Tranche A Notes, the
"Notes"), with appropriate insertions as to payee and date, payable to the
order of such Lender and in a principal amount up to the Tranche A Commitment
or Tranche B Commitment, as the case may be, of such Lender. Each Lender is
hereby authorized to record the date, Type and amount of each Loan made by such
Lender, each continuation thereof, each conversion of all or a portion thereof
to another Type, and the date and amount of each payment or prepayment of
principal thereof on the schedule annexed to and constituting a part of its
Note, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, provided, that the failure to make any
such recordation or any error in such recordation shall not affect the
Borrower's obligations hereunder or under such Note. Each Note shall (i) be
dated the Initial Closing Date, (ii) be stated to mature on the Maturity Date
and (iii) provide for the payment of principal in accordance with Section
2.6(d) and the payment of interest in accordance with Section 2.8.
2.3 PROCEDURE FOR BORROWING.
(a) The Borrower may borrow under the Commitments during the
Commitment Period on any Business Day that an Advance may be requested pursuant
to the terms of Section 5.2 of the Participation Agreement, provided, that the
Borrower shall give the Agent irrevocable notice (which must be received by the
Agent prior to 12:00 Noon, Charlotte, North Carolina time, at least three (3)
Business Days prior to the requested Borrowing Date specifying (i) the
2
<PAGE> 6
amount to be borrowed (which on any date shall not be in excess of the then
Available Commitments), (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof,
(iv) if the borrowing is to be a combination of Eurodollar Loans and ABR Loans,
the respective amounts of each Type of Loan and (v) the Interest Period
applicable to each Eurodollar Loan. Pursuant to the terms of the Participation
Agreement, the Borrower shall be deemed to have delivered such notice upon the
delivery of a notice by the Construction Agent or the Lessee containing such
required information. Upon receipt of any such notice from the Borrower, the
Agent shall promptly notify each Lender thereof. Each Lender will make the
amount of its pro rata share of each borrowing available to the Agent for the
account of the Borrower at the office of the Agent specified in Section 9.2
prior to 12:00 Noon, Charlotte, North Carolina time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Agent. Such
borrowing will then be made available to the Borrower by the Agent crediting an
account designated, subject to Section 9.1 of the Participation Agreement, by
the Borrower on the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by the
Agent. No amount of any Loan which is repaid or prepaid by the Borrower may be
reborrowed hereunder, except as set forth in Section 5.2(d) of the
Participation Agreement.
(b) Interest accruing on each Loan during the Construction Period
with respect to any Property shall, subject to the limitations set forth in
Section 5.1(b) of the Participation Agreement be added to the principal amount
of such Loan on the relevant Scheduled Interest Payment Date. On each such
Scheduled Interest Payment Date, the Loan Property Cost and Construction Loan
Property Cost shall be increased by the amount of interest added to the Loans.
2.4 [RESERVED]
2.5 TERMINATION OR REDUCTION OF COMMITMENTS.
(a) The Borrower shall have the right, upon not less than three
(3) Business Days' written notice to the Agent, to terminate the Commitments
or, from time to time, to reduce the amount of the Commitments, provided, that
(i) after giving effect to such reduction, the aggregate outstanding principal
amount of the Loans shall not exceed the aggregate Commitments and (ii) such
notice shall be accompanied by a certificate of the Construction Agent stating
that the amount not less than ninety-seven percent (97%) of aggregate Budgeted
Total Property Costs as of the date of such reduction does not exceed the
aggregate amount of Available Commitments as of such date after giving effect
to such reduction. Any such reduction (A) shall be in an amount equal to the
lesser of (1) $1,000,000 (or an even multiple thereof) or (2) the remaining
Available Commitments, (B) shall reduce permanently the Commitments then in
effect and (C) shall be pro rata for the Commitments of all Lenders and pro
rata between the Tranche A Loans and the Tranche B Loans.
(b) On any date on which the Commitments shall automatically be
reduced to zero (0) pursuant to Section 6, the Borrower shall prepay all
outstanding Loans, together with accrued unpaid interest thereon and all other
amounts owing under the Operative Agreements.
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2.6 PREPAYMENTS AND PAYMENTS.
(a) Subject to Sections 11.2(e), 11.3 and 11.4 of the
Participation Agreement, the Borrower may at any time and from time to time
prepay the Loans, in whole or in part, without premium or penalty and without
setoff, deduction or counterclaim, upon at least three (3) Business Days'
irrevocable notice to the Agent, specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, ABR Loans or a combination
thereof, and, if a combination thereof, the amount allocable to each. Upon
receipt of any such notice the Agent shall promptly notify each Lender thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein. Amounts prepaid may not be
reborrowed, and shall reduce the Commitments and the Available Commitments,
except in each case as set forth in Section 5.2(d) of the Participation
Agreement.
(b) If on any date the Agent or the Lessor shall receive any
payment in respect of (i) any Casualty, Condemnation or Environmental Violation
pursuant to Sections 15.1(a) or 15.1(g) or Article XVI of the Lease (excluding
any payments in respect thereof which are payable to the Lessee in accordance
with the Lease), or (ii) the Termination Value of any Property in connection
with the delivery of a Termination Notice pursuant to Article XVI of the Lease,
or (iii) the Termination Value of any Property in connection with the exercise
of the Purchase Option under Article XX of the Lease or the exercise of the
option of the Lessor to transfer the Properties to the Lessee pursuant to
Section 20.3 of the Lease, or (iv) any payment required to be made or elected
to be made by the Construction Agent to the Lessor pursuant to the terms of the
Agency Agreement, then in each case, the Borrower shall pay such amounts to the
Agent and the Agent shall be required to apply and pay such amounts in
accordance with the provisions of Section 8.7(b)(ii) of the Participation
Agreement.
(c) Each prepayment of the Loans pursuant to Section 2.6(a) shall
be allocated to reduce the respective Loan Property Costs of all Properties pro
rata according to the Loan Property Costs of such Properties immediately before
giving effect to such prepayment. Each prepayment of the Loans pursuant to
Section 2.6(b) shall be allocated to reduce the Loan Property Cost of the
Property or Properties subject to the respective Casualty, Condemnation,
Environmental Violation, termination, purchase, transfer or other circumstance
giving rise to such prepayment. Any amounts applied to reduce the Loan
Property Cost of any Construction Period Property pursuant to this paragraph
(c) shall also be applied to reduce the Construction Loan Property Cost of such
Property until such Construction Loan Property Cost has been reduced to zero
(0).
(d) The outstanding principal balance of the Loans and all other
amounts then due and owing under this Agreement or otherwise with respect to
the Loans shall be due and payable in full on the Maturity Date.
2.7 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to ABR Loans by giving the Agent at least three (3) Business Days' prior
irrevocable notice of such
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election, provided, that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto, and provided,
further, to the extent an Event of Default has occurred and is continuing on
the last day of any such Interest Period, the applicable Eurodollar Loan shall
automatically be converted to an ABR Loan. The Borrower may elect from time to
time to convert ABR Loans to Eurodollar Loans by giving the Agent at least
three (3) Business Days' prior irrevocable notice of such election. Upon
receipt of any such notice, the Agent shall promptly notify each Lender
thereof. All or any part of outstanding Eurodollar Loans or ABR Loans may be
converted as provided herein, provided, that (i) no ABR Loan may be converted
into a Eurodollar Loan after the date that is one (1) month prior to the
Maturity Date and (ii) such notice of conversion regarding any Eurodollar Loan
shall contain an election by the Borrower of an Interest Period for such
Eurodollar Loan to be created by such conversion and such Interest Period shall
be in accordance with the terms of the definition of the term "Interest Period"
including without limitation subparagraphs (A) through (D) thereof.
(b) Subject to the restrictions set forth in Section 2.3 hereof,
any Eurodollar Loan may be continued as such upon the expiration of the current
Interest Period with respect thereto by the Borrower giving irrevocable notice
to the Agent, in accordance with the applicable notice provision for the
conversion of ABR Loans to Eurodollar Loans set forth herein, of the length of
the next Interest Period to be applicable to such Loans, provided, that no
Eurodollar Loan may be continued as such after the date that is one (1) month
prior to the Maturity Date, provided, further, no Eurodollar Loans may be
continued as such if an Event of Default has occurred and is continuing as of
the last day of the Interest Period for such Eurodollar Loan, and provided,
further, that if the Borrower shall fail to give any required notice as
described above or otherwise herein, or if such continuation is not permitted
pursuant to the proceeding proviso, such Loan shall automatically be converted
to an ABR Loan on the last day of such then expiring Interest Period.
2.8 INTEREST RATES AND PAYMENT DATES.
(a) The Loans outstanding hereunder from time to time shall bear
interest at a rate per annum equal to either (i) with respect to a Eurodollar
Loan, the Eurodollar Rate determined for the applicable Interest Period plus
the Applicable Percentage or (ii) with respect to an ABR Loan, the ABR plus the
Applicable Percentage, as selected by the Borrower in accordance with the
provisions hereof; provided, however, (A) upon delivery by the Agent of the
notice described in Section 2.9(c), the Loans of each of the Lenders shall bear
interest at the ABR applicable from time to time from and after the dates and
during the periods specified in Section 2.9(c), (B) upon the delivery by a
Lender of the notice described in Section 11.3(c) of the Participation
Agreement, the Loans of such Lender shall bear interest at the ABR applicable
from time to time from and after the dates and during the periods specified in
Section 11.3(c) of the Participation Agreement and (C) in such other
circumstances as expressly provided herein, the Loans shall bear interest at
the ABR.
(b) If (i) all or a portion of (A) the principal amount of any
Loan, (B) any interest payable thereon or (C) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise) or (ii) (A) a replacement Construction Agent
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is hired in accordance with the provisions of the Agency Agreement, (B)
Completion of all Properties has not occurred on or prior to the Construction
Period Termination Date or (C) the cost of any Property exceeds the original
Construction Budget therefor (or the applicable Construction Budget modified in
accordance with the Operative Agreements) in each case as previously delivered
to the Agent, such overdue amount (in the case of Section 2.8(b)(i)) or all
Loans, including without limitation principal and interest, and all other
amounts payable hereunder (in the case of Section 2.8(b)(ii)) shall bear
interest at a rate per annum which is the lesser of (x) the then current rate
of interest respecting such payment or other amount, as the case may be, plus
four percent (4%) and (y) the highest interest rate permitted by applicable
law, in each case from the date of such non-payment until such payment is paid
in full (whether after or before judgment) (in the case of Section 2.8(b)(i))
or Completion of all Properties (in the case of Section 2.8(b)(ii)). All such
amounts referenced in this Section 2.8(b) shall be paid upon demand.
(c) Interest shall be payable in arrears on the applicable
Scheduled Interest Payment Date, provided, that (i) interest accruing pursuant
to paragraph (b) of this Section 2.8 shall be payable from time to time on
demand and (ii) each prepayment of the Loans shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
2.9 COMPUTATION OF INTEREST.
(a) Interest shall be calculated on the basis of a year of three
hundred sixty-five (365) days (or three hundred sixty-six (366) days, as the
case may be) for the actual days elapsed. The Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the day on which such change becomes effective. The Agent
shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error.
(c) If the Eurodollar Rate cannot be determined by the Agent in
the manner specified in the definition of the term "Eurodollar Rate", the Agent
shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter. Until such time as the Eurodollar
Rate can be determined by the Agent in the manner specified in the definition
of such term, no further Eurodollar Loans shall be made or shall be continued
as such at the end of the then current Interest Period nor shall the Borrower
have the right to convert ABR Loans to Eurodollar Loans.
2.10 PRO RATA TREATMENT AND PAYMENTS.
(a) Each borrowing by the Borrower from the Lenders hereunder and
any reduction of the Commitments of the Lenders shall be made pro rata
according to their respective
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Commitments. Subject to the provisions of Section 8.7 of the Participation
Agreement and Section 2.11(b) hereof, each payment (including without
limitation each prepayment) by the Borrower on account of principal of and
interest on the Loans shall be made pro rata according to the respective
outstanding principal amounts on the Loans then held by the Lenders. All
payments (including without limitation prepayments) to be made by the Borrower
hereunder and under the Notes, whether on account of principal, interest or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, Charlotte, North Carolina time, on the due date thereof to the
Agent, for the account of the Lenders, at the Agent's office specified in
Section 9.2, in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder becomes due and payable on a day other than
a Business Day, such payment shall be extended to the next succeeding Business
Day; provided, however, if such payment includes an amount of interest
calculated with reference to the Eurodollar Rate and the result of such
extension would be to extend such payment into another calendar month, then
such payment shall be made on the immediately preceding Business Day. In the
case of any extension of any payment of principal pursuant to the preceding two
(2) sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make its share of such
borrowing available to the Agent, the Agent may assume that such Lender is
making such amount available to the Agent, and the Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Agent by the required time on the
Borrowing Date therefor, such Lender shall pay to the Agent, on demand, such
amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Agent. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this Section 2.10(b) shall be
conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Agent by such Lender within three (3)
Business Days of such Borrowing Date, the Agent shall also be entitled to
recover such amount with interest thereon at the rate as set forth above on
demand from the Borrower.
2.11 NOTICE OF AMOUNTS PAYABLE; MANDATORY ASSIGNMENT.
(a) In the event that any Lender becomes aware that any amounts
are or will be owed to it pursuant to Sections 11.2(e), 11.3 or 11.4 of the
Participation Agreement or that it is unable to make Eurodollar Loans, then it
shall promptly notify the Borrower, the Lessee and the Agent thereof and, as
soon as possible thereafter, such Lender shall submit to the Borrower (with a
copy to the Agent) a certificate indicating the amount owing to it and the
calculation thereof. The amounts set forth in such certificate shall be prima
facie evidence of the obligations of the Borrower hereunder.
(b) In the event that any Lender delivers to the Borrower a
certificate in accordance with Section 2.11(a) in connection with amounts
payable pursuant to Sections 11.2(e) or 11.3 of the Participation Agreement
then, subject to Section 9.1 of the Participation Agreement, the
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Borrower may, at its own expense (provided, such amounts shall be reimbursed or
paid entirely (as elected by the Borrower) by the Lessee, as Supplemental Rent)
and in the discretion of the Borrower, (i) require such Lender to transfer or
assign, in whole or (with such Lender's consent) in part, without recourse (in
accordance with Section 9.8), all or (with such Lender's consent) part of its
interests, rights (except for rights to be indemnified for actions taken while
a party hereunder) and obligations under this Agreement to a replacement bank
or institution if the Borrower (subject to Section 9.1 of the Participation
Agreement), with the full cooperation of such Lender, can identify a Person who
is ready, willing and able to be such replacement bank or institution with
respect thereto and such replacement bank or institution (which may be another
Lender) shall assume such assigned obligations, or (ii) during such time as no
Default or Event of Default has occurred and is continuing, terminate the
Commitment of such Lender and prepay all outstanding Loans of such Lender;
provided, however, that (x) subject to Section 9.1 of the Participation
Agreement, the Borrower or such replacement bank or institution, as the case
may be, shall have paid to such Lender in immediately available funds the
principal of and interest accrued to the date of such payment on the Loans made
by it hereunder and all other amounts owed to it hereunder (and, if such Lender
is also a Holder, all Holder Advances and Holder Yield accrued and unpaid
thereon), (y) any termination of Commitments shall be subject to the terms of
Section 2.5(a) and (z) such assignment or termination of the Commitment of such
Lender and prepayment of Loans does not conflict with any law, rule or
regulation or order of any court or Governmental Authority.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans, each of the Trust Company and the Owner Trustee hereby makes
and affirms the representations and warranties set forth in Section 6.1 of the
Participation Agreement to the same extent as if such representations and
warranties were set forth in this Agreement in their entirety.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement is subject to the satisfaction of
all conditions precedent set forth in Section 5.3 of the Participation
Agreement required by said Section to be satisfied on or prior to the Initial
Closing Date.
4.2 CONDITIONS TO EACH LOAN.
The agreement of each Lender to make any Loan requested to be made by
it on any date is subject to the satisfaction of all conditions precedent set
forth in Section 5.3 and 5.4 of the Participation Agreement required by said
Sections to be satisfied on or prior to the date of the applicable Loan.
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Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan that the conditions
contained in this Section 4.2 have been satisfied.
SECTION 5. COVENANTS
So long as any Loan or Note remains outstanding and unpaid or any
other amount is owing to any Lender or the Agent hereunder:
5.1 OTHER ACTIVITIES.
The Borrower shall not conduct, transact or otherwise engage in, or
commit to transact, conduct or otherwise engage in, any business or operations
other than the entry into, and exercise of rights and performance of
obligations in respect of, the Operative Agreements and other activities
incidental or related to the foregoing.
5.2 OWNERSHIP OF PROPERTIES, INDEBTEDNESS.
The Borrower shall not own, lease, manage or otherwise operate any
properties or assets other than in connection with the activities described in
Section 5.1, or incur, create, assume or suffer to exist any Indebtedness or
other consensual liabilities or financial obligations other than as may be
incurred, created or assumed or as may exist in connection with the activities
described in Section 5.1 (including without limitation the Loans and other
obligations incurred by the Borrower hereunder).
5.3 DISPOSITION OF ASSETS.
The Borrower shall not convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets, whether now owned
or hereafter acquired, except to the extent expressly contemplated by the
Operative Agreements.
5.4 COMPLIANCE WITH OPERATIVE AGREEMENTS.
The Borrower shall at all times (a) observe and perform all of the
covenants, conditions and obligations required to be performed by it (whether
in its capacity as the Lessor, the Owner Trustee or otherwise) under each
Operative Agreement to which it is a party and (b) observe and perform, or
cause to be observed and performed, all of the covenants, conditions and
obligations of the Lessor under the Lease, even in the event that the Lease is
terminated at stated expiration following a Lease Event of Default or
otherwise.
5.5 FURTHER ASSURANCES.
At any time and from time to time, upon the written request of the
Agent, and at the expense of the Borrower (provided, such amounts shall be
reimbursed or paid entirely (as elected
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by the Borrower) by the Lessee, as Supplemental Rent), the Borrower will
promptly and duly execute and deliver such further instruments and documents
and take such further action as the Agent or the Majority Lenders may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and the other Operative Agreements and of the rights and
powers herein or therein granted.
5.6 NOTICES.
If on any date, a Responsible Officer of the Borrower shall obtain
actual knowledge of the occurrence of a Default or Event of Default, the
Borrower will give written notice thereof to the Agent within five (5) Business
Days after such date.
5.7 DISCHARGE OF LIENS.
Neither the Borrower nor the Trust Company will create or permit to
exist at any time, and will, at its own expense, promptly take such action as
may be necessary duly to discharge, or cause to be discharged, all Lessor Liens
attributable to it, provided, that the Borrower and the Trust Company shall not
be required to discharge any Lessor Lien while the same is being contested in
good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of any of the
Liens contemplated by the Security Documents or of the sale, forfeiture or loss
of, and shall not materially interfere with the disposition of, any Property or
title thereto or any interest therein or the payment of Rent.
5.8 TRUST AGREEMENT.
Without prejudice to any right under the Trust Agreement of the Owner
Trustee to resign, the Owner Trustee (a) agrees not to terminate or revoke the
trust created by the Trust Agreement except as permitted by Article VIII of the
Trust Agreement, (b) agrees not to amend, supplement, terminate, revoke or
otherwise modify any provision of the Trust Agreement in any manner which could
reasonably be expected to have an adverse effect on the rights or interests of
the Agent or the Lenders hereunder or under the other Operative Agreements and
(c) agrees to comply with all of the terms of the Trust Agreement.
SECTION 6. EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
(a) Except as provided in Sections 6(c), the Borrower shall
default in the payment when due of any principal on the Loans or default in the
payment when due of any interest on the Loans, and in either such case, such
default shall continue for five (5) or more days after notice by the Agent or
any Lender; or
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(b) Except as provided in Sections 6(a) and 6(c), the Borrower
shall default, and such default shall continue for five (5) or more days after
notice from the Agent or any Lender, in the payment of any amount owing under
any Credit Document; or
(c) (i) The Borrower shall default in the payment of any amount
due on the Maturity Date owing under any Credit Document or (ii) the Borrower
shall default in the payment when due of any principal or interest on the Loans
payable with regard to any obligation of Lessee to pay Termination Value when
due or to pay Basic Rent or Supplemental Rent at such time as any Termination
Value is due; or
(d) The Borrower shall default in the due performance or
observance by it of any term, covenant or agreement contained in any Credit
Document to which it is a party (other than those referred to in paragraphs
(a), (b) and (c) above), provided, that in the case of any such default under
Sections 5.4, 5.5 or 5.8(c), such default shall have continued unremedied for a
period of at least thirty (30) days after notice to the Borrower by the Agent
or the Majority Lenders, provided, further, if any such default under Sections
5.4, 5.5 or 5.8(c) is not capable of remedy within such thirty (30) day period
but may be remedied with further diligence and if the Borrower has and
continues to pursue diligently such remedy, then the Borrower shall be granted
additional time to pursue such remedy but in no event more than an additional
sixty (60) days.
(e) Any written representation, warranty or statement made by the
Borrower herein or in any other Credit Document or by the Borrower or the
Lessee in the Participation Agreement, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto, shall prove
to be untrue in any material respect on the date as of which made; or
(f) (i) Any Lease Event of Default shall have occurred and be
continuing, or (ii) the Owner Trustee shall default in the due performance or
observance by it of any term, covenant or agreement contained in the
Participation Agreement or in the Trust Agreement to or for the benefit of the
Agent or a Lender, provided, that in the case of this clause (ii) such default
shall have continued unremedied for a period of at least fifteen (15) days
after notice to the Owner Trustee and Lessee by the Agent or the Majority
Lenders, provided, further, that in the case of this clause (ii), such default
is not capable of remedy within such fifteen (15) day period but may be
remedied with further diligence and if the Borrower has and continues to pursue
diligently such remedy, then the Borrower shall be granted additional time to
pursue such remedy but in no event more than an additional thirty (30) days; or
(g) The Borrower shall commence a voluntary case concerning itself
under the Bankruptcy Code or an involuntary case is commenced against the
Borrower and the petition is not contravened within ten (10) days after
commencement of the case or an involuntary case is commenced against the
Borrower and the petition is not dismissed within sixty (60) days after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower; or the Borrower commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower, or there is
commenced against the Borrower
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any such proceeding which remains undismissed for a period of sixty (60) days;
or the Borrower is adjudicated insolvent or bankrupt, or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of sixty
(60) days; or the Borrower makes a general assignment for the benefit of
creditors; or any corporate or partnership action is taken by the Borrower for
the purpose of effecting any of the foregoing; or
(h) Any Security Document shall cease to be in full force and
effect, or shall cease to give the Agent the Liens, rights, powers and
privileges purported to be created thereby (including without limitation a
first priority perfected security interest in, and Lien on, all of the
Properties), in favor of the Agent on behalf of the Lenders and the Holders,
superior to and prior to the rights of all third Persons and subject to no
other Liens (except in each case to the extent expressly permitted herein or in
any Operative Agreement) other than any Ground Lease; or
(i) The Lease shall cease to be enforceable against the Lessee; or
(j) One (1) or more judgments or decrees shall be entered against
the Borrower involving a liability of $100,000 or more in the aggregate for all
such judgments and decrees for the Borrower and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded pending appeal
within sixty (60) days from the entry thereof,
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the
Notes shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Majority Lenders, the Agent may, or upon the
request of the Majority Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Majority Lenders,
the Agent may, or upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes to be
due and payable forthwith, whereupon the same shall immediately become due and
payable (any of the foregoing occurrences or actions referred to in clause (A)
or (B) above, an "Acceleration"). Except as expressly provided above in this
Section 6, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
Upon the occurrence of any Event of Default and at any time thereafter
so long as any Event of Default shall be continuing, the Agent shall, upon the
written instructions of the Majority Secured Parties, exercise any or all of
the rights and powers and pursue any and all of the remedies available to it
hereunder and (subject to the terms thereof) under the other Credit Documents,
the Lease and the other Operative Agreements and shall have any and all rights
and remedies available under the Uniform Commercial Code or any provision of
law.
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Upon the occurrence of any Event of Default and at any time thereafter
so long as any Event of Default shall be continuing, the Agent may, and upon
request of the Majority Secured Parties shall, proceed to protect and enforce
this Agreement, the Notes, the other Credit Documents and the Lease by suit or
suits or proceedings in equity, at law or in bankruptcy, and whether for the
specific performance of any covenant or agreement herein contained or in
execution or aid of any power herein granted, or for foreclosure hereunder, or
for the appointment of a receiver or receivers for the Property or for the
recovery of judgment for the indebtedness secured thereby or for the
enforcement of any other proper, legal or equitable remedy available under
applicable laws.
The Borrower shall be liable for any and all accrued and unpaid
amounts due hereunder before, after or during the exercise of any of the
foregoing remedies, including without limitation all reasonable legal fees and
other reasonable costs and expenses incurred by the Agent or any Lender by
reason of the occurrence of any Event of Default or the exercise of remedies
with respect thereto.
SECTION 7. THE AGENT
7.1 APPOINTMENT.
Each Lender hereby irrevocably designates and appoints the Agent as
the agent of such Lender under this Agreement and the other Operative
Agreements, and each such Lender irrevocably authorizes the Agent, in such
capacity, to execute the Operative Agreements as agent for and on behalf of
such Lender, to take such action on behalf of such Lender under the provisions
of this Agreement and the other Operative Agreements and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Agreement and other Operative Agreements, together with such
other powers as are reasonably incidental thereto. Without limiting the
generality of the foregoing, each of the Lenders hereby specifically
acknowledges the terms and provisions of the Participation Agreement and
directs the Agent to exercise such powers, make such decisions and otherwise
perform such duties as are delegated to the Agent thereunder without being
required to obtain any specific consent with respect thereto from any Lender,
unless the matter under consideration is a Unanimous Vote Matter or otherwise
requires the consent of the Majority Lenders and/or the Majority Secured
Parties. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Operative Agreement or otherwise exist against the Agent.
7.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Agreement and the
other Operative Agreements by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel
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concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
7.3 EXCULPATORY PROVISIONS.
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (a) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Operative Agreement (except for its
or such Person's own gross negligence or willful misconduct) or (b) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or the Lessee or any officer
thereof contained in this Agreement or any other Operative Agreement or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Operative Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Operative Agreement or for any failure of the Borrower or the Lessee to perform
its obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Operative Agreement, or to inspect the properties, books
or records of the Borrower or the Lessee.
7.4 RELIANCE BY THE AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including without limitation counsel to the
Borrower or the Lessee), independent accountants and other experts selected by
the Agent. The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Operative Agreement unless it shall first receive such advice or
concurrence of the Majority Lenders, the Majority Secured Parties or all
Secured Parties, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other
Operative Agreements in accordance with a request of the Majority Lenders, the
Majority Secured Parties or all Secured Parties, as the case may be, and such
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes (or all Secured Parties, as
the case may be).
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7.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Secured Parties; provided, that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Secured Parties; provided, further, the foregoing shall
not limit (a) the rights of the Majority Secured Parties to elect remedies as
set forth in Section 6 and/or (b) the rights of the Majority Secured Parties or
all Secured Parties, as the case may be, as described in the Participation
Agreement (including without limitation Sections 8.2(h) and 8.6 of the
Participation Agreement).
7.6 NON-RELIANCE ON THE AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Agent
hereinafter taken, including without limitation any review of the affairs of
the Borrower or the Lessee, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent that
it has, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and the
Lessee and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Operative Agreements, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and the Lessee. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the
Borrower or the Lessee which may come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
7.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent, in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so), ratably according to their respective Commitment
Percentages in effect on the date on which
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indemnification is sought under this Section 7.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against any of them in any way
relating to or arising out of, the Commitments, this Agreement, any of the
other Operative Agreements or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any of them under or in connection with any of the
foregoing; provided, that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
gross negligence or willful misconduct of the Agent. The agreements in this
Section 7.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
7.8 THE AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower or the Lessee as
though the Agent were not the Agent hereunder and under the other Operative
Agreements. With respect to its Loans made or renewed by it and any Note
issued to it, the Agent shall have the same rights and powers under this
Agreement and the other Operative Agreements as any Lender and may exercise the
same as though it were not the Agent, and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
7.9 SUCCESSOR AGENT.
The Agent may resign at any time as the Agent upon thirty (30) days'
notice to the Lenders, the Borrower and, so long as no Lease Event of Default
shall have occurred and be continuing, the Lessee. The Agent may be terminated
as Agent by a vote of the Majority Lenders and, so long as no Lease Event of
Default shall have occurred and be continuing, with the consent of the Lessee,
as a result of the Agent's gross negligence or willful misconduct. If the
Agent shall resign or be terminated as the Agent under this Agreement, the
Majority Lenders shall appoint from among the Lenders a successor Agent which
successor Agent shall be subject to the approval of the Borrower and, so long
as no Lease Event of Default shall have occurred and be continuing, the Lessee,
such approval not to be unreasonably withheld or delayed. If no successor
Agent is appointed prior to the effective date of the resignation of the
resigning Agent, the Agent may appoint, after consulting with the Lenders and
subject to the approval of the Borrower and, so long as no Lease Event of
Default shall have occurred and be continuing, the Lessee, such approval not to
be unreasonably withheld or delayed, a successor Agent from among the Lenders
(or such other Person as shall be acceptable to the Majority Lenders). If no
successor Agent has accepted appointment as the Agent by the date which is
thirty (30) days following a retiring Agent's notice of resignation, the
retiring Agent's notice of resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Agent until
such time, if any, as the Majority Lenders appoint a successor Agent, as
provided for
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above. Upon the effective date of such resignation or termination, only such
successor Agent shall succeed to all the rights, powers and duties of the
retiring or terminated Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's rights, powers and duties in such capacity shall
be terminated. After any retiring or terminated Agent resigns or is terminated
hereunder as the Agent, the provisions of this Article VII and Section 9.5
shall inure to their respective benefit as to any actions taken or omitted to
be taken by it while it was the Agent under this Agreement.
7.10 ACTIONS OF THE AGENT ON BEHALF OF HOLDERS.
The parties hereto specifically acknowledge and consent to the Agent's
acting on behalf of the Holders as provided in the Participation Agreement,
and, in any such case, the Lenders acknowledge that the Holders shall be
entitled to vote as "Secured Parties" hereunder to the extent required or
permitted by the Operative Agreements (including without limitation Sections
8.2(h) and 8.6 of the Participation Agreement).
7.11 THE AGENT'S DUTY OF CARE.
Other than the exercise of reasonable care to assure the safe custody
of the Collateral while being held by the Agent hereunder or under any other
Operative Agreement, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the Lessee shall
be responsible for preservation of all rights in the Collateral, and the Agent
shall be relieved of all responsibility for the Collateral upon surrendering it
or tendering the surrender of it to the Lessee. The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Agent accords its own property, which
shall be no less than the treatment employed by a reasonable and prudent agent
in the industry, it being understood that the Agent shall not have
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any of the Collateral.
SECTION 8. MATTERS RELATING TO PAYMENT AND COLLATERAL
8.1 COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
The Lessee, the Construction Agent, the Agent, the Lenders, the
Holders and the Borrower have agreed pursuant to the terms of Section 8.7 of
the Participation Agreement to a procedure for the allocation and distribution
of certain payments and distributions, including without limitation the
proceeds of Collateral.
8.2 CERTAIN REMEDIAL MATTERS.
Notwithstanding any other provision of this Agreement or any other
Credit Document:
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(a) the Borrower shall at all times retain to the exclusion of all
other parties, all rights to Excepted Payments payable to it and to demand,
collect or commence an action at law to obtain such payments and to enforce any
judgment with respect thereto; and
(b) the Borrower and each Holder shall at all times retain the
right, but not to the exclusion of the Agent, (i) to retain all rights with
respect to insurance that Article XIV of the Lease specifically confers upon
the "Lessor", (ii) to provide such insurance as the Lessee shall have failed to
maintain or as the Borrower or any Holder may desire, and (iii) to bring an
action to enforce compliance by the Lessee with the provisions of Articles
VIII, IX, X, XI, XIV and XVII of the Lease.
8.3 EXCEPTED PAYMENTS.
Notwithstanding any other provision of this Agreement or the Security
Documents, any Excepted Payment received at any time by the Agent shall be
distributed promptly to the Person entitled to receive such Excepted Payment.
SECTION 9. MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS.
None of the terms or provisions of this Agreement may be terminated,
amended, supplemented, waived or modified except in accordance with the terms
of Section 12.4 of the Participation Agreement.
9.2 NOTICES.
All notices required or permitted to be given under this Agreement
shall be given in accordance with Section 12.2 of the Participation Agreement.
9.3 NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part of the
Agent or any Lender, any right, remedy, power or privilege hereunder or under
the other Credit Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by the Borrower under the
Operative Agreements shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans hereunder.
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9.5 PAYMENT OF EXPENSES AND TAXES.
The Borrower agrees to (with funds provided by the Lessee as
Supplemental Rent): (a) pay all reasonable out-of-pocket costs and expenses of
(i) the Agent whether or not the transactions herein contemplated are
consummated, in connection with the negotiation, preparation, execution and
delivery of the Operative Agreements and the documents and instruments referred
to therein (including without limitation the reasonable fees and disbursements
of Moore & Van Allen, PLLC) and any amendment, waiver or consent relating
thereto (including without limitation the reasonable fees and disbursements of
counsel to the Agent) and (ii) the Agent and each of the Lenders in connection
with the enforcement of the Operative Agreements and the documents and
instruments referred to therein (including without limitation the reasonable
fees and disbursements of counsel for the Agent and for each of the Lenders)
and (b) pay and hold each of the Lenders harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save each of the Lenders harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Lender) to pay such taxes.
9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
9.7 PARTICIPATIONS.
Subject to and in accordance with Section 10.1 of the Participation
Agreement, each Lender may sell participations to one or more Persons (each, a
"Participant") in all or a portion of its rights, obligations or rights and
obligations under the Operative Agreements (including all or a portion of its
Commitment or its Loans); provided, however, that (a) such Lender's
obligations under the Operative Agreements shall remain unchanged, (b) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (c) the Participant shall be entitled to the
benefit of the yield protection provisions contained in Sections 11.2(e), 11.3
and 11.4 of the Participation Agreement and the right of set-off contained in
Section 12.15 of the Participation Agreement, and (d) the Borrower shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Operative Agreements, and such Lender
shall retain the sole right to enforce the obligations of the Borrower relating
to its Loans and its Notes and to approve any amendment, modification, or
waiver of any provision of the Operative Agreements (other than amendments,
modifications, or waivers decreasing the amount of principal of or the rate at
which interest is payable on such Loans or Notes, extending any scheduled
principal payment date or date fixed for the payment of interest on such Loans
or Notes, or extending its Commitment).
Any Lender may furnish any information concerning the Borrower, the
Lessee or any Subsidiaries of the Lessee in the possession of such Lender from
time to time to participants
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(including prospective participants), subject, however, to the provisions of
Section 12.13 of the Participation Agreement.
9.8 ASSIGNMENTS.
Assignments. (a) Subject to and in accordance with Section
10.1 of the Participation Agreement, each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under the
Operative Agreements (including, without limitation, all or a portion of its
Loans, its Notes, and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another Lender
or an assignment of all of a Lender's rights and obligations under the
Operative Agreements, any such partial assignment shall be in an
amount at least equal to $5,000,000 or an integral multiple of
$1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under the Operative Agreements and the Notes; and
(iv) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and Acceptance
substantially in the form of Exhibit B hereto, together with any Note
subject to such assignment and, except with respect to an assignment
to a Wholly-Owned Subsidiary of the assigning Lender, a processing fee
of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights and benefits of a Lender under the
Operative Agreements and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations under
the Operative Agreements. Upon the consummation of any assignment pursuant to
this Section, the assignor, the Agent and the Borrower shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and the
assignee. If the assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of Taxes in
accordance with Section 11.2(e) of the Participation Agreement.
(b) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
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(c) Notwithstanding any other provision set forth in any Operative
Agreement, any Lender may at any time assign and pledge all or any portion of
its Loans and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(d) Any Lender may furnish any information concerning the
Borrower, the Lessee or any Subsidiaries of the Lessee in the possession of
such Lender from time to time to assignees (including prospective assignees),
subject, however, to the provisions of Section 12.13 of the Participation
Agreement.
9.9 THE REGISTER; DISCLOSURE; PLEDGES TO FEDERAL RESERVE BANKS.
The Agent shall maintain at its address referred to in Section 12.2 of
the Participation Agreement a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
9.10 ADJUSTMENTS; SET-OFF.
(a) Except as otherwise expressly provided in Section 8.1 hereof
and Section 8.7 of the Participation Agreement where, and to the extent, one
(1) Lender is entitled to payments prior to other Lenders, if any Lender (a
"Benefitted Lender") shall at any time receive any payment of all or part of
its Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 6(g), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest thereon,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan, or
shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the event of such recovery, but without interest.
(b) In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence of an Event of Default, the Agent and each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply
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any and all deposits (general or special) and any other Indebtedness at any
time held or owing by the Agent or such Lender (including without limitation by
branches and agencies of the Agent or such Lender wherever located) to or for
the credit or the account of the Borrower against and on account of the
obligations and liabilities of the Borrower to the Agent or such Lender under
this Agreement or under any of the other Operative Agreements, including
without limitation all interests in obligations of the Borrower purchased by
any such Lender pursuant to Section 9.10(a), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Operative Agreement, irrespective or whether or not the Agent or such Lender
shall have made any demand and although said obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
9.11 COUNTERPARTS.
This Agreement may be executed by one (1) or more of the parties to
this Agreement on any number of separate counterparts (including without
limitation by telecopy), and all of said counterparts taken together shall be
deemed to constitute one (1) and the same instrument. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Agent.
9.12 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, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.13 INTEGRATION.
This Agreement and the other Credit Documents represent the agreement
of the Borrower, the Agent, and the Lenders with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or
warranties by the Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Credit Documents.
9.14 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF VIRGINIA.
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9.15 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION
TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
9.16 ACKNOWLEDGEMENTS.
The Borrower hereby acknowledges that:
(a) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Credit Documents, and the relationship
between the Agent (and the Lenders) and the Borrower, in connection herewith or
therewith is solely that of debtor and creditor; and
(b) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
9.17 WAIVERS OF JURY TRIAL.
THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.18 NONRECOURSE.
In addition to and not in limitation of Section 12.9 of the
Participation Agreement, anything to the contrary contained in this Agreement
or in any other Operative Agreement notwithstanding, no Exculpated Person shall
be personally liable in any respect for any liability or obligation hereunder
or under any other Operative Agreement including without limitation the payment
of the principal of, or interest on, the Notes, or for monetary damages for the
breach of performance of any of the covenants contained in this Agreement, the
Notes or any of the other Operative Agreements. The Agent and the Lenders
agree that, in the event any of them pursues any remedies available to them
under this Agreement, the Notes or any other Operative Agreement, neither the
Agent nor the Lenders shall have any recourse against the Borrower, nor any
other Exculpated Person, for any deficiency, loss or claim for monetary damages
or otherwise resulting therefrom and recourse shall be had solely and
exclusively against the Trust Estate and the Lessee; but nothing contained
herein shall be taken to prevent recourse against or the enforcement of
remedies against the Trust Estate in respect of any and all liabilities,
obligations and undertakings contained in this Agreement, the Notes or any
other Operative Agreement. The Agent and the Lenders further agree that the
Borrower shall not be responsible for the payment of any amounts owing
hereunder (excluding principal and interest (other than
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Overdue Interest) in respect of the Loans) (such non-excluded amounts,
"Supplemental Amounts") except to the extent that payments of Supplemental Rent
designated by the Lessee for application to such Supplemental Amounts shall
have been paid by the Lessee pursuant to the Lease (it being understood that
the failure by the Lessee for any reason to pay any Supplemental Rent in
respect of such Supplemental Amounts shall nevertheless be deemed to constitute
a default by the Borrower for the purposes of Section 6). Notwithstanding the
foregoing provisions of this Section 9.18, nothing in this Agreement or any
other Operative Agreement shall (a) constitute a waiver, release or discharge
of any obligation evidenced or secured by this Agreement or any other Credit
Document, (b) limit the right of the Agent or any Lender to name the Borrower
as a party defendant in any action or suit for judicial foreclosure and sale
under any Security Document, or (c) affect in any way the validity or
enforceability of any guaranty (whether of payment and/or performance) given to
the Lessor, the Agent or the Lenders, or of any indemnity agreement given by
the Borrower, in connection with the Loans made hereunder.
9.19 USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN
STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. ANY
SUCH PAYMENTS SO CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN AS
"INTEREST." ALL AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE
PROVISIONS OF THIS PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH
AGREEMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR
ORAL. IN NO WAY, NOR IN ANY EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION
PREPAYMENT OR ACCELERATION OF THE MATURITY OF ANY OBLIGATION), SHALL ANY
INTEREST TAKEN, RESERVED, CONTRACTED FOR, CHARGED, OR RECEIVED UNDER THIS
AGREEMENT OR OTHERWISE, EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMISSIBLE UNDER
APPLICABLE LAW. IF, FROM ANY POSSIBLE CONSTRUCTION OF ANY OF THE OPERATIVE
AGREEMENTS OR ANY OTHER DOCUMENT OR AGREEMENT, INTEREST WOULD OTHERWISE BE
PAYABLE IN EXCESS OF THE MAXIMUM NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION
SHALL BE SUBJECT TO THE PROVISIONS OF THIS PARAGRAPH AND SUCH AMOUNTS UNDER
SUCH DOCUMENTS OR AGREEMENTS SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM
NONUSURIOUS AMOUNT PERMITTED UNDER APPLICABLE LAW, WITHOUT THE NECESSITY OF
EXECUTION OF ANY AMENDMENT OR NEW DOCUMENT OR AGREEMENT. IF THE AGENT OR ANY
LENDER SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS CHARACTERIZED AS INTEREST
WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR UNDER APPLICABLE LAW AND
WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF THE MAXIMUM LAWFUL
AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE
24
<PAGE> 28
BEEN EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF
THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF
INTEREST, OR REFUNDED TO THE BORROWER OR ANY OTHER PAYOR THEREOF, IF AND TO THE
EXTENT SUCH AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF
PAYMENTS DEEMED TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS
EVIDENCED BY ANY OF THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO
RECEIVE ANY INTEREST WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH
DEMAND, AND NEITHER THE AGENT NOR ANY LENDER INTENDS TO CHARGE OR RECEIVE ANY
UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND. ALL INTEREST PAID OR AGREED TO
BE PAID TO THE AGENT OR ANY LENDER SHALL, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED
TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS AGREEMENT
SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED THE
MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW.
[signature pages to follow]
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except as
expressly stated herein, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
By: /s/ VAL T. ORTON
------------------------------------------------
Name: Val T. Orton
----------------------------------------------
Title: Vice President
---------------------------------------------
NATIONSBANK, N.A., as the Agent and a Lender
By: /s/ LESLIE M. ZUGA
------------------------------------------------
Name: Leslie M. Zuga
----------------------------------------------
Title: Senior Vice President
---------------------------------------------
FLEET NATIONAL BANK, as a Lender
By: /s/ PATRICIA MARINILLI
------------------------------------------------
Name: Patricia Marinilli
----------------------------------------------
Title: Vice President
---------------------------------------------
PROVIDENT BANK OF MARYLAND, as a Lender
By: /s/ FRIEDA M.A. McWILLIAMS
------------------------------------------------
Name: Frieda M.A. McWilliams
----------------------------------------------
Title: Vice President
---------------------------------------------
<PAGE> 30
Schedule 2.1
<TABLE>
<CAPTION>
Tranche A Tranche B
Commitment Commitment
---------- -----------
Name and Address of Lenders Amount/Percentage Amount/Percentage
- --------------------------- ----------------- -----------------
<S> <C> <C>
NATIONSBANK, N.A. $14,790,000.00 / 36.1702127659574% $1,700,000.00 /
36.1702127659574%
10 Light Street, MD4-302-20-05
Baltimore, MD 21202-1499
Attention: Leslie Zuga
Telephone: (410) 605-8157
Telecopy: (410) 605-8081
-
FLEET NATIONAL BANK $13,050,000.00 / 31.9148936170213% $1,500,000.00 /
31.9148936170213%
75 State Street
MA BO FIIC
Boston, MA 02109
Attention: Patricia Marinilli
Telephone: (617) 346-2862
Telecopy: (617) 346-3220
PROVIDENT BANK OF MARYLAND $13,050,000.00 / 31.9148936170213% $1,500,000.00 /
31.9148936170213%
114 East Lexington Street
5th Floor
Baltimore, MD 21202
Attention: Frieda McWilliams
Telephone: (410) 277-2086
Telecopy: (410) 277-2291
TOTAL $40,890,000.00 / 100% $4,700,000.00 / 100%
- -----
</TABLE>
<PAGE> 31
Exhibit A-1
TRANCHE A NOTE
(Sunrise Trust 1998-1)
___________, 1998
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but solely as the Owner Trustee
under the Sunrise Trust 1998-1(the "Borrower"), hereby unconditionally promises
to pay to the order of [LENDER] (the "Lender"), at the office of [BANK],
located at [__________] or at such other address as may be specified by [BANK],
in lawful money of the United States of America and in immediately available
funds, on the Maturity Date, the aggregate unpaid principal amount of all
Tranche A Loans made by the Lender to the Borrower pursuant to Section 2.1 of
the Credit Agreement (as defined below). The Borrower agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in Section 2.8 of such
Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Tranche A Loan made pursuant to the Credit Agreement and the date and amount of
each payment or prepayment of principal thereof, each continuation thereof and
each conversion of all or a portion thereof to another Type. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
such endorsement shall not affect the obligations of the Borrower in respect of
such Loan.
This Note (a) is one (1) of the Notes referred to in the Credit
Agreement dated as of December 2, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto and NationsBank, N.A., as the Agent, (b) is subject to the provisions
of the Credit Agreement (including without limitation Section 9.18 thereof) and
(c) is subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. Reference is hereby made to the Credit
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one (1) or more of the Events of Default,
all amounts then remaining unpaid on this Note shall become, or may be declared
to be, immediately due and payable, all as provided in the Credit Agreement.
A-1
<PAGE> 32
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF VIRGINIA.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
A1-2
<PAGE> 33
Exhibit A-2
TRANCHE B NOTE
(Sunrise Trust 1998-1)
_________, 1998
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but solely as the Owner Trustee
under the Sunrise Trust 1998-1 (the "Borrower"), hereby unconditionally
promises to pay to the order of [LENDER] (the "Lender") at the office of [BANK]
located at [__________] or at such other address as may be specified by [BANK],
in lawful money of the United States of America and in immediately available
funds, on the Maturity Date, the aggregate unpaid principal amount of all
Tranche B Loans made by the Lender to the Borrower pursuant to Section 2.1 of
the Credit Agreement (as defined below). The Borrower agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in Section 2.8 of such
Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Tranche B Loan made pursuant to the Credit Agreement and the date and amount of
each payment or prepayment of principal thereof, each continuation thereof and
each conversion of all or a portion thereof to another Type. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
such endorsement shall not affect the obligations of the Borrower in respect of
such Loan.
This Note (a) is one (1) of the Notes referred to in the Credit
Agreement dated as of December 2, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto and NationsBank, N.A., as the Agent, (b) is subject to the provisions
of the Credit Agreement (including without limitation Section 9.18 thereof) and
(c) is subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. Reference is hereby made to the Credit
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one (1) or more of the Events of Default,
all amounts then remaining unpaid on this Note shall become, or may be declared
to be, immediately due and payable, all as provided in the Credit Agreement.
A2-1
<PAGE> 34
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF VIRGINIA.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
By:
------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
A2-2
<PAGE> 35
Exhibit B
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of December 2,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as the Owner Trustee under the Sunrise
Trust 1998-1 (the "Owner Trustee" or the "Borrower"), the Lenders named therein
and NationsBank N.A., as the Agent. Unless otherwise defined herein, terms
defined in the Credit Agreement (or pursuant to Section 1 of the Credit
Agreement, defined in other agreements) and used herein shall have the meanings
given to them in or pursuant to the Credit Agreement.
[____________________] (the "Assignor") and [_______________] (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), a [___%] interest (the "Assigned
Interest") in and to the Assignor's rights and obligations under the Credit
Agreement with respect to the credit facility contained in the Credit Agreement
as are set forth on Schedule 1 hereto (the "Assigned Facility"), in a principal
amount for the Assigned Facility as set forth on Schedule 1.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Operative Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Operative
Agreement or any other instrument or document furnished pursuant thereto, other
than that it has not created any adverse claim upon the interest being assigned
by it hereunder and that such interest is free and clear of any such adverse
claim; (b) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower, or any other obligor
or the performance or observance by the Borrower, or any other obligor of any
of their respective obligations under the Credit Agreement or any other
Operative Agreement or any other instrument or document furnished pursuant
hereto or thereto; and (c) attaches the Note held by it evidencing the Assigned
Facility and requests that the Agent exchange such Note for a new Note payable
to the Assignee and (if the Assignor has retained any interest in the Assigned
Facility) a new Note payable to the Assignor in the respective amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received copies of the Operative
<PAGE> 36
Agreements, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement, the other Operative Agreements or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement, the other Operative Agreements or any
other instrument or document furnished pursuant hereto or thereto as are
delegated to the Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the provisions of
the Credit Agreement and the other Operative Agreements to which Assignee is a
party and will perform in accordance herewith all the obligations which by the
terms of the Credit Agreement and the other Operative Agreements to which
Assignee is a party are required to be performed by it as a Lender including
without limitation, if it is organized under the laws of a jurisdiction outside
the U.S., its obligation pursuant to Section 11.2(e) of the Participation
Agreement.
4. The effective date of this Assignment and Acceptance shall be
[________, 199__] (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to Section 9.9 of the Credit Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Agent, be earlier than five (5) Business Days after the date of such
acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including without limitation payments of principal, interest, fees
and other amounts) to the Assignee whether such amounts have accrued prior to
the Effective Date or accrue subsequent to the Effective Date. The Assignor
and the Assignee shall make all appropriate adjustments in payments by the
Agent for periods prior to the Effective Date or with respect to the making of
this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and
under the other Operative Agreements and shall be bound by the provisions
thereof and (b) the Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement and the other Operative Agreements.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
VIRGINIA.
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.
[Name of Assignor]
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
[Name of Assignee]
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
Consented To:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
NATIONSBANK, N.A. as the Agent
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
[consents required only to the extent expressly provided in Section 9.8 of the
Credit Agreement]
<PAGE> 38
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE CREDIT AGREEMENT,
DATED AS OF DECEMBER 2, 1998,
AMONG
FIRST SECURITY BANK, NATIONAL ASSOCIATION
NOT INDIVIDUALLY,
BUT SOLELY AS THE OWNER TRUSTEE,
THE LENDERS NAMED THEREIN
AND
NATIONSBANK, N.A., AS THE AGENT
FOR THE LENDERS (IN SUCH CAPACITY, THE "AGENT")
Name of Assignor:
------------------------------------------
Name of Assignee:
------------------------------------------
Effective Date of Assignment:
------------------------------------------
Credit Principal Commitment
Facility Assigned Amount Assigned Percentage Assigned
----------------- --------------- -------------------
$ %
---------------- ------------ ------------
[Name of Assignor]
By:
-------------------------------------------------------
Name:
-----------------------------------------------------
Title:
----------------------------------------------------
[Name of Assignee]
By:
-------------------------------------------------------
Name:
-----------------------------------------------------
Title:
----------------------------------------------------
<PAGE> 1
- -------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
Dated as of December 2, 1998
among
SUNRISE MIDWEST LEASING, L.L.C.,
as the Construction Agent and as the Lessee,
SUNRISE ASSISTED LIVING, INC.,
as the Guarantor,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the Sunrise Trust 1998-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
NATIONSBANK, N.A.,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1A. INITIAL LOANS AND HOLDER ADVANCES....................................................................................1
SECTION 1. THE LOANS............................................................................................................1
SECTION 2. HOLDER ADVANCES......................................................................................................1
SECTION 3. SUMMARY OF TRANSACTIONS..............................................................................................2
3.1. Operative Agreements.................................................................................................2
3.2. Property Purchase....................................................................................................2
3.3. Construction of Improvements; Commencement of Basic Rent.............................................................2
3.4. Ratable Interests of the Holders and the Lenders.....................................................................2
SECTION 4. THE CLOSINGS.........................................................................................................3
4.1. Initial Closing Date.................................................................................................3
4.2. Initial Closing Date; Property Closing Dates; Acquisition Advances; Construction Advances............................3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS ON
COMPLETION DATE; THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS........................................................3
5.1. General..............................................................................................................3
5.2. Procedures for Funding...............................................................................................3
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Initial
Closing Date and the Advance of Funds for the Acquisition of a Property...................................................5
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Advance
of Funds after the Acquisition Advance....................................................................................8
5.5. Additional Reporting and Delivery Requirements on Completion Date and on Construction Period
Termination Date..........................................................................................................9
5.6. The Construction Agent Delivery of Construction Budget Modifications................................................10
5.7. Restrictions on Liens...............................................................................................10
[5.8. Reserved.].........................................................................................................10
5.9. Maintenance of the Lessee as a Wholly-Owned Entity..................................................................10
5.10. Payments...........................................................................................................10
SECTION 6. REPRESENTATIONS AND WARRANTIES......................................................................................11
6.1. Representations and Warranties of the Borrower......................................................................11
6.2. Representations and Warranties of the Credit Parties................................................................12
SECTION 6B. GUARANTY...........................................................................................................16
6B.1. Guaranty of Payment and Performance................................................................................16
6B.2. Obligations Unconditional..........................................................................................16
6B.3. Modifications......................................................................................................17
6B.4. Waiver of Rights...................................................................................................17
6B.5. Reinstatement......................................................................................................18
6B.6. Remedies...........................................................................................................18
6B.7. Limitation of Guaranty.............................................................................................18
SECTION 7. PAYMENT OF CERTAIN EXPENSES..........................................................................................18
7.1. Transaction Expenses................................................................................................18
7.2. Brokers' Fees.......................................................................................................19
7.3. Certain Fees and Expenses...........................................................................................19
7.4. Administrative Fee..................................................................................................20
SECTION 8. OTHER COVENANTS AND AGREEMENTS......................................................................................20
8.1. Cooperation with the Construction Agent or the Lessee...............................................................20
8.2. Covenants of the Owner Trustee and the Holders......................................................................20
8.3. Credit Party Covenants, Consent and Acknowledgment..................................................................21
8.3B Additional Covenants of SALI........................................................................................24
8.3B.1.1 Existence.......................................................................................................24
8.3B.1.2 Further Assurances..............................................................................................24
8.3B.1.3 Financial Records - Inspection..................................................................................24
8.3B.1.4 Estoppel Certificates...........................................................................................25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
8.3B.2 Financial Covenants..............................................................................................25
8.3B.3 Negative Covenants................................................................................................27
8.4. Sharing of Certain Payments.........................................................................................28
8.5. Grant of Easements, etc.............................................................................................28
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner Trustee............................................28
8.7. Collection and Allocation of Payments and Other Amounts.............................................................29
8.8. Release of Properties, etc..........................................................................................31
8.9 Release of Residual Payment Collateral...............................................................................31
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT................................................................................31
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights...................................................31
9.2. The Construction Agent's and the Lessee's Trust Agreement Rights....................................................32
SECTION 10. TRANSFER OF INTEREST...............................................................................................32
10.1. Restrictions on Transfer...........................................................................................32
10.2. Effect of Transfer.................................................................................................33
SECTION 11. INDEMNIFICATION....................................................................................................33
11.1. General Indemnity..................................................................................................33
11.2. General Tax Indemnity..............................................................................................35
11.3. Increased Costs, Illegality, etc...................................................................................37
11.4. Funding/Contribution Indemnity.....................................................................................38
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC.............................................39
11.6. Additional Provisions Regarding Environmental Indemnification......................................................39
11.7. Additional Provisions Regarding Indemnification....................................................................39
11.8. Indemnifications Provided by the Owner Trustee in Favor of the Other Indemnified Persons...........................40
SECTION 12. MISCELLANEOUS......................................................................................................40
12.1. Survival of Agreements.............................................................................................40
12.2. Notices............................................................................................................40
12.3. Counterparts.......................................................................................................42
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters....................................................42
12.5. Headings, etc......................................................................................................43
12.6. Parties in Interest................................................................................................43
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE.............................................43
12.8. Severability.......................................................................................................44
12.9. Liability Limited..................................................................................................44
12.10. Rights of the Credit Parties......................................................................................45
12.11. Further Assurances................................................................................................45
12.12. Calculations under Operative Agreements...........................................................................45
12.13. Confidentiality...................................................................................................45
12.14. Financial Reporting/Tax Characterization..........................................................................46
12.15. Set-off...........................................................................................................46
</TABLE>
ii
<PAGE> 4
EXHIBITS
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - Form of Officer's Certificate - Section 5.3(z)
D- Form of Secretary's Certificate - Section 5.3(aa)
E - Form of Officer's Certificate - Section 5.3(cc)
F - Form of Secretary's Certificate - Section 5.3(dd)
G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(ee)
H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(ff)
I - Form of Officer's Certificate - Section 5.5
J - Description of Material Litigation - Section 6.2(d)
K- State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.2(i)
L- Description of Properties to be Purchased on Initial Closing Date
M - Allocated Property Cost Amounts
N - Residual Payment Collateral
Appendix A - Rules of Usage and Definitions
iii
<PAGE> 5
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of December 2, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among SUNRISE MIDWEST LEASING, L.L.C., a Virginia
limited liability company (the "Lessee" or the "Construction Agent"); SUNRISE
ASSISTED LIVING, INC., a Delaware corporation, as guarantor ("SALI" or the
"Guarantor"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (in its individual capacity, the "Trust
Company"), except as expressly stated herein, but solely as the Owner Trustee
under the Sunrise Trust 1998-1 (the "Owner Trustee", the "Borrower" or the
"Lessor"); the various banks and other lending institutions which are parties
hereto from time to time as holders of certificates issued with respect to the
Sunrise Trust 1998-1 (subject to the definition of Holders in Appendix A
hereto, individually, a "Holder" and collectively, the "Holders"); the various
banks and other lending institutions which are parties hereto from time to time
as lenders (subject to the definition of Lenders in Appendix A hereto,
individually, a "Lender" and collectively, the "Lenders"); and NATIONSBANK,
N.A., a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the
Holders, to the extent of their interests (in such capacity, the "Agent").
