<PAGE> 1
EXHIBIT 10.1
LOAN NO. 20-199
LOAN AGREEMENT
BETWEEN
HELLER HEALTHCARE FINANCE, INC.,
A DELAWARE CORPORATION
AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS WHO HEREAFTER
BECOME PARTIES TO THIS AGREEMENT
AS LENDERS
AND
AHC BORROWER I, INC.,
A DELAWARE CORPORATION
AS BORROWER
$45,000,000 LOAN
ALTERRA PORTFOLIO OF THIRTEEN
ASSISTED LIVING FACILITIES
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS.......................................................................................1
ARTICLE I The Loan.............................................................................2
ARTICLE II Security...........................................................................10
ARTICLE III Conditions Precedent..............................................................10
ARTICLE IV Representations and Warranties.....................................................13
ARTICLE V Affirmative Covenants...............................................................18
ARTICLE VI Negative Covenants.................................................................21
ARTICLE VII Events of Default; Acceleration of Indebtedness; Remedies.........................24
ARTICLE VIII Assignment and Participation.....................................................26
ARTICLE IX Miscellaneous......................................................................37
</TABLE>
LIST OF EXHIBITS, SCHEDULES AND RIDERS
EXHIBIT A-1 - Legal Description of Pool 1 Properties
EXHIBIT A-2 - Legal Description of Pool 2 Properties
EXHIBIT B - Reporting Guidelines
EXHIBIT C - Litigation
EXHIBIT D - Release Price and Proportionate Exit Fee for Each of the
Properties
EXHIBIT E - AHC Properties
EXHIBIT F - Joint Ventures
SCHEDULE I - Calculation of Net Operating Income
SCHEDULE II - Index of Defined Terms
RIDER - Senior Housing Rider
<PAGE> 3
LOAN NO. 20-199
LOAN AGREEMENT
This LOAN AGREEMENT (this "AGREEMENT") is made this 28th day
of August, 2000 between AHC BORROWER I, INC., a Delaware corporation
("BORROWER"), the financial institutions who are or hereafter become parties to
this Agreement as Lenders (as defined below) and HELLER HEALTHCARE FINANCE,
INC., a Delaware corporation (in its individual capacity, "HELLER"), as the
"AGENT" and a Lender.
RECITALS
A. Lenders have agreed to make a loan (the "LOAN") to Borrower
in the aggregate principal amount of FORTY-FIVE MILLION and No/100 Dollars
($45,000,000.00), which Loan is comprised of a "POOL 1 LOAN" in the aggregate
principal amount of TWENTY-FOUR MILLION EIGHT HUNDRED TWENTY THOUSAND and No/100
Dollars ($24,820,000.00) and a "POOL 2 LOAN" in the aggregate principal amount
of TWENTY MILLION ONE HUNDRED EIGHTY THOUSAND and No/100 Dollars
($20,180,000.00), each subject to the terms and conditions contained herein. The
Loan is evidenced on the Closing Date by that certain Promissory Note A of even
date herewith in the original principal amount of THIRTY-SIX MILLION and No/100
Dollars ($36,000,000.00) ("NOTE A"), and by that certain Subordinated Promissory
Note B of even date herewith in the original principal amount of NINE MILLION
and No/100 Dollars ($9,000,000.00) ("NOTE B") (Note A and Note B and all
amendments thereto and substitutions therefor (including those described in
Section 1.9 below) are hereinafter collectively referred to as the "NOTES"). The
terms and provisions of the Notes are hereby incorporated herein by reference in
this Agreement.
B. Borrower is the owner of the real property more
particularly described on Exhibit A-1 hereto (collectively called the "POOL 1
PROPERTIES") and the real property more particularly described on Exhibit A-2
hereto (collectively called the "POOL 2 PROPERTIES"; the Pool 1 Properties and
Pool 2 Properties are sometimes referred to collectively as the "PROPERTIES" and
individually as a "PROPERTY"), and the assisted living facilities and other
improvements located on the Properties (collectively called the "IMPROVEMENTS").
The Properties and the Improvements are sometimes collectively called the
"PROJECT".
C. The Properties listed on Exhibit F hereto (the "JV
PROPERTIES") are each leased pursuant to a Lease Agreement (the "JV LEASES") by
Borrower, as landlord, to the limited partnership or limited liability company
listed on Exhibit F (each, a "JOINT VENTURE"), as tenant. Each Joint Venture has
entered into an Assisted Living Consultant and Operations Agreement with Alterra
with respect to the Property and Improvements it leases. Each Joint Venture has
entered into a Subordination, Nondisturbance and Attornment Agreement (each, an
"SNDA") with Agent.
<PAGE> 4
D. Borrower will use the proceeds of the Loan to pay a portion
of the purchase price of the Properties to Alterra Healthcare Corporation
("ALTERRA").
