<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-11999
ALTERRA HEALTHCARE CORPORATION
DELAWARE 39-1771281
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 N. SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WI
53005
(Address of principal executive offices)
(Zip Code)
(414) 641-5100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
AS OF NOVEMBER 12, 1999, THERE WERE 22,084,888 SHARES OF THE
REGISTRANT'S COMMON STOCK, PAR VALUE $0.01, OUTSTANDING.
(Number of shares outstanding of each class of the issuer's classes of common
stock, as of the latest practical date.)
<PAGE> 2
ALTERRA HEALTHCARE CORPORATION
INDEX
Part I. Financial Information
<TABLE>
<CAPTION>
PAGE NO.
-----------
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of September 30, 1999 and
December 31, 1998.............................................................. 1
Condensed Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 1999 and 1998....................................... 2
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1999 and 1998.............................................. 3
Notes to Condensed Consolidated Financial Statements........................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................... 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................................... 13
</TABLE>
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------- ---------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 33,046 $ 40,621
Accounts receivable.............................................. 8,057 4,045
Pre-opening costs, net of amortization........................... -- 7,856
Notes receivable................................................. 20,838 10,986
Restricted cash in escrow accounts............................... 11,713 9,313
Other current assets............................................. 30,471 18,031
--------- ---------
Total current assets......................................... 104,125 90,852
--------- ---------
Property and equipment, net........................................ 796,754 640,211
Long-term investments.............................................. 9,665 4,504
Goodwill, net...................................................... 5,136 5,243
Other assets....................................................... 62,653 37,000
--------- ---------
Total assets................................................. $ 978,333 $ 777,810
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term obligations.................... $ 10,312 $ 4,376
Short-term notes payable......................................... 18,512 8,363
Accounts payable trade........................................... 5,688
Accounts payable - construction.................................. 12,054 21,812
Accrued expenses................................................. 25,932 15,723
Deferred rent and refundable deposits............................ 7,925 5,419
--------- ---------
Total current liabilities.................................... 80,423 62,547
--------- ---------
Long-term obligations, less current installments................... 467,273 286,984
Convertible debt................................................... 228,600 228,600
Deferred gain on sale and other.................................... 10,250 18,347
Minority interest.................................................. 2,304 4,220
Stockholders' equity:
Common stock..................................................... 222 219
Additional paid-in capital....................................... 178,942 177,864
Retained earnings (accumulated deficit).......................... 10,319 (971)
--------- ---------
Total stockholders' equity..................................... 189,483 177,112
--------- ---------
Total liabilities and stockholders' equity................... $ 978,333 $ 777,810
========= =========
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
1
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ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ------------------------------
1999 1998 1999 1998
----------- ------------ ------------- ------------
Revenue:
<S> <C> <C> <C> <C>
Resident service fees........................................ $ 90,683 $ 64,544 $ 252,149 $ 164,830
Management fees and other.................................... 9,428 1,742 22,773 3,139
-------- -------- --------- ---------
Operating revenue.......................................... 100,111 66,286 274,922 167,969
Operating expenses:
Residence operations......................................... 57,526 40,492 157,122 104,063
Lease expense................................................ 18,386 11,901 48,816 30,952
General and administrative................................... 9,268 6,295 28,166 16,377
Depreciation and amortization................................ 5,233 5,534 13,783 13,180
-------- -------- --------- ---------
Total operating expenses................................... 90,413 64,222 247,887 164,572
-------- -------- --------- ---------
Operating income........................................... 9,698 2,064 27,035 3,397
-------- -------- --------- ---------
Other income (expense):
Interest expense, net........................................ (9,075) (2,744) (23,150) (5,285)
Lease income................................................. 7,579 -- 17,405 --
Equity in (losses) of unconsolidated affiliates.............. (597) (32) (667) (54)
Minority interest in losses of consolidated subsidiaries..... 498 5,984 3,776 15,672
-------- -------- --------- ---------
Total other (expense) income net........................... (1,595) 3,208 (2,636) 10,333
-------- -------- --------- ---------
Income before income taxes and the cumulative effect of a
change in accounting principle............................... 8,103 5,272 24,399 13,730
Income tax (expense) benefit................................... (3,079) 549 (9,272) 549
-------- -------- --------- ---------
Income before the cumulative effect of a change in
accounting principle................................. 5,024 5,821 15,127 14,279
-------- -------- --------- ---------
Cumulative effect of a change in accounting principle, net of
tax benefit of $2,409 (see Note 3) ......................... -- -- (3,837) --
-------- -------- -------- ---------
Net income..................................................... $ 5,024 $ 5,821 $ 11,290 $ 14,279
======== ======== ======== =========
Income per common share before change in accounting principle:
Basic...................................................... $0.23 $ 0.27 $ 0.68 $ 0.65
======== ======= ======= =========
Diluted.................................................... $0.23 $ 0.26 $ 0.68 $ 0.64
======== ======= ======== =========
Net income per common share:
Basic...................................................... $0.23 $ 0.27 $ 0.51 $ 0.65
======== ======= ======= =========
Diluted.................................................... $0.23 $ 0.26 $ 0.50 $ 0.64
======== ======= ======= =========
Weighted average common shares outstanding:
Basic...................................................... 22,085 21,946 22,084 21,876
======== ======== ======== =========
Diluted.................................................... 22,262 22,409 22,366 22,386
======== ======== ======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
2
<PAGE> 5
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income.......................................................................... $ 11,290 $ 14,279
Adjustments to reconcile net income to net cash provided by (used in) operating
activities net of acquisitions:
Depreciation and amortization....................................................... 13,783 13,180
Deferred income taxes............................................................... 3,432 --
Equity in net loss from investments in unconsolidated affiliates.................... 667 54
Minority interest in losses of consolidated subsidiaries............................ (3,776) (15,672)
Tax effect of stock options exercised............................................... 320 1,330
Increase in net resident receivables................................................ (4,012) (2,119)
Decrease (increase) in pre-opening costs............................................ 7,856 (9,179)
(Increase) in other current assets.................................................. (12,440) (4,221)
(Decrease) in accounts payable...................................................... (1,166) (1,816)
Increase in accrued expenses and deferred rent...................................... 12,929 10,686
Decrease in accrued merger costs.................................................... (214) (4,160)
Changes in other assets and liabilities, net........................................ 3,561 (7,663)
-------- --------
Net cash provided by (used in) operating activities................................... 32,230 (5,301)
-------- --------
Cash flows from investing activities:
Payments for property, equipment and project development costs...................... (176,874) (283,767)
Net proceeds from sale of plant, property, and equipment............................ 18,263 --
Increase in notes receivable........................................................ (9,852) --
Acquisitions of facilities, net of cash............................................ (15,206) (43,278)
Changes in investments in and advances to unconsolidated affiliates................. (1,400) (11,818)
Purchase of joint venture interests................................................. (59,482) (17,755)
Decrease in short-term investments.................................................. -- 90,000
Increase in long-term investments................................................... (5,161) --
-------- --------
Net cash used in investing activities................................................. (249,712) (266,618)
-------- --------
Cash flows from financing activities:
Repayments of short-term borrowings................................................. (981) (15,537)
Repayments of long-term obligations................................................. (77,859) (53,015)
Proceeds from issuance of debt...................................................... 212,893 176,177
Proceeds from issuance of convertible debt.......................................... -- 18,750
Payments for financing costs........................................................ (5,391) (4,803)
Proceeds from sale/leaseback transactions........................................... 72,014 107,563
Issuance of common stock and other capital contributions............................ 761 10,149
Contributions by minority partners and minority stockholders........................ 8,470 18,754
-------- --------
Net cash provided by financing activities............................................. 209,907 258,038
-------- --------
Net decrease in cash and cash equivalents............................................. (7,575) (13,881)
-------- --------
Cash and cash equivalents:
Beginning of period................................................................. 40,621 79,838
======== =======
End of period........................................................................ $ 33,046 $ 65,957
======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest, including amounts capitalized............................... $ 25,871 $ 14,317
=========== ========
Cash paid during period for income taxes............................................ $ 4,397 $ 1,322
=========== ========
</TABLE>
See footnote 2 for discussion of capitalized lease transaction.
See accompanying notes to condensed consolidated financial statements
3
<PAGE> 6
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The condensed consolidated balance sheets as of September 30, 1999 and
December 31, 1998, the condensed consolidated statements of operations for the
three and nine months ended September 30, 1999 and 1998 and the condensed
consolidated statements of cash flows for the nine months ended September 30,
1999 and 1998 contained herein include the accounts of Alterra Healthcare
Corporation (the "Company") and its affiliates which are under the common
financial control of the Company. All significant intercompany accounts have
been eliminated in consolidation. In the opinion of management, all adjustments
(consisting only of normal recurring items) necessary for a fair presentation of
such condensed consolidated financial statements have been included. The results
of operations for the nine months ended September 30, 1999 are not necessarily
indicative of the results to be expected for the full fiscal year.
The condensed consolidated financial statements do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. The accompanying condensed consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K, for the year ended December 31, 1998.
(2) ACQUISITIONS
During the quarter ended September 30, 1999, the Company consummated a
synthetic lease transaction relating to 26 assisted living and
Alzheimer's/dementia care residences that were previously owned and operated by
Manor Care, Inc. and it's affiliates (the "Transaction"). Pursuant to the
Transaction, an affiliate of Key Bank National Association acquired the 26
residences for an aggregate purchase price of approximately $189.1 million
(including closing costs) and simultaneously leased the 26 residences to AHC
Tenant, Inc., a wholly-owned subsidiary of the Company. Mortgage financing for
the acquisition in the amount of $174.5 million was provided by Greenwich
Capital Financial Products and credit enhancement of this financing in the form
of a surety bond was provided by a member of the Zurich Financial Services
Group. The Company's leases of these 26 residences have a term of ten years,
reflect initial rental based on a lease constant of 9.93% and contain an option
to purchase the 26 residences at the end of the lease term for a pre-negotiated
fixed price. For financial accounting purposes, leases for 17 of the residences
will be treated as operating leases and leases for nine residences will be
treated as capital leases. The Company recorded $53.2 million of property and
equipment and $53.2 million of long term obligations upon completion of the
Transaction related to these capital leases. The Company also entered into
leases with Manor Care, Inc. with respect to two additional residences formerly
operated by Manor Care, Inc.
(3) CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
In the first quarter of 1999, the Company adopted the Statement of
Position No. 98-5, "Reporting on the Costs of Start-up Activities." This
Statement provides guidance on the financial reporting of start-up activities
and organization costs. It requires costs of start-up activities and
organization costs to be expensed when incurred. The Company's prior practice
was to capitalize such costs and amortize them over a one year period after
residence opening in the case of start-up costs and five years in the case of
organizational costs. The cumulative effect of the accounting change reflected
in the condensed consolidated statement of operations for the nine months ended
September 30, 1999 was $3.8 million, net of tax.
4
<PAGE> 7
(4) NET INCOME PER COMMON SHARE
The following table summarizes the computation of basic and diluted net
income per share amounts presented in the accompanying consolidated statements
of operations (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ------------------------------
1999 1998 1999 1998
----------- ------------ ------------- -------------
Numerator:
<S> <C> <C> <C> <C>
Numerator for basic and diluted income per share before
cumulative effect of a change in accounting principle.. $ 5,024 $ 5,821 $ 15,127 $ 14,279
Cumulative effect of a change in accounting principle..... -- -- (3,837) --
------- -------- ------- --------
Numerator for basic and diluted net income per share...... $ 5,024 $ 5,821 $ 11,290 $ 14,279
======= ======== ======== ========
Denominator:
Denominator for basic net income per common
share-weighted average shares.......................... 22,085 21,946 22,084 21,876
Effect of dilutive securities:
Employee stock options............................... 177 463 282 510
------- ------- -------- --------
Denominator for diluted net income per common
share-weighted average shares plus assumed conversions.. 22,262 22,409 22,366 22,386
======= ======= ======== ========
Basic income per common share before cumulative effect
of a change in accounting principle.................... $ 0.23 $ 0.27 $ 0.68 $ 0.65
Cumulative effect of a change in accounting principle..... -- -- (0.17) --
------- ------- -------- --------
Basic net income per common share......................... $ 0.23 $ 0.27 $ 0.51 $ 0.65
======= ======= ======== ========
Diluted income per common share before cumulative effect
of a change in accounting principle.................... $ 0.23 $ 0.26 $ 0.68 $ 0.64
Cumulative effect of a change in accounting principle..... -- -- (0.17) --
------- ------- ------- --------
Diluted net income per common share (1).................. $ 0.23 $ 0.26 $ 0.50 $ 0.64
======= ======= ======= ========
</TABLE>
(1) Nine month period ended September 30, 1999 does not total due to
rounding.
Shares issuable upon the conversion of convertible subordinated
notes have been excluded from the computation because the effect of their
inclusion would be anti-dilutive.
(5) RECLASSIFICATIONS
Certain reclassifications have been made in the 1998 financial
statements to conform with the 1999 financial statement presentation.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's continued growth has had a significant impact on its
results of operations and accounts for most of the changes in results between
the first nine months of 1999 and 1998. As of September 30, 1999 and 1998, the
Company operated or managed 431 and 336 residences with aggregate capacities of
19,688 and 14,315 residents, respectively. The Company is also constructing or
developing approximately 116 residences with aggregate capacity of 5,400 as of
September 30, 1999. However, the Company has announced its intention during the
fourth quarter of 1999 to review development projects not yet in construction
and, in light of the competitive environment and tighter capital markets, to
discontinue or defer a substantial portion of these projects. See "-Liquidity
and Capital Resources." For the nine months ended September 30, 1999, the
Company generated operating revenue of $274.9 million, and realized operating
income of $27.0 million, and net income of $15.1 million prior to the cumulative
effect of a change in accounting.
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
Residence Service Fees. Residence service fees for the three months
ended September 30, 1999 were $90.6 million representing an increase of $26.1
million, or 40%, from the $64.5 million for the comparable 1998 period.
Substantially all of this increase resulted from the addition of newly
constructed residences and other residences acquired by the Company. The Company
operated 431 and 336 residences at September 30, 1999 and 1998, respectively.
Management Fees and Other Revenues. Management Fees and other revenues
for the three months ended September 30, 1999 were $9.4 million, an increase of
$7.7 million over the $1.7 million of other revenue for the three months ended
September 30, 1998. The increase is attributable to management fees on a greater
number of residences which were either managed for third parties or for entities
in which the Company held a minority ownership position in the 1999 period
versus the 1998 period. As of September 30, 1999, the Company managed 92 such
residences compared to 61 such residences as of September 30, 1998. Management
fees include charges for transitional services to recruit and train staff,
initial and recurring fees for the use of the Company's Name and branding,
initial and recurring fees for the use of the Company's methodologies, services
for assisting with finance processing, and ongoing management services provided
to operate the residence.
Residence Operating Expenses. Residence operating expenses for the
three months ended September 30, 1999 increased to $57.5 million from $40.5
million in the three-month period ended September 30, 1998 due to the increased
number of residences operated during the 1999 period. Operating expenses as a
percentage of residence service fees for the three months ended September 30,
1999 and 1998 were 63.4% and 62.7%, respectively. This percentage increase
resulted primarily from increases in labor costs due to increased competition
for personnel. The increase in marginal expenses was also impacted by a slower
lease-up of residences in some markets.
Lease Expense. Lease expense for the three months ended September 30,
1999 was $18.4 million, compared to $11.9 million in the comparable period in
1998. Such increase was primarily attributable to the utilization of additional
sale/leaseback financing totaling $115.4 million during the twelve-month period
ended September 30, 1999.
General and Administrative Expense. For the three months ended
September 30, 1999, general and administrative expenses were $9.3 million,
compared to $6.3 million for the comparable 1998 period, representing a decrease
as a percentage of operating revenue to 9.3% in the 1999 period from 9.5% in the
1998 period.
6
<PAGE> 9
The $3.0 million increase in expenses from 1998 was primarily attributable to
salaries, related payroll taxes and employee benefits for additional corporate
personnel retained to support the Company's growth.
Depreciation and Amortization. Depreciation and amortization for the
three months ended September 30, 1999 was $5.2 million, representing a decrease
of $300,000, or 5.4%, from the $5.5 million of depreciation and amortization for
the comparable 1998 period. This decrease resulted primarily from the
elimination of amortization on pre-opening costs which are now expensed when
they are incurred. This decrease was offset by depreciation of fixed assets on
the larger number of new residences that were owned by the Company during the
three months ended September 30, 1999, versus the comparable period in 1998.
Interest Expense, Net. Interest expense, net of interest income, was
$9.1 million for the three months ended September 30, 1999, compared to $2.7
million for the comparable period in 1998. Gross interest expense (before
interest capitalization and interest income) for the 1999 period was $12.7
million compared to $8.0 million for the 1998 period, an increase of $4.7
million. This increase is primarily attributable to an increase in the amount of
debt financing used in the 1999 period as compared to the 1998 period. The
Company capitalized $2.2 million of interest expense in the 1999 period compared
to $3.7 million in the comparable 1998 period. This decrease is due primarily to
a decrease in assets under construction financed using general corporate funds
in 1999 compared to 1998. Interest income for the 1999 period was $1.5 million
as compared to $1.6 million for the 1998 period. This decrease was primarily due
to a reduction in average cash and investment balances from 1998 to 1999.
Lease Income. The Company recorded $7.6 million of lease income on
residences owned or leased by the Company and leased or subleased to
unconsolidated joint ventures in 1999. Lease payment obligations of the
unconsolidated joint venture entities are generally equivalent to the debt
service payable by the Company on the leased residences, and thereby offset
Company costs associated with obtaining and maintaining financing for such
residences. The Company had no such arrangements in 1998.
Minority Interest in Losses of Consolidated Subsidiaries. Minority
interest in losses of consolidated subsidiaries for the three months ended
September 30, 1999 was $498,000, representing a decrease of $5.5 million from
$6.0 million for the comparable 1998 period. The decrease was primarily
attributable to the decrease in the number of residences in various stages of
lease-up that were owned by the Company in consolidated joint venture
arrangements during the 1999 period. During the third quarter of 1999, the
Company had an average of 11 residences held in these consolidated joint venture
arrangements compared to an average of 60 residences held in similar joint
venture arrangements during the comparable 1998 period.
Income Taxes. For the three months ended September 30, 1999, the
Company recorded a reduction in the current income tax provision of $853,000
which was offset by the recognition of a $3.9 million deferred tax obligation
resulting in a current income tax expense of $3.0 million. During the three
months ended September 30, 1998, the Company recorded a current income tax
provision of $4.3 million which was offset by the recognition of $4.9 million of
deferred tax assets resulting in a current income tax benefit of $549,000.
7
<PAGE> 10
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
Residence Service Fees. Residence service fees for the nine months
ended September 30, 1999 were $252.1 million representing an increase of $87.3
million, or 53%, from the $164.8 million for the comparable 1998 period.
Substantially all of this increase resulted from the addition of newly
constructed residences and other residences acquired by the Company. The Company
operated 431 and 336 residences at September 30, 1999 and 1998, respectively.
Management Fees and Other Revenues. Management Fees and other revenues
for the nine months ended September 30, 1999 were $22.8 million, an increase of
$19.7 million over the $3.1 million of other revenue for the nine months ended
September 30, 1998. The increase is attributable to management fees on a greater
number of residences which were either managed for third parties or for entities
in which the Company held a minority ownership position in the 1999 period
versus the 1998 period. As of September 30, 1999, the Company managed 92 such
residences compared to 61 such residences as of September 30, 1998. Management
fees include charges for transitional services to recruit and train staff,
initial and recurring fees for use of the Company's name and branding, initial
and recurring fees for the use of the Company's methodologies, services for
assisting with finance processing, and ongoing management services provided to
operate the residence. The increase in other revenue was also impacted by $3.0
million of development fees recognized in the first nine months of 1999 in
connection with development activities conducted by the Company on behalf of
third parties.
Residence Operating Expenses. Residence operating expenses for the nine
months ended September 30, 1999 increased to $157.1 million from $104.1 million
in the nine month period ended September 30, 1998 due to the increased number of
residences operated during the 1999 period. Operating expenses as a percentage
of resident service fees for the nine months ended September 30, 1999 and 1998
were 62.3% and 63.1%, respectively.
Lease Expense. Lease expense for the nine months ended September 30,
1999 was $48.8 million, compared to $30.9 million in the comparable period in
1998. Such increase was primarily attributable to the utilization of additional
sale/leaseback financing totaling $115.4 million during the twelve-month period
ended September 30, 1999.
General and Administrative Expense. For the nine months ended September
30, 1999, general and administrative expenses before costs related to the $1.8
million write-off of existing signage and other expenses associated with the
name change from Alternative Living Services, Inc. to Alterra Healthcare
Corporation were $26.4 million, compared to $16.4 million for the comparable
1998 period, representing a decrease as a percentage of operating revenue to
9.6% in the 1999 period from 9.8% in the 1998 period. The $10.0 million increase
in expenses from 1998 was primarily attributable to salaries, related payroll
taxes and employee benefits for additional corporate personnel retained to
support the Company's growth.
Depreciation and Amortization. Depreciation and amortization for the
nine months ended September 30, 1999 was $13.8 million, representing an increase
of $600,000, or 4.6%, from the $13.2 million of depreciation and amortization
for the comparable 1998 period. This increase resulted primarily from
depreciation of fixed assets on the larger number of new residences that were
owned by the Company during the nine months ended September 30, 1999, versus the
comparable period in 1998. This increase was offset by the elimination of
amortization on pre-opening costs which are now expensed when they are incurred.
Interest Expense, Net. Interest expense, net of interest income, was
$23.1 million for the nine months ended September 30, 1999, compared to $5.3
million for the comparable period in 1998. Gross
8
<PAGE> 11
interest expense (before interest capitalization and interest income) for the
1999 period was $33.8 million compared to $20.8 million for the 1998 period, an
increase of $13.0 million. This increase is primarily attributable to an
increase in the amount of debt financing used in the 1999 period as compared to
the 1998 period. The Company capitalized $7.4 million of interest expense in the
1999 period compared to $10.6 million in the comparable 1998 period. This
decrease is due to a decrease in assets under construction financed using
general corporate funds in the 1999 period compared to the 1998 period. Interest
income for the 1999 period was $3.3 million as compared to $4.9 million for the
1998 period.
Lease Income. The Company recorded $17.4 million of lease income on
residences owned or leased by the Company and leased or subleased to
unconsolidated joint ventures in 1999. Lease payment obligations of the
unconsolidated joint venture entities are generally equivalent to the debt
service payable by the Company on the leased residences, and thereby offset
Company costs associated with obtaining and maintaining financing for such
residences. The Company had no such arrangements in 1998.
Minority Interest in Losses of Consolidated Subsidiaries. Minority
interest in losses of consolidated subsidiaries for the nine months ended
September 30, 1999 was $3.8 million, representing a decrease of $11.9 million
from $15.7 million for the comparable period in 1998. The decrease was primarily
attributable to the decrease in the number of residences in various stages of
lease-up that are owned by the Company in consolidated joint venture
arrangements during the 1999 period. During the first nine months of 1999, the
Company had an average of 17 residences held in consolidated joint venture
relationships compared to an average of 52 residences in consolidated joint
venture relationships during the first nine months of 1998.
Income Taxes. For the nine months ended September 30, 1999, the Company
recorded a current income tax provision of $4.5 million and recognized a $4.8
million deferred tax liability resulting in a current income tax expense of $9.3
million before the effect of a cumulative change in accounting. During the nine
months ended September 30, 1998, the Company recorded a current income tax
provision of $4.3 million which was offset by the recognition of $4.9 million of
deferred tax assets resulting in a current income tax benefit of $549,000.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations and growth
through a combination of various forms of real estate financing (mortgage,
synthetic lease and sale/leaseback financing), capital contributions from joint
venture partners, the sale of its securities (common stock and convertible
debentures) and, to a lesser extent, cash from operations. At September 30,
1999, the Company had $724.7 million of outstanding debt principally consisting
of $228.6 of convertible debentures having a weighted average interest rate of
5.86%, $252.1 million of fixed rate debt having a weighted average interest rate
of 7.56%, capitalized lease obligations of $53.2 million having a weighted
average interest rate of 9.16% and $190.8 million of variable rate debt having
a weighted average interest rate of 7.89%.
At September 30, 1999, the Company had approximately $33.0 million in
unrestricted cash and cash equivalents and $23.7 million working capital
(compared to working capital of $40.4 million at September 30,1998). For the
nine months ended September 30, 1999 cash flow from operations was $32.2 million
versus an operating cash flow deficit of $5.3 million for nine months ended
September 30, 1998. The significant increase in cash flow is attributable to the
greater number of consolidated residences operating at or near stabilized
occupancy levels during the 1999 period in comparison to the comparable 1998
period. During the nine months ended September 30, 1999, the Company closed on
approximately $212.9 million of new debt financing and capital lease obligations
which included approximately $79.7 million of debt used to refinance properties
having prior debt balances of $66.1 million. Additionally, financing was
provided through $72.0 million of sale/leaseback financing and $8.5 million of
minority partner contributions.
Net cash provided by financing activities together with cash from
operations was used during the nine month period ending September 30, 1999 to
fund $176.8 million in construction and development activity, $59.5 million in
joint venture buy-outs, $15.2 million in acquisition activity, and $9.9 million
of construction bridge financing under third party development arrangements.
The Company has the following three series of convertible subordinated
debentures outstanding:
- $143.8 million aggregate principal amount of 5.25%
convertible subordinated debentures due December 15, 2002.
These convertible debentures bear interest at 5.25% per
annum payable semi-annually on June 15 and December 15 of
each year. The conversion price is $28.75, which is
equivalent to a conversion ratio of 34.8 shares of common
stock per $1,000 in principal amount of the convertible
debentures. The convertible debentures are redeemable at
the option of the company commencing on December 31, 2000,
at specified premiums. The holders of the convertible
debentures may require the Company to repurchase the
convertible debentures; upon a change of control of the
Company, as defined in the convertible debenture;
- $50.0 million aggregate principal amount of 7.00%
convertible subordinated debentures due June 1, 2004. These
convertible debentures bear interest at 7.00% per annum
payable semi-annually on June 1 and December 1 of each year.
The conversion price is $20.25, which is equivalent to a
conversion ratio of 49.4 shares of common stock per $1,000
in principal amount of the convertible debentures. The
convertible debentures are redeemable at the option of the
Company commencing on June 15, 2000, at specified premiums;
and
- $35.0 million aggregate principal amount 6.75% convertible
subordinated debentures due June 30, 2006. These
convertible debentures bear interest at 6.75% per annum
payable semi-annually on June 30 and December 30 of each
year. The conversion price is $20.38, which is equivalent
to a conversion ratio of 49.3 shares of common stock per
$1,000 principal amount of the convertible debentures. The
convertible debentures are redeemable at the option of the
Company commencing on July 15, 1999, at specified premiums;
The Company's principal credit agreements and debt instruments include
various financial covenants and other restrictions, including: (i) debt service
coverage requirements, typically measured on a trailing four quarter basis,
which typically increase over the term of the applicable credit agreement; (ii)
maximum leverage ratios which limit the Company's aggregate senior indebtedness
to total capitalization; (iii) various minimum net worth or tangible net worth
requirements; (iv) in certain cases, property specific financial covenants of
the type referenced above applicable to individual properties or to the pool of
residences financed by the applicable lender; and (v) the maintenance of
operating and other reserves for the benefit of the residences serving as
collateral for the applicable lender. In addition, under certain of its credit
and sale/leaseback facilities, the Company is required to secure lender or
lessor consent prior to engaging in certain mergers, business combinations or
change in control transactions.
The Company's operations and growth will require significant additional
capital resources in the future in order to fund; (i) the Company's ongoing
construction and development of assisted living and Alzheimer's care
residences; (ii) the Company's purchase of minority and majority equity
interests in assisted living residences operated by the Company from the third
party joint venture partners; (iii) ongoing debt service obligations, including
maturities of its long-term debt; and (iv) certain obligations to finance the
operations of third party developments partners. Each of these principal uses
of capital resources are summarized below:
Development Activities. The development and construction of new,
purpose-built assisted living and Alzheimer's care residences has
historically been the principal use of the Company's capital resources. In
many markets in which the Company operates, competition has increased
significantly in recent periods and, in selected markets, the supply of
assisted living beds exceeds demand. Concurrently, financing for new
assisted living residences has become more difficult and more expensive to
obtain. In light of this competitive environment and the tightening of the
capital markets, the Company is actively reviewing its development
projects not yet in construction in order to determine which to complete
or terminate. In conducting this analysis, the Company is considering
market-specific and competitive factors on a site-by-site basis. The
Company anticipates that upon completion of this review it will elect to
discontinue a significant portion of its pending development projects and,
accordingly, record a charge related to the write-down of markets and
sites under development and the reduction of its development activities to
a modest level.
The Company will continue to construct and complete substantially all
of the 61 residences currently in construction. The Company estimates
that between $100.0 million and $115.0 million will be required to fund
its ongoing construction and development activity during the next twelve
months, depending upon the scope of its scale back of development and new
construction activities.
Purchase of Joint Venture Interests. The Company is obligated under
many of its joint venture arrangements to purchase the equity interests of
its joint venture partners at fair market value upon the election of such
partners. During the next twelve months, the Company will be subject to
such contingent purchase obligations with respect to equity interests held
by joint venture partners, exercisable at their election, related to
certain of the Company's residences.
At such times, or earlier, as such contingent purchase obligations are
exercisable, the Company may also elect to exercise its rights to
purchase such interests. Based on a number of assumptions, including
assumptions as to the number of residences to be operated with joint
venture partners, the timing of such development, the time at which such
options may be exercised and the fair market value of such residences at
the date such options are exercised, the Company estimates that it may
require approximately $55 million to $70 million to satisfy these purchase
obligations during the twelve month period ending September 30, 2000.
Debt Service. In addition to ongoing debt service and lease payment
obligations, including interest payments due on its convertible debentures,
the Company will be required to fund or refinance approximately $58.8
million of long-term indebtedness that will mature during the twelve
months ending September 30, 2000. In addition, in the quarter ended
September 30, 1999, the Company arranged a series of operating leases
which were used to finance $135.9 million of the acquisition of residences
from Manor Care, Inc.
Advances to Development Partners. The Company has committed in certain
circumstances to provide up to $113.9 million in financing to development
partners under third party arrangements. The Company has advanced $17.3
million pursuant to these arrangements as of September 30, 1999. The
Company intends to finance these projects under existing bank credit
facilities.
The Company expects to fund a portion of its capital and liquidity
requirements from cash on hand, cash generated from operations, financing under
existing debt and lease commitments and equity from its joint venture
development partners. The Company has executed non-binding letters of intent
with various healthcare REITs and other lessors with approximately $69.9
million of remaining capacity at September 30, 1999 and had available
approximately $419.8 million of remaining financing capacity from conventional
mortgage lenders as of September 30, 1999, which conventional mortgage financing
is accessible by the Company upon satisfying the respective lenders' property
underwriting requirements. Included in this $419.8 million of mortgage financing
commitments is $151.8 million of financing available under a construction loan
facility established by the Company and Manor Care, Inc. to finance projects
developed through their development joint venture relationship. The Company
does not expect to utilize all of this financing to fund development of Company
projects. The Company's ability to utilize non-binding financing commitments
from REITs and other lenders has become substantially limited due in part to the
volatility in the capital markets and factors affecting the assisted living
industry generally. In particular, many healthcare REITs are currently not
extending new financing. In addition, the property level underwriting
requirements of certain of the Company's lenders are being more strictly
applied. Accordingly, the Company's ability to secure financing on acceptable
terms has become increasingly difficult.
The Company is currently exploring alternatives to obtain additional
sources of capital, to reduce or defer certain of its capital obligations and to
deleverage (i.e., reduce debt and other financial commitments in relation to
equity) its balance sheet. Among the alternatives the Company is considering
are the sale of equity or convertible securities, the sale of assets in a
"sale/manage-back" transaction, altering or reducing its utilization of joint
venture development arrangements, and discontinuing or deferring development
projects. Although beneficial from a liquidity or cash flow perspective, certain
of these alternatives, if implemented, could have a material and adverse impact
upon the Company's future earnings and could require the Company to seek
modifications from its lenders with respect to certain of its financing
covenants. There can be no assurance that the Company will be successful in
these efforts or that it will be able to access additional debt and equity
financing required to fund its operations and growth on acceptable terms in the
future.
9
<PAGE> 12
IMPACT OF INFLATION
To date, inflation has not had a significant impact on the Company. Inflation
could, however, affect the Company's results of operations due to the Company's
dependence on its senior resident population who generally rely on liquid assets
and relatively fixed incomes to pay for the Company's services. As a result, the
Company may not be able to increase residence service fees to account fully for
increased operating expenses. In structuring its fees, the Company attempts to
anticipate inflation levels, but there can be no
10
<PAGE> 13
assurance that the Company will be able to anticipate fully or otherwise respond
to any future inflationary pressures. In addition, given the amount of
construction and development activity which the Company anticipates,
inflationary pressures could affect the Company's cost of new product deployment
and financing. There can be no assurances that financing will be available on
terms acceptable to the Company.
YEAR 2000 ISSUE
As a result of certain computer programs being written using two digits rather
than four to define the applicable year, computer systems that have date
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000 (the so called "Year 2000 Issue"). This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in normal business activities.
The Company's year 2000 readiness plan consists of:
- Identify and assess year 2000 issues in the Company's information and
non-information technology systems including inquiring of third parties
with whom it does significant business, such as vendors and suppliers,
as to the state of their year 2000 readiness; and
- Repair or replace non-compliant information and non-information
technology.
The Company has identified year 2000 risks in the following areas:
- THE COMPANY'S INFORMATION TECHNOLOGY SYSTEMS MIGHT NOT BE YEAR 2000
COMPLIANT. The Company has assessed its readiness in regard to year
2000 issues, and believe that all material hardware and software
utilized in its operations and, specifically, in its accounting
systems, is year 2000 compliant. This assessment included obtaining
year 2000 certifications from all software vendors, installation of
software patches issued by these vendors and specific year 2000 testing
of all material software. Despite the Company's efforts to identify and
resolve year 2000 issues, it cannot guarantee that all of its systems
will be year 2000 compliant.
- THE COMPANY'S NON-INFORMATION TECHNOLOGY SYSTEMS MIGHT NOT BE YEAR 2000
COMPLIANT. Its non-information technology systems are its building
management and life/safety systems, which include its emergency call
systems, electrical locking systems, fire alarm systems, fire alarm
monitoring systems, and in limited cases, elevator systems. The Company
has assessed its readiness of these systems in regard to year 2000
issues by deploying approximately 12 regional maintenance personnel
who contacted, as part of their normal course of business, all
manufacturers and vendors of material non-information technology
systems requesting written certification that each of their systems is
year 2000 compliant. Any systems identified as not in compliance will
be upgraded or replaced.
- THE COMPANY MAY HAVE YEAR 2000 ISSUES WITH SIGNIFICANT THIRD
PARTIES. It has obtained year 2000 compliance letters from its major
financial institution and tested compliance for key third party systems
like check processing and ACH/direct deposit transmissions. However,
some third parties, including certain utilities and the federal
government, continue to be in the process of evaluating and updating
their internal systems and cannot yet assure the Company that their
systems are year 2000 compliant. The Company plans to monitor the
progress of its major vendors in achieving year 2000 compliance and,
where possible, develop alternative means to obtain necessary goods and
services.
The Company does not anticipate any major interruption in its business as a
result of year 2000 issues. Accordingly, The Company does not expect that the
Year 2000 Issue will have a material adverse effect upon its operations or that
it will incur any material expense associated with year 2000 compliance.
However, despite the Company's efforts to identify and resolve year 2000
compliance problems, it cannot guarantee that all of its systems or that
11
<PAGE> 14
third parties on which the Company relies will be year 2000 compliant. As a
result the Company's operations could be interrupted or adversely effected. In
the worst case scenario, if the Company's non-information technology systems
suffered year 2000 issues, it would implement it's standard emergency operation
plan. This plan primarily includes incurring additional staffing and if
necessary relocation of it's residents to alternate locations. If the Company
needs to sustain this additional staffing or were unable to occupy it's existing
buildings for an extended period of time, it could have a material adverse
effect on the Company's business and operations.
The Company has not established a contingency plan to address potential year
2000 noncompliance with respect to it's information systems or those of it's
major vendors. The Company is currently considering the extent to which such a
plan is necessary. Because the Company depends on organizations who maintain
systems outside of our control, such as telecommunications, power supplies and
the federal government, which may not have adequately addressed year 2000
issues, it cannot guarantee that it will not face unexpected problems associated
with year 2000 issues effecting it's operations, business and financial
condition.
FORWARD-LOOKING STATEMENTS
The statements in this quarterly report relating to matters that are
not historical facts are forward-looking statements based on management's belief
and assumptions using currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements involve a number of risks and uncertainties,
including, but not limited to, substantial debt and operating lease payment
obligations, operating losses associated with new residences, the ability to
manage rapid growth and business diversification, the need for additional
financing, development and construction risks, risks associated with
acquisitions, competition, governmental regulation and other risks and
uncertainties detailed in the reports filed by the Company with the Securities
and Exchange Commission. Should one or more of these risks materialize (or the
consequences of such a development worsen) or should the underlying assumptions
prove incorrect, actual results could differ materially from those forecasted or
expected. The Company assumes no duty to publicly update such statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and equity prices. Changes in these factors may
cause fluctuations in the Company's earnings and cash flows.
The Company performed a sensitivity analysis which presents the
hypothetical change in fair value of those financial instruments held by the
Company at September 30, 1999 which are sensitive to changes in interest rates.
Market risk is estimated as the potential change in fair value resulting from an
immediate hypothetical one percentage point parallel shift in the yield curve.
The fair value of the debt included in the analysis is $199.5 million. Although
not expected, a one percentage point change in the interest rates would have
caused the Company's annual interest expense to change by approximately $1.5
million. Accordingly, a significant increase in LIBOR based interest rates could
have a material adverse effect on the Company's earnings.
Although a majority of the debt and lease payment obligations of the
Company as of or during the three months ended, September 30, 1999 are not
subject to floating interest rates, indebtedness that the Company may incur in
the future may bear interest at a floating rate. Debt and annual operating lease
payment obligations will continue to increase as the Company pursues its growth
strategy.
The Company does not presently use financial derivative instruments to
manage its interest costs. The Company does not use foreign currency exchange
rate forward contracts or commodity contracts and does not have foreign currency
exposure as of September 30, 1999.
12
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Amended Schedule of Bank United Mortgages which are
substantially similar to the Form of Bank United Mortgage
attached as Exhibit 10.53 to the Registrant's 10-K for the
period ending December 31, 1998.
10.2 Form of Deed of Trust and Security Agreement ("Form of Key
Mortgage") between ALS National, Inc. and Key Corporate
Capital, Inc. dated September 1999.
10.3 Form of Project Promissory Note ("Form of Key Note") by ALS
National, Inc. to Key Corporate Capital, Inc.
10.4 Schedule of Mortgages and Notes which are substantially
similar to the Form of Key Mortgage attached as Exhibit 10.2
and Form of Key Note attached as Exhibit 10.2 herein.
10.5 Form of Multifamily Mortgage, Assignment of Rents and
Security Agreement ("Form of Amresco Mortgage") between ALS
Kansas, Inc. and Amresco Capital, L.P. dated July 16, 1999,
including Exhibit B thereto (other exhibits to this agreement
have been omitted; the Registrant agrees to furnish
supplementally to the Commission, upon request, a copy of
these exhibits).
10.6 Form of Multifamily Note ("Form of Amresco Note") by ALS
Kansas, Inc. to Amresco Capital, L.P. dated July 16, 1999.
10.7 Schedule of Mortgages and Notes which are substantially
similar to the Form of Amresco Mortgage attached as Exhibit
10.5 and Form of Amresco Note attached as Exhibit 10.5
herein.
10.8 Credit Agreement ("the Bank of America Credit Agreement")
between the Borrowers defined therein ("Devco I Entities"),
HCR/Alterra Development, LLC ("HCR/Alterra"), as Guarantor,
the Lenders defined therein, Bank of America, N.A. as
Administrative Agent, The Chase Manhattan Bank as Syndication
Agent, and Deutsche Bank AG New York and/or Cayman Islands
Branches and Bank United, F.S.B. as Co-Agents, dated
September 30, 1999 (exhibits and schedules to this agreement,
which are listed and summarized in the table of contents to
the agreement, have been omitted; the Registrant agrees to
furnish supplementally to the Commission, upon request, a
copy of these exhibits and schedules).
13
<PAGE> 16
10.9 Guaranty Agreement dated September 30, 1999 by the Registrant
in favor of Bank of America, N.A. as Administrative Agent
under the Credit Agreement attached as Exhibit 10.8 herein
(exhibits to this agreement have been omitted; the Registrant
agrees to furnish supplementally to the Commission, upon
request, a copy of these exhibits).
10.10 Schedule of Devco I properties mortgaged under the Bank of
America Credit Agreement attached as Exhibit 10.8 herein.
10.11 Guaranty dated August 31, 1999 by the Registrant in favor of
Key Corporate Capital Inc. as Administrative Agent under the
Master Construction Line of Credit Agreement among Third
Party Investors I, L.L.C., as Borrower, and the lending
institutions and co-agents named therein, and Key Corporate
Capital Inc.
10.12 Amended and Restated Purchase Rights and Financing Agreement
dated as of June 30, 1999 between the Registrant and Third
Party Investors I, L.L.C.
10.13 Convertible Subordinated Loan Agreement among Third Party
Investors I, L.L.C. and the Company dated September 30, 1999.
10.14 Bridge Construction Loan Agreement among Third Party
Investors I, L.L.C. and the Company dated September 30, 1999.
10.15 Bridge Construction Loan Note by Third Party Investors I,
L.L.C. to the Company dated September 30, 1999.
10.16 Supplementary Financing Loan Agreement among Third Party
Investors I, L.L.C. and the Company dated September 30, 1999.
10.17 Supplementary Financing Loan Note by Third Party Investors I,
L.L.C. to the Company dated September 30, 1999.
10.18 Master Amendment, Confirmation and Acknowledgment Agreement
dated September 28, 1999 between Pita General Corporation,
AHC Tenant, Inc., the Registrant, Greenwich Capital Financial
Products, Inc., SELCO Service Corporation, The First National
Bank of Chicago, ZC Specialty Insurance Company, and certain
other parties as defined therein, including Exhibit 3.1(e)
thereto (other exhibits and schedules to this agreement have
been omitted; the Registrant agrees to furnish supplementally
to the Commission, upon request, a copy of these exhibits and
schedules).
10.19 First Amendment to Amended and Restated Financing and
Security Agreement.
10.20 First Amendment to Guarantee of Payment Agreement.
11.1 Statement Regarding Computation of Net Income Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K: The Registrant filed the following report
with the Securities and Exchange Commission on Form 8-K during the
quarter ended September 30, 1999:
14
<PAGE> 17
On August 3, 1999, the Company filed a Current Report on Form
8-K dated July 20, 1999 reporting the consummation of a
synthetic lease transaction relating to 20 assisted living
and Alzheimer's/dementia care residences previously owned and
operated by HCR Manor Care, Inc.
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, in the City of Brookfield, State of
Wisconsin, on the 12th day of November, 1999.
ALTERRA HEALTHCARE CORP., INC.
Date: November 12, 1999 By: /s/ Mark W. Ohlendorf
----------------------------------
Mark W. Ohlendorf
Chief Financial Officer
(Principal Financial Officer)
15
<PAGE> 1
EXHIBIT 10.1
AMENDED SCHEDULE OF MORTGAGES
WHICH ARE SUBSTANTIALLY IN THE FORM OF BANK UNITED MORTGAGE
ATTACHED AS EXHIBIT 10.53 TO THE COMPANY'S FORM
10-K FOR THE PERIOD ENDING 12/31/98
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION MORTGAGE AMOUNT
--------- ------------- -------- ---------------
<S> <C> <C> <C>
ALS Holdings, Inc. Sterling House of Lawrence 3220 Peterson Road $3,210,000
Lawrence, KS 66049
ALS Holdings, Inc. Sterling House of Lenexa I 8710 Caenen Lake Road $2,325,000
Lenexa, KS 66215
ALS Wisconsin Wynwood of Appleton 5800 Pennsylvania Avenue $5,397,360
Holdings, Inc.* Grand Chute, WI
ALS Holdings, Inc.* Sterling Cottage of Lady Lake I 17395 S.E. 109th Terrace Road $2,850,000
Summerfield, FL 34491
ALS Holdings, Inc.* Sterling House of Lady Lake II 17421 S.E. 109th Terrace Road $2,521,102
Summerfield, FL 34491
ALS Holdings, Inc.* Sterling Cottage of Michigan City I 1300 East Coolspring Avenue $2,981,250
Michigan City, IN 46360
ALS Holdings, Inc.* Sterling House of Michigan City II 1400 East Coolspring Avenue $2,483,613
Michigan City, IN 46360
ALS Holdings, Inc.* Sterling House of Southern Pines II 101 Brucewood Road $2,925,000
Southern Pines, NC 28387
ALS Holdings, Inc.* Sterling Cottage of Valparaiso I 2501 Valparaiso Street $2,793,143
Valparaiso, IN 46383
<CAPTION>
DATE OF
MORTGAGOR MORTGAGE
--------- --------
<S> <C>
ALS Holdings, Inc. November 18, 1998
ALS Holdings, Inc. November 18, 1998
ALS Wisconsin
Holdings, Inc.* December 10, 1998
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc.* March 22, 1998
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION MORTGAGE AMOUNT
--------- ------------- -------- ---------------
<S> <C> <C> <C>
ALS Holdings, Inc.* Sterling House of Valparaiso II 2601 Valparaiso Street $2,583,820
Valparaiso, IN 46383
ALS Holdings, Inc.* Clare Bridge of Pin Oak I 8015 Pin Oak Drive $9,324,992
Orlando, FL 32819
and
Wynwood of Pin Oak II 8001 Pin Oak Drive
Orlando, FL 32819
ALS Holdings, Inc. Alterra Clare Bridge of Southern Pines 101 Brucewood Road $3,244,249
Southern Pines, NC 28387-5144
ALS Holdings, Inc. Alterra Clare Bridge Cottage of Dublin 160 Elephant Rd. $2,026,006
Borough Dublin, PA 18917-2202
ALS Holdings, Inc. Alterra Clare Bridge Cottage of Vero 420 4th Ct. $2,325,000
Beach Vero Beach, FL 32962-1812
ALS Holdings, Inc. Alterra Sterling House of Vero Beach 410 4th Ct. $3,150,000
Vero Beach, FL 32962-1812
ALS Holdings, Inc. Alterra Clare Bridge Cottage of Leesburg 710 South Lake Street $2,813,522
Leesburg, FL 34748-7316
ALS Holdings, Inc. Alterra Clare Bridge Cottage of Muncie 1605 North Morrison Road $2,707,813
Muncie, IN 47304-5329
ALS Holdings, Inc. Alterra Sterling House of Muncie 1601 North Morrison Road $3,000,000
Muncie, IN 47304-5329
ALS Holdings, Inc. Alterra Clare Bridge Cottage of Florence 467 Sterling Drive $2,700,000
Florence, SC 29505
ALS Holdings, Inc. Alterra Sterling House of Florence 3006 Hoffmeyer Road $2,700,000
Florence, SC 29501-7551
<CAPTION>
DATE OF
MORTGAGOR MORTGAGE
--------- --------
<S> <C>
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc.* March 22, 1998
ALS Holdings, Inc. June 4, 1999
ALS Holdings, Inc. June 4, 1999
ALS Holdings, Inc. June 11, 1999
ALS Holdings, Inc. June 11, 1999
ALS Holdings, Inc. June 30, 1999
ALS Holdings, Inc. June 30, 1999
ALS Holdings, Inc. June 30, 1999
ALS Holdings, Inc. June 30, 1999
ALS Holdings, Inc. June 30, 1999
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION MORTGAGE AMOUNT
--------- ------------- -------- ---------------
<S> <C> <C> <C>
ALS Holdings, Inc. Alterra Sterling House of Carrollton 1029 Seminole Trail $3,150,000
Carrollton, TX 75007-6275
ALS Holdings, Inc. Alterra Sterling House of Owatonna 334 Cedardale Drive $1,125,000
Owatonna, MN 55060-4467
and
Alterra Clare Bridge Cottoage of Owatonna 334 Cedardale Drive $1,720,627
Owatonna, MN 55060-4467
ALS Holdings, Inc. Alterra Wynwood of Brush Creek 4225 Wayvern Drive $8,100,000
Santa Rosa, CA 95409-4193
<CAPTION>
DATE OF
MORTGAGOR MORTGAGE
--------- --------
<S> <C>
ALS Holdings, Inc. June 30, 1999
ALS Holdings, Inc. September 27, 1999
ALS Holdings, Inc. September 27, 1999
</TABLE>
*The form of mortgages entered into for these properties were conformed to meet
the requirements of applicable state law.
<PAGE> 1
EXHIBIT 10.2
DEED OF TRUST AND SECURITY AGREEMENT
PRINCIPAL AMOUNT SECURED: $6,080,000
DATED AS OF
OCTOBER 13, 1999
BY
ALS NATIONAL, INC.
AS GRANTOR ("BORROWER")
TO
STEVEN A. TEITELBAUM
AS TRUSTEE
FOR THE BENEFIT OF
KEY CORPORATE CAPITAL INC.,
AS BENEFICIARY ("COLLATERAL AGENT")
THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF THE
SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL, ARE AS DESCRIBED IN SECTION 13
HEREOF.
<PAGE> 2
DEED OF TRUST AND SECURITY AGREEMENT
THIS INSTRUMENT, dated as of September __, 1999 (as amended, modified,
or supplemented from time to time, "THIS INSTRUMENT"), by (i) ALS NATIONAL,
INC., a Delaware corporation (hereinafter, together with its successors and
assigns, called the "BORROWER") which is duly qualified to transact business in
the jurisdiction in which the real property referred to below is located, whose
address is 450 Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005, to (ii)
STEVEN A. TEITELBAUM, an individual having an address at 51 Louisiana Avenue,
N.W., Washington, D.C. 20001-2113 ("TRUSTEE"), for the benefit of (iii) KEY
CORPORATE CAPITAL INC., a Michigan corporation, as collateral agent under the
Credit Agreement referred to below (herein, together with its successors and
assigns in such capacity, the "COLLATERAL AGENT"), whose address is 700 Fifth
Avenue, Seattle, Washington 98104 (attention: Commercial Real Estate Services),
for the benefit of the holders from time to time of the Indebtedness secured
hereby (hereafter defined):
PRELIMINARY STATEMENTS:
(A) This Instrument is made pursuant to the Master Construction Line of
Credit Agreement, dated as of October 6, 1998 (herein, as amended or otherwise
modified from time to time, the "CREDIT AGREEMENT"), among Alternative Living
Services, Inc., a Delaware corporation (herein, together with its successors and
assigns, the "COMPANY"), the Borrowers party thereto, the financial institutions
named as lenders therein (together with their successors and assigns, the
"LENDERS"), and Key Corporate Capital Inc., as the Administrative Agent for the
Lenders under the Credit Agreement).
(B) Except as otherwise defined herein, terms which are defined in the
Credit Agreement are used herein with the same meanings.
(C) The Credit Agreement provides, among other things, for loans or
advances or other extensions of credit (collectively, "LOANS") to or for the
benefit of the Borrower with respect to the Property Covered by this instrument
(as hereafter defined) of up to $6,080,000, with such loans or advances being
evidenced by promissory notes (the "NOTES", such term to include all notes and
other securities issued in exchange therefor or in replacement thereof).
(D) The Borrower is a Subsidiary or Affiliate of the Company.
(E) The Credit Agreement also provides for other Loans to the Borrower
and to other Subsidiaries or Affiliates of the Company. The Borrower will derive
financial benefits from such Loans, and this Instrument is made to induce the
Lenders to make Loans to the Borrower as well as to make Loans to such other
Subsidiaries and Affiliates of the Company.
(F) It is a condition precedent to the making of Loans to the Borrower
under the Credit Agreement with respect to the Property Covered by this
Instrument that the Borrower shall have executed and delivered to the Collateral
Agent this Instrument.
(G) The Borrower desires to execute this Instrument to satisfy the
condition described in the preceding paragraph.
(H) The execution and delivery of this Instrument and the incurrence of
Loans by the Borrower with respect to the Property Covered by this Instrument
have been duly authorized by the Borrower, and all things necessary to make this
Instrument a valid, binding and legal instrument according to its terms, have
been done and performed.
NOW, THEREFORE, in consideration of the sum of $1.00, and other good
and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, received to the Borrower's full satisfaction from the
Collateral Agent, and in consideration of the payments or loans or advances or
other credit facilities made or to be made hereafter to or for the benefit of
the Borrower by the Lenders, the Borrower DOES HEREBY MORTGAGE, CONVEY AND
WARRANT does unto the Trustee, its successors-in-trust and assigns, in trust
with power of sale, for the
<PAGE> 3
benefit of Collateral Agent, its successors and assigns, all of the following
(collectively, the "PROPERTY COVERED BY THIS INSTRUMENT"):
GRANTING CLAUSE FIRST
THE PREMISES
The real property situated in Washington County, State of Maryland,
described in Exhibit 1 attached hereto and made a part hereof by this reference
thereto (the "PREMISES").
GRANTING CLAUSE SECOND
APPURTENANT RIGHTS AND EASEMENTS
Any and all rights and easements now and/or hereafter created which are
appurtenant to the Premises, including, but not limited to, rights of way,
easements for ingress and egress, licenses, rights in streets, alleys, passages,
water, water courses and riparian rights.
GRANTING CLAUSE THIRD
GROUND LEASES AND LEASEHOLD INTERESTS
All rights and leasehold interests under the leases, if any (the
"GROUND LEASES"), described in the instruments identified in Exhibit 1, attached
hereto and made a part hereof by reference.
GRANTING CLAUSE FOURTH
BUILDINGS AND IMPROVEMENTS
All buildings and improvements (such buildings and improvements,
herein, "IMPROVEMENTS") of every kind and description now or hereafter erected
or placed on the Premises; and all materials intended for construction,
reconstruction, alteration and repairs of such Improvements now or hereafter
erected thereon, all of which materials shall be deemed to be included within
the Property subject to this Instrument immediately upon the delivery thereof to
the Premises; all fixtures and articles of personal property now or hereafter
owned by the Borrower and attached to, or located on, and used in the operation
or management of the Premises and the Improvements, including but not limited to
all elevators, fittings, radiators, furniture, furnishings, apparatus, awnings,
shades, blinds, office equipment, carpeting and other furnishings, and all
plumbing, heating, lighting, ventilating, refrigerating, incinerating,
air-conditioning and sprinkler equipment and fixtures and appurtenances thereto;
and all renewals or replacements thereof, proceeds therefrom, or articles in
substitution therefor, whether or not the same are or shall be attached to such
Improvements in any manner; it being mutually agreed that all the aforesaid
property owned by the Borrower and placed by it on the Premises or in or about
the Improvements shall, so far as permitted by law, be deemed to be fixtures and
a part of the realty, security for the Indebtedness secured by this Instrument
and, as to the balance of the property aforesaid, this Instrument is hereby
deemed to be as well a security agreement for the purpose of creating hereby a
security interest in such property, securing the Indebtedness, for the benefit
of the Collateral Agent and the other holders from time to time of the
Indebtedness secured hereby.
GRANTING CLAUSE FIFTH
TENANT LEASES
All leases, written or oral, and all agreements for use or occupancy of
all or any portion of the Premises or the Improvements, together with any and
all extensions and renewals thereof and any and all further leases, subleases,
lettings or agreements (including subleases thereof and tenancies following
attornment) upon or covering use or occupancy of all or any part of the Premises
or the Improvements (all such leases, agreements, subleases, and tenancies
sometimes collectively referred to herein as the "TENANT LEASES" and sometimes
individually as a "TENANT LEASE").
2
<PAGE> 4
GRANTING CLAUSE SIXTH
RENTS, INCOME AND PROFITS
All of the rents, income, receipts, revenues, tolls, issues and profits
now due or which may become due or to which the Borrower may now or hereafter
(including during the period of redemption, if any, following foreclosure of
this Instrument) become entitled or may demand or claim, arising or issuing from
or out of the Tenant Leases or from or out of the Premises or the Improvements
or any part thereof, or the operation thereof, including but not limited to: (i)
security deposits, (ii) minimum rents, additional rents, parking rents,
deficiency rents and liquidated damages following default by the tenants
thereunder, (iii) other fees, income or revenues arising from the operation of
the Improvements or any other activities conducted therefrom, whether from the
sale or rental of equipment or other goods, the provision of services, or
otherwise, (iv) any charge or premium payable by any tenant upon the exercise of
a cancellation privilege contained in its Tenant Lease, (v) all proceeds payable
under any policy of insurance covering loss of rents resulting from
untenantability caused by destruction or damage to the Improvements, (vi) any
and all rights and claims of any kind which the Borrower has or hereafter may
have against the tenants under the Tenant Leases and any subtenants and other
occupants of the Premises and the Improvements or any portion thereof, (vii) any
award granted the Borrower after the date hereof in any court proceeding
involving any tenant in any bankruptcy, insolvency, or reorganization
proceedings in any state or federal court, and (viii) any and all payments made
by any tenant in lieu of rent (any and all such moneys, rights and claims
identified in this paragraph referred to herein sometimes as the "RENTS" and
sometimes as the "RENT").
GRANTING CLAUSE SEVENTH
EQUIPMENT AND OTHER PERSONAL PROPERTY
RELATING TO THE PREMISES OR IMPROVEMENTS
Without limitation of the foregoing, all right, title and interest of
the Borrower in and to all of the following, whether now owned or held or
hereafter acquired, and wherever located, in each case insofar as the same
relate directly or indirectly in any way to the ownership of the Premises, or to
the ownership, construction or operation of the Improvements, or to any other
activities conducted therefrom: (i) all "equipment", "inventory" and other
"goods", (ii) all "accounts", "chattel paper", "instruments" and "documents",
(iii) all "general intangibles" other than the "ALS Marks" as defined in the
Management Contract for the Improvements and any other marks used by the Company
in operating or managing assisted living residences, and (iv) all "proceeds" and
"products" of any of the foregoing, in each case as such terms are defined in
the Uniform Commercial Code of any applicable jurisdiction
GRANTING CLAUSE EIGHTH
EQUIPMENT AND VEHICLE LEASES
Without limitation of the foregoing, all right, title and interest of
the Borrower in and to any leases for equipment now or hereafter located at or
used in connection with the Premises or the Improvements, and any leases for
vehicles used in connection with the operation of the Improvements or other
activities conducted therefrom, including without limitation all leases for
office equipment, maintenance and operating equipment, medical equipment,
recreational equipment, telephone and other communication equipment, security
equipment, and furniture and furnishings of every kind and description.
GRANTING CLAUSE NINTH
MANAGEMENT AND OTHER CONTRACTS,
PLANS AND SPECIFICATIONS
3
<PAGE> 5
Without limitation of the foregoing, all right, title, and interest of
the Borrower in and to (i) any management contract or similar agreement
pertaining to the Premises and/or the Improvements, and all cash payments to be
made to or for the account of Borrower pursuant thereto, and all proceeds
thereof, (ii) any other contract or agreement (other than the Credit Documents)
relating to the ownership, construction, use, operation, occupancy, or
development of the Premises or the Improvements, or to any other activities
conducted therefrom, including, without limitation, contracts with architects
and contractors, and all proceeds thereof, and (iii) any plans, specifications
or drawings pertaining to the construction or development of the Improvements.
GRANTING CLAUSE TENTH
PERMITS, LICENSES AND FRANCHISES
Without limitation of the foregoing, all permits, licenses, franchises,
privileges, grants, consents, building variances, certificates of occupancy or
operation, and other authorizations or approvals, now or hereafter issued or
granted by any governmental authority with respect to the ownership of the
Premises, or with respect to the ownership, construction or operation of the
Improvements, and any renewals or extensions of any of the foregoing, PROVIDED
that the lien of this Instrument shall not apply to, and there shall be excluded
from the ambit of this paragraph, any of the foregoing permits, licenses,
franchises, privileges, grants, consents, building variances, certificates of
occupancy or operation, and other authorizations or approvals, which, by their
express terms or by reason of applicable law would become void or voidable if
mortgaged or pledged by the Borrower hereunder.
GRANTING CLAUSE ELEVENTH
INSURANCE PROCEEDS
All proceeds of all insurance now or hereafter carried by, or payable
to, the Borrower with respect to the Premises and/or the Improvements, or
otherwise now or hereafter payable with respect to any loss or damage of the
Premises and/or the Improvements, and all claims or demands with respect
thereto.
GRANTING CLAUSE TWELFTH
CONDEMNATION AWARDS, ETC.
Without limitation of the foregoing, all awards and other compensation
heretofore or hereafter to be made to the present and all subsequent owners of
the property subject to this Instrument for any taking by eminent domain, either
permanent or temporary, of all or any part of the Premises or any easement or
appurtenance thereof, including severance and consequential damage and change in
grade of streets, which such awards and compensation are hereby assigned to the
Collateral Agent and Trustee; the Borrower hereby appoints the Trustee its
Attorney-in-Fact, coupled with an interest, and authorizes, directs and empowers
such Attorney, at the option of such Attorney, on behalf of the Borrower and its
successors or assigns to collect and receive the proceeds thereof, to give
proper receipts and acquittances therefor (but not to adjust or compromise the
claim) and, after deducting reasonable expenses of collection, to apply the net
proceeds without penalty or premium as a credit upon any portion, as selected by
the Collateral Agent and, of the Indebtedness secured hereby, notwithstanding
the fact that the amount owing thereon may not then be due and payable or that
such Indebtedness is otherwise adequately secured.
TO HAVE AND TO HOLD the Property Covered by this Instrument with the
appurtenances thereunto belonging unto the Trustee, its successors-in-trust and
assigns, forever, for the purposes and uses herein set forth, until such time as
all of the Indebtedness and obligations secured hereby shall have been paid in
full.
The property, interests and rights hereinabove mentioned, whether owned
in fee or held under lease, is hereinafter referred to as the "REAL PROPERTY" to
the extent that the same is realty, and as the "PERSONAL PROPERTY COLLATERAL" to
the extent that the same is personalty. The Real Property and the Personal
Property Collateral collectively constitute the Property Covered by this
Instrument. The Premises and the Improvements are sometimes referred to herein
collectively as the "PROJECT".
4
<PAGE> 6
It is also agreed that if any of the property herein mortgaged is of a
nature so that a security interest therein can be perfected under the Uniform
Commercial Code, this Instrument shall constitute a security agreement and the
Borrower agrees to execute, deliver and file or refile any financing statement,
continuation statement, or other instruments the Collateral Agent may require
from time to time to perfect or renew such security interest under the Uniform
Commercial Code. This Instrument shall be effective as a financing statement and
is to be filed for record in the Office of the County Recorder or County Clerk
where the Premises are situated. The mailing address of the Borrower is set
forth at the beginning of this Instrument and the address of the Collateral
Agent from which information concerning the security interest may be obtained is
the address of the Collateral Agent set forth at the beginning of this
Instrument.
The Borrower represents to and covenants with the Collateral Agent, its
successors and assigns, that at and until the ensealing of these presents: (i)
the Borrower is well seized of and has a good and indefeasible estate in fee
simple in the Premises (other than any portion of the Premises which is the
subject of a Ground Lease in favor of the Borrower); (ii) if the Borrower's
interest in any portion of the Premises is held by it under a Ground Lease, the
Borrower has a valid and subsisting leasehold estate in each of the properties
covered by such Ground Lease; (iii) the Borrower has good title to the Personal
Property Collateral; (iv) the Borrower and has good right to mortgage, warrant,
bargain, sell and convey, and create a security interest in, the Property
Covered by this Instrument in manner and form as herein written; (v) the
Borrower will warrant and defend the Property Covered by this Instrument with
the appurtenances thereunto belonging to the Collateral Agent, its successors
and assigns, forever against all lawful claims, and demands whatsoever; (vi) the
Property Covered by this Instrument is free and clear of all liens and
encumbrances except only those listed in Exhibit 2, attached hereto and made a
part hereof by reference; (vii) the Property Covered by this Instrument and the
intended use thereof by the Borrower comply to the best of the Borrower's
knowledge with all applicable restrictive covenants, zoning ordinances and
building codes and flood disaster laws, and, to the extent that noncompliance
therewith would materially adversely affect the ability of the Borrower to
conduct its business on the Property Covered by this Instrument, or the value or
marketability of the Property Covered by this Instrument, all applicable
occupational, health and environmental and other applicable laws, rules and
regulations of any other governmental authority whatsoever; and (viii) the
Borrower will execute, acknowledge and deliver all necessary assurances to the
Collateral Agent of the title to the Property Covered by this Instrument as
provided above.
If the Borrower hereafter acquires any real property, or any interest
in real property, in addition to the Real Property, which is adjacent to, or
contiguous with, or otherwise intended or required to be subjected to the lien
of this Instrument, the Borrower will subject the same to the lien of this
Instrument by instrument supplemental hereto, satisfactory in form and substance
to the Collateral Agent and Trustee.
The conditions of this Instrument are such that the Borrower has
executed and delivered this Instrument for the purpose of securing the
performance of its covenants and agreements contained herein and in any
agreement or instrument made by it with respect to any Indebtedness secured
hereby and to secure the payment when due (whether at the stated maturity, by
acceleration or otherwise) of the following indebtedness, liabilities and
obligations (including obligations which, but for the automatic stay under
section 362(a) of the Bankruptcy Code, would become due), now existing or
hereafter arising (collectively, the "INDEBTEDNESS", the "INDEBTEDNESS SECURED
BY THIS INSTRUMENT" or the "INDEBTEDNESS SECURED HEREBY"), ratably, although not
necessarily in the order of priority set forth below:
(a) the aggregate principal amount of $6,080,000, representing the
Loans made or to be made to the Borrower under the Credit
Agreement with respect to the Project, with interest thereon,
as evidenced by the Notes, maturing on or prior to the 18th
monthly anniversary of the date this Instrument is recorded in
the real property records of the jurisdiction in which the
Premises are located (unless such date is extended as provided
in the Credit Agreement); and principal and interest on the
Notes in respect of such Loans shall be payable as set forth
therein and in the Credit Agreement;
(b) all sums expended or advanced by or on behalf of the
Collateral Agent pursuant to any term or provision of this
Instrument or any other agreement or instrument relating to or
securing any of the foregoing for the purpose of protecting or
preserving the Property Covered by this Instrument or the
priority of the Lien of this Instrument, including, all
advances or disbursements of the Collateral Agent for the
payment of taxes, levies, assessments, insurance, insurance
premiums or costs incurred in the protection of the Property
Covered by this Instrument;
5
<PAGE> 7
(c) all other liabilities, obligations and indebtedness of the
Borrower incurred under or arising out of or in connection
with the Credit Agreement and the other Credit Documents to
which it is a party, and the due performance and compliance by
the Borrower with all of the terms, conditions and agreements
contained in the Credit Agreement and such other Credit
Documents;
(d) all other liabilities, obligations and indebtedness of the
Borrower and/or any other Credit Party under any Designated
Hedge Agreement, whether relating to the Loans for the Project
or to any other Project financed or to be financed pursuant to
the Credit Agreement; and
(e) all other liabilities, obligations and indebtedness of the
Company and the other Borrowers incurred under or arising out
of or in connection with the Credit Agreement and the other
Credit Documents to which the Company or any other Borrower is
a party, and the due performance and compliance by the Company
and the other Borrowers with all of the terms, conditions and
agreements contained in the Credit Agreement and such other
Credit Documents;
but only to the extent that the total unpaid Indebtedness secured by this
Instrument, exclusive of liabilities and obligations referred to in the
preceding clause (c), in the aggregate, exclusive of the interest thereon, does
not exceed the maximum amount specified in this Instrument, which is $6,080,000,
and as security for the payment of the Indebtedness secured hereby, the Borrower
has granted to the Trustee hereunder a lien against the Property Covered by this
Instrument. In accordance with the provisions of the Notes, the whole of the
principal sum of the Loans made to finance the Project which are then unpaid may
be declared and become due and payable upon the occurrence of an Event of
Default hereunder or under the Credit Agreement. This Instrument is given for
the purpose of creating a lien on the Property Covered by this Instrument and
expressly is to secure the Indebtedness secured hereby, ratably, including but
not limited to future advances, whether such advances are obligatory or to be
made at the option of the Lenders or otherwise, to the same extent as if such
future advances were made on the date of the execution of this Instrument. The
total amount of the Indebtedness secured hereby may decrease or increase from
time to time and the Lenders may hereafter, as described in this Instrument, at
any time after this Instrument is delivered to the county recorder or county
clerk for record, make additional loans or advances to the Borrower or otherwise
make credit facilities available for the account of the Borrower or any the
other Borrowers; PROVIDED, HOWEVER, that the total unpaid balance secured at any
one time shall not exceed $6,080,000, plus interest thereon and any
disbursements made for the payment of taxes, levies or insurance on the Property
Covered by this Instrument with interest on such disbursements. Any such further
loans or advances or credit facilities, with interest, shall be secured by this
Instrument.
PROVIDED, NEVERTHELESS, that if the Indebtedness secured hereby shall
be paid in full when due, and if all of the provisions of the Credit Agreement
and the other Credit Documents shall be timely performed and observed, then the
lien of this Instrument and the interest of the Trustee in the Property Covered
by this Instrument shall be released at the cost of the Borrower, but shall,
except as otherwise provided herein, remain in full force and effect.
The Borrower, intending to bind its successors and assigns, hereby
covenants and agrees with the Collateral Agent and Trustee, its
successors-in-trust and assigns, for its benefit and for the benefit of the
holders of the Indebtedness secured hereby, as follows:
1 PAYMENT OF LOANS, PERFORMANCE OF OBLIGATIONS, ETC. (a) The
Borrower shall pay the principal of and interest on its Loans incurred to
finance the Project in accordance with the Credit Agreement.
(b) The Borrower hereby irrevocably authorizes the Company to take
any and all actions on behalf of the Borrower contemplated to be taken as
provided in the Credit Agreement.
(c) The Borrower hereby (i) undertakes and agrees to perform all
of the obligations of a Borrower under the Credit Agreement, and (ii) agrees to
be bound to all of the limitations, conditions, restrictions and other
provisions of the Credit Agreement applicable to a Borrower.
6
<PAGE> 8
(d) The Borrower will keep and perform or cause to be kept and
performed all covenants, agreements, conditions and stipulations contained in
the other Credit Documents binding on or otherwise applicable to the Borrower
under any of the other Credit Documents.
(e) The Borrower hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Indebtedness secured
hereby and this Instrument and any requirement that the Collateral Agent or
other holder of any of the Indebtedness secured hereby protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against any other person, or any
collateral, or pursue any other remedy in the power of the Collateral Agent or
other holder of any of the Indebtedness secured hereby.
2 GROUND LEASES. If the Borrower holds any interest in the
Premises under a Ground Lease, the Borrower shall maintain such Ground Lease in
full force and effect and shall duly and punctually perform all of its
obligations thereunder.
3 ESCROW OF TAXES AND INSURANCE PREMIUMS. In order more fully to
protect the security of this Instrument, the Borrower shall, subject to any
provisions of any Ground Lease requiring payment of such amounts thereunder, pay
to the Collateral Agent, in addition to any amounts otherwise payable by the
Borrower hereunder in respect of the Indebtedness hereby secured, and
concurrently therewith but not less frequently than monthly (on the first day of
each month) until the Indebtedness is fully paid, the following sums:
(a) A sum equal to one-twelfth (1/12) of the estimated
annual cost of all taxes, assessments and levies levied on the Real
Property and one-twelfth (1/12) of the annual insurance premiums
required to keep the buildings, fixtures and equipment of the Real
Property insured as required by section 10 hereof against loss or
damage for the benefit of, with loss payable to, and in the manner and
amount approved by, the Collateral Agent, which monthly payments shall
be credited to an escrow account, held by the Collateral Agent, without
interest accruing thereon, from which the Collateral Agent shall pay
each of the such particular items. The amount of the estimated monthly
payment under this section may be adjusted from time to time so that
the amount deposited by the Borrower shall approximate the total sum
required annually for such taxes, assessments, levies and insurance
premiums. This adjustment shall be made on the demand of the Collateral
Agent and any deficiencies shall be paid by the Borrower upon the
Collateral Agent's demand. If funds in the escrow account are
insufficient to pay any taxes, assessments, levies or insurance
premiums and the Borrower has failed, refused or neglected to pay the
same as they become due, the Collateral Agent may, but shall have no
obligation to, pay the same plus any interest or penalties due thereon.
Any such amount so paid by the Collateral Agent shall be added to the
Indebtedness forthwith with interest at the rate specified in section
2.9(c) of the Credit Agreement (hereinafter referred to as the "DEFAULT
RATE"). No later than 10 days prior to the date when any installment of
taxes and assessments is due, without penalty, interest, or
delinquency, the Borrower shall present to the Collateral Agent the
bill for any such installment of taxes and assessments and the
Collateral Agent shall immediately draw a check on the escrow account,
payable to the appropriate governmental authority, for the amount of
such installment (to the extent such funds exist in the escrow
account), and shall deliver such check to the Borrower. Upon receipt of
such check by the Borrower, the Borrower shall pay and discharge the
same, the Borrower shall submit to the Collateral Agent evidence of the
due and punctual payment of such taxes, assessments, reassessments and
other governmental charges as the Collateral Agent may require. Any
deficiency in the fixed amount of any such aggregate monthly payment
not paid as required shall constitute an Event of Default under this
Instrument. In the event of a sale of the Property Covered by this
Instrument, but without it being considered a waiver of any rights
contained in section 6 hereof, any such funds then on deposit with the
Collateral Agent, automatically and without necessity of further notice
or written assignment, shall be transferred to and held thereafter for
the account of the new owner to be applied in accordance with the
foregoing; PROVIDED, HOWEVER, that in the event there are any defaults
hereunder at the time of a sale of the Property Covered by this
Instrument, such funds may be used by the Collateral Agent to satisfy
such defaults. Any excess funds accumulated remaining after payment of
the items therein mentioned shall be credited to subsequent monthly
payments of the same nature required hereunder, but if any such item
shall exceed the estimate therefor, the Borrower shall upon demand
forthwith make good the deficiency. Failure to do so before the due
date of such item shall be a default hereunder. If the Property Covered
by this Instrument are sold under foreclosure or are otherwise acquired
by the Collateral Agent after default, any remaining balance of the
above accumulations shall, at the option of the Collateral
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<PAGE> 9
Agent, be credited to the principal amount of the Indebtedness secured
hereby as of the date such estates are acquired. The Borrower will also
pay all taxes and assessments or charges which may be levied on the
Indebtedness secured hereby or the interest therein excepting the
federal income tax imposed under the laws of the United States and
excepting state franchise and state income taxes. Any assessment which
is payable in installments at the application of the Borrower shall,
nevertheless, for the purposes of this section, be deemed due and
payable by the Borrower in its entirety on the day the first
installment becomes due or payable or a lien, unless the written
approval of the Collateral Agent is obtained for any such installment
payments of assessments.
(b) Notwithstanding the provisions of section 3(a) above,
(i) the Borrower shall have the right to contest in good faith any of
such taxes and assessments upon posting with the Collateral Agent
sufficient security, reasonably satisfactory to the Collateral Agent,
for the payment thereof, with interest, costs and penalties, under
written agreement conditioning payment of such contested taxes and
assessments upon the resolution of such contest, or prior thereto if
the continuance of such contest shall put the Property Covered by this
Instrument or any part thereof in jeopardy of tax sale or forfeiture;
and (ii) so long as there exists no Event of Default under this
Instrument, the Borrower may make such payments of insurance premiums,
taxes, assessments, levies, and other charges directly and without
making the payments to the escrow account contemplated by section 3(a)
above, but in the event of the occurrence and continuance of an Event
of Default under this Instrument, the provisions set forth above in
section 3(a) providing for payments to such escrow account shall be
fully applicable and in full force and effect.
4 REVENUE STAMPS; TAXES ON INDEBTEDNESS. (a) If at any time the
United States of America shall require internal revenue stamps to be affixed to
any of the Indebtedness secured hereby, the Borrower will pay for the same with
any interest or penalties imposed in connection herewith.
(b) If at any time the United States or the State or Commonwealth
in which the Real Property is located or any of their subdivisions having
jurisdiction shall levy, assess or charge any tax, assessment or imposition upon
this Instrument or the credit or Indebtedness secured hereby or the interest of
the Collateral Agent in the Real Property or upon the Collateral Agent or any
Lender by reason of or as holder of any of the foregoing, then the Indebtedness
secured hereby and the accrued interest thereon shall be and become due and
payable at the election of the Collateral Agent; PROVIDED, HOWEVER, that such
election and the right to elect shall be unavailing if the Borrower lawfully may
pay for such stamps or such tax, including interest and penalties thereon, to or
for the benefit of the Collateral Agent and the other holders of the
Indebtedness secured hereby, and the Borrower elects to pay and does, in fact,
pay when payable, for all such stamps or such tax, as the case may be, including
interest and penalties thereon, prior to any such election by the Collateral
Agent. The Borrower further agrees to deliver to the Collateral Agent, at any
time, upon demand, evidence of citizenship and such other evidence as may be
required by any government agency having jurisdiction in order to determine
whether the Indebtedness secured hereby is subject to or exempt from any such
tax or any other governmental filing or reporting requirement.
5 LIENS. (a) The Borrower shall not create or suffer to exist
any lien, security interest, charge, restriction or other encumbrance affecting
all or any portion of the Property Covered by this Instrument, and shall keep
the Property Covered by this Instrument free and clear from any of the
foregoing, EXCEPT FOR (1) the lien of this Instrument, (2) taxes and assessments
which may be a lien but are not yet due and payable, (3) easements, licenses and
similar rights granted in the ordinary course of business to suppliers of gas,
oil, electricity, cable or satellite television, telephone, wireless
communication and similar services, (4) purchase money liens on equipment and
vehicles, and rights of lessors under Capital Leases of equipment or vehicles,
in each case which are permitted under section 16(c) hereof, (5) such other
matters of record as may be described in Exhibit 2 or as to which the Collateral
Agent has otherwise specifically consented in writing, (6) mechanics' liens and
other statutory liens which (w) secure amounts not more than 30 days overdue, or
(x) are being contested in accordance with section 5(b), or (y) are "bonded
over" in a manner reasonably acceptable to the Collateral Agent, or (z)
otherwise do not appear as exceptions on the Title Policy (and endorsements
thereto) issued in favor of the Collateral Agent with respect hereto, and (7)
Tenant Leases entered into in accordance with section 6 hereof.
(b) If any lien, security interest, charge, restriction or other
encumbrance affecting all or any portion of the Property Covered by this
Instrument, not otherwise permitted by section 5(a), shall be filed in the real
property
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records in which this instrument is recorded, the Borrower will have the same
discharged of record either by payment, the bonding thereof or other lawful
means. Without limitation of the foregoing, the Borrower will keep and maintain
the Property Covered by this Instrument free from mechanics' liens and other
statutory liens securing claims of all persons supplying labor, materials or
services which will enter into or otherwise contribute to the construction of
any and all buildings now being erected or which hereafter may be erected on the
Real Property, notwithstanding by whom such labor or materials may have been
contracted; PROVIDED, HOWEVER, that the Borrower shall have the right to contest
in good faith any such mechanics' lien or statutory lien (i) so long as the
continuance of such contest or litigation does not result in an order for the
foreclosure of such lien, the forced sale of any of the Property Covered by this
Instrument, or the forfeiture of the lien of this Instrument, and (ii) in the
case of any such mechanics' lien or statutory lien involving a claim in excess
of $100,000, there has been posted with the Collateral Agent sufficient security
(in the form of a bond issued by a surety company or otherwise), satisfactory to
the Collateral Agent, for the payment thereof, with interest, costs and
penalties, under written agreement conditioning payment of such contested
mechanics' lien or statutory lien upon the resolution of such contest, or prior
thereto.
6 TRANSFERS AND MERGERS; LEASES AND MANAGEMENT CONTRACTS, ETC.
The Borrower shall not (i) sell, assign, transfer or otherwise dispose of the
Property Covered by this Instrument or any part thereof or interest therein, or
(ii) merge or consolidate with any other person, or (iii) amend, modify,
terminate or surrender any Ground Lease, or (iv) enter into any management
contract or similar agreement under which any person other than the Borrower
shall have the right to manage the operation of the Project, or (v) lease all or
any portion of the Property Covered by this Instrument to any other person,
pursuant to a Tenant Lease, or otherwise, or permit any of its lessees or
sublessees to do so, or (vi) enter into any contract or agreement to do any of
the foregoing, expressly including, without limitation, any land contract,
lease/purchase, lease/option or option agreement, without, in each such case,
first obtaining the written consent of the Collateral Agent; EXCEPT, HOWEVER,
that the Borrower shall have the right, without such consent, to
(A) sell, assign or transfer all of its right title and
interest in the Property Covered by this Instrument to the Company or
to another Affiliate of the Company, or merge or consolidate with the
Company or another Affiliate of the Company, if (1) no Event of Default
under this Instrument shall have occurred and be continuing, or would
result therefrom, (2) the obligations of the Permanent Lender or the
Supplemental Permanent Lender under the Project Take-Out Agreement
related to the Borrower's Project, or under any commitment issued by it
to the Borrower which is referred to therein, would not be impaired,
subject to termination, or otherwise adversely affected in any manner
which might jeopardize the ability of the Borrower to refinance its
Loans for the Project with borrowings made from the Permanent Lender or
the Supplemental Permanent Lender, as applicable, and (3) the
acquiring, surviving or resulting person (if other than the Borrower)
shall expressly assume (x) all obligations of the Borrower under this
Instrument, and (y) all obligations of the Borrower under the Credit
Agreement and the other Credit Documents which relate to the Project,
pursuant to one or more assumption agreements, satisfactory in form and
substance to the Collateral Agent, executed and delivered to the
Collateral Agent contemporaneously with the consummation of such
transaction, and such person shall, contemporaneously therewith deliver
to the Collateral Agent certified resolutions or other evidence
satisfactory to the Collateral Agent, as to the authority of such
person to make such assumption;
(B) enter into a Management Contract with respect to the
Project with the Company in accordance with the provisions of section
6.2 of the Credit Agreement; or permit an Affiliate of the Company
which is the tenant under an Affiliate Lease with respect to the
Project, to enter into a Management Contract with the Company in
accordance with the provisions of section 6.2 of the Credit Agreement;
(C) lease the entire Project to the Company pursuant to a
Company Lease entered into as contemplated by section 6.2 of the Credit
Agreement, which Company Lease shall be subject and subordinate in all
respects to the lien of this Instrument, PROVIDED that at the time any
such Company Lease is entered into, no Event of Default under this
Instrument shall have occurred and be continuing, or would result
therefrom;
(D) lease the entire Project to another Affiliate of the
Company pursuant to an Affiliate Lease entered into as contemplated by
section 6.2 of the Credit Agreement, contemporaneously with either (x)
a sublease by such Affiliate of the entire Project to the Company
pursuant to a Company Sublease entered into
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as contemplated by section 6.2 of the Credit Agreement, or (y) a
Management Contract between such Affiliate and the Company for the
Project entered into as contemplated by section 6.2 of the Credit
Agreement, which Affiliate Lease need not be subordinate to the lien of
this Instrument and may be subject to a subordination, non-disturbance
and attornment agreement entered into with the Collateral Agent as
contemplated by the Credit Agreement, and (if applicable) which Company
Sublease shall either be subject and subordinate in all respects to the
lien of this Instrument, or the rights of the Company thereunder made
the subject of a Security Document in favor of the Collateral Agent,
PROVIDED that at the time any such Affiliate Lease is entered into, no
Event of Default under this Instrument shall have occurred and be
continuing, or would result therefrom;
(E) sublease units of the Project to individual residents in
the ordinary course of business pursuant to Tenant Leases, or permit
the Company or any Affiliate if it is a party to a Management Contract,
Company Lease, Affiliate Lease and/or Company Sublease, to do so,
PROVIDED that the form of Tenant Lease has been approved by the
Collateral Agent (it being understood that such Tenant Leases need not
be expressly subordinated to the lien of this Instrument);
(F) lease, sublease or license portions of the Improvements
in the ordinary course of business to operators of food service,
medical, hair care, recreational and other services and amenities for
individual residents of the Project, on arms-length terms reflecting
prevailing market conditions or on such other terms as may be
reasonably acceptable to the Collateral Agent; and
(G) remove and dispose of, free from the lien of this
Instrument, such personalty and equipment as from time to time may
become worn out or obsolete, PROVIDED that (1) such removal is not
prohibited by the Credit Agreement or the other Credit Documents; (2)
simultaneously with or prior to such removal, such equipment shall, if
required in order to continue operations on the Property Covered by
this Instrument at the same level of activity as prior to such removal,
be replaced with equipment of like kind and quality, free from any
security interest, lien or encumbrance not permitted under the
provisions of the Credit Agreement or the other Credit Documents, and
by such removal, the Borrower shall be deemed to have subjected the
replacement equipment to the lien of this Instrument; and (3) any net
cash proceeds received from such disposition (not otherwise applied to
the purchase of such replacement equipment) shall, if required pursuant
to the provisions of the Credit Agreement, be promptly paid over to the
Collateral Agent to be applied to the Indebtedness secured hereby in
such manner as may be provided in the Credit Agreement or the other
Credit Documents.
Any Tenant Lease not actually approved by the Collateral Agent or entered into
as contemplated by the above provisions or section 6.2 of the Credit Agreement,
shall, at the option of the Collateral Agent, be null and void and shall not
grant any rights in the Property Covered by this Instrument or any part thereof
to the tenant named therein. No sale or transfer of the Borrower's interest in
the Property Covered by this Instrument permitted by clause (A) above shall
operate as a release of the Borrower from its obligations hereunder or in
respect of the Indebtedness secured hereby without the written consent of the
Collateral Agent (acting on instructions from the Required Lenders, or all of
the Lenders if required under section 13.13 of the Credit Agreement), and in the
event of any such sale or transfer, the Collateral Agent may, without notice to
the Borrower, deal with such assignee with reference to this Instrument and the
obligations hereunder in the same manner as with the Borrower, without in any
way releasing, discharging or otherwise affecting the Borrower's liability
hereunder, or the Indebtedness secured hereby.
7 MAINTENANCE; ALTERATIONS; REPAIR OR RESTORATION OF LOSS OR
DAMAGE CAUSED BY CASUALTY; PREPAYMENT UPON EVENT OF LOSS. (a) The Borrower will
keep the Property Covered by this Instrument in good order, condition and
repair, ordinary wear and tear excepted, and in compliance in all material
respects with any law, regulation, ordinance or contract affecting the Property
Covered by this Instrument. The Borrower will, from time to time, make all
needful and proper replacements so that buildings, fixtures, machinery and
appurtenances included in or on the Property Covered by this Instrument and
useful to the ownership and operation of the Property Covered by this Instrument
will at all times be in good condition, fit and proper for the respective
purposes for which they were erected or installed. The Borrower shall not in any
event commit waste upon the Property Covered by this Instrument or suffer waste
to be committed thereon.
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<PAGE> 12
(b) After completion of construction of the Improvements as
contemplated by the Credit Agreement and the other Credit Documents, no
buildings or substantial improvements on the Property Covered by this Instrument
shall be altered or demolished or removed by the Borrower without the prior
written consent of the Collateral Agent (which consent shall be given as
provided in section 13.13 of the Credit Agreement upon instructions or consent
of the Required Lenders), PROVIDED that the proposed alterations shall not
materially and adversely affect the value of the Property Covered by this
Instrument or the utility of the Property Covered by this Instrument for the
purposes to which the same are designed or presently devoted); PROVIDED,
FURTHER, HOWEVER, the Borrower may make alterations to the Property Covered by
this Instrument (including structural or material alterations to the buildings
or improvements thereon) without such consent if (i) such alterations do not
reduce the value or marketability of the Property Covered by this Instrument or
the uses or utility of the Property Covered by this Instrument; or (ii) if such
alterations are not required by applicable law, if the cost of all such
alterations (whenever made) taken in the aggregate do not cost more than
$250,000. In the event the Collateral Agent's consent is required, the Borrower
in requesting such consent shall submit to the Collateral Agent plans and
specifications for such alterations and a cost estimate satisfactory to the
Collateral Agent, which plans and specifications and cost estimate shall be
prepared by a registered architect selected by the Borrower and reasonably
acceptable to the Collateral Agent.
(c) If the Improvements suffer any damage or loss or are destroyed
by fire, rain, storm, flood, earthquake, or any other casualty, whether or not
covered by insurance, the Borrower will (i) if the same constitutes an Event of
Loss, prepay its Loans related to the Project as provided in the Credit
Agreement, or (ii) otherwise repair, replace or restore the Improvements in
accordance with the requirements of this Instrument applicable to the
construction or alteration of the Improvements.
8 COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS, ETC. (a) The
Borrower covenants that the Real Property and Improvements will at all times be
constructed, maintained and operated in compliance with all applicable
requirements of
(i) all laws, rules, regulations, orders, authorizations,
permits and licenses of all governmental authorities, federal, state
and local, having jurisdiction over the Borrower, the Real Property or
the Improvements, including, without limitation, (x) all Environmental
Laws, and (y) the Americans with Disabilities Act of 1990, the Fair
Housing Amendments Act of 1988, all state and local laws and ordinances
related to handicapped access and all rules, regulations, and orders
issued pursuant thereto including, without limitation, the Americans
with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (collectively as referred to in this clause (y), "ACCESS
LAWS"); and
(ii) all restrictive covenants affecting any portion or all
of the Real Property;
other than those requirements (A) being contested in good faith by appropriate
proceedings, as to which adequate reserves are established to the extent
required under GAAP, and (B) the noncompliance with which would not have, and
which would not be reasonably expected to have, a Material Adverse Effect or a
material adverse effect on the ability of the Borrower to perform its
obligations under any Credit Document.
(b) Notwithstanding any provisions set forth herein or in any
other document regarding the Collateral Agent's approval of alterations of the
Real Property, the Borrower shall not alter the Real Property in any manner
which would increase in any material respect the responsibilities of the
Borrower for compliance with the applicable Access Laws without the prior
written approval of the Collateral Agent. The foregoing shall apply to tenant
improvements constructed by the Borrower or by any of its tenants. The
Collateral Agent may condition any such approval upon receipt of a certificate
of Access Law compliance from an architect, engineer, or other person acceptable
to the Collateral Agent.
(c) The Borrower does hereby agree to give prompt notice to the
Collateral Agent of the receipt by the Borrower of any complaints related to
violation of any Access Laws and of the commencement of any proceedings or
investigations which relate to compliance with applicable Access Laws.
(d) The Borrower shall (i) observe and comply with all conditions
and requirements necessary to preserve and extend any and all rights, licenses,
permits (including but not limited to zoning variances, special exceptions and
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<PAGE> 13
non-conforming uses), privileges, franchises and concessions which are
applicable to the Property Covered by this Instrument or which have been granted
to or contracted for by the Borrower in connection with any existing or
presently contemplated use of the Property Covered by this Instrument, and (ii)
obtain and keep in full force and effect all necessary governmental and
municipal approvals as may be necessary from time to time to comply in all
material respects with all Environmental Laws, Access Laws and other statutory
or regulatory requirements; except in any such case referred to in clause (i) or
(ii) above where the noncompliance would not have, and would not be reasonably
expected to have, a Material Adverse Effect or a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
(e) The Borrower shall observe and comply with any and all
conditions attached to the insurance relating to the Property Covered by this
Instrument and the condition thereof.
9 ENVIRONMENTAL MATTERS. Without limitation of the provisions of
section 8 hereof, or any of the terms or provisions of the Environmental
Indemnity Agreement executed and delivered by the Borrower to the Collateral
Agent contemporaneously herewith, the Borrower represents, warrants, covenants
and agrees as follows:
(a) The Borrower represents that, to the best of the
Borrower's knowledge and belief, after due investigation and due
inquiry, and except as may otherwise be disclosed in the Environmental
Report with respect to the Project delivered pursuant to section 2.2 of
the Credit Agreement: (i) neither the Borrower nor any previous owner,
tenant, occupant or other user of the Property Covered by this
Instrument has used, generated, stored, treated, produced, handled or
disposed of in, on, under, around or above the Property Covered by this
Instrument, any Hazardous Materials; (ii) the Property Covered by this
Instrument is not currently in violation of any Hazardous Materials
Laws or Wetlands Laws; (iii) the Property Covered by this Instrument
does not now contain and has not in the past contained any Hazardous
Materials; (iv) the Property Covered by this Instrument does not now
contain and has not in the past contained any underground storage
tanks; (v) no event has occurred with respect to the Property Covered
by this Instrument which, with the passage of time or the giving of
notice or both, would constitute a violation of any Hazardous Materials
Laws or Wetlands Laws; (vi) there are no agreements, orders,
determinations, permits or directives of or with any federal, state or
local governmental agency or authority relating to the Property Covered
by this Instrument that require any work, repair, construction,
containment, clean up, investigation, study, removal, mitigation or
other environmental remedial action with respect to the Property
Covered by this Instrument; and (vii) there are no actions, suits,
claims, proceedings or investigations, pending or threatened, arising
out of or relating to the Property Covered by this Instrument and any
Hazardous Materials Laws or Wetlands Laws.
(b) The Borrower shall, and the Borrower shall cause all
employees, agents, contractors, and subcontractors of the Borrower and
any other persons who now or hereafter are present on or occupying the
Property Covered by this Instrument, to keep and maintain the Property
Covered by this Instrument, including, without limitation, the soil and
ground water thereof, in compliance with, and not cause or knowingly
permit the Property Covered by this Instrument, including the soil and
ground water thereof, to be in violation of any federal, state or local
laws, ordinances, regulations, rules, determinations, directives and
permits relating to industrial hygiene or to the environmental
conditions thereof (including, but not limited to, any and all
Hazardous Materials Laws and Wetlands Laws. Neither the Borrower nor
any employees, agents, contractors, and subcontractors of the Borrower
nor any other persons who now or hereafter occupy or are present on the
Property Covered by this Instrument shall (A) use, handle, generate,
manufacture, store, or dispose of, on, under, around or above the
Property Covered by this Instrument or transport to or from the
Property Covered by this Instrument any Hazardous Materials, except as
such may be required to be used, handled, stored, or transported in
connection with the permitted uses of the Property Covered by this
Instrument and then only to the extent permitted by law and in strict
compliance with all applicable statutes, laws, ordinances, rules,
guidelines and regulations and only after obtaining and keeping in
force all necessary permits, approvals and licenses therefor; or (B)
perform, cause to be performed or permit any fill activities or other
acts which would in any way fill, destroy, eliminate, alter, obstruct,
interfere with, or otherwise affect any Wetlands, in violation of any
Wetlands Laws.
(c) The Borrower shall promptly upon, and in any event
within 10 Business Days after an officer of the Borrower obtains actual
notice thereof, notify the Administrative Agent in writing of any of
the
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following environmental matters which involves any reasonable
likelihood (in the Borrower's reasonable judgment) of resulting in a
Material Adverse Effect upon the Borrower or any material liabilities
for the Project: (A) any notices (whether such notices are received
from the Environmental Protection Agency, or any other federal, state,
or local governmental agency or regional office thereof) of an actual
violation or potential violation which is received by the Borrower of
any Hazardous Materials Laws or of any Wetlands Laws; (B) any and all
enforcement, cleanup, removal or other governmental or regulatory
demands made or actions threatened, instituted or completed pursuant to
any Hazardous Materials Laws or Wetlands Laws; (C) any claims or
demands made or threatened by any third party against the Borrower or
the Property Covered by this Instrument relating to actual or alleged
damage, contribution, obligations, cost recovery compensation, loss or
injury resulting from any Hazardous Materials or Wetlands (the matters
set forth in clauses (A), (B) and (C) above are hereinafter referred to
as "HAZARDOUS MATERIALS OR WETLANDS CLAIMS"); and (D) the Borrower's
discovery of any occurrence or condition in, on, under, around or above
the Property Covered by this Instrument or any real property adjoining
or in the vicinity of the Property Covered by this Instrument that
could cause the Property Covered by this Instrument or any part thereof
to be classified as "border zone property" under the provisions of any
Hazardous Materials Laws, or to be otherwise subject to any
restrictions on the ownership, occupancy, transferability or use of the
Property Covered by this Instrument under any Hazardous Materials Laws
or Wetlands Laws.
(d) The Lenders, the Administrative Agent and the Collateral
Agent shall have the right but not the obligation to join and
participate in, as a party if it so elects, any legal proceedings or
actions initiated in connection with any Hazardous Materials or
Wetlands Claims and to have their reasonable attorneys' and
consultants' fees in connection therewith paid by the Borrower within
30 days after receipt of an invoice or invoices therefor.
(e) The Borrower shall be solely responsible for, and agrees
to indemnify and hold harmless the Lenders, the Administrative Agent,
the Collateral Agent, and their respective directors, officers,
employees, agents, successors and assigns from and against, any claim,
action, cause of action, loss, damage, cost, expense or liability
directly or indirectly, in whole or in part, arising out of or
attributable to (I) the breach, violation or threatened violation of
any applicable environmental law, ordinance, regulation, rule, order,
determination, directive or permit including, but not limited to,
Hazardous Materials Laws and Wetlands Laws, relating to the Borrower
and/or the Property Covered by this Instrument; and (II) the use,
handling, generation, storage, release, threatened release, discharge,
disposal, or of Hazardous Materials or Wetlands in, on, under or about
the Property Covered by this Instrument (whether by the Borrower or a
predecessor in title or past, present or future tenant, occupant or
other user or any employee, agent, contractor, or subcontractor of the
Borrower or any predecessor in title or any third persons at any time
occupying or present on the Property Covered by this Instrument),
including, without limitation: (A) all consequential damages; (B) the
cost of any required or necessary repair, response, cleanup,
remediation, or detoxification of the Property Covered by this
Instrument or any adjoining property, including the soil and ground
water thereof, and the preparation and implementation of any closure,
remedial or other required plans incurred by any person to be
indemnified hereunder; (C) damage to any Wetlands or natural resources;
and (D) all reasonable costs and expenses incurred by any indemnified
person in connection with clauses (A), (B), and (C), including, but not
limited to, reasonable attorneys' and consultants' fees; provided,
however, that nothing contained in this paragraph shall be deemed to
(x) create or give any rights to any person other than the indemnified
persons described herein, it being intended that there shall be no
third party beneficiary of such provisions beyond the persons to be
indemnified as described herein, or (y) preclude the Borrower from
seeking indemnification from, or otherwise proceeding against, any
third party including, without limitation, any tenant or predecessor in
title to the Property Covered by this Instrument.
(f) Any costs or expenses reasonably incurred by a person to
be indemnified hereunder for which the Borrower is responsible shall be
paid to the person to be indemnified on demand, and failing prompt
reimbursement, shall be added to the Indebtedness secured hereby and
earn interest at the Default Rate until paid in full.
(g) The Borrower shall promptly notify the Collateral Agent
if the Borrower takes any remedial action in response to the presence
of any Hazardous Materials or Wetlands in, on, under, around or above
any
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portion of the Property Covered by this Instrument or enters into any
settlement agreement, consent decree, or other compromise in respect to
any Hazardous Material or Wetlands Claims.
(h) Upon the Collateral Agent's learning of the presence on
the Property Covered by this Instrument of any Hazardous Materials, or
any material actual or alleged liabilities, costs or expenses related
to environmental matters affecting the Property Covered by this
Instrument, the Collateral Agent may request the Borrower to retain
(and if so requested the Borrower shall retain), at the Borrower's sole
cost and expense, a licensed geologist, industrial hygienist or an
environmental consultant (referred to hereinafter as the "CONSULTANT"),
selected by or otherwise acceptable to the Collateral Agent, to conduct
a baseline investigation of the Property Covered by this Instrument for
the presence of Hazardous Materials or Wetlands ("ENVIRONMENTAL
STUDY"). The Environmental Study shall be performed in a manner
reasonably calculated to discover the presence of Hazardous Materials
contamination or Wetlands and shall be conducted in accordance with the
general standards of persons providing such services taking into
consideration the known current and past uses of the Property Covered
by this Instrument and property in the vicinity of the Premises and any
factors unique to the Premises. The Consultant shall concurrently
deliver the results, recommendations and conclusions of its
investigation in writing (the "REPORT") directly to the Borrower and
the Collateral Agent. The Borrower shall cause the Consultant to permit
the Collateral Agent and the Lenders to rely on the results,
recommendations and conclusions contained in the Report. Such results,
recommendations and conclusions shall be kept confidential by the
Borrower, the Lenders and the Collateral Agent unless any such person
legally compelled or required to disclose such results or disclosure is
reasonably required in order to pursue rights or remedies provided
herein or at law.
(i) The Borrower's representations, warranties, and
obligations under this section shall not be terminated, released,
discharged, extinguished, or otherwise affected by any foreclosure of
any indebtedness or obligation, any satisfaction of the Indebtedness
secured hereby or the release or discharge of the Property Covered by
this Instrument or any part thereof or any other action or thing,
except and unless such representations, warranties, and obligations are
expressly released in writing by the Collateral Agent, which writing
shall refer particularly to this section. The provisions of this
section may be enforced at any time by any of the Lenders, the
Collateral Agent or any other person entitled to be indemnified
hereunder and, without limiting the foregoing, shall survive the
payment or other satisfaction by any means of the obligations evidenced
by the Notes and the release and discharge of this Instrument, except
in the case of a specific written release by the Collateral Agent as to
this section, as referred to above.
(j) As used herein, the following terms shall have the
respective meanings specified below:
"HAZARDOUS MATERIALS LAWS" means all applicable
federal, state and local statutes, laws, ordinances,
regulations, rules, orders, determinations, directives and
permits relating to any "Hazardous Materials", including, but
not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Toxic
Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Federal Water Pollution Control
Act, as amended and any so-called "Superfund" or "Superlien"
law.