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in Appendix A hereto.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1A. INITIAL LOANS AND HOLDER ADVANCES.
Notwithstanding the various references in the Operative Agreements to
terms and conditions for the extension of Loans and Holder Advances subsequent
to the Initial Closing Date, the entire $45,590,000 of the Lender Commitments
and the entire $1,410,000 of the Holder Commitments will be advanced on the
Initial Closing Date upon satisfaction (on or prior to such Initial Closing
Date) of the terms and conditions set forth in the Operative Agreements for
such closing and funding (which terms and conditions include the acquisition by
the Borrower of the Properties identified on Exhibit L hereto). The provisions
hereof and of the other Operative Agreements related to Loans and Holder
Advances extended subsequent to the Initial Closing Date shall only apply in
the event each Person then a party to this Agreement, in its sole and absolute
discretion, agrees to an increase in the Lender Commitments and the Holder
Commitments.
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the
Lenders have agreed to make Loans to the Lessor from time to time in an
aggregate principal amount of up to the aggregate amount of the Commitments of
the Lenders in order for the Lessor to acquire the Properties and certain
Improvements, to develop and construct certain Improvements in accordance with
the Agency Agreement and the terms and provisions hereof and for the other
purposes described herein, and in consideration of the receipt of proceeds of
the Loans, the Lessor will issue the Notes. The Loans shall be made and the
Notes shall be issued pursuant to the Credit Agreement. Pursuant to Section 5
of this Agreement and Section 2 of the Credit Agreement, the Loans will be made
to the Lessor from time to time at the request of the Construction Agent in
consideration for the Construction Agent agreeing for the benefit of the
Lessor, pursuant to the Agency Agreement, to acquire the Properties, to acquire
the Equipment, to construct certain Improvements and to cause the Lessee to
lease the Properties, each in accordance with the Agency Agreement and the
other Operative Agreements. The Loans and the obligations of the Lessor under
the Credit Agreement shall be secured by the Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, on each
date Advances are requested to be made in accordance with Section 5 hereof,
each Holder shall make a Holder
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Advance on a pro rata basis to the Lessor with respect to the Sunrise Trust
1998-1 based on its Holder Commitment in an amount in immediately available
funds such that the aggregate of all Holder Advances on such date shall be
three percent (3%) of the amount of the Requested Funds on such date; provided,
that no Holder shall be obligated for any Holder Advance in excess of its pro
rata share of the Available Holder Commitment. The aggregate amount of Holder
Advances shall be up to the aggregate amount of the Holder Commitments. No
prepayment or any other payment with respect to any Advance shall be permitted
such that the Holder Advance with respect to such Advance is less than three
percent (3%) of the outstanding amount of such Advance, except in connection
with termination or expiration of the Term or in connection with the exercise
of remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
On the date hereof, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, the Agency Agreement, the
Credit Agreement, the Notes, the Trust Agreement, the Certificates, the
Security Agreement, each applicable Mortgage Instrument and such other
documents, instruments, certificates and opinions of counsel as agreed to by
the parties hereto.
3.2. PROPERTY PURCHASE.
On each Property Closing Date and subject to the terms and conditions
of this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement, (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement, (c) the Lessor will purchase and acquire good and marketable title
to or ground lease pursuant to a Ground Lease, the applicable Property, each to
be within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Bill of Sale or Ground Lease, as the case may be, and grant
the Agent a lien on such Property by execution of the required Security
Documents, (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property and (e) the Basic Term shall
commence with respect to such Property.
3.3. CONSTRUCTION OF IMPROVEMENTS; COMMENCEMENT OF BASIC RENT.
Construction Advances will be made with respect to particular
Improvements to be constructed and with respect to ongoing Work regarding the
Equipment and construction of particular Improvements, in each case, pursuant
to the terms and conditions of this Agreement and the Agency Agreement. The
Construction Agent will act as a construction agent on behalf of the Lessor
respecting the Work regarding the Equipment, the construction of such
Improvements and the expenditures of the Construction Advances related to the
foregoing. The Construction Agent shall promptly notify the Lessor upon
Completion of the Improvements and the Lessee shall commence to pay Basic Rent
as of the Rent Commencement Date.
3.4. RATABLE INTERESTS OF THE HOLDERS AND THE LENDERS.
Each Holder and Lender agrees at all times (a) to hold the same
ratable portion of the aggregate Lender Commitment for Tranche A Loans, the
aggregate Lender Commitment for Tranche B Loans, the aggregate Holder
Commitment and (b) to make advances consistent with such committed amounts
referenced in Section 3.4(a) in accordance with the requirements of the
Operative Agreements.
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SECTION 4. THE CLOSINGS.
4.1. INITIAL CLOSING DATE.
All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of Moore & Van Allen, PLLC,
Charlotte, North Carolina, or at such other location as may be determined by
the Lessor, the Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION
ADVANCES; CONSTRUCTION ADVANCES.
The Construction Agent shall deliver to the Agent a requisition (a
"Requisition"), in the form attached hereto as Exhibit A or in such other form
as is satisfactory to the Agent, in its reasonable discretion, in connection
with (a) the Transaction Expenses and other fees, expenses and disbursements
payable, pursuant to Section 7.1, by the Lessor and (b) each Acquisition
Advance pursuant to Section 5.3 and (c) each Construction Advance pursuant to
Section 5.4.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
(a) To the extent funds have been advanced to the Lessor
as Loans by the Lenders and to the Lessor as Holder Advances by the
Holders, the Lessor will use such funds from time to time in
accordance with the terms and conditions of this Agreement and the
other Operative Agreements (i) at the direction of the Construction
Agent to acquire the Properties in accordance with the terms of this
Agreement, the Agency Agreement and the other Operative Agreements,
(ii) to make Advances to the Construction Agent to permit the
acquisition, testing, engineering, installation, development,
construction, modification, design, and renovation, as applicable, of
the Properties (or components thereof) in accordance with the terms of
the Agency Agreement and the other Operative Agreements, and (iii) to
pay Transaction Expenses, fees, expenses and other disbursements
payable by the Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and
Holder Yield on the Holder Advances on any Scheduled Interest Payment
Date with respect to any Property during the period prior to the Rent
Commencement Date with respect to such Property, (i) each Lender's
Loan shall automatically be increased by the amount of interest
accrued and unpaid on such Loan for such period (except to the extent
that at any time such increase would cause such Lender's Loan to
exceed such Lender's Available Commitment, in which case the Lessee
shall pay such excess amount to such Lender in immediately available
funds on the date such Lender's Available Commitment was exceeded),
and (ii) each Holder's Holder Advance shall automatically be increased
by the amount of Holder Yield accrued and unpaid on such Holder
Advance for such period (except to the extent that at any time such
increase would cause the Holder Advance of such Holder to exceed such
Holder's Available Holder Commitment, in which case the Lessee shall
pay such excess amount to such Holder in immediately available funds
on the date the Available Holder Commitment of such Holder was
exceeded). Such increases in a Lender's Loan and a Holder's Holder
Advance shall occur without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
(a) The Construction Agent shall designate the date for
Advances hereunder in accordance with the terms and provisions hereof;
provided, however, it is understood and agreed that no more than two
(2) Advances (excluding any conversion and/or continuation of any Loan
or Holder Advance) may be requested during any calendar month. Not
less than (i) three (3) Business Days prior to the date that the first
Advance is requested hereunder and (ii) three (3) Business Days prior
to the date on which any subsequent Acquisition Advance or
Construction Advance is to be made, the Construction Agent shall
deliver to the Agent, (A) with respect to the date that the first
Advance is requested hereunder and each
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subsequent Acquisition Advance, a Requisition as described in Section
4.2 hereof (including without limitation a legal description of the
Land, if any, a schedule of the Improvements, if any, and a schedule
of the Equipment, if any, acquired or to be acquired on such date, and
a schedule of the Work, if any, to be performed, each of the foregoing
in a form reasonably acceptable to the Agent) and (B) with respect to
each Construction Advance, a Requisition identifying (among other
things) the Property to which such Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii)
request funds in an amount that is not in excess of the total
aggregate of the Available Commitments plus the Available Holder
Commitments at such time, and (iii) request that the Holders make
Holder Advances and that the Lenders make Loans to the Lessor for the
payment of Transaction Expenses, Property Acquisition Costs (in the
case of an Acquisition Advance) or other Property Costs (in the case
of a Construction Advance) that have previously been incurred or are
to be incurred on the date of such Advance to the extent such were not
subject to a prior Requisition, in each case as specified in the
Requisition.
(c) Subject to the satisfaction of the conditions
precedent set forth in Sections 5.3 or 5.4, as applicable, on each
Property Closing Date or the date on which the Construction Advance is
to be made, as applicable, (i) the Lenders shall make Loans based on
their respective Lender Commitments to the Lessor in an aggregate
amount equal to ninety-seven percent (97%) of the Requested Funds
specified in any Requisition plus any additional amount of Transaction
Expenses as referenced in Sections 7.1(a) and 7.1(b) and any
additional amount respecting any indemnity payment as referenced in
Section 11.8, unless any such funding of Transaction Expenses or any
indemnity payment is declined in writing by each Lender and each
Holder (such decision to be in the sole discretion of each Lender and
each Holder) ratably between the Tranche A Lenders and the Tranche B
Lenders with the Tranche A Lenders funding eighty-seven percent (87%)
of the Requested Funds and the Tranche B Lenders funding ten percent
(10%) of the Requested Funds), up to an aggregate principal amount
equal to the aggregate of the Available Commitments, (ii) the Holders
shall make Holder Advances based on their respective Holder
Commitments in an aggregate amount equal to three percent (3%) of the
balance of the Requested Funds specified in such Requisition plus any
additional amount of Transaction Expenses as referenced in Sections
7.1(a) and 7.1(b) and any additional amount respecting any indemnity
payment as referenced in Section 11.8, unless any such funding of
Transaction Expenses or any indemnity payment is declined in writing
by each Lender and each Holder (such decision to be in the sole
discretion of each Lender and each Holder), up to the aggregate
advanced amount equal to the aggregate of the Available Holder
Commitments; and (iii) the total amount of such Loans and Holder
Advances made on such date shall (x) be used by the Lessor to pay
Property Costs including Transaction Expenses within three (3)
Business Days of the receipt by the Lessor of such Advance or (y) be
advanced by the Lessor on the date of such Advance to the Construction
Agent or the Lessee to pay Property Costs, as applicable.
Notwithstanding that the Operative Agreements state that Advances
shall be directed to the Lessor, each Advance shall in fact be
directed to the Construction Agent (for the benefit of the Lessor) and
applied by the Construction Agent (for the benefit of the Lessor)
pursuant to the requirements imposed on the Lessor under the Operative
Agreements.
(d) With respect to an Advance obtained by the Lessor to
pay for Property Costs and/or Transaction Expenses or other costs
payable under Section 7.1 hereof and not expended by the Lessor for
such purpose on the date of such Advance, such amounts shall be held
by the Lessor (or the Agent on behalf of the Lessor) until the
applicable closing date or, if such closing date does not occur within
three (3) Business Days of the date of the Lessor's receipt of such
Advance, shall be applied regarding the applicable Advance to repay
the Lenders and the Holders and, subject to the terms hereof, and of
the Credit Agreement and the Trust Agreement, shall remain available
for future Advances. Any such amounts held by the Lessor (or the
Agent on behalf of the Lessor) shall be subject to the lien of the
Security Agreement.
(e) All Operative Agreements which are to be delivered to
the Lessor, the Agent, the Lenders or the Holders shall be delivered
to the Agent, on behalf of the Lessor, the Agent, the Lenders or the
Holders, and such items (except for Notes, Certificates, Bills of
Sale, the Ground Leases and chattel paper originals, with respect to
which in each case there shall be only one original) shall be
delivered with originals sufficient for the Lessor, the Agent, each
Lender and each Holder. All other items which are to be
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<PAGE> 9
delivered to the Lessor, the Agent, the Lenders or the Holders shall
be delivered to the Agent, on behalf of the Lessor, the Agent, the
Lenders or the Holders, and such other items shall be held by the
Agent. To the extent any such other items are requested in writing
from time to time by the Lessor, any Lender or any Holder, the Agent
shall provide a copy of such item to the party requesting it.
(f) Notwithstanding the completion or any closing under
this Agreement pursuant to Sections 5.3 or 5.4, each condition
precedent in connection with any such closing may be subsequently
enforced by the Agent (unless such has been expressly waived in
writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS
AND THE HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE
ADVANCE OF FUNDS FOR THE ACQUISITION OF A PROPERTY.
The obligations (i) on the Initial Closing Date of the Lessor, the
Agent, the Lenders and the Holders to enter into the transactions contemplated
by this Agreement, including without limitation the obligation to execute and
deliver the applicable Operative Agreements to which each is a party on the
Initial Closing Date, (ii) on the Initial Closing Date of the Holders to make
Holder Advances, and of the Lenders to make Loans in order to pay Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(a) of this Agreement and (iii) on a Property Closing Date for the
purpose of providing funds to the Lessor necessary to pay the Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(b) of this Agreement and to acquire or ground lease a Property (an
"Acquisition Advance"), in each case (with regard to the foregoing Sections
5.3(i), (ii) and (iii)) are subject to the satisfaction or waiver of the
following conditions precedent on or prior to the Initial Closing Date or the
applicable Property Closing Date, as the case may be (to the extent such
conditions precedent require the delivery of any agreement, certificate,
instrument, memorandum, legal or other opinion, appraisal, commitment, title
insurance commitment, lien report or any other document of any kind or type,
such shall be in form and substance satisfactory to the Agent, in its
reasonable discretion; notwithstanding the foregoing, the obligations of each
party shall not be subject to any conditions contained in this Section 5.3
which are required to be performed by such party):
(a) the correctness of the representations and warranties
of the parties to this Agreement contained herein, in each of the
other Operative Agreements and each certificate delivered pursuant to
any Operative Agreement (including without limitation the Incorporated
Representations and Warranties) on each such date;
(b) the performance by the parties to this Agreement of
their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to each such
date;
(c) the Agent shall have received a fully executed
counterpart copy of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the
representations and warranties set forth in Section 6.2(l) hereof;
(e) the Construction Agent shall have delivered to the
Agent a good standing certificate for the Construction Agent in the
state where each such Property is located, the Deed with respect to
the Land and existing Improvements (if any), a copy of the Ground
Lease (if any), and a copy of the Bill of Sale with respect to the
Equipment (if any), respecting such of the foregoing as are being
acquired or ground leased on each such date with the proceeds of the
Loans and Holder Advances or which have been previously acquired or
ground leased with the proceeds of the Loans and Holder Advances and
such Land, existing Improvements (if any) and Equipment (if any) shall
be located in an Approved State;
(f) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred after giving effect to the Advance requested by
each such Requisition;
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<PAGE> 10
(g) the Construction Agent shall have delivered to the
Agent title insurance commitments to issue policies respecting each
such Property, with such endorsements as the Agent deems necessary, in
favor of the Lessor and the Agent from a title insurance company
acceptable to the Agent, but only with such title exceptions thereto
as are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the
Agent an environmental site assessment respecting each such Property
prepared by an independent recognized professional acceptable to the
Agent and evidencing no pre-existing environmental condition with
respect to which there is more than a remote risk of loss;
(i) the Construction Agent shall have delivered to the
Agent a survey (with a flood hazard certification) respecting each
such Property prepared by (i) an independent recognized professional
acceptable to the Agent and (ii) in a manner and including such
information as is required by the Agent;
(j) unless such an opinion has previously been delivered
with respect to a particular state, the Construction Agent shall have
caused to be delivered to the Agent a legal opinion in the form
attached hereto as Exhibit B or in such other form as is acceptable to
the Agent with respect to local law real property issues respecting
the state in which each such Property is located addressed to the
Lessor, the Agent, the Lenders and the Holders, from counsel located
in the state where each such Property is located, prepared by counsel
acceptable to the Agent and a separate flood hazard certificate
respecting each such Property prepared by an independent recognized
professional acceptable to the Agent;
(k) the Agent shall be satisfied that the acquisition,
ground leasing and/or holding of each such Property and the execution
of the Mortgage Instrument and the other Security Documents will not
materially and adversely affect the rights of the Lessor, the Agent,
the Holders or the Lenders under or with respect to the Operative
Agreements;
(l) the Construction Agent shall have delivered to the
Agent invoices for, or other reasonably satisfactory evidence of, the
various Transaction Expenses and other fees, expenses and
disbursements referenced in Sections 7.1(a) or 7.1(b) of this
Agreement, as appropriate;
(m) the Construction Agent shall have caused to be
delivered to the Agent a Mortgage Instrument (in such form as is
acceptable to the Agent, with revisions as necessary to conform to
applicable state law), Lessor Financing Statements and Lender
Financing Statements respecting each such Property and (as of the
Initial Closing Date) the Residual Payment Collateral more
specifically identified on Exhibit N, all fully executed and in
recordable form;
(n) the Lessee shall have delivered to the Agent with
respect to each such Property a Lease Supplement and a memorandum (or
short form lease) regarding the Lease and such Lease Supplement (such
memorandum or short form lease to be in the form attached to the Lease
as Exhibit B or in such other form as is acceptable to the Agent, with
modifications as necessary to conform to applicable state law, and in
form suitable for recording);
(o) with respect to each Acquisition Advance, the sum of
the Available Commitment plus the Available Holder Commitment (after
deducting the Unfunded Amount, if any, and after giving effect to the
Acquisition Advance) will be sufficient to pay all amounts payable
therefrom;
(p) if any such Property is subject to a Ground Lease,
the Construction Agent shall have caused a lease memorandum (or short
form lease) to be delivered to the Agent for such Ground Lease and, if
requested by the Agent, a landlord waiver and a mortgagee waiver (in
each case, in such form as is acceptable to the Agent);
(q) counsel (acceptable to the Agent) for the ground
lessor of each such Property subject to a Ground Lease shall have
issued to the Lessor, the Agent, the Lenders and the Holders, its
opinion;
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(r) the Construction Agent shall have delivered to the
Agent a preliminary Construction Budget for each such Property, if
applicable;
(s) the Construction Agent shall have provided evidence
to the Agent of insurance with respect to each such Property as
provided in the Lease;
(t) the Construction Agent shall have caused an Appraisal
regarding each such Property (showing an aggregate appraised value for
the Properties identified on Exhibit L of at least $62,666,666) to be
provided to the Agent from an appraiser selected by the Agent;
(u) the Construction Agent shall cause (i) Uniform
Commercial Code lien searches, tax lien searches and judgment lien
searches regarding the Lessee to be conducted (and copies thereof to
be delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company acceptable to the
Agent and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled
in a manner satisfactory to the Agent;
(v) all taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the
Operative Agreements and/or documents related thereto shall have been
paid or provisions for such payment shall have been made to the
satisfaction of the Agent;
(w) in the opinion of the Agent and its respective
counsel, the transactions contemplated by the Operative Agreements do
not and will not subject the Lessor, the Lenders, the Agent or the
Holders to any adverse regulatory prohibitions, constraints, penalties
or fines;
(x) each of the Operative Agreements to be entered into
on such date shall have been duly authorized, executed and delivered
by the parties thereto, and shall be in full force and effect, and the
Agent shall have received a fully executed copy of each of the
Operative Agreements;
(y) since the date of the most recent audited financial
statements of the Lessee, there shall not have occurred any event,
condition or state of facts which shall have or could reasonably be
expected to have a Material Adverse Effect, other than as specifically
contemplated by the Operative Agreements;
(z) as of the Initial Closing Date only, the Agent shall
have received an Officer's Certificate, dated as of the Initial
Closing Date, of the Lessee in the form attached hereto as Exhibit C
or in such other form as is acceptable to the Agent stating that (i)
each and every representation and warranty of each Credit Party
contained in the Operative Agreements to which it is a party is true
and correct on and as of the Initial Closing Date; (ii) no Default or
Event of Default has occurred and is continuing under any Operative
Agreement; (iii) each Operative Agreement to which any Credit Party is
a party is in full force and effect with respect to it; and (iv) each
Credit Party has duly performed and complied with all covenants,
agreements and conditions contained herein or in any Operative
Agreement required to be performed or complied with by it on or prior
to the Initial Closing Date;
(aa) as of the Initial Closing Date only, the Agent shall
have received (i) a certificate of the Secretary or an Assistant
Secretary of each Credit Party, dated as of the Initial Closing Date,
in the form attached hereto as Exhibit D or in such other form as is
acceptable to the Agent attaching and certifying as to (1) the
resolutions of the Board of Directors of such Credit Party duly
authorizing the execution, delivery and performance by such Credit
Party of each of the Operative Agreements to which it is or will be a
party, (2) the articles of incorporation of such Credit Party
certified as of a recent date by the Secretary of State of its state
of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit
Party the Operative Agreements to which it is or will be a party and
(ii) a good standing certificate (or local equivalent) from the
respective states where such Credit Party is incorporated and where
the principal place of business of such Credit Party is located as to
its good standing in each such state. To the extent any Credit Party
is a partnership, a limited liability company or is otherwise
organized, such Person shall deliver to the Agent (in form and
substance satisfactory to the Agent) as of the Initial Closing Date
(A) a certificate regarding such Person and any corporate general
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partners covering the matters described in Exhibit D and (B) a good
standing certificate, a certificate of limited partnership or a local
equivalent of either of the foregoing, as applicable;
(bb) as of the Initial Closing Date only, there shall not
have occurred any material adverse change in the consolidated assets,
liabilities, operations, business or condition (financial or
otherwise) of the Credit Parties (on a consolidated basis) from that
set forth in the most recent audited consolidated financial statements
of the Credit Parties which have been provided to the Agent;
(cc) as of the Initial Closing Date only, the Agent shall
have received an Officer's Certificate of the Lessor dated as of the
Initial Closing Date in the form attached hereto as Exhibit E or in
such other form as is acceptable to the Agent, stating that (i) each
and every representation and warranty of the Lessor contained in the
Operative Agreements to which it is a party is true and correct on and
as of the Initial Closing Date, (ii) each Operative Agreement to which
the Lessor is a party is in full force and effect with respect to it
and (iii) the Lessor has duly performed and complied with all
covenants, agreements and conditions contained herein or in any
Operative Agreement required to be performed or complied with by it on
or prior to the Initial Closing Date;
(dd) as of the Initial Closing Date only, the Agent shall
have received (i) a certificate of the Secretary, an Assistant
Secretary, Trust Officer or Vice President of the Trust Company in the
form attached hereto as Exhibit F or in such other form as is
acceptable to the Agent, attaching and certifying as to (A) the
signing resolutions duly authorizing the execution, delivery and
performance by the Lessor of each of the Operative Agreements to which
it is or will be a party, (B) its articles of association or other
equivalent charter documents and its by-laws, as the case may be,
certified as of a recent date by an appropriate officer of the Trust
Company and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it
is a party and (ii) a good standing certificate from the Office of the
Comptroller of the Currency;
(ee) as of the Initial Closing Date only, counsel for the
Lessor acceptable to the Agent shall have issued to the Lessee, the
Holders, the Lenders and the Agent its opinion in the form attached
hereto as Exhibit G or in such other form as is reasonably acceptable
to the Agent;
(ff) as of the Initial Closing Date only, the Construction
Agent shall have caused to be delivered to the Agent a legal opinion
in the form attached hereto as Exhibit H or in such other form as is
acceptable to the Agent, addressed to the Lessor, the Agent, the
Lenders and the Holders, from counsel acceptable to the Agent; and
(gg) as of the Initial Closing Date only, the Construction
Agent shall cause (i) tax lien searches and judgment lien searches
regarding each Credit Party to be conducted (and copies thereof to be
delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company acceptable to the
Agent and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled
in a manner satisfactory to the Agent.
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS
AND THE HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE
ACQUISITION ADVANCE.
The obligations of the Holders to make Holder Advances, and the
Lenders to make Loans in connection with all requests for Advances subsequent
to the acquisition of a Property (and to pay the Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Section 7.1 of
this Agreement in connection therewith) are subject to the satisfaction or
waiver of the following conditions precedent (to the extent such conditions
precedent require the delivery of any agreement, certificate, instrument,
memorandum, legal or other opinion, appraisal, commitment, title insurance
commitment, lien report or any other document of any kind or type, such shall
be in form and substance satisfactory to the Agent, in its reasonable
discretion; notwithstanding the foregoing, the obligations of each party shall
not be subject to any conditions contained in this Section 5.4 which are
required to be performed by such party):
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(a) the correctness on such date of the representations
and warranties of the parties to this Agreement contained herein, in
each of the other Operative Agreements and in each certificate
delivered pursuant to any Operative Agreement (including without
limitation the Incorporated Representations and Warranties);
(b) the performance by the parties to this Agreement of
their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to each such
date;
(c) the Agent shall have received a fully executed
counterpart of the Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which
shall satisfy the requirements of this Agreement, the Available
Commitments and the Available Holder Commitment (after deducting the
Unfunded Amount) will be sufficient to complete the Improvements;
(e) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred after giving effect to the Construction Advance
requested by the applicable Requisition;
(f) the title insurance policy delivered in connection
with the requirements of Section 5.3(g) shall provide for (or shall be
endorsed to provide for) insurance in an amount at least equal to the
maximum total Property Cost indicated by the Construction Budget
referred to in subparagraph (d) above and there shall be no title
change or exception objectionable to the Agent;
(g) the Construction Agent shall have delivered to the
Agent copies of the Plans and Specifications for the applicable
Improvements;
(h) the Construction Agent shall have delivered to the
Agent invoices for, or other reasonably satisfactory evidence of, any
Transaction Expenses and other fees, expenses and disbursements
referenced in Section 7.1(b) that are to be paid with the Advance;
(i) the Construction Agent shall have delivered, or
caused to be delivered to the Agent, invoices, Bills of Sale or other
documents acceptable to the Agent, in each case with regard to any
Equipment or other components of such Property then being acquired
with the proceeds of the Loans and Holder Advances and naming the
Lessor as purchaser and transferee;
(j) all taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the
Operative Agreements shall have been paid or provisions for such
payment shall have been made to the satisfaction of the Agent;
(k) since the date of the most recent audited Financial
Statements of the Lessee, there shall not have occurred any event,
condition or state of facts which shall have or could reasonably be
expected to have a Material Adverse Effect, other than as specifically
contemplated by the Operative Agreements; and
(l) in the opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will
not subject the Lessor, the Lenders, the Agent or the Holders to any
adverse regulatory prohibitions, constraints, penalties or fines.
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION
DATE AND ON CONSTRUCTION PERIOD TERMINATION DATE.
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as Exhibit I or in such other form as is acceptable to the Agent
specifying (a) the address for such Property, (b) the Completion Date for such
Property, (c) the aggregate Property
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Cost for such Property, (d) detailed, itemized documentation supporting the
asserted Property Cost figures and (e) that all representations and warranties
of the Construction Agent and Lessee in each of the Operative Agreements and
each certificate delivered pursuant thereto (including without limitation the
Incorporated Representations and Warranties) are true and correct as of the
Completion Date. The Agent shall have the right to contest the information
contained in such Officer's Certificate. Furthermore, on or prior to the
Completion Date for each Property, the Construction Agent shall deliver or
cause to be delivered to the Agent (unless previously delivered to the Agent)
originals of the following, each of which shall be in form and substance
acceptable to the Agent, in its reasonable discretion: (w) a title insurance
endorsement regarding the title insurance policy delivered in connection with
the requirements of Section 5.3(g), but only to the extent such endorsement is
necessary to provide for insurance in an amount at least equal to the maximum
total Property Cost and, if endorsed, the endorsement shall not include a title
change or exception objectionable to the Agent; (x) an as-built survey for such
Property, (y) insurance certificates respecting such Property as required
hereunder and under the Lease Agreement, and (z) if requested by the Agent,
amendments to the Lessor Financing Statements executed by the appropriate
parties. In addition, on the Completion Date for such Property the Construction
Agent covenants and agrees that the recording fees, documentary stamp taxes or
similar amounts required to be paid in connection with the related Mortgage
Instrument shall be paid in an amount required by applicable law, subject,
however, to the obligations of the Lenders and the Holders to fund such costs
to the extent required pursuant to Section 7.1.
5.6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET
MODIFICATIONS.
The Construction Agent covenants and agrees to deliver to the Agent
each month notification of any modification to any Construction Budget
regarding any Property if such modification increases the cost to construct
such Property; provided no Construction Budget may be increased unless (a) the
title insurance policies referenced in Section 5.3(g) are also modified or
endorsed, if necessary, to provide for insurance in an amount that satisfies
the requirements of Section 5.4(f) of this Agreement and (b) after giving
effect to any such amendment, the Construction Budget remains in compliance
with the requirements of Section 5.4(d) of this Agreement.
5.7. RESTRICTIONS ON LIENS.
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.2(r)(i) and 6.2(r)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than Lessor Liens and such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved by the Agent).
[5.8. RESERVED.]
5.9. MAINTENANCE OF THE LESSEE AS A WHOLLY-OWNED ENTITY.
From the Initial Closing Date and thereafter until such time as all
obligations of all Credit Parties under the Operative Agreements have been
satisfied and performed in full, Sunrise Assisted Living Investments, Inc.
("SALII") shall remain the sole member of the Lessee, SALII shall retain the
Lessee as a Wholly-Owned Entity and SALI shall retain SALII as a Wholly-Owned
Entity.
5.10. PAYMENTS.
All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be made by the Construction Agent or the Lessee under this
Agreement or any other Operative Agreements (excluding Excepted Payments which
shall be paid directly to the party to whom such payments are owed) shall be
made to the Agent at the office designated by the Agent from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim. Subject to the definition of "Interest Period" in Appendix A
attached hereto, whenever any payment under this Agreement or any other
Operative Agreements shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such
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case shall be included in the computation of interest, Holder Yield and fees
payable pursuant to the Operative Agreements, as applicable and as the case may
be.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
Effective as of the Initial Closing Date and the date of each Advance,
the Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly
organized and validly existing and in good standing under the laws of
the United States of America and has the power and authority to enter
into and perform its obligations under the Trust Agreement and
(assuming due authorization, execution and delivery of the Trust
Agreement by the Holders) has the corporate and trust power and
authority to act as the Owner Trustee and to enter into and perform
the obligations under each of the other Operative Agreements to which
the Trust Company or the Owner Trustee, as the case may be, is or will
be a party and each other agreement, instrument and document to be
executed and delivered by it on or before such Closing Date in
connection with or as contemplated by each such Operative Agreement to
which the Trust Company or the Owner Trustee, as the case may be, is
or will be a party;
(b) The execution, delivery and performance of each
Operative Agreement to which it is or will be a party, either in its
individual capacity or (assuming due authorization, execution and
delivery of the Trust Agreement by the Holders) as the Owner Trustee,
as the case may be, has been duly authorized by all necessary action
on its part and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance
by it with any of the terms and provisions thereof (i) does or will
require any approval or consent of any trustee or holders of any of
its indebtedness or obligations, (ii) does or will contravene any
Legal Requirement relating to its banking or trust powers, (iii) does
or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any of its
property under, (A) its charter or by-laws, or (B) any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement or other agreement or instrument to
which it is a party or by which it or its properties may be bound or
affected, which contravention, breach, default or Lien under clause
(B) would materially and adversely affect its ability, in its
individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or
(iv) does or will require any Governmental Action by any Governmental
Authority regulating its banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement
is the legal, valid and binding obligation of the Holders, each other
Operative Agreement to which the Trust Company or the Owner Trustee,
as the case may be, is or will be a party have been, or on or before
such Closing Date will be, duly executed and delivered by the Trust
Company or the Owner Trustee, as the case may be, and the Trust
Agreement and each such other Operative Agreement to which the Trust
Company or the Owner Trustee, as the case may be, is a party
constitutes, or upon execution and delivery will constitute, a legal,
valid and binding obligation enforceable against the Trust Company or
the Owner Trustee, as the case may be, in accordance with the terms
thereof;
(d) There is no action or proceeding pending or, to its
knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental
Authority that, if adversely determined, would materially and
adversely affect its ability, in its individual capacity or as the
Owner Trustee, to perform its obligations under the Operative
Agreements to which it is a party or would question the validity or
enforceability of any of the Operative Agreements to which it is or
will become a party;
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(e) It, either in its individual capacity or as the Owner
Trustee, has not assigned or transferred any of its right, title or
interest in or under the Lease, the Agency Agreement or its interest
in any Property or any portion thereof, except in accordance with the
Operative Agreements;
(f) No Default or Event of Default under the Operative
Agreements attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative
Agreements, the proceeds of the Loans and Holder Advances shall not be
applied by the Owner Trustee, either in its individual capacity or as
the Owner Trustee, for any purpose other than the purchase and/or
lease of the Properties, the acquisition, installation and testing of
the Equipment, the construction of Improvements and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each
case which accrue prior to the Rent Commencement Date with respect to
a particular Property;
(h) Neither the Owner Trustee nor any Person authorized
by the Owner Trustee to act on its behalf has offered or sold any
interest in the Trust Estate or the Notes, or in any similar security
relating to a Property, or in any security the offering of which for
the purposes of the Securities Act would be deemed to be part of the
same offering as the offering of the aforementioned securities to, or
solicited any offer to acquire any of the same from, any Person other
than, in the case of the Notes, the Agent, and neither the Owner
Trustee nor any Person authorized by the Owner Trustee to act on its
behalf will take any action which would subject, as a direct result of
such action alone, the issuance or sale of any interest in the Trust
Estate or the Notes to the provisions of Section 5 of the Securities
Act or require the qualification of any Operative Agreement under the
Trust Indenture Act of 1939, as amended;
(i) The Owner Trustee's principal place of business,
chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement
and each other Operative Agreement are kept are located at 79 South
Main Street, Salt Lake City, Utah 84111;
(j) The Owner Trustee is not engaged principally in, and
does not have as one (1) of its important activities, the business of
extending credit for the purpose of purchasing or carrying any margin
stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the
proceeds of the Loans or the Holder Advances will be used by it to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any such margin stock or for any
purpose that violates, or is inconsistent with, the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal
Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a
company controlled by an "investment company" within the meaning of
the Investment Company Act;
(l) Each Property is free and clear of all Lessor Liens
attributable to the Owner Trustee, either in its individual capacity
or as the Owner Trustee; and
(m) The Owner Trustee, in its trust capacity, is not a
party to any documents, instruments or agreements other than the
Operative Agreements executed by the Owner Trustee, in its trust
capacity.
6.2. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.
Effective as of the Initial Closing Date, the date of each Advance and
the Rent Commencement Date, each Credit Party represents and warrants to each
of the other parties hereto that:
(a) The Incorporated Representations and Warranties are
true and correct (unless such relate solely to an earlier point in
time) and the Lessee has delivered to the Agent the financial
statements and other reports referred to in Section 3.1 of the Master
Guaranty of Payment;
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(b) The execution and delivery by each Credit Party of
this Agreement and the other applicable Operative Agreements as of
such date and the performance by each Credit Party of its respective
obligations under this Agreement and the other applicable Operative
Agreements are within the corporate, partnership or limited liability
company (as the case may be) powers of each Credit Party, have been
duly authorized by all necessary corporate, partnership or limited
liability company (as the case may be) action on the part of each
Credit Party (including without limitation any necessary shareholder
action), have been duly executed and delivered, have received all
necessary governmental approval, and do not and will not (i) violate
any Legal Requirement which is binding on any Credit Party or any of
its Subsidiaries, (ii) contravene or conflict with, or result in a
breach of, any provision of the Articles of Incorporation, By-Laws or
other organizational documents of any Credit Party or any of its
Subsidiaries or of any agreement, indenture, instrument or other
document which is binding on any Credit Party or any of its
Subsidiaries or (iii) result in, or require, the creation or
imposition of any Lien (other than pursuant to the terms of the
Operative Agreements) on any asset of any Credit Party or any of its
Subsidiaries;
(c) This Agreement and the other applicable Operative
Agreements, executed prior to and as of such date by any Credit Party,
constitute the legal, valid and binding obligation of such Credit
Party, as applicable, enforceable against such Credit Party, as
applicable, in accordance with their terms. Each Credit Party has
executed the various Operative Agreements required to be executed by
such Credit Party as of such date;
(d) There are no material actions, suits or proceedings
pending or, to our knowledge, threatened against any Credit Party in
any court or before any Governmental Authority (nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority to set aside, restrain, enjoin or prevent the
full performance of any Operative Agreement or any transaction
contemplated thereby) that (i) concern any Property or any Credit
Party's interest therein, (ii) question the validity or enforceability
of any Operative Agreement to which any Credit Party is a party or the
overall transaction described in the Operative Agreements to which any
Credit Party is a party or (iii) have or could reasonably be expected
to have a Material Adverse Effect; provided, for purposes of
disclosure, the Credit Parties have described the litigation set forth
on Exhibit J;
(e) No Governmental Action by any Governmental Authority
or other authorization, registration, consent, approval, waiver,
notice or other action by, to or of any other Person pursuant to any
Legal Requirement, contract, indenture, instrument or agreement or for
any other reason is required to authorize or is required in connection
with (i) the execution, delivery or performance of any Operative
Agreement, (ii) the legality, validity, binding effect or
enforceability of any Operative Agreement, (iii) the acquisition,
ownership, construction, completion, occupancy, operation, leasing or
subleasing of any Property or (iv) any Advance, in each case, except
those which have been obtained and are in full force and effect;
(f) Upon the execution and delivery of each Lease
Supplement to the Lease, (i) the Lessee will have unconditionally
accepted the Property subject to the Lease Supplement and will have a
valid and subsisting leasehold interest in such Property, subject only
to the Permitted Liens, and (ii) no offset will exist with respect to
any Rent or other sums payable under the Lease;
(g) Except as otherwise contemplated by the Operative
Agreements, the Construction Agent shall not use the proceeds of any
Holder Advance or Loan for any purpose other than the purchase and/or
lease of the Properties, the acquisition, installation and testing of
the Equipment, the construction of Improvements and the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 7.1(a) and 7.1(b) of this Agreement, in each
case which accrue prior to the Rent Commencement Date with respect to
a particular Property;
(h) All information heretofore or contemporaneously
herewith furnished by each Credit Party or its Subsidiaries to the
Agent, the Owner Trustee, any Lender or any Holder for purposes of or
in connection with this Agreement and the transactions contemplated
hereby is, and all information hereafter furnished by or on behalf of
each Credit Party or its Subsidiaries to the Agent, the Owner Trustee,
any
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Lender or any Holder pursuant hereto or in connection herewith will
be, true and accurate in every material respect on the date as of
which such information is dated or certified, and such information,
taken as a whole, does not and will not omit to state any material
fact necessary to make such information, taken as a whole, not
misleading;
(i) The principal place of business, chief executive
office and office of the Construction Agent and the Lessee where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
kept are located at 9401 Lee Highway, Suite 300, Fairfax, Virginia and
the states of formation and the chief executive offices of each other
Credit Party are located at the places set forth in Exhibit K;
(j) The representations and warranties of each Credit
Party set forth in any of the Operative Agreements are true and
correct in all material respects on and as of each such date as if
made on and as of such date. Each Credit Party is in all material
respects in compliance with its obligations under the Operative
Agreements and there exists no Default or Event of Default under any
of the Operative Agreements which is continuing and which has not been
cured within any cure period expressly granted under the terms of the
applicable Operative Agreement or otherwise waived in accordance with
the applicable Operative Agreement. No Default or Event of Default
will occur under any of the Operative Agreements as a result of, or
after giving effect to, the Advance requested by the Requisition on
the date of each Advance;
(k) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
then being financed consists of (i) unimproved Land or (ii) Land and
existing Improvements thereon which Improvements are either suitable
for occupancy at the time of acquisition or ground leasing or will be
renovated and/or modified in accordance with the terms of this
Agreement. Each Property then being financed is located at the
location set forth on the applicable Requisition, each of which is in
one (1) of the Approved States;
(l) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, the Lessor has
good and marketable fee simple title to each Property, or, if any
Property is the subject of a Ground Lease, the Lessor will have a
valid ground leasehold interest enforceable against the ground lessor
of such Property in accordance with the terms of such Ground Lease,
subject only to (i) such Liens referenced in Sections 6.2(r)(i) and
6.2(r)(ii) on the applicable Property Closing Date and (ii) subject to
Section 5.7, Permitted Liens after the applicable Property Closing
Date;
(m) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, no portion of
any Property is located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other
applicable agency, or if any such Property is located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance has
been obtained for such Property in accordance with Section 14.2(b) of
the Lease and in accordance with the National Flood Insurance Act of
1968, as amended;
(n) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
complies with all Insurance Requirements and all standards of Lessee
with respect to similar properties owned by Lessee;
(o) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
complies with all Legal Requirements as of such date (including
without limitation all zoning and land use laws and Environmental
Laws), except to the extent that failure to comply therewith,
individually or in the aggregate, shall not have and could not
reasonably be expected to have a Material Adverse Effect;
(p) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, all utility
services and facilities necessary for the construction and operation
of
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the Improvements and the installation and operation of the Equipment
regarding each Property (including without limitation gas, electrical,
water and sewage services and facilities) are available at the
applicable Land or will be constructed prior to the Completion Date
for such Property;
(q) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, acquisition,
installation and testing of the Equipment (if any) and construction of
the Improvements (if any) to such date shall have been performed in a
good and workmanlike manner, substantially in accordance with the
applicable Plans and Specifications;
(r) (i) The Security Documents create, as security
for the Obligations (as such term is defined in the Security
Agreement), valid and enforceable security interests in, and
Liens on, all of the Collateral, in favor of the Agent, for
the ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements, and
such security interests and Liens are subject to no other
Liens other than Liens that are expressly set forth as title
exceptions on the title commitment issued under Section 5.3(g)
with respect to the applicable Property, to the extent such
title commitment has been approved by the Agent. Upon
recordation of the Mortgage Instrument in the real estate
recording office in the applicable Approved State identified
by the Construction Agent or the Lessee, the Lien created by
the Mortgage Instrument in the real property described therein
shall be a perfected first priority mortgage Lien on such real
property (or, in the case of a Ground Lease, the leasehold
estate under such Ground Lease) in favor of the Agent, for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements. To
the extent that the security interests in the portion of the
Collateral comprised of personal property can be perfected by
filing in the filing offices in the applicable Approved States
or elsewhere identified by the Construction Agent or the
Lessee, upon filing of the Lender Financing Statements in such
filing offices, the security interests created by the Security
Agreement shall be perfected first priority security interests
in such personal property in favor of the Agent, for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements;
(ii) The Lease Agreement creates, as security for
the obligations of the Lessee under the Lease Agreement, valid
and enforceable security interests in, and Liens on, each
Property leased thereunder, in favor of the Lessor, and such
security interests and Liens are subject to no other Liens
other than Liens that are expressly set forth as title
exceptions on the title commitment issued under Section 5.3(g)
with respect to the applicable Property, to the extent such
title commitment has been approved by the Agent. Upon
recordation of the memorandum of the Lease Agreement and the
memorandum of a Ground Lease (or, in either case, a short form
lease) in the real estate recording office in the applicable
Approved State identified by the Construction Agent or the
Lessee, the Lien created by the Lease Agreement in the real
property described therein shall be a perfected first priority
mortgage Lien on such real property (or, in the case of a
Ground Lease, the leasehold estate under such Ground Lease) in
favor of the Agent, for the ratable benefit of the Lenders and
the Holders, as their respective interests appear in the
Operative Agreements. To the extent that the security
interests in the portion of any Property comprised of personal
property can be perfected by the filing in the filing offices
in the applicable Approved State or elsewhere identified by
the Construction Agent or the Lessee upon filing of the Lessor
Financing Statements in such filing offices, a security
interest created by the Lease Agreement shall be perfected
first priority security interests in such personal property in
favor of the Lessor, which rights pursuant to the Lessor
Financing Statements are assigned to the Agent, for the
ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements;
(s) The Plans and Specifications for each Property will
be prepared prior to the commencement of construction in accordance
with all applicable Legal Requirements (including without limitation
all applicable Environmental Laws and building, planning, zoning and
fire codes), except to the extent the failure to comply therewith,
individually or in the aggregate, shall not have and could not
reasonably be expected to have a Material Adverse Effect. Upon
completion of the Improvements for each Property in accordance with
the applicable Plans and Specifications, such Improvements will be
within any
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building restriction lines and will not encroach in any manner onto
any adjoining land (except as permitted by express written easements,
which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property
shall be improved in accordance with the applicable Plans and
Specifications in a good and workmanlike manner and shall be
operational;
(u) As of the Initial Closing Date, each Domestic
Subsidiary (formed prior to or on such date) shall have executed this
Agreement in its capacity as a Guarantor;
(v) As of each Property Closing Date only, each Property
has been acquired or ground leased pursuant to a Ground Lease at a
price that is not in excess of fair market value or fair market rental
value, as the case may be;
(w) Each Credit Party has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers,
vendors and customers of each Credit Party and the Subsidiaries of
each Credit Party) that could be adversely affected by the Year 2000
Problem, (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis and (iii) to date, implemented that
plan in accordance with that timetable. Based on the foregoing, each
Credit Party believes that all computer applications (including those
of suppliers, vendors and customers of each Credit Party and the
Subsidiaries of each Credit Party) that are material to its or any of
its Subsidiaries' business and operations are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions
for all dates before and after January 1, 2000 (that is, be "Year 2000
Compliant"), except to the extent that a failure to do so shall not
have and could not reasonably be expected to have a Material Adverse
Effect.
SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
Subject to Section 6B.7, the Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed. This Section 6B is a guaranty of payment and
performance and not of collection and is a continuing guaranty and shall apply
to all Guaranteed Obligations whenever arising. All rights granted to the
Financing Parties under this Section 6B shall be subject to the provisions of
Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
The Guarantor agrees that its obligations hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Operative Agreements, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety, guarantor or co-obligor, it being the intent
of this Section 6B.2 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. The Guarantor
agrees that this Section 6B may be enforced by the Financing Parties without
the necessity at any time of resorting to or exhausting any other security or
collateral and without the necessity at any time of having recourse to the
Notes, the Certificates or any other of the Operative Agreements or any
collateral, if any, hereafter securing the Guaranteed Obligations or otherwise
and each Guarantor hereby waives the right to require the Financing Parties to
proceed against the Construction Agent, the Lessee, the Borrower or any other
Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. The
Guarantor further agrees that it hereby waives any and all right of
subrogation, indemnity, reimbursement or contribution against the Lessee, the
Construction Agent, the Borrower or any other guarantor of the Guaranteed
Obligations for amounts paid under this Section 6B until such time as the
Loans, Holder Advances, accrued but unpaid interest, accrued but unpaid Holder
Yield and all other amounts owing under the
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Operative Agreements have been paid in full. Without limiting the generality
of the waiver provisions of this Section 6B, the Guarantor hereby waives any
rights to require the Financing Parties to proceed against the Construction
Agent, the Lessee, the Borrower or any co-guarantor or to require Lessor to
pursue any other remedy or enforce any other right, including without
limitation, any and all rights under N.C. Gen. Stat. Section 26-7 through 26-9.
The Guarantor further agrees that nothing contained herein shall prevent the
Financing Parties from suing on any Operative Agreement or foreclosing any
security interest in or Lien on any collateral, if any, securing the Guaranteed
Obligations or from exercising any other rights available to it under any
Operative Agreement, or any other instrument of security, if any, and the
exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any Guarantor's obligations
hereunder; it being the purpose and intent of the Guarantor that its
obligations hereunder shall be absolute, independent and unconditional under
any and all circumstances; provided that any amounts due under this Section 6B
which are paid to or for the benefit of any Financing Party shall reduce the
Guaranteed Obligations by a corresponding amount (unless required to be
rescinded at a later date). Neither the Guarantor's obligations under this
Section 6B nor any remedy for the enforcement thereof shall be impaired,
modified, changed or released in any manner whatsoever by an impairment,
modification, change, release or limitation of the liability of the
Construction Agent or the Lessee or by reason of the bankruptcy or insolvency
of the Construction Agent, the Lessee or the Borrower. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any Financing
Party upon this Section 6B or acceptance of this Section 6B. The Guaranteed
Obligations shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Section 6B. All dealings between the Construction Agent, the Lessee, the
Borrower and the Guarantor, on the one hand, and the Financing Parties, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Section 6B.
6B.3. MODIFICATIONS.
The Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Guaranteed Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the
Guaranteed Obligations or the properties subject thereto; (c) the time or place
of payment of the Guaranteed Obligations may be changed or extended, in whole
or in part, to a time certain or otherwise, and may be renewed or accelerated,
in whole or in part; (d) the Construction Agent, the Lessee, the Borrower and
any other party liable for payment under the Operative Agreements may be
granted indulgences generally; (e) any of the provisions of the Notes, the
Certificates or any of the other Operative Agreements may be modified, amended
or waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Construction Agent, the Lessee, the Borrower or any other
party liable for the payment of the Guaranteed Obligations or liable upon any
security therefor may be released, in whole or in part, at, before or after the
stated, extended or accelerated maturity of the Guaranteed Obligations, all
without notice to or further assent by the Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification, indulgence or release.
6B.4. WAIVER OF RIGHTS.
The Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Guaranteed Obligations; (c) protest and notice of dishonor or of default with
respect to the Guaranteed Obligations or with respect to any security therefor;
(d) notice of any Financing Party obtaining, amending, substituting for,
releasing, waiving or modifying any security interest, lien or encumbrance, if
any, hereafter securing the Guaranteed Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which the Guarantor
might otherwise be entitled. Notwithstanding anything to the contrary herein,
(i) the Guarantor's payments hereunder shall be due five (5) Business Days
after written demand by the Agent for such payment (unless the Guaranteed
Obligations are automatically accelerated pursuant to the applicable provisions
of the Operative Agreements in which case the Guarantor's payments shall be
automatically due) and (ii) any modification of the Operative Agreements which
has the effect of increasing the Guaranteed Obligations shall not be
enforceable against the Guarantor unless the Guarantor executes the document
evidencing such modification or otherwise reaffirms its guaranty in writing in
connection with such modification.
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6B.5. REINSTATEMENT.
The obligations of the Guarantor under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and the Guarantor agrees that it will indemnify
each Financing Party on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by any
Financing Party in connection with such rescission or restoration, including
without limitation any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
6B.6. REMEDIES.
The Guarantor agrees that, as between the Guarantor, on the one hand,
and each Financing Party, on the other hand, the Guaranteed Obligations may be
declared to be forthwith due and payable as provided in the applicable
provisions of the Operative Agreements (and shall be deemed to have become
automatically due and payable in the circumstances provided therein)
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Guaranteed Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or such Guaranteed Obligations being deemed to have
become automatically due and payable), such Guaranteed Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by the Guarantor in accordance with the applicable provisions of the Operative
Agreements.