E. Borrower's obligations under the Loan will be secured by,
among other things, (a) a first priority Mortgage, Assignment of Rents and
Security Agreement (or a document of similar title) of even date herewith
(individually, a "MORTGAGE" and collectively, the "MORTGAGES") encumbering each
Property and the Improvements located thereon, (b) an Assignment of Leases and
Rents of even date herewith (collectively, the "ASSIGNMENTS OF LEASES")
encumbering each Property and the Improvements located thereon, (c) a Stock
Pledge Agreement of even date herewith (the "PLEDGE") by Alterra of 100% of the
stock of AHC Purchaser Holding, Inc. ("AHC Holding"), and (d) an Assignment of
LLC Units or an Assignment of Partnership Interest, as applicable, with respect
to Alterra's interest in each of the Joint Ventures (the "ASSIGNMENTS"). This
Agreement, the Note, the Mortgages, the Assignments of Leases, the Environmental
Indemnity, the Guaranty, the Pledge, the Assignments and any other documents
evidencing or securing the Loan or executed in connection therewith, and any
modifications, renewals and extensions thereof, are referred to herein
collectively as the "LOAN Documents."
F. "AGENT" means Heller in its capacity as agent for the
Lenders under this Agreement and each of the other Loan Documents and any
successor in such capacity appointed pursuant to Section 8.2 below. "LENDER" or
"LENDERS" means Heller in its individual capacity and its successors and
permitted assigns pursuant to Section 8.1 below.
G. An index of defined terms appears on the attached Schedule
II.
NOW, THEREFORE, in consideration of the foregoing and the
mutual conditions and agreements contained herein, the parties agree as follows:
ARTICLE I
THE LOAN
1.1. DISBURSEMENTS.
1.1.1. INITIAL POOL 1 FUNDING. On the Closing Date, Lenders
shall disburse to Borrower from the proceeds of the Pool 1 Loan an amount up to
TWENTY-FOUR MILLION FIVE HUNDRED TWENTY THOUSAND and No/100 Dollars
($24,520,000.00) (the "INITIAL POOL 1 FUNDING AMOUNT"). "CLOSING DATE" means the
date of disbursement of the Initial Pool 1 Funding Amount.
1.1.2. POOL 2 FUNDINGS. Absent a default hereunder or under
any of the other Loan Documents, Lenders shall disburse to Borrower from the
proceeds of the Pool 2 Loan an amount equal to seventy percent (70%) of
Borrower's cost of acquisition and/or development of each Pool 2 Property and
Improvements at the time: (a) such Property and Improvements are open for
business, in compliance with all applicable laws, covenants, conditions and
restrictions, subdivision requirements and environmental requirements, and have
a certificate of occupancy and all applicable licenses, including licenses
necessary to
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<PAGE> 5
operate an assisted living facility and, where such services are to be provided,
all applicable approvals and licenses to provide care for residents with
Alzheimer's disease or other forms of dementia (copies of which certificate and
licenses shall have been delivered to Lender), and Borrower shall have delivered
to Agent a legal opinion from Borrower's local counsel in a form acceptable to
Agent stating that Borrower and/or the manager or operator of such facility
holds all healthcare licenses necessary for the operation of an assisted living
facility, including a facility providing Alzheimer's or dementia care where
applicable, (b) (i) such Property and Improvements have achieved an occupancy
level of at least twenty percent (20%) for each of the thirty (30) days
preceding disbursement or (ii) at least twenty-five percent (25%) net
pre-leasing as evidenced by signed resident agreements and resident cash
deposits of at least $500 per occupant as of the opening date of such Property,
(c) Borrower has delivered to Agent a date-down endorsement to the title policy
for such Property (including full mechanic's and materialman's lien coverage) as
well as an update of the survey of such Property if the survey previously
delivered to Agent is more than ninety (90) days old, each in form and substance
satisfactory to Agent, (d) Borrower has delivered to Agent evidence reasonably
satisfactory to Agent substantiating Borrower's cost of acquisition and
development of such Property, (e) Borrower has delivered to Agent UCC, tax,
judgment lien and bankruptcy searches as Agent may require, showing no
unpermitted liens, (f) Borrower has delivered to Agent a current property
condition report for such Property which is acceptable to Agent, and (g)
Borrower has delivered to Agent such other documents as Agent may reasonably
require to evidence Borrower's satisfaction of the foregoing requirements. The
aggregate amount to be funded (excluding the Interest Reserve and Working
Capital Reserve described below) for Pool 2 Properties shall not exceed EIGHTEEN
MILLION THREE HUNDRED EIGHTY THOUSAND and No/100 Dollars ($18,380,000.00) (the
"INITIAL POOL 2 FUNDING AMOUNT"). The Initial Pool 2 Funding Amount with respect
to each Pool 2 Property and Improvements thereon shall not exceed the applicable
amount set forth on Exhibit D hereto. Lenders shall have no obligation to fund
any of the Initial Pool 2 Funding Amount after May 31, 2001.