"HAZARDOUS MATERIALS" means, without limitation,
asbestos, urea formaldehyde, polychlorinated biphenyl's,
petroleum and petroleum based products, methane, radon, lead,
any flammable substance or material, any explosive, any
radioactive substance or material and any hazardous,
dangerous, toxic or regulated waste, substance, pollutant,
contaminant or material, including, without limitation, any
substances or materials defined as or included within the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any
Hazardous Materials Laws.
"WETLANDS LAWS" means, without limitation, 33 C.F.R.
ss.328.3 and any comparable state and local law, statute,
ordinances, rule or regulation.
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10. INSURANCE. (a) The Borrower will maintain insurance with
responsible companies in such amounts and against such risks as is usually
carried by owners of similar businesses and properties (and with such
deductibles and levels of self-insurance as are usually maintained by owners of
similar businesses and properties and as are consistent with the Borrower's
practices as of the date of the execution and delivery hereof), PROVIDED that in
any event the Borrower will maintain:
(i) ALL RISK EXTENDED COVERAGE AND BUILDER'S RISK INSURANCE:
insurance against loss or damage covering all of the tangible real and
personal property of the Borrower and the Improvements by reason of any
loss or damage by fire, storms, and other hazards, perils, casualties
and risks, including without limitation risks usually covered by
extended coverage policies issued in the jurisdiction in which the
Improvements are located and comprehensive builder's risk insurance,
which insurance shall:
(A) name Key Corporate Capital Inc., as Collateral
Agent as an additional insured and as loss payee,
(B) provide coverage in an amount not less than the
greater of (w) 100% of the replacement costs of the
Improvements and the Personal Property, (x) the full insurable
value of the Improvements and the Personal Property, (y) the
aggregate principal amount of the Loans incurred by the
Borrower, and (z) the amount applicable to any such Property
or Improvements necessary so that neither the Borrower (or any
of its Affiliates) or the Collateral Agent shall be considered
or shall become a co-insurer of any loss under such policy,
and
(C) provide for a deductible or self-insurance
retention of an amount reasonably acceptable to the
Collateral Agent;
(ii) FLOOD INSURANCE: if the area in which the Real
Property is located has been designated as flood prone or a flood risk
area, as defined by the Flood Disaster Protection Act of 1973, as
amended, flood insurance, which insurance shall:
(A) name Key Corporate Capital Inc., as Collateral
Agent as an additional insured and as loss payee,
(B) provide coverage in an amount not less than the
greater of (w) 100% of the replacement costs of the
Improvements and the Personal Property, (x) the full insurable
value of the Improvements and the Personal Property, (y) the
aggregate principal amount of the Loans incurred by the
Borrower, and (z) the amount applicable to any such Property
or Improvements necessary so that neither the Borrower (or any
of its Affiliates) or the Collateral Agent shall be considered
or shall become a co-insurer of any loss under such policy;
PROVIDED that if flood insurance in the required amount is not
available, flood insurance shall be maintained in the maximum
amount available;
(C) provide for a deductible or self-insurance
retention of an amount reasonably acceptable to the Collateral
Agent; and
(D) comply with any additional requirements of the
National Flood Insurance Program as set forth in such Act;
(iii) COMMERCIAL GENERAL LIABILITY INSURANCE: insurance
against claims for bodily injury, death or property damage occurring
on, in or about the Property Covered by this Instrument and any other
facilities owned, leased or used by the Borrower (including adjoining
streets, sidewalks and waterways), which insurance shall:
(A) name Key Corporate Capital Inc., as Collateral
Agent as an additional insured,
(B) provide coverage in an amount not less than
$1,000,000 per occurrence and $2,000,000 in the aggregate,
PLUS umbrella coverage of not less than $10,000,000; and
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<PAGE> 17
(C) provide for a deductible or self-insurance
retention of an amount reasonably acceptable to the
Collateral Agent;
(iv) WORKERS' COMPENSATION INSURANCE: insurance against
claims for injuries to or death of employees (including Employers'
Liability Insurance) to the extent required by applicable law;
(v) BUSINESS INTERRUPTION INSURANCE: after completion of the
construction of the Improvements, insurance against loss of operating
income for a period of at least six months, occasioned by reason of any
peril affecting the operations of the Borrower; and
(vi) OTHER INSURANCE: such other and additional insurance, in
such amounts and with such coverages as are then customary for property
similar in use and located in the same state in which the Property
Covered by this Instrument is located.
Such insurance shall be written by financially responsible companies selected by
the Borrower and having an A.M. Best rating of "A-" or better and being in a
financial size category of "VII" or larger, or by other companies acceptable to
the Collateral Agent, and (other than workers' compensation insurance) shall
name the Collateral Agent, as loss payee (in the case of insurance described in
items (i) and (ii)) or as an additional named insured (in the case of the
insurance described in items (iii), (v) and (vi) above), in each case as its
interests may appear. Each policy referred to in this section shall provide that
it will not be canceled or reduced or expire except after not less than 30 days'
written notice to the Collateral Agent and shall also provide that the interests
of the Collateral Agent shall not be invalidated by an act or negligence of the
Borrower or any person having an interest in any facility owned, leased or used
by the Borrower nor by occupancy or use of any facility owned, leased or used by
the Borrower for purposes more hazardous than permitted by such policy nor by
any foreclosure or other proceedings relating to any facility owned, leased or
used by the Borrower. The Borrower will advise the Collateral Agent promptly of
any policy cancellation, reduction or amendment. All of such insurance shall be
primary and non-contributing with any insurance which may be carried by the
Collateral Agent. All insurance policies, to the extent of its interest, are to
be for the benefit of and first payable in case of loss to the Collateral Agent
as first mortgagee without contribution. At or prior to the time of the initial
Borrowing by the Borrower, it will provide to the Collateral Agent (x)
certificates or endorsements naming the Collateral Agent as an additional
insured or loss payee with respect to the casualty and liability insurance
maintained as required hereby with respect to the Property Covered by this
Instrument, and (y) if requested to do so, copies of all insurance policies
maintained by it as required hereby. The Borrower shall deliver to the
Collateral Agent contemporaneously with the expiration or replacement of any
policy of insurance required to be maintained hereunder a certificate as to the
new or renewal policy.
(b) All amounts recoverable under any policy of casualty insurance
are hereby assigned to the Collateral Agent and, in the event of a loss, the
Collateral Agent is authorized and empowered, at its option, to adjust or
compromise any loss covered by any insurance policies on the Property Covered by
this Instrument, to collect and receive the proceeds therefrom and, after
deducting from such proceeds any expenses incurred by it in the collection or
handling thereof, to apply the net proceeds to the Indebtedness in accordance
with the provisions of the Credit Agreement if at such time an Event of Default
has occurred and is continuing or the Borrower is at the time required to prepay
its Notes. If any such net proceeds are not to be so applied, the Collateral
Agent is authorized, at its option, to apply the net proceeds in any one or more
of the following ways: (i) use the same or any part thereof to fulfill any of
the covenants contained herein as the Collateral Agent may determine; (ii) use
the same or any part thereof to replace and restore the Property Covered by this
Instrument to a condition satisfactory to the Collateral Agent; or (iii release
the same or any part thereof to the Borrower to cover the cost of repair or
restoration of the Improvements; PROVIDED that (A) if the aggregate net proceeds
in respect of such event (other than proceeds in respect of business
interruption insurance) are less than $250,000, such net proceeds shall be paid
over to or retained by the Borrower unless an Event of Default has occurred and
is continuing, and shall be applied by it to the cost of repair or restoration
of the Project, and (B) all proceeds of business interruption insurance shall be
paid over to or retained by the Borrower unless an Event of Default has occurred
and is continuing.
(c) The Collateral Agent is hereby irrevocably appointed by the
Borrower as attorney for the Borrower to assign any policy to itself or its
nominees in the event of the foreclosure of this Instrument. In the event of
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<PAGE> 18
foreclosure of this Instrument, or other transfer of title of the Property
Covered by this Instrument in lieu of foreclosure, all right, title and interest
of the Borrower in and to any insurance policies then in force shall pass to the
purchaser or grantee thereof.
11. CONDEMNATION. (a) The Borrower will give the Collateral Agent
immediate notice of the actual or threatened commencement of any proceedings
under eminent domain affecting all or any part of the Property Covered by this
Instrument or any easement therein or appurtenance thereof, including severance
and consequential damage and change in grade of streets, and will deliver to the
Collateral Agent copies of any and all papers served in connection with any such
proceedings. The Borrower agrees that all awards heretofore or hereafter made by
any public or quasi-public authority to the present and all subsequent owners of
the Property Covered by this Instrument by virtue of an exercise of the right of
eminent domain by such authority, including any award for taking of title,
possession or right of access to a public way, or for any change of grade or
streets affecting the Property Covered by this Instrument, are, subject to the
terms and provisions of the Ground Leases (if any), to the extent applicable
thereto, hereby assigned to the Collateral Agent and the Collateral Agent at its
option is hereby authorized, directed and empowered to collect and receive the
proceeds of any such awards from the authorities making the same and to give
proper receipts therefor. After deducting from such proceeds any expenses
incurred by the Collateral Agent in the collection or handling thereof, the
Collateral Agent shall apply the net proceeds to the Indebtedness in accordance
with the provisions of the Credit Agreement if at such time an Event of Default
has occurred and is continuing or the Borrower is at the time required to prepay
its Loans. If any such net proceeds are not to be so applied, the Collateral
Agent is authorized, at its option, to apply the net proceeds in any one or more
of the following ways: (A) use the same or any part thereof to fulfill any of
the covenants contained herein as the Collateral Agent may determine; (B) use
the same or any part thereof to replace and restore the Property Covered by this
Instrument to a condition satisfactory to the Collateral Agent; or (C) release
the same or any part thereof to the Borrower to cover the cost of repair or
restoration of the Improvements; PROVIDED that (1) if the aggregate net proceeds
in respect of such event (other than proceeds in respect of business
interruption insurance) are less than $250,000, such net proceeds shall be paid
over to or retained by the Borrower unless an Event of Default has occurred and
is continuing, and shall be applied by it to the cost of repair or restoration
of the Project, and (2) all proceeds of business interruption insurance shall be
paid over to or retained by the Borrower unless an Event of Default has occurred
and is continuing.
(b) The Borrower hereby covenants and agrees to and with the
Collateral Agent, upon the request of the Collateral Agent to make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning all such awards to the Collateral Agent, free and clear and
discharged of any and all encumbrances of any kind or nature whatsoever except
as above stated. Notwithstanding any taking under the power of eminent domain,
alteration of the grade of any street, or other injury to or decrease in value
of the Property Covered by this Instrument by any public or quasi-public
authority or corporation, the Borrower shall continue to pay installments on the
Indebtedness owed by it and any reduction in the principal sum resulting from
the application by the Collateral Agent of such award or payment as hereinafter
set forth shall be deemed to take effect only on the date of such receipt.
12. RIGHT OF COLLATERAL AGENT TO MAKE PAYMENTS ON BEHALF OF
BORROWER, ETC. (a) In the event the Borrower shall fail to comply with any or
all of its covenants, agreements, conditions and stipulations herein set forth,
then the Collateral Agent shall after notice to the Borrower be and hereby is
authorized and empowered at its option, but without legal obligation to do so,
to pay or perform the same without waiver of any other remedy. In addition, the
Collateral Agent is authorized and empowered at its option, but without legal
obligation to do so, to enter, or have its agents enter, the Property Covered by
this Instrument whenever necessary for the purpose of inspecting the Property
Covered by this Instrument and curing any default hereunder. The Borrower agrees
that the Collateral Agent shall thereupon have a claim against the Borrower for
all sums paid by the Collateral Agent for such defaults so cured, together with
a lien upon the Property Covered by this Instrument for the sum so paid plus
interest at the Default Rate.
(b) The Collateral Agent, in making any payment herein and hereby
authorized in the place and stead of the Borrower (i) relating to taxes,
assessments, water rates, sewer rentals and other governmental or municipal
charges, fines, impositions or liens asserted against the Property Covered by
this Instrument, may do so according to any bill, statement or estimate procured
from the appropriate public authority without inquiry into the validity thereof;
or (ii) relating to any adverse title, lien, statement of lien, encumbrance,
claim or charge, shall be the sole judge of the validity of same; or (iii)
otherwise relating to any purpose herein and hereby authorized, but not
enumerated in this section, may do so whenever, in its good faith judgment and
discretion, such payment shall seem necessary or desirable to protect
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<PAGE> 19
the full security intended to be created by this Instrument. In connection with
any such payment, the Collateral Agent, at its option, may and is hereby
authorized to obtain a continuation report of title prepared by a title
insurance company, the cost and expenses of which shall be repayable by the
Borrower upon demand and shall be secured hereby.
13. SECURITY AGREEMENT PROVISIONS. This Instrument is hereby
deemed to be as well a security agreement within the meaning of the Maryland
Uniform Commercial Code for the purpose of creating hereby a security interest
securing the Indebtedness in and to the Personal Property Collateral. Without
derogating any of the provisions of this Instrument, the Borrower by this
Instrument:
(a) grants to the Collateral Agent a security interest in all
of the Borrower's right, title and interest in and to all
Personal Property Collateral, including, but not limited to,
the items referred to above, together with all additions,
accessions and substitutions and all similar property
hereafter acquired and used or obtained for use on, or in
connection with, the Real Property; the proceeds of the
Personal Property Collateral are intended to be secured
hereby; PROVIDED, HOWEVER, that such intent shall never
constitute an expressed or implied consent on the part of the
Collateral Agent to the sale of any or all Personal Property
Collateral except as provided in section 6;
(b) agrees that the security interest hereby granted by this
Instrument shall secure the payment of the Indebtedness
secured hereby;
(c) agrees not to sell, convey, mortgage or grant a security
interest in, or otherwise dispose of or encumber, any of the
Personal Property Collateral or any of the Borrower's right,
title or interest therein without first securing the
Collateral Agent's written consent, except as provided in
section 6;
(d) agrees that if any of the Borrower's rights in the Personal
Property Collateral are voluntarily or involuntarily
transferred, whether by sale, creation of a security interest,
attachment, levy, garnishment or other judicial process, other
than as expressly contemplated by section 6 hereof, without
the written consent of the Collateral Agent, such transfer
shall constitute a default by the Borrower under the terms of
this Instrument;
(e) authorizes the Collateral Agent to file, in the jurisdiction
where this Instrument will be given effect, financing
statements covering the Personal Property Collateral and at
the request of the Collateral Agent, the Borrower shall join
the Collateral Agent in executing one or more of such
financing statements pursuant to the Uniform Commercial Code
in a form satisfactory to the Collateral Agent and the
Borrower shall pay the cost of filing the same in all public
offices at any time and from time to time wherever the
Collateral Agent deems filing or recording of any financing
statements or of this Instrument to be desirable or necessary;
and
(f) acknowledges that the Borrower, as of the date hereof, has
joined the Collateral Agent in the execution of one or more
Uniform Commercial Code financing statements to be filed to
perfect the security interest in the Personal Property created
by this Instrument.
This information contained in this Section 13 is provided in order that this
Instrument shall comply with the requirements of the Maryland Uniform Commercial
Code for deeds of trust to be effective as financing statements. The name of the
"debtor" is ALS NATIONAL, INC.; the name of the "secured party" is KEY CORPORATE
CAPITAL INC, as Collateral Agent under the Credit Agreement referred to herein;
the mailing address of the "secured party" from which information concerning
this security interest may be obtained and the mailing a address of the "debtor"
are as set forth in the preamble of this Instrument; and a statement indicating
the types, or describing the items, of collateral is set forth hereinabove in
the granting clauses.
14. FILINGS AND RECORDINGS. The Borrower agrees at all time to
cause this Instrument, and each amendment or modification hereof or supplement
hereto, and financing statements covering personal property (and continuation
statements in respect thereof), if necessary or appropriate under the Uniform
Commercial Code, as in effect in the jurisdiction in which the Real Property is
located, and all assignments of leases, to be recorded, registered and filed,
and kept recorded, registered and filed, in such manner and in such places as
appropriate, and shall comply with all applicable statutes and regulations in
order to establish, preserve and protect the security and priority of this
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<PAGE> 20
Instrument, and such assignments and the rights of the Collateral Agent
thereunder. The Borrower shall pay, or cause to be paid, all taxes, fees and
other charges incurred in connection with such recording, registration, filing
and compliance.
15. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders
to make Loans to the Borrower, the Borrower makes the following representations
and warranties, all of which shall survive the execution and delivery of this
Instrument and the making of any such Loans:
(a) ORGANIZATIONAL STATUS, ETC. The Borrower (i) is a duly
organized or formed and validly existing corporation, partnership or
limited liability company, as the case may be, in good standing under
the laws of the jurisdiction of its formation and has the corporate,
partnership or limited liability company power and authority, as
applicable, to own its property and assets and to transact the business
in which it is engaged and presently proposes to engage, (ii) has duly
qualified and is authorized to do business in the jurisdiction in which
the Borrower's Project is located, and (iii) is a Subsidiary or an
Affiliate of the Company.
(b) ORGANIZATIONAL POWER AND AUTHORITY, ETC. The Borrower
has the corporate or other organizational power and authority to
execute, deliver and carry out the terms and provisions of the Credit
Documents to which it is party and has taken all necessary corporate
action to authorize the execution, delivery and performance of the
Credit Documents to which it is party. The Borrower has duly executed
and delivered each Credit Document to which it is party and each Credit
Document to which it is party constitutes the legal, valid and binding
agreement or obligation of the Borrower enforceable in accordance with
its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is
sought in equity or at law).
(c) NO VIOLATION. Neither the execution, delivery and
performance by the Borrower of the Credit Documents to which it is
party nor compliance with the terms and provisions thereof (i) will
contravene any provision of any law, statute, rule, regulation, order,
writ, injunction or decree of any court or governmental instrumentality
applicable to the Borrower or its properties and assets, (ii) will
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or
impose) any Lien (other than the Liens of the Security Documents) upon
any of the property or assets of the Borrower pursuant to the terms of
any promissory note, bond, debenture, indenture, mortgage, deed of
trust, credit or loan agreement, or any other material agreement or
other instrument, to which the Borrower is a party or by which it or
any of its property or assets are bound or to which it may be subject,
or (iii) will violate any provision of the charter or other
organizational document of the Borrower.
(d) GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof,
is required to authorize or is required as a condition to (i) the
execution, delivery and performance by the Borrower of any Credit
Document to which it is a party, or (ii) the legality, validity,
binding effect or enforceability of any Credit Document to which the
Borrower is a party, other than filings and recordings necessary to
establish and perfect the Liens purported to be created pursuant to the
Security Documents to which the Borrower is a party.
(e) LITIGATION. There are no actions, suits or proceedings
pending or, to, the knowledge of the Borrower, threatened with respect
to the Borrower or the Borrower's Project (i) that have, or could
reasonably be expected to have, a Material Adverse Effect on the
Borrower's Project or the Borrower, or (ii which question the validity
or enforceability of any of the Credit Documents, or of any action to
be taken by the Borrower pursuant to any of the Credit Documents to
which it is a party.
(f) USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of all
Loans to the Borrower for the Project shall be utilized solely to
finance the costs and expenses of the acquisition and construction of
the Project. The Borrower hereby represents and warrants that the Loan
evidenced hereby is a commercial loan and that such Loan is being made
solely to acquire or carry on a business, professional or commercial
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<PAGE> 21
enterprise or activity. Notwithstanding anything to the contrary
contained herein, no proceeds of any Loans shall be used by the
Borrower directly or indirectly to purchase or carry Margin Stock, or
to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. Neither any Loans, nor the use of the proceeds
thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying any Margin
Stock. At no time would more than 25% of the value of the assets of the
Borrower or of the Borrower and its consolidated Subsidiaries that are
subject to any "arrangement" (as such term is used in section 221.2(g)
of such Regulation U) hereunder be represented by Margin Stock.
(g) FINANCIAL CONDITION. The Borrower has received
consideration which is the reasonable equivalent value of the
obligations and liabilities that the Borrower has incurred to the
Collateral Agent, the Administrative Agent and the Lenders. The
Borrower now has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to
engage and is now solvent and able to pay its debts as they mature and
the Borrower owns property having a value, both at fair valuation and
at present fair salable value, greater than the amount required to pay
the Borrower's debts; and the Borrower is not entering into the Credit
Documents with the intent to hinder, delay or defraud its creditors.
(h) TAX RETURNS AND PAYMENTS. The Borrower has (i) filed all
federal income tax returns and all other material tax returns, domestic
and foreign, required to be filed by it; and (ii) paid all taxes and
assessments payable by it which have become due, other than those not
yet delinquent and except for those contested in good faith. The
Borrower has established on its books such charges, accruals and
reserves in respect of taxes, assessments, fees and other governmental
charges for all fiscal periods as are required by GAAP. The Borrower
knows of no proposed assessment for additional federal, foreign or
state taxes for any period, or of any basis therefor, which,
individually or in the aggregate, taking into account such charges,
accruals and reserves in respect thereof as the Borrower has made,
could reasonably be expected to have a Material Adverse Effect.
(i) TITLE TO BORROWER'S PROJECT AND OTHER PROPERTIES, ETC.
The Borrower has good and marketable title to the Land and good title
(or valid leasehold interests, in the case of any leased property), in
the case of all other property, to all of its properties and assets
free and clear of Liens other than the Liens purported to be created by
the Security Documents to which the Borrower is a party and Liens
permitted by this Instrument. Each Draw Request and Notice of Borrowing
made on behalf of the Borrower pursuant to the Credit Agreement in
connection with the incurrence of Loans by the Borrower shall
constitute the Borrower's representation and warranty to the Lenders,
the Administrative Agent, the Trustee and the Collateral Agent that (i)
all completed construction is substantially in accordance with the
Plans and Specifications, and (ii) all construction and other costs and
expenses for the payment of which the Lenders have previously advanced
Loans to the Borrower have in fact been paid.
(j) LAWFUL OPERATIONS, ETC. All necessary federal, state and
local governmental licenses, registrations, certifications, permits and
authorizations currently required by law to be obtained in order to
permit the Borrower to construct and operate the Borrower's Project and
to operate its business, have been obtained by the Borrower (or by the
Company on its behalf) and are in full force and effect, except for any
such authorizations which are not currently so required and which, in
the judgment of the Borrower, can be obtained by the Borrower (or by
the Company on its behalf) without undue difficulty prior to the time
so required. The Borrower (i) is in full compliance with all material
requirements imposed by law, regulation or rule, whether federal, state
or local, which are applicable to it, its operations, the Borrower's
Project or its other properties and assets, including without
limitation, applicable requirements of Environmental Laws, except for
any failure to obtain and maintain in effect, or noncompliance, which,
individually or in the aggregate, could not reasonably be expected to
result in any substantial delay in construction of the Borrower's
Project or have a Material Adverse Effect. The Improvements, when
constructed, will comply with all Legal Requirements affecting the
Improvements or the Premises.
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<PAGE> 22
(k) COMPLIANCE WITH ERISA. Compliance by the Borrower with
the provisions hereof and Loans contemplated hereby will not involve
any prohibited transaction within the meaning of ERISA or section 4975
of the Code.
(l) TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to the Administrative Agent or any
Lender for purposes of or in connection with this Instrument or any
transaction contemplated herein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of
the Borrower in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at
such time in light of the circumstances under which such information
was provided, except that any such future information consisting of
financial projections prepared by management of the Borrower is only
represented herein as being based on good faith estimates and
assumptions believed by such persons to be reasonable at the time made,
it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ materially
from the projected results. There is no fact known to the Borrower
which has, or could reasonably be expected to have, a Material Adverse
Effect on the Borrower which has not theretofore been disclosed in
writing to the Lenders.
16. CONSTRUCTION AND OTHER PARTICULAR COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that from the date hereof until the Loans made
to the Borrower with respect to the Borrower's Project are paid in full:
(a) CONSTRUCTION OF THE BORROWER'S PROJECT. (i) The Borrower
will cause construction of the Improvements to the Borrower's Project
to be commenced within 60 days of the date hereof and carried on
continuously and to be 100% completed, Lien free and ready for
occupancy within 15 months of the date of the initial Borrowing by the
Borrower for the Project, subject to any extension of the maturity date
of the Loans evidenced hereby pursuant to section 2.7(a) of the Credit
Agreement (such time, including any such extension, the "COMPLETION
DATE"), time being of the essence.
(ii) The Borrower's Project will be constructed strictly in
accordance with the Borrower's Plans and Specifications (as modified
from time to time in accordance with the Credit Agreement), and all
applicable Legal Requirements. The Borrower's Project will be
constructed entirely on the Premises and will not encroach upon or
overhang any easement, building line or right of way and, when erected,
will not violate applicable use or other restrictions of record. If, in
the judgment of the Required Lenders, the Borrower's Project is not in
substantial conformity with the foregoing, the Required Lenders shall
have the right to require the Borrower to stop the work and/or effect
repair or reconstruction of the Borrower's Project in order for the
Borrower's Project to achieve compliance with the Plans and
Specifications (as so modified) and all Legal Requirements. Upon notice
from the Administrative Agent to the Borrower, or the Borrower's
discovery irrespective of such notice, that the work is not in
substantial conformity with the Plans and Specifications (as so
modified) and/or all Legal Requirements, the Borrower shall commence
correcting the deviation, as promptly as is practicable, and in any
event within 30 days after the notice or discovery and shall prosecute
such work diligently to completion, which, in no event, shall be later
than 60 days after such notice of discovery. No other notice shall be
required to render such deviation an Event of Default (as hereinafter
defined) hereunder.
(iii) All materials incorporated in such construction will be
purchased so that absolute ownership and title vest in the Borrower
upon delivery of such materials to the Borrower's Project.
(iv) No materials, equipment, personal property, or fixtures
of any kind will be purchased or acquired by the Borrower for
installation or use in or about the Improvements under any conditional
sales contract or security agreement or any lease agreement, and all
such materials, equipment, personal property, and fixtures will be
fully paid for before payment therefor becomes past due or in any event
within 45 days after delivery thereof; PROVIDED, HOWEVER, that the
foregoing shall not (A) apply to amounts withheld and unpaid on account
of bona fide disputes with the suppliers, or (B) restrict the Borrower
from incurring Capital
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Leases or other Indebtedness, or granting purchase money Liens as security
therefor, in accordance with section 16(c).
(b) CONTRACTS AFFECTING THE BORROWER'S PROJECT; NO CHANGES
IN PLANS AND SPECIFICATIONS, ETC. (i) No change will be made in the
Plans and Specifications for the Improvements, the terms and conditions
of the construction contract (the "CONSTRUCTION Contract") for the
Improvements, or the identity of the General Contractor named therein,
except in compliance with the requirements of sections 2.3(d) or 6.3(a)
of the Credit Agreement, without the prior written consent of the
Administrative Agent (or the Required Lenders, if required under the
Credit Agreement).
(ii) The Borrower will furnish to the Administrative Agent,
within 10 days following request, copies of any Tenant Leases or other
contracts affecting the Borrower's Project.
(c) INDEBTEDNESS. The Borrower will not create, incur,
assume, or permit to be outstanding, any Indebtedness of the Borrower,
OTHER THAN
(i) Indebtedness incurred under the Credit Agreement
and the other Credit Documents, whether related to the
Project, other Projects of the Borrower, or otherwise;
(ii) Indebtedness in respect of other Projects incurred
under the Permanent Credit Agreement or the Supplemental
Permanent Credit Agreement, or any of the other agreements or
instruments executed and delivered in connection therewith;
(iii) Indebtedness incurred to finance up to 100% of the
purchase price of equipment or vehicles to be used in
connection with the Project, and Capitalized Lease Obligations
relating to equipment or vehicles to be used in connection
with the Project, PROVIDED that the aggregate principal amount
(or Capitalized Lease Obligation, in the case of a Capital
Lease) of all such Indebtedness outstanding at any time does
not exceed $250,000; and
(iv) as to any other Project of the Borrower,
Indebtedness incurred to finance up to 100% of the purchase
price of equipment or vehicles to be used in connection with
such Project, and Capitalized Lease Obligations relating to
equipment or vehicles to be used in connection with such
Project, PROVIDED that the aggregate principal amount (or
Capitalized Lease Obligation, in the case of a Capital Lease)
of all such Indebtedness related to such Project outstanding
at any time does not exceed $250,000.
(d) INSPECTION, ETC. (i) The Administrative Agent and the
Lenders will have the right to cause the Borrower's Project (and all
records, books and contracts of the Borrower with respect thereto) to
be inspected from time to time during or after construction. The
Borrower will furnish to the Administrative Agent and the Lenders any
information regarding the Borrower's business affairs and financial
condition as the Administrative Agent or any Lender may, from time to
time, request.
(ii) Without limitation of the foregoing, the Borrower will
allow the Administrative Agent and the Lenders and their
representatives and agents, at all times during construction: (i) the
right of entry and free access to the site of the Improvements; (ii)
the right to inspect all work done, labor performed and materials
furnished in and about the Improvements; and (iii) to require to be
replaced or otherwise corrected any material or work that does not
substantially comply with the Plans and Specifications.
(e) REIMBURSEMENT OF COSTS AND EXPENSES. (i) The Borrower
will reimburse the Administrative Agent, the Collateral Agent and the
Lenders promptly for all costs and expenses incurred by any of them in
connection with this Instrument and the Loans, including but not
limited to the costs of title insurance policies, title examinations,
recording fees, surveys, appraisal fees, inspection fees, reasonable
attorneys' fees and out-of-pocket expenses, all of which the
Administrative Agent is authorized to deduct from the proceeds of Loans
to the Borrower.
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(ii) In the event extraordinary services are required by the
Administrative Agent or any Lender for inspections, appraisals, or for
securing estimates of costs which, in its reasonable judgment are not
regular or routine, the Borrower will reimburse the Administrative
Agent and the Lenders therefor, on demand, and the Administrative Agent
may deduct the reasonable cost and expense thereof from the proceeds of
Loans to the Borrower.
(iii) The Borrower will immediately upon demand reimburse any
Lender for the cost and expense of any appraisal of the Borrower's
Project obtained by such Lender on or after the date hereof if such
appraisal is obtained by such Lender pursuant to the requirements of
any law, statute, rule, regulation, interpretive ruling, opinion, or
directive of any state or federal governmental agency or unit
governing, regulating, or controlling the activities of such Lender,
whether now existing or hereafter enacted.
(f) LIEN WAIVERS, ETC. The Borrower will furnish or cause to
be furnished to the Title Company which issues the loan policy of title
insurance covering this Instrument, and to the Collateral Agent, any
evidence, lien waivers, or affidavits required by the Title Company if
any liens of contractors, subcontractors or materialmen would appear on
the endorsement to be issued with respect to the applicable Title
Policy covering any disbursement of Loan proceeds.
(g) OPERATING ACCOUNT. (i) If required to do so by the
Administrative Agent, the Borrower shall maintain with the Lender which
is the Administrative Agent (or an Affiliate thereof designated by such
Lender) a general deposit and disbursing account (the "OPERATING
ACCOUNT"). All disbursements of Loan proceeds to or for the benefit of
the Borrower shall be made as provided in the Credit Agreement.
(ii) The Borrower authorizes the Administrative Agent to make
disbursements of Loan proceeds by debiting the Operating Account to pay
any principal or interest upon the Notes when and as same shall become
due under the terms thereof, and Borrower agrees that such
disbursements shall constitute Loans under this Instrument and the
Notes. The Borrower also authorizes the Administrative Agent to charge
the Borrower's Operating Account for any amounts payable by the
Borrower under any of the Credit Documents to which the Borrower is a
party.
(h) NOTICE OF EVENT OF DEFAULT. The Borrower shall notify
the Administrative Agent, in writing, within five days of the
occurrence thereof of any Event of Default (as hereinafter defined) or
of any event which, with notice or lapse of time or both, would become
an Event of Default.
(i) SIGNAGE AND PUBLICITY OF FINANCING. The Administrative
Agent may, without out-of-pocket expense to the Borrower, at any time
following the commencement of construction, erect on the Premises a
temporary sign, reasonably acceptable to the Borrower, identifying the
Project and stating that financing for the Borrower's Project is being
provided by the Lenders, as represented by the Administrative Agent.
The Borrower hereby agrees that the Administrative Agent and the
Lenders may release publicity articles concerning the financing of the
Borrower's Project.
(j) NOTICES AND ACTIONS UNDER CONSTRUCTION LENDING STATUTES.
The Borrower will comply from time to time upon the request of the
Administrative Agent with the requirements of any statutes in effect in
the jurisdiction in which the Premises are located which do or may give
the Loans priority over claims of contractors, laborers, materialmen or
others for labor or other amounts due for work or labor performed, or
materials furnished, to the Premises, including, without limitation,
the filing, recording and giving of notices of this Instrument and the
commencement of work to be financed thereby.
17. RIGHT OF SETOFF. 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, 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 any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender (including, without limitation, by
branches and agencies of 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 such Lender under
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the Notes or any other Credit Documents to which the Borrower is a party,
including, without limitation, all interests in Obligations of the Borrower
purchased by such Lender pursuant to section 13.4(b) of the Credit Agreement,
and all other claims of any nature or description arising out of or connected
with this Note or any other Credit Document, irrespective of whether or not such
Lender shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
18. TRANSFER AND EXCHANGE OF NOTES. Whenever any Note or Notes of the
Borrower shall be surrendered for exchange or for transfer, the Borrower will
execute and deliver in exchange therefor a new Note or Notes, in whatever
appropriate denominations are requested.
19. EVENTS OF DEFAULT. Any of the following specified events (each an
"EVENT OF Default") shall constitute an Event of Default under this Instrument:
(a) PAYMENTS: the Borrower shall (i) default in the payment when
due of any principal of the Loans made to the Borrower for the Project
or any other Project of the Borrower (whether at maturity, on a
required prepayment or otherwise); or (ii) default, and such default
shall continue for five or more days, in the payment when due of any
interest on such Loans or any other amounts owing hereunder or under
any other Credit Document; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower herein or in any other Credit Document
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 deemed made; or
(c) CERTAIN NEGATIVE COVENANTS: the Borrower shall default
in the due performance or observance by it of any term, covenant or
agreement contained in section 5, 10, 16(a)(i) or 16(c) of this
Instrument; or
(d) OTHER COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in this Instrument or any other Credit Document, other than
those referred to in section 19.1(a) or (b) or (c) above, and such
default shall not be remedied within 30 days after the earlier of (i)
an officer (or similar official) of the Borrower obtaining actual
knowledge of such default or (ii) the Borrower receiving written notice
of such default from the Collateral Agent or the Required Lenders (any
such notice to be identified as a "notice of default " and to refer
specifically to this paragraph); PROVIDED, that in the case of any
default referred to in this paragraph not involving a monetary
obligation, the 30-day period referred to above may be extended by
written notice from the Borrower (or the Company on its behalf) to the
Collateral Agent delivered not later than 10 days following the giving
of any notice referred to in the preceding clause (ii), for an
additional period of up to 60 days, if (x) such notice from the
Borrower (or the Company on its behalf) includes a certification that
unavoidable delays or other circumstances are such that such default
cannot be remedied within such 30-day period, but that such default can
be remedied within the time period specified for such extension, and
(y) throughout the period of such requested extension the Borrower is
diligently and continuously taking all reasonable actions to remedy
such default (it being understood that if the Borrower shall cease or
abandon such efforts to remedy the default, such extension period shall
immediately and automatically terminate); or
(e) EVENT OF DEFAULT UNDER CREDIT AGREEMENT: any Event of
Default under and as defined in the Credit Agreement shall occur and be
continuing beyond any grace period (if any) provided therein,
regardless of whether such Event of Default does or does not relate to
any events or circumstances which constitute, or which with notice or
lapse of time, or both, would constitute, an Event of Default under
this Instrument; or
(f) PROJECT TAKE-OUT COMMITMENT, ETC.: the commitment issued by
the Permanent Lender or the Supplemental Permanent Lender to the
Borrower with respect to the Project shall, for any reason, cease to be
in full force and effect, with availability, subject to the terms and
conditions contained in such commitment, of loans thereunder sufficient
to enable the Borrower to refinance all Loans for the Project which
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may be made under the Credit Agreement; or the Project Take-Out
Agreement with respect to the Project shall, for any reason, cease to
be in full force and effect; or
(g) ACCELERATION OF OTHER INDEBTEDNESS: the Borrower shall (A)
default in any payment with respect to any Indebtedness (other than the
Loans of the Borrower for the Project or any other Project of the
Borrower) having an unpaid principal amount (or Capitalized Lease
Obligation, in the case of any Capital Lease) of $100,000 times the
number of Projects at the time being financed by the Borrower under the
Credit Agreement, or greater, or (B) default in the observance or
performance of any agreement, covenant or condition relating to any
such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (and all grace periods
applicable to such observance, performance or condition shall have
expired), and (1) such default shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating
to such Indebtedness, and (2) the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) shall accelerate the maturity of all or any portion thereof,
or shall demand payment thereof in the case of any such Indebtedness
which is payable upon demand or after demand and notice, and such
acceleration or demand for payment shall not have been rescinded prior
to the acceleration of any of the Loans or other Obligations pursuant
to section 10.2 of the Credit Agreement; or
(h) LIEN OF THIS INSTRUMENT: this Instrument, after recording in
the real property records in the jurisdiction in which the Premises are
located, shall for any reason not be effective to establish and
perfect, or shall otherwise not constitute, a perfected first priority
lien on the Premises and the Improvements, subject to no other liens or
security interests; or
(i) BANKRUPTCY, ETC.: any of the following shall occur: (A) the
Borrower shall commence a voluntary case concerning itself under Title
11 of the United States Code entitled "Bankruptcy," as now or hereafter
in effect, or any successor thereto (the "BANKRUPTCY CODE"); or (B) an
involuntary case is commenced against the Borrower and the petition is
not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or (C) a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the Project or all or substantially all of the
property of the Borrower; or (D) the Borrower commences (including by
way of applying for or consenting to the appointment of, or the taking
of possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "CONSERVATOR") of itself or
the Project or all or any substantial portion of its property) any
other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency, liquidation,
rehabilitation, conservatorship or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower; or (E) any
such proceeding is commenced against the Borrower to the extent such
proceeding is consented by the Borrower or remains undismissed for a
period of 60 days; or (F) the Borrower is adjudicated insolvent or
bankrupt; or (G) any order of relief or other order approving any such
case or proceeding is entered; or (H) the Borrower suffers any
appointment of any conservator or the like for it or the Project or any
substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or (I) the Borrower makes a general
assignment for the benefit of creditors; or (J) any corporate (or
similar organizational) action is taken by the Borrower for the purpose
of effecting any of the foregoing.
20. REMEDIES. If an Event of Default, under and as defined in
section 19 of this Instrument, has occurred and is continuing:
(a) The Collateral Agent, acting by or through the Trustee, the
Administrative Agent and the Lenders may exercise any one or more of
the remedies specified in section 10.2 of the Credit Agreement or
otherwise available at law or in equity.
(b) To the extent permitted by applicable law, the Collateral
Agent or Trustee may enter upon the Property Covered by this Instrument
or any portion thereof and may exclude the Borrower therefrom; and
having and holding the same, may use, operate, manage, and control the
Property Covered by this Instrument and conduct business in connection
therewith, including, without limitation the continuation of the
construction of the Improvements if not previously completed, either
personally or by its superintendents, managers, agents, servants,
attorneys or receivers; and upon every such entry, the Collateral Agent
or Trustee, at the expense of the Borrower and from time to time, may
maintain the Property Covered by this Instrument and may insure
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and reinsure the same, as may seem to the Collateral Agent or Trustee
to be necessary or advisable; and, at the expense of the Borrower and
from time to time, the Collateral Agent may make all repairs, renewals,
replacements, alterations, additions, betterments and improvements
thereto and thereon, as to the Collateral Agent or Trustee may seem
necessary or advisable, and if the construction of the Improvements has
not been completed, may cause such construction to be continued to
completion or to such stage of completion as the Collateral Agent or
Trustee considers necessary or advisable; and in every such case the
Collateral Agent or Trustee shall have the right to carry on the
construction thereof, enter into, terminate, cancel and/or enforce
contracts or Tenant Leases related thereto, manage and operate the
Property Covered by this Instrument and carry on the business thereof,
and otherwise exercise all rights which the Borrower might otherwise
have with respect thereto, in the name of the Borrower or otherwise, as
the Collateral Agent or Trustee shall deem best or advisable; and the
Collateral Agent or Trustee shall be entitled to collect all Rents,
earnings, revenues, issues, profits and income of the Property Covered
by this Instrument, awards made for the taking of or injury to the
Property Covered by this Instrument through eminent domain or
otherwise, including awards or damages for change of grade, and also
return premiums or other payments upon insurance, and said Rents,
earnings, revenues, issues, profits and income, awards, damages,
premiums and payments are hereby assigned to the Collateral Agent or
Trustee, and after deducting the expenses and costs of conducting the
business thereof and of all betterments, additions, alterations,
replacements, repairs and for taxes, assessments, insurance and prior
or other charges upon or with respect to the Property Covered by this
Instrument or any portion thereof, as well as just and reasonable
compensations for the services of all counsel, agents, employees,
receivers and other persons properly engaged or employed, the
Collateral Agent or Trustee shall apply the proceeds as provided in
section 21.
(c) To the extent permitted by applicable law, the Trustee
is hereby authorized and empowered by the Borrower to sell the Property
Covered by this Instrument in such manner as may be prescribed by law,
by advertisement and public sale as provided by the laws of the
jurisdiction in which the Real Property is located, or to foreclose
this Instrument by judicial proceedings and sell the Property Covered
by this Instrument pursuant to such proceedings as permitted by
applicable law. Upon the occurrence of an Event of Default, the
Borrower assents to the passage of a decree for the sale of the
Property Covered by this Instrument and further authorizes the Trustee
to sell the Property Covered by this Instrument. The Borrower does
hereby authorize the Trustee to sell the Property Covered by this
Instrument together or in lots or parcels, as to the Trustee shall seem
expedient, and to execute and deliver to the purchaser or purchasers of
such property good and sufficient deeds thereof with covenants of
general, special or limited warranty or such other instruments of
conveyance, assignment or transfer as the Trustee may deem appropriate.
Payment of the purchase price to the Trustee shall satisfy the
obligation of the purchaser at any such sale therefor, and he shall not
be bound to look after the application thereof. The Trustee shall cause
notice of any such sale to be mailed to the Borrower; but, except as
otherwise provided by any applicable provision of law, failure so to
mail any such notice shall not affect the validity of any such sale. If
the Collateral Agent, acting on behalf of any or all of the holders of
the Notes or other Indebtedness secured hereby, or any or all such
holders acting on their own behalf, is the highest bidder, the
Collateral Agent or such holders, as the case may be, may purchase at
any sale or sales (whether statutory foreclosure or public sale or
sales conducted as hereinabove authorized) and may, in paying the
purchase price, turn in the Note or Notes or other Indebtedness secured
hereby held by them, in lieu of cash, up to the entire amount owing
thereunder, whether for principal, interest or other amounts, which
amount as so designated as being turned over shall be considered
distribution of the proceeds of such sale. The provisions set forth
above as to public sale or sales in lieu of statutory foreclosure are
not intended as an exclusive method of foreclosure hereunder or to
deprive the Collateral Agent or Trustee of any other legal or equitable
remedy available under applicable law. Accordingly, it is specifically
agreed that the remedy of foreclosure by the Trustee's sale as
hereinabove provided for shall be cumulative and shall not in any wise
be construed as an exclusive remedy, and the Collateral Agent or
Trustee shall be fully entitled to a statutory court foreclosure and to
avail itself of any and all other legal or equitable remedies available
under the laws of the jurisdiction in which the Real Property is
located.
(d) The Borrower hereby authorizes the Collateral Agent or
Trustee to demand and receive, in the place and stead of the Borrower,
all amounts that may become due under any and each Tenant Lease,
rental, contract, easement and other right of the Borrower pertaining
or in any way relating to the Property Covered by this Instrument or
any part thereof, and, when received, to apply the same to the costs
and expenses
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incurred by the Collateral Agent or Trustee incurred hereunder and to
the Indebtedness secured hereby. No demand for, and no receipt or
application of any such amount shall be deemed to minimize, subordinate
or affect in any way the lien hereof and rights hereunder of the
Collateral Agent or any rights of a purchaser of any portion of the
Property Covered by this Instrument at any foreclosure or other sale
hereunder, as against the person from whom the amount was demanded or
received, or his executors, administrators, successors or assigns, or
anyone claiming under such Tenant Lease, rental, contract or other
right.
(e) The Collateral Agent, acting by or through the Trustee,
may exercise all rights and remedies granted by law and more
particularly the Uniform Commercial Code, including, but not limited
to, the right to take possession of the Personal Property Collateral,
and for this purpose may peaceably enter upon any premises on which any
or all of the Personal Property Collateral is situated, without being
deemed guilty of trespass and without liability for damages thereby
occasioned, and take possession of and operate the Personal Property
Collateral or remove it therefrom; the Collateral Agent or Trustee
shall have the further right to take any action it deems necessary,
appropriate or desirable, at its option and in its discretion, to
repair, refurbish or otherwise prepare the Personal Property Collateral
for sale, lease or other use or disposition and to sell at public or
private sales or otherwise dispose of, lease or utilize the Personal
Property Collateral and any part thereof in any manner authorized or
permitted by law and to apply the proceeds thereof toward payment of
any costs and expenses, including reasonable attorneys' fees and legal
expenses, to the extent permitted by law, thereby incurred by the
Collateral Agent or Trustee and toward payment of the Indebtedness and
all other indebtedness described in this Instrument, in such order and
manner as may be provided in the Credit Agreement or this Instrument or
in the event such provisions are not applicable in such order and
manner as the Collateral Agent or Trustee may elect.
21. COSTS OF ENFORCEMENT; APPLICATION OF PROCEEDS; BORROWER LIABLE
FOR DEFICIENCY, ETC. (a) In case of (i) foreclosure of this Instrument in any
court of law or equity, whether or not any order or decree shall have been
entered therein, and to the extent permitted by law, a reasonable sum shall be
allowed for attorney's fees of the Collateral Agent or Trustee in such
proceedings, for stenographer's fees and for all moneys expended for documentary
evidence and the cost of a complete abstract of title and title report for the
purpose of such foreclosure, such sums to be secured by the lien hereunder, and,
to the extent permitted by law, there shall be included in any judgment or
decree foreclosing this Instrument and be paid out of such rents, issues and
profits or out of the proceeds of any sale made in pursuance of any such
judgment or decree, or (ii) any other realization by the Collateral Agent or
Trustee upon or with respect to the Property Covered by this Instrument or any
part or portion thereof, the proceeds thereof shall be applied as follows:
(A) first, to the payment or reimbursement of the Collateral
Agent or Trustee for all costs and expenses of such suit or suits or
other enforcement activities of the Collateral Agent or Trustee,
including, but not limited to, the costs of advertising, sale and
conveyance, including attorneys', solicitors' and stenographers' fees,
if permitted by law, outlays for documentary evidence and the cost of
such abstract, examination of title and title report;
(B) second, to the extent proceeds remain after the
application pursuant to preceding clause (A), to reimburse the
Collateral Agent for all moneys advanced by the Collateral Agent or
Trustee, if any, for any purpose authorized in this Instrument with
interest at the Default Rate;
(C) third, to the extent proceeds remain after the
application pursuant to preceding clause (B), an amount equal to the
outstanding Indebtedness shall be applied by the Collateral Agent or
Trustee to the Indebtedness secured hereby in such order as may be
provided in the Credit Agreement; and
(D) fourth, to the extent remaining after the application
pursuant to the preceding clauses (A), (B) and (C) and payment in full
of the Indebtedness hereby secured, to the Borrower or to whomever may
be lawfully entitled to receive such payment.
(b) It is understood that the Borrower shall remain liable to the
extent of any deficiency between (x) the amount of the proceeds of the Property
Covered by this Instrument and the amount of the sum referred to in the
foregoing clauses (A) and (B) and (y) the aggregate outstanding amount of the
Indebtedness secured hereby.
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22. RECEIVER. In the event an action shall be instituted to
foreclose this Instrument, or prior to foreclosure but after default, the
Collateral Agent or Trustee shall be entitled to the appointment of a receiver
of the rents, issues and profits of the Property Covered by this Instrument as a
matter of right, with power to collect the rents, issues and profits of the
Property Covered by this Instrument due and becoming due during the period of
default and/or the pendency of such foreclosure suit to and including the date
of confirmation of the sale under such foreclosure and during the redemption
period, if any, after such confirmation, such rents, issues and profits being
hereby expressly assigned and pledged as security for the payment of the
Indebtedness secured by this Instrument without regard to the value of the
Property Covered by this Instrument or the solvency of any person or persons
liable for the payment of the Indebtedness and regardless of whether the
Collateral Agent or Trustee has an adequate remedy at law. The Borrower for
itself and for any subsequent owner hereby waives any and all defenses to the
application for a receiver as above provided and hereby specifically consents to
such appointment, but nothing herein contained is to be construed to deprive the
holder of this Instrument of any other right or remedy or privilege it may now
have under the law to have a receiver appointed. The provision for the
appointment of a receiver and the assignment of such rents, issues and profits
is made an express condition upon which the Loans hereby secured are made. In
such event, the court shall at once on application of the Collateral Agent,
Trustee or their attorneys in such action, appoint a receiver to take immediate
possession of, manage and control the Property Covered by this Instrument, for
the benefit of the holder or holders of the Indebtedness and of any other
parties in interest, with power to collect the rents, issues and profits of the
Property Covered by this Instrument during the pendency of such action, and to
apply the same toward the payment of the several obligations herein mentioned
and described, notwithstanding that the same or any part thereof is occupied by
the Borrower or any other person. The rights and remedies herein provided for
shall be deemed to be cumulative and in addition to and not in limitation of
those provided by law and if there be no receiver so appointed, the Collateral
Agent or Trustee may proceed to collect the rents, issues and profits from the
Property Covered by this Instrument. From any such rents, issues, and profits
collected by the receiver or by the Collateral Agent or Trustee prior to a
foreclosure sale, there shall be deducted the cost of collection thereof and the
expenses of operation of the Property Covered by this Instrument, including but
not limited to real estate commissions, receiver's fee and the reasonable fees
of its attorney, if any, and the Collateral Agent's or Trustee's attorney's
fees, if permitted by law, and court costs, the remainder to be applied against
the Indebtedness. In the event the rents, issues and profits are not adequate to
pay all tax and other expenses of operation, the Collateral Agent or Trustee
may, but is not obligated to, advance to any receiver the amounts necessary to
operate, maintain and repair, if necessary, the Property Covered by this
Instrument and any such amounts so advanced, together with interest thereon at
the Default Rate from and after the date of advancement, shall be secured by
this Instrument and have the same priority of collection as the principal of the
Indebtedness secured hereby.
23. LIABILITY OF BORROWER NOT AFFECTED. No sale of the Property
Covered by this Instrument, no forbearance on the part of the Collateral Agent,
no extension of the time for the payment of the Indebtedness and no change in
the terms of the payment thereof consented to by the Collateral Agent or Trustee
shall in any way whatsoever operate to release, discharge, modify, change or
affect the original liability of the Borrower hereunder or the original
liability of the Borrower or any other obligor under any of the Indebtedness,
either in whole or in part. No waiver by the Collateral Agent or Trustee of any
breach of any covenant of the Borrower herein contained shall be construed as a
waiver of any subsequent breach of the same or any other covenant herein
contained. The failure of the Collateral Agent, Trustee and/or the Lenders to
exercise the option for acceleration of maturity and/or foreclosure (including
sale under power of sale hereunder) following any default as aforesaid or to
exercise any other option granted to the Collateral Agent or Trustee hereunder
in any one or more instances, or the acceptance by the Collateral Agent, Trustee
and/or the Lenders of partial payments hereunder shall not constitute a waiver
of any such default, nor extend or affect the grace period, if any, but such
option shall remain continuously in force with respect to any unremedied or
uncured default. Acceleration of maturity once claimed hereunder by the
Collateral Agent or Trustee may, at the option of the Collateral Agent or
Trustee, be rescinded by written acknowledgment to that effect by the Collateral
Agent or Trustee, but the tender and acceptance of partial payments alone shall
not in any way affect or rescind such acceleration of maturity, or extend or
affect the grace period, if any. The Collateral Agent or Trustee may pursue any
of its rights without first exhausting its rights hereunder and all rights,
powers and remedies conferred upon the Collateral Agent or Trustee herein are in
addition to each and every right which the Collateral Agent or Trustee may have
hereunder at law or equity and may be enforced concurrently therewith.
24. PARTICIPATION IN PROCEEDINGS. If any action or proceeding be
commenced, to which action or proceeding the Collateral Agent or Trustee is made
a party by reason of the execution of this Instrument or the Indebtedness, or in
which it becomes necessary to defend or uphold the lien of this Instrument, or
the priority thereof
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or possession of the Property Covered by this Instrument, or otherwise to
perfect the security hereunder, or in any suit, action, legal proceeding or
dispute of any kind in which the Collateral Agent or Trustee is made a party or
appears as party plaintiff or defendant, affecting the interest created herein,
or the Property Covered by this Instrument, including, but not limited to,
bankruptcy, probate and administration proceedings, foreclosure of this
Instrument or any condemnation action involving the Property Covered by this
Instrument, all sums paid by the Collateral Agent or Trustee for the expense of
any litigation to prosecute and defend the rights and liens created hereby shall
be paid by the Borrower, to the extent permitted by applicable law, together
with interest thereon from the date of payment at the Default Rate. Any such sum
and the interest thereon shall be immediately due and payable upon demand and be
secured hereby, having the benefit of the lien hereby created, as a part hereof
and its priority.
25. REMEDIES CUMULATIVE. Each remedy or right of the Collateral
Agent or Trustee shall not be exclusive of but shall be in addition to every
other remedy or right now or hereafter existing at law or in equity. No delay in
the exercise or omission to exercise any remedy or right accruing on any default
shall impair any such remedy or right or be construed to be a waiver of any such
default or acquiescence therein, nor shall it affect any subsequent default of
the same or of a different nature. Every such remedy or right may be exercised
concurrently or independently and when and as often as may be deemed expedient
by the Collateral Agent or Trustee.
26. COLLATERAL AGENT SUBROGATED TO PRIOR LIENS PAID OUT OF LOAN
PROCEEDS. Should the proceeds of any Loans made by any Lender to the Borrower,
the repayment of which is hereby secured, or any part thereof, or any amount
paid out or advanced by the Collateral Agent, Trustee or any Lender, be used
directly or indirectly to pay off, discharge or satisfy, in whole or in part,
any prior lien or encumbrance upon the Property Covered by this Instrument or
any part thereof, then the Collateral Agent shall be subrogated to such other
liens or encumbrances and upon any additional security held by the holder
thereof and shall have the benefit of the priority of all of the same.
27. FURTHER ASSURANCES. The Borrower shall execute, acknowledge
and deliver any and all such further acts, conveyances, documents, mortgages and
assurances as the Collateral Agent or Trustee may reasonably require for
accomplishing the purpose hereof forthwith upon the request of the Collateral
Agent or Trustee, whether in writing or otherwise. The Borrower, within 10 days
upon request by mail, shall furnish a written statement duly acknowledged of the
amount due upon this Instrument and the Indebtedness (both unpaid principal and
accrued interest) and whether any offset or defenses exist against the
Indebtedness, and any other information which might reasonably be requested in
connection with the sale of the Indebtedness, or any portion thereof or interest
therein, to any third party, or an audit of the Collateral Agent or Trustee, and
which may be relied on for such purposes.
28. BORROWER'S OBLIGATIONS ABSOLUTE. The lien of this Instrument
and the obligations of the Borrower hereunder shall be absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation:
(a) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from other Credit Documents, or
any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof;
(b) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of any such agreement or
instrument or this Instrument except as expressly provided in such
renewal, extension, amendment, modification, addition, supplement,
assignment or transfer;
(c) any furnishing of any additional security to the
Collateral Agent or its assignee or any acceptance thereof or any
release of any security by the Collateral Agent or its assignee;
(d) any limitation on any person's liability or obligations
under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to the Borrower, any other Credit Party or any Subsidiary of any
thereof, or
29
<PAGE> 31
any action taken with respect to this Instrument by any trustee or
receiver, or by any court, in any such proceeding, whether or not the
Borrower shall have notice or knowledge of any of the foregoing.
29. NOTICES. Wherever notices may appropriately be given under
this Instrument, such notices shall be in writing and shall always be treated as
having adequately been given if:
(a) when intended for the Borrower, five days after dispatch
by Registered or Certified Mail return receipt requested, addressed to
the mailing address, as set out herein or to such other address or to
such other person, as the Borrower may from time to time, designate in
writing; or
(b) when intended for the Collateral Agent or Trustee, five
days after dispatch by Registered or Certified Mail return receipt
requested, addressed to the mailing address of the Collateral Agent or
Trustee as set out herein or to such other address or to such other
person as the Collateral Agent may from time to time designate in
writing.
30. DISCHARGE OF INSTRUMENT; RELEASE OF PROPERTY. (a) After the
termination of the Total Commitment and when all Loans and other Obligations
have been paid in full, or earlier in accordance with the provisions of section
13.9 of the Credit Agreement, this Instrument shall terminate, and the
Collateral Agent, at the request and expense of the Borrower, will execute and
deliver to the Borrower a proper instrument or instruments (including Uniform
Commercial Code termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Instrument, and will duly assign, transfer
and deliver to the Borrower (without recourse and without any representation or
warranty) such of the Personal Property Collateral as may be in the possession
of the Collateral Agent and as has not theretofore been sold or otherwise
applied or released pursuant to this Instrument. In case of failure of the
Collateral Agent to promptly so release this Instrument, all claims for
statutory penalties and damages are hereby waived.
(b) So long as no payment default on any of the Indebtedness
secured hereby is in existence or would exist after the application of proceeds
as provided below, the Collateral Agent shall, at the request of the Borrower,
release any or all of the Property Covered by this Instrument, PROVIDED that (x)
such release is permitted by the terms of clause (G) of section 6 of this
Instrument, or section 9.2 of the Credit Agreement) or otherwise has been
approved in writing by the Required Lenders (or all of the Lenders, if required
by section 13.13 of the Credit Agreement) and (y) if required pursuant to the
provisions of section 5.2 of the Credit Agreement, the proceeds of such
Collateral are applied to the prepayment of the Loans for the Project.
(c) At any time that the Borrower desires that the Collateral
Agent take any action to give effect to any release of any or all of the
Property Covered by this Instrument pursuant to the foregoing paragraph (a) or
(b), it shall deliver to the Collateral Agent a certificate signed by a
principal executive officer stating that the release of the respective portion
of or all of the Property Covered by this Instrument is permitted pursuant to
paragraph (a) or (b). In the event that any part of the Property Covered by this
Instrument is released as provided in paragraph (a), the Collateral Agent, at
the request and expense of the Borrower, will duly release such part of the
Property Covered by this Instrument and assign, transfer and deliver to the
Borrower (without recourse and without any representation or warranty) such of
the part of the Property Covered by this Instrument as is then being (or has
been) so sold and as may be in the possession of the Collateral Agent and has
not theretofore been released pursuant to this Instrument. The Collateral Agent
shall have no liability whatsoever to any Lender as the result of any release of
all or any part of the Property Covered by this Instrument by it as permitted by
this section. Upon any release of all or any part of the Property Covered by
this Instrument pursuant to paragraph (a) or (b), none of the Collateral Agent
or any of the Lenders shall have any continuing right or interest in the same,
or the proceeds thereof.
31. SUBSTITUTE TRUSTEE. Collateral Agent shall have, and is hereby
granted by Borrower with a warranty of further assurances, the irrevocable power
to appoint a substitute trustee or trustees hereunder and to remove any or all
trustees hereunder from time to time without notice and without specifying any
reason therefor, by filing for record a deed of appointment in the office in
which this Deed of Trust is recorded. Such power of removal and appointment may
be exercised as often and whenever Collateral Agent deems it advisable, and the
exercise of such power, no matter how often, shall not result in an exhaustion
of such power. Upon the recordation of each such deed of appointment or removal,
each trustee so appointed shall become fully vested with identically the same
title and estate in and to the Property Covered by This Instrument and with all
the identical rights, powers, trusts and duties hereunder given.
30
<PAGE> 32
32. MISCELLANEOUS. (A) ACKNOWLEDGMENT OF RECEIPT OF COPIES OF
CREDIT DOCUMENTS. The Borrower acknowledges that it has received from the
Collateral Agent without charge a true and correct copy of this Instrument and
each other Credit Document executed and delivered on or prior to the date
hereof.
(b) INDEMNIFICATION. The Collateral Agent and its successors and
assigns shall be entitled to all of the benefits of the indemnification
provisions of the Credit Agreement and the other Credit Documents. All of the
terms and provisions of section 13.1 of the Credit Agreement (including any
defined terms used therein) are by this reference thereto hereby incorporated
into this Instrument for the benefit of the Collateral Agent and its successors
and assigns as fully as if written out at length herein, and any references in
such section of the Credit Agreement to the "Company" shall be deemed to refer
to, and constitute obligations of, the Borrower.
(c) SUBSEQUENT SERVICES OF COUNSEL TO COLLATERAL AGENT OR TRUSTEE.
To the extent services are required of the Collateral Agent's or Trustee's
counsel after the date hereof, which are normally incident to the closing,
amendment, alteration, and enforcement of this Instrument, and all provisions
herein contained, the Borrower shall, to the extent permitted by law, pay the
reasonable fees therefor, promptly upon the rendering of such a bill and
delivery thereof to the Borrower.
(d) NO PARTNERSHIP OR JOINT VENTURE. Neither this Instrument, the
Credit Agreement, the Notes, any other Indebtedness secured hereby, any of the
other Credit Documents, or any of the Designated Hedge Agreements, are intended
or shall be construed as creating a partnership or joint venture between the
Borrower, on the one hand, and the Collateral Agent or any other holder of any
of the Indebtedness, on the other hand; and the relationship of the Borrower and
the Collateral Agent hereunder shall solely be that of borrower and collateral
agent for the holders of the Indebtedness secured hereby.
(e) ELECTION OF COLLATERAL AGENT TO SUBORDINATE. At the option of
the Collateral Agent (acting on instructions from all of the Lenders), this
Instrument shall become subject and subordinate in whole or in part (but not in
respect to the priority of entitlement to insurance proceeds or any award in
condemnation) to any or all leases and/or subleases of all or any part of the
Property Covered by this Instrument upon the execution by the Collateral Agent
and recording thereof, at any time hereafter, in the appropriate recorder's
office, a unilateral declaration to that effect.
(f) WAIVER OF HOMESTEAD AND EXEMPTION RIGHTS, ETC. To the extent
permitted by law with respect to the Indebtedness secured hereby or any renewals
or extensions thereof, the Borrower waives and renounces any and all homestead
and exemption rights, as well as the benefit of all valuation and appraisement
privileges, and also moratoriums under or by virtue of the constitution and laws
of the jurisdiction in which the Real Property is located or any other state or
of the United States, now existing or hereafter enacted.
(g) COVENANTS RUN WITH THE LAND. All the covenants hereof shall
run with the land. Nothing herein contained nor any transaction related hereto
shall be construed or shall so operate, either presently or prospectively, to
require the Borrower to pay interest at a rate greater than is now lawful in
such case to contract for, but shall require payment of interest only to the
extent of such lawful rate.
(h) GOVERNING LAW; SUCCESSORS AND ASSIGNS; SEVERABILITY, ETC. This
Instrument shall be construed and enforced according to the laws of the
jurisdiction in which the Real Property is located, and shall be binding upon
the Borrower, its successors and assigns, any subsequent owners of the Property
Covered by this Instrument, and shall inure to the benefit of the Collateral
Agent, Trustee, its successors-in-trust and assigns. Any provision of this
Instrument 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.
(i) NO MODIFICATION. None of the terms and conditions of this
Instrument may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Borrower and the Collateral Agent (with the
consent of the Required Lenders or, to the extent required by section 13.13 of
the Credit Agreement, all of the Lenders), PROVIDED, HOWEVER, that no such
change, waiver, modification or variance shall be made to this provision without
the consent of each Lender adversely affected thereby.
31
<PAGE> 33
(j) AGENCY PROVISIONS. By accepting the benefits of this
Instrument, each Lender acknowledges and agrees that the rights and obligations
of the Collateral Agent shall be as set forth in section 11 of the Credit
Agreement. Notwithstanding anything to the contrary contained in of this
Instrument, the duties and obligations of the Collateral Agent set forth or
incorporated into the provisions of this Instrument may not be amended or
modified without the consent of the Collateral Agent.
(k) WAIVER OF TRIAL BY JURY. THE BORROWER, COLLATERAL AGENT AND
TRUSTEE EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS INSTRUMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(l) TIME OF ESSENCE. It is specifically agreed that time is of the
essence with respect to this Instrument and that the waiver of the rights or
options, or obligations secured hereby, shall not at any time thereafter be held
to be abandonment of such rights. Notice of the exercise of any right or option
granted to the Collateral Agent herein, or in the Indebtedness secured hereby,
is not required to be given.
(m) COUNTERPARTS. This Instrument may be executed by the Borrower
in counterparts, each of which shall be an original and all of which
collectively shall constitute one and the same instrument.
32
<PAGE> 34
IN WITNESS WHEREOF, the Borrower has caused this Instrument to be duly
executed and delivered as of the date first set forth above.
ALS NATIONAL, INC.
BY: /S/ MARK J. CHAPMAN (SEAL)
-----------------------------
NAME: MARK J. CHAPMAN
TITLE: VICE PRESIDENT
33
<PAGE> 35
STATE OF: WISCONSIN COUNTY OF: WAUKESHA
---------------------------- -----------------------
I HEREBY CERTIFY that on this 13 day of October, 1999, before me, a
Notary Public for the state and county aforesaid, personally appeared Mark J.
Chapman know to me or satisfactorily proven to be the person whose name is
subscribed to the foregoing instrument, who acknowledged that he is the Vice
President of ALS National, Inc., that he has been duly authorized to execute,
and has executed, the foregoing instrument on behalf of the said entity for the
purposes therein set forth, and that the same is its act and deed.
IN WITNESS WHEREOF, I have set my hand and Notarial Seal, the day and
year first above written.
/s/Randi Bougneit
-----------------------------
Notary Public
My commission expires on 5/11/03 .
-------------------------
34
<PAGE> 36
CERTIFICATE OF PREPARATION
This is to certify that this instrument was prepared by, or
under the supervision of, the undersigned, an attorney admitted to practice and
in good standing before the Court of Appeals of Maryland.
/s/ Jonathan M. Prince
------------------------------------
Jonathan M. Prince
<PAGE> 1
EXHIBIT 10.3
PROJECT PROMISSORY NOTE
$2,825,000 October 13, 1999
FOR VALUE RECEIVED, the undersigned ALS NATIONAL, INC., a Delaware
corporation (herein, together with its successors and assigns, the "COMPANY"),
hereby promises to pay to the order of Key Corporate Capital Inc. (the
"ADMINISTRATIVE AGENT"), as agent for the benefit of the Lenders (as defined in
the Credit Agreement referred to below (the "LENDER"), in lawful money of the
United States of America in immediately available funds, at the Payment Office
(such term and certain other capitalized terms used herein without definition
shall have the respective meanings ascribed thereto in the Credit Agreement
referred to below) of Key Corporate Capital Inc.(the "ADMINISTRATIVE AGENT"),
the principal sum of TWO MILLION EIGHT HUNDRED TWENTY FIVE THOUSAND DOLLARS
($2,825,000) or, if less, the then unpaid principal amount of all Loans made by
the Lender to the Borrowers pursuant to the Credit Agreement.
The Company promises to pay the principal amount of each Loan made by
the Lender to each Borrower on the date the such Loan matures as provided in
section 2.7 of the Credit Agreement. The Company promises also to pay interest
on the unpaid principal amount of each Loan made by the Lender to each Borrower
in like money at said office from the date hereof until paid at the rates and at
the times provided in section 2.9 of the Credit Agreement.
The Company is a co-maker of this Note and has guaranteed this Note as
provided in the Credit Agreement. As provided in the Joinder Supplement to which
any Borrower is a party, such Borrower has unconditionally assumed and agreed to
pay the principal of and interest on all Loans made to such Borrower by the
Lender which are evidenced hereby. Any payments of principal or interest on the
Loans made to a Borrower which are actually paid by such Borrower to the
Administrative Agent and distributed by the Administrative Agent to the Lender
shall be applied against the obligations of the Company hereunder in respect of
the principal of and interest on the Loans made to such Borrower.
This Note is one of the Notes referred to in the Credit Agreement,
dated as of October 6, 1998, among the Company, the Borrowers from time to time
party thereto, the financial institutions from time to time party thereto, and
Key Corporate Capital Inc., as Administrative Agent (as from time to time in
effect, the "CREDIT AGREEMENT"), and is entitled to the benefits thereof and of
the other Credit Documents. As provided in the Credit Agreement, this Note is
subject to mandatory prepayment prior to maturity, in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
The Company hereby waives presentment, demand, protest or notice of any
kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED WITH THE LAW OF THE STATE
OF FLORIDA
<PAGE> 2
IN WITNESS WHEREOF, the Company has duly executed and delivered this
Note on and as of the date first above written.
ALS NATIONAL, INC.
By: /s/ Mark J. Chapman
--------------------------------
Title: Vice President
<PAGE> 1
EXHIBIT 10.4
SCHEDULE OF MORTGAGES AND NOTES
WHICH ARE SUBSTANTIALLY IN THE FORM OF KEY MORTGAGE AND NOTE
ATTACHED AS EXHIBITS 10.2 AND 10.3 TO THE COMPANY'S FORM
10-Q FOR THE PERIOD ENDING 9/30/99
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION
--------- ------------- --------
<S> <C> <C>
ALS National, Inc. Alterra Clare Bridge of Galloway Township Jimmie Leeds Road and Ash Ave.
Galloway, New Jersey 0821
and
Alterra Wynwood of Galloway Township
ALS National, Inc. Alterra Clare Bridge of Portland (Beaverton) 16655 NW Walker Road
Beaverton, OR 97006-4163
ALS National, Inc. Alterra Clare Bridge of Portland (Troutdale) Not Available
ALS National, Inc. Alterra Clare Bridge Cottage of Hagerstown 10114 Sharpburg Pike
Hagerstown, MD 21740
and
Alterra Sterling House of Hagerstown
10116 Sharpburg Pike
Hagerstown, MD 21740
ALS National, Inc. Alterra Clare Bridge Cottage of Lakeland 605 Carpenters Way
Lakeland, FL 33809-3919
<CAPTION>
DATE OF
NOTE AMOUNT MORTGAGE
----------- AND NOTE
--------
<S> <C>
$12,182,000 June 4, 1999
$5,400,000 October 12, 1999
$5,200,000 October 12, 1999
$6,080,000 October 12, 1999
$2,825,000 October 12, 1999
</TABLE>
*The form of mortgages entered into for these properties were conformed to meet
the requirements of applicable state law.
<PAGE> 1
EXHIBIT 10.5
Multifamily Mortgage, Assignment of
Rents and Security Agreement
Document Number Document Title
Recording Area
------------------------------------
Name and Return Address
Randall S. Frye, Esq.
AMRESCO Capital, L.P.
700 N. Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Parcel Identification Number (PIN)
60-0809-251-0195-1
This Instrument was drafted by:
RANDALL S. FRYE, ESQ.
AMRESCO CAPITAL, L.P.
700 N. PEARL STREET, SUITE 2400, LB #342
DALLAS, TEXAS 75201-7424
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
1. DEFINITIONS...................................................................................1
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT....................................................7
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION............................7
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.................................9
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM................11
6. EXCULPATION..................................................................................12
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES..............................................12
8. COLLATERAL AGREEMENTS........................................................................13
9. APPLICATION OF PAYMENTS......................................................................13
10. COMPLIANCE WITH LAWS.........................................................................13
11. USE OF PROPERTY..............................................................................14
12. PROTECTION OF LENDER'S SECURITY..............................................................14
13. INSPECTION...................................................................................15
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
14. BOOKS AND RECORDS; FINANCIAL REPORTING.......................................................15
15. TAXES; OPERATING EXPENSES....................................................................17
16. LIENS; ENCUMBRANCES..........................................................................17
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY...............................18
18. ENVIRONMENTAL HAZARDS........................................................................19
19. PROPERTY AND LIABILITY INSURANCE.............................................................25
20. CONDEMNATION.................................................................................26
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.................................27
22. EVENTS OF DEFAULT............................................................................31
23. REMEDIES CUMULATIVE..........................................................................32
24. FORBEARANCE..................................................................................32
25. LOAN CHARGES.................................................................................33
26. WAIVER OF STATUTE OF LIMITATIONS.............................................................33
27. WAIVER OF MARSHALLING........................................................................33
28. FURTHER ASSURANCES...........................................................................33
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
29. ESTOPPEL CERTIFICATE.........................................................................34
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.............................................34
31. NOTICE.......................................................................................34
32. SALE OF NOTE; CHANGE IN SERVICER.............................................................35
33. SINGLE ASSET BORROWER........................................................................35
34. SUCCESSORS AND ASSIGNS BOUND.................................................................35
35. JOINT AND SEVERAL LIABILITY..................................................................35
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY..........................................35
37. SEVERABILITY; AMENDMENTS.....................................................................36
38. CONSTRUCTION.................................................................................36
39. LOAN SERVICING...............................................................................36
40. DISCLOSURE OF INFORMATION....................................................................36
41. NO CHANGE IN FACTS OR CIRCUMSTANCES..........................................................37
42. SUBROGATION..................................................................................37
43. ACCELERATION; REMEDIES.......................................................................37
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
44. RELEASE......................................................................................37
45. ACCELERATED REDEMPTION PERIODS...............................................................37
46. WAIVER OF TRIAL BY JURY......................................................................38
</TABLE>
<PAGE> 6
MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(THE MORTGAGED PROPERTY [AS HEREINAFTER DEFINED] IS NOT HOMESTEAD PROPERTY)
THIS MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"INSTRUMENT") is dated as of the 16th day of July, 1999, between ALS KANSAS,
INC., a corporation organized and existing under the laws of Delaware, whose
address is c/o Alterra Healthcare Corporation, 450 N. Sunnyslope Road, Suite
300, Brookfield, Wisconsin 53005, as mortgagor ("BORROWER"), and AMRESCO
CAPITAL, L.P., a limited partnership, organized and existing under the laws of
Delaware, whose address is c/o AMRESCO Services, L.P., 245 Peachtree Center
Avenue, N.E., Suite 1800, Atlanta, Georgia 30303-1231, as mortgagee ("LENDER").
Borrower is indebted to Lender in the principal amount of
$3,786,000.00, as evidenced by Borrower's Multifamily Note payable to Lender
dated as of the date of this Instrument, and maturing on August 1, 2009.
TO SECURE TO LENDER the repayment of the Indebtedness, and all
renewals, extensions and modifications of the Indebtedness, and the performance
of the covenants and agreements of Borrower contained in the Loan Documents,
Borrower mortgages, warrants, grants, conveys and assigns to Lender the
Mortgaged Property, including the Land located in Dane County, State of
Wisconsin, and described in Exhibit A attached to this Instrument.
Borrower represents and warrants that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to mortgage,
grant, convey and assign the Mortgaged Property, and that the Mortgaged Property
is unencumbered. Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and demands,
subject to any easements and restrictions listed in a schedule of exceptions to
coverage in any title insurance policy issued to Lender contemporaneously with
the execution and recordation of this Instrument and insuring Lender's interest
in the Mortgaged Property.
COVENANTS. Borrower and Lender covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following meanings:
<PAGE> 7
(a) "BORROWER" means all persons or entities identified as
"Borrower" in the first paragraph of this Instrument, together with their
successors and assigns.
(b) "COLLATERAL AGREEMENT" means any separate agreement between
Borrower and Lender for the purpose of establishing replacement reserves for the
Mortgaged Property, establishing a fund to assure completion of repairs or
improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the occupancy of or income
from the Mortgaged Property does not increase to a level specified in that
agreement, or any other agreement or agreements between Borrower and Lender
which provide for the establishment of any other fund, reserve or account.
(c) "ENVIRONMENTAL PERMIT" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.
(d) "EVENT OF DEFAULT" means the occurrence of any event listed in
Section 22.
(e) "FIXTURES" means all property which is so attached to the Land
or the Improvements as to constitute a fixture under applicable law, including:
machinery, equipment, engines, boilers, incinerators, installed building
materials; systems and equipment for the purpose of supplying or distributing
heating, cooling, electricity, gas, water, air, or light; antennas, cable,
wiring and conduits used in connection with radio, television, security, fire
prevention, or fire detection or otherwise used to carry electronic signals;
telephone systems and equipment; elevators and related machinery and equipment;
fire detection, prevention and extinguishing systems and apparatus; security and
access control systems and apparatus; plumbing systems; water heaters, ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers,
dryers and other appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors;
cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants;
swimming pools; and exercise equipment.
(f) "GOVERNMENTAL AUTHORITY" means any board, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision of any of them, that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the Mortgaged
Property.
(g) "HAZARDOUS MATERIALS" means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground or above-ground storage tanks, whether empty or containing
any substance;
<PAGE> 8
any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.
(h) "HAZARDOUS MATERIALS LAWS" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials and apply to Borrower or to the Mortgaged Property.
Hazardous Materials Laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the
Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, and their state analogs.
(i) "IMPOSITIONS" and "IMPOSITION DEPOSITS" are defined in
Section 7(a).
(j) "IMPROVEMENTS" means the buildings, structures, improvements,
and alterations now constructed or at any time in the future constructed or
placed upon the Land, including any future replacements and additions.
(k) "INDEBTEDNESS" means the principal of, interest on, and all
other amounts due at any time under, the Note, this Instrument or any other Loan
Document, including prepayment premiums, late charges, default interest, and
advances as provided in Section 12 to protect the security of this Instrument.
(l) [Intentionally omitted]
(m) "KEY PRINCIPAL" means the natural person(s) or entity
identified as such at the foot of this Instrument, and any person or entity who
becomes a Key Principal after the date of this Instrument and is identified as
such in an amendment or supplement to this Instrument.
(n) "LAND" means the land described in Exhibit A.
(o) "LEASES" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or hereafter
in force, whether oral or written, covering or affecting the Mortgaged Property,
or any portion of the Mortgaged Property (including proprietary leases or
occupancy agreements if Borrower is a cooperative housing corporation), and all
modifications, extensions or renewals.
<PAGE> 9
(p) "LENDER" means the entity identified as "Lender" in the first
paragraph of this Instrument and its successors and assigns, or any subsequent
holder of the Note.
(q) "LOAN DOCUMENTS" means the Note, this Instrument, all
guaranties, all indemnity agreements, all Collateral Agreements, O&M Programs,
and any other documents now or in the future executed by Borrower, Key
Principal, any guarantor or any other person in connection with the loan
evidenced by the Note, as such documents may be amended from time to time.
(r) "LOAN SERVICER" means the entity that from time to time is
designated by Lender to collect payments and deposits and receive notices under
the Note, this Instrument and any other Loan Document, and otherwise to service
the loan evidenced by the Note for the benefit of Lender. Unless Borrower
receives notice to the contrary, the Loan Servicer is the entity identified as
"Lender" in the first paragraph of this Instrument.
(s) "MORTGAGED PROPERTY" means all of Borrower's present and
future right, title and interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights,
development rights, zoning rights and other similar
rights or interests, easements, tenements,
rights-of-way, strips and gores of land, streets,
alleys, roads, sewer rights, waters, watercourses,
and appurtenances related to or benefiting the Land
or the Improvements, or both, and all rights-of-way,
streets, alleys and roads which may have been or may
in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the
Land, the Improvements, the Fixtures, the Personalty
or any other part of the Mortgaged Property, whether
or not Borrower obtained the insurance pursuant to
Lender's requirement;
(7) all awards, payments and other compensation made or
to be made by any municipal, state or federal
authority with respect to the Land, the
<PAGE> 10
Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, including any awards or
settlements resulting from condemnation proceedings
or the total or partial taking of the Land, the
Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property under the power
of eminent domain or otherwise and including any
conveyance in lieu thereof;
(8) all contracts, options and other agreements for the
sale of the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged
Property entered into by Borrower now or in the
future, including cash or securities deposited to
secure performance by parties of their obligations;
(9) all proceeds from the conversion, voluntary or
involuntary, of any of the above into cash or
liquidated claims, and the right to collect such
proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues
and profits from the Land, the Improvements or any
other part of the Mortgaged Property, and all
undisbursed proceeds of the loan secured by this
Instrument and, if Borrower is a cooperative housing
corporation, maintenance charges or assessments
payable by shareholders or residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of Impositions by any
municipal, state or federal authority or insurance
company (other than refunds applicable to periods
before the real property tax year in which this
Instrument is dated);
(14) all tenant security deposits which have not been
forfeited by any tenant under any Lease; and
(15) all names under or by which any of the above
Mortgaged Property may be operated or known, and all
trademarks, trade names, and goodwill relating to any
of the Mortgaged Property.
(t) "NOTE" means the Multifamily Note described on page 1 of this
Instrument, including the Acknowledgment and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability (if any), and all
schedules, riders, allonges and addenda, as such Multifamily Note may be amended
from time to time.
<PAGE> 11
(u) "O&M PROGRAM" is defined in Section 18(a).
(v) "PERSONALTY" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment (hardware
and software) and other tangible personal property (other than Fixtures) which
are used now or in the future in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land or in the
Improvements, and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements and all other intangible property and rights relating to the
operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land.
(w) "PROPERTY JURISDICTION" is defined in Section 30(a).
(x) "RENTS" means all rents (whether from residential or
non-residential space), revenues and other income of the Land or the
Improvements, including parking fees, laundry and vending machine income and
fees and charges for food, health care and other services provided at the
Mortgaged Property, whether now due, past due, or to become due, and deposits
forfeited by tenants.
(y) "TAXES" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments for
schools, public betterments and general or local improvements, which are levied,
assessed or imposed by any public authority or quasi-public authority, and
which, if not paid, will become a lien, on the Land or the Improvements.
(z) "TRANSFER" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of law); (B) the
granting, creating or attachment of a lien, encumbrance or security interest
(whether voluntary, involuntary or by operation of law); (C) the issuance or
other creation of an ownership interest in a legal entity, including a
partnership interest, interest in a limited liability company or corporate
stock; (D) the withdrawal, retirement, removal or involuntary resignation of a
partner in a partnership or a member or manager in a limited liability company;
or (E) the merger, dissolution, liquidation, or consolidation of a legal entity.
"Transfer" does not include (i) a conveyance of the Mortgaged Property at a
judicial or non-judicial foreclosure sale under this Instrument or (ii) the
Mortgaged Property becoming part of a bankruptcy estate by operation of law
under the United States Bankruptcy Code. For purposes of defining the term
"Transfer," the term "partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability partnership, and the term
"partner" shall mean a general partner, a limited partner and a joint venturer.
<PAGE> 12
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
also a security agreement under the Uniform Commercial Code for any of the
Mortgaged Property which, under applicable law, may be subject to a security
interest under the Uniform Commercial Code, whether acquired now or in the
future, and all products and cash and non-cash proceeds thereof (collectively,
"UCC COLLATERAL"), and Borrower hereby grants to Lender a security interest in
the UCC Collateral. Borrower shall execute and deliver to Lender, upon Lender's
request, financing statements, continuation statements and amendments, in such
form as Lender may require to perfect or continue the perfection of this
security interest. Borrower shall pay all filing costs and all costs and
expenses of any record searches for financing statements that Lender may
require. Without the prior written consent of Lender, Borrower shall not create
or permit to exist any other lien or security interest in any of the UCC
Collateral. If an Event of Default has occurred and is continuing, Lender shall
have the remedies of a secured party under the Uniform Commercial Code, in
addition to all remedies provided by this Instrument or existing under
applicable law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender's other remedies. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all Rents. It is
the intention of Borrower to establish a present, absolute and irrevocable
transfer and assignment to Lender of all Rents and to authorize and empower
Lender to collect and receive all Rents without the necessity of further action
on the part of Borrower. Promptly upon request by Lender, Borrower agrees to
execute and deliver such further assignments as Lender may from time to time
require. Borrower and Lender intend this assignment of Rents to be immediately
effective and to constitute an absolute present assignment and not an assignment
for additional security only. For purposes of giving effect to this absolute
assignment of Rents, and for no other purpose, Rents shall not be deemed to be a
part of the "Mortgaged Property," as that term is defined in Section 1(s).
However, if this present, absolute and unconditional assignment of Rents is not
enforceable by its terms under the laws of the Property Jurisdiction, then the
Rents shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and
perfect a lien on Rents in favor of Lender, which lien shall be effective as of
the date of this Instrument.
(b) After the occurrence of an Event of Default, Borrower authorizes
Lender to collect, sue for and compromise Rents and directs each tenant of the
Mortgaged Property to pay all Rents to, or as directed by, Lender. However,
until the occurrence of an Event of Default, Lender hereby
<PAGE> 13
grants to Borrower a revocable license to collect and receive all Rents, to hold
all Rents in trust for the benefit of Lender and to apply all Rents to pay the
installments of interest and principal then due and payable under the Note and
the other amounts then due and payable under the other Loan Documents, including
Imposition Deposits, and to pay the current costs and expenses of managing,
operating and maintaining the Mortgaged Property, including utilities, Taxes and
insurance premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. So long as no Event of Default has
occurred and is continuing, the Rents remaining after application pursuant to
the preceding sentence may be retained by Borrower free and clear of, and
released from, Lender's rights with respect to Rents under this Instrument. From
and after the occurrence of an Event of Default, and without the necessity of
Lender entering upon and taking and maintaining control of the Mortgaged
Property directly, or by a receiver, Borrower's license to collect Rents shall
automatically terminate and Lender shall without notice be entitled to all Rents
as they become due and payable, including Rents then due and unpaid. Borrower
shall pay to Lender upon demand all Rents to which Lender is entitled. At any
time on or after the date of Lender's demand for Rents, Lender may give, and
Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of
the Mortgaged Property instructing them to pay all Rents to Lender, no tenant
shall be obligated to inquire further as to the occurrence or continuance of an
Event of Default, and no tenant shall be obligated to pay to Borrower any
amounts which are actually paid to Lender in response to such a notice. Any such
notice by Lender shall be delivered to each tenant personally, by mail or by
delivering such demand to each rental unit. Borrower shall not interfere with
and shall cooperate with Lender's collection of such Rents.
(c) Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents (other than an assignment of Rents
securing indebtedness that will be paid off and discharged with the proceeds of
the loan evidenced by the Note), that Borrower has not performed, and Borrower
covenants and agrees that it will not perform, any acts and has not executed,
and shall not execute, any instrument which would prevent Lender from exercising
its rights under this Section 3, and that at the time of execution of this
Instrument there has been no anticipation or prepayment of any Rents for more
than two months prior to the due dates of such Rents. Borrower shall not collect
or accept payment of any Rents more than two months prior to the due dates of
such Rents.
(d) If an Event of Default has occurred and is continuing, Lender
may, regardless of the adequacy of Lender's security or the solvency of Borrower
and even in the absence of waste, enter upon and take and maintain full control
of the Mortgaged Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the operation and
maintenance of the Mortgaged Property, including the execution, cancellation or
modification of Leases, the collection of all Rents, the making of repairs to
the Mortgaged Property and the execution or termination of contracts providing
for the management, operation or maintenance of the Mortgaged Property, for the
purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting
<PAGE> 14
the Mortgaged Property or the security of this Instrument, or for such other
purposes as Lender in its discretion may deem necessary or desirable.
Alternatively, if an Event of Default has occurred and is continuing, regardless
of the adequacy of Lender's security, without regard to Borrower's solvency and
without the necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the appointment of a
receiver for the Mortgaged Property to take any or all of the actions set forth
in the preceding sentence. If Lender elects to seek the appointment of a
receiver for the Mortgaged Property at any time after an Event of Default has
occurred and is continuing, Borrower, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the
appointment of a receiver ex parte if permitted by applicable law. Lender or the
receiver, as the case may be, shall be entitled to receive a reasonable fee for
managing the Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender's entering upon and taking possession and control of
the Mortgaged Property, Borrower shall surrender possession of the Mortgaged
Property to Lender or the receiver, as the case may be, and shall deliver to
Lender or the receiver, as the case may be, all documents, records (including
records on electronic or magnetic media), accounts, surveys, plans, and
specifications relating to the Mortgaged Property and all security deposits and
prepaid Rents. In the event Lender takes possession and control of the Mortgaged
Property, Lender may exclude Borrower and its representatives from the Mortgaged
Property. Borrower acknowledges and agrees that the exercise by Lender of any of
the rights conferred under this Section 3 shall not be construed to make Lender
a mortgagee-in-possession of the Mortgaged Property so long as Lender has not
itself entered into actual possession of the Land and Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be liable
to account only to Borrower and only for those Rents actually received. Lender
shall not be liable to Borrower, anyone claiming under or through Borrower or
anyone having an interest in the Mortgaged Property, by reason of any act or
omission of Lender under this Section 3, and Borrower hereby releases and
discharges Lender from any such liability to the fullest extent permitted by
law.
(f) If the Rents are not sufficient to meet the costs of taking
control of and managing the Mortgaged Property and collecting the Rents, any
funds expended by Lender for such purposes shall become an additional part of
the Indebtedness as provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged
Property by Lender or the receiver, as the case may be, and any application of
Rents as provided in this Instrument shall not cure or waive any Event of
Default or invalidate any other right or remedy of Lender under applicable law
or provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
<PAGE> 15
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all of Borrower's
right, title and interest in, to and under the Leases, including Borrower's
right, power and authority to modify the terms of any such Lease, or extend or
terminate any such Lease. It is the intention of Borrower to establish a
present, absolute and irrevocable transfer and assignment to Lender of all of
Borrower's right, title and interest in, to and under the Leases. Borrower and
Lender intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only. For purposes of giving effect to this absolute assignment of the
Leases, and for no other purpose, the Leases shall not be deemed to be a part of
the "Mortgaged Property," as that term is defined in Section 1(s). However, if
this present, absolute and unconditional assignment of the Leases is not
enforceable by its terms under the laws of the Property Jurisdiction, then the
Leases shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and
perfect a lien on the Leases in favor of Lender, which lien shall be effective
as of the date of this Instrument.
(b) Until Lender gives notice to Borrower of Lender's exercise of
its rights under this Section 4, Borrower shall have all rights, power and
authority granted to Borrower under any Lease (except as otherwise limited by
this Section or any other provision of this Instrument), including the right,
power and authority to modify the terms of any Lease or extend or terminate any
Lease. Upon the occurrence of an Event of Default, the permission given to
Borrower pursuant to the preceding sentence to exercise all rights, power and
authority under Leases shall automatically terminate. Borrower shall comply with
and observe Borrower's obligations under all Leases, including Borrower's
obligations pertaining to the maintenance and disposition of tenant security
deposits.
(c) Borrower acknowledges and agrees that the exercise by Lender,
either directly or by a receiver, of any of the rights conferred under this
Section 4 shall not be construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and the Improvements. The acceptance by Lender of the
assignment of the Leases pursuant to Section 4(a) shall not at any time or in
any event obligate Lender to take any action under this Instrument or to expend
any money or to incur any expenses. Lender shall not be liable in any way for
any injury or damage to person or property sustained by any person or persons,
firm or corporation in or about the Mortgaged Property. Prior to Lender's actual
entry into and taking possession of the Mortgaged Property, Lender shall not (i)
be obligated to perform any of the terms, covenants and conditions contained in
any Lease (or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the Lease
or the Mortgaged Property; or (iii) be responsible for the operation, control,
care, management or repair of the Mortgaged Property or any portion of the
Mortgaged Property. The execution of this Instrument by Borrower shall
constitute conclusive evidence that all responsibility
<PAGE> 16
for the operation, control, care, management and repair of the Mortgaged
Property is and shall be that of Borrower, prior to such actual entry and taking
of possession.
(d) Upon delivery of notice by Lender to Borrower of Lender's
exercise of Lender's rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of Lender entering
upon and taking and maintaining control of the Mortgaged Property directly, by a
receiver, or by any other manner or proceeding permitted by the laws of the
Property Jurisdiction, Lender immediately shall have all rights, powers and
authority granted to Borrower under any Lease, including the right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease.
(e) Borrower shall, promptly upon Lender's request, deliver to
Lender an executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be for
initial terms of at least six months and not more than two years, and shall not
include options to purchase. If customary in the applicable market, residential
Leases with terms of less than six months may be permitted with Lender's prior
written consent.
(f) Borrower shall not lease any portion of the Mortgaged Property
for non-residential use except with the prior written consent of Lender and
Lender's prior written approval of the Lease agreement. Borrower shall not
modify the terms of, or extend or terminate, any Lease for non-residential use
(including any Lease in existence on the date of this Instrument) without the
prior written consent of Lender. Borrower shall, without request by Lender,
deliver an executed copy of each non-residential Lease to Lender promptly after
such Lease is signed. All non-residential Leases, including renewals or
extensions of existing Leases, shall specifically provide that (1) such Leases
are subordinate to the lien of this Instrument (unless waived in writing by
Lender); (2) the tenant shall attorn to Lender and any purchaser at a
foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a foreclosure
sale or by Lender in any manner; (3) the tenant agrees to execute such further
evidences of attornment as Lender or any purchaser at a foreclosure sale may
from time to time request; (4) the Lease shall not be terminated by foreclosure
or any other transfer of the Mortgaged Property; (5) after a foreclosure sale of
the Mortgaged Property, Lender or any other purchaser at such foreclosure sale
may, at Lender's or such purchaser's option, accept or terminate such Lease; and
(6) the tenant shall, upon receipt after the occurrence of an Event of Default
of a written request from Lender, pay all Rents payable under the Lease to
Lender.
(g) Borrower shall not receive or accept Rent under any Lease
(whether residential or non-residential) for more than two months in advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM. Borrower shall pay the Indebtedness when due
<PAGE> 17
in accordance with the terms of the Note and the other Loan Documents and shall
perform, observe and comply with all other provisions of the Note and the other
Loan Documents. Borrower shall pay a prepayment premium in connection with
certain prepayments of the Indebtedness, including a payment made after Lender's
exercise of any right of acceleration of the Indebtedness, as provided in the
Note.
6. EXCULPATION. Borrower's personal liability for payment of the
Indebtedness and for performance of the other obligations to be performed by it
under this Instrument is limited in the manner, and to the extent, provided in
the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or on
another day designated in writing by Lender), until the Indebtedness is paid in
full, an additional amount sufficient to accumulate with Lender the entire sum
required to pay, when due (1) any water and sewer charges which, if not paid,
may result in a lien on all or any part of the Mortgaged Property, (2) the
premiums for fire and other hazard insurance, rent loss insurance and such other
insurance as Lender may require under Section 19, (3) Taxes, and (4) amounts for
other charges and expenses which Lender at any time reasonably deems necessary
to protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect Lender's interests, all as
reasonably estimated from time to time by Lender. The amounts deposited under
the preceding sentence are collectively referred to in this Instrument as the
"IMPOSITION DEPOSITS". The obligations of Borrower for which the Imposition
Deposits are required are collectively referred to in this Instrument as
"IMPOSITIONS". The amount of the Imposition Deposits shall be sufficient to
enable Lender to pay each Imposition before the last date upon which such
payment may be made without any penalty or interest charge being added. Lender
shall maintain records indicating how much of the monthly Imposition Deposits
and how much of the aggregate Imposition Deposits held by Lender are held for
the purpose of paying Taxes, insurance premiums and each other obligation of
Borrower for which Imposition Deposits are required. Any waiver by Lender of the
requirement that Borrower remit Imposition Deposits to Lender may be revoked by
Lender, in Lender's discretion, at any time upon notice to Borrower.
(b) Imposition Deposits shall be held in an institution (which may
be Lender, if Lender is such an institution) whose deposits or accounts are
insured or guaranteed by a federal agency. Lender shall not be obligated to open
additional accounts or deposit Imposition Deposits in additional institutions
when the amount of the Imposition Deposits exceeds the maximum amount of the
federal deposit insurance or guaranty. Lender shall apply the Imposition
Deposits to pay Impositions so long as no Event of Default has occurred and is
continuing. Unless applicable law requires, Lender shall not be required to pay
Borrower any interest, earnings or profits on the Imposition Deposits. Borrower
hereby pledges and grants to Lender a security interest in the
<PAGE> 18
Imposition Deposits as additional security for all of Borrower's obligations
under this Instrument and the other Loan Documents. Any amounts deposited with
Lender under this Section 7 shall not be trust funds, nor shall they operate to
reduce the Indebtedness, unless applied by Lender for that purpose under Section
7(e).
(c) If Lender receives a bill or invoice for an Imposition, Lender
shall pay the Imposition from the Imposition Deposits held by Lender. Lender
shall have no obligation to pay any Imposition to the extent it exceeds
Imposition Deposits then held by Lender. Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.
(d) If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition exceeds the amount reasonably deemed
necessary by Lender, the excess shall be credited against future installments of
Imposition Deposits. If at any time the amount of the Imposition Deposits held
by Lender for payment of a specific Imposition is less than the amount
reasonably estimated by Lender to be necessary, Borrower shall pay to Lender the
amount of the deficiency within 15 days after notice from Lender.
(e) If an Event of Default has occurred and is continuing, Lender
may apply any Imposition Deposits, in any amounts and in any order as Lender
determines, in Lender's discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, Lender shall
refund to Borrower any Imposition Deposits held by Lender.
8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform all
other obligations of Borrower under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, then Lender may apply that
payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Neither Lender's acceptance of an
amount which is less than all amounts then due and payable nor Lender's
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower's obligations under this Instrument and the Note shall
remain unchanged.
10. COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Governmental Authority and all
recorded lawful covenants and
<PAGE> 19
agreements relating to or affecting the Mortgaged Property, including all laws,
ordinances, regulations, requirements and covenants pertaining to health and
safety, construction of improvements on the Mortgaged Property, fair housing,
zoning and land use, and Leases. Borrower also shall comply with all applicable
laws that pertain to the maintenance and disposition of tenant security
deposits. Borrower shall at all times maintain records sufficient to demonstrate
compliance with the provisions of this Section 10. Borrower shall take
appropriate measures to prevent, and shall not engage in or knowingly permit,
any illegal activities at the Mortgaged Property that could endanger tenants or
visitors, result in damage to the Mortgaged Property, result in forfeiture of
the Mortgaged Property, or otherwise materially impair the lien created by this
Instrument or Lender's interest in the Mortgaged Property. Borrower represents
and warrants to Lender that no portion of the Mortgaged Property has been or
will be purchased with the proceeds of any illegal activity.
11. USE OF PROPERTY. Unless required by applicable law, Borrower
shall not (a) except for any change in use approved by Lender, allow changes in
the use for which all or any part of the Mortgaged Property is being used at the
time this Instrument was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a change in the
zoning classification of the Mortgaged Property, or (d) establish any
condominium or cooperative regime with respect to the Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of its obligations under this
Instrument or any other Loan Document, or if any action or proceeding is
commenced which purports to affect the Mortgaged Property, Lender's security or
Lender's rights under this Instrument, including eminent domain, insolvency,
code enforcement, civil or criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or reorganizations or proceedings
involving a bankrupt or decedent, then Lender at Lender's option may make such
appearances, disburse such sums and take such actions as Lender reasonably deems
necessary to perform such obligations of Borrower and to protect Lender's
interest, including (1) payment of fees and out-of-pocket expenses of attorneys,
accountants, inspectors and consultants, (2) entry upon the Mortgaged Property
to make repairs or secure the Mortgaged Property, (3) procurement of the
insurance required by Section 19, and (4) payment of amounts which Borrower has
failed to pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or under
any other provision of this Instrument that treats such disbursement as being
made under this Section 12, shall be added to, and become part of, the principal
component of the Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the "DEFAULT RATE", as
defined in the Note.
<PAGE> 20
(c) Nothing in this Section 12 shall require Lender to incur any
expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees
may make or cause to be made entries upon and inspections of the Mortgaged
Property (including environmental inspections and tests) during normal business
hours, or at any other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the Mortgaged
Property or the management agent's offices, and upon Lender's request shall make
available at the Mortgaged Property, complete and accurate books of account and
records (including copies of supporting bills and invoices) adequate to reflect
correctly the operation of the Mortgaged Property, and copies of all written
contracts, Leases, and other instruments which affect the Mortgaged Property.
The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection at any reasonable time by Lender.
(b) Borrower shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of
Borrower, a statement of income and expenses for
Borrower's operation of the Mortgaged Property for
that fiscal year, a statement of changes in financial
position of Borrower relating to the Mortgaged
Property for that fiscal year and, when requested by
Lender, a balance sheet showing all assets and
liabilities of Borrower relating to the Mortgaged
Property as of the end of that fiscal year;
(2) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's
request, a rent schedule for the Mortgaged Property
showing the name of each tenant, and for each tenant,
the space occupied, the lease expiration date, the
rent payable for the current month, the date through
which rent has been paid, and any related information
requested by Lender;
(3) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's
request, an accounting of all security deposits held
pursuant to all Leases, including the name of the
institution (if any) and the names and identification
numbers of the accounts (if any) in which such
security deposits are held and the name of the person
to contact at such financial institution, along with
any authority or release necessary for Lender to
access information regarding such accounts;
<PAGE> 21
(4) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's
request, a statement that identifies all owners of
any interest in Borrower and the interest held by
each, if Borrower is a corporation, all officers and
directors of Borrower, and if Borrower is a limited
liability company, all managers who are not members;
(5) upon Lender's request, a monthly property management
report for the Mortgaged Property, showing the number
of inquiries made and rental applications received
from tenants or prospective tenants and deposits
received from tenants and any other information
requested by Lender;
(6) upon Lender's request, a balance sheet, a statement
of income and expenses for Borrower and a statement
of changes in financial position of Borrower for
Borrower's most recent fiscal year; and
(7) if required by Lender, a statement of income and
expense for the Mortgaged Property for the prior
month or quarter.