6B.7. LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in
any of the other Operative Agreements, to the extent the obligations of the
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of the
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including without limitation
the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Guaranteed
Obligations in full, regardless of the source of payment, the Guarantor's
obligations hereunder shall be deemed satisfied, discharged and terminated
other than indemnifications set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
Each Financing Party hereby instructs the Guarantor, and the Guarantor
hereby acknowledges and agrees, that until such time as the Loans and the
Holder Advances are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released any and all Rent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. TRANSACTION EXPENSES.
(a) The Lessor agrees on the Initial Closing Date, to
pay, or cause to be paid, all Transaction Expenses arising from the
Initial Closing Date, including without limitation all reasonable
fees, expenses and disbursements of the various legal counsels for the
Lessor and the Agent in connection with the transactions contemplated
by the Operative Agreements and incurred in connection with such
Initial
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Closing Date, the initial fees and expenses of the Owner Trustee due
and payable on such Initial Closing Date, all fees, taxes and expenses
for the recording, registration and filing of documents and all other
reasonable fees, expenses and disbursements incurred in connection
with such Initial Closing Date; provided, however, the Lessor shall
pay such amounts described in this Section 7.1(a) only if funds are
made available by the Lenders and the Holders in an amount sufficient
to allow such payment and without regard to whether such amounts are
referenced in any Requisition. On the Initial Closing Date after
delivery and receipt of the Requisition referenced in Section 4.2(a)
hereof (if required) and satisfaction of the other conditions
precedent for such date, the Holders shall make Holder Advances and
the Lenders shall make Loans to the Lessor to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in this
Section 7.1(a).
(b) Assuming no Default or Event of Default shall have
occurred and be continuing and only for the period prior to the Rent
Commencement Date, the Lessor agrees on each Property Closing Date, on
the date of any Construction Advance and on the Completion Date to
pay, or cause to be paid, all Transaction Expenses including without
limitation all reasonable fees, expenses and disbursements of the
various legal counsels for the Lessor and the Agent in connection with
the transactions contemplated by the Operative Agreements and billed
in connection with such Advance or such Completion Date, all amounts
described in Section 7.1(a) of this Agreement which have not been
previously paid, the annual fees and reasonable out-of-pocket expenses
of the Owner Trustee, all fees, expenses and disbursements incurred
with respect to the various items referenced in Sections 5.3, 5.4
and/or 5.5 (including without limitation any premiums for title
insurance policies and charges for any updates to such policies) and
all other reasonable fees, expenses and disbursements in connection
with such Advance or such Completion Date including without limitation
all expenses relating to and all fees, taxes and expenses for the
recording, registration and filing of documents and during the
Commitment Period, all fees, expenses and costs referenced in Sections
7.3(a), 7.3(b), 7.3(d) and 7.4; provided, however, the Lessor shall
pay such amounts described in this Section 7.1(b) only if funds are
made available by the Lenders and the Holders in an amount sufficient
to allow such payment and without regard to whether such amounts are
referenced in any Requisition. On each Property Closing Date, on the
date of any Construction Advance or any Completion Date, after
delivery of the applicable Requisition (if required) and satisfaction
of the other conditions precedent for such date, the Holders shall
make a Holder Advance and the Lenders shall make Loans to the Lessor
to pay for the Transaction Expenses, fees, expenses and other
disbursements referenced in this Section 7.1(b).
(c) All fees payable pursuant to the Operative Agreements
shall be calculated on the basis of a year of three hundred sixty five
(365) days for the actual days elapsed.
7.2. BROKERS' FEES.
The parties hereto acknowledge that there are no brokers' fees payable
in connection with the transactions contemplated by this Agreement and the
other Operative Agreements.
7.3. CERTAIN FEES AND EXPENSES.
The Lessee agrees to pay or cause to be paid (a) the initial and
annual Owner Trustee's fee and all reasonable expenses of the Owner Trustee and
any co-trustees (including without limitation reasonable counsel fees and
expenses) or any successor owner trustee and/or co-trustee, for acting as the
owner trustee under the Trust Agreement, (b) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in entering into any Lease Supplement and any future amendments,
modifications, supplements, restatements and/or replacements with respect to
any of the Operative Agreements, whether or not such Lease Supplement,
amendments, modifications, supplements, restatements and/or replacements are
ultimately entered into, or giving or withholding of waivers of consents hereto
or thereto, which have been requested by any Credit Party, the Agent, the
Lenders, the Holders or the Lessor, (c) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in connection with any exercise of remedies under any Operative
Agreement or any purchase of any Property by the Construction Agent, the Lessee
or any third party and (d) all reasonable costs and expenses incurred by the
Credit Parties, the Agent, the Lenders, the Holders or the Lessor in
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connection with any transfer or conveyance of any Property, whether or not such
transfer or conveyance is ultimately accomplished.
7.4. ADMINISTRATIVE FEE.
The Lessee shall pay or cause to be paid an administrative fee to the
Agent (for its individual account) on the terms and conditions set forth in the
engagement letter dated November 13, 1998 addressed to Mr. David W. Faeder,
President and Chief Financial Officer, Sunrise Assisted Living, Inc., 9401 Lee
Highway, Suite 300, Fairfax, VA 22031 from Douglas E. Neal, Managing Director
of NationsBanc Montgomery Securities LLC and Leslie M. Zuga, Senior Vice
President of NationsBank, N.A.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
Each of the Owner Trustee and the Holders hereby agrees that so long
as this Agreement is in effect:
(a) Neither the Owner Trustee (in its trust capacity or
in its individual capacity) nor any Holder will create or permit to
exist at any time, and each of them will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, all Lessor Liens on the Properties
attributable to it; provided, however, that the Owner Trustee and the
Holders shall not be required to so discharge any such Lessor Lien
while the same is being contested in good faith by appropriate
proceedings diligently prosecuted so long as such proceedings shall
not materially and adversely affect the rights of the Lessee under the
Lease and the other Operative Agreements or involve any material
danger of impairment of the Liens of the Security Documents or of the
sale, forfeiture or loss of, and shall not interfere with the use or
disposition of, any Property or title thereto or any interest therein
or the payment of Rent;
(b) Without prejudice to any right under the Trust
Agreement of the Owner Trustee to resign (subject to the requirement
set forth in the Trust Agreement that such resignation shall not be
effective until a successor shall have agreed to accept such
appointment), or the Holders' rights under the Trust Agreement to
remove the institution acting as the Owner Trustee (after consent to
such removal by the Agent as provided in the Trust Agreement), each of
the Owner Trustee and the Holders hereby agrees with the Lessee and
the Agent (i) not to terminate or revoke the trust created by the
Trust Agreement except as permitted by Article VIII of the Trust
Agreement, (ii) not to amend, supplement, terminate or revoke or
otherwise modify any provision of the Trust Agreement in such a manner
as to adversely affect the rights of any such party without the prior
written consent of such party and (iii) to comply with all of the
terms of the Trust Agreement, the nonperformance of which would
adversely affect such party;
(c) The Owner Trustee or any successor may resign or be
removed by the Holders as the Owner Trustee, a successor Owner Trustee
may be appointed and a corporation may become the Owner Trustee under
the Trust Agreement, only in accordance with the provisions of Article
IX of the Trust Agreement and, with respect to such appointment, with
the consent of the Lessee (so long as there shall be
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no Lease Event of Default that shall have occurred and be continuing),
which consent shall not be unreasonably withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner
Trustee under the Trust Agreement, and not in its individual capacity,
shall not contract for, create, incur or assume any Indebtedness, or
enter into any business or other activity or enter into any contracts
or agreements, other than pursuant to or under the Operative
Agreements;
(e) The Holders will not instruct the Owner Trustee to
take any action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i)
commence any case, proceeding or other action with respect to the
Owner Trustee under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (ii)
seek appointment of a receiver, trustee, custodian or other similar
official with respect to the Owner Trustee or for all or any
substantial benefit of the creditors of the Owner Trustee; and neither
any Holder nor the Owner Trustee shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any
of the acts set forth in this paragraph;
(g) The Owner Trustee shall give prompt notice to the
Lessee, the Holders and the Agent if the Owner Trustee's principal
place of business or chief executive office, or the office where the
records concerning the accounts or contract rights relating to any
Property are kept, shall cease to be located at 79 South Main Street,
Salt Lake City, Utah 84111, or if it shall change its name; and
(h) The Owner Trustee shall take or refrain from taking
such actions and grant or refrain from granting such approvals with
respect to the Operative Agreements and/or relating to any Property in
each case as directed in writing by the Agent (until such time as the
Loans are paid in full, and then by the Majority Holders) or, in
connection with Sections 8.5 and 9.2 hereof, the Lessee; provided,
however, that notwithstanding the foregoing provisions of this
subparagraph (h) the Owner Trustee, the Agent, the Lenders and the
Holders each acknowledge, covenant and agree that neither the Owner
Trustee nor the Agent shall act or refrain from acting, regarding each
Unanimous Vote Matter, until such party has received the approval of
each Lender and each Holder affected by such matter.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
(a) Each Credit Party acknowledges and agrees that the
Owner Trustee, pursuant to the terms and conditions of the Security
Agreement and the Mortgage Instruments, shall create Liens respecting
the various personal property, fixtures and real property described
therein in favor of the Agent. Each Credit Party hereby irrevocably
consents to the creation, perfection and maintenance of such Liens.
Each Credit Party shall, to the extent reasonably requested by any of
the other parties hereto, cooperate with the other parties in
connection with their covenants herein or in the other Operative
Agreements and shall from time to time duly execute and deliver any
and all such future instruments, documents and financing statements
(and continuation statements related thereto) as any other party
hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and
each Credit Party hereby acknowledges and agrees, that until such time
as the Loans and the Holder Advances are paid in full and the Liens
evidenced by the Security Agreement and the Mortgage Instruments have
been released (i) any and all Rent (excluding Excepted Payments which
shall be payable to each Holder or other Person as appropriate) and
any and all other amounts of any kind or type under any of the
Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments
which shall be payable to each Holder or other Person as appropriate)
or as the Agent may direct from time to time for allocation and
distribution in accordance with the procedures set forth in Section
8.7 hereof, (ii) all rights of the Lessor under the Lease shall be
exercised by the Agent and (iii) each Credit Party shall cause all
notices,
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certificates, financial statements, communications and other
information which are delivered, or are required to be delivered, to
the Lessor, to also be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any
amendment, supplement or other modification of the terms or provisions
of any Operative Agreement except in accordance with Section 12.4 of
this Agreement.
(d) Each Credit Party hereby covenants and agrees that,
except for amounts payable as Basic Rent, any and all payment
obligations owing from time to time under the Operative Agreements by
any Person to the Agent, any Lender, any Holder or any other Person
shall (without further action) be deemed to be Supplemental Rent
obligations payable by the Lessee and guaranteed by the other Credit
Parties. Without limitation, such obligations of the Credit Parties
shall include without limitation arrangement fees, administrative
fees, unused fees, breakage costs, indemnities, trustee fees and
transaction expenses incurred by the parties hereto in connection with
the transactions contemplated by the Operative Agreements.
(e) The Lessee hereby covenants and agrees to cause an
Appraisal or reappraisal (in form and substance satisfactory to the
Agent and from an appraiser selected by the Agent) to be issued
respecting any Property as requested by the Agent from time to time
(i) at each and every time as such shall be required to satisfy any
regulatory requirements imposed on the Agent, the Lessor, the Trust
Company, any Lender and/or any Holder and (ii) after the occurrence of
an Event of Default.
(f) The Lessee hereby covenants and agrees that, except
for amounts payable as Basic Rent, any and all payment obligations
owing from time to time under the Operative Agreements by any Person
to the Agent, any Lender, any Holder or any other Person shall
(without further action) be deemed to be Supplemental Rent obligations
payable by the Lessee. Without limitation, such obligations of the
Lessee shall include the Supplement Rent obligations pursuant to
Section 3.3 of the Lease, arrangement fees, administrative fees,
participation fees, commitment fees, unused fees, prepayment
penalties, breakage costs, indemnities, trustee fees and transaction
expenses incurred by the parties hereto in connection with the
transactions contemplated by the Operative Agreements.
(g) At any time the Lessor or the Agent is entitled under
the Operative Agreements to possession of a Property or any component
thereof, each of the Construction Agent and the Lessee hereby
covenants and agrees, at its own cost and expense, to assemble and
make the same available to the Agent (on behalf of the Lessor).
(h) The Lessee hereby covenants and agrees that,
respecting each Property, Non-Integral Equipment financed under the
Operative Agreements may constitute up to, but shall not exceed, ten
percent (10%) of the aggregate Advances extended at or prior to such
time with respect to such Property.
(i) [RESERVED].
(j) The Lessee hereby covenants and agrees that it shall
give prompt notice to the Agent if the Lessee's principal place of
business or chief executive office, or the office where the records
concerning the accounts or contract rights relating to any Property
are kept, shall cease to be located at 9401 Lee Highway, Suite 300,
Fairfax, Virginia or if it shall change its name.
(k) Unless the Agent otherwise agrees in writing, the
Lessee hereby covenants and agrees that the aggregate Property Cost of
Non-Integral Equipment purchased for any reason by the Lessee prior to
the Expiration Date shall not exceed ten percent (10%) of the
aggregate Property Cost for all Properties funded during the
Commitment Period.
(l) [RESERVED]
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(m) The Lessee hereby covenants and agrees that the
rights of the Lessee under this Agreement and the Lease shall not
impair or in any way diminish the obligations of the Construction
Agent and/or the rights of the Lessor under the Agency Agreement.
(n) [RESERVED].
(o) Each Credit Party shall promptly notify the Agent, or
cause the Agent to be promptly notified, upon such Credit Party
gaining knowledge of the occurrence of any Default or Event of Default
which is continuing at such time.
(p) Until all of the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in
full and the Commitments and the Holder Commitments terminated unless
consent has been obtained from the Majority Secured Parties, each
Credit Party will:
(i) preserve and maintain its separate legal
existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and
remain qualified as a foreign corporation (or partnership,
limited liability company or other such similar entity, as the
case may be) and authorized to do business in each
jurisdiction in which the failure to do so qualify would have
a Material Adverse Effect;
(ii) pay and perform all obligations of the Credit
Parties under the Operative Agreements and pay and perform (A)
all taxes, assessments and other governmental charges that may
be levied or assessed upon it or any of its property, and (B)
all other indebtedness, obligations and liabilities in
accordance with customary trade practices, which if not paid
would have a Material Adverse Effect; provided that any Credit
Party may contest any item described in this Section
8.3(p)(ii) in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a
Material Adverse Effect, observe and remain in compliance with
all applicable Laws and maintain in full force and effect all
Governmental Actions, in each case applicable to the conduct
of its business; keep in full force and effect all licenses,
certifications or accreditations necessary for any Facility to
carry on its business; and not permit the termination of any
insurance reimbursement program available to any Facility; and
(iv) provided that the Agent, the Lenders and the
Holders use reasonable efforts to minimize disruption to the
business of the Credit Parties permit representatives of the
Agent or any Lender or Holder, from time to time and upon
reasonable notice to the Lessee, to visit and inspect its
properties; inspect, audit and make extracts from its books,
records and files, including without limitation management
letters prepared by independent accountants; and discuss with
its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of
operations and business prospects.
(q) Lessee shall perform any and all obligations of
Lessor under, and cause Lessor to otherwise remain in full compliance
with, the terms and provisions of each Ground Lease, if any.
(r) Promptly after obtaining any required architectural
approvals by any business park or any other applicable entity with
oversight responsibility for the applicable Improvements, the
Construction Agent shall deliver to the Agent copies of the same.
(s) Each Credit Party will promptly notify the Agent in
the event such Credit Party discovers or determines that any computer
application (including those of any supplier, vendor or customer of
such Credit Party or any Subsidiary of such Credit Party) that is
material to such Credit Party's or any of its Subsidiaries' business
and operations will not be Year 2000 Compliant, except to the extent
that such failure shall not have and could not reasonably be expected
to have a Material Adverse Effect.
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(t) SALI and the Lessee will provide to the Agent and the
Lenders:
(i) within 45 days after the end of each fiscal
month, consolidating operating statements for each of the
Properties and each of the Residual Payment Collateral
properties, including an income and expense statement and an
occupancy report, with comparative information against budget,
in form and detail satisfactory to the Agent;
(ii) within 45 days after the end of each fiscal
quarter, consolidated operating statements for the Properties
and the Residual Payment Collateral properties, respectively,
including a balance sheet, an income and expense statement and
an occupancy report, with comparative information against
budget, in form and detail satisfactory to the Agent; and
(iii) within 30 days after the end of each fiscal
year, an operating budget for the Properties and the Residual
Payment Collateral properties, respectively, including an
income and expense statement and an occupancy report, in form
and detail satisfactory to the Agent.
(u) Each Credit Party covenants and agrees that it will
either (i) cause Completion with respect to the Charlotte Property to
occur on or before March 1, 1999, or (ii) cause SALI or any of its
Affiliates to purchase the Charlotte Property for the amount set forth
on Exhibit M on or before March 1, 1999.
(v) The Lessee will deliver to the Agent on or before
March 31, 1999 an Appraisal for the Residual Payment Collateral
located in Bluebell, Pa. (plus any other Residual Payment Collateral
approved by the Lenders subsequent to the Initial Closing Date)
showing an appraised value for such property or properties of at least
$15,000,000.
(w) If any Credit Party enters into a Management
Agreement pursuant to which a Credit Party is obligated to pay a
management fee with respect to any of the Properties, such obligation
of the Credit Party to pay such management fee shall be subordinated
to the obligations of such Credit Party under the Operative
Agreements.
8.3B ADDITIONAL COVENANTS OF SALI.
8.3B.1 SALI hereby covenants and agrees as follows:
8.3B.1.1 EXISTENCE.
Without limiting the provisions of Section 8.3(p)(i) which shall apply
with equal effect, SALI shall maintain its existence in good standing in the
jurisdiction in which it is organized and in each other jurisdiction where it
is required to register or qualify to do business if the failure to do so in
such other jurisdiction might have a material adverse effect on the ability of
SALI to perform the obligations under the Basic Documents, on the conduct of
SALI's operations, on SALI's financial condition, or on the value of, or the
ability of the Lenders to realize upon, the Collateral.
8.3B.1.2 FURTHER ASSURANCES.
SALI will make, execute, acknowledge and deliver all and every such
further acts and assurances as the Lenders shall from time to time require for
confirming or carrying out the intentions or facilitating the performance of
the terms of this Agreement.
8.3B.1.3 FINANCIAL RECORDS - INSPECTION.
SALI will (a) maintain or cause to be maintained full, complete,
accurate and adequate records and books of account in accordance with generally
accepted accounting principles consistently applied; (b) permit the Agent, the
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Lenders, the Holders and their duly authorized agents, attorneys and
accountants to inspect, examine, and copy its records and books of account at
all reasonable times; (c) (i) as soon as available, but in no event more than
one hundred twenty (120) days after the close of SALI's fiscal years, provide
the Agent, the Lenders and the Holders with copies of (1) SALI's consolidated
financial statements for the year in question, in form and detail satisfactory
to the Agent, prepared in accordance with generally accepted accounting
principles, consistently applied, and audited by an independent certified
public accountant satisfactory to the Agent, which financial statements shall
include a balance sheet as of the end of such fiscal year, (2) the related
statements of operations and retained earnings and cash statements for such
fiscal year in a format acceptable to the Agent, and (3) an unqualified letter
or opinion of the independent accountant; (ii) as soon as available, but in no
event more than forty-five (45) days after the end of SALI's fiscal quarters,
provide the Agent with copies of internally prepared consolidated and
consolidating financial statements of SALI on a year-to-date basis and as of
the close of such period and income and expense statements for SALI for such
period, each certified as to accuracy by the chief financial officer of SALI;
and (iii) as soon as available but in no event more than thirty (30) days after
the date of filing, provide the Agent with copies of the federal and state
income tax returns for SALI for the year in question as well as any requests
for extensions, schedules and exhibits filed in connection therewith; (d) SALI
shall provide to the Agent copies of each 10K or 10Q reports as soon as
possible, but in no event more than thirty (30) days after filing such report
with the Securities and Exchange Commission; (e) promptly deliver to the Agent
such other information with respect to the financial statements of SALI as the
Lenders and Holders may from time to time require; and (f) all required
financial statements shall be accompanied by a certificate of compliance with
the financial covenants set forth in this Agreement (and shall include SALI's
computation of such covenants) signed by SALI's Chief Financial Officer and a
representation whether or not there has occurred a Default or Event of Default
under the Basic Documents and, if so, stating the facts with respect thereto.
All financial statements will include the following certification:
"The undersigned as __________________ of
___________________ certifies that the financial information
contained in the financial statements dated ________________,
is true and complete as of this date. This statement is
provided to NationsBank, N.A., as agent for the Lenders (in
such capacity, the "Agent"), set forth in the Participation
Agreement dated December 2, 1998 as amended, restated or
substituted from time to time for the purpose of obtaining
credit or in fulfillment of the terms and conditions of credit
already provided. Accordingly, it is intended that the Agent
and the Lenders (as referenced and defined in the
Participation Agreement) may rely on this information".
8.3B.1.4 ESTOPPEL CERTIFICATES.
Within ten (10) days following any request of the Agent so to do, SALI
will furnish the Agent and such other persons as the Agent may direct with a
written certificate, duly acknowledged stating in detail whether or not any
credits, offsets or defenses exist with respect to this Agreement.
8.3B.2 FINANCIAL COVENANTS.
SALI hereby covenants and agrees as follows:
(a) Minimum Tangible Net Worth. SALI shall maintain, on
a consolidated basis with all Subsidiaries, at all times measured quarterly
beginning with the quarter ending December 31, 1998, a minimum Tangible Net
Worth of not less than the sum of a $171,514,850 plus 75% of SALI's net income
(if positive) for each quarter ending after September 30, 1998 plus 85% of the
net proceeds to SALI of any equity capital transaction received during such
quarter.
(b) Minimum Liquidity. SALI shall maintain at all times,
measured quarterly, on an individual basis (i.e. SALI only), Liquid Assets plus
availability under all lines of credit of SALI and its Subsidiaries in an
amount equal to $47,000,000. Upon reaching the Minimum Equity Value covenant
in subsection (d) hereof, the Minimum Liquidity covenant will be the greater of
$25,000,000 of Liquid Assets or 90 days of debt service on all of the SALI's
direct and contingent liabilities.
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(c) Funded Debt to EBITDAR. SALI shall maintain as of
the end of each fiscal quarter (beginning with the fiscal quarter ending March
31, 2001) a ratio of Funded Debt as of such date to EBITDAR for SALI on a
consolidated basis for the period of four consecutive fiscal quarters ending as
of such date, of not more than:
March 31, 2001 5.0:1.0
(d) Minimum Equity Value. SALI shall achieve a minimum
shareholder's equity (determined in accordance with GAAP) of $290 million by
June 30, 1999. Once this equity value is achieved, this covenant shall no
longer be applicable.
(e) Aggregate Adjusted EBITDAR to Debt Service for the
Properties. Maintain as of the end of the fiscal quarters shown below a ratio
(for all Properties in the aggregate) of Adjusted Properties EBITDAR for the
period of four consecutive fiscal quarters then ended to Annual Properties Debt
Service of not less than:
<TABLE>
<S> <C>
Fiscal Quarter Ending
---------------------
December 31, 1999 1.0:1.0
March 31, 2000 1.2:1.0
June 30, 2000 and each fiscal quarter thereafter 1.35:1:0
</TABLE>
(f) Minimum NOI for Residual Payment Collateral. The
Residual Payment Collateral shall have a combined NOI of at least $1.1 million
for the twelve month period ending on the last day of each fiscal quarter.
(g) Minimum Occupancy for Residual Payment Collateral.
As of the end of each fiscal quarter, the Resident Occupancy Rate for each
property comprising the Residual Payment Collateral shall be not less than 85%.
(h) Notification of Certain Events. Promptly notify the
Agent upon obtaining knowledge of the occurrence of any of the following:
(i) any Event of Default under the Basic
Documents;
(ii) any event, development or circumstance
whereby the financial statements furnished under the Basic Documents fail in
any material respect to present fairly, in accordance with GAAP, the financial
condition and operational results of SALI or the Lessee;
(iii) any judicial, administrative or arbitral
proceeding pending against SALI in any judicial or administrative proceeding
known by SALI to have been threatened in a written communication against it
which, if adversely decided, could materially adversely affect its financial
condition or operations (present or prospective);
(iv) (A) the revocation, suspension,
probation, restriction, limitation or refusal to renew, or the pending,
revocation, suspension, probation, restriction, limitation, or refusal to
renew, of any License held by SALI, the Lessee, the Management Company, their
Subsidiaries or affiliates, or (B) the decertification, revocation, suspension,
probation, restriction, limitation, or refusal to renew, or the pending,
decertification, revocation, suspension, probation, restriction, limitation, or
refusal to renew any participation or eligibility in any third party payor
program in which SALI, the Lessee, Management Company, their Subsidiaries or
affiliates elects to participate which exceeds 10% of the gross revenue of a
Facility, including, without limitation, Medicare, Medicaid, or private
insurer, or any accreditation of SALI, the Lessee, the Management Company,
their Subsidiaries or affiliates, or (C) of the issuance or pending issuance of
any License for a period of less than twelve (12) months, as a consequence of
sanctions imposed by any governmental issuance of any License for a period of
less than twelve (12) months, as a consequence of sanctions imposed by any
governmental authority, or (D) the assessment or pending assessment, of any
civil or criminal penalties by any government authority, any third party
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payor or any accreditation organization or Person, if any, which could
materially adversely affect the financial condition or operations of SALI, the
Lessee, the Management Company, their Subsidiaries or affiliates; and
(v) any other development in the business or
affairs of SALI or the Management Company which may be a Material Adverse
Effect; and
(vi) any actual contingent liability or a
potential contingent liability threatened or noticed in a written communication
of SALI of $1,000,000 or more,
in each case described in (i) through (vi) above, such notification shall
describe in detail satisfactory to the Agent the nature thereof and, in the
case of notification under this clause (iii), the action SALI, the Lessee or
the Management Company proposes to take with respect thereto or a statement
that SALI, the Lessee or the Management Company intends to take no action and
an explanation of the reasons for such inaction. In addition, SALI, the Lessee
or the Management Company will furnish to the Agent immediately after receipt
thereof copies of all administrative notices material to SALI's, the Lessee's,
the Management Company's, their Subsidiaries' or affiliates' business and
operations of any Facility and all responses by or on behalf of SALI, the
Lessee, the Management Company, their Subsidiaries or affiliates with respect
to such administrative notices.
8.3B.3 NEGATIVE COVENANTS.
SALI hereby covenants and agrees that it will not:
(a) Mergers or Acquisitions. Enter into any merger or
consolidation or amalgamation, wind up or dissolve itself (or suffer any
liquidation or dissolution), or acquire all or substantially all of the assets
of any person, firm, joint venture or corporation. The foregoing
notwithstanding, SALI shall be permitted to enter into any merger,
consolidation or acquisition pursuant to which SALI retains its corporate
identity and Paul J. Klaassen or Teresa M. Klaassen remains the Chairman of the
Board and Chief Executive Officer with responsibility for managing the
businesses of SALI and such merger, consolidation or acquisition does not
result in either a Material Adverse Effect or a breach of any covenant under
any of the Basic Documents.
(b) Sale of Assets. Sell, lease or otherwise dispose of
any substantial portion of its assets (except for customary political and
charitable contributions and assets disposed of in the ordinary course of
business) unless such disposition is in exchange for not less than fair market
value and does not result in either a Material Adverse Effect or a breach of
any covenant under any of the Basic Documents.
(c) Subsidiaries. Except for the purpose of acquiring
real property to construct an assisted living facility or acquiring an existing
assisted living facility, create or otherwise acquire any subsidiaries if such
creation or acquisition will result in a Material Adverse Effect.
(d) Additional Stock and Transfers of Stock. SALI may
issue or grant options or rights to purchase its capital stock and there shall
be no limitations on the right of shareholders of SALI to pledge, assign,
transfer or encumber any of their stock in SALI provided, (1) SALI is an entity
whose common equity is registered under an applicable Federal Securities Act
and is traded on a National Securities Exchange or NASDAQ national market, and
(2) either Paul J. Klaassen or Teresa M. Klaassen is the Chief Executive
Officer and Chairman of the Board with responsibility for managing the
businesses of SALI; and provided, that, SALI shall provide written notice to
the Agent of transfer of stock in SALI under such circumstances and in such
manner as SALI is required to give notice thereof to the Securities Exchange
Commission.
(e) ERISA Compliance. (A) Restate or amend any Plan
established and maintained by SALI or any Commonly Controlled Entity and
subject to the requirements of ERISA, in a manner designed to disqualify such
Plan and its related trusts under the applicable requirements of the Code; (B)
permit any Commonly Controlled Entity to take any action or fail to take any
action which causes a termination of any Plan in a manner which could result in
the imposition of a lien on the property of SALI or any Commonly Controlled
Entity pursuant to Section 4068 of ERISA; (F) fail to notify the Agent that
notice has been received of a "termination" (as defined in ERISA) of any
Multiemployer Plan to which SALI or any Commonly Controlled Entity has an
obligation to contribute; (G)
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incur or permit any Commonly Controlled Entity to incur a "complete withdrawal"
or "partial withdrawal" (as defined in ERISA) from any Multiemployer Plan to
which SALI or any Commonly Controlled Entity has an obligation to contribute;
or (H) fail to notify the Agent that notice has been received from the
administrator of any Multiemployer Plan to which SALI or administrator of any
Multiemployer Plan to which SALI or any Commonly Controlled Entity has an
obligation to contribute that any such Plan will be placed in "reorganization"
(as defined in ERISA).
(f) Amendments; Termination. Without the prior written
consent of the Agent, the Lenders and the Holder, SALI will not, nor will it
permit any Subsidiary or affiliate to, amend or terminate or agree to amend or
terminate any License, Reimbursement-Participation Agreement or any Management
Agreement, relating to any of the Properties, except for amendments or
modifications making allowances in the ordinary course of business and which
are not, in the aggregate, materially adverse to SALI or the Lessee, directly
or indirectly, or the Lenders and Holders
8.4. SHARING OF CERTAIN PAYMENTS.
Except for Excepted Payments, the parties hereto acknowledge and
agree that all payments due and owing by any Credit Party to the Lessor under
the Lease or any of the other Operative Agreements shall be made by such Credit
Party directly to the Agent as more particularly provided in Section 8.3
hereof. The Lessor, the Holders, the Agent, the Lenders and the Credit Parties
acknowledge the terms of Section 8.7 of this Agreement regarding the allocation
of payments and other amounts made or received from time to time under the
Operative Agreements and agree, that all such payments and amounts are to be
allocated as provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
The Agent, the Lenders and the Holders hereby agree that, so long as
no Event of Default shall have occurred and be continuing, the Owner Trustee
shall, from time to time at the request of the Lessee (and with the prior
consent of the Agent), in connection with the transactions contemplated by the
Agency Agreement, the Lease or the other Operative Agreements, (i) grant
easements and other rights in the nature of easements with respect to any
Property, (ii) release existing easements or other rights in the nature of
easements which are for the benefit of any Property, (iii) execute and deliver
to any Person any instrument appropriate to confirm or effect such grants or
releases, and (iv) execute and deliver to any Person such other documents or
materials in connection with the acquisition, development, construction,
testing or operation of any Property, including without limitation reciprocal
easement agreements, construction contracts, operating agreements, development
agreements, plats, replats or subdivision documents; provided, that each of the
agreements referred to in this Section 8.5 shall be of the type normally
executed by the Lessee in the ordinary course of the Lessee's business and
shall be on commercially reasonable terms so as not to diminish the value of
any Property in any material respect.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE
OWNER TRUSTEE.
The Holders hereby appoint the Agent to act as collateral agent for
the Holders in connection with the Lien granted by the Security Documents to
secure the Holder Amount. The Lenders and the Holders acknowledge and agree
and direct that the rights and remedies of the beneficiaries of the Lien of the
Security Documents shall be exercised by the Agent on behalf of the Lenders and
the Holders as directed from time to time by the Majority Secured Parties or,
pursuant to Sections 8.2(h) and 12.4, all of the Lenders and the Holders, as
the case may be; provided, in all cases, the Agent shall allocate payments and
other amounts received in accordance with Section 8.7. The Agent is further
appointed to provide notices under the Operative Agreements on behalf of the
Owner Trustee (as determined by the Agent, in its reasonable discretion), to
receive notices under the Operative Agreements on behalf of the Owner Trustee
and (subject to Sections 8.5 and 9.2) to take such other action under the
Operative Agreements on behalf of the Owner Trustee as the Agent shall
determine in its reasonable discretion from time to time. The Agent hereby
accepts such appointments. For purposes hereof, the provisions of Section 7 of
the Credit Agreement, together with such other terms and provisions of the
Credit Agreement and the other Operative Agreements as required for the full
interpretation and operation of Section 7 of the Credit Agreement are hereby
incorporated by reference as if restated herein for the mutual benefit of the
Agent and each Holder as if each Holder were a Lender thereunder. Outstanding
Holder Advances and outstanding Loans shall each be taken into account for
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<PAGE> 33
purposes of determining Majority Secured Parties. Further, the Agent shall be
entitled to take such action on behalf of the Owner Trustee as is delegated to
the Agent under any Operative Agreement (whether express or implied) as may be
reasonably incidental thereto. The parties hereto hereby agree to the
provisions contained in this Section 8.6. Any appointment of a successor agent
under Section 7.9 of the Credit Agreement shall also be effective as an
appointment of a successor agent for purposes of this Section 8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
(a) Each Credit Party has agreed pursuant to Section 5.8
and otherwise in accordance with the terms of this Agreement to pay to
(i) the Agent any and all Rent (excluding Excepted Payments) and any
and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person and (ii) each Person
as appropriate the Excepted Payments. Promptly after receipt, the
Agent shall apply and allocate, in accordance with the terms of this
Section 8.7, such amounts received from any Credit Party and all other
payments, receipts and other consideration of any kind whatsoever
received by the Agent pursuant to the Security Agreement or otherwise
received by the Agent, the Holders or any of the Lenders in connection
with the Collateral, the Security Documents or any of the other
Operative Agreements. Ratable distributions among the Lenders and the
Holders under this Section 8.7 shall be made based on (in the case of
the Lenders) the ratio of the outstanding Loans to the aggregate
Property Cost and (in the case of the Holders) the ratio of the
outstanding Holder Advances to the aggregate Property Cost. Ratable
distributions among the Tranche A Lenders under this Section 8.7 shall
be made based on the ratio of the individual Tranche A Lender's
Commitment for Tranche A Loans to the aggregate of all the Tranche A
Lenders' Commitments for Tranche A Loans. Ratable distributions among
the Tranche B Lenders under this Section 8.7 shall be made based on
the ratio of the individual Tranche B Lender's Commitment for Tranche
B Loans to the aggregate of all the Tranche B Lenders' Commitments for
Tranche B Loans. Ratable distributions among the Lenders (in
situations where the Tranche A Lenders are not differentiated from the
Tranche B Lenders) shall be made based on the ratio of the individual
Lender's Commitment to the aggregate of all the Lenders' Commitments.
Ratable distributions among the Holders under this Section 8.7 shall
be based on the ratio of the individual Holder's Holder Commitment to
the aggregate of all the Holders' Holder Commitments.
(b) Payments and other amounts received by the Agent from
time to time in accordance with the terms of subparagraph (a) shall be
applied and allocated as follows (subject in all cases to Section
8.7(c)):
(i) Any such payment or amount identified as or
deemed to be Basic Rent shall be applied and allocated by the
Agent first, ratably to the Lenders and the Holders for
application and allocation to the payment of interest on the
Loans and thereafter the principal of the Loans which is due
and payable on such date and to the payment of accrued Holder
Yield with respect to the Holder Advances and thereafter the
portion of the Holder Advances which is due on such date; and
second, if no Default or Event of Default is in effect, any
excess shall be paid to such Person or Persons as the Lessee
may designate; provided, that if a Default or Event of Default
is in effect, such excess (if any) shall instead be held by
the Agent until the earlier of (I) the first date thereafter
on which no Default or Event of Default shall be in effect (in
which case such payments or returns shall then be made to such
other Person or Persons as the Lessee may designate) and (II)
the Maturity Date or the Expiration Date, as the case may be
(or, if earlier, the date of any Acceleration), in which case
such amounts shall be applied and allocated in the manner
contemplated by Section 8.7(b)(iv).
(ii) If on any date the Agent or the Lessor shall
receive any amount in respect of (A) any Casualty or
Condemnation pursuant to Sections 15.1(a) or 15.1(g) of the
Lease (excluding any payments in respect thereof which are
payable to the Lessee in accordance with the Lease), or (B)
the Termination Value in connection with the delivery of a
Termination Notice pursuant to Article XVI of the Lease, or
(C) the Termination Value in connection with the exercise of
the Purchase Option under Section 20.1 of the Lease or the
exercise of the option of the Lessor to transfer the
Properties to the Lessee pursuant to Section 20.3 of the
Lease, or (D) any payment required to be
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<PAGE> 34
made or elected to be made by the Construction Agent to the
Lessor pursuant to the terms of the Agency Agreement, then in
each case, the Lessor shall be required to pay such amount
received (1) if no Acceleration has occurred, to prepay the
principal balance of the Loans and the Holder Advances, on a
pro rata basis, a portion of such amount to be distributed to
the Lenders and the Holders or (2) if an Acceleration has
occurred, to apply and allocate the proceeds respecting
Sections 8.7(b)(ii)(A) through 8.7(b)(ii)(D) in accordance
with Section 8.7(b)(iii) hereof.
(iii) An amount equal to any payment identified as
proceeds of the sale or other disposition (or lease upon the
exercise of remedies) of the Properties or any portion
thereof, whether pursuant to Article XXII of the Lease or the
exercise of remedies under the Security Documents or
otherwise, the execution of remedies set forth in the Lease
and any payment in respect of excess wear and tear pursuant to
Section 22.3 of the Lease (whether such payment relates to a
period before or after the Construction Period Termination
Date) shall be applied and allocated by the Agent first,
ratably to the payment of the principal and interest of the
Tranche B Loans then outstanding, second, ratably to the
payment to the Holders of the outstanding principal balance of
all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, third, to the
extent such amount exceeds the maximum amount to be returned
pursuant to the foregoing provisions of this paragraph (iii),
ratably to the payment of the principal and interest of the
Tranche A Loans then outstanding, fourth, to any and all other
amounts owing under the Operative Agreements to the Lenders
under the Tranche B Loans, fifth, to any and all other amounts
owing under the Operative Agreements to the Holders, sixth, to
any and all other amounts owing under the Operative Agreements
to the Lenders under the Tranche A Loans, and seventh, to the
extent moneys remain after application and allocation pursuant
to clauses first through sixth above, to the Owner Trustee for
application and allocation to any and all other amounts owing
to the Holders or the Owner Trustee and as the Holders shall
determine; provided, where no Event of Default shall exist and
be continuing and a prepayment is made for any reason with
respect to less than the full amount of the outstanding
principal amount of the Loans and the outstanding Holder
Advances, the proceeds shall be applied and allocated ratably
to the Lenders and to the Holders.
(iv) An amount equal to (A) any such payment
identified as a payment pursuant to Section 22.1(b) of the
Lease (or otherwise) of the Maximum Residual Guarantee Amount
(and any such lesser amount as may be required by Section
22.1(b) of the Lease) in respect of the Properties and (B) any
other amount payable upon any exercise of remedies after the
occurrence of an Event of Default not covered by Sections
8.7(b)(i) or 8.7(b)(iii) above (including without limitation
any amount received in connection with an Acceleration which
does not represent proceeds from the sale or liquidation of
the Properties) and (C) any other amount payable by any
Guarantor pursuant to Section 6B shall be applied and
allocated by the Agent first, ratably, to the payment of the
principal and interest balance of Tranche A Loans then
outstanding, second, ratably to the payment of the principal
and interest balance of the Tranche B Loans then outstanding,
third, ratably to the payment of the principal balance of all
Holder Advances plus all outstanding Holder Yield with respect
to such outstanding Holder Advances, fourth, to the payment of
any other amounts owing to the Lenders hereunder or under any
of the other Operative Agreement, and fifth, to the extent
moneys remain after application and allocation pursuant to
clauses first through fourth above, to the Owner Trustee for
application and allocation to Holder Advances and Holder Yield
and any other amounts owing to the Holders or the Owner
Trustee as the Holders shall determine.
(v) An amount equal to any such payment
identified as Supplemental Rent shall be applied and allocated
by the Agent to the payment of any amounts then owing to the
Agent, the Lenders, the Holders and the other parties to the
Operative Agreements (or any of them) (other than any such
amounts payable pursuant to the preceding provisions of this
Section 8.7(b)) as shall be determined by the Agent in its
reasonable discretion; provided, however, that Supplemental
Rent received upon the exercise of remedies after the
occurrence and continuance of an Event of Default in lieu of
or in substitution of the Maximum Residual Guarantee Amount or
as a partial payment thereon shall be applied and allocated as
set forth in Section 8.7(b)(iv).
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(vi) The Agent in its reasonable judgment shall
identify the nature of each payment or amount received by the
Agent and apply and allocate each such amount in the manner
specified above.
(c) Upon the payment in full of the Loans, the Holder
Advances and all other amounts then due and owing by the Owner Trustee
hereunder or under any Credit Document and the payment in full of all
other amounts then due and owing to the Lenders, the Holders, the
Agent, the Owner Trustee and the other Financing Parties pursuant to
the Operative Agreements, any moneys remaining with the Agent shall be
returned to the Lessee. In the event of an Acceleration it is agreed
that, prior to the application and allocation of amounts received by
the Agent in the order described in Section 8.7(b) above or any
distribution of money to the Lessee, any such amounts shall first be
applied and allocated to the payment of (i) any and all sums advanced
by the Agent in order to preserve the Collateral or to preserve its
Lien thereon, (ii) the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Agent of its rights under the
Security Documents, together with reasonable attorneys' fees and
expenses and court costs and (iii) any and all other amounts
reasonably owed to the Agent under or in connection with the
transactions contemplated by the Operative Agreements (including
without limitation any accrued and unpaid administration fees).
8.8. RELEASE OF PROPERTIES, ETC.
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to prepay the Loans, Holder Advances and all other amounts owing to
the Lenders and the Holders under the Operative Agreements, the Agent is hereby
authorized and directed to release such Properties from the Liens created by
the Security Documents to the extent of its interest therein. In addition,
upon the termination of the Commitments and the Holder Commitments and the
payment in full of the Loans, the Holder Advances and all other amounts owing
by the Owner Trustee and the Lessee hereunder or under any other Operative
Agreement the Agent is hereby authorized and directed to release all of the
Properties from the Liens created by the Security Documents to the extent of
its interest therein. Upon request of the Owner Trustee following any such
release, the Agent shall, at the sole cost and expense of the Lessee, execute
and deliver to the Owner Trustee and the Lessee such documents as the Owner
Trustee or the Lessee shall reasonably request to evidence such release.
8.9 RELEASE OF RESIDUAL PAYMENT COLLATERAL.
The Residual Payment Collateral will be promptly released, at the
request and expense of SALI, at any time after the ratio of Adjusted EBITDAR
for the Properties to Annual Properties Debt Service shall be equal to or
greater than 1.50:1.0 as of the end of at least two (2) consecutive fiscal
quarters, provided that no Default or Event of Default shall then exist and be
continuing. The Agent is specifically authorized and directed by the Lenders
and the Holders to take such action as is necessary or appropriate to give
effect to such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT AGREEMENT
RIGHTS.
Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Holders, the Construction Agent, the
Credit Parties and the Owner Trustee hereby agree that, prior to the occurrence
and continuation of any Default or Event of Default, the Construction Agent or
the Lessee, as the case may be, shall have the following rights:
(a) the right to designate an account to which amounts
funded under the Operative Agreements shall be credited pursuant to
Section 2.3(a) of the Credit Agreement;
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(b) the right to terminate or reduce the Commitments
pursuant to Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation
options pursuant to Section 2.7 of the Credit Agreement;
(d) the right to receive any notice and any certificate,
in each case issued pursuant to Section 2.11(a) of the Credit
Agreement;
(e) the right to replace any Lender pursuant to Section
2.11(b) of the Credit Agreement;
(f) the right to approve any successor agent pursuant to
Section 7.9 of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to
which the Lessor has the right to consent pursuant to Section 9.8 of
the Credit Agreement.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT
RIGHTS.
Notwithstanding anything to the contrary contained in the Trust
Agreement, the Credit Parties, the Owner Trustee and the Holders hereby agree
that, prior to the occurrence and continuation of any Default or Event of
Default, the Construction Agent or the Lessee, as the case may be, shall have
the following rights:
(a) the right to exercise the conversion and continuation
options pursuant to Section 3.8 of the Trust Agreement;
(b) the right to receive any notice and any certificate,
in each case issued pursuant to Section 3.9(a) of the Trust Agreement;
(c) the right to replace any Holder pursuant to Section
3.9(b) of the Trust Agreement;
(d) the right to exercise the removal options contained
in Section 9.1 of the Trust Agreement; provided, however, that no
removal of the Owner Trustee and appointment of a successor Owner
Trustee by the Holders pursuant to Section 9.1 of the Trust Agreement
shall be made without the prior written consent (not to be
unreasonably withheld or delayed) of the Lessee.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
Each Lender may participate, assign or transfer all or a portion of
its interest hereunder and under the other Operative Agreements to an Eligible
Assignee in accordance with Sections 9.7 and 9.8 of the Credit Agreement;
provided, each participant, assignee or transferee must obtain the same ratable
interest in Tranche A Loans, Tranche A Commitments, Tranche B Loans, Tranche B
Commitments (and to the extent the selling Lender is also a Holder (or an
Affiliate of a Holder), each such participant, assignor or transferee must also
obtain the same ratable interest in and to the Holder Advances, Holder
Commitments and the Trust Estate); provided further, that each Lender that
participates, assigns or transfers all or a portion of its interest hereunder
and under the other Operative Agreements shall deliver to the Agent a copy of
each Assignment and Acceptance (as referenced in Section 9.8 of the Credit
Agreement) for purposes of maintaining the Register and notice of such
assignment to the Lessee. The Holders may, directly or indirectly, assign,
convey or otherwise transfer any of their right, title or interest in or to the
Trust Estate or the Trust Agreement to an Eligible Assignee and in accordance
with the terms of Section 11.8(b) of the Trust Agreement; provided, to the
extent the selling Holder is also a Lender (or an Affiliate of a Lender), each
such assignee, receiver of a conveyance or other transferee must also obtain
the same ratable interest in and to the Tranche A Loans, Tranche A Commitments,
Tranche B Loans and Tranche B Commitments. The Owner Trustee may, subject to
the rights of the Lessee under the Lease and the other Operative Agreements and
to the Lien of the
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applicable Security Documents but only with the prior written consent of the
Agent (which consent may be withheld by the Agent in its sole discretion) and
(provided, no Default or Event of Default has occurred and is continuing) with
the consent of the Lessee, directly or indirectly, assign, convey, appoint an
agent with respect to enforcement of, or otherwise transfer any of its right,
title or interest in or to any Property, the Lease, the Trust Agreement and the
other Operative Agreements (including without limitation any right to
indemnification thereunder), or any other document relating to a Property or
any interest in a Property as provided in the Trust Agreement and the Lease.
The provisions of the immediately preceding sentence shall not apply to the
obligations of the Owner Trustee to transfer Property to the Lessee or a third
party purchaser pursuant to Article XXII of the Lease upon payment for such
Property in accordance with the terms and conditions of the Lease. No Credit
Party may assign any of the Operative Agreements or any of their respective
rights or obligations thereunder or with respect to any Property in whole or in
part to any Person without the prior written consent of the Agent, the Lenders,
the Holders and the Lessor.
10.2. EFFECT OF TRANSFER.
From and after any transfer effected in accordance with this Section
10, the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein
to the transferor shall thereafter be deemed a reference to such transferee for
all purposes, except as provided in the preceding sentence. Notwithstanding
any transfer of all or a portion of the transferor's interest as provided in
this Section 10, the transferor shall be entitled to all benefits accrued and
all rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
Subject to and limited by in all respects the provisions of Sections
11.6 through 11.8 and whether or not any of the transactions contemplated
hereby shall be consummated, the Indemnity Provider hereby assumes liability
for and agrees to defend, indemnify and hold harmless each Indemnified Person
on an After Tax Basis from and against any Claims, which may be imposed on,
incurred by or asserted against an Indemnified Person by any third party,
including without limitation Claims arising from the negligence of an
Indemnified Person (but not to the extent such Claims arise from the gross
negligence or willful misconduct of such Indemnified Person itself, as
determined by a court of competent jurisdiction, as opposed to gross negligence
or willful misconduct imputed to such Indemnified Person) in any way relating
to or arising or alleged to arise out of the execution, delivery, performance
or enforcement of this Agreement, the Lease or any other Operative Agreement or
on or with respect to any Property or any component thereof, including without
limitation Claims in any way relating to or arising or alleged to arise out of
(a) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, construction, refurbishment, development, delivery, acceptance,
nondelivery, leasing, subleasing, possession, use, occupancy, operation,
maintenance repair, modification, transportation, condition, sale, return,
repossession (whether by summary proceedings or otherwise), or any other
disposition of any Property or any part thereof, including without limitation
the acquisition, holding or disposition of any interest in the Property, lease
or agreement comprising a portion of any thereof; (b) any latent or other
defects in any Property or any portion thereof whether or not discoverable by
an Indemnified Person or the Indemnity Provider; (c) a violation of
Environmental Laws, Environmental Claims or other loss of or damage to any
property or the environment relating to the Property, the Lease, the Agency
Agreement or the Indemnity Provider; (d) the Operative Agreements, or any
transaction contemplated thereby; (e) any breach by the Indemnity Provider of
any of its representations or warranties under the Operative Agreements to
which the Indemnity Provider is a party or failure by the Indemnity Provider to
perform or observe any covenant or agreement to be performed by it under any of
the Operative Agreements; (f) the transactions contemplated hereby or by any
other Operative Agreement, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA; (g) personal injury, death or property damage,
including without limitation Claims based on strict or absolute
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liability in tort; and (h) any fees, expenses and/or other assessments by any
business park or any other applicable entity with oversight responsibility for
the applicable Property.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including
without limitation a written notice of such proceeding), for any Claim, such
Indemnified Person shall promptly notify the Indemnity Provider in writing and
shall not take action with respect to such Claim without the consent of the
Indemnity Provider for thirty (30) days after the receipt of such notice by the
Indemnity Provider; provided, however, that in the case of any such Claim, if
action shall be required by law or regulation to be taken prior to the end of
such period of thirty (30) days, such Indemnified Person shall endeavor to, in
such notice to the Indemnity Provider, inform the Indemnity Provider of such
shorter period, and no action shall be taken with respect to such Claim without
the consent of the Indemnity Provider before seven (7) days before the end of
such shorter period; provided, further, that the failure of such Indemnified
Person to give the notices referred to in this sentence shall not diminish the
Indemnity Provider's obligation hereunder except to the extent such failure
precludes in all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person shall, at the expense of the Indemnity Provider, in good
faith conduct and control such action (including without limitation by pursuit
of appeals) (provided, however, that (A) if such Claim, in the Indemnity
Provider's reasonable discretion, can be pursued by the Indemnity Provider on
behalf of or in the name of such Indemnified Person, the Indemnified Person, at
the Indemnity Provider's request, shall allow the Indemnity Provider to conduct
and control the response to such Claim and (B) in the case of any Claim (and
notwithstanding the provisions of the foregoing subsection (A)), the
Indemnified Person may request the Indemnity Provider to conduct and control
the response to such Claim (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not to be
unreasonably withheld; provided, however, that any Indemnified Person may
retain separate counsel at the expense of the Indemnity Provider in the event
of a conflict of interest between such Indemnified Person and the Indemnity
Provider)) by, in the sole discretion of the Person conducting and controlling
the response to such Claim (1) resisting payment thereof, (2) not paying the
same except under protest, if protest is necessary and proper, (3) if the
payment be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings, or (4) taking such other
action as is reasonably requested by the Indemnity Provider from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the
controlling party. The parties agree that an Indemnified Person may at any
time decline to take further action with respect to the response to such Claim
and may settle such Claim if such Indemnified Person shall waive its rights to
any indemnity from the Indemnity Provider that otherwise would be payable in
respect of such Claim (and any future Claim, the pursuit of which is precluded
by reason of such resolution of such Claim) and shall pay to the Indemnity
Provider any amount previously paid or advanced by the Indemnity Provider
pursuant to this Section 11.1 by way of indemnification or advance for the
payment of an amount regarding such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed
to pay and shall pay to such Indemnified Person on demand and on an After Tax
Basis all reasonable costs, losses and expenses that such Indemnified Person
actually incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed
by the Indemnity Provider), the Indemnity Provider shall have agreed that the
Claim is an indemnifiable Claim hereunder, (B) in the case of a Claim that must
be pursued in the name of an Indemnified Person (or an Affiliate thereof), the
amount of the potential indemnity (taking into account all similar or logically
related Claims that have been or could be raised for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified
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Person), (C) the Indemnified Person shall have reasonably determined that the
action to be taken will not result in any material danger of sale, forfeiture
or loss of the Property, or any part thereof or interest therein, will not
interfere with the payment of Rent, and will not result in risk of criminal
liability, (D) if such Claim shall involve the payment of any amount prior to
the resolution of such Claim, the Indemnity Provider shall provide to the
Indemnified Person an interest-free advance in an amount equal to the amount
that the Indemnified Person is required to pay (with no additional net
after-tax cost to such Indemnified Person) prior to the date such payment is
due, (E) in the case of a Claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall have
provided to such Indemnified Person an opinion of independent counsel selected
by the Indemnity Provider and reasonably satisfactory to the Indemnified Person
stating that a reasonable basis exists to contest such Claim (or, in the case
of an appeal of an adverse determination, an opinion of such counsel to the
effect that the position asserted in such appeal will more likely than not
prevail) and (F) no Event of Default shall have occurred and be continuing. In
no event shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person shall not be required to contest any Claim in its name (or that of an
Affiliate) if the subject matter thereof shall be of a continuing nature and
shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnity Provider and
reasonably acceptable to the Indemnified Person stating that as a result of
such change in law (or interpretation thereof), it is more likely than not that
the Indemnified Person will prevail in such contest. In no event shall the
Indemnity Provider be permitted to adjust or settle any Claim without the
consent of the Indemnified Person to the extent any such adjustment or
settlement involves, or is reasonably likely to involve, any performance by or
adverse admission by or with respect to the Indemnified Person.
11.2. GENERAL TAX INDEMNITY.
(a) Subject to and limited by in all respects the
provisions of Sections 11.6 through 11.8, the Indemnity Provider shall
pay and assume liability for, and does hereby agree to indemnify,
protect and defend each Property and all Indemnified Persons, and hold
them harmless against, all Impositions on an After Tax Basis, and all
payments pursuant to the Operative Agreements shall be made free and
clear of and without deduction for any and all present and future
Impositions.
(b) Notwithstanding anything to the contrary in Section
11.2(a) hereof, the following shall be excluded from the indemnity
required by Section 11.2(a) (collectively, the "Excluded Taxes"):
(i) Taxes (other than Taxes that are, or are in
the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Indemnified Person
(other than the Lessor, the Owner Trustee and the Trust) by
the United States federal government that are based on or
measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person;
provided, that this clause (i) shall not be interpreted to
prevent a payment from being made on an After Tax Basis if
such payment is otherwise required to be so made;
(ii) Taxes (other than Taxes that are, or are in
the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on any Indemnified Person
(other than the Lessor, the Owner Trustee and the Trust) by
any state or local jurisdiction or taxing authority within any
state or local jurisdiction and that are based upon or
measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person;
provided that such Taxes shall not be excluded under this
subparagraph (ii) to the extent such Taxes would have been
imposed had the location, possession or use of any Property
in, the location or the operation of the Lessee in, or the
Lessee's making payments under the Operative Agreements from,
the jurisdiction imposing such Taxes been the sole connection
between such Indemnified Person and the jurisdiction imposing
such Taxes; provided, further, that this clause (ii) shall not
be interpreted to prevent a payment from being made on an
After Tax Basis if such payment is otherwise required to be so
made;
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(iii) any Tax to the extent it relates to any act,
event or omission that occurs after the termination of the
Lease and redelivery or sale of the Property in accordance
with the terms of the Lease (but not any Tax that relates to
such termination, redelivery or sale and/or to any period
prior to such termination, redelivery or sale); and
(iv) any Taxes which are imposed on an Indemnified
Person as a result of the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by
a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Indemnified
Person), but not Taxes imposed as a result of ordinary
negligence of such Indemnified Person;
(c) (i) Subject to the terms of Section 11.2(f), the
Indemnity Provider shall pay or cause to be paid all
Impositions directly to the taxing authorities where feasible
and otherwise to the Indemnified Person, as appropriate, and
the Indemnity Provider shall at its own expense, upon such
Indemnified Person's reasonable request, furnish to such
Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no
contest is conducted pursuant to Section 11.2(f) and which the
Indemnity Provider pays directly to the taxing authorities,
the Indemnity Provider shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which the
Indemnity Provider reimburses an Indemnified Person, the
Indemnity Provider shall do so within thirty (30) days after
receipt by the Indemnity Provider of demand by such
Indemnified Person describing in reasonable detail the nature
of the Imposition and the basis for the demand (including
without limitation the computation of the amount payable),
accompanied by receipts or other reasonable evidence of such
demand. In the case of Impositions for which a contest is
conducted pursuant to Section 11.2(f), the Indemnity Provider
shall pay such Impositions or reimburse such Indemnified
Person for such Impositions, to the extent not previously paid
or reimbursed pursuant to subsection (a), prior to the latest
time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under Section
11.2(f).
(iii) At the Indemnity Provider's request, the
amount of any indemnification payment by the Indemnity
Provider pursuant to subsection (a) shall be verified and
certified by an independent public accounting firm mutually
acceptable to the Indemnity Provider and the Indemnified
Person. The fees and expenses of such independent public
accounting firm shall be paid by the Indemnity Provider unless
such verification shall result in an adjustment in the
Indemnity Provider's favor of fifteen percent (15%) or more of
the payment as computed by the Indemnified Person, in which
case such fee shall be paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for
preparing and filing any real and personal property or ad valorem tax
returns in respect of each Property and any other tax returns required
for the Owner Trustee respecting the transactions described in the
Operative Agreements. In case any other report or tax return shall be
required to be made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a) and of which the
Indemnity Provider has knowledge or should have knowledge, the
Indemnity Provider, at its sole cost and expense, shall notify the
relevant Indemnified Person of such requirement and (except if such
Indemnified Person notifies the Indemnity Provider that such
Indemnified Person intends to prepare and file such report or return)
(A) to the extent required or permitted by and consistent with Legal
Requirements, make and file in the Indemnity Provider's name such
return, statement or report; and (B) in the case of any other such
return, statement or report required to be made in the name of such
Indemnified Person, advise such Indemnified Person of such fact and
prepare such return, statement or report for filing by such
Indemnified Person or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the
Indemnity Provider under or arising out of subsection (a), provide
such Indemnified Person at the Indemnity Provider's expense with
information sufficient to permit such return, statement or report to
be properly made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a). Such Indemnified
Person shall,
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upon the Indemnity Provider's request and at the Indemnity Provider's
expense, provide any data maintained by such Indemnified Person (and
not otherwise available to or within the control of the Indemnity
Provider) with respect to each Property which the Indemnity Provider
may reasonably require to prepare any required tax returns or reports.
(e) As between the Indemnity Provider on one hand, and
each Financing Party on the other hand, the Indemnity Provider shall
be responsible for, and the Indemnity Provider shall indemnify and
hold harmless each Financing Party (without duplication of any
indemnification required by subsection (a)) against, any obligation by
a Financing Party to pay any Lender Tax with respect to amounts
payable to a Financing Party under any of the Operative Agreements.
To the extent that any payment owing under any Operative Agreement
shall be subject to any Lender Tax, such payment be accompanied by an
additional payment by the Indemnity Provider of such amount as may be
necessary so that the net amount received by each Financing Party
(after deducting all applicable Taxes) is the same as such Financing
Party would have received had such payment not been subject to such
Lender Tax. Upon any payment of Lender Tax by the Indemnity Provider,
the Indemnity Provider, the Indemnity Provider shall promptly (and in
any event within 30 days) furnish to the Agent and applicable
Financing Party such tax receipts, certificates an other evidence of
such payment as the Indemnity Provider may have or the Agent or the
applicable Financing Party may reasonably request.
(f) If a written Claim is made against any Indemnified
Person or if any proceeding shall be commenced against such
Indemnified Person (including without limitation a written notice of
such proceeding), for any Impositions, the provisions in Section 11.1
relating to notification and rights to contest shall apply; provided,
however, that the Indemnity Provider shall have the right to conduct
and control such contest only if such contest involves a Tax other
than a Tax on net income of the Indemnified Person and can be pursued
independently from any other proceeding involving a Tax liability of
such Indemnified Person.
11.3. INCREASED COSTS, ILLEGALITY, ETC.
(a) In the event that the Agent determines (which
determination shall be conclusive absent manifest error) that, by
reason of circumstances affecting the London interbank market,
quotations of the Eurodollar Rate are not being provided in the
relevant amounts or for the relevant maturities for the purpose of
determining a Eurodollar Rate for any portion of the Loans or Holder
Advances, the Agent will give notice of such determination to the
Lessee and each Financing Party at least one day prior to the date of
an advance or any subsequent Interest Period for a Loan or Holder
Advance. If any such notice is given, no Financing Party shall have
any obligation to make any advance or maintain any Loan or Holder
Advance outstanding at a Eurodollar Rate. Until the earlier of the
date any such notice has been withdrawn by the Agent or the date when
the Financing Parties and the Lessee have mutually agreed upon an
alternate method of determining the rates of interest payable on the
Loans and Holder Advances, as the case may be, the Lessee shall not
have the right to have additional advances or maintain any portion of
Loans or Holder Advances at a Eurodollar Rate, whereupon the Financing
Parties and the Lessee shall mutually agree upon an alternate method
of determining the rates of interest payable on the Loans and the
Holder Advances or such Financing Party's portion of the principal
outstanding under all the Loans and Holder Advances shall be
immediately due and payable.
(b) Notwithstanding any other provision of the Operative
Agreements to the contrary, in the event that it shall become unlawful
for any Financing Party to obtain funds in the London interbank market
or for such Financing Party to maintain a Loan or Holder Advance at
the Eurodollar Rate, then, by written notice to the Lessee and to the
Agent, such Financing Party may declare that advances will not
thereafter be made or the existing Loans or Holder Advances thereafter
maintained by such Financing Party hereunder at the Eurodollar Rate,
whereupon the Financing Parties and the Lessee shall mutually agree
upon an alternate method of determining the rates of interest payable
on the Loans and the Holder Advances or such Financing Party's portion
of the principal outstanding under the Loans and the Holder Advances
shall be immediately due and payable.
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(c) (i) If any event shall occur (whether in the form
of a reserve requirement (not included in the definition of
the Eurodollar Rate), exchange control regulations,
governmental charges, compliance with any guideline or request
from any central bank or other Governmental Authority, changes
in the London interbank market or the position of any
Financing Party in such market or otherwise) and the result of
any such event is, in such Financing Party's reasonable
judgment, to increase the costs which such Financing Party
determines are attributable to its making or maintaining any
Loan or Holder Advance at the Eurodollar Rate, or its
obligation to make available any Loan or Holder Advance at the
Eurodollar Rate or to reduce the amount of any sum received or
receivable by such Financing Party under the Operative
Agreements, then, within ten (10) days after demand by such
Financing Party, Lessee hereby agrees to pay to such Financing
Party such additional amount or amounts as will compensate
such Financing Party for such increased cost or reduction.
(ii) In addition to any amounts payable pursuant
to Section 11.3(c)(i), if any Financing Party shall have
determined that the applicability of any law, rule, regulation
or guideline adopted pursuant to or arising out of the July
1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards," or the adoption
after the date hereof of any other law, rule, regulation or
guideline regarding capital adequacy, or any change in any of
the foregoing or in the enforcement or interpretation or
administration of any of the foregoing by any court or any
central bank or other Governmental Authority, charged with the
enforcement or interpretation or administration thereof, or
compliance by such Financing Party (or any lending office of
such Financing Party) or such Financing Party's holding
company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such
Financing Party's capital or on the capital of such Financing
Party's holding company, if any, as a consequence of its
making or maintaining Loans and/or Holder Advances or its
incurring any obligations under the Operative Agreements to a
level below that which such Financing Party or such Financing
Party's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into
consideration such Financing Party's policies and the policies
of such Financing Party's holding company with respect to
capital adequacy) by an amount deemed by such Financing Party
to be material, then, upon demand by such Financing Party, the
Lessee hereby agrees to pay to such Financing Party from time
to time such additional amount or amounts as will compensate
such Financing Party or such Financing Party's holding company
for any such reduction suffered.
(d) If any Financing Party shall seek payment of any
amounts from Lessee pursuant to this Section 11.3, it shall notify the
Lessee and the Agent of the amount payable by the Lessee to such
Financing Party hereunder. A certificate of such Financing Party
seeking payment, setting forth in reasonable detail the factual basis
for and the computation of the amount specified, shall be conclusive
and binding on all parties for all purposes, absent manifest error, as
to the amounts owned. The Lessee's obligations under this Section
shall survive the termination of the Operative Agreements and the
repayment of the Obligations.
11.4. FUNDING/CONTRIBUTION INDEMNITY.
Subject to the provisions of Section 2.11(a) of the Credit Agreement
and 3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof
has been given in accordance with the provisions of the Operative Agreements or
(c) the making of a voluntary or involuntary payment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification shall be
in an amount equal to the excess, if any, of (x) the amount of interest or
Holder Yield, as the case may be, which would have accrued on the amount so
paid, or not so borrowed, accepted, converted or continued for the period from
the date of such
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payment or of such failure to borrow, accept, convert or continue to the last
day of such Interest Period (or, in the case of a failure to borrow, accept,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable Eurodollar Rate plus the
Applicable Percentage for such Loan or Holder Advance, as the case may be, for
such Interest Period over (y) the amount of interest (as determined by such
Financing Party in its reasonable discretion) which would have accrued to such
Financing Party on such amount by (i) (in the case of the Lenders) reemploying
such funds in loans of the same type and amount during the period from the date
of payment or failure to borrow to the last day of the then applicable Interest
Period (or, in the case of a failure to borrow, the Interest Period that would
have commenced on the date of such failure) and (ii) (in the case of the
Holders) placing such amount on deposit for a comparable period with leading
banks in the relevant interest rate market. This covenant shall survive the
termination of the Operative Agreements and the payment of all other amounts
payable hereunder.
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT
LIABILITY, ETC.
SUBJECT TO AND LIMITED BY IN ALL RESPECTS THE PROVISIONS OF SECTION
11.6 THROUGH 11.8 AND WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION
PROVISIONS OF ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING
INDEMNIFICATION OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER
EXPRESSLY RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS
FOR LOSS OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR
OMISSION ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY
NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH
BENEFICIARY, AND INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
CLAIMS, LOSSES, COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT
LIMITATION ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH
BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE
ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR
CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY.
11.6. ADDITIONAL PROVISIONS REGARDING ENVIRONMENTAL INDEMNIFICATION.
Each and every Indemnified Person shall at all times have the rights
and benefits, and the Indemnity Provider shall have the obligations, in each
case provided pursuant to the Operative Agreements with respect to
environmental matters, violations of any Environmental Law, any Environmental
Claim or other loss of or damage to any property or the environment relating to
any Property, the Lease, the Agency Agreement or the Indemnity Provider
(including without limitation the rights and benefits provided pursuant to
Section 11.1(c).
11.7. ADDITIONAL PROVISIONS REGARDING INDEMNIFICATION.
Notwithstanding the provisions of Sections 11.1, 11.2 and 11.5 (other
than with respect to matters concerning environmental indemnification
referenced in Section 11.6), (a) the Owner Trustee shall be the only
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5 (again,
subject to the immediately preceding parenthetical phrase) with respect to each
Property during the Construction Period for such Property and (b) such limited
rights of indemnification referenced in Section 11.7(a) (to the extent relating
to third-party claims) shall be limited to third-party claims caused by or
resulting from the Indemnity Provider's acts or omissions and/or all other
Persons acting by, through or under the Indemnity Provider. After the
Construction Period for a Property, each Indemnified Person shall be a
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5.
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11.8. INDEMNIFICATIONS PROVIDED BY THE OWNER TRUSTEE IN FAVOR OF THE
OTHER INDEMNIFIED PERSONS.
To the extent the Indemnity Provider is not obligated to indemnify
each Indemnified Person with respect to the various matters described in this
Section 11.8, the Owner Trustee shall provide such indemnities (but only to the
extent amounts sufficient to pay such indemnity are funded by the Lenders and
the Holders) in favor of each Indemnified Person in accordance with this
Section 11.8 and shall pay all such amounts owed with respect to this Section
11.8 with amounts advanced by the Lenders and the Holders (a) to the extent,
but only to the extent, amounts are available therefor with respect to the
Available Commitments and the Available Holder Commitments and (b) unless each
Lender and each Holder has declined in writing to fund such amount.
Notwithstanding any other provision in any other Operative Agreement to the
contrary, all amounts so advanced shall be deemed added (ratably, based on the
ratio of the Property Cost for each Property individually to the Aggregate
Property Cost of all Properties at such time) to the Property Cost of all
Properties then subject to the terms of the Operative Agreements.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Owner Trustee hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person or breach of such Indemnified Person's obligations
under this Agreement, the Lease or any other Operative Agreement) in any way
relating to or arising or alleged to arise out of the execution, delivery,
performance or enforcement of this Agreement, the Lease or any other Operative
Agreement or on or with respect to any Property or any component thereof,
including without limitation Claims in any way relating to or arising or
alleged to arise out of the matters set forth in Sections 11.1(a) through
11.1(h).
The Owner Trustee shall pay and assume liability for, and does hereby
agree to indemnify, protect and defend each Property and all Indemnified
Persons, and hold them harmless against, all Impositions on an After Tax Basis,
and all payments pursuant to the Operative Agreements shall be made free and
clear of and without deduction for any and all present and future Impositions.
Notwithstanding anything to the contrary in this paragraph, the Excluded Taxes
shall be excluded from the indemnity provisions afforded by this paragraph.
THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO
THIS SECTION 11.8 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY
REFERENCED IN SECTION 12.9.
SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
The representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest
of the Owner Trustee in any Property or any interest of the Holders in the
Trust Estate, the payment of the Notes and any disposition thereof and shall be
and continue in effect notwithstanding any investigation made by any party and
the fact that any party may waive compliance with any of the other terms,
provisions or conditions of any of the Operative Agreements. Except as
otherwise expressly set forth herein or in other Operative Agreements, the
indemnities of the parties provided for in the Operative Agreements shall
survive the expiration or termination of any thereof.
12.2. NOTICES.
All notices required or permitted to be given under any Operative
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage paid with return receipt requested; by private courier, prepaid;
by telex, facsimile, or other telecommunication device capable of transmitting
or creating a written record; or
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<PAGE> 45
personally. Mailed notices shall be deemed delivered five (5) days after
mailing, properly addressed. Couriered notices shall be deemed delivered when
delivered as addressed, or if the addressee refuses delivery, when presented
for delivery notwithstanding such refusal. Telex or telecommunicated notices
shall be deemed delivered when receipt is either confirmed by confirming
transmission equipment or acknowledged by the addressee or its office.
Personal delivery shall be effective when accomplished. Unless a party changes
its address by giving notice to the other party as provided herein, notices
shall be delivered to the parties at the following addresses:
If to the Construction Agent or the Lessee, to such entity at
the following address:
Sunrise Midwest Leasing, L.L.C.
9401 Lee Highway, Suite 300
Fairfax, Virginia 22031
Attention: Thomas B. Newell, Executive Vice President
Telephone: (703) 273-7500
Telecopy: (703) 273-7501
If to the Guarantor, to it at the following address:
Sunrise Assisted Living, Inc.
9401 Lee Highway, Suite 300
Fairfax, Virginia 22031
Attention: Thomas B. Newell, Executive Vice President
Telephone: (703) 273-7500
Telecopy: (703) 273-7501
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton,
Vice President
Telephone: (801) 246-5300
Telecopy: (801) 246-5053
If to the Holders, to each such Holder at the address set
forth for such Holder on Schedule I of the Trust Agreement.
If to the Agent, to it at the following address:
NationsBank, N.A.
10 Light Street
Baltimore, Maryland 21202
Attention: Leslie Zuga
Telephone: (410) 605-8157
Telecopy: (410) 605-8081
With a copy to:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28202
Attention: Angela Berry
Telephone: (704) 386-8958
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Telecopy: (704) 388-9436
If to any Lender, to it at the address set forth for such
Lender in Schedule 2.1 of the Credit Agreement.
From time to time any party may designate additional parties
and/or another address for notice purposes by notice to each of the
other parties hereto. Each notice hereunder shall be effective upon
receipt or refusal thereof.
12.3. COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one (1) and
the same instrument.
12.4. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE
MATTERS.
Each Basic Document may be terminated, amended, supplemented, waived
or modified only by an instrument in writing signed by, subject to Article VIII
of the Trust Agreement regarding termination of the Trust Agreement, the
Majority Secured Parties and each Credit Party (to the extent such Credit Party
is a party to such Basic Document); provided, to the extent no Default or Event
of Default shall have occurred and be continuing, the Majority Secured Parties
shall not amend, supplement, waive or modify any provision of any Basic
Document in such a manner as to adversely affect the rights of any Credit Party
without the prior written consent (not to be unreasonably withheld or delayed)
of such Credit Party. Each Operative Agreement which is not a Basic Document
may be terminated, amended, supplemented, waived or modified only by an
instrument in writing signed by the parties thereto and (without the consent of
any other Financing Party) the Agent. In addition, the Unanimous Vote Matters
shall require the consent of each Lender and each Holder affected by such
matter.
Notwithstanding the foregoing, no such termination, amendment,
supplement, waiver or modification shall, without the consent of the Agent and,
to the extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) increase or reduce the amount of any Note or any
Certificate, extend the scheduled date of maturity of any Note, extend the
scheduled Expiration Date, extend any payment date of any Note or Certificate,
reduce the stated rate of interest payable on any Note, reduce the stated
Holder Yield payable on any Certificate (other than as a result of waiving the
applicability of any post-default increase in interest rates or Holder Yields),
modify the priority of any Lien in favor of the Agent under any Security
Document, subordinate any obligation owed to any Lender or Holder, reduce any
Lender Unused Fees or any Holder Unused Fees payable under this Participation
Agreement, extend the scheduled date of payment of any Lender Unused Fees or
any Holder Unused Fees, fund any Advance referenced in Section 2.1 of the
Agency Agreement in excess of the then current aggregate sum of the Available
Commitments and the Available Holder Commitments, elect to decline the funding
of any Transaction Expense with respect to Sections 7.1(a) or 7.1(b), elect to
decline the funding of any indemnity payment by the Owner Trustee with respect
to Section 12.9 or increase the amount or extend the expiration date of any
Lender's Commitment or the Holder Commitment of any Holder, or (ii) terminate,
amend, supplement, waive or modify any provision of this Section 12.4 or reduce
the percentages specified in the definitions of Majority Lenders, Majority
Holders or Majority Secured Parties, or consent to the assignment or transfer
by the Owner Trustee of any of its rights and obligations under any Credit
Document or release any portion of the Collateral (except in accordance with
Section 8.8) or release any Credit Party from its obligations under any
Operative Agreement or otherwise alter any payment obligations of any Credit
Party to the Lessor or any Financing Party under the Operative Agreements, or
(iii) terminate, amend, supplement, waive or modify any provision of Section 7
of the Credit Agreement (which shall also require the consent of the Agent), or
(iv) eliminate the automatic option under Section 5.3(b) of the Agency
Agreement requiring that the Construction Agent pay certain liquidated damages
in exchange for the conveyance of a Property to the Construction Agent, or (v)
permit the extension of the Construction Period beyond the date that is two (2)
years from the Initial Closing Date, or (vi) consent to the modification or
amendment of any Sublease in any material respect, unless and until SALI or the
Lessee shall have purchased or otherwise acquired 100% of the outstanding stock
of Karrington. Any such termination, amendment, supplement, waiver or
modification shall apply equally to each of the Lenders and the Holders and
shall be binding upon all the parties to
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this Agreement. In the case of any waiver, each party to this Agreement shall
be restored to its former position and rights under the Operative Agreements,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall
continue, the Defaulting Lender shall (unless the Lessee and the Majority
Lenders, determined as if the Defaulting Lender were not a "Lender", shall
otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Loans, shall not be treated as a "Lender" when
performing the computation of Majority Lenders or Majority Secured Parties, and
shall have no rights under this Section 12.4; provided that any action taken
pursuant to the second paragraph of this Section 12.4 shall not be effective as
against the Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority
Secured Parties, and shall have no rights under this Section 12.4; provided
that any action taken pursuant to the second paragraph of this Section 12.4
shall not be effective as against the Defaulting Holder.
12.5. HEADINGS, ETC.
The Table of Contents and headings of the various Articles and
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof.
12.6. PARTIES IN INTEREST.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF VIRGINIA. Any
legal action or proceeding with respect to this Agreement or any other
Operative Agreement may be brought in the courts of the State of
Virginia in Fairfax County or of the United States for the Eastern
District of Virginia, and, by execution and delivery of this
Agreement, each of the parties to this Agreement hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the nonexclusive jurisdiction of such courts. Each
of the parties to this Agreement further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 12.2, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by
Law or to commence legal proceedings or to otherwise proceed against
any party in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW,
WAIVES TRIAL BY JURY IN
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ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER
OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the parties to this Agreement hereby
irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other
Operative Agreement brought in the courts referred to in subsection
(a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
12.8. SEVERABILITY.
Any provision of this Agreement that 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9. LIABILITY LIMITED.
(a) The Lenders, the Agent, the Credit Parties, the Owner
Trustee and the Holders each acknowledge and agree that the Owner
Trustee is (except as otherwise expressly provided herein or therein)
entering into this Agreement and the other Operative Agreements to
which it is a party (other than the Trust Agreement and to the extent
otherwise provided in Section 6.1 of this Agreement), solely in its
capacity as trustee under the Trust Agreement and not in its
individual capacity and that the Trust Company shall not be liable or
accountable under any circumstances whatsoever in its individual
capacity for or on account of any statements, representations,
warranties, covenants or obligations stated to be those of the Owner
Trustee, except for its own gross negligence or willful misconduct and
as otherwise expressly provided herein or in the other Operative
Agreements.
(b) Anything to the contrary contained in this Agreement,
the Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in
any respect for any liability or obligation arising hereunder or in
any other Operative Agreement including without limitation the payment
of the principal of, or interest on, the Notes, or for monetary
damages for the breach of performance of any of the covenants
contained in the Credit Agreement, the Notes, this Agreement, the
Security Agreement or any of the other Operative Agreements. The
Lenders, the Holders and the Agent agree that, in the event any
remedies under any Operative Agreement are pursued, neither the
Lenders, the Holders nor the Agent shall have any recourse against any
Exculpated Person, for any deficiency, loss or Claim for monetary
damages or otherwise resulting therefrom and recourse shall be had
solely and exclusively against the Trust Estate (excluding Excepted
Payments) and the Credit Parties (with respect to the Credit Parties'
obligations under the Operative Agreements); but nothing contained
herein shall be taken to prevent recourse against or the enforcement
of remedies against the Trust Estate (excluding Excepted Payments) in
respect of any and all liabilities, obligations and undertakings
contained herein and/or in any other Operative Agreement.
Notwithstanding the provisions of this Section, nothing in any
Operative Agreement shall: (i) constitute a waiver, release or
discharge of any indebtedness or obligation evidenced by the Notes
and/or the Certificates arising under any Operative Agreement or
secured by any Operative Agreement, but the same shall continue until
paid or discharged; (ii) relieve any Exculpated Person from liability
and responsibility for (but only to the extent of the damages arising
by reason of): active waste knowingly committed by any Exculpated
Person with respect to any Property, any fraud, gross negligence or
willful misconduct on the part of any Exculpated Person; (iii) relieve
any Exculpated Person from liability and responsibility for (but only
to the extent of the moneys misappropriated, misapplied or not turned
over) (A) except for Excepted Payments, misappropriation or
misapplication by the Lessor (i.e., application in a manner contrary
to any of the Operative Agreements) of any insurance proceeds or
condemnation award paid or delivered to the Lessor by any Person other
than the Agent, (B) except for Excepted Payments, any deposits or any
escrows or amounts owed by the Construction Agent under the Agency
Agreement held by the Lessor or (C) except for Excepted Payments, any
rent or other income
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received by the Lessor from any Credit Party that is not turned over
to the Agent; or (iv) affect or in any way limit the Agent's rights
and remedies under any Operative Agreement with respect to the Rents
and rights and powers of the Agent under the Operative Agreements or
to obtain a judgment against the Lessee's interest in the Properties
or the Agent's rights and powers to obtain a judgment against the
Lessor or any Credit Party (provided, that no deficiency judgment or
other money judgment shall be enforced against any Exculpated Person
except to the extent of the Lessor's interest in the Trust Estate
(excluding Excepted Payments) or to the extent the Lessor may be
liable as otherwise contemplated in clauses (ii) and (iii) of this
Section 12.9(b)).
12.10. RIGHTS OF THE CREDIT PARTIES.
If at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents and the other Operative Agreements and
(ii) of the Credit Parties under the Operative Agreements have in each case
been satisfied or discharged in full, then the Credit Parties shall be entitled
to (a) terminate the Lease and guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a), the Lessor shall transfer to
the Lessee all of its right, title and interest free and clear of the Lien of
the Lease, the Lien of the Security Documents and all Lessor Liens in and to
any Propert ies then subject to the Lease and any amounts or proceeds referred
to in the foregoing clause (b) shall be paid over to the Lessee.
12.11. FURTHER ASSURANCES.
The parties hereto shall promptly cause to be taken, executed,
acknowledged or delivered, at the sole expense of the Lessee, all such further
acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and
the transactions contemplated hereby and thereby (including without limitation
the preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be
filed or effected). The Lessee, at its own expense and without need of any
prior request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to
execute such instruments of conveyance as may be reasonably required in
connection therewith.
12.12. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Owner Trustee
shall be made by the Agent and that such calculations and determinations shall
be conclusive and binding on the parties hereto in the absence of manifest
error.
12.13. CONFIDENTIALITY.
Each Financing Party agrees to keep confidential any information
furnished or made available to it by any Credit Party or any of its
Subsidiaries pursuant to this Agreement that is marked confidential; provided
that nothing herein shall prevent any Financing Party from disclosing such
information (a) to any other Financing Party or any Affiliate of any Financing
Party, or any officer, director, employee, agent, or advisor of any Financing
Party or Affiliate of any Financing Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Financing Party other than as a result
of a disclosure by any Financing Party prohibited by this Agreement, (g) in
connection with any litigation to which such Financing Party or any of its
Affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Operative Agreement,
and (i) subject to provisions substantially similar to those contained in this
Section, to any actual or proposed participant or assignee.
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12.14. FINANCIAL REPORTING/TAX CHARACTERIZATION.
Lessee agrees to obtain advice from its own accountants and tax
counsel regarding the financial reporting treatment and the tax
characterization of the transactions described in the Operative Agreements.
Lessee further agrees that Lessee shall not rely upon any statement of any
Financing Party or any of their respective Affiliates and/or Subsidiaries
regarding any such financial reporting treatment and/or tax characterization.
12.15. SET-OFF.
In addition to any rights now or hereafter granted under applicable
Law and not by way of limitation of any such rights, upon and after the
occurrence of any Event of Default and during the continuance thereof, the
Lenders, the Holders, their respective Affiliates and any assignee or
participant of a Lender or a Holder in accordance with the applicable
provisions of the Operative Agreements are hereby authorized by the Credit
Parties at any time or from time to time, without notice to the Credit Parties
or to any other Person, any such notice being hereby expressly waived, to
set-off and to appropriate and to apply any and all deposits (general or
special, time or demand, including without limitation indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Lenders, the Holders, their
respective Affiliates or any assignee or participant of a Lender or a Holder in
accordance with the applicable provisions of the Operative Agreements to or for
the credit or the account of any Credit Party against and on account of the
obligations of any Credit Party under the Operative Agreements irrespective of
whether or not (a) the Lenders or the Holders shall have made any demand under
any Operative Agreement or (b) the Agent shall have declared any or all of the
obligations of any Credit Party under the Operative Agreements to be due and
payable and although such obligations shall be contingent or unmatured.
Notwithstanding the foregoing, neither the Agent nor any other Financing Party
shall exercise, or attempt to exercise, any right of setoff, banker's lien, or
the like, against any deposit account or property of any Credit Party held by
the Agent or any other Financing Party, without the prior written consent of
the Majority Secured Parties, and any Financing Party violating this provision
shall indemnify the Agent and the other Financing Parties from any and all
costs, expenses, liabilities and damages resulting therefrom. The contractual
restriction on the exercise of setoff rights provided in the foregoing sentence
is solely for the benefit of the Agent and the Financing Parties and may not be
enforced by any Credit Party.
[signature pages follow]
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<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
<TABLE>
<S> <C>
CONSTRUCTION AGENT
- ------------------
AND LESSEE: SUNRISE MIDWEST LEASING, L.L.C., as the Construction
- ----------
Agent and as the Lessee
by Sunrise Assisted Living Investments, Inc., as Sole Member
By: /s/ JAMES S. POPE
-----------------------------------------------
Name: James S. Pope
---------------------------------------------
Title: Senior Vice President
--------------------------------------------
GUARANTOR: SUNRISE ASSISTED LIVING, INC., as Guarantor
- ---------
By: /s/ DAVID W. FAEDER
-----------------------------------------------
Name: David W. Faeder
---------------------------------------------
Title: President and Chief Financial Officer
--------------------------------------------
By: /s/ THOMAS B. NEWELL
-----------------------------------------------
Name: Thomas B. Newell
---------------------------------------------
Title: Executive Vice President
--------------------------------------------
OWNER TRUSTEE AND
- -----------------
LESSOR: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
- ------
not individually, except as expressly stated herein, but solely
as the Owner Trustee under the Sunrise Trust 1998-1
By: /s/ VAL T. ORTON
-----------------------------------------------
Name: Val T. Orton
---------------------------------------------
Title: Vice President
--------------------------------------------
[signature pages continued]
AGENT, LENDERS AND HOLDERS: NATIONSBANK, N.A., as a Lender, as a Holder and as the Agent
- --------------------------
By: /s/ LESLIE M. ZUGA
-----------------------------------------------
Name: Leslie M. Zuga
---------------------------------------------
Title: Senior Vice President
--------------------------------------------
FLEET NATIONAL BANK, as a Lender and as a Holder
By: /s/ PATRICIA MARINILLI
-----------------------------------------------
Name: Patricia Marinilli
---------------------------------------------
Title: Vice Presidnet
--------------------------------------------
</TABLE>
<PAGE> 52
PROVIDENT BANK OF MARYLAND, as a Lender and as a Holder
By: /s/ FRIEDA M.A. MCWILLIAMS
-----------------------------------------------
Name: Frieda M.A. McWilliams
---------------------------------------------
Title: Vice President
--------------------------------------------
<PAGE> 53
EXHIBIT A
REQUISITION FORM
(Pursuant to Sections 4.2, 5.2, 5.3 and 5.4 of the Participation Agreement)
SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability company
(the "Company") hereby certifies as true and correct and delivers the following
Requisition to NATIONSBANK, N.A., as the agent for the Lenders (hereinafter
defined) and respecting the Security Documents, as the agent for the Lenders
and the Holders (hereinafter defined), to the extent of their interests (the
"Agent"):
Reference is made herein to that certain Participation Agreement dated
as of December 2, 1998 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Participation Agreement") among the
Company, in its capacity as the Lessee and as the Construction Agent, the
various parties thereto from time to time, as the guarantors (the
"Guarantors"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders"), and the Agent. Capitalized terms used herein but not otherwise
defined herein shall have the meanings set forth therefor in the Participation
Agreement.
Check one:
____ INITIAL CLOSING DATE: _________________
(three (3) Business Days prior notice required for Advance)
____ PROPERTY CLOSING DATE:_________________
(three (3) Business Days prior notice required for Advance)
____ CONSTRUCTION ADVANCE DATE:_____________
(three (3) Business Days prior notice required for Advance)
1. Transaction Expenses and other fees, expenses and disbursements under
Sections 7.1(a) or 7.1(b) of the Participation Agreement and any and
all other amounts contemplated to be financed under the Participation
Agreement including without limitation any Work, broker's fees, taxes,
recording fees and the like (with supporting invoices or closing
statement attached):
<TABLE>
<S> <C>
Party to Whom Amount Owed
Amount is Owed (in U.S. Dollars)
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
</TABLE>
2. Description of Land (which shall be a legal description of the Land in
connection with an Advance to pay Property Acquisition Costs):
See attached Schedule 1
3. Description of Improvements: See attached Schedule 2
4. Description of Equipment: See attached Schedule 3
5. Description of Work: See attached Schedule 4
6. Aggregate Loans and Holder Advances requested since the Initial
Closing Date with respect to each Property for which Advances
are requested under this Requisition (listed on a Property by
Property basis), including
A-1
<PAGE> 54
without limitation all amounts requested under this Requisition:
[IDENTIFY ON A PROPERTY BY PROPERTY BASIS]
$______________ [Property]
In connection with this Requisition, the Company hereby requests that
the Lenders make Loans to the Lessor in the amount of $______________ and that
the Holders make Holder Advances to the Lessor in the amount of
$________________. The Company hereby certifies (i) that the foregoing amounts
requested do not exceed the total aggregate of the Available Commitments plus
the Available Holder Commitments and (ii) each of the provisions of the
Participation Agreement applicable to the Loans and Holder Advances requested
hereunder have been complied with as of the date of this Requisition.
The Company requests the Loans be allocated as follows:
$______________ ABR Loans
$______________ Eurodollar Loans
The Company requests the Holder Advances be allocated as follows:
$______________ ABR Holder Advances
$______________ Eurodollar Holder Advances
The Company has caused this Requisition to the executed by its duly
authorized officer as of this _____ day of __________, ______.
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living Investments, Inc., as Sole Member
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
A-2
<PAGE> 55
Schedule 1
Description of Land
(Legal Description and Street Address)
A-3
<PAGE> 56
Schedule 2
Description of Improvements
A-4
<PAGE> 57
Schedule 3
Description of Equipment
<TABLE>
=============================================================================================
General Description Make Model Serial Number
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
=============================================================================================
</TABLE>
A-5
<PAGE> 58
Schedule 4
Work
Work Performed for which the Advance is requested:
--------------------------------------------------------------------
--------------------------------------------------------------------
A-6
<PAGE> 59
EXHIBIT B
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(j) of the
Participation Agreement)
____________, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing Provided in favor of Sunrise Midwest
Leasing, L.L.C.
Dear Sirs:
We have acted as special counsel to Sunrise Midwest Leasing, a Virginia limited
liability company (the "Lessee"), and Sunrise Assisted Living, Inc., a Delaware
corporation, as guarantor (the "Guarantor"; individually, the Lessee and the
Guarantor may be referred to herein as a "Credit Party" or collectively, as the
"Credit Parties"), in connection with certain transactions contemplated by the
Participation Agreement dated as of December 2, 1998 (the "Participation
Agreement"), among the Lessee, the Guarantor, First Security Bank, National
Association, as the Owner Trustee (the "Owner Trustee"), the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as lenders (the "Lenders") and
NationsBank, N.A., as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent"). This opinion is delivered pursuant to Section 5.3(j) of
the Participation Agreement. All capitalized terms used herein, and not
otherwise defined herein, shall have the meanings assigned thereto in Appendix A
to the Participation Agreement.
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of [IDENTIFY THE APPLICABLE OPERATIVE AGREEMENTS,
INCLUDING EACH MORTGAGE INSTRUMENT, RELATED UCC FIXTURE FILINGS, ADDITIONAL UCCS
(HEREINAFTER DEFINED), DEEDS AND MEMORANDA OF LEASE] and such other corporate
documents and records of the Credit Parties, certificates of public officials
and representatives of the Credit Parties as to certain factual matters, and
such other instruments and documents which we have deemed necessary or advisable
to examine for the purpose of this opinion. With respect to such examination, we
have assumed (i) the statements of fact made in all such certificates, documents
and instruments are true, accurate and complete; (ii) except as to the Credit
Parties, the due authorization, execution and delivery of the Operative
Agreements by the parties thereto; (iii) the genuineness of all signatures
(except as to the Credit Parties), the authenticity and completeness of all
documents, certificates, instruments, records and corporate records submitted to
us as originals and the conformity to the original instruments of all documents
submitted to us as copies, and the authenticity and completeness of the
originals of such copies; (iv) except as to the Credit Parties, that all parties
have all requisite corporate power and authority to execute, deliver and perform
the Operative Agreements; and (v) except as to the Credit Parties, the
enforceability of the Mortgage Instrument, the Memorandum of Lease and the UCC
financing statements against all parties thereto.
Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:
(a) The Mortgage Instrument and Memorandum of Lease are enforceable
in accordance with their respective terms, except as limited by laws generally
affecting the enforcement of creditors' rights, which laws will not materially
prevent the realization of the benefits intended by such documents.
(b) Each form of Mortgage Instrument and UCC fixture filing relating
thereto, attached hereto as Schedules 1 and 2, respectively, is in proper form
for filing and recording with the offices of [IDENTIFY THE RECORDING
B-1
<PAGE> 60
OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED].
Upon filing of each Mortgage Instrument and UCC fixture filing in [IDENTIFY THE
RECORDING OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE
LOCATED], the Agent will have a valid, perfected lien and security interest in
that portion of the Collateral described in such Mortgage Instrument or UCC
fixture filing to the extent such Collateral is comprised of real property
and/or fixtures.
(c) The forms of UCC financing statements relating to the Security
Documents, attached hereto as Schedule 3 (the "Additional UCCs"), are in proper
form for filing and recording with the offices of [IDENTIFY (I) THE RECORDING
OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED
AND (II) THE SECRETARY OF STATE WHERE THE PROPERTIES ARE TO BE LOCATED]. Upon
filing of the Additional UCCs in [IDENTIFY (I) THE RECORDING OFFICES OF THE
RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED AND (II) THE
SECRETARY OF STATE WHERE THE PROPERTIES ARE TO BE LOCATED], the Agent will have
a valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by filing UCC-1 financing statements under Article 9 of
the UCC.
(d) Each form of Deed and Memorandum of Lease is in appropriate form
for filing and recording with the [IDENTIFY THE RECORDING OFFICES OF THE
RESPECTIVE COUNTY CLERKS FOR THE COUNTIES WHERE THE PROPERTIES ARE TO BE
LOCATED].
(e) Each Memorandum of Lease, when filed and recorded with the
[IDENTIFY THE RECORDING OFFICES OF THE RESPECTIVE COUNTY CLERKS FOR THE COUNTIES
WHERE THE PROPERTIES ARE TO BE LOCATED], will have been filed and recorded in
all public offices in the State of [__________] in which filing or recording is
necessary to provide constructive notice of the Lease to third Persons and to
establish of record the interest of the Lessor thereunder as to the Properties
described in each such Memorandum of Lease.
(f) Title to the Properties located in the State of [___________]
may be held in the name of the Owner Trustee as follows: First Security Bank,
National Association, not individually, but solely as the Owner Trustee under
the Sunrise Trust 1998-1.
(g) The execution and delivery by First Security Bank, National
Association, individually or as the Owner Trustee, as the case may be, of the
Operative Agreements to which it is a party and compliance by First Security
Bank, National Association, individually or as the Owner Trustee, with all of
the provisions thereof do not and will not contravene any law, rule or
regulation of [IDENTIFY THE STATE].
(h) By reason of their participation in the transaction contemplated
under the Operative Agreements, none of the Agent, the Lenders, the Holders or
the Owner Trustee has to (a) qualify as a foreign corporation in [IDENTIFY THE
STATE], (b) file any application or any designation for service of process in
[IDENTIFY THE STATE] or (c) pay any franchise, income, sales, excise, stamp or
other taxes of any kind to [IDENTIFY THE STATE].
(i) The provisions in the Operative Agreements concerning Rent,
interest, fees, prepayment premiums and other similar charges do not violate the
usury laws or other similar laws regulating the use or forbearance of money of
[IDENTIFY THE STATE].
(j) If the transactions contemplated by the Operative Agreements are
characterized as a lease transaction by a court of competent jurisdiction, the
Lease and the applicable Lease Supplement shall demise to the Lessee a valid
leasehold interest in the Properties described in such Lease Supplement.
(k) If the transactions contemplated by the Operative Agreements are
characterized as a loan transaction by a court of competent jurisdiction, the
combination of the Mortgage Instruments, the Deeds, the Lease and the applicable
Lease Supplements (and the other Operative Agreements incorporated therein by
reference) are sufficient to create a valid, perfected lien or security interest
in the Properties therein described, enforceable as a mortgage in [IDENTIFY THE
STATE].
B-2
<PAGE> 61
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein. This opinion is based on
and is limited to the laws of the State of [___________] and the federal laws of
the United States of America. Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.
This opinion is for the sole benefit of the Lessee, the Construction Agent, the
Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns and may not be relied upon by any other person
other than such parties and their respective successors and assigns without the
express written consent of the undersigned. The opinions expressed herein are as
of the date hereof and we make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions.
Very truly yours,
[LESSEE'S OUTSIDE COUNSEL]
B-3
<PAGE> 62
Distribution List
NationsBank, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Sunrise Midwest Leasing, L.L.C., as the Construction Agent and the Lessee
Sunrise Assisted Living, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
B-4
<PAGE> 63
Schedule 1
Form of Mortgage Instrument
B-5
<PAGE> 64
Schedule 2
Forms of UCC Fixture Filings
B-6
<PAGE> 65
Schedule 3
Forms of UCC Financing Statements
B-7
<PAGE> 66
EXHIBIT C
SUNRISE MIDWEST LEASING, L.L.C.
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(z) of the Participation Agreement)
SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability
company (the "Company"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of each
Credit Party contained in the Operative Agreements to
which it is a party is true and correct on and as of the
date hereof.
2. No Default or Event of Default has occurred and is
continuing under any Operative Agreement.
3. Each Operative Agreement to which any Credit Party is a
party is in full force and effect with respect to it.
4. Each Credit Party has duly performed and complied with
all covenants, agreements and conditions contained in
the Participation Agreement (hereinafter defined) or in
any Operative Agreement required to be performed or
complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of December 2, 1998 among the Company, as the Lessee and as
the Construction Agent, Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders") and NationsBank, N.A., as the agent for the Lenders and respecting
the Security Documents, as the agent for the Lenders and the Holders, to the
extent of their interests (the "Agent").
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this _____ day of __________, ______.
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living
Investments, Inc., as Sole Member
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
C-1
<PAGE> 67
EXHIBIT D
[NAME OF CREDIT PARTY]
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(aa) of the Participation Agreement)
[NAME OF CREDIT PARTY], a [__________] [corporation or limited
liability company] (the "Company") DOES HEREBY CERTIFY as follows:
1. Attached hereto as Schedule 1 is a true, correct and
complete copy of the resolutions of the Board of
Directors of the Company duly adopted by the Board of
Directors of the Company on __________. Such resolutions
have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as
of the date hereof.
2. Attached hereto as Schedule 2 is a true, correct and
complete copy of the Articles of [Incorporation or
Organization/Formation] of the Company on file in the
Office of the Secretary of State of __________. Such
Articles of [Incorporation or Organization/Formation]
have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as
of the date hereof.
3. Attached hereto as Schedule 3 is a true, correct and
complete copy of the [Bylaws or Operating Agreement] of
the Company. Such [Bylaws or Operating Agreement have or
has] not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as
of the date hereof.
4. The persons named below now hold the offices set forth
opposite their names, and the signatures opposite their
names and titles are their true and correct signatures.
<TABLE>
<CAPTION>
Name Office Signature
<S> <C> <C>
------------------- ----------------------- -------------------------
------------------- ----------------------- -------------------------
</TABLE>
IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.
[NAME OF CREDIT PARTY]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
D-1
<PAGE> 68
Schedule 1
Board Resolutions
D-2
<PAGE> 69
Schedule 2
Articles of Incorporation
D-3
<PAGE> 70
Schedule 3
Bylaws
D-4
<PAGE> 71
EXHIBIT E
FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(cc) of the Participation Agreement)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (except with respect to paragraph 1 below, to the
extent any such representations and warranties are made in its individual
capacity) but solely as the owner trustee under the Sunrise Trust 1998-1 (the
"Owner Trustee"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of the Owner
Trustee contained in the Operative Agreements to which
it is a party is true and correct on and as of the date
hereof.
2. Each Operative Agreement to which the Owner Trustee is a
party is in full force and effect with respect to it.
3. The Owner Trustee has duly performed and complied with
all covenants, agreements and conditions contained in
the Participation Agreement (hereinafter defined) or in
any Operative Agreement required to be performed or
complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of December 2, 1998 among Sunrise Midwest Leasing, L.L.C., as
the Lessee and as the Construction Agent, Sunrise Assisted Living, Inc., as
guarantor (the "Guarantor"), the Owner Trustee, the various banks and other
lending institutions which are parties thereto from time to time, as holders
(the "Holders"), the various banks and other lending institutions which are
parties thereto from time to time, as lenders (the "Lenders") and NationsBank,
N.A., as the agent for the Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent of their interests (the
"Agent").
IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to
be duly executed and delivered as of this _____ day of __________, ______.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually,
except as expressly stated herein,
but solely as the Owner Trustee
under the Sunrise Trust 1998-1
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
E-1
<PAGE> 72
EXHIBIT F
FIRST SECURITY BANK, NATIONAL ASSOCIATION
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(dd) of the Participation Agreement)
CERTIFICATE OF ASSISTANT SECRETARY
I, ______________________, duly elected and qualified Assistant
Secretary of the Board of Directors of First Security Bank, National Association
(the "Association"), hereby certify as follows:
1. The Association is a National Banking Association duly organized,
validly existing and in good standing under the laws of the United States. With
respect thereto the following is noted:
A. Pursuant to Revised Statutes 324, et seq., as amended,
12 U.S.C. 1, et seq., the Comptroller of the Currency
charters and exercises regulatory and supervisory
authority over all National Banking Associations;
B. On December 9, 1881, the First National Bank of Ogden,
Utah was chartered as a National Banking Association
under the laws of the United States and under Charter
No. 2597;
C. On October 2, 1922, in connection with a consolidation
of The First National Bank of Ogden, Ogden, Utah, and
The Utah National Bank of Ogden, Ogden, Utah, the title
was changed to "The First & Utah National Bank of
Ogden"; on January 18, 1923, The First & Utah National
Bank of Ogden changed its title to "First Utah National
Bank of Ogden"; on January 19, 1926, the title was
changed to "First National Bank of Ogden"; on February
24, 1934, the title was changed to "First Security Bank
of Utah, National Association"; on June 21, 1996, the
title was changed to "First Security Bank, National
Association"; and
D. First Security Bank, National Association, Ogden, Utah,
continues to hold a valid certificate to do business as
a National Banking Association.
2. The Association's Articles of Association, as amended, are in
full force and effect, and a true, correct and complete copy is attached hereto
as Schedule A and incorporated herein by reference. Said Articles were last
amended October 20, 1975, as required by law on notice at a duly called special
meeting of the shareholders of the Association.
3. The Association's By-Laws, as amended, are in full force and
effect; and a true, correct and complete copy is attached hereto as Schedule B
and incorporated herein by reference. Said By-Laws, still in full force and
effect, were adopted September 17, 1942, by resolution, after proper notice of
consideration and adoption of By-Laws was given to each and every shareholder,
at a regularly called meeting of the Board of Directors with a quorum present.
4. Pursuant to the authority vested in it by an Act of Congress
approved December 23, 1913 and known as the Federal Reserve Act, as amended, the
Federal Reserve Board (now the Board of Governors of the Federal Reserve System)
has granted to the Association now known as "First Security Bank, National
Association" of Ogden, Utah, the right to act, when not in contravention of
State or local law, as trustee, executor, administrator, registrar of stocks and
bonds, guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State banks, trust
companies or other corporations which come into competition with
F-1
<PAGE> 73
National Banks are permitted to act under the laws of the State of Utah; and
under the provisions of applicable law, the authority so granted remains in full
force and effect.
5. Pursuant to authority vested by Act of Congress (12 U.S.C. 92a
and 12 U.S.C. 481, as amended) the Comptroller of the Currency has issued
Regulation 9, as amended, dealing, in part, with the Fiduciary Powers of
National Banks, said regulation providing in subparagraph 9.7 (a) (1-2):
(1) The board of directors is responsible for the proper
exercise of fiduciary powers by the Bank. All matters
pertinent thereto, including the determination of
policies, the investment and disposition of property
held in fiduciary capacity, and the direction and review
of the actions of all officers, employees, and
committees utilized by the Bank in the exercise of its
fiduciary powers, are the responsibility of the board.
In discharging this responsibility, the board of
directors may assign, by action duly entered in the
minutes, the administration of such of the Bank's
fiduciary powers as it may consider proper to assign to
such director(s), officer(s), employee(s) or
committee(s) as it may designate.
(2) No fiduciary account shall be accepted without the prior
approval of the board, or of the director(s),
officer(s), or committee(s) to whom the board may have
designated the performance of that responsibility. . . .
6. A Resolution relating to Exercise of Fiduciary Powers was adopted
by the Board of Directors at a meeting held July 26, 1994 at which time there
was a quorum present; said resolution is still in full force and effect and has
not been rescinded. Said resolution is attached hereto as Schedule C and
incorporated herein by reference.
7. A Resolution relating to the Designation of Officers and
Employees to Exercise Fiduciary Powers was adopted by the Trust Policy Committee
at a meeting held February 7, 1996 at which time a quorum was present; said
resolution is still in full force and effect and has not been rescinded. Said
resolution is attached hereto as Schedule D and is incorporated herein by
reference.
8. Attached hereto as Schedule E and incorporated herein by
reference, is a listing of facsimile signatures of persons authorized (herein
"Authorized Signatory or Signatories") on behalf of the Association and its
Trust Group to act in exercise of its fiduciary powers subject to the
resolutions in Paragraphs 6 and 7, above.
9. The principal office of the First Security Bank, National
Association, Trust Group and of its departments, except for the St. George,
Utah, Ogden, Utah, and Provo, Utah, branch offices, is located at 79 South Main
Street, Salt Lake City, Utah 84111 and all records relating to fiduciary
accounts are located at such principal office of the Trust Group or in storage
facilities within Salt Lake County, Utah, except for those of the Ogden, Utah,
St. George, Utah, and Provo, Utah, branch offices, which are located at said
office.
10. Each Authorized Signatory (i) is a duly elected or appointed,
duly qualified officer or employee of the Association; (ii) holds the office or
job title set forth below his or her name on the date hereof; (iii) and the
facsimile signature appearing opposite the name of each such officer or employee
is a true replica of his or her signature.
F-2
<PAGE> 74
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Association this __________ day of _________________, ______.
(SEAL)
----------------------------------------
R. James Steenblik
Senior Vice President
Assistant Secretary
F-3
<PAGE> 75
Schedule A
Articles of Association
F-4
<PAGE> 76
Schedule B
Bylaws
F-5
<PAGE> 77
Schedule C
Resolution Relating to
Exercise of Fiduciary Powers
F-6
<PAGE> 78
Schedule D
Resolution Relating to the
Designation of Officers and Employees
To Exercise Fiduciary Powers
F-7
<PAGE> 79
Schedule E
Authorized Signatory or Signatories
F-8
<PAGE> 80
EXHIBIT G
[Outside Counsel Opinion for the Owner Trustee]
(Pursuant to Section 5.3(ee) of the
Participation Agreement)
December ___, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Trust Agreement dated as of December 2, 1998
Dear Sirs:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("FSB")
and in its capacity as trustee (the "Owner Trustee") under the Trust Agreement
dated as of December 2, 1998 (the "Trust Agreement") by and among it and the
various banks and other lending institutions which are parties thereto from time
to time, as holders (the "Holders"), in connection with the execution and
delivery by the Owner Trustee of the Operative Agreements to which it is a
party. Except as otherwise defined herein, the terms used herein shall have the
meanings set forth in Appendix A to the Participation Agreement dated as of
December 2, 1998 (the "Participation Agreement") by and among Sunrise Midwest
Leasing, L.L.C. (the "Lessee"), Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the Holders, the various banks and other lending institutions which are parties
thereto from time to time, as lenders (the "Lenders") and NationsBank, N.A., as
the agent for the Lenders and respecting the Security Documents, as the agent
for the Lenders and the Holders, to the extent of their interests (the "Agent").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or advisable for the purpose of
rendering this opinion.
Based upon the foregoing, we are of the opinion that:
1. FSB is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America and
each of FSB and the Owner Trustee has under the laws of the State of Utah and
federal banking law the power and authority to enter into and perform its
obligations under the Trust Agreement and each other Operative Agreement to
which it is a party.