(c) Each of the statements, schedules and reports required by
Section 14(b) shall be certified to be complete and accurate by an individual
having authority to bind Borrower, and shall be in such form and contain such
detail as Lender may reasonably require. Lender also may require that any
statements, schedules or reports be audited at Borrower's expense by independent
certified public accountants acceptable to Lender.
(d) If Borrower fails to provide in a timely manner the statements,
schedules and reports required by Section 14(b), Lender shall have the right to
have Borrower's books and records audited, at Borrower's expense, by independent
certified public accountants selected by Lender in order to obtain such
statements, schedules and reports, and all related costs and expenses of Lender
shall become immediately due and payable and shall become an additional part of
the Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing, Borrower
shall deliver to Lender upon written demand all books and records relating to
the Mortgaged Property or its operation.
(f) Borrower authorizes Lender to obtain a credit report on Borrower
at any time.
(g) If an Event of Default has occurred and Lender has not
previously required Borrower to furnish a quarterly statement of income and
expense for the Mortgaged Property,
<PAGE> 22
Lender may require Borrower to furnish such a statement within 45 days after the
end of each fiscal quarter of Borrower following such Event of Default.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d),
Borrower shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of Section 15(c), Borrower shall pay
the expenses of operating, managing, maintaining and repairing the Mortgaged
Property (including insurance premiums, utilities, repairs and replacements)
before the last date upon which each such payment may be made without any
penalty or interest charge being added.
(c) As long as no Event of Default exists and Borrower has timely
delivered to Lender any bills or premium notices that it has received, Borrower
shall not be obligated to pay Taxes, insurance premiums or any other individual
Imposition to the extent that sufficient Imposition Deposits are held by Lender
for the purpose of paying that specific Imposition. If an Event of Default
exists, Lender may exercise any rights Lender may have with respect to
Imposition Deposits without regard to whether Impositions are then due and
payable. Lender shall have no liability to Borrower for failing to pay any
Impositions to the extent that any Event of Default has occurred and is
continuing, insufficient Imposition Deposits are held by Lender at the time an
Imposition becomes due and payable or Borrower has failed to provide Lender with
bills and premium notices as provided above.
(d) Borrower, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity of
any Imposition other than insurance premiums, if (1) Borrower notifies Lender of
the commencement or expected commencement of such proceedings, (2) the Mortgaged
Property is not in danger of being sold or forfeited, (3) Borrower deposits with
Lender reserves sufficient to pay the contested Imposition, if requested by
Lender, and (4) Borrower furnishes whatever additional security is required in
the proceedings or is reasonably requested by Lender, which may include the
delivery to Lender of the reserves established by Borrower to pay the contested
Imposition.
(e) Borrower shall promptly deliver to Lender a copy of all notices
of, and invoices for, Impositions, and if Borrower pays any Imposition directly,
Borrower shall promptly furnish to Lender receipts evidencing such payments.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt,
<PAGE> 23
security interest or other lien or encumbrance (a "LIEN") on the Mortgaged
Property (other than the lien of this Instrument) or on certain ownership
interests in Borrower, whether voluntary, involuntary or by operation of law,
and whether or not such Lien has priority over the lien of this Instrument, is a
"TRANSFER" which constitutes an Event of Default.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
(a) Borrower (1) shall not commit waste or permit impairment or
deterioration of the Mortgaged Property, (2) shall not abandon the Mortgaged
Property, (3) shall restore or repair promptly, in a good and workmanlike
manner, any damaged part of the Mortgaged Property to the equivalent of its
original condition, or such other condition as Lender may approve in writing,
whether or not insurance proceeds or condemnation awards are available to cover
any costs of such restoration or repair, (4) shall keep the Mortgaged Property
in good repair, including the replacement of Personalty and Fixtures with items
of equal or better function and quality, (5) shall provide for professional
management of the Mortgaged Property by a residential rental property manager
satisfactory to Lender under a contract approved by Lender in writing, and (6)
shall give notice to Lender of and, unless otherwise directed in writing by
Lender, shall appear in and defend any action or proceeding purporting to affect
the Mortgaged Property, Lender's security or Lender's rights under this
Instrument. Borrower shall not (and shall not permit any tenant or other person
to) remove, demolish or alter the Mortgaged Property or any part of the
Mortgaged Property except in connection with the replacement of tangible
Personalty.
(b) If, in connection with the making of the loan evidenced by the
Note or at any later date, Lender waives in writing the requirement of Section
17(a)(5) above that Borrower enter into a written contract for management of the
Mortgaged Property and if, after the date of this Instrument, Borrower intends
to change the management of the Mortgaged Property, Lender shall have the right
to approve such new property manager and the written contract for the management
of the Mortgaged Property and require that Borrower and such new property
manager enter into an Assignment of Management Agreement on a form approved by
Lender. If required by Lender (whether before or after an Event of Default),
Borrower will cause any Affiliate of Borrower to whom fees are payable for the
management of the Mortgaged Property to enter into an agreement with Lender, in
a form approved by Lender, providing for subordination of those fees and such
other provisions as Lender may require. "Affiliate of Borrower" means any
corporation, partnership, joint venture, limited liability company, limited
liability partnership, trust or individual controlled by, under common control
with, or which controls Borrower (the term "control" for these purposes shall
mean the ability, whether by the ownership of shares or other equity interests,
by contract or otherwise, to elect a majority of the directors of a corporation,
to make management decisions on behalf of, or independently to select the
managing partner of, a partnership, or otherwise to have the power independently
to remove and then select a majority of those
<PAGE> 24
individuals exercising managerial authority over an entity, and control shall be
conclusively presumed in the case of the ownership of 50% or more of the equity
interests).
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations
and maintenance approved in writing by Lender (an "O&M PROGRAM") or matters
described in Section 18(b), Borrower shall not cause or permit any of the
following:
(1) the presence, use, generation, release, treatment,
processing, storage (including storage in above
ground and underground storage tanks), handling, or
disposal of any Hazardous Materials on or under the
Mortgaged Property or any other property of Borrower
that is adjacent to the Mortgaged Property;
(2) the transportation of any Hazardous Materials to, from,
or across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property
or any other property of Borrower that is adjacent to
the Mortgaged Property, which occurrence or condition
is or may be in violation of Hazardous Materials
Laws; or
(4) any violation of or noncompliance with the terms of
any Environmental Permit with respect to the
Mortgaged Property or any property of Borrower that
is adjacent to the Mortgaged Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "PROHIBITED ACTIVITIES OR CONDITIONS".
(b) Prohibited Activities and Conditions shall not include the safe
and lawful use and storage of quantities of (1) pre-packaged supplies, cleaning
materials and petroleum products customarily used in the operation and
maintenance of comparable multifamily properties, (2) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for
consumer use and used by tenants and occupants of residential dwelling units in
the Mortgaged Property; and (3) petroleum products used in the operation and
maintenance of motor vehicles from time to time located on the Mortgaged
Property's parking areas, so long as all of the foregoing are used, stored,
handled, transported and disposed of in compliance with Hazardous Materials
Laws.
<PAGE> 25
(c) Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any Leases executed after
the date of this Instrument) to prevent its employees, agents, and contractors,
and all tenants and other occupants from causing or permitting any Prohibited
Activities or Conditions. Borrower shall not lease or allow the sublease or use
of all or any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.
(d) If an O&M Program has been established with respect to Hazardous
Materials, Borrower shall comply in a timely manner with, and cause all
employees, agents, and contractors of Borrower and any other persons present on
the Mortgaged Property to comply with the O&M Program. All costs of performance
of Borrower's obligations under any O&M Program shall be paid by Borrower, and
Lender's out-of-pocket costs incurred in connection with the monitoring and
review of the O&M Program and Borrower's performance shall be paid by Borrower
upon demand by Lender. Any such out-of-pocket costs of Lender which Borrower
fails to pay promptly shall become an additional part of the Indebtedness as
provided in Section 12.
(e) Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing:
(1) Borrower has not at any time engaged in, caused or
permitted any Prohibited Activities or Conditions;
(2) to the best of Borrower's knowledge after reasonable
and diligent inquiry, no Prohibited Activities or
Conditions exist or have existed;
(3) except to the extent previously disclosed by Borrower
to Lender in writing, the Mortgaged Property does not
now contain any underground storage tanks, and, to
the best of Borrower's knowledge after reasonable and
diligent inquiry, the Mortgaged Property has not
contained any underground storage tanks in the past.
If there is an underground storage tank located on
the Property which has been previously disclosed by
Borrower to Lender in writing, that tank complies
with all requirements of Hazardous Materials Laws;
(4) Borrower has complied with all Hazardous Materials
Laws, including all requirements for notification
regarding releases of Hazardous Materials. Without
limiting the generality of the foregoing, Borrower
has obtained all Environmental Permits required for
the operation of the Mortgaged Property
<PAGE> 26
in accordance with Hazardous Materials Laws now in
effect and all such Environmental Permits are in full
force and effect;
(5) no event has occurred with respect to the Mortgaged
Property that constitutes, or with the passing of
time or the giving of notice would constitute,
noncompliance with the terms of any Environmental
Permit;
(6) there are no actions, suits, claims or proceedings
pending or, to the best of Borrower's knowledge after
reasonable and diligent inquiry, threatened that
involve the Mortgaged Property and allege, arise out
of, or relate to any Prohibited Activity or
Condition; and
(7) Borrower has not received any complaint, order,
notice of violation or other communication from any
Governmental Authority with regard to air emissions,
water discharges, noise emissions or Hazardous
Materials, or any other environmental, health or
safety matters affecting the Mortgaged Property or
any other property of Borrower that is adjacent to
the Mortgaged Property.
The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.
(f) Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events:
(1) Borrower's discovery of any Prohibited Activity or
Condition;
(2) Borrower's receipt of or knowledge of any complaint,
order, notice of violation or other communication
from any Governmental Authority or other person with
regard to present or future alleged Prohibited
Activities or Conditions or any other environmental,
health or safety matters affecting the Mortgaged
Property or any other property of Borrower that is
adjacent to the Mortgaged Property; and
(3) any representation or warranty in this Section 18
becomes untrue after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower of, or result in a
waiver of, any obligation under this Instrument, the Note, or any other Loan
Document.
<PAGE> 27
(g) Borrower shall pay promptly the costs of any environmental
inspections, tests or audits ("ENVIRONMENTAL INSPECTIONS") required by Lender in
connection with any foreclosure or deed in lieu of foreclosure, or as a
condition of Lender's consent to any Transfer under Section 21, or required by
Lender following a reasonable determination by Lender that Prohibited Activities
or Conditions may exist. Any such costs incurred by Lender (including the fees
and out-of-pocket costs of attorneys and technical consultants whether incurred
in connection with any judicial or administrative process or otherwise) which
Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12. The results of all Environmental
Inspections made by Lender shall at all times remain the property of Lender and
Lender shall have no obligation to disclose or otherwise make available to
Borrower or any other party such results or any other information obtained by
Lender in connection with its Environmental Inspections. Lender hereby reserves
the right, and Borrower hereby expressly authorizes Lender, to make available to
any party, including any prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental Inspections made by Lender
with respect to the Mortgaged Property. Borrower consents to Lender notifying
any party (either as part of a notice of sale or otherwise) of the results of
any of Lender's Environmental Inspections. Borrower acknowledges that Lender
cannot control or otherwise assure the truthfulness or accuracy of the results
of any of its Environmental Inspections and that the release of such results to
prospective bidders at a foreclosure sale of the Mortgaged Property may have a
material and adverse effect upon the amount which a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a result of
delivering the results of any of its Environmental Inspections to any third
party, and Borrower hereby releases and forever discharges Lender from any and
all claims, damages, or causes of action, arising out of, connected with or
incidental to the results of, the delivery of any of Lender's Environmental
Inspections.
(h) If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work ("REMEDIAL WORK") is necessary to comply with
any Hazardous Materials Law or order of any Governmental Authority that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property under any Hazardous Materials Law,
Borrower shall, by the earlier of (1) the applicable deadline required by
Hazardous Materials Law or (2) 30 days after notice from Lender demanding such
action, begin performing the Remedial Work, and thereafter diligently prosecute
it to completion, and shall in any event complete the work by the time required
by applicable Hazardous Materials Law. If Borrower fails to begin on a timely
basis or diligently prosecute any required Remedial Work, Lender may, at its
option, cause the Remedial Work to be completed, in which case Borrower shall
reimburse Lender on demand for the cost of doing so. Any reimbursement due from
Borrower to Lender shall become part of the Indebtedness as provided in Section
12.
<PAGE> 28
(i) Borrower shall cooperate with any inquiry by any Governmental
Authority and shall comply with any governmental or judicial order which arises
from any alleged Prohibited Activity or Condition.
(j) Borrower shall indemnify, hold harmless and defend (i) Lender,
(ii) any prior owner or holder of the Note, (iii) the Loan Servicer, (iv) any
prior Loan Servicer, (v) the officers, directors, shareholders, partners,
employees and trustees of any of the foregoing, and (vi) the heirs, legal
representatives, successors and assigns of each of the foregoing (collectively,
the "INDEMNITEES") from and against all proceedings, claims, damages, penalties
and costs (whether initiated or sought by Governmental Authorities or private
parties), including fees and out-of-pocket expenses of attorneys and expert
witnesses, investigatory fees, and remediation costs, whether incurred in
connection with any judicial or administrative process or otherwise, arising
directly or indirectly from any of the following:
(1) any breach of any representation or warranty of
Borrower in this Section 18;
(2) any failure by Borrower to perform any of its
obligations under this Section 18;
(3) the existence or alleged existence of any Prohibited
Activity or Condition;
(4) the presence or alleged presence of Hazardous
Materials on or under the Mortgaged Property or any
property of Borrower that is adjacent to the
Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous
Materials Law.
(k) Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. However, any Indemnitee may elect
to defend any claim or legal or administrative proceeding at the Borrower's
expense.
(l) Borrower shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "CLAIM"), settle or compromise the Claim if the settlement (1)
results in the entry of any judgment that does not include as an unconditional
term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender; or (2) may
materially and adversely affect Lender, as determined by Lender in its
discretion.
<PAGE> 29
(m) Lender agrees that the indemnity under this Section 18 shall be
limited to the assets of Borrower and Lender shall not seek to recover any
deficiency from any natural persons who are general partners of Borrower.
(n) Borrower shall, at its own cost and expense, do all of the
following:
(1) pay or satisfy any judgment or decree that may be
entered against any Indemnitee or Indemnitees in any
legal or administrative proceeding incident to any
matters against which Indemnitees are entitled to be
indemnified under this Section 18;
(2) reimburse Indemnitees for any expenses paid or
incurred in connection with any matters against which
Indemnitees are entitled to be indemnified under this
Section 18; and
(3) reimburse Indemnitees for any and all expenses,
including fees and out-of-pocket expenses of
attorneys and expert witnesses, paid or incurred in
connection with the enforcement by Indemnitees of
their rights under this Section 18, or in monitoring
and participating in any legal or administrative
proceeding.
(o) In any circumstances in which the indemnity under this Section
18 applies, Lender may employ its own legal counsel and consultants to
prosecute, defend or negotiate any claim or legal or administrative proceeding
and Lender, with the prior written consent of Borrower (which shall not be
unreasonably withheld, delayed or conditioned), may settle or compromise any
action or legal or administrative proceeding. Borrower shall reimburse Lender
upon demand for all costs and expenses incurred by Lender, including all costs
of settlements entered into in good faith, and the fees and out-of-pocket
expenses of such attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to any
and all other obligations and liabilities that Borrower may have under
applicable law or under other Loan Documents, and each Indemnitee shall be
entitled to indemnification under this Section 18 without regard to whether
Lender or that Indemnitee has exercised any rights against the Mortgaged
Property or any other security, pursued any rights against any guarantor, or
pursued any other rights available under the Loan Documents or applicable law.
If Borrower consists of more than one person or entity, the obligation of those
persons or entities to indemnify the Indemnitees under this Section 18 shall be
joint and several. The obligation of Borrower to indemnify the Indemnitees under
this Section 18 shall survive any repayment or discharge of the Indebtedness,
any foreclosure proceeding, any foreclosure sale, any delivery of any deed in
lieu of foreclosure, and any release of record of the lien of this Instrument.
<PAGE> 30
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times
against such hazards as Lender may from time to time require, which insurance
shall include but not be limited to coverage against loss by fire and allied
perils, general boiler and machinery coverage, and business income coverage.
Lender's insurance requirements may change from time to time throughout the term
of the Indebtedness. If Lender so requires, such insurance shall also include
sinkhole insurance, mine subsidence insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to applicable zoning or land use laws,
building ordinance or law coverage. If any of the Improvements is located in an
area identified by the Federal Emergency Management Agency (or any successor to
that agency) as an area having special flood hazards, and if flood insurance is
available in that area, Borrower shall insure such Improvements against loss by
flood.
(b) All premiums on insurance policies required under Section 19(a)
shall be paid in the manner provided in Section 7, unless Lender has designated
in writing another method of payment. All such policies shall also be in a form
approved by Lender. All policies of property damage insurance shall include a
non-contributing, non-reporting mortgage clause in favor of, and in a form
approved by, Lender. Lender shall have the right to hold the original policies
or duplicate original policies of all insurance required by Section 19(a).
Borrower shall promptly deliver to Lender a copy of all renewal and other
notices received by Borrower with respect to the policies and all receipts for
paid premiums. At least 30 days prior to the expiration date of a policy,
Borrower shall deliver to Lender the original (or a duplicate original) of a
renewal policy in form satisfactory to Lender.
(c) Borrower shall maintain at all times commercial general
liability insurance, workers' compensation insurance and such other liability,
errors and omissions and fidelity insurance coverages as Lender may from time to
time require.
(d) All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for such periods as
Lender may from time to time require, and shall be issued by insurance companies
satisfactory to Lender.
(e) Borrower shall comply with all insurance requirements and shall
not permit any condition to exist on the Mortgaged Property that would
invalidate any part of any insurance coverage that this Instrument requires
Borrower to maintain.
(f) In the event of loss, Borrower shall give immediate written
notice to the insurance carrier and to Lender. Borrower hereby authorizes and
appoints Lender as attorney-in-fact for Borrower to make proof of loss, to
adjust and compromise any claims under policies of property
<PAGE> 31
damage insurance, to appear in and prosecute any action arising from such
property damage insurance policies, to collect and receive the proceeds of
property damage insurance, and to deduct from such proceeds Lender's expenses
incurred in the collection of such proceeds. This power of attorney is coupled
with an interest and therefore is irrevocable. However, nothing contained in
this Section 19 shall require Lender to incur any expense or take any action.
Lender may, at Lender's option, (1) hold the balance of such proceeds to be used
to reimburse Borrower for the cost of restoring and repairing the Mortgaged
Property to the equivalent of its original condition or to a condition approved
by Lender (the "RESTORATION"), or (2) apply the balance of such proceeds to the
payment of the Indebtedness, whether or not then due. To the extent Lender
determines to apply insurance proceeds to Restoration, Lender shall do so in
accordance with Lender's then-current policies relating to the restoration of
casualty damage on similar multifamily properties.
(g) Lender shall not exercise its option to apply insurance proceeds
to the payment of the Indebtedness if all of the following conditions are met:
(1) no Event of Default (or any event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default) has occurred and
is continuing; (2) Lender determines, in its discretion, that there will be
sufficient funds to complete the Restoration; (3) Lender determines, in its
discretion, that the rental income from the Mortgaged Property after completion
of the Restoration will be sufficient to meet all operating costs and other
expenses, Imposition Deposits, deposits to reserves and loan repayment
obligations relating to the Mortgaged Property; (4) Lender determines, in its
discretion, that the Restoration will be completed before the earlier of (A) one
year before the maturity date of the Note or (B) one year after the date of the
loss or casualty; and (5) upon Lender's request, Borrower provides Lender
evidence of the availability during and after the Restoration of the insurance
required to be maintained by Borrower pursuant to this Section 19.
(h) If the Mortgaged Property is sold at a foreclosure sale or
Lender acquires title to the Mortgaged Property, Lender shall automatically
succeed to all rights of Borrower in and to any insurance policies and unearned
insurance premiums and in and to the proceeds resulting from any damage to the
Mortgaged Property prior to such sale or acquisition.
20. CONDEMNATION.
(a) Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, or conveyance in lieu
thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a "CONDEMNATION"). Borrower shall appear in and prosecute or defend
any action or proceeding relating to any Condemnation unless otherwise directed
by Lender in writing. Borrower authorizes and appoints Lender as
attorney-in-fact for Borrower to commence, appear in and prosecute, in Lender's
or Borrower's name, any action or proceeding relating to any Condemnation and to
settle or compromise any claim in connection with any Condemnation. This power
of attorney is coupled with an interest and therefore is irrevocable.
<PAGE> 32
However, nothing contained in this Section 20 shall require Lender to incur any
expense or take any action. Borrower hereby transfers and assigns to Lender all
right, title and interest of Borrower in and to any award or payment with
respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and
(ii) any damage to the Mortgaged Property caused by governmental action that
does not result in a Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction of
Lender's expenses incurred in the collection of such amounts, at Lender's
option, to the restoration or repair of the Mortgaged Property or to the payment
of the Indebtedness, with the balance, if any, to Borrower. Unless Lender
otherwise agrees in writing, any application of any awards or proceeds to the
Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments. Borrower agrees
to execute such further evidence of assignment of any awards or proceeds as
Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
(a) The occurrence of any of the following events shall constitute
an Event of Default under this Instrument:
(1) a Transfer of all or any part of the Mortgaged
Property or any interest in the Mortgaged Property;
(2) a Transfer of a Controlling Interest in Borrower;
(3) a Transfer of a Controlling Interest in any entity
which owns, directly or indirectly through one or
more intermediate entities, a Controlling Interest in
Borrower;
(4) a Transfer of all or any part of Key Principal's
ownership interests (other than limited partnership
interests) in Borrower, or in any other entity which
owns, directly or indirectly through one or more
intermediate entities, an ownership interest in
Borrower;
(5) if Key Principal is an entity, (A) a Transfer of a
Controlling Interest in Key Principal, or (B) a
Transfer of a Controlling Interest in any entity
which owns, directly or indirectly through one or
more intermediate entities, a Controlling Interest in
Key Principal;
<PAGE> 33
(6) if Borrower or Key Principal is a trust, the
termination or revocation of such trust; and
(7) a conversion of Borrower from one type of legal
entity into another type of legal entity, whether or
not there is a Transfer.
Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not
constitute an Event of Default under this Instrument, notwithstanding any
provision of Section 21(a) to the contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by
operation of law upon the death of a natural person;
(3) the grant of a leasehold interest in an individual
dwelling unit for a term of two years or less not
containing an option to purchase;
(4) a Transfer of obsolete or worn out Personalty or
Fixtures that are contemporaneously replaced by items
of equal or better function and quality, which are
free of liens, encumbrances and security interests
other than those created by the Loan Documents or
consented to by Lender;
(5) the grant of an easement, if before the grant Lender
determines that the easement will not materially
affect the operation or value of the Mortgaged
Property or Lender's interest in the Mortgaged
Property, and Borrower pays to Lender, upon demand,
all costs and expenses incurred by Lender in
connection with reviewing Borrower's request; and
(6) the creation of a tax lien or a mechanic's,
materialman's or judgment lien against the Mortgaged
Property which is bonded off, released of record or
otherwise remedied to Lender's satisfaction within 30
days of the date of creation.
(c) Lender shall consent, without any adjustment to the rate at
which the Indebtedness secured by this Instrument bears interest or to any other
economic terms of the Indebtedness, to a
<PAGE> 34
Transfer that would otherwise violate this Section 21 if, prior to the Transfer,
Borrower has satisfied each of the following requirements:
(1) the submission to Lender of all information required
by Lender to make the determination required by this
Section 21(c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit,
management and other standards (including any
standards with respect to previous relationships
between Lender and the transferee and the
organization of the transferee) customarily applied
by Lender at the time of the proposed Transfer to the
approval of borrowers in connection with the
origination or purchase of similar mortgages, deeds
of trust or deeds to secure debt on multifamily
properties;
(4) the Mortgaged Property, at the time of the proposed
Transfer, meets all standards as to its physical
condition that are customarily applied by Lender at
the time of the proposed Transfer to the approval of
properties in connection with the origination or
purchase of similar mortgages on multifamily
properties;
(5) in the case of a Transfer of all or any part of the
Mortgaged Property, or direct or indirect ownership
interests in Borrower or Key Principal (if an
entity), if transferor or any other person has
obligations under any Loan Document, the execution by
the transferee or one or more individuals or entities
acceptable to Lender of an assumption agreement
(including, if applicable, an Acknowledgement and
Agreement of Key Principal to Personal Liability for
Exceptions to Non-Recourse Liability) that is
acceptable to Lender and that, among other things,
requires the transferee to perform all obligations of
transferor or such person set forth in such Loan
Document, and may require that the transferee comply
with any provisions of this Instrument or any other
Loan Document which previously may have been waived
by Lender;
(6) if a guaranty has been executed and delivered in
connection with the Note, this Instrument or any of
the other Loan Documents, the Borrower causes one or
more individuals or entities acceptable to Lender to
execute and deliver to Lender a guaranty in a form
acceptable to Lender; and
<PAGE> 35
(7) Lender's receipt of all of the following:
(A) a non-refundable review fee in the amount
of $3,000 and a transfer fee equal to 1
percent of the outstanding Indebtedness
immediately prior to the Transfer.
(B) In addition, Borrower shall be required to
reimburse Lender for all of Lender's
out-of-pocket costs (including reasonable
attorneys' fees) incurred in reviewing the
Transfer request, to the extent such
expenses exceed $3,000.
(d) For purposes of this Section, the following terms shall have the
meanings set forth below:
(1) "INITIAL OWNERS" means, with respect to Borrower
or any other entity, the persons or entities who on
the date of the Note own in the aggregate 100% of the
ownership interests in Borrower or that entity.
(2) A Transfer of a "CONTROLLING INTEREST" shall mean,
with respect to any entity, the following:
(i) if such entity is a general partnership or a
joint venture, a Transfer of any general
partnership interest or joint venture
interest which would cause the Initial
Owners to own less than 51% of all general
partnership or joint venture interests in
such entity;
(ii) if such entity is a limited partnership, a
Transfer of any general partnership
interest;
(iii) if such entity is a limited liability
company or a limited liability partnership,
a Transfer of any membership or other
ownership interest which would cause the
Initial Owners to own less than 51% of all
membership or other ownership interests in
such entity;
(iv) if such entity is a corporation (other than
a Publicly-Held Corporation) with only one
class of voting stock, a Transfer of any
voting stock which would cause the Initial
Owners to own less than 51% of voting stock
in such corporation;
<PAGE> 36
(v) if such entity is a corporation (other than
a Publicly-Held Corporation) with more than
one class of voting stock, a Transfer of any
voting stock which would cause the Initial
Owners to own less than a sufficient number
of shares of voting stock having the power
to elect the majority of directors of such
corporation; and
(vi) if such entity is a trust, the removal,
appointment or substitution of a trustee of
such trust other than (A) in the case of a
land trust, or (B) if the trustee of such
trust after such removal, appointment or
substitution is a trustee identified in the
trust agreement approved by Lender.
(3) "PUBLICLY-HELD CORPORATION" shall mean a
corporation the outstanding voting stock of which
is registered under Section 12(b) or 12(g) of the
Securities and Exchange Act of 1934, as amended.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:
(a) any failure by Borrower to pay or deposit when due any amount
required by the Note, this Instrument or any other Loan Document;
(b) any failure by Borrower to maintain the insurance coverage
required by Section 19;
(c) any failure by Borrower to comply with the provisions of
Section 33;
(d) fraud or material misrepresentation or material omission by
Borrower, or any of its officers, directors, trustees, general partners or
managers, Key Principal or any guarantor in connection with (A) the application
for or creation of the Indebtedness, (B) any financial statement, rent roll, or
other report or information provided to Lender during the term of the
Indebtedness, or (C) any request for Lender's consent to any proposed action,
including a request for disbursement of funds under any Collateral Agreement;
(e) any Event of Default under Section 21;
(f) the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender's reasonable judgment, could result in a
forfeiture of the Mortgaged Property or otherwise materially impair the lien
created by this Instrument or Lender's interest in the Mortgaged Property;
<PAGE> 37
(g) any failure by Borrower to perform any of its obligations
under this Instrument (other than those specified in Sections 22(a) through
(f)), as and when required, which continues for a period of 30 days after notice
of such failure by Lender to Borrower, but no such notice or grace period shall
apply in the case of any such failure which could, in Lender's judgment, absent
immediate exercise by Lender of a right or remedy under this Instrument, result
in harm to Lender, impairment of the Note or this Instrument or any other
security given under any other Loan Document;
(h) any failure by Borrower to perform any of its obligations as
and when required under any Loan Document other than this Instrument which
continues beyond the applicable cure period, if any, specified in that Loan
Document; and
(i) any exercise by the holder of any other debt instrument
secured by a mortgage, deed of trust or deed to secure debt on the Mortgaged
Property of a right to declare all amounts due under that debt instrument
immediately due and payable.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this Instrument
or any other Loan Document or afforded by applicable law, and each shall be
cumulative and may be exercised concurrently, independently, or successively, in
any order.
24. FORBEARANCE.
(a) Lender may (but shall not be obligated to) agree with
Borrower, from time to time, and without giving notice to, or obtaining the
consent of, or having any effect upon the obligations of, any guarantor or other
third party obligor, to take any of the following actions: extend the time for
payment of all or any part of the Indebtedness; reduce the payments due under
this Instrument, the Note, or any other Loan Document; release anyone liable for
the payment of any amounts under this Instrument, the Note, or any other Loan
Document; accept a renewal of the Note; modify the terms and time of payment of
the Indebtedness; join in any extension or subordination agreement; release any
Mortgaged Property; take or release other or additional security; modify the
rate of interest or period of amortization of the Note or change the amount of
the monthly installments payable under the Note; and otherwise modify this
Instrument, the Note, or any other Loan Document.
(b) Any forbearance by Lender in exercising any right or remedy
under the Note, this Instrument, or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any other right or remedy. The acceptance by Lender of payment of all or any
part of the Indebtedness after the due date of such payment, or in an amount
which is less than the required payment, shall not be a waiver of Lender's right
to require prompt
<PAGE> 38
payment when due of all other payments on account of the Indebtedness or to
exercise any remedies for any failure to make prompt payment. Enforcement by
Lender of any security for the Indebtedness shall not constitute an election by
Lender of remedies so as to preclude the exercise of any other right available
to Lender. Lender's receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.
25. LOAN CHARGES. If any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower is interpreted
so that any charge provided for in any Loan Document, whether considered
separately or together with other charges levied in connection with any other
Loan Document, violates that law, and Borrower is entitled to the benefit of
that law, that charge is hereby reduced to the extent necessary to eliminate
that violation. The amounts, if any, previously paid to Lender in excess of the
permitted amounts shall be applied by Lender to reduce the principal of the
Indebtedness. For the purpose of determining whether any applicable law limiting
the amount of interest or other charges permitted to be collected from Borrower
has been violated, all Indebtedness which constitutes interest, as well as all
other charges levied in connection with the Indebtedness which constitute
interest, shall be deemed to be allocated and spread over the stated term of the
Note. Unless otherwise required by applicable law, such allocation and spreading
shall be effected in such a manner that the rate of interest so computed is
uniform throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Instrument or to any action brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any
other security interests in the Mortgaged Property held by Lender or by any
other party, Lender shall have the right to determine the order in which any or
all of the Mortgaged Property shall be subjected to the remedies provided in
this Instrument, the Note, any other Loan Document or applicable law. Lender
shall have the right to determine the order in which any or all portions of the
Indebtedness are satisfied from the proceeds realized upon the exercise of such
remedies. Borrower and any party who now or in the future acquires a security
interest in the Mortgaged Property and who has actual or constructive notice of
this Instrument waives any and all right to require the marshalling of assets or
to require that any of the Mortgaged Property be sold in the inverse order of
alienation or that any of the Mortgaged Property be sold in parcels or as an
entirety in connection with the exercise of any of the remedies permitted by
applicable law or provided in this Instrument.
28. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements, transfers and
assurances as Lender may require from time to time in order to
<PAGE> 39
better assure, grant, and convey to Lender the rights intended to be granted,
now or in the future, to Lender under this Instrument and the Loan Documents.
29. ESTOPPEL CERTIFICATE. Within 10 days after a request from
Lender, Borrower shall deliver to Lender a written statement, signed and
acknowledged by Borrower, certifying to Lender or any person designated by
Lender, as of the date of such statement, (i) that the Loan Documents are
unmodified and in full force and effect (or, if there have been modifications,
that the Loan Documents are in full force and effect as modified and setting
forth such modifications); (ii) the unpaid principal balance of the Note; (iii)
the date to which interest under the Note has been paid; (iv) that Borrower is
not in default in paying the Indebtedness or in performing or observing any of
the covenants or agreements contained in this Instrument or any of the other
Loan Documents (or, if the Borrower is in default, describing such default in
reasonable detail); (v) whether or not there are then existing any setoffs or
defenses known to Borrower against the enforcement of any right or remedy of
Lender under the Loan Documents; and (vi) any additional facts requested by
Lender.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be governed by the laws
of the jurisdiction in which the Land is located (the "PROPERTY JURISDICTION").
(b) Borrower agrees that any controversy arising under or in
relation to the Note, this Instrument, or any other Loan Document shall be
litigated exclusively in the Property Jurisdiction. The state and federal courts
and authorities with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which shall arise under or in
relation to the Note, any security for the Indebtedness, or any other Loan
Document. Borrower irrevocably consents to service, jurisdiction, and venue of
such courts for any such litigation and waives any other venue to which it might
be entitled by virtue of domicile, habitual residence or otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("NOTICE") under
or concerning this Instrument shall be in writing. Each notice shall be
addressed to the intended recipient at its address set forth in this Instrument,
and shall be deemed given on the earliest to occur of (1) the date when the
notice is received by the addressee; (2) the first Business Day after the notice
is delivered to a recognized overnight courier service, with arrangements made
for payment of charges for next Business Day delivery; or (3) the third Business
Day after the notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested. As used in this
<PAGE> 40
Section 31, the term "Business Day" means any day other than a Saturday, a
Sunday or any other day on which Lender is not open for business.
(b) Any party to this Instrument may change the address to which
notices intended for it are to be directed by means of notice given to the other
party in accordance with this Section 31. Each party agrees that it will not
refuse or reject delivery of any notice given in accordance with this Section
31, that it will acknowledge, in writing, the receipt of any notice upon request
by the other party and that any notice rejected or refused by it shall be deemed
for purposes of this Section 31 to have been received by the rejecting party on
the date so refused or rejected, as conclusively established by the records of
the U.S. Postal Service or the courier service.
(c) Any notice under the Note and any other Loan Document which
does not specify how notices are to be given shall be given in accordance with
this Section 31.
32. SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial
interest in the Note (together with this Instrument and the other Loan
Documents) may be sold one or more times without prior notice to Borrower. A
sale may result in a change of the Loan Servicer. There also may be one or more
changes of the Loan Servicer unrelated to a sale of the Note. If there is a
change of the Loan Servicer, Borrower will be given notice of the change.
33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not acquire any real or personal property other than the
Mortgaged Property and personal property related to the operation and
maintenance of the Mortgaged Property; (b) shall not operate any business other
than the management and operation of the Mortgaged Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and
the rights granted by this Instrument shall inure to, the respective successors
and assigns of Lender and Borrower. However, a Transfer not permitted by Section
21 shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be solely
that of creditor and debtor, respectively, and nothing contained in this
Instrument shall create any other relationship between Lender and Borrower.
<PAGE> 41
(b) No creditor of any party to this Instrument and no other
person shall be a third party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence, (1) any
arrangement (a "SERVICING ARRANGEMENT") between the Lender and any Loan Servicer
for loss sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Borrower for the payment of the Indebtedness, (2) Borrower shall not be a third
party beneficiary of any Servicing Arrangement, and (3) no payment by the Loan
Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability
of any provision of this Instrument shall not affect the validity or
enforceability of any other provision, and all other provisions shall remain in
full force and effect. This Instrument contains the entire agreement among the
parties as to the rights granted and the obligations assumed in this Instrument.
This Instrument may not be amended or modified except by a writing signed by the
party against whom enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of
this Instrument are for convenience only and shall be disregarded in construing
this Instrument. Any reference in this Instrument to an "Exhibit" or a "Section"
shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of this
Instrument. All Exhibits attached to or referred to in this Instrument are
incorporated by reference into this Instrument. Any reference in this Instrument
to a statute or regulation shall be construed as referring to that statute or
regulation as amended from time to time. Use of the singular in this Agreement
includes the plural and use of the plural includes the singular. As used in this
Instrument, the term "including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the
loan evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the Loan
Servicer unless Borrower receives notice to the contrary. If Borrower receives
conflicting notices regarding the identity of the Loan Servicer or any other
subject, any such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information
regarding Borrower or the Mortgaged Property to third parties with an existing
or prospective interest in the servicing, enforcement, evaluation, performance,
purchase or securitization of the Indebtedness, including trustees, master
servicers, special servicers, rating agencies, and organizations maintaining
databases on the underwriting and performance of multifamily mortgage loans.
Borrower irrevocably waives any and all rights it may have under applicable law
to prohibit such disclosure, including any right of privacy.
<PAGE> 42
41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "LOAN APPLICATION") and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application are complete and accurate in
all material respects. There has been no material adverse change in any fact or
circumstance that would make any such information incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the
loan evidenced by the Note are used to pay, satisfy or discharge any obligation
of Borrower for the payment of money that is secured by a pre-existing mortgage,
deed of trust or other lien encumbering the Mortgaged Property (a "PRIOR LIEN"),
such loan proceeds shall be deemed to have been advanced by Lender at Borrower's
request, and Lender shall automatically, and without further action on its part,
be subrogated to the rights, including lien priority, of the owner or holder of
the obligation secured by the Prior Lien, whether or not the Prior Lien is
released.
43. ACCELERATION; REMEDIES. At any time during the existence of an
Event of Default, Lender, at Lender's option, and without notice, may declare
the Indebtedness to be immediately due and payable without further demand and
may pursue any remedies permitted by applicable law or provided in this
Instrument or in any other Loan Document, including the enforcement of its
rights under this Instrument by foreclosure proceedings. Borrower has the right
to bring an action to assert the nonexistence of an Event of Default or any
other defense of Borrower to acceleration and foreclosure. Lender shall be
entitled to collect all costs and expenses incurred in pursuing such remedies,
including attorneys' fees and costs of documentary evidence, abstracts and title
reports.
Lender shall deliver to the purchaser at a foreclosure sale, within a
reasonable time after the sale, a Lender's deed conveying the Mortgaged Property
so sold without any covenant or warranty, express or implied. The recitals in
Lender's deed shall be prima facie evidence of the truth of the statements made
therein. The proceeds of the sale shall be applied in the following order: (a)
to all costs and expenses of the sale, including attorneys' fees and costs of
title evidence; (b) to the Indebtedness in such order as Lender, in Lender's
discretion, directs; and (c) the excess, if any, to the clerk of the Circuit
Court of the county in which the sale is held.
44. RELEASE. Upon payment of the Indebtedness, Lender shall
release this Instrument. Borrower shall pay Lender's reasonable costs incurred
in releasing this Instrument.
45. ACCELERATED REDEMPTION PERIODS. Borrower hereby agrees to the
provisions of Section 846.103 of Wisconsin Statutes (or any successor provision
thereto) permitting
<PAGE> 43
Lender to elect a shortened redemption period on the conditions specified
therein in the event of a foreclosure of this Instrument
46. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS
BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT
EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY
GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT
LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:
|X| Exhibit A Description of the Land (required).
|X| Exhibit B Modifications to Instrument
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument
or has caused this Instrument to be signed and delivered by its duly authorized
representative.
BORROWER:
ALS KANSAS, INC.,
a Delaware corporation
By: /s/ Mark Chapman
--------------------------------
Name: Mark Chapman
Title: Vice President
Taxpayer Identification Number: 39-1960113
<PAGE> 44
ACKNOWLEDGMENT
STATE OF GEORGIA )
)
COUNTY OF FULTON )
The above and foregoing Instrument was acknowledged before me, the
undersigned Notary Public, on this 16th day of July, 1999, by Mark Chapman, Vice
President of ALS KANSAS, INC., a Delaware corporation, on behalf of said
corporation.
/s/ Lawrence J. Vicario
--------------------------------------
Notary Public for the State of Georgia
Lawrence J. Vicario
--------------------------------------
Printed/Typed Name of Notary
My Commission Expires:
12/9/01
- ---------------------
<PAGE> 45
KEY PRINCIPAL IDENTIFICATION
KEY PRINCIPAL
NAME: ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
ADDRESS: 450 N. Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005
<PAGE> 46
EXHIBIT A
[DESCRIPTION OF THE LAND]
<PAGE> 47
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
(SENIORS HOUSING; CROSS-DEFAULT AND CROSS-COLLATERALIZATION)
The following modifications are made to the text of the Instrument that
precedes this Exhibit:
1. Section 1(g) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"The term "Hazardous Materials" shall also include any medical
products or devices, including, but not limited to, those
materials defined as "medical waste" or "biological waste"
under relevant statutes or regulations pertaining to any
Hazardous Materials Law."
2. Section 1(o) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"The term "Leases" shall also include any occupancy and
admission agreements pertaining to occupants of the Mortgaged
Property, including both residential and commercial
agreements, and shall also specifically include, without
limitation, that certain Lease Agreement (the "Operating
Lease") dated as of July 16, 1999 by and between Borrower, as
"Landlord" thereunder, and ALTERRA HEALTHCARE CORPORATION,
f/k/a Alternative Living Services, Inc., a Delaware
corporation, as "Tenant" thereunder."
3. Section 1(s) of the Instrument is hereby amended to add the
following sections (16), (17), (18), and (19) at the end thereof:
"(16) all payments due, or received, from occupants, second
party charges added to base rental income, base and/or
additional meal sales, commercial operations located on the
Mortgaged Property or provided as a service to the occupants
of the Mortgaged Property, rental from guest suites, seasonal
lease charges, furniture leases, and laundry services, and any
and all other services provided to third parties in connection
with the Mortgaged Property, and any and all other personal
property on the real property site, excluding personal
property belonging to occupants of the real property (other
than property belonging to Borrower);
<PAGE> 48
(17) subject to applicable law and regulations, all permits,
licenses and contracts relating to the operation and authority
to operate the Mortgaged Property as a Seniors Housing
Facility;
(18) all rights to payments from Medicare or Medicaid
programs, or similar federal, state or local programs, boards,
bureaus or agencies and rights to payment from residents or
private insurers ("third party payments"), arising from the
operation of the Mortgaged Property as a Seniors Housing
Facility, utility deposits, unearned premiums, accrued,
accruing or to accrue under insurance policies now or
hereafter obtained by the Borrower and all proceeds of any
conversion of the Mortgaged Property or any part thereof
including, without limitation, proceeds of hazard and title
insurance and all awards and compensation for the taking by
eminent domain, condemnation or otherwise, of all or any part
of the Mortgaged Property or any easement therein; and,
(19) all of Borrower's inventory, accounts, accounts
receivable, contract rights, general intangibles, and all
proceeds thereof."
4. Section 1(v) of the Instrument is hereby amended to add the
following phrase and sentence at the end thereof:
", to the extent permitted by applicable law. The term
"Personalty" shall also include all personal property
currently owned or acquired by Borrower after the date hereof
used in connection with the ownership and operation of the
Mortgaged Property as a Seniors Housing Facility, all kitchen
or restaurant supplies, dining room facilities, medical
facilities, or related furniture and equipment, and any other
equipment, supplies or furniture owned by Borrower and leased
to any third party service provider or facility operator under
any use, occupancy, or lease agreements, as well as all
licenses, permits, certificates, and approvals required for
the operation of the Mortgaged Property as a Seniors Housing
Facility, to the extent permitted by applicable law and
regulations, including replacements and additions thereto."
5. Section 1(x) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"together with and including all proceeds from any private
insurance for tenants to cover rental charges and charges for
services at or in connection with the Mortgaged Property, and
the right to payments from Medicare or Medicaid programs, or
similar federal, state or local programs, boards, bureaus or
agencies and rights to payment from tenants, private insurers
or others ("third party payments"), due for the rents of
<PAGE> 49
tenants or for services at the Mortgaged Property. " Each of
the foregoing shall be considered "Rents" for the purposes of
the actions and rights set forth in Section 3 of the
Instrument."
6. Section 1 of the Instrument is hereby amended to add the
following paragraph (aa) at the end thereof:
"(aa) "SENIORS HOUSING FACILITY" means a residential housing facility
which qualifies as "housing for older persons" under the Fair Housing
Amendments Act of 1988 and includes congregate living units and
assisted living units, but which does not include any nursing care
units."
7. Section 3(b) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"After an Event of Default, Lender is further authorized to
give notice to all third party providers, including insurers,
any governmental provider, or Medicare or Medicaid or any
similar program or provider, at Lender's option, instructing
them to pay all Rents which would be otherwise paid to
Borrower to Lender, to the extent permitted by law."
8. Section 3(c) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"Because of the special regulatory requirements applicable to
the Mortgaged Property as a Seniors Housing Facility,
including the requirement that operators be approved and
licensed, Borrower (and any licensed operator or manager of
the Mortgaged Property), in order to induce Lender to lend
funds hereunder, hereby agrees, upon the occurrence of an
Event of Default and at the option of Lender, that for a
period of up to six (6) months following the date on which
Lender accelerates the Note secured by this Instrument, it
shall continue to provide all necessary services required
under any operating agreement or applicable licensing or
regulatory requirements and shall fully cooperate with Lender
and any receiver as may be appointed by a court, in performing
these services and agree to arrange for an orderly transition
to a replacement licensed operator, manager or provider of the
necessary services."
9. Section 4(e) of the Instrument is hereby amended to provide
that acceptable Leases may have a month-to-month term.
10. Section 4(f) of the Instrument is hereby deleted in its
entirety and shall have
<PAGE> 50
substituted in place thereof the following:
"(f) Borrower shall not lease any portion of the Mortgaged
Property for non-residential use except with the prior written
consent and approval of Lender with the exception of (A) the
Operating Lease which has previously been approved by Lender,
and (B) any other non-residential Lease of the Land or the
Seniors Housing Facility such that the aggregate amount (for
both Borrower and Key Principal) of (1) all non-residential
Leases (excluding the Operating Lease), based on the annual
rental income from such non-residential Leases, and (2) all
indebtedness of Borrower and/or Key Principal with respect to
the Seniors Housing Facility secured solely by purchase money
security interests in vehicles or office equipment, and not by
a lien upon the Land or the Improvements (which purchase money
indebtedness is used exclusively for the purchase of the
aforesaid items which are necessary for the operation of the
Mortgaged Property as a Seniors Housing Facility), does not
exceed three percent (3%) of the original principal balance of
the Note described in this Instrument (such Leases being
hereinafter referred to as the "Excluded Leases"). Borrower
shall not modify the terms of, or extend or terminate, any
Lease (including, without limitation, the Operating Lease) for
non-residential use (including any Lease in existence on the
date of this Instrument), except with respect to the Excluded
Leases, without the prior written consent of Lender. Except
for the Excluded Leases, Borrower shall, without request by
Lender, deliver an executed copy of each non-residential Lease
to Lender promptly after such Lease is signed. Except for the
Excluded Leases, all non-residential Leases (including ,
without limitation, the Operating Lease), including renewals
or extensions of existing Leases, shall specifically provide
that (1) such Leases are subordinate to the lien of this
Instrument (unless waived in writing by Lender); (2) the
tenant shall attorn to Lender and any purchaser at a
foreclosure sale, such attornment to be self-executing and
effective upon acquisition of title to the Mortgaged Property
by any purchaser at a foreclosure sale or by Lender in any
manner; (3) the tenant agrees to execute such further
evidences of attornment as Lender or any purchaser at a
foreclosure sale may from time to time request; (4) the Lease
shall not be terminated by foreclosure or any other transfer
of the Mortgaged Property; (5) after a foreclosure sale of the
Mortgaged Property, Lender or any other purchaser at such
foreclosure sale may, at Lender's or such purchaser's option,
accept or terminate such Lease; and (6) the tenant shall, upon
receipt after the occurrence of an Event of Default of a
written request from Lender, pay all Rents payable under the
Lease to Lender."
11. Section 7(a) of the Instrument is hereby amended to add the
following sentence at the end thereof:
<PAGE> 51
"Notwithstanding the preceding provisions of this Section
7(a), Borrower shall be permitted to suspend its obligation to
include among the Imposition Deposits deposited with Lender on
a monthly basis the premiums for fire and other insurance,
rent loss insurance and such other insurance as Lender may
require under Section 19, as long as each of the following
conditions are satisfied:
(i) Not later than fifteen (15) days prior to the
expiration date of each of the insurance policies described in
Section 19, Borrower has delivered to Lender satisfactory
evidence of (x) the renewal of each such insurance policy and
(y) the payment of the premiums therefor for a period of at
least six months in advance; and
(ii) no Event of Default (or any event which, with
the giving of notice or the passage of time, or both, would
constitute an Event of Default) has occurred and is
continuing."
12. Section 10 of the Instrument is amended to delete therefrom
the first sentence thereof in its entirety and to substitute in its place the
following:
"Borrower shall comply in all material respects with all laws,
ordinances, regulations and requirements of any Governmental
Authority and all recorded lawful covenants and agreements
relating to or affecting the Mortgaged Property, including all
laws, ordinances, regulations, requirements and covenants
pertaining to health and safety, construction of improvements
on the Mortgaged Property, fair housing, zoning and land use,
and Leases."
13. Section 11 of the Instrument is hereby amended to add the
following phrase in the second line following the word "for" and preceding the
word "any" in "(a)" thereof, and by adding the following sentences at the end
thereof:
"activities closely related to and compatible with a Seniors
Housing Facility and except for"
"Borrower further covenants and agrees that it shall not
permit more than 20% of its total units or more than 20% of
its total income to be derived from units relying on Medicaid
or Medicare payments. If by reason of applicable law or
regulation more than 20% of the total units or more than 20%
of the total income becomes derived from units relying on
Medicaid or Medicare payments, the Borrower shall diligently
and expeditiously take all reasonable steps necessary to bring
the Mortgaged Property into compliance with the preceding
sentence to the extent permissible by applicable law or
regulation. Borrower further covenants and agrees that it
shall limit the use and occupancy of the Mortgaged Property to
tenants that meet the
<PAGE> 52
standards for congregate living or assisted living, and that
it shall not accept tenants that require skilled nursing care
or permit, except to the extent required by law, tenants
requiring skilled nursing care to remain at the Mortgaged
Property as a routine matter."
14. Section 12(a) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"and, (5) payments for any required licensing fees, permits,
or other expenses related to the operation of the Mortgaged
Property by or on behalf of the Lender as a Seniors Housing
Facility, any fines or penalties that may be assessed against
the Mortgaged Property, any costs incurred to bring the
Mortgaged Property into full compliance with applicable codes
and regulatory requirements, and any fees or costs related to
Lender's employment of a licensed operator for the Mortgaged
Property."
15. Section 14(b) of the Instrument is hereby amended to delete
therefrom sections (1) and (7) in their entirety and to substitute in place
thereof the following sections (1) and (7), and to add the following sections
(8), (9) and (10) at the end thereof:
"(1) within 120 days after the end of each fiscal year of
Borrower: (i) a statement of income and expenses for
Borrower's operation of the Mortgaged Property for that fiscal
year; (ii) copies of the Forms 10-Q and 10-K filed by Key
Principal with the Securities and Exchange Commission during
that fiscal year; and (iii) the written re-certification,
executed by a duly authorized representative of Borrower,
confirming the continued compliance by the Borrower with the
provisions of Section 33 of this Instrument;
(7) within 45 days after the end of each calendar quarter, a
statement of income and expenses for the Mortgaged Property
for that calendar quarter;
(8) copies of (i) all inspection reports, reviews, and
certifications prepared by, for, or on behalf of any licensing
or regulatory authority relating to the Mortgaged Property and
(ii) any legal actions, orders, notices, or reports relating
to the Mortgaged Property issued by the applicable regulatory
or licensing authorities, in either instance reflecting: (x)
that the license or any other certification for the Seniors
Housing Facility situated upon the Mortgaged Property is being
downgraded to a substandard category, converted to a
probationary status, revoked, or suspended, or that action is
pending or being considered to downgrade to a substandard
category, convert to probationary status, revoke, or suspend
such license or certification; or (y) matters which are likely
to have a Material Adverse Effect upon the operation of the
Seniors Housing Facility situated upon the
<PAGE> 53
Mortgaged Property (including within the time period required
by the particular agency for furnishing a plan of correction
[A] copies of the plan of correction generated from any such
survey or report for the Seniors Housing Facility and [B]
evidence of the implementation of the plan of correction of
any deficiencies, the curing of which is a condition of
continued licensure of the Seniors Housing Facility situated
upon the Mortgaged Property, by the date required for cure by
such agency [or any extensions thereof granted by such
agency]);
(9) Upon the request of Lender, copies of all reports relating
to the services and operations of the Mortgaged Property,
including, if applicable, Medicaid cost reports and records
relating to account balances due to or from Medicaid or any
private insurer and,
(10) For purposes of this Section 14(b), the term "Material
Adverse Effect" shall mean a material adverse effect upon (i)
the business or the financial position or results of operation
of Borrower or Key Principal, taken as a whole, (ii) the
ability of Borrower or Key Principal to perform, or of Lender
to enforce, any of the Loan Documents or (iii) the value of
(x) the Borrower's Projects, taken as a whole or (y) the
Mortgaged Property."
16. Section 14(c) of the Instrument is hereby amended to delete
therefrom the second sentence thereof in its entirety and to substitute in its
place the following:
"Upon the occurrence of an Event of Default, Lender also may
require that any statements, schedules or reports be audited
at Borrower's expense by independent certified public
accountants acceptable to Lender."
17. Section 16 of the Instrument is hereby amended to delete the
period at the end thereof and to substitute in its place the following:
"; provided, however, that for purposes of this Section 16 and
of Section 21 of this Instrument, the grant, creation or
existence of a security interest or lien or other encumbrance
securing purchase money financing shall not constitute a
Transfer and shall be a permitted encumbrance hereunder, if
and to the extent that, the aggregate amount of (1) all
indebtedness of Borrower and/or Key Principal with respect to
the Seniors Housing Facility which is secured solely by
purchase money security interests in vehicles or office
equipment, and not by a lien upon the Land or the Improvements
(which purchase money financing is used exclusively for the
purchase of the aforesaid items which are necessary for the
operation of the Mortgaged Property as a Seniors Housing
Facility) and (2) all non-residential Leases (excluding the
Operating Lease), based on the annual rental income from
<PAGE> 54
such non-residential Leases, does not exceed three percent
(3%) of the original principal balance of the Note described
in this Instrument."
18. Section 17(a) of the Instrument is hereby amended to add the
following sentences at the end thereof:
"Borrower further covenants and agrees that it shall maintain
and operate the Mortgaged Property as a Seniors Housing
Facility at all times in accordance with the standards
required by any applicable license or permit and as required
by any regulatory authority, that it shall maintain in good
standing all operating licenses and permits, and that it shall
cause to renew and extend all such required operating licenses
or permits, and shall not fail to take any action necessary to
keep all such licenses and permits in good standing and full
force and effect. Borrower will immediately provide Lender
with any notice or order which may materially adversely impact
the Mortgaged Property, its operations or its compliance with
licensing and regulatory requirements."
19. Section 17(b) of the Instrument is hereby amended to replace
the second sentence of Section 17(b) with the following sentence:
"If required by Lender (whether before or after an Event of
Default), Borrower will cause any Affiliate of Borrower to whom
fees are payable for the management of the Mortgaged Property to
enter into an agreement with Lender, in a form approved by Lender,
providing for subordination of those fees and such other
provisions as Lender may reasonably require."
20. The reference in Section 17(a)(5) to a residential rental
property manager shall be deemed to mean and refer to an operator of a Seniors
Housing Facility and any management company engaged thereby.
21. Section 18(b) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"Prohibited Activities and Conditions also shall not include
the safe and lawful use and storage of medical products and
devices customarily used in the operation of a Seniors Housing
Facility."
22. Section 18(g) of the Instrument is hereby amended to delete
the period following the third sentence thereof and to add the following phrase
at the end of the third sentence:
<PAGE> 55
"provided, however, that if Lender discloses such results or
information to third parties in connection with the
enforcement of Lender's rights hereunder, such results or
information shall also be made available to Borrower."
23. Section 19 of the Instrument is hereby amended to delete
therefrom Sections 19(c) and 19(d) in their entirety and to substitute in their
place the following subsections (c) and (d) and to add at the end thereof the
following new subsection (i):
"(c) Borrower shall maintain at all times commercial general
liability insurance, workers' compensation insurance and such
other liability, errors and omissions and fidelity insurance
coverages as Lender may from time to time reasonably require,
provided, however, that such insurance coverages shall not
materially vary from the insurance coverages maintained by
Borrower as of the date of this Instrument.
(d) All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for
such periods as Lender may from time to time reasonably
require, provided, however, that such insurance coverages
shall not materially vary from the insurance coverages
maintained by Borrower as of the date of this Instrument, and
shall be issued by insurance companies reasonably satisfactory
to Lender.
(i) Notwithstanding the preceding provisions of this Section
19 to the contrary, in the event of any insured damage to or
destruction of the Mortgaged Property, or any part thereof, if
(A) the loss is in the aggregate amount of less than two
percent (2%) of the original principal balance of the Note,
(B) in the reasonable judgment of Lender, the Mortgaged
Property can be restored within six (6) months following the
date of the loss and (C) no Event of Default (or any event
which, with the giving of notice or the passage of time, or
both, would constitute an Event of Default) has occurred and
is continuing, then the proceeds of the insurance shall be
applied to reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Mortgaged Property or
part thereof subject to the insured casualty; provided,
however, in any event Borrower shall pay all costs of such
restoring, repairing, replacing or rebuilding in excess of the
net proceeds of insurance made available pursuant to the terms
of this Section 19(i)."
24. Section 21(a) of the Instrument is hereby amended to delete
therefrom sections (3) and (5) and to substitute in their place the following
sections (3) and (5) and to add the following section (8) at the end thereof:
"(3) a Transfer of a Controlling Interest in any entity
(unless such entity is a Publicly-Held Corporation or,
immediately following such Transfer, is wholly-
<PAGE> 56
owned by a Publicly-Held Corporation) which owns, directly or
indirectly through one or more intermediate entities, a
Controlling Interest in Borrower;
(5) if Key Principal is an entity, (A) a Transfer of a
Controlling Interest in Key Principal (unless Key Principal is
a Publicly-Held Corporation or, immediately following such
Transfer, is wholly-owned by a Publicly-Held Corporation) or
(B) a Transfer of a Controlling Interest in any entity (unless
such entity is a Publicly-Held Corporation or, immediately
following such Transfer is wholly-owned by a Publicly-Held
Corporation) which owns, directly or indirectly through one or
more intermediate entities, a Controlling Interest in Key
Principal; and,
(8) a Transfer to a separate entity, or change in the holder,
of the operating license or permit allowing the Mortgaged
Property to operate as a Seniors Housing facility."
25. Section 22 of the Instrument is hereby amended to add the
following sections (g), (h), and (i) at the end thereof:
"(g) any failure by Borrower to comply with the use and
licensing requirements set forth in Sections 10 and 11,
including but not limited to Borrower's loss of its license or
other legal authority to operate the Mortgaged Property as a
Seniors Housing Facility;
(h) any failure by Borrower to correct, within the time
deadlines set by any federal, state or local licensing agency,
any deficiency that justifies any action by such agency with
respect to the Mortgaged Property that may have a material
adverse affect on the income and operation of the Mortgaged
Property or Borrower's interest in the Mortgaged Property,
including, without limitation, a termination, revocation or
suspension of any applicable license, registration, permit,
certificate, authorization or approval necessary for the
operation of the Mortgaged Property as a Seniors Housing
Facility.
(i) if, without the consent of Lender: (a) Borrower ceases to
operate the Mortgaged Property as a Seniors Housing Facility;
(b) Borrower ceases to provide such kitchens (except ovens)
separate bathrooms, and areas for eating, sitting and sleeping
in each unit as are provided in the units as of the date of
this Instrument; (c) Borrower ceases to provide other
facilities and services normally associated with congregate or
assisted living units, including, without limitation, (i)
central dining services providing one to three meals per day,
(ii) periodic housekeeping, (iii) laundry services, and (iv)
customary transportation services; (d) except as required by
applicable law or regulation, Borrower provides or contracts
for skilled nursing
<PAGE> 57
care for any of the units; (e) non-residential space leased or
held available for lease to commercial tenants (i.e., space
other than the units, dining areas, activity rooms, lobby,
parlors, kitchen, mailroom, marketing/management offices)
exceeds ten percent (10%) of the net rental area; or, (f) the
Mortgaged Property is no longer classified as housing for
older persons pursuant to the Fair Housing Amendments Act of
1988, as it may be amended from time to time hereafter."
26. The former Sections 22 (g), (h), and (i) are hereby changed to
be Sections 22 (j), (k), and (l), respectively, and Section 22(j) is hereby
amended in the third line thereof to insert the following phrase after the word
"Borrower" and prior to the comma immediately preceding the word "but":
"provided, however, if such failure cannot be cured prior to
the expiration of such 30-day notice period, it shall not
constitute an Event of Default hereunder if Borrower has
promptly commenced cure efforts and pursues diligently to
completion for the period of time necessary to effect such
cure (which shall in no event exceed a period of 120 days
after notice of such failure by Lender to Borrower),"
27. Section 33 of the Instrument is hereby amended to read as
follows:
"Until the Indebtedness evidenced by the Note is paid in full,
Borrower shall not (1) acquire any real or personal property
other than the Borrower's Projects (as defined in Section 50)
and assets (such as accounts) related to the ownership,
leasing and/or operation and/or maintenance of the Borrower's
Projects, or (2) operate any business other than the
ownership, leasing and/or management and/or operation and/or
maintenance of the Borrower's Projects."
28. Section 43 of the Instrument is hereby amended to add the
following paragraph at the end thereof:
"In addition to the remedies set forth herein and elsewhere in
this Instrument, Lender upon an Event of Default shall be
entitled to mandate the use of a lockbox bank account, to be
maintained under the control and supervision of Lender, for
all income of the Mortgaged Property, including, but not
limited to, Rents, service charges, insurance payments, third
party provider payments including Medicare and Medicaid and
any other governmental or private program by which the rents
or occupancy charges are being paid. Lender may, upon an Event
of Default, cause the removal of Borrower from any Mortgaged
Property operations. Until such time as Lender has located a
replacement licensed operator, Borrower or its related or
affiliated entity acting as the licensed operator, for a
period of up to six (6) months
<PAGE> 58
following the date on which Lender accelerates the Note
secured by this Instrument, shall continue to provide all
required services to maintain the Mortgaged Property in full
compliance with all licensing and regulatory requirements as a
Seniors Housing Facility. Borrower acknowledges that its
failure to perform this service shall constitute a form of
waste of the Mortgaged Property, causing irreparable harm to
Lender and the Mortgaged Property, and shall constitute
sufficient cause for the appointment of a receiver."
29. The following new Sections are added to the Instrument after
the last numbered Section:
"47. BORROWER'S REPRESENTATIONS AND WARRANTIES. In addition
to any other representations and warranties contained in this
Instrument, Borrower hereby represents and warrants to Lender as
follows:
(a) The Mortgaged Property is duly licensed as a community-based
residential facility and Borrower and/or Key Principal is in all
respects otherwise legally authorized to operate the Mortgaged Property
as a Seniors Housing Facility, under the applicable laws of the
Property Jurisdiction;
(b) Borrower and the Mortgaged Property (and the operation thereof) are
in compliance in all material respects with the applicable provisions
of all laws, statutes, regulations, ordinances, orders, standards,
restrictions and rules of any federal, state or local government or
quasi-government body, agency, board or authority having jurisdiction
over the operation of the Mortgaged Property, including, without
limitation: (a) health care and fire safety codes; (b) laws regulating
the handling and disposal of medical or biological waste; (c) the
applicable provisions of Seniors Housing Facility laws, rules,
regulations and published interpretations thereof to which the Borrower
or the Mortgaged Property is subject; and (d) all criteria established
to classify the Mortgaged Property as housing for older persons under
the Fair Housing Amendments Act of 1988;
(c) If required, Borrower has a current provider agreement under any
and all applicable federal, state and local laws for reimbursement: (a)
to an Seniors Housing Facility; or (b) for other type of care provided
at such facility. There is no decision not to renew any provider
agreement related to the Mortgaged Property, nor is there any action
pending or threatened to impose material intermediate or alternative
sanctions with respect to the Mortgaged Property;
(d) Borrower and the Mortgaged Property are not subject to any
proceeding, suit or investigation by any federal, state or local
government or quasi-government body, agency, board authority or any
other administrative or investigative body which may result in the
<PAGE> 59
imposition of a fine or alternative, interim or final sanction which
would have a material adverse effect on Borrower or the operation of
the Mortgaged Property, or which would result in the appointment of a
receiver or manager or would result in the revocation, transfer,
surrender, suspension or other impairment of the operating certificate,
license, permit, approval or authorization of the Mortgaged Property to
operate as an Seniors Housing Facility;
(e) Upon Lender's request, copies of resident care agreements shall be
provided to Lender. All resident records at the Mortgaged Property are
true and correct in all material respects;
(f) Neither the execution and delivery of the Note, the Instrument or
the Loan Documents, Borrower's performance thereunder, nor the
recordation of the Instrument will adversely affect the licenses,
registrations, permits, certificates, authorizations and approvals
necessary for the operation of the Mortgaged Property as a Seniors
Housing Facility in the Property Jurisdiction;
(g) Borrower is not a participant in any federal program whereby any
federal, state or local, government or quasi-governmental body, agency,
board or other authority may have the right to recover funds by reason
of the advance of federal funds. Borrower has received no notice, and
is not aware of any violation of applicable antitrust laws of any
federal, state or local, government or quasi-government body, agency,
board or other authority; and,
(h) Except as otherwise specifically disclosed to the Lender in
writing, in the event any existing management agreement is terminated
or Lender acquires the Mortgaged Property through foreclosure or
otherwise, neither Borrower, Lender, any subsequent manager, nor any
subsequent purchaser (through foreclosure or otherwise) must obtain a
certificate of need from any applicable state health care regulatory
authority or agency (other than giving such notice required under the
applicable state law or regulation) prior to applying for any
applicable license, registration, permit, certificate, authorization or
approval necessary for the operation of the Mortgaged Property as a
Seniors Housing Facility, provided that no service or the unit
complement is changed.
48. CROSS-DEFAULT AND CROSS-COLLATERALIZATION.
(a) In addition to the Mortgaged Property described
on Exhibit A attached hereto, the Borrower also owns each of
the senior housing facilities described on Exhibit C to this
Instrument. All of the properties described on Exhibit C,
together with the Mortgaged Property, are referred to herein
collectively as the "Borrower's Projects". Contemporaneous
with the closing and funding of the loan to the Borrower
evidenced by the Note, the Lender has extended additional
<PAGE> 60
loans to the Borrower, each loan being secured by a
Multifamily Mortgage or Deed of Trust, Assignment of Rents
and Security Agreement (a "Security Instrument") against each
of the other Borrower's Projects.
(b) The Borrower acknowledges that the Lender is
unwilling to extend the loan evidenced by the Note to the
Borrower unless the Borrower agrees that all of the Borrower's
Projects will be treated as a single project through the
imposition of cross-collateralization, cross-default and
release provisions. The Borrower further acknowledges that the
Lender's agreement to amend the single asset borrower
provisions of Section 33 of this Instrument, to permit the
Borrower's ownership of all of the Borrower's Projects, is in
partial consideration for the cross-collateralization,
cross-default and release provisions set forth herein below.
(c) The Borrower hereby agrees and consents that as
additional security to the Lender, each of the Borrower's
Projects shall be subject to the lien of the Lender's Security
Instrument for each of the other of the Borrower's Projects,
and that each of the respective Borrower's Projects shall
collateralize the other Borrower's Projects as follows: all
Mortgaged Property (as defined in the respective Security
Instrument) for each of the Borrower's Projects shall be
considered part of the "Mortgaged Property" under this
Instrument, and shall be collateral under this Instrument and
the Loan Documents.
(d) The Borrower hereby agrees and consents that upon
the occurrence of an Event of Default under the Security
Instrument securing one of the Borrower's Projects, then an
Event of Default shall exist under the Security Instrument
with respect to the other Borrower's Projects. No notice shall
be required to be given to the Borrower in connection with
such Event of Default. In the event of an Event of Default
under the Security Instrument with respect to any one of the
Borrower's Projects, the Lender shall have the right, in its
sole and absolute discretion, to exercise and perfect any and
all rights in and under the Loan Documents with regard to any
or all of the other Borrower's Projects, including, but not
limited to, an acceleration of one or all of the Notes and the
sale of one or all of the Borrower's Projects in accordance
with the terms of the respective Security Instrument. No
notice, except as may be required by the respective Security
Instrument, shall be required to be given to the Borrower in
connection with the Lender's exercise of any and all of its
rights after an Event of Default has occurred.
(e) The Borrower may request that Lender make a
determination whether any of the Borrower's Projects may be
released from the cross-default and
<PAGE> 61
cross-collateral provisions of this Section if (i) the
Borrower proposes to pay off an individual loan held by Lender
and secured by one of the Borrower's Projects, or (ii) the
Borrower proposes to sell one of the Borrower's Projects and
have the Borrower's loan on that project assumed by a buyer
acceptable to Lender. Upon such request from Borrower, Lender
shall consent to the release of the Borrower's Project from
the cross-default and cross-collateralization provisions of
this Section, provided:
(1) The remaining loans to the Borrower
secured by the remaining Borrower's Projects that are
not requested to be released have, in the aggregate,
a minimum overall 1.40 debt service coverage, based
on the remaining Borrower's Projects' collective Net
Operating Income for the 12 months of operation
immediately prior to the Borrower's request for such
release; and
(2) If the Borrower's loan is to be assumed
by a buyer acceptable to and approved by Lender, the
assumed loan must also have a minimum 1.40 debt
service coverage, based on that Project's Net
Operating Income for the 12 months of operation
immediately prior to the Borrower's request for such
release; and
(3) As consideration for the Lender's
agreement to modify the single asset borrower
provisions of Section 33 of the Instrument, and
permit the Borrower to own all of the Borrower's
Projects, in the event the Borrower proposes to pay
off one of the Borrower's loans secured by one of the
Borrower's Projects by refinancing the respective
loan with a new lender, but not in connection with
the sale of the respective secured Borrower's
Project, the Borrower must convey the Borrower's
Project being refinanced to a different ownership
entity (with neither the specific Borrower's Project
or the proposed new ownership entity being owned by
the Borrower) prior to such refinancing, so that none
of the Borrower's Projects will be security for
financing held by any lender other than the Lender
that is the owner and holder of the Note.
For purposes of (1) and (2) of this paragraph (e), "Net
Operating Income" is defined as:
(i) the lesser of all actual rents and other
income derived from the Borrower's Project sought to
be released from the cross-default and cross
collateralization provisions of this Section
collected for the 12 month
<PAGE> 62
period (net of any concession) or 95% of the gross
potential rental income for the 12 month period; plus
(ii) all service income and other ancillary
income (including, without limitation, community fees
and fees from amenities), cable and alarm fees,
application fees, move-in fees, late fees and
forfeited deposits for the 12 month period; less
(iii) the greater of the actual operating
expenses for the 12 month period (including the
required Replacement Reserves funding for the period
utilized by Lender in its final underwriting) or the
operating expenses used by Lender in its final
underwriting (including Replacement Reserves),
increased at the rate of 3% per annum.
(f) Notwithstanding any provision of this Section to
the contrary, the Borrower shall not be permitted to request a
release of any of the Borrower's Projects from the
cross-default and cross-collateral provisions of this Section
if, at the time of such request, a default or Event of Default
under any of the loans held by Lender on any of the Borrower's
Projects. No release of any of the Borrower's Projects from
the cross-default and cross-collateral provisions of this
Section shall be permitted by Lender unless Borrower has paid
all costs and expenses of Lender incurred in connection with
its processing of the requested release, including, without
limitation, all title endorsement premiums, recording fees,
inspection fees, and attorney fees.
49. EXHIBIT C. Exhibit C is attached to this
Instrument."
30. All capitalized terms used in this Exhibit not specifically
defined herein shall have the meanings set forth in the text of the Instrument
that precedes this Exhibit.
BORROWER'S INITIALS: _____________
<PAGE> 1
EXHIBIT 10.6
MULTIFAMILY NOTE
US $3,786,000.00
July 16, 1999
FOR VALUE RECEIVED, the undersigned ("BORROWER") jointly and severally
(if more than one) promises to pay to the order of AMRESCO CAPITAL, L.P., a
Delaware limited partnership, the principal sum of THREE MILLION SEVEN HUNDRED
EIGHTY-SIX THOUSAND AND NO/100 (US $3,786,000.00), with interest on the unpaid
principal balance at the annual rate of Seven and Eighty-three hundredths
percent (7.83%).
1. DEFINED TERMS. As used in this Note, (i) the term "LENDER" means the
holder of this Note, and (ii) the term "INDEBTEDNESS" means the principal of,
interest on, or any other amounts due at any time under, this Note, the
Security Instrument or any other Loan Document, including prepayment premiums,
late charges, default interest, and advances to protect the security of the
Security Instrument under Section 12 of the Security Instrument. Event of
Default, Key Principal and other capitalized terms used but not defined in this
Note shall have the meanings given to such terms in the Security Instrument (as
defined in Paragraph 5).
2. ADDRESS FOR PAYMENT. All payments due under this Note shall be payable
at AMRESCO Services, L.P., 245 Peachtree Center Avenue, N.E., Suite 1800,
Atlanta, Georgia 30303-1231, or such other place as may be designated by
written notice to Borrower from or on behalf of Lender.
3. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Twenty-Eight Thousand Seven Hundred Ninety-Five and 88/100 Dollars
(US $28,795.88), shall be payable on the first day of each month beginning on
September 1, 1999, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on August 1, 2009 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "MATURITY DATE"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is
<PAGE> 2
paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. APPLICATION OF PAYMENTS. If at any time Lender receives, from Borrower
or otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. SECURITY. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "SECURITY INSTRUMENT"), and reference is made to the Security
Instrument for other rights of Lender concerning the collateral for the
Indebtedness.
6. ACCELERATION. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. LATE CHARGE. If any monthly amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Lender
within 10 days after the amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to 5 percent of
such amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "LOAN"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. DEFAULT RATE. So long as any monthly installment or any other payment
due under this Note remains past due for 30 days or more, interest under this
Note shall accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or other payment due, as
applicable, at a rate (the "DEFAULT RATE") equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued
<PAGE> 3
interest are not paid in full on the Maturity Date, the unpaid principal balance
and all accrued interest shall bear interest from the Maturity Date at the
Default Rate. Borrower also acknowledges that its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment or
payment under this Note is delinquent for more than 30 days, Lender will incur
additional costs and expenses arising from its loss of the use of the money due
and from the adverse impact on Lender's ability to meet its other obligations
and to take advantage of other investment opportunities, and that it is
extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment or other payment due under this Note is delinquent for more than 30
days, Lender's risk of nonpayment of this Note will be materially increased and
Lender is entitled to be compensated for such increased risk. Borrower agrees
that the increase in the rate of interest payable under this Note to the Default
Rate represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional costs and
expenses Lender will incur by reason of the Borrower's delinquent payment and
the additional compensation Lender is entitled to receive for the increased
risks of nonpayment associated with a delinquent loan.
9. LIMITS ON PERSONAL LIABILITY.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall
have no personal liability under this Note, the Security Instrument or any other
Loan Document for the repayment of the Indebtedness or for the performance of
any other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default. All Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence; (2) failure of Borrower to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Borrower to comply with Section 14(d) or (e) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports; (4) fraud or written material misrepresentation by
Borrower, Key Principal or any officer, director, partner, member or employee of
Borrower in connection with the application for or creation of the Indebtedness
or any request for any action or consent by Lender; or (5) failure to apply
Rents, first, to the payment of reasonable operating expenses (other than
Property management fees that are not currently payable pursuant to the terms of
an Assignment of Management Agreement or any other agreement with Lender
executed in connection with the Loan) and then to amounts ("DEBT SERVICE
AMOUNTS") payable under this Note, the Security Instrument or any other Loan
Document (except that Borrower will not be
<PAGE> 4
personally liable (i) to the extent that Borrower lacks the legal right to
direct the disbursement of such sums because of a bankruptcy, receivership or
similar judicial proceeding, or (ii) with respect to Rents that are distributed
in any calendar year if Borrower has paid all operating expenses and Debt
Service Amounts for that calendar year).
(c) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrowers acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; or (2) a Transfer that
is an Event of Default under Section 21 of the Security Instrument.
(d) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "MORTGAGED PROPERTY" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default, or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. VOLUNTARY AND INVOLUNTARY PREPAYMENTS.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all (but not less than all) of
the unpaid principal balance of this Note on the last Business Day of a
calendar month if Borrower has given Lender at least 30 days prior notice
of its intention to make such prepayment. Such prepayment shall be made by
paying (A) the amount of principal being prepaid, (B) all accrued interest,
(C) all other sums due Lender at the time of such prepayment, and (D) the
prepayment premium calculated pursuant to Schedule A. For all purposes,
including the accrual of interest, any prepayment received by Lender on any
day other than the last calendar day of the month shall be deemed to have
been received on the last calendar day of such month. For purposes of this
Note, a "BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid
principal balance of this Note outstanding at the time of the acceleration,
(A) all accrued interest and all other sums due Lender under this Note and
the other Loan Documents, and (B) the prepayment premium calculated
pursuant to Schedule A.
<PAGE> 5
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note
prior to the Maturity Date and in the absence of acceleration shall be
deemed to be a partial prepayment by Borrower, requiring the payment to
Lender by Borrower of a prepayment premium. The amount of any such partial
prepayment shall be computed so as to provide to Lender a prepayment
premium computed pursuant to Schedule A without Borrower having to pay
out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than 90
days before the Maturity Date, or (B) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any required prepayment of less than the unpaid principal balance of
this Note shall not extend or postpone the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender agrees
otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the loan evidenced by
this Note, and acknowledges that the terms of this Note are in other respects
more favorable to Borrower as a result of the Borrower's voluntary agreement to
the prepayment premium provisions.
11. COSTS AND EXPENSES. Borrower shall pay on demand all expenses and
costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. FORBEARANCE. Any forbearance by Lender in exercising any right or
remedy under
<PAGE> 6
this Note, the Security Instrument, or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
that or any other right or remedy. The acceptance by Lender of any payment after
the due date of such payment, or in an amount which is less than the required
payment, shall not be a waiver of Lender's right to require prompt payment when
due of all other payments or to exercise any right or remedy with respect to any
failure to make prompt payment. Enforcement by Lender of any security for
Borrower's obligations under this Note shall not constitute an election by
Lender of remedies so as to preclude the exercise of any other right or remedy
available to Lender.
13. WAIVERS. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower, Key Principal, and all
endorsers and guarantors of this Note and all other third party obligors.
14. LOAN CHARGES. Borrower agrees to pay an effective rate of interest
equal to the sum of the interest rate provided for in this Note and any
additional rate of interest resulting from any other charges of interest or in
the nature of interest paid or to be paid in connection with the loan evidenced
by this Note and any other fees or amounts to be paid by Borrower pursuant to
any of the other Loan Documents. Neither this Note nor any of the other Loan
Documents shall be construed to create a contract for the use, forbearance or
detention of money requiring payment of interest at a rate greater than the
maximum interest rate permitted to be charged under applicable law. If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower in connection with the Loan is interpreted so that any
interest or other charge provided for in any Loan Document, whether considered
separately or together with other charges provided for in any other Loan
Document, violates that law, and Borrower is entitled to the benefit of that
law, that interest or charge is hereby reduced to the extent necessary to
eliminate that violation. The amounts, if any, previously paid to Lender in
excess of the permitted amounts shall be applied by Lender to reduce the unpaid
principal balance of this Note. For the purpose of determining whether any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower has been violated, all Indebtedness that constitutes
interest, as well as all other charges made in connection with the Indebtedness
that constitute interest, shall be deemed to be allocated and spread ratably
over the stated term of the Note. Unless otherwise required by applicable law
such allocation and spreading shall be effected in such a manner that the rate
of interest so computed is uniform throughout the stated term of the note.
15. COMMERCIAL PURPOSE. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. COUNTING OF DAYS. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business.
Days.
17. GOVERNING LAW. This Note shall be governed by the law of the
jurisdiction in
<PAGE> 7
which the Land is located.
1.8. CAPTIONS. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note,
19. NOTICES. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be given
in accordance with Section 31 of the Security Instrument.
20. CONSENT TO JURISDICTION AND VENUE. Borrower and Key Principal each
agrees that any controversy arising under or in relation to this Note shall be
litigated exclusively in the jurisdiction in which the Land is located (the
"PROPERTY JURISDICTION"). The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over
all controversies which shall arise under or in relation to this Note. Borrower
and Key Principal each irrevocably consents to service, jurisdiction, and venue
of such courts for any such litigation and waives any other venue to which it
might be entitled by virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER, KEY PRINCIPAL AND LENDER EACH (A)
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER, KEY PRINCIPAL AND
BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. THE FOLLOWING SCHEDULES ARE ATTACHED TO THIS NOTE:
X SCHEDULE A PREPAYMENT PREMIUM (REQUIRED)
X SCHEDULE B MODIFICATIONS TO MULTIFAMILY NOTE
[SIGNATURES APPEAR ON NEXT PAGE]
<PAGE> 8
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has caused
this Note to be signed and delivered by its duly authorized representative.
BORROWER:
ALS KANSAS, INC.,
a Delaware corporation
By:
----------------------------------
Name: Mark Chapman
Title: Vice President
39-1960113
Borrower's Social Security/Employer ID Number
Fannie Mae Loan Number: 985996
<PAGE> 9
PAY TO THE ORDER OF
-------------------------------------
WITHOUT RECOURSE
AMRESCO CAPITAL, L.P.,
a Delaware limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation
Its Sole General Partner
By: /s/ Daniel B. Kirby
---------------------------------
Name: Daniel B. Kirby
---------------------------------
Title: Senior Vice President
---------------------------------
Date: July 16, 1999
<PAGE> 10
ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO
PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY
Key Principal, who has an economic interest in Borrower or who will
otherwise obtain a material financial benefit from the Loan, hereby absolutely,
unconditionally and irrevocably agrees to pay to Lender, or its assigns, on
demand, all amounts for which Borrower is personally liable under Paragraph 9 of
the Multifamily Note to which this Acknowledgment is attached (the "NOTE"). The
obligations of Key Principal shall survive any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the Security Instrument. Lender may pursue its remedies
against Key Principal without first exhausting its remedies against the Borrower
or the Mortgaged Property. All capitalized terms used but not defined in this
Acknowledgment shall have the meanings given to such terms in the Security
Instrument. As used in this Acknowledgment, the term "Key Principal" (each if
more than one) shall mean only those individuals or entities that execute this
Acknowledgment.
The obligations of Key Principal shall be performed without demand by
Lender and shall be unconditional irrespective of the genuineness, validity, or
enforceability of the Note, or any other Loan Document, and without regard to
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Key Principal hereby waives the benefit of
all principles or provisions of law, which are or might be in conflict with the
terms of this Acknowledgment, and agrees that Key Principal's obligations shall
not be affected by any circumstances which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor. Key Principal hereby waives the
benefits of any right of discharge and all other rights under any and all
statutes or other laws relating to guarantors or sureties, to the fullest extent
permitted by law, diligence in collecting the Indebtedness, presentment, demand
for payment, protest, all notices with respect to the Note including this
Acknowledgment, which may be required by statute, rule of law or otherwise to
preserve Lender's rights against Key Principal under this Acknowledgment,
including notice of acceptance, notice of any amendment of the Loan Documents,
notice of the occurrence of any default or Event of Default, notice of intent to
accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
notice of protest, notice of the incurring by Borrower of any obligation or
indebtedness and all rights to require Lender to (a) proceed against Borrower,
(b) proceed against any general partner of Borrower, (c) proceed against or
exhaust any collateral held by Lender to secure the repayment of the
Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy it
may have against Borrower, or any general partner of Borrower. In addition, Key
Principal waives, to the fullest extent allowed by applicable law, all of Key
Principal's rights under Chapter 846, Wis. Statutes, including ss. 846.103.
At any time without notice to Key Principal, and without affecting the
liability of Key Principal hereunder, (a) the time for payment of the principal
of or interest on the Indebtedness may be extended or the Indebtedness may be
renewed in whole or in part; (b) the time for Borrower's performance of or
compliance with any covenant or agreement contained in the Note, or any other
Loan Document, whether presently existing or hereinafter entered into, may be
extended or such performance or compliance may be waived; (c) the maturity of
the Indebtedness may be accelerated
<PAGE> 11
as provided in the Note or any other Loan Document; (d) the Note or any other
Loan Document may be modified or amended by Lender and Borrower in any respect,
including an increase in the principal amount; and (e) any security for the
Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or
additional security may be pledged or mortgaged for the Indebtedness.
Key Principal acknowledges that Key Principal has received a copy of the
Note and all other Loan Documents. Neither this Acknowledgment nor any of its
provisions may be waived, modified, amended, discharged, or terminated except by
an agreement in writing signed by the party against which the enforcement of the
waiver, modification, amendment, discharge, or termination is sought, and then
only to the extent set forth in that agreement. Key Principal agrees to notify
Lender (in the manner for giving notices provided in Section 31 of the Security
Instrument) of any change of Key Principal's address within 10 Business Days
after such change of address occurs. Any notices to Key Principal shall be given
in the manner provided in Section 31 of the Security Instrument. Key Principal
agrees to be bound by Paragraphs 20 and 21 of the Note.
THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART
OF, THE NOTE. BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO
BECOME AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE.
IN WITNESS WHEREOF, Key Principal has signed and delivered this
Acknowledgment or has caused this Acknowledgment to be signed and delivered by
its duly authorized representative.
KEY PRINCIPAL:
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Mark Chapman
---------------------------------
Name: Mark Chapman
Title: Vice President, Finance
Address: 450 N. Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005
Social Security/Employer ID No.:
39-1771281
- --------------------------------------------------------------------------------
FOR WISCONSIN MARRIED RESIDENTS ONLY: Each Key Principal who signs above
represents that this obligation is incurred in the interest of his or her
marriage or family.
X X
- --------------------------- ---------------------------
- --------------------------------------------------------------------------------
<PAGE> 12
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made during the first nine and one-half (9.5)
years beginning on the date of the Note (the "YIELD MAINTENANCE
PERIOD"), the prepayment premium shall be the greater of:
(i) I % of the unpaid principal balance of this Note; or
(ii) The product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the difference obtained by subtracting from the
interest rate on this Note the yield rate (the "YIELD
RATE") on the 5.50% U.S. Treasury Security due May,
2009 (the "SPECIFIED U.S. TREASURY SECURITY"), as the
Yield Rate is reported in The Wall Street Journal on
the fifth Business Day preceding (x) the date notice
of prepayment is given to Lender where prepayment is
voluntary, or (y) the date Lender accelerates the
Loan,
by
(C) the present value factor calculated using the
following formula:
1-(1 + r)-n
-----------
r
[r= Yield Rate
n= the number of 365-day years
(or 366-day years, if
applicable), and any fraction
thereof, remaining between
the Prepayment Date and the
expiration of the Yield
Maintenance Period]
<PAGE> 13
In the event that no Yield Rate is published
for the Specified U.S. Treasury Security,
then the nearest equivalent U.S. Treasury
Security shall be selected at Lender's
discretion. If the publication of such Yield
Rates in The Wall Street Journal is
discontinued, Lender shall determine such
Yield Rates from another source selected by
Lender.
For purposes of subparagraph (ii)(C), the
"PREPAYMENT DATE" shall be (x) in the case of
a voluntary prepayment, the date on which the
prepayment is made, and (y) in any other
case, the date on which Lender accelerates
the unpaid principal balance of this Note.
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 90 days before the Maturity Date, the
prepayment premium shall be 1% of the unpaid principal balance of this
Note.
-------------------------------
BORROWER'S INITIAL(S)
<PAGE> 14
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
(SENIORS HOUSING)
The Multifamily Note dated July 16, 1999 in the original principal amount
of $3,786,000.00 (the "Note") issued by ALS KANSAS, INC., a Delaware corporation
("Borrower") and payable to the order of AMRESCO CAPITAL, L.P., a Delaware
limited partnership ("Lender") is hereby amended as follows:
1. The last sentence of Paragraph 3(a) of the Note is hereby deleted and
the following new sentence is inserted in lieu thereof: "Interest shall be
computed on basis of a 360-day year."
2. The following new sentence is hereby added at the end of Paragraph
3(b) of the Note:
"The amount of each monthly payment made by Borrower pursuant to this
Paragraph 3(b) that is allocated to interest will be based on the
actual number of calendar days during such month. Borrower understands
that the amount allocated to interest for each month will vary
depending on the actual number of calendar days during such month."
3. Section 9(b)(3) of the Note is hereby amended to read as follows:
"Failure of Borrower to comply with Sections 14(d), 14(e), or 14(f) of
the Security Instrument relating to the delivery of books and records,
statements schedules and reports."
4. Section 9(b) of the Note is hereby amended to delete paragraph (2)
thereof in its entirety and to substitute in its place the following
paragraph (2):
"(2) failure of Borrower to apply all insurance proceeds, insurance
deductible amounts in excess of $10,000.00 and condemnation proceeds
as required by the Security Instrument."
and to delete the word "or" immediately preceding paragraph (5) thereof
and to insert a semi-colon in lieu of the period and the word "or",
and add the following paragraph (6) at the end thereof:
<PAGE> 15
"; or (6) Borrower's failure to renew, continue, extend, or maintain
all permits, licenses or other certificates or other approvals
required to legally operate the Mortgaged Property as a Seniors
Housing Facility, as defined in the Security Instrument."
5. All capitalized terms used in this Schedule not specifically defined
herein shall have the meanings set forth in the text of the Note that precedes
this Schedule.
-------------------------
BORROWER'S INITIAL(S)
<PAGE> 1
EXHIBIT 10.7
SCHEDULE OF MORTGAGES AND NOTES
WHICH ARE SUBSTANTIALLY IN THE FORM OF AMRESCO MORTGAGE AND FORM OF AMRESCO NOTE
ATTACHED AS EXHIBITS 10.5 AND 10.6 TO THE COMPANY'S FORM
10-Q FOR THE PERIOD ENDING 9/30/99
<TABLE>
<CAPTION>
NOTE/
----- DATE OF
MORTGAGOR FACILITY NAME LOCATION MORTGAGE AMOUNT MORTGAGE
--------- ------------- -------- --------------- --------
<S> <C> <C> <C> <C>
ALS Kansas, Inc. Alterra Sterling House of Bristol 2022 Bath Road $1,272,000 July 16, 1999
Bristol, PA 19007
ALS Kansas, Inc. Alterra Sterling House of Leawood 12720 State Line Road $2,835,000 July 16, 1999
Leawood, KS 66209
ALS Kansas, Inc. Alterra Sterling House of Lenexa 8740 Caenen Lake Road $2,500,000 July 16, 1999
Lenexa, KS 66215
ALS Kansas, Inc. Alterra Sterling House of Olathe 791 N. Somerset Terrace $3,150,000 July 16, 1999
Olathe, KS 66062
ALS Kansas, Inc. Alterra Sterling House of Topeka 5820 S.W. Drury Lane $3,115,000 July 16, 1999
Topeka, KS 66604
ALS Kansas, Inc. Alterra Wynwood of Madison East 1601 Wheeler Road $3,786,000 July 16, 1999
Madison, WI 53711
ALS Kansas, Inc. Alterra Wynwood of Meridian Park 19200 S.W. 65th $7,740,000 July 16, 1999
Tualatin, OR 97062
</TABLE>
*The form of mortgages entered into for these properties were conformed to meet
the requirements of applicable state law.
<PAGE> 1
EXHIBIT 10.8
CREDIT AGREEMENT
Dated as of September 30, 1999
among
THE BORROWERS FROM TIME TO TIME PARTY HERETO
HCR/ALTERRA DEVELOPMENT, LLC,
as Guarantor
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
BANK OF AMERICA, N. A.,
as Administrative Agent
THE CHASE MANHATTAN BANK,
as Syndication Agent
AND
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES and
BANK UNITED, F.S.B.
as Co-Agents
Arranged by:
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and
Sole Book Manager
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS............................................................................................1
1.1 Definitions..........................................................................................1
1.2 Computation of Time Periods.........................................................................27
1.3 Accounting Terms....................................................................................27
SECTION 2 CREDIT FACILITIES.....................................................................................27
2.1Revolving Loans......................................................................................27
2.2Extension of Maturity Date...........................................................................30
2.3Additional Borrowers.................................................................................31
2.4Joint and Several Liability among Pool Borrowers.....................................................32
2.5Removal of a Borrower................................................................................38
2.6Appointment of Designated Borrower as Agent for Borrowers............................................38
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........................................................39
3.1Default Rate.........................................................................................39
3.2Extension and Conversion.............................................................................39
3.3Prepayments..........................................................................................40
3.4Termination and Reduction of Revolving Committed Amount..............................................41
3.5Fees.................................................................................................42
3.6Capital Adequacy.....................................................................................42
3.7Limitation on Eurodollar Loans.......................................................................43
3.8Illegality...........................................................................................43
3.9Requirements of Law..................................................................................44
3.10Treatment of Affected Loans.........................................................................45
3.11Taxes...............................................................................................45
3.12Compensation........................................................................................47
3.13Pro Rata Treatment..................................................................................48
3.14Sharing of Payments.................................................................................49
3.15Payments, Computations, Etc.........................................................................49
3.16Evidence of Debt....................................................................................53
3.17Substitution of Lenders.............................................................................54
SECTION 4 GUARANTY..............................................................................................55
4.1The Parent Guaranty..................................................................................55
4.2Obligations Unconditional............................................................................55
4.3Reinstatement........................................................................................57
4.4Certain Additional Waivers...........................................................................57
4.5Remedies.............................................................................................57
4.6Guarantee of Payment; Continuing Guarantee...........................................................57
SECTION 5 CONDITIONS............................................................................................58
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
5.1 Closing Conditions..................................................................................58
5.2 Conditions to all Extensions of Credit..............................................................63
5.3 Conditions to Revolving Loans to Finance Construction or Refinancing of New Properties..............67
SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................................67
6.1 Financial Condition.................................................................................67
6.2 No Material Change..................................................................................67
6.3 Organization and Good Standing......................................................................68
6.4 Power; Authorization; Enforceable Obligations.......................................................68
6.5 No Conflicts........................................................................................68
6.6 No Default..........................................................................................69
6.7 Ownership...........................................................................................69
6.8 Litigation..........................................................................................69
6.9 Taxes...............................................................................................69
6.10 Compliance with Law................................................................................69
6.11 ERISA..............................................................................................70
6.12 Subsidiaries.......................................................................................71
6.13 Governmental Regulations, Etc......................................................................71
6.14 Purpose of Loans...................................................................................72
6.15 Environmental Matters..............................................................................73
6.16 Intellectual Property..............................................................................74
6.17 Solvency...........................................................................................74
6.18 Location of Collateral.............................................................................74
6.19 Disclosure.........................................................................................74
6.20 No Burdensome Restrictions.........................................................................74
6.21 Labor Matters......................................................................................75
6.22 Year 2000 Compliance...............................................................................75
6.23 First Priority Lien................................................................................75
SECTION 7 AFFIRMATIVE COVENANTS.................................................................................75
7.1 Information Covenants...............................................................................75
7.2 Preservation of Existence and Franchises............................................................79
7.3 Books and Records...................................................................................79
7.4 Compliance with Law.................................................................................79
7.5 Payment of Taxes and Other Indebtedness.............................................................79
7.6 Insurance...........................................................................................79
7.7 Maintenance of Property.............................................................................81
7.8 Performance of Obligations..........................................................................81
7.9 Use of Proceeds.....................................................................................82
7.10 Audits/Inspections.................................................................................82
7.11 Financial Covenants................................................................................82
7.12 Environmental Laws.................................................................................82
7.13 Collateral.........................................................................................83
7.14 Year 2000 Compliance...............................................................................83
7.15 Construction Inspector.............................................................................84
7.16 Surveys............................................................................................84
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
7.17 Environmental Indemnity............................................................................84
SECTION 8 NEGATIVE COVENANTS....................................................................................86
8.1 Indebtedness........................................................................................86
8.2 Liens...............................................................................................87
8.3 Nature of Business..................................................................................88
8.4 Consolidation, Merger, Dissolution, etc.............................................................88
8.5 Asset Dispositions..................................................................................88
8.6 Investments.........................................................................................89
8.7 Restricted Payments.................................................................................89
8.8 Prepayments of Indebtedness, etc....................................................................90
8.9 Transactions with Affiliates........................................................................90
8.10 Fiscal Year; Organizational Documents..............................................................90
8.11 Limitation on Restricted Actions...................................................................90
8.12 Sale Leasebacks....................................................................................91
8.13 No Further Negative Pledges........................................................................91
8.14 Construction.......................................................................................91
8.15 Changes to Plans and Specifications................................................................91
8.16 Transfer of Partnership Interests..................................................................92
SECTION 9 EVENTS OF DEFAULT.....................................................................................92
9.1 Events of Default...................................................................................92
9.2 Acceleration; Remedies..............................................................................99
SECTION 10 AGENCY PROVISIONS...................................................................................100
10.1 Appointment, Powers and Immunities................................................................100
10.2 Reliance by Administrative Agent..................................................................101
10.3 Defaults..........................................................................................102
10.4 Rights as a Lender................................................................................102
10.5 Indemnification...................................................................................102
10.6 Non-Reliance on Administrative Agent and Other Lenders............................................103
10.7 Successor Administrative Agent....................................................................103
SECTION 11 MISCELLANEOUS.......................................................................................104
11.1 Notices...........................................................................................104
11.2 Right of Set-Off; Adjustments.....................................................................106
11.3 Benefit of Agreement..............................................................................106
11.4 No Waiver; Remedies Cumulative....................................................................108
11.5 Expenses; Indemnification.........................................................................108
11.6 Amendments, Waivers and Consents..................................................................109
11.7 Counterparts......................................................................................111
11.8 Headings..........................................................................................111
11.9 Survival..........................................................................................111
11.10 Governing Law; Submission to Jurisdiction; Venue.................................................111
11.11 Severability..................................................................................112
11.12 Entirety......................................................................................112
11.13 Binding Effect; Termination...................................................................113
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
11.14 Confidentiality...............................................................................113
11.15 Conflict......................................................................................113
11.16 Source of Funds...............................................................................113
11.17 Release of Liens..............................................................................114
<CAPTION>
SCHEDULES
---------
<S> <C>
Schedule 1.1(a) Development Agreements
Schedule 1.1(b) Management Agreements
Schedule 1.1(c) Pool A Borrowers
Schedule 2.1(a)(i) Lenders
Schedule 2.1(a)(ii) Pool B Properties
Schedule 5.1(e)(i) Existing Properties
Schedule 6.12 Subsidiaries
Schedule 6.16 Intellectual Property
Schedule 6.18(a) Real Property Locations
Schedule 6.18(b) Personal Property Locations
Schedule 6.18(c) Chief Executive Offices/Principal Places of Business
Schedule 7.6 Insurance
Schedule 8.1(e) Subordinated Debt
<CAPTION>
EXHIBITS
--------
<S> <C>
Exhibit 1.1(a) Form of Alterra Guaranty Agreement
Exhibit 1.1(b) Form of HCR Guaranty Agreement
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(i) Form of Joinder Agreement
Exhibit 2.3(ii) Form of Pledge Supplement Agreement
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(d) Form of Officer's Compliance Certificate
Exhibit 7.1(f) Form of Borrowing Base Certificate
Exhibit 11.3(b) Form of Assignment and Acceptance
</TABLE>
iv
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 30, 1999 (as amended,
modified, restated or supplemented from time to time, the "Credit Agreement"),
is by and among the Borrowers (as defined herein), HCR/ALTERRA DEVELOPMENT, LLC,
a Delaware limited liability company (the "Parent"), the Lenders (as defined
herein), BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in such
capacity, the "Administrative Agent"), THE CHASE MANHATTAN BANK, as Syndication
Agent (in such capacity, the "Syndication Agent") and DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES and BANK UNITED, F.S.B., as Co-Agents (in such
capacity, the "Co-Agents").
W I T N E S S E T H
WHEREAS, the Borrowers have requested that the Lenders provide a
$200,000,000 credit facility for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrowers on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" shall have the meaning assigned to such
term in the heading hereof, together with any successors or assigns.
"Administrative Agent's Fee Letter" means that certain letter
agreement, dated as of June 11, 1999, between the Administrative Agent
and the Partners, as amended, modified, restated or supplemented from
time to time.
<PAGE> 7
"Administrative Agent's Fees" shall have the meaning assigned
to such term in Section 3.5(c).
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the Capital
Stock in such Person. For purposes of this definition, "control" when
used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agency Services Address" means Bank of America, N.A.,
Independence Center, 15th Floor, NC1-001-15-04, 101 N. Tryon Street,
Charlotte, North Carolina 28255, Attn: Agency Services, or such other
address as may be identified by written notice from the Administrative
Agent to the Borrowers.
"Alterra" means Alterra Healthcare Corporation, a Delaware
corporation.
"Alterra Guaranty Agreement" means the guaranty agreement
dated as of the Closing Date in the form of Exhibit 1.1(a) executed by
Alterra, as amended, modified, restated or supplemented from time to
time.
"Applicable Lending Office" means, for each Lender, the office
of such Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to the Administrative Agent and the Borrowers
by written notice as the office by which its Eurodollar Loans are made
and maintained.