2. The Owner Trustee is the duly appointed trustee under the Trust
Agreement.
3. The Trust Agreement has been duly authorized, executed and
delivered by one (1) of the officers of FSB and, assuming due authorization,
execution and delivery by the Holders, is a legal, valid and binding obligation
of the Owner Trustee (and to the extent set forth therein, against FSB),
enforceable against the Owner Trustee (and to the extent set forth therein,
against FSB) in accordance with its terms, and the Trust Agreement creates under
the laws of the State of Utah for the Holders the beneficial interest in the
Trust Estate it purports to create and is a valid trust under the laws of the
State of Utah.
4. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by FSB, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding obligations of FSB, enforceable against FSB in accordance with
their respective terms.
5. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by the Owner Trustee, and, assuming due
authorization, execution and delivery by the other parties thereto, are legal,
<PAGE> 81
valid and binding obligations of FSB, enforceable against FSB in accordance with
their respective terms.
5. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by the Owner Trustee, and, assuming due
authorization, execution and delivery by the other parties thereto, are legal,
valid and binding obligations of the Owner Trustee, enforceable against the
Owner Trustee in accordance with their respective terms. The Notes and
Certificates have been duly issued, executed and delivered by the Owner Trustee,
pursuant to authorization contained in the Trust Agreement, and the Certificates
are entitled to the benefits and security afforded by the Trust Agreement in
accordance with its terms and the terms of the Trust Agreement.
6. The execution and delivery by each of FSB and the Owner Trustee
of the Trust Agreement and the Operative Agreements to which it is a party, and
compliance by FSB or the Owner Trustee, as the case may be, with all of the
provisions thereof do not and will not contravene any Laws applicable to or
binding on FSB, or as the Owner Trustee, or contravene the provisions of, or
constitute a default under, its charter documents or by-laws or, to our
knowledge after due inquiry, any indenture, mortgage contract or other agreement
or instrument to which FSB or Owner Trustee is a party or by which it or any of
its property may be bound or affected.
7. The execution and delivery of the Operative Agreements by each of
FSB and the Owner Trustee and the performance by each of FSB and the Owner
Trustee of their respective obligations thereunder does not require on or prior
to the date hereof the consent or approval of, the giving of notice to, the
registration or filing with, or the taking of any action in respect of any
Governmental Authority or any court.
8. Assuming that the trust created by the Trust Agreement is treated
as a grantor trust for federal income tax purposes within the contemplation of
Section 671 through 678 of the Internal Revenue Code of 1986, there are no fees,
taxes, or other charges (except taxes imposed on fees payable to the Owner
Trustee) payable to the State of Utah or any political subdivision thereof in
connection with the execution, delivery or performance by the Owner Trustee, the
Agent, the Lenders, the Lessee or the Holders, as the case may be, of the
Operative Agreements or in connection with the acquisition of any Property by
the Owner Trustee or in connection with the making by any Holder of its
investment in the Trust or its acquisition of the beneficial interest in the
Trust Estate or in connection with the issuance and acquisition of the
Certificates, or the Notes, and neither the Owner Trustee, the Trust Estate nor
the trust created by the Trust Agreement will be subject to any fee, tax or
other governmental charge (except taxes on fees payable to the Owner Trustee)
under the laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts, net income
or value of the Trust Estate by reason of the creation or continued existence of
the trust under the terms of the Trust Agreement pursuant to the laws of the
State of Utah or the Owner Trustee's performance of its duties under the Trust
Agreement.
9. There is no fee, tax or other governmental charge under the laws
of the State of Utah or any political subdivision thereof in existence on the
date hereof on, based on or measured by any payments under the Certificates,
Notes or the beneficial interest in the Trust Estate, by reason of the creation
of the trust under the Trust Agreement pursuant to the laws of the State of Utah
or the Owner Trustee's performance of its duties under the Trust Agreement
within the State of Utah.
10. Upon the filing of the financing statement on form UCC-1 in the
form attached hereto as Schedule 1 with the Utah Division of Corporation and
Commercial Code, the Agent's security interest in the Trust Estate, for the
benefit of the Lenders and the Holders, will be perfected, to the extent that
such perfection is governed by Article 9 of the Uniform Commercial Code as in
effect in the State of Utah (the "Utah UCC").
Your attention is directed to the Utah UCC, which provides, in part,
that a filed financing statement which does not state a maturity date or which
states a maturity date of more than five (5) years is effective only for a
period of five (5) years from the date of filing, unless within six (6) months
prior to the expiration of said period a continuation statement is filed in the
same office or offices in which the original statement was filed. The
continuation statement must be signed by the secured party, identify the
original statement by file number and state that the original statement is still
effective. Upon the timely filing of a continuation statement, the effectiveness
of the original financing statement is continued for five (5) years after the
last date to which the original statement was effective. Succeeding continuation
statements may be filed in the same manner to continue the effectiveness of the
original statement.
The foregoing opinions are subject to the following assumptions, exceptions and
qualifications:
<PAGE> 82
A. We are attorneys admitted to practice in the State of Utah and in
rendering the foregoing opinions we have not passed upon, or purported to pass
upon, the laws of any jurisdictions other than the State of Utah and the federal
banking law governing the banking and trust powers of FSB. In addition, without
limiting the foregoing we express no opinion with respect to (i) federal
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, (iii) the
Federal Communications Act of 1934, as amended, or (iv) state securities or blue
sky laws. Insofar as the foregoing opinions relate to the legality, validity,
binding effect and enforceability of the documents involved in these
transactions, which by their terms are governed by the laws of a state other
than Utah, we have assumed that the laws of such state (as to which we express
no opinion), are in all material aspects identical to the laws of the State of
Utah.
B. The opinions set forth in paragraphs 3, 4, and 5 above are
subject to the qualification that enforceability of the Trust Agreement and the
other Operative Agreements to which FSB and the Owner Trustee are parties, in
accordance with their respective terms, may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, receivership or similar laws affecting
enforcement of creditors' rights generally, and (ii) general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
C. As to the documents involved in these transactions, we have
assumed that each is a legal, valid and binding obligation of each party
thereto, other than FSB or the Owner Trustee, and is enforceable against each
such party in accordance with their respective terms.
D. We have assumed that all signatures, other than those of the
Owner Trustee or FSB, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
as copies conform with the originals, which facts we have not independently
verified.
E. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment or property involved in these transactions.
F. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment or property
involved in these transactions or the priority of any mortgage or security
interest.
G. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. In addition to any other limitation by operation of law upon the
scope, meaning, or purpose of this opinion, the opinions expressed herein speak
only as of the date hereof. We have no obligation to advise the recipients of
this opinion (or any third party) and make no undertaking to amend or supplement
such opinions if facts come to our attention or changes in the current law of
the jurisdictions mentioned herein occur which could affect such opinions the
legal analysis, a legal conclusion or any information confirmation herein.
<PAGE> 83
I. This opinion is for the sole benefit of the Lessee, the
Construction Agent, the Guarantor, the Owner Trustee, the Holders, the Lenders,
the Agent and their respective successors and assigns in matters directly
related to the Participation Agreement or the transaction contemplated
thereunder and may not be relied upon by any other person other than such
parties and their respective successors and assigns without the express written
consent of the undersigned. The opinions expressed in this letter are limited to
the matter set forth in this letter, and no other opinions should be inferred
beyond the matters expressly stated.
Very truly yours,
RAY, QUINNEY & NEBEKER
M. John Ashton
<PAGE> 84
Distribution List
NationsBank, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Sunrise Midwest Leasing, L.L.C., as the Construction Agent and the Lessee
Sunrise Assisted Living, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
<PAGE> 85
EXHIBIT H
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(ff) of the Participation Agreement)
December ____, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing Provided in favor of Sunrise Midwest
Leasing, L.L.C.
Dear Sirs:
We have acted as special counsel to Sunrise Midwest Leasing, L.L.C., a Virginia
limited liability company (the "Lessee") and the Guarantors (hereinafter
defined) in connection with certain transactions contemplated by the
Participation Agreement dated as of December 2, 1998 (the "Participation
Agreement"), among the Lessee, Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee
(the "Owner Trustee"), the various banks and other lending institutions which
are parties thereto from time to time, as holders (the "Holders"), the various
banks and other lending institutions which are parties thereto from time to
time, as lenders (the "Lenders") and NationsBank, N.A., as the agent for the
Lenders and respecting the Security Documents, as the agent for the Lenders and
the Holders, to the extent of their interests (the "Agent"). This opinion is
delivered pursuant to Section 5.3(ff) of the Participation Agreement. All
capitalized terms used herein, and not otherwise defined herein, shall have the
meanings assigned thereto in Appendix A to the Participation Agreement.
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of the Operative Agreements, and such other
corporate, partnership or limited liability company documents and records of the
Credit Parties, certificates of public officials and representatives of the
Credit Parties as to certain factual matters, and such other instruments and
documents which we have deemed necessary or advisable to examine for the purpose
of this opinion. With respect to such examination, we have assumed (i) the
statements of fact made in all such certificates, documents and instruments are
true, accurate and complete; (ii) the due authorization, execution and delivery
of the Operative Agreements by the parties thereto other than the Credit
Parties; (iii) the genuineness of all signatures (other than the signatures of
persons signing on behalf of the Credit Parties), the authenticity and
completeness of all documents, certificates, instruments, records and corporate
records submitted to us as originals and the conformity to the original
instruments of all documents submitted to us as copies, and the authenticity and
completeness of the originals of such copies; (iv) that all parties other than
the Credit Parties have all requisite corporate power and authority to execute,
deliver and perform the Operative Agreements; and (v) the enforceability of the
Operative Agreements against all parties thereto other than the Credit Parties
and respecting the opinion set forth below in section (i), First Security Bank,
National Association, individually or as the Owner Trustee, as the case may be.
We have further assumed that the laws of the States of [STATE OF LAWYER'S
ADMISSION] and [GOVERNING LAW OF PARTICIPATION AGREEMENT] are substantively
identical.
Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:
(a) Each Credit Party is a [CORPORATION, PARTNERSHIP OR LIMITED
LIABILITY COMPANY] duly [INCORPORATED OR ORGANIZED], validly existing and in
good standing under the laws of the state of its [INCORPORATION/FORMATION] and
has the power and authority to conduct its business as presently conducted and
to execute, deliver and perform its obligations under the Operative Agreements
to which it is a party. Each Credit Party is duly qualified to do business in
all jurisdictions in which its failure to so qualify would materially impair its
ability
<PAGE> 86
to perform its obligations under the Operative Agreements to which it is a party
or its financial position or its business as now and now proposed to be
conducted.
(b) The execution, delivery and performance by each Credit Party of
the Operative Agreements to which it is a party have been duly authorized by all
necessary [CORPORATE] action on the part of each Credit Party and the Operative
Agreements to which each Credit Party is a party have been duly executed and
delivered by each Credit Party.
(c) The Operative Agreements to which each Credit Party is a party
constitute valid and binding obligations of each Credit Party enforceable
against each Credit Party in accordance with the terms thereof, subject to
bankruptcy, insolvency, liquidation, reorganization, fraudulent conveyance, and
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
(d) The execution and delivery by each Credit Party of the Operative
Agreements to which it is a party and compliance by each Credit Party with all
of the provisions thereof do not and will not (i) contravene the provisions of,
or result in any breach of or constitute any default under, or result in the
creation of any Lien (other than Permitted Liens and Lessor Liens) upon any of
its property under, its [ARTICLES OF INCORPORATION BY-LAWS, OPERATING AGREEMENT,
PARTNERSHIP AGREEMENT OR OTHER SIMILAR DOCUMENT OF FORMATION] or any indenture,
mortgage, chattel mortgage, deed of trust, lease, conditional sales contract,
bank loan or credit agreement or other agreement or instrument to which any
Credit Party is a party or by which any Credit Party or any property of any
Credit Party may be bound or affected, or (ii) contravene any Laws or any order
of any Governmental Authority applicable to or binding on any Credit Party.
(e) No Governmental Action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery or
performance by any Credit Party of any of the Operative Agreements to which any
Credit Party is a party or for the acquisition, ownership, construction and
completion of the Properties, except for those which have been obtained.
(f) Except as set forth on Schedule 1 hereto, there are no actions,
suits or proceedings pending or to our knowledge, threatened against any Credit
Party in any court or before any Governmental Authority, that concern the
Properties or the interest of any Credit Party therein or that question the
validity or enforceability of any Operative Agreement to which any Credit Party
is a party or the overall transaction described in the Operative Agreements to
which any Credit Party is a party.
(g) Neither the nature of the Properties, nor any relationship
between any Credit Party and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Operative
Agreements to which any Credit Party is a party is such as to require any
approval of stockholders of, or approval or consent of any trustee or holders of
indebtedness of, any Credit Party, except for such approvals and consents which
have been duly obtained and are in full force and effect.
(h) The Security Documents which have been executed and delivered as
of the date of this opinion create, for the benefit of the Agent, the security
interests in the Collateral described therein which by their terms such Security
Documents purport to create. Upon filing of the UCC-1 financing statements
(attached hereto as Schedule 2) relating to the Security Documents in the
recording offices of (A) the respective county clerk where the principal place
of business of the Lessee is located and (B) the Secretary of State where the
principal place of business of the Lessee is located, the Agent will have a
valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by the filing of UCC-1 financing statements under Article
9 of the UCC in [IDENTIFY THE STATE].
(i) The Operative Agreements to which First Security Bank, National
Association, individually or as the Owner Trustee, is a party constitute valid
and binding obligations of such party and are enforceable against First Security
Bank, National Association, individually or as the Owner Trustee, as the case
may be, in accordance with the terms thereof, subject to bankruptcy, insolvency,
liquidation, reorganization, fraudulent conveyance, and similar
<PAGE> 87
laws affecting creditors, rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
(j) The issuance, sale and delivery of the Notes and the issuance
and delivery of the Certificates under the circumstances contemplated by the
Participation Agreement do not, under existing law, require registration of the
Notes or the Certificates being issued on the date hereof under the Securities
Act of 1933, as amended, or the qualification of the Loan Agreement under the
Trust Indenture Act of 1939, as amended.
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein. This opinion is based on
and is limited to the laws of the States of [__________], and the federal laws
of the United States of America. Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.
This opinion is for the sole benefit of the Lessee, the Construction Agent, the
Guarantor, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns and may not be relied upon by any other person
other than such parties and their respective successors and assigns without the
express written consent of the undersigned. The opinions expressed herein are as
of the date hereof and we make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions.
Very truly yours,
[LESSEE'S OUTSIDE COUNSEL]
<PAGE> 88
Distribution List
NationsBank, N.A., as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Sunrise Midwest Leasing, L.L.C., as the Construction Agent and the Lessee
Sunrise Assisted Living, Inc., as the Guarantor
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
<PAGE> 89
Schedule 1
(Litigation)
<PAGE> 90
Schedule 2
(UCC-1 Financing Statements)
<PAGE> 91
EXHIBIT I
SUNRISE MIDWEST LEASING, L.L.C.
OFFICER'S CERTIFICATE
(Pursuant to Section 5.5 of the Participation Agreement)
SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability
company (the "Company") DOES HEREBY CERTIFY as follows:
1. The address for the subject Property is ____________________________
____________________________________________.
2. The Completion Date for the construction of Improvements at the
Property occurred on ______________.
3. The aggregate Property Cost for the Property was $___________.
4. Attached hereto as Schedule 1 is the detailed, itemized
documentation supporting the asserted Property Cost figures.
5. All representations and warranties of the Company in each Operative
Agreement and in each certificate delivered pursuant thereto
(including without limitation the Incorporated Representations and
Warranties) are true and correct as of the Completion Date.
Capitalized terms used in this Officer's Certificate and not otherwise defined
have the respective meanings ascribed thereto in the Participation Agreement
dated as of December 2, 1998 among the Company, as the Lessee and as the
Construction Agent, Sunrise Assisted Living, Inc., as guarantor (the
"Guarantor"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders"), NationsBank, N.A., as the agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders, to the extent
of their interests.
[The remainder of this page has been intentionally left blank.]
<PAGE> 92
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this ____ day of ______________, ______.
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living
Investments, Inc., as Sole Member
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 93
Schedule I
(Itemized Documentation in Support of Asserted Property Cost)
<PAGE> 94
EXHIBIT J
[Description of Material Litigation]
(Pursuant to Section 6.2(d) of the Participation Agreement)
1. Elizabeth Nyberg, Administratrix of the Estate of Edward P. Hughes,
Sr. v. Sunrise Terrace, Inc., Sunrise Assisted Living, Inc., and
John Doe(s), (Cir. Ct. Loudon County, VA) At Law No. 17896.
2. Margaret C. Torberf v. Sunrise Assisted Living, Inc., et al.,
(Superior Ct., Muscogee County, GA) Civil Action File No. SU
98CU-4302.
3. Robert McElvenney v. Sunrise Terrace, Inc. and Sunrise East Assisted
Living Limited Partnership, (Montgomery County Ct. of Common Pleas,
Civil Division, PA) Civil Action File No. SU98U-4302.
4. Rosemaray Braband v. Sunrise Retirement Homes, Sunrise Terrace,
Inc., Sunrise Retirement Homes and Communities, Inc., Sunrise
Assisted Living, Inc. and Sunrise Incorporated, (Cir. Ct. Fairfax
County, VA) At Law No. 52579 (On appeal).
5. Bernice Koester v. Sunrise Assisted Living, (Superior Ct. of
Washington for King County) (On appeal).
<PAGE> 95
EXHIBIT K
[States of Incorporation/Formation and Principal Place of Business of Guarantor]
(Pursuant to Section 6.2(i) of the Participation Agreement)
<TABLE>
<CAPTION>
GUARANTORS STATE OF STATE OF PRINCIPAL PLACE OF
---------- -------- ---------------------------
INCORPORATION/FORMATION BUSINESS
----------------------- --------
<S> <C> <C>
Sunrise Assisted Living, Inc. Delaware Virginia
</TABLE>
<PAGE> 96
EXHIBIT L
Description of Permitted Facilities to be purchased on Initial Closing Date
Washtenaw County (Ann Arbor), Michigan
Mahoning County (Poland), Ohio
Mecklenburg County (Charlotte), North Carolina
Summit County (Bath), Ohio
Hamilton County (Carmel), Indiana
Franklin County (Gahanna), Ohio
<PAGE> 97
EXHIBIT M
Allocated Property Cost Amounts
<TABLE>
<CAPTION>
Allocated Allocated Portion of
Property Annual Properties
Property Name Cost Debt Service
------------- --------- ------------------------
<S> <C> <C>
Washtenaw County ( Ann Arbor), Michigan $7,340,000 15.617%
Mahoning County (Poland), Ohio $7,230,000 15.383%
Mecklenburg County (Charlotte), North Carolina $10,517,000 22.377%
Summit County (Bath), Ohio $7,560,000 16.085%
Hamilton county (Carmel), Indiana $7,780,000 16.553%
Franklin County (Gahanna), Ohio $6,573,000 13.985%
Total $47,000,000 100%
</TABLE>
<PAGE> 98
EXHIBIT N
Residual Payment Collateral
Montgomery County (Blue Bell), Pennsylvania
<PAGE> 99
- --------------------------------------------------------------------------------
Appendix A
Rules of Usage and Definitions
- --------------------------------------------------------------------------------
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set
forth herein or in any other document shall be equally applicable to the
singular and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any
document to articles, sections, paragraphs, clauses, annexes, appendices,
schedules or exhibits are references to articles, sections, paragraphs, clauses,
annexes, appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute a part
of any such document nor shall they affect the meaning, construction or effect
of any provision thereof.
(d) References to any Person shall include such Person, its
successors, permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any
agreement means such agreement as amended, modified, extended, supplemented,
restated and/or replaced from time to time in accordance with the applicable
provisions thereof.
(f) Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or regulations
issued thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, 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 the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the allocated cost
of in-house counsel.
(j) Each of the parties to the Operative Agreements and their
counsel have reviewed and revised, or requested revisions to, the Operative
Agreements, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall be inapplicable in the construction
and interpretation of the Operative Agreements and any amendments or exhibits
thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
have the meaning so ascribed to such term in the applicable Operative Agreement.
<PAGE> 100
II. Definitions
"ABR" shall mean, for any day, a rate per annum equal to the greater
of (a) the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate which the Agent
announces from time to time as its prime lending rate as in effect from time to
time. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Any Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate. The Prime Lending Rate shall change automatically and
without notice from time to time as and when the prime lending rate of the Agent
changes. "Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members or the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Lending Rate or the Federal Funds Effective
Rate shall be effective as of the opening of business on the effective day of
such change in the Prime Lending Rate or the Federal Funds Effective Rate,
respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder
Yield based on the ABR.
"ABR Loans" shall mean Loans the rate of interest applicable to
which is based upon the ABR.
"Acceleration" shall have the meaning given to such term in Section
6 of the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in
Section 5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Incorporated Terms" shall have the meaning given to such
term in Section 28.1 of the Lease.
"Adjusted Properties EBITDAR" means, for the Properties for any
period, earnings before interest, federal and state income taxes, depreciation,
amortization, rent, but after an imputed replacement reserve of $250 per year
per bed in each facility and a management fee equal to the greater of 5% for
gross revenues or the actual management fee paid to the Management Company.
"Advance" shall mean a Construction Advance or an Acquisition
Advance.
"Affiliate" shall mean, with respect to any Person, any Person or
group acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid by the recipient calculated at the then
maximum marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated on or
about the Initial Closing Date between the Construction Agent and the Lessor.
Appendix A-2
<PAGE> 101
"Agency Agreement Event of Default" shall mean an "Event of Default"
as defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean NationsBank, N.A. as agent for the Lenders
pursuant to the Credit Agreement, or any successor agent appointed in accordance
with the terms of the Credit Agreement and respecting the Security Documents,
for the Lenders and the Holders, to the extent of their interests.
"Allocated Portion of Annual Properties Debt Service", as used in
the definition of Requisite Stabilization Ratio", shall mean with respect to any
Property acquired on the Initial Closing Date, the Annual Properties Debt
Service multiplied by the percentage applicable for such Property as set forth
on Exhibit M hereto.
"Annual Properties Debt Service" means the annual principal and
interest payments (with the interest rate equal to 9%) required to amortize a
$47,000,000 loan over 25 years.
"Applicable Percentage" shall mean for Loans and Holder Advances,
the appropriate applicable percentages as set out below:
<TABLE>
<CAPTION>
Applicable Percentage
---------------------
Tranche A Loan Tranche B Loan Holder Advances
-------------- -------------- ---------------
Eurodollar ABR Eurodollar ABR Eurodollar ABR
Loans Loans Loans Loans Advances Advances
----- ----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Initial Pricing Level from the Initial Closing
Date 2.25% 1.25% 3.00% 2.00% 3.75% 2.75%
After achievement by SALI of Minimum Equity Value
provided in Sec. 8.3B.2(d) 2.10% 1.10% 2.85% 1.85% 3.60% 2.60%
After achievement by SALI of Minimum Equity Value
provided in Sec. 8.3B.2(d) and achievement of
the Requisite Stabilization Threshold 1.88% 0.88% 2.63% 1.63% 3.38% 2.38%
</TABLE>
The Applicable Percentage shall remain at the initial pricing level
until receipt by the Agent of notice of a circumstances warranting a change in
the pricing level and a certificate from a responsible officer of SALI in a form
satisfactory to the Agent certifying (i) attainment of the requisite levels
justifying a change in the pricing level hereunder and (ii) that no Default or
Event of Default then exists and is continuing. Any adjustment in the Applicable
Percentage shall be applicable to all existing Eurodollar Loans and Eurodollar
Holder Advances as well as any new Eurodollar Loans and Eurodollar Holder
Advances made or issued.
"Appraisal" shall mean, with respect to any Property, an appraisal
to be delivered in connection with the Participation Agreement or in accordance
with the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
"Appraisal Procedure" shall have the meaning given such term in
Section 22.4 of the Lease.
Appendix A-3
<PAGE> 102
"Approved State" shall mean each of the following: Ohio, Michigan,
Indiana, North Carolina and any other state within the continental United States
proposed by the Lessee and consented to in writing by the Agent.
"Appurtenant Rights" shall mean (a) all agreements, easements,
rights of way or use, rights of ingress or egress, privileges, appurtenances,
tenements, hereditaments and other rights and benefits at any time belonging or
pertaining to the Land underlying the Improvements or the Improvements,
including without limitation the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land and (b)
all permits, licenses and rights, whether or not of record, appurtenant to such
Land or the Improvements.
"Assignment and Acceptance" shall mean the Assignment and Acceptance
in the form attached to the Credit Agreement as Exhibit B.
"Available Commitment" shall mean, as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Commitment over (b) the aggregate principal amount of all Loans made by such
Lender as of such date after giving effect to Section 5.2(d) of the
Participation Agreement (but without giving effect to any other repayments or
prepayments of any Loans hereunder).
"Available Holder Commitments" shall mean an amount equal to the
excess, if any, of (a) the aggregate amount of the Holder Commitments over (b)
the aggregate amount of the Holder Advances made since the Initial Closing Date
after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Basic Documents" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b)
the Lessor Basic Rent, calculated as of the applicable date on which Basic Rent
is due.
"Basic Term" shall have the meaning specified in Section 2.2 of the
Lease.
"Basic Term Commencement Date" shall have the meaning specified in
Section 2.2 of the Lease.
"Basic Term Expiration Date" shall have the meaning specified in
Section 2.2 of the Lease.
"Benefitted Lender" shall have the meaning specified in Section
9.10(a) of the Credit Agreement.
"Bill of Sale" shall mean a Bill of Sale regarding Equipment in form
and substance satisfactory to the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual
capacity but as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans hereunder.
"Budgeted Total Property Cost" shall mean, at any date of
determination with respect to any Construction Period Property, an amount equal
to the aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
Appendix A-4
<PAGE> 103
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or any other
states from which the Agent, any Lender or any Holder funds or engages in
administrative activities with respect to the transactions under the Operative
Agreements are authorized or required by law to close; provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.
"Capitalized Lease" shall mean, as applied to any Person, any lease
of property (whether real, personal, tangible, intangible or mixed of such
Person) by such Person as the lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Capital Stock" shall mean any nonredeemable capital stock of any
Credit Party or any of its Subsidiaries, whether common or preferred.
"Casualty" means any act or occurrence of any kind or nature that
results in damage, loss or destruction to any Property.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section.9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of each Holder
regarding the Holder Commitment of such Holder issued pursuant to the terms and
conditions of the Trust Agreement in favor of each Holder.
"Charlotte Property" means the Property located in Charlotte, North
Carolina as more particularly described on Exhibit L hereto.
"Chattel Paper" shall have the meaning given to such term in Section
1 of the Security Agreement.
"Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses (including
without limitation reasonable attorney's fees and expenses) of any nature
whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 together with
rules and regulations promulgated thereunder, as amended from time to time, or
any successor statute thereto.
"Collateral" shall mean all assets of the Lessor, the Construction
Agent and the Lessee, now owned or hereafter acquired, upon which a Lien is
purported to be created by one or more of the Security Documents.
"Commitment" shall mean, as to any Lender, the obligation of such
Lender to make the portion of the Loans to the Lessor in an aggregate principal
amount at any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.1 of the Credit Agreement, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements.
"Commitment Percentage" shall mean, as to any Lender at any time,
the percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Loans then outstanding constitutes of the aggregate principal amount of all of
the Loans then outstanding), and such Commitment Percentage shall take into
account both the Lender's Tranche A Commitment and the Lender's Tranche B
Commitment.
"Commitment Period" shall mean the period from and including the
Initial Closing Date to and including the Construction Period Termination Date,
or such earlier date as the Commitments shall terminate as provided in the
Credit Agreement or the Holder Commitment shall terminate as provided in the
Trust Agreement.
Appendix A-5
<PAGE> 104
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with SALI within the meaning of
Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended and the
regulations promulgated or issued thereunder.
"Completion" shall mean, with respect to a Property, such time as
the acquisition, installation, testing and final completion of the Improvements
on such Property has been achieved in accordance with the Plans and
Specifications, the Agency Agreement and/or the Lease, and in compliance with
all Legal Requirements and Insurance Requirements and a certificate of occupancy
has been issued with respect to such Property by the appropriate governmental
entity (except if non-compliance, individually or in the aggregate, shall not
have and could not reasonably be expected to have a Material Adverse Effect). If
the Lessor purchases a Property that includes existing Improvements that are to
be immediately occupied by the Lessee without any improvements financed pursuant
to the Operative Agreements, the date of Completion for such Property shall be
the Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the
earlier of (a) the date on which Completion for such Property has occurred or
(b) the Construction Period Termination Date.
"Condemnation" shall mean, with respect to any Property or any
Residual Payment Collateral, any taking of title, of use, or of any other
property interest under the exercise of the power of eminent domain, whether
temporarily or permanently, by any Governmental Authority or by any Person
acting under Governmental Authority.
"Condemnation Awards" shall mean any and all judgments, awards of
damages (including, but not limited to, severance and consequential damages),
payments, proceeds, settlements, amounts paid for a taking in lieu of
Condemnation, or other compensation heretofore or hereafter made, including
interest thereon, and the right to receive the same, as a result of, or in
connection with, any Condemnation or threatened Condemnation.
"Consolidated Subsidiary" shall mean, as to any Person, any
Subsidiary of such Person which under the rules of GAAP consistently applied
should have its financial results consolidated with those of such Person for
purposes of financial accounting statements.
"Construction Advance" shall mean an advance of funds to pay
Property Costs pursuant to Section 5.4 of the Participation Agreement.
"Construction Agent" shall mean Sunrise Midwest Leasing, L.L.C., a
Virginia limited liability company, as the construction agent under the Agency
Agreement.
"Construction Agent Options" shall have the meaning given to such
term in Section 2.1 of the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition,
installation, testing, constructing and developing any Property as determined by
the Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to
Improvements, the date on which construction of such Improvements commences
pursuant to the Agency Agreement.
"Construction Contract" shall mean any contract entered into between
the Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement.
Appendix A-6
<PAGE> 105
"Construction Period" shall mean, with respect to a Property, the
period commencing on the Construction Commencement Date for such Property and
ending on the Completion Date for such Property.
"Construction Period Property" means, at any date of determination,
any Property as to which the Rent Commencement Date has not occurred on or prior
to such date.
"Construction Period Termination Date" shall mean (a) the earlier of
(i) the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as may be
agreed to by the Majority Secured Parties.
"Contractor" shall mean each entity with whom the Construction Agent
or the Lessee contracts to construct any Improvements or any portion thereof on
the Property.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2
of the Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated on or
about the Initial Closing Date, among the Lessor, the Agent and the Lenders, as
specified therein.
"Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or
condition defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the
Agency Agreement, the Credit Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the Lessee and
the Guarantor.
"Deed" shall mean a warranty deed regarding the Land and/or
Improvements in form and substance satisfactory to the Agent.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Holder" shall have the meaning given to such term in
Section 12.4 of the Participation Agreement.
"Defaulting Lender" shall have the meaning given to such term in
Section 12.4 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b)
of the Lease Agreement.
"Documents" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"EBITDAR" means, for any period, earnings before interest, federal
and state income taxes, depreciation, amortization, and rent.
Appendix A-7
<PAGE> 106
"Election Notice" shall have the meaning given to such term in
Section 20.1 of the Lease.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other Person approved by the Agent; provided, however,
that neither the Lessee nor an Affiliate of the Lessee shall qualify as an
Eligible Assignee.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit
plan (within the meaning of Section 3(3) of ERISA, including without limitation
any Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of the
Code and as interpreted by the Internal Revenue Service and the Department of
Labor in rules, regulations, releases or bulletins in effect on any Closing
Date.
"Environmental Claims" shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial, or private in nature) arising (a) pursuant to, or in
connection with, an actual or alleged violation of, any Environmental Law, (b)
in connection with any Hazardous Substance, (c) from any abatement, removal,
remedial, corrective, or other response action in connection with a Hazardous
Substance, Environmental Law, or other order of a Tribunal or (d) from any
actual or alleged damage, injury, threat, or harm to health, safety, natural
resources, or the environment.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires remediation under
any Environmental Law and is not remediated during any grace period allowed
under such Environmental Law) to violate or results in or threatens (if the
threat requires remediation under any Environmental Law and is not remediated
during any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings
and personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements,
including but without limiting the generality of the foregoing, all equipment
described in the Appraisal including without limitation all heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description.
"Equipment Schedule" shall mean (a) each Equipment Schedule attached
to the applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean each entity required to be aggregated
with any Credit Party pursuant to the requirements of Section 414(b) or (c) of
the Code.
"Eurocurrency Reserve Requirements" shall mean for any day as
applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal) of reserve requirements in effect on
Appendix A-8
<PAGE> 107
such day (including without limitation basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed on eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D) maintained by a member bank of the
Federal Reserve System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a
Holder Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable
to which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan or Eurodollar
Holder Advance comprising part of the same borrowing or advance (including
without limitation conversions, extensions and renewals), for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan or Eurodollar Holder Advance for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). As used herein,
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks) ("RMMRS"). In the event the RMMRS is not then quoting such
offered rates, "Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance comprising part of the same
borrowing or advance (including without limitation conversions, extensions and
renewals), the average (rounded upward to the nearest one sixteenth (1/16) of
one percent (1%)) per annum rate of interest determined by the office of the
Agent (each such determination to be conclusive and binding) as of two (2)
Business Days prior to the first day of such Interest Period, as the effective
rate at which deposits in immediately available funds in U.S. dollars are being,
have been, or would be offered or quoted by the Agent to major banks in the
applicable interbank market for Eurodollar deposits at any time during the
Business Day which is the second Business Day immediately preceding the first
day of such Interest Period, for a term comparable to such Interest Period and
in the amount of the requested Eurodollar Loan and/or Eurodollar Holder Advance.
If no such offers or quotes are generally available for such amount, then the
Agent shall be entitled to determine the Eurodollar Rate by estimating in its
reasonable judgment the per annum rate (as described above) that would be
applicable if such quote or offers were generally available.
"Event of Default" shall mean a Lease Event of Default, an Agency
Agreement Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation
indemnity payments made pursuant to Section 11 of the Participation
Agreement), whether made by adjustment to Basic Rent or otherwise,
to which the Owner Trustee, any Holder or any of their respective
Affiliates, agents, officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination
Value) payable under any Operative Agreement to reimburse the Owner
Trustee, any Holder or any of their respective Affiliates (including
without limitation the reasonable expenses of the Owner Trustee, the
Trust Company and the Holders incurred in connection with any such
payment) for performing or complying with any of the obligations of
any Credit Party under and as permitted by any Operative Agreement;
Appendix A-9
<PAGE> 108
(c) any amount payable to a Holder by any transferee of
such interest of a Holder as the purchase price of such Holder's
interest in the Trust Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to
risks self-insured or policy deductibles) under liability policies
other than such proceeds or payments payable to the Agent or any
Lender;
(e) any insurance proceeds under policies maintained by
the Owner Trustee or any Holder;
(f) Transaction Expenses or other amounts, fees,
disbursements or expenses paid or payable to or for the benefit of
the Owner Trustee or any Holder;
(g) all right, title and interest of any Holder or the
Owner Trustee to any Property or any portion thereof or any other
property to the extent any of the foregoing has been released from
the Liens of the Security Documents and the Lease pursuant to the
terms thereof;
(h) upon termination of the Credit Agreement pursuant to
the terms thereof, all remaining property covered by the Lease or
Security Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent
attributable to payments referred to in clauses (a) through (i)
above; and
(k) any rights of either the Owner Trustee or the Trust
Company to demand, collect, sue for or otherwise receive and enforce
payment of any of the foregoing amounts, provided that such rights
shall not include the right to terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the Termination Value paid by the Lessee pursuant
to the Lease with respect to such Casualty or Condemnation.
"Excluded Taxes" shall have the meaning given to such term in
Section 11.2(b) of the Participation Agreement.
"Exculpated Persons" shall mean the Trust Company (except with
respect to the representations and warranties and the other obligations of the
Trust Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to the
Trust Agreement), the Holders (except with respect to the obligations of the
Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their officers,
directors, shareholders and partners.
"Exempt Payments" shall have the meaning specified in Section
11.2(e) of the Participation Agreement.
"Expenses" shall mean all costs and expenses of any nature
whatsoever incurred at any time and from time to time (whether before or after
an Event of Default) by the Agent, the Lessor, the Holders or the Lenders in
exercising or enforcing any rights, powers and remedies provided in the Lease or
any of the other Operative Agreements, including, without limitation, attorney's
fees, court costs, receiver's fees, management fees and costs incurred in the
repair, maintenance and operation of, or taking possession of, or selling, of
any Property or any Residual Payment Collateral.
"Expiration Date" shall mean either (a) the Basic Term Expiration
Date or (b) the last day of the applicable Renewal Term; provided, in no event
shall the Expiration Date be later than the annual anniversary of the Initial
Appendix A-10
<PAGE> 109
Closing Date occurring in the year 2001, unless such later date has been
expressly agreed to in writing by each of the Lessor, the Lessee, the Agent, the
Lenders and the Holders.
"Facility" or "Facilities" means, individually or collectively, an
assisted living facility or independent living facility owned or operated by
SALI, a subsidiary or affiliate.
"Fair Market Sales Value" shall mean, with respect to any Property,
the amount, which in any event, shall not be less than zero (0), that would be
paid in cash in an arms-length transaction between an informed and willing
purchaser and an informed and willing seller, neither of whom is under any
compulsion to purchase or sell, respectively, such Property. Fair Market Sales
Value of any Property shall be determined based on the assumption that, except
for purposes of Section 17 of the Lease, such Property is in the condition and
state of repair required under Section 10.1 of the Lease and each Credit Party
is in compliance with the other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such
term in the definition of ABR.
"Financing Parties" shall mean the Lessor, the Owner Trustee, in its
trust capacity, the Agent, the Holders and the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements,
including without limitation all components thereof, located in or on the
Improvements, together with all replacements, modifications, alterations and
additions thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including without
limitation strikes or lockouts (but only when the Construction Agent is legally
prevented from securing replacement labor or materials as a result thereof),
adverse soil conditions, acts of God, adverse weather conditions, inability to
obtain labor or materials after all possible efforts have been expended by the
Construction Agent, governmental activities, civil commotion and enemy action;
but excluding any event, cause or condition that results from the Construction
Agent's financial condition.
"Funded Debt" means for SALI on a consolidated basis at any time the
sum at such time of (a) indebtedness for borrowed money or for the deferred
purchase price of property or services, (b) any obligations in respect of
letters of credit, banker's or other acceptances or similar obligations issued
or created for the account of the SALI, (c) lease obligations which have been or
should be, in accordance with GAAP, capitalized on the books of the SALI, (d)
all liabilities secured by any property owned by the SALI to the extent attached
to the SALI's interest in such property, even though the SALI has not assumed or
become liable for the payment thereof, and in the case of the SALI, (e) any
obligation of the SALI or a commonly controlled entity to a multi-employer Plan;
but excluding trade and other accounts payable in the ordinary course of
business in accordance with customer trade terms and which are not overdue (as
determined in accordance with customary trade practices) or which are being
disputed in good faith by the SALI and for which adequate reserves are being
provided on the books of the SALI in accordance with GAAP, (f) any synthetic
lease obligations, and (g) any other lease expenses for rented real property
will be accounted for as debt based on eight times annualized lease payments.
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the accounting principles board of the
American Institute of Certified Public Accountants, and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, that are applicable to the circumstances as of the
date of determination.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operating of the Property.
Appendix A-11
<PAGE> 110
"Governmental Authority or Authorities" shall mean 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.
"Ground Lease" shall mean a ground lease (in form and substance
satisfactory to the Agent) respecting any Property (a) owned by any Credit Party
(or a parent corporation or any Subsidiary of any Credit Party) and leased to
the Lessor where such lease has at least a ninety-nine (99) year term and
payments set at no more than $1.00 per year, or (b) where such lease is subject
to such other terms and conditions as are satisfactory to the Agent.
"Guaranteed Obligations" shall mean (a) the obligations of Sunrise
Midwest in any and all capacities (including without limitation in its capacity
as Lessee and as Construction Agent) under and with respect to the Operative
Agreements and each Property and (b) any and all amounts now or hereafter owing
with respect to the Tranche A Loans and the Tranche A Notes to the Lenders under
the Credit Agreement and the other Operative Agreements.
"Guarantor" shall mean Sunrise Assisted Living, Inc., its successors
and assigns, as guarantor of the Guaranteed Obligations.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract.
"Hazardous Substance" shall mean any of the following: (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or hazardous
to the environment or human health or safety as determined in accordance with
any Environmental Law; or (c) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"Holder Advance" shall mean any advance made by any Holder to the
Owner Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of
Holder Advances made by each Holder to the Trust Estate pursuant to Section 2 of
the Participation Agreement and Section 3.1 of the Trust Agreement less any
payments of any Holder Advances received by the Holders pursuant to Section 3.4
of the Trust Agreement.
"Holder Commitments" shall mean $1,410,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Holder, the
Holder Commitment of each Holder shall be as set forth in Schedule I to the
Trust Agreement as such Schedule I may be amended and replaced from time to
time.
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
the outstanding Holder Advances made with respect thereto under the Trust
Agreement.
"Holder Overdue Rate" shall mean the lesser of (a) the then current
rate of Holder Yield respecting the particular amount in question plus four
percent (4%) and (b) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property an
amount equal to the outstanding Holder Advances with respect thereto.
"Holder Yield" shall mean with respect to Holder Advances from time
to time either the Eurodollar Rate plus the Applicable Percentage or the ABR
plus the Applicable Percentage as elected by the Owner Trustee from
Appendix A-12
<PAGE> 111
time to time with respect to such Holder Advances in accordance with the terms
of the Trust Agreement; provided, however, (a) upon delivery of the notice
described in Section 3.7(c) of the Trust Agreement, the outstanding Holder
Advances of each Holder shall bear a yield at the ABR applicable from time to
time from and after the dates and during the periods specified in Section 3.7(c)
of the Trust Agreement, and (b) upon the delivery by a Holder of the notice
described in Section 11.3(f) of the Participation Agreement, the Holder Advances
of such Holder shall bear a yield at the ABR applicable from time to time after
the dates and during the periods specified in Section 11.3(f) of the
Participation Agreement.
"Holders" shall mean NationsBank, N.A. and shall include the other
banks and financial institutions which may be from time to time holders of
Certificates in connection with the Sunrise Trust 1998-1.
"Impositions" shall mean any and all liabilities, losses, expenses,
costs, charges and Liens of any kind whatsoever for fees, taxes, levies,
imposts, duties, charges, assessments or withholdings ("Taxes") including but
not limited to (i) real and personal property taxes, including without
limitation personal property taxes on any property covered by the Lease that is
classified by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii)
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes and
documentary recording taxes and fees; (v) taxes that are or are in the nature of
franchise, income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including without
limitation all assessments for public Improvements or benefits, whether or not
such improvements are commenced or completed within the Term; and (vii) taxes,
Liens, assessments or charges asserted, imposed or assessed by the PBGC or any
governmental authority succeeding to or performing functions similar to, the
PBGC; and in each case all interest, additions to tax and penalties thereon,
which at any time prior to, during or with respect to the Term or in respect of
any period for which the Lessee shall be obligated to pay Supplemental Rent, may
be levied, assessed or imposed by any Governmental Authority upon or with
respect to (a) any Property or any part thereof or interest therein; (b) the
leasing, financing, refinancing, demolition, construction, substitution,
subleasing, assignment, control, condition, occupancy, servicing, maintenance,
repair, ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, sale, transfer of title, return or other disposition of
such Property or any part thereof or interest therein; (c) the Notes, other
indebtedness with respect to any Property, or the Certificates, or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Property or any part thereof or interest therein; (e) the Operative
Agreements, the performance thereof, or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to any Property
or any part thereof or interest therein upon the sale or disposition thereof;
(g) any contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; (h) the issuance of the Notes or the Certificates; (i) the Owner
Trustee, the Trust or the Trust Estate; or (j) otherwise in connection with the
transactions contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction,
renovations and/or Modifications on any Land, all buildings, structures,
Fixtures, and other improvements of every kind existing at any time and from
time to time on or under the Land purchased or otherwise acquired using the
proceeds of the Loans or the Holder Advances or which is subject to a Ground
Lease, together with any and all appurtenances to such buildings, structures or
improvements, including without limitation sidewalks, utility pipes, conduits
and lines, parking areas and roadways, and including without limitation all
Modifications and other additions to or changes in the Improvements at any time,
including without limitation (a) any Improvements existing as of the Property
Closing Date as such Improvements may be referenced on the applicable
Requisition and (b) any Improvements made subsequent to such Property Closing
Date.
"Incorporated Representations and Warranties" shall have the meaning
given to such term in Section 28.1 of the Lease.
"Indebtedness" of a Person shall mean, without duplication, such
Person's:
(a) obligations for borrowed money;
Appendix A-13
<PAGE> 112
(b) obligations representing the deferred purchase price
of Property (whether real, personal, tangible, intangible or mixed)
or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the
trade);
(c) obligations, whether or not assumed, secured by
liens or payable out of the proceeds or production from property now
or hereafter owned or acquired by such Person;
(d) obligations which are evidenced by notes,
acceptances or other instruments;
(e) Capitalized Lease obligations;
(f) net liabilities under interest rate swap, exchange
or cap agreements; and
(g) contingent obligations.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in
its individual and its trust capacity, the Trust, the Trust Company, the Agent,
the Holders, the Lenders and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the
Lessee.
"Initial Closing Date" shall mean December 2, 1998.
"Initial Construction Advance" shall mean any initial Advance to pay
for: (a) Property Costs for construction of any Improvements; and (b) the
Property Costs of restoring or repairing any Property which is required to be
restored or repaired in accordance with Section 15.1(e) of the Lease.
"Instruments" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Interest Period" shall mean (a) during the Commitment Period and
thereafter as to any Eurodollar Loan or Eurodollar Holder Advance (i) with
respect to the initial Interest Period, the period beginning on the date of the
first Eurodollar Loan and Eurodollar Holder Advance and ending one (1) month,
two (2) months or three (3) months thereafter, as selected by the Lessor (in the
case of a Eurodollar Loan) or the Owner Trustee (in the case of a Eurodollar
Holder Advance) in its applicable notice given with respect thereto and (ii)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan or Eurodollar Holder Advance
and ending one (1) month, two (2) months or three (3) months thereafter, as
selected by the Lessor by irrevocable notice to the Agent (in the case of a
Eurodollar Loan) or by the Owner Trustee (in the case of a Eurodollar Holder
Advance) in each case not less than three (3) Business Days prior to the last
day of the then current Interest Period with respect thereto; provided, however,
that all of the foregoing provisions relating to Interest Periods are subject to
the following: (A) if any Interest Period would end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business Day falls in the
next succeeding calendar month, then on the next preceding Business Day), (B) no
Interest Period shall extend beyond the Maturity Date or the Expiration Date, as
the case may be, (C) where an Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall end on the last Business Day of
such calendar month, (D) there shall not be more than four (4) Interest Periods
outstanding at any one (1) time.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, together with the rules and regulations promulgated
thereunder.
Appendix A-14
<PAGE> 113
"Joinder Agreement" shall mean a joinder agreement, in the form of
Exhibit J to the Participation Agreement, executed from time to time between a
Domestic Subsidiary of any Credit Party and the Agent.
"Karrington" means Karrington Acquisition, Inc., an Ohio
corporation.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing Date
relating to such parcel and (b) the schedules to each applicable Lease
Supplement executed and delivered in accordance with the requirements of Section
2.4 of the Lease.
"Law" shall mean any statute, law, ordinance, regulation, rule,
directive, order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on
or about the Initial Closing Date, between the Lessor and the Lessee, together
with any Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the
lapse of time or the giving of notice, or both, would constitute a Lease Event
of Default.
"Lease Event of Default" shall have the meaning specified in Section
17.1 of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in
the form of Exhibit A to the Lease, together with all attachments and schedules
thereto.
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101 et. seq.,
and any other similar federal, state or local laws or ordinances and the
regulations promulgated thereunder) and any that may relate to environmental
requirements (including without limitation all Environmental Laws), and all
permits, certificates of occupancy, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments which are either of record or known to any Credit
Party affecting any Property or the Appurtenant Rights.
"Lender Commitments" shall mean $45,590,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Lender, the
Lender Commitment of each Lender shall be as set forth in Schedule 2.1 to the
Credit Agreement as such Schedule 2.1 may be amended and replaced from time to
time.
"Lender Financing Statements" shall mean UCC financing statements
and fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lender Tax" shall mean any present or future tax, levy, cost or
charge of any nature imposed by any Governmental Authority, excluding taxes on
or measured by the net income of any Financing Party imposed by any jurisdiction
in which the principal or relevant lending office of such Financing Party is
located.
"Lenders" shall mean NationsBank, N.A. and shall include the other
banks and financial institutions which may be from time to time party to the
Participation Agreement and the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessor" shall mean the Owner Trustee, not in its individual
capacity, but as the Lessor under the Lease.
Appendix A-15
<PAGE> 114
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the
Holder Advances on any Scheduled Interest Payment Date pursuant to the Trust
Agreement (but not including interest on (a) any such scheduled Holder Yield due
on the Holder Advances prior to the Rent Commencement Date with respect to the
Property to which such Holder Advances relate or (b) overdue amounts under the
Trust Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements
and fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Lessor or
the Trust Company, in its individual capacity, not resulting from the
transactions contemplated by the Operative Agreements, (b) any act or omission
of the Lessor or the Trust Company, in its individual capacity, which is not
required by the Operative Agreements or is in violation of any of the terms of
the Operative Agreements, (c) any claim against the Lessor or the Trust Company,
in its individual capacity, with respect to Taxes or Transaction Expenses
against which the Lessee is not required to indemnify the Lessor or the Trust
Company, in its individual capacity, pursuant to Section 11 of the Participation
Agreement or (d) any claim against the Lessor arising out of any transfer by the
Lessor of all or any portion of the interest of the Lessor in the Properties,
the Trust Estate or the Operative Agreements other than the transfer of title to
or possession of any Properties by the Lessor pursuant to and in accordance with
the Lease, the Credit Agreement, the Security Agreement or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Article XVII
of the Lease.
"Licenses" means any and all licenses, certificates of need,
operating permits, franchises, and other licenses, authorizations,
certifications, permits, or approvals, other than construction permits, issued
by, or on behalf of, any Governmental Authority now existing or at any time
hereafter issued, with respect to the acquisition, construction, renovation,
expansion, leasing, management, ownership and/or the participation or
eligibility for participation in any third party payment or reimbursement
programs to the extent SALI or its subsidiary or affiliate is participating in
such programs (but specifically excluding any and all
Reimbursement-Participation Agreements to the extent required by law), any and
all operating licenses issued by any state Governmental Authority, any and all
pharmaceutical licenses and other licenses related to the purchase, dispensing,
storage, prescription or use of drugs, medications, and other "controlled
substances," any and all licenses relating to the operation of food or beverage
facilities or amenities, if any, and any and all certifications and eligibility
for participation in Medicare, Medicaid, Blue Cross and/or Blue Shield, or any
of the Managed Care Plans, private insurer, employee assistance programs or
other third party payment or reimbursement programs as the same may from time to
time be amended, renewed, restated, reissued, restricted, supplemented or
otherwise modified.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, option or charge of any kind.
"Limited Recourse Amount" shall mean with respect to all the
Properties on an aggregate basis, an amount equal to the sum of the Termination
Values with respect to all the Properties on an aggregate basis on each Payment
Date, less the Maximum Residual Guarantee Amount as of such date with respect to
all the Properties on an aggregate basis.
"Liquid Assets" means cash, cash equivalents and readily marketable
securities.
"Loan Basic Rent" shall mean the scheduled interest due on the Loans
on any Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
with respect to the Property to which such Loan relates or (b) any overdue
amounts under Section 2.8(c) of the Credit Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at
any date of determination, an amount equal to (a) the aggregate principal amount
all Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
aggregate amount of prepayments or repayments as the case may be of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement.
Appendix A-16
<PAGE> 115
"Loans" shall mean the loans extended pursuant to the Credit
Agreement and shall include both the Tranche A Loans and the Tranche B Loans.
"Majority Holders" shall mean at any time, Holders whose Holder
Advances outstanding represent at least sixty-six and two thirds percent (66
2/3%) of (a) the aggregate Holder Advances outstanding or (b) to the extent
there are no Holder Advances outstanding, the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders whose Loans
outstanding represent at least sixty-six and two thirds percent (66 2/3%) of (a)
the aggregate Loans outstanding or (b) to the extent there are no Loans
outstanding, the aggregate of the Lender Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and
Holders whose Loans and Holder Advances outstanding represent at least sixty-six
and two thirds percent (66 2/3%) of (a) the aggregate Advances outstanding or
(b) to the extent there are no Advances outstanding, the sum of the aggregate
Holder Commitments plus the aggregate Lender Commitments.
"Managed Care Plans" shall mean any health maintenance organization,
preferred provider organization, individual practice association, competitive
medical plan, or similar arrangement, entity, organization, or Person.
"Management Agreement" shall mean any and all Management Agreements
entered into or to be entered into by and between SALI or any of its
Subsidiaries or affiliates and the Management Company relating to the management
of the Properties, as the same may from time to time be amended, restated and
supplemented or otherwise modified.
"Management Company" means SALMI, its successors and assigns and any
other Person which may become the manager of the Facilities.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice
in accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
"Master Guaranty of Payment" means that Amended and Restated Master
Guaranty of Payment Agreement dated as of December 23, 1997, as amended,
modified, supplemented, restated and/or replaced, given by SALI, as guarantor,
for the benefit of NationsBank, N.A., as agent for itself and other lenders
under a $250 million Amended and Restated Financing and Security Agreement dated
as of December 23, 1997 among Sunrise East Assisted Living Limited Partnership,
a Virginia limited partnership, as borrower, the lenders identified therein and
NationsBank, N.A., as Agent, as referenced therein.
"Master Guaranty of Payment Event of Default" shall mean an Event of
Default as defined in Section 1.7 of the Master Guaranty of Payment.
"Material Adverse Effect" shall mean (a) a significant adverse
change in a Person's financial position or capacity including but not limited to
significant adverse changes in (i) liquidity, (ii) gross revenues, (iii) total
expenses, (iv) such Person's net worth, or (v) ability to meet payment
obligations under such Person's Funded Debt, the obligations under the Operative
Agreements and/or contingent obligations, and (b) a material adverse effect on
(i) the validity or enforceability of any Operative Agreement or the rights and
remedies of the Agent, the Lenders, the Holders, or the Lessor thereunder, (ii)
the validity, priority or enforceability of any Lien on any Property created by
any of the Operative Agreements, or (iii) the value, utility or useful life of
any Property or the use, or ability of the Lessee to use, any Property for the
purpose for which it was intended.