"Applicable Percentage" means, for any day, the rate per annum
set forth below opposite the applicable Senior Debt Rating then in
effect, it being understood that the Applicable Percentage for (i)
Eurodollar Loans shall be the percentage set forth under the column
"Applicable Percentage for Eurodollar Loans", (ii) Base Rate Loans
shall be the percentage set forth under the column "Applicable
Percentage for Base Rate Loans" and (iii) Unused Fee shall be the
percentage set forth under the column "Applicable Percentage for Unused
Fee". The Applicable Percentage shall be determined based on the Senior
Debt Rating; provided that (a) if either S&P or Moody's shall not have
a Senior Debt Rating for HCR, then the Applicable Percentages shall be
based on Pricing Level IV, (b) if there is a split Senior Debt Rating
with a difference of only one pricing level, then the higher of the two
ratings shall apply and (c) if there is a split Senior Debt Rating with
a difference of more than one pricing level, then the Applicable
Percentages shall be based on the Pricing Level one level below the
Pricing Level corresponding to the higher of the two ratings and both
of the actual Senior Debt Ratings will be disregarded.
2
<PAGE> 8
<TABLE>
<CAPTION>
-------------- ------------------- ------------------ ------------------- ------------------ -------------------
Applicable Applicable Applicable
Percentage for Percentage for Percentage for
Pricing Moody's Rating Eurodollar Loans Base Rate Loans Unused Fee
Level S&P Rating
-------------- ------------------- ------------------ ------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
I >BBB+ >Baa1 1.125% .125% .225%
- -
-------------- ------------------- ------------------ ------------------- ------------------ -------------------
II BBB Baa2 1.375% .375% .25%
-------------- ------------------- ------------------ ------------------- ------------------ -------------------
III BBB- Baa3 1.75% .75% .375%
-------------- ------------------- ------------------ ------------------- ------------------ -------------------
IV <BBB- <Baa3 2.50% 1.50% .50%
-------------- ------------------- ------------------ ------------------- ------------------ -------------------
</TABLE>
The Applicable Percentages shall be determined and adjusted on the date
that the Senior Debt Rating changes (each a "Ratings Date"). Each
Applicable Percentage shall be effective from one Ratings Date until
the next Ratings Date. Any adjustment in the Applicable Percentages
shall be applicable to all existing Loans as well as any new Loans made
or issued.
"Applicant Borrower" shall have the meaning assigned to such
term in Section 2.3.
"As-Stabilized Appraised Value" means with respect to any
Eligible Project being constructed or refinanced by a Borrower using
proceeds of the Loans, the value (as determined pursuant to an
independent appraisal from an appraiser selected by the Administrative
Agent) of such Eligible Project.
"Asset Disposition" means the disposition of any or all of the
assets (including without limitation the Capital Stock of a Subsidiary)
of an Operative Party or any of its Subsidiaries whether by sale,
lease, transfer or otherwise (including pursuant to any casualty or
condemnation event).
"Bank of America" means Bank of America, N.A. and its
successors.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive
3
<PAGE> 9
days; or (iii) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-half of
one percent (0.5%) and (b) the Prime Rate for such day. Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in the
Prime Rate or Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrowers" means a collective reference to the Pool A
Borrowers, the Pool B Borrowers and the Pool C Borrowers, and
"Borrower" means any one of them.
"Borrowing Base" means, at any date of determination, the sum
of the Eligible Project Loan Amounts for the Eligible Projects.
"Borrowing Base Certificate" means a Borrowing Base
Certificate substantially in the form of Exhibit 7.1(f).
"Businesses" shall have the meaning set forth in Section 6.15.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or San
Francisco, California are authorized or required by law to close,
except that, when used in connection with a Eurodollar Loan, such day
shall also be a day on which dealings between banks are carried on in
U.S. dollar deposits in London, England.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of
a partnership, partnership interests (whether general or limited), (iv)
in the case of a limited liability company, membership interests and
(v) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.
4
<PAGE> 10
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, (ii) any domestic commercial bank of
recognized standing having capital and surplus in excess of
$500,000,000 or (iii) any bank whose short-term commercial paper rating
(or its parent's short-term commercial paper rating) from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank being an "Approved Bank"), in
each case with maturities of not more than 365 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within twelve months of the date of acquisition, (d) repurchase
agreements entered into by any Person with a bank or trust company
(including any of the Lenders) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which
such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations and (e) Investments, classified in accordance
with GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which
are administered by reputable financial institutions having capital of
at least $500,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions
(a) through (d).
"Change of Control" means the occurrence of any of the
following events:
(i) HCR shall fail to own and have the right to vote
fifty percent (50%) of the outstanding Voting Stock of the
Parent,
(ii) Alterra shall fail to own and have the right to
vote fifty percent (50%) of the outstanding Voting Stock of
the Parent,
(iii) subject to the terms of Section 8.16, the
Parent shall fail to own and have the right to vote at least
ten percent (10%) of the outstanding Voting Stock of each of
the Pool A Borrowers,
(iv) the Parent shall fail to own and have the right
to vote at least ten percent (10%) of the outstanding Voting
Stock of each of the Pool B Borrowers or
(v) the Parent shall fail to own and have the right
to vote at least ten percent (10%) of the outstanding Voting
Stock of each of the Pool C Borrowers.
"Clare Bridge Jefferson" means Clare Bridge of Jefferson
Township L.P., a Delaware limited partnership.
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<PAGE> 11
"Clare Bridge Palos Heights" means Clare Bridge of Palos
Heights L.P., a Delaware limited partnership.
"Clare Bridge Parma" means Clare Bridge of Parma L.P., a
Delaware limited partnership.
"Clare Bridge Westchase" means Clare Bridge of Westchase L.P.,
a Delaware limited partnership.
"Closing Date" means the date hereof.
"Co-Agents" shall have the meaning assigned to such term in
the heading hereof, together with any successors and assigns.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" means a collective reference to the collateral
which is identified in, and at any time will be covered by, the
Collateral Documents.
"Collateral Documents" means a collective reference to the
Security Agreements, the Pledge Agreement, the Mortgage Documents and
such other documents executed and delivered in connection with the
attachment and perfection of the Administrative Agent's security
interests and liens arising thereunder, including without limitation,
UCC financing statements.
"Commitment" means with respect to each Lender, the Revolving
Commitment of such Lender.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the Alterra Guaranty Agreement, the HCR Guaranty
Agreement, each Joinder Agreement, the Administrative Agent's Fee
Letter, the Collateral Documents and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto (in each case as the same may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to
time), and "Credit Document" means any one of them.
"Credit Parties" means a collective reference to the Borrowers
and the Guarantors, and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (i) all
of the obligations of the Credit Parties to the Lenders and the
Administrative Agent, whenever arising, under this Credit Agreement,
the Notes, the Guaranty Agreements, the Collateral Documents or any of
the other Credit Documents (including, but not limited to, any interest
accruing after the
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<PAGE> 12
occurrence of a Bankruptcy Event with respect to any Credit Party,
regardless of whether such interest is an allowed claim under the
Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from any Borrower to any Lender, or any Affiliate of a
Lender, arising under any Hedging Agreement.
"Debt Service" means, as of any date for the four fiscal
quarter period ending on such date, with respect to any Eligible
Project, the principal and interest payments which would be due and
payable during such four fiscal quarter period (assuming (A) a mortgage
style amortization schedule for a loan equal to such Eligible Project's
Eligible Project Loan Amount (as of the last day of the fiscal quarter
ending five full fiscal quarters following the date of the first
resident occupancy at such Eligible Project) with a term of twenty-five
years and (B) an interest rate equal to the greater of (a) 7.5% per
annum and (b) the then applicable Treasury Rate plus 2.00% per annum).
"Debt Service Coverage Ratio" means, as of the last day of any
fiscal quarter, with respect to any Eligible Project, the ratio of (a)
the Net Operating Income for such Eligible Project to (b) the Debt
Service for such Eligible Project. Notwithstanding the foregoing, (i)
for purposes of calculating the Debt Service Coverage Ratio of an
Eligible Project that has been in operation for five full fiscal
quarters following the date of the first resident occupancy of the
Facility, the Net Operating Income for the four fiscal quarter period
for which Net Operating Income is being calculated shall be deemed to
be the result obtained by multiplying the actual Net Operating Income
of such Eligible Project for the three month period ending as of the
last day of the applicable fiscal quarter end by 4, (ii) for purposes
of calculating the Debt Service Coverage Ratio of an Eligible Project
that has been in operation for six full fiscal quarters following the
date of the first resident occupancy of the Facility, the Net Operating
Income for the four fiscal quarter period for which Net Operating
Income is being calculated shall be deemed to be the result obtained by
multiplying the actual Net Operating Income of such Eligible Project
for the six month period ending as of the last day of the applicable
fiscal quarter end by 2 and (iii) for purposes of calculating the Debt
Service Coverage Ratio of an Eligible Project that has been in
operation for seven full fiscal quarters following the date of the
first resident occupancy of the Facility, the Net Operating Income for
the four fiscal quarter period for which Net Operating Income is being
calculated shall be deemed to be the result obtained by multiplying the
actual Net Operating Income of such Eligible Project for the nine month
period ending as of the last day of the applicable fiscal quarter end
by 1 1/3.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a)
has failed to make a Loan or purchase a Participation Interest required
pursuant to the term of this Credit Agreement within one Business Day
of when due, (b) other than as set forth in (a) above, has failed to
pay to the Administrative Agent or any Lender an amount owed by such
Lender pursuant to the terms of this Credit Agreement within one
Business Day of when due, unless such amount is subject to a good faith
dispute or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or with respect to which (or
7
<PAGE> 13
with respect to any of assets of which) a receiver, trustee or similar
official has been appointed.
"Designated Borrowers" means a collective reference to the
Pool A Designated Borrower, the Pool B Designated Borrower and the Pool
C Designated Borrower, and "Designated Borrower" means any one of them.
"Development Agreements" means a collective reference to the
development agreements identified on Schedule 1.1(a) and any additional
development agreements entered into by a Borrower and HCR or Alterra,
as applicable, with respect to an Eligible Project, and "Development
Agreement" means any one of them.
"Development Budget" means (i) with respect to any Eligible
Project which will be constructed using proceeds of the Loans, the
detailed budget of the cost of the acquisition, if applicable,
development, construction and working capital of such Eligible Project
which has been (a) reviewed by the Engineer and (b) recommended by the
Engineer to the Administrative Agent as an acceptable budget prior to
commencement of construction and (ii) with respect to any Eligible
Project which will be refinanced using proceeds of the Loans, the
detailed budget of the cost of development, construction and working
capital of such Eligible Project which has been (a) reviewed by the
Engineer and (b) recommended by the Engineer to the Administrative
Agent as an acceptable budget prior to such refinancing.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the
laws of any State of the United States or the District of Columbia.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender or any fund that invests in bank loans and is managed by an
investment advisor to a Lender; and (iii) any other commercial bank,
financial institution, other "accredited investor" (as defined in
Regulation D of the Securities Act of 1933, as amended) or "qualified
institutional buyer" (as defined in Rule 144A of the Securities Act of
1933, as amended) approved by the Administrative Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 11.3, the Designated
Borrowers (such approval by the Administrative Agent or the Designated
Borrowers not to be unreasonably withheld or delayed and such approval
to be deemed given by the Designated Borrowers if no objection is
received by the assigning Lender and the Administrative Agent from the
Designated Borrowers within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender to the
Designated Borrowers); provided, however, that neither a Credit Party
nor an Affiliate of any Credit Party shall qualify as an Eligible
Assignee.
"Eligible Project" means any Facility that (i)(a) has been
proposed to be acquired and/or constructed by a Borrower using proceeds
of the Loans or (b) is owned by such
8
<PAGE> 14
Borrower and has been proposed to be refinanced by such Borrower using
the proceeds of the Loans and (ii) satisfies each of following
conditions:
(a) such Facility shall be located or is located, as
applicable, within HCR's Core Market;
(b) except for the Facilities located on the Pool B
Properties identified on Schedule 2.1(a)(ii), the
Administrative Agent shall have received an appraisal (in form
and substance satisfactory to the Administrative Agent) with
respect to such Facility from a qualified appraiser
satisfactory to the Administrative Agent (if the
Administrative Agent does not receive an appraisal for any of
Pool B Properties identified on Schedule 2.1(a)(ii) in
accordance with the terms of Section 7.l8, such Facilities
located on such Pool B Properties shall cease to be Eligible
Projects) and;
(c) the Administrative Agent shall have received an
environmental assessment (in form and substance satisfactory
to the Administrative Agent) of the property where such
Facility will be constructed or is located, as applicable,
from a consulting firm acceptable to the Administrative Agent;
(d) for each Facility to be constructed using
proceeds of the Loans, the Administrative Agent shall have
received a set of plans and specifications for the
construction of such Facility in form and substance
satisfactory to the Administrative Agent;
(e) for each Facility (other than the Facilities
owned by the Initial Pool A Borrowers), the Engineer and the
Administrative Agent shall have received a Development Budget
for such Facility, and the Engineer shall have recommended to
the Administrative Agent that such Development Budget is
satisfactory in form and substance to the Engineer (the
Lenders have agreed to accept the Development Budgets provided
to the Administrative Agent for the Facilities owned by the
Initial Pool A Borrowers);
(f) (i) for each Facility to be constructed using
proceeds of the Loans, the Administrative Agent shall have
received projections for such Facility for the two year period
subsequent to its construction completion date satisfactory in
form and substance to the Administrative Agent and (ii) for
each Facility to be refinanced using proceeds of the Loans,
the Administrative Agent shall have received satisfactory
projections for such Facility for the two year period
subsequent to the refinancing satisfactory in form and
substance to the Administrative Agent;
(g) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
fully executed and notarized Mortgage in favor of the
Administrative Agent encumbering the ownership interest of the
applicable Borrower in the property where such Facility is
located, together with
9
<PAGE> 15
such UCC-1 financing statements as the Administrative Agent
shall deem appropriate with respect to the property;
(h) the Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, an opinion of counsel in the state in
which such Facility is located with respect to the
enforceability of the form of Mortgage and sufficiency of the
form of UCC-1 financing statements to be recorded or filed in
such state and such other matters as the Administrative Agent
may request, in form and substance reasonably satisfactory to
the Administrative Agent;
(i) the Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, a title insurance policy from a title
insurer reasonably satisfactory to the Administrative Agent in
an amount satisfactory to the Administrative Agent with
respect to the property where such Facility is located,
assuring the Administrative Agent that the applicable Mortgage
creates a valid and enforceable first priority mortgage lien
on the property where such Facility is located, free and clear
of all defects and encumbrances except Permitted Liens, such
title insurance policy to contain such coverage and
endorsements as shall be reasonably satisfactory to the
Administrative Agent, all of the foregoing in form and
substance reasonably satisfactory to the Administrative Agent;
(j) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent,
map or plat of a survey of the site of the property where such
Facility is located certified to the Administrative Agent and
the applicable title insurer in a manner satisfactory to them,
dated a date satisfactory to the Administrative Agent and the
applicable title insurer by an independent professional
licensed land surveyor reasonably satisfactory to the
Administrative Agent and the applicable title insurer, and
otherwise in form and substance satisfactory to the
Administrative Agent;
(k) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
current certification from the applicable Borrower's
registered engineer land surveyor as to whether such Facility
or any other improvements on the applicable property are
located within any area designated by the Director of the
Federal Emergency Management Agency as a "special flood
hazard" area and if any improvements on such parcel are
located within a "special flood hazard" area, evidence of a
flood insurance policy from a company and in an amount
satisfactory to the Administrative Agent for the applicable
portion of the property, naming the Administrative Agent, for
the benefit of the Lenders, as mortgagee;
(l) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
subordination and assignment of management agreement with
respect to such Facility;
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<PAGE> 16
(m) (i) with respect to each Facility owned by a Pool
A Borrower, the Administrative Agent shall have received
documents to ensure that such Facility secures the obligations
of all Pool A Borrowers under the Credit Documents, (ii) with
respect to each Facility owned by a Pool B Borrower, the
Administrative Agent shall have received documents to ensure
that such Facility secures the obligations of all Pool B
Borrowers under the Credit Documents and (iii) with respect to
each Facility owned by a Pool C Borrower, the Administrative
Agent shall have received documents to ensure that such
Facility secures the obligations of all Pool C Borrowers under
the Credit Documents;
(n) the Administrative Agent shall have received a
certified copy of the construction contract with respect to
such Facility; and
(o) the Administrative Agent shall have received a
certified copy of the Management Agreement with respect to
such Facility.
Notwithstanding the foregoing, if a Facility satisfies each of the
conditions identified in subclauses (a) through (o) above of this
definition of "Eligible Project" but is not fully constructed and open
for business within fifteen months of the commencement of construction
of such Facility, such Facility shall no longer be considered an
Eligible Project for purposes of this Credit Agreement.
"Eligible Project Loan Amount" means, at any date of
determination with respect to an Eligible Project, an amount for such
Eligible Project equal to the lesser of:
(a) 75% of such Eligible Project's As-Stabilized
Appraised Value; and
(b) 80% of that portion of such Eligible
Project's Development Budget which has been
incurred to date.
Notwithstanding the foregoing, with respect to any Eligible Project
identified on Schedule 2.1(a)(ii), the Eligible Project Loan Amount for
such Eligible Project shall be based solely on 80% of that portion of
such Eligible Project's Development Budget which has been incurred to
date until such time as the appraisal for such Eligible Project is
delivered to the Administrative Agent in accordance with the terms of
Section 7.18
"Engineer" means PACS, Inc. who will serve as the
Administrative Agent's engineer responsible for (i) reviewing the
Development Budgets submitted by the Borrowers pursuant to the terms
hereof and (ii) making a recommendation to the Administrative Agent as
to whether or not a particular Development Budget is satisfactory in
form and substance.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened
11
<PAGE> 17
releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment including,
without limitation, ambient air, surface water, ground water, or land,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Operative Party or any of its Subsidiaries within the
meaning of Section 4001(a)(14) of ERISA, or is a member of a group
which includes any Operative Party or any of its Subsidiaries and which
is treated as a single employer under Sections 414(b) or (c) of the
Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by any Operative Party or any of its Subsidiaries 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;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Operative Party or any of its Subsidiaries or any ERISA Affiliate from
a Multiemployer Plan; (vii) the conditions for imposition of a lien
under Section 302(f) of ERISA exist with respect to any Plan; or (viii)
the adoption of an amendment to any Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate
based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Administrative
Agent to be equal to the quotient obtained by dividing (a) the
Interbank Offered Rate for such Eurodollar Loan for such Interest
Period by (b) 1 minus the Eurodollar Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the
maximum rate at which reserves (including, without limitation, any
marginal, special, supplemental, or emergency reserves) are required to
be maintained under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) by member
banks of
12
<PAGE> 18
the Federal Reserve System against "Eurodollar liabilities" (as such
term is used in Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes deposits by reference to
which the Adjusted Eurodollar Rate is to be determined, or (ii) any
category of extensions of credit or other assets which include
Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Requirement.
"Event of Default" shall have the meaning as defined in
Section 9.1(a).
"Executive Officer" of any Person means any of the chief
executive officer, chief operating officer, president, vice president,
chief financial officer or treasurer of such Person.
"Existing Properties" shall have the meaning set forth in
Section 5.1(e)(i).
"Facility" and "Facilities" means, individually or
collectively, an assisted living facility, alzheimers or dementia care
facility or independent living facility owned or to be developed by one
of the Borrowers.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent (in its individual capacity) on
such day on such transactions as determined by the Administrative
Agent.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantors" means a collective reference to HCR, Alterra and
the Parent, and "Guarantor" means any one of them.
"Guaranty Agreements" means a collective reference to the
Alterra Guaranty Agreement and the HCR Guaranty Agreement.
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<PAGE> 19
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"HCR" means Manor Care, Inc. (formerly known as HCR Manor
Care, Inc.), a Delaware corporation.
"HCR's Core Market" means any geographic area falling within a
fifty mile radius of any assisted living, dementia care or long-term
care facility operated, at the time of determination, by HCR, Alterra
or their respective controlled affiliates within the states of
Connecticut, Delaware, Florida, Illinois, Indiana, Kentucky, Maryland,
Michigan, New Jersey, New York, Ohio, Pennsylvania, Texas, Virginia and
Wisconsin.
"HCR Credit Agreement" means, that certain Credit Agreement
dated as of September 25, 1998 among HCR, Manor Care, Bank of America,
as administrative agent, The Chase Manhattan Bank, as syndication
agent, TD Securities (USA) Inc., as documentation agent and the other
financial institutions party thereto, as amended, modified,
supplemented or restated from time to time.
"HCR Guaranty Agreement" means the guaranty agreement dated as
of the Closing Date in the form of Exhibit 1.1(b) executed by HCR, as
amended, modified, restated or supplemented from time to time.
"Health Care Retirement Corporation" means Health Care and
Retirement Corporation of America (a wholly-owned subsidiary of HCR),
an Ohio corporation.
"Hedging Agreement" means any interest rate protection
agreement or foreign currency exchange agreement.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are
14
<PAGE> 20
customarily made, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to Property purchased
by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or
assumed as the deferred purchase price of Property or services
purchased by such Person (other than trade debt incurred in the
ordinary course of business and due within six months of the incurrence
thereof or such longer period, if the payment of which is being
contested in good faith) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all Guaranty
Obligations of such Person, (h) the principal portion of all
obligations of such Person under Capital Leases, (i) all obligations of
such Person under Hedging Agreements, (j) all obligations of such
Person to repurchase any securities which repurchase obligation is
related to the issuance thereof, (k) the maximum amount of all standby
letters of credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all drafts drawn
thereunder (to the extent unreimbursed), (l) all preferred Capital
Stock issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due, by a
fixed date, (m) all other obligations of such person under any
arrangement or financing structure classified as debt (for tax
purposes) by any nationally recognized rating agency, (n) the principal
portion of all obligations of such Person under Synthetic Leases and
(o) the Indebtedness of any partnership or unincorporated joint venture
in which such Person is a general partner or a joint venturer.
"Initial Pool A Borrowers" means a collective reference to the
Pool A Borrowers identified on Schedule 1.1(c).
"Initial Pool A Subordinated Debt" means the unsecured
indebtedness in the amounts identified on Schedule 8.1(e) incurred by
each of the Initial Pool A Borrowers (other than Clare Bridge Parma and
Clare Bridge Westchase) pursuant to promissory notes satisfactory in
form and substance to the Administrative Agent.
"Interbank Offered Rate" means, for any Eurodollar Loan 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 "Interbank Offered Rate" shall mean, for any
Eurodollar Loan 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
15
<PAGE> 21
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%).
"Interest Payment Date" means (a) as to Base Rate Loans, the
last day of each calendar month, the date of repayment of principal of
such Loan and the Maturity Date, and (b) as to Eurodollar Loans, the
last day of each applicable Interest Period, the date of repayment of
principal of such Loan and the Maturity Date, and in addition where the
applicable Interest Period for a Eurodollar Loan is greater than three
months, then also the date three months from the beginning of the
Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the applicable Designated
Borrower may elect, commencing, in each case, on the date of the
borrowing (including continuations and conversions thereof); provided,
however, (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 and (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.
"Investment" means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or
otherwise) of assets, Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of any Person or (b) any deposit with, or advance, loan or
other extension of credit to, any Person (other than (i) deposits made
in connection with the purchase of services, equipment or other assets
in the ordinary course of business and (ii) trade debt) or (c) any
other capital contribution to or investment in any Person, including,
without limitation, any Guaranty Obligations (including any support for
a letter of credit issued on behalf of such Person) incurred for the
benefit of such Person.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Exhibit 2.3(i) hereto, executed and delivered by an
Applicant Borrower in accordance with the provisions of Section 2.3.
"Lender" means any of the Persons identified as a "Lender" on
the signature pages hereto, and any Person which may become a Lender by
way of assignment in accordance with the terms hereof, together with
their successors and permitted assigns.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
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"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan bearing interest at the Adjusted Base Rate or the
Adjusted Eurodollar Rate) individually or collectively, as appropriate.
"Management Agreements" means a collective reference to the
management agreements identified on Schedule 1.1(b) and any additional
management agreements entered into by a Borrower and Alterra with
respect to an Eligible Project, and "Management Agreement" means any
one of them.
"Manor Care" means Manor Care of America, Inc. (formerly
known as Manor Care, Inc.), a Delaware corporation.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets or liabilities of HCR and its Subsidiaries taken as a whole,
(ii) the condition (financial or otherwise), operations, business,
assets or liabilities of Alterra and its Subsidiaries taken as a whole,
(iii) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of any Operative Party or any of its
Subsidiaries, (iv) the ability of any Credit Party to perform any
material obligation under the Credit Documents to which it is a party
or (v) the material rights and remedies of the Lenders under the Credit
Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Maturity Date" means September 30, 2002, as such date may be
extended pursuant to Section 2.2.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Mortgage" shall have the meaning given to such term in
Section 5.1(e)(i).
"Mortgage Policy" shall have the meaning given to such term in
Section 5.1(e)(ii).
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which any Operative
Party or any of its Subsidiaries or any ERISA Affiliate and at least
one employer other than an Operative Party or any of its Subsidiaries
or any ERISA Affiliate are contributing sponsors.
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"Net Operating Income" means, as of any date for the four
fiscal quarter period ending on such date with respect to any Eligible
Project, the amount equal to (a) the total operating revenue with
respect to the operation of such Eligible Project for such period less
(b) total operating expenses with respect to the operation of such
Eligible Project for such period (excluding any (i) management fees or
(ii) interest paid during such period with respect to Loans used to
construct and/or develop such Eligible Project) plus (c) an amount
which, in the determination of total operating expenses for such period
has been deducted for (i) total taxes with respect to such Eligible
Project for such period and (ii) depreciation and amortization with
respect to such Eligible Project for such period less (d) a replacement
reserve equal to $250 per year per bed in such Eligible Project less
(e) an amount equal to 5% of total operating revenue with respect to
the operation of such Eligible Project for such period.
"New Property" means any Facility owned by a Borrower which
qualifies as an Eligible Project subsequent to the Closing Date.
"Note" or "Notes" means the Revolving Notes, individually or
collectively, as appropriate.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Exhibit 2.1(b)(i), as required by Section
2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Exhibit 3.2, as
required by Section 3.2.
"Occupancy Rate" means for each Eligible Project, the ratio
(expressed as a percentage) equal to (a) the number of individuals
paying fees pursuant to a residency agreement entitling them to
residency at such Eligible Project to (b) the pro forma resident
occupancy for such Eligible Project, as contained in the projections
for such Eligible Project reviewed and approved by the Administrative
Agent at the time such Facility is admitted as an Eligible Project.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Operative Parties" means a collective reference to the
Borrowers and the Parent, and "Operative Party" means any one of them.
"Other Taxes" shall have the meaning assigned to such term in
Section 3.11.
"Parent" means HCR/Alterra Development, LLC, a Delaware
limited liability company.
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"Parma Vacant Land" means that certain vacant portion of land
at the Existing Property in Parma, Ohio, generally located west of the
East Ohio Gas Easement (as shown on the current survey of the Existing
Property in Parma, Ohio), which, prior to its release pursuant to
Section 11.7(a), is to be identified to the Administrative Agent
pursuant to a metes and bounds legal description and survey
satisfactory in form and substance to the Administrative Agent.
"Participation Interest" means a purchase by a Lender in any
Loans as provided in Section 3.14.
"Partners" means the collective reference to HCR and
Alterra and "Partner" means any one of them.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made by any Operative Party in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(iii) equity investments by the Parent in any Pool A Borrower; (iv)
equity investments by the Parent in any Pool B Borrower, (v) equity
investments by the Parent in any Pool C Borrower and (vi) equity
investments by the Parent in Clare Bridge Palos Heights so long as (A)
Clare Bridge Palos Heights becomes a Borrower hereunder in accordance
with the terms of Section 2.3 on or before December 31, 1999 and (B)
the real property presently owned by Clare Bridge Palos Heights is
subdivided in accordance with applicable law and in a manner acceptable
to the Administrative Agent in its reasonable discretion on or before
December 31, 1999. It is understood and agreed that the Parent will
make equity investments in certain of the Borrowers simultaneously with
such Borrowers becoming Borrowers hereunder in accordance with the
terms of Section 2.3. It is also understood and agreed that the Parent
will need to make equity investments in certain Persons prior to their
becoming a Borrower hereunder. Such investment shall be considered a
Permitted Investment so long as such Person becomes a Borrower
hereunder in accordance with the terms of Section 2.3 within 30 days of
the initial investment by the Parent in such Person.
"Permitted Liens" means:
(i) Liens in favor of the Administrative Agent for the
benefit of the Lenders to secure the Credit Party Obligations;
(ii) Liens (other than Liens created or imposed under ERISA)
for taxes, assessments or governmental charges or levies not yet due or
Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account
thereof);
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(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, provided that such
Liens secure only amounts not yet due and payable or, if due and
payable, are unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such Lien
is not yet subject to foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Operative Party in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the judgments
secured shall, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have
been discharged within 30 days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including present
and future zoning restrictions), minor defects or irregularities in
title and other similar charges or encumbrances not, in any material
respect, impairing the use of the encumbered Property for its intended
purposes;
(vii) Liens on Property of any Borrower securing purchase
money Indebtedness (including Capital Leases) of such Borrower to the
extent permitted under Section 8.1(c), provided that any such Lien
attaches to such Property concurrently with or within 90 days after the
acquisition thereof;
(viii) leases or subleases granted to others not interfering
in any material respect with the business of any Operative Party;
(ix) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions; and
(x) rights reserved to or vested in any Governmental Authority
by law to control or regulate, or obligations under law to any
Governmental Authority with respect to the use of any Property or to
any right, power, franchise, license or permit.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
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"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Operative Party or any of its Subsidiaries or any ERISA Affiliate is
(or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" within the meaning of
Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as of the
Closing Date executed in favor of the Administrative Agent by the
Parent, as amended, modified, restated or supplemented from time to
time.
"Pool A Borrowers" means a collective reference to each of the
Borrowers identified on Schedule 1.1(c) and such other Persons as may
become Pool A Borrowers hereunder in accordance with the provisions of
Section 2.3, and "Pool A Borrower" means any one of them.
"Pool A Collateral" means a collective reference to the
Collateral pledged to the Administrative Agent, for the benefit of the
Lenders, by the Pool A Borrowers pursuant to the Collateral Documents.
"Pool A Designated Borrower" means Clare Bridge of Tuscawilla
L.P., a Delaware limited partnership.
"Pool A Event of Default" shall have the meaning given to such
term in Section 9.1(b).
"Pool A Loans" means the Revolving Loans (or a portion of any
Revolving Loan bearing interest at the Adjusted Base Rate or the
Adjusted Eurodollar Rate) made to the Pool A Borrowers individually or
collectively, as appropriate.
"Pool A Obligations" means, without duplication, (i) all of
the obligations of the Pool A Borrowers to the Lenders and the
Administrative Agent, whenever arising, under this Credit Agreement,
the Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited, to, any interest accruing after
the occurrence of a Bankruptcy Event with respect to any Pool A
Borrower, regardless of whether such interest is an allowed claim under
the Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from any Pool A Borrower to any Lender, or any Affiliate
of a Lender, arising under any Hedging Agreement.
"Pool A Properties" means a collective reference to those Real
Properties owned by the Pool A Borrowers, and "Pool A Property" means
any one of them.
"Pool A Security Agreement" means the Pool A Security
Agreement dated as of the Closing Date executed in favor of the
Administrative Agent by the Pool A Borrowers, as amended, modified,
restated or supplemented from time to time.
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"Pool B Borrowers" means a collective reference to such
Persons as may become Pool B Borrowers hereunder in accordance with the
provisions of Section 2.3, and "Pool B Borrower" means any of them.
"Pool B Collateral" means a collective reference to the
Collateral pledged to the Administrative Agent, for the benefit of the
Lenders, by the Pool B Borrowers pursuant to the Collateral Documents.
"Pool B Designated Borrower" means that certain Pool B
Borrower designated by the other Pool B Borrowers to deliver Notices of
Borrowing and/or Notices of Extension/Conversion on behalf of all Pool
B Borrowers.
"Pool B Event of Default" shall have the meaning given to such
term in Section 9.1(c).
"Pool B Loans" means the Revolving Loans (or a portion of any
Revolving Loan bearing interest at the Adjusted Base Rate or the
Adjusted Eurodollar Rate) made to the Pool B Borrowers individually or
collectively, as appropriate.
"Pool B Obligations" means, without duplication, (i) all of
the obligations of the Pool B Borrowers to the Lenders and the
Administrative Agent, whenever arising, under this Credit Agreement,
the Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited, to, any interest accruing after
the occurrence of a Bankruptcy Event with respect to any Pool B
Borrower, regardless of whether such interest is an allowed claim under
the Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from any Pool B Borrower to any Lender, or any Affiliate
of a Lender, arising under any Hedging Agreement.
"Pool B Properties" means a collective reference to those Real
Properties owned by the Pool B Borrowers, and "Pool B Property" means
any one of them.
"Pool B Security Agreement" means the security agreement to be
executed by the Pool B Borrowers in favor of the Administrative Agent,
as amended, modified, restated or supplemented from time to time.
"Pool C Borrower" means a collective reference to such Persons
as may become Pool C Borrowers hereunder in accordance with the
provisions of Section 2.3, and "Pool C Borrower" means any one of them.
"Pool C Collateral" means a collective reference to the
Collateral pledged to the Administrative Agent, for the benefit of the
Lenders, by the Pool C Borrowers pursuant to the Collateral Documents.
"Pool C Designated Borrower" means that certain Pool C
Borrower designated by the other Pool C Borrowers to deliver Notices of
Borrowing and/or Notices of Extension/Conversion on behalf of all Pool
C Borrowers.
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"Pool C Event of Default" shall have the meaning given to such
term in Section 9.1(d).
"Pool C Loans" means the Revolving Loans (or a portion of any
Revolving Loan bearing interest at the Adjusted Base Rate or the
Adjusted Eurodollar Rate) made to the Pool C Borrowers, individually or
collectively, as appropriate.
"Pool C Obligations" means, without duplication, (i) all of
the obligations of the Pool C Borrowers to the Lenders and the
Administrative Agent, whenever arising, under this Credit Agreement,
the Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited, to, any interest accruing after
the occurrence of a Bankruptcy Event with respect to any Pool C
Borrower, regardless of whether such interest is an allowed claim under
the Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from any Pool C Borrower to any Lender, or any Affiliate
of a Lender, arising under any Hedging Agreement.
"Pool C Properties" means a collective reference to those Real
Properties owned by the Pool C Borrowers, and "Pool C Property" means
any one of them.
"Pool C Security Agreement" means the security agreement to be
executed by the Pool C Borrowers in favor of the Administrative Agent,
as amended, modified, restated or supplemented from time to time.
"Prime Rate" means the per annum rate of interest established
from time to time by Bank of America as its prime rate, which rate may
not necessarily be the lowest rate of interest charged by Bank of
America to its customers.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Real Properties" means the collective reference to the
Existing Properties and the New Properties, and "Real Property" means
any one of them.
"Register" shall have the meaning given such term in Section
11.3(c).
"Regulation T, U, or X" means Regulation T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles) of any
Materials of Environmental Concern.
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"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders holding in the
aggregate more than 50% of (i) the Revolving Commitments (and
Participation Interests therein) or (ii) if the Revolving Commitments
have been terminated, the outstanding Loans and Participation
Interests, provided that the Revolving Commitments of and the
outstanding principal amount of Revolving Loans and Participation
Interests owing to a Defaulting Lender shall be excluded for purposes
hereof in making a determination of Required Lenders.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Restricted Payment" means (i) any dividend or other payment
or distribution, direct or indirect, on account of any shares of any
class of Capital Stock of any Operative Party or any of its
Subsidiaries, now or hereafter outstanding (including without
limitation any payment in connection with any merger or consolidation
involving any Operative Party or any of its Subsidiaries), or to the
direct or indirect holders of any shares of any class of Capital Stock
now or hereafter outstanding of any Operative Party or any of its
Subsidiaries in their capacity as such holder (other than dividends or
distributions payable in the same class of Capital Stock of the
applicable Person or to any Operative Party (directly or indirectly
through Subsidiaries), (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of any Operative
Party or any of its Subsidiaries, now or hereafter outstanding and
(iii) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of Capital Stock of any Operative Party or any of its
Subsidiaries, now or hereafter outstanding.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of
the Revolving Committed Amount to make Revolving Loans in accordance
with the provisions of Section 2.1(a).
"Revolving Commitment Percentage" means, for any Lender, the
percentage identified as its Revolving Commitment Percentage on
Schedule 2.1(a)(i), as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section
11.3.
"Revolving Committed Amount" means Two Hundred Million Dollars
($200,000,000) (as such aggregate maximum amount may be reduced from
time to time as provided in Section 3.4).
"Revolving Loans" shall have the meaning assigned to such term
in Section 2.1(a).
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"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrowers in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1(e), individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or replaced from
time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to any Operative Party or any of its
Subsidiaries of any Property, whether owned by such Operative Party or
any of its Subsidiaries as of the Closing Date or later acquired, which
has been or is to be sold or transferred by such Operative Party or any
of its Subsidiaries to such Person or to any other Person from whom
funds have been, or are to be, advanced by such Person on the security
of such Property.
"Security Agreements" means a collective reference to the Pool
A Security Agreement, the Pool B Security Agreement and the Pool C
Security Agreement.
"Senior Debt" shall have the meaning given such term in the
definition of Senior Debt Rating.
"Senior Debt Rating" means (i) the publicly announced rating
by S&P for the senior unsecured revolving bank debt of HCR and (ii) the
publicly announced rating by Moody's for the senior unsecured revolving
bank debt of HCR ("Senior Debt").
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair salable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such
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time, represents the amount that can reasonably be expected to become
an actual or matured liability.
"Stabilized Eligible Project" means an Eligible Project that
(i) has been in operation for at least five full fiscal quarters
following the date of the first resident occupancy of such Eligible
Project and (ii) has a Debt Service Coverage Ratio of at least 1.15 to
1.0.
"Subsidiary" means, as to any Person at any time, (a) any
corporation more than 50% of whose Capital Stock of any class or
classes having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of whether
or not at such time, any class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at such time owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership, association,
joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock.
"Syndication Agent" shall have the meaning assigned to such
term in the heading hereof, together with any successors and assigns.
"Synthetic Lease" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease
for purposes of GAAP.
"Taxes" shall have the meaning assigned to such term in
Section 3.11.
"Treasury Rate" means, for any day, a rate of interest equal
to the yield for actively traded U.S. Treasury securities having a ten
(10) year maturity as determined by the Administrative Agent prior to
9:00 a.m. Charlotte, North Carolina time.
"Title Insurance Company" shall have the meaning given to such
term in Section 5.1(e)(ii).
"Unused Fee" shall have the meaning assigned to such term in
Section 3.5(b).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(b).
"Unused Revolving Committed Amount" means, for any period, the
amount by which (a) the then applicable Revolving Committed Amount
exceeds (b) the daily average sum for such period of the outstanding
aggregate principal amount of all Revolving Loans.
"Upfront Fee" shall have the meaning assigned to such term in
Section 3.5(a).
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"Voting Stock" means, with respect to any Person, Capital
Stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary
100% of whose Voting Stock is at the time owned by such Person directly
or indirectly through other Wholly Owned Subsidiaries.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements as at December 31, 1998); provided,
however, if (a) the Operative Parties shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Administrative Agent or the Required Lenders shall so object in writing
within 60 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Operative Parties to the Lenders as to which no such
objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Revolving Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set
forth herein, each Lender severally agrees to make available to the
Borrowers such Lender's Revolving Commitment Percentage of revolving
credit loans requested by the Borrowers in Dollars ("Revolving Loans")
from time to time from the Closing Date until the Maturity Date, or
such earlier date as the Revolving Commitments shall have been
terminated as provided herein; provided, however, that (i) with regard
to the Lenders collectively, the sum of the aggregate principal amount
of Revolving Loans outstanding shall not exceed the lesser of (x) the
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Revolving Committed Amount and (y) the Borrowing Base, (ii) with regard
to each Lender individually, the amount of such Lender's Revolving
Commitment Percentage of the sum of the Revolving Loans shall not
exceed such Lender's Revolving Committed Amount, (iii) the sum of the
aggregate principal amount of Revolving Loans outstanding with respect
to any Eligible Project shall not exceed such Eligible Project's
Eligible Project Loan Amount and (iv) a Revolving Loan borrowing shall
only be made available once per calendar month; provided, however (A)
the Borrowers may make additional Revolving Loan borrowings during a
calendar month so long as the Loan proceeds received by the Borrowers
from such Revolving Loan borrowings are used solely to make interest
payments in accordance with the terms hereof and (B) the Pool B
Borrowers may make two (2) additional Revolving Loan borrowings prior
to October 31, 1999 in order to refinance the Pool B Properties
identified on Schedule 2.1(a)(ii). Revolving Loans may consist of Base
Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrowers may request; provided, however, that no more than twelve
Eurodollar Loans (other than Eurodollar Loans outstanding which have
been used by the Borrowers solely to make interest payments required
hereunder) shall be outstanding hereunder at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different
Interest Periods shall be considered as separate Eurodollar Loans, even
if they begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new Eurodollar
Loan with a single Interest Period). Revolving Loans hereunder may be
repaid and reborrowed in accordance with the provisions hereof. Other
than any Revolving Loans used to refinance an Eligible Project already
open for business, no Revolving Loans shall be made available to any
Borrower with respect to any Eligible Project which has been in
operation for five full fiscal quarters following the date of the first
resident occupancy of such Eligible Project.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. A Designated Borrower shall
request a Revolving Loan borrowing by written notice (or
telephonic notice promptly confirmed in writing) to the
Administrative Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the sixth Business Day prior to the
date of the requested borrowing in the case of Base Rate Loans
(other than the initial borrowing of Base Rate Loans on the
Closing Date which will require notice to be delivered on the
Closing Date), and on the eighth Business Day prior to the
date of the requested borrowing in the case of Eurodollar
Loans. Each such request for borrowing shall be irrevocable
and shall specify (A) that a Revolving Loan is requested, (B)
the date of the requested borrowing (which shall be a Business
Day), (C) the aggregate principal amount to be borrowed, (D) a
breakdown of (I) the amount of such Revolving Loan which each
applicable Borrower is actually borrowing and (II) the
Eligible Project for which each such portion of the Revolving
Loan is being used, and (E) whether the borrowing shall be
comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested,
the Interest Period(s) therefor. Each Notice of Borrowing
shall also be accompanied by (x) copies of invoices
substantiating the soft costs of the Borrowers and (y) a
schedule designating which Eligible Projects and which
expenditure categories with respect to
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such Eligible Projects such Revolving Loans will be used to
pay by the applicable Borrowers; provided, however, subject to
the terms of Section 8.15, a Revolving Loan advance may be
used by an applicable Borrower to make payment on a specific
expenditure category in an amount in excess of the amount
designated for such expenditure category in the applicable
Development Budget, so long as there has been a demonstrated
cost savings in one or more specific expenditure categories in
an amount equal to or greater than such excess payment. If a
Designated Borrower shall fail to specify in any such Notice
of Borrowing (I) an applicable Interest Period in the case of
a Eurodollar Loan, then such notice shall be deemed to be a
request for an Interest Period of one month, or (II) the type
of Revolving Loan requested, then such notice shall be deemed
to be a request for a Base Rate Loan hereunder. The
Administrative Agent shall give notice to each affected Lender
promptly upon receipt of each Notice of Borrowing pursuant to
this Section 2.1(b)(i), the contents thereof and each such
Lender's share of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Base Rate Loan shall be in
a minimum aggregate principal amount of $500,000 and integral
multiples of $100,000 in excess thereof (or the remaining
amount of the Revolving Committed Amount, if less). Each
Eurodollar Loan shall be in a minimum aggregate principal of
$1,000,000 and integral multiples of $100,000 in excess
thereof (or the remaining amount of the Revolving Committed
Amount, if less).
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing
available to the Administrative Agent for the account of a
Borrower as specified in Section 3.15(a), or in such other
manner as the Administrative Agent may specify in writing, by
11:00 A.M. (Charlotte, North Carolina time) on the date
specified in the applicable Notice of Borrowing in Dollars and
in funds immediately available to the Administrative Agent.
Such borrowing will then be made available to the Designated
Borrowers by the Administrative Agent on the date specified in
the applicable Notice of Borrowing by crediting the account of
the Designated Borrowers on the books of such office with the
aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the
Administrative Agent.
(iv) Development Fees. The Lenders will make Loan
advances to reimburse the appropriate Borrowers' development
fees owing to HCR and/or Alterra with respect to the Eligible
Projects; provided, however with respect to any development
fees owing to HCR and/or Alterra on Eligible Projects which
have not been fully constructed, Loan advances to reimburse
such development fees will be made in the following manner:
(A) From and after such time as site zoning and
permitting and site acquisition have occurred with
respect to an Eligible Project, the Borrower may use
Loan proceeds in an amount up to 5% of the applicable
projected all-in project costs as set forth in the
applicable Development
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<PAGE> 35
Budget with respect to an Eligible Project to pay the
development fee with respect to an Eligible Project;
and
(B) From and after such time as a
certificate of occupancy has been issued for an
Eligible Project, the Borrower may use Loan proceeds
to pay development fees with respect to such Eligible
Project in an amount equal to the difference between
(I) 7% of the applicable projected all-in project
costs as set forth in the applicable Development
Budget with respect to an Eligible Project minus (II)
the amount of Loan proceeds used to pay the
development fees with respect to such Eligible
Project pursuant to subsection (iv)(A) above.
Provided, however, it is understood and agreed that
Loan advances used to pay development fees with
respect to an Eligible Project shall not exceed 7% of
the applicable projected all-in project costs on such
Eligible Project.
(c) Repayment. The principal amount of all Revolving
Loans shall be due and payable in full on the Maturity Date,
unless accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate
Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the Adjusted Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(e) Revolving Notes. The Revolving Loans made by each
Lender shall be evidenced by a duly executed promissory note of the
Borrowers to such Lender in an original principal amount equal to such
Lender's Revolving Commitment Percentage of the Revolving Committed
Amount and in substantially the form of Exhibit 2.1(e).
2.2 EXTENSION OF MATURITY DATE.
(a) First Extension. Not more than 15 months and not less
than 90 days prior to the date occurring three years from the Closing
Date, the Credit Parties may request in writing that the Lenders extend
the Maturity Date for an additional one year period (the "First
Extended Maturity Date"). The Maturity Date shall be extended for an
additional one year period if (i) each of the Lenders has approved such
extension in writing and (ii) the Borrowers shall have paid to each
Lender an extension fee in an amount equal to 0.15% of the Revolving
Commitment of each Lender.
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<PAGE> 36
(b) Second Extension. If the Maturity Date has been
extended to the First Extended Maturity Date, not more than 12 months
and not less than 90 days prior to the First Extended Maturity Date,
the Credit Parties may request in writing that the Lenders extend the
Maturity Date for a second one year period. The Maturity Date shall be
extended for a second one year period (the "Second Extended Maturity
Date") if (i) each of the Lenders has approved such extension in
writing and (ii) the Borrowers shall have paid to each Lender an
extension fee in an amount equal to 0.15% of the Revolving Commitment
of each Lender.
2.3 ADDITIONAL BORROWERS.
The Parent may request designation of any Person (an "Applicant
Borrower") as a Borrower hereunder by delivery of such a request to the
Administrative Agent together with a Joinder Agreement executed by such
Applicant Borrower in substantially the form attached as Exhibit 2.3(i). Such
request shall include a designation of whether such Borrower will be a Pool A
Borrower, a Pool B Borrower or a Pool C Borrower. The Administrative Agent will
promptly notify the Lenders of any such request together with a copy of the
Joinder Agreement executed by the Applicant Borrower. The joinder of each
Applicant Borrower as a Borrower will be subject to (i) delivery of executed
Revolving Notes and supporting resolutions, articles or certificates of
incorporation or organization, as applicable, bylaws, operating agreement or
partnership agreement, incumbency certificates, opinions of counsel and such
other items as the Administrative Agent and the Required Lenders may reasonably
request, (ii) pledge by such Applicant Borrower of all of its assets to the
Administrative Agent, for the benefit of the Lenders, pursuant to a security
agreement in substantially the form of the Security Agreements and otherwise in
form and substance reasonably acceptable to the Administrative Agent, (iii) with
respect to the joinder of a Borrower, delivery of stock certificates, if any,
and pledge of 10% of the Capital Stock of such Borrower by the Parent pursuant
to a pledge supplement in substantially the form of Exhibit 2.3(ii), (iv)
acknowledgment and consent of each of the Guarantors to the joinder of such
Applicant Borrower, together with the agreement of such Guarantors that such
joinder does not operate to reduce or discharge the Guarantors' obligations
under the Credit Documents, (v) delivery to the Administrative Agent of all
items identified in Section 5.3 with respect to the Facility of such Applicant
Borrower (in form, content and scope satisfactory to the Administrative Agent)
and all other items necessary to qualify the Facility of such Borrower as an
Eligible Project, (vi) delivery by an officer of the Parent, in its capacity as
general partner of such Applicant Borrower, of an officer's certificate in
substantially the form of the officer's certificate described in Section
5.1(n)(a) hereof and (vii) such other documentation as the Administrative Agent
may reasonably request in connection with the foregoing, including, without
limitation, searches of Uniform Commercial Code filings and appropriate UCC-1
financing statements, all in form, content and scope reasonably satisfactory to
the Administrative Agent. Any such addition of an Applicant Borrower shall be
effective upon receipt by the Administrative Agent of the items required by the
terms of this Section 2.3 and the items with respect to the Facility of such
Applicant Borrower required by Section 5.3. Such Applicant Borrower shall
thereupon become a party hereto and a Borrower hereunder and shall be (i)
entitled to all rights and benefits of a Borrower hereunder and under each
instrument executed pursuant hereto and (ii) subject to all obligations of a
Borrower hereunder and thereunder.
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2.4 JOINT AND SEVERAL LIABILITY AMONG POOL BORROWERS.
(a) Pool A Borrowers.
(i) Each of the Pool A Borrowers is accepting joint
and several liability hereunder for the Pool A Obligations in
consideration of the financial accommodation to be provided by
the Lenders under this Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pool A
Borrowers and in consideration of the undertakings of each of
the Pool A Borrowers to accept joint and several liability for
the obligations of each of them.
(ii) Each of the Pool A Borrowers jointly and
severally hereby irrevocably and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several
liability with the other Pool A Borrowers with respect to the
payment and performance of all of the Pool A Obligations
arising under this Credit Agreement and the other Credit
Documents, it being the intention of the parties hereto that
all the Pool A Obligations shall be the joint and several
obligations of each of the Pool A Borrowers without
preferences or distinction among them.
(iii) If and to the extent that any of the Pool A
Borrowers shall fail to make any payment with respect to any
of the Pool A Obligations hereunder as and when due or to
perform any of such obligations in accordance with the terms
thereof (including, without limitation, any applicable cure
periods), then in each such event, the other Pool A Borrowers
will make such payment with respect to, or perform, such
obligation.
(iv) The obligations of each Pool A Borrower under
the provisions of this Section 2.4(a) constitute full recourse
obligations of such Pool A Borrower, enforceable against it to
the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Credit
Agreement or any other circumstances whatsoever.
(v) Except as otherwise expressly provided herein,
each Pool A Borrower hereby waives notice of acceptance of its
joint and several liability, notice (except to the extent
notice is expressly required to be given pursuant to the terms
of this Credit Agreement) of occurrence of any Default or
Event of Default, or of any demand for any payment under this
Credit Agreement, notice of any action at any time taken or
omitted by the Lender under or in respect of any of the Pool A
Obligations hereunder, any requirement of diligence and,
generally, all demands, notices and other formalities of every
kind in connection with this Credit Agreement. With respect to
its obligations under this Section 2.4(a), each Pool A
Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any
of the Pool A Obligations hereunder, the acceptance of any
partial payment thereon, any waiver, consent or other action
or acquiescence by the Lenders at any time or times in respect
of any
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<PAGE> 38
default by any other Pool A Borrower in the performance or
satisfaction of any term, covenant, condition or provision of
this Credit Agreement, any and all other indulgences
whatsoever by the Lenders in respect of any of the Pool A
Obligations hereunder, and the taking, addition, substitution
or release, in whole or in part, at any time or times, of any
security for any of such Pool A Obligations or the addition,
substitution or release, in whole or in part, of any Pool A
Borrower. Without limiting the generality of the foregoing,
each Pool A Borrower assents to any other action or delay in
acting or any failure to act on the part of the Lender,
including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder
which might, but for the provisions of this Section 2.4(a),
afford grounds for terminating, discharging or relieving such
Pool A Borrower, in whole or in part, from any of its
obligations under this Section 2.4(a), it being the intention
of each Pool A Borrower that, so long as any of the Pool A
Obligations hereunder remain unsatisfied, the obligations of
such Pool A Borrower under this Section 2.4(a) shall not be
discharged except by performance and then only to the extent
of such performance. The obligations of each Pool A Borrower
under this Section 2.4(a) shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect
to any reconstruction or similar proceeding with respect to
any Pool A Borrower or any Lender. The joint and several
liability of the Pool A Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Pool A
Borrower or any Lender.
(vi) The provisions of this Section 2.4(a) are made
for the benefit of the Administrative Agent and the Lenders
and their respective successors and assigns, and may be
enforced by any such Person from time to time against any of
the Pool A Borrowers as often as occasion therefor may arise
and without requirement on the part of any Lender first to
marshal any of its claims or to exercise any of its rights
against any of the other Pool A Borrowers or to exhaust any
remedies available to it against any of the other Pool A
Borrowers or to resort to any other source or means of
obtaining payment of any of the Pool A Obligations or to elect
any other remedy. The provisions of this Section 2.4(a) shall
remain in effect until all the Pool A Obligations hereunder
shall have been paid in full or otherwise fully satisfied. If
at any time, any payment, or any part thereof, made in respect
of any of the Pool A Obligations, is rescinded or must
otherwise be restored or returned by the Lenders upon the
insolvency, bankruptcy or reorganization of any of the Pool A
Borrowers, or otherwise, the provisions of this Section 2.4(a)
will forthwith be reinstated and in effect as though such
payment had not been made.
(vii) Notwithstanding any provision to the contrary
contained herein or in any other of the Credit Documents or
Hedging Agreements of the Pool A Borrowers, the obligations of
each Pool A Borrower hereunder shall be limited to
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<PAGE> 39
an aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under
Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
(viii) Notwithstanding anything to the contrary
contained in any Credit Document, each of the parties hereto
agrees that the Pool A Borrowers shall not have any liability
for the Pool B Obligations and Pool C Obligations.
(b) Pool B Borrowers.
(i) Each of the Pool B Borrowers is accepting joint
and several liability hereunder for the Pool B Obligations in
consideration of the financial accommodation to be provided by
the Lenders under this Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pool B
Borrowers and in consideration of the undertakings of each of
the Pool B Borrowers to accept joint and several liability for
the obligations of each of them.
(ii) Each of the Pool B Borrowers jointly and
severally hereby irrevocably and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several
liability with the other Pool B Borrowers with respect to the
payment and performance of all of the Pool B Obligations
arising under this Credit Agreement and the other Credit
Documents, it being the intention of the parties hereto that
all the Pool B Obligations shall be the joint and several
obligations of each of the Pool B Borrowers without
preferences or distinction among them.
(iii) If and to the extent that any of the Pool B
Borrowers shall fail to make any payment with respect to any
of the Pool B Obligations hereunder as and when due or to
perform any of such obligations in accordance with the terms
thereof (including, without limitation, any applicable cure
periods), then in each such event, the other Pool B Borrowers
will make such payment with respect to, or perform, such
obligation.
(iv) The obligations of each Pool B Borrower under
the provisions of this Section 2.4(b) constitute full recourse
obligations of such Pool B Borrower, enforceable against it to
the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Credit
Agreement or any other circumstances whatsoever.
(v) Except as otherwise expressly provided herein,
each Pool B Borrower hereby waives notice of acceptance of its
joint and several liability, notice (except to the extent
notice is expressly required to be given pursuant to the terms
of this Credit Agreement) of occurrence of any Default or
Event of Default, or of any demand for any payment under this
Credit Agreement, notice of any action at any time taken or
omitted by the Lender under or in respect of any of the Pool B
Obligations hereunder, any requirement of diligence and,
generally, all
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demands, notices and other formalities of every kind in
connection with this Credit Agreement. Each Pool B Borrower
hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Pool B
Obligations hereunder, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence
by the Lenders at any time or times in respect of any default
by any other Pool B Borrower in the performance or
satisfaction of any term, covenant, condition or provision of
this Credit Agreement, any and all other indulgences
whatsoever by the Lenders in respect of any of the Pool B
Obligations hereunder, and the taking, addition, substitution
or release, in whole or in part, at any time or times, of any
security for any of such Pool B Obligations or the addition,
substitution or release, in whole or in part, of any Pool B
Borrower. Without limiting the generality of the foregoing,
each Pool B Borrower assents to any other action or delay in
acting or any failure to act on the part of the Lender,
including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder
which might, but for the provisions of this Section 2.4(b),
afford grounds for terminating, discharging or relieving such
Pool B Borrower, in whole or in part, from any of its
obligations under this Section 2.4(b), it being the intention
of each Pool B Borrower that, so long as any of the Pool B
Obligations hereunder remain unsatisfied, the obligations of
such Pool B Borrower under this Section 2.4(b) shall not be
discharged except by performance and then only to the extent
of such performance. The obligations of each Pool B Borrower
under this Section 2.4(b) shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect
to any reconstruction or similar proceeding with respect to
any Pool B Borrower or any Lender. The joint and several
liability of the Pool B Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Pool B
Borrower or any Lender.
(vi) The provisions of this Section 2.4(b) are made
for the benefit of the Administrative Agent and the Lenders
and their respective successors and assigns, and may be
enforced by any such Person from time to time against any of
the Pool B Borrowers as often as occasion therefor may arise
and without requirement on the part of any Lender first to
marshal any of its claims or to exercise any of its rights
against any of the other Pool B Borrowers or to exhaust any
remedies available to it against any of the other Pool B
Borrowers or to resort to any other source or means of
obtaining payment of any of the Pool B Obligations or to elect
any other remedy. The provisions of this Section 2.4(b) shall
remain in effect until all the Pool B Obligations hereunder
shall have been paid in full or otherwise fully satisfied. If
at any time, any payment, or any part thereof, made in respect
of any of the Pool B Obligations, is rescinded or must
otherwise be restored or returned by the Lenders upon the
insolvency, bankruptcy or reorganization of any of the Pool B
Borrowers, or otherwise, the provisions of
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<PAGE> 41
this Section 2.4(b) will forthwith be reinstated and in effect
as though such payment had not been made.
(vii) Notwithstanding any provision to the contrary
contained herein or in any other of the Credit Documents or
Hedging Agreements of the Pool B Borrowers, the obligations of
each Pool B Borrower hereunder shall be limited to an
aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under
Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
(viii) Notwithstanding anything to the contrary
contained in any Credit Document, each of the parties hereto
agrees that the Pool B Borrowers shall not have any liability
for the Pool A Obligations and Pool C Obligations.
(c) Pool C Borrowers.
(i) Each of the Pool C Borrowers is accepting joint
and several liability hereunder for the Pool C Obligations in
consideration of the financial accommodation to be provided by
the Lenders under this Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pool C
Borrowers and in consideration of the undertakings of each of
the Pool C Borrowers to accept joint and several liability for
the obligations of each of them.
(ii) Each of the Pool C Borrowers jointly and
severally hereby irrevocably and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several
liability with the other Pool C Borrowers with respect to the
payment and performance of all of the Pool C Obligations
arising under this Credit Agreement and the other Credit
Documents, it being the intention of the parties hereto that
all the Pool C Obligations shall be the joint and several
obligations of each of the Pool C Borrowers without
preferences or distinction among them.
(iii) If and to the extent that any of the Pool C
Borrowers shall fail to make any payment with respect to any
of the Pool C Obligations hereunder as and when due or to
perform any of such obligations in accordance with the terms
thereof (including, without limitation, any applicable cure
periods), then in each such event, the other Pool C Borrowers
will make such payment with respect to, or perform, such
obligation.
(iv) The obligations of each Borrower under the
provisions of this Section 2.4(c) constitute full recourse
obligations of such Pool C Borrower, enforceable against it to
the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Credit
Agreement or any other circumstances whatsoever.
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<PAGE> 42
(v) Except as otherwise expressly provided herein,
each Pool C Borrower hereby waives notice of acceptance of its
joint and several liability, notice (except to the extent
notice is expressly required to be given pursuant to the terms
of this Credit Agreement) of occurrence of any Default or
Event of Default, or of any demand for any payment under this
Credit Agreement, notice of any action at any time taken or
omitted by the Lender under or in respect of any of the Pool C
Obligations hereunder, any requirement of diligence and,
generally, all demands, notices and other formalities of every
kind in connection with this Credit Agreement. Each Pool C
Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any
of the Pool C Obligations hereunder, the acceptance of any
partial payment thereon, any waiver, consent or other action
or acquiescence by the Lenders at any time or times in respect
of any default by any other Pool C Borrower in the performance
or satisfaction of any term, covenant, condition or provision
of this Credit Agreement, any and all other indulgences
whatsoever by the Lenders in respect of any of the Pool C
Obligations hereunder, and the taking, addition, substitution
or release, in whole or in part, at any time or times, of any
security for any of such Pool C Obligations or the addition,
substitution or release, in whole or in part, of any Pool C
Borrower. Without limiting the generality of the foregoing,
each Pool C Borrower assents to any other action or delay in
acting or any failure to act on the part of the Lender,
including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder
which might, but for the provisions of this Section 2.4(c),
afford grounds for terminating, discharging or relieving such
Pool C Borrower, in whole or in part, from any of its
obligations under this Section 2.4(c), it being the intention
of each Pool C Borrower that, so long as any of the Pool C
Obligations hereunder remain unsatisfied, the obligations of
such Pool C Borrower under this Section 2.4(c) shall not be
discharged except by performance and then only to the extent
of such performance. The obligations of each Pool C Borrower
under this Section 2.4(c) shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect
to any reconstruction or similar proceeding with respect to
any Pool C Borrower or any Lender. The joint and several
liability of the Pool C Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Pool C
Borrower or any Lender.
(vi) The provisions of this Section 2.4(c) are made
for the benefit of the Administrative Agent and the Lenders
and their respective successors and assigns, and may be
enforced by any such Person from time to time against any of
the Pool C Borrowers as often as occasion therefor may arise
and without requirement on the part of any Lender first to
marshal any of its claims or to exercise any of its rights
against any of the other Pool C Borrowers or to exhaust any
remedies available to it against any of the other Pool C
Borrowers or to resort to any other source or means of
obtaining payment of any of the Pool C
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Obligations or to elect any other remedy. The provisions of
this Section 2.4(c) shall remain in effect until all the Pool
C Obligations hereunder shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Pool C
Obligations, is rescinded or must otherwise be restored or
returned by the Lenders upon the insolvency, bankruptcy or
reorganization of any of the Pool C Borrowers, or otherwise,
the provisions of this Section 2.4(c) will forthwith be
reinstated and in effect as though such payment had not been
made.
(vii) Notwithstanding any provision to the contrary
contained herein or in any other of the Credit Documents or
Hedging Agreements of the Pool C Borrowers, the obligations of
each Pool C Borrower hereunder shall be limited to an
aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under
Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
(viii) Notwithstanding anything to the contrary
contained in any Credit Document, each of the parties hereto
agrees that the Pool C Borrowers shall not have any liability
for the Pool A Obligations and Pool B Obligations.
2.5 REMOVAL OF A BORROWER.
If (a) a Borrower sells or refinances an Eligible Project in accordance
with the terms of Section 8.5 and such Borrower no longer owns any other
Eligible Projects or (b) the Capital Stock of a Borrower is sold by the Parent
and the other shareholders thereof in accordance with Section 8.5, such Borrower
may request to cease to be a Borrower by delivering to the Administrative Agent
a written notice to such effect. Such Borrower shall cease to be a Borrower
hereunder on the later to occur of (i) the date the Administrative Agent
receives such request and (ii) the date such Borrower has paid all of its
Revolving Loans and all accrued and unpaid interest, fees and other obligations
hereunder or in connection herewith. Upon the occurrence of the events
referenced in the preceding sentence, the Administrative Agent shall deliver to
the applicable Borrower (and the Lenders hereby authorize the Administrative
Agent to) upon such Borrower's request and at such Borrower's expense, such
documentation as is reasonably necessary to evidence the release of the
Administrative Agent's security interest in such Borrower's assets.
2.6 APPOINTMENT OF DESIGNATED BORROWER AS AGENT FOR BORROWERS.
(a) Pool A Appointment. Each of the Pool A Borrowers hereby
appoints the Pool A Designated Borrower to act as its exclusive agent
for all matters related to the borrowing of Revolving Loans as
described in Section 2 hereof). Each of the Pool A Borrowers
acknowledges and agrees that (a) the Pool A Designated Borrower may
execute a Notice of Borrowing and/or a Notice of Extension/Conversion
on behalf of any or all of the Pool A Borrowers, and each such Pool A
Borrower shall be bound by and obligated by all of the terms of such
Notice of Borrowing and/or
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Notice of Extension/Conversion executed by the Pool A Designated
Borrower on its behalf and (b) the Administrative Agent and each of the
Lenders shall accept (and shall be permitted to rely on) any Notice of
Borrowing and/or Notice of Extension/Conversion executed by the Pool A
Designated Borrower on behalf of the Pool A Borrowers (or any of them).
(b) Pool B Appointment. Each of the Pool B Borrowers hereby
appoints the Pool B Designated Borrower to act as its exclusive agent
for all matters related to the borrowing of Revolving Loans as
described in Section 2 hereof). Each of the Pool B Borrowers
acknowledges and agrees that (a) the Pool B Designated Borrower may
execute a Notice of Borrowing and/or a Notice of Extension/Conversion
on behalf of any or all of the Pool B Borrowers, and each such Pool B
Borrower shall be bound by and obligated by all of the terms of such
Notice of Borrowing and/or Notice of Extension/Conversion executed by
the Pool B Designated Borrower on its behalf and (b) the Administrative
Agent and each of the Lenders shall accept (and shall be permitted to
rely on) any Notice of Borrowing and/or Notice of Extension/Conversion
executed by the Pool B Designated Borrower on behalf of the Pool B
Borrowers (or any of them).
(c) Pool C Appointment. Each of the Pool C Borrowers hereby
appoints the Pool C Designated Borrower to act as its exclusive agent
for all matters related to the borrowing of Revolving Loans as
described in Section 2 hereof). Each of the Pool C Borrowers
acknowledges and agrees that (a) the Pool C Designated Borrower may
execute a Notice of Borrowing and/or Notice of Extension/Conversion on
behalf of any or all of the Pool C Borrowers, and each such Pool C
Borrower shall be bound by and obligated by all of the terms of such
Notice of Borrowing and/or Notice of Extension/Conversion executed by
the Pool C Designated Borrower on its behalf and (b) the Administrative
Agent and each of the Lenders shall accept (and shall be permitted to
rely on) any Notice of Borrowing and/or Notice of Extension/Conversion
executed by the Pool C Designated Borrower on behalf of the Pool C
Borrowers (or any of them).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate 2% greater than the
rate which would otherwise be applicable (or if no rate is applicable, whether
in respect of interest, fees or other amounts, then the Adjusted Base Rate plus
2%).
3.2 EXTENSION AND CONVERSION.
The Designated Borrowers shall have the option, on any Business Day, to
extend existing Loans into a subsequent permissible Interest Period or to
convert Loans into Loans of another interest rate type; provided, however, that
(i) except as provided in Section 3.8, Eurodollar Loans may be converted into
Base Rate Loans or extended as Eurodollar Loans for new Interest Periods
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only on the last day of the Interest Period applicable thereto, (ii) Eurodollar
Loans may be extended, and Base Rate Loans may be converted into Eurodollar
Loans, only if the conditions precedent set forth in Section 5.2 are satisfied
on the date of extension or conversion, (iii) Loans extended as, or converted
into, Eurodollar Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such minimum amounts
as provided in Section 2.1(b)(ii), (iv) no more than twelve Eurodollar Loans
(other than Eurodollar Loans outstanding which were used by the Borrowers solely
to make interest payments in accordance with the terms hereof) shall be
outstanding hereunder at any time (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period) and (v) any request for extension
or conversion of a Eurodollar Loan which shall fail to specify an Interest
Period shall be deemed to be a request for an Interest Period of one month. Each
such extension or conversion shall be effected by a Designated Borrower by
giving a Notice of Extension/Conversion (or telephonic notice promptly confirmed
in writing) to the office of the Administrative Agent specified in specified in
Schedule 2.1(a)(i), or at such other office as the Administrative Agent may
designate in writing, prior to 11:00 A.M. (Charlotte, North Carolina time) on
the Business Day of, in the case of the conversion of a Eurodollar Loan into a
Base Rate Loan, and on the third Business Day prior to, in the case of the
extension of a Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or conversion, specifying
the date of the proposed extension or conversion, the Loans to be so extended or
converted, the types of Loans into which such Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each request
for extension or conversion shall be irrevocable and shall constitute a
representation and warranty by the applicable Borrowers of the matters specified
in subsections (b), (c), (d), (e), (f) and (g) of Section 5.2(i), (ii) or (iii),
as applicable. In the event a Designated Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this Section, or any such
conversion or extension is not permitted or required by this Section, then such
Eurodollar Loan shall be automatically converted into a Base Rate Loan at the
end of the Interest Period applicable thereto. The Administrative Agent shall
give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrowers shall have the right
to prepay Loans in whole or in part from time to time; provided,
however, that each partial prepayment of Loans shall be in a minimum
principal amount of $1,000,000 and integral multiples of $100,000.
Subject to the foregoing terms, amounts prepaid under this Section
3.3(a) shall be applied as the Borrowers may elect; provided that if
the Borrowers fail to specify a voluntary prepayment then such
prepayment shall be applied to Revolving Loans, in each case first to
Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments under this Section 3.3(a)
shall be subject to Section 3.12, but otherwise without premium or
penalty.
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(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time, the
sum of the aggregate principal amount of Revolving Loans
outstanding shall exceed the lesser of (x) the Revolving
Committed Amount and (y) the Borrowing Base, the Borrowers
shall immediately make payment on the Loans in an amount
sufficient to eliminate the deficiency.
(ii) Disposition or Refinancing of Eligible
Project/Disposition of Capital Stock.
(A) Immediately upon the disposition or refinancing
of a Facility, such Borrower shall prepay the Revolving Loans
in an aggregate amount equal to the amount of the Revolving
Loans of such Borrower borrowed hereunder with respect to such
Facility (such prepayment to be applied as set forth in clause
(iii) below).
(B) Immediately upon the disposition of the Capital
Stock of a Borrower in accordance with Section 8.5, such
Borrower shall prepay the Revolving Loans in an aggregate
amount equal to the amount of the Revolving Loans of such
Borrower borrowed hereunder (such prepayment to be applied as
set forth in clause (iii) below).
(C) If a Facility which has been constructed by a
Borrower using proceeds of the Revolving Loans is not fully
constructed and open for business within fifteen months of the
commencement of construction of such Facility, such Borrower
shall immediately prepay the Revolving Loans in an aggregate
amount equal to the amount of Revolving Loans borrowed
hereunder with respect to such Facility (such prepayment to be
applied as set forth in clause (iii) below.
(iii) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to Section 3.3(b)(i) and
(ii) shall be applied to Revolving Loans. Within the
parameters of the applications set forth above, prepayments
shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(b) shall be
subject to Section 3.12.
3.4 TERMINATION AND REDUCTION OF REVOLVING COMMITTED AMOUNT.
Revolving Commitment. The Borrowers may from time to time
permanently reduce or terminate the Revolving Committed Amount in whole
or in part (in minimum aggregate amounts of $5,000,000 or in integral
multiples of $5,000,000 in excess thereof (or, if less, the full
remaining amount of the then applicable Revolving Committed Amount))
upon five Business Days' prior written notice to the Administrative
Agent; provided, that, no such termination or reduction shall be made
which would cause the sum of the aggregate outstanding principal amount
of the Revolving Loans to exceed the Revolving Committed Amount,
unless, concurrently with such termination or reduction, the
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Loans are repaid to the extent necessary to eliminate such excess. The
Administrative Agent shall promptly notify each affected Lender of
receipt by the Administrative Agent of any notice from the Borrowers
pursuant to this Section 3.4.
3.5 FEES.
(a) Upfront Fees. The Borrowers agree to pay to the
Administrative Agent for the benefit of the Lenders in immediately
available funds on or before the Closing Date an upfront fee (the
"Upfront Fee") in the amount provided in the Administrative Agent's Fee
Letter.
(b) Unused Fee. In consideration of the Revolving Commitments
of the Lenders hereunder, the Borrowers agree to pay to the
Administrative Agent for the account of each Lender a fee (the "Unused
Fee") on the Unused Revolving Committed Amount computed at a per annum
rate for each day during the applicable Unused Fee Calculation Period
(hereinafter defined) equal to the Applicable Percentage for Unused Fee
in effect from time to time. The Unused Fee shall commence to accrue on
the Closing Date and shall be due and payable in arrears on the last
business day of each March, June, September and December (and any date
that the Revolving Committed Amount is reduced as provided in Section
3.4 and the Maturity Date) for the immediately preceding quarter (or
portion thereof) (each such quarter or portion thereof for which the
Unused Fee is payable hereunder being herein referred to as an "Unused
Fee Calculation Period"), beginning with the first of such dates to
occur after the Closing Date.
(c) Administrative Fees. The Borrowers agree to pay to the
Administrative Agent, for its own account and Banc of America
Securities LLC, as applicable, the fees referred to in the
Administrative Agent's Fee Letter (collectively, the "Administrative
Agent's Fees").
3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender 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 Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrowers (which notice shall set forth such
change regarding capital adequacy and the calculation of such reduced rate of
return as a result thereof), the Borrowers shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction; provided, however, that no such amounts shall be payable with respect
to a reduction in rate of return incurred more than 180 days before such Lender
demands compensation under this Section 3.6. Each
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determination by any such Lender of amounts owing under this Section shall,
absent manifest or demonstrable error, be conclusive and binding on the parties
hereto. The Lenders agree that in the exercise of rights under this Section 3.6,
they will accord the Borrowers the treatment generally accorded by the Lenders
to similarly situated borrowers.
3.7 LIMITATION ON EURODOLLAR LOANS.
If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
(a) the Administrative Agent determines (which determination
shall be conclusive) that by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Administrative Agent that the Eurodollar
Rate will not adequately and fairly reflect the cost to the Lenders of
funding Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrowers prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, continue Eurodollar Loans, or to
convert Base Rate Loans into Eurodollar Loans and the Borrowers shall, on the
last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Eurodollar Loans or convert such Eurodollar
Loans into Base Rate Loans in accordance with the terms of this Credit
Agreement.
3.8 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrowers
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans, shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) on receipt of such notice by the
Administrative Agent and the Borrowers, such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.12.
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3.9 REQUIREMENTS OF LAW.
If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to such
Lender (or its Applicable Lending Office) under this Credit Agreement
or its Notes in respect of any Eurodollar Loans (other than taxes
imposed on the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other
than the Eurodollar Reserve Requirement utilized in the determination
of the Adjusted Eurodollar Rate) relating to any extensions of credit
or other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including the Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or the London interbank market any other condition
affecting this Credit Agreement or its Notes or any of such extensions
of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, converting into, continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrowers shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests compensation by the
Borrowers under this Section 3.9, the Borrowers may, by notice to such Lender
(with a copy to the Administrative Agent), suspend the obligation of such Lender
to make or continue Eurodollar Loans, or to convert Base Rate Loans into
Eurodollar Loans, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 3.10 shall be
applicable); provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested. Each Lender shall promptly
notify the Borrowers and the Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section 3.9 and will designate a different
Applicable Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Lender,
be otherwise disadvantageous to it. Any Lender claiming compensation under this
Section 3.9 shall furnish to the Borrowers and the Administrative Agent a
statement setting forth in reasonable detail the additional amount or amounts to
be paid to it
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hereunder which shall be conclusive in the absence of manifest or demonstrable
error. In determining such amount, such Lender may use any reasonable averaging
and attribution methods. No Lender shall be entitled to receive any compensation
for such amounts incurred more than 180 days prior to the delivery of such
statement. If any Credit Party is required to pay compensation to any Lender
pursuant to this Section 3.9, then such Lender will agree to use reasonable
efforts to change the jurisdiction of its Applicable Lending Office so as to
eliminate or reduce any such additional compensation which may thereafter accrue
if such change in the judgment of the Lender, is not otherwise disadvantageous
to such Lender. The Lenders agree that in the exercise of rights under this
Section 3.9, they will accord the Borrowers the treatment generally accorded by
the Lenders to similarly situated borrowers.
3.10 TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make any Eurodollar Loan or to
continue, or to convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans
shall be automatically converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for such Eurodollar Loans (or, in the case of a
conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrowers with a copy to the Administrative Agent) and,
unless and until such Lender gives notice as provided below that the
circumstances specified in Section 3.8 or 3.9 hereof that gave rise to such
conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or continued by
such Lender as Eurodollar Loans shall be made or continued instead as
Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Borrowers (with a copy to the Administrative
Agent) that the circumstances specified in Section 3.8 or 3.9 hereof that gave
rise to the conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.10 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Eurodollar Loans and by
such Lender are held pro rata (as to principal amounts, interest rate basis, and
Interest Periods) in accordance with their respective Commitments.
3.11 TAXES.
(a) Any and all payments by any Credit Party to or for the
account of any Lender or the Administrative Agent hereunder or under
any other Credit Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties,
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levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender
and the Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender (or its Applicable Lending Office) or the
Administrative Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If any Credit Party shall be
required by law to deduct any Taxes from or in respect of any sum
payable under this Credit Agreement or any other Credit Document to any
Lender or the Administrative Agent, (i) the sum payable shall be
increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 3.11) such Lender or the Administrative Agent receives an
amount equal to the sum it would have received had no such deductions
been made, (ii) such Credit Party shall make such deductions, (iii)
such Credit Party shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable
law, and (iv) such Credit Party shall furnish to the Administrative
Agent, at its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrowers agree to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Credit Agreement or any other Credit Document
or from the execution or delivery of, or otherwise with respect to,
this Credit Agreement or any other Credit Document (hereinafter
referred to as "Other Taxes").
(c) The Borrowers agree to indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section
3.11) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.
(d) Each Lender that is not a United States person under
Section 7701(a)(30) of the Code, on or prior to the date of its
execution and delivery of this Credit Agreement in the case of each
Lender listed on the signature pages hereof and on or prior to the date
on which it becomes a Lender in the case of each other Lender, and from
time to time thereafter if requested in writing by the Borrowers or the
Administrative Agent (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrowers and the Administrative
Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Credit Agreement is effectively
connected with the conduct of a trade or business in the United States,
(ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii)
any other form or certificate required by any taxing authority
(including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying
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that such Lender is entitled to an exemption from or a reduced rate of
tax on payments pursuant to this Credit Agreement or any of the other
Credit Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrowers and the Administrative Agent with the
appropriate form pursuant to Section 3.11(d) (unless such failure is
due to a change in treaty, law, or regulation occurring subsequent to
the date on which a form originally was required to be provided), such
Lender shall not be entitled to indemnification under Section 3.11(a)
or 3.11(b) with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise exempt from
or subject to a reduced rate of withholding tax, become subject to
Taxes because of its failure to deliver a form required hereunder, the
Borrowers shall take such steps as such Lender shall reasonably request
to assist such Lender to recover such Taxes.
(f) If any Credit Party is required to pay additional amounts
to or for the account of any Lender pursuant to this Section 3.11, then
such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, the applicable Credit Party shall furnish to the Administrative
Agent the original or a certified copy of a receipt evidencing such
payment.
(h) Without prejudice to the survival of any other agreement
of the Credit Parties hereunder, the agreements and obligations of the
Credit Parties contained in this Section 3.11 shall survive the
repayment of the Loans and other obligations under the Credit Documents
and the termination of the Commitments hereunder.
3.12 COMPENSATION.
Upon the request of any Lender, the Borrowers shall pay to such Lender
such amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense incurred by it as a
result of:
(a) any payment, prepayment, or conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to Section 9.2) on a date other than the last day of
the Interest Period for such Loan; or
(b) any failure by the Borrowers for any reason (including,
without limitation, the failure of any condition precedent specified in
Section 5 to be satisfied) to borrow, convert, continue, or prepay a
Eurodollar Loan on the date for such borrowing, conversion,
continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, continuation, or conversion under this Credit
Agreement.
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With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrowers set forth in this Section 3.12 shall survive the repayment of the
Loans and other obligations under the Credit Documents and the termination of
the Commitments hereunder.
3.13 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or (subject to the terms of
Section 3.3) prepayment of principal of any Loan, each payment of
interest on the Loans, each payment of Unused Fees, each reduction in
Commitments and each conversion or extension of any Loan, shall be
allocated pro rata among the Lenders in accordance with the respective
principal amounts of their outstanding Revolving Loans and
Participation Interests.
(b) Advances. No Lender shall be responsible for the failure
or delay by any other Lender in its obligation to make its ratable
share of a borrowing hereunder; provided, however, that the failure of
any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. Unless the Administrative
Agent shall have been notified in writing by any Lender prior to the
date of any requested borrowing that such Lender does not intend to
make available to the Administrative Agent its ratable share of such
borrowing to be made on such date, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative
Agent on the date of such borrowing, and the Administrative Agent in
reliance upon such assumption, may (in its sole discretion but without
any obligation to do so) make available to the Borrowers a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent, the Administrative Agent shall
be able to recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrowers, and the Borrowers shall immediately pay
such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from the Lender
or the Borrowers, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount
was made available by the Administrative Agent to the Borrowers to the
date such corresponding amount is recovered by the Administrative Agent
at a per annum rate equal to (i) from the Borrowers at the applicable
rate for the applicable borrowing pursuant to the Notice of Borrowing
and (ii) from a Lender at the Federal Funds Rate.
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3.14 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan or any other obligation owing to
such Lender under this Credit Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a Participation Interest in such Loans and other obligations in such
amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance with
their respective ratable shares as provided for in this Credit Agreement. The
Lenders further agree among themselves that if payment to a Lender obtained by
such Lender through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or must otherwise be
restored, each Lender which shall have shared the benefit of such payment shall,
by repurchase of a Participation Interest theretofore sold, return its share of
that benefit (together with its share of any accrued interest payable with
respect thereto) to each Lender whose payment shall have been rescinded or
otherwise restored. The Borrowers agree that any Lender so purchasing such a
Participation Interest may, to the fullest extent permitted by law, exercise all
rights of payment, including setoff, banker's lien or counterclaim, with respect
to such Participation Interest as fully as if such Lender were a holder of such
Loan or other obligation in the amount of such Participation Interest. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Administrative Agent shall fail to remit to the Administrative Agent or any
other Lender an amount payable by such Lender or the Administrative Agent to the
Administrative Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 3.14 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.14 to share in
the benefits of any recovery on such secured claim.
3.15 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Administrative Agent in dollars
in immediately available funds, without setoff, deduction, counterclaim
or withholding of any kind, at the Administrative Agent's office
specified in Schedule 2.1(a)(i) not later than 1:00 P.M. (Charlotte,
North Carolina time) on the date when due. Payments received after such
time shall be deemed to have been received on the next succeeding
Business Day. The Administrative Agent may (but shall not be obligated
to) debit the amount of any such payment which is not made by such time
to any ordinary deposit account of any of the Borrowers or any other
Operative Party maintained with the Administrative Agent (with notice
to the Borrowers or such other Operative Party). The Borrowers (or any
one of them) shall, at the time it makes any
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payment under this Credit Agreement, specify to the Administrative
Agent the Loans, Fees, interest or other amounts payable by the
Borrowers hereunder to which such payment is to be applied (and in the
event that it fails so to specify, or if such application would be
inconsistent with the terms hereof, the Administrative Agent shall
distribute such payment to the Lenders in such manner as the
Administrative Agent may determine to be appropriate in respect of
obligations owing by the Borrowers hereunder, subject to the terms of
Section 3.13(a)). The Administrative Agent will distribute such
payments to such Lenders, if any such payment is received prior to 1:00
P.M. (Charlotte, North Carolina time) on a Business Day in like funds
as received prior to the end of such Business Day and otherwise the
Administrative Agent will distribute such payment to such Lenders on
the next succeeding Business Day. If the Administrative Agent fails to
distribute such payment on the next succeeding Business Day, then the
amount of such payment shall bear interest payable to the Lenders at a
rate equal to the Federal Funds Rate. Whenever any payment hereunder
shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and Fees for the period of such
extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day. Unless the Administrative Agent receives notice
from a Borrower prior to the date on which any payment is due to the
Lenders that such Borrower will not make such payment in full as and
when required, the Administrative Agent may assume that such Borrower
has made such payment in full to the Administrative Agent on such date
in immediately available funds and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, distribute
to each Lender on such date an amount equal to the amount then due such
Lender. If and to the extent such Borrower has not made such payment in
full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender,
together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such lender until the date
repaid. Except as expressly provided otherwise herein, all computations
of interest and fees shall be made on the basis of actual number of
days elapsed over a year of 360 days, except with respect to
computation of interest on Base Rate Loans which (unless the Base Rate
is determined by reference to the Federal Funds Rate) shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest
shall accrue from and include the date of borrowing, but exclude the
date of payment.
(b) Allocation of Payments After Event of Default.
(i) Fees and Expenses. Notwithstanding any other
provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default,
all amounts collected or received by the Administrative Agent
or any Lender on account of the Credit Party Obligations or
any other amounts outstanding under any of the Credit
Documents or in respect of the Collateral shall be paid over
or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Administrative Agent
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then due and owing in connection with enforcing the rights of
the Lenders under the Credit Documents and any protective
advances made by the Administrative Agent with respect to the
Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees then due and owing to
the Administrative Agent;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation, reasonable
attorneys' fees) of each of the Lenders then due and owing in
connection with enforcing its rights under the Credit
Documents or otherwise with respect to the Credit Party
Obligations owing to such Lender;
In carrying out the foregoing, (A) amounts received shall be
applied in the numerical order provided until exhausted prior
to application to the next succeeding category; and (B) each
of the Lenders shall receive an amount equal to its pro rata
share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding
Loans) of amounts available to be applied pursuant to clause
"THIRD" above.
(ii) Pool A Obligations. Notwithstanding any other
provisions of this Credit Agreement to the contrary, after (A)
the occurrence and during the continuance of an Event of
Default and (B) all fees, costs and expenses identified in
Section 3.15(b)(i) have been paid in full, all amounts
collected or received by the Administrative Agent or any
Lender on account of the Pool A Obligations or any other
amounts owing from a Pool A Borrower outstanding under any of
the Credit Documents or in respect of the Pool A Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all of the Pool A
Obligations consisting of accrued fees and interest;
SECOND, to the payment of the outstanding principal
amount of the Pool A Obligations;
THIRD , to all other Pool A Obligations and other
obligations of the Pool A Borrowers which shall have become
due and payable under the Credit Documents or otherwise and
not repaid pursuant to clauses "FIRST" through "THIRD" above;
and
FOURTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (x) amounts received shall be
applied in the numerical order provided until exhausted prior
to application to the next succeeding category; and (y) each
of the Lenders shall receive an amount equal to its pro rata
share (based on the proportion that the then outstanding Pool
A Loans
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held by such Lender bears to the aggregate then outstanding
Pool A Loans) of amounts available to be applied pursuant to
clauses "FIRST", "SECOND" and "THIRD" above.
(iii) Pool B Obligations. Notwithstanding any other
provisions of this Credit Agreement to the contrary, after (A)
the occurrence and during the continuance of an Event of
Default and (B) all fees, costs and expenses in Section
3.15(b)(i) have been paid in full, all amounts collected or
received by the Administrative Agent or any Lender on account
of the Pool B Obligations or any other amounts owing from a
Pool B Borrower outstanding under any of the Credit Documents
or in respect of the Pool B Collateral shall be paid over or
delivered as follows:
FIRST, to the payment of all of the Pool B
Obligations consisting of accrued fees and interest;
SECOND, to the payment of the outstanding principal
amount of the Pool B Obligations;
THIRD, to all other Pool B Obligations and other
obligations of the Pool B Borrowers which shall have become
due and payable under the Credit Documents or otherwise and
not repaid pursuant to clauses "FIRST" through "THIRD" above;
and
FOURTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (x) amounts received shall be
applied in the numerical order provided until exhausted prior
to application to the next succeeding category; and (y) each
of the Lenders shall receive an amount equal to its pro rata
share (based on the proportion that the then outstanding Pool
B Loans held by such Lender bears to the aggregate then
outstanding Pool B Loans) of amounts available to be applied
pursuant to clauses "FIRST", "SECOND" and "THIRD" above.
(iv) Pool C Obligations. Notwithstanding any other
provisions of this Credit Agreement to the contrary, after (A)
the occurrence and during the continuance of an Event of
Default and (B) all fees, costs and expenses in Section
3.15(b)(i) have been paid in full, all amounts collected or
received by the Administrative Agent or any Lender on account
of the Pool C Obligations or any other amounts owing from a
Pool C Borrower outstanding under any of the Credit Documents
or in respect of the Pool C Collateral shall be paid over or
delivered as follows:
FIRST, to the payment of all of the Pool C
Obligations consisting of accrued fees and interest;
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SECOND, to the payment of the outstanding principal
amount of the Pool C Obligations;
THIRD, to all other Pool C Obligations and other
obligations of the Pool C Borrowers which shall have become
due and payable under the Credit Documents or otherwise and
not repaid pursuant to clauses "FIRST" through "THIRD" above;
and
FOURTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (A) amounts received shall be
applied in the numerical order provided until exhausted prior
to application to the next succeeding category; and (B) each
of the Lenders shall receive an amount equal to its pro rata
share (based on the proportion that the then outstanding Pool
C Loans held by such Lender bears to the aggregate then
outstanding Pool C Loans) of amounts available to be applied
pursuant to clauses "FIRST", "SECOND" and "THIRD" above.
(v) HCR/Alterra/Parent. Notwithstanding the foregoing
provisions of this Section 3.15(b) to the contrary, after the
occurrence and during the continuance of an Event of Default,
all amounts collected or received by the Administrative Agent
or any Lender directly from the Parent, HCR or Alterra on
account of the Credit Party Obligations or any other amounts
outstanding under any of the Credit Documents (including,
without limitation, any amounts collected on account of (i)
the Collateral provided by HCR, Alterra and the Parent
(specifically including the equity in the Pool A Borrowers,
the Pool B Borrowers and the Pool C Borrowers pledged by the
Parent to the Administrative Agent, for the benefit of the
Lenders) or (ii) any set off by any Lender of deposits held by
such Lender by such Lenders for HCR, Alterra or the Parent
shall be paid over or delivered to satisfy the Credit Party
Obligations and shall be paid over or delivered as follows:
FIRST, to the payment of the fees, costs and expenses
identified in Section 3.15(b)(i) in the numerical order
provided therein until exhausted prior to application to the
next succeeding category; and
SECOND, following the payment of all fees, costs and
expenses identified in Section 3.15(b)(i), to the payment of
those obligations then due and owing identified in Sections
3.15(b)(ii), 3.15(b)(iii) and 3.15(b)(iv) in the numerical
order provided in such Sections; provided, however, the
Administrative Agent shall determine in its sole discretion
how collections will be allocated between obligations
identified in Sections 3.15(b)(ii), Section 3.15(b)(iii) and
Section 3.15(b)(iv).
3.16 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to any Borrower from time to
time, including the amounts of principal
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and interest payable and paid to such Lender from time to time under
this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update
its account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register
pursuant to Section 11.3(c), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded (i) the
amount, type and Interest Period of each such Loan hereunder, (ii) the
amount of any principal or interest due and payable or to become due
and payable to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from or for the account
of any Credit Party and each Lender's share thereof. The Administrative
Agent will make reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to promptly
update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if
consistent with the entries of the Administrative Agent, subsection (a)
shall be prima facie evidence of the existence and amounts of the
obligations of the Credit Parties therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain
any such account, such Register or such subaccount, as applicable, or
any error therein, shall not in any manner affect the obligation of the
Credit Parties to repay the Credit Party Obligations owing to such
Lender.
3.17 SUBSTITUTION OF LENDERS.
Upon the receipt by the Borrowers from any Lender (an "Affected
Lender") of a claim for compensation under Section 3.9 or Section 3.11, or in
the event any Lender whose obligations to make Eurodollar Loans have been
suspended under Section 3.8, the Borrowers may: (i) request the Affected Lender
to use its reasonable efforts to obtain a replacement bank or financial
institution satisfactory to the Borrowers to acquire and assume all or a ratable
part of all of such Affected Lender's Revolving Loans and Revolving Commitment
(a "Replacement Lender"); (ii) request one more of the other Lenders to acquire
and assume all or part of such Affected Lender's Revolving Loans and Revolving
Commitment; or (iii) designate an Eligible Assignee that is willing to become
the assignee of the Revolving Loans, the Revolving Commitment and other
obligations of such Lender under the Credit Agreement. Any such designation of a
Replacement Lender under clause (i) or (iii) shall be subject to the prior
written consent of the Administrative Agent (which consent shall not be
unreasonably withheld).
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SECTION 4
GUARANTY
4.1 THE PARENT GUARANTY.
The Parent hereby guarantees to each Lender, each Affiliate of a Lender
that enters into a Hedging Agreement with any Operative Party, and the
Administrative Agent as hereinafter provided, as primary obligor and not as
surety, (a) the prompt payment of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) strictly in accordance with the
terms thereof and (b) the timely performance of all other obligations of the
Borrowers under the Credit Documents, including, without limitation, that the
Eligible Projects will be constructed in accordance with this Credit Agreement
and applicable law. The Parent hereby further agrees that if any of the Credit
Party Obligations are not paid in full when due (whether at stated maturity, as
a mandatory prepayment, by acceleration, as a mandatory cash collateralization
or otherwise), the Parent will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Credit Party Obligations, the same will be promptly paid
in full when due (whether at extended maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) in accordance
with the terms of such extension or renewal. The Parent further agrees to (x)
assume all responsibility for the completion of the Eligible Projects and, at
the Parent's own cost and expense, to cause the Eligible Projects to be fully
completed in accordance with the plans and specifications provided to the
Administrative Agent in accordance with the terms hereof and in accordance with
this Credit Agreement, (y) pay all bills in connection with the construction of
the Eligible Projects and (z) indemnify and hold the Lenders harmless from any
and all loss, cost, liability or expense the Lenders may suffer by reason of any
such event (except if such event is due to the gross negligence or willful
misconduct of the Administrative Agent or the Lenders).
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements of any Operative Party,
the obligations of the Parent hereunder shall be limited to an aggregate amount
equal to the largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Parent under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or Hedging
Agreements of any Operative Party, or any other agreement or instrument referred
to therein, or any substitution, release, impairment or exchange of any other
guarantee of or security for any of the Credit Party 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 or guarantor, it being the intent of this
Section 4.2 that the obligations of the Parent hereunder shall be absolute and
unconditional under any and all circumstances. The Parent agrees that it shall
have no right of subrogation, indemnity,
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reimbursement or contribution against a Borrower or any other Guarantor for
amounts paid under this Section 4 until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements with any Operative Party)
have been paid in full (other than contingent indemnification obligations which
survive), all Commitments under this Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to request any return
or reimbursement of funds from the Lenders in connection with monies received
under the Credit Documents or Hedging Agreements with any Operative Party.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of the Parent hereunder which
shall remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement with any Operative Party
or any other agreement or instrument referred to in the Credit
Documents or such Hedging Agreements shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement with any Operative
Party or any other agreement or instrument referred to in the Credit
Documents or such Hedging Agreements shall be waived or any other
guarantee of any of the Credit Party Obligations or any security
therefor shall be released, impaired or exchanged in whole or in part
or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Administrative
Agent or any Lender or Lenders as security for any of the Credit Party
Obligations shall fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, the Parent hereby expressly waives
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that the Administrative Agent or any Lender exhaust any
right, power or remedy or proceed against any Person under any of the Credit
Documents, any Hedging Agreement with any Operative Party or any other agreement
or instrument referred to in the Credit Documents or such Hedging Agreements, or
against any other Person under any other guarantee of, or security for, any of
the Credit Party Obligations.
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4.3 REINSTATEMENT.
The obligations of the Parent under this Section 4 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 Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and the Parent agrees that it will indemnify the
Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or such Lender in connection with such rescission or
restoration, including 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.
4.4 CERTAIN ADDITIONAL WAIVERS.
The Parent agrees that it shall have no right of recourse to security
for the Credit Party Obligations, except through the exercise of rights of
subrogation in accordance with Section 4.2.
4.5 REMEDIES.
The Parent agrees that, to the fullest extent permitted by law, the
Credit Party Obligations may be declared to be forthwith due and payable as
provided in Section 9.2 (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9.2) for purposes of
Section 4.1 notwithstanding any stay, injunction or other prohibition preventing
such declaration (or preventing the Credit Party Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or the Credit Party Obligations being deemed to have
become automatically due and payable), the Credit Party Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by the Parent for purposes of Section 4.1. The Parent acknowledges and agrees
that its obligations hereunder are secured in accordance with the terms of the
Pledge Agreement and the other Collateral Documents and that the Administrative
Agent and Lenders may exercise their remedies thereunder in accordance with the
terms thereof.
4.6 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.
The guarantee of the Parent in this Section 4 is a guaranty of payment
and not of collection, is a continuing guarantee, and shall apply to all Credit
Party Obligations whenever arising.
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SECTION 5
CONDITIONS
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans shall be subject to satisfaction of the following
conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the Administrative
Agent of duly executed copies of: (i) this Credit Agreement, (ii) the
Notes, (iii) the Guaranty Agreements; (iv) the Collateral Documents and
(v) all other Credit Documents, each in form and substance acceptable
to the Administrative Agent in its sole discretion.
(b) Corporate Documents. Receipt by the Administrative
Agent of the following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or organization, as applicable,
or other charter documents of each Credit Party certified to
be true and complete as of a recent date by the appropriate
Governmental Authority of the state or other jurisdiction of
its incorporation or organization or operating agreement and
certified by a secretary, assistant secretary or manager of
such Credit Party to be true and correct as of the Closing
Date.
(ii) Bylaws/Operating Agreement. A copy of the bylaws
or operating agreement of each Credit Party certified by a
secretary, assistant secretary or manager of such Credit Party
to be true and correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions of each
Credit Party approving and adopting the Credit Documents to
which it is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a
secretary, assistant secretary or manager of such Credit Party
to be true and correct and in force and effect as of the
Closing Date.
(iv) Good Standing. Copies of certificates of good
standing, existence or its equivalent with respect to each
Credit Party certified as of a recent date by the appropriate
Governmental Authorities of the state or other jurisdiction of
incorporation or organization and each other jurisdiction in
which the failure to so qualify and be in good standing could
have a Material Adverse Effect.
(v) Incumbency. An incumbency certificate of each
Credit Party certified by a secretary, assistant secretary or
manager to be true and correct as of the Closing Date.
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(c) Opinions of Counsel. The Administrative Agent shall have
received legal opinions of counsel (which shall cover, among other
things, authority, legality, validity, binding effect and
enforceability) in form and substance reasonably satisfactory to the
Administrative Agent dated as of the Closing Date from counsel to the
Credit Parties.
(d) Personal Property Collateral. The Administrative Agent
shall have received:
(i) searches of Uniform Commercial Code filings in
the jurisdiction of the chief executive office of each
Borrower and each jurisdiction where any Collateral is located
or where a filing would need to be made in order to perfect
the Administrative Agent's security interest in the
Collateral, copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than
Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the
Administrative Agent's sole discretion, to perfect the
Administrative Agent's security interest, for the benefit of
the Lenders, in the Collateral;
(iii) all stock certificates, if any, evidencing the
Capital Stock pledged to the Administrative Agent, for the
benefit of the Lenders, pursuant to the Pledge Agreement,
together with duly executed in blank, undated stock powers
attached thereto;
(iv) all instruments and chattel paper in the
possession of any of the Borrowers, together with allonges or
assignments as may be necessary or appropriate to perfect the
Administrative Agent's security interest, for the benefit of
the Lenders, in the Collateral; and
(v) duly executed consents as are necessary, in the
Administrative Agent's reasonable discretion, to perfect the
Administrative Agent's security interest, for the benefit of
the Lenders, in the Collateral.