"Material Sublease" means a Sublease that generates $15,000 per year
or more in revenue for a Property.
"Maturity Date" shall mean the Expiration Date.
Appendix A-17
<PAGE> 116
"Maximum Amount" shall mean (a) one hundred percent (100%) of the
cost of the Land or the Ground Lease (as the case may be) for all, but not less
than all, the Properties (collectively, the "Land Cost"), plus (b) the product
of eighty-nine and nine tenths percent (89.9%) multiplied by the following: (the
aggregate Termination Value for all, but not less than all, the Properties,
minus the Land Cost, minus all structuring fees payable in connection with the
transactions evidenced by the Operative Agreements to NationsBanc Montgomery
Securities LLC, NationsBank, N.A. and/or any Affiliates of either of the
foregoing, minus accrued, unpaid Holder Yield respecting any and all
Construction Period Properties) minus (c) the accreted value (calculated at a
rate of seven and forty-three hundreths percent (7.43%) per annum) of any
payments previously made by the Construction Agent or the Lessee regarding any
and all Construction Period Properties and not reimbursed.
"Maximum Residual Guarantee Amount" shall mean an amount equal to
the product of the aggregate Property Cost for all of Properties times
eighty-seven percent (87%).
"Modifications" shall have the meaning specified in Section 11.1(a)
of the Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any
other instrument executed by the Owner Trustee and the Lessee (or regarding any
Property subject to a Ground Lease, the applicable Affiliate of the Lessee) in
favor of the Agent (for the benefit of the Lenders and the Holders) and
evidencing a Lien on the Property, in form and substance reasonably acceptable
to the Agent.
"Multiemployer Plan" shall mean any plan described in Section
4001(a)(3) of ERISA to which contributions are or have been made or required by
any Credit Party or any of its Subsidiaries or ERISA Affiliates.
"Multiple Employer Plan" shall mean a plan to which any Credit Party
or any ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.
"Net Proceeds", when used with respect to any Condemnation Awards or
insurance proceeds allocable to the Properties, shall mean the gross proceeds
from any Casualty or Condemnation remaining after payment of all expenses
(including attorneys' fees) incurred in the collection of such gross proceeds.
"New Facility" shall have the meaning given to such term in Section
28.1 of the Lease.
"NOI" means, for the Properties or the Residual Payment Collateral,
as appropriate, for any period, the total operating revenue less total operating
expenses (excluding interest, federal and state income taxes, depreciation and
amortization) but after an imputed replacement reserve of $250 per year per bed
in each facility), and including a management fee to the Management Company of
the higher of five percent (5%) of gross revenues or the actual management fee
for the period in question as shown in financial information provided by the
SALI.
"Non-Integral Equipment" shall mean Equipment which (a) is personal
property that is readily removable without causing material damage to the
applicable Property and (b) is not integral or necessary, respecting the
applicable Property, for compliance with Section 8.3 of the Lease or otherwise
to the structure thereof, the mechanical operation thereof, the electrical
systems thereof or otherwise with respect to any aspect of the physical plant
thereof.
"Notes" shall mean those notes issued to the Lenders pursuant to the
Credit Agreement and shall include both the Tranche A Notes and the Tranche B
Notes.
"Obligations" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Officer's Certificate" with respect to any person shall mean a
certificate executed on behalf of such person by a Responsible Officer who has
made or caused to be made such examination or investigation as is necessary to
enable such Responsible Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.
Appendix A-18
<PAGE> 117
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), each Sublease, the Security Agreement, the Mortgage Instruments, the
other Security Documents, the Ground Leases, the Deeds and the Bills of Sale and
any and all other agreements, documents and instruments executed in connection
with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such
term in Section 5 of Exhibit A to the Lease.
"Overdue Interest" shall mean any interest payable pursuant to
Section 2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent,
and any other amount owed under or with respect to the Credit Agreement or the
Security Documents, the rate specified in Section 2.8(b) of the Credit
Agreement, (b) with respect to the Lessor Basic Rent, the Holder Yield and any
other amount owed under or with respect to the Trust Agreement, the Holder
Overdue Rate, and (c) with respect to any other amount, the amount referred to
in clause (y) of Section 2.8(b) of the Credit Agreement.
"Owner Trustee," "Borrower" or "Lessor" shall mean First Security
Bank, National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the Sunrise
Trust 1998-1, and any successor, replacement and/or additional Owner Trustee
expressly permitted under the Operative Agreements.
"Participant" shall have the meaning given to such term in Section
9.7 of the Credit Agreement.
"Participation Agreement" shall mean the Participation Agreement
dated on or about the Initial Closing Date, among the Lessee, the Guarantors,
the Owner Trustee, not in its individual capacity except as expressly stated
therein, the Holders, the Lenders and the Agent.
"Payment Date" shall mean any Scheduled Interest Payment Date and
any date on which interest or Holder Yield in connection with a prepayment of
principal on the Loans or of the Holder Advances is due under the Credit
Agreement or the Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created
by Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined
in section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Facility" shall mean each of the properties identified on
Exhibit L hereto, plus any other property approved by the Lenders and the
Holders in their sole discretion which is of a type and size customarily used
and operated by the Lessee in its ordinary course of business as of the Initial
Closing Date.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties
to the Operative Agreements as provided in the Operative Agreements;
(b) the rights of any sublessee or assignee under a
sublease or an assignment expressly permitted by the terms of the
Lease for no longer than the duration of the Lease;
Appendix A-19
<PAGE> 118
(c) Liens for Taxes that either are not yet due or are
being contested in accordance with the provisions of Section 13.1 of
the Lease;
(d) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens relating to the construction of
the Improvements or in connection with any Modifications or arising
in the ordinary course of business for amounts that either are not
more than thirty (30) days past due or are being diligently
contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 13.1 of the Lease;
(e) Liens of any of the types referred to in clause (d)
above that have been bonded for not less than the full amount in
dispute (or as to which other security arrangements satisfactory to
the Lessor and the Agent have been made), which bonding (or
arrangements) shall comply with applicable Legal Requirements, and
shall have effectively stayed any execution or enforcement of such
Liens;
(f) Liens arising out of judgments or awards with
respect to which appeals or other proceedings for review are being
prosecuted in good faith and for the payment of which adequate
reserves have been provided as required by GAAP or other appropriate
provisions have been made, so long as such proceedings have the
effect of staying the execution of such judgments or awards and
satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease; and
(g) Liens in favor of municipalities to the extent
agreed to by the Lessor.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, governmental authority or any other entity.
"Plan" shall mean a Pension Plan.
"Plans and Specifications" shall mean, with respect to Improvements,
the plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Prime Lending Rate" shall have the meaning given to such term in
the definition of ABR.
"Property" shall mean, with respect to each Permitted Facility that
is (or is to be) acquired, constructed and/or renovated pursuant to the terms of
the Operative Agreements, the Land and each item of Equipment and the various
Improvements, in each case located on such Land, including without limitation
each Construction Period Property, each Property subject to a Ground Lease and
each Property for which the Basic Term has commenced.
"Property Acquisition Cost" shall mean the cost to the Lessor to
purchase a Property on a Property Closing Date.
"Property Closing Date" shall mean the date on which the Lessor
purchases a Property or, with respect to the first Advance, the date on which
the Lessor seeks reimbursement for Property previously purchased by the Lessor
(it being understood and agreed that the Property Closing Date for the
Properties identified on Exhibit L hereto shall be the Initial Closing Date).
"Property Cost" shall mean with respect to a Property the aggregate
amount (and/or the various items and occurrences giving rise to such amounts) of
the Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
and 7.1(b) and indemnity payments pursuant to Section 11.8, in each case of the
Participation Agreement).
"Purchase Option" shall have the meaning given to such term in
Section 20.1 of the Lease.
Appendix A-20
<PAGE> 119
"Purchasing Lender" shall have the meaning given to such term in
Section 9.8(a) of the Credit Agreement.
"Register" shall have the meaning given to such term in Section
9.9(a) of the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Reimbursement-Participation Agreement" means any and all third
party payor participation or reimbursement agreements now or at any time
hereafter existing for the benefit of SALI or its subsidiaries or affiliates
relating to rights to payment or reimbursement from, and claims against, private
insurers, Managed Care Plans, material employee assistance programs, Blue Cross
and/or Blue Shield, federal, sate and local Governmental Authorities, including
without limitation, Medicare and Medicaid, and other third party payors, as the
same may be from time to time be amended, restated, extended, supplemented or
modified.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date (it being understood and agreed that the Rent Commencement Date
for each of the Properties identified on Exhibit L shall be the Initial Closing
Date).
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee or
the Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requisite Stabilization Threshold" shall have been achieved if
either
(i) with respect to each of the six (6) Properties
identified on Exhibit L hereto, (A) each such Property shall have
achieved a Resident Occupancy Rate of at least 85% for at least two
(2) consecutive fiscal quarters, and (B) the ratio of the NOI for
each such Property to the Allocated Portion of the Annual Properties
Debt Service for such Property shall be not less than 1.25:1.0 as of
the end of at least two (2) consecutive fiscal quarters; or
(ii) (A) at least five (5) of the Properties identified
on Exhibit L hereto shall have achieved a Resident Occupancy Rate of
at least 85% for at least two (2) consecutive fiscal quarters, (B)
the ratio of NOI to the Allocated Portion of the Annual Properties
Debt Service for each of five of the six Properties shall be not
less than 1.25:1.0, (C) the ratio of NOI to the Allocated Portion of
the Annual Properties Debt Service for each Property shall be not
less than 1.0:1.0, and (D) the combined ratio of NOI for all six of
the Properties to the Annual Properties Debt Service shall be not
less than 1.35:1.0.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Resident Agreement" means any and all contracts, authorizations,
agreements and/or consents executed by, or on behalf of any resident or other
person seeking services from Karrington or any Karrington subsidiary or SALI or
any SALI subsidiary pursuant to which Karrington or any Karrington subsidiary or
SALI or any SALI subsidiary provides or furnishes health or assisted living care
and related services at any and all of the assisted living facilities, including
the consent to treatment, assignment of payment of benefits by third party, as
the same may from time to time be amended, restated, supplemented or modified.
Appendix A-21
<PAGE> 120
"Resident Occupancy Rate" means a percentage derived by dividing (i)
the number of residents who are in occupancy at an assisted living facility and
paying fees pursuant to a Resident Agreement by (ii) the pro forma resident
occupancy for such assisted living facility as contained in the annual pro forma
operating budget of such assisted living facility to be reviewed by the Agent.
"Residual Payment Collateral" means those properties, in addition to
the Properties, pledged to secure the Loans and obligations hereunder. Exhibit N
sets out the properties comprising the Residual Payment Collateral as of the
Initial Closing Date. The foregoing schedule will be updated periodically to
reflect the addition or substitution of properties comprising the Residual
Payment Collateral.
"Responsible Officer" shall mean the Chairman or Vice Chairman of
the Board of Directors, the Chairman or Vice Chairman of the Executive Committee
of the Board of Directors, the President, any Senior Vice President or Executive
Vice President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Sale Date" shall have the meaning given to such term in Section
22.1(a) of the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection
with the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section
20.1 of the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the
proceeds of a sale described in Section 22.1 of the Lease are less than the
Limited Recourse Amount with respect to the Properties if it has been determined
that the Fair Market Sales Value of the Properties at the expiration of the term
of the Lease has been impaired by greater than ordinary wear and tear during the
Term of the Lease.
"SALI" means Sunrise Assisted Living, Inc., a Delaware corporation,
its successors and permitted assigns.
"SALMI" means Sunrise Assisted Living Management, Inc., a Virginia
corporation, formerly known as Sunrise Terrace, Inc.
"Scheduled Interest Payment Date" shall mean (a) as to any
Eurodollar Loan or Eurodollar Holder Advance, the last day of the Interest
Period applicable to such Eurodollar Loan or Eurodollar Holder Advance, (b) as
to any ABR Loan or any ABR Holder Advance, the fifteenth day of each month,
unless such day is not a Business Day and in such case on the next occurring
Business Day and (c) as to all Loans and Holder Advances, the date of any
voluntary or involuntary payment, prepayment, return or redemption, and the
Maturity Date or the Expiration Date, as the case may be.
"Secured Parties" shall have the meaning given to such term in the
Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or
about the Initial Closing Date between the Lessor and the Agent, for the benefit
of the Secured Parties, and accepted and agreed to by the Lessee.
"Security Documents" shall mean the collective reference to the
Security Agreement, the Mortgage Instruments, (to the extent the Lease is
construed as a security instrument) the Lease, the UCC Financing Statements and
all other security documents hereafter delivered to the Agent granting a lien on
any asset or assets of any Person
Appendix A-22
<PAGE> 121
to secure the obligations and liabilities of the Lessor under the Credit
Agreement and/or under any of the other Credit Documents or to secure any
guarantee of any such obligations and liabilities.
"Soft Costs" shall mean all costs which are ordinarily and
reasonably incurred in relation to the acquisition, development, installation,
construction, improvement and testing of the Properties other than Hard Costs,
including without limitation structuring fees, administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations, title
insurance, document recordation, surveys, environmental site assessments,
geotechnical soil investigations and similar costs and professional fees
customarily associated with a real estate closing, the Lender Unused Fee, the
Holder Unused Fee, fees and expenses of the Owner Trustee payable or
reimbursable under the Operative Agreements and costs and expenses incurred
pursuant to Sections 7.3(a) and 7.3(b) of the Participation Agreement.
"Sublease" shall have the meaning given to such term in Section
17.1(q) of the Lease.
"Sublease Default" shall have the meaning given to such term in
Section 17.1(q) of the Lease.
"Subsidiary" shall mean, as to any Person, any corporation of which
at least a majority of the outstanding stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person, or by
one (1) or more Subsidiaries, or by such Person and one (1) or more
Subsidiaries.
"Sunrise Midwest" shall mean Sunrise Midwest Leasing, L.L.C., a
Virginia corporation, and its successors and permitted assigns.
"Sunrise Trust 1998-1" shall mean the grantor trust created pursuant
to the terms and conditions of the Trust Agreement.
"Supplemental Amounts" shall have the meaning given to such term in
Section 9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Basic Rent) which the Lessee assumes or agrees to pay to
the Lessor, the Trust Company, the Holders, the Agent, the Lenders or any other
Person under the Lease or under any of the other Operative Agreements including
without limitation payments of the Termination Value and the Maximum Residual
Guarantee Amount and all indemnification amounts, liabilities and obligations.
"Tangible Net Worth" means, at any time, the sum at such time of Net
Worth (as defined by GAAP) less the total of (i) all assets which would be
classified as intangible assets under GAAP, including goodwill (except for the
minority interest in the Park Ridge, Ill. property and except for deferred taxes
recorded as goodwill), trademarks, trademark applications, trade names, service
marks, patent applications and licenses, and deferred charges, (ii) any
revaluation or other write-up in book value of assets subsequent to the date of
the most recent financial statements delivered to the Agent, (iii) the amount of
all loans and advances to, or investments in, any person of entity, excluding
cash equivalents and deposit accounts maintained by SALI with any financial
institution, (iv) advances or loans made to or receivables from any
unconsolidated affiliates (excluding subordinated debt of unconsolidated
subsidiaries and affiliates of SALI) of which SALI owns less than fifty percent
(50%) or any stockholder of SALI or any affiliate and (v) the amount of all
loans and advances to, or investments in, any person or entity, excluding loans
to Karrington and its affiliates, cash equivalents and deposit accounts
maintained by SALI with any financial institutions, certain mortgage revenue
bonds issued by the Bucks County, Pennsylvania Industrial Development Authority
and investments of less than $2,500,000 individually (not to exceed $10,000,000
in the aggregate).
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall mean the Basic Term and each Renewal Term, if any.
Appendix A-23
<PAGE> 122
"Termination Date" shall have the meaning specified in Section
16.2(a) of the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan,
the occurrence of a Reportable Event or an event described in Section 4062(e) of
ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan, (c) the distribution of a notice of intent to
terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A
of ERISA, (d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section
16.1 of the Lease.
"Termination Value" shall mean the sum of (a) either (i) with
respect to all Properties, an amount equal to the aggregate outstanding Property
Cost for all the Properties, in each case as of the last occurring Payment Date,
or (ii) with respect to a particular Property, an amount equal to the Property
Cost allocable to such Property (as identified on Exhibit M hereto with respect
to the Properties acquired on the Initial Closing Date), plus (b) respecting the
amounts described in each of the foregoing subclause (i) or (ii), as applicable,
any and all accrued but unpaid interest on the Loans and any and all Holder
Yield on the Holder Advances related to the applicable Property Cost, plus (c)
to the extent the same is not duplicative of the amounts payable under clause
(b) above, all other Rent and other amounts then due and payable or accrued
under the Agency Agreement, Lease and/or under any other Operative Agreement
(including without limitation amounts under Sections 11.1 and 11.2 of the
Participation Agreement and all costs and expenses referred to in clause FIRST
of Section 22.2 of the Lease).
"Tranche A Commitments" shall mean the obligation of the Tranche A
Lenders to make the Tranche A Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche A Lender's name on Schedule 2.1 to the
Credit Agreement, as such amount may be increased or reduced from time to time
in accordance with the provisions of the Operative Agreements; provided, no
Tranche A Lender shall be obligated to make Tranche A Loans in excess of such
Tranche A Lender's share of the Tranche A Commitments as set forth adjacent to
such Tranche A Lender's name on Schedule 2.1 to Credit Agreement.
"Tranche A Lenders" shall mean NationsBank, N.A. and shall include
the several banks and other financial institutions from time to time party to
the Credit Agreement that commit to make the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche
A Commitment.
"Tranche A Note" shall have the meaning given to it in Section 2.2
of the Credit Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B
Lenders to make the Tranche B Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche B Lender's name on Schedule 2.1 to the
Credit Agreement, as such amount may be increased or reduced from time to time
in accordance with the provisions of the Operative Agreements; provided, no
Tranche B Lender shall be obligated to make Tranche B Loans in excess of such
Tranche B Lender's share of the Tranche B Commitments as set forth adjacent to
such Tranche B Lender's name on Schedule 2.1 to Credit Agreement.
"Tranche B Lenders" shall mean NationsBank, N.A. and shall include
the several banks and other financial institutions from time to time party to
the Credit Agreement that commit to make the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitment.
"Tranche B Note" shall have the meaning given to it in Section 2.2
of the Credit Agreement.
Appendix A-24
<PAGE> 123
"Transaction Expenses" shall mean all Soft Costs and all other costs
and expenses incurred in connection with the preparation, execution and delivery
of the Operative Agreements and the transactions contemplated by the Operative
Agreements including without limitation all costs and expenses described in
Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative
Agreements and the other transaction documents, preparing for the
closings under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Agreements;
(b) the reasonable fees, out-of-pocket expenses and
disbursements of accountants for any Credit Party in connection with
the transaction contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other
amounts payable to the Lenders, the Agent, the Holders, the Owner
Trustee or any broker which arises under any of the Operative
Agreements;
(d) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any
of the other transaction documents; and
(e) any and all Taxes and fees incurred in recording or
filing any Operative Agreement or any other transaction document,
any deed, declaration, mortgage, security agreement, notice or
financing statement with any public office, registry or governmental
agency in connection with the transactions contemplated by the
Operative Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Trust" shall mean the Sunrise Trust 1998-1.
"Trust Agreement" shall mean the Trust Agreement dated on or about
the Initial Closing Date between the Holders and the Owner Trustee.
"Trust Company" shall mean First Security Bank, National
Association, in its individual capacity, and any successor owner trustee under
the Trust Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of
the Trust Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender
Financing Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section
12.4 of the Participation Agreement.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of
the Agency Agreement.
"Unfunded Liability" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Company or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.
"Uniform Commercial Code" and "UCC" shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
Appendix A-25
<PAGE> 124
"United States Bankruptcy Code" shall mean Title 11 of the United
States Code.
"U.S. Person" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"U.S. Taxes" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Wholly-Owned Entity" shall mean a Person all of the shares of
capital stock or other ownership interest of which are owned by Sunrise Assisted
Living, Inc. and/or one of its wholly-owned Subsidiaries or other wholly-owned
entities.
"Withholdings" shall have the meaning specified in Section 11.2(e)
of the Participation Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
"Year 2000 Compliant" shall have the meaning specified in Section
6.2(w) of the Participation Agreement.
"Year 2000 Problem" shall mean the risk that computer applications
used by any Credit Party, any Subsidiary of any Credit Party or any supplier,
vendor or customer of any Credit Party or any Subsidiary of any Credit Party may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999.
Appendix A-26
<PAGE> 1
- --------------------------------------------------------------------------------
SECURITY AGREEMENT
Dated as of December 2, 1998
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner Trustee under
the Sunrise Trust 1998-1
and
NATIONSBANK, N.A.,
as the Agent for the Lenders and the Holders
and accepted and agreed to by
SUNRISE MIDWEST LEASING, L.L.C.
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. Definitions..........................................................................................2
2. Grant of Security Interest...........................................................................3
3. Payment of Obligations...............................................................................5
4. Other Covenants......................................................................................6
5. Default; Remedies....................................................................................6
6. Remedies Not Exclusive...............................................................................7
7. Performance by the Agent of the Borrower's Obligations...............................................7
8. Duty of the Agent....................................................................................7
9. Powers Coupled with an Interest......................................................................8
10. Execution of Financing Statements....................................................................8
11. Security Agreement Under Uniform Commercial Code.....................................................8
12. Authority of the Agent...............................................................................9
13. Notices..............................................................................................9
14. Severability.........................................................................................9
15. Amendment in Writing; No Waivers; Cumulative Remedies................................................9
16. Section Headings....................................................................................10
17. Successors and Assigns..............................................................................10
18. The Borrower's Waiver of Rights.....................................................................10
19. GOVERNING LAW.......................................................................................11
20. Obligations Are Without Recourse....................................................................11
21. Partial Release; Full Release.......................................................................11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
22. Miscellaneous.......................................................................................11
23. Conflicts with Participation Agreement..............................................................12
24. LESSEE AS A PARTY...................................................................................12
</TABLE>
<PAGE> 4
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December 2, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Security Agreement"), is made between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not individually, but solely as
Owner Trustee under the Sunrise Trust 1998-1 (the "Borrower"), and NATIONSBANK,
N.A., a national banking association ("Bank"), as agent for (a) the Lenders
(hereinafter defined) under the Credit Agreement dated as of December 2, 1998
(as amended, modified, extended, supplemented, restated and/or replaced from
time to time, the "Credit Agreement") by and among the Borrower, the lending
institutions from time to time parties thereto (the "Lenders") and Bank as the
agent for the Lenders and (b) the holders of the certificates issued pursuant to
the Trust Agreement dated as of December 2, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, the "Trust
Agreement") among the holders from time to time parties thereto (the "Holders")
and the Borrower, in its individual capacity thereunder and in its capacity as
Owner Trustee thereunder. The Lenders and the Holders, together with their
successors and permitted assigns, are collectively referred to hereinafter as
the "Secured Parties." Bank, in its capacity as agent for the Secured Parties is
referred to hereinafter as the "Agent", and this Security Agreement is accepted
and agreed to by SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited liability
company.
Preliminary Statement
Pursuant to the Credit Agreement, the Lenders have severally agreed to
make Loans to the Borrower in an aggregate amount not to exceed $45,590,000 upon
the terms and subject to the conditions set forth therein, to be evidenced by
the Notes issued by the Borrower under the Credit Agreement. Pursuant to the
Trust Agreement, the Holders have agreed to purchase the ownership interests of
the Trust created thereby in an aggregate amount not to exceed $1,410,000 upon
the terms and subject to the conditions set forth therein, to be evidenced by
the Certificates issued by the Borrower under the Trust Agreement. The Borrower
is, or shall be upon the date of the initial Advance with respect to each
Property, the legal and beneficial owner of such Property (except the Borrower
may have a ground leasehold interest in certain Properties pursuant to one (1)
or more Ground Leases).
It is a condition, among others, to the obligation of the Lenders to
make their respective Loans to the Borrower under the Credit Agreement and the
Holders to make their respective Holder Advances under the Trust Agreement that
the Borrower shall have executed and delivered this Security Agreement to the
Agent, for the benefit of the Lenders and the Holders.
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make their respective Loans under the Credit Agreement and to induce
the Holders to make their respective Holder Advances under the Trust Agreement,
the Borrower hereby agrees with the Agent, for the benefit of the Lenders and
the Holders, as follows:
<PAGE> 5
1. DEFINITIONS.
(a) As used herein, the following terms shall have the
following respective meanings:
"Accounts" shall mean all "accounts," as such term is defined
in the Uniform Commercial Code, now owned or hereafter acquired by the
Borrower, including without limitation (i) all accounts receivable,
other receivables, book debts and other forms of obligations now owned
or hereafter received or acquired by or belonging or owing to the
Borrower, whether arising out of goods sold or leased or services
rendered by it or from any other transaction (including without
limitation any such obligations which may be characterized as an
account under the Uniform Commercial Code), (ii) all of the Borrower's
rights in, to and under all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, (iii) all of the
Borrower's rights to any goods represented by any of the foregoing
(including without limitation unpaid sellers' rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), (iv) all monies due or to become due
to the Borrower under all purchase orders and contracts for the sale or
lease of goods or the performance of services or both by the Borrower
(whether or not yet earned by performance on the part of the Borrower)
now or hereafter in existence, including without limitation the right
to receive the proceeds of said purchase orders and contracts, and (v)
all collateral security and guarantees of any kind, now or hereafter in
existence, given by any Person with respect to any of the foregoing.
"Chattel Paper" shall mean any and all "chattel paper," as
such term is defined in the Uniform Commercial Code, now owned or
hereafter acquired by the Borrower, wherever located.
"Documents" shall mean any and all "documents", as such term
is defined in the Uniform Commercial Code, now owned or hereafter
acquired by the Borrower, wherever located, including without
limitation each bill of lading, dock warrant, dock receipt, warehouse
receipt or order for the delivery of goods, and also any other document
which in the regular course of business or financing is treated as
adequately evidencing that the person in possession of it is entitled
to receive, hold and dispose of the document and the goods it covers.
"General Intangibles" shall mean any and all "general
intangibles," as such term is defined in the Uniform Commercial Code,
now owned or hereafter acquired by the Borrower, including without
limitation all contracts, undertakings, or agreements in or under which
the Borrower may now or hereafter have any right (other than any right
evidenced by Chattel Paper, Documents or Instruments), title or
interest, including without limitation any agreements relating to the
terms of payment or the terms of performance of any Account.
"Holders" shall have the meaning specified in the first
paragraph of this Security Agreement.
2
<PAGE> 6
"Instruments" shall mean any and all "instruments", as such
term is defined in the Uniform Commercial Code, now owned or hereafter
acquired by the Borrower, wherever located, including without
limitation all certificated securities, all certificates of deposit,
and all notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group of
writings that constitute, Chattel Paper.
"Investment Property" shall mean any and all "investment
property," as such term is defined in the Uniform Commercial Code, now
owned or hereafter acquired by the Borrower, wherever located.
"Lenders" shall have the meaning specified in the first
paragraph of this Security Agreement.
"Lessee" shall mean Sunrise Midwest Leasing, L.L.C., a
Virginia limited liability company, its successors, permitted assigns
and permitted transferees.
"Obligations" shall mean any and all obligations now existing
or hereafter arising under the Credit Agreement, the Notes, the Trust
Agreement, the Certificates and/or any other Operative Agreement.
(b) Capitalized terms used but not otherwise defined in this
Security Agreement shall have the respective meanings specified in the
Credit Agreement or Appendix A to the Participation Agreement dated as
of December 2, 1998 (as amended, modified, extended, supplemented,
restated and/or replaced from time to time in accordance with the
applicable provisions thereof, the "Participation Agreement") among
Lessee, Sunrise Assisted Living, Inc., as guarantor, the Borrower, the
Holders, the Lenders and the Bank, as agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the
Holders, to the extent of their interests.
(c) The rules of usage set forth in Appendix A to the
Participation Agreement shall apply to this Agreement.
2. GRANT OF SECURITY INTEREST.
To secure payment of all the amounts advanced under the Credit
Agreement in connection with the Notes, all the amounts advanced or contributed
under the Trust Agreement in connection with the Certificates and all other
amounts now or hereafter owing to the Lenders, the Holders or the Agent
thereunder or under any other Operative Agreement, THE BORROWER HEREBY CONVEYS,
GRANTS, ASSIGNS, TRANSFERS, HYPOTHECATES, MORTGAGES AND SETS OVER TO THE AGENT
FOR THE BENEFIT OF THE SECURED PARTIES, A FIRST PRIORITY SECURITY INTEREST IN
AND LIEN ON THE TRUST ESTATE, WHETHER NOW EXISTING OR HEREAFTER ACQUIRED
INCLUDING WITHOUT LIMITATION THE FOLLOWING:
3
<PAGE> 7
(a) all right, title and interest of the Borrower in and to
the Operative Agreements now existing or hereafter acquired by the
Borrower (including without limitation all rights to payment and
indemnity rights of the Borrower under the Participation Agreement)
(all of the foregoing in this paragraph (a) being referred to as the
"Rights in Operative Agreements");
(b) all right, title and interest of the Borrower in and to
all of the Equipment;
(c) all right, title and interest of the Borrower in and to
all of the Fixtures;
(d) all the estate, right, title, claim or demand whatsoever
of the Borrower, in possession or expectancy, in and to each Property,
Fixture or Equipment or any part thereof;
(e) all right, title and interest of the Borrower in and to
all substitutes, modifications and replacements of, and all additions,
accessions and improvements to, the Fixtures and Equipment,
subsequently acquired or leased by the Borrower or constructed,
assembled or placed by the Borrower on any Property, immediately upon
such acquisition, lease, construction, assembling or placement, and in
each such case, without any further conveyance, assignment or other act
by the Borrower;
(f) all right, title and interest of the Borrower in, to and
under books and records relating to or used in connection with the
operation of one (1) or more Properties or any part thereof; all rights
of the Borrower to the payment of money and all property; and all
rights in and to any causes of action or choses in action now or
hereafter existing in favor of the Borrower and all rights to any
recoveries therefrom;
(g) all right, title and interest of the Borrower in and to
all unearned premiums under insurance policies now held or subsequently
obtained by the Lessee relating to one (1) or more Properties and the
Borrower's interest in and to all proceeds of any insurance policies
maintained by or for the benefit of the Borrower, including without
limitation any right to collect and receive such proceeds; and all
awards and other compensation, including without limitation the
interest payable thereon and any right to collect and receive the same,
made to the present or any subsequent owner of any Property for the
taking by eminent domain, condemnation or otherwise, of all or any part
of any Property or any easement or other right therein;
(h) all right, title and interest of the Borrower in and to
(i) all consents, licenses, certificates and other governmental
approvals relating to construction,
4
<PAGE> 8
completion, use or operation of any Property or any part thereof and
(ii) all Plans and Specifications relating to any Property;
(i) all right, title and interest of the Borrower in and to
all Rent and all other rents, payments, purchase prices, receipts,
revenues, issues and profits payable under the Lease or pursuant to any
other lease with respect to any Property;
(j) all right, title and interest of the Borrower in and to
all Instruments and Documents;
(k) all right, title and interest of the Borrower in and to
all General Intangibles;
(l) all right, title and interest of the Borrower in and to
all Chattel Paper (including without limitation all rights under the
Lease) and each Ground Lease;
(m) all right, title and interest of the Borrower in and to
all money, cash or cash equivalent and bank accounts;
(n) all right, title and interest of the Borrower in and to
all Accounts;
(o) all right, title and interest of the Borrower in and to
all proceeds of letters of credit issued in favor of the Borrower in
connection with any Property; and
(p) all right, title and interest of the Borrower in and to
all proceeds, both cash and noncash, of any of the foregoing.
(All of the foregoing property and rights and interests now owned or
held or subsequently acquired by the Borrower and described in the foregoing
clauses (a) through (p) are collectively referred to as the "Trust Property").
TO HAVE AND TO HOLD the Trust Property and the rights and privileges
hereby granted unto the Agent (for the benefit of the Lenders and the Holders)
its successors and assigns for the uses and purposes set forth, until all of the
obligations owing to the Lenders, the Holders or the Agent under the Operative
Agreements are paid in full; provided, that EXCLUDED from the Trust Property at
all times and in all respects shall be all Excepted Payments.
3. PAYMENT OF OBLIGATIONS.
The Borrower shall pay all Obligations in accordance with the terms of
the Credit Agreement, the Notes, the Trust Agreement, the Certificates and the
other Operative Agreements
5
<PAGE> 9
and perform each term to be performed by it under the Credit Agreement, the
Notes, the Trust Agreement, the Certificates and the other Operative Agreements.
4. OTHER COVENANTS.
At any time and from time to time, upon the written request of the
Agent, and at the expense of the Borrower (with funds provided by the Lessee for
such purpose), the Borrower will promptly and duly execute and deliver such
further instruments and documents and take such further actions as the Agent
reasonably may request for the purposes of obtaining or preserving the full
benefits of this Security Agreement and of the rights and powers granted by this
Security Agreement.
5. DEFAULT; REMEDIES.
(a) If a Credit Agreement Event of Default has occurred and is
continuing:
(i) the Agent, in addition to all other remedies
available at law or in equity, shall have the right forthwith
to enter upon any Property (or any other place where any
component of any Property is located at such time) without
charge, and take possession of all or any portion of the Trust
Property, and to re-let the Trust Property and receive the
rents, issues and profits thereof, to make repairs and to
apply said rentals and profits, after payment of all necessary
or proper charges and expenses, on account of the amounts
hereby secured (subject to the Excepted Payments); and
(ii) the Agent, shall, as a matter of right, be
entitled to the appointment of a receiver for the Trust
Property, and the Borrower hereby consents to such appointment
and waives notice of any application therefor.
(b) If a Credit Agreement Event of Default has occurred and is
continuing, the Agent may proceed by an action at law, suit in equity
or other appropriate proceeding, to protect and enforce its rights,
whether for the foreclosure of the Lien of this Security Agreement, or
for the specific performance of any agreement contained herein or for
an injunction against the violation of any of the terms hereof. The
proceeds of any sale of any of the Trust Property shall be applied
pursuant to Section 8.7 of the Participation Agreement. In addition,
the Agent may proceed under Section 11 hereof.
(c) The Borrower hereby waives the benefit of all
appraisement, valuation, stay, extension and redemption laws now or
hereafter in force and all rights of marshalling in the event of any
sale of the Trust Property or any portion thereof or interest therein.
6
<PAGE> 10
6. REMEDIES NOT EXCLUSIVE.
The Agent shall be entitled to enforce payment of the indebtedness and
performance of the Obligations and to exercise all rights and powers under this
Security Agreement or under any of the other Operative Agreements or other
agreements or any laws now or hereafter in force, notwithstanding some or all of
the Obligations may now or hereafter be otherwise secured, whether by deed of
trust, mortgage, security agreement, pledge, Lien, assignment or otherwise.
Neither the acceptance of this Security Agreement nor its enforcement, shall
prejudice or in any manner affect the Agent's right to realize upon or enforce
any other security now or hereafter held by the Agent, it being agreed that the
Agent shall be entitled to enforce this Security Agreement and any other
security now or hereafter held by the Agent in such order and manner as the
Agent may determine in its absolute discretion. No remedy conferred hereunder or
under any other Operative Agreement upon or reserved to the Agent is intended to
be exclusive of any other remedy herein or therein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or thereunder or now or hereafter existing at law or in
equity or by statute. Every power or remedy given by any of the Operative
Agreements to the Agent or to which it may otherwise be entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by the Agent. In no event shall the Agent, in the exercise
of the remedies provided in this Security Agreement (including without
limitation in connection with the assignment of Rents to the Agent, or the
appointment of a receiver and the entry of such receiver onto all or any part of
the Land), be deemed a "mortgagee in possession" or a "pledgee in possession",
and the Agent shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.
7. PERFORMANCE BY THE AGENT OF THE BORROWER'S OBLIGATIONS.
If the Borrower fails to perform or comply with any of its agreements
contained herein the Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement. The expenses of the Agent incurred in connection with actions
undertaken as provided in this Section 7, together with interest thereon at a
rate per annum equal to the Overdue Rate, from the date of payment by the Agent
to the date reimbursed by the Borrower, shall be payable by the Borrower (with
funds provided by the Lessee for such purpose) to the Agent on demand and
constitutes part of the Obligations secured hereby.
8. DUTY OF THE AGENT.
The Agent's sole duty with respect to the custody, safekeeping and
physical preservation of any Trust Property in its possession, under Section
9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in
the same manner as the Agent deals with similar property for its own account.
Neither the Agent, any Lender, any Holder nor any of their respective directors,
officers, employees, shareholders, partners or agents shall be liable for
failure to demand, collect or realize upon any of the Trust Property or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Trust Property upon the request of the Borrower or
7
<PAGE> 11
any other Person or to take any other action whatsoever with regard to the Trust
Property or any part thereof.
9. POWERS COUPLED WITH AN INTEREST.
All powers, authorizations and agencies contained in this Security
Agreement are coupled with an interest and are irrevocable until this Security
Agreement is terminated and the Liens created hereby are released.
10. EXECUTION OF FINANCING STATEMENTS.
Pursuant to Section 9-402 of the Uniform Commercial Code, the Borrower
authorizes the Agent at the expense of the Borrower (such amounts to be paid
with funds provided by the Lessee for such purpose) to file financing statements
with respect to the Trust Property under this Security Agreement without the
signature of the Borrower in such form and in such filing offices as the Agent
reasonably determines appropriate to perfect the security interests of the Agent
under this Security Agreement. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement for filing
in any jurisdiction. For purposes of such financing statement, the Borrower
shall be deemed to be the debtor, and the Agent shall be deemed to be the
secured party. The address of the Borrower is 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Val T. Orton, Vice President, and the address of
the Agent is NationsBank, N.A., 10 Light Street, MD4-302-20-05, Baltimore,
Maryland 21202-1499, Attention: Leslie Zuga.
11. SECURITY AGREEMENT UNDER UNIFORM COMMERCIAL CODE.
(a) It is the intention of the parties hereto that this
Security Agreement as it relates to matters of the grant, perfection
and priority of security interests the subject hereof, shall constitute
a security agreement within the meaning of the Uniform Commercial Code
of the States in which the Trust Property is located. If a Credit
Agreement Event of Default shall occur, then in addition to having any
other right or remedy available at law or in equity, the Agent may
proceed under the applicable Uniform Commercial Code and exercise such
rights and remedies as may be provided to a secured party by such
Uniform Commercial Code with respect to all or any portion of the Trust
Property which is personal property (including without limitation
taking possession of and selling such property). If the Agent shall
elect to proceed under the Uniform Commercial Code, then fifteen (15)
days' notice of sale of the personal property shall be deemed
reasonable notice and the reasonable expenses of retaking, holding,
preparing for sale, selling and the like incurred by the Agent shall
include, but not be limited to, attorneys' fees and legal expenses. At
the Agent's request, the Borrower shall assemble such personal property
and make it available to the Agent at a place designated by the Agent
which is reasonably convenient to both parties.
(b) The Borrower, upon request by the Agent from time to time,
shall execute, acknowledge and deliver to the Agent one (1) or more
separate security agreements, in
8
<PAGE> 12
form satisfactory to the Agent, covering all or any part of the Trust
Property and will further execute, acknowledge and deliver, or cause to
be executed, acknowledged and delivered, any financing statement,
affidavit, continuation statement or certificate or other document as
the Agent may request in order to perfect, preserve, maintain, continue
or extend the security interest under, and the priority of the Liens
granted by, this Security Agreement and such security instrument. The
Borrower further agrees to pay to the Agent (with funds provided by the
Lessee for such purpose) on demand all costs and expenses incurred by
the Agent in connection with the preparation, execution, recording,
filing and re-filing of any such document and all reasonable costs and
expenses of any record searches for financing statements the Agent
shall reasonably require. The filing of any financing or continuation
statements in the records relating to personal property or chattels
shall not be construed as in any way impairing the right of the Agent
to proceed against any property encumbered by this Security Agreement.
12. AUTHORITY OF THE AGENT.
The Borrower acknowledges that the rights and responsibilities of the
Agent under this Security Agreement with respect to any action taken by the
Agent or the exercise or non-exercise by the Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall be governed by the Credit Agreement
and Section 8.6 of the Participation Agreement and by such other agreements with
respect thereto as may exist from time to time (until such time as all amounts
due and owing to the Secured Parties and the Agent under the Operative
Agreements have been paid in full), but the Agent shall be conclusively presumed
to be acting as agent for the Secured Parties with full and valid authority so
to act or refrain from acting, and the Borrower shall be under no obligation, or
entitlement, to make any inquiry respecting such authority.
13. NOTICES.
All notices required or permitted to be given under this Security
Agreement shall be in writing and delivered as provided in Section 12.2 of the
Participation Agreement.
14. SEVERABILITY.
Any provision of this Security Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
15. AMENDMENT IN WRITING; NO WAIVERS; CUMULATIVE REMEDIES.
(a) None of the terms or provisions of this Security Agreement
may be waived, amended, supplemented or otherwise modified except in
accordance with the terms of Section 12.4 of the Participation
Agreement.
9
<PAGE> 13
(b) No failure to exercise, nor any delay in exercising, on
the part of the Agent, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent of any right or remedy hereunder on
any one (1) occasion shall not be construed as a bar to any right or
remedy which the Agent would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
16. SECTION HEADINGS.
The section headings used in this Security Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
17. SUCCESSORS AND ASSIGNS.
This Security Agreement shall be binding upon the successors of the
Borrower, and the Borrower shall not assign any of its rights or obligations
hereunder or with respect to any of the Trust Property without the prior written
consent of the Agent. This Security Agreement shall inure to the benefit of the
Agent, the Lenders, the Holders and their respective successors and assigns, in
accordance with their respective interest herein.
18. THE BORROWER'S WAIVER OF RIGHTS.
Except as otherwise set forth herein, to the fullest extent permitted
by law, the Borrower waives the benefit of all laws now existing or that may
subsequently be enacted providing for (a) any appraisement before sale of any
portion of the Trust Property, (b) any extension of the time for the enforcement
of the collection of the indebtedness or the creation or extension of a period
of redemption from any sale made in collecting such debt and (c) exemption of
any portion of the Trust Property from attachment, levy or sale under execution
or exemption from civil process. Except as otherwise set forth herein, to the
fullest extent the Borrower may do so, the Borrower agrees that the Borrower
will not at any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any appraisement, valuation,
stay, exemption, extension or redemption, or requiring foreclosure of this
Security Agreement before exercising any other remedy granted hereunder and the
Borrower, for the Borrower and its successors and assigns, and for any and all
Persons ever claiming any interest in the Trust Property, to the extent
permitted by law, hereby waives and releases all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of the Obligations and marshalling in the event of
foreclosure of the Liens hereby created.
10
<PAGE> 14
19. GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 11(a) HEREOF, THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF VIRGINIA.
20. OBLIGATIONS ARE WITHOUT RECOURSE.
The provisions of the Participation Agreement relating to limitations
on liability are hereby incorporated by reference herein, Mutatis Mutandis.
21. PARTIAL RELEASE; FULL RELEASE.
The Agent may release for such consideration as it may require any
portion of the Trust Property without (as to the remainder of the Trust
Property) in any way impairing or affecting the Lien, security interest and
priority herein provided for the Agent compared to any other Lien holder or
secured party. Further, the Agent shall execute and deliver to the Borrower such
documents and instruments as may be required to release the Lien and security
interest created by this Security Agreement with respect to the Properties as
provided in Section 8.8 of the Participation Agreement or to grant the easements
and permit the other matters provided for in Section 8.5 of the Participation
Agreement.
22. MISCELLANEOUS.
(a) This Security Agreement is one (1) of the documents which
create Liens and security interests that secure payment and performance
of the Obligations. The Agent, at its election, may commence or
consolidate in a single action all proceedings to realize upon all such
Liens and security interests. The Borrower hereby waives (i) any
objections to the commencement or continuation of an action to
foreclose the Lien of this Security Agreement or exercise of any other
remedies hereunder based on any action being prosecuted or any judgment
entered with respect to the Obligations or any Liens or security
interests that secure payment and performance of the Obligations and
(ii) any objections to the commencement of, continuation of, or entry
of a judgment in any such other action based on any action or judgment
connected to this Security Agreement. In case of a foreclosure sale,
the Trust Property may be sold, at the Agent's election, in one (1)
parcel or in more than one (1) parcel and the Agent is specifically
empowered (without being required to do so, and in its sole and
absolute discretion) to cause successive sales of portions of the Trust
Property to be held.
(b) This Security Agreement may not be amended, waived,
discharged or terminated except in accordance with Section 12.4 of the
Participation Agreement. Upon the prior written consent of the Majority
Secured Parties and unless such matter is a Unanimous Vote Matter, the
Agent may release any portion of the Trust Property or any other
security, and grant such extensions and indulgences in relation to the
Obligations
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<PAGE> 15
secured hereby without in any manner affecting the priority of the Lien
hereof on any part of the Trust Property.
(c) THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
23. CONFLICTS WITH PARTICIPATION AGREEMENT.
Notwithstanding any other provision hereof, in the event of any
conflict between the terms of this Security Agreement and the Participation
Agreement, the terms of the Participation Agreement shall govern.
24. LESSEE AS A PARTY.
LESSEE HAS EXECUTED THIS SECURITY AGREEMENT FOR THE PURPOSE OF
SUBJECTING TO THE SECURITY INTERESTS GRANTED HEREUNDER ALL OF ITS RIGHT, TITLE,
ESTATE AND INTEREST, IF ANY, IN AND TO THE TRUST PROPERTY TO SECURE ALL
OBLIGATIONS OF ALL CREDIT PARTIES UNDER THE OPERATIVE AGREEMENTS. ACCORDINGLY,
LESSEE HEREBY GRANTS TO THE AGENT (FOR THE BENEFIT OF THE LENDERS AND THE
HOLDERS) A SECURITY INTEREST IN AND TO ALL OF ITS RIGHT, TITLE, ESTATE AND
INTEREST, IF ANY, IN AND TO THE TRUST PROPERTY (TO THE EXTENT LESSEE HAS ANY
RIGHT, TITLE OR INTEREST THEREIN AND WITHOUT REGARD TO ANY LANGUAGE IN SECTION 2
OR THE DEFINITION OF "TRUST PROPERTY' OR ANY DEFINITION OF ANY ITEM CONSTITUTING
THE TRUST PROPERTY WHICH OTHERWISE WOULD LIMIT THE TRUST PROPERTY TO THE RIGHT,
TITLE AND INTEREST OF THE BORROWER THEREIN) TO SECURE ALL OBLIGATIONS OF ALL
CREDIT PARTIES UNDER THE OPERATIVE AGREEMENTS. LESSEE ACKNOWLEDGES AND AGREES
THAT, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE AGENT SHALL HAVE THE RIGHT
TO EXERCISE ANY OR ALL OF ITS REMEDIES HEREUNDER AS AGAINST ANY SUCH RIGHT,
TITLE, ESTATE OR INTEREST OF LESSEE IN OR TO THE TRUST PROPERTY.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 16
IN WITNESS WHEREOF, each of the undersigned have caused the Security
Agreement to be duly executed and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
By: /s/ VAL T. ORTON
----------------------------------------
Name: Val T. Orton
--------------------------------------
Title: Vice President
-------------------------------------
NATIONSBANK, N.A., as the Agent for the
Lenders and the Holders
By: /s/ LESLIE M. ZUGA
----------------------------------------
Name: Leslie M. Zuga
--------------------------------------
Title: Senior Vice President
-------------------------------------
Accepted and Agreed to:
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living, Inc.,
as Sole Member
By: /s/ JAMES S. POPE
----------------------------------------
Name: James S. Pope
--------------------------------------
Title: Senior Vice President
-------------------------------------
<PAGE> 1
- --------------------------------------------------------------------------------
LEASE AGREEMENT
Dated as of December 2, 1998
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as the Owner Trustee
under the Sunrise Trust 1998-1,
as Lessor
and
SUNRISE MIDWEST LEASING, L.L.C.,
as Lessee
- --------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of NationsBank,
N.A., as the agent for the Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent of their interests (the
"Agent") under a Security Agreement dated as of December 2, 1998, between First
Security Bank, National Association, not individually, but solely as the Owner
Trustee under the Sunrise Trust 1998-1 and the Agent, as amended, modified,
extended, supplemented, restated and/or replaced from time to time in accordance
with the applicable provisions thereof. This Lease Agreement has been executed
in several counterparts. To the extent, if any, that this Lease Agreement
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease Agreement may be created through the transfer or possession of any
counterpart other than the original counterpart containing the receipt therefor
executed by the Agent on the signature page hereof.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I.........................................................................................................1
1.1 Definitions..........................................................................................1
1.2 Interpretation.......................................................................................2
ARTICLE II........................................................................................................2
2.1 Property.............................................................................................2
2.2 Lease Term...........................................................................................2
2.3 Title................................................................................................2
2.4 Lease Supplements....................................................................................2
ARTICLE III.......................................................................................................3
3.1 Rent.................................................................................................3
3.2 Payment of Basic Rent................................................................................3
3.3 Supplemental Rent....................................................................................3
3.4 Performance on a Non-Business Day....................................................................4
3.5 Rent Payment Provisions..............................................................................4
ARTICLE IV........................................................................................................4
4.1 Taxes; Utility Charges...............................................................................4
ARTICLE V.........................................................................................................5
5.1 Quiet Enjoyment......................................................................................5
ARTICLE VI........................................................................................................5
6.1 Net Lease............................................................................................5
6.2 No Termination or Abatement..........................................................................6
ARTICLE VII.......................................................................................................6
7.1 Ownership of the Properties..........................................................................6
ARTICLE VIII......................................................................................................7
8.1 Condition of the Properties..........................................................................7
8.2 Possession and Use of the Properties.................................................................8
8.3 Integrated Properties................................................................................9
ARTICLE IX........................................................................................................9
9.1 Compliance With Legal Requirements, Insurance Requirements and Manufacturer's
Specifications and Standards.........................................................................9
ARTICLE X........................................................................................................10
10.1 Maintenance and Repair; Return.....................................................................10
10.2 Environmental Inspection...........................................................................11
</TABLE>
<PAGE> 3
<TABLE>
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ARTICLE XI.......................................................................................................12
11.1 Modifications......................................................................................12
ARTICLE XII......................................................................................................12
12.1 Warranty of Title..................................................................................12
ARTICLE XIII.....................................................................................................13
13.1 Permitted Contests Other Than in Respect of Indemnities............................................13
13.2 Impositions, Utility Charges, Other Matters; Compliance with Legal Requirements....................14
ARTICLE XIV......................................................................................................14
14.1 Insurance..........................................................................................14
15.1 Environmental Matters..............................................................................21
15.2 Notice of Environmental Matters....................................................................22
ARTICLE XVI......................................................................................................22
16.1 Termination Upon Certain Events....................................................................22
16.2 Procedures.........................................................................................22
ARTICLE XVII.....................................................................................................23
17.1 Lease Events of Default............................................................................23
17.2 Surrender of Possession............................................................................26
17.3 Reletting..........................................................................................26
17.4 Damages............................................................................................27
17.5 Power of Sale......................................................................................27
17.6 Final Liquidated Damages...........................................................................27
17.7 Environmental Costs................................................................................28
17.8 Waiver of Certain Rights...........................................................................28
17.9 Assignment of Rights Under Contracts...............................................................29
17.10 Remedies Cumulative...............................................................................29
ARTICLE XVIII....................................................................................................29
18.1 Lessor's Right to Cure Lessee's Lease Defaults.....................................................29
ARTICLE XIX......................................................................................................29
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option....................................29
19.2 No Purchase or Termination With Respect to Less than All of a Property.............................30
ARTICLE XX.......................................................................................................30
20.1 Purchase Option or Sale Option-General Provisions..................................................30
20.2 Lessee Purchase Option.............................................................................30
20.3 Third Party Sale Option............................................................................31
ARTICLE XXI......................................................................................................32
21.1 [Intentionally Omitted]............................................................................32
</TABLE>
<PAGE> 4
<TABLE>
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ARTICLE XXII.....................................................................................................32
22.1 Sale Procedure.....................................................................................32
22.2 Application of Proceeds of Sale....................................................................35
22.3 Indemnity for Excessive Wear.......................................................................35
22.4 Appraisal Procedure................................................................................36
22.5 Certain Obligations Continue.......................................................................36
ARTICLE XXIII....................................................................................................36
23.1 Holding Over.......................................................................................36
ARTICLE XXIV.....................................................................................................37
24.1 Risk of Loss.......................................................................................37
ARTICLE XXV......................................................................................................37
25.1 Assignment.........................................................................................37
25.2 Subleases..........................................................................................38
ARTICLE XXVI.....................................................................................................38
26.1 No Waiver..........................................................................................38
ARTICLE XXVII....................................................................................................38
27.1 Acceptance of Surrender............................................................................38
27.2 No Merger of Title.................................................................................39
ARTICLE XXVIII...................................................................................................39
28.1 Incorporation of Covenants.........................................................................39
ARTICLE XXIX.....................................................................................................40
29.1 Notices............................................................................................40
ARTICLE XXX......................................................................................................40
30.1 Miscellaneous......................................................................................40
30.2 Amendments and Modifications.......................................................................40
30.3 Successors and Assigns.............................................................................40
30.4 Headings and Table of Contents.....................................................................40
30.5 Counterparts.......................................................................................40
30.6 GOVERNING LAW......................................................................................41
30.7 Calculation of Rent................................................................................41
30.8 Memoranda of Lease and Lease Supplements...........................................................41
30.9 Allocations between the Lenders and the Holders....................................................41
30.10 Limitations on Recourse...........................................................................41
30.11 WAIVERS OF JURY TRIAL.............................................................................42
30.12 Exercise of Lessor Rights.........................................................................42
30.13 SUBMISSION TO JURISDICTION; VENUE.................................................................42
30.14 USURY SAVINGS PROVISION...........................................................................42
</TABLE>
<PAGE> 5
EXHIBITS
EXHIBIT A - Lease Supplement No. ____
EXHIBIT B - Memorandum of Lease and Lease Supplement No. ____
<PAGE> 6
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of December 2, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Lease") is between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, having its principal office at 79 South Main Street, Salt
Lake City, Utah 84111, not individually, but solely as the Owner Trustee under
the Sunrise Trust 1998-1 as lessor (the "Lessor"), and SUNRISE MIDWEST LEASING,
L.L.C., a Virginia limited liability company, having its principal place of
business at 9401 Lee Highway, Suite 300, Fairfax, Virginia 22031, as lessee (the
"Lessee").
W I T N E S S E T H:
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and the Agency Agreement, Lessor will (i) purchase or ground lease
various parcels of real property, some of which will (or may) have existing
Improvements thereon, from one (1) or more third parties designated by Lessee
and (ii) fund the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties by the Construction Agent; and
B. WHEREAS, the Basic Term shall commence with respect to each Property
upon the Property Closing Date with respect thereto; provided, Basic Rent with
respect thereto shall not be payable until the applicable Rent Commencement
Date; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to
lease from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 DEFINITIONS.
For purposes of this Lease, capitalized terms used in this
Lease and not otherwise defined herein shall have the meanings assigned to them
in Appendix A to that certain Participation Agreement dated as of December 2,
1998 (as amended, modified, extended, supplemented, restated and/or replaced
from time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among Lessee, Sunrise Assisted Living, Inc., as the
Guarantor, Lessor, the various banks and other lending institutions which are
parties thereto from time to time, as the Holders, the various banks and other
lending institutions which are parties thereto from time to time, as the
Lenders, and NationsBank, N.A., as agent for the
<PAGE> 7
Lenders and respecting the Security Documents, as the agent for the Lenders and
the Holders, to the extent of their interests. Unless otherwise indicated,
references in this Lease to articles, sections, paragraphs, clauses, appendices,
schedules and exhibits are to the same contained in this Lease.
1.2 INTERPRETATION.
The rules of usage set forth in Appendix A to the
Participation Agreement shall apply to this Lease.
ARTICLE II
2.1 PROPERTY.
Subject to the terms and conditions hereinafter set forth and
contained in the respective Lease Supplement relating to each Property, Lessor
hereby leases to Lessee and Lessee hereby leases from Lessor, each Property.
2.2 LEASE TERM.
The basic term of this Lease with respect to each Property
(the "Basic Term") shall begin upon the Property Closing Date for such Property
(in each case the "Basic Term Commencement Date") and shall end on the third
annual anniversary of the Initial Closing Date (the "Basic Term Expiration Date"
or "Expiration Date"), unless the Basic Term is earlier terminated or the term
of this Lease is renewed (as described below) in accordance with the provisions
of this Lease. Notwithstanding the foregoing, Lessee shall not be obligated to
pay Basic Rent until the Rent Commencement Date with respect to such Property.
2.3 TITLE.
Each Property is leased to Lessee without any representation
or warranty, express or implied, by Lessor and subject to the rights of parties
in possession (if any), the existing state of title (including without
limitation the Permitted Liens) and all applicable Legal Requirements. Lessee
shall in no event have any recourse against Lessor for any defect in Lessor's
title to any Property or any interest of Lessee therein other than for Lessor
Liens.
2.4 LEASE SUPPLEMENTS.
On or prior to each Basic Term Commencement Date, Lessee and
Lessor shall each execute and deliver a Lease Supplement for the Property to be
leased effective as of such Basic Term Commencement Date in substantially the
form of Exhibit A hereto.
<PAGE> 8
ARTICLE III
3.1 RENT.
(a) Lessee shall pay Basic Rent in arrears on each Payment
Date, and on any date on which this Lease shall terminate with respect
to any or all Properties during the Term; provided, however, with
respect to each individual Property Lessee shall have no obligation to
pay Basic Rent with respect to such Property until the Rent
Commencement Date with respect to such Property (notwithstanding that
Basic Rent for such Property shall accrue from and including the
Scheduled Interest Payment Date immediately preceding such Rent
Commencement Date).
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid on the due date therefor (or within the
applicable grace period) to such account or accounts at such bank or
banks as Lessor shall from time to time direct.
(c) Lessee's inability or failure to take possession of all or
any portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of Lessor, the Construction Agent,
Lessee or any other Person or for any other reason whatsoever, shall
not delay or otherwise affect Lessee's obligation to pay Rent for such
Property in accordance with the terms of this Lease.
(d) Lessee shall make all payments of Rent prior to 12:00
Noon, Charlotte, North Carolina time, on the applicable date for
payment of such amount.
3.2 PAYMENT OF BASIC RENT.
Basic Rent shall be paid absolutely net to Lessor or its
designee, so that this Lease shall yield to Lessor the full amount thereof,
without setoff, deduction or reduction.
3.3 SUPPLEMENTAL RENT.
Lessee shall pay to the Person entitled thereto any and all
Supplemental Rent when and as the same shall become due and payable, and if
Lessee fails to pay any Supplemental Rent within three (3) days after the same
is due, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity or otherwise in the case of nonpayment of Basic Rent. All such
payments of Supplemental Rent shall be in the full amount thereof, without
setoff, deduction or reduction. Lessee shall pay to the appropriate Person, as
Supplemental Rent due and owing to such Person, among other things, on demand,
(a) any and all payment obligations (except for amounts payable as Basic Rent)
owing from time to time under the Operative Agreements by any Person to the
Agent, any Lender, any Holder or any other Person, (b) interest at the
applicable Overdue Rate on any installment of Basic Rent not paid when due
(subject to the applicable grace period) for the period for which the same shall
be overdue and on any payment of Supplemental Rent not paid when due or demanded
by the appropriate Person (subject to any applicable grace period) for the
period from the due date or the date of any such
<PAGE> 9
demand, as the case may be, until the same shall be paid and (c) amounts
referenced as Supplemental Rent obligations pursuant to Section 8.3 of the
Participation Agreement. It shall be an additional Supplemental Rent obligation
of Lessee to pay to the appropriate Person all rent and other amounts when such
become due and owing from time to time under each Ground Lease and without the
necessity of any notice from Lessor with regard thereto. The expiration or other
termination of Lessee's obligations to pay Basic Rent hereunder shall not limit
or modify the obligations of Lessee with respect to Supplemental Rent. Unless
expressly provided otherwise in this Lease, in the event of any failure on the
part of Lessee to pay and discharge any Supplemental Rent as and when due,
Lessee shall also promptly pay and discharge any fine, penalty, interest or cost
which may be assessed or added for nonpayment or late payment of such
Supplemental Rent, all of which shall also constitute Supplemental Rent.
3.4 PERFORMANCE ON A NON-BUSINESS DAY.
If any Basic Rent is required hereunder on a day that is not a
Business Day, then such Basic Rent shall be due on the corresponding Scheduled
Interest Payment Date. If any Supplemental Rent is required hereunder on a day
that is not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
3.5 RENT PAYMENT PROVISIONS.
Lessee shall make payment of all Basic Rent and Supplemental
Rent when due (subject to the applicable grace periods) regardless of whether
any of the Operative Agreements pursuant to which same is calculated and is
owing shall have been rejected, avoided or disavowed in any bankruptcy or
insolvency proceeding involving any of the parties to any of the Operative
Agreements. Such provisions of such Operative Agreements and their related
definitions are incorporated herein by reference and shall survive any
termination, amendment or rejection of any such Operative Agreements.
ARTICLE IV
4.1 TAXES; UTILITY CHARGES.
Lessee shall pay or cause to be paid all Impositions with
respect to the Properties and/or the use, occupancy, operation, repair, access,
maintenance or operation thereof and all charges for electricity, power, gas,
oil, water, telephone, sanitary sewer service and all other rents, utilities and
operating expenses of any kind or type used in or on any Property and related
real property during the Term. Upon Lessor's request, Lessee shall provide from
time to time Lessor with evidence of all such payments referenced in the
foregoing sentence. Lessee shall be entitled to receive any credit or refund
with respect to any Imposition or utility charge paid by Lessee. Unless an Event
of Default shall have occurred and be continuing, the amount of any credit or
refund received by Lessor on account of any Imposition or utility charge paid by
Lessee, net of the costs and expenses incurred by Lessor in obtaining such
credit or refund, shall be promptly paid over to Lessee. All charges for
Impositions or utilities imposed with respect to
<PAGE> 10
any Property for a period during which this Lease expires or terminates shall be
adjusted and prorated on a daily basis between Lessor and Lessee, and each party
shall pay or reimburse the other for such party's pro rata share thereof.
ARTICLE V
5.1 QUIET ENJOYMENT.
Subject to the rights of Lessor contained in Sections 17.2,
17.3 and 20.3 and the other terms of this Lease and the other Operative
Agreements and so long as no Event of Default shall have occurred and be
continuing, Lessee shall peaceably and quietly have, hold and enjoy each
Property for the applicable Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor (other than Lessee) with
respect to any matters arising from and after the applicable Basic Term
Commencement Date.
ARTICLE VI
6.1 NET LEASE.
This Lease shall constitute a net lease, and the obligations
of Lessee hereunder are absolute and unconditional. Lessee shall pay all
operating expenses arising out of the use, operation and/or occupancy of each
Property. Any present or future law to the contrary notwithstanding, this Lease
shall not terminate, nor shall Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of Lessee hereunder be affected (except as expressly
herein permitted and by performance of the obligations in connection therewith)
for any reason whatsoever, including without limitation by reason of: (a) any
damage to or destruction of any Property or any part thereof; (b) any taking of
any Property or any part thereof or interest therein by Condemnation or
otherwise; (c) any prohibition, limitation, restriction or prevention of
Lessee's use, occupancy or enjoyment of any Property or any part thereof, or any
interference with such use, occupancy or enjoyment by any Person or for any
other reason; (d) any title defect, Lien or any matter affecting title to any
Property; (e) any eviction by paramount title or otherwise; (f) any default by
Lessor hereunder; (g) any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding relating to or affecting the Agent,
any Lender, Lessor, Lessee, any Holder or any Governmental Authority; (h) the
impossibility or illegality of performance by Lessor, Lessee or both; (i) any
action of any Governmental Authority or any other Person; (j) Lessee's
acquisition of ownership of all or part of any Property; (k) breach of any
warranty or representation with respect to any Property or any Operative
Agreement; (l) any defect in the condition, quality or fitness for use of any
Property or any part thereof; or (m) any other cause or circumstance whether
similar or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that the
obligations of Lessee hereunder shall be covenants, agreements and obligations
that are separate and independent from any obligations of Lessor hereunder and
shall continue unaffected unless such covenants,
<PAGE> 11
agreements and obligations shall have been modified or terminated in accordance
with an express provision of this Lease. Lessor and Lessee acknowledge and agree
that the provisions of this Section 6.1 have been specifically reviewed and
subjected to negotiation.
6.2 NO TERMINATION OR ABATEMENT.
Lessee shall remain obligated under this Lease in accordance
with its terms and shall not take any action to terminate, rescind or avoid this
Lease, notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting any Person or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
any Person or any Governmental Authority or by any court with respect to any
Person, or any Governmental Authority. Lessee hereby waives all right (a) to
terminate or surrender this Lease (except as permitted under the terms of the
Operative Agreements) or (b) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
ARTICLE VII
7.1 OWNERSHIP OF THE PROPERTIES.
(a) Lessor and Lessee intend that for federal and all state
and local income tax purposes, bankruptcy purposes, regulatory
purposes, commercial law and real estate purposes and all other
purposes (other than for accounting purposes) (A) this Lease will be
treated as a financing arrangement and (B) Lessee will be treated as
the owner of the Properties and will be entitled to all tax benefits
ordinarily available to owners of property similar to the Properties
for such tax purposes. Notwithstanding the foregoing, neither party
hereto has made, or shall be deemed to have made, any representation or
warranty as to the availability of any of the foregoing treatments
under applicable accounting rules, tax, bankruptcy, regulatory,
commercial or real estate law or under any other set of rules. Lessee
shall claim the cost recovery deductions associated with each Property,
and Lessor shall not, to the extent not prohibited by Law, take on its
tax return a position inconsistent with Lessee's claim of such
deductions.
(b) For all purposes described in Section 7.1(a), Lessor and
Lessee intend this Lease to constitute a finance lease and not a true
lease. In order to secure the obligations of Lessee now existing or
hereafter arising under any and all Operative Agreements, Lessee hereby
conveys, grants, assigns, transfers, hypothecates, mortgages and sets
over to Lessor, for the benefit of all Financing Parties, a first
priority security interest (but subject to the security interest in the
assets granted by Lessee in favor of the Agent in accordance with the
Security Agreement) in and lien on all right, title and interest of
<PAGE> 12
Lessee (now owned or hereafter acquired) in and to all Properties to
the extent such is personal property and irrevocably grants and conveys
a lien, deed of trust and mortgage on all right, title and interest of
Lessee (now owned or hereafter acquired) in and to all Properties to
the extent such is a real property. Lessor and Lessee further intend
and agree that, for the purpose of securing the obligations of Lessee
and/or the Construction Agent now existing or hereafter arising under
the Operative Agreements, (i) this Lease shall be a security agreement
and financing statement within the meaning of Article 9 of the Uniform
Commercial Code respecting each of the Properties and all proceeds
(including without limitation insurance proceeds thereof) to the extent
such is personal property and an irrevocable grant and conveyance of a
lien, deed of trust and mortgage on each of the Properties and all
proceeds (including without limitation insurance proceeds thereof) to
the extent such is real property; (ii) the acquisition of title by
Lessor (or to the extent applicable, a leasehold interest pursuant to a
Ground Lease) in each Property referenced in Article II constitutes a
grant by Lessee to Lessor of a security interest, lien, deed of trust
and mortgage in all of Lessee's right, title and interest in and to
each Property and all proceeds (including without limitation insurance
proceeds thereof) of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property, whether
in the form of cash, investments, securities or other property, and an
assignment of all rents, profits and income produced by each Property;
and (iii) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of Lessee shall be
deemed to have been given for the purpose of perfecting such lien,
security interest, mortgage lien and deed of trust under applicable
law. Lessee shall promptly take such actions as Lessor may reasonably
request (including without limitation the filing of Uniform Commercial
Code Financing Statements, Uniform Commercial Code Fixture Filings and
memoranda (or short forms) of this Lease and the various Lease
Supplements) to ensure that the lien, security interest, lien, mortgage
lien and deed of trust in each Property and the other items referenced
above will be deemed to be a perfected lien, security interest,
mortgage lien and deed of trust of first priority under applicable law
and will be maintained as such throughout the Term.
ARTICLE VIII
8.1 CONDITION OF THE PROPERTIES.
LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH
PROPERTY "AS-IS WHERE-IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS
OR IMPLIED) BY LESSOR (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND
CLEAR OF LESSOR LIENS) AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF
TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY
STATE OF FACTS REGARDING ITS PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY
MIGHT SHOW, (D) ALL APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL
REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF AND/OR THE DATE OF
<PAGE> 13
THE APPLICABLE LEASE SUPPLEMENT. NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR
ANY HOLDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY
OR COVENANT (EXPRESS OR IMPLIED) (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY
FREE AND CLEAR OF LESSOR LIENS) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART
THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER
LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY
PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR PRIOR TO THE
BASIC TERM COMMENCEMENT DATE WILL HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT
EACH PROPERTY AND THE IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS
LESSOR, THE AGENT, EACH LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE
RESULTS OF ITS INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS
OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS
DESCRIBED IN THE PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS
AND THE HOLDERS, ON THE ONE HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE
BY LESSEE.
8.2 POSSESSION AND USE OF THE PROPERTIES.
(a) At all times during the Term with respect to each
Property, such Property shall be a Permitted Facility and shall be used
by Lessee in the ordinary course of its business. Lessee shall pay, or
cause to be paid, all charges and costs required in connection with the
use of the Properties as contemplated by this Lease. Lessee shall not
commit or permit any waste of the Properties or any part thereof.
(b) The address stated in Section 29.1 of this Lease is the
principal place of business and chief executive office of Lessee (as
such terms are used in Section 9-103(3) of the Uniform Commercial Code
of any applicable jurisdiction), and Lessee will provide Lessor with
prior written notice of any change of location of its principal place
of business or chief executive office. Regarding a particular Property,
each Lease Supplement correctly identifies the initial location of the
related Equipment (if any) and Improvements (if any) and contains an
accurate legal description for the related parcel of Land or a copy of
the Ground Lease (if any). The Equipment and Improvements respecting
each particular Property will be located only at the location
identified in the applicable Lease Supplement.
(c) Lessee will not attach or incorporate any item of
Equipment to or in any other item of equipment or personal property or
to or in any real property in a manner that could give rise to the
assertion of any Lien on such item of Equipment by reason of such
<PAGE> 14
attachment or the assertion of a claim that such item of Equipment has
become a fixture and is subject to a Lien in favor of a third party
that is prior to the Liens thereon created by the Operative Agreements.
(d) On the Basic Term Commencement Date for each Property,
Lessor and Lessee shall execute a Lease Supplement in regard to such
Property which shall contain an Equipment Schedule that has a general
description of the Equipment which shall comprise the Property, an
Improvement Schedule that has a general description of the Improvements
which shall comprise the Property and a legal description of the Land
to be leased hereunder (or in the case of any Property subject to a
Ground Lease to be subleased hereunder) as of such date. Each Property
subject to a Ground Lease shall be deemed to be ground subleased from
Lessor to Lessee as of the Basic Term Commencement Date, and such
ground sublease shall be in effect until this Lease is terminated or
expires, in each case in accordance with the terms and provisions
hereof. Lessee shall satisfy and perform all obligations imposed on
Lessor under each Ground Lease. Simultaneously with the execution and
delivery of each Lease Supplement, such Equipment, Improvements, Land,
ground subleasehold interest, all additional Equipment and all
additional Improvements which are financed under the Operative
Agreements after the Basic Term Commencement Date and the remainder of
such Property shall be deemed to have been accepted by Lessee for all
purposes of this Lease and to be subject to this Lease.
(e) At all times during the Term with respect to each
Property, Lessee will comply with all obligations under and (to the
extent no Event of Default exists and provided that such exercise will
not impair the value, utility or remaining useful life of such
Property) shall be permitted to exercise all rights and remedies under,
all operation and easement agreements and related or similar agreements
applicable to such Property.
8.3 INTEGRATED PROPERTIES.
On the Rent Commencement Date for each Property, Lessee shall,
at its sole cost and expense, cause such Property and the applicable property
subject to a Ground Lease to constitute (and for the duration of the Term shall
continue to constitute) all of the equipment, facilities, rights, other personal
property and other real property necessary or appropriate to operate, utilize,
maintain and control a Permitted Facility in a commercially reasonable manner.
ARTICLE IX
9.1 COMPLIANCE WITH LEGAL REQUIREMENTS, INSURANCE REQUIREMENTS AND
MANUFACTURER'S SPECIFICATIONS AND STANDARDS.
Subject to the terms of Article XIII relating to permitted
contests, Lessee, at its sole cost and expense, shall (a) comply with all
applicable Legal Requirements (including without limitation all Environmental
Laws) and all Insurance Requirements relating to the
<PAGE> 15
Properties, (b) procure, maintain and comply with all licenses, permits, orders,
approvals, consents and other authorizations required for the acquisition,
installation, testing, use, development, construction, operation, maintenance,
repair, refurbishment and restoration of the Properties and (c) comply with all
manufacturer's specifications and standards, including without limitation the
acquisition, installation, testing, use, development, construction, operation,
maintenance, repair, refurbishment and restoration of the Properties, whether or
not compliance therewith shall require structural or extraordinary changes in
any Property or interfere with the use and enjoyment of any Property, unless the
failure to procure, maintain and comply with such items identified in
subparagraphs (b) and (c), individually or in the aggregate, shall not have and
could not reasonably be expected to have a Material Adverse Effect. Lessor
agrees to take such actions as may be reasonably requested by Lessee in
connection with the compliance by Lessee of its obligations under this Section
9.1.
ARTICLE X
10.1 MAINTENANCE AND REPAIR; RETURN.
(a) Lessee, at its sole cost and expense, shall maintain each
Property in good condition, repair and working order (ordinary wear and
tear excepted) and in the repair and condition as when originally
delivered to Lessor and make all necessary repairs thereto and
replacements thereof, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by
Section 9.1 and on a basis consistent with the operation and
maintenance of properties or equipment comparable in type and function
to the applicable Property, such that such Property is capable of being
immediately utilized by a third party and in compliance with standard
industry practice subject, however, to the provisions of Article XV
with respect to Casualty and Condemnation.
(b) Lessee shall not use or locate any component of any
Property outside of the Approved State therefor. Lessee shall not move
or relocate any component of any Property beyond the boundaries of the
Land (comprising part of such Property) described in the applicable
Lease Supplement, except for the temporary removal of Equipment and
other personal property for repair or replacement.
(c) If any component of any Property becomes worn out, lost,
destroyed, damaged beyond repair or otherwise permanently rendered
unfit for use, Lessee, at its own expense, will within a reasonable
time replace such component with a replacement component which is free
and clear of all Liens (other than Permitted Liens and Lessor Liens)
and has a value, utility and useful life at least equal to the
component replaced (assuming the component replaced had been maintained
and repaired in accordance with the requirements of this Lease). All
components which are added to any Property shall immediately become the
property of (and title thereto shall vest in) Lessor and shall be
deemed incorporated in such Property and subject to the terms of this
Lease as if originally leased hereunder.
<PAGE> 16
(d) Upon reasonable advance notice, Lessor and its agents
shall have the right to inspect each Property and all maintenance
records with respect thereto at any reasonable time during normal
business hours but shall not, in the absence of an Event of Default,
materially disrupt the business of Lessee.
(e) Lessee shall cause to be delivered to Lessor (at Lessee's
sole expense) one or more additional Appraisals (or reappraisals of
Property) as Lessor may request if any one of Lessor, the Agent, the
Trust Company, any Lender or any Holder is required pursuant to any
applicable Legal Requirement to obtain such Appraisals (or
reappraisals) and upon the occurrence of any Event of Default.
(f) Lessor shall under no circumstances be required to build
any improvements or install any equipment on any Property, make any
repairs, replacements, alterations or renewals of any nature or
description to any Property, make any expenditure whatsoever in
connection with this Lease or maintain any Property in any way. Lessor
shall not be required to maintain, repair or rebuild all or any part of
any Property, and Lessee waives the right to (i) require Lessor to
maintain, repair, or rebuild all or any part of any Property, or (ii)
make repairs at the expense of Lessor pursuant to any Legal
Requirement, Insurance Requirement, contract, agreement, covenant,
condition or restriction at any time in effect.
(g) Lessee shall, upon the expiration or earlier termination
of this Lease with respect to a Property, if Lessee shall not have
exercised its Purchase Option with respect to such Property and
purchased such Property, surrender such Property (i) pursuant to the
exercise of the applicable remedies upon the occurrence of a Lease
Event of Default, to Lessor or (ii) pursuant to the second paragraph of
Section 22.1(a) hereof, to Lessor or the third party purchaser, as the
case may be, subject to Lessee's obligations under this Lease
(including without limitation the obligations of Lessee at the time of
such surrender under Sections 9.1, 10.1(a) through (f), 10.2, 11.1,
12.1, 22.1 and 23.1).
10.2 ENVIRONMENTAL INSPECTION.
If Lessee has not given notice of exercise of its Purchase
Option on the Expiration Date pursuant to Section 20.1 or for whatever reason
Lessee does not purchase a Property in accordance with the terms of this Lease,
then not more than one hundred twenty (120) days nor less than sixty (60) days
prior to the Expiration Date, Lessee at its expense shall cause to be delivered
to Lessor a Phase I environmental site assessment recently prepared (no more
than thirty (30) days prior to the date of delivery) by an independent
recognized professional reasonably acceptable to Lessor, and in form, scope and
content reasonably satisfactory to Lessor.
<PAGE> 17
ARTICLE XI
11.1 MODIFICATIONS.
(a) Lessee at its sole cost and expense, at any time and from
time to time without the consent of Lessor may make modifications,
alterations, renovations, improvements and additions to any Property or
any part thereof and substitutions and replacements therefor
(collectively, "Modifications"), and Lessee shall make any and all
Modifications required to be made pursuant to all Legal Requirements,
Insurance Requirements and manufacturer's specifications and standards;
provided, that: (i) no Modification shall materially impair the value,
utility or useful life of any Property from that which existed
immediately prior to such Modification; (ii) each Modification shall be
done expeditiously and in a good and workmanlike manner; (iii) no
Modification shall adversely affect the structural integrity of any
Property; (iv) to the extent required by Section 14.2(a), Lessee shall
maintain builders' risk insurance at all times when a Modification is
in progress; (v) subject to the terms of Article XIII relating to
permitted contests, Lessee shall pay all costs and expenses and
discharge any Liens arising with respect to any Modification; (vi) each
Modification shall comply with the requirements of this Lease
(including without limitation Sections 8.2 and 10.1); and (vii) no
Improvement shall be demolished or otherwise rendered unfit for use
unless Lessee shall finance the proposed replacement Modification
outside of this lease facility; provided, further, Lessee shall not
make any Modification (unless required by any Legal Requirement) to the
extent any such Modification, individually or in the aggregate, shall
have or could reasonably be expected to have a Material Adverse Effect.
All Modifications shall immediately and without further action upon
their incorporation into the applicable Property (1) become property of
Lessor, (2) be subject to this Lease and (3) be titled in the name of
Lessor. Lessee shall not remove or attempt to remove any Modification
from any Property. Each Ground Lease for a Property shall expressly
provide for the provisions of the foregoing sentence. Lessee, at its
own cost and expense, will pay for the repairs of any damage to any
Property caused by the removal or attempted removal of any
Modification.
(b) The construction process provided for in the Agency
Agreement is acknowledged by Lessor to be consistent with and in
compliance with the terms and provisions of this Article XI.
ARTICLE XII
12.1 WARRANTY OF TITLE.
(a) Lessee hereby acknowledges and shall cause title in each
Property (including without limitation all Equipment, all Improvements,
all replacement components to each Property and all Modifications)
immediately and without further action to vest in and become the
property of Lessor and to be subject to the terms of this Lease
(provided, respecting each Property subject to a Ground Lease, Lessor's
interest
<PAGE> 18
therein is acknowledged to be a leasehold interest pursuant to such
Ground Lease) from and after the date hereof or such date of
incorporation into any Property. Lessee agrees that, subject to the
terms of Article XIII relating to permitted contests, Lessee shall not
directly or indirectly create or allow to remain, and shall promptly
discharge at its sole cost and expense, any Lien, defect, attachment,
levy, title retention agreement or claim upon any Property, any
component thereof or any Modifications or any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by
Lessor, the Agent, any Lender or any Holder pursuant to any Operative
Agreement, other than Permitted Liens and Lessor Liens. Lessee shall
promptly notify Lessor in the event it receives actual knowledge that a
Lien other than a Permitted Lien or Lessor Lien has occurred with
respect to a Property, the Rent or any other such amounts, and Lessee
represents and warrants to, and covenants with, Lessor that the Liens
in favor of Lessor and/or the Agent created by the Operative Agreements
are (and until the Financing Parties under the Operative Agreements
have been paid in full shall remain) first priority perfected Liens
subject only to Permitted Liens and Lessor Liens. At all times
subsequent to the Basic Term Commencement Date respecting a Property,
Lessee shall (i) cause a valid, perfected, first priority Lien on each
applicable Property to be in place in favor of the Agent (for the
benefit of the Lenders and the Holders) and (ii) file, or cause to be
filed, all necessary documents under the applicable real property law
and Article 9 of the Uniform Commercial Code to perfect such title and
Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to
or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to any Property or any part thereof. NOTICE
IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR
TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR
IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 PERMITTED CONTESTS OTHER THAN IN RESPECT OF INDEMNITIES.
Except to the extent otherwise provided for in Section 11 of
the Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Legal Requirement,
Imposition or utility charge payable pursuant to Section 4.1 or any Lien,
attachment, levy, encumbrance or encroachment, and Lessor agrees not to pay,
settle or otherwise compromise any such item, provided, that (a) the
commencement and continuation of such proceedings shall
<PAGE> 19
suspend the collection of any such contested amount from, and suspend the
enforcement thereof against, the applicable Properties, Lessor, each Holder, the
Agent and each Lender; (b) there shall not be imposed a Lien (other than
Permitted Liens and Lessor Liens) on any Property and no part of any Property
nor any Rent would be in any danger of being sold, forfeited, lost or deferred;
(c) at no time during the permitted contest shall there be a risk of the
imposition of criminal liability or material civil liability on Lessor, any
Holder, the Agent or any Lender for failure to comply therewith; and (d) in the
event that, at any time, there shall be a material risk of extending the
application of such item beyond the end of the Term, then Lessee shall deliver
to Lessor an Officer's Certificate certifying as to the matters set forth in
clauses (a), (b) and (c) of this Section 13.1. Lessor, at Lessee's sole cost and
expense, shall execute and deliver to Lessee such authorizations and other
documents as may reasonably be required in connection with any such contest and,
if reasonably requested by Lessee, shall join as a party therein at Lessee's
sole cost and expense.
13.2 IMPOSITIONS, UTILITY CHARGES, OTHER MATTERS; COMPLIANCE WITH
LEGAL REQUIREMENTS.
Except with respect to Impositions, Legal Requirements,
utility charges and such other matters referenced in Section 13.1 which are the
subject of ongoing proceedings contesting the same in a manner consistent with
the requirements of Section 13.1, Lessee shall cause (a) all Impositions,
utility charges and such other matters to be timely paid, settled or
compromised, as appropriate, with respect to each Property and (b) each Property
to comply with all applicable Legal Requirements.
ARTICLE XIV
14.1 INSURANCE.
The Lessee shall maintain the following insurance as to each
of the Properties at its sole cost and expense:
(a) Insurance against Casualty to the Property under a policy
or policies covering such risks as are ordinarily insured against by
similar businesses, but in any event including fire, lightning,
earthquake, windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, damage from aircraft, smoke, vandalism and malicious
mischief. Unless otherwise agreed in writing by the Agent, such
insurance shall be for the greater of (i) the full insurable value of
the Property, or (ii) the Termination Value of the Property. The
deductible amount under such policy or policies shall not exceed
$25,000. No policy of insurance shall be written such that the proceeds
thereof will produce less than the minimum coverage required by this
Section by reason of co-insurance provisions or otherwise. The term
"full insurable value" means the actual replacement cost of the
Property (excluding foundation and excavation costs and costs of
underground flues, pipes, drains and other uninsurable items). The
"full insurable value" shall be determined from time to time at the
request of the Agent (but not more frequently
<PAGE> 20
than once every three (3) years) by an appraiser or appraisal company
or one of the insurers, who shall be selected and paid for by the
Lessee but subject to the Agent's approval. Such insurance shall name
the Lessee as the insured and shall be endorsed to name the Lessor and
the Agent, on behalf of the Holders and Lenders, as additional insureds
and loss payees, to the extent of their respective interests.
(b) Comprehensive general public liability insurance for
injuries to Persons and damage to property, in limits of not less than
$1,000,000 for any one occurrence and $5,000,000 for the aggregate of
all occurrences during any given annual policy period. No policy of
insurance shall be written such that the proceeds thereof will produce
less than the minimum coverage required by this Section by reason of
co-insurance provisions or otherwise. Such insurance shall name the
Lessee as the insured and shall be endorsed to name the Lessor, the
Holders, the Agent and the Lenders as additional insureds.
(c) Worker's compensation insurance for all employees of the
Lessee in such amount as is required by Law.
(d) During any period of construction upon the Property, the
Lessee shall maintain, or cause others to maintain, builder's risk
insurance (non-reporting form) of the type customarily carried in the
case of similar construction for the full replacement cost of work in
place and materials stored at or upon the Property.
(e) If at any time the Property is in an area that has been
identified as having special flood and mudslide hazards, and flood
insurance is available in such area, the Lessee shall purchase and
maintain a flood insurance policy in form and amount acceptable to the
Agent. In the event that the Property is not in an area having special
flood and mudslide hazards, the Lessee shall deliver to the Agent upon
request evidence satisfactory to the Agent stating that the Property is
not in such a flood or mudslide hazard area.
(f) Business interruption insurance in an amount equal to at
least twelve (12) months' Basic Rent upon the issuance of the
certificate of occupancy.
(g) To the extent that health care professionals are employed
by the Management Company or the Lessee, medical liability, malpractice
and other health care professional liability insurance protecting the
Lessee and the Management Company, as the case may be, against claims
arising from the professional services performed by the Lessee or the
Management Company, as the case may be, with limits of (A) not less
than One Million Dollars ($1,000,000) with respect to injury or death
for each person or occurrence, and (B) not less than Three Million
Dollars ($3,000,000) in the aggregate for claims made for injury or
death in any one year, and an umbrella policy insuring against such
liability in an aggregate amount of Five Million Dollars ($5,000,000).
(h) The Lessee will obtain and keep in force such other and
further insurance as may be required from time to time by the Agent in
order to comply with regular
<PAGE> 21
requirements and practices of the Agent in similar transactions. Each
policy of insurance shall (i) be issued by one or more recognized,
financially sound and responsible insurance companies approved by the
Agent and which are qualified or authorized by the Laws of the state
where the Property is located to assume the risks covered by such
policy, (ii) with respect to the insurance described under the
preceding subsections (a), (d), (e) and (f), have attached thereto
standard non-contributing, non-reporting mortgagee clauses in favor of
and entitling the Agent for and on behalf of the Lessor, the Holders,
the Lenders and the Agent, without contribution to collect any and all
proceeds payable under such insurance, (iii) provide that such policy
shall not be canceled or modified without at least thirty (30) days
prior written notice to the Agent, and (iv) provide that any loss
otherwise payable thereunder shall be payable notwithstanding any act
or negligence of the Lessee which might, absent such agreement, result
in a forfeiture of all or a part of such insurance payment. The Lessee
shall promptly pay all premiums when due on such insurance and, not
less than thirty (30) days prior to the expiration dates of each such
policy, the Lessee will deliver to the Agent a renewal policy or
policies marked "premium paid" or accompanied by other evidence of
payment satisfactory to the Agent. The Lessee will immediately give the
Agent notice of any cancellation of, or chance in, any insurance
policy. The Agent shall not, because of accepting, rejecting, approving
or obtaining insurance, incur any liability for (i) the existence,
nonexistence, form or legal sufficiency thereof, (ii) the solvency of
any insurer, or (iii) the payment of losses. The Lessee will provide to
the Agent annually, and more frequently upon request, certificates of
insurance demonstrating compliance with the provisions of this Section,
and, at any time after the occurrence and during the continuance of an
Event of Default, will provide to the Agent, promptly upon request,
copies of all insurance policies addressing the requirements of this
Section.
14.2 ADJUSTMENT OF CONDEMNATION AND INSURANCE CLAIMS.
(a) The Lessee shall give prompt notice to the Agent of the
Casualty or any Condemnation or threatened written Condemnation. The
Agent is authorized, at its sole option, to commence, appear in and
prosecute, in its own or the Lessee's name, any action or proceeding
relating to any Condemnation or Casualty, and to settle or compromise
any Claim in connection therewith. In such case, the Agent may also
deduct from any payment all of its Expenses. The Agent agrees, however,
that, so long as no Event of Default has occurred, it will not settle
or compromise any such Claim without the prior written consent of the
Lessee, which consent shall not be unreasonably withheld or delayed. If
the Agent elects not to adjust a Claim, the Lessee agrees to promptly
pursue the settlement and compromise of the Claim subject to the
Agent's approval which will not be unreasonably withheld or delayed.
If, prior to the receipt by the Agent of any Condemnation Award or
insurance proceeds, the Lease shall have been terminated pursuant to
the provisions of Section 17.1 hereof, the Agent shall have the right
to receive such funds to the extent of (i) any deficiency found to be
due or amounts otherwise owing under the Lease or the Operative
Documents with interest thereon (whether or not a deficiency judgment
shall have been sought or recovered or denied), and (ii) necessary to
reimburse the Agent for its Expenses. The Lessee agrees to execute and
deliver from
<PAGE> 22
time to time, upon the request of the Agent, such further instruments
or documents as may be requested by the Agent to confirm the grant and
assignment to the Agent of any Condemnation Awards or insurance
proceeds.
(b) If the Lessee shall receive notice of any Casualty or
Condemnation of a Property or any interest therein where damage to the
affected Property is estimated to equal or exceed twenty-five (25%) of
the Property Cost of such Property, the Lessee shall give notice
thereof to the Lessor promptly after Lessee's receipt of such notice.
In the event of such a Casualty or Condemnation (regardless of whether
notice is given as provided herein), the Lessee shall be deemed to have
delivered a Termination Notice to the Lessor and the provisions of
Sections 16.1 and 16.2 shall apply.
(c) In the event of a Casualty or Condemnation (regardless of
whether notice thereof must be given pursuant to the foregoing
subsection (b) hereof), this Lease shall terminate with respect to the
applicable Property in accordance with Section 16.1, if the Lessee,
within thirty (30) days after such occurrence, delivers to the Lessor a
notice to such effect.
(d) If pursuant to this Section, this Lease shall continue if
full force and effect following a Casualty or Condemnation with respect
to an affected Property, the Lessee shall restore the Property in
accordance with the provisions of Section 14.3.
(e) In no event shall a Casualty of Condemnation affect the
Lessee's obligations to pay Rent pursuant to Article III.
(f) Notwithstanding anything to the contrary set forth in
subsections (b) and (d) of this Section, if during the Term with
respect to a Property a Casualty occurs with respect to such Property
or the Lessee receives notice of a Condemnation with respect to such
Property, and following such Casualty or Condemnation, the applicable
Property cannot reasonably be restored, repaired or replaced on or
before the day one hundred eighty (180) days prior to the Expiration
Date or the date nine (9) months after the occurrence of such Casualty
or Condemnation (if such Casualty or Condemnation occurs during the
Term) to the same or a greater remaining economic value, useful life,
utility, condition, operation and function as existed immediately prior
to such Casualty or Condemnation (assuming all maintenance and repair
standards have been satisfied) or on or before such day such Property
is not in fact so restored, repaired or replaced, then Lessee shall be
required to exercise its Purchase Option for such Property on the next
Payment Date (notwithstanding the limits on such exercise contained in
Section 20.2) and pay Lessor the Termination Value for such Property;
provided, if any Default or Event of Default has occurred and is
continuing, Lessee shall also promptly (and in any event within three
(3) Business Days) pay Lessor any award, compensation or insurance
proceeds received on account of any Casualty or Condemnation with
respect to any Property; provided, further, that if no Default or Event
of Default has occurred and is continuing, any Excess Proceeds shall be
paid to Lessee. If a Default or an Event of Default has occurred and is
continuing and any Loans, Holder Advances or other amounts
<PAGE> 23
are owing with respect thereto, then any Excess Proceeds (to the extent
of any such Loans, Holder Advances or other amounts owing with respect
thereto) shall be paid to Lessor, held as security for the performance
of Lessee's obligations hereunder and under the other Operative
Agreements and applied to such obligations upon the exercise of
remedies in connection with the occurrence of an Event of Default, with
the remainder of such Excess Proceeds in excess of such Loans, Holder
Advances and other amounts owing with respect thereto being distributed
to the Lessee.
(g) The provisions of this Section (a) through (f) shall not
apply to any Property until after the Construction Period Termination
Date applicable to such Property.
14.3 APPLICATION OF NET PROCEEDS.
At the sole discretion of the Agent, Net Proceeds must be
applied to either (a) be held as security for the performance of the Lessee's
obligations hereunder and under the other Operative Agreements and applied to
such obligations upon the exercise of remedies in connection with the occurrence
of an Event of Default, or (b) the restoration of the Property; provided,
however, that if the aggregate amount of Net Proceeds is less than $500,000
unless an Event of Default has occurred and is continuing, the Net Proceeds
shall be applied to the restoration. In the event that, and to the extent that,
Net Proceeds are to be applied to the restoration of the Property, each of the
following conditions must also be met and complied with if and to the extent
required by the Agent:
(a) An escrow account shall have been established with the
Agent composed of Net Proceeds, and, if necessary, additional deposits
made by the Lessee, which, in the sole judgment of the Agent, is
sufficient to restore the Property to its use, value and condition
immediately prior to the Casualty or Condemnation. The Agent shall be
entitled, at the expense of the Lessee, to consult such professionals
as the Agent may deem necessary, in its sole discretion, to determine
the total costs of restoring the Property. Interest will be paid on
funds in the escrow account. The Lessee hereby assigns to, and grants
the Agent a security interest in, such escrow account and the funds
therein to secure the payment and performance of the Lessee's
obligations hereunder and under the other Operative Agreements.
(b) (i) Either all Resident Agreements and Material Subleases
must continue in full force and effect (subject to rent abatement
during restoration as may be provided in the Resident Agreements and
the Material Subleases) or, if terminated, the terminated Material
Subleases must have been replaced with Material Subleases or equal
quality in the reasonable judgment of the Agent. Any tenant having the
right to terminate its Material Sublease due to the Casualty or
Condemnation, and which has not exercised that right, shall have
confirmed in writing to the Agent its irrevocable waiver of such
termination right, or proceeds from business interruption insurance or
other moneys of SALI, must be available to the Lessee in such amounts
as the Agent, in its reasonable judgment, considers sufficient to pay
the Termination Value relating to the Property, and
<PAGE> 24
all Impositions, insurance premiums and other sums becoming due from
the Lessee pursuant to this Lease and the other Operative Agreements
during the time required for restoration, OR
(ii) Proceeds from business interruption insurance or
other moneys of the Lessee must be available to the Lessee in such
amounts as the Agent, in its reasonable judgment, considers sufficient
to pay the Termination Value relating to the Property, and all
Impositions, insurance premiums and other sums becoming due from the
Lessee pursuant to this Lease during the time required for restoration.
(c) All restoration will be conducted under the supervision of
an architect or engineer, or both, selected and paid for by the Lessee
and approved in advance by the Agent, and by a general contractor who
shall be approved by the Agent and shall have executed a fixed price
contract.
(d) The restoration will be performed pursuant to the original
plans and specifications approved by the Agent.
(e) If required by the Agent at its sole option, the
contractor or contractors responsible for the restoration shall have
obtained payment and performance bonds from a corporate surety
acceptable to the Agent and naming the Lessor, the Holders, the Lenders
and the Agent as dual obligees.
(f) The Lessee shall have provided the Agent with reasonably
satisfactory evidence that there has been no adverse change in the
economic viability of the Property since the date of this Lease, such
evidence to include, among other things, an appraisal and market study
prepared by a firm or firms acceptable to the Agent, but at the
Lessee's expense.
If any of the foregoing conditions are not satisfied, the Agent may, in its sole
discretion, hold the Net Proceeds as security for the performance of the
Lessee's obligations hereunder and under the other Operative Agreements and
applied to such obligations upon the exercise of remedies in connection with the
occurrence of an Event of Default.
If applied to restoration, Net Proceeds (and any other funds required
to be deposited with the Agent) shall be disbursed from time to time in
accordance with the terms and conditions of the construction loan agreement most
commonly used by the Agent or other regionally recognized construction lenders,
at the time of the Casualty or Condemnation for major commercial construction
loans, and subject also to the following conditions (which shall control in the
event of any conflict with the provisions of such construction loan agreement):
(a) Restoration shall commence within sixty (60) days
following receipt of the Net Proceeds by the Agent or such additional
time as may be required by Lessee in obtaining the necessary licenses,
permits or approvals from the applicable Governmental Authorities
provided the Lessee has and continues to diligently pursue obtaining
the
<PAGE> 25
necessary licenses, permits and approvals, and shall be completed
within such time as may be determined by the Agent in view of the
extent of the Casualty or Condemnation but, in any event, shall be
completed within a reasonable period after the date of the Net Proceeds
are received.
(b) (i) At the time of each disbursement, (A) no Subleases (if
any) shall have been terminated which either singularly or in the
aggregate affect more than ten percent (10%) of the leaseable area of
the Property unless the same have been replaced with Subleases of equal
quality, in the reasonable judgment of the Agent, and (B) no Default
shall have occurred, OR
(ii) Proceeds from business interruption insurance or
other moneys of the Lessee must be available to the Lessee in such
amounts as the Agent, in its reasonable judgment, considers sufficient
to pay the Termination Value relating to the Property, and all
Impositions, insurance premiums and other sums becoming due from the
Lessee pursuant to this Deed of Trust during the time required for
restoration.
(c) Restoration involving costs in excess of $100,000 in the
aggregate shall be subject to the prior written consent of the Agent.
Any such restoration shall be completed and paid for, within a
reasonable time, following any such consent. Restoration of permitted
Improvements shall be (i) strictly in accordance with all applicable
Laws and any private restrictive covenants, (ii) entirely on lots or
parcels of the Land, (iii) so as not to encroach upon any easement or
right of way or upon the land of others, and (iv) wholly within any
building restriction lines applicable to the Land.
(d) With respect to each disbursement and accompanying each
request therefor, there shall be delivered to the Agent (i) a
certificate addressed to the Agent from the architect or engineer
supervising the restoration stating that such disbursement is to pay
the cost of restoration not paid previously by any prior disbursement,
that all restoration completed to the date of such certificate has been
completed in accordance with applicable Laws and the approved plans and
specifications, and that the amount of such disbursement, together with
all other disbursements, does not exceed ninety percent (90%) of the
requisition for direct construction costs until such time as fifty
percent (50%) of the restoration has been completed, then such
disbursements shall not exceed ninety-five percent (95%) of the
requisition for direct construction costs, and (ii) evidence
satisfactory to the Agent that all Claims then existing fro labor,
services and materials have been paid in full or will be paid in full
from the proceeds of the disbursement requested.
(e) The final holdback shall be disbursed only upon delivery
to the Agent, in addition to the items required in paragraph (d) above
and the Operative Agreements, of the following:
(i) Final waivers of Liens from all contractors and
subcontractors.
<PAGE> 26
(ii) A certificate of architect or engineer stating
that the restoration has been completed in a good and workmanlike
manner, in accordance with the plans and specifications approved by the
Agent in accordance with applicable Laws.
(iii) An estoppel affidavit from each tenant
occupying or leasing space under a Material Sublease in the Property
stating that its Sublease is in full force and effect.
(f) Immediately upon the occurrence of any Event of Default,
the Agent may apply Net Proceeds and any other sums deposited with the
Agent to the repayment of the Lessee's obligations hereunder and under
the other Operative Agreements.
ARTICLE XV
15.1 ENVIRONMENTAL MATTERS.
Promptly upon Lessee's actual knowledge of the presence of
Hazardous Substances in any portion of any Property or Properties in
concentrations and conditions that constitute an Environmental Violation and
which, in the reasonable opinion of Lessee, the cost to undertake any legally
required response, clean up, remedial or other action will or might result in a
cost to Lessee of more than $15,000, Lessee shall notify Lessor in writing of
such condition. In the event of any Environmental Violation (regardless of
whether notice thereof must be given), Lessee shall, not later than thirty (30)
days after Lessee has actual knowledge of such Environmental Violation, either
deliver to Lessor a Termination Notice with respect to the applicable Property
or Properties pursuant to Section 16.1, if applicable, or, at Lessee's sole cost
and expense, promptly and diligently undertake and diligently complete any
response, clean up, remedial or other action (including without limitation the
pursuit by Lessee of appropriate action against any off-site or third party
source for contamination) necessary to remove, cleanup or remediate the
Environmental Violation in accordance with all Environmental Laws. Any such
undertaking shall be timely completed in accordance with prudent industry
standards. If Lessee does not deliver a Termination Notice with respect to such
Property pursuant to Section 16.1, Lessee shall, upon completion of remedial
action by Lessee, cause to be prepared by a reputable environmental consultant
acceptable to Lessor a report describing the Environmental Violation and the
actions taken by Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that the Environmental Violation
has been remedied in full compliance with applicable Environmental Law. Not less
than sixty (60) days prior to any time that Lessee elects to cease operations
with respect to any Property or to remarket any Property pursuant to Section
20.1 hereof or any other provision of any Operative Agreement, Lessee at its
expense shall cause to be delivered to Lessor a Phase I environmental site
assessment respecting such Property recently prepared (no more than thirty (30)
days prior to the date of delivery) by an independent recognized professional
acceptable to Lessor in its reasonable discretion and in form, scope and content
satisfactory to Lessor in its reasonable discretion. Notwithstanding any other
provision of any Operative Agreement, if Lessee fails to comply with the
foregoing obligation regarding the Phase I environmental site assessment, Lessee
shall be obligated to
<PAGE> 27
purchase such Property for its Termination Value and shall not be permitted to
exercise (and Lessor shall have no obligation to honor any such exercise) any
rights under any Operative Agreement regarding a sale of such Property to a
Person other than Lessee.
15.2 NOTICE OF ENVIRONMENTAL MATTERS.
Promptly, but in any event within five (5) Business Days from
the date Lessee has actual knowledge thereof, Lessee shall provide to Lessor
written notice of any pending or threatened claim, action or proceeding
involving any Environmental Law or any Release on or in connection with any
Property or Properties. All such notices shall describe in reasonable detail the
nature of the claim, action or proceeding and Lessee's proposed response
thereto. In addition, Lessee shall provide to Lessor, within five (5) Business
Days of receipt, copies of all material written communications with any
Governmental Authority relating to any Environmental Law in connection with any
Property. Lessee shall also promptly provide such detailed reports of any such
material environmental claims as may reasonably be requested by Lessor.
ARTICLE XVI
16.1 TERMINATION UPON CERTAIN EVENTS.
If Lessee has delivered, or is deemed to have delivered,
written notice of a termination of this Lease with respect to the applicable
Property to Lessor in the form described in Section 16.2(a) (a "Termination
Notice") pursuant to the provisions of this Lease, then following the applicable
Casualty, Condemnation or Environmental Violation, this Lease shall terminate
with respect to the affected Property on the applicable Termination Date.
16.2 PROCEDURES.
(a) A Termination Notice shall contain: (i) notice of
termination of this Lease with respect to the affected Property on a
Payment Date not more than ninety (90) days after Lessor's receipt of
such Termination Notice (the "Termination Date"); and (ii) a binding
and irrevocable agreement of Lessee to pay the Termination Value for
the applicable Property and purchase such Property on such Termination
Date.
(b) On each Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, and Lessor shall convey
such Property or the remaining portion thereof, if any, to Lessee (or
Lessee's designee), all in accordance with Section 20.2.
<PAGE> 28
ARTICLE XVII
17.1 LEASE EVENTS OF DEFAULT.
If any one (1) or more of the following events (each a "Lease
Event of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent
(except as set forth in clause (ii)) within five (5) days after notice
of such failure has been given to the Lessee by the Agent or any
Lender, or (ii) any Termination Value, on the date any such payment is
due and payable, or any payment of Basic Rent or Supplemental Rent due
on the due date of any such payment of Termination Value, or any amount
due on the Expiration Date;
(b) Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in Section 17.1(a)(ii)) or
any other Credit Party shall fail to make any payment of any amount
under any Operative Agreement which has become due and payable within
five (5) days after receipt of notice that such payment is due;
(c) Lessee shall fail to maintain insurance as required by
Article XIV of this Lease or to deliver any requisite annual
certificate with respect thereto within ten (10) days of the date such
certificate is due under the terms hereof;
(d) (i) Lessee shall fail to observe or perform any term,
covenant, obligation or condition of Lessee under this Lease or any
other Operative Agreement to which Lessee is a party other than those
set forth in Sections 17.1(a), (b) or (c) hereof, or any other Credit
Party shall fail to observe or perform any term, covenant, obligation
or condition of such Credit Party under any Operative Agreement other
than those set forth in Section 17.1(b) hereof and such failure shall
continue for thirty (30) days after notice thereof to the Lessee or
such Credit Party; provided, however, if (A) the nature of the failure
is such that it cannot be cured within the thirty (30) day period and
(B) the Lessee institutes corrective action within the thirty (30) day
period, then such failure shall not constitute a Lease Event of Default
unless the Lessee is unable to cure such failure within ninety (90)
days of such notice, or (ii) any representation or warranty made by
Lessee or any other Credit Party set forth in this Lease (including
without limitation the Incorporated Representation and Warranties) or
in any other Operative Agreement or in any document entered into in
connection herewith or therewith or in any document, certificate or
financial or other statement delivered in connection herewith or
therewith shall be false or inaccurate in any material way when made;
(e) An Agency Agreement Event of Default shall have occurred
and be continuing;
(f) A default which continues beyond any applicable grace
period shall be made under any obligation of or guaranteed by any
Credit Party or any Subsidiary of a Credit
<PAGE> 29
Party equal to or greater than $250,000, if the effect of such default
is to accelerate the maturity of such obligation or to permit the
holder or obligee thereof to cause such obligation to become due prior
to its stated maturity, or a default shall be made under any obligation
of a consolidated Affiliate of any Credit Party equal to or greater
than $1,000,000, which is otherwise non-recourse to such Credit Party
or any of its Subsidiaries, if the holder or obligee with respect to
any such obligation has commenced an action on any remedies available
to such Person under the obligation;
(g) Any Credit Party shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator of itself or any of
its property, (ii) admit in writing its inability to pay its debts as
they mature, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated a bankrupt or insolvent, (v) file a
voluntary petition in bankruptcy or a petition or an answer seeking or
consenting to reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an
answer admitting the material allegations of a petition filed against
it in any proceeding under any such law, or take corporate action for
the purposes of effecting any of the foregoing, or (vi) by any act
indicate its consent to, approval of or acquiescence in any such
proceeding or the appointment of any receiver of or trustee for any of
its property, or suffer any such receivership, trusteeship or
proceeding to continue undischarged for a period of sixty (60) days, or
(vii) by any act indicate its consent to, approval of or acquiescence
in any order, judgment or decree by any court of competent jurisdiction
or any Governmental Authority enjoining or otherwise prohibiting the
operation of a material portion of any Credit Party's business or the
use or disposition of a material portion of any Credit Party's assets;
(h) (i) An order for relief shall be entered in any
involuntary case brought against any Credit Party under the Bankruptcy
Code, or (ii) any such case shall be commenced against any Credit Party
and shall not be dismissed within sixty (60) days after the filing of
the petition, or (iii) an order, judgment or decree under any other Law
is entered by any court of competent jurisdiction or by any other
Governmental Authority on the application of a Governmental Authority
or of a Person other than a Credit Party or its Subsidiaries (A)
adjudicating any Credit Party bankrupt or insolvent, or (B) appointing
a receiver, trustee or liquidator of any Credit Party, or (B)
appointing a receiver, trustee or liquidator of any Credit Party, or of
a material portion of any Credit Party's assets, or (C) enjoining,
prohibiting or otherwise limiting the operation of a material portion
of any Credit Party's businesses or the use or disposition of a
material portion of any Credit Party's assets, and such order, judgment
or decree continues unstayed and in effect for a period of thirty (30)
days from the date entered;
(i) Any Credit Party shall liquidate, dissolve or terminate
its existence or any change occurs in management or control of SALI
without the prior written consent of the Agent and the Majority
Lenders;
<PAGE> 30
(j) Any report, certificate, financial statement or other
instrument delivered to Lessor by or on behalf of any Credit Party
pursuant to the terms of this Lease or any other Operative Agreement is
false or misleading in any material respect when made or delivered;
(k) Any Master Guaranty of Payment Event of Default shall have
occurred and be continuing and shall not have been waived;
(l) To the extent not adequately covered by insurance in the
reasonable determination of the Agent and the Majority Lenders, the
entry of a final judgment for the payment of money involving more than
$1,000,000 against any Credit Party or any Subsidiary of a Credit
Party, and the failure by such Credit Party or Subsidiary to discharge
the same, or case it to be discharged, within thirty (3) days from the
date of the order, decree or process under which or pursuant to which
such judgment was entered, or to secure a stay of execution pending
appeal of such judgment.