(e) Real Property Collateral. The Administrative Agent shall
have received, in form and substance satisfactory to the Administrative
Agent:
(i) fully executed and notarized mortgages, deeds of
trust or deeds to secure debt in favor of the Administrative
Agent (each such mortgage, deed of trust and deed to secure
debt referenced above shall be referred to herein as a
"Mortgage" and collectively as "Mortgages") for the real
property assets owned by a Borrower set forth on Schedule
5.1(e)(i) (each of these real property assets on Schedule
5.1(e)(i) being an "Existing Property" and collectively the
"Existing Properties"), together with such UCC-1 financing
statements, as the Administrative Agent shall deem appropriate
with respect to each such Existing Property;
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(ii) ALTA or other appropriate form mortgagee title
insurance policies (the "Mortgage Policies") issued by a title
insurer reasonably satisfactory to the Administrative Agent
(the "Title Insurance Company"), in an amount satisfactory to
the Administrative Agent with respect to each Existing
Property, assuring the Administrative Agent that the
applicable Existing Mortgages create valid and enforceable
first priority mortgage liens on the respective Existing
Properties, free and clear of all defects and encumbrances
except Permitted Liens which Mortgage Policies shall be in
form and substance satisfactory to the Administrative Agent
and containing such endorsements as shall be satisfactory to
the Administrative Agent and for any other matters that the
Administrative Agent may request, and providing affirmative
insurance and such reinsurance as the Administrative Agent may
request, all of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent;
(iii) map or plat of a survey of the sites of the
Existing Properties certified to the Administrative Agent and
the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably
satisfactory to the Administrative Agent and the Title
Insurance Company, and otherwise in form and substance
satisfactory to the Administrative Agent (if a Facility has
been constructed on such Existing Property the survey must be
an "as built" survey);
(iv) an opinion of counsel (which counsel shall be
reasonably satisfactory to the Administrative Agent) in the
state in which each Existing Property is located with respect
to the enforceability of the Mortgages, standard remedies with
respect thereto, and sufficiency of the form of UCC-1
financing statements to be recorded or filed in such state and
such other matters as the Administrative Agent may reasonably
request, in form and substance satisfactory to the
Administrative Agent;
(v) certification from the applicable Borrower's land
surveyor in a form reasonably satisfactory to the
Administrative Agent or other evidence reasonably acceptable
to the Administrative Agent that none of the improvements on
the Existing Properties are located within any area designated
by the Director of the Federal Emergency Management Agency as
a "special flood hazard" area or if any improvements on the
Existing Properties are located within a "special flood
hazard" area, evidence of a flood insurance policy from a
company and in an amount satisfactory to the Administrative
Agent for the applicable portion of the premises, naming the
Administrative Agent, for the benefit of the Lenders, as
mortgagee;
(vi) an appraisal (in form and substance satisfactory
to the Administrative Agent) with respect to each Existing
Property from a qualified appraiser satisfactory to the
Administrative Agent;
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(vii) an environmental assessment (in form and
substance satisfactory to the Administrative Agent) of each
Existing Property from a consulting firm reasonably acceptable
to the Administrative Agent;
(viii) a set of plans and specifications for the
construction of the Facility on each Existing Property in form
and substance satisfactory to the Administrative Agent;
(ix) (i) with respect to any Facility which will be
constructed on each Existing Property using the proceeds of
the Loans, projections for such Facility for the two year
period subsequent to its construction completion date in form
and substance satisfactory to the Administrative Agent and
(ii) with respect to any Facility on an Existing Property
which will be refinanced using proceeds of the Loans,
projections for such Facility for the two year period
subsequent to the refinancing in form and substance
satisfactory to the Administrative Agent;
(x) with respect to any Existing Property, a
Development Budget for such Facility on each Existing Property
(which such Development Budget has been reviewed by the
Engineer and recommended by the Engineer to the Administrative
Agent as an acceptable Development Budget); and
(xi) a subordination and assignment of management
agreement with respect to the Facility on each Existing
Property.
(f) Construction Contract. The Administrative Agent shall have
received (i) a copy of the construction contract for the Facility to be
constructed on each Existing Property and (ii) a certified copy of the
Management Agreement for each Existing Property.
(g) Priority of Liens. The Administrative Agent shall have
received satisfactory evidence that (i) the Administrative Agent, on
behalf of the Lenders, holds a perfected, first priority Lien on all
Collateral and (ii) none of the Collateral is subject to any other
Liens other than Permitted Liens.
(h) Corporate Structure. The capital and ownership structure
(including articles of organization), equityholder agreements and
management of each of the Borrowers and the Parent shall be in form and
substance satisfactory to the Lenders, and receipt by the
Administrative Agent of a certificate from each of the Borrowers
evidencing receipt of equity on terms satisfactory to the Lenders.
(i) Opening Borrowing Base. Receipt by the Administrative
Agent of a Borrowing Base Certificate as of the Closing Date, certified
by each of the chief financial officers of the Designated Borrowers to
be true and correct as of the Closing Date.
(j) Evidence of Insurance. Receipt by the Administrative Agent
of copies of insurance policies or certificates of insurance of the
Borrowers evidencing liability and
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casualty insurance meeting the requirements set forth in the Credit
Documents, including, but not limited to, naming the Administrative
Agent as sole loss payee or additional insured, as appropriate, on
behalf of the Lenders.
(k) Government Consent. Receipt by the Administrative Agent of
evidence that all governmental, shareholder and material third party
consents and approvals necessary in connection with the transactions
contemplated hereby and expiration of all applicable waiting periods
without any action being taken by any authority that could reasonably
be likely to restrain, prevent or impose any material adverse
conditions on such other transactions or that could reasonably be
likely to seek or threaten any of the foregoing, and no law or
regulation shall be applicable which in the judgment of the
Administrative Agent could reasonably be likely to have such effect.
(l) Material Adverse Effect. Since December 31, 1998, there
has been no change in the condition (financial or otherwise), business,
assets, operations, management or, if applicable, prospects of a Credit
Party or any of its Subsidiaries which could reasonably be expected to
cause a Material Adverse Effect.
(m) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against a Credit
Party or any of its Subsidiaries that could reasonably be expected to
have a Material Adverse Effect.
(n) Officer's Certificates.
(a) The Administrative Agent shall have received a
certificate or certificates executed by an Executive Officer of the
Parent, in its capacity as general partner, of each of the Initial Pool
A Borrowers as of the Closing Date stating, with respect to the Initial
Pool A Borrowers, that (i) each Initial Pool A Borrower is in
compliance with all existing financial obligations, (ii) all
governmental, shareholder and third party consents and approvals, if
any, with respect to the Credit Documents and the transactions
contemplated thereby have been obtained, (iii) no action, suit,
investigation or proceeding is pending or threatened in any court or
before any arbitrator or governmental instrumentality that purports to
affect any Initial Pool A Borrower or any transaction contemplated by
the Credit Documents, if such action, suit, investigation or proceeding
could have a Material Adverse Effect, and (iv) immediately after giving
effect to this Credit Agreement, the other Credit Documents and all the
transactions contemplated therein to occur on such date, (1) each
Initial Pool A Borrower is Solvent, (2) no Default or Event of Default
exists, (3) all representations and warranties contained herein and in
the other Credit Documents are true and correct in all material
respects, and (4) the Operative Parties are in compliance with each of
the financial covenants set forth in Section 7.11.
(b) The Administrative Agent shall have received a
certificate or certificates executed by an Executive Officer of each
Guarantor, as of the Closing Date (i) stating that such Guarantor is in
compliance with all existing material financial obligations, (ii)
stating that immediately after giving effect to this Credit Agreement,
the Credit Documents and all transactions contemplated therein, such
Guarantor is Solvent, (iii) with
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respect to each of HCR and Alterra respectively, stating that such
Guarantor is in compliance with the financial covenants applicable to
it set forth in the HCR Guaranty Agreement and Alterra Guaranty
Agreement and (iv) with respect to HCR, certifying as to the Senior
Debt Rating.
(o) Fees and Expenses. Payment by the Credit Parties of all
fees and expenses owed by them to the Lenders and the Administrative
Agent, including, without limitation, payment to the Administrative
Agent of the fees set forth in the Fee Letter.
(p) The Initial Pool A Subordinated Debt. Receipt by the
Administrative Agent of evidence that each of the Initial Pool A
Borrowers (other than Clare Bridge Parma and Clare Bridge Westchase)
shall have received the proceeds from the issuance of the Initial Pool
A Subordinated Debt pursuant to terms in accordance with the terms of
Section 8.1(e) and otherwise acceptable to the Administrative Agent.
(q) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding
litigation, tax, accounting, labor, insurance, pension liabilities
(actual or contingent), real estate leases, material contracts, debt
agreements, property ownership and contingent liabilities of the Credit
Parties and their Subsidiaries.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
(i) Pool A Loans. The obligations of each Lender to make,
convert or extend any Pool A Loan (including the initial Pool A Loans)
are subject to satisfaction of the following conditions in addition (x)
to satisfaction on the Closing Date of the conditions set forth in
Section 5.1 and (y) with respect to any Pool A Loan used to finance the
construction or refinancing of a New Property the satisfaction of the
conditions set forth in Section 5.3:
(a) The Designated Borrower shall have delivered (i)
a Notice of Borrowing or Notice of Extension/Conversion and
(ii) together with such Notice of Borrowing or Notice of
Extension/Conversion, a Borrowing Base Certificate, duly
executed by the applicable Designated Borrower;
(b) The representations and warranties made by HCR
(with respect to itself and its Subsidiaries), Alterra (with
respect to itself and its Subsidiaries), the Parent (with
respect to itself and the Pool A Borrowers) and the Pool A
Borrowers in the Credit Documents shall, subject to the
limitations set forth therein, be true and correct in all
material respects as of such date (except for those which
expressly relate to an earlier date);
(c) There shall not have been commenced against any
Credit Party or the Subsidiary of any Operative Party an
involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any
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substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other
case, proceeding or other action shall remain undismissed,
undischarged or unbonded;
(d) No Default with respect to any Pool A Borrower or
Event of Default or Pool A Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(e) No circumstances, events or conditions shall have
occurred since December 31, 1998 which would reasonably be
expected to have a Material Adverse Effect with respect to any
Pool A Borrower, the Parent, HCR and its Subsidiaries taken as
a whole, or Alterra and its Subsidiaries taken as a whole;
(f) Immediately after giving effect to the making of
such Pool A Loan (and the application of the proceeds thereof)
(i) the sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed the lesser of (x) the
Revolving Committed Amount and (y) the Borrowing Base and (ii)
the aggregate amount of outstanding Revolving Loans with
respect to such Eligible Project shall not exceed such
Eligible Project's Eligible Project Loan Amount; and
(g) There has been no change in the state of the
title to the Pool A Properties other than Permitted Liens,
there are no liens on any Pool A Properties other than
Permitted Liens and there are no survey exceptions on the Pool
A Properties not approved by the Administrative Agent.
The delivery of each Notice of Borrowing by the Pool A Designated
Borrower and each Notice of Extension/Conversion by the Pool A
Designated Borrower shall constitute a representation and warranty by
HCR, Alterra, the Parent (with respect to itself and each of the Pool A
Borrowers) and the Pool A Borrowers of the correctness of the matters
specified in subsections (b), (c), (d), (e), (f) and (g) of this
Section 5.2(i).
(ii) Pool B Loans. The obligations of each Lender to make,
convert or extend any Pool B Loan (including the initial Pool B Loans)
are subject to satisfaction of the following conditions in addition (x)
to satisfaction on the Closing Date of the conditions set forth in
Section 5.1 and (y) with respect to any Pool B Loan used to finance the
construction or refinancing of a New Property the satisfaction of the
conditions set forth in Section 5.3:
(a) The Designated Borrower shall have delivered (i)
a Notice of Borrowing or Notice of Extension/Conversion and
(ii) together with such Notice of Borrowing or Notice of
Extension/Conversion, a Borrowing Base Certificate, duly
executed by the applicable Designated Borrower;
(b) The representations and warranties made by HCR
(with respect to itself and its Subsidiaries), Alterra (with
respect to itself and its Subsidiaries), the Parent (with
respect to itself and each of the Pool B Borrowers) and the
Pool B Borrowers in the Credit Documents shall, subject to the
limitations set forth therein,
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be true and correct in all material respects as of such date
(except for those which expressly relate to an earlier date);
(c) There shall not have been commenced against any
Credit Party or the Subsidiary of any Operative Party an
involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part
of its Property or for the winding up or liquidation of its
affairs, and such involuntary case or other case, proceeding
or other action shall remain undismissed, undischarged or
unbonded;
(d) No Default with respect to any Pool B Borrower or
Event of Default or Pool B Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(e) No circumstances, events or conditions shall have
occurred since December 31, 1998 which would reasonably be
expected to have a Material Adverse Effect with respect to any
Pool B Borrower, the Parent, HCR and its Subsidiaries taken as
a whole or Alterra and its Subsidiaries taken as a whole; and
(f) Immediately after giving effect to the making of
such Pool B Loan (and the application of the proceeds thereof)
(i) the sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed the lesser of (x) the
Revolving Committed Amount and (y) the Borrowing Base and (ii)
the aggregate amount of outstanding Revolving Loans with
respect to such Eligible Project shall not exceed such
Eligible Project's Eligible Project Loan Amount; and
(g) There has been no change in the state of the
title to the Pool B Properties other than Permitted Liens,
there are no liens on any of the Pool B Properties other than
Permitted Liens and there are no survey exceptions on the Pool
B Properties not approved by the Administrative Agent.
The delivery of each Notice of Borrowing by the Pool B Designated
Borrower and each Notice of Extension/Conversion by the Pool B
Designated Borrower shall constitute a representation and warranty by
HCR, Alterra, the Parent (with respect to itself and each of the Pool B
Borrowers) and the Pool B Borrowers of the correctness of the matters
specified in subsections (b), (c), (d), (e), (f) and (g) of this
Section 5.2(ii).
(iii) Pool C Loans. The obligations of each Lender to make,
convert or extend any Pool C Loan (including the initial Pool C Loans)
are subject to satisfaction of the following conditions in addition (x)
to satisfaction on the Closing Date of the conditions set forth in
Section 5.1 and (y) with respect to any Pool C Loan used to finance the
construction or refinancing of a New Property the satisfaction of the
conditions set forth in Section 5.3:
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(a) The Designated Borrower shall have delivered (i) a Notice of
Borrowing or Notice of Extension/Conversion and (ii) together with such
Notice of Borrowing or Notice of Extension/Conversion, a Borrowing Base
Certificate, duly executed by the applicable Designated Borrower;
(b) The representations and warranties made by HCR (with respect
to itself and its Subsidiaries), Alterra (with respect to itself and
its Subsidiaries), the Parent (with respect to itself and each of the
Pool C Borrowers) and the Pool C Borrowers in the Credit Documents
shall, subject to the limitations set forth therein, be true and
correct in all material respects as of such date (except for those
which expressly relate to an earlier date);
(c) There shall not have been commenced against any Credit Party
or any Subsidiary of any Operative Party an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded;
(d) No Default with respect to any Pool C Borrower or Event of
Default or Pool C Event of Default shall exist and be continuing either
prior to or after giving effect thereto;
(e) No circumstances, events or conditions shall have occurred
since December 31, 1998 which would reasonably be expected to have a
Material Adverse Effect with respect to any Pool C Borrower, the
Parent, HCR and its Subsidiaries taken as a whole or Alterra and its
Subsidiaries taken as a whole;
(f) Immediately after giving effect to the making of such Pool C
Loan (and the application of the proceeds thereof) (i) the sum of the
aggregate principal amount of outstanding Revolving Loans shall not
exceed the lesser of (x) the Revolving Committed Amount and (y) the
Borrowing Base and (ii) the aggregate amount of outstanding Revolving
Loans with respect to such Eligible Project shall not exceed such
Eligible Project's Eligible Project Loan Amount; and
(g) There has been no change in the state of the title to the
Pool C Properties other than Permitted Liens, there are no liens on any
of the Pool C Properties other than Permitted Liens and there are no
survey exceptions on the Pool C Properties not approved by the
Administrative Agent.
The delivery of each Notice of Borrowing by the Pool C Designated Borrower
and each Notice of Extension/Conversion by the Pool C Designated Borrower
shall constitute a representation and warranty by HCR, Alterra, the Parent
(with respect to itself and each of
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the Pool C Borrowers) and the Pool C Borrowers of the correctness of the
matters specified in subsections (b), (c), (d), (e), (f) and (g) of this
Section 5.2(iii).
5.3 CONDITIONS TO REVOLVING LOANS TO FINANCE CONSTRUCTION OR REFINANCING
OF NEW PROPERTIES.
The obligation of the Lenders to advance Revolving Loans to finance the
construction or refinancing of a New Property is subject to satisfaction of the
following conditions in addition to satisfaction of the conditions set forth in
Section 5.2:
(a) Eligible Project. Such New Property shall (i) conform with the
definition of Eligible Project and (ii) after such financing be free from
all Liens other than Permitted Liens.
(b) Joinder. All of the conditions set forth in Section 2.3 with
respect hereof to such New Property and the applicable Applicant Borrower
shall have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
Each Operative Party hereby represents with respect to itself and its
Subsidiaries to the Administrative Agent and each Lender that:
6.1 FINANCIAL CONDITION.
The financial statements delivered to the Lenders pursuant to Section
7.1(a) present fairly (on the basis disclosed in the footnotes to such financial
statements) the financial condition, results of operations and cash flows of the
Parent as of such date and for such periods. Since December 31, 1998, (i) there
has been no sale, transfer or other disposition by the Parent of any part of the
business or property of the Parent, and (ii) no purchase or other acquisition by
the Parent of any business or property (including any capital stock of any other
Person) material in relation to financial condition of the Parent, which is not
reflected in the foregoing financial statements or in the notes thereto and has
not otherwise been disclosed in writing to the Lenders on or prior to the
Closing Date. As of the Closing Date, the Parent has no material liabilities
(contingent or otherwise) that are not reflected in the foregoing financial
statements or in the notes thereto.
6.2 NO MATERIAL CHANGE.
Since December 31, 1998 (a) there has been no development or event relating
to or affecting such Operative Party or any of its Subsidiaries which has had or
could reasonably be expected to have a Material Adverse Effect and (b) except as
otherwise permitted under this Credit Agreement, no dividends or other
distributions have been declared, paid or made upon the Capital Stock in such
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Operative Party or any of its Subsidiaries nor has any of the Capital Stock in
such Operative Party or any of its Subsidiaries been redeemed, retired,
purchased or otherwise acquired for value.
6.3 ORGANIZATION AND GOOD STANDING.
Such Operative Party (a) is duly organized, validly existing and is in good
standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the corporate or other necessary power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Such Operative Party has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of each of the Borrowers, to
obtain extensions of credit hereunder, and has taken all necessary corporate
action to authorize the borrowings and other extensions of credit on the terms
and conditions of this Credit Agreement and to authorize the execution, delivery
and performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Operative Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which such
Operative Party is a party, except for filings to perfect the Liens created by
the Collateral Documents. This Credit Agreement has been, and each other Credit
Document to which any Operative Party is a party will be, duly executed and
delivered on behalf of such Operative Party. This Credit Agreement constitutes,
and each other Credit Document to which such Operative Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Operative Party enforceable against such party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
6.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Operative Party will
(a) violate or conflict with any provision of its articles or certificate of
incorporation or certificate of limited partnership or bylaws or partnership
agreement or operating agreement or other organizational or governing documents
of such Person, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
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provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which would
reasonably be expected to have a Material Adverse Effect, or (d) result in or
require the creation of any Lien (other than those contemplated in or created in
connection with the Credit Documents) upon or with respect to its properties.
6.6 NO DEFAULT.
Neither such Operative Party, nor any of its Subsidiaries, is in
default in any respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its properties is bound which default could reasonably
be expected to have a Material Adverse Effect. No Default or Event of Default
has occurred or exists except as previously disclosed in writing to the Lenders.
6.7 OWNERSHIP.
Such Operative Party and each of its Subsidiaries is the owner of, and
has good and marketable title to, all of its respective assets and none of such
assets is subject to any Lien other than Permitted Liens.
6.8 LITIGATION.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Operative Party,
threatened against an Operative Party or any of its Subsidiaries which might
reasonably be expected to have a Material Adverse Effect.
6.9 TAXES.
Such Operative Party and each of its Subsidiaries has filed, or caused
to be filed, all tax returns (federal, state, local and foreign) required to be
filed and paid (a) all amounts of taxes shown thereon to be due (including
interest and penalties) and (b) all other taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing by it, except for such taxes (i) which are
not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Operative Party is aware of any proposed tax
assessments against it or any of its Subsidiaries.
6.10 COMPLIANCE WITH LAW.
Such Operative Party and each of its Subsidiaries is in compliance with
all Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to it, or
to its properties, unless such failure to comply could not reasonably be
expected to have a Material Adverse Effect.
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6.11 ERISA.
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of such Operative Party, no event
or condition has occurred or exists as a result of which any ERISA
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor of
the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single Employer Plan, as of the last annual valuation date
prior to the date on which this representation is made or deemed made
(determined, in each case, in accordance with Financial Accounting
Standards Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did not exceed
as of such valuation date the fair market value of the assets of such
Plan.
(c) Neither such Operative Party, nor any of its Subsidiaries,
nor any ERISA Affiliate has incurred, or, to the best knowledge of such
Operative Party, could be reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan. Neither such Operative
Party, nor any of its Subsidiaries, nor any ERISA Affiliate would
become subject to any withdrawal liability under ERISA if such
Operative Party or any of its Subsidiaries or any ERISA Affiliate were
to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is
made or deemed made. Neither such Operative Party nor any of its
Subsidiaries nor any ERISA Affiliate has received any notification that
any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section
4245 of ERISA), or has been terminated (within the meaning of Title IV
of ERISA), and no Multiemployer Plan is, to the best knowledge of such
Operative Party, reasonably expected to be in reorganization,
insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject such Operative Party or any of its Subsidiaries or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which such Operative Party or any of its
Subsidiaries or any ERISA Affiliate has agreed or is required to
indemnify any Person against any such liability.
(e) Neither such Operative Party, nor any of its Subsidiaries
nor any ERISA Affiliate has any material liability with respect to
"expected post-retirement benefit obligations" within the meaning of
the Financial Accounting Standards Board Statement
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106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
apply has been administered in compliance in all material respects of
such sections.
(f) Neither the execution and delivery of this Credit
Agreement nor the consummation of the financing transactions
contemplated thereunder will involve any transaction which is subject
to the prohibitions of Sections 404, 406 or 407 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. The representation by the Operative Parties in the
preceding sentence is made in reliance upon and subject to the accuracy
of the Lenders' representation in Section 11.16 with respect to their
source of funds and is subject, in the event that the source of the
funds used by the Lenders in connection with this transaction is an
insurance company's general asset account, to the application of
Prohibited Transaction Class Exemption 95-60, 60 Fed. Reg. 35,925
(1995), compliance with the regulations issued under Section
401(c)(1)(A) of ERISA, or the issuance of any other prohibited
transaction exemption or similar relief, to the effect that assets in
an insurance company's general asset account do not constitute assets
of an "employee benefit plan" within the meaning of Section 3(3) of
ERISA of a "plan" within the meaning of Section 4975(e)(1) of the Code.
6.12 SUBSIDIARIES.
Set forth on Schedule 6.12 is a complete and accurate list of all
Subsidiaries of such Operative Party. Information on Schedule 6.12 includes
jurisdiction of incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding shares of each class
owned (directly or indirectly) by such Operative Party; and the number and
effect, if exercised, of all outstanding options, warrants, rights of conversion
or purchase and all other similar rights with respect thereto. The outstanding
Capital Stock of all such Subsidiaries of the Operative Parties is validly
issued, fully paid and non-assessable and is owned by each such Operative Party,
directly or indirectly, free and clear of all Liens (other than those arising
under or contemplated in connection with the Credit Documents). Other than as
set forth in Schedule 6.12, no Operative Party has outstanding any securities
convertible into or exchangeable for its Capital Stock nor does any such Person
have outstanding any rights to subscribe for or to purchase or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to
its Capital Stock. None of the Borrowers own any Subsidiaries. Schedule 6.12 may
be updated from time to time by the Operative Parties by giving written notice
thereof to the Administrative Agent.
6.13 GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the proceeds of the Loans will be used, directly
or indirectly, for the purpose of purchasing or carrying any "margin
stock" within the meaning of Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If requested by
any Lender or the Administrative Agent, the Borrowers will furnish to
the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 referred to
in Regulation U. No indebtedness being reduced or retired out of the
proceeds of the Loans was or will be incurred for the purpose of
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purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation
T. "Margin stock" within the meaning of Regulation U does not
constitute more than 25% of the value of the consolidated assets of the
Borrowers or the Operative Parties. None of the transactions
contemplated by this Credit Agreement (including, without limitation,
the direct or indirect use of the proceeds of the Loans) will violate
or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued
pursuant thereto, or Regulation T, U or X.
(b) Neither such Operative Party, nor any of its Subsidiaries,
is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act or the Investment Company Act of 1940,
each as amended. In addition, no Credit Party, nor any of their
Subsidiaries, is (i) an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, and
is not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(c) Such Operative Party and its Subsidiaries has obtained and
holds in full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals which
are necessary for the ownership of its respective Property and to the
conduct of its respective businesses as presently conducted.
(d) Neither such Operative Party, nor any of its Subsidiaries,
is in violation of any applicable statute, regulation or ordinance of
the United States of America, or of any state, city, town,
municipality, county or any other jurisdiction, or of any agency
thereof (including without limitation, environmental laws and
regulations), which violation could reasonably be expected to have a
Material Adverse Effect.
(e) Such Operative Party and each of its Subsidiaries is
current with all material reports and documents, if any, required to be
filed with any state or federal securities commission or similar agency
and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
6.14 Purpose of Loans.
(a) The proceeds of the Pool A Loans hereunder shall be used
solely by the Pool A Borrowers to (i) finance the acquisition and/or
construction, development and working capital needs of Eligible
Projects or (ii) refinance Eligible Projects.
(b) The proceeds of the Pool B Loans hereunder shall be used
solely by the Pool B Borrowers to (i) finance the acquisition and/or
construction, development and working capital needs of Eligible
Projects or (ii) refinance Eligible Projects.
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(c) The proceeds of the Pool C Loans hereunder shall be used
solely by the Pool C Borrowers to (i) finance the acquisition and/or
construction, development and working capital needs of Eligible
Projects or (ii) refinance Eligible Projects.
(d) Eighty percent (80%) of the proceeds of the Loans shall be
used by the Borrowers to finance the acquisition and/or construction,
development and working capital needs or refinancing of Eligible
Projects dedicated to individuals with Alzheimer's disease.
6.15 ENVIRONMENTAL MATTERS.
(a) Each of the facilities and properties owned, leased or
operated by such Operative Party or any of its Subsidiaries (the
"Properties") and all operations at the Properties are in compliance
with all applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to the Properties or the businesses
operated by the Operative Parties or any of their Subsidiaries (the
"Businesses"), and there are no conditions relating to the Businesses
or Properties that could give rise to material liability under any
applicable Environmental Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the
Properties in amounts or concentrations that constitute or constituted
a material violation of, or could give rise to material liability
under, Environmental Laws.
(c) Neither such Operative Party, nor any of its Subsidiaries,
has received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard
to any of the Properties or the Businesses, nor does such Operative
Party have knowledge or reason to believe that any such notice will be
received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or generated, treated,
stored or disposed of at, on or under any of the Properties, in each
case by or on behalf of such Operative Party or any of its Subsidiaries
in violation of, or in a manner that could give rise to material
liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of such Operative Party,
threatened, under any Environmental Law to which such Operative Party
or any of its Subsidiaries is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with
respect to such Operative Party, any of its Subsidiaries, the
Properties or the Businesses.
(f) There has been no release, or threat of release, of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations (including,
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without limitation, disposal) of such Operative Party or any of its
Subsidiaries in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a
manner that could give rise to material liability under Environmental
Laws.
6.16 INTELLECTUAL PROPERTY.
Such Operative Party owns, or has the legal right to use, all
patents, trademarks, tradenames, copyrights, technology, know-how and processes
(the "Intellectual Property") necessary for each of them to conduct its business
as currently conducted except for those the failure to own or have such legal
right to use could not reasonably be expected to have a Material Adverse Effect.
Set forth on Schedule 6.16 is a list of all Intellectual Property owned by each
Borrower or that any Borrower has the right to use. Except as provided on
Schedule 6.16, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does any
Borrower know of any such claim, and to the Borrower's knowledge the use of such
Intellectual Property by any Borrower does not infringe on the rights of any
Person, except for such claims and infringements that, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
6.17 SOLVENCY.
Such Operative Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.18 LOCATION OF COLLATERAL.
Set forth on Schedule 6.18(a) is a list of all real property located
in the United States and owned or leased by such Borrower with street address,
county and state where located. Set forth on Schedule 6.18(b) is a list of all
locations where any personal property of such Borrower is located, including
county and state where located. Set forth on Schedule 6.18(c) is the chief
executive office and principal place of business of such Operative Party.
Schedules 6.18(a), 6.18(b) and 6.18(c) may be updated from time to time by an
Operative Party by giving written notice to the Administrative Agent.
6.19 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered
to the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Operative Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading.
6.20 NO BURDENSOME RESTRICTIONS.
Neither such Operative Party nor any of its Subsidiaries is a party
to any agreement or instrument or subject to any other obligation or any charter
or corporate restriction or any provision
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of any applicable law, rule or regulation which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.21 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of such Operative Party or any of its Subsidiaries, and
such Operative Party and each of its Subsidiaries has not suffered any strikes,
walkouts, work stoppages or other material labor difficulty within the last five
years.
6.22 YEAR 2000 COMPLIANCE.
Such Operative Party has (i) initiated a review and assessment of all
areas within its and each of its Subsidiaries' business and operations that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by such Operative Party or any of its Subsidiaries
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (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 the
timetable. Based on the foregoing, each Operative Party believes that all
computer applications that are material to its and 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 could not reasonably be expected to have a Material Adverse Effect.
6.23 FIRST PRIORITY LIEN.
The Administrative Agent, on behalf of the Lenders, holds a first
priority lien, subject to no other liens other than Permitted Liens, in the
Collateral.
SECTION 7
AFFIRMATIVE COVENANTS
Each Operative Party hereby covenants and agrees with respect to
itself and each of its Subsidiaries that, so long as this Credit Agreement is in
effect or any amounts payable hereunder or under any other Credit Document shall
remain outstanding (other than contingent indemnification obligations which
survive), and until all of the Commitments hereunder shall have terminated:
7.1 INFORMATION COVENANTS.
The Operative Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
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(a) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the
Parent (other than the fourth fiscal quarter, in which case 90 days
after the end thereof) a balance sheet and income statement of the
Parent, as of the end of such fiscal quarter, together with related
statements of cash flows for such fiscal quarter, in each case setting
forth in comparative form figures for the corresponding period of the
preceding fiscal year, all such financial information described above to
be in reasonable form and detail and reasonably acceptable to the
Administrative Agent, and accompanied by a certificate of the chief
financial officer of the Parent to the effect that such quarterly
financial statements fairly present in all material respects the
financial condition of the Parent.
(b) Quarterly Operating Statements. As soon as available, and in any
event within 30 days after the close of each fiscal quarter of the
Borrowers, an operating statement for each Eligible Project, together
with (i) for each Eligible Project which has been in operation for at
least five full fiscal quarters following the date of the first resident
occupancy of such Facility, a calculation of the Debt Service Coverage
Ratio of such Eligible Project for the appropriate period, setting forth
in reasonable detail the earnings and expenses of each Eligible Project
for such period, (ii) the Occupancy Rate, as at the end of such fiscal
quarter for each Eligible Project and (iii) comparative figures for the
preceding fiscal quarter, all such information to be in reasonable form
and detail and reasonably acceptable to the Administrative Agent
accompanied by a certificate of the chief financial officer of the
applicable Borrower to the effect that such quarterly operating
statements fairly present in all material respects the operating results
of the applicable Eligible Project.
(c) Monthly Operating Statements. As soon as available, and in any
event within 30 days after the close of each calendar month, an
operating statement for each Eligible Project as of the end of such
calendar month, setting forth in detail the earnings and expenses of
each Eligible Project for such calendar month, together with comparative
form figures for the preceding calendar month, all such information to
be in reasonable form and detail and reasonably acceptable to the
Administrative Agent and accompanied by a certificate of the chief
financial officer of the applicable Borrower to the effect that such
monthly operating statements fairly present in all material respects the
operating results of the applicable Eligible Project, together with the
Occupancy Rate as at the end of such calendar month for each Eligible
Project.
(d) Officer's Certificate. At the time of delivery of the operating
statements provided for in Section 7.1(c) above, a certificate of an
Executive Officer of each Designated Borrower substantially in the form
of Exhibit 7.1(d), (i) demonstrating compliance with the financial
covenants contained in Section 7.11 by calculation thereof as of the end
of each such fiscal period and (ii) stating that no Default or Event of
Default exists, or if any Default or Event of Default does exist,
specifying the nature and extent thereof and what action the Operative
Parties propose to take with respect thereto.
(e) Annual Business Plan and Budgets. Within 30 days following the
commencement of each fiscal year of the Borrowers, beginning with the
fiscal year ending
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December 31, 1999, an operating budget and capital expenditure budget
for each Borrower for the next fiscal year.
(f) Borrowing Base Certificate. Within 30 days after the end of each
fiscal quarter, a Borrowing Base Certificate as of the end of the
immediately preceding fiscal quarter, substantially in the form of
Exhibit 7.1(f) and certified by each of the chief financial officers of
the Designated Borrowers to be true and correct as of such date.
(g) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants
to any Operative Party in connection with any annual, interim or special
audit of the books of such Person.
(h) Reports. Promptly upon transmission or receipt thereof, (i)
copies of any filings and registrations with, and reports to or from,
the Securities and Exchange Commission, or any successor agency, and
copies of all financial statements, proxy statements, notices and
reports as any Operative Party or any of its Subsidiaries shall send to
its shareholders or to a holder of any Indebtedness owed by any
Operative Party or any of its Subsidiaries in its capacity as such a
holder and (ii) upon the request of the Administrative Agent, all
reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies or
authorities concerning material environmental, health or safety matters.
(i) Notices. Upon obtaining knowledge thereof, the Operative Parties
will give written notice to the Administrative Agent immediately of (i)
the occurrence of an event or condition consisting of a Default or Event
of Default, specifying the nature and existence thereof and what action
the Operative Parties propose to take with respect thereto, (ii) the
occurrence of any of the following with respect to any Operative Party
or any of its Subsidiaries (A) the pendency or commencement of any
litigation, arbitral or governmental proceeding against such Person
which if adversely determined is likely to have a Material Adverse
Effect, (B) the institution of any proceedings against such Person with
respect to, or the receipt of notice by such Person of potential
liability or responsibility for violation, or alleged violation of any
federal, state or local law, rule or regulation, including but not
limited to, Environmental Laws, the violation of which could reasonably
be expected to have a Material Adverse Effect, or (C) any notice or
determination concerning the imposition of any withdrawal liability by a
Multiemployer Plan against such Person or any ERISA Affiliate, the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA or the
termination of any Plan and (iii) the occurrence of an event of default
under any of the Management Agreements.
(j) ERISA. Upon obtaining knowledge thereof, the Operative Parties
will give written notice to the Administrative Agent promptly (and in
any event within five business days) of: (i) of any event or condition,
including, but not limited to, any Reportable Event, that constitutes,
or might reasonably lead to, an ERISA Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any
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withdrawal liability assessed against the Operative Parties or any of
their Subsidiaries or any ERISA Affiliates, or of a determination that
any Multiemployer Plan is in reorganization or insolvent (both within
the meaning of Title IV of ERISA); (iii) the failure to make full
payment on or before the due date (including extensions) thereof of all
amounts which any Operative Party or any of its Subsidiaries or any
ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the
funding status of any Plan that could have a Material Adverse Effect,
together with a description of any such event or condition or a copy of
any such notice and a statement by an Executive Officer of any Operative
Party, as appropriate, briefly setting forth the details regarding such
event, condition, or notice, and the action, if any, which has been or
is being taken or is proposed to be taken by the Operative Parties with
respect thereto. Promptly upon request, the Operative Parties shall
furnish the Administrative Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return (Form
5500 series), as well as all schedules and attachments thereto required
to be filed with the Department of Labor and/or the Internal Revenue
Service pursuant to ERISA and the Code, respectively, for each "plan
year" (within the meaning of Section 3(39) of ERISA).
(k) Environmental.
(i) Subsequent to a notice from any Governmental Authority
where the subject matter of such notice would reasonably cause
concern that a material environmental problem existed at a Property
or during the existence of an Event of Default, and upon the written
request of the Administrative Agent, the Borrowers will furnish or
cause to be furnished to the Administrative Agent, at the Borrowers'
expense, a report of an environmental assessment of reasonable scope,
form and depth, (including, where appropriate, invasive soil or
groundwater sampling) by a consultant reasonably acceptable to the
Administrative Agent as to the nature and extent of the presence of
any Materials of Environmental Concern on any Properties (as defined
in Section 6.15) and as to the compliance by any Operative Party with
Environmental Laws at such Properties. If the Borrowers fail to
deliver such an environmental report within seventy-five (75) days
after receipt of such written request then the Administrative Agent
may arrange for same, and the Borrowers hereby grant to the
Administrative Agent and their representatives access to the
Properties to reasonably undertake such an assessment (including,
where appropriate, invasive soil or groundwater sampling). The
reasonable cost of any assessment arranged for by the Administrative
Agent pursuant to this provision will be payable by the Borrowers on
demand and added to the obligations secured by the Collateral
Documents.
(ii) The Borrowers will conduct and complete all
investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Materials of
Environmental Concern on, from or affecting any of the Properties to
the extent necessary to be in compliance with all Environmental Laws
and with the validly issued orders and directives of all Governmental
Authorities
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with jurisdiction over such Properties to the extent any
failure could reasonably be expected to have a Material Adverse
Effect.
(l) Other Information. With reasonable promptness
upon any such request, such other information regarding the business,
properties or financial condition of the Operative Parties as the
Administrative Agent or any Lender (through the Administrative Agent)
may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Each Operative Party will, and will cause each of its
Subsidiaries to, do all things necessary to preserve and keep in full
force and effect its existence, rights, franchises and authority.
7.3 BOOKS AND RECORDS.
Each Operative Party will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the
basis of GAAP (including the establishment and maintenance of
appropriate reserves).
7.4 COMPLIANCE WITH LAW.
Each Operative Party will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders,
and all applicable restrictions imposed by all Governmental
Authorities, applicable to it and its property if noncompliance with
any such law, rule, regulation, order or restriction could reasonably
be expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each Operative Party will, and will cause each of its
Subsidiaries to, pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its income or
profits, or upon any of its properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien
upon any of its properties, and (c) except as prohibited hereunder,
all of its other Indebtedness as it shall become due; provided,
however, that an Operative Party or any of its Subsidiaries shall not
be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate
proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any
such payment (i) could give rise to an immediate right to foreclose
on a Lien securing such amounts or (ii) could reasonably be expected
to have a Material Adverse Effect.
7.6 INSURANCE.
(a) Each Borrower hereby agrees that it will at all
times maintain in full force and effect insurance (including, but not
limited to, liability insurance, property insurance and builders risk
insurance) in such amounts and covering such risks and liabilities
and with
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such deductibles as are in accordance with normal industry practice and
the provisions set forth below:
(i) The builder's risk insurance policy with respect to
each Eligible Project of such Borrower shall be an "all-risk"
completed value, non-reporting builder's risk insurance policy
and shall contain provisions for a minimum 30-day advance
written notice to the Administrative Agent of any intended
policy cancellation or non-renewal, (B) a standard mortgagee
endorsement designating the Administrative Agent, for the
benefit of the Lenders, as mortgagee and loss payee and (C) an
endorsement sufficient to eliminate all co-insurance
provisions.
(ii) The commercial general liability insurance maintained
by each of the Borrowers and the general contractor with
respect to each Eligible Project of such Borrower shall (A)
include a liability limit of not less than $1,000,000 per
occurrence and $2,000,000 annually in the aggregate and (B)
include worker's compensation coverage in an amount sufficient
to satisfy statutory requirements.
(iii) The "all-risk" property insurance policy, including
flood, earthquake and business interruption insurance with
respect to each Eligible Project of such Borrower must (i)
contain a replacement cost endorsement sufficient to eliminate
all co-insurance provisions, (ii) include provisions for a
minimum 30-day advance written notice to the Administrative
Agent of any intended policy cancellation or non-renewal and
(iii) designate the Administrative Agent, for the benefit of
the Lenders, as mortgagee and loss payee in a standard
mortgagee endorsement, as its interest may appear.
(b) In the event a Borrower fails to maintain insurance as
required hereunder, the Administrative Agent shall have the right to
procure such insurance whether or not such Borrower's failure to
maintain such insurance constitutes a Default or an Event of Default.
Any amounts paid by the Administrative Agent for insurance shall be due
and payable to the Administrative Agent upon demand and shall be
secured by the Collateral Documents.
(c) In the event of loss, the applicable Borrower shall
promptly give written notice thereof to the Administrative Agent and
the insurance carrier describing the nature and extent of such damage
or destruction. The Administrative Agent may make proof of loss if not
made promptly by such Borrower. The Administrative Agent is hereby
authorized, upon the request and direction of the Required Lenders, to
adjust, compromise and collect the proceeds of any insurance claims.
The Borrowers hereby assign to the Administrative Agent, for the
benefit of the Lenders, the proceeds of any such insurance policies and
hereby directs and authorizes each insurance company to make payment
for such loss directly to the Administrative Agent. In the event a
Borrower shall receive any such insurance proceeds as a result of any
loss, damage or destruction with respect to the Collateral, such
Borrower shall immediately pay over such proceeds to the Administrative
Agent as cash collateral for the Credit Party Obligations. The
Administrative Agent agrees to release insurance proceeds of $1,000,000
or less directly to such Borrower for restoration or repair. The
Administrative Agent agrees to release insurance proceeds in excess of
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$1,000,000 to such Borrower for restoration or repair of the Collateral
damaged provided the following conditions are met:
(i) there exists no Default or Event of Default;
(ii) such Borrower presents sufficient evidence to
the Administrative Agent that there are sufficient funds from
the insurance proceeds (or that sufficient funds from
insurance proceeds can reasonably be expected to be received)
and from equity funds, if needed, to completely restore or
repair the damaged collateral;
(iii) such Borrower presents sufficient evidence to
the Administrative Agent that the damaged Collateral will be
restored prior to the Maturity Date;
(iv) the Administrative Agent will not incur any
liability to any other Person as a result of such use or
release of insurance proceeds; and
(v) the insurance proceeds shall be held by the
Administrative Agent and disbursed substantially in accordance
with the disbursement procedures under Section 2.2 of this
Credit Agreement as repair or restoration progresses as if
such proceeds were Loans.
If the above-referenced conditions of this Section 7.6(c)(i), (ii),
(iii), (iv) and (v) are not satisfied within ninety (90) days of loss,
then the Administrative Agent may, at its option, apply any insurance
proceeds to the payment of the Revolving Loans. The insurance coverage
of each of the Borrowers is outlined as to carrier, policy number,
expiration date, type and amount on Schedule 7.6.
7.7 MAINTENANCE OF PROPERTY.
Each Operative Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, to
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed, to the extent and in the manner customary for companies in similar
businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
Each Operative Party will, and will cause each of its Subsidiaries to,
perform in all respects all of its obligations under the terms of all
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound unless the failure to do so could
not have or be reasonably expected to have a Material Adverse Effect.
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7.9 USE OF PROCEEDS.
The Borrowers will use the proceeds of the Loans for the purposes set
forth in Section 6.14.
7.10 AUDITS/INSPECTIONS.
(a) Upon reasonable notice (and in any event upon no less than
two (2) Business Days notice) and during normal business hours, each
Operative Party will permit representatives appointed by the
Administrative Agent, including, without limitation, independent
accountants, agents, attorneys, and appraisers to visit and inspect its
property, including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to make
photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the
Administrative Agent or its representatives to investigate and verify
the accuracy of information provided to the Lenders and to discuss all
such matters with the officers, employees and representatives of such
Person. Upon the occurrence and during the continuance of an Event of
Default, the Operative Parties agree that the Administrative Agent, and
its representatives, may conduct an audit of the Collateral, at the
expense of the Operative Parties.
(b) Upon reasonable notice (and in any event upon no less than
two (2) Business Days notice), the Borrowers will permit the
Administrative Agent and/or its agents or representatives (including,
without limitation, the Engineer) (at the expense of the Borrowers) to
enter upon any of the Real Properties for the purpose of inspecting the
construction of the Facilities.
7.11 FINANCIAL COVENANTS.
(a) Eligible Project. The Operative Parties hereby covenant
and agree that at least 85% of all Facilities shall be either (i)
Eligible Projects to the extent such Facilities have not been in
operation for five full fiscal quarters following the date of the first
resident occupancy of such Facilities or (ii) Stabilized Eligible
Projects to the extent such Facilities have been in operation for at
least five full fiscal quarters following the date of the first
resident occupancy of such Facilities.
(b) Debt Service. The Operative Parties hereby covenant and
agree that all Facilities of the Borrower which have been in operation
for more than twenty four calendar months shall at all times be
Stabilized Eligible Projects.
7.12 ENVIRONMENTAL LAWS.
(a) The Operative Parties shall comply in all material
respects with, and take reasonable actions to ensure compliance in all
material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply in all material
respects with and maintain, and take reasonable actions to ensure that
all tenants and subtenants obtain and comply in all material respects
with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable
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Environmental Laws except to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Effect;
(b) The Operative Parties shall conduct and complete all
investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws
except to the extent that the same are being contested in good faith by
appropriate proceedings and the failure to do or the pendency of such
proceedings would not reasonably be expected to have a Material Adverse
Effect; and
(c) The Operative Parties shall defend, indemnify and hold
harmless the Administrative Agent and the Lenders, and their respective
employees, agents, officers and directors, from and against any and all
claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental
Law applicable to the operations of the Borrowers or the Properties, or
any orders, requirements or demands of Governmental Authorities related
thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs,
court costs and litigation expenses, except to the extent that any of
the foregoing arise out of the gross negligence or willful misconduct
of the party seeking indemnification therefor. The agreements in this
paragraph shall survive repayment of the Loans and all other amounts
payable hereunder, and termination of the Commitments.
7.13 COLLATERAL.
If, subsequent to the Closing Date, a Borrower shall acquire (a) any
real property or (b) any intellectual property, securities instruments, chattel
paper or other personal property required to be delivered to the Administrative
Agent as Collateral hereunder or under any of the Collateral Documents, such
Borrower shall notify the Administrative Agent of same in each case as soon as
practicable after the acquisition thereof. Each Operative Party shall take such
action as requested by the Administrative Agent and at its own expense, to
ensure that the Administrative Agent shall have a first priority perfected Lien
in (i) all real property of the Borrowers (whether now owned or hereafter
acquired) and (ii) all personal property of the Borrowers (whether now owned or
hereafter acquired), subject in each case only to Permitted Liens.
7.14 YEAR 2000 COMPLIANCE.
Each Operative Party will promptly notify the Administrative Agent in
the event such Operative Party discovers or determines that any computer
application that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 compliant, except to the extent that such
failure could not reasonably be expected to have a Material Adverse Effect.
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7.15 CONSTRUCTION INSPECTOR.
The Operative Parties hereby agree that the Administrative Agent may
hire a construction inspector of the Administrative Agent's choice (at the
expense of the Borrowers) to review during normal business hours the progress of
construction of any Eligible Project at any time during the term of the Credit
Agreement.
7.16 SURVEYS.
Each of the Borrowers hereby agrees that it shall provide the
Administrative Agent with an "as-built" survey (in form and substance
satisfactory to the Administrative Agent) for each Facility which is being
constructed using proceeds of the Loans within 30 Business Days of the
substantial completion of the construction of such Facility.
7.17 ENVIRONMENTAL INDEMNITY.
(i) The Parent and the Pool A Borrowers agree that
they will reimburse the Lenders for and hereby hold the
Lenders harmless from all fines or penalties made or levied
against any of the Lenders by any Governmental Authority as a
result of or in connection with (i) the use of Materials of
Environmental Concern at any Pool A Property, (ii) the use of
Materials of Environmental Concern at the Facilities thereon,
or (iii) the use, generation, storage, transportation,
discharge, release or handling of any Materials of
Environmental Concern at any Pool A Property, or as a result
of any release of any Materials of Environmental Concern onto
the ground or into the water or air from or upon any Pool A
Property at any time. The Parent and the Pool A Borrowers also
agree that they will reimburse the Lenders for and indemnify
and hold the Lenders harmless from any and all costs and
expenses (including reasonable attorneys' fees) and for all
civil judgments or penalties incurred, entered, assessed, or
levied against any of the Lenders as a result of a Pool A
Borrower's use of Materials of Environmental Concern at any
Pool A Property or as a result of any release of any Materials
of Environmental Concern on the ground or into the water or
air by a Pool A Borrower from or upon any Pool A Property.
Such reimbursement or indemnification shall include but not be
limited to any and all judgments or penalties to recover the
costs of cleanup of any such release by a Pool A Borrower from
or upon any Pool A Property and all reasonable expenses
incurred by the Lenders as a result of such a civil action,
including but not limited to reasonable attorneys' fees. The
Parent's and the Pool A Borrowers' obligations under this
Section 7.17(i) shall survive the repayment of the Loans and
any deed in lieu of foreclosure or any foreclosure of a
Mortgage on a Pool A Property.
(ii) The Parent and the Pool B Borrowers agree that
they will reimburse the Lenders for and hereby hold the
Lenders harmless from all fines or penalties made or levied
against any of the Lenders by any Governmental Authority as a
result of or in connection with (i) the use of Materials of
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Environmental Concern at any Pool B Property, (ii) the use of
Materials of Environmental concern at the Facilities thereon,
or (iii) the use, generation, storage, transportation,
discharge, release or handling of any Materials of
Environmental Concern at any Pool B Property, or as a result
of any release of any Materials of Environmental Concern onto
the ground or into the water or air from or upon any Pool B
Property at any time. The Parent and the Pool B Borrowers also
agree that they will reimburse the Lenders for and indemnify
and hold the Lenders harmless from any and all costs and
expenses (including reasonable attorneys' fees) and for all
civil judgments or penalties incurred, entered, assessed, or
levied against any of the Lenders as a result of a Pool B
Borrower's use of Materials of Environmental Concern at any
Pool B Property or as a result of any release of any Materials
of Environmental Concern on the ground or into the water or
air by a Pool B Borrower from or upon any Pool B Property.
Such reimbursement or indemnification shall include but not be
limited to any and all judgments or penalties to recover the
costs of cleanup of any such release by a Pool B Borrower from
or upon any Pool B Property and all reasonable expenses
incurred by the Lenders as a result of such a civil action,
including but not limited to reasonable attorneys' fees. The
Parent's and the Pool B Borrowers' obligations under this
Section 7.17(ii) shall survive the repayment of the Loans and
any deed in lieu of foreclosure or any foreclosure of a
Mortgage on a Pool B Property.
(iii) The Parent and the Pool C Borrowers agree that
they will reimburse the Lenders for and hereby hold the
Lenders harmless from all fines or penalties made or levied
against any of the Lenders by any Governmental Authority as a
result of or in connection with (i) the use of Materials of
Environmental Concern at any Pool C Property, (ii) the use of
Materials of Environmental concern at the Facilities thereon,
or (iii) the use, generation, storage, transportation,
discharge, release or handling of any Materials of
Environmental Concern at any Pool C Property, or as a result
of any release of any Materials of Environmental Concern onto
the ground or into the water or air from or upon any Pool C
Property at any time. The Parent and the Pool C Borrowers also
agree that they will reimburse the Lenders for and indemnify
and hold the Lenders harmless from any and all costs and
expenses (including reasonable attorneys' fees) and for all
civil judgments or penalties incurred, entered, assessed, or
levied against any of the Lenders as a result of a Pool C
Borrower's use of Materials of Environmental Concern at any
Pool C Property or as a result of any release of any Materials
of Environmental Concern on the ground or into the water or
air by a Pool C Borrower from or upon any Pool C Property.
Such reimbursement or indemnification shall include but not be
limited to any and all judgments or penalties to recover the
costs of cleanup of any such release by a Pool C Borrower from
or upon any Pool C Property and all reasonable expenses
incurred by the Lenders as a result of such a civil action,
including but not limited to reasonable attorneys' fees. The
Parent's and the Pool C Borrowers' obligations under this
Section 7.17(iii) shall survive the repayment
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of the Loans and any deed in lieu of foreclosure or any
foreclosure of a Mortgage on a Pool C Property.
7.18 APPRAISALS.
The Pool B Borrowers shall provide to the Administrative Agent, within
60 days of the commencement of construction at each Pool B Property identified
on Schedule 2.1(a)(ii), an appraisal (in form and substance satisfactory to the
Administrative Agent) with respect to each Facility located on such Pool B
Property from a qualified appraiser satisfactory to the Administrative Agent.
SECTION 8
NEGATIVE COVENANTS
Each Operative Party hereby covenants and agrees with respect to itself
and its Subsidiaries that, so long as this Credit Agreement is in effect or any
amounts payable hereunder or under any other Credit Document shall remain
outstanding (other than contingent indemnification obligations which survive),
and until all of the Commitments hereunder shall have terminated:
8.1 INDEBTEDNESS.
No Operative Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) obligations of the Operative Parties in respect of Hedging
Agreements entered into in order to manage existing or anticipated
interest rate or exchange rate risks and not for speculative purposes;
(c) purchase money Indebtedness (including obligations in
respect of Capital Leases) (including refinancings thereof) hereafter
incurred by any Borrower to finance the purchase of fixed assets
provided that (i) the total of all such Indebtedness for such Borrower
shall not exceed an aggregate principal amount of $150,000 at any one
time outstanding; (ii) such Indebtedness when incurred shall not exceed
the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing; and
(d) additional unsecured subordinated Indebtedness of any
Borrower, provided that (i) such Indebtedness is owing only to HCR,
Alterra or the Parent, (ii) such Indebtedness shall be subordinated to
the Loans pursuant to subordination terms (including, without
limitation, (x) assignment of bankruptcy voting rights and (y)
prohibition on acceleration until the Loans shall have been
accelerated) satisfactory in form and substance
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to the Administrative Agent, (iii) such Indebtedness (x) with respect
to any one Borrower (other than Clare Bridge Jefferson) (together with
any such Indebtedness of such Borrower referred to in subsection (c)
and (e) hereof) shall not exceed an aggregate principal amount of
$550,000 at any one time outstanding and (y) with respect to Clare
Bridge Jefferson (together with any such Indebtedness of Clare Bridge
Jefferson referred to in subsection (c) and (e) hereof) shall not
exceed an aggregate principal amount of $600,000 at any time
outstanding, (iv) the aggregate subordinated Indebtedness of the
Borrowers taken as a whole referred to in subsections (d) and (e)
hereof shall not exceed $5,000,000 in the aggregate principal amount
outstanding at any time, (v) no part of the principal amount of such
Indebtedness shall have a maturity date earlier than one month
following the Maturity Date, (vi) such Indebtedness shall not be
amended or modified without the prior written consent of the
Administrative Agent, (vii) such Indebtedness shall not be assigned or
otherwise transferred, in whole or in part, or encumbered in any manner
whatsoever by HCR, Alterra or the Parent, as applicable, and (VII) the
interest rate on any such Indebtedness shall not exceed the Prime Rate
(as published in The Wall Street Journal) plus 2% per annum.
(e) the unsecured subordinated Indebtedness of the Initial
Pool A Borrowers (other than Clare Bridge Parma and Clare Bridge
Westchase) in the amounts identified on Schedule 8.11(e) owing to
Health Care Retirement Corporation, provided that (i) such Indebtedness
shall be subordinated to the Loans pursuant to subordination terms
(including, without limitation, (x) assignment of bankruptcy voting
rights and (y) prohibition on acceleration until the Loans shall have
been accelerated) satisfactory in form and substance to the
Administrative Agent, (ii) such Indebtedness with respect to any such
Initial Pool A Borrower (other than Clare Bridge Jefferson) (together
with any such Indebtedness of such Initial Pool A Borrower referred to
in subsections (c) and (d) above) shall not exceed an aggregate
principal amount of $550,000 at any one time outstanding, (iii) such
Indebtedness with respect to Clare Bridge Jefferson (together with any
such Indebtedness of Clare Bridge Jefferson referred to in subsections
(c) and (d) above) shall not exceed $600,000 at any one time
outstanding, (iv) the aggregate subordinated Indebtedness of the
Borrowers taken as a whole referred to in subsections (d) and (e)
hereof shall not exceed $5,000,000 in the aggregate principal amount
outstanding at any time outstanding, (v) no part of the principal
amount of such Indebtedness shall have a maturity date earlier than one
month following the Maturity Date, (vi) such Indebtedness shall not be
amended or modified without the prior written consent of the
Administrative Agent, (vii) such Indebtedness shall not be assigned or
otherwise transferred, in whole or in part, or encumbered in any manner
whatsoever by Health Care Retirement Corporation and (viii) the
interest rate on any such Indebtedness shall not exceed the Prime Rate
(as published in the Wall Street Journal) plus 2% per annum.
8.2 LIENS.
No Operative Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its Property, whether now owned or after acquired, except for Permitted
Liens.
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8.3 NATURE OF BUSINESS.
No Borrower will engage in any business other than (a) the acquisition
(as applicable) construction, development or refinancing and operation of its
respective Facility and (b) entering into and performance of the Credit
Documents to which it is a party. The Parent shall not engage in any business,
activity or operation other than (a) the ownership of Capital Stock permitted by
Section 8.6 and (b) entering into and performance of the Credit Documents to
which it is a party.
8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC.
Except as provided in Section 8.5 below, no Operative Party will, nor
will it permit any of its Subsidiaries to, enter into any transaction of merger
or consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution). Furthermore, none of the Borrowers shall form any
Subsidiaries. The Parent shall also not form any Subsidiaries, and the Parent
shall not own any assets other than (i) ten percent (10%) of the Capital Stock
of each Pool A Borrower, (ii) ten percent (10%) of the Capital Stock of each
Pool B Borrower, (iii) ten percent of the Capital Stock of each Pool C Borrower,
and (iv) ten percent (10%) of the Capital Stock of any Person which shall become
a Borrower in accordance with the terms of Section 2.3 within 30 days of the
initial investment by the Parent in such Person.
8.5 ASSET DISPOSITIONS.
No Operative Party will, nor will it permit any of its Subsidiaries to,
make any Asset Disposition (including, without limitation, any Sale and
Leaseback Transaction) other than (i) the sale of assets (other than any
Facility) in the ordinary course of business for fair consideration (ii) the
sale or disposition of assets (other than any Facility) no longer used or useful
in the conduct of such Person's business and (iii) the sale of non-material
assets (other than any Facility) for fair consideration.
Notwithstanding the foregoing paragraph, a Borrower may sell a Facility
and obtain the release of the Administrative Agent's security interest, for the
benefit of the Lenders, with respect to such Facility provided (i) no Default
(other than a Default which the applicable Borrower is attempting to remedy by
removing such Facility as Collateral in accordance with the terms of this
Section 8.5) or Event of Default exists before or after giving effect to any
such sale, (ii) after giving effect to any such sale on a pro forma basis, as if
such sale had occurred on the first day of the four fiscal quarter period most
recently ending, the Borrowers are in compliance with Section 7.11 (such
compliance to be evidenced by the delivery to the Administrative Agent prior to
consummating such sale of a certificate of each of the chief financial officers
of the Designated Borrowers demonstrating compliance with the financial
covenants contained in Section 7.11), (iii) such Facility is sold pursuant to
the terms and conditions of an arms-length contract for fair market value, (iv)
to the extent such Borrower has any Revolving Loans outstanding hereunder, the
proceeds received from such disposition of such Facility are applied to prepay
such Revolving Loans borrowed by such Borrower in full in accordance with
Section 3.3(b)(ii) and (v) the Borrowing Base shall continue to exceed the
amount of Revolving Loans outstanding after giving effect to any such sale (to
be evidenced by the delivery to the Administrative Agent
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prior to consummating such sale of a Borrowing Base Certificate certified by
each of the chief financial officers of the Designated Borrowers to be true
and correct).
Notwithstanding the terms of Section 8.4 and Section 8.5 to the
contrary, the Parent and the limited partners of a Borrower may (i) sell the
Capital Stock of such Borrower or (ii) merge such Borrower with and into a
successor entity and obtain the release of the Administrative Agent's security
interest, for the benefit of the Lenders, with respect to the Facility owned by
such Borrower provided (A) no Default (other than a Default which the Parent and
the limited partners of the applicable Borrower are attempting to remedy by
removing the Facility of such Borrower as Collateral in accordance with the
terms of this Section 8.5) or Event of Default exists before or after giving
effect to any such disposition of Capital Stock or merger, as applicable, (B)
after giving effect to any such disposition of Capital Stock or merger, as
applicable, on a pro forma basis, as if such merger or disposition had occurred
on the first day of the four fiscal quarter period most recently ending the
Borrowers are in compliance with Section 7.11 (such compliance to be evidenced
by the delivery to the Administrative Agent prior to consummating such
disposition or merger, as applicable, of a certificate of each of the chief
financial officers of the Designated Borrowers demonstrating compliance with the
financial covenants contained in Section 7.11), (C) such Capital Stock is sold
or such merger is consummated, as applicable, pursuant to the terms and
conditions of an arms-length contract for fair market value, (D) to the extent
such Borrower has any Revolving Loans outstanding hereunder, the proceeds
received from such disposition of Capital Stock or merger, as applicable, are
applied to prepay such Revolving Loans borrowed by such Borrower in accordance
with Section 3.3(b)(ii) and (E) after giving effect to any such disposition of
Capital Stock or merger, as applicable, the Borrowing Base shall continue to
exceed the amount of Revolving Loans outstanding (to be evidenced by the
delivery to the Administrative Agent prior to consummating such disposition or
merger, as applicable, of a Borrowing Base Certificate certified by each of the
chief financial officers of the Designated Borrowers to be true and correct).
Upon the sale of assets permitted by this Section 8.5, the
Administrative Agent shall deliver to the applicable Borrower (and the Lenders
hereby authorize the Administrative Agent to), upon such Borrower's request and
at such Borrower's expense, such documentation as is reasonably necessary to
evidence the release of the Administrative Agent's security interest in such
assets.
8.6 INVESTMENTS.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, make any Investments, except for Permitted Investments.
8.7 RESTRICTED PAYMENTS.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except (a) to make dividends payable
solely in the same class of Capital Stock of such Person, (b) a Borrower may
make cash dividends or other cash distributions payable to any shareholder of
such Borrower with proceeds received by such Borrower pursuant to a sale of a
Facility in accordance with the
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terms of Section 8.5 so long as the Revolving Loans borrowed hereunder with
respect to such Facility have been repaid in full in accordance with the terms
of Section 3.3(b)(ii), (c) a Borrower may make cash dividends or other cash
distributions payable to its shareholders to the extent such cash dividends or
cash distributions are required pursuant to the terms of such Borrower's
organizational documents and (d) the Parent may make cash dividends or cash
distributions payable to HCR and Alterra.
8.8 PREPAYMENTS OF INDEBTEDNESS, ETC.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, (a) after the issuance thereof, amend or modify (or permit the
amendment or modification of) any of the terms of any Indebtedness (other than
trade debt incurred in the ordinary course of business) if such amendment or
modification would add or change any terms in a manner adverse to the obligor of
such Indebtedness, or shorten the final maturity or average life to maturity or
require any payment to be made sooner than originally scheduled or increase the
interest rate applicable thereto or change any subordination provision thereof,
or (b) make (or give any notice with respect thereto) any voluntary or optional
payment or prepayment or redemption or acquisition for value of (including
without limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness.
8.9 TRANSACTIONS WITH AFFILIATES.
Except for the Management Agreements and the Development Agreements,
the Operative Parties will not, nor will they permit any of their Subsidiaries
to, enter into or permit to exist any transaction or series of transactions with
any officer, director, shareholder, Subsidiary or Affiliate of such Person other
than (i) normal compensation and reimbursement of expenses of officers and
directors and (ii) except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director, shareholder, Subsidiary or
Affiliate.
8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, (a) change its fiscal year without the prior written consent of
the Required Lenders or (b) amend, modify or change its articles of
incorporation (or corporate charter or other similar organizational document) or
bylaws (or other similar document) or partnership agreement (or other similar
document) in any manner that would reasonably be likely to adversely affect the
Lenders.
8.11 LIMITATION ON RESTRICTED ACTIONS.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Person to (a) pay dividends or make any other distributions
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to any Credit Party on its Capital Stock or with respect to any other interest
or participation in, or measured by, its profits, (b) pay any Indebtedness or
other obligation owed to any Operative Party, (c) make loans or advances to any
Operative Party, (d) sell, lease or transfer any of its properties or assets to
any Operative Party, or (e) act as a Guarantor and pledge its assets pursuant to
the Credit Documents or any renewals, refinancings, exchanges, refundings or
extension thereof, except (in respect of any of the matters referred to in
clauses (a)-(d) above) for such encumbrances or restrictions existing under or
by reason of (i) this Credit Agreement and the other Credit Documents or (ii)
applicable law.
8.12 SALE LEASEBACKS.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as
guarantor or other surety with respect to any lease, whether an Operating Lease
or a Capital Lease, of any Property (whether real, personal or mixed), whether
now owned or hereafter acquired, (a) which such Operative Party or its
Subsidiary has sold or transferred or is to sell or transfer to any Person or
(b) which such Operative Party or its Subsidiary intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Operative Party or its Subsidiary to another
Person in connection with such lease.
8.13 NO FURTHER NEGATIVE PLEDGES.
The Operative Parties will not, nor will they permit any of their
Subsidiaries to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation, except pursuant to this Credit Agreement and the other Credit
Documents.
8.14 CONSTRUCTION.
The Operative Parties will not permit the commencement of construction
of any Eligible Project if the Eligible Project Loan Amount for such Eligible
Project exceeds the sum of (a) the amount of Revolving Loans available to be
drawn hereunder plus (b) the amount of equity investments made by the partners
of the applicable Borrower in the applicable Borrower which owns such Eligible
Project (the receipt of which shall be evidenced by certificate delivered to the
Administrative Agent by the applicable Borrower in a form satisfactory to the
Administrative Agent). Furthermore, the Operative Parties hereby agree that all
such equity investments referenced in the preceding sentence shall be expended
on the acquisition and/or construction, development and working capital needs or
refinancing of the applicable Eligible Project prior to using any proceeds from
the Revolving Loans for the acquisition and/or construction, development and
working capital needs or refinancing of such Eligible Project.
8.15 CHANGES TO PLANS AND SPECIFICATIONS.
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After (a) the review of a Development Budget by the Engineer and (b)
the recommendation by the Engineer to the Administrative Agent that such
Development Budget is acceptable, the Borrowers shall not permit any change
order (i) increasing the price of the improvements for an Eligible Project by
more than $50,000 for any one change order, (ii) increasing the price of the
improvements for an Eligible Project by more than 10% of the total hard cost
portion of the Development Budget or (iii) materially altering the scope of the
improvements without the prior written consent of the Administrative Agent
(which consent will not be unreasonably withheld).
8.16 TRANSFER OF PARTNERSHIP INTERESTS.
The Operative Parties (other than the Initial Pool A Borrowers) will
not permit their organizational documents (or any other contract or agreement)
to give any shareholder of any Operative Party any put rights with respect to
the Capital Stock of such Operative Party; provided, however, the Lenders hereby
acknowledge that the shareholders of the Initial Pool A Borrowers have the right
under the respective partnership agreements of the Initial Pool A Borrowers to
require Alterra to purchase 100% of the Capital Stock of any Initial Pool A
Borrower from such shareholders at any time from and after the first anniversary
of the date of the first resident occupancy at the applicable Eligible Project.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
(a) An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(i) Payment. Any Operative Party shall
(A) default in the payment when due of any principal
of any of the Loans, or
(B) default, and such default shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans, or of any Fees or other amounts
owing hereunder, under any of the other Credit Documents or in
connection herewith or therewith; or
(ii) Representations. Any representation, warranty or
statement made or deemed to be made by HCR, Alterra or the Parent with
respect to itself only but not on behalf of any Borrower herein, in any
of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
deemed to have been made; or
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(iii) Covenants.
(A) The Parent shall default in the due performance
or observance with respect to itself only but not with respect
to any Borrower of any term, covenant or agreement contained
in Sections 7.2, 7.4 or 8.1 through 8.15, inclusive;
(B) The Parent shall default in the due performance
or observance of any term, covenant or agreement contained in
Sections 7.1(a) or (b) and such default shall continue
unremedied for a period of at least 5 days after the earlier
of a responsible officer of the Parent becoming aware of such
default or notice thereof by the Administrative Agent;
(C) (I) Any Operative Party shall default in the due
performance or observance of any term, covenant or agreement
contained in Section 7.11(a) and such default shall continue
unremedied for a period of at least 60 days after the earlier
of a responsible officer of the Parent or a Borrower becoming
aware of such default or notice thereof by the Administrative
Agent (a default in the due performance or observance of
Section 7.11(a) may be remedied by the Borrowers by either
adding Eligible Projects and/or Stabilized Eligible Projects
as Collateral or removing as Collateral in accordance with the
terms of Section 8.5 those Facilities which fail to constitute
Eligible Projects or Stabilized Eligible Projects, as
applicable;
(II) Any Operative Party shall default in
the due performance or observance of any term, covenant or
agreement contained in Section 7.11(b) and such default shall
continue unremedied for a period of at least 60 days after the
earlier of a responsible officer of the Parent or a Borrower
becoming aware of such default or notice thereof by the
Administrative Agent (a default in the due performance or
observance of Section 7.11(b) may be remedied by the Borrowers
by removing as Collateral in accordance with the terms of
Section 8.5 those Facilities which fail to constitute
Stabilized Eligible Projects;
(D) The Parent shall default with respect to itself
only (but not with respect to any Borrower) in the due
performance or observance by it of any term, covenant or
agreement (other than those referred to in subsections (i),
(ii), (iii)(A), (iii)(B) or (iii)(C) of this Section 9.1(a))
contained in this Credit Agreement and such default shall
continue unremedied for a period of at least 30 days after the
earlier of a responsible officer of the Parent becoming aware
of such default or notice thereof by the Administrative Agent;
or
(iv) Other Credit Documents. (A) HCR, Alterra or the Parent
shall default with respect to itself but not with respect to any
Borrower in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents (subject to applicable
grace or cure periods, if any), or (B) any Credit Document shall fail
to be in full force and effect or to give the Administrative Agent
and/or the Lenders the Liens, rights,
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powers and privileges purported to be created thereby, or any Credit
Party shall so state in writing; or
(v) Guaranties. The guaranty given by any Guarantor
hereunder or any of the Guaranty Agreements or any provision thereof
shall cease to be in full force and effect, or any Guarantor hereunder
or any of the Guaranty Agreements 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
(vi) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to any Operative Party or any of its Subsidiaries; or
(vii) Defaults under Other Agreements.
(A) The Parent shall default in the performance or
observance (beyond the applicable grace period with respect
thereto, if any) of any material obligation or condition of
any material contract or lease; or
(B) With respect to any Indebtedness (other than
Indebtedness outstanding under this Credit Agreement) in
excess of $100,000 of the Parent (A) the Parent shall default
in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such
Indebtedness, (B) the occurrence and continuance of a default
in the observance or performance relating to such Indebtedness
or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition
shall occur or condition exist, the effect of which default or
other event or condition is to cause, or permit, the holder or
holders of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to whether
any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity; or
(C) any such Indebtedness shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof.
(viii) Judgments. One or more judgments or decrees shall be
entered against the Parent involving a liability of $250,000 or more in
the aggregate (to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has the ability
to perform) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof; or
(ix) ERISA. Any of the following events or conditions, if
such event or condition could reasonably be expected to have a Material
Adverse Effect: (i) any "accumulated funding deficiency," as such term
is defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of any Operative Party, any of its Subsidiaries or
any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Event
shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Administrative Agent,
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likely to result in the termination of such Plan for purposes of Title
IV of ERISA; (iii) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B)
any Operative Party, any of its Subsidiaries or any ERISA Affiliate
incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency or (within the meaning of Section 4245 of ERISA) such Plan;
or (iv) any prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any Operative Party, any
of its Subsidiaries or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) or ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which any
Operative Party, any of its Subsidiaries or any ERISA Affiliate has
agreed or is required to indemnify any person against any such
liability; or
(x) Ownership. There shall occur a Change of Control; or
(xi) HCR/Alterra Guaranties. (i) There shall occur a default
or event of default under the Alterra Guaranty Agreement or (ii) there
shall occur a default or event of default under the HCR Guaranty
Agreement; or
(xii) Management Agreements. (i) There shall occur a default
under any Management Agreement, or (ii) any Management Agreement shall
be terminated without the prior written consent of the Required
Lenders; or
(xiii) Pool A Event of Default. Any Pool A Event of Default
shall continue unremedied for a period of at least 60 days; or
(xiv) Pool B Event of Default. Any Pool B Event of Default
shall continue unremedied for a period of at least 60 days; or
(xv) Pool C Event of Default. Any Pool C Event of Default
shall continue unremedied for a period of at least 60 days.
(b) A Pool A Event of Default shall exist upon the occurrence of
any of the following specified events (each a "Pool A Event of Default"):
(i) Representations. Any representation, warranty or
statement made or deemed to be made by any Pool A Borrower herein, in
any of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
deemed to have been made; or
(ii) Covenants. Any Pool A Borrower shall
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(A) default in the due performance or observance with
respect to itself or any of its Subsidiaries of any term, covenant
or agreement contained in Sections 7.2, 7.4, 7.9, 7.13, 7.15 or
8.1 through 8.15, inclusive;
(B) default in the due performance or observance of any
term, covenant or agreement contained in Section 8.16 and such
default shall continue unremedied for a period of at least 60 days
after the earlier of a responsible officer of the Parent or a Pool
A Borrower becoming aware of such default or notice thereof by the
Administrative Agent, or
(C) default in the due performance or observance with
respect to itself or any of its Subsidiaries of any term, covenant
or agreement (other than those referred to in subsections (i),
(ii)(A) or (ii)(B) of this Section 9.1(b)) contained in this
Credit Agreement and such default shall continue unremedied for a
period of at least 30 days after the earlier of a responsible
officer of a Pool A Borrower becoming aware of such default or
notice thereof by the Administrative Agent; or
(iii) Other Credit Documents. Any Pool A Borrower shall
default in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents (subject to applicable
grace or cure periods, if any); or
(iv) Defaults under Other Agreements.
(A) Any Pool A Borrower shall default in the performance or
observance (beyond the applicable grace period with respect
thereto, if any) of any material obligation or condition of any
material contract or lease; or
(B) With respect to any Indebtedness (other than
Indebtedness outstanding under this Credit Agreement) in excess of
$100,000 of any Pool A Borrower (A) such Pool A Borrower shall
default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness,
(B) the occurrence and continuance of a default in the observance
or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event or condition shall occur or condition exist,
the effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause (determined
without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its stated
maturity; or (C) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity
thereof.
(v) Judgments. One or more judgments or decrees shall be
entered against any Pool A Borrower involving a liability of $100,000
or more in the aggregate (to the extent not paid or fully covered by
insurance provided by a carrier who has acknowledged coverage and has
the ability to perform) and any such judgments or decrees shall not
have
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been vacated, discharged or stayed or bonded pending appeal within 30
days from the entry thereof; or
(vi) Put Obligations. The shareholders of more than five (5) of
the fourteen (14) Initial Pool A Borrowers exercise their option to
require Alterra to purchase the Capital Stock of such Initial Pool A
Borrowers.
(c) A Pool B Event of Default shall exist upon the occurrence of any
of the following specified events (each a "Pool B Event of Default"):
(i) Representations. Any representation, warranty or statement
made or deemed to be made by any Pool B Borrower herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was deemed to have
been made; or
(ii) Covenants. Any Pool B Borrower shall
(A) default in the due performance or observance with
respect to itself of any term, covenant or agreement contained in
Sections 7.2, 7.4, 7.9, 7.13, 7.15, 7.18 or 8.1 through 8.16,
inclusive;
(B) default in the due performance or observance with
respect to itself of any term, covenant or agreement (other than
those referred to in subsections (i) or (ii)(A) of this Section
9.1(c)) contained in this Credit Agreement and such default shall
continue unremedied for a period of at least 30 days after the
earlier of a responsible officer of the Parent or a Pool B
Borrower becoming aware of such default or notice thereof by the
Administrative Agent; or
(iii) Other Credit Documents. Any Pool B Borrower shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents (subject to applicable grace or
cure periods, if any); or
(iv) Defaults under Other Agreements.
(A) Any Pool B Borrower shall default in the performance or
observance (beyond the applicable grace period with respect
thereto, if any) of any material obligation or condition of any
material contract or lease; or
(B) With respect to any Indebtedness (other than
Indebtedness outstanding under this Credit Agreement) in excess of
$100,000 of any Pool B Borrower (A) such Pool B Borrower shall
default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness,
(B) the occurrence and continuance of a default in the observance
or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event or condition
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shall occur or condition exist, the effect of which default or
other event or condition is to cause, or permit, the holder or
holders of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to whether any
notice or lapse of time is required), any such Indebtedness to
become due prior to its stated maturity; or (C) any such
Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or
(v) Judgments. One or more judgments or decrees shall be entered
against any Pool B Borrower involving a liability of $100,000 or more
in the aggregate (to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has the ability
to perform) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof.
(d) A Pool C Event of Default shall exist upon the occurrence of any
of the following specified events (each a "Pool C Event of Default"):
(i) Representations. Any representation, warranty or statement
made or deemed to be made by any Pool C Borrower herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was deemed to have
been made; or
(ii) Covenants. Any Pool C Borrower shall
(A) default in the due performance or observance with
respect to itself or any of its Subsidiaries of any term, covenant
or agreement contained in Sections 7.2, 7.4, 7.9, 7.13, 7.15, 7.18
or 8.1 through 8.16, inclusive;
(B) default in the due performance or observance with
respect to itself or any of its Subsidiaries of any term, covenant
or agreement (other than those referred to in subsections (i) or
(ii)(A) of this Section 9.1(c)) contained in this Credit Agreement
and such default shall continue unremedied for a period of at
least 30 days after the earlier of a responsible officer of the
Parent or any Pool C Borrower becoming aware of such default or
notice thereof by the Administrative Agent; or
(iii) Other Credit Documents. Any Pool C Borrower shall default in
the due performance or observance of any term, covenant or agreement in
any of the other Credit Documents (subject to applicable grace or cure
periods, if any); or
(iv) Defaults under Other Agreements.
(A) Any Pool C Borrower shall default in the performance or
observance (beyond the applicable grace period with respect
thereto, if any) of any material obligation or condition of any
material contract or lease; or
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(B) With respect to any Indebtedness (other than
Indebtedness outstanding under this Credit Agreement) in excess of
$100,000 of any Pool C Borrower (A) such Pool C Borrower shall
default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness,
(B) the occurrence and continuance of a default in the observance
or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event or condition shall occur or condition exist,
the effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause (determined
without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its stated
maturity; or (C) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity
thereof.
(v) Judgments. One or more judgments or decrees shall be entered
against any Pool C Borrower involving a liability of $100,000 or more
in the aggregate (to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has the ability
to perform) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Administrative Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Credit Parties, take any of the
following actions:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the Credit
Parties to the Administrative Agent and/or any of the Lenders hereunder
to be due whereupon the same shall be immediately due and payable
without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Credit Parties.
(c) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
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Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(a)(vi) shall occur with respect to a Credit Party, then the
Commitments shall automatically terminate and all Loans, all accrued interest in
respect thereof, all accrued and unpaid Fees and other indebtedness or
obligations owing to the Administrative Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without the
giving of any notice or other action by the Administrative Agent or the Lenders.
Notwithstanding anything contained herein to the contrary, the
Administrative Agent and the Lenders shall not take any of the actions
referenced above in subsections (a), (b) or (c) of this Section 9.2 following
the occurrence of a Pool A Event of Default, a Pool B Event of Default or a Pool
C Event of Default; provided, however, the Administrative Agent and the Lenders
shall be free to exercise any of the rights and remedies identified in this
Section 9.2 on account of any such Pool A Event of Default, Pool B Event of
Default or Pool C Event of Default (x) if any such Pool A Event of Default, Pool
B Event of Default or Pool C Event of Default is not remedied within 60 days of
the occurrence of such Pool A Event of Default, Pool B Event of Default or Pool
C Event of Default respectively or (y) upon the occurrence of an Event of
Default which has not been waived by the requisite Lenders (pursuant to the
voting requirements of Section 11.6).
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT, POWERS AND IMMUNITIES.
(a) Each Lender hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent under this Credit Agreement
and the other Credit Documents with such powers and discretion as are
specifically delegated to the Administrative Agent by the terms of this
Credit Agreement and the other Credit Documents, together with such
other powers as are reasonably incidental thereto. The Administrative
Agent (which term as used in this sentence and in Section 10.5 and the
first sentence of Section 10.6 hereof shall include its Affiliates and
its own and its Affiliates' officers, directors, employees, and
agents): (a) shall not have any duties or responsibilities except those
expressly set forth in this Credit Agreement and shall not be a trustee
or fiduciary for any Lender; (b) shall not be responsible to the
Lenders for any recital, statement, representation, or warranty
(whether written or oral) made in or in connection with any Credit
Document or any certificate or other document referred to or provided
for in, or received by any of them under, any Credit Document, or for
the value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Credit Document, or any other document referred to
or provided for therein or for any failure by any Credit Party or any
other Person to perform any of its obligations thereunder; (c) shall
not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by
any Credit Party or the satisfaction of any condition or to inspect the
property (including the books and records) of any Credit Party or any
of its Subsidiaries or Affiliates; (d) shall not be required to
initiate or conduct any litigation or collection proceedings under any
Credit Document;
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and (e) shall not be responsible for any action taken or omitted to be
taken by it under or in connection with any Credit Document, except for
its own gross negligence or willful misconduct. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The
Administrative Agent agrees that it will administer the Loans and the
Credit Documents in a manner consistent with that ordinarily employed
by the Administrative Agent in the administration of similar loans for
its own account.
(b) Each Lender hereby consents to and approves the terms of
the Alterra Guaranty Agreement and the HCR Guaranty Agreement. By
execution hereof, the Lenders authorize and direct the Administrative
Agent to enter into the Alterra Guaranty Agreement and the HCR Guaranty
Agreement on behalf of the Lenders.
10.2 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy)
believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel for any
Credit Party), independent accountants, and other experts selected by
the Administrative Agent. The Administrative Agent may deem and treat
the payee of any Note as the holder thereof for all purposes hereof
unless and until the Administrative Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 11.3(b)
hereof. As to any matters not expressly provided for by this Credit
Agreement, the Administrative Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding on all of the Lenders; provided,
however, that the Administrative Agent shall not be required to take
any action that exposes the Administrative Agent to personal liability
or that is contrary to any Credit Document or applicable law or unless
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 any such action.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has executed this Credit
Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter either sent by the
Administrative Agent to such Lender for consent, approval, acceptance
or satisfaction, or required thereunder to be consented to or approved
by or acceptable or satisfactory to the Lender.
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10.3 DEFAULTS.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the
Administrative Agent has received written notice from a Lender or a Credit Party
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default, the Administrative
Agent shall give prompt notice thereof to the Lenders. The Administrative Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative 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
interest of the Lenders.
10.4 RIGHTS AS A LENDER.
With respect to its Commitment and the Loans made by it, Bank of
America (and any successor acting as Administrative Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. Bank of America (and any successor acting as Administrative Agent) and
its Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Administrative Agent, and Bank of America (and any successor acting as
Administrative Agent) and its Affiliates may accept fees and other consideration
from any Credit Party or any of its Subsidiaries or Affiliates for services in
connection with this Credit Agreement or otherwise without having to account for
the same to the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of America or its Affiliates may receive information regarding
a Credit Party or any of its Affiliates (including information that may be
subject to confidentiality obligations in favor of a Credit Party or any of its
Subsidiaries) and acknowledge that the Administrative Agent shall be under no
obligation to provide such information to them.
10.5 INDEMNIFICATION.
The Lenders agree to indemnify the Administrative Agent and each of its
Affiliates (to the extent not reimbursed under Section 11.5 hereof, but without
limiting the obligations of the Credit Parties under such Section) ratably in
accordance with their respective Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the
Administrative Agent or any of its Affiliates (including by any Lender) in any
way relating to or arising out of any Credit Document or the transactions
contemplated thereby or any action taken or omitted by the Administrative Agent
or any of its Affiliates under any Credit Document (including any of the
foregoing arising from the negligence of the Administrative Agent or any of its
Affiliates); provided that no
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Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Person to be indemnified or
the breach by any such Person of its obligations under the Credit Documents.
Without limitation of the foregoing, each Lender agrees to reimburse the
Administrative Agent and each of its Affiliates promptly upon demand for its
ratable share of any costs or expenses payable by the Credit Parties under
Section 11.5, to the extent that the Administrative Agent or any of its
Affiliates is not promptly reimbursed for such costs and expenses by the Credit
Parties. The agreements in this Section 10.5 shall survive the repayment of the
Loans and other obligations under the Credit Documents and the termination of
the Commitments hereunder.
10.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Credit Parties and their Subsidiaries and decision to enter into this Credit
Agreement and that it will, independently and without reliance upon the
Administrative 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
analysis and decisions in taking or not taking action under the Credit
Documents. Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition, or business of any Credit Party or any of its Subsidiaries
or Affiliates that may come into the possession of the Administrative Agent or
any of its Affiliates.
10.7 SUCCESSOR ADMINISTRATIVE AGENT.
The Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Credit Parties. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Administrative Agent's giving of notice of resignation,
then the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a commercial bank organized under
the laws of the United States of America having combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. If no successor
Administrative Agent has accepted appointment as Administrative Agent within
thirty (30) days after the retiring Administrative Agent's giving notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
become effective and the Lenders shall perform all duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor Administrative Agent as provided for above. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 10 shall
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continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Credit Parties and the
Administrative Agent, set forth below, and, in the case of the Lenders, set
forth on Schedule 2.1(a)(i), or at such other address as such party may specify
by written notice to the other parties hereto:
if to HCR:
Manor Care, Inc.
One Seagate
Toledo, Ohio 43604-2616
Attn: Geoffrey Meyers
Telephone: (419) 252-5549
Telecopy: (419) 252-5564
if to Alterra:
Alterra Healthcare Corporation
450 North Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005
Attn: Mark Ohlendorf
Telephone: (414) 641-7432
Telecopy: (414) 789-6677
if to the Parent:
HCR/Alterra Development, LLC
One Seagate
Toledo, Ohio 43604-2616
Attn: Douglas Haag
Telephone: (419) 252-5710
Telecopy: (419) 252-5571
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with a copy to:
HCR/Alterra Development, LLC
450 North Sunnyslope Road, Suite 53005
Brookfield, Wisconsin 53005
Attn: Mark Ohlendorf
Telephone: (414) 641-7432
Telecopy: (414) 789-6677
if to any Borrower:
c/o HCR/Alterra Development, LLC
450 North Sunnyslope Road, Suite 53005
Brookfield, Wisconsin 53005
Attn: Mark Ohlendorf
Telephone: (414) 641-7432
Telecopy: (414) 789-6677
if to the Administrative Agent:
Bank of America, N. A.
Independence Center, 15th Floor
NC1-001-15-04
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-9371
Telecopy: (704) 409-0023
with a copy to:
Bank of America, N. A.
700 Louisiana Street, 8th Floor
Houston, Texas 77002
Attn: Scott Singhoff
Telephone: (713) 247-6961
Telecopy: (713) 247-6719
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with a copy to:
Bank of America, N. A.
Agency Management #10831
CA5-701-12-09
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Christine Cordi
Telephone: (415) 436-2790
Telecopy: (415) 436-3425
11.2 RIGHT OF SET-OFF; ADJUSTMENTS.
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates) is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender (or any
of its Affiliates) to or for the credit or the account of any Operative Party
against any and all of the obligations of such Person now or hereafter existing
under this Credit Agreement, under the Notes, under any other Credit Document or
otherwise, irrespective of whether such Lender shall have made any demand
hereunder or thereunder and although such obligations may be unmatured. Each
Lender agrees promptly to notify any affected Operative Party after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 11.2 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
11.3 BENEFIT OF AGREEMENT.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns
of the parties hereto; provided that none of the Credit Parties may
assign or transfer any of its interests and obligations without prior
written consent of the Lenders; provided further that the rights of
each Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth in this
Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Credit Agreement
(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 this Credit Agreement, any such partial assignment shall be
in an amount at least equal to
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$10,000,000 (or, if less, the remaining amount of the Commitment
being assigned by such Lender) 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 this Credit Agreement and the Notes; and
(iv) the parties to such assignment shall execute and
deliver to (A) the Administrative Agent for its acceptance an
Assignment and Acceptance in the form of Exhibit 11.3(b) hereto
and (B) so long as no Event of Default shall have occurred and be
continuing at the time of such assignment, the Designated
Borrowers for their acceptance (such acceptance not to be
unreasonably withheld) an Assignment and Acceptance in the form
of Exhibit 11.3(b), together with any Note subject to such
assignment and 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 hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its
obligations under this Credit Agreement. Upon the consummation of any
assignment pursuant to this Section 11.3(b), the assignor, the
Administrative Agent and the Credit Parties shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor
and the assignee. If the assignee is not a United States person under
Section 7701(a)(30) of the Code, it shall deliver to the Credit Parties
and the Administrative Agent certification as to exemption from
deduction or withholding of Taxes in accordance with Section 3.11.
(c) The Administrative Agent shall maintain at its address
referred to in Section 11.1 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 Credit
Parties, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Credit Parties or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) 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 Administrative Agent shall, if
such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit 11.3(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.
(e) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations
under this Credit Agreement
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(including all or a portion of its Commitment or its Loans); provided,
however, that (i) such Lender's obligations under this Credit Agreement
shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the participant shall be entitled to the benefit of
the yield protection provisions contained in Sections 3.7 through 3.12,
inclusive, and the right of set-off contained in Section 11.2, and (iv)
the Credit Parties shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Credit Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Credit Parties relating to the Credit
Party Obligations owing to such Lender and to approve any amendment,
modification, or waiver of any provision of this Credit Agreement
(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).
(f) Notwithstanding any other provision set forth in this Credit
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.
(g) Any Lender may furnish any information concerning the Credit
Parties in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.14 hereof.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Administrative Agent or any
Lender and any of the Credit Parties shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Administrative Agent or any Lender
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle the Credit Parties to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
11.5 EXPENSES; INDEMNIFICATION.
(a) The Operative Parties jointly and severally agree to pay on demand
all costs and expenses of the Administrative Agent in connection with the
syndication, preparation, execution, delivery, administration, modification, and
amendment of this Credit Agreement, the other Credit Documents, and the other
documents to be delivered hereunder, including, without
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limitation, the reasonable fees and expenses of counsel for the Administrative
Agent with respect thereto and with respect to advising the Administrative Agent
as to its rights and responsibilities under the Credit Documents. The Operative
Parties further jointly and severally agree to pay on demand all costs and
expenses of the Administrative Agent and the Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) and
attempted enforcement of the Credit Documents and the other documents to be
delivered hereunder and the preservation of any rights and remedies under this
Credit Agreement or any other Credit Document during the existence of an Event
of Default or after the acceleration of the Loans (including, without
limitation) in connection with any "workout" or restructuring regarding the
Loans, and including, without limitation, any insolvency proceeding or appellate
proceeding).
(b) The Operative Parties jointly and severally agree to indemnify and
hold harmless the Administrative Agent and each Lender and each of their
Affiliates and their respective officers, directors, employees, agents, and
advisors (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans (including to
the extent arising from the negligence of the Indemnified Party), except to the
extent such claim, damage, loss, liability, cost, or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this Section 11.5 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any of
the Operative Parties, their respective directors, shareholders or creditors or
an Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. The Operative Parties agree not to assert any claim against the
Administrative Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and advisers, on
any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Operative Parties hereunder, the agreements and obligations of the Operative
Parties contained in this Section 11.5 shall survive the repayment of the Loans
and other obligations under the Credit Documents and the termination of the
Commitments hereunder.
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment,
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change, waiver, discharge or termination is in writing entered into by, or
approved in writing by, the Required Lenders and the Borrowers, provided,
however, that:
(i) without the consent of each Lender affected thereby,
neither this Credit Agreement nor any other Credit Document may be
amended to
(a) extend the final maturity of any Loan or any portion
thereof,
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) thereon or Fees
hereunder,
(c) reduce or waive the principal amount of any Loan or any
portion thereof,
(d) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver
of any Default or Event of Default or mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender),
(e) release any Facility (provided that the Administrative
Agent may, without consent from any other Lender, release any
Collateral (including without limitation any Facility or Capital
Stock owned by the Parent in any Borrower) that is sold or
transferred by a Borrower or the Parent, as applicable, in
conformance with Section 8.4 and 8.5),
(f) release a Borrower or any Credit Party from its or their
obligations under the Credit Documents (provided that the
Administrative Agent may, without consent from any other Lender,
release a Borrower in conformance with Section 2.5),
(g) amend, modify or waive any provision of this Section
11.6 or Section 3.5(b), 3.13, 3.14, 3.15, 3.17, 9.1(a)(i), 11.2,
11.3, 11.5 or 11.9,
(h) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders, or
(i) amend (x) the requirement contained in Section 2.1 that
the sum of the aggregate principal amount of Revolving Loans used
to construct or refinance an Eligible Project not exceed such
Eligible Project's Eligible Project Loan Amount or (y) the
definition of Eligible Project Loan Amount contained in Section
1.1(a), or
(j) consent to the assignment or transfer by a Borrower or
all or substantially all of the other Credit Parties of any of
its or their rights and obligations under (or in respect of) the
Credit Documents except as permitted thereby; and
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(ii) without the consent of the Administrative Agent, no
provision of Section 10 may be amended.
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender
is entitled to vote as such Lender sees fit on any bankruptcy
reorganization plan that affects the Loans, and each Lender
acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use
cash collateral in the context of a bankruptcy or insolvency
proceeding.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 3.11, 3.12, 10.5 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the repayment of the Loans and
other obligations under the Credit Documents and the termination of the
Commitments hereunder and all representations and warranties made by the
Operative Parties herein shall survive delivery of the Notes and the making of
the Loans hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY
PROVIDED THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the
courts of the State of New York, or of the United States for the
Southern District of New York, and, by execution and delivery of this
Credit Agreement, each of the Operative Parties, the Administrative
Agent and the Lenders hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the
nonexclusive
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jurisdiction of such courts. Each of the Operative Parties, the
Administrative Agent and the Lenders 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 11.1, such service to become
effective three (3) days after such mailing. Nothing herein shall
affect the right of the Administrative Agent or any Lender to (i) serve
process or to commence legal proceedings in any other manner permitted
by law or (ii) commence legal proceedings, exercise rights or otherwise
proceed against the Collateral in any other jurisdictions as permitted
by law or as deemed necessary or appropriate by the Administrative
Agent or any Lender. Nothing herein shall affect the rights of the
Operative Parties to serve process or to commence legal proceedings in
any other manner permitted by law.
(b) Each of the Operative Parties 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 Credit Agreement or any other Credit Document
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.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS, EACH OF THE Operative PARTIES HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
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11.13 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time
when all of the conditions set forth in Section 5.1 have been satisfied
or waived by the Lenders and it shall have been executed by each
Operative Party and the Administrative Agent, and the Administrative
Agent shall have received copies hereof (telefaxed or otherwise) which,
when taken together, bear the signatures of each Lender, and thereafter
this Credit Agreement shall be binding upon and inure to the benefit of
each Operative Party, the Administrative Agent and each Lender and
their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans or
any other amounts payable hereunder or under any of the other Credit
Documents shall remain outstanding, all of the Credit Party Obligations
(other than contingent indemnification obligations which survive) have
been irrevocably satisfied in full and all of the Commitments hereunder
shall have expired or been terminated.
11.14 CONFIDENTIALITY.
The Administrative Agent and each Lender (each, a "Lending Party")
agrees to keep confidential any information furnished or made available to it by
the Operative Parties pursuant to this Credit Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or Affiliate of any Lending 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 Lending Party other than as a result of a
disclosure by any Lending Party prohibited by this Credit Agreement, (g) to the
extent necessary, in connection with any litigation to which such Lending 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 Credit Agreement or any
other Credit Document, and (i) subject to provisions substantially similar to
those contained in this Section 11.14, to any actual or proposed participant or
assignee.
11.15 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
11.16 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Borrowers
that at least one of the following statements is an accurate representation as
to the source of funds to be used by such Lender in connection with the
financing hereunder:
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(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such
Lender has disclosed to the Borrowers the name of each employee benefit
plan whose assets in such account exceed 10% of the total assets of
such account as of the date of such purchase (and, for purposes of this
subsection (b), all employee benefit plans maintained by the same
employer or employee organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes assets
of an insurance company's general account, such insurance company has
complied with all of the requirements of the regulations issued under
Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific benefit
plans which such Lender has identified in writing to the Borrowers.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.17 RELEASE OF LIENS.
The Lenders hereby agree that the Administrative Agent shall
(upon the request and at the expense of Clare Bridge Parma) take such
action as is necessary to release the Administrative Agent's security
interest in the Parma Vacant Land; provided, (i) no Default or Event of
Default shall have occurred and be continuing, (ii) Clare Bridge Parma
shall first cause the Parma Vacant Land to be subdivided in accordance
with applicable law from the land on which the Facility in Parma, Ohio
is located and such Parma Vacant Land shall be a separate parcel of
land for all building, subdivision, zoning and taxing purposes, (iii)
the land on which the Facility in Parma, Ohio is located is a platted
and subdivided parcel upon which the Administrative Agent may maintain
a legally enforceable first priority perfected lien, (iv) the land on
which the Facility in Parma, Ohio is located shall continue to remain
subject to the Administrative Agent's security interest pursuant to the
applicable Mortgage and shall be of a sufficient size and nature in the
reasonable opinion of the Administrative Agent for the operation of the
Facility in Parma, Ohio, (v) to the extent reasonably required, an
appropriate reciprocal easement agreement or other agreements shall be
executed and recorded to ensure the integrated use and operation of the
Facility in Parma, Ohio and the Parma Vacant Land, (vi) title to the
Parma Vacant Land shall have been or simultaneously shall be conveyed
to a person or entity other than Clare Bridge Parma, (vii) all
agreements and instruments to be delivered to Administrative Agent in
connection with the release of the Parma Vacant Land shall be in form
and substance reasonably satisfactory to Administrative Agent and
(viii) Clare Bridge Parma shall pay all costs reasonably incurred by
Administrative Agent (including, but not limited to, reasonable
attorneys' fees and disbursements, title search costs and endorsement
premiums) in connection with the review, execution and delivery of the
release of the Parma Vacant Land.
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[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and delivered as of
the date first above written.
BORROWERS: CLARE BRIDGE OF AKRON L.P.,
a Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
CLARE BRIDGE OF ARLINGTON L.P.,
a Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 122
CLARE BRIDGE OF BAINBRIDGE L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
CLARE BRIDGE OF BINGHAM FARMS L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 123
CLARE BRIDGE OF CARROLLWOOD L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
CLARE BRIDGE OF FT. MYERS L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 124
CLARE BRIDGE OF HOUSTON L.P., a Delaware
limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
CLARE BRIDGE OF JEFFERSON TOWNSHIP L.P.,
a Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 125
CLARE BRIDGE OF LIVONIA L.P., a Delaware
limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
CLARE BRIDGE OF PARMA L.P., a Delaware
limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 126
CLARE BRIDGE OF RICHARDSON L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
CLARE BRIDGE OF TUSCAWILLA L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 127
CLARE BRIDGE OF WESTCHASE L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its
sole general partner
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 128
CREDIT AGREEMENT
GUARANTORS: HCR/ALTERRA DEVELOPMENT, LLC,
a Delaware limited liability company
By: /s/Mark W. Ohlendorf
-------------------------------
Name: Mark W. Ohlendorf
-----------------------------
Title: Co-Vice President
----------------------------
By: /s/Douglas G. Haas
-------------------------------
Name: Douglas G. Haas
-----------------------------
Title: Co-Vice President
----------------------------
<PAGE> 129
LENDERS: BANK OF AMERICA, N. A.,
individually in its capacity as a
Lender and in its capacity as
Administrative Agent
By: /s/J. Gregory Seibly
-------------------------------
Name: J. Gregory Seibly
-----------------------------
Title: Managing Director
----------------------------
<PAGE> 130
THE CHASE MANHATTAN BANK
By: /s/Dawn Lee Lum
-------------------------------
Name: Dawn Lee Lum
-----------------------------
Title: Vice President
----------------------------
<PAGE> 131
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/Susan L. Pearson
-------------------------------
Name: Susan L. Pearson
-----------------------------
Title: Director
----------------------------
By: /s/Joel Makowsky
-------------------------------
Name: Joe Makowsky
-----------------------------
Title: Vice President
-----------------------------
<PAGE> 132
BANK UNITED, F.S.B.
By: /s/Casey Moore
-------------------------------
Name: Casey Moore
-----------------------------
Title: Vice President
----------------------------
<PAGE> 133
COMERICA BANK
By: /s/Colleen M. Murphy
-------------------------------
Name: Colleen M. Murphy
-----------------------------
Title: Vice President
----------------------------
<PAGE> 134
NATIONAL CITY BANK
By: /s/Janice E. Focke
-------------------------------
Name: Janice E. Focke
-----------------------------
Title: Vice President
----------------------------
<PAGE> 135
THE BANK OF NEW YORK
By: /s/Edward J. Dougherty III
----------------------------------------
Name: Edward J. Dougherty III
----------------------------------------
Title: Vice President, U.S. Commerical Banking
----------------------------------------
<PAGE> 136
THE HUNTINGTON NATIONAL BANK
By: /s/Daniel E. Crane
---------------------------------
Name: Daniel E. Crane
-------------------------------
Title: Vice President
------------------------------
<PAGE> 137
BANK OF MONTREAL
By: /s/Heather L. Turf
---------------------------------
Name: Heather L. Turf
-------------------------------
Title: Director
------------------------------
<PAGE> 1
EXHIBIT 10.9
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT dated as of September 30, 1999 (the "Guaranty")
is given by Alterra Healthcare Corporation, a Delaware corporation (the
"Partner" or "Alterra"), in favor of BANK OF AMERICA, N.A., as Administrative
Agent (in such capacity, the "Administrative Agent") for the Lenders under the
Credit Agreement referenced below.
W I T N E S S E T H
WHEREAS, the Borrowers, HCR/Alterra Development, LLC, the Lenders and
the Administrative Agent have entered into that certain Credit Agreement (each
as defined below);
WHEREAS, this Guaranty is a condition precedent to the obligations of
the Lenders to make loans and extensions of credit to the Borrowers under the
Credit Agreement;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Partner hereby agrees as follows:
SECTION 1
DEFINITIONS
1.1 CERTAIN DEFINITIONS.
Unless otherwise defined herein or the context otherwise requires,
terms used in this Guaranty, including its preamble and recitals, have the
meanings provided in the Credit Agreement:
"Acquisition", by any Person, means the acquisition by such
Person of all of the Capital Stock or all or substantially all of the
Property of another Person, whether or not involving a merger or
consolidation with such other Person.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the Capital
Stock in such Person. For purposes of this definition, "control" when
used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Alterra" means Alterra Healthcare Corporation, a Delaware
corporation.
<PAGE> 2
"Asset Disposition" means the disposition of any or all of the
assets (including without limitation the Capital Stock of a Subsidiary)
of Alterra or any of its Subsidiaries whether by sale, lease, transfer
or otherwise (including pursuant to any casualty or condemnation
event).
"Borrowers" shall have the meaning set forth in the Credit
Agreement.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Capital Stock" shall have the meaning set forth in the Credit
Agreement.
"Change of Control" means, except as a result of a transaction
permitted under Section 5.3, any Person or two or more Persons acting
in concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control over,
Voting Stock of Alterra (or other securities convertible into such
Voting Stock) representing 35% or more of the combined voting power of
all Voting Stock of Alterra.
"Closing Date" means the date hereof.
"Consolidated Parties" means a collective reference to Alterra
and its Subsidiaries, and "Consolidated Party" means any one of them.
"Consolidated Net Worth" means, as of any date, shareholders'
equity or net worth of any Person and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"Credit Agreement" means that certain Credit Agreement dated
as of September 30, 1999 (as amended, modified, restated or
supplemented from time to time, the "Credit Agreement"), by and among
Borrowers party thereto, the Guarantors party thereto, the Lenders
party thereto and Bank of America, N.A., as Administrative Agent for
the Lenders.
"Credit Documents" means a collective reference to the Credit
Agreement, the Notes, the Alterra Guaranty Agreement, the HCR Guaranty
Agreement, each Joinder Agreement, the Administrative Agent's Fee
Letter, the Collateral Documents and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto (in each case as the same may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to
time), and "Credit Document" means any one of them.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
2
<PAGE> 3
"EBITDAR" means, for any period, with respect to Alterra and
its Subsidiaries on a consolidated basis, earnings before Interest,
taxes, depreciation, amortization and Rent plus the dollar amount of
Alterra's minority interest in losses of unconsolidated Subsidiaries.
"Event of Default" means any of the events or circumstances
specified in Section 6.
"Existing Credit Agreements" means those certain material
credit agreements of Alterra and/or its Subsidiaries set forth on
Schedule 1.1(a) hereto.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guaranteed Obligations" means, without duplication, (i) all
of the obligations of the Credit Parties to the Lenders and the
Administrative Agent, whenever arising, under the Credit Agreement, the
Notes, the Guaranty Agreements, the Collateral Documents or any of the
other Credit Documents (including, but not limited to, any interest
accruing after the occurrence of a Bankruptcy Event with respect to any
Credit Party, regardless of whether such interest is an allowed claim
under the Bankruptcy Code) and (ii) all liabilities and obligations,
whenever arising, owing from any Operative Party to any Lender, or any
Affiliate of a Lender, arising under any Hedging Agreement.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Guarantors" shall have the meaning set forth in the Credit
Agreement.
"Hedging Agreement" means any interest rate protection
agreement or foreign currency exchange agreement.
3
<PAGE> 4
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c)
all obligations of such Person under conditional sale or other title
retention agreements relating to Property purchased by such Person
(other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by such
Person which would appear as liabilities on a balance sheet of such
Person, (e) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on,
or payable out of the proceeds of production from, Property owned or
acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all Guaranty Obligations of such Person, (h) the
principal portion of all obligations of such Person under Capital
Leases, (i) all obligations of such Person under Operating Leases, (j)
all obligations of such Person under Hedging Agreements, (k) the
maximum amount of all standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (l) all preferred Capital Stock issued by such Person
and required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date (m) the
principal portion of all obligations of such Person under Synthetic
Leases and (n) the Indebtedness of any partnership or unincorporated
joint venture in which such Person is a general partner or a joint
venturer.
"Interest" means, for any period, the sum of all interest
expense (as defined by GAAP), net of interest income of Alterra and its
Subsidiaries on a consolidated basis for such period.
"Lenders" shall have the meaning set forth in the Credit
Agreement.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Management Agreements" shall have the meaning set forth in
the Credit Agreement.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets or liabilities of Alterra and its Subsidiaries taken as a whole,
(ii) the ability of any Credit Party to perform any material
4
<PAGE> 5
obligation under the Credit Documents to which it is a party or (iii)
the material rights and remedies of the Lenders under the Credit
Documents.
"Material Subsidiaries" means any Subsidiary of Alterra having
5% or more of the consolidated assets of Alterra and its Subsidiaries,
and "Material Subsidiary" means any one of them.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Operative Party" shall have the meaning set forth in the
Credit Agreement.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Rent" means, for any period, the sum of all lease expense (as
defined pursuant to GAAP) of Alterra and its Subsidiaries on a
consolidated basis for such period.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of Capital Stock of any Consolidated Party, now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of Capital Stock of any Consolidated Party,
now or hereafter outstanding, and (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding.
"Sale and Leaseback Transaction" means any arrangement
pursuant to which any Consolidated Party, directly or indirectly,
becomes liable as lessee, guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property
(a) which such Consolidated Party has sold or transferred (or is to
sell or transfer) to a Person which is not a Consolidated Party or (b)
which such Consolidated Party intends to use for substantially the same
purpose as any other Property which has been sold or transferred (or is
to be sold or transferred) by such Consolidated Party to another Person
which is not a Consolidated Party in connection with such lease.
"Tangible Net Worth" means, at any time, the sum at such time
of Net Worth (defined as shareholder's equity as defined by GAAP) less
the total of (a) all assets which would be classified as intangible
assets under GAAP, including without limitation, goodwill, trademarks,
trademark applications, trade names, service marks, patent
5
<PAGE> 6
applications and licenses, and deferred charges, (b) pre-opening costs,
organizational costs and deferred financing costs and (c) advances or
loans made to or receivables from any unconsolidated Affiliates of
which Alterra owns less than fifty percent (50%) or any stockholder of
Alterra or any Affiliate.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Guaranty shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with the most recent annual or
quarterly financial statements delivered pursuant to Section 4.1 (or, prior to
the delivery of the first financial statements pursuant to Section 4.1,
consistent with the financial statements as at December 31, 1998); provided,
however, if (a) Alterra shall object to determining such compliance on such
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Administrative
Agent or the Required Lenders shall so object in writing within 60 days after
delivery of such financial statements, then such calculations shall be made on a
basis consistent with the most recent financial statements delivered by Alterra
to the Lenders as to which no such objection shall have been made.
SECTION 2
GUARANTY
2.1 THE GUARANTY.
The Partner hereby guarantees to each Lender, each Affiliate of a
Lender that enters into a Hedging Agreement, and the Administrative Agent as
hereafter provided, as primary obligor and not as surety, (a) the prompt payment
of the Guaranteed Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof and (b) the timely
performance of all other obligations of the Borrowers under the Credit
Documents, including, without limitation, that the Eligible Projects will be
constructed in accordance with the Credit Agreement and applicable law. The
Partner hereby further agrees that if any of the Guaranteed Obligations are not
paid in full when due (whether at stated maturity, as a mandatory prepayment, by
6
<PAGE> 7
acceleration, as a mandatory cash collateralization or otherwise), the Partner
will promptly pay the same, without any demand or notice whatsoever, and that in
the case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal. The Partner further agrees to (x) assume all
responsibility for the completion of the Eligible Projects and, at the Partner's
own cost and expense, to cause the Eligible Projects to be fully completed in
accordance with the plans and specifications provided to the Administrative
Agent in accordance with the terms of the Credit Agreement, (y) pay all bills in
connection with the construction of the Eligible Projects and (z) indemnify and
hold the Lenders harmless from any and all loss, cost, liability or expense the
Lenders may suffer by reason of any such failure to meet its obligations under
clauses (x) or (y) above.
The guaranty in this Section 2.1 is a guaranty of payment and not of
collection, is a continuing guaranty, and shall apply to all Guaranteed
Obligations whenever owing.
2.2 GUARANTEED OBLIGATIONS UNCONDITIONAL.
The obligations of the Partner under Section 2.1 are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or Hedging Agreements, or any
other agreement or instrument referred to therein, or any substitution,
compromise, release, impairment 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 or guarantor, it being the intent of this Section 2.2 that the
obligations of the Partner hereunder shall be absolute and unconditional under
any and all circumstances. Without limiting the generality of the foregoing, it
is agreed that, to the fullest extent permitted by law, the occurrence of any
one or more of the following shall not alter or impair the liability of the
Partner hereunder which shall remain absolute and unconditional as described
above:
(a) at any time or from time to time, without notice to the
Partner, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Credit Documents or Hedging Agreements or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements
shall be done or omitted;
(c) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents or Hedging Agreements or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements
shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Administrative
Agent or any Lender or Lenders as security for any of the Guaranteed
Obligations shall fail to attach or be perfected;
7
<PAGE> 8
(e) any addition, substitution, replacement or release of a
Borrower pursuant to the terms of the Credit Agreement, with or without
the consent of the Partner or with or without any notice of such
addition, substitution, replacement or release being provided to the
Partner; or
(f) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of the Partner) or shall be subordinated to the claims of
any Person (including, without limitation, any creditor of the
Partner).
With respect to its obligations hereunder, the Partner hereby expressly waives
diligence, presentment, demand of payment, protest, notice of acceptance of this
Guaranty and of extensions of credit which may constitute Guaranteed
Obligations, notice of amendments, waivers or supplements to the Credit
Documents or Hedging Agreements or the compromise, release or exchange of
collateral or security and all other notices whatsoever, and any requirement
that the Administrative Agent or any Lender exhaust any right, power or remedy
or proceed against any Person under any of the Credit Documents or Hedging
Agreements or any other agreement or instrument referred to in the Credit
Documents or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
2.3 REINSTATEMENT.
Neither the Partner's obligations hereunder 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 Borrowers, by reason of any Borrower's bankruptcy or
insolvency or by reason of the invalidity or unenforceability of all or any
portion of the Guaranteed Obligations. The obligations of the Partner under this
Guaranty 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 Partner agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Administrative Agent or such Lender in connection with
such rescission or restoration, including 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.
2.4 CERTAIN ADDITIONAL WAIVERS.
The Partner agrees that this Guaranty may be enforced by the
Administrative Agent and the Lenders without the necessity of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the Borrowers under the Credit Agreement, any Hedging
Agreement or any collateral securing the Guaranteed Obligations or otherwise,
and the Partner agrees not to assert any right to require the Administrative
Agent and the Lenders to proceed against any Borrower or any other Person
(including any co-guarantor) or
8
<PAGE> 9
to require the Administrative Agent and the Lenders to pursue any other remedy
or enforce any other right. The Partner further agrees that it shall have no
right of subrogation, reimbursement or indemnity, nor any right of recourse to
security, if any, for the Guaranteed Obligations so long as any amounts payable
to the Administrative Agent or the Lenders in respect of the Guaranteed
Obligations shall remain outstanding (other than contingent indemnification
obligations) and until all of the Commitments shall have expired or been
terminated. The Partner further acknowledges and agrees that nothing contained
in this Guaranty shall prevent the Administrative Agent or the Lenders from
suing any Borrower in respect of his obligations under the Credit Agreement, any
Hedging Agreement and the other Credit Documents or foreclosing on any security
interest or lien on any collateral securing the Guaranteed Obligations or from
exercising any other rights available to the Administrative Agent and the
Lenders under the Credit Documents or Hedging Agreements if neither the
Borrowers nor the Partner timely perform their obligations, and the exercise of
any of such rights and completion of any such foreclosure proceedings shall not
constitute a discharge of any of the Partner's obligations hereunder unless as a
result thereof the Guaranteed Obligations shall have been paid in full (other
than contingent indemnification obligations) and all of the Commitments shall
have terminated or expired, it being the purpose and intent that the Partner's
obligations hereunder be absolute, irrevocable, independent and unconditional
under all circumstances.
2.5 REMEDIES.
The Partner agrees that, to the fullest extent permitted by law, as
between the Partner, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, the Guaranteed Obligations may be declared to be
forthwith due and payable (as provided in Section 9.2 of the Credit Agreement)
for purposes of Section 2.1 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 Partner for purposes of Section
2.1.
2.6 FURTHER REPRESENTATIONS AND WARRANTIES.
The Partner agrees that the Administrative Agent and the Lenders will
have no obligation to investigate the financial condition or affairs of any
Borrower for the benefit of the Partner nor to advise the Partner of any fact
respecting, or any change in, the financial condition or affairs of any Borrower
which might come to the knowledge of the Administrative Agent or any Lender at
any time, whether or not the Administrative Agent or any Lender knows or
believes or has reason to know or believe that any such fact or change is
unknown to the Partner or might (or does) materially increase the risk of the
Partner as Partner or might (or would) affect the willingness of the Partner to
continue as a guarantor with respect to the Guaranteed Obligations.
2.7 ADDITIONAL LIABILITY OF PARTNER.
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If the Partner is or becomes liable for any indebtedness owing by any
Borrower to the Administrative Agent or any Lender by endorsement or otherwise
other than under this Guaranty, such liability shall not be in any manner
impaired or reduced hereby but shall have all and the same force and effect it
would have had if this Guaranty had not existed and the Partner's liability
hereunder shall not be in any manner impaired or reduced thereby.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Alterra hereby represents to the Administrative Agent and each Lender
that:
3.1 FINANCIAL CONDITION.
The financial statements delivered to the Lenders pursuant to Section
4.1(a) and (b), (i) have been prepared in accordance with GAAP and (ii) present
fairly (on the basis disclosed in the footnotes to such financial statements)
the financial condition, results of operations and cash flows of Alterra and its
Subsidiaries as of such date and for such periods. Since December 31, 1998, (i)
there has been no sale, transfer or other disposition by Alterra or its
Subsidiaries of any material part of the business or material property of
Alterra and its Subsidiaries, and (ii) no purchase or other acquisition by any
of them of any business or property (including any capital stock of any other
Person) material in relation to financial condition of Alterra and its
Subsidiaries, which is not reflected in the foregoing financial statements or in
the notes thereto and has not otherwise been disclosed in writing to the Lenders
on or prior to the Closing Date. As of the Closing Date (other than the
liabilities of Alterra arising from the transactions contemplated by the Credit
Documents), Alterra and its Subsidiaries have no material liabilities
(contingent or otherwise) that are not reflected in the foregoing financial
statements, in the notes thereto or Alterra's report on Form 10-K or Form 10-Q,
as applicable.
3.2 NO MATERIAL CHANGE.
(a) Since December 31, 1998 (a) there has been no development
or event relating to or affecting any Consolidated Party which has had
or could reasonably be expected to have a Material Adverse Effect.
(b) Since the Closing Date, except as otherwise permitted
under this Guaranty, no dividends or other distributions have been
declared, paid or made upon the Capital Stock in an Consolidated Party
nor has any of the Capital Stock in any Consolidated Party been
redeemed, retired, purchased or otherwise acquired for value.
3.3 ORGANIZATION AND GOOD STANDING.
Each of the Consolidated Parties (a) is duly organized, validly
existing and is in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has the corporate or other necessary power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged and
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(c) is duly qualified as a foreign entity and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect.
3.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Alterra has the corporate or other necessary power and authority, and
the legal right, to make, deliver and perform the Credit Documents to which it
is a party, and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of Alterra in connection with
the execution, delivery, performance, validity or enforceability of the Credit
Documents to which Alterra is a party. This Guaranty has been, and each other
Credit Document to which Alterra is a party will be, duly executed and delivered
on behalf of Alterra. This Guaranty constitutes, and each other Credit Document
to which Alterra is a party when executed and delivered will constitute, a
legal, valid and binding obligation of Alterra enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
3.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by Alterra will (a) violate or
conflict with any provision of its articles or certificate of incorporation or
bylaws or other organizational or governing documents of such Person, (b)
violate, contravene or materially conflict with any Requirement of Law or any
other law, regulation (including, without limitation, Regulation U or Regulation
X), order, writ, judgment, injunction, decree or permit applicable to it, (c)
violate, contravene or conflict with contractual provisions of, or cause an
event of default under, any indenture, loan agreement, mortgage, deed of trust,
contract or other agreement or instrument to which it is a party or by which it
may be bound, the violation of which could reasonably be expected to have a
Material Adverse Effect, or (d) result in or require the creation of any Lien
(other than those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
3.6 NO DEFAULT.
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
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3.7 OWNERSHIP.
Each Consolidated Party is the owner of, and has good and marketable
title to, all of its respective assets.
3.8 LITIGATION.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Consolidated
Party, threatened against a Consolidated Party which might reasonably be
expected to have a Material Adverse Effect.
3.9 TAXES.
Each Consolidated Party has filed, or caused to be filed, all tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due (including interest and penalties)
and (b) all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet delinquent or
(ii) that are being contested in good faith and by proper proceedings, and
against which adequate reserves are being maintained in accordance with GAAP. No
Consolidated Party is aware of any proposed tax assessments against it or any of
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
3.10 COMPLIANCE WITH LAW.
Each Consolidated Party is in compliance with all Requirements of Law
and all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could not reasonably be expected to have a Material
Adverse Effect.
3.11 ERISA.
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of Alterra, no event or condition
has occurred or exists as a result of which any ERISA Event could
reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived, has
occurred with respect to any Plan; (iii) each Plan has been maintained,
operated, and funded in compliance with its own terms and in material
compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC
or a Plan has arisen or is reasonably likely to arise on account of any
Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single Employer Plan, as of the last annual valuation date
prior to the date on which this representation is made or deemed made
(determined, in each case, in accordance with Financial Accounting
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Standards Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did not exceed
as of such valuation date the fair market value of the assets of such
Plan.
(c) Neither any Consolidated Party, nor any ERISA Affiliate
has incurred, or, to the best knowledge of Alterra, could be reasonably
expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither any Consolidated
Party, nor any ERISA Affiliate would become subject to any withdrawal
liability under ERISA if any Consolidated Party or any of its
Subsidiaries or any ERISA Affiliate were to withdraw completely from
all Multiemployer Plans and Multiple Employer Plans as of the valuation
date most closely preceding the date on which this representation is
made or deemed made. Neither any Consolidated Party nor any ERISA
Affiliate has received any notification that any Multiemployer Plan is
in reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of Alterra, reasonably
expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject any Consolidated Party or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Consolidated Party or any ERISA Affiliate has
agreed or is required to indemnify any Person against any such
liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates
has any material liability with respect to "expected post-retirement
benefit obligations" within the meaning of the Financial Accounting
Standards Board Statement 106. Each Plan which is a welfare plan (as
defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA
and Section 4980B of the Code apply has been administered in compliance
in all material respects of such sections.
(f) Neither the execution and delivery of this Guaranty nor
the consummation of the financing transactions contemplated thereunder
will involve any transaction which is subject to the prohibitions of
Sections 404, 406 or 407 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975 of the Code. The
representation by Alterra in the preceding sentence is made in reliance
upon and subject to the accuracy of the Lenders' representation in
Section 11.16 of the Credit Agreement with respect to their source of
funds and is subject, in the event that the source of the funds used by
the Lenders in connection with this transaction is an insurance
company's general asset account, to the application of Prohibited
Transaction Class Exemption 95-60, 60 Fed. Reg. 35,925 (1995),
compliance with the regulations issued under Section 401(c)(1)(A) of
ERISA, or the issuance of any other prohibited transaction exemption or
similar relief, to the effect that assets in an insurance company's
general asset account do not constitute assets of an
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"employee benefit plan" within the meaning of Section 3(3) of ERISA of
a "plan" within the meaning of Section 4975(e)(1) of the Code.
3.12 SUBSIDIARIES.
Set forth on Schedule 3.12 is a complete and accurate list of all
Subsidiaries of Alterra.
3.13 GOVERNMENTAL REGULATIONS, ETC.
(a) No Consolidated Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940, each as amended. In addition, no
Consolidated Party is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(b) No director, executive officer or principal shareholder of
any Consolidated Party is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms
"director", "executive officer" and "principal shareholder" (when used
with reference to any Lender) have the respective meanings assigned
thereto in Regulation O issued by the Board of Governors of the Federal
Reserve System.
(c) Each Consolidated Party has obtained and holds in full
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of
way and other rights, consents and approvals which are necessary for
the ownership of its respective Property and to the conduct of its
respective businesses as presently conducted.
(d) No Consolidated Party is in violation of any applicable
statute, regulation or ordinance of the United States of America, or of
any state, city, town, municipality, county or any other jurisdiction,
or of any agency thereof (including without limitation, environmental
laws and regulations), which violation could reasonably be expected to
have a Material Adverse Effect.
(e) Each Consolidated Party and each of its Subsidiaries is
current with all material reports and documents, if any, required to be
filed with any state or federal securities commission or similar agency
and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
3.14 ENVIRONMENTAL MATTERS.
(a) Each of the facilities and properties owned, leased or
operated by the Consolidated Parties (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any
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Environmental Law with respect to the Properties or the businesses
operated by the Consolidated Parties (the "Businesses"), and there are
no conditions relating to the Businesses or Properties that could
reasonably be expected to give rise to a material liability under any
applicable Environmental Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the
Properties in amounts or concentrations that constitute or constituted
a violation of, or that could reasonably be expected to give rise to a
material liability under, Environmental Laws.
(c) No Consolidated Party has received any written or verbal
notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the
Businesses, nor does any Consolidated Party have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or generated, treated,
stored or disposed of at, on or under any of the Properties, in each
case by or on behalf of any Consolidated Party or any of its
Subsidiaries in violation of, or in a manner that could give rise to
material liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of any Consolidated Party,
threatened, under any Environmental Law to which any Consolidated Party
or any of its Subsidiaries is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with
respect to the Consolidated Parties, any of its Subsidiaries, the
Properties or the Businesses.
(f) There has been no release, or threat of release, of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations (including, without
limitation, disposal) of any Consolidated Party or any of its
Subsidiaries in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a
manner that could reasonably be expected to give rise to material
liability under Environmental Laws.
3.15 INTELLECTUAL PROPERTY.
Each Consolidated Party owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use could not reasonably be expected to have a Material Adverse Effect.
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3.16 SOLVENCY.
Each Consolidated Party is and, after consummation of the transactions
contemplated by the Credit Agreement and this Guaranty, will be Solvent.
3.17 DISCLOSURE.
Neither this Guaranty, the Credit Agreement nor any financial
statements delivered to the Lenders nor any other document, certificate or
statement furnished to the Lenders by or on behalf of any Consolidated Party in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein or herein not misleading.
3.18 NO BURDENSOME RESTRICTIONS.
No Consolidated Party nor any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
3.19 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of an Consolidated Party or any of its Subsidiaries, and
none of the Consolidated Parties has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years.
3.20 YEAR 2000 COMPLIANCE.
Each Consolidated Party has (i) initiated a review and assessment of
all areas within its and each of its Subsidiaries' business and operations that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by such Consolidated Party or any of its Subsidiaries
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (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 the
timetable. Based on the foregoing, Alterra believes that all computer
applications that are material to its and 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 could not reasonably be expected to have Material Adverse Effect.
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SECTION 4
AFFIRMATIVE COVENANTS
Alterra hereby covenants and agrees that, so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
thereunder shall have terminated:
4.1 INFORMATION COVENANTS.
Alterra will furnish, or cause to be furnished, to the Administrative
Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of each fiscal year of the
Consolidated Parties, a consolidated balance sheet and income statement
of the Consolidated Parties, as of the end of such fiscal year,
together with related statements of operations and retained earnings
and of cash flows for such fiscal year, setting forth in comparative
form figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
audited by independent certified public accountants of recognized
national standing reasonably acceptable to the Administrative Agent and
whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the scope
of the audit or qualified as to the status of the Consolidated Parties
as a going concern or any other material qualifications or exceptions.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after the close of each fiscal quarter of
the Consolidated Parties (other than the fourth fiscal quarter, in
which case 90 days after the end thereof) a balance sheet and income
statement of the Consolidated Parties, as of the end of such fiscal
quarter, together with related statements of cash flows for such fiscal
quarter, in each case setting forth in comparative form figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Administrative Agent, and accompanied by a
certificate of the chief financial officer of Alterra to the effect
that such quarterly financial statements fairly present in all material
respects the financial condition of the Consolidated Parties and have
been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the
financial statements provided for in Section 4.1(a) and 4.1(b) above, a
certificate of an Executive Officer of Alterra, (i) demonstrating
compliance with the financial covenants contained in Section 4.9 by
calculation thereof as of the end of each such fiscal period and (ii)
stating that no Default or Event of Default exists, or if any Default
or Event of Default does exist, specifying the nature and extent
thereof and what action the Credit Parties propose to take with respect
thereto.
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(d) Parent Financial Statements. Promptly upon receipt
thereof, a copy of all balance sheets or income statements, as of the
end of any fiscal period, together with related statements of
operations and retained earnings and of cash flows for such fiscal
period or any other financial information with respect to the Parent.
(e) Auditor's Reports. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to any Consolidated Party in connection with any annual,
interim or special audit of the books of such Person.
(f) Reports. Promptly upon transmission or receipt thereof,
copies of any filings and registrations with, and reports to or from,
the Securities and Exchange Commission, or any successor agency, and
copies of all financial statements, proxy statements, notices and
reports as any Consolidated Party or any of its Subsidiaries shall send
to its shareholders or to a holder of any Indebtedness owed by any
Consolidated Party or any of its Subsidiaries in its capacity as such a
holder.
(g) Notices. Upon obtaining knowledge thereof, Alterra will
give written notice to the Administrative Agent immediately of (i) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action
Alterra proposes to take with respect thereto, (ii) the occurrence of
any of the following with respect to Alterra or any of its Subsidiaries
(A) the pendency or commencement of any litigation, arbitral or
governmental proceeding against such Person which if adversely
determined is likely to have a Material Adverse Effect, (B) the
institution of any proceedings against such Person with respect to, or
the receipt of notice by such Person of potential liability or
responsibility for violation, or alleged violation of any federal,
state or local law, rule or regulation, including but not limited to,
Environmental Laws, the violation of which could reasonably be expected
to have a Material Adverse Effect, or (C) any notice or determination
concerning the imposition of any withdrawal liability by a
Multiemployer Plan against such Person or any ERISA Affiliate, the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA or the
termination of any Plan and (iii) the occurrence of an event of default
under any of the Management Agreements.
(h) ERISA. Upon obtaining knowledge thereof, Alterra will give
written notice to the Administrative Agent promptly (and in any event
within five business days) of: (i) of any event or condition,
including, but not limited to, any Reportable Event, that constitutes,
or might reasonably lead to, an ERISA Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against the Consolidated
Parties or any ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the
meaning of Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of all amounts
which any Consolidated Party or any of its Subsidiaries or any ERISA
Affiliate is required to contribute to each Plan pursuant to its terms
and as required to meet the minimum funding standard set forth in ERISA
and the Code with respect thereto; or (iv) any change in the funding
status of any Plan that could reasonably be expected to have a Material
Adverse Effect, together with a description of
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any such event or condition or a copy of any such notice and a
statement by an Executive Officer of Alterra, as appropriate, briefly
setting forth the details regarding such event, condition, or notice,
and the action, if any, which has been or is being taken or is proposed
to be taken by the Consolidated Parties with respect thereto. Promptly
upon request, the Consolidated Parties shall furnish the Administrative
Agent and the Lenders with such additional information concerning any
Plan as may be reasonably requested, including, but not limited to,
copies of each annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the
meaning of Section 3(39) of ERISA).
(i) Other Information. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of the Consolidated Parties as the
Administrative Agent or any Lender (through the Administrative Agent)
may reasonably request.
4.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a transaction permitted
under Section 5.3, Alterra and each of its Material Subsidiaries will, and will
cause each of its Subsidiaries to, do all things necessary to preserve and keep
in full force and effect its existence, rights, franchises and authority.
4.3 BOOKS AND RECORDS.
Each Consolidated Party will, and will cause each of its Subsidiaries
to, keep complete and accurate books and records of its transactions in
accordance with good accounting practices on the basis of GAAP (including the
establishment and maintenance of appropriate reserves).
4.4 COMPLIANCE WITH LAW.
Each Consolidated Party will, and will cause each of its Subsidiaries
to, comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
property if noncompliance with any such law, rule, regulation, order or
restriction could reasonably be expected to have a Material Adverse Effect.
4.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each Consolidated Party will, and will cause each of its Subsidiaries
to, pay and discharge (a) all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) except as prohibited
hereunder, all of its other Indebtedness as it shall become due; provided,
however, that an Consolidated Party or any of its Subsidiaries shall not be
required to pay any such tax, assessment, charge, levy, claim or Indebtedness
which is being contested in good faith by appropriate proceedings and as to
which adequate reserves therefor have been established in accordance with GAAP,
unless the failure to make any such payment (i) could
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give rise to an immediate right to foreclose on a Lien securing such amounts or
(ii) could reasonably be expected to have a Material Adverse Effect.
4.6 INSURANCE.
Each Consolidated Party will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are in accordance with
normal industry practice and furnish to the Administrative Agent, upon written
request, full information as to the insurance carried.
4.7 MAINTENANCE OF PROPERTY.
Each Consolidated Party will, and will cause each of its Subsidiaries
to, maintain and preserve its properties and equipment material to the conduct
of its business in good repair, working order and condition, normal wear and
tear and casualty and condemnation excepted, and will make, or cause to be made,
to such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
4.8 PERFORMANCE OF OBLIGATIONS.
Each Consolidated Party will, and will cause each of its Subsidiaries
to, perform in all material respects all of its obligations under the terms of
all material agreements, indentures, mortgages, security agreements or other
debt instruments to which it is a party or by which it is bound.
4.9 FINANCIAL COVENANTS.
(a) Tangible Net Worth. The Tangible Net Worth of the
Consolidated Parties on a consolidated basis shall, at all times during
the term of the Credit Agreement (measured quarterly) be not less than
the sum of $125,000,000 as of June 30, 1999 plus fifty percent (50%) of
Alterra's net income (if positive) for each subsequent quarter plus
seventy-five (75%) of the net proceeds to Alterra of any equity capital
(or equity equivalent) securities offering received during such
quarter.
(b) Ratio of EBITDAR to Interest and Rent. The ratio of
EBITDAR to the sum of Interest plus Rent, measured quarterly as of the
last day of each fiscal quarter of the Consolidated Parties during each
of the fiscal years noted as follows shall be greater than or equal to:
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<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C>
1999 1.40 to 1.0
2000 1.40 to 1.0
2001 1.50 to 1.0
2002 1.50 to 1.0
</TABLE>
4.10 YEAR 2000 COMPLIANCE.
Alterra will promptly notify the Administrative Agent in the event it
discovers or determines that any computer application that is material to its or
any of its Subsidiaries' business and operations will not be Year 2000
compliant, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
SECTION 5
NEGATIVE COVENANTS
Alterra hereby covenants and agrees that, so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
5.1 INDEBTEDNESS.
Alterra will not, nor will it permit any Consolidated Party to,
contract, create, incur, assume or permit to exist any Indebtedness if (a) the
creation, incurrence, assumption or existence of such Indebtedness would
directly or indirectly cause a Default or Event of Default or (b) such
Indebtedness is not created, incurred, assumed or permitted to exist in the
ordinary course of business on terms and conditions substantially similar as
would be obtainable in a comparable arms-length transaction (considered in the
context of the applicable transaction taken as a whole).
5.2 NATURE OF BUSINESS.
Alterra and each of its Material Subsidiaries will remain substantially
engaged in the lines of business conducted by them on the Closing Date and
related businesses thereto.
5.3 CONSOLIDATION, MERGER, DISSOLUTION, ETC.
Alterra will not, nor will it permit any Consolidated Party to,
contract, create, incur, assume or permit to, enter into any transaction of
merger or consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), provided that, notwithstanding the foregoing
provisions of this Section 5.3:
(a) Alterra may merge or consolidated with or into any
Person, provided that:
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(i) the Consolidated Net Worth of the surviving
corporation after giving effect to such merger or
consolidation is at least equal to the Consolidated Net Worth
of Alterra immediately prior to such merger or consolidation;
(ii) the surviving corporation is a publicly held
corporation immediately after giving effect to such merger or
consolidation;
(iii) such Person is either (A) a company in the
healthcare business or hospitality business with experience
operating and/or managing healthcare facilities or (B) a
company with a minimum senior unsecured debt rating of at
least "BBB" from S&P or "Baa2" from Moody's;
(iv) at least two of the four persons serving Alterra
immediately prior to such merger or consolidation in the
capacities of Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer and Alterra's officer with
primary responsibility for new residences development and
construction will serve in comparable or enhanced positions
with the surviving corporation following such merger or
consolidation;
(v) the Administrative Agent, in its sole reasonable
discretion, shall determine the Person or Persons that shall
be required to assume the obligations of Alterra under this
Guaranty following such merger or consolidation, including
without limitation, Alterra's past, current and future
obligations and liabilities under this Guaranty and each other
Credit Document to which Alterra is a party pursuant to an
assumption agreement in form and substance satisfactory to the
Administrative Agent;
(vi) the Administrative Agent shall have received
such other documents, agreements, certificates, legal opinions
and information (in form and substance satisfactory to the
Administrative Agent) which may be reasonably requested by the
Administrative Agent; and
(vii) no Default or Event of Default has occurred and
is continuing or would result therefrom.
(b) any Consolidated Party (other than Alterra) may merge or
consolidate with any other Consolidated Party (including Alterra) so
long as (i) no Event of Default has occurred and is continuing or would
result therefrom and (ii) if the merger or consolidation involves
Alterra, Alterra is the surviving corporation,
(c) any Subsidiary of Alterra may merge with any Person in
connection with an Asset Disposition permitted under Section 5.4;
(d) any Subsidiary of Alterra may dissolve , liquidate or wind
up its affairs at any time provided that such disposition, liquidation
or winding up, as applicable, could not reasonably be expected to have
a Material Adverse Effect; and
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<PAGE> 23
(e) any Subsidiary of Alterra may merge or consolidate with or
into any Person, provided that:
(i) the Consolidated Net Worth of Alterra after
giving effect to such merger or consolidation is at least
equal to the Consolidated Net Worth of Alterra immediately
prior to such merger or consolidation;
(ii) The surviving corporation continues to be a
Subsidiary of Alterra immediately after giving effect to such
merger or consolidation;
(iii) such Person is either (A) a company in the
healthcare business or hospitality business with experience
operating and/or managing healthcare facilities or (B) a
company with a minimum senior unsecured debt rating of at
least "BBB" from S&P or "Baa2" from Moody's;
(iv) at least two of the four persons serving Alterra
immediately prior to such merger or consolidation in the
capacities of Chief Financial Officer, Chief Operating
Officer, Chief Financial Officer and Alterra's officer with
primary responsibility for new residences development and
construction will serve in comparable or enhanced positions
with Alterra following such merger or consolidation;
(v) the Administrative Agent, in its sole discretion,
shall determine the Person or Persons that shall be required
to join in the obligations of Alterra under this Guaranty
following such merger or consolidation, including without
limitation, Alterra's past, current and future obligations and
liabilities under this Guaranty and each other Credit Document
to which Alterra is a party pursuant to a joinder agreement in
form and substance satisfactory to the Administrative Agent;
(vi) the Administrative Agent shall have received
such other documents, agreements, certificates, legal opinions
and information (in form and substance satisfactory to the
Administrative Agent); and
(vii) no Default or Event of Default has occurred and
is continuing or would result therefrom.
5.4 ASSET DISPOSITIONS.
Alterra will not, nor will it permit any Consolidated Party to,
contract, create, incur, assume or permit to, make any Asset Disposition
(including, without limitation, any Sale and Leaseback Transaction) if (a) a
Default or Event of Default would be directly or indirectly caused as a result
thereof or (b) such Asset Disposition is not in the ordinary course of business
and does not contain terms and conditions substantially similar as would be
obtainable in a comparable arms-length transaction (considered in the context of
the applicable business taken as a whole).
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<PAGE> 24
5.5 RESTRICTED PAYMENTS.
Alterra will not, nor will it permit any Consolidated Party to,
contract, create, incur, assume or permit to, directly or indirectly, declare,
order, make or set apart any sum for or pay any Restricted Payment, except (a)
to make dividends payable solely in the same class of Capital Stock of such
Person,(b) to make cash dividends or other cash distributions payable from any
Consolidated Party (directly or indirectly through Subsidiaries) to Alterra, (c)
to make payments to acquire the Capital Stock of any Person holding any equity
interest in any Subsidiary of Alterra pursuant to the exercise of put or call
options contained in the organizational documents (as the same may be amended
from time to time) of such Subsidiary, (d) any Subsidiary of Alterra may make
dividends or distributions to any shareholders of such Subsidiary so long as
such dividends or distributions are made with cash flow generated by the assets
of such Subsidiary, (e) to make payments or distributions in connection with any
merger or consolidation permitted by Section 5.3, (f) to make payments to redeem
rights issued pursuant to Alterra's rights plan, (g) to retire any convertible
securities of Alterra which may become due and (h) to refinance or replace
existing convertible securities of Alterra with another issuance of convertible
securities or Capital Stock of equivalent amount.
5.6 TRANSACTIONS WITH AFFILIATES.
Except for the Management Agreements and any payments permitted by
Section 5.5, Alterra will not, nor will it permit any Consolidated Party to,
contract, create, incur, assume or permit to, enter into or permit to exist any
transaction or series of transactions with any officer, director, shareholder,
Subsidiary or Affiliate of such Person other than (i) normal compensation and
reimbursement of expenses of officers and directors, (ii) except as otherwise
specifically limited in this Guaranty Agreement, other transactions which are
entered into in the ordinary course of such Person's business on terms and
conditions substantially as favorable to such Person as would be obtainable by
it in a comparable arms-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate(considered in the context of the
applicable transaction taken as a whole) and (iii) inter-company transfers by
and among Alterra and its wholly-owned Subsidiaries.
5.7 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
Alterra will not, nor will it permit any Consolidated Party to,
contract, create, incur, assume or permit to, (a) change its fiscal year without
the prior written consent of the Required Lenders or (b) amend, modify or change
its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or other similar document) in any manner
that would reasonably be likely to adversely affect the Lenders.
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<PAGE> 25
SECTION 6
EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Guaranty. The guaranty given by Alterra hereunder shall
cease to be in full force and effect, or Alterra or any Person acting
by or on behalf of Alterra shall deny or disaffirm Alterra's
obligations under this Guaranty, or Alterra shall default in the due
performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to this Guaranty; or
(b) Representations. Any representation, warranty or statement
made or deemed to be made by Alterra herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to
be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was deemed to have been
made; or
(c) Covenants. Alterra shall
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 4.2, 4.4
or 5.1 through 5.7, inclusive;
(ii) default in the due performance or observance of
any term, covenant or agreement contained in Sections 4.1(a)
or (b) and such default shall continue unremedied for a period
of at least 5 days after the earlier of a responsible officer
of Alterra becoming aware of such default or notice thereof by
the Administrative Agent;
(iii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) of this Section
6.1) contained in this Guaranty and such default shall
continue unremedied for a period of at least 30 days after the
earlier of a responsible officer of Alterra becoming aware of
such default or notice thereof by the Administrative Agent; or
(d) Other Credit Documents. (i) Alterra shall default in the
due performance or observance of any term, covenant or agreement in any
of the other Credit Documents (subject to applicable grace or cure
periods, if any), or (ii) any Credit Document shall fail to be in full
force and effect or to give the Administrative Agent and/or the Lenders
the Liens, rights, powers and privileges purported to be created
thereby, or Alterra shall so state in writing; or
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<PAGE> 26
(e) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to Alterra or with respect to any Subsidiary or Subsidiaries of
Alterra having 5% of more of the consolidated assets of the
Consolidated Parties; or
(f) Defaults under Other Agreements.
(i) The occurrence of an "Event of Default" under the
Credit Agreement;
(ii) The occurrence of an "Event of Default" under
the HCR Guaranty Agreement;
(iii) Alterra or any of its Subsidiaries shall
default in the performance or observance (beyond the
applicable grace period with respect thereto, if any) of any
material obligation or condition or any contract or lease; or
(iv) With respect to any Indebtedness of Alterra or
any of its Subsidiaries in an aggregate principal amount in
excess of $25,000,000 (including, without limitation, any
Indebtedness under the Existing Credit Agreements) (A) Alterra
or one of its Subsidiaries shall default in any payment
(beyond the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness or (B)(i) the
occurrence and continuance of a default in the observance or
performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of
such Indebtedness (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any
notice or lapse of time is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any such
Indebtedness shall be declared due and payable, or required to
be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof.
(g) Judgments. One or more judgments or decrees shall be
entered against one or more of the Consolidated Parties and its
Subsidiaries involving a liability of $25,000,000 or more in the
aggregate (to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has the ability
to perform) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof; or
(h) ERISA. Any of the following events or conditions, if such
event or condition could reasonably be expected to have a Material
Adverse Effect: (i) any "accumulated funding deficiency," as such term
is defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of any Consolidated Party, any of its Subsidiaries
or any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA
Event shall occur with respect to a Single Employer Plan, which is, in
the reasonable opinion of the Administrative
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<PAGE> 27
Agent, likely to result in the termination of such Plan for purposes of
Title IV of ERISA; (iii) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B)
any Consolidated Party, any of its Subsidiaries or any ERISA Affiliate
incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency or (within the meaning of Section 4245 of ERISA) such Plan;
or (iv) any prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any Consolidated Party,
any of its Subsidiaries or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which any
Consolidated Party, any of its Subsidiaries or any ERISA Affiliate has
agreed or is required to indemnify any person against any such
liability; or
(i) Ownership. There shall occur a Change of Control; or
(j) Management Agreements. (a) There shall occur a default or
event of default under any Management Agreement, or (b) any Management
Agreement shall be terminated without the prior written consent of the
Required Lenders.
6.2 REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6 of the Credit Agreement) or
cured to the satisfaction of the requisite Lenders (pursuant to the voting
procedures in Section 11.6 of the Credit Agreement), the Administrative Agent
may, or shall, upon the request and direction of the Required Lenders, by
written notice to the Credit Parties, enforce any and all rights and interests
created and existing under the Credit Documents including, without limitation,
all rights and remedies existing under the Collateral Documents (including,
without limitation, this Guaranty), all rights and remedies against the Partner
and all rights of set-off.
SECTION 7
MISCELLANEOUS
7.1 CUMULATIVE RIGHTS.
All rights of the Administrative Agent and the Lenders hereunder or
otherwise arising under any documents executed in connection with or as security
for the Guaranteed Obligations are separate and cumulative and may be pursued
separately, successively or concurrently, or not pursued, without affecting or
limiting any other right of the Administrative Agent or any Lender and without
affecting or impairing the liability of Alterra.
7.2 USURY.
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Notwithstanding any other provisions herein contained, no provision of
this Guaranty shall require or permit the collection from Alterra of interest in
excess of the maximum rate or amount that Alterra may be required or permitted
to pay pursuant to any applicable law. In the event any such interest is
collected, it shall be applied in reduction of Alterra's obligations hereunder,
and the remainder of such excess collected shall be returned to Alterra once
such obligations have been fully satisfied.
7.3 EXPENSES; INDEMNIFICATION.
(a) Alterra agrees to pay on demand all costs and expenses of
the Administrative Agent in connection with the syndication,
preparation, execution, delivery, administration, modification, and
amendment of the Credit Agreement, the other Credit Documents
(including, without limitation, this Guaranty), and the other documents
to be delivered thereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Administrative Agent
with respect hereto and thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities under the
Credit Documents. Alterra further agrees to pay on demand all costs and
expenses of the Administrative Agent and the Lenders, if any
(including, without limitation, reasonable attorneys' fees and
expenses), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Credit Documents
(including, without limitation, this Guaranty) and the other documents
to be delivered pursuant thereto.
(b) Alterra agrees to indemnify and hold harmless the
Administrative Agent and each Lender and each of their Affiliates and
their respective officers, directors, employees, agents, and advisors
(each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or
proceeding or preparation of defense in connection therewith) the
Credit Documents (including, without limitation, this Guaranty), any of
the transactions contemplated herein or the actual or proposed use of
the proceeds of the Loans (including any of the foregoing arising from
the negligence of the Indemnified Party), except to the extent such
claim, damage, loss, liability, cost, or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 4.3 applies, such
indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any of the Credit Parties, their
respective directors, shareholders or creditors or an Indemnified Party
or any other Person or any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are
consummated. Alterra agrees not to assert any claim against the
Administrative Agent, any Lender, any of their Affiliates, or any of
their respective directors, officers, employees, attorneys, agents, and
advisers, on any theory of liability, for special, indirect,
consequential, or punitive
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<PAGE> 29
damages arising out of or otherwise relating to the Credit Documents
(including, without limitation, this Guaranty), any of the transactions
contemplated herein or the actual or proposed use of the proceeds of
the Loans.
(c) Without prejudice to the survival of any other agreement
of Alterra hereunder, the agreements and obligations of Alterra
contained in this Section 7.3 shall survive the repayment of the
Guaranteed Obligations.
7.4 ENVIRONMENTAL INDEMNITY.
The Partner agrees that its will reimburse the Lenders for and hereby
hold the Lenders harmless from all fines or penalties made or levied against any
of the Lenders by any Governmental Authority as a result of or in connection
with (i) the use of Materials of Environmental Concern at any of the Real
Properties, (ii) the use of Materials of Environmental Concern at the Facilities
thereon, or (iii) the use, generation, storage, transportation, discharge,
release or handling of any Materials of Environmental Concern at any of the Real
Properties, or as a result of any release of any Materials of Environmental
Concern onto the ground or into the water or air from or upon any of the Real
Properties at any time. The Partner also agrees that it will reimburse the
Lenders for and indemnify and hold the Lenders harmless from any and all costs
and expenses (including reasonable attorneys' fees) and for all civil judgments
or penalties incurred, entered, assessed, or levied against any of the Lenders
as a result of any Borrower's use of Materials of Environmental Concern at any
of the Real Properties or as a result of any release of any Materials of
Environmental Concern on the ground or into the water or air by any Borrower
from or upon any of the Real Properties. Such reimbursement or indemnification
shall include but not be limited to any and all judgments or penalties to
recover the costs of cleanup of any such release by any Borrower from or upon
any of the Real Properties and all reasonable expenses incurred by the Lenders
as a result of such a civil action, including but not limited to reasonable
attorneys' fees. The Partner's obligations under this Section 7.4 shall survive
the repayment of the Loans and any deed in lieu of foreclosure or any
foreclosure of a Mortgage on a any of the Real Properties.
7.5 RIGHT OF SET-OFF.
After the occurrence of an Event of Default under the Credit Agreement,
any Lender may set-off any matured obligation owed by Alterra under this
Guaranty (to the extent beneficially owned or held by such Lender) against any
obligation (whether or not matured) owed by such Lender to Alterra, regardless
of the place of payment. If any obligation is unliquidated or unascertained,
such Lender may set-off in any amount estimated by it in good faith to be the
amount of that obligation.
7.6 TERM OF GUARANTEE.
This Guaranty shall continue in full force and effect until the
Guaranteed Obligations are fully and indefeasibly paid, performed and discharged
and all Commitments have expired or been terminated. This Guaranty covers the
Guaranteed Obligations whether presently
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<PAGE> 30
outstanding or arising subsequent to the date hereof including all amounts
advanced by the Administrative Agent or any Lender in stages or installments.
7.7 THE ADMINISTRATIVE AGENT.
In acting under or by virtue of this Guaranty, the Administrative Agent
shall be entitled to all the rights, authority, privileges and immunities
provided in the Credit Agreement, all of which provisions are incorporated by
reference herein with the same force and effect as if set forth herein.
7.8 SUCCESSORS AND ASSIGNS.
This Guaranty shall be binding on and enforceable against Alterra and
its successors and assigns; provided that, Alterra may not assign or transfer
any of its obligations hereunder without prior written consent of the requisite
Lenders as provided in the Credit Agreement. This Guaranty is intended for and
shall inure to the benefit of the Administrative Agent and each Lender and each
and every person who shall from time to time be or become the owner or holder of
any of the Guaranteed Obligations, and each and every reference herein to
"Administrative Agent" or "Lender" shall include and refer to each and every
successor or assignee of the Administrative Agent or any Lender at any time
holding or owning any part of or interest in any part of the Guaranteed
Obligations. This Guaranty shall be transferable and negotiable with the same
force and effect, and to the same extent, that the Guaranteed Obligations are
transferable and negotiable, it being understood and stipulated that upon
assignment or transfer by the Administrative Agent or any Lender of any of the
Guaranteed Obligations the legal holder or owner of the Guaranteed Obligations
(or a part thereof or interest therein thus transferred or assigned by the
Administrative Agent or any Lender) shall (except as otherwise stipulated by the
Administrative Agent or any such Lender in its assignment) have and may exercise
all of the rights granted to the Administrative Agent or such Lender under this
Guaranty to the extent of that part of or interest in the Guaranteed Obligations
thus assigned or transferred to said person. Alterra expressly waives notice of
transfer or assignment by the Lenders of the Guaranteed Obligations, or any part
thereof, or of the rights of the Administrative Agent or any Lender hereunder.
Failure to give notice will not affect the liabilities of Alterra hereunder.
7.9 APPLICATION OF PAYMENTS.
Each of the Administrative Agent and the Lenders may apply any payments
received by it from any source against that portion of the Guaranteed
Obligations (principal, interest, court costs, attorneys' fees or other) in such
priority and fashion as it may deem appropriate.
7.10 MODIFICATIONS.
Subject to the terms of the Credit Agreement, this Guaranty and the
provisions hereof may be changed, discharged or terminated only by an instrument
in writing signed by Alterra and the Administrative Agent.
7.11 NOTICES.
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Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address set forth below or at such other address as such party may specify
by written notice to the other parties hereto:
if to Alterra:
Alterra Healthcare Corporation
450 North Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005
Attn: Mark Ohlendorf
Telephone: (414) 641-7432
Telecopy: (414) 789-6182
with a copy to:
Rogers & Harding
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303-1601
Attn: Miriam J. Dent
Telephone: (404) 522-4700
Telecopy: (404) 525-2224
if to the Administrative Agent:
Bank of America, N. A.
Agency Management
CA5-701-12-09
1455 Market Street
San Francisco, California 94103
Attn: Christine Cordi
Telephone: (415) 436-2790
Telecopy: (415) 436-3425
with a copy to:
Bank of America, N. A.
700 Louisiana Street, 8th Floor
Houston, Texas 77002
Attn: Scott Singhoff
Telephone: (713) 247-6961
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Telecopy: (713) 247-6719
7.12 TAXES.
All payments made by the Partner under this Guaranty and any other
Credit Documents shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by or
imposed upon the overall net income of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes, branch
taxes, taxes on doing business or taxes on the overall capital or net worth of
any Lender or its applicable lending office, or any branch or affiliate thereof,
in each case imposed in lieu of net income taxes, imposed: (i) by the
jurisdiction under the laws of which such Lender, applicable lending office,
branch or affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such jurisdiction is
located or any political subdivision thereof; or (ii) by reason of any
connection between the jurisdiction imposing such tax and such Lender,
applicable lending office, branch or affiliate other than a connection arising
solely from such Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Guaranty or any other Credit
Document. If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Administrative Agent or any Lender
under this Guaranty or under any other Credit Document, (A) the amounts so
payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Guaranty and any
other Credit Document, and (B) as promptly as possible thereafter the Partner
shall send to the Administrative Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original official
receipt received by the Partner showing payment thereof. If the Partner fails to
pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails
to remit to the Administrative Agent the required receipts or other required
documentary evidence, the Partner shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this subsection shall survive the termination of this
Guaranty and the other Credit Documents.
7.13 SEVERABILITY.
If any provision of this Guaranty is determined to be illegal, invalid
or unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
7.14 GOVERNING LAW.
This Guaranty and the rights and obligations of the parties hereto
shall be construed in accordance with and governed by the laws of the State of
New York.
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<PAGE> 33
7.15 WAIVER OF JURY TRIAL.
To the extent permitted by law, each of the Administrative Agent and
the Partner hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Guaranty or the
transactions contemplated hereby.
7.16 CONSENT TO JURISDICTION.
(a) Any legal action or proceeding with respect to this
Guaranty may be brought in the courts of the State of New York, or of
the United States for the Southern District of New York, and, by
execution and delivery of this Guaranty, each of the Partner, the
Administrative Agent and the Lenders hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally,
the nonexclusive jurisdiction of such courts. Each of the Partner, the
Administrative Agent and the Lenders 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 7.11, such service to become
effective three (3) days after such mailing. Nothing herein shall
affect the right of the Administrative Agent or any Lender to (i) serve
process or to commence legal proceedings in any other manner permitted
by law or (ii) commence legal proceedings, exercise rights or otherwise
proceed against the Collateral in any other jurisdictions as permitted
by law or as deemed necessary or appropriate by the Administrative
Agent or any Lender. Nothing herein shall affect the rights of Alterra
to serve process or to commence legal proceedings in any other manner
permitted by law.
(b) The Partner hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this
Guaranty in the courts referred to in Section 7.16(a). Each of the
parties hereto 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.
(c) Each party to this Guaranty irrevocably consents to
service of process in the manner provided for notices in Section 7.11.
Nothing in this Guaranty will affect the right of any party to this
Guaranty to serve process in any other manner permitted by law.
7.17 HEADINGS.
The headings in this instrument are for convenience of reference only
and shall not limit or otherwise affect the meaning of any provisions hereof.
7.18 COUNTERPARTS.
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<PAGE> 34
This Guaranty may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each constituting an
original, but all together one and the same instrument.
7.19 RIGHTS OF THE REQUIRED LENDERS.
All rights of the Administrative Agent hereunder, if not exercised by
the Administrative Agent, may be exercised by the Required Lenders.
[Remainder of Page Intentionally Left Blank]
34
<PAGE> 35
IN WITNESS WHEREOF, the Partner has caused this Guaranty to be duly
executed and delivered as of the day and year first above written.
PARTNER: Alterra Healthcare Corporation
a Delaware corporation
By: /s/Mark W. Ohlendorf
--------------------------------
Name: Mark W. Ohlendorf
------------------------------
Title: Senior Vice President
-----------------------------
ACCEPTED:
BANK OF AMERICA, N.A.,
as Administrative Agent, on behalf of the Lenders
By: /s/J. Gregory Seibly
--------------------------------
Name: J. Gregory Seibly
------------------------------
Title: Managing Director
-----------------------------
<PAGE> 1
EXHIBIT 10.10
SCHEDULE OF DEVCO I PROPERTIES
MORTGAGED UNDER THE HCR/ALTERRA DEVELOPMENT, LLC
AND BANK OF AMERICA CREDIT AGREEMENT
ATTACHED AS EXHIBIT 10.8 TO THE COMPANY'S FORM
10-Q FOR THE PERIOD ENDING 9/30/99
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION
--------- ------------- --------
<S> <C> <C>
Clare Bridge of Carrollwood L.P. Alterra Clare Bridge of Carrollwood 14950 Casey Road
Tampa, Florida 33624
Clare Bridge of Ft. Myers L.P. Alterra Clare Bridge of Ft. Myers 15950 McGregor Boulevard
Ft. Myers, Florida 33908
Clare Bridge of Tuscawilla L.P. Alterra Clare Bridge of Tuscawilla 1057 Willa Springs Drive
Winter Springs, Florida 32708
Clare Bridge of Bingham Farms L.P. Alterra Clare Bridge of Bingham Farms 24005 West 13 Mile Road
Detroit, Michigan 48025
Clare Bridge of Livonia L.P. Alterra Clare Bridge of Livonia 32500 Seven Mile Road
Livonia, Michigan 48152
Clare Bridge of Akron L.P. Alterra Clare Bridge of Akron 171 North Cleveland Massillon Rd.
Akron, Ohio 44333
Clare Bridge of Bainbridge L.P. Alterra Clare Bridge of Bainbridge 8100 E. Washington Street
Bainbridge Township, Ohio 44023
Clare Bridge of Parma L.P. Alterra Clare Bridge of Parma 9205 Sprague Road
Parma, Ohio 44133
Clare Bridge of Arlington L.P. Alterra Clare Bridge of Arlington 1501 NE Green Oaks Boulevard
Arlington, Texas 76006
<CAPTION>
DATE OF
MORTGAGOR MORTGAGE
--------- --------
<S> <C>
Clare Bridge of Carrollwood L.P. September 30, 1999
Clare Bridge of Ft. Myers L.P. September 30, 1999
Clare Bridge of Tuscawilla L.P. September 30, 1999
Clare Bridge of Bingham Farms L.P. September 30, 1999
Clare Bridge of Livonia L.P. September 30, 1999
Clare Bridge of Akron L.P. September 30, 1999
Clare Bridge of Bainbridge L.P. September 30, 1999
Clare Bridge of Parma L.P. September 30, 1999
Clare Bridge of Arlington L.P. September 30, 1999
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION
--------- ------------- --------
<S> <C> <C>
Clare Bridge of Jefferson Township L.P. Alterra Clare Bridge of Jefferson Township 380 Wray Large Road
Jefferson Hills, Pennsylvania 15025
Clare Bridge of Houston L.P. Alterra Clare Bridge of Houston 7800 N. Stadium Drive
Houston, Texas
Clare Bridge of Richardson L.P. Clare Bridge of Richardson 410 Buckingham Road
Richardson, Texas 75081
Clare Bridge of Westchase L.P. Clare Bridge of Westchase 11555 Richmond Avenue
Houston, Texas 77082
<CAPTION>
MORTGAGOR MORTGAGE
--------- --------
<S> <C>
Clare Bridge of Jefferson Township L.P. September 30, 1999
Clare Bridge of Houston L.P. September 30, 1999
Clare Bridge of Richardson L.P. September 30, 1999
Clare Bridge of Westchase L.P. September 30, 1999
</TABLE>
<PAGE> 1
EXHIBIT 10.11
================================================================================
ALTERRA HEALTHCARE CORPORATION
AS GUARANTOR
WITH
(KEY CORPORATE CAPTIAL LOGO)
KEY CORPORATE CAPITAL INC.,
AS ADMINISTRATIVE AGENT
-----------------------------
GUARANTY
DATED AS OF
AUGUST 31, 1999
-----------------------------
RELATING TO UP TO $75,000,000 AGGREGATE PRINCIPAL AMOUNT OF LOANS
AND CERTAIN OTHER OBLIGATIONS OF THIRD PARTY INVESTORS I, LLC
================================================================================
<PAGE> 2
GUARANTY
THIS GUARANTY, dated as of August 31, 1999 (as amended, modified or
supplemented from time to time, "THIS GUARANTY"), made by (i) ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation (herein, together with its successors and
assigns, the "GUARANTOR"), which was formerly known as Alternative Living
Services, Inc., with (ii) KEY CORPORATE CAPITAL INC., a Michigan corporation, as
Administrative Agent (herein, together with its successors and assigns in such
capacity, the "ADMINISTRATIVE AGENT"), for the benefit of the Creditors (as
defined below):
PRELIMINARY STATEMENTS:
(1) Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement (as defined below) shall be used herein as therein
defined. Certain terms used herein are defined in section 1 hereof.
(2) This Guaranty is made pursuant to the Master Construction Line of
Credit Agreement, dated as of the date hereof (herein, as amended or otherwise
modified, restated or replaced from time to time, the "CREDIT AGREEMENT"), among
Third Party Investors I, LLC, a Delaware limited liability company (herein,
together with its successors and assigns, the "BORROWER"), the financial
institutions named as lenders therein (herein, together with their successors
and assigns, the "LENDERS"), and the Administrative Agent, providing, among
other things, for loans or advances or other extensions of credit to or for the
benefit of the Borrower of up to $75,000,000, with such loans or advances being
evidenced by promissory notes (the "NOTES", such term to include all notes and
other securities issued in exchange therefor or in replacement thereof).
(3) The Borrower may from time to time be party to one or more
Designated Hedge Agreements (as defined in the Credit Agreement) and other
Designated Hedge Documents (as defined herein). Any institution or other person
that participates, and in each case their successors and assigns, as a
counterparty to the Borrower pursuant to any Designated Hedge Document is
referred to herein individually as a "DESIGNATED HEDGE CREDITOR" and
collectively as the "DESIGNATED HEDGE CREDITORS".
(4) This Guaranty is made for the benefit of the Administrative
Agent, the Collateral Agent, the Lenders and the Designated Hedge Creditors (any
or all of the foregoing, together with their respective successors and assigns,
individually a "CREDITOR" and collectively, the "CREDITORS").
(5) This Guaranty is made to guarantee the payment of the principal
of and interest on the Notes and the payment and performance by the Borrower of
its obligations under the Credit Agreement and the other Credit Documents to
which the Borrower is a party, and the payment and performance by the Borrower
of its obligations under Designated Hedge Documents. This Guaranty is one of the
Credit Documents referred to in the Credit Agreement.
(6) The Guarantor is financially interested in the Borrower as a
result of various direct or indirect management, leasing and other arrangements
with the Borrower relating to the Projects to be financed under the Credit
Agreement.
(7) It is a condition to the making of Loans under the Credit
Agreement that the Guarantor shall have executed and delivered this Guaranty.
(8) The Guarantor will obtain benefits from the incurrence of the
Credit Document Obligations and the Designated Hedge Document Obligations (as
such terms are hereafter defined) and, accordingly, desires to execute this
Guaranty in order to satisfy the condition described in the preceding paragraph
and to induce the Creditors to extend the Credit Document Obligations and the
Designated Hedge Document Obligations.
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantor, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby makes the following representations and
warranties to the Administrative Agent and the other Creditors and hereby
covenants and agrees with the Administrative
Agent and each other Creditor as follows:
2
<PAGE> 3
1 CERTAIN DEFINITIONS. As noted above, except as otherwise defined
herein, terms used herein and defined in the Credit Agreement shall be used
herein as therein defined. As used in this Guaranty, the following terms shall
have the meanings herein specified unless the context otherwise requires:
"ACQUISITION" shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any person who is not a Subsidiary of the Guarantor, and
(ii) acquisitions of a majority of the outstanding equity or other similar
interests in any such person (whether by merger, stock purchase or otherwise).
"CAPITAL LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under
Capital Leases of the Guarantor or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Guarantor and its Subsidiaries prepared in accordance with GAAP.
"CONSOLIDATED ADJUSTED NET WORTH" shall mean at any time for the
determination thereof the sum of
(i) all amounts which, in conformity with GAAP, would be
included under the caption "total stockholders' equity" (or any like
caption) on a consolidated balance sheet of the Guarantor as at such
date,
(ii) to the extent the Guarantor has guaranteed outstanding
Indebtedness of the Borrower, all amounts which, in conformity with
GAAP, would be included under the caption "total members' equity" (or
any like caption) on a balance sheet of the Borrower as at such date,
to the extent attributable to investments in the Borrower by persons
who are not Affiliates of the Guarantor,
(iii) if and to the extent that the Guarantor has guaranteed
outstanding Indebtedness of Devco or of any limited liability company,
partnership or other joint venture in which Devco participates as an
equity owner, all amounts which, in conformity with GAAP, would be
included under the caption "total members' equity" or "total partners'
equity" (or any like caption) on a balance sheet of Devco or such joint
venture as of such date, to the extent attributable to investments in
or capital contributions to Devco or such joint venture by persons who
are not Affiliates of the Guarantor, and
(iv) if and to the extent that (x) all of the Lenders have
approved in writing the inclusion thereof for purposes of this
definition, and (y) the Guarantor has guaranteed outstanding
Indebtedness of any other person which is not a Subsidiary of the
Guarantor, all amounts which, in conformity with GAAP, would be
included under the caption "total stockholders' equity" (or any like
caption) on a consolidated balance sheet of such person as at such
date, to the extent attributable to investments in such person by
persons who are not Affiliates of the Guarantor,
PROVIDED that in no event shall Consolidated Adjusted Net Worth include any
amounts in respect of Redeemable Stock.
"CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, all
amortization expenses of the Guarantor and its Subsidiaries, all as determined
for the Guarantor and its Subsidiaries on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events amounts expended or capitalized under Capital Leases
and Synthetic Leases but excluding any amount representing capitalized interest)
by the Guarantor and its Subsidiaries during that period that, in conformity
with GAAP, are or are required to be included in the property, plant or
equipment reflected in the consolidated balance sheet of the Guarantor and its
Subsidiaries.
3
<PAGE> 4
"CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, all
depreciation expenses of the Guarantor and its Subsidiaries, all as determined
for the Guarantor and its Subsidiaries on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED EBIT" shall mean, for any period, Consolidated Net Income
for such period, PLUS (A) the sum of the amounts for such period included in
determining such Consolidated Net Income of (i) Consolidated Interest Expense,
(ii) Consolidated Income Tax Expense, and (iii) extraordinary and other
non-recurring non-cash losses and charges, LESS (B) gains on sales of assets and
other extraordinary gains and other non-recurring non-cash gains, all as
determined for the Guarantor and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED EBITDAR" shall mean, for any period, Consolidated EBIT
for such period, PLUS the sum for such period of (i) Consolidated Depreciation
Expense, (ii) Consolidated Amortization Expense, and (iii) Consolidated Rental
Expense, all as determined for the Guarantor and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period, all
provisions for taxes based on the net income of the Guarantor or any of its
Subsidiaries (including, without limitation, any additions to such taxes, and
any penalties and interest with respect thereto), all as determined for the
Guarantor and its Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, total
interest expense (including that which is attributable to Capital Leases and
Synthetic Leases) of the Guarantor and its Subsidiaries on a consolidated basis
with respect to all outstanding Indebtedness of the Guarantor and its
Subsidiaries, all as determined in accordance with GAAP, but (i) including in
any event net costs under Hedge Agreements, and (ii) excluding in any event (x)
any amortization or write-off of deferred financing costs, and (y) any interest
during construction which is capitalized in accordance with GAAP. If the
Guarantor uses the net interest method of accounting, in which interest expense
is determined net of interest income, in accordance with GAAP, then Consolidated
Interest Expense may be determined on such basis.
"CONSOLIDATED LEASE AND DEBT SERVICE CHARGES" shall mean, for any
period, the sum for such period of (1) Consolidated Interest Expense, (2)
Consolidated Rental Expense, (3) scheduled or mandatory repayments, prepayments
or redemptions of the principal of Indebtedness and the stated or liquidation
value of Redeemable Stock (including required reductions in committed credit
facilities), and (4) without duplication of any amount included under the
preceding clause (3), scheduled payments representing the principal portion of
Capitalized Leases and Synthetic Leases, all as determined for the Guarantor and
its Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" shall mean for any period, the net income (or
loss) of the Guarantor and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"CONSOLIDATED NET WORTH" shall mean, at any time for the determination
thereof, all amounts which, in conformity with GAAP, would be included under the
caption "total stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Guarantor as at such date, PROVIDED that in no event shall
Consolidated Net Worth include any amounts in respect of Redeemable Stock.
"CONSOLIDATED RENTAL EXPENSE" shall mean, for any period, all basic
rental expenses of the Guarantor and its Subsidiaries (exclusive of any thereof
specifically intended to cover taxes, maintenance, insurance or similar
charges), all as determined for the Guarantor and its Subsidiaries on a
consolidated basis in accordance with GAAP, PROVIDED that Consolidated Rental
Expense shall be computed without duplication of any amounts in respect of any
Capital Lease or Synthetic Lease which is included in Consolidated Interest
Expense.
"CONSOLIDATED SENIOR INDEBTEDNESS" shall mean Consolidated Total
Indebtedness, exclusive of the portion thereof, if any, which constitutes the
outstanding principal amount of Subordinated Indebtedness of the Guarantor.
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean at any date the sum of
(i) the Consolidated Adjusted Net Worth at such date (or if such date is not the
end of a fiscal quarter, as of the end of the then most recently completed
fiscal quarter), PLUS (ii) the Consolidated Total Indebtedness at such date.
4
<PAGE> 5
"CONSOLIDATED TOTAL INDEBTEDNESS" shall mean the sum (without
duplication) of the following:
(i) the principal amount of all Indebtedness which has a
principal amount,
(ii) the amount of all Capitalized Lease Obligations,
(iii) the present value, determined on the basis of the
implicit interest rate, of all basic rental obligations under all
Synthetic Leases,
(iv) the amount which represents 8 times the annual
Consolidated Rental Expense of all Operating Leases of real property
and/or improvements which have a remaining fixed term of at least one
year (other than any such lease which is a Synthetic Lease),
(v) the stated value, or liquidation value if higher, of all
Redeemable Stock, and
(vi) the amount reasonably determined for any other
Indebtedness, including Contingent Obligations,
all as determined on a consolidated basis for the Guarantor and its
Subsidiaries.
"CONTINGENT OBLIGATIONS" shall mean as to any person (without
duplication) any and all existing obligation of such person:
(i) to purchase any property pursuant to a "put" or similar
option, if such option has been exercised;
(ii) to make any investment in or loan or advance to any other
person, which obligation has been "called" or is otherwise required to
be made at a fixed time or within a determinable period; and/or
(iii) guaranteeing any Indebtedness, leases, dividends or
other obligations ("PRIMARY OBLIGATIONS") of any other person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such person, whether
or not contingent, (1) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (2) to
advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (3) to purchase property, securities
or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (4) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect
thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such person is
required to perform thereunder) as determined by such person in good faith.
"CREDIT DOCUMENT OBLIGATIONS" shall mean and include:
(i) the principal of and interest on the Notes issued by, and
the Loans made to, the Borrower under the Credit Agreement, and
(ii) all other obligations and liabilities owing by the
Borrower to the Administrative Agent, the Collateral Agent or any of
the Lenders under the Credit Agreement and the other Credit Documents
(other than any Designated Hedge Agreement) to which the Borrower is
now or may hereafter become a party (including, without limitation,
indemnities, Fees and other amounts payable thereunder),
5
<PAGE> 6
in all cases whether now existing, or hereafter incurred under, arising out of,
or in connection with, the Credit Agreement or any of such other Credit
Documents, including any such interest or other amounts which, but for any
automatic stay under section 362(a) of the Bankruptcy Code, would become due.
"DESIGNATED HEDGE AGREEMENT" shall have the meaning provided in the
Credit Agreement.
"DESIGNATED HEDGE DOCUMENT" shall mean and include (i) each Designated
Hedge Agreement to which the Borrower is now or may hereafter become a party,
and (ii) each confirmation, transaction statement or other document executed and
delivered in connection therewith to which the Borrower is now or may hereafter
become a party.
"DESIGNATED HEDGE DOCUMENT OBLIGATIONS" shall mean and include all
obligations and liabilities owing by the Borrower under all existing and future
Designated Hedge Documents, in all cases whether now existing, or hereafter
incurred under, arising out of, or in connection with, any Designated Hedge
Document, including any such amounts which, but for any automatic stay under
section 362(a) of the Bankruptcy Code, would become due.
"DEVCO" shall mean HCR/Alterra Development, LLC, a Delaware limited
liability company, and its successors and assigns.
"EVENT OF DEFAULT" shall mean (i) any Event of Default under, and as
defined in, the Credit Agreement, (ii) any Event of Default under, and as
defined in, any Designated Hedge Document, and (iii) if the term Event of
Default is not defined in any particular Designated Hedge Document, any payment
default by the Borrower thereunder beyond any applicable grace period provided
therein.
"GUARANTEED DOCUMENTS" shall mean and include (i) the Credit Agreement,
the Notes and the other Credit Documents to which the Borrower is now or may
hereafter become a party, and (ii) each Designated Hedge Agreement and other
Designated Hedge Document to which the Borrower is now or may hereafter become a
party.
"GUARANTEED OBLIGATIONS" shall mean and include the Credit Document
Obligations and the Designated Hedge Document Obligations.
"INDEBTEDNESS" of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money;
(ii) all bonds, notes, debentures and similar debt securities
of such person;
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such person;
(iv) the face amount of all letters of credit issued for the
account of such person and, without duplication, all drafts drawn
thereunder;
(v) all obligations, contingent or otherwise, of such person
in respect of bankers' acceptances;
(vi) all Indebtedness of a second person secured by any Lien
on any property owned by such first person, whether or not such
indebtedness has been assumed;
(vii) all Capitalized Lease Obligations of such person;
(viii) the present value, determined on the basis of the
implicit interest rate, of all basic rental obligations under all
Synthetic Leases of such person;
6
<PAGE> 7
(ix) the amount which represents 8 times the annual
Consolidated Rental Expense of all Operating Leases of real property
and/or improvements which have a remaining fixed term of at least one
year (other than any such lease which is a Synthetic Lease);
(x) all obligations of such person to pay a specified purchase
price for goods or services whether or not delivered or accepted, I.E.,
take-or-pay and similar obligations;
(xi) all net obligations of such person under Hedge Agreements;
(xii) the full outstanding balance of trade receivables, notes
or other instruments sold with full recourse (and the portion thereof
subject to potential recourse, if sold with limited recourse), other
than in any such case any thereof sold solely for purposes of
collection of delinquent accounts;
(xiii) the stated value, or liquidation value if higher, of
all Redeemable Stock of such person; and
(xiv) all Contingent Obligations of such person;
PROVIDED that (x) neither trade payables nor other similar accrued expenses, in
each case arising in the ordinary course of business, nor obligations in respect
of insurance policies or performance or surety bonds which themselves are not
guarantees of Indebtedness (nor drafts, acceptances or similar instruments
evidencing the same nor obligations in respect of letters of credit supporting
the payment of the same), shall constitute Indebtedness; and (y) the
Indebtedness of any person shall in any event include (without duplication) the
Indebtedness of any other entity (including any general partnership in which
such person is a general partner) to the extent such person is liable thereon as
a result of such person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide expressly
that such person is not liable thereon.
"OPERATING LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is not accounted for as a Capital Lease on the balance
sheet of that person.
"REDEEMABLE STOCK" shall mean with respect to any person which is a
corporation, any capital stock of such corporation, and with respect to any
person which is not a corporation, any equity interests of such person which are
similar to capital stock, in each case that (i) is by its terms subject to
mandatory redemption, in whole or in part, pursuant to a sinking fund, scheduled
redemption or similar provisions, at any time prior to the latest date when any
Loans could mature under section 2.7 of the Credit Agreement; or (ii) otherwise
is required to be repurchased or retired on a scheduled date or dates, upon the
occurrence of any event or circumstance, at the option of the holder or holders
thereof, or otherwise, at any time prior to the latest date when any Loans could
mature under section 2.7 of the Credit Agreement, other than any such repurchase
or retirement occasioned by a "change of control" or similar event.
"SUBORDINATED INDEBTEDNESS" shall mean
(i) the Guarantor's $143,750,000 aggregate original principal
amount of 5.25% convertible subordinated debentures due December 15,
2002;
(ii) the Guarantor's $50,000,000 aggregate original principal
amount of 7.00% convertible subordinated debentures due June 1, 2004;
(iii) the Guarantor's $35,000,000 aggregate original principal
amount of 6.75% convertible subordinated debentures due June 30, 2006;
(iv) any other Indebtedness which (x) matures on a date later
than the latest maturity date of any Loans which could be made under
the Credit Agreement (assuming the exercise of any extension options
provided in the Credit Agreement), (y) does not provide for a sinking
fund or mandatory prepayment on any specified date or dates prior to
such latest maturity date, and (z) is subject to subordination
provisions no less
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favorable to the Creditors than those contained in any of the
indentures related to the Subordinated Indebtedness described in the
foregoing clauses (i), (ii) and (iii); and
(v) any other Indebtedness which has been subordinated to the
obligations of the Guarantor hereunder in such manner and to such
extent as the Administrative Agent (acting on instructions from the
Required Lenders) may require.
"SUBSIDIARY" of any person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any 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 directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Guarantor.
"SYNTHETIC LEASE" shall mean any lease (i) which is accounted for by
the lessee as an Operating Lease, and (ii) under which the lessee is intended to
be the "owner" of the leased property for Federal income tax purposes.
"TESTING PERIOD" shall mean for any determination a single period
consisting of the four consecutive fiscal quarters of the Guarantor then last
ended (whether or not such quarters are all within the same fiscal year), EXCEPT
that if a particular provision of this Guaranty indicates that a Testing Period
shall be of a different specified duration, such Testing Period shall consist of
the particular fiscal quarter or quarters then last ended which are so indicated
in such provision.
"TOTAL PROJECT COSTS" shall mean the total for all Projects of all
items of costs and expense incurred in connection with the development,
construction and leasing-up of the Projects, including, without limitation, (i)
all items of cost that would normally be capitalized as a component of the cost
of the Projects together with related pre-opening and start-up costs and losses;
(ii) direct cost (including costs of employees of the Guarantor assigned to any
Project) associated with performing market research, development and
construction management services, professional fees paid to third parties, and
amounts paid under construction contracts (including costs related to the
general condition of a construction project); (iii) to the extent the Guarantor
shall advance funds toward the development, construction or leasing-up of any
Project, the Guarantor's imputed construction period interest; (iv) interest,
fees and expenses related to debt financing for such Project; (v) contingency
reserves and (vi) Developer Fees.
2 GUARANTY BY THE GUARANTOR, ETC. (A) GUARANTY OF PAYMENT. The
Guarantor hereby irrevocably and unconditionally guarantees:
(i) to the Administrative Agent and the Lenders the full and
prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all of the Credit Document Obligations of
the Borrower; and
(ii) to each Designated Hedge Creditor the full and prompt
payment when due (whether at the stated maturity, by acceleration or
otherwise) of all of the Designated Hedge Document Obligations of the
Borrower.
Such guaranty is an absolute, unconditional, present and continuing guaranty of
payment and not of collectibility and is in no way conditioned or contingent
upon any attempt to collect from the Borrower, or any other action, occurrence
or circumstance whatsoever. If an Event of Default shall occur and be continuing
under the Credit Agreement or any payment default shall occur and be outstanding
under any Designated Hedge Document, the Guarantor will, within ten Business
Days following its receipt of written notice from the Administrative Agent
demanding payment hereunder, pay to the Administrative Agent, for the benefit of
the Creditors, in immediately available funds, at the Payment Office of the
Administrative Agent, such amount of the Guaranteed Obligations as the
Administrative Agent shall specify in such notice.
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(B) GUARANTY OF PERFORMANCE. In addition to the foregoing, the
Guarantor also irrevocably and unconditionally guarantees that each of the
terms, conditions, covenants and agreements of the Borrower under the Credit
Agreement, and of the Borrower under the other Guaranteed Documents, will be
duly and punctually performed and observed strictly in accordance with the terms
thereof and that if for any reason whatsoever the Borrower shall fail to do so,
the Guarantor shall duly and punctually perform and observe, or cause the
Borrower to duly and punctually perform and observe, the same. Such guaranty is
an absolute, unconditional, present and continuing guaranty of performance and
is in no way conditioned or contingent upon any attempt to enforce performance
by the Borrower, or any other act, occurrence or circumstance whatsoever.
(C) INSOLVENCY OF BORROWER, ETC. In addition to the foregoing, the
Guarantor unconditionally and irrevocably guarantees to the Creditors the
payment of any and all Guaranteed Obligations of the Borrower, whether or not
due or payable by the obligor thereon, upon the occurrence in respect of the
Borrower or other applicable obligor of any bankruptcy or insolvency proceeding
or case under the Bankruptcy Code, and unconditionally and irrevocably promises
to pay such Guaranteed Obligations to the Administrative Agent, for the benefit
of the Creditors, on demand, in such currency and otherwise in such manner as is
provided in the Guaranteed Documents governing such Guaranteed Obligations.
(D) IF AMOUNTS OWED BY BORROWER NOT RECOVERABLE, ETC. As a separate,
additional and continuing obligation, the Guarantor unconditionally and
irrevocably undertakes and agrees, for the benefit of the Creditors, that,
should any amounts constituting Guaranteed Obligations not be recoverable from
the Borrower or other applicable obligor for any reason whatsoever (including,
without limitation, by reason of any provision of any Guaranteed Document or any
other agreement or instrument executed in connection therewith being or
becoming, at any time, voidable, void, unenforceable, or otherwise invalid under
any applicable law), then notwithstanding any notice or knowledge thereof by the
Administrative Agent, any other Creditor, any of their respective Affiliates, or
any other person, the Guarantor, as sole, original and independent obligor, upon
demand by the Administrative Agent, will make payment to the Administrative
Agent, for the account of the Creditors, of all such obligations not so
recoverable by way of full indemnity, in such currency and otherwise in such
manner as is provided in the Guaranteed Documents.
(E) FULL DIRECT ENFORCEMENT. The Guarantor understands, agrees and
confirms that the Administrative Agent and the other Creditors may enforce this
Guaranty against the Guarantor up to the full amount of the Guaranteed
Obligations, SUBJECT to the effect of section 5 hereof, and that such
enforcement against the Guarantor may be effected without proceeding against the
Borrower or other person, against any security for all or any portion of the
Guaranteed Obligations, or under any other guaranty covering all or any portion
of the Guaranteed Obligations.
(F) PAYMENTS BY GUARANTOR. All payments by the Guarantor under this
Guaranty shall be made to the Administrative Agent, for the benefit of the
Creditors, in such currency and otherwise in such manner as is provided in the
Guaranteed Documents to which such payments relate.
3 SUBORDINATION. (a) Any Indebtedness or other liabilities or
obligations of the Borrower now or hereafter held by or owed to the Guarantor
(collectively, "SUBORDINATED OBLIGATIONS") is hereby subordinated to the
Indebtedness of the Borrower to any of the Creditors; and such Subordinated
Obligations of the Borrower to the Guarantor, if the Administrative Agent, after
an Event of Default has occurred so requests, shall be collected, enforced and
received by the Guarantor as trustee for the Creditors and be paid over to the
Administrative Agent, for the benefit of the Creditors, on account of the
Indebtedness of the Borrower to the Creditors, but without affecting or
impairing in any manner the liability of the Guarantor under the other
provisions of this Guaranty. Prior to the transfer by the Guarantor of any note
or negotiable instrument evidencing any Subordinated Obligation of the Borrower
to the Guarantor, the Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination.
(b) If and to the extent that the Guarantor makes any payment to the
Administrative Agent or any other Creditor or to any other person pursuant to or
in respect of this Guaranty, any reimbursement or similar claim which the
Guarantor may have against the Borrower by reason thereof shall be subject and
subordinate to the prior termination of the Total Commitment and indefeasible
payment in full of all Guaranteed Obligations then or thereafter owed to the
Administrative Agent and the other Creditors.
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4 GUARANTOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Guarantor under this Guaranty shall be absolute and unconditional, shall not be
subject to any counterclaim, setoff, deduction or defense based on any claim the
Guarantor may have against the Borrower or any other person, including, without
limitation, the Administrative Agent, any other Creditor, any of their
respective Affiliates, and shall remain in full force and effect without regard
to, and shall not be released, suspended, abated, deferred, reduced, limited,
discharged, terminated or otherwise impaired or adversely affected by any
circumstance or occurrence whatsoever, other than indefeasible payment in full
of, and complete performance of, all of the Guaranteed Obligations, including,
without limitation:
(1) any increase in the amount of the Guaranteed Obligations
outstanding from time to time, SUBJECT to the provisions of section 5;
(2) SUBJECT to the provisions of section 5, any increase in
any interest rate, Fee or other amount applicable to any portion of the
Guaranteed Obligations or otherwise payable under any Guaranteed
Document;
(3) any direction as to the application of any payment by the
Borrower or by any other person;
(4) any incurrence of additional Guaranteed Obligations,
SUBJECT to the provisions of section 5, at any time or under any
circumstances, including, without limitation, (x) during the
continuance of a Default or Event of Default, (y) at any time when all
conditions to such incurrence have not been satisfied, or (z) in excess
of borrowing base, sublimit or other similar or dissimilar limitations
contained in the Credit Agreement or any of the other Guaranteed
Documents;
(5) any renewal or extension of the time for payment or
maturity of any of the Guaranteed Obligations, or any amendment or
modification of, or addition or supplement to, or deletion from, the
Credit Agreement, any other Guaranteed Document, or any other
instrument or agreement applicable to the Borrower or any other person,
or any part thereof, or any assignment, transfer or other disposition
of any thereof;
(6) any failure of the Credit Agreement, any other Guaranteed
Document, or any other instrument or agreement applicable to the
Borrower or any other person, to constitute the legal, valid and
binding agreement or obligation of any party thereto, enforceable in
accordance with its terms, or any irregularity in the form of any
Guaranteed Document;
(7) any failure on the part of the Borrower or any other
person to perform or comply with any term or provision of the Credit
Agreement, any other Guaranteed Document, or any such other instrument
or agreement;
(8) any waiver, consent, extension, indulgence or other action
or inaction (including, without limitation, any lack of diligence, any
failure to mitigate damages or marshall assets, or any election of
remedies) under or in respect of (x) the Credit Agreement, any other
Guaranteed Document, or any such other instrument or agreement, or (y)
any obligation or liability of the Borrower or any other person;
(9) any exercise or non-exercise of any right, power or remedy
under or in respect of the Credit Agreement, any other Guaranteed
Document, or any such other instrument or agreement, or any such
obligation or liability, including, without limitation, (x) any failure
of the Administrative Agent or any other Creditor to give notice of any
Default or Event of Default under any Guaranteed Document, or to
advance funds for the protection or preservation of, or provision of
insurance for, or payment of taxes on, any property which is collateral
security for any of the Guaranteed Obligations, and (y) any act or
failure to act on the part of the Administrative Agent or any other
Creditor, in any manner referred to in this Guaranty, or otherwise,
which may deprive the Guarantor of its right to (A) subrogation against
the Borrower to recover full reimbursement or indemnity for any
payments made pursuant to this Guaranty, or (B) contribution from any
other surety for any such payments made by it, or which otherwise may
adversely affect the amount recoverable upon the exercise of any such
right of subrogation or contribution;
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(10) any application of any amounts by whomsoever paid or
howsoever realized to the Guaranteed Obligations or any other
liabilities owed to the Administrative Agent or any other Creditor,
regardless of the order or priority of any such application, and
regardless of what liabilities of the Borrower or any other person
remain unpaid;
(11) any settlement or compromise of any of the Guaranteed
Obligations, any security therefor or guaranty thereof;
(12) any payment made to the Administrative Agent or any other
Creditor on the Guaranteed Obligations which the Administrative Agent
or any other Creditor repays, returns or otherwise restores to the
Borrower or any other applicable obligor pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding;
(13) any subordination of any of the claims of the
Administrative Agent or any other Creditor to any claims of any
creditors of the Borrower or any other person, or any subordination of
any liens or security interests in favor of the Administrative Agent or
any other Creditor to any liens or security interests of any other
person;
(14) any sale, exchange, release, surrender or foreclosure of,
or any realization upon, or other dealing with, in any manner and in
any order, any property, rights or interests by whomsoever at any time
granted, assigned, pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations, or any other liabilities or
obligations (including any of those hereunder), or any portion of any
thereof;
(15) the existence of any right of setoff, offset or banker's
lien, or any failure to exercise rights in respect thereof, or any
release thereof;
(16) any furnishing of any new or additional security or any
new or additional guaranty to or for the benefit of any Creditor, or
any acceptance thereof;
(17) any release of any security or any guaranty by or at the
direction of the Administrative Agent or any other Creditor, or any
release or discharge of, or limitation of recourse against, any person
furnishing any security or guaranty;
(18) any limitation on any person's liability or obligation
under the Credit Agreement, any other Guaranteed Document, or any such
other instrument or agreement, or any such obligation or liability, or
any termination, cancellation, avoidance, commercial or other
frustration, impracticability, invalidity, unenforceability or
ineffectiveness, in whole or in part, of the Credit Agreement, any
other Guaranteed Document, or any such other instrument or agreement or
any such obligation or liability or any term or provision of any
thereof;
(19) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition, arrangement or other similar
proceeding relating to the Borrower or to any of its properties or
assets, or any such proceeding by, among or on behalf of any of its
creditors, as such, or any proceeding for the voluntary liquidation or
dissolution or other winding up of the Borrower, whether or not
insolvency or bankruptcy proceedings, or any assignment for the benefit
of its creditors, or any other marshaling of its assets, or any action
taken by any trustee or receiver or by any court in any such
proceeding;
(20) any disallowance or limitation of any claim of the
Administrative Agent, any other Creditor, or any other person, in any
such proceeding;
(21) any change in the ownership of all or any part of the
capital stock of, or other equity interests in, the Borrower, any of
its Affiliates, or any other person, or any merger or consolidation
involving the Borrower, any of its Affiliates, or any other person, or
any purchase, acquisition, sale, lease or disposition by the Borrower,
any of its Affiliates, or any other person, of any assets or
properties;
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(22) any breach by the Borrower of any of its representations
or warranties contained in any of the Guaranteed Documents or any other
certificate or document executed and delivered in connection therewith;
(23) any inability of the Borrower to create or incur any
Subordinated Indebtedness or other Indebtedness, or the existence of
any contractual or other restriction upon the ability of the Borrower
to issue and sell shares of its capital stock, to purchase, sell, lease
or otherwise dispose of assets, to incur Subordinated Indebtedness or
other Indebtedness, or to otherwise conduct its business affairs;
(24) any assignment, transfer or other disposition, in whole
or in part, by the Borrower or any other person of its interest in any
of the property, rights or interests constituting security for all or
any portion of the Guaranteed Obligations or any other Indebtedness,
liabilities or obligations;
(25) any failure of any of the Credit Documents, or any other
agreement or instrument securing all or any portion of the Guaranteed
Obligations, to effectively subject any property, rights or interests
to any liens or security interests purported to be granted or created
thereby, or any failure of any such liens or security interests to be
or become perfected or to establish or maintain the priority over other
liens and security interests contemplated thereby;
(26) any condemnation or taking of, or any encumbrance on or
interference with any use of, or any damage to, or any destruction of,
any such property, or any part thereof or interest therein;
(27) any lack of notice to, or knowledge by, the Guarantor of
any of the matters referred to above; and/or
(28) any other circumstance or occurrence, whether similar or
dissimilar to any of the foregoing, which could or might constitute a
defense available to, or a discharge of the obligations of, a guarantor
or other surety.
5 LIMITATION ON OBLIGATIONS OF GUARANTOR. (a) Notwithstanding
anything to the contrary contained in this Guaranty, no Loans which have been
prepaid or repaid and then re-borrowed shall be covered by the Guarantor's
guaranty and other obligations under section 2 of this Guaranty unless such
re-borrowing is consented to in writing by the Guarantor, PROVIDED that this
clause shall not apply to the prepayment or repayment, and contemporaneous
re-borrowing, of any Loans effected solely to accommodate the joinder in the
Credit Agreement of the additional Lender providing the Incremental Commitment,
as contemplated by section 2.1(f) of the Credit Agreement, and no (i) increase
in the maximum aggregate principal amount of the Loans above $75,000,000; (ii)
increases in the interest rate or rates applicable to the Loan, other than
fluctuations in the Prime Rate or Applicable LIBOR Rate or a change to the
Default Rate pursuant to the terms of the Notes or Credit Agreement; or (iii)
changes in the maturity dates of the Loans, unless extended pursuant to Section
2.7 of the Credit Agreement or unless accelerated by the Administrative Agent
pursuant to the terms of the Credit Agreement, shall be binding upon the
Guarantor for purposes of this Guaranty unless such increases or changes are
consented to in writing by the Guarantor.
(b) Notwithstanding anything to the contrary contained in this
Guaranty, the Guarantor's guaranty and other obligations under section 2 of this
Guaranty shall be limited to the sum of:
(i) 100% of the Credit Document Obligations; and
(ii) such portion, not in excess of 100%, of the Designated
Hedge Document Obligations, as the Administrative Agent determines will
not result in the Guarantor's guaranty and other obligations under
section 2 of this Guaranty in respect of all of the Guaranteed
Obligations, exclusive of interest on the Notes issued by the Borrower
under the Credit Agreement, exceeding 85% of the result obtained by
subtracting from the Total Project Costs the sum of (x) the then
outstanding principal balance of all loans made by the Guarantor to the
Borrower the proceeds of which are actually applied to the Total
Project Costs, plus (y) all capital contributions made by the Guarantor
to the Borrower pursuant to the terms of the Company Equity Documents
and Company Capitalization Documents.
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In no event shall the provisions of this section 5 limit, impair or otherwise
affect the ability of the Administrative Agent to apply monies or other proceeds
of enforcement in accordance with section 10.3 of the Credit Agreement.
6 WAIVERS. The Guarantor unconditionally waives, to the maximum
extent permitted under any applicable law now or hereafter in effect, insofar as
its obligations under this Guaranty are concerned, (i) notice of any of the
matters referred to in section 4 unless notice is specifically required under
the Credit Documents, (ii) all notices required by statute, rule of law or
otherwise to preserve any rights against the Guarantor hereunder, including,
without limitation, any demand, presentment, proof or notice of dishonor or
non-payment of any Guaranteed Obligation, notice of acceptance of this Guaranty,
notice of the incurrence of any Guaranteed Obligation, notice of any failure on
the part of the Borrower or any other person to perform or comply with any term
or provision of the Credit Agreement, any other Guaranteed Document or any other
agreement or instrument to which the Borrower or any other person is a party, or
notice of the commencement of any proceeding against any other person or any of
its property or assets unless notice is specifically required under the Credit
Documents, (iii) any right to the enforcement, assertion or exercise against the
Borrower or against any other person or any collateral of any right, power or
remedy under or in respect of the Credit Agreement, the other Guaranteed
Documents or any other agreement or instrument, (iv) any requirement that the
Guarantor be joined as a party to any proceedings against the Borrower or any
other person for the enforcement of any term or provision of the Credit
Agreement, the other Guaranteed Documents or any other agreement or instrument,
and (v) the provisions of Nev. Rev. Stat. 40.430, the "one action rule" and any
amendments or successor statutes thereto, and the Guarantor understands and
acknowledges that demand upon and an action against the Guarantor to pay the
indebtedness, if secured by a mortgage or lien upon real property, may, at the
sole and absolute option of the Collateral Agent, be initiated against the
Guarantor as a separate and independent action apart from the action initiated
to recover the indebtedness or obligation secured by said mortgage or lien upon
real property.
7 SUBROGATION RIGHTS. Until such time as the Guaranteed Obligations
have been paid in full in cash and otherwise fully performed and the Total
Commitment under the Credit Agreement has been terminated, the Guarantor hereby
agrees not to assert any rights of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual, under section
509 of the Bankruptcy Code, or otherwise) to the claims of the Administrative
Agent and/or the other Creditors against the Borrower or any other guarantor of
or surety for the Guaranteed Obligations and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity from the Borrower
or any other guarantor which it may at any time otherwise have as a result of
this Guaranty.
8 SEPARATE ACTIONS. A separate action or actions may be brought and
prosecuted against the Guarantor whether or not action is brought against any
other person, including the Borrower, and whether or not any other person,
including the Borrower be joined in any such action or actions.
9 GUARANTOR FAMILIAR WITH BORROWER'S AFFAIRS, ETC. The Guarantor
confirms that an executed (or conformed) copy of each of the Credit Documents
has been made available to its principal executive officers, that such officers
are familiar with the contents thereof and of this Guaranty, and that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Credit Agreement, the other Credit Documents and this Guaranty and such
other information as it has deemed appropriate in order to make its own credit
analysis and decision to execute and deliver this Guaranty. The Guarantor
confirms that it has made its own independent investigation with respect to the
creditworthiness of the Borrower and is not executing and delivering this
Guaranty in reliance on any representation or warranty by the Administrative
Agent or any other Creditor or any other person acting on behalf of the
Administrative Agent or any other Creditor as to such creditworthiness. The
Guarantor expressly assumes all responsibilities to remain informed of the
financial condition of the Borrower and any circumstances affecting (i) the
Borrower's ability to perform its obligations under the Credit Agreement and the
other Guaranteed Documents to which it is a party, or (ii) any collateral
securing, or any other guaranty for, all or any part of the Borrower's payment
and performance obligations thereunder; and the Guarantor further agrees that
the Administrative Agent and the other Creditors shall have no duty to advise
the Guarantor of information known to them regarding such circumstances or the
risks the Guarantor undertakes in this Guaranty.
10 COVENANT NOT TO CAUSE EVENTS OF DEFAULT UNDER CREDIT AGREEMENT,
ETC. The Guarantor covenants and agrees that on and after the date hereof and
until this Guaranty is terminated in accordance with section 25 hereof,
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the Guarantor shall take, or will refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in section 8 or 9 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of the Guarantor or any of its Subsidiaries.
11 REPRESENTATIONS AND WARRANTIES. The Guarantor represents and
warrants to the Administrative Agent and each of the other Creditors that:
(a) ORGANIZATION AND CORPORATE POWER AND AUTHORITY. The
Guarantor is a duly organized and validly existing corporation, in good
standing under the laws of the jurisdiction of its formation and has
the corporate power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to
engage. The Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of the Credit Documents
to which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Credit
Documents to which it is party.
(b) CREDIT DOCUMENTS. The Guarantor has duly executed and
delivered each Credit Document to which it is party and each Credit
Document to which it is party constitutes the legal, valid and binding
agreement or obligation of the Guarantor enforceable in accordance with
its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is
sought in equity or at law).
(c) NO CONFLICTS, ETC. Neither the execution, delivery and
performance by the Guarantor of the Credit Documents to which the
Guarantor is party nor compliance with the terms and provisions thereof
(i) will contravene any provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or
governmental instrumentality applicable to the Guarantor or its
properties and assets, (ii) will conflict with or result in any breach
of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than any Lien
created pursuant to the Credit Documents) upon any of the property or
assets of the Guarantor pursuant to the terms of any material
promissory note, bond, debenture, indenture, mortgage, deed of trust,
credit or loan agreement, or any other material agreement or other
instrument, to which the Guarantor is a party or by which it or any of
its property or assets are bound or to which it may be subject, or
(iii) will violate any provision of the certificate or articles of
incorporation, code of regulations or by-laws, or other charter or
organizational documents of the Guarantor.
(d) NO GOVERNMENTAL APPROVALS, ETC. No order, consent,
approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or
domestic governmental or public body or authority, or any subdivision
thereof, is required to authorize or is required as a condition to (i)
the execution, delivery and performance by the Guarantor of any Credit
Document to which it is a party, or (ii) the legality, validity,
binding effect or enforceability of any Credit Document to which the
Guarantor is a party, other than filings and recordings necessary to
establish or perfect any security interests or other Liens created
pursuant to the Credit Documents.
(e) LITIGATION. There are no actions, suits or proceedings
pending or, to, the knowledge of the Guarantor, threatened with respect
to the Guarantor which question the validity or enforceability of any
of the Credit Documents to which the Guarantor is a party, or of any
action to be taken by the Guarantor pursuant to any of the Credit
Documents to which it is a party.
(f) FINANCIAL STATEMENTS, ETC. The Guarantor has furnished to
the Lenders and the Administrative Agent complete and correct copies of
(1) the audited consolidated balance sheet of the Guarantor and its
consolidated subsidiaries as of December 31, 1997 and December 31,
1998, and the related audited consolidated statements of income,
shareholders' equity, and cash flows for the fiscal years then ended,
accompanied by the unqualified report thereon of the Guarantor's
independent accountants; and (2) the unaudited condensed consolidated
balance sheets of the Guarantor and its consolidated subsidiaries as of
June
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30, 1999, and the related unaudited condensed consolidated
statements of income and of cash flows of the Guarantor and its
consolidated subsidiaries for the fiscal quarter or quarters then
ended, as contained in the Form 10-Q Quarterly Report of the Guarantor
filed with the SEC. All such financial statements have been prepared in
accordance with GAAP, consistently applied (except as stated therein),
and fairly present the financial position of the Guarantor and its
consolidated subsidiaries as of the respective dates indicated and the
consolidated results of their operations and cash flows for the
respective periods indicated, subject in the case of any such financial
statements which are unaudited, to the absence of footnotes and to
normal year-end or audit adjustments which the Guarantor reasonably
believes will not involve a Material Adverse Effect.
(g) NO MATERIAL ADVERSE CHANGE. Since December 31, 1998, there
has been no change in the condition, business or affairs of the
Guarantor and its Subsidiaries taken as a whole, or their properties
and assets considered as an entirety, except for changes, which, in the
aggregate, have not had or could not reasonably be expected to have, a
Material Adverse Effect.
(h) ANNUAL REPORT ON FORM 10-K. The Guarantor has delivered or
caused to be delivered to the Lenders prior to the Effective Date a
copy of the Guarantor's Report on Form 10-K as filed (without Exhibits)
with the SEC for its fiscal year ended December 31, 1998, which
contains a general description of the business and affairs of the
Guarantor and its Subsidiaries.
(i) CONFIDENTIAL INFORMATION MEMORANDUM; FINANCIAL
PROJECTIONS. The Guarantor has delivered or caused to be delivered to
the Lenders prior to the Effective Date (1) a confidential information
brochure dated April 1999, as supplemented by a Summary of Terms and
Conditions distributed May 28, 1999, prepared by the Administrative
Agent (with assistance from the Guarantor) which contains information
with respect to the business, properties and operations of the
Guarantor and its Subsidiaries (the "CONFIDENTIAL INFORMATION
MEMORANDUM"), and (2) financial projections prepared by management of
the Guarantor for (x) the Guarantor and its Subsidiaries for the fiscal
years 1999-2001, and (y) the Borrower, which are included as part of
the Confidential Information Memorandum (the "FINANCIAL PROJECTIONS").
The Financial Projections were prepared on behalf of the Guarantor in
good faith after taking into account historical levels of business
activity of the Guarantor and its Subsidiaries, the particular Projects
to be developed for the Borrower, known trends, including general
economic trends, and all other information, assumptions and estimates
considered by management of the Guarantor and its Subsidiaries to be
pertinent thereto; PROVIDED, that no representation or warranty is made
as to the impact of future general economic conditions or as to whether
the Guarantor's or the Borrower's projected consolidated results as set
forth in the Financial Projections will actually be realized. No facts
are known to the Guarantor at the date hereof which, if reflected in
the Financial Projections, would result in a material adverse change in
the assets, liabilities, results of operations or cash flows reflected
therein.