(m) Any Credit Party or any member of the Controlled Group
shall fail to pay when due an amount or amounts aggregating in excess
of $2,000,000 which it shall have become liable to pay to the PBGC or
to a Pension Plan under Title IV of ERISA; or notice of intent to
terminate a Pension Plan or Pension Plans having aggregate Unfunded
Liabilities in excess of $2,000,000 shall be filed under Title IV of
ERISA by any Credit Party or any member of the Controlled Group, any
plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Pension Plan or
Pension Plans or a proceeding shall be instituted by a fiduciary of any
such Pension Plan or Pension Plans against any Credit Party or any
member of the Controlled Group to enforce Section 515 or 4219(c)(5) of
ERISA; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Pension Plan or
Pension Plans must be terminated;
(n) [RESERVED]
(o) Any Operative Agreement shall cease to be in full force
and effect;
(p) Except as to any Credit Party which is released in
connection with the Operative Agreements, the guaranty given by any
Guarantor under the Participation Agreement or any material provision
thereof shall cease to be in full force and effect, or any Guarantor or
any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
(q) A default shall occur under any sublease (each a
"Sublease") of Property between Karrington and the Lessee; provided,
however, if the Lessee is diligently pursuing the termination of such
Sublease and the recovery of the applicable Property
<PAGE> 31
from Karrington such default (a "Sublease Default") shall not
constitute a Lease Event of Default unless such Sublease has not been
terminated and the applicable Property recovered from Karrington within
90 days of the occurrence of the Sublease Default.
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination (provided,
notwithstanding the foregoing, this Lease shall be deemed to be automatically
terminated without the giving of notice upon the occurrence of a Lease Event of
Default under Sections 17.1(g), (h) or (i)), and this Lease shall terminate, and
all rights of Lessee under this Lease shall cease. Lessee shall, to the fullest
extent permitted by law, pay as Supplemental Rent all costs and expenses
incurred by or on behalf of Lessor or any other Financing Party, including
without limitation reasonable fees and expenses of counsel, as a result of any
Lease Event of Default hereunder.
A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY
ALLOW LESSOR TO TAKE THE PROPERTIES AND SELL THE PROPERTIES WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT.
17.2 SURRENDER OF POSSESSION.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall, upon thirty (30) days written notice, surrender to
Lessor possession of the Properties. Lessor may enter upon and repossess the
Properties by such means as are available at law or in equity, and may remove
Lessee and all other Persons and any and all personal property and Lessee's
equipment and personalty and severable Modifications from the Properties. Lessor
shall have no liability by reason of any such entry, repossession or removal
performed in accordance with applicable law. Upon the written demand of Lessor,
Lessee shall return the Properties promptly to Lessor, in the manner and
condition required by, and otherwise in accordance with the provisions of,
Section 22.1(c) hereof.
17.3 RELETTING.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessor may, but shall be under no obligation to, relet any or all
of the Properties, for the account of Lessee or otherwise, for such term or
terms (which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Lessor may determine, and
Lessor may collect, receive and retain the rents resulting from such reletting.
Lessor shall not be liable to Lessee for any failure to relet any Property or
for any failure to collect any rent due upon such reletting.
<PAGE> 32
17.4 DAMAGES.
Neither (a) the termination of this Lease as to all or any of
the Properties pursuant to Section 17.1; (b) the repossession of all or any of
the Properties; nor (c) the failure of Lessor to relet all or any of the
Properties, the reletting of all or any portion thereof, nor the failure of
Lessor to collect or receive any rentals due upon any such reletting, shall
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If any Lease Event of
Default shall have occurred and be continuing and notwithstanding any
termination of this Lease pursuant to Section 17.1, Lessee shall forthwith pay
to Lessor all Rent and other sums due and payable hereunder to and including
without limitation the date of such termination. Thereafter, on the days on
which the Basic Rent or Supplemental Rent, as applicable, are payable under this
Lease or would have been payable under this Lease if the same had not been
terminated pursuant to Section 17.1 and until the end of the Term hereof or what
would have been the Term in the absence of such termination, Lessee shall pay
Lessor, as current liquidated damages (it being agreed that it would be
impossible accurately to determine actual damages) an amount equal to the Basic
Rent and Supplemental Rent that are payable under this Lease or would have been
payable by Lessee hereunder if this Lease had not been terminated pursuant to
Section 17.1, less the net proceeds, if any, which are actually received by
Lessor with respect to the period in question of any reletting of any Property
or any portion thereof; provided, that Lessee's obligation to make payments of
Basic Rent and Supplemental Rent under this Section 17.4 shall continue only so
long as Lessor shall not have received the amounts specified in Section 17.6. In
calculating the amount of such net proceeds from reletting, there shall be
deducted all of Lessor's, any Holder's, the Agent's and any Lender's reasonable
expenses in connection therewith, including without limitation repossession
costs, brokerage or sales commissions, fees and expenses for counsel and any
necessary repair or alteration costs and expenses incurred in preparation for
such reletting. To the extent Lessor receives any damages pursuant to this
Section 17.4, such amounts shall be regarded as amounts paid on account of Rent.
Lessee specifically acknowledges and agrees that its obligations under this
Section 17.4 shall be absolute and unconditional under any and all circumstances
and shall be paid and/or performed, as the case may be, without notice or demand
and without any abatement, reduction, diminution, setoff, defense, counterclaim
or recoupment whatsoever.
17.5 POWER OF SALE.
Without limiting any other remedies set forth in this Lease,
Lessor and Lessee agree that Lessee has granted, pursuant to Section 7.1(b)
hereof and each Lease Supplement, a Lien against the Properties WITH POWER OF
SALE, and that, upon the occurrence and during the continuance of any Lease
Event of Default, Lessor shall have the power and authority, to the extent
provided by law, after prior notice and lapse of such time as may be required by
law, to foreclose its interest (or cause such interest to be foreclosed) in all
or any part of the Properties.
17.6 FINAL LIQUIDATED DAMAGES.
If a Lease Event of Default shall have occurred and be
continuing, whether or not this Lease shall have been terminated pursuant to
Section 17.1 and whether or not Lessor shall
1
<PAGE> 33
have collected any current liquidated damages pursuant to Section 17.4, Lessor
shall have the right to recover, by demand to Lessee and at Lessor's election,
and Lessee shall pay to Lessor, as and for final liquidated damages, but
exclusive of the indemnities payable under Section 11 of the Participation
Agreement (which, if requested, shall be paid concurrently), and in lieu of all
current liquidated damages beyond the date of such demand (it being agreed that
it would be impossible accurately to determine actual damages) the Termination
Value. Upon payment of the amount specified pursuant to the first sentence of
this Section 17.6, Lessee shall be entitled to receive from Lessor, either at
Lessee's request or upon Lessor's election, in either case at Lessee's cost, an
assignment of Lessor's entire right, title and interest in and to the
Properties, Improvements, Fixtures, Modifications, Equipment and all components
thereof, in each case in recordable form and otherwise in conformity with local
custom and free and clear of the Lien of this Lease (including without
limitation the release of any memoranda of Lease and/or the Lease Supplement
recorded in connection therewith) and any Lessor Liens. The Properties shall be
conveyed to Lessee "AS-IS, WHERE-IS" and in their then present physical
condition. If any statute or rule of law shall limit the amount of such final
liquidated damages to less than the amount agreed upon, Lessor shall be entitled
to the maximum amount allowable under such statute or rule of law; provided,
however, Lessee shall not be entitled to receive an assignment of Lessor's
interest in the Properties, the Improvements, Fixtures, Modifications, Equipment
or the components thereof unless Lessee shall have paid in full the Termination
Value. Lessee specifically acknowledges and agrees that its obligations under
this Section 17.6 shall be absolute and unconditional under any and all
circumstances and shall be paid and/or performed, as the case may be, without
notice or demand and without any abatement, reduction, diminution, setoff,
defense, counterclaim or recoupment whatsoever.
17.7 ENVIRONMENTAL COSTS.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall pay directly to any third party (or at Lessor's
election, reimburse Lessor) for the cost of any environmental testing and/or
remediation work undertaken respecting any Property, as such testing or work is
deemed appropriate in the reasonable judgment of Lessor. Lessee shall pay all
amounts referenced in the immediately preceding sentence within ten (10) days of
any request by Lessor for such payment. The provisions of this Section 17.7
shall not limit the obligations of Lessee under any Operative Agreement
regarding indemnification obligations, environmental testing, remediation and/or
work.
17.8 WAIVER OF CERTAIN RIGHTS.
If this Lease shall be terminated pursuant to Section 17.1,
Lessee waives, to the fullest extent permitted by Law, (a) any notice of
re-entry or the institution of legal proceedings to obtain re-entry or
possession; (b) any right of redemption, re-entry or possession; (c) the benefit
of any laws now or hereafter in force exempting property from liability for rent
or for debt; and (d) any other rights which might otherwise limit or modify any
of Lessor's rights or remedies under this Article XVII.
<PAGE> 34
17.9 ASSIGNMENT OF RIGHTS UNDER CONTRACTS.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall upon Lessor's demand immediately assign, transfer and
set over to Lessor all of Lessee's right, title and interest in and to each
agreement executed by Lessee in connection with the acquisition, installation,
testing, use, development, construction, operation, maintenance, repair,
refurbishment and restoration of the Properties (including without limitation
all right, title and interest of Lessee with respect to all warranty,
performance, service and indemnity provisions), as and to the extent that the
same relate to the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties or any of them.
17.10 REMEDIES CUMULATIVE.
The remedies herein provided shall be cumulative and in
addition to (and not in limitation of) any other remedies available at law,
equity or otherwise, including without limitation any mortgage foreclosure
remedies.
ARTICLE XVIII
18.1 LESSOR'S RIGHT TO CURE LESSEE'S LEASE DEFAULTS.
Lessor, without waiving or releasing any obligation or Lease
Event of Default, may (but shall be under no obligation to) remedy any Lease
Event of Default for the account and at the sole cost and expense of Lessee,
including without limitation the failure by Lessee to maintain the insurance
required by Article XIV, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon any
Property, and take all such action thereon as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of any lessee. All
out-of-pocket costs and expenses so incurred (including without limitation fees
and expenses of counsel), together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid by Lessor, shall be paid
by Lessee to Lessor on demand.
ARTICLE XIX
19.1 PROVISIONS RELATING TO LESSEE'S EXERCISE OF ITS PURCHASE
OPTION.
Subject to Section 19.2, in connection with any termination of
this Lease with respect to any Property pursuant to the terms of Section 16.2,
or in connection with Lessee's exercise of its Purchase Option, upon the date on
which this Lease is to terminate with respect to any Property, and upon tender
by Lessee of the amounts set forth in Sections 16.2(b) or 20.2, as applicable,
Lessor shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's
cost and expense an assignment (by deed or other appropriate instrument) of
Lessor's entire interest in
<PAGE> 35
such Property, in each case in recordable form and otherwise in conformity with
local custom and free and clear of any Lessor Liens attributable to Lessor but
without any other warranties (of title or otherwise) from Lessor. Such Property
shall be conveyed to Lessee "AS-IS, "WHERE-IS" and in then present physical
condition.
19.2 NO PURCHASE OR TERMINATION WITH RESPECT TO LESS THAN ALL OF A
PROPERTY.
Lessee shall not be entitled to exercise its Purchase Option or the
Sale Option separately with respect to a portion of any Property consisting of
Land, Equipment, Improvements and/or any interest pursuant to a Ground Lease but
shall be required to exercise its Purchase Option or the Sale Option with
respect to an entire Property.
ARTICLE XX
20.1 PURCHASE OPTION OR SALE OPTION-GENERAL PROVISIONS.
Not less than one hundred twenty (120) days and no more than
one hundred eighty (180) days prior to the Expiration Date or (respecting the
Purchase Option only) any Payment Date, Lessee may give Lessor irrevocable
written notice (the "Election Notice") that Lessee is electing to exercise
either (a) the option to purchase all, but not less than all, the Properties on
the Expiration Date or on the Payment Date specified in the Election Notice (the
"Purchase Option") or (b) with respect to an Election Notice given in connection
with the Expiration Date only, the option to remarket all, but not less than
all, the Properties to a Person other than Lessee or any Affiliate of Lessee and
cause a sale of such Properties to occur on the Expiration Date pursuant to the
terms of Section 22.1 (the "Sale Option"). If Lessee does not give an Election
Notice indicating the Purchase Option or the Sale Option at least one hundred
twenty (120) days and not more than one hundred eighty (180) days prior to the
Expiration Date, then, unless such Expiration Date is the final Expiration Date
to which the Term may be extended, the term of this Lease shall be extended in
accordance with Section 2.2 hereof; if such Expiration Date is the final
Expiration Date, then Lessee shall be deemed to have elected the Purchase
Option. If Lessee shall either (i) elect (or be deemed to have elected) to
exercise the Purchase Option or (ii) elect the Sale Option and fail to cause
all, but not less than all, the Properties to be sold in accordance with the
terms of Section 22.1 on the Expiration Date, then in either case Lessee (or its
designee) shall pay to Lessor on the date on which such purchase or sale is
scheduled to occur an amount equal to the Termination Value for all, but not
less than all, the Properties (which the parties do not intend to be a "bargain"
purchase price) and, upon receipt of such amounts and satisfaction of such
obligations, Lessor shall transfer to Lessee (or its designee) all of Lessor's
right, title and interest in and to all, but not less than all, the Properties
in accordance with Section 20.2.
20.2 LESSEE PURCHASE OPTION.
Provided, no Default or Event of Default shall have occurred
and be continuing (other than those that will be cured by the payment of the
Termination Value for all the
<PAGE> 36
Properties) and provided, that the Election Notice has been appropriately given
specifying the Purchase Option, Lessee (or its designee) shall purchase all the
Properties on the Expiration Date or Payment Date at a price equal to the
Termination Value for such Properties (which the parties do not intend to be a
"bargain" purchase price).
Subject to Section 19.2, in connection with any termination of
this Lease with respect to any Property pursuant to the terms of Section 16.2,
or in connection with Lessee's exercise of its Purchase Option, upon the date on
which this Lease is to terminate with respect to a Property or all of the
Properties, and upon tender by Lessee (or its designee) of the amounts set forth
in Section 16.2(b) or this Section 20.2, as applicable, Lessor shall execute,
acknowledge (where required) and deliver to Lessee (or its designee), at
Lessee's (or its designee) cost and expense, each of the following: (a) a
termination or assignment (as requested by the Lessee) of each applicable Ground
Lease and special or limited warranty Deeds conveying each Property (to the
extent it is real property not subject to a Ground Lease) to Lessee (or its
designee) free and clear of the Lien of this Lease, the Lien of the Credit
Documents and any Lessor Liens; (b) a Bill of Sale conveying each Property (to
the extent it is personal property) to Lessee (or its designee) free and clear
of the Lien of this Lease, the Lien of the Credit Documents and any Lessor
Liens; (c) any real estate tax affidavit or other document required by law to be
executed and filed in order to record the applicable Deed and/or the applicable
Ground Lease termination; and (d) FIRPTA affidavits. All of the foregoing
documentation must be in form and substance reasonably satisfactory to Lessor.
The applicable Property shall be conveyed to Lessee (or its designee) "AS-IS,
WHERE-IS" and in then present physical condition.
If any Property is the subject of remediation efforts
respecting Hazardous Substances at the Expiration Date which could materially
and adversely impact the Fair Market Sales Value of such Property (with
materiality determined in Lessor's discretion), then Lessee shall be obligated
to purchase each such Property pursuant to Section 20.2.
On the Expiration Date and/or any Payment Date on which Lessee
has elected to exercise its Purchase Option, Lessee shall pay (or cause to be
paid) to Lessor, the Agent and all other parties, as appropriate, the sum of all
costs and expenses incurred by any such party in connection with the election by
Lessee to exercise its Purchase Option and all Rent and all other amounts then
due and payable or accrued under this Lease and/or any other Operative
Agreement.
20.3 THIRD PARTY SALE OPTION.
(a) Provided, that (i) no Default or Event of Default shall
have occurred and be continuing and (ii) the Election Notice has been
appropriately given specifying the Sale Option, Lessee shall undertake
to cause a sale of the Properties on the Expiration Date (all as
specified in the Election Notice) in accordance with the provisions of
Section 22.1 hereof.
(b) In the event Lessee exercises the Sale Option then, as
soon as practicable and in all events not less than sixty (60) days
prior to the Expiration Date, Lessee at its
<PAGE> 37
expense shall cause to be delivered to Lessor a Phase I environmental
site assessment for each of the Properties recently prepared or updated
(no more than thirty (30) days old prior to the Sale Date) by an
independent recognized professional reasonably acceptable to Lessor and
in form, scope and content reasonably satisfactory to Lessor. Lessor
(at the direction of the Agent) shall elect whether the costs incurred
respecting the above-referenced Phase I environmental site assessment
shall be paid by either (i) sales proceeds from the Properties, (ii)
Lessor (but only the extent amounts are available therefor with respect
to the Available Commitments and the Available Holder Commitments or
each Lender and each Holder approves the necessary increases in the
Available Commitments and the Available Holder Commitments to fund such
costs) or (iii) Lessee; provided, amounts funded by the Lenders and the
Holders with respect to the foregoing shall be added to the Property
Cost of each applicable Property; provided, further, amounts funded by
Lessee with respect to the foregoing shall be a part of (and limited
by) the Maximum Residual Guarantee Amount. In the event that Lessor
shall not have received such environmental site assessment by the date
sixty (60) days prior to the Expiration Date or in the event that such
environmental assessment shall reveal the existence of any material
violation of Environmental Laws, other material Environmental Violation
or potential material Environmental Violation (with materiality
determined in each case by Lessor in its reasonable discretion), then
Lessee on the Expiration Date shall pay to Lessor an amount equal to
the Termination Value for all the Properties and any and all other
amounts due and owing hereunder. Upon receipt of such payment and all
other amounts due under the Operative Agreements, Lessor shall transfer
to Lessee all of Lessor's right, title and interest in and to all the
Properties in accordance with Section 19.1.
ARTICLE XXI
21.1 [INTENTIONALLY OMITTED].
ARTICLE XXII
22.1 SALE PROCEDURE.
(a) During the Marketing Period, Lessee, on behalf of Lessor,
shall obtain bids for the cash purchase of all the Properties in
connection with a sale to one (1) or more third party purchasers to be
consummated on the Expiration Date or such earlier date as is
acceptable to the Agent and the Lessee (the "Sale Date") for the
highest price available, shall notify Lessor promptly of the name and
address of each prospective purchaser and the cash price which each
prospective purchaser shall have offered to pay for each such Property
and shall provide Lessor with such additional information about the
bids and the bid solicitation procedure as Lessor may reasonably
request from time to time. All such prospective purchasers must be
Persons other than Lessee or any Affiliate of Lessee. On the Sale Date,
Lessee shall pay (or cause to be paid) to Lessor and all other parties,
as appropriate, all Rent and all other amounts then due and payable or
accrued
<PAGE> 38
under this Lease and/or any other Operative Agreement and Lessor (at
the direction of the Agent) shall elect whether the costs and expenses
incurred by Lessor and/or the Agent respecting the sale of one or more
Properties shall be paid by either (i) sales proceeds from the
Properties, (ii) Lessor (but only the extent amounts are available
therefor with respect to the Available Commitments and the Available
Holder Commitments or each Lender and each Holder approves the
necessary increases in the Available Commitments and the Available
Holder Commitments to fund such costs and expenses) or (iii) Lessee;
provided, amounts funded by the Lenders and the Holders with respect to
such costs and expenses shall be added to the Property Cost of each
applicable Property; provided, further, amounts funded by Lessee with
respect to such costs and expenses shall be a part of (and limited by)
the Maximum Residual Guarantee Amount.
Lessor may reject any and all bids and may solicit and obtain
bids by giving Lessee written notice to that effect; provided, however,
that notwithstanding the foregoing, Lessor may not reject the bids
submitted by Lessee if such bids, in the aggregate, are greater than or
equal to the sum of the Limited Recourse Amount for all the Properties,
and represent bona fide offers from one (1) or more third party
purchasers. If the highest price which a prospective purchaser or the
prospective purchasers shall have offered to pay for all the Properties
on the Sale Date is less than the sum of the Limited Recourse Amount
for all the Properties or if such bids do not represent bona fide
offers from one (1) or more third parties or if there are no bids,
Lessor may elect to retain one or more of the Properties by giving
Lessee prior written notice of Lessor's election to retain the same,
and promptly upon receipt of such notice, Lessee shall surrender, or
cause to be surrendered, each of the Properties specified in such
notice in accordance with the terms and conditions of Section 10.1.
Upon acceptance of any bid, Lessor agrees, at Lessee's request and
expense, to execute a contract of sale with respect to such sale, so
long as the same is consistent with the terms of this Article 22 and
provides by its terms that it is nonrecourse to Lessor.
Unless Lessor shall have elected to retain one or more of the
Properties pursuant to the provisions of the preceding paragraph,
Lessee shall arrange for Lessor to sell all the Properties free and
clear of the Lien of this Lease and any Lessor Liens attributable to
Lessor, without recourse or warranty (of title or otherwise), for cash
on the Sale Date to the purchaser or purchasers offering the highest
cash sales price, as identified by Lessee or Lessor, as the case may
be; provided, however, solely as to Lessor or the Trust Company, in its
individual capacity, any Lessor Lien shall not constitute a Lessor Lien
so long as Lessor or the Trust Company, in its individual capacity, is
diligently and in good faith contesting, at the cost and expense of
Lessor or the Trust Company, in its individual capacity, such Lessor
Lien by appropriate proceedings in which event the applicable Sale
Date, all without penalty or cost to Lessee, shall be delayed for the
period of such contest. To effect such transfer and assignment, Lessor
shall execute, acknowledge (where required) and deliver to the
appropriate purchaser each of the following: (a) special or limited
warranty Deeds conveying each such Property (to the extent it is real
property titled to Lessor) and an assignment of the Ground Lease
conveying the leasehold interest of Lessor in each such Property (to
the extent it is real property and subject to a Ground
<PAGE> 39
Lease) to the appropriate purchaser free and clear of the Lien of this
Lease, the Lien of the Credit Documents and any Lessor Liens; (b) a
Bill of Sale conveying each such Property (to the extent it is personal
property) titled to Lessor to the appropriate purchaser free and clear
of the Lien of this Lease, the Lien of the Credit Documents and any
Lessor Liens; (c) any real estate tax affidavit or other document
required by law to be executed and filed in order to record each Deed
and/or each Ground Lease assignment; and (d) FIRPTA affidavits, as
appropriate. All of the foregoing documentation must be in form and
substance reasonably satisfactory to Lessor. Lessee shall surrender the
Properties so sold or subject to such documents to each purchaser in
the condition specified in Section 10.1, or in such other condition as
may be agreed between Lessee and such purchaser. Lessee shall not take
or fail to take any action which would have the effect of unreasonably
discouraging bona fide third party bids for any Property. If each of
the Properties is not either (i) sold on the Sale Date in accordance
with the terms of this Section 22.1, or (ii) retained by Lessor
pursuant to an affirmative election made by Lessor pursuant to the
second sentence of the second paragraph of this Section 22.1(a), then
(x) Lessee shall be obligated to pay Lessor on the Sale Date an amount
equal to the aggregate Termination Value for all the Properties less
any sales proceeds received by the Lessor, and (y) Lessor shall
transfer each applicable Property to Lessee in accordance with Section
20.2.
(b) If the Properties are sold on a Sale Date to one (1) or
more third party purchasers in accordance with the terms of Section
22.1(a) and the aggregate purchase price paid for all the Properties is
less than the sum of the aggregate Property Cost for all the Properties
(hereinafter such difference shall be referred to as the "Deficiency
Balance"), then Lessee hereby unconditionally promises to pay to Lessor
on the Sale Date the lesser of (i) the Deficiency Balance, or (ii) the
Maximum Residual Guarantee Amount for all the Properties. On a Sale
Date if (x) Lessor receives the aggregate Termination Value for all the
Properties from one (1) or more third party purchasers, (y) Lessor and
such other parties receive all other amounts specified in the last
sentence of the first paragraph of Section 22.1(a) and (z) the
aggregate purchase price paid for all the Properties on such date
exceeds the sum of the aggregate Property Cost for all the Properties,
then Lessee may retain such excess. If one or more of the Properties
are retained by Lessor pursuant to an affirmative election made by
Lessor pursuant to the provisions of Section 22.1(a), then Lessee
hereby unconditionally promises to pay to Lessor on the Sale Date an
amount equal to the Maximum Residual Guarantee Amount for the
Properties so retained. Any payment of the foregoing amounts described
in this Section 22.1(b) shall be made together with a payment of all
other amounts referenced in the last sentence of the first paragraph of
Section 22.1(a).
(c) In the event that all the Properties are either sold to
one (1) or more third party purchasers on the Sale Date or retained by
Lessor in connection with an affirmative election made by Lessor
pursuant to the provisions of Section 22.1(a), then in either case on
the applicable Sale Date Lessee shall provide Lessor or such third
party purchaser (unless otherwise agreed by such third party purchaser)
with (i) all permits, certificates of occupancy, governmental licenses
and authorizations necessary to use, operate, repair, access and
maintain each such Property for the purpose it is being used by Lessee,
and (ii)
<PAGE> 40
such manuals, permits, easements, licenses, intellectual property,
know-how, rights-of-way and other rights and privileges in the nature
of an easement as are reasonably necessary or desirable in connection
with the use, operation, repair, access to or maintenance of each such
Property for its intended purpose or otherwise as Lessor or such third
party purchaser(s) shall reasonably request (and a royalty-free license
or similar agreement to effectuate the foregoing on terms reasonably
agreeable to Lessor or such third party purchaser(s), as applicable).
All assignments, licenses, easements, agreements and other deliveries
required by clauses (i) and (ii) of this paragraph (c) shall be in form
reasonably satisfactory to Lessor or such third party purchaser(s), as
applicable, and shall be fully assignable (including without limitation
both primary assignments and assignments given in the nature of
security) without payment of any fee, cost or other charge. Lessee
shall also execute any documentation requested by Lessor or such third
party purchaser(s), as applicable, evidencing the continuation or
assignment of each Ground Lease.
22.2 APPLICATION OF PROCEEDS OF SALE.
In the event Lessee receives any proceeds of sale of any
Property, such proceeds shall be deemed to have been received in trust on behalf
of Lessor and Lessee shall promptly remit such proceeds to Lessor. Lessor shall
apply the proceeds of sale of any Property in the following order of priority:
(a) FIRST, to pay or to reimburse Lessor (and/or the Agent, as
the case may be) for the payment of all reasonable costs and expenses
incurred by Lessor (and/or the Agent, as the case may be) in connection
with the sale (to the extent Lessee has not satisfied its obligation to
pay such costs and expenses);
(b) SECOND, so long as the Credit Agreement is in effect and
any Loans or Holder Advances or any amount is owing to the Financing
Parties under any Operative Agreement, to the Agent to be applied
pursuant to intercreditor provisions among Lessor, the Lenders and the
Holders contained in the Operative Agreements; and
(c) THIRD, to Lessee.
22.3 INDEMNITY FOR EXCESSIVE WEAR.
If the proceeds of the sale described in Section 22.1 with
respect to the Properties shall be less than the Limited Recourse Amount with
respect to the Properties, and at the time of such sale it shall have been
reasonably determined (pursuant to the Appraisal Procedure) that the Fair Market
Sales Value of the Properties shall have been impaired by greater than expected
wear and tear during the term of the Lease, Lessee shall pay to Lessor within
ten (10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Sale Proceeds Shortfall, whichever amount is less.
<PAGE> 41
22.4 APPRAISAL PROCEDURE.
For determining the Fair Market Sales Value of the Properties
or any other amount which may, pursuant to any provision of any Operative
Agreement, be determined by an appraisal procedure, Lessor and Lessee shall use
the following procedure (the "Appraisal Procedure"). Lessor and Lessee shall
endeavor to reach a mutual agreement as to such amount for a period of ten (10)
days from commencement of the Appraisal Procedure under the applicable section
of the Lease, and if they cannot agree within ten (10) days, then two (2)
qualified appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor,
shall mutually agree thereupon, but if either party shall fail to choose an
appraiser within twenty (20) days after notice from the other party of the
selection of its appraiser, then the appraisal by such appointed appraiser shall
be binding on Lessee and Lessor. If the two (2) appraisers cannot agree within
twenty (20) days after both shall have been appointed, then a third appraiser
shall be selected by the two (2) appraisers or, failing agreement as to such
third appraiser within thirty (30) days after both shall have been appointed, by
the American Arbitration Association. The decisions of the three (3) appraisers
shall be given within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of the other
two (2) shall be discarded and such average shall be binding on Lessor and
Lessee; provided, that if the highest appraisal and the lowest appraisal are
equidistant from the third appraisal, the third appraisal shall be binding on
Lessor and Lessee. The fees and expenses of the appraiser appointed by Lessee
shall be paid by Lessee; the fees and expenses of the appraiser appointed by
Lessor shall be paid by Lessor (such fees and expenses not being indemnified
pursuant to Section 13 of the Participation Agreement); and the fees and
expenses of the third appraiser shall be divided equally between Lessee and
Lessor.
22.5 CERTAIN OBLIGATIONS CONTINUE.
During the Marketing Period, the obligation of Lessee to pay
Rent with respect to the Properties (including without limitation the
installment of Basic Rent due on the Expiration Date) shall continue
undiminished until payment in full to Lessor of the sale proceeds, if any, the
Maximum Residual Guarantee Amount, the amount due under Section 22.3, if any,
and all other amounts due to Lessor or any other Person with respect to all
Properties or any Operative Agreement. Lessor shall have the right, but shall be
under no duty, to solicit bids, to inquire into the efforts of Lessee to obtain
bids or otherwise to take action in connection with any such sale, other than as
expressly provided in this Article XXII.
ARTICLE XXIII
23.1 HOLDING OVER.
If Lessee shall for any reason remain in possession of a
Property after the expiration or earlier termination of this Lease as to such
Property (unless such Property is conveyed to Lessee), such possession shall be
as a tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were
<PAGE> 42
the Lease then in full force and effect with respect to such Property and Lessee
shall continue to pay Basic Rent at the lesser of the highest lawful rate and
one hundred ten percent (110%) of the last payment of Basic Rent due with
respect to such Property prior to such expiration or earlier termination of this
Lease. Such Basic Rent shall be payable from time to time upon demand by Lessor
and such additional amount of Basic Rent shall be applied by Lessor ratably to
the Lenders and the Holders based on their relative amounts of the then
outstanding aggregate Property Cost for all Properties. During any period of
tenancy at sufferance, Lessee shall, subject to the second preceding sentence,
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenants at sufferance, to continue their occupancy and
use of such Property. Nothing contained in this Article XXIII shall constitute
the consent, express or implied, of Lessor to the holding over of Lessee after
the expiration or earlier termination of this Lease as to any Property (unless
such Property is conveyed to Lessee) and nothing contained herein shall be read
or construed as preventing Lessor from maintaining a suit for possession of such
Property or exercising any other remedy available to Lessor at law or in equity.
ARTICLE XXIV
24.1 RISK OF LOSS.
During the Term, unless Lessee shall not be in actual
possession of any Property in question solely by reason of Lessor's exercise of
its remedies of dispossession under Article XVII, the risk of loss or decrease
in the enjoyment and beneficial use of such Property as a result of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be answerable or
accountable therefor.
ARTICLE XXV
25.1 ASSIGNMENT.
(a) Lessee may not assign this Lease or any of its rights or
obligations hereunder or with respect to any Property in whole or in
part to any Person without the prior written consent of the Agent, the
Lenders, the Holders and Lessor.
(b) No assignment by Lessee (referenced in this Section 25.1
or otherwise) or other relinquishment of possession to any Property
shall in any way discharge or diminish any of the obligations of Lessee
to Lessor hereunder and Lessee shall remain directly and primarily
liable under the Operative Agreements as to any rights or obligations
assigned by Lessee or regarding any Property in which rights or
obligations have been assigned or otherwise transferred.
<PAGE> 43
25.2 SUBLEASES.
(a) Promptly, but in any event within five (5) Business Days,
following the execution and delivery of any sublease permitted by this
Article XXV, Lessee shall notify Lessor of the execution of such
sublease. As of the date of each Lease Supplement, Lessee shall lease
the respective Properties described in such Lease Supplement from
Lessor, and any existing tenant respecting such Property shall
automatically be deemed to be a subtenant of Lessee and not a tenant of
Lessor.
(b) Without the prior written consent of the Agent, any
Lender, any Holder or Lessor and subject to the other provisions of
this Section 25.2, Lessee may sublet any Property or portion thereof to
any wholly-owned Subsidiary of Lessee or to Karrington. Except as
referenced in the immediately preceding sentence, no other subleases
shall be permitted unless consented to in writing by Lessor. All
subleasing shall be done on market terms and shall in no way diminish
the fair market value or useful life of any applicable Property.
(c) No sublease (referenced in this Section 25.2 or otherwise)
or other relinquishment of possession to any Property shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder
and Lessee shall remain directly and primarily liable under this Lease
as to such Property, or portion thereof, so sublet. During the Basic
Term, the term of any such sublease shall not extend beyond the Basic
Term. During any Renewal Term, the term of any such sublease shall not
extend beyond such Renewal Term. Each sublease shall be expressly
subject and subordinate to this Lease.
ARTICLE XXVI
26.1 NO WAIVER.
No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy upon a
default hereunder, and no acceptance of full or partial payment of Rent during
the continuance of any such default, shall constitute a waiver of any such
default or of any such term. To the fullest extent permitted by law, no waiver
of any default shall affect or alter this Lease, and this Lease shall continue
in full force and effect with respect to any other then existing or subsequent
default.
ARTICLE XXVII
27.1 ACCEPTANCE OF SURRENDER.
No surrender to Lessor of this Lease or of all or any portion
of any Property or of any part of any thereof or of any interest therein shall
be valid or effective unless agreed to and accepted in writing by Lessor and no
act by Lessor or the Agent or any representative or agent of
<PAGE> 44
Lessor or the Agent, other than a written acceptance, shall constitute an
acceptance of any such surrender.
27.2 NO MERGER OF TITLE.
There shall be no merger of this Lease or of the leasehold
estate created hereby by reason of the fact that the same Person may acquire,
own or hold, directly or indirectly, in whole or in part, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, (b) any right, title or interest in any Property, (c) any Notes, or (d)
a beneficial interest in Lessor.
ARTICLE XXVIII
28.1 INCORPORATION OF COVENANTS.
Reference is made to the Master Guaranty of Payment and the
representations and warranties of Lessee contained in Article 2 of the Master
Guaranty of Payment (hereinafter referred to as the "Incorporated
Representations and Warranties"). Lessee agrees with Lessor that the
Incorporated Representations and Warranties (and all other relevant provisions
of the Master Guaranty of Payment related thereto, including without limitation
the defined terms which are used in the Incorporated Representations and
Warranties, referred to as the "Additional Incorporated Terms") are hereby
incorporated by reference into this Lease to the same extent and with the same
effect as if set forth fully herein and shall inure to the benefit of Lessor,
without giving effect to any waiver, amendment, modification or replacement of
the Master Guaranty of Payment or any term or provision of the Incorporated
Representations and Warranties occurring subsequent to the date of this Lease,
except to the extent otherwise specifically provided in the following provisions
of this paragraph. In the event a waiver is granted under the Master Guaranty of
Payment or an amendment or modification is executed with respect to the Master
Guaranty of Payment, and such waiver, amendment and/or modification affects the
Incorporated Representations and Warranties or the Additional Incorporated
Terms, then such waiver, amendment or modification shall be effective with
respect to the Incorporated Representations and Warranties and the Additional
Incorporated Terms as incorporated by reference into this Lease only if
consented to in writing by the Agent (acting upon the direction of the Majority
Secured Parties). In the event of any replacement of the Master Guaranty of
Payment with a similar arrangement (the "New Facility") the representations and
warranties, covenants and additional terms contained in the New Facility which
correspond to the representations and warranties contained in Article 2 and such
additional terms (each of the foregoing contained in the Master Guaranty of
Payment) shall become the Incorporated Representations and Warranties and the
Additional Incorporated Terms only if consented to in writing by the Agent
(acting upon the direction of the Majority Secured Parties) and, if such consent
is not granted or if the Master Guaranty of Payment is terminated and not
replaced, then the representations and warranties and covenants contained in
Article 2 and such additional terms (each of the foregoing contained in the
Master Guaranty of Payment (together with any modifications or amendments
approved in
<PAGE> 45
accordance with this paragraph)) shall continue to be the Incorporated
Representations and Warranties and the Additional Incorporated Terms hereunder.
ARTICLE XXIX
29.1 NOTICES.
All notices required or permitted to be given under this Lease
shall be in writing and delivered as provided in the Participation Agreement.
ARTICLE XXX
30.1 MISCELLANEOUS.
Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any provision of
this Lease shall be held to be unenforceable in any jurisdiction, such
unenforceability shall not affect the enforceability of any other provision of
this Lease and such jurisdiction or of such provision or of any other provision
hereof in any other jurisdiction.
30.2 AMENDMENTS AND MODIFICATIONS.
Neither this Lease nor any Lease Supplement may be amended,
waived, discharged or terminated except in accordance with the provisions of
Section 12.4 of the Participation Agreement.
30.3 SUCCESSORS AND ASSIGNS.
All the terms and provisions of this Lease shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
30.4 HEADINGS AND TABLE OF CONTENTS.
The headings and table of contents in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
30.5 COUNTERPARTS.
This Lease may be executed in any number of counterparts, each
of which shall be an original, but all of which shall together constitute one
(1) and the same instrument.
<PAGE> 46
30.6 GOVERNING LAW.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF VIRGINIA, EXCEPT TO THE
EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE REQUIRED
TO APPLY.
30.7 CALCULATION OF RENT.
All calculation of Rent payable hereunder shall be computed
based on the actual number of days elapsed over a year of three hundred
sixty-five (365) (or three hundred sixty-six (366), as applicable) days.
30.8 MEMORANDA OF LEASE AND LEASE SUPPLEMENTS.
This Lease shall not be recorded; provided, Lessor and Lessee
shall promptly record (a) a memorandum of this Lease and the applicable Lease
Supplement (in substantially the form of Exhibit B attached hereto) or a short
form lease (in form and substance reasonably satisfactory to Lessor) regarding
each Property promptly after the acquisition thereof in the local filing office
with respect thereto, in all cases at Lessee's cost and expense, and as required
under applicable law to sufficiently evidence this Lease and any such Lease
Supplement in the applicable real estate filing records. Lessor (at the
direction of the Agent) shall elect whether the costs and expenses incurred by
Lessor and/or the Agent respecting the recordation of the above-referenced items
shall be paid by either (i) Lessor (but only the extent amounts are available
therefor with respect to the Available Commitments and the Available Holder
Commitments or each Lender and each Holder approves the necessary increases in
the Available Commitments and the Available Holder Commitments to fund such
costs and expenses) or (ii) Lessee; provided, amounts funded by the Lenders and
the Holders with respect to such costs and expenses shall be added to the
Property Cost of each applicable Property; provided, further, amounts funded by
Lessee with respect to such costs and expenses shall be a part of (and limited
by) the Maximum Residual Guarantee Amount.
30.9 ALLOCATIONS BETWEEN THE LENDERS AND THE HOLDERS.
Notwithstanding any other term or provision of this Lease to
the contrary, the allocations of the proceeds of the Properties and any and all
other Rent and other amounts received hereunder shall be subject to the
inter-creditor provisions between the Lenders and the Holders contained in the
Operative Agreements (or as otherwise agreed among the Lenders and the Holders
from time to time).
30.10 LIMITATIONS ON RECOURSE.
Notwithstanding anything contained in this Lease to the
contrary, Lessee agrees to look solely to Lessor's estate and interest in the
Properties (and in no circumstance to the Agent, the Lenders, the Holders or
otherwise to Lessor) for the collection of any judgment requiring the
<PAGE> 47
payment of money by Lessor in the event of liability by Lessor, and no other
property or assets of Lessor or any shareholder, owner or partner (direct or
indirect) in or of Lessor, or any director, officer, employee, beneficiary,
Affiliate of any of the foregoing shall be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Lessee under or
with respect to this Lease, the relationship of Lessor and Lessee hereunder or
Lessee's use of the Properties or any other liability of Lessor to Lessee.
Nothing in this Section shall be interpreted so as to limit the terms of
Sections 6.1 or 6.2 or the provisions of Section 12.9 of the Participation
Agreement.
30.11 WAIVERS OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO
THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LEASE AND FOR ANY COUNTERCLAIM THEREIN.
30.12 EXERCISE OF LESSOR RIGHTS.
Lessee hereby acknowledges and agrees that the rights and
powers of Lessor under this Lease have been assigned to the Agent pursuant to
the terms of the Security Agreement and the other Operative Agreements. Lessor
and Lessee hereby acknowledge and agree that (a) the Agent shall, in its
discretion, direct and/or act on behalf of Lessor pursuant to the provisions of
Sections 8.2(h) and 8.6 of the Participation Agreement, (b) all notices to be
given to Lessor shall be given to the Agent and (c) all notices to be given by
Lessor may be given by the Agent, at its election.
30.13 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE
HEREIN, MUTATIS MUTANDIS.
30.14 USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND
CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN
EFFECT. TO THE EXTENT ANY RENT OR PAYMENTS HEREUNDER ARE HEREINAFTER
CHARACTERIZED BY ANY COURT OF COMPETENT JURISDICTION AS THE REPAYMENT OF
PRINCIPAL AND INTEREST THEREON, THIS SECTION 30.14 SHALL APPLY. ANY SUCH RENT OR
PAYMENTS SO CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST."
ALL AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF
THIS PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH
<PAGE> 48
AGREEMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR
ORAL. IN NO WAY, NOR IN ANY EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION
PREPAYMENT OR ACCELERATION OF THE MATURITY OF ANY OBLIGATION), SHALL ANY
INTEREST TAKEN, RESERVED, CONTRACTED FOR, CHARGED, OR RECEIVED UNDER THIS LEASE
OR OTHERWISE, EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE
LAW. IF, FROM ANY POSSIBLE CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR
ANY OTHER DOCUMENT OR AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS
OF THE MAXIMUM NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE
PROVISIONS OF THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS
SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER
APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW
DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS
CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR
UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF
THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN
EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE
COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST,
OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH
AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED
TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF
THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST
WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT
INTEND TO CHARGE OR RECEIVE ANY UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND.
ALL INTEREST PAID OR AGREED TO BE PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE
FULL STATED TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS
LEASE SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED
THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 49
IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1, as
Lessor
By: /s/ VAL T. ORTON
----------------------------------------
Name: Val T. Orton
--------------------------------------
Title: Vice President
-------------------------------------
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living Investments, Inc.,
as Sole Member
By: /s/ JAMES S. POPE
----------------------------------------
Name: James S. Pope
--------------------------------------
Title: Senior Vice President
-------------------------------------
Receipt of this original
counterpart of the foregoing
Lease is hereby acknowledged
as the date hereof
NATIONSBANK, N.A.,
as the Agent
By: /s/ LESLIE M. ZUGA
------------------------------------
Name: Leslie M. Zuga
----------------------------------
Title: Senior Vice President
---------------------------------
<PAGE> 50
EXHIBIT A TO THE LEASE
LEASE SUPPLEMENT NO. ___
THIS LEASE SUPPLEMENT NO. ___ (this "Lease Supplement") dated as of
___________, 199__ between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not individually, but solely as the Owner Trustee under the
Sunrise Trust 1998-1, as lessor (the "Lessor"), and SUNRISE MIDWEST LEASING,
L.L.C., a Virginia limited liability company, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS; RULES OF USAGE. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of December 2, 1998, among Lessee, Sunrise Assisted Living, Inc., as
Guarantor, Lessor, not individually, except as expressly stated therein, but
solely as the Owner Trustee under the Sunrise Trust 1998-1, the various banks
and other lending institutions which are parties thereto from time to time, as
the Holders, the various banks and other lending institutions which are parties
thereto from time to time, as the Lenders, and NationsBank, N.A., as the Agent
for the Lenders and respecting the Security Documents, as the Agent for the
Lenders and Holders, to the extent of their interests, as such may be amended,
modified, extended, supplemented, restated and/or replaced from time to time.
SECTION 2. THE PROPERTIES. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and [A
LEGAL DESCRIPTION OF THE LAND / A COPY OF THE GROUND LEASE] attached hereto as
Schedule 1-C. Effective upon the execution and delivery of this Lease Supplement
by Lessor and Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease. Without further action, any and all additional
Equipment funded under the Operative Agreements and any and all additional
Improvements made to the Land shall be deemed to be titled to the Lessor and
subject to the terms and conditions of the Lease and this Lease Supplement.
This Lease Supplement shall constitute a mortgage, deed of trust,
security agreement and financing statement under the laws of the state in which
the Leased Property is situated. The maturity date of the obligations secured
hereby shall be [___________].
For purposes of provisions of the Lease and this Lease Supplement
related to the creation and enforcement of the Lease and this Lease Supplement
as a security agreement and a fixture
<PAGE> 51
filing, Lessee is the debtor and Lessor is the secured party. The mailing
addresses of the debtor (Lessee herein) and of the secured party (Lessor herein)
from which information concerning security interests hereunder may be obtained
are set forth on the signature pages hereto. A carbon, photographic or other
reproduction of the Lease and this Lease Supplement or of any financing
statement related to the Lease and this Lease Supplement shall be sufficient as
a financing statement for any of the purposes referenced herein.
SECTION 3. USE OF PROPERTY. At all times during the Term with respect
to each Property, Lessee will comply with all obligations under and (to the
extent no Event of Default exists and provided, that such exercise will not
impair the value of such Property) shall be permitted to exercise all rights and
remedies under, all operation and easement agreements and related or similar
agreements applicable to such Property.
SECTION 4. RATIFICATION; INCORPORATION BY REFERENCE. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. ORIGINAL LEASE SUPPLEMENT. The single executed original of
this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Agent therefor on or following the signature page thereof shall be the original
executed counterpart of this Lease Supplement (the "Original Executed
Counterpart"). To the extent that this Lease Supplement constitutes chattel
paper, as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY
AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE
OF VIRGINIA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. MORTGAGE; POWER OF SALE. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. COUNTERPART EXECUTION. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
<PAGE> 52
For purposes of the provisions of this Lease Supplement concerning this
Lease Supplement constituting a security agreement and fixture filing, the
addresses of the debtor (Lessee herein) and the secured party (Lessor herein),
from whom information may be obtained about this Lease Supplement, are as set
forth on the signature pages hereto.
[The remainder of this page has been intentionally left blank.]
<PAGE> 53
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1, as
Lessor
By: ____________________________________
Name: __________________________________
Title: _________________________________
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Val T. Orton
Vice President
SUNRISE MIDWEST LEASING, L.L.C.,
as Lessee
by Sunrise Assisted Living Investments, Inc.
as Sole Member
By: ____________________________________
Name: __________________________________
Title: _________________________________
SUNRISE MIDWEST LEASING, L.L.C.
c/o Sunrise Assisted Living Investments, Inc.
9401 Lee Highway, Suite 300
Fairfax, Virginia 22031
Attn: Thomas B. Newell
<PAGE> 54
Receipt of this original counterpart
of the foregoing Lease Supplement
is hereby acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
NationsBank, N.A.
10 Light Street, MD4-302-20-05
Baltimore, Maryland 21202-1499
Attn: Leslie Zuga
<PAGE> 55
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _________________ this _____ day of
______________, by ________________, as __________________ of FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not individually,
but solely as the Owner Trustee under the Sunrise Trust 1998-1, on behalf of the
Owner Trustee.
[Notarial Seal] ____________________________________
Notary Public
My commission expires: ____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _________________ this _____ day of
______________, by ________________, as __________________ of SUNRISE ASSISTED
LIVING INVESTMENTS, INC., a Delaware corporation, as Sole Member of SUNRISE
MIDWEST LEASING, L.L.C., a Virginia limited liability company, on behalf of the
limited liability company.
[Notarial Seal] ____________________________________
Notary Public
My commission expires: ____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of ________________ this ____ day of
___________, by _____________, as __________________ of NATIONSBANK, N.A., a
national banking association, as the Agent.
[Notarial Seal] ____________________________________
Notary Public
My commission expires: ____________
<PAGE> 56
SCHEDULE 1
TO LEASE SUPPLEMENT NO. ____
(Description of the Leased Property)
<PAGE> 57
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. ____
(Equipment)
<PAGE> 58
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. ____
(Improvements)
<PAGE> 59
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. ____
[(LAND)/
(GROUND LEASE)]
<PAGE> 60
EXHIBIT B TO THE LEASE
[MODIFY OR SUBSTITUTE SHORT FORM LEASE AS
NECESSARY FOR LOCAL LAW REQUIREMENTS]
Recordation requested by:
Moore & Van Allen, PLLC
After recordation return to:
Moore & Van Allen, PLLC (WMA)
100 North Tryon Street, Floor 47
Charlotte, NC 28202-4003
Space above this line
for Recorder's use
- --------------------------------------------------------------------------------
MEMORANDUM OF LEASE AGREEMENT
AND
LEASE SUPPLEMENT NO. ____
THIS MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO. ____
("Memorandum"), dated as of _____________, 199___, is by and between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually, but solely as the Owner Trustee under the Sunrise Trust 1998-1,
with an office at 79 South Main Street, Salt Lake City, Utah 84111 (hereinafter
referred to as "Lessor") and SUNRISE MIDWEST LEASING, L.L.C., a Virginia limited
liability company, with an office at 9401 Lee Highway, Suite 300, Fairfax,
Virginia 22031 (hereinafter referred to as "Lessee").
WITNESSETH:
That for value received, Lessor and Lessee do hereby covenant, promise
and agree as follows:
1. DEMISED PREMISES AND DATE OF LEASE. Lessor has leased to Lessee, and
Lessee has leased from Lessor, for the Term (as hereinafter defined), certain
real property and other property located in ________________, which is described
in the attached Schedule 1 (the "Property"), pursuant to the terms of a Lease
Agreement between Lessor and Lessee dated as of __________, 1998 (as such may be
amended, modified, extended, supplemented, restated and/or replaced from time to
time, "Lease") and a Lease Supplement No. ____ between Lessor and Lessee dated
as of ______________ (the "Lease Supplement").
<PAGE> 61
The Lease and the Lease Supplement shall constitute a mortgage, deed of
trust and security agreement and financing statement under the laws of the state
in which the Property is situated. The maturity date of the obligations secured
thereby shall be ___________.
For purposes of provisions of the Lease and the Lease Supplement
related to the creation and enforcement of the Lease and the Lease Supplement as
a security agreement and a fixture filing, Lessee is the debtor and Lessor is
the secured party. The mailing addresses of the debtor (Lessee herein) and of
the secured party (Lessor herein) from which information concerning security
interests hereunder may be obtained are as set forth on the signature pages
hereof. A carbon, photographic or other reproduction of this Memorandum or of
any financing statement related to the Lease and the Lease Supplement shall be
sufficient as a financing statement for any of the purposes referenced herein.
2. TERM, RENEWAL, EXTENSION AND PURCHASE OPTION. The term of the Lease
for the Property ("Term") commenced as of __________, 19__ and shall end as of
_________, 19__, unless the Term is extended or earlier terminated in accordance
with the provisions of the Lease. The tenant has a purchase option under the
Lease.
3. TAX PAYER NUMBERS.
Lessor's tax payer number: __________________.
Lessee's tax payer number: __________________.
4. MORTGAGE; POWER OF SALE. Without limiting any other remedies set
forth in the Lease, in the event that a court of competent jurisdiction rules
that the Lease constitutes a mortgage, deed of trust or other secured financing
as is the intent of the parties, then Lessor and Lessee agree that Lessee has
granted, pursuant to the terms of the Lease and the Lease Supplement, a Lien
against the Property WITH POWER OF SALE, and that, upon the occurrence and
during the continuance of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Property.
5. EFFECT OF MEMORANDUM. The purpose of this instrument is to give
notice of the Lease and the Lease Supplement and their respective terms,
covenants and conditions to the same extent as if the Lease and the Lease
Supplement were fully set forth herein. This Memorandum shall not modify in any
manner the terms, conditions or intent of the Lease or the Lease Supplement and
the parties agree that this Memorandum is not intended nor shall it be used to
interpret the Lease or the Lease Supplement or determine the intent of the
parties under the Lease or the Lease Supplement.
[The remainder of this page has been intentionally left blank.]
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LESSOR:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as the
Owner Trustee under the Sunrise Trust 1998-1
By: ____________________________________
Name: __________________________________
Title: _________________________________
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Val T. Orton
Vice President
LESSEE:
SUNRISE MIDWEST LEASING, L.L.C.
by Sunrise Assisted Living Investments, Inc.,
as Sole Member
By: ____________________________________
Name: __________________________________
Title: _________________________________
SUNRISE MIDWEST LEASING, L.L.C.
c/o Sunrise Assisted Living Investments, Inc.
9401 Lee Highway, Suite 300
Fairfax, Virginia 22031
Attn: Thomas B. Newell
<PAGE> 63
SCHEDULE 1
(Description of Property)
<PAGE> 64
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Memorandum of Lease Agreement and Lease Supplement No.
_____ was acknowledged before me, the undersigned Notary Public, in the County
of _________________ this _____ day of ______________, by ________________, as
__________________ of FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not individually, but solely as the Owner Trustee under the
Sunrise Trust 1998-1, on behalf of the Owner Trustee.
[Notarial Seal] ____________________________________
Notary Public
My commission expires: ____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Memorandum of Lease Agreement and Lease Supplement No.
_____ was acknowledged before me, the undersigned Notary Public, in the County
of _________________ this _____ day of ______________, by ________________, as
__________________ of SUNRISE ASSISTED LIVING INVESTMENTS, INC., a Delaware
corporation, as Sole Member of SUNRISE MIDWEST LEASING, L.L.C., a Virginia
limited liability company, on behalf of the limited liability company.
[Notarial Seal] ____________________________________
Notary Public
My commission expires:____________