(j) CONSIDERATION FOR GUARANTY; SOLVENCY. The Guarantor has
received consideration which is the reasonable equivalent value of the
obligations and liabilities that the Guarantor has incurred to the
Administrative Agent and the other Creditors under this Guaranty and
the other Credit Documents to which the Guarantor is a party. The
Guarantor has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to
engage and is solvent and able to pay its debts as they mature. The
Guarantor owns property having a value, both at fair valuation and at
present fair salable value, greater than the amount required to pay its
debts. The Guarantor is not entering into this Guaranty or any other
Credit Documents to which it is a party with the intent to hinder,
delay or defraud its creditors.
(k) TAX RETURNS AND PAYMENTS. Each of the Guarantor and each
of its Subsidiaries has filed all federal income tax returns and all
other material tax returns, domestic and foreign, required to be filed
by it and has paid all material taxes and assessments payable by it
which have become due, other than those not yet delinquent and except
for those contested in good faith. The Guarantor and each of its
Subsidiaries has established on its books such charges, accruals and
reserves in respect of taxes, assessments, fees and other governmental
charges for all fiscal periods as are required by GAAP. The Guarantor
knows of no proposed assessment for additional federal, foreign or
state taxes for any period, or of any basis therefor, which,
individually or in the aggregate, taking into account such charges,
accruals and reserves in respect thereof as the Guarantor and its
Subsidiaries have made, could reasonably be expected to have a Material
Adverse Effect.
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(l) COMPLIANCE WITH ERISA. Compliance by the Guarantor with
the provisions hereof and the making of the Loans contemplated by the
Credit Documents will not involve any prohibited transaction within the
meaning of ERISA or section 4975 of the Code. The Guarantor and each of
its Subsidiaries, (i) has fulfilled all obligations under minimum
funding standards of ERISA and the Code with respect to each Plan that
is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has
satisfied all respective contribution obligations in respect of each
Multiemployer Plan and each Multiple Employer Plan, (A) is in
compliance in all material respects with all other applicable
provisions of ERISA and the Code with respect to each Plan, each
Multiemployer Plan and each Multiple Employer Plan, and (iii) has not
incurred any liability under the Title IV of ERISA to the PBGC with
respect to any Plan, any Multiemployer Plan, any Multiple Employer
Plan, or any trust established thereunder. No Plan or trust created
thereunder has been terminated, and there have been no Reportable
Events, with respect to any Plan or trust created thereunder or with
respect to any Multiemployer Plan or Multiple Employer Plan, which
termination or Reportable Event will or could result in the termination
of such Plan, Multiemployer Plan or Multiple Employer Plan and give
rise to a material liability of the Guarantor or any ERISA Affiliate in
respect thereof. Neither the Guarantor nor any ERISA Affiliate is at
the date hereof, or has been at any time within the two years preceding
the date hereof, an employer required to contribute to any
Multiemployer Plan or Multiple Employer Plan, or a "contributing
sponsor" (as such term is defined in section 4001 of ERISA) in any
Multiemployer Plan or Multiple Employer Plan. Neither the Guarantor nor
any ERISA Affiliate has any contingent liability with respect to any
post-retirement "welfare benefit plan" (as such term is defined in
ERISA) except as has been disclosed to the Lenders in writing.
(m) INVESTMENT COMPANY ACT, ETC. Neither the Guarantor nor any
of its Subsidiaries is subject to regulation with respect to the
creation or incurrence of Indebtedness under the Investment Company Act
of 1940, as amended, the Interstate Commerce Act, as amended, the
Federal Power Act, as amended, the Public Utility Holding Company Act
of 1935, as amended, or any applicable state public utility law.
(n) YEAR 2000 COMPUTER MATTERS. (i) The Guarantor and its
Subsidiaries have (A) conducted a comprehensive review and assessment
of all areas of their business that could be adversely affected by the
"Y2K ISSUE" (that is, the risk that computer applications used by the
Guarantor and its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), which review and assessment has
included, without limitation written inquiry of each of the Guarantor's
and its Subsidiaries' key suppliers, vendors and customers with whom
there is regular electronic communication via access to computer
networks or systems, (B) developed a detailed plan and timeline for
addressing the Y2K issue, including linkages with, and programming
changes to be made by, key suppliers, vendors and customers, on a
timely basis, and (C) to date, implemented that plan in accordance with
that timetable.
(ii) Based on such review and program, (A) the Guarantor
reasonably believes that the Y2K issue is not reasonably likely to have
a Material Adverse Effect, (B) the Guarantor reasonably anticipates
that all computer applications that are material to its business and
the business of its Subsidiaries will on a timely basis be able to
perform properly date-sensitive functions for all dates before and
after January 1, 2000 (i.e., be "Y2K COMPLIANT"), and (C) the Guarantor
reasonably believes that each of such key suppliers, vendors and
customers will on a timely basis be Y2K compliant in all material
respects which affect the Guarantor or any of its Subsidiaries.
(o) TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on
behalf of the Guarantor or any of its Subsidiaries in writing to the
Administrative Agent or any Lender for purposes of or in connection
with this Guaranty or any transaction contemplated herein, other than
the Financial Projections (as to which representations are made only as
provided in section 11(i) hereof), is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of
such person in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at
such time in light of the circumstances under which such information
was provided, except that any such future information consisting of
financial projections
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prepared by management of the Guarantor is only represented herein as
being based on good faith estimates and assumptions believed by such
persons to be reasonable at the time made, it being recognized by the
Lenders that such projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered
by any such projections may differ materially from the projected
results. As of the date hereof, there is no fact known to the Guarantor
or any of its Subsidiaries which has, or could reasonably be expected
to have, a Material Adverse Effect which has not theretofore been
disclosed in writing to the Lenders.
12. AFFIRMATIVE COVENANTS. The Guarantor covenants and agrees that on
and after the date hereof and until this Guaranty is terminated in accordance
with section 25 hereof:
(a) REPORTING REQUIREMENTS. The Guarantor will furnish to each
Lender and the Administrative Agent:
(i) ANNUAL CONSOLIDATED FINANCIAL STATEMENTS. As soon
as available and in any event within 90 days after the close
of each fiscal year of the Guarantor, the consolidated balance
sheets of the Guarantor and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidated
statements of income, of stockholder's equity and of cash
flows for such fiscal year, in each case setting forth
comparative figures for the preceding fiscal year, all in
reasonable detail and accompanied by the opinion with respect
to such consolidated financial statements of independent
public accountants of recognized national standing selected by
the Guarantor, which opinion shall be unqualified and shall
(A) state that such accountants audited such consolidated
financial statements in accordance with generally accepted
auditing standards, that such accountants believe that such
audit provides a reasonable basis for their opinion, and that
in their opinion such consolidated financial statements
present fairly, in all material respects, the consolidated
financial position of the Guarantor and its consolidated
subsidiaries as at the end of such fiscal year and the
consolidated results of their operations and cash flows for
such fiscal year in conformity with generally accepted
accounting principles, or (B) contain such statements as are
customarily included in unqualified reports of independent
accountants in conformity with the recommendations and
requirements of the American Institute of Certified Public
Accountants (or any successor organization).
(ii) QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS. As
soon as available and in any event within 45 days after the
close of each of the first three quarterly accounting periods
in each fiscal year of the Guarantor and within 90 days after
the close of the last quarterly accounting period in each
fiscal year of the Guarantor, the unaudited condensed
consolidated balance sheets of the Guarantor and its
consolidated Subsidiaries as at the end of such quarterly
period and the related unaudited condensed consolidated and
consolidating statements of income and of cash flows for such
quarterly period and for the fiscal year to date, and setting
forth, in the case of such unaudited consolidated statements
of income and of cash flows, comparative figures for the
related periods in the prior fiscal year, and which
consolidated financial statements shall be certified on behalf
of the Guarantor by the Chief Financial Officer or other
Authorized Officer of the Guarantor, subject to changes
resulting from normal year-end or audit adjustments.
(iii) OFFICER'S COMPLIANCE CERTIFICATES. At the time
of the delivery of the financial statements provided for in
sections 12(a)(i) and (ii), a certificate on behalf of the
Guarantor of the Chief Financial Officer or other Authorized
Officer of the Guarantor to the effect that, to the best
knowledge of the Guarantor, no Default or Event of Default
(including, without limitation pursuant to section 10.1 of the
Credit Agreement) exists or, if any Default or Event of
Default does exist, specifying the nature and extent thereof,
and which certificate shall set forth the calculations
required to establish compliance with the provisions of
sections 13(b), (c), (d) and (e) of this Guaranty.
(iv) NOTICE OF DEFAULT OR LITIGATION, ETC. Promptly,
and in any event within three Business Days, in the case of
clause (A) below, or five Business Days, in the case of clause
(B) below, after the Guarantor or any of its Subsidiaries
obtains knowledge thereof, notice of
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(a) the occurrence of any event which
constitutes a Default or Event of Default, which notice
shall specify the nature thereof, the period of existence
thereof and what action the Guarantor proposes to take with
respect thereto, and
(b) any litigation or governmental or
regulatory proceeding pending against the Guarantor, or any
of its Subsidiaries, or the Borrower, which is likely to
have a Material Adverse Effect, or a material adverse effect
on the ability of the Guarantor or the Borrower to perform
its obligations hereunder or under any other Credit
Document.
(v) AUDITORS' INTERNAL CONTROL COMMENT LETTERS, ETC.
Promptly upon receipt thereof, a copy of each letter or
memorandum commenting on internal accounting controls or
financial reporting practices or policies which is submitted
to the Guarantor by its independent accountants in connection
with any annual audit made by them of the books of the
Guarantor.
(vi) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly
upon transmission thereof or other filing with the SEC, copies
of all annual, quarterly or current reports that the Guarantor
or any of its Subsidiaries files with the SEC. In addition,
the Guarantor shall cause LiveEdgar(TM) or another third party
service bureau regularly offering such "watch" services to
promptly notify via e-mail a representative designated by the
Administrative Agent of all registration statements filed with
the SEC by the Guarantor or any of its Subsidiaries.
(vii) OTHER INFORMATION. With reasonable promptness, such
other information or documents (financial or otherwise) relating
to the Guarantor or any of its Subsidiaries as any Creditor may
reasonably request from time to time.
(b) BOOKS, RECORDS AND INSPECTIONS. The Guarantor will, and will
cause each of its Subsidiaries to, (i) keep proper books of record
and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Guarantor or
such Subsidiaries, as the case may be, in accordance with GAAP; and
(ii) permit, upon at least five Business Days' notice to the Chief
Financial Officer or any other Authorized Officer of the Guarantor,
officers and designated representatives of the Administrative Agent or
any of the other Creditors to visit and inspect any of the properties
or assets of the Guarantor and any of its Subsidiaries in whomsoever's
possession (but only to the extent the Guarantor or such Subsidiary has
the right to do so to the extent in the possession of another person),
to examine the books of account of the Guarantor and any of its
Subsidiaries and to make copies thereof and take extracts therefrom,
and to discuss the affairs, finances and accounts of the Guarantor and
of any of its Subsidiaries with, and be advised as to the same by, its
and their officers and independent accountants and independent
actuaries, if any, all at such reasonable times and intervals and to
such reasonable extent as the Administrative Agent or any of the other
Creditors may request.
(c) INSURANCE. The Guarantor will, and will cause each of its
Subsidiaries to, (i) maintain insurance coverage by such insurers and
in such forms and amounts and against such risks as are generally
consistent with the insurance coverage maintained by the Guarantor and
its Subsidiaries at the date hereof, and (ii) forthwith upon any
Creditor's written request, furnish to such Creditor such information
about such insurance as such Creditor may from time to time reasonably
request, which information shall be prepared in form and detail
satisfactory to such Creditor and certified by an Authorized Officer of
the Guarantor.
(d) PAYMENT OF TAXES AND CLAIMS. The Guarantor will pay and
discharge, and will cause each of its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach thereto,
and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of the Guarantor or any of its Subsidiaries;
PROVIDED that neither the Guarantor nor any of its Subsidiaries shall
be required to pay any such tax, assessment, charge, levy or claim
which is being contested in good faith and by proper proceedings if it
has maintained adequate reserves with respect thereto in accordance
with GAAP; and PROVIDED, FURTHER, that the Guarantor will not be
considered to be in default of any of the provisions of this
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sentence if the Guarantor or any Subsidiary fails to pay any such
amount which, individually or in the aggregate, is immaterial to the
Guarantor and its Subsidiaries considered as an entirety.
(e) CORPORATE FRANCHISES. The Guarantor will do, and will
cause each of its Subsidiaries to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its corporate
or other organizational existence, rights, authority and franchises,
PROVIDED that nothing in this section 12(e) shall be deemed to prohibit
(i) any transaction permitted by section 13(a); (ii) the termination of
existence of any Subsidiary if (1) the Guarantor determines that such
termination is in its best interest and (2) such termination is not
adverse in any material respect to the Lenders; or (iii) the loss of
any rights, authorities or franchises if the loss thereof, in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(f) GOOD REPAIR. The Guarantor will, and will cause each of
its Subsidiaries to, ensure that its material properties and equipment
used or useful in its business in whomsoever's possession they may be,
are kept in good repair, working order and condition, normal wear and
tear excepted, and that from time to time there are made in such
properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements,
thereto, to the extent and in the manner customary for companies in
similar businesses.
(g) COMPLIANCE WITH STATUTES, ETC. The Guarantor will, and
will cause each of its Subsidiaries to, comply, in all material
respects, with all applicable statutes, regulations and orders of, and
all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including, without limitation, all
Environmental Laws), other than those (i) being contested in good faith
by appropriate proceedings, as to which adequate reserves are
established to the extent required under GAAP, and (ii) the
noncompliance with which would not have, and which would not be
reasonably expected to have, a Material Adverse Effect on the
Guarantor.
(h) INFORMATION CONCERNING DEVCO. The Guarantor will furnish
to the Lenders, promptly after the same become available, copies of all
quarterly and annual financial statements of Devco, together with a
certificate on behalf of the Guarantor of the Chief Financial Officer
or other authorized officer of the Guarantor dated as of the date of
any such financial statements, certifying to the best knowledge of the
Guarantor, the extent of the equity interests in Devco and each joint
venture arrangement in which Devco participates held by persons who are
not Affiliates of the Guarantor and the outstanding amount of
Indebtedness of Devco or such joint venture which has been guaranteed
by the Guarantor, together with such information as may be reasonably
requested by the Collateral Agent related to such financial statements.
(i) SENIOR DEBT. The Guarantor will at all times ensure that
(i) the claims of the Creditors hereunder will not be subordinate to,
and will in all respects rank prior to the claims of every senior
unsecured creditor of the Guarantor, and (ii) any Indebtedness
subordinated in any manner to the claims of any other senior secured or
unsecured creditor of the Guarantor will be subordinated in like manner
to such claims of the Creditors.
13. NEGATIVE COVENANTS. The Guarantor covenants and agrees that on
and after the date hereof and until this Guaranty is terminated in accordance
with section 25 hereof:
(a) CONSOLIDATION, MERGER, OR SALE OF ASSETS, ETC. Without the
prior written consent of the Administrative Agent (acting on the
instruction of the Required Lenders), the Guarantor shall not
consolidate with or merge into or with any other person, or convey,
transfer or lease substantially all of its assets in a single
transaction or series of transactions to any person, or permit any
person or persons acting in concert, together with any Affiliates
thereof, to in the aggregate, directly or indirectly, control or own
(beneficially or otherwise) more than 50% (by number of shares) of the
issued and outstanding stock of the Guarantor (any such transaction a
"CHANGE OF CONTROL"); provided that a Change of Control of the
Guarantor resulting from (A) a sale, issuance or transfer of any stock
in the Guarantor, of (B) a merger, consolidation, reorganization or
other business combination involving the Guarantor shall be permitted
(any such transaction a "PERMITTED TRANSACTION") PROVIDED that
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(1) after the Permitted Transaction the Consolidated
Net Worth of the Guarantor or its successor entity, on a
consolidated basis, is at least equal to the Consolidated Net
Worth of the Guarantor immediately prior to such Permitted
Transaction, and after the Permitted Transaction all other
financial covenants contained herein shall remain satisfied;
(2) the Guarantor or its successor entity (or the
Guarantor's or such successor entity's parent corporation) is, at
the time of or immediately after such transaction, a publicly
held corporation;
(3) the successor entity (if other than the Guarantor)
expressly assumes in writing all of the Guarantor's past, current
and future obligations and liabilities under this Guaranty, the
Environmental Indemnity Agreement and each other Credit Document
to which the Guarantor is a party pursuant to an assumption
agreement in form and substance reasonably satisfactory to the
Administrative Agent and provides reasonable assurance to the
Lenders of the intent of such successor entity to maintain
continuity of the Guarantor's management following such Change
of Control and provides such persons such certificates and legal
opinions with respect to matters related to the Permitted
Transaction, and the assumption of such obligations, as such
persons shall reasonably require;
(4) either of the following items (i) or (ii) is
complied with:
(i) the Permitted Transaction involves a
company in the healthcare or hospitality business; or
(ii) the Permitted Transaction involves a company
with a minimum senior unsecured debt rating of at least "BBB"
from S&P or Baa2 from Moody's; and
(5) no Event of Default has occurred and is continuing
or would result therefrom.
(b) MINIMUM CONSOLIDATED NET WORTH. The Guarantor will not
permit its Consolidated Net Worth at any time to be less than
$150,000,000, EXCEPT that
(i) effective as of the end of the Guarantor's fiscal
quarter ended June 30, 1999, the foregoing amount (as it may
from time to time be increased as herein provided), shall be
increased by 50% of the Consolidated Net Income of the
Guarantor for the two fiscal quarters ended on such date, if
any (there being no reduction in the case of any such
Consolidated Net Income which reflects a deficit);
(ii) effective as of the end of the Guarantor's fiscal
quarter ended September 30, 1999, and as of the end of each
fiscal quarter thereafter, the foregoing amount (as it may from
time to time be increased as herein provided), shall be increased
by 50% of the Consolidated Net Income of the Guarantor for the
fiscal quarter ended on such date, if any (there being no
reduction in the case of any such Consolidated Net Income which
reflects a deficit);
(iii) the foregoing amount (as it may from time to time
be increased as herein provided), shall be increased by an amount
equal to 75% of the cash proceeds (net of underwriting discounts
and commissions and other customary fees and costs associated
therewith) from any sale or issuance of equity by the Guarantor
after December 31, 1998 (other than any sale or issuance to any
Subsidiary or to management or employees pursuant to employee
benefit plans of general application);
(iv) the foregoing amount (as it may from time to time
be increased as herein provided), shall be increased by an
amount equal to 75% of (x) the principal amount of
Indebtedness or (y) the higher of stated value or liquidation
value of Redeemable Stock, as the case may be, which
Indebtedness
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or Redeemable Stock is converted or exchanged after December 31,
1998 into common stock of the Guarantor or any of its
Subsidiaries; and
(v) he foregoing amount (as it may from time to time be
increased as herein provided), shall be increased by an amount
equal to 75% of the increase in Consolidated Net Worth
attributable to the issuance of common stock or other equity
interests subsequent to December 31, 1998 as consideration in any
Acquisition.
(c) RATIO OF CONSOLIDATED SENIOR INDEBTEDNESS TO CONSOLIDATED
TOTAL CAPITALIZATION. The Guarantor will not at any time permit the
ratio of (i) its Consolidated Senior Indebtedness at such time, to (ii)
its Consolidated Total Capitalization at such time, expressed as a
percentage, to exceed 80.00%.
(d) INTEREST COVERAGE RATIO. The Guarantor will not permit the
ratio of (i) its Consolidated EBIT for any Testing Period, to (ii) its
Consolidated Interest Expense for such Testing Period, to be less than
1.85 to 1.00 for any Testing Period ending on or prior to June 30,
2000, or thereafter, less than 1.95 to 1.00 for any Testing Period
ending on or before December 31, 2000, or thereafter, less than 2.10 to
1.00 for any Testing Period ending on or before June 30, 2001, or less
than 2.25 to 1.00 for any Testing Period ending thereafter.
(e) LEASE AND DEBT SERVICE COVERAGE RATIO. The Guarantor will
not permit the ratio of (i) its Consolidated EBITDAR for any Testing
Period, to (ii) its Consolidated Lease and Debt Service Charges for
such Testing Period, to be less than 1.25 to 1.00.
(f) INTENTIONALLY OMITTED.
(g) TRANSACTIONS WITH AFFILIATES. The Guarantor will not, and
will not permit any Subsidiary to, enter into any transaction or series
of transactions with any Affiliate (other than, in the case of the
Guarantor, any Subsidiary, and in the case of a Subsidiary, the
Guarantor or another Subsidiary) other than in the ordinary course of
business of and pursuant to the reasonable requirements of the
Guarantor's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Guarantor or such Subsidiary than would
obtain in a comparable arm's-length transaction with a person other
than an Affiliate, EXCEPT agreements and transactions with and payments
to officers, directors and shareholders and other Affiliates which are
either (i) entered into in the ordinary course of business and not
prohibited by any of the provisions of this Guaranty, or (ii) entered
into outside the ordinary course of business, approved by the directors
or shareholders of the Guarantor, and not prohibited by any of the
provisions of this Guaranty.
14. CONTINUING GUARANTY; REMEDIES CUMULATIVE, ETC. This Guaranty is a
continuing guaranty, all liabilities to which it applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon, and this Guaranty shall remain in full force and effect until terminated
as provided in section 25 hereof. No failure or delay on the part of the
Administrative Agent or any other Creditor in exercising any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly specified are cumulative and
not exclusive of any rights or remedies which the Administrative Agent or any
other Creditor would otherwise have. No notice to or demand on the Guarantor in
any case shall entitle the Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or any other Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for the
Administrative Agent or any other Creditor to inquire into the capacity or
powers of the Borrower or any of its Subsidiaries or Affiliates or the officers,
directors, partners or agents acting or purporting to act on its or their
behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
15. ENFORCEMENT EXPENSES. The Guarantor hereby agrees to pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent and each
Creditor in connection with the enforcement of this Guaranty and any amendment,
waiver or consent relating hereto (including, without limitation, the reasonable
fees and disbursements of counsel employed by the Administrative Agent or any of
the other Creditors).
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16. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantor and its successors and assigns, and shall inure to the benefit of the
Administrative Agent and the other Creditors and their successors and assigns.
17. AMENDMENTS AND WAIVERS. Neither this Guaranty nor any provision
hereof may be amended, waived or otherwise modified except with the written
consent of (i) the Administrative Agent, acting with the written consent of the
Required Lenders (or to the extent required by section 12.13 of the Credit
Agreement, with the written consent of each Lender); and (ii) the Guarantor;
PROVIDED, HOWEVER, that no such amendment, waiver or modification shall be made
to the definitions of the terms "Credit Document Obligations", "Designated Hedge
Document Obligations" or "Guaranteed Obligations", or to section 2, section 3,
this section 17 or section 25, without the consent of each Creditor adversely
affected thereby, and PROVIDED FURTHER that any amendment, waiver or other
modification affecting the rights and benefits of a single Class of Creditors
(and not all Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Creditors. For the purpose
of this Guaranty, the term "CLASS" shall mean each class of Creditors, I.E.,
whether (x) the Administrative Agent and the Lenders as holders of the Credit
Document Obligations or (y) the Designated Hedge Creditors as holders of the
Designated Hedge Document Obligations. For the purpose of this Guaranty, the
term "REQUISITE CREDITORS" of any Class shall mean (x) with respect to the
Credit Document Obligations, the Required Lenders and (y) with respect to the
Designated Hedge Document Obligations, the holders of at least 51% of all
Designated Hedge Document Obligations outstanding from time to time under the
Designated Hedge Documents.
18. HEADINGS DESCRIPTIVE. The headings of the several sections of
this Guaranty are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Guaranty.
19. SEVERABILITY. Any provision of this Guaranty 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.
20. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of an Event of Default, each
Creditor is hereby authorized at any time or from time to time, without notice
to the Guarantor or to any other person, any such notice being expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Creditor
to or for the credit or the account of the Guarantor, against and on account of
the obligations and liabilities of the Guarantor to such Creditor under this
Guaranty, irrespective of whether or not the Administrative Agent or such
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Each Creditor agrees to promptly notify the Guarantor after any such
set off and application, PROVIDED, HOWEVER, that the failure to give such notice
shall not affect the validity of such set off and application.
21. NOTICES. All notices requests, demands or other communications
pursuant hereto shall be made in writing (including telegraphic, telex,
facsimile transmission or cable communication) and mailed, telegraphed, telexed,
transmitted, cabled or delivered, if to the Guarantor, at 450 North Sunnyslope
Road, Suite 300, Brookfield, Wisconsin 53005, attention Mark Ohlendorf, Senior
Vice President, Finance (telephone: (414) 641-7432; facsimile: (414) 789-6182),
with a courtesy copy to the Borrower at its address provided in or pursuant to
the Credit Agreement; if to the Administrative Agent or any Lender, at its
address provided in or pursuant to the Credit Agreement; if to any Designated
Hedge Creditor, at its address provided in or pursuant to the Designated Hedge
Agreement to which it is a party; or in any case at such other address as any of
the persons listed above may hereafter notify the others in writing. All such
notices and communication shall be mailed, telegraphed, telexed, facsimile
transmitted, or cabled or sent by overnight courier, and shall be effective when
received.
22. REINSTATEMENT. If claim is ever made upon the Administrative
Agent or any other Creditor for recission, repayment, recovery or restoration of
any amount or amounts received by the Administrative Agent or any other Creditor
in payment or on account of any of the Guaranteed Obligations and any of the
aforesaid payees repays all or part of said amount by reason of (x) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (y) any settlement or
compromise of any such claim effected by such payee with any
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such claimant (including the Borrower), THEN and in such event (i) any such
judgment, decree, order, settlement or compromise shall be binding upon the
Guarantor, notwithstanding any revocation hereof or other instrument evidencing
any liability of the Borrower, (ii) the Guarantor shall be and remain liable to
the aforesaid payees hereunder for the amount so repaid or otherwise recovered
or restored to the same extent as if such amount had never originally been
received by any such payee, and (iii) this Guaranty shall continue to be
effective or be reinstated, as the case may be, all as if such repayment or
other recovery had not occurred.
23. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. (a) THIS GUARANTY AND
THE RIGHTS AND OBLIGATIONS OF THE ADMINISTRATIVE AGENT, THE CREDITORS AND OF THE
UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF OHIO. Any legal action or proceeding with respect to this
Guaranty may be brought in the Courts of the State of Ohio, or of the United
States of America for the Northern District of Ohio, and, by execution and
delivery of this Guaranty, the Guarantor hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The Guarantor hereby 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 mail, return receipt
requested, to the Guarantor at its address provided herein, such service to
become effective 30 days after such mailing, or such earlier time as may be
provided by applicable law. Nothing herein shall affect the right of the
Administrative Agent or any of the other Creditors to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Guarantor in any other jurisdiction.
(b) The Guarantor 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 Guaranty or any other
Credit Document or Guaranteed Document brought in the courts referred to in
section 23(a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that such action or proceeding brought in any
such court has been brought in an inconvenient forum.
(c) THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH OTHER CREDITOR
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE
OTHER CREDIT DOCUMENTS, ANY OTHER GUARANTEED DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
24. FULL RECOURSE OBLIGATIONS; EFFECT OF FRAUDULENT TRANSFER LAWS,
ETC. It is the desire and intent of the Guarantor, the Administrative Agent and
the other Creditors that this Guaranty shall be enforced as a full recourse
obligation of the Guarantor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought. If
and to the extent that the obligations of the Guarantor under this Guaranty
would, in the absence of this sentence, be adjudicated to be invalid or
unenforceable because of any applicable state or federal law relating to
fraudulent conveyances or transfers, then the amount of the Guarantor's
liability hereunder in respect of the Guaranteed Obligations shall be deemed to
be reduced AB INITIO to that maximum amount which would be permitted without
causing the Guarantor's obligations hereunder to be so invalidated.
25. TERMINATION. This Guaranty will terminate when (i) the Total
Commitment has terminated and all Loans and other Guaranteed Obligations (other
than unasserted indemnity obligations) have been paid in full; or (ii) following
any request or demand by the Administrative Agent, the Guarantor shall have paid
to the Administrative Agent in full the maximum amount which the Administrative
Agent shall be entitled to recover from the Guarantor under sections 2 and 15
hereof, SUBJECT to the effect of section 5 hereof. Upon or following termination
of this Guaranty, the Administrative Agent, at the request and expense of the
Borrower and/or the Guarantor, will execute and deliver to the Guarantor a
proper instrument or instruments acknowledging the satisfaction and termination
of this Guaranty.
26. ENFORCEMENT ONLY BY ADMINISTRATIVE AGENT. The Creditors agree
that this Guaranty may be enforced only by the action of the Administrative
Agent, acting upon the instructions of the Required Lenders, and that no
Creditor shall have any right individually to seek to enforce or to enforce this
Guaranty, it being understood and agreed that such rights and remedies may be
exercised by the Administrative Agent, for the benefit of the Creditors, upon
the terms of this
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Guaranty. The Administrative Agent and the other Creditors further agree that
this Guaranty may not be enforced against any director, officer or employee of
the Guarantor, as such.
27. GENERAL LIMITATION ON CLAIMS BY GUARANTOR. No claim may be made
by the Guarantor against the Administrative Agent or any other Creditor, or the
Affiliates, directors, officers, employees, attorneys or agents of any of them,
for any damages other than actual compensatory damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Guaranty or any of the other
Guaranteed Documents, or any act, omission or event occurring in connection
therewith; and the Guarantor hereby, to the fullest extent permitted under
applicable law, waives, releases and agrees not to sue or counterclaim upon any
such claim for any special, consequential or punitive damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
28. ATTORNEYS, ACCOUNTANTS, ETC. OF CREDITORS HAVE NO DUTY TO
GUARANTOR. All attorneys, accountants, appraisers, consultants and other
professional persons (including the firms or other entities on behalf of which
any such person may act) retained by the Administrative Agent or any other
Creditor with respect to the transactions contemplated by the Guaranteed
Documents shall have the right to act exclusively in the interest of the
Administrative Agent or such other Creditor, as the case may be, and shall have
no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to the Guarantor, to any of its
Affiliates, or to any other person, with respect to any matters within the scope
of such representation or related to their activities in connection with such
representation. The Guarantor agrees, on behalf of itself and its Affiliates,
not to assert any claim or counterclaim against any such persons with regard to
such matters, all such claims and counterclaims, now existing or hereafter
arising, whether known or unknown, foreseen or unforeseeable, being hereby
waived, released and forever discharged.
29. CREDITORS NOT FIDUCIARY TO GUARANTOR, ETC. The relationship among
the Guarantor and its Affiliates, on the one hand, and the Administrative Agent
and the other Creditors, on the other hand, is solely that of debtor and
creditor, and the Administrative Agent and the other Creditors have no fiduciary
or other special relationship with the Guarantor or any of its Affiliates, and
no term or provision of any Guaranteed Document, no course of dealing, no
written or oral communication, or other action, shall be construed so as to deem
such relationship to be other than that of debtor and creditor.
30. COUNTERPARTS. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantor and the
Administrative Agent.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
ALTERRA HEALTHCARE CORPORATION,
AS GUARANTOR
BY: /s/THOMAS E. KOMULA
----------------------------
SENIOR VICE PRESIDENT
KEY CORPORATE CAPITAL INC.,
AS ADMINISTRATIVE AGENT
BY: /s/DAVID A. MACVICAR
----------------------------
VICE PRESIDENT
25
<PAGE> 1
EXHIBIT 10.12
AMENDED AND RESTATED PURCHASE RIGHTS AND FINANCING AGREEMENT
THIS PURCHASE RIGHTS AND FINANCING AGREEMENT ("Agreement") is entered
into as of the 30th day of June, 1999, by and between ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation formerly known as Alternative Living
Services, Inc. ("Alterra"), and THIRD PARTY INVESTORS I, L.L.C., a Delaware
corporation ("Purchaser").
W I T N E S S E T H:
Purchaser has acquired the interest of Alterra (or its subsidiary, as
the case may be) in properties or purchase and sale agreements described in that
certain Agreement of Purchase and Sale between Alterra and Purchaser of December
31, 1998, as the same may be amended from time to time ("First Purchase
Agreement"), and in that certain Agreement of Purchase and Sale between Alterra
and Purchaser of March 31, 1999, as the same may be amended from time to time
("Second Purchase Agreement"), and may acquire the interest of Alterra (or its
subsidiary, as the case may be) in properties or purchase and sale agreements
described in that certain Option Agreement between Alterra and Purchaser of
March 31, 1999, as the same may be amended from time to time (the "Option
Agreement"). The First Purchase Agreement, the Second Purchase Agreement and the
Option Agreement are sometimes hereinafter referred to collectively as the
"Purchase Agreements." The properties which are the subject of the Purchase
Agreements (including those which are the subject of the aforesaid purchase and
sale agreements or option) are hereinafter collectively referred to as "Parcels"
and individually as a "Parcel."
Purchaser and Alterra have agreed that Alterra shall have certain
purchase rights with respect to the Parcels.
Purchaser and Alterra have agreed to certain other matters as more
particularly described herein, all of which agreements were originally embodied
in that certain Purchase Rights And Financing Agreement dated as of March 31,
1999 which the parties wish to amend and restate on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration for TEN AND NO/100 DOLLARS ($10.00) in
hand paid by Alterra to Purchaser and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Alterra and Purchaser
hereby agree as follows:
1. Purchase Rights Notice/Offer/Acceptance. Except as otherwise
provided in Section 3.c, below, and subject to any approval rights of Alterra
prior to the First Sale Date as defined in the Operating Agreement of Third
Party Investors I, L.L.C., as the same may be amended from time to time, in the
event that Purchaser desires to sell a single Parcel (the "Applicable Single
Parcel") or a group of Parcels (the "Applicable Group of Parcels"), Purchaser
shall notify Alterra thereof which notice shall include a copy of the form of
purchase and sale agreement (inclusive of all material terms other than the
purchase price) that Purchaser plans to use in connection with such sale
("Purchase Agreement Form"). Alterra shall have thirty (30)
<PAGE> 2
days in which to notify Purchaser in writing whether Alterra desires to purchase
the Applicable Single Parcel or the Applicable Group of Parcels (but only as a
Group). The aforesaid notice shall be in the form of two (2) executed (by either
Alterra or an affiliate or subsidiary thereof) originals of the Purchase
Agreement Form for the Applicable Single Parcel or Applicable Group of Parcels,
as the case may be, which purchase agreement shall have been modified to include
(a) the purchase price and (b) any other modifications that Alterra reasonably
deems appropriate. The effective date of the notice by Alterra to Purchaser of
its election to purchase the Applicable Single Parcel or Applicable Group of
Parcels is hereinafter referred to as the "Election Date." If Alterra elects not
to purchase the Applicable Single Parcel or Applicable Group of Parcels, or
otherwise does not make an election with respect to the Applicable Single Parcel
or Applicable Group of Parcels, Purchaser shall have the right at any time
thereafter to sell the Applicable Single Parcel or the Applicable Group of
Parcels (but only as a group) to a bona fide third party on substantially the
same terms (or other terms which are more favorable to Purchaser) as those set
forth in the Purchase Agreement Form and using a purchase agreement in
substantially the same form as the Purchase Agreement Form. Purchaser shall have
fifteen (15) days from the applicable Election Date for the Applicable Single
Parcel or Applicable Group of Parcels, as the case may be, to execute and return
to Alterra one (1) original of the purchase agreement executed and delivered by
Alterra therefor. If Purchaser executes and delivers an original of the purchase
agreement as aforesaid, the Applicable Single Parcel or Applicable Group of
Parcels (but only as a group) shall thereby be released from this Agreement and
Purchaser and Alterra shall proceed to close the transaction contemplated
thereby in accordance with said purchase agreement. If Purchaser does not
execute and return an original of the applicable purchase agreement to Alterra
as aforesaid, Purchaser shall be deemed to have rejected the offer of Alterra
and such offer shall terminate. For a period of six (6) months after such
rejection, the rights of Alterra hereunder shall be suspended such that
Purchaser shall have the right to enter into an agreement to sell the Applicable
Single Parcel or Applicable Group of Parcels (but only as a group) to a bona
fide third party for a purchase price in excess of the purchase price offered by
Alterra therefor and otherwise on substantially the same terms as those set
forth in the Purchase Agreement Form and using a purchase agreement in
substantially the same form as the Purchase Agreement Form. The sale
contemplated by said purchase agreement shall close within a reasonable time
after the date thereof. Upon the consummation of such sale, the Applicable
Single Parcel or each Parcel included within the Applicable Group of Parcels
shall thereby be released from this Agreement. Upon the later to occur of (a)
the expiration of the suspension period without Purchaser entering into a
permitted purchase agreement as described above or (b) the termination of a
permitted purchase agreement as described above without the consummation of the
transaction contemplated thereby, the rights of Alterra shall be reinstated such
that Purchaser shall be required to comply with the terms hereof prior to the
sale of the Applicable Single Parcel and of each Parcel included in the
Applicable Group of Parcels. To the extent that Alterra shall purchase any
Parcel pursuant to the provisions of this Section 1, Alterra shall assume any
and all obligations of Purchaser with respect to any applicable interest rate
lock, swap or similar agreement or refinancing fees payable in connection with
the Permanent Financing (as defined in Section 3.a, below) with respect to such
Parcel provided that such obligations or fees were reasonable in relation to the
Permanent Financing. The aggregate amount of such obligations and fees which
Alterra would be obligated to assume and pay shall be considered as part of the
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purchase price offered by Alterra in determining whether the offer of any third
party is at a price in excess of the amount offered by Alterra.
2. General Terms of Purchase Rights.
a. Recorded Instrument. Within thirty (30) days after the date
hereof, Purchaser and Alterra shall execute a recordable memorandum of this
Agreement for each Parcel. Alterra shall be permitted to record a memorandum of
this Agreement in the real estate records where each Parcel is located. In
connection with any sale to a third party with respect to which Alterra no
longer has a purchase right pursuant to Section 1, Alterra shall promptly
provide evidence in writing of such fact as requested by Purchaser.
b. Substitution of Parcels. In the event that a Parcel is re-conveyed
to Alterra (or an affiliate thereof) and a substitution parcel conveyed to
Purchaser in accordance with the terms of this Agreement or the Purchase
Agreements, this Agreement shall be automatically released as to the Parcel
reconveyed to Alterra or its affiliate. Further, upon the conveyance of the
substitution parcel to Purchaser, this Agreement shall automatically govern said
substitution parcel and said substitution parcel shall constitute a Parcel for
the purposes of this Agreement. Contemporaneously with the conveyance of the
substitution parcel, Alterra and Purchaser shall execute a recordable memorandum
of this Agreement in accordance with Section 2(a) hereof. Alterra shall have the
right to record such memorandum as contemplated by Section 2(a) hereof.
3. Financing/Guaranty.
a. Permanent Financing; Alterra Guaranties. Purchaser and Alterra
agree that it is their mutual intent that Purchaser obtain financing from an
unrelated party or parties (collectively, the "Senior Lender"), as soon as
practicable after the date hereof, for each of the Parcels which have or may
hereafter be acquired by Purchaser pursuant to the Purchase Agreements
(including the construction and development thereof) on terms and conditions
reasonably acceptable to Purchaser ("Permanent Financing") for not less than
seventy five percent (75%) (the "Target Percentage") of Total Costs of each
Parcel. Purchaser agrees that terms substantially consistent with those set
forth in the Key Bank Financing Proposal attached hereto as Exhibit A (the "Key
Bank Financing Proposal") would be acceptable to Purchaser. Proceeds of the
Permanent Financing shall be used, in part, to discharge Purchaser's liability
to Alterra under (a) the Amended Bridge Loan Agreement between Alterra and
Purchaser of even date and (b) the other documents evidencing and securing the
loan contemplated by the Amended Bridge Loan Agreement. Purchaser agrees to use
its best efforts to obtain Permanent Financing with respect to each of the
Parcels. The parties also contemplate that Purchaser from time to time may
desire, or be required, to obtain refinancing from a Senior Lender ("Replacement
Permanent Financing") for Parcels which are subject to Permanent Financing.
Alterra, promptly upon the demand of Purchaser, shall execute unconditional
guaranties of the Purchaser's obligations (limited to eighty percent (80%) of
the "Total Costs," as hereinafter defined) pursuant to the Permanent Financing
or Replacement Permanent Financing for each Parcel in the form reasonably
required by the lender or lenders and reasonably acceptable to Alterra (each an
"Alterra Guaranty" and, collectively, the "Alterra Guaranties"). The Alterra
Guaranties shall be
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for a period ending not later than December 31, 2010. Alterra agrees that terms
and conditions of the Alterra Guaranties may include, but not be limited to, the
financial covenants and other terms and conditions applicable to Alterra as
described in the Key Bank Financing Proposal. "Total Costs" means with respect
to each Parcel as of any given time the amount paid by Purchaser for the
acquisition of the Parcel and the aggregate "Project Costs" as of such time for
such Parcel (incurred after the date of closing of the acquisition of such
Parcel by Purchaser) as the term "Project Costs" is defined in Section 2.5 of
the Development Agreement between Purchaser and Alterra relative thereto dated
either (i) as of December 31, 1998, (ii) of even date herewith or (iii) with
respect to Parcels acquired under the Option Agreement, the closing date of such
acquisition, as the case may be, as such agreements described in clauses (i),
(ii) or (iii) may be amended from time to time.
b. Supplementary Financing. If after reasonable efforts by Purchaser,
Purchaser is unable to obtain Permanent Financing with Alterra Guaranties for
the Target Percentage of the Total Costs of all of the Parcels on an aggregate
basis, Alterra shall make all reasonable efforts to allocate to the Purchaser a
portion of its total financing commitments in order to permit Purchaser to be
able to obtain the Permanent Financing for the Target Percentage of Total Costs
with respect to all of the Parcels on an aggregate basis. In addition, from time
to time on or before each Closing of Pending Financing (as hereinafter defined),
Alterra shall lend to the Purchaser on the terms and conditions hereinafter set
forth (each a "Supplementary Financing") the percentage of the Total Costs with
respect to each such Parcel equal to the amount by which the percentage of Total
Costs of each such Parcel which will be a Permanently Financed Parcel (as
hereinafter defined) upon such Closing of Pending Financing is less than the
Target Percentage, provided that Alterra shall not be required to lend to
Purchaser with respect to any Parcel an amount in excess of twenty-five percent
(25%) of the Total Costs of such Parcel nor in an amount which would cause the
aggregate principal amount of all Supplementary Financings which will be
outstanding upon any Closing of Pending Financing to exceed Ten Million Dollars
($10,000,000.00). If at any time, Purchaser obtains Permanent Financing and/or
Replacement Placement Financing which causes the aggregate of all Permanent
Financing and/or Replacement Permanent Financing and Supplementary Financing to
exceed the Target Percentage of the Total Costs of all Parcels covered by such
financings, Purchaser shall pay the amount of such excess to Alterra as a
prepayment on Supplementary Financings. Each Supplementary Financing shall be at
an interest rate of eleven percent (11%) per annum, and interest shall be
payable quarterly except to the extent prohibited by any intercreditor or
subordination agreement entered into by Alterra with the Senior Lender. The
maturity date of the Supplementary Financing with respect to any Parcel shall be
the same as the scheduled maturity date of the Permanent Financing or
Replacement Permanent Financing with respect to such Parcel. The Supplementary
Financing with respect to any Parcel shall be evidenced by a promissory note of
Purchaser in form reasonably acceptable to Purchaser, Alterra and the Senior
Lender and, if permitted by the Senior Lender, will be secured by a mortgage and
other security interests (including a security interest in all the outstanding
limited liability company member interests in Purchaser other than that held by
Alterra), subordinate to the mortgage and other security instruments securing
the Permanent Financing or Replacement Permanent Financing, and otherwise on
terms and conditions reasonably acceptable to Purchaser, Alterra and the Senior
Lender. The Senior Lender must enter into an intercreditor agreement with
Alterra which provides, without limitation, that Alterra shall
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<PAGE> 5
have the right, but not the obligation, to acquire the interest of the Senior
Lender or cure the default of Purchaser (in either case, within 10 days after
written notice from the Senior Lender) prior to any foreclosure, deed in lieu of
foreclosure or similar action with respect to the collateral securing the
Permanent Financing or Replacement Permanent Financing. Subject to the
foregoing, the terms of said intercreditor agreement shall be reasonably
acceptable to Purchaser and Alterra. "Closing of Pending Financing" means the
closing of Permanent Financing or Replacement Permanent Financing. "Permanently
Financed Parcels" means all Parcels with respect to which Permanent Financing or
Replacement Permanent Financing is in effect, except any Parcels which are
Financing In Process Parcels. "Financing In Process Parcels" means all Parcels
which are in process of being financed with Permanent Financing or refinanced
with Replacement Permanent Financing.
c. Financing Default by Alterra. In the event that after the closing of
Permanent Financing or Replacement Permanent Financing, Alterra or Purchaser are
notified by the Senior Lender that Alterra has defaulted on any covenant
applicable to Alterra in the Alterra Guaranties and as a result thereof the
obligation of Alterra with respect to the Alterra Guaranties or of Purchaser
with respect to the Permanent Financing or Replacement Permanent Financing for
any one or more Parcels is due and payable, then unless and until such default
and the effect thereof have been cured to the satisfaction of or otherwise
waived by the Senior Lender, (a) subject to Section 1 hereof as modified by this
subsection, Purchaser may, at its option, enter into an agreement of sale with
respect to any or all of such Parcels to a third party on such terms and
conditions as determined by Purchaser provided, however, as to the Alterra
purchase right in Section 1 hereof, the thirty (30) day period in which Alterra
has the right to notify Purchaser whether it desires to purchase a Parcel shall
be reduced to ten (10) days and within two business days after Purchaser
notifies Alterra of the acceptance of Alterra's offer, Alterra shall be required
to deposit an amount equal to 10% of the amount of its offer in escrow with a
bank or other party reasonably acceptable to Purchaser to secure Alterra's
obligations under the purchase agreement under reasonable terms for a deposit
intended to secure the obligation of a purchaser to complete a real estate
purchase and if Alterra defaults in its obligation to make such deposit, all of
Alterra's rights under Section 1 with respect to such Parcels shall be
extinguished and (b) in connection with the sale of any Parcel pursuant to the
provisions of clause (a) of this sentence, Purchaser may, at its option,
terminate the Assisted Living Consultant and Management Services Agreement and
Development Agreement between Alterra and Purchaser with respect to any such
Parcel effective with the date of sale thereof, provided that Purchaser shall
first repay, to the extent incurred in connection with such Parcel, all amounts
of principal and interest outstanding pursuant to (i) any Supplementary
Financing, (ii) those two (2) certain Management Fee Loan Notes dated December
31, 1998 and March 31, 1999, respectively, and (iii) those two (2) certain
Working Capital Loan Notes also dated as of December 31, 1998 and March 31,
1999, respectively. Alterra, in its capacity as a member of Third Party
Investors I, L.L.C. hereby consents to the sale of any Parcel pursuant to the
provisions of this Section 3.c which may occur prior to the First Sale Date as
defined in the Operating Agreement of Third Party Investors I, L.L.C., as
amended from time to time.
4. Miscellaneous
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a. Agreement Binding. This Agreement shall be binding upon each party
hereto and such party's successors and assigns and shall inure to the benefit of
each party hereto and such party's successors and assigns. Alterra may assign
this Agreement and the rights of Alterra hereunder (in whole or in part) without
the prior written consent of Purchaser.
b. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the matters contained herein, and no prior
agreement or understanding pertaining to any of the matters connected with this
transaction shall be effective for any purpose. Except as may be otherwise
provided herein, the agreements embodied herein may not be amended except by an
agreement in writing signed by the parties hereto.
c. Facsimile Execution. In the event of delivery by facsimile, such
delivery shall be binding as if an original had been delivered and the
delivering party covenants and agrees that originals will be sent that same day
by overnight delivery.
d. Time is of the Essence. Time is of the essence of the transaction
contemplated by this Agreement.
e. Governing Law. With respect to matters pertaining to the
individual Parcels, this Agreement shall be governed by and construed in
accordance with the laws of the state in which such Parcel is located. Except as
set forth in the immediately preceding sentence, this Agreement shall be
governed by the laws of the state of Wisconsin.
f. Interpretation; Date of Agreement. The titles, captions and
paragraph headings are inserted for convenience only and are in no way intended
to interpret, define, limit or expand the scope or content of this Agreement or
any provision hereof. If any time period under this Agreement ends on a day
other than a Business Day (as hereinafter defined), then the time period shall
be extended until the next business day. The term "Business Day" shall mean
Monday through Friday excluding holidays recognized by the state government of
the State of Wisconsin. All references in this Agreement to "the date of this
Agreement" shall be deemed to refer to the last date appearing on the signature
page hereof.
g. Waiver. Purchaser or Alterra, as the case may be, reserves the
right to waive, in whole or in part, any provision hereof which is for the
benefit of the party so waiving.
h. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, taken
as a whole, shall be deemed to be one (1) original. This Agreement shall be
deemed fully executed when each party whose signature is required has signed at
least one (1) counterpart even though no one (1) counterpart contains the
signatures of all of the parties to this Agreement.
i. Non-Waiver. Unless otherwise expressly provided herein, no waiver
by Alterra or Purchaser of any provision hereof shall be deemed to have been
made unless expressed in writing and signed by such party. No delay or omission
in the exercise of any right or remedy accruing to Alterra or Purchaser upon any
breach under this Agreement shall impair such right or remedy
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<PAGE> 7
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by Alterra or Purchaser of any breach of any term,
covenant or condition herein stated shall not be deemed to be a waiver of any
other breach, or of a subsequent breach of the same or any other term, covenant
or condition herein contained. Each party hereby reserves the right to waive any
provision hereof made or intended for the benefit of the waiving party.
j. Rights Cumulative. All rights, powers, options or remedies
afforded to Alterra or Purchaser either hereunder or by law shall be cumulative
and not alternative, and the exercise of one right, power, option or remedy
shall not bar other rights, powers, options or remedies allowed herein or by
law, unless expressly provided to the contrary herein.
k. Notices. All notices, consents, approvals and other communications
which may be or are required to be given by either Alterra or Purchaser under
this Agreement shall be properly given if made in writing and sent by (a) hand
delivery, or (b) certified mail, return receipt requested, or (c) facsimile or
telecopier, provided a confirming copy thereof is thereafter sent in accordance
with (a), (b) or (d), or (d) nationally recognized overnight delivery service
for next business day delivery (such as Express Mail, Federal Express or
Airborne Express), with all postage, delivery and other charges paid by the
sender and addressed to Purchaser or Alterra, as applicable, as follows, or at
such other address as each may request in advance in writing. Such notices
delivered (i) by hand shall be deemed received upon actual delivery, (ii) by
overnight delivery service shall be deemed received on the next business day,
(iii) by facsimile or telecopier, on the date the sender receives either
electronic or verbal or other acknowledgment of receipt (without regard to the
date, if any, that the confirming copy is actually received) and (iv) if mailed,
shall be deemed received upon the earlier of actual receipt or two (2) business
days after mailing. Refusal of delivery shall be deemed effective delivery on
the date said delivery was attempted. Impossibility of delivery by a particular
means shall be deemed effective delivery on the date said delivery was attempted
provided that the delivering party thereafter diligently pursues actual delivery
by the same or other means. Said notice addresses are as follows:
If to Purchaser:
Twin Oaks Capital, L.L.C.
2215 York Road
Suite 500
Oak Brook, Illinois 60523
Attn: Ronald G. Kenny
Telephone: 630/928 0414
Fax: 630/990-2110
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<PAGE> 8
With a copy to:
Hecht & Lentz
333 Bridge, N.W., Suite 330
Grand Rapids, Michigan 49504
Attention: David M. Hecht, Esq.
Telephone: 616/776-7200
Facsimile: 616/776-7203
If to Alterra
Alternative Living Services, Inc.
450 N. Sunnyslope Road, Ste. 300
Brookfield, Wisconsin 53005
Attention: Mr. Thomas E. Komula
Telephone: 414/641-7431
Facsimile: 414/789-6182
with a copy to:
Rogers & Hardin
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Alan C. Leet, Esq.
Telephone: 404/420-4616
Facsimile: 404/522-2224
l. Prior Agreement. This Agreement supersedes the Purchase Rights and
Financing Agreement between the parties dated as of December 31, 1998, which
upon execution of this Agreement shall be null and void and of no further force
and effect.
******************************************************************
8
<PAGE> 9
IN WITNESS WHEREOF, Alterra and Purchaser have caused this Agreement to
be duly executed as of this 30th day of June, 1999.
ALTERRA HEALTHCARE CORPORATION
By: /s/Thomas E. Komula
-----------------------------------
Its: Senior Vice President
----------------------------------
Execution Date: June 30, 1999
-----------------------
THIRD PARTY INVESTOR I, L.L.C., a Delaware
Corporation
By: Twin Oaks Capital, LLC, its Manager
By: /s/ Ronald G. Kenny
-----------------------------------
Its: President
----------------------------------
Execution Date: June 30, 1999
-----------------------
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<PAGE> 10
With respect only to the pledge of member interests referenced in Section 3.b
hereof:
TWIN OAKS CAPITAL, LLC
By: /s/Ronald G. Kenny
-----------------------------------
Ronald G. Kenny, President
Execution Date: June 30, 1999
-----------------------
GROUP ONE INVESTORS, L.L.C.
By: RDV Corporation, Manager
By: /s/Robert S. Schierbeck
-----------------------------------
Its: Treasurer
----------------------------------
Execution Date: June 30, 1999
-----------------------
10
<PAGE> 1
EXHIBIT 10.13
CONVERTIBLE SUBORDINATED LOAN AGREEMENT
This Agreement, dated as of September 30, 1999, is entered into among
THIRD PARTY INVESTORS I, LLC, a Delaware limited liability company ("Borrower"),
and ALTERRA HEALTHCARE CORPORATION, a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender guaranty certain loans of
Borrower;
WHEREAS, Lender is willing to guaranty such loans of Borrower, provided
that the Borrower agrees to reimburse the Lender on the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated for purposes of this Agreement
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"Additional Capital Contribution" shall have the meaning given such
term in the Operating Agreement.
"Agreement" shall mean this Convertible Subordinated Loan Agreement.
"Borrower" shall mean Third Party Investors I, LLC, a Delaware limited
liability company.
"Business Day" shall mean a day on which national banks are open for
the transaction of business required for this Agreement in Milwaukee, Wisconsin.
"Capital Contribution" shall have the meaning given such term in the
Operating Agreement.
"Class C Member Interest" shall mean the Member Interest held by a
Class C Member pursuant to the Operating Agreement.
"Closing Date" shall mean the date of this Agreement.
<PAGE> 2
"Conversion Amount" shall mean the aggregate principal amount of Loans
in excess of the Non-Conversion Amount.
"Conversion Notice" shall have the meaning set forth in Section 3.2.
"Development Agreement" shall mean the Development Agreements entered
into by Lender and Borrower as contemplated by Section 5.5 of the Amended and
Restated Operating Agreement of Borrower dated as of June 30, 1999.
"Equity Pledge Agreement" shall mean that certain Second Amended and
Restated Equity Pledge Agreement dated as of the date hereof between Group One
Investors, LLC, as Pledgor, and Lender, as Pledgee and that certain Amended and
Restated Equity Pledge Agreement of even date herewith between Twin Oaks
Capital, LLC, as Pledgor, and Lender, as Pledgee.
"Event of Default" shall mean any of the events specified in Section
8.1 hereof, provided that any requirement for notice or passage of time has
been satisfied.
"Guaranty Amount" shall have the meaning set forth in Section 2.1(b)
hereof.
"Guaranty" shall mean that certain Guaranty dated as of August 31, 1999
made by Lender in favor of Key Corporate Capital Inc., as administrative agent,
relating to the Key Credit Agreement.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
as of September 30, 1999 between Borrower, Lender and Key Corporate Capital,
Inc., as Administrative Agent.
"Key Credit Agreement" shall mean the Master Construction Line of
Credit Agreement dated as of August 31, 1999 among the Borrower, the lending
institutions named therein, the co-agents named therein and Key Corporate
Capital, Inc., as administrative agent and all of he Credit Documents as defined
in that agreement.
"Key Loan" or "Key Loans" shall mean the loan or loans made to Borrower
pursuant to the Key Credit Agreement.
"Lender" shall mean Alterra Healthcare Corporation, a Delaware
corporation.
"Loan Amount" shall have the meaning set forth in Section 2.1(a)
hereof.
"Loan" and "Loans" shall have the meanings set forth in Section 2.1(a)
hereof.
"Loan Documents" shall mean the Note, the Equity Pledge Agreement and
any other documents executed by Borrower or its members with or for the benefit
of Lender in connection with this Agreement or the Loans.
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<PAGE> 3
"Material Adverse Effect" shall mean any act, omission or undertaking
which would, singly or in the aggregate, have (or reasonably be expected to
have) a material adverse effect upon the business, assets, liabilities,
financial condition or results of operations of a Person.
"Management Agreement" shall mean the Amended and Restated Assisted
Living Consultant and Management Services Agreements between Lender and
Borrower, each dated as of June 30, 1999, and al other similar agreements
relating to a Project.
"Mini-Perm Period" shall have the meaning set forth in the Key Credit
Agreement.
"Non-Conversion Amount" shall mean the earliest amounts loaned under
this Agreement (exclusive of any interest on such amounts accrued or compounded
hereunder) equal to the sum of i) $10,000,000.00 less the aggregate of the
Supplementary Financing Loans outstanding as of the date the Non-Conversion
Amount is being calculated, plus ii) all amounts paid or advanced by Lender
under Section 2.1(b)(i) and (ii) which are required due to Lender's breach under
the Guaranty or due to Lender's breach under any Management Agreement or
Development Agreement.
"Note" shall mean the Convertible Subordinated Loan Notes made by
Borrower to the order of Lender and delivered to Lender pursuant to Section
2.1(c) hereof.
"Other Loan Agreements" shall mean the September 30, 1999 Bridge
Construction Loan Agreement, the December 30, 1998 and March 31, 1999 Management
Fee Loan Agreements, as amended, the December 30, 1998 and March 31, 1999
Working Capital Loan Agreements, as amended, the June 30, 1999 Financing Cost
Loan Agreement, as amended, and the September 30, 1999 Supplementary Financing
Loan Agreement, in each case between the Borrower and the Lender
"Operating Agreement" shall mean the Amended and Restated Operating
Agreement of Borrower dated as of June 30, 1999.
"Person" shall mean an individual, corporation, limited liability
company, partnership, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Prepayment Amount" shall having the meaning set forth in Section 2.2
hereof.
"Prepayment Notice Period" shall having the meaning set forth in
Section 2.2 hereof.
"Project" or "Projects" shall mean the assisted living and/or dementia
care residences developed, acquired and/or operated by Borrower pursuant to the
Operating Agreement.
"Supplementary Financing Loans" shall mean the principal balances
(exclusive of any interest added to principal) loans made from time to time by
Lender to the Borrower in the aggregate principal amount of up to $10,000,000.00
pursuant to that certain Supplementary
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<PAGE> 4
Financing Loan Agreement dated as of September 30, 1999 by and between the
Lender and the Borrower.
"Tax Distributions" shall mean cash distributions to members of
Borrower from time to time in amounts sufficient to pay income tax liabilities
(calculated at the highest federal marginal individual tax rates plus the
highest state and local individual income taxes rates to which any member is
subject), of such members in respect of their shares of the cumulative taxable
income of the Borrower, the calculation of such distributions to take into
account both the tax benefits resulting from taxable losses of the Borrower as
well as the tax costs resulting from taxable income of the Borrower for the
current and all prior tax years, net of any such prior distributions, on a
cumulative basis.
"Taxes" shall mean, with respect to any Person, taxes, assessments or
other governmental charges or levies imposed upon such Person, its income or any
of its properties or assets.
"Unmatured Event of Default" shall mean any event or condition which,
with the lapse of time or giving of notice to Borrower contemplated hereby,
would constitute an Event of Default.
ARTICLE II
COMMITMENT TO LEND, BORROWING PROCEDURES, ETC.
Section 2.1 Loans
(a) Amount. Lender agrees, from the Closing Date until the Maturity
Date described in Section 2.1(d) below and upon the terms and conditions herein
set forth, to make a loan or loans to Borrower in the aggregate principal amount
of up to the maximum amount for which Lender may be obligated under the Guaranty
(the "Commitment") (each such loan in herein referred to as the "Loan," all such
loans are herein referred to as "Loans," and the aggregate amount of all such
Loans outstanding from time to time, the "Loan Amount"). Borrower shall repay
each of the outstanding Loans on its Maturity Date, or such earlier date if
payment of the Loans are accelerated in accordance herewith.
(b) Borrowings. If i) the Lender makes any required payments under the
Guaranty, or ii) the Lender makes any advances for the benefit of the Borrower
which are reasonably required to avoid or cure a default or event of default
under the Key Loan, or iii) any amount shall be due and owing under any of the
Other Loan Agreements and the Intercreditor Agreement prohibits the payment by
Borrower of such amount due (unless such prohibition is the result of the
Lender's default under the Guaranty or the Lender's breach of any Management
Agreement or Development Agreement), then the amount of any such payment under
i) or advance under ii) or the amount due under iii) shall be deemed to have
borrowed from the Lender and the Lender shall be deemed to have made a Loan to
the Borrower in such amount with such Loan being made on the date upon which the
Lender makes any such
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<PAGE> 5
payment or advance or such amount is due. The Loans hereunder shall not exceed
the Commitment.
(c) Convertible Subordinated Loan Note. The obligations of Borrower to
repay the Loans shall be evidenced by one or more promissory notes of the
Borrower in the form attached hereto as Exhibit A, executed by Borrower and
delivered to Lender as of the date of each Loan hereunder and in the principal
amount of each such Loan.
(d) Payments. Unless payment of the Loans are accelerated upon
occurrence of an Event of Default pursuant to Section 8.2 hereof, the aggregate
outstanding principal amount of the Loans relating to a Project, together with
all accrued unpaid interest thereon, shall be due and payable (the "Maturity
Date") on the earlier of i) the date on which the Mini-Perm Period was
originally scheduled (or would have been so scheduled had the Mini-Perm Period
election been made after the maximum possible construction period under Section
2.7 of the Key Credit Agreement) to expire for such Project, and ii) with
respect of borrowings under Section 2.1(b)(iii), thirty (30) days after the date
of demand by Lender for payments that are no longer prohibited by the
Intercreditor Agreement. However, while the Intercreditor Agreement is in
effect, no payment of principal and interest on any of the Loans, including any
mandatory prepayments under Section 2.3, shall be due and payable to the extent
and for the period that the Intercreditor Agreement prohibits such payment.
(e) Interest Rate. The Loans shall bear interest, compounded quarterly,
during the period from and including the date of funding to (but not including)
the date the Loans are paid in full, at the per annum rates set forth in the
Note. However, any Conversion Amount which Lender converts into Class C Member
Interests under Article III shall bear no interest (including any interest which
has been compounded) retroactive to the date such amount was first advanced
under this Agreement.
Section 2.2 Optional Prepayment.
The principal amount of each Loan may be repaid or prepaid in full or
in part at any time prior to the Maturity Date, without premium or penalty,
provided that, for Loans as to which the elapsed time from the date the amount
was advanced under this Agreement exceeds six months (and are therefore subject
to conversion under Section 3.1), the Borrower gives the Lender not less than
thirty (30) days prior notice (the "Prepayment Notice Period") of the proposed
prepayment date.
Section 2.3 Mandatory Prepayment.
Borrower shall pay to Lender for application to the Loans in accordance
with Section 2.4(c) an amount equal to all distributions made by Borrower to, on
account of, or for the benefit of its members, except for i) Tax Distributions,
and ii) distributions allowed under Section 9.2(d) of the Key Credit Agreement
and the "further except" provisions of Section 9.2 of the Key Credit Agreement.
However, no distribution may be made pursuant to ii) above unless Borrower on or
before the date of the distribution has paid or caused to be paid in full
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<PAGE> 6
all loans (including accrued interest) related to the Project involved in the
distribution which loans are then owed to Lender under this Agreement and any of
the Other Loan Agreements.
Section 2.4 Manner of Payment.
(a) Each payment (including prepayments) by Borrower on account of the
principal or interest on the Loan shall be made on the dates specified for
payment under this Agreement (or, in the case of prepayments, on the dates
specified by Borrower) to the Lender in lawful money of the United States of
America in immediately available funds.
(b) If any payment under this Agreement shall be specified to be made
upon a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day, and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
(c) If some or less than all amounts due from Borrower are received by
Lender, Lender shall distribute such amounts in the following order of priority:
(i) to the payment of all amounts then due and payable under this Agreement
other than interest or principal; (ii) to the payment of interest then due and
payable on the Loan; and (iii) to the repayment or prepayment of the principal
balance of the Loans, with such repayment or prepayment being applied first to
the Loans most recently made (except any prepayments made under Section 2.2
shall be applied to the Loans specified by Borrower).
Section 2.5 Basis of Calculation of Interest.
All interest payable hereunder shall be calculated on the basis of the
360/365 method, which computes a daily amount of interest for a hypothetical
year of 360 days, then multiplies such amount by the actual number of days
elapsed in an interest calculation period.
Section 2.6 Maximum Interest Rate.
In no event shall the amount of interest due or payable under the Note
exceed the maximum rate of interest allowed by applicable law, and in the event
that any such payment is inadvertently paid by Borrower or inadvertently
received by Lender, then such excess sum shall be credited as a payment of
principal, unless Borrower shall notify Lender, in writing, that Borrower elects
to have such excess sum returned to it forthwith. It is the express intent
hereof that Borrower not pay, and that Lender not receive, directly or
indirectly, in any manner whatsoever, interest in excess of that which would
lawfully be paid by Borrower under applicable law.
ARTICLE III
OPTIONAL CONVERSION
Section 3.1 Right of Optional Conversion. Subject to and upon
compliance with the provisions hereof, the Lender shall have the right, at its
option, at any time and from time to
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<PAGE> 7
time, to convert prior to the close of business on the Maturity Date the
Conversion Amount (or a portion thereof) into Class C Member Interests in the
Borrower based on and subject to the amount of time elapsed from the date the
amount was advanced under this Agreement pursuant to the following schedule:
<TABLE>
<CAPTION>
ELAPSED TIME SINCE AMOUNT TO BE CONVERTED ADVANCED PERCENTAGE OF AMOUNT
CONVERTIBLE
- ------------------------------------------------------------ ---------------------------------------------------------
<S> <C>
During months 7, 8 and 9 50%
- ------------------------------------------------------------ ---------------------------------------------------------
During months 10, 11 and 12 75%
- ------------------------------------------------------------ ---------------------------------------------------------
After 12 months 100%
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, the Lender's rights to convert the
Conversion Amount shall terminate upon the expiration of the Prepayment Notice
Period to the extent of the Prepayment Amount to which such Prepayment Notice
Period relates, unless the Borrower shall default in the payment of such
Prepayment Amount.
Section 3.2 Process for Optional Conversion. In order to exercise the
conversion privilege with respect to any of the Conversion Amount, the Lender
shall give to the Borrower a Conversion Notice specifying the amount of the
Conversion Amount to be converted.
Section 3.3 Issuance and Amount of Member Interest. As promptly as
practicable after satisfaction of the requirements for conversion set forth
above, the Borrower shall cause to be delivered to the Lender at its offices an
amendment to the Operating Agreement reflecting the Lender's membership interest
therein resulting from the Conversion Amount so converted. The Conversion Amount
shall be convertible into additional Class C Member Interests in the Borrower
based on the portion of the Conversion Amount converted being an Additional
Capital Contribution by Lender under the Operating Agreement (with no obligation
or right of the Borrower's Class B Member to make a proportionate Additional
Capital Contribution to prevent dilution of its Membership Interest as defined
in the Operating Agreement).
Each conversion shall be deemed to have been effected on the date on
which the requirements set forth above in this Section 3 have been satisfied.
ARTICLE IV
CLOSING DELIVERIES
The following deliveries shall be made simultaneously with the
execution of this Agreement:
Section 4.1 The Note.
Borrower shall deliver to Lender the Note duly executed and dated as of
the Closing Date.
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<PAGE> 8
Section 4.2 Evidence of Approvals.
Lender shall have received from the Borrower copies of all such
documents and other evidence that it may reasonably request to confirm the
Borrower's authority to enter into the Agreement and the transactions
contemplated hereby, and to fully perform its obligations hereunder and
thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties. Borrower hereby represents and
warrants that:
(a) Organization; Power; Qualification. Borrower is a Delaware limited
liability company duly organized, validly existing and in good standing under
the laws of the state of Delaware, has the power and authority, to own or lease
and operate its properties and to carry on its businesses as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a foreign limited liability company, and is authorized to do business in each
jurisdiction, in which the character of its properties or the nature of its
business requires such qualification or authorization, and on which failure to
so qualify would have a Material Adverse Effect on Borrower.
(b) Execution and Enforceability. This Agreement has been duly executed
and delivered by Borrower, and is, and each of the Loan Documents to which
Borrower is a party is, a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to the following qualifications: (i) the application of equitable
principals, whether applied in equity or at law, and (ii) limitations by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws effecting enforcement of creditors' rights generally.
(c) Authorization. Borrower is duly authorized to execute, deliver and
perform its obligations under this Agreement and the Loan Documents. The
execution, delivery and performance by Borrower of this Agreement and the Loan
Documents do not and will not require any consent or approval of any
governmental agency or authority.
(d) No Conflicts. The execution, delivery and performance by the
Borrower of this Agreement and the Loan Documents (i) do not and will not
conflict with: (A) any provision of law, (B) the Borrower's operating agreement
or the Delaware Limited Liability Company Act, (C) any material agreement
binding upon Borrower, or (D) any court or administrative order or decree
applicable to Borrower, and (ii) do not and will not require, or result in, the
creation or imposition of any lien on any asset of Borrower.
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<PAGE> 9
ARTICLE VI
AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until all Loans pursuant
to this Agreement, and all interest thereon, are paid in full, and unless Lender
shall otherwise consent in writing:
Section 6.1 Notices.
Borrower shall notify the Lender in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken with respect thereto:
(a) Default. The occurrence of an Event of Default or Unmatured Event
of Default;
(b) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding which would constitute a Material Adverse
Effect on the Borrower;
(c) Material Adverse Change. The occurrence of a material adverse
change in the business, operations or financial condition of Borrower; or
(d) Other Events. The occurrence of such other events as the Lender
may from time to time reasonably specify regarding the financial condition of
Borrower.
Section 6.2 Existence.
Borrower shall maintain and preserve its existence as a limited
liability company, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, tradenames, and other authority to the extent material
and necessary for the conduct of its business in the ordinary course as
conducted from time to time.
Section 6.3 Books, Records and Access.
Borrower shall maintain accurate books and records in conformance with
its method of income tax accounting. Within 15 days after receiving written
notice from Lender, Borrower shall permit reasonable access by the Lender to the
books and records of Borrower during normal business hours and permit the Lender
to make reasonable copies of such books and records.
Section 6.4 Insurance.
Borrower shall maintain insurance to such extent and against such
hazards and liabilities as is commonly maintained by companies similarly
situated.
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<PAGE> 10
Section 6.5 Repair.
Borrower shall maintain, preserve and keep its properties in good
repair, working order and condition, and from time to time make all necessary
and proper repairs, renewals, replacements, additions, betterments and
improvements thereto so that at all times the efficiency thereof shall be fully
preserved and maintained except for where the failure to comply with this
Section 6.5, individually or in the aggregate, does not have a Material Adverse
Effect on Borrower.
Section 6.6 Taxes.
Borrower shall pay when due, all of its Taxes, unless and only to the
extent that Borrower is contesting such Taxes in good faith and by appropriate
proceedings and Borrower has set aside in its books reasonable reserves
therefor.
Section 6.7 Compliance.
Borrower shall comply with all statutes and governmental rules and
regulations applicable to it, except where the failure to comply with this
Section 6.7, individually or in the aggregate, does not have a Material Adverse
Effect on the Borrower.
ARTICLE VII
NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Loan Amount,
and all interest thereon, is paid in full, and unless Lender shall otherwise
consent in writing:
Section 7.1 Liquidation, Merger or Sale.
Borrower shall not, without the prior written consent of Lender:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise windup its affairs;
(b) sell, lease, abandon, transfer or otherwise dispose of any real
property or of any personal property in violation of the Key Credit Agreement;
(c) be party to any merger or consolidation; or
(d) unless all of the Loans under this Agreement and all other loans
under the Other Loan Agreements (excluding the Financing Cost Loan Agreement
dated June 30, 1999) related to a Project are paid in full, sell, transfer, or
distribute such Project.
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<PAGE> 11
Section 7.2 Liens.
Borrower shall not create, incur or suffer to exist, any lien
(including, without limitation, any pledge, assignment, mortgage, title
retaining contract or other type of security interest) to exist on any of the
assets or property (real, personal or mixed, tangible or intangible) of the
Borrower, other than:
(i) Liens for Taxes not delinquent or for Taxes being
contested in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on Borrower's books
and records;
(ii) Liens created in connection with workmen's compensation,
unemployment insurance, and social security, or to secure the
performance of bids, tenders or contracts (other than for the repayment
of borrowed money), leases, statutory obligations, surety and appeal
bonds, and other obligations of like nature made in the ordinary course
of business;
(iii) Liens in favor of the Collateral Agent pursuant to the
Key Credit Agreement;
(iv) Liens created in connection with purchase money mortgages
or security interests granted to secure the purchase price of assets,
the purchase of which does not violate this Agreement or any instrument
required hereunder; or
(v) Liens allowed under the Key Credit Agreement.
Section 7.3 Distributions.
Other than Tax Distributions, Borrower shall not make any distribution,
directly or indirectly, whether in cash or in other property, on account of or
for the benefit of its members unless Borrower on or before the date of the
distribution has paid in full all loans (including accrued interest) related to
the Project involved in the distribution which loans are then owed to Lender
under this Agreement and any of the Other Loan Agreements (excluding loans under
the Financing Cost Loan Agreement dated June 30, 1999).
ARTICLE VIII
EVENTS OF DEFAULT & REMEDIES
Section 8.1 Events of Default.
An Event of Default shall have occurred under this Agreement:
(a) Non-payment. If Borrower shall default in the payment when due of
any principal of, or interest on, the Loan, and such default shall not be cured
within three (3) Business Days following notice thereof from Lender.
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<PAGE> 12
(b) Insolvency. If Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for Borrower or for a substantial part of the
property of Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower or for a
substantial part of the property of the Borrower and is not discharged within
sixty days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against Borrower and, if instituted
against Borrower, is consented to or acquiesced in by Borrower or remains for
sixty days undismissed; or any warrant of attachment or similarly legal process
is issued against any substantial part of the property of Borrower which is not
released within sixty days of service.
(c) Representations and Warranties. If any representation or warranty
made under this Agreement or any statement in any certificate given directly by
Borrower (and not by Lender as Borrower's agent under any Management Agreement
or Development Agreement) hereunder shall be untrue, incorrect or misleading in
any material respect when made or given.
(d) Covenants. If Borrower shall default in the performance or
observance of any covenant set forth in Article VI or Article VII hereof (except
in each case to the extent such default is due to Landlord's breach under any
Management Agreement or Development Agreement) and, with respect to any covenant
set forth in Section 6.1, 6.3, 6.4, 6.5, 6.6, or 6.7, such default shall not be
cured within thirty (30) days following notice thereof from Lender to Borrower.
(e) Other Defaults. If there is an event of default under any of the
Loan Documents, subject to any applicable period of grace.
Section 8.2 Remedies.
If an Event of Default shall have occurred and shall be continuing,
Lender shall have the right at its option, and in its sole discretion, to
declare all amounts outstanding under the Note and this Agreement to be
immediately due and payable (except that if an event described in Section 8.1(b)
occurs, all amounts outstanding under the Note and this Agreement shall
automatically become immediately due and payable). Lender shall promptly advise
Borrower, in writing, of any such declaration, but failure to do so shall not
impair the effect of such declaration. Lender shall also be entitled to exercise
any and all remedies available to it, at law or equity.
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<PAGE> 13
ARTICLE IX
MISCELLANEOUS
Section 9.1 Waiver and Amendments.
No failure or delay on the part of Lender in the exercise of any power
or right, and no course of dealing between Borrower and Lender, shall operate as
a waiver of such power or right, nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. Remedies provided for herein are cumulative and not
exclusive of any remedies which may be available to the Lender at law or in
equity. No notice to or demand on the Borrower required hereunder or under the
Note shall in any event entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Lender to any other or further action and any circumstances without notice or
demand. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Note shall in any event be effective unless
the same shall be in writing and signed and delivered by the party affected by
the amendment or modification or making the waiver. Any waiver of any provision
of this Agreement or the Note, and any consent to any departure by Borrower from
the terms of any provision of this Agreement or the Note, shall be effective
only in the specific instance and for the specific purpose for which given.
Section 9.2 Notices
All notices and other communications required or permitted under this
Agreement shall be in writing and, if mailed by prepaid first-class mail, or
certified mail, return receipt requested, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-mark date thereof and, if by telecopy, shall be followed forthwith by
letter and shall be deemed to have been received upon dispatch and
acknowledgment of receipt by the recipient's telecopier machine. In addition,
notices hereunder may be delivered by hand in which event the notice shall be
deemed effective when delivered or by overnight courier, in which event the
Notice shall be deemed delivered the Business Day after it is accepted by the
courier for next day delivery. All notices and other communications under this
Agreement shall be given to the parties hereto at the following addresses:
(i) If to Borrower:
Third Party Investors I, LLC
c/o Twin Oaks Capital, LLC
2215 York Road, Suite 500
Oak Brook, Illinois 60523
Attn: Ronald G. Kenny
Fax: (630) 990-2110
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<PAGE> 14
with a copy to (which shall not constitute notice):
Hecht & Lentz
333 Bridge, N.W., Suite 330
Grand Rapids, Michigan 49504
Attn: David M. Hecht, Esq.
Fax: (616) 776-7203
(ii) If to Lender:
Alterra Healthcare Corporation
450 N. Sunnyslope Road
Suite 300
Brookfield, Wisconsin 83005
Attn: President and CEO
Fax: 414-789-6677
with a copy to (which shall not
constitute notice):
Rogers & Hardin LLP
229 Peachtree Street, N.E.
2700 International Tower
Atlanta, Georgia 30303
Attn: Alan C. Leet, Esq.
Fax: 404-525-2224
Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
Section 9.3 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 9.4 Governing Law.
This Agreement shall be construed under and governed by the laws of the
state of Wisconsin, without giving effect to its principles of conflicts of
laws.
Section 9.5 Successors and Assigns.
This Agreement shall be binding upon Borrower and Lender and their
respective successors and assigns, and shall inure to the benefit of Borrower
and Lender and their
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<PAGE> 15
successors and assigns. Neither Borrower nor Lender shall assign its rights or
delegate its duties hereunder without the consent of the other party.
Section 9.6 Headings.
Headings used in this Agreement are for convenience only and shall not
be used in connection with the interpretation of any provision hereof.
Section 9.7 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which counterparts shall
together constitute one and the same instrument.
Section 9.8 Expenses.
In any litigation or other dispute resolution proceeding relating to
this Agreement or any of the Loan Documents, the prevailing party shall be
entitled to be awarded from the other party all of the prevailing party's
reasonable costs and expenses (including reasonable fees and expenses of
counsel).
[Signature Page Follows.]
15
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned thereunto duly authorized as of the date first
written above.
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/Thomas E. Komula
--------------------------------
Thomas E. Komula
Senior Vice President
THIRD PARTY INVESTORS I, LLC,
AS BORROWER
BY: TWIN OAKS CAPITAL, LLC, ITS MANAGER
By: /s/Ronald G. Kenny
-------------------------------
Ronald G. Kenny
President
16
<PAGE> 17
EXHIBIT A TO THE
CONVERTIBLE SUBORDINATED LOAN AGREEMENT
CONVERTIBLE SUBORDINATED LOAN NOTE
$ , 1999
-------------- ------------ ---
FOR VALUE RECEIVED, the undersigned, THIRD PARTY INVESTORS I, LLC, a
Delaware limited liability company ("Borrower"), promises to pay to the order of
Alterra Healthcare Corporation, a Delaware corporation ("Lender") and, together
with any holder hereof ("Holder"), at 450 N. Sunnyslope Rd., Suite 300,
Brookfield, Wisconsin 53005 (or at such other place as the Holder may designate
in writing to Borrower), the principal amount of ______________________________
AND NO/100 DOLLARS ($____________), or, if less, the unpaid aggregate principal
amount of all loans made from time to time hereunder, plus interest as
hereinafter provided.
All capitalized terms used herein shall have the meanings ascribed to
such terms in that certain Convertible Subordinated Loan Agreement dated as of
September 30, 1999 by and between Borrower and Lender (the "Loan Agreement"),
except to the extent that such capitalized terms are otherwise defined or
limited herein.
The aggregate Loan Amount of all outstanding Loans relating to a
Project made pursuant to the Loan Agreement, together with accrued and unpaid
interest thereon, shall be paid as provided in Section 2 of the Loan Agreement.
Borrower may repay all or any portion of the principal amount of this
Note in full or in part at any time prior to the Maturity Date, without premium
or penalty, in the manner set forth in the Loan Agreement.
The principal amount of outstanding Loans shall bear interest during
the period from and including the date of funding of such Loans to (but not
including) the date the principal amount thereof is paid in full, at a rate per
annum equal to the lesser of i) the "Prime Rate" as published from time to time
in the Money Rates Section of The Wall Street Journal or its successor plus one
percent (1%) (the "Applicable Rate"), and ii) eleven percent (11%). However, no
interest shall be payable on any principal of the Loans which are converted
under Article III of the Loan Agreement.
Interest shall be calculated on the basis of the 360/365 method, which
computes a daily amount of interest for a hypothetical year of 360 days, then
multiplies such amount by the actual number of days elapsed in an interest
calculation period. All past due amounts of principal of, and to the extent
permitted by applicable law, unpaid interest on, this Note from time to time
outstanding, shall bear interest at a rate equal to the Applicable Rate plus two
percent (2%).
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and in the event
any such payment is inadvertently paid by the undersigned or inadvertently
received by Holder, then such excess sum shall be credited as a payment of
principal, unless the undersigned shall notify Holder, in writing that the
undersigned elects to have such excess sum returned to it forthwith. It is the
express intent hereof that the undersigned not pay and that Holder not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may be lawfully paid by the undersigned under applicable law.
This Note is entitled to the benefits of the Loan Agreement which
contains provisions with respect to the conversion of the principal amount of
the Loans, the acceleration of the maturity of this Note upon the happening of
certain stated events, and provisions for prepayment.
Should an Event of Default occur under the Loan Agreement, then, at
any time during which such Event of Default shall continue, Holder shall have
the right and option, in its sole discretion, to exercise any and all of the
remedies provided and available to it under the Loan Agreement.
<PAGE> 18
All parties now or hereafter liable with respect to this Note, whether
the Borrower, any guarantor, endorser or any other Person, hereby expressly
waive presentation, demand of payment, protest, notice for demand of payment,
protest and notice of non-payment, or any other notice of any kind with respect
thereto.
No delay or failure on the part of Holder in the exercise of any right
or remedy hereunder, under the Loan Agreement or under the Equity Pledge
Agreement, or at law or in equity, shall operate as a waiver thereof, and no
single or partial exercise by the Holder of any right or remedy hereunder, under
the Loan Agreement, the Equity Pledge Agreement, or at law or in equity, shall
preclude or estop another or further exercise thereof or the exercise of any
other right or remedy.
Principal and interest on this Note shall be payable and paid in
lawful money of the United States of America.
Holder shall be under no duty to exercise any or all of the rights and
remedies given by this Note or the Loan Agreement or the Equity Pledge Agreement
and no party to this instrument shall be discharged from the obligations or
undertakings hereunder (a) should the Holder release or agree not to sue any
Person against whom the party has, to the knowledge of the Holder, a right to
recourse, or (b) should the Holder agree to suspend the right to enforce this
Note or the Holder's interest in any collateral pledged or any guaranty given to
secure this Note against such Person or other discharge such Person.
The provisions of this Note shall be construed and
interpreted, and all rights and obligations of the parties hereunder determined,
in accordance with the laws of the State of Wisconsin.
[ IN WITNESS WHEREOF, Borrower has caused this Note to be executed, and
delivered in its name, by and through the undersigned, thereunto duly
authorized, as of the day and year first above written.
THIRD PARTY INVESTORS I, LLC,
a Delaware limited liability company
By: Twin Oaks Capital, LLC, a Delaware
limited liability company, Manager
By:
----------------------------------
Ronald G. Kenny, President
18
<PAGE> 1
EXHIBIT 10.14
BRIDGE CONSTRUCTION LOAN AGREEMENT
This Agreement, dated as of September 30, 1999, is entered into among Third
Party Investors I, LLC, a Delaware limited liability company ("Borrower"), and
Alterra Healthcare Corporation, a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make loans to Borrower in the
aggregate amount of up to $10,000,000; and
WHEREAS, Lender is willing to make the loans to Borrower on the terms and
subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the meanings indicated for purposes of this Agreement (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).
"Agreement" shall mean this Loan Agreement.
"Borrower" shall mean Third Party Investors I, LLC, a Delaware limited
liability company.
"Bridge Loan Notes" shall mean the Bridge Loan Note dated December 31, 1998
in the principal amount o $30,000,000 and the Bridge Loan Note dated March 31,
1999 in the principal amount of $35,000,000, each executed by Borrower in favor
of Lender.
"Business Day" shall mean a day on which national banks are open for the
transaction of business required for this Agreement in Milwaukee, Wisconsin.
"Closing Date" shall mean the date of this Agreement.
<PAGE> 2
"Development Agreement" shall mean the Development Agreements entered into
by Lender and Borrower as contemplated by Section 5.5 of the Amended and
Restated Operating Agreement of Borrower dated as of June 30, 1999.
"Equity Pledge Agreements" shall mean that certain Second Amended and
Restated Equity Pledge Agreement dated as of the date hereof between Group One
Investors, LLC, as Pledgor, and Lender, as Pledgee and that certain Amended and
Restated Equity Pledge Agreement of even date herewith between Twin Oaks
Capital, LLC, as Pledgor, and Lender, as Pledgee.
"Event of Default" shall mean any of the events specified in Section 7.1
hereof, provided that any requirement for notice or passage of time has been
satisfied.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated as
of September 30, 1999 between Borrower, Lender and Key Corporate Capital, Inc.,
as Administrative Agent.
"Key Credit Agreement" shall mean the Master Construction Line of Credit
Agreement dated as of August 31, 1999 among the Borrower, the lending
institutions named therein, the co-agents named therein and Key Corporate
Capital, Inc. as Administrative Agent, and all of the other Credit Documents as
defined in that agreement.
"Key Loans" shall mean the loans made to Borrower pursuant to the Key
Credit Agreement.
"Lender" shall mean Alterra Healthcare Corporation, a Delaware corporation.
"Loan" and "Loans" shall have the meanings set forth in Section 2.1 hereof.
"Loan Documents" shall mean the Note, the Equity Pledge Agreements and any
other documents executed by Borrower or its members with or for the benefit of
Lender in connection with this Agreement or the Loans.
"Management Agreements" shall mean the Amended and Restated Assisted Living
Consultant and Management Services Agreements between Lender and Borrower, each
dated as of June 30, 1999 and relating to the Projects
"Material Adverse Effect" shall mean any act, omission or undertaking which
would, singly or in the aggregate, have (or reasonably be expected to have) a
material adverse effect upon the business, assets, liabilities, financial
condition or results of operations of a Person.
"Note" shall mean the Bridge Construction Loan Note, dated as of the date
hereof, in the aggregate principal amount of $10,000,000, made by Borrower to
the order of Lender and delivered to Lender pursuant to Section 2.1(c) hereof.
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<PAGE> 3
"Other Loan Documents" shall mean the September 30, 1999 Convertible
Subordinated Loan Agreement, the December 30, 1998 and March 31, 1999 Management
Fee Loan Agreements, as amended, the December 30, 1998 and March 31, 1999
Working Capital Loan Agreements, as amended, and the June 30, 1999 Supplementary
Financing Loan Agreement, as amended, in each case between the Borrower and the
Lender.
"Person" shall mean an individual, corporation, limited liability company,
partnership, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Project" or "Projects" shall mean the assisted living and/or dementia care
residences developed, acquired and/or operated by Borrower pursuant to the
Amended and Restated Operating Agreement of Borrower dated as of June 30, 1999.
"Tax Distributions" shall mean cash distributions to members of Borrower
from time to time in amounts sufficient to pay income tax liabilities
(calculated at the highest federal marginal individual tax rates plus the
highest state and local individual income taxes rates to which any member is
subject), of such members in respect of their shares of the cumulative taxable
income of the Borrower, the calculation of such distributions to take into
account both the tax benefits resulting from taxable losses of the Borrower as
well as the tax costs resulting from taxable income of the Borrower for the
current and all prior tax years, net of any such prior distributions, on a
cumulative basis.
"Taxes" shall mean, with respect to any Person, taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties or assets.
"Unmatured Event of Default" shall mean any event or condition which, with
the lapse of time or giving of notice to Borrower contemplated hereby, would
constitute an Event of Default.
ARTICLE II
COMMITMENT TO LEND, BORROWING PROCEDURES, ETC.
Section 2.1 Loans
(a) Amount. Lender agrees, from the Closing Date until the Maturity Date
described in Section 2.1(d) below and upon the terms and conditions herein set
forth, to make a loan or loans to Borrower in the aggregate principal amount of
up to Ten Million Dollars ($10,000,000) (the "Commitment") (each such loan in
herein referred to as the "Loan," all such loans are herein referred to as
"Loans," and the aggregate amount of all such Loans outstanding from time to
time, the "Loan Amount").
(b) Borrowings. Borrower authorizes and directs Lender, and Lender agrees,
to make Loans by funding on their due dates construction draws for the Projects
which have been
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<PAGE> 4
approved by Lender under the Development Agreements and Lender shall give
Borrower notice of such Loans on a monthly basis which notice shall include the
amount, the Project and the draw involved. In the event that Borrower shall
withdraw such authorization and direction, which it may do in its absolute
discretion by written notice to Lender, Borrower shall elect to borrow pursuant
hereto by giving written notice to the Lender not later than three (3) Business
Days prior to the proposed date of such borrowing. Each such notice of borrowing
shall be by telecopy, promptly confirmed by letter, and shall specify therein:
(i) the date of such proposed borrowing, which shall be a Business Day; (ii) the
amount of such proposed borrowing which, when aggregated together with all other
outstanding Loans, shall not exceed the Commitment; and (iii) the bank account
or accounts to which the proceeds of such Loan should be paid by Lender.
(c) Bridge Construction Loan Note. The obligations of Borrower to repay the
Loans shall be evidenced by Borrower's promissory note in the form attached
hereto as Exhibit A, dated the Closing Date and payable to the order of Lender
for the principal sum of $10,000,000, or such Loan Amount as shall be
outstanding hereunder from time to time, with interest as therein provided.
(d) Payments. Unless payment of the Loans are accelerated upon occurrence
of an Event of Default pursuant to Section 7.2 hereof, the aggregate outstanding
principal amount of the Loans as to each Project, together with all accrued
interest thereon, shall be due and payable from time to time in the amounts of
and on the dates of receipt by Borrower of proceeds of Key Loans relating to
such Project, with any unpaid principal and accrued interest due and payable in
full on or before the 120th day following issuance of the certificate of
occupancy for the last Project to be completed (the "Maturity Date"). Borrower
authorizes and directs Lender, and Lender agrees, to immediately apply such
proceeds from the Key Loans over which Lender has authority as Borrower's agent
or otherwise to the repayment of the Loans and Lender shall promptly give
Borrower notice of each such repayment which notice shall include the amount,
the Project and the draw involved. Notwithstanding anything in this Agreement to
the contrary, no amount shall be due and payable on the Loans or under this
Agreement or any of the Loan Documents to the extent and during such time or
times as such payment by Borrower is prohibited by the Intercreditor Agreement.
However, if the prohibition is not due to the default of the Lender under the
Guaranty or to the breach of the Lender under any Management Agreement or
Development Agreement, then such amounts due and payable but prohibited by such
Intercreditor Agreement shall be deemed paid on the date due with proceeds of,
and shall be deemed advances under the Convertible Subordinated Loan Agreement
dated the date of this Agreement between the Lender and the Borrower.
(e) Interest Rate. The Loans shall bear interest, compounded quarterly from
and after the date of this Agreement, during the period from and including the
date of funding to (but not including) the date the Loans are paid in full, at
the per annum rate set forth in the Note.
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<PAGE> 5
Section 2.2 Prepayment.
The principal amount of the Loans may be repaid or prepaid in full or in
part at any time prior to the date payments of principal are due, without
premium or penalty.
Section 2.3 Manner of Payment.
(a) Each payment (including prepayments) by Borrower on account of the
principal or interest on the Loans shall be made on the dates specified for
payment under this Agreement (or, as to prepayments, any date specified by the
Borrower) to the Lender in lawful money of the United States of America in
immediately available funds.
(b) If any payment under this Agreement shall be specified to be made upon
a day which is not a Business Day, it shall be made on the next succeeding day
which is a Business Day, and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
(c) Amounts received by Lender with respect to Loans shall be applied in
the following order of priority: (i) to the payment of all amounts then due and
payable under this Agreement other than interest or principal; (ii) to the
payment of interest then due and payable on the Loan; and (iii) to the repayment
or prepayment of the principal balance of the Loans.
Section 2.4 Basis of Calculation of Interest.
All interest payable hereunder shall be calculated on the basis of the
360/365 method, which computes a daily amount of interest for a hypothetical
year of 360 days, then multiplies such amount by the actual number of days
elapsed in an interest calculation period.
Section 2.5 Maximum Interest Rate.
In no event shall the amount of interest due or payable under the Note
exceed the maximum rate of interest allowed by applicable law, and in the event
that any such payment is inadvertently paid by Borrower or inadvertently
received by Lender, then such excess sum shall be credited as a payment of
principal, unless Borrower shall notify Lender, in writing, that Borrower elects
to have such excess sum returned to it forthwith. It is the express intent
hereof that Borrower not pay, and that Lender not receive, directly or
indirectly, in any manner whatsoever, interest in excess of that which would
lawfully be paid by Borrower under applicable law.
ARTICLE III
CLOSING DELIVERIES
The following deliveries shall be made simultaneously with the execution of
this Agreement:
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<PAGE> 6
Section 3.1 The Note.
Borrower shall deliver to Lender the Note duly executed and dated as of the
Closing Date.
Section 3.2 Equity Pledge Agreements.
The holders of all of the outstanding member interests in the Borrower
(other than the Lender) shall execute and deliver to Lender the Equity Pledge
Agreements dated as of the Closing Date, such agreements to be in form and
substance satisfactory to the Lender. The Borrower, by its execution of the
Equity Pledge Agreements, shall acknowledge the terms and provisions of such
agreement.
Section 3.3 Evidence of Approvals.
Lender shall have received from the Borrower copies of all such documents
and other evidence that it may reasonably request to confirm the Borrower's
authority to enter into the Agreement and the transactions contemplated hereby,
and to fully perform its obligations hereunder and thereunder.
Section 3.4 Loan Amount.
The initial disbursement of Loan Proceeds shall equal all outstanding
balances under the Bridge Loan Notes after reduction by payments received by
Lender on the Bridge Loan Notes from the proceeds of draws under the Key Credit
Agreement. Lender shall at all times keep adequate records by which the Loan
Amount related to each Project may be ascertained.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
Borrower hereby represents and warrants that:
(a) Organization; Power; Qualification. Borrower is a Delaware limited
liability company duly organized, validly existing and in good standing under
the laws of the state of Delaware, has the power and authority, to own or lease
and operate its properties and to carry on its businesses as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a foreign limited liability company, and is authorized to do business, in
each jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, and on which failure to
so qualify would have a Material Adverse Effect on Borrower.
(b) Execution and Enforceability. This Agreement has been duly executed and
delivered by Borrower, and is, and each of the Loan Documents to which Borrower
is a party
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<PAGE> 7
is, a legal, valid and binding obligation of Borrower, enforceable in accordance
with its terms, subject, as to enforcement of remedies, to the following
qualifications: (i) the application of equitable principals, whether applied in
equity or at law, and (ii) limitations by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws effecting enforcement of
creditors' rights generally.
(c) Authorization. Borrower is duly authorized to execute, deliver and
perform its obligations under this Agreement and the Loan Documents. The
execution, delivery and performance by Borrower of this Agreement and the Loan
Documents do not and will not require any consent or approval of any
governmental agency or authority.
(d) No Conflicts. The execution, delivery and performance by the Borrower
of this Agreement and the Loan Documents (i) do not and will not conflict with:
(A) any provision of law, (B) the Borrower's operating agreement or the Delaware
Limited Liability Company Act, (C) any material agreement binding upon Borrower,
or (D) any court or administrative order or decree applicable to Borrower, and
(ii) do not and will not require, or result in, the creation or imposition of
any lien on any asset of Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until all Loans pursuant to
this Agreement, and all interest thereon, are paid in full, and unless Lender
shall otherwise consent in writing:
Section 5.1 Notices.
Borrower shall notify the Lender in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken with respect thereto:
(a) Default. The occurrence of an Event of Default or Unmatured Event of
Default;
(b) Litigation. The institution of any litigation, arbitration proceeding
or governmental proceeding which would constitute a Material Adverse Effect on
the Borrower;
(c) Material Adverse Change. The occurrence of a material adverse change in
the business, operations or financial condition of Borrower; or
(d) Other Events. The occurrence of such other events as the Lender may
from time to time reasonably specify regarding the financial condition of
Borrower.
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<PAGE> 8
Section 5.2 Existence.
Borrower shall maintain and preserve its existence as a limited liability
company, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, tradenames, and other authority to the extent material
and necessary for the conduct of its business in the ordinary course as
conducted from time to time.
Section 5.3 Books, Records and Access.
Borrower shall maintain accurate books and records in conformance with its
method of income tax accounting. Within 15 days after receiving written notice
from Lender, Borrower shall permit reasonable access by the Lender to the books
and records of Borrower during normal business hours and permit the Lender to
make reasonable copies of such books and records.
Section 5.4 Insurance.
Borrower shall maintain insurance to such extent and against such hazards
and liabilities as is commonly maintained by companies similarly situated.
Section 5.5 Repair.
Borrower shall maintain, preserve and keep its properties in good repair,
working order and condition, and from time to time make all necessary and proper
repairs, renewals, replacements, additions, betterments and improvements thereto
so that at all times the efficiency thereof shall be fully preserved and
maintained except for where the failure to comply with this Section 5.5,
individually or in the aggregate, does not have a Material Adverse Effect on
Borrower.
Section 5.6 Taxes.
Borrower shall pay when due, all of its Taxes, unless and only to the
extent that Borrower is contesting such Taxes in good faith and by appropriate
proceedings and Borrower has set aside in its books reasonable reserves
therefor.
Section 5.7 Compliance.
Borrower shall comply with all statutes and governmental rules and
regulations applicable to it, except where the failure to comply with this
Section 5.7, individually or in the aggregate, does not have a Material Adverse
Effect on the Borrower.
Section 5.8 Use of Proceeds.
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Borrower shall use the proceeds of Loans only to pay Project Costs (as
defined in the Development Agreement for a Project), but excluding management
fees payable pursuant to the Management Agreements.
ARTICLE VI
NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Loan
Amount, and all interest thereon, is paid in full, and unless Lender shall
otherwise consent in writing:
Section 6.1 Liquidation, Merger or Sale.
Borrower shall not, without the prior written consent of Lender:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise windup its affairs;
(b) sell, lease, abandon, transfer or otherwise dispose of any real
property or of any personal property in violation of the Key Credit Agreement;
(c) be party to any merger or consolidation; or
(d) unless all of the Loans under this Agreement and all other loans
under the Other Loan Agreements related to a Project are paid in full, sell,
transfer, or distribute such Project.
Section 6.2 Liens.
Borrower shall not create, incur or suffer to exist, any lien
(including, without limitation, any pledge, assignment, mortgage, title
retaining contract or other type of security interest) to exist on any of the
assets or property (real, personal or mixed, tangible or intangible) of the
Borrower, other than:
(i) Liens for Taxes not delinquent or for Taxes being contested in good
faith by appropriate proceedings and as to which adequate financial reserves
have been established on Borrower's books and records;
(ii) Liens created in connection with workmen's compensation, unemployment
insurance, and social security, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money), leases, statutory
obligations, surety and appeal bonds, and other obligations of like nature made
in the ordinary course of business;
(iii) Liens in favor of the Collateral Agent pursuant to the Key Credit
Agreement;
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<PAGE> 10
(iv) Liens created in connection with purchase money mortgages or security
interests granted to secure the purchase price of assets, the purchase of which
does not violate this Agreement or any instrument required hereunder; or
(v) Liens allowed under the Key Credit Agreement.
Section 6.3 Distributions.
Other than Tax Distributions, Borrower shall not make any distribution,
directly or indirectly, whether in cash or in other property, on account of or
for the benefit of its members unless Borrower on or before the date of the
distribution has paid in full all loans (including accrued interest) related to
the Project involved in the distribution which loans are then owed to Lender
under this Agreement and any of the Other Loan Agreements.
ARTICLE VII
EVENTS OF DEFAULT & REMEDIES
Section 7.1 Events of Default.
An Event of Default shall have occurred under this Agreement:
(a) Non-payment. If Borrower shall default in the payment when due of
any principal of, or interest on, the Loan, and such default shall not be cured
within three (3) Business Days following notice thereof from Lender.
(b) Insolvency. If Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for Borrower or for a substantial part of the
property of Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower or for a
substantial part of the property of the Borrower and is not discharged within
sixty days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against Borrower and, if instituted
against Borrower, is consented to or acquiesced in by Borrower or remains for
sixty days undismissed; or any warrant of attachment or similarly legal process
is issued against any substantial part of the property of Borrower which is not
released within sixty days of service.
(c) Representations and Warranties. If any representation or warranty
made under this Agreement or any statement in any certificate given by directly
Borrower (and not by Lender as Borrower's representative under any Management
Agreement or Development Agreement) hereunder shall be untrue, incorrect or
misleading in any material respect when made or given.
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(d) Covenants. If Borrower shall default in the performance or
observance of any covenant set forth in Article V or Article VI hereof (except
in each case to the extent such default is due to Lender's breach under any
Management Agreement or Development Agreement) and, with respect to any covenant
set forth in Section 5.1, 5.3, 5.4, 5.5, 5.6, or 5.7, such default shall not be
cured within thirty (30) days following notice thereof from Lender to Borrower.
(e) Other Defaults. If there is an event of default under any of the
Loan Documents, subject to any applicable period of grace.
Section 7.2 Remedies.
If an Event of Default shall have occurred and shall be continuing,
Lender shall have the right at its option, and in its sole discretion, to
declare all amounts outstanding under the Note and this Agreement to be
immediately due and payable (except that if an event described in Section 7.1(b)
occurs, all amounts outstanding under the Note and this Agreement shall
automatically become immediately due and payable). Lender shall promptly advise
Borrower, in writing, of any such declaration, but failure to do so shall not
impair the effect of such declaration. Lender shall also be entitled to exercise
any and all remedies available to it, at law or equity.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Waiver and Amendments.
No failure or delay on the part of Lender in the exercise of any power
or right, and no course of dealing between Borrower and Lender, shall operate as
a waiver of such power or right, nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. Remedies provided for herein are cumulative and not
exclusive of any remedies which may be available to the Lender at law or in
equity. No notice to or demand on the Borrower required hereunder or under the
Note shall in any event entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Lender to any other or further action and any circumstances without notice or
demand. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Note shall in any event be effective unless
the same shall be in writing and signed and delivered by the party affected by
such amendment or modification or making the waiver. Any waiver of any provision
of this Agreement or the Note, and any consent to any departure by Borrower from
the terms of any provision of this Agreement or the Note, shall be effective
only in the specific instance and for the specific purpose for which given.
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Section 8.2 Notices
All notices and other communications required or permitted under this
Agreement shall be in writing and, if mailed by prepaid first-class mail, or
certified mail, return receipt requested, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-mark date thereof and, if by telecopy, shall be followed forthwith by
letter and shall be deemed to have been received upon dispatch and
acknowledgment of receipt by the recipient's telecopier machine. In addition,
notices hereunder may be delivered by hand in which event the notice shall be
deemed effective when delivered or by overnight courier, in which event the
Notice shall be deemed delivered the Business Day after it is accepted by the
courier for next day delivery. All notices and other communications under this
Agreement shall be given to the parties hereto at the following addresses:
(i) If to Borrower:
Third Party Investors I, LLC
c/o Twin Oaks Capital, LLC
2215 York , Suite 500
Oak Brook, Illinois 60523
Attn: Ronald G. Kenny
Fax: (630) 920-2110
with a copy to (which shall not constitute notice):
Hecht & Lentz
333 Bridge, N.W., Suite 330
Grand Rapids, Michigan 49504
Attn: David M. Hecht, Esq.
Fax: (616) 776-7203
(ii) If to Lender:
Alterra Healthcare Corporation
450 N. Sunnyslope Road
Suite 300
Brookfield, Wisconsin 83005
Attn: President and CEO
Fax: 414-789-6677
with a copy to (which shall not constitute notice):
Rogers & Hardin LLP
229 Peachtree Street, N.E.
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<PAGE> 13
2700 International Tower
Atlanta, Georgia 30303
Attn: Alan C. Leet, Esq.
Fax: 404-525-2224
Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
Section 8.3 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 8.4 Governing Law.
This Agreement shall be construed under and governed by the laws of the
state of Wisconsin, without giving effect to its principles of conflicts of
laws.
Section 8.5 Successors and Assigns.
This Agreement shall be binding upon Borrower and Lender and their
respective successors and assigns, and shall inure to the benefit of Borrower
and Lender and their successors and assigns. Neither Borrower nor Lender shall
assign its rights or delegate its duties hereunder without the consent of the
other party.
Section 8.6 Headings.
Headings used in this Agreement are for convenience only and shall not
be used in connection with the interpretation of any provision hereof.
Section 8.7 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which counterparts shall
together constitute one and the same instrument.
Section 8.8 Expenses.
In any litigation or other dispute resolution proceeding relating to
this Agreement or any of the Loan Documents, the prevailing party shall be
entitled to be awarded from the other party all of the prevailing party's
reasonable costs and expenses (including reasonable fees and expenses of
counsel).
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Section 8.9 Prior Agreements.
This Agreement replaces in their entirety the Bridge Loan Agreement
dated December 31, 1998 and the Bridge Loan Agreement dated March 31, 1999, each
between the Borrower and Lender. Upon the initial disbursement of the Loan
proceeds as described in Section 3.4, the Bridge Loan Notes shall be marked
"paid" and returned to Borrower.
[Signature Page Follows.]
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned thereunto duly authorized as of the date first
written above.
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Thomas E. Komula
---------------------------------------
Thomas E. Komula
Senior Vice President
THIRD PARTY INVESTORS I, LLC,
AS BORROWER
BY: TWIN OAKS CAPITAL, LLC, ITS MANAGER
By: /s/ Ronald G. Kenny
---------------------------------------
Ronald G. Kenny
President
<PAGE> 1
EXHIBIT 10.15
BRIDGE CONSTRUCTION LOAN NOTE
$10,000,000 September 30, 1999
FOR VALUE RECEIVED, the undersigned, THIRD PARTY INVESTORS I, LLC, a
Delaware limited liability company ("Borrower"), promises to pay to the order of
Alterra Healthcare Corporation, a Delaware corporation ("Lender") and, together
with any holder hereof ("Holder"), at 450 N. Sunnyslope Rd., Suite 300,
Brookfield, Wisconsin 53005 (or at such other place as the Holder may designate
in writing to Borrower), the principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000), or, if less, the unpaid aggregate principal amount of all loans
made from time to time hereunder, plus interest as hereinafter provided.
All capitalized terms used herein shall have the meanings ascribed to
such terms in that certain Bridge Construction Loan Agreement dated as of the
date of this Note by and between Borrower and Lender (the "Loan Agreement"),
except to the extent that such capitalized terms are otherwise defined or
limited herein.
The aggregate Loan Amount of all outstanding Loans made pursuant to
the Loan Agreement, together with accrued interest thereon, shall be paid from
time to time as provided in Section 2.1(d) of the Loan Agreement.
Borrower may repay all or any portion of the principal amount of this
Note in full or in part at any time prior to the date payments of principal are
due, without premium or penalty, in the manner set forth in the Loan Agreement.
The principal amount of outstanding Loans shall bear interest during
the period from and including the date of funding of such Loans to (but not
including) the date the principal amount thereof is paid in full, at the per
annum rate equal to the Prime Rate plus 1% (the "Applicable Rate").
For purposes of this Note, the term "Prime Rate" means the prime
interest rate in effect from time to time as published in the Money Rates
Section of The Wall Street Journal, or its successor.
Interest shall be calculated on the basis of the 360/365 method, which
computes a daily amount of interest for a hypothetical year of 360 days, then
multiplies such amount by the actual number of days elapsed in an interest
calculation period. All past due amounts of principal of, and to the extent
permitted by applicable law, unpaid interest on, this Note from time to time
outstanding, shall bear interest at a rate equal to the then Applicable Rate
plus two percent (2%).
<PAGE> 2
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and in the event
any such payment is inadvertently paid by the undersigned or inadvertently
received by Holder, then such excess sum shall be credited as a payment of
principal, unless the undersigned shall notify Holder, in writing that the
undersigned elects to have such excess sum returned to it forthwith. It is the
express intent hereof that the undersigned not pay and that Holder not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may be lawfully paid by the undersigned under applicable law.
This Note is entitled to the benefits of the Loan Agreement which
contains provisions with respect to the acceleration of the maturity of this
Note upon the happening of certain stated events, and provisions for prepayment.
Should an Event of Default occur under the Loan Agreement, then, at
any time while such Event of Default shall continue, Holder shall have the right
and option, in its sole discretion, to exercise any and all of the remedies
provided and available to it under the Loan Agreement.
All parties now or hereafter liable with respect to this Note, whether
the Borrower, any guarantor, endorser or any other Person, hereby expressly
waive presentation, demand of payment, protest, notice for demand of payment,
protest and notice of non-payment, or any other notice of any kind with respect
thereto.
No delay or failure on the part of Holder in the exercise of any right
or remedy hereunder, under the Loan Agreement or under the Equity Pledge
Agreement, or at law or in equity, shall operate as a waiver thereof, and no
single or partial exercise by the Holder of any right or remedy hereunder, under
the Loan Agreement, the Equity Pledge Agreement, or at law or in equity, shall
preclude or estop another or further exercise thereof or the exercise of any
other right or remedy.
Principal and interest on this Note shall be payable and paid in
lawful money of the United States of America.
Holder shall be under no duty to exercise any or all of the rights and
remedies given by this Note or the Loan Agreement or either of the Equity Pledge
Agreements and no party to this instrument shall be discharged from the
obligations or undertakings hereunder (a) should the Holder release or agree not
to sue any Person against whom the party has, to the knowledge of the Holder, a
right to recourse, or (b) should the Holder agree to suspend the right to
enforce this Note or the Holder's interest in any collateral pledged or any
guaranty given to secure this Note against such Person or other discharge such
Person.
The provisions of this Note shall be construed and interpreted, and
all rights and obligations of the parties hereunder determined, in accordance
with the laws of the State of Wisconsin.
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<PAGE> 3
IN WITNESS WHEREOF, Borrower has caused this Note to be executed, and
delivered in its name, by and through the undersigned, thereunto duly
authorized, as of the day and year first above written.
THIRD PARTY INVESTORS I, LLC,
a Delaware limited liability company
By: Twin Oaks Capital, LLC, a Delaware limited
liability company, Manager
By: /s/ Ronald G. Kenny
----------------------------------
Ronald G. Kenny, President
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<PAGE> 1
EXHIBIT 10.16
SUPPLEMENTARY FINANCING LOAN AGREEMENT
This Agreement, dated as of September 30, 1999, is entered into among
Third Party Investors I, LLC, a Delaware limited liability company ("Borrower"),
and Alterra Healthcare Corporation, a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make loans to Borrower in
the aggregate amount of up to $ 10,000,000; and
WHEREAS, Lender is willing to make the loans to Borrower on the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated for purposes of this Agreement
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"Agreement" shall mean this Loan Agreement.
"Alterra Guaranty" shall mean the Guaranty dated as of August 31,
1999 executed by Lender in favor of KCCI for the benefit of the creditors named
therein.
"Borrower" shall mean Third Party Investors I, LLC, a Delaware limited
liability company.
"Business Day" shall mean a day on which national banks are open for
the transaction of business required for this Agreement in Milwaukee, Wisconsin.
"Closing Date" shall mean the date of this Agreement.
"Development Agreement" shall mean the Development Agreements entered
into by Lender and Borrower as contemplated by Section 5.5 of the Amended and
Restated Operating Agreement of Borrower dated as of June 30, 1999.
<PAGE> 2
"Equity Pledge Agreements" shall mean that certain Second Amended and
Restated Equity Pledge Agreement dated as of the date hereof between Group One
Investors, LLC, as Pledgor, and Lender, as Pledgee and that certain Amended and
Restated Equity Pledge Agreement of even date herewith between Twin Oaks
Capital, LLC, as Pledgor, and Lender, as Pledgee.
"Event of Default" shall mean any of the events specified in Section
7.1 hereof, provided that any requirement for notice or passage of time has
been satisfied.
"Intercreditor Agreement" shall mean the Subordination and
Intercreditor dated as of September 30,1999 between Lender, KCCI and Borrower.
"KCCI" shall mean Key Corporate Capital, Inc., a Michigan corporation,
in its capacity as Administrative Agent under the Key Credit Agreement.
"Key Credit Agreement" shall mean the Master Construction Line of
Credit Agreement dated as of August 31, 1999 among the Borrower, the lending
institutions named therein, the co-agents named therein and KCCI and all of the
other Credit Documents as defined in that agreement.
"Key Loans" shall mean the loans made to Borrower pursuant to the Key
Credit Agreement.
"Key Loan Deficit" shall mean, with respect to a Project, the amount by
which the Target Loan Amount for such Project exceeds the aggregate principal
amount of the Key Project Loan permitted with respect to such Project pursuant
to the Key Credit Agreement.
"Key Project Loan" shall mean the loans made to Borrower pursuant to
the Key Credit Agreement with respect to an individual Project.
"Lender" shall mean Alterra Healthcare Corporation, a Delaware
corporation.
"Loan" and "Loans" shall have the meanings set forth in Section 2.1
hereof.
"Loan Documents" shall mean the Notes, the Equity Pledge Agreements and
any other documents executed by Borrower or its members with or for the benefit
of Lender in connection with this Agreement or the Loans.
"Management Agreements" shall mean the Amended and Restated Assisted
Living Consultant and Management Services Agreements between Lender and
Borrower, each dated as of June 30, 1999, and all other later executed similar
agreements relating to a Project.
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"Material Adverse Effect" shall mean any act, omission or undertaking
which would, singly or in the aggregate, have (or reasonably be expected to
have) a material adverse effect upon the business, assets, liabilities,
financial condition or results of operations of a Person.
"Note" shall mean the Supplementary Financing Loan Note, dated as of
the date hereof, in the aggregate principal amount of $10,000,000, made by
Borrower to the order of Lender and delivered to Lender pursuant to Section
2.1(c) hereof.
"Other Loan Agreements" shall mean the September 30, 1999 Convertible
Subordinated Loan Agreement, the December 30, 1998 and March 31, 1999 Management
Fee Loan Agreements, as amended, the December 30, 1998 and March 31, 1999
Working Capital Loan Agreements, as amended, and the June 30, 1999 Bridge
Construction Loan Agreement, as amended, in each case between the Borrower and
the Lender.
"Person" shall mean an individual, corporation, limited liability
company, partnership, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Project" or "Projects" shall mean the assisted living and/or dementia
care residences developed, acquired and/or operated by Borrower pursuant to the
Amended and Restated Operating Agreement of Borrower dated as of June 30, 1999.
"Project Costs" with respect to a Project shall have the meaning
ascribed thereto in the Development Agreement relating to such Project.
"Target Loan Amount" shall mean, with respect to a Project, an amount
equal to 75% of Total Costs for such Project.
"Taxes" shall mean, with respect to any Person, taxes, assessments or
other governmental charges or levies imposed upon such Person, its income or any
of its properties or assets.
"Tax Distributions" shall mean cash distributions to members of
Borrower from time to time in amounts sufficient to pay income tax liabilities
(calculated at the highest federal marginal individual tax rates plus the
highest state and local individual income taxes rates to which any member is
subject), of such members in respect of their shares of the cumulative taxable
income of the Borrower, the calculation of such distributions to take into
account both the tax benefits resulting from taxable losses of the Borrower as
well as the tax costs resulting from taxable income of the Borrower for the
current and all prior tax years, net of any such prior distributions, on a
cumulative basis.
"Total Costs" shall mean, with respect to a Project, as of any given
time the amount paid by Borrower for the acquisition of the Project plus the
aggregate Project Costs as of such time for such Project incurred after the date
of closing of the acquisition of such Project by Borrower.
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"Unmatured Event of Default" shall mean any event or condition which,
with the lapse of time or giving of notice to Borrower contemplated hereby,
would constitute an Event of Default.
ARTICLE II
COMMITMENT TO LEND, BORROWING PROCEDURES, ETC.
Section 2.1 Loans
(a) Amount. Lender agrees, upon the terms and conditions herein set
forth, to make a loan or loans to Borrower from time to time and from the
Closing Date until ten (10) days after Borrower has notice that no further
advances of loan proceeds are available under the Key Credit Agreement, each in
a principal amount up to, but not exceeding, the amount of the Key Loan Deficit
for any Project, provided that the aggregate principal amount of such loans for
any Project shall not exceed 25% of the Total Costs of such Project and the
aggregate principal amount of all loans for all Projects then outstanding shall
not exceed Ten Million Dollars ($10,000,000) (the "Commitment") (each such loan
is herein referred to as the "Loan," all such loans are herein referred to as
"Loans," and the aggregate amount of all such Loans outstanding from time to
time, the "Loan Amount").
(b) Borrowings. In the event that Borrower shall elect to borrow
pursuant hereto, the Borrower shall give written notice to the Lender not later
than three (3) Business Days prior to the proposed date of such borrowing. Each
such notice of borrowing shall be by telecopy, promptly confirmed by letter, and
shall specify therein: (i) the date of such proposed borrowing, which shall be a
Business Day; (ii) the amount of such proposed borrowing which, when aggregated
together with the amount of all Loans then outstanding, shall not exceed the
Commitment; and (iii) the bank account or accounts to which the proceeds of such
Loan should be paid by Lender. The obligations of Borrower to repay the Loans
shall be evidenced by Borrower's promissory note in the form attached hereto as
Exhibit A, dated the Closing Date and payable to the order of Lender for the
principal sum of $10,000,000 or such Loan Amount as shall be outstanding
hereunder from time to time, with interest as therein provided.
(c) Payments. Unless payment of the Loans are accelerated upon
occurrence of an Event of Default pursuant to Section 7.2 hereof, i) the
aggregate outstanding principal amount of the Loans relating to a Project,
together with all accrued and unpaid interest thereon, shall be due and payable
in full on the maturity date of the Key Project Loan for such Project, and ii)
accrued interest on Loans relating to a Project shall be payable quarterly;
provided that, while the Intercreditor Agreement is in effect, no such principal
and interest shall be payable to the extent and for the period that the
Intercreditor Agreement prohibits such payment. However, if the Intercreditor
Agreement's payment prohibition is not due to the default of the Lender under
the Guaranty or to the breach of the Lender under any Management Agreement or
Development Agreement, then such amounts due and payable but so prohibited shall
be deemed paid on the date due with proceeds of, and shall be deemed advances
under the Convertible Subordinated Loan Agreement dated the date of this
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<PAGE> 5
Agreement between the Lender and the Borrower.
(d) Interest Rate. The Loans shall bear interest, during the period
from and including the date of funding to (but not including) the date the Loans
are paid in full, at the per annum rate set forth in the Note.
Section 2.2 Prepayment.
The principal amount of the Loans may be repaid or prepaid in full or
in part at any time prior to the date payments of principal are due, without
premium or penalty.
Section 2.3 Manner of Payment.
(a) Each payment (including prepayments) by Borrower on account of
the principal or interest on the Loans shall be made on the dates specified for
payment under this Agreement (or, as to prepayments, any date specified by
Borrower) to the Lender in lawful money of the United States of America in
immediately available funds.
(b) If any payment under this Agreement shall be specified to be made
upon a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day, and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
(c) Amounts received by Lender with respect to Loans shall be applied
in the following order of priority: (i) to the payment of all amounts then due
and payable under this Agreement other than interest or principal; (ii) to the
payment of interest then due and payable on the Loans; and (iii) to the
repayment or prepayment of the principal balance of the Loans.
Section 2.4 Basis of Calculation of Interest.
All interest payable hereunder shall be calculated on the basis of the
360/365 method, which computes a daily amount of interest for a hypothetical
year of 360 days, then multiplies such amount by the actual number of days
elapsed in an interest calculation period.
Section 2.5 Maximum Interest Rate.
In no event shall the amount of interest due or payable under the Note
exceed the maximum rate of interest allowed by applicable law, and in the event
that any such payment is inadvertently paid by Borrower or inadvertently
received by Lender, then such excess sum shall be credited as a payment of
principal, unless Borrower shall notify Lender, in writing, that Borrower elects
to have such excess sum returned to it forthwith. It is the express intent
hereof that Borrower not pay, and that Lender not receive, directly or
indirectly, in any manner whatsoever, interest in excess of that which would
lawfully be paid by Borrower under applicable law.
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<PAGE> 6
ARTICLE III
CLOSING DELIVERIES
The following deliveries shall be made simultaneously with the
execution of this Agreement:
Section 3.1 The Note.
Borrower shall deliver to Lender the Note duly executed and dated as of
the Closing Date.
Section 3.2 Equity Pledge Agreements.
The holders of all of the outstanding member interests in the Borrower
(other than the Lender) shall execute and deliver to Lender the Equity Pledge
Agreements dated as of the Closing Date, such agreements to be in form and
substance satisfactory to the Lender. The Borrower, by its execution of the
Equity Pledge Agreements, shall acknowledge the terms and provisions of such
agreement.
Section 3.3 Evidence of Approvals.
Lender shall have received from the Borrower copies of all such
documents and other evidence that it may reasonably request to confirm the
Borrower's authority to enter into the Agreement and the transactions
contemplated hereby, and to fully perform its obligations hereunder and
thereunder.
Section 3.4 Loan Amount.
Lender shall at all times keep adequate records by which the Loan
amount related to each Project may be ascertained.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
Borrower hereby represents and warrants that:
(a) Organization; Power; Qualification. Borrower is a Delaware
limited liability company duly organized, validly existing and in good standing
under the laws of the state of Delaware, has the power and authority, to own or
lease and operate its properties and to carry on its businesses as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a foreign limited liability company, and is authorized to do business, in
each jurisdiction in which the character of its properties or the nature of its
business
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<PAGE> 7
requires such qualification or authorization, and on which failure to so qualify
would have a Material Adverse Effect on Borrower.
(b) Execution and Enforceability. This Agreement has been duly
executed and delivered by Borrower, and is, and each of the Loan Documents to
which Borrower is a party is, a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to the following qualifications: (i) the application of equitable
principals, whether applied in equity or at law, and (ii) limitations by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws effecting enforcement of creditors' rights generally.
(c) Authorization. Borrower is duly authorized to execute, deliver
and perform its obligations under this Agreement and the Loan Documents. The
execution, delivery and performance by Borrower of this Agreement and the Loan
Documents do not and will not require any consent or approval of any
governmental agency or authority.
(d) No Conflicts. The execution, delivery and performance by the
Borrower of this Agreement and the Loan Documents (i) do not and will not
conflict with: (A) any provision of law, (B) the Borrower's operating agreement
or the Delaware Limited Liability Company Act, (C) any material agreement
binding upon Borrower, or (D) any court or administrative order or decree
applicable to Borrower, and (ii) do not and will not require, or result in, the
creation or imposition of any lien on any asset of Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until all Loans pursuant
to this Agreement, and all interest thereon, are paid in full, and unless Lender
shall otherwise consent in writing:
Section 5.1 Notices.
Borrower shall notify the Lender in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken with respect thereto:
(a) Default. The occurrence of an Event of Default or Unmatured
Event of Default;
(b) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding which would constitute a Material Adverse
Effect on the Borrower;
(c) Material Adverse Change. The occurrence of a material adverse
change in the business, operations or financial condition of Borrower; or
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<PAGE> 8
(d) Other Events. The occurrence of such other events as the Lender
may from time to time reasonably specify regarding the financial condition of
Borrower.
Section 5.2 Existence.
Borrower shall maintain and preserve its existence as a limited
liability company, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, tradenames, and other authority to the extent material
and necessary for the conduct of its business in the ordinary course as
conducted from time to time.
Section 5.3 Books, Records and Access.
Borrower shall maintain accurate books and records in conformance with
its method of income tax accounting. Within 15 days after receiving written
notice from Lender, Borrower shall permit reasonable access by the Lender to the
books and records of Borrower during normal business hours and permit the Lender
to make reasonable copies of such books and records.
Section 5.4 Insurance.
Borrower shall maintain insurance to such extent and against such
hazards and liabilities as is commonly maintained by companies similarly
situated.
Section 5.5 Repair.
Borrower shall maintain, preserve and keep its properties in good
repair, working order and condition, and from time to time make all necessary
and proper repairs, renewals, replacements, additions, betterments and
improvements thereto so that at all times the efficiency thereof shall be fully
preserved and maintained except for where the failure to comply with this
Section 5.5, individually or in the aggregate, does not have a Material Adverse
Effect on Borrower.
Section 5.6 Taxes.
Borrower shall pay when due, all of its Taxes, unless and only to the
extent that Borrower is contesting such Taxes in good faith and by appropriate
proceedings and Borrower has set aside in its books reasonable reserves
therefor.
Section 5.7 Compliance.
Borrower shall comply with all statutes and governmental rules and
regulations applicable to it, except where the failure to comply with this
Section 5.7, individually or in the aggregate, does not have a Material Adverse
Effect on the Borrower.
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<PAGE> 9
ARTICLE VI
NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Loan Amount,
and all interest thereon, is paid in full, and unless Lender shall otherwise
consent in writing:
Section 6.1 Liquidation, Merger or Sale.
Borrower shall not, without the prior written consent of Lender:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise windup its affairs;
(b) sell, lease, abandon, transfer or otherwise dispose of any real
property or of any personal property in violation of the Key Credit Agreement;
(c) be party to any merger or consolidation; or
(d) unless all of the Loans under this Agreement and all other loans
under the Other Loan Agreements related to a Project are paid in full, sell,
transfer, or distribute such Project.
Section 6.2 Liens.
Borrower shall not create, incur or suffer to exist, any lien
(including, without limitation, any pledge, assignment, mortgage, title
retaining contract or other type of security interest) to exist on any of the
assets or property (real, personal or mixed, tangible or intangible) of the
Borrower, other than:
(i) Liens for Taxes not delinquent or for Taxes being contested
in good faith by appropriate proceedings and as to which adequate
financial reserves have been established on Borrower's books and
records;
(ii) Liens created in connection with workmen's compensation,
unemployment insurance, and social security, or to secure the
performance of bids, tenders or contracts (other than for the repayment
of borrowed money), leases, statutory obligations, surety and appeal
bonds, and other obligations of like nature made in the ordinary course
of business;
(iii) Liens in favor of the Collateral Agent pursuant to the Key
Credit Agreement;
(iv) Liens created in connection with purchase money mortgages or
security interests granted to secure the purchase price of assets, the
purchase of which does not violate this Agreement or any instrument
required hereunder; or
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<PAGE> 10
(v) Liens allowed under the Key Credit Agreement.
Section 6.3 Distributions.
Other than Tax Distributions, Borrower shall not make any distribution,
directly or indirectly, whether in cash or in other property, on account of or
for the benefit of its members unless Borrower on or before the date of the
distribution has paid in full all loans (including accrued interest) related to
the Project involved in the distribution which loans are then owed to Lender
under this Agreement and any of the Other Loan Agreements.
ARTICLE VII
EVENTS OF DEFAULT & REMEDIES
Section 7.1 Events of Default.
An Event of Default shall have occurred under this Agreement:
(a) Non-payment. If Borrower shall default in the payment when due of
any principal of, or interest on, the Loan, and such default shall not be cured
within three (3) Business Days following notice thereof from Lender.
(b) Insolvency. If Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for Borrower or for a substantial part of the
property of Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower or for a
substantial part of the property of the Borrower and is not discharged within
sixty days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against Borrower and, if instituted
against Borrower, is consented to or acquiesced in by Borrower or remains for
sixty days undismissed; or any warrant of attachment or similarly legal process
is issued against any substantial part of the property of Borrower which is not
released within sixty days of service.
(c) Representations and Warranties. If any representation or warranty
made under this Agreement or any statement in any certificate given directly by
Borrower (and not by Lender as Borrower's agent under any Development Agreement
or Management Agreement) hereunder shall be untrue, incorrect or misleading in
any material respect when made or given.
(d) Covenants. If Borrower shall default in the performance or
observance of any covenant set forth in Article V or Article VI hereof (except
in each case to the extent such default is due to Lender's breach under any
Development Agreement or Management Agreement) and, with respect to any covenant
set forth in Section 5.1, 5.3, 5.4, 5.5, 5.6, or 5.7, such default shall not be
cured within thirty (30) days following notice thereof from Lender to Borrower.
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<PAGE> 11
(e) If there is an event of default under any of the Loan Documents,
subject to any applicable period of grace.
Section 7.2 Remedies.
If an Event of Default shall have occurred and shall be continuing,
Lender shall have the right at its option, and in its sole discretion, to
declare all amounts outstanding under the Note and this Agreement to be
immediately due and payable (except that if an event described in Section 7.1(b)
occurs, all amounts outstanding under the Note and this Agreement shall
automatically become immediately due and payable). Lender shall promptly advise
Borrower, in writing, of any such declaration, but failure to do so shall not
impair the effect of such declaration. Lender shall also be entitled to exercise
any and all remedies available to it, at law or equity.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Waiver and Amendments.
No failure or delay on the part of Lender in the exercise of any power
or right, and no course of dealing between Borrower and Lender, shall operate as
a waiver of such power or right, nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. Remedies provided for herein are cumulative and not
exclusive of any remedies which may be available to the Lender at law or in
equity. No notice to or demand on the Borrower required hereunder or under the
Note shall in any event entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Lender to any other or further action and any circumstances without notice or
demand. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Note shall in any event be effective unless
the same shall be in writing and signed and delivered by the party affected by
such amendment or modification or making the waiver. Any waiver of any provision
of this Agreement or the Note, and any consent to any departure by Borrower from
the terms of any provision of this Agreement or the Note, shall be effective
only in the specific instance and for the specific purpose for which given.
Section 8.2 Notices
All notices and other communications required or permitted under this
Agreement shall be in writing and, if mailed by prepaid first-class mail, or
certified mail, return receipt requested, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-mark date thereof and, if by telecopy, shall be followed forthwith by
letter and shall be deemed to have been received upon dispatch and
acknowledgment of receipt by the recipient's telecopier machine. In addition,
notices hereunder may be delivered by hand in which event the notice shall be
deemed effective when
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<PAGE> 12
delivered or by overnight courier, in which event the Notice shall be deemed
delivered the Business Day after it is accepted by the courier for next day
delivery. All notices and other communications under this Agreement shall be
given to the parties hereto at the following addresses:
(i) If to Borrower:
Third Party Investors I, LLC
c/o Twin Oaks Capital, LLC
2215 York Road, Suite 500
Oak Brook, Illinois 60523
Attn: Ronald G. Kenny
Fax: (630) 920-2110
with a copy to (which shall not constitute notice):
Hecht & Lentz
333 Bridge, N.W., Suite 330
Grand Rapids, Michigan 49504
Attn: David M. Hecht, Esq.
Fax: (616) 776-7203
(ii) If to Lender:
Alterra Healthcare Corporation
450 N. Sunnyslope Road
Suite 300
Brookfield, Wisconsin 83005
Attn: President and CEO
Fax: 414-789-6677
with a copy to (which shall not constitute notice):
Rogers & Hardin LLP
229 Peachtree Street, N.E.
2700 International Tower
Atlanta, Georgia 30303
Attn: Alan C. Leet, Esq.
Fax: 404-525-2224
Any party hereto may change the address to which notices shall be directed
under this Section by giving written notice of such change to the other parties.
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<PAGE> 13
Section 8.3 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 8.4 Governing Law.
This Agreement shall be construed under and governed by the laws of the
state of Wisconsin, without giving effect to its principles of conflicts of
laws.
Section 8.5 Successors and Assigns.
This Agreement shall be binding upon Borrower and Lender and their
respective successors and assigns, and shall inure to the benefit of Borrower
and Lender and their successors and assigns. Neither Borrower nor Lender shall
assign its rights or delegate its duties hereunder without the consent of the
other party.
Section 8.6 Headings.
Headings used in this Agreement are for convenience only and shall not
be used in connection with the interpretation of any provision hereof.
Section 8.7 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which counterparts shall
together constitute one and the same instrument.
Section 8.8 Expenses.
In any litigation or other dispute resolution proceeding relating to
this Agreement or any of the Loan Documents, the prevailing party shall be
entitled to be awarded from the other party all of the prevailing party's
reasonable costs and expenses (including reasonable fees and expenses of
counsel).
[Signature Page Follows.]
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned thereunto duly authorized as of the
date first written above.
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Thomas E. Komula
-----------------------------------
Thomas E. Komula
Senior Vice President
THIRD PARTY INVESTORS I, LLC,
AS BORROWER
BY: TWIN OAKS CAPITAL, LLC, ITS MANAGER
By: /s/ Ronald G. Kenny
------------------------------------
Ronald G. Kenny
President
<PAGE> 1
EXHIBIT 10.17
SUPPLEMENTARY FINANCING LOAN NOTE
$10,000,000 September 30, 1999
FOR VALUE RECEIVED, the undersigned, THIRD PARTY INVESTORS I, LLC, a
Delaware limited liability company ("Borrower"), promises to pay to the order of
Alterra Healthcare Corporation, a Delaware corporation ("Lender") and, together
with any holder hereof ("Holder"), at 450 N. Sunnyslope Rd., Suite 300,
Brookfield, Wisconsin 53005 (or at such other place as the Holder may designate
in writing to Borrower), the principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000),or, if less, the unpaid aggregate principal amount of all loans
made from time to time hereunder, plus interest as hereinafter provided.
All capitalized terms used herein shall have the meanings ascribed to
such terms in that certain Supplementary Financing Loan Agreement dated as of
September 30, 1999 by and between Borrower and Lender (the "Loan Agreement"),
except to the extent that such capitalized terms are otherwise defined or
limited herein.
The aggregate Loan Amount of the Loans relating to each Project made
pursuant to the Loan Agreement, together with accrued and unpaid interest
thereon, shall be paid in full on the maturity date of the Key Loan for such
Project.
Borrower may repay all or any portion of the principal amount of this
Note in full or in part at any time prior to the date payments of principal are
due, without premium or penalty, in the manner set forth in the Loan Agreement.
The principal amount of outstanding Loans shall bear interest during
the period from and including the date of funding of such Loans to (but not
including) the date the principal amount thereof is paid in full, at the rate of
11% per annum rate. Accrued interest on Loans shall be payable as provided in
the Loan Agreement.
Interest shall be calculated on the basis of the 360/365 method, which
computes a daily amount of interest for a hypothetical year of 360 days, then
multiplies such amount by the actual number of days elapsed in an interest
calculation period. All past due amounts of principal of, and to the extent
permitted by applicable law, unpaid interest on, this Note from time to time
outstanding, shall bear interest at a rate equal to the then Applicable Rate
plus two percent (2%).
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and in the event
any such payment is inadvertently paid by the undersigned or inadvertently
received by Holder, then such excess sum shall be
<PAGE> 2
credited as a payment of principal, unless the undersigned shall notify Holder,
in writing that the undersigned elects to have such excess sum returned to it
forthwith. It is the express intent hereof that the undersigned not pay and that
Holder not receive, directly or indirectly, in any manner whatsoever, interest
in excess of that which may be lawfully paid by the undersigned under applicable
law.
This Note is entitled to the benefits of the Loan Agreement, which
contains provisions with respect to the acceleration of the maturity of this
Note upon the happening of certain stated events, and provisions for prepayment.
Should an Event of Default occur under the Loan Agreement, then, at any
time thereafter, Holder shall have the right and option, in its sole discretion,
to exercise any and all of the remedies provided and available to it under the
Loan Agreement.
All parties now or hereafter liable with respect to this Note, whether
the Borrower, any guarantor, endorser or any other Person, hereby expressly
waive presentation, demand of payment, protest, notice for demand of payment,
protest and notice of non-payment, or any other notice of any kind with respect
thereto.
No delay or failure on the part of Holder in the exercise of any right
or remedy hereunder, under the Loan Agreement or under the Equity Pledge
Agreement, or at law or in equity, shall operate as a waiver thereof, and no
single or partial exercise by the Holder of any right or remedy hereunder, under
the Loan Agreement, the Equity Pledge Agreement, or at law or in equity, shall
preclude or estop another or further exercise thereof or the exercise of any
other right or remedy.
Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America.
Time is of the essence of this Note, and, in case this Note is
collected by law or through an attorney at law or under advice therefrom,
Borrower agrees to pay all costs of collection, including reasonable attorneys'
fees.
Holder shall be under no duty to exercise any or all of the rights and
remedies given by this Note or the Loan Agreement or either of the Equity Pledge
Agreements and no party to this instrument shall be discharged from the
obligations or undertakings hereunder (a) should the Holder release or agree not
to sue any Person against whom the party has, to the knowledge of the Holder, a
right to recourse, or (b) should the Holder agree to suspend the right to
enforce this Note or the Holder's interest in any collateral pledged or any
guaranty given to secure this Note against such Person or other discharge such
Person.
The provisions of this Note shall be construed and interpreted, and all
rights and obligations of the parties hereunder determined, in accordance with
the laws of the State of Wisconsin.
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<PAGE> 3
IN WITNESS WHEREOF, Borrower has caused this Note to be executed, and
delivered in its name, by and through the undersigned, thereunto duly
authorized, as of the day and year first above written.
THIRD PARTY INVESTORS I, LLC,
a Delaware limited liability company
By: Twin Oaks Capital, LLC, a Delaware limited
liability company, Manager
By: /s/ Ronald G. Kenny
---------------------------------------
Ronald G. Kenny, President
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<PAGE> 1
EXHIBIT 10.18
MASTER AMENDMENT, CONFIRMATION
AND ACKNOWLEDGMENT AGREEMENT
MASTER AMENDMENT, CONFIRMATION AND ACKNOWLEDGMENT AGREEMENT (this "MASTER
AMENDMENT") dated as of September 28, 1999, by PITA GENERAL CORPORATION, an
Illinois corporation ("BORROWER"), ZC SPECIALTY INSURANCE COMPANY, a Texas
corporation ("SURETY"), GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation ("LENDER"), ALTERRA HEALTHCARE CORPORATION, a Delaware corporation
("GUARANTOR"), AHC TENANT, INC., a Delaware corporation ("LESSEE"), ALS-CLARE
BRIDGE, INC., a Delaware corporation ("ALS-CLARE BRIDGE"), ALI PALMER RANCH
EAST, INC., a Delaware corporation ("ALI PALMER RANCH"), SELCO SERVICE
CORPORATION, an Ohio corporation ("SELCO"), BANK ONE, NATIONAL ASSOCIATION, a
national banking association duly established with its principal corporate trust
office located in Chicago, Illinois (formerly known as THE FIRST NATIONAL BANK
OF CHICAGO) ("TRUSTEE"), CLARE BRIDGE OF CITRUS HEIGHTS L.P., CLARE BRIDGE OF
COBB COUNTY L.P., CLARE BRIDGE OF COLORADO SPRINGS L.P., CLARE BRIDGE OF DECATUR
L.P., CLARE BRIDGE OF EAST MESA L.P., CLARE BRIDGE OF OVERLAND PARK L.P., CLARE
BRIDGE OF PEORIA L.P., CLARE BRIDGE OF RENO L.P., CLARE BRIDGE OF ROANOKE L.P.,
CLARE BRIDGE OF SOUTH PARK L.P., CLARE BRIDGE OF SUN CITY WEST DEER VALLEY L.P.,
WYNWOOD OF BOYNTON BEACH WEST L.P., WYNWOOD OF BREA L.P., WYNWOOD OF DUNEDIN
L.P., WYNWOOD OF EMERSON L.P., WYNWOOD OF TUCSON L.P., WYNWOOD OF WAYNE L.P.,
WYNWOOD OF WESTLAKE L.P., WYNWOOD OF WEST ORANGE, L.P. AND WYNWOOD OF WHITTIER
L.P. (collectively, the "INITIAL JOINT VENTURES") and CLARE BRIDGE OF DENVER
L.P., WYNWOOD OF BOYNTON BEACH CONGRESS L.P., WYNWOOD OF PALMER RANCH EAST L.P.,
WYNWOOD OF SARASOTA L.P., CLARE BRIDGE OF FULTON COUNTY L.P. AND WYNWOOD OF
FULTON COUNTY L.P. (the "ADDITIONAL JOINT VENTURES", and together with the
Initial Joint Ventures, the "JOINT VENTURES").
R E C I T A L S
WHEREAS, Borrower, Surety, Lender, Guarantor, Lessee, SELCO and Trustee are
party to that certain Trust Agreement dated as of July 16, 1999 (the "TRUST
AGREEMENT") pursuant to which the parties thereto have, among other things,
appointed Trustee to act as trustee.
WHEREAS, Borrower, Lessee and Lender are party to that certain Loan
Agreement dated as of July 16, 1999 (THE "LOAN AGREEMENT") pursuant to which the
Lender made the Initial Advance (as defined in the Loan Agreement) on or about
July 20, 1999, and agreed, subject to the satisfaction of certain conditions, to
make the Additional Advance (as
1
<PAGE> 2
defined in the Loan Agreement).
WHEREAS, Borrower (as Lessor) and Lessee are party to that certain Master
Lease Agreement dated as of July 16, 1999 (together with all Lease Supplements
thereto, the "MASTER LEASE") pursuant to which Borrower has leased to the
Lessee, certain Leased Properties on the initial Property Closing Date, and has
agreed to lease to the Lessee the Additional Properties on the Additional
Properties Closing Date, subject to the terms and provisions of the Master
Lease.
WHEREAS, in connection with the making of the Additional Advance and the
leasing of Additional Properties on the Additional Properties Closing Date, the
parties hereto desire to amend certain of the Transaction Documents to
effectuate the foregoing.
NOW, THEREFORE, in consideration of the foregoing and the agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed thereto in the Master
Glossary of Definitions referred to in the Trust Agreement, including any
amendments to such definitions contemplated hereby.
ARTICLE II
AMENDMENTS, CONFIRMATIONS AND ACKNOWLEDGMENTS
Section 2.1 AMENDMENTS AND CONFIRMATIONS TO TRUST AGREEMENT.
(a) Amendment of Grant of Trust Estate. The last sentence of the first
paragraph of the "Grant of Trust Estate" provision set forth at page 2 of
the Trust Agreement is hereby amended by deleting the words "clause (iii)"
in such sentence and replacing such words with the words "clause (ii)".
(b) Confirmation of Grant of Trust Estate. In accordance with the
first paragraph of the "Grant of Trust Estate" provision set forth at page
2 of the Trust Agreement, (i) as of the Additional Properties Closing Date,
each of the Settlors hereby confirms the grant of a security interest in
all Collateral set forth in such Grant of Trust Estate section of the Trust
Agreement, including, without limitation any new Collateral arising in
connection with the Additional Properties Closing Date or arising on or
after the Additional Properties Closing Date, and (ii) pursuant to this
Master Amendment, the Trustee is hereby informed of the existence of, and
the security interest in, the new Collateral acquired on or after the
Additional Properties Closing Date, which new
2
<PAGE> 3
Collateral is hereby subject to a security interest in favor of the
Trustee.
(c) Amendments to Section 3.2 of Trust Agreement. Section 3.2(a) of
the Trust Agreement is hereby amended by deleting the last sentence of
Section 3.2(a) and replacing such sentence with the following sentences:
"On the Additional Properties Closing Date, Lessee shall deposit into
the Capital Improvements Account an amount equal to $152,843.75 (the
"ADDITIONAL PROPERTIES CAPITAL IMPROVEMENTS AMOUNT"). The Additional
Properties Capital Improvement Amount shall be used to satisfy, within
180 days of Additional Properties Closing Date, those capital
improvements set forth in the Property Condition Reports prepared by
Environmental Management Group, Inc. with respect to the Additional
Properties, which capital improvements Lessee hereby agrees to
complete, in a good and workmanlike manner free of any liens or
claims. In addition to the Initial Capital Improvements Amount and
Additional Properties Capital Improvements Amount, from time to time
as required by the Flow of Funds Agreement, the Lessee shall deliver
additional monies to Trustee, which additional amounts Trustee shall
deposit in the Capital Improvements Account, and which sums, together
with the Initial Capital Improvements Amount and the Additional
Properties Capital Improvements Amount shall be designated as "CAPITAL
IMPROVEMENTS FUNDS.""
(d) Amendment to Section 3.15(a) of the Trust Agreement. Section
3.15(a) of the Trust Agreement is hereby amended by deleting the third
(3rd) sentence thereof in its entirety and replacing same with the
following:
"On the Additional Properties Closing Date, Guarantor shall deposit an
additional amount of not less than $2,500,000 (the "JV ADDITIONAL
PROPERTIES DEPOSIT") from the proceeds received from the Joint Ventures or
funded by Guarantor on the Additional Properties Closing Date into the
Operating Reserve Account, and on or before October 31, 1999 Guarantor or
Joint Ventures shall deposit into the Operating Reserve Account an amount
which, when aggregated with the JV Additional Properties Deposit, shall
equal $7,000,000 ."
(e) Amendment to Section 3.15(b) of the Trust Agreement. Section
3.15(b) of the Trust Agreement is hereby amended (A) by inserting a "(i)"
at the beginning of such Section 3.15(b) immediately prior to the words "On
November 15, 1999, Lessee shall . . .", and (B) by deleting the reference
to "$17,000,000" in the proviso to the last sentence of such Section
3.15(b)(i) and inserting in its stead the amount of "$19,000,000".
(f) Further Amendment to Section 3.15(b)(i) of the Trust Agreement.
Section 3.15(b)(i) is hereby amended to add the following sentence at the
end of the first
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<PAGE> 4
paragraph of such subsection:
"The parties hereto hereby agree that Lessee shall not receive credit
for amounts deposited into the Operating Reserve Account pursuant to
subsection 3.15(b)(ii) below in determining whether or not $19,000,000
has been deposited into the Operating Reserve Account in satisfaction
of the requirements of this first paragraph of this subsection
3.15(b)(i)."
(g) New Section 3.15(b)(ii). Section 3.15(b) is hereby further amended
to create a new subsection (ii) which shall be inserted into Section
3.15(b) at the end of such subsection, immediately above subsection
3.15(c). New subsection 3.15(b)(ii) shall read as follows:
"(ii) Commencing with January 1, 2000, and on the 5th day of each
month thereafter to and including June 1, 2001, Chicago Title
Insurance Company ("Escrow Agent") shall withdraw from the escrow fund
(the "Palmer Ranch Escrow") established under the Palmer Ranch Escrow
Agreement (hereinafter defined), and deposit $388,888 into the
Operating Reserve Account to the extent the Escrow Agent is authorized
to make a withdrawal and corresponding deposit pursuant to the terms
of that certain Escrow Agreement (Palmer Ranch) dated as of September
30, 1999 (as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms
thereof and the Trust Agreement, the "PALMER RANCH ESCROW AGREEMENT")
among Surety, Lender, Guarantor, Manor Care, Inc. and the Escrow
Agent. In addition, on June 1, 2001, the Escrow Agent shall, to the
extent required by the Palmer Ranch Escrow Agreement, deposit the
remaining portion of the Palmer Ranch Escrow, if any, into the
Operating Reserve Account. The parties hereto hereby acknowledge that
the right to receive any amounts from the Escrow Agent shall be
subject to provisions and limitation set forth in the Palmer Ranch
Escrow Agreement, and to the extent that Manor Care, Inc., Guarantor
or any of their respective affiliates satisfies the conditions to
release of the Palmer Ranch Escrow, no further funds will be deposited
into the Operating Reserve Account pursuant to the Palmer Ranch Escrow
Agreement. Amounts deposited in the Operating Reserve Account pursuant
to the provisions of this subsection 3.15(b)(ii) shall not be included
in the calculation of whether or not the $19,000,000 threshold has
been achieved in the first paragraph of subsection 3.15(b)(i) above."
(h) Amendment to Section 7.2 of the Trust Agreement. The references to
"The First National Bank of Chicago" and "One First National Plaza" in
Section 7.2 of the Trust Agreement are each hereby deleted and replaced
with "Bank One, National Association" and "1 Bank One Plaza", respectively.
Section 2.2 AMENDMENTS TO PARTICIPATION AGREEMENT.
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(a) Waiver and Amendment of Section 3.2(g) - $5,000,000 Joint Venture
Partners' Contributions. The requirement in Section 3.2(g) of the
Participation Agreement requiring that the Joint Venture partners
contribute at least $5,000,000 on the Additional Properties Closing Date is
amended by reducing the amount of such contribution to be $3,750,000 on the
Additional Properties Closing Date, so long as at least $2,500,000 of such
contribution by the Joint Ventures is deposited into the Operating Reserve
Account on the Additional Properties Closing Date in accordance with
Article III of the Trust Agreement.
(b) Amendment to Article IV of the Participation Agreement. Article IV
to the Participation Agreement is hereby amended by adding the words "and
the Additional Properties Closing Date" immediately after the words "as of
the Closing Date" and before the period in the lead in language to such
Article IV (before the beginning of Section 4.1 of such Article IV).
(c) Amendment to Section 9.5 of the Participation Agreement. Section
9.5 of the Participation Agreement is hereby amended to add the following
new subsection (d) thereto:
"(d) As soon as available, but in no event more than forty-five (45) days
after the end of each of the Guarantor's first three fiscal quarters and
within ninety (90) days after Guarantor's fourth fiscal quarter, Guarantor
shall deliver to each of Noteholder, Surety and Borrower a certificate of
compliance in the form of Exhibit A hereto (the "COMPLIANCE CERTIFICATE")
which shall set forth calculation necessary to show compliance with the
financial covenants set forth in this Section 9.5."
(d) New Section 9.11 - Joint Venture Contribution Regarding Additional
Properties. The Participation Agreement is hereby amended to insert a new
section 9.11 thereto which shall read as follows:
"Section 9.11. Additional Joint Venture Contribution. The Guarantor hereby
covenants and agrees that on or prior to October 31, 1999, either the
Guarantor or new or existing joint venture partners shall deposit into the
Operating Reserve Account in accordance with Article III of the Trust
Agreement, an amount, which when aggregated with the amount contributed by
the Joint Ventures on the Additional Closing Date shall aggregate at least
$7,000,000 in connection with the acquisition of the Additional
Properties."
(e) Amendment to Add Exhibit A to the Participation Agreement. The
Participation Agreement is hereby amended to add "Exhibit A - Compliance
Certificate" to such Agreement, a form of which is attached to this Master
Amendment.
(f) Amendment to Schedule 4.2(c)(ii) to the Participation Agreement.
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Schedule 4.2(c)(ii) to the Participation Agreement - Owner Licenses and
Permits is hereby deleted in its entirety and replaced with a new Schedule
4.2(c)(ii) to the Participation Agreement Owner Licenses and Permits
attached to this Master Amendment.
Section 2.3 AMENDMENTS TO LOAN AGREEMENT.
(a) Amendment to Definition of "Additional Properties Outside Date."
The definition of "Additional Properties Outside Date" set forth in Section
1.1 of the Loan Agreement is hereby amended to add the following words at
the end of such definition, immediately prior to the period at the end of
such definition:
"or such other date as the Lender and Borrower shall agree"
(b) Amendment to Definition of "Assignments of Memoranda of Lease."
The definition of "Assignments of Memoranda of Lease" set forth in Section
1.1 of the Loan Agreement is hereby amended to add the following words at
the end of such definition, immediately prior to the period at the end of
such definition:
"including, without limitation, any Collateral Assignments of
Memoranda of Lease executed on the Initial Closing Date and on the
Additional Properties Closing Date"
(c) Amendment to Definition of "CERCLIS". The definition of "CERCLIS"
set forth in Section 1.1 of the Loan Agreement is hereby amended by
deleting "CERCIS" and replacing same with "CERCLIS".
(d) Amendment to Definition of "Excluded Collateral". The definition
of "Excluded Collateral" set forth in Section 1.1 of the Loan Agreement is
hereby amended by adding the words "(together with any additional letter of
credit delivered in connection with the Equity Advances made on the
Additional Properties Closing Date in an amount of not more than
$5,775,000)" immediately after the words "$9,975,000 letter of credit" and
before the words "issued by Firstar Bank, Milwaukee, N.A."
(e) Amendment to Definition of "Note". The definition of "Note" set
forth in Section 1.1 of the Loan Agreement is hereby amended to add the
following words at the end of such definition, immediately prior to the
period at the end of such definition:
", as the same may be amended, modified, supplemented, renewed,
restated or replaced in accordance with the terms thereof and the
Trust Agreement, as applicable."
(f) Amendment to Definition of "Pledge Agreements". The definition of
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"Pledge Agreements" set forth in Section 1.1 of the Loan Agreement is
hereby amended to add the following words at the end of each roman numeral
subset:
", as the same may be amended, restated, supplemented or otherwise
modified from time to time, in accordance with the terms thereof and
the Trust Agreement, as applicable."
(g) Definition of "Transaction Documents". The definition of
"Transaction Documents" in Section 1.1 of the Loan Agreement is hereby
amended to insert the words ",that certain Post Closing Agreement dated as
of September 28, 1999 among the parties to the Trust Agreement" immediately
after the words "the Lease Documents" and immediately before the words "and
the Insurance Documents".
(h) Amendment to Definition of "Trustee". The definition of "Trustee"
set forth in Section 1.1 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"means Bank One, National Association, a national banking association
duly established with its principal corporate trust office located in
Chicago, Illinois (formerly known as The First National Bank of
Chicago), acting in its capacity as trustee under the Trust
Agreement."
(i) Amendment to Definition of Other Terms. The definitions of
"Participation Agreement', "Security Agreement", "Subordination of
Management Agreements", "Subleases" and "Trust Agreement" set forth in
Section 1.1 of the Loan Agreement are each hereby amended to add the
following words at the end of each of such definitions, immediately prior
to the period at the end of such definitions:
", as same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and
the Trust Agreement, as applicable."
(j) Amendment to Section 4.4 (a)(v) of the Loan Agreement. Section 4.4
(a)(v) of the Loan Agreement is hereby amended by adding the following
language at the end of such provision:
"; provided, however, that for purposes of this Section 4.4 (a)(v)
only, "Operating Expenses" shall include all Surety Premiums and
interest expenses"
(k) Amendment to Exhibit B-2 to Loan Agreement. Exhibit B-2 to Loan
Agreement - Additional Properties is hereby deleted in it entirety and
replaced with a new Exhibit B-2 to Loan Agreement - Additional Properties
attached to this Master
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Amendment.
(l) Supplement to Exhibit C to Loan Agreement. Exhibit C to Loan
Agreement - Disbursement Schedule is hereby supplemented by adding thereto
a Disbursement Schedule relating to the funding to occur on the Additional
Properties Closing Date, which supplement to Exhibit C is attached to this
Master Amendment.
(m) Amendment to Exhibit D to Loan Agreement. Exhibit D to Loan
Agreement - Ground Leases is hereby deleted in it entirety and replaced
with a new Exhibit D to Loan Agreement - Ground Leases attached to this
Master Amendment.
(n) Amendment to Exhibit E to Loan Agreement. Exhibit E to Loan
Agreement - Subleases; Sublessees is hereby deleted in it entirety and
replaced with a new Exhibit E - Subleases; Sublessees to Loan Agreement
attached to this Master Amendment.
(o) Amendment to certain Schedules to Loan Agreement. The following
Schedules to the Loan Agreement are hereby deleted in their entirety and
replaced with the following new Schedules, each of which is attached to
this Master Amendment:
Schedule 2.9(p) - Appraised Value of Individual Properties
Schedule 3.1(e) - Addresses of Lessee; Offices; Places of Business,
Location of Properties
Schedule 3.9 - Pending Matters Against Lessee of the Properties
Schedule 3.11-1 - Available Beds/Licensed Beds
Schedule 3.11-2 - List of Regulatory Permits
Schedule 3.19 - Legal Names
Schedule 3.20(a) - Schedule of Plans
Schedule 6.5 - Environmental Reports
(p) Supplement to Schedules to Loan Agreement. Schedule 3.31(d) - Rent
Rolls and Schedule 4.10 - Financial Projections are hereby supplemented by
adding thereto additional information as to rent rolls and financial
projections, respectively, relating to the funding to occur on the
Additional Properties Closing Date, which
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supplement to such Schedules 3.31 and Schedule 4.10 respectively, are
attached to this Master Agreement.
Section 2.4 AMENDMENT TO MASTER LEASE.
(a) Amendment to Exhibit B to Master Lease. Exhibit B to Master
Lease - Assigned Values is hereby deleted in its entirety and replaced with
a new Exhibit B to Master Lease - Assigned Values attached to this Master
Amendment.
(b) Amendment to Exhibit C to Master Lease. Exhibit C to Master
Lease - Ground Lease Properties is hereby amended by deleting the reference
to the Lynwood, Washington Lease Property.
(c) Amendment to Exhibit E to Master Lease. Exhibit E to Master
Lease - Percentage for Determining Maximum Lessee Risk Amount is hereby
deleted in its entirety and replaced with a new Exhibit E to Master Lease -
Percentage for Determining Maximum Lessee Risk Amount attached to this
Master Amendment.
Section 2.5 AMENDMENT TO SUBLEASE.
(a) Amendment to Exhibit B to each of Subleases. Exhibit B to
Sublease - Allocated Values is hereby deleted in its entirety and replaced,
in the case of each Sublease, with a new Exhibit B to Sublease - Allocated
Values attached to this Master Amendment.
Section 2.6 AMENDMENT TO REIMBURSEMENT AGREEMENT.
(a) Amendment to Exhibit A to Reimbursement Agreement. Exhibit A to
Reimbursement Agreement - Insurance Surety Bond is hereby supplemented to
attach thereto the First Amendment to Insurance Surety Bond, which First
Amendment is attached to this Master Amendment.
(b) Amendment to Article VI to Reimbursement Agreement. Article VI
of the Reimbursement Agreement is hereby amended to add the following
language as a lead in to such Article, immediately prior to Section 6.01:
"Each Borrower Party, as to itself, agrees with and covenants unto the
Surety that, so long as the Bond remains in effect or any Reimbursement
Obligations remains unpaid, such Borrower Party shall perform and comply,
or cause the performance and compliance, with all covenants in set forth in
this Article VI."
(c) Amendment to Article VII to Reimbursement Agreement. Article
VII. B to Reimbursement Agreement (Covenants of the Lessee) is hereby
amended by inserting
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the words "so long as the Bond remains in effect or any Reimbursement
Obligations remains unpaid," in the first line of the lead in to such
Article VII. B, immediately after the words "covenants unto the Surety" and
immediately prior to the words "that the Lessee shall perform".
(d) Amendment to certain Schedules to Reimbursement Agreement. The
following Schedules to the Reimbursement Agreement are hereby deleted in
their entirety and replaced with the following new Schedules, each of which
is attached to this Master Amendment:
Schedule 5.1(e) - Addresses of Lessee; Offices; Places of Business,
Location of Properties
Schedule 5.9 - Pending Matters Against Lessee of the Properties
Schedule 5.11-1 - Available Beds/Licensed Beds
Schedule 5.11-2 - List of Regulatory Permits
Schedule 5.19 - Legal Names
Schedule 5.20(a) - Schedule of Plans
Schedule 8.5 - Environmental Reports
(e) Supplement to Schedules to Reimbursement Agreement. Schedule
5.31(d) - Rent Rolls (Amended and Restated) and Schedule 7.10 - Financial
Projections to the Reimbursement Agreement are hereby supplemented by
adding thereto additional information as to rent rolls and financial
projections, respectively relating to the funding to occur on the
Additional Properties Closing Date, which supplement Schedules 5.31 and
Schedule 7.10 respectively, are attached to this Master Agreement.
Section 2.7 AMENDMENT TO SUBORDINATION OF MANAGEMENT AGREEMENTS.
(a) Amendment to Recitals of Subordination of Management
Agreements.
(1) The second recital to the Subordination of Management
Agreements is hereby amended by deleting the word "Pita" in the first
(1st) line thereof and replacing same with "AHC".
(2) The second, fourth and fifth recitals to the Subordination
of Management Agreements are each hereby amended by adding the words
"(or dated as of the Additional Properties Closing Date)" immediately
after the words
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"of even date herewith" in the (i) first (1st) line of such second
recital, (ii) second (2nd) line of such fourth recital and (iii)
second (2nd) line of such fifth recital.
(3) The fourth and fifth recitals to the Subordination of
Management Agreements are each hereby further amended by adding the
words "as amended or modified," (i) immediately after the word "each,"
in the definition of "JV Management Agreement" in such fourth recital
and (ii) immediately prior to the word "the" in the definition of "AHC
Management Agreement" in such fifth recital.
(b) Addition of New Section 22. The Subordination of Management
Agreements is hereby amended to add a new Section 22 thereto as follows:
"22. Each of the parties hereto acknowledge and agree that on or prior to
the Additional Properties Closing Date, new Joint Ventures will be formed
which will have an interest in the Properties financed on such Additional
Properties Closing Date, and as a condition to such funding, such new Joint
Ventures will be, and will be required to become a party to this
Subordination of Management Agreements by execution of a Joinder Agreement
in the form of Exhibit D hereto (the "JOINDER AGREEMENT") Each such party
consents to such new Joint Ventures becoming a party to this Collateral
Assignment of Management Agreements (Joint Ventures) in accordance with the
provision of this Section 22."
(c) Exhibit A to the Subordination of Management Agreements. Exhibit A
to the Subordination of Management Agreements is hereby deleted in its
entirety and replaced with a new Exhibit A to Subordination of Management
Agreements attached to this Master Amendment.
(d) Addition of Joinder Agreement. The Subordination of Management
Agreements is hereby amended to add new Exhibit D -Joinder Agreement
(Subordination of Management Agreements) thereto, a form of which is
attached to this Master Amendment.
Section 2.8 AMENDMENT TO PLEDGE AGREEMENT (JV PARTNERSHIP INTERESTS).
(a) Amendment to Recital D. The first sentence of Recital D to Pledge
Agreement (JV Partnership Interest) dated as of July 16, 1999 by Guarantor
and ALS-CLARE BRIDGE, INC., a Delaware corporation, in favor of Trustee
(the "JV PLEDGE") is hereby deleted in its entirety and replaced with the
following:
"D. The Loan is and shall be secured by, among other things, the
Mortgages (i) from Borrower and Lessee to Trustee on the date hereof
encumbering the Initial Properties and (ii) to be granted by Borrower
and Lessee
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in favor of Trustee on the Additional Properties Closing Date and
encumbering the Additional Properties (each of the foregoing
capitalized terms, as defined in the Loan Agreement). The Initial
Properties and Additional Properties shall hereinafter be referred to
collectively as the 'PROPERTIES'."
(b) Further Amendment to Recital D The second sentence of Recital D
to the JV Pledge is hereby amended by: (i) inserting the words "(or, as of
the Additional Properties Closing Date, shall be)" immediately after the
words "The Properties are..." on the third (3rd) line of said paragraph and
immediately after the words "Property is" on the fifth (5th) line of said
paragraph, and (ii) inserting the words "(or entered into as of the
Additional Properties Closing Date)" immediately after the word "herewith"
on the last line of said paragraph.
(c) Confirmation of Grant. Pursuant to Section 2 of the JV Pledge,
and in addition to the security interests in the other Collateral granted
thereunder, Guarantor hereby confirms that it has pledged, assigned and
granted to Trustee a continuing security interest in all of its right,
title and interest in and to the Partnership Interests in the Joint
Ventures (the "ADDITIONAL JOINT VENTURES") which are the sublessees of the
Additional Properties acquired by Borrower (and leased by Borrower to
Lessee) on the Additional Properties Closing Date and all of the other
Pledged Collateral relating to such Joint Ventures, all in accordance with
the terms and subject to the conditions of the JV Pledge.
(d) Acknowledgment by JVs. By execution of this Master Amendment,
each of the Additional Joint Ventures acknowledges the pledge of and
security interest in the Pledged Collateral pursuant to the JV Pledge (as
amended hereby), agrees that any inconsistency between the JV Pledge and
any Joint Venture Documents shall be construed in favor of the JV Pledge
and further acknowledges and agrees with all of the terms and conditions of
the "Acknowledgment of Joint Ventures - Part II" attached to this Master
Amendment.
(e) Acknowledgment of Joint Ventures - Part II. The JV Pledge is
hereby amended to add a new "Acknowledgment of Joint Ventures - Part II"
thereto, a form of which is attached to this Master Amendment.
(f) Exhibit A to Pledge Agreement (JV Partnership Interest).
Exhibit A to Pledge Agreement (JV Partnership Interest) is hereby deleted
in its entirety and replaced with new Exhibit A Pledge Agreement (JV
Partnership Interest).
Section 2.9 AMENDMENT TO SECURITY AGREEMENT MADE BY BORROWER.
(a) That certain Security Agreement dated as of July 16, 1999 by
Borrower in favor of Trustee is hereby amended by deleting the words
"pursuant to subleases of even date herewith" in the second to last line of
Recital C thereto and replacing such
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words with the words "pursuant to subleases dated as of July 16, 1999 and
September 28, 1999".
(b) Confirmation of Grant. Pursuant to Section 1 of the Security
Agreement referenced in clause (a) above, and in addition to the security
interests in the other Collateral granted thereunder, Borrower hereby
confirms that it has pledged, assigned and granted to Trustee a continuing
security interest in all of its right, title and interest in and to the
Collateral (as defined in such Security Agreement) relating to the
Additional Properties, all in accordance with the terms and subject to the
conditions of such Security Agreement.
Section 2.10 AMENDMENT TO SECURITY AGREEMENT MADE BY LESSEE.
(a) That certain Security Agreement dated as of July 16, 1999 by
Lessee in favor of Trustee is hereby amended by deleting the words
"pursuant to subleases of even date herewith" in the second to last line of
Recital D thereto and replacing such words with the words "pursuant to
subleases dated as of July 16, 1999 and September 28, 1999".
(b) Confirmation of Grant. Pursuant to Section 1 of the Security
Agreement referenced in clause (a) above, and in addition to the security
interests in the other Collateral granted thereunder, Borrower hereby
confirms that it has pledged, assigned and granted to Trustee a continuing
security interest in all of its right, title and interest in and to the
Collateral (as defined in such Security Agreement) relating to the
Additional Properties, all in accordance with the terms and subject to the
conditions of such Security Agreement.
Section 2.11 AMENDMENT TO COLLATERAL ASSIGNMENT OF MANAGEMENT AGREEMENT
(AHC TENANT).
(a) Collateral Assignment of Management Agreement (AHC Tenant).
The third recital of that certain Collateral Assignment of Management
Agreement (AHC Tenant) dated as of July 16, 1999 by the Lessee in favor of
the Trustee is hereby amended by adding the words "as amended, restated,
supplemented or modified in accordance with the terms thereof and the Trust
Agreement, as applicable" in the definition of "Management Agreement" on
the third line thereof immediately before the word "the" .
(b) Exhibit A to Collateral Assignment of Management Agreement
(AHC Tenant). Exhibit A to such Collateral Assignment of Management
Agreement (AHC Tenant) by the Lessee in favor of the Trustee is hereby
amended to attach thereto the amended Assisted Living Consultant and
Management Services Agreement (Post
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Sublease) between the Lessee and Alterra, which Assisted Living Consultant
Agreement shall give effect to the amendments contemplated hereby.
(c) Acknowledgment and Consent By Manager - Part II. The CollateraL
Assignment of Management Agreement (AHC Tenant) is hereby amended to add a
new "Acknowledgment and Consent By Manager - Part II" thereto, a form of
which is attached to this Master Amendment.
Section 2.12 AMENDMENT TO COLLATERAL ASSIGNMENT OF MANAGEMENT AGREEMENT
(JOINT VENTURES).
(a) The third Whereas Clause contained in that certain Collateral
Assignment of Management Agreements (Joint Ventures) dated as of July 16,
1999 by each of the limited partnerships set forth on Exhibit B thereto in
favor of the Trustee is hereby amended to delete the following language at
the end thereof:
"and a true and correct copy of each Management is attached hereto as
"Exhibit A-1" through "Exhibit A-20" and incorporated herein" and to
replace such language with the following: "which Management Agreements
are described on Exhibit A."
(b) The third Whereas Clause of such Collateral Assignment of
Management Agreements (Joint Ventures) is hereby further amended by
inserting the words ", as amended or modified," immediately prior to the
word "individually" on the fifth (5th) line thereof.
(c) New Exhibit A. The Collateral Assignment of Management
Agreements (Joint Ventures) is hereby amended to delete Exhibits A-1
through Exhibit A-20 and to replace same with a new Exhibit A - List of
Management Agreements thereto, which Exhibit A is attached to this Master
Amendment.
(d) Joinder Agreement. The Collateral Assignment of Management
Agreements (Joint Ventures) is hereby amended to add a new Section 18
thereto as follows:
"18. Each of the parties hereto acknowledge and agree that on or prior to
the Additional Properties Closing Date, new Joint Ventures will be formed
which will have an interest in the Properties financed on such Additional
Properties Closing Date, and as a condition to such funding, such new Joint
Ventures will be, and will be required to become a party to this Collateral
Assignment of Management Agreements (Joint Ventures) by execution of a
Joinder Agreement in the form of Exhibit C hereto (the "JOINDER AGREEMENT")
Each such party consents to such new Joint Ventures becoming a
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party to this Collateral Assignment of Management Agreements (Joint
Ventures) in accordance with the provision of this Section 18."
(e) Exhibit B to Collateral Assignment of Management Agreements
(Joint Ventures). Exhibit B attached to such Collateral Assignment of
Management Agreements (Joint Ventures) is hereby deleted in its entirety
and replaced with new Exhibit B to Collateral Assignment of Management
Agreements (Joint Ventures) attached to this Master Amendment.
(f) Exhibit C - Joinder Agreement. The Collateral Assignment of
Management Agreements (Joint Ventures) is hereby amended to add new Exhibit
C - Joinder Agreement Collateral Assignment of Management Agreements (Joint
Ventures) thereto, a form of which is attached to this Master Amendment.
(g) Acknowledgment and Consent By Manager - Part II. The
Collateral Assignment of Management Agreement (Joint Ventures) is hereby
amended to add a new "Acknowledgment and Consent By Manager (Joint
Ventures) - Part II" thereto, a form of which is attached to this Master
Amendment.
Section 2.13 AMENDMENT TO ASSISTED LIVING CONSULTANT AND MANAGEMENT
SERVICES AGREEMENT (POST SUBLEASE). Exhibit A to that certain Assisted Living
Consultant and Management Services Agreement (Post Sublease) dated as of July
16, 1999 between Guarantor and Lessee is hereby deleted in its entirety and
replaced with a new Exhibit A attached to this Master Amendment.
Section 2.14 AMENDMENT TO MASTER GLOSSARY OF DEFINITIONS.
(a) Definition of "Equity Commitment". The definition of "Equity
Commitment" is hereby deleted in its entirety and replaced with a new
definition as follows:
"EQUITY COMMITMENT" shall mean an amount not to exceed
$12,500,000.
(b) Definition of "Excluded Collateral". The definition of
"Excluded Collateral" is hereby amended by adding the words "(together with
any additional letter of credit delivered in connection with the Equity
Advances made on the Additional Properties Closing Date in an amount of not
more than $5,775,000)" immediately after the words "$9,975,000 letter of
credit" and before the words "issued by Firstar Bank, Milwaukee, N.A."
(c) Definition of Manager. The definition of "Manager" is hereby
amended by inserting the words " ALI Palmer Ranch East, Inc, a Delaware
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corporation," immediately after the comma after the words "a Delaware
corporation," in the first line thereof and immediately prior to the word
and any successor Manager."
(d) Definition of "Guarantor Rental Obligations". The definition
of "Guarantor Rental Obligations" is hereby amended by adding the following
words at the end of such definition, immediately prior to the period at the
end of such definition:
", net of lease income".
Section 2.15 AMENDMENT TO ALL NOTICE PROVISIONS FOR, AND ALL REFERENCES TO,
"THE FIRST NATIONAL BANK OF CHICAGO". All references (i) to "The First National
Bank of Chicago" in any of the Transaction Documents shall hereinafter be
references to "Bank One, National Association", and (ii) to The First National
Bank of Chicago's address for notice purposes in any of the Transaction
Documents are hereby deleted in their entirety and replaced with the following
name and address:
"Bank One, National Association (formerly known as The First National Bank
of Chicago), 1 Bank One Plaza, Suite 0126, Chicago, Illinois 60670, Attn:
Global Corporate Trust"
Section 2.16 WAIVER OF REIMBURSEMENT CONTRACT PROVISIONS FOR PALMER RANCH
IN LOAN AGREEMENT, REIMBURSEMENT AGREEMENT AND PARTICIPATION AGREEMENT.
Reference is made to Section 3.11 of the Loan Agreement, Section 5.1 of the
Reimbursement Agreement and Section 4.6 of the Participation Agreement
(collectively, the "LICENSING PROVISIONS"). The parties hereto hereby agree that
notwithstanding the language set forth in such Licensing Provisions, (i) each of
Borrower, Lessee, each Sublessee and/or Manager shall have until July 31, 2000
to be in compliance with all applicable Medicare Regulations and Medicaid
Regulations and receive all Reimbursement Contracts (as each such terms are
defined in the applicable Licensing Provision) with respect to Palmer Ranch and
(ii) each of Borrower, Lessee, each Sublessee and/or Manager shall have until
the expiration of the Escrow Agreement (as defined above) to comply with the
other Licensing Provisions with respect to Palmer Ranch.
Section 2.17 CONSENT TO APPOINTMENT OF SUBMANAGER. The parties hereto
hereby approve ALI Palmer Ranch East, Inc., a Delaware corporation and
wholly-owned subsidiary of Guarantor ("ALI Palmer Ranch"), as the manager of
nursing home beds within the Property known as Wynwood of Palmer Ranch East,
Sarasota, Florida (the "Palmer Ranch SNF Beds") pursuant to that certain Nursing
Facility Consultant and Management Services Agreement dated as of September 28,
1999 between Wynwood of Palmer Ranch East L.P. and ALI Palmer Ranch (the "SNF
Management Agreement"). The parties hereto further agree, notwithstanding any
provision of the Transaction Documents to the contrary, ALI Palmer Ranch and any
successor manager of the Palmer Ranch SNF Beds approved pursuant
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to the Transaction Documents shall be entitled to enter into that certain
Nursing Facility Consultant and Submanagement Services Agreement dated as of
September 28, 1999 between ALI Palmer Ranch and Manor Care of Boynton Beach,
Inc. (the "SNF Management Subcontract") without any further consent of the
parties to the Transaction Documents, provided that, (i) ALI Palmer Ranch
remains primarily obligated under the SNF Management Agreement to provide all
services which are subcontracted pursuant to the SNF Management Subcontract,
(ii) all fees payable to the submanager pursuant to the SNF Management
Subcontract are solely the responsibility of ALI Palmer Ranch and (iii) the SNF
Management Subcontract is immediately terminable by ALI Palmer Ranch upon
termination of the Management Agreement for the Palmer Ranch SNF Beds.
Section 2.18. "PARTICIPATIONS" Notwithstanding anything to the contrary in
any of the Transaction Documents (including, without limitation, Sections 9.3 of
the Participation Agreement, Sections 5.2, 5.12 and 5.13 of the Loan Agreement)
each of Borrower and SELCO (for purposes of this Section 2.17, each referred to
individually as a "BORROWER PARTY") may, on or after December 31, 1999, sell,
transfer, grant or assign participations in all or any part of their respective
interests under the Transaction Documents without the consent of the parties
hereto to a Person or Persons (each such Person hereinafter referred to as a
"SUB-PARTICIPANT"); provided that (i) such selling Borrower Party shall remain
the "Borrower", "Lessor" or "Equity Investor", as the case may be, for all
purposes under the Transaction Documents (such selling Borrower Party's
obligations under the Transaction Documents remaining unchanged) and the
sub-participant shall not constitute a Borrower, Lessor or an Equity Investor,
as the case may be, for any purposes hereunder or under any of the other
Transaction Documents, (ii) no such sub-participant shall have, or be granted,
rights to approve any amendment or waiver relating to the Transaction Document,
(iii) each such sub-participant shall be an institutional or corporate investor
meeting the criteria set forth in Section 9.3(a) of the Participation Agreement,
and (iv) there shall not be more than an aggregate of 5 sub-participants at any
one time.
In the case of any such participation, no sub-participant shall have
any rights under the Transaction Documents (each sub-participant's rights shall
be limited to rights against the Borrower Party in respect of such participation
as set forth in the participation agreement between such sub-participant and
such Borrower Party creating such sub-participation) and all amounts payable by
the Trustee under the Flow of Funds Agreement shall be determined as if such
Participant had not sold such participation; provided, however, that such
sub-participant shall be entitled to receive additional amounts under Sections
10.2 and 10.7 of the Participation Agreement on the same basis as if it were a
Borrower Party (but only to the extent that the Borrower Party would have been
entitled to receive such additional amounts with respect to the interest
participated had it not sold such participation).
Section 2.19 CONSENT TO LICENSING SUBLEASES. The parties hereto consent
to the Licensing Subleases to be entered into on the Additional Properties
Closing Date, including without limitation the Sub-Sub-Sublease (SNF) dated as
of September 28,1999 between ALI Palmer Ranch East, Inc., and Manor Care of
Boynton Beach, Inc. with respect to the Palmer
17
<PAGE> 18
Ranch SNF Beds.
ARTICLE III
RATIFICATIONS, CONFIRMATIONS AND ACKNOWLEDGMENTS; REPRESENTATION AND
WARRANTIES
Section 3.1 RATIFICATIONS, CONFIRMATION AND ACKNOWLEDGMENTS. Each of the
parties hereto hereby acknowledges that (i) it is aware of, and has reviewed the
terms of, the funding to occur on the Additional Properties Closing Date, and
(ii) it has reviewed the terms of this Master Amendment and by its execution
hereof, consents to and acknowledges the terms hereof. In connection with the
amendments contemplated hereby, and in order to induce the Lender to make the
Additional Advance contemplated on the Additional Properties Closing Date, and
to induce the Surety to issue the Amended and Restated Insurance Surety Bond and
the Amended and Restated Back-Stop Surety Bond to cover the increased amount of
the Additional Advances to be made on the Additional Properties Closing Date and
to induce Borrower to make additional Equity Advances on the Additional
Properties Closing Date, each of the parties hereto hereby confirms all of the
representations and warranties made by it in the Transaction Documents to which
it is a party, and confirms the grant of any security interest made by it in any
Transaction Document to which it is a party, and to the extent not already
covered by any security document (as amended hereby), hereby grants a security
interest in its interest, if any, in the Additional Properties and all
collateral relating thereto and located thereon. Except as expressly amended
hereby, all of the provisions of the Transaction Documents (including, without
limitation, the Guarantee) shall remain unaltered and in full force and effect,
and, as amended hereby, such Transaction Documents are in all respects agreed
to, ratified and confirmed by the parties hereto.
Section 3.2 REPRESENTATION AND WARRANTIES.
(a) Each of the parties hereto hereby represents and warrants that is
has full power and authority to execute and deliver this Master Amendment,
and upon execution hereof, this Master Amendment will constitute the valid
and binding obligation of such party, enforceable against such party in
accordance with its terms subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditor's rights.
(b) As of the date of this Master Amendment, each of the parties
hereto hereby certifies that all of the representations and warranties made
by each such party in the applicable Transaction Document to which it is a
party are true and correct as of the date hereof.
ARTICLE IV
MISCELLANEOUS
18
<PAGE> 19
Section 4.1 REFERENCES. Upon the effectiveness of this Master Amendment,
all references in any of the Transaction Documents and in all other agreements,
documents, certificates, exhibits and instruments executed pursuant thereto,
including, without limitation, references to "this Agreement," "hereunder,"
"hereof," "herein" and words of like import contained in any such Transaction
Documents shall, except where the context otherwise requires, mean and be a
reference to the applicable Transaction Document as amended hereby.
Section 4.2 COUNTERPARTS, SEVERABILITY AND EFFECTIVENESS. This Master
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement. Any provisions of this Master Amendment which are 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. This Master Amendment
shall become effective upon the execution of a copy hereof, whether by the same
or different copies, by the parties hereto.
Section 4.3 TRUSTEE. The parties hereto acknowledge and agree that Trustee
is acting not in its individual capacity, but solely in its capacity as Trustee
under the Trust Agreement, and that where there is any reference herein to
Trustee (except for any duties of the Trustee under the Sublease, of which it is
not a party) performing any activity, making any decision or determination,
approving or consenting to any matter, exercising any rights, fulfilling any
obligation, exercising any discretion or otherwise acting in any capacity,
Trustee will not take such action unless it is specifically authorized and
directed to do so in each instance pursuant to the Trust Agreement.
Section 4.4 GOVERNING LAW. THIS MASTER AMENDMENT SHALL BE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
19
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Master Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
"BORROWER":
PITA GENERAL CORPORATION,
an Illinois corporation
By: /s/ Mindy Berman
-------------------------------------
Mindy Berman
Vice President
"SURETY":
ZC SPECIALTY INSURANCE COMPANY,
a Texas corporation
By: /s/ Lynn Finkel
------------------------------------
Lynn Finkel
Vice President
"LENDER":
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
a Delaware corporation
By: /s/ Warren Ashenmil
------------------------------------
Warren Ashenmil
Senior Vice President
<PAGE> 21
"GUARANTOR":
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ David M. Boitano
--------------------------------
David M. Boitano
Senior Vice President
"LESSEE":
AHC TENANT, INC.,
a Delaware corporation
By: /s/ David M. Boitano
--------------------------------
David M. Boitano
Vice President
"SELCO":
SELCO SERVICE CORPORATION, an Ohio corporation
By: /s/ Donald C. Davis
--------------------------------
Donald C. Davis
Vice President
"TRUSTEE":
BANK ONE, NATIONAL ASSOCIATION,
with its principal office
located in Chicago, Illinois
(formerly known as THE FIRST
NATIONAL BANK OF CHICAGO), as
Trustee
By: /s/ Jeffrey L. Kinney
--------------------------------
Jeffrey L. Kinney
Vice President
<PAGE> 22
"ALS-CLARE BRIDGE"
ALS-CLARE BRIDGE INC., a Delaware corporation
By: /s/ David M. Boitano
--------------------------------
David M. Boitano
"ALS PALMER RANCH"
ALS PALMER RANCH EAST, INC.,
a Delaware corporation
By: /s/ David M. Boitano
--------------------------------
David M. Boitano
<PAGE> 23
SCHEDULE 3.1(E) TO LOAN AGREEMENT
ADDRESSES OF LESSEE; OFFICES; PLACES OF BUSINESS;
LOCATION OF PROPERTIES
ADDRESS OF PRINCIPAL PLACE OF
BUSINESS AND CHIEF
EXECUTIVE OFFICE OF LESSEE
450 North Sunnyslope Road
Suite 300
Brookfield, WI 53005
LOCATION OF PROPERTIES
1. 1935 South Federal Highway
Boynton Beach, FL 33435
(Palm Beach County)
2. 3005 S. Congress Avenue
Boynton Beach, FL 33435
(Palm Beach County)
3. 285 West Central Avenue
Brea, California 92621
(Orange County)
3. 5326 Park Road
Charlotte, NC 28209
(Mecklenburg County)
4. 7375 Stock Ranch Road
Citrus Heights, CA 95621
(Sacramento County)
5. 4375 Beech Haven Trail, SE
Smyrna, GA 30080
(Cobb County)
6. 2850 N. Academy Boulevard
Colorado Springs, CO 80917
(El Paso County)
7. 475 Irvin Court
Decatur, GA 30030
(DeKalb County)
<PAGE> 24
8. 3790 W. Quincy Avenue
Denver, CO 80236
(Denver County)
9. 880 Patricia Avenue
Dunedin, FL 34698
(Pinellas County)
10. 590 Old Hook Road
Emerson, NJ 07630
(Bergen County)
11. 1260 Hightower Trail
Atlanta, GA 30350
(Fulton County)
12. 1262 Hightower Trail
Atlanta, GA 30350
(Fulton County)
13. 18705 36th Avenue
Lynnwood, WA 98037
(Snohomish County)
14. 6145 East Arbor Avenue
Mesa, Arizona 85206
(Maricopa County)
15. 11001 Oakmont
Overland Park, Kansas 66210
(Johnson County)
16. 9296 West Union Hills Drive
Peoria, AZ 85382
(Maricopa County)
17. 3105 Plumas Street
Reno, NV 89509
(Washoe County)
18. 1127 Persinger Road, SW
Roanoke, Virginia 24015
(Roanoke County)
<PAGE> 25
19. 5111 Palmer Ranch Parkway
Sarasota, FL 34238
(Sarasota County)
20. 5511 Swift Road
Sarasota, FL 34231
(Sarasota County)
21. 21739 N. 151st Avenue
Sun City West, AZ 85375
(Maricopa County)
22. 3701 N. Swan Road
Tucson, Arizona 85718
(Pima County)
23. 820 Hamburg Turnpike
Wayne, NJ 07470
(Passaic County)
24. 27569 Detroit Road
Westlake, Ohio 44145
(Cuyahoga County)
25. 520 Prospect Avenue
West Orange, NJ 07052
(Essex County)
26. 8101 South Painter Avenue and 8132 Friends Avenue
Whittier, California 90602
(Los Angeles County)
OTHER OFFICES OF LESSEE
None.
<PAGE> 1
EXHIBIT 10.19
FIRST AMENDMENT TO AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED FINANCING AND SECURITY
AGREEMENT (herein called the "Amendment") made as of October 29, 1999, to be
effective for all purposes as of July 1, 1999, by and among ALS Holdings, Inc.,
a Delaware corporation ("Holdings"), ALS Wisconsin Holdings, Inc., a Delaware
corporation ("Wisconsin Holdings"), Bank United, individually and as agent for
itself and certain other lenders ("Agent").
W I T N E S S E T H:
WHEREAS, Holdings, Wisconsin Holdings and Agent entered into that
certain Amended and Restated Financing and Security Agreement dated as of
February 12, 1999, (as amended, supplemented, or restated to the date hereof,
the "Original Agreement"), for the purpose and consideration therein expressed,
whereby Lenders (as defined in the Original Agreement) became obligated to make
loans to Borrower (as defined in the Original Agreement) as therein provided;
and
WHEREAS, Holdings, Wisconsin Holdings and Agent desire to amend the
Original Agreement for the purposes expressed herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement, in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Agreement shall have the same meanings whenever
used in this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
"Amendment" means this First Amendment to Amended and Restated
Financing and Security Agreement.
"Agreement" means the Original Agreement as amended hereby.
<PAGE> 2
ARTICLE II.
Amendments to Original Agreement
Section 2.1. Definitions. The definition of "Stabilized Project" in
Section 1.1 of the Original Agreement is hereby amended in its entirety to read
as follows:
"Stabilized Project" means an Eligible Project with a Resident
Occupancy of at least 85% and shall include a Development Project which
(a) if the Eligible Project has fifty units or less, has either been
open fifteen months or longer or achieves a ratio of Net Operating
Income to Debt Service of not less than 1.25 to 1.00 measured at the
last day of the fifth full fiscal quarter of operations and (b) if the
Eligible Project has more than fifty units, has either been open
eighteen months or longer or achieves a ratio of Net Operating Income
to Debt Service of not less than 1.25 to 1.00 measured at the last day
of the sixth full fiscal quarter of operations."
Section 2.2. Pool A Project Covenants. Section 7.2.2 of the Original
Agreement is hereby amended by adding the following clauses (k) and (l) below:
"(k) Minimum Occupancy Requirement (Completed Project). Each
Completed Project shall maintain a minimum Resident Occupancy as of the
Operating Month shown below:
Minimum Facilities Facilities with
Occupancy with 50 51 units or
Requirement units or more
less
------------ --------------- ---------------
By 6 months 35%
By 9 months 50% 35%
By 12 months 75% 50%
By 15 months 85% 75%
By 18 months 85%
<PAGE> 3
(l) Minimum Occupancy Requirement (Acquisition Project). Each
Acquisition Project shall maintain a minimum Resident Occupancy as of
the Operating Month shown below:
Minimum Facilities Facilities with
Occupancy with 50 51 units or
Requirement units or more
less
--------------- ------------- ---------------
By 6 months 35%
By 9 months 50% 35%
By 12 months 75% 50%
By 15 months 85% 75%
By 18 months 85%
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become effective as
of July 1, 1999, when, and only when, Agent shall have received, at Agent's
office, a counterpart of this Amendment executed and delivered by Holdings,
Wisconsin Holdings and each Lender.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of the Borrower. In order
to induce each Lender to enter into this Amendment, the Borrower represents and
warrants to each Lender that:
(a) The representations and warranties contained in Article V of the
Original Agreement are true and correct at and as of the time of the
effectiveness hereof.
(b) The Borrower is duly authorized to execute and deliver this
Amendment and is and will continue to be duly authorized to perform its
obligations under the Agreement. The Borrower has duly taken all corporate
action necessary to authorize the execution and delivery of this Amendment and
to authorize the performance of the obligations of the Borrower hereunder.
(c) The execution and delivery by the Borrower of this Amendment, the
performance by the Borrower of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not conflict with any
provision of law, statute, rule or regulation or of the articles of
incorporation and bylaws of the Borrower, or of any material agreement,
judgment, license, order or
<PAGE> 4
permit applicable to or binding upon the Borrower, or result in the creation of
any lien, charge or encumbrance upon any assets or properties of the Borrower.
Except for those which have been obtained, no consent, approval, authorization
or order of any court or governmental authority or third party is required in
connection with the execution and delivery by the Borrower of this Amendment or
to consummate the transactions contemplated hereby.
(d) When duly executed and delivered, each of this Amendment and the
Agreement will be a legal and binding obligation of the Borrower, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of creditors'
rights and by equitable principles of general application.
(e) The audited annual consolidated financial statements of the
Borrower dated as of December 31, 1998 and the unaudited quarterly consolidated
financial statements of the Borrower dated as of June 30, 1999 fairly present
the consolidated financial position at such dates and the consolidated statement
of operations and the changes in consolidated financial position for the periods
ending on such dates for the Borrower. Copies of such financial statements have
heretofore been delivered to each Lender. Since such dates no material adverse
change has occurred in the financial condition or businesses or in the
consolidated financial condition or businesses of the Borrower.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. The Original Agreement as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Financing Agreement in any Financing Document shall be deemed to be a
reference to the Original Agreement as hereby amended. The execution, delivery
and effectiveness of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of Lenders under the
Financing Agreement or any other Financing Document nor constitute a waiver of
any provision of the Financing Agreement or any other Financing Document.
Section 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of the Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full.
Section 5.3. Financing Documents. This Amendment is a Financing
Document, and all provisions in the Financing Agreement pertaining to Financing
Documents apply hereto.
Section 5.4. Governing Law. This Amendment shall be governed by and
construed in accordance the laws of the State of Texas and any applicable laws
of the United States of America in all respects, including construction,
validity and performance.
Section 5.5. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. This Amendment may be validly executed by facsimile or
other electronic transmission.
<PAGE> 5
THIS AMENDMENT AND THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
Section 5.6. Consent by Lenders. Each Lender is executing this
Amendment to evidence their acknowledgment of, and consent to, the amendments to
the Original Agreement contained herein.
[The Remainder Of This Page Has Been Intentionally Left Blank.]
<PAGE> 6
IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
ALS HOLDINGS, INC.
By: /s/ Mark W. Ohlendorf
------------------------
Name: Mark W. Ohlendorf
Title: Vice President
ALS WISCONSIN HOLDINGS, INC.
By: /s/ Mark W. Ohlendorf
------------------------
Name: Mark W. Ohlendorf
Title: Vice President
BANK UNITED, AS AGENT AND
INDIVIDUALLY AS A LENDER
By: /s/ Casey Moore
------------------------
Name: Casey Moore
Title: Vice President
FIRSTAR BANK MILWAUKEE N.A.
By: /s/ Thomas V. Richtman
------------------------
Name: Thomas V. Richtman
Title: Vice President
AMSOUTH BANK
By: /s/ Allison J. Sanders
------------------------
Name: Allison J. Sanders
Title: Vice President
<PAGE> 7
CONSENT AND AGREEMENT OF GUARANTOR
Alterra Healthcare Corporation, a Delaware corporation, hereby consents
to the provisions of this Amendment and the transactions contemplated herein,
and hereby ratifies and confirms the Guaranty of Payment Agreement dated as of
February 12, 1999, made by it for the benefit of Agent and the Lenders, and
agrees that its obligations and covenants thereunder are unimpaired hereby and
shall remain in full force and effect.
ALTERRA HEALTHCARE CORPORATION
By: /s/ Mark W. Ohlendorf
------------------------------------
Name: Mark W. Ohlendorf
Title: Senior Vice President
<PAGE> 1
EXHIBIT 10.20
FIRST AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT
THIS FIRST AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT (herein
called the "Amendment") made as of October 29, 1999, to be effective for all
purposes as of July 1, 1999, by and among Alterra Healthcare Corporation, a
Delaware corporation, formerly known as Alternative Living Services, Inc.
("Guarantor"), Bank United, individually and as agent for itself and certain
additional lenders ("Agent").
W I T N E S S E T H:
WHEREAS, ALS Holdings, Inc., a Delaware corporation, ALS Wisconsin
Holdings, Inc., a Delaware corporation and Agent entered into that certain
Amended and Restated Financing and Security Agreement dated as of February 12,
1999, (as amended, supplemented, or restated to the date hereof, the "Financing
Agreement"), for the purpose and consideration therein expressed, whereby
Lenders (as defined in the Original Agreement) became obligated to make loans to
Borrower (as defined in the Financing Agreement) as therein provided; and
WHEREAS, in connection with the transactions contemplated by the
Financing Agreement, Guarantor executed and delivered to Agent, for the benefit
of Lenders, that certain Guaranty of Payment Agreement dated as of February 12,
1999 (as amended, supplemented or restated to the date hereof, the "Original
Guaranty"), pursuant to which Guarantor guaranteed the payment and performance
of all obligations of Borrower under the Financing Agreement; and
WHEREAS, Guarantor and Agent desire to amend the Original Guaranty to
amend the ratio of EBITDAR to Interest and Rent;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Guaranty, in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Guaranty. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Guaranty shall have the same meanings whenever used in
this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
<PAGE> 2
"Amendment" means this First Amendment to Guaranty of Payment
Agreement.
"Guaranty" means the Original Guaranty as amended hereby.
ARTICLE II.
Amendments to Original Guaranty
Section 2.1. Financial Covenants.
(a) Section 3.2.3 of the Original Guaranty is hereby amended in its
entirety to read as set forth below:
"Maintain a minimum ratio of (a) EBITDAR for the four
consecutive fiscal quarters ending on any Calculation Date to (b) the
sum of Interest plus Rent, all for the four consecutive fiscal quarters
ending on such Calculation Date, of not less than the ratio for the
applicable period set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including 1.4 to 1.0
September 30, 1999
through and including
December 31, 2000
From and including 1.5 to 1.0
January 1, 2001 and thereafter
</TABLE>
For purposes of this Section 3.2.3, the term "Calculation Date" shall
mean the last date of each fiscal quarter of Guarantor."
(b) The Original Guaranty is hereby amended by adding the following
Section 3.2.3A immediately following Section 3.2.3 thereof:
"3.2.3A Minimum Liquidity.
Maintain Liquidity, at all times during the term of the Credit
Facility, measured quarterly, of not less than the greater of (a) $15,000,000 or
(b) the Guarantor's Debt Service for the ninety (90) day period beginning on the
date of determination. For purposes of this Section 3.2.3A, the term `Liquidity'
shall mean, at any time, the sum of (i) all cash of the Guarantor at such time
plus (ii) seventy-five percent (75%) of the aggregate costs (as determined in
accordance with GAAP) expended by Guarantor with respect to all Facilities owned
by the Guarantor at such time that are not subject to a Lien (including any such
Facilities that are under construction). The term `Guarantor's Debt Service'
means, with respect to any period, the sum of all lease payments and
<PAGE> 3
interest and principal payments payable during such period on the aggregate
indebtedness of the Guarantor for Facilities that, at the time of determination,
do not constitute Guarantor's Stabilized Projects. The term `Guarantor's
Stabilized Project' means any Facility owned by Guarantor that (i) has a
Resident Occupancy of at least 95% and (ii) has achieved a ratio of Net
Operating Income to Debt Service of not less than 1.25 to 1.00 measured for
three consecutive months. The computation of the financial test set forth in
this Section shall be based on the Guarantor's quarterly financial statements
delivered to Lenders and the information used in the preparation thereof."
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become effective as
of July 1, 1999, when, and only when, Agent shall have received, at Agent's
office, a counterpart of this Amendment executed and delivered by Guarantor and
each Lender.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of Guarantor. In order to
induce each Lender to enter into this Amendment, Guarantor represents and
warrants to each Lender that:
(a) The representations and warranties contained in Article II of the
Original Guaranty are true and correct at and as of the time of the
effectiveness hereof.
(b) Guarantor is duly authorized to execute and deliver this Amendment
and is and will continue to be duly authorized to perform its obligations under
the Guaranty. Guarantor has duly taken all corporate action necessary to
authorize the execution and delivery of this Amendment and to authorize the
performance of the obligations of Guarantor hereunder.
(c) The execution and delivery by Guarantor of this Amendment, the
performance by Guarantor of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not conflict with any
provision of law, statute, rule or regulation or of the articles of
incorporation and bylaws of Guarantor, or of any material agreement, judgment,
license, order or permit applicable to or binding upon Guarantor, or result in
the creation of any lien, charge or encumbrance upon any assets or properties of
Guarantor. Except for those which have been obtained, no consent, approval,
authorization or order of any court or governmental authority or third party is
required in connection with the execution and delivery by Guarantor of this
Amendment or to consummate the transactions contemplated hereby.
(d) When duly executed and delivered, each of this Amendment and the
Guaranty
<PAGE> 4
will be a legal and binding obligation of Guarantor, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights and by
equitable principles of general application.
(e) The audited annual consolidated financial statements of Guarantor
dated as of December 31, 1998 and the unaudited quarterly consolidated financial
statements of Guarantor dated as of June 30, 1999 fairly present the
consolidated financial position at such dates and the consolidated statement of
operations and the changes in consolidated financial position for the periods
ending on such dates for Guarantor. Copies of such financial statements have
heretofore been delivered to each Lender. Since such dates no material adverse
change has occurred in the financial condition or businesses or in the
consolidated financial condition or businesses of Guarantor.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. The Original Guaranty as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Guaranty in any Financing Document shall be deemed to be a reference to
the Original Guaranty as hereby amended. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of Lenders under the Financing
Agreement, the Guaranty, or any other Financing Document nor constitute a waiver
of any provision of the Financing Agreement, the Guaranty or any other Financing
Document.
Section 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of Guarantor herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full.
Section 5.3. Financing Documents. This Amendment is a Financing
Document, and all provisions in the Financing Agreement pertaining to Financing
Documents apply hereto.
Section 5.4. Governing Law. This Amendment shall be governed by and
construed in accordance the laws of the State of Texas and any applicable laws
of the United States of America in all respects, including construction,
validity and performance.
Section 5.5. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. This Amendment may be validly executed by facsimile or
other electronic transmission.
THIS AMENDMENT AND THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
<PAGE> 5
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
Section 5.6. Consent of Lenders. Each Lender is executing this
Amendment to evidence its acknowledgment of, and consent to, the amendments to
the Original Guaranty contained herein.
[The Remainder Of This Page Has Been Intentionally Left Blank.]
<PAGE> 6
IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
ALTERRA HEALTHCARE CORPORATION
By: /s/ Mark W. Ohlendorf
-------------------------------------
Name: Mark W. Ohlendorf
Title: Senior Vice President
BANK UNITED, AS AGENT AND
INDIVIDUALLY AS A LENDER
By: /s/ Casey Moore
-------------------------------------
Name: Casey Moore
Title: Vice President
FIRSTAR BANK MILWAUKEE N.A.
By: /s/ Thomas V. Richtman
-------------------------------------
Name: Thomas V. Richtman
Title: Vice President
AMSOUTH BANK
By: /s/ Allison J. Sanders
-------------------------------------
Name: Allison J. Sanders
Title: Vice President
<PAGE> 1
EXHIBIT 11.1 COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
1999 1998 1999 1998
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Basic:
Net income attributable to common shares............. $ 5,024 $ 5,821 $11,290 $ 14,279
============= ============= ============= ==============
Weighted average common shares outstanding........... 22,085 21,946 22,085 21,876
============= ============= ============= ==============
Per share amount..................................... $ 0.23 $0.27 $ 0.51 $ 0.65
============= ============= ============= ==============
Diluted:
Net income........................................... $ 5,024 $ 5,821 $11,290 $14,279
Net effect of convertible debentures based on the
if-converted method, assuming 100% conversion:
$35,000,000, 6.75%, due 2006..................... 391 630 1,173 1,890
$50,000,000, 7.0%, due 2004...................... 587 947 1,761 2,841
$143,750,000, 5.25%, due 2002.................... 1,295 2,089 2,885 6,267
------------- ------------- ------------- --------------
Net income (loss) attributable to common shares...... $ 7,297 $ 9,487 $17,109 $ 25,277
============= ============= ============= ==============
Weighted average common shares outstanding........... 22,085 21,946 22,085 21,876
Net effect of convertible debentures based on the
if-converted method, assuming 100% conversion:
$35,000,000, 6.75%, due 2006..................... 1,717 1,710 1,717 1,714
$50,000,000, 7.0%, due 2004...................... 2,469 2,469 2,469 2,469
$143,750,000, 5.25%, due 2002.................... 5,000 5,000 5,000 5,000
Net effect of dilutive stock options based on the
Treasury stock method, using average market price.. 177 463 282 510
------------- ------------- ------------- --------------
Totals........................................... 31,488 31,588 31,553 31,569
============= ============= ============= ==============
Per share amount..................................... $ 0.23 $ 0.30 $ 0.54 $ 0.80
============= ============= ============= ==============
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statements of operations of Altera
Healthcare Corporation filed with the Company's Form 10-Q for the period ended
September 30, 1999 and is qualified in its entirety by reference to such
financial statements and related footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> SEP-30-1999
<CASH> 28,046
<SECURITIES> 0
<RECEIVABLES> 8,057
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 99,125
<PP&E> 834,505
<DEPRECIATION> (34,851)
<TOTAL-ASSETS> 976,233
<CURRENT-LIABILITIES> 75,423
<BONDS> 642,704
0
0
<COMMON> 179,164
<OTHER-SE> 10,319
<TOTAL-LIABILITY-AND-EQUITY> 976,233
<SALES> 274,922
<TOTAL-REVENUES> 274,922
<CGS> 0
<TOTAL-COSTS> 247,887
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,150
<INCOME-PRETAX> 24,399
<INCOME-TAX> 9,272
<INCOME-CONTINUING> 15,127
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 3,837
<NET-INCOME> 11,290
<EPS-BASIC> 0.51
<EPS-DILUTED> 0.50
</TABLE>