1.1.3. WORKING CAPITAL RESERVE AND INTEREST RESERVE. A portion
of the proceeds of the Pool 1 Loan in the amount of Three Hundred Thousand and
No/100 Dollars ($300,000.00) shall not be advanced by Lenders and said amount
shall be retained to fund an interest reserve for the Pool 1 Properties other
than the JV Properties (and each Funded Pool 2 Property) (the "INTEREST
RESERVE") and shall be advanced by Lenders to pay the interest due on that
portion of the Pool 1 Loan advanced with respect to the Pool 1 Properties other
than the JV Properties (and the Pool 2 Loan, upon commencement of funding
thereof) to the extent that such interest for a calendar month exceeds the
greater of (i) Net Cash Flow from the Pool 1 Properties other than the JV
Properties (and all Funded Pool 2 Properties) for such calendar month, or (ii)
the Net Cash Flow from the Project, for such calendar month, subject to the
terms hereof.
A portion of the proceeds of the Pool 2 Loan in the amount of
9.79% of the actual Initial Pool 2 Funding Amount advanced for each Pool 2
Property (the "POOL 2 HOLDBACK") shall not be advanced by Lenders and said
amount shall be retained and disbursed as follows: 22.22% of the Pool 2 Holdback
for each Pool 2 Property shall be
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<PAGE> 6
retained to fund a working capital reserve for the Pool 2 Properties (the
"WORKING CAPITAL RESERVE") and shall be advanced by Lenders to pay the lesser of
(i) the ordinary and necessary operating expenses of each Pool 2 Property for
which a portion of the Pool 2 Loan is disbursed pursuant to Subsection 1.1.2
herein (each, a "FUNDED POOL 2 PROPERTY") (the "OPERATING EXPENSES") to the
extent that they exceed Gross Revenue (as hereinafter defined) from the Funded
Pool 2 Properties, or (ii) the negative Net Cash Flow from the Project, for a
calendar month, subject to the terms hereof. 77.78% of the Pool 2 Holdback for
each Pool 2 Property shall be added to the Interest Reserve.
Lenders shall not be required to make any other disbursements
from the Working Capital Reserve or the Interest Reserve, except as set forth
above.
Absent a default hereunder or under any of the other Loan
Documents, Lenders shall disburse the Working Capital Reserve subject to the
following conditions:
(a) At least ten (10) business days prior to the date of any
disbursement for Operating Expenses, Borrower shall have provided Agent
with a written request for payment together with operating statements
for each of the Pool 1 Properties, the Funded Pool 2 Properties and the
remainder of the Project (all in form and substance acceptable to
Agent) showing such working capital needs;
(b) Agent shall have approved the Operating Expense for which
the disbursement is being used, which approval shall not be
unreasonably withheld;
(c) Disbursements for Operating Expenses shall be made no more
than once a month, with the final disbursement to be made no later than
March 1, 2002; and
(d) The aggregate disbursements from the Working Capital
Reserve shall not exceed 22.22% of the Pool 2 Holdback for the Funded
Pool 2 Properties.
Absent a default hereunder or under any of the other Loan
Documents, Lenders shall make disbursements from the Interest Reserve on the
applicable Due Date for the payment of interest due on the Loan, in accordance
with Section 1.4 hereof. Disbursements from the Interest Reserve shall be made
no more than once a month, with the final disbursement to be made no later than
March 1, 2002. The aggregate disbursements from the Interest Reserve shall not
exceed Three Hundred Thousand and No/100 Dollars ($300,000.00) plus 77.78% of
the Pool 2 Holdback for the Funded Pool 2 Properties. Nothing in this subsection
1.1.3 shall be deemed to relieve Borrower of its obligation to timely pay all
interest which comes due on or before March 1, 2002, to the extent Lenders are
not obligated under the foregoing provisions of this subsection to fund it. If
Borrower has not paid all interest due on the Loan on the due date pursuant to
Section 1.4, and if Lenders make an advance of interest under this subsection
which is greater than the required amount of such advance, then upon
determination and notification thereof by Agent to Borrower, Borrower shall
repay the excess advance within two (2) Business Days after Borrower's receipt
of such notice. Such repayment shall constitute a permitted prepayment
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<PAGE> 7
of principal, without Exit Fees and without penalty of any sort, notwithstanding
any other provision of this Agreement or the Notes to the contrary. For example:
if prior to any Pool 2 Loan advance, on the first day of a
calendar month, $100.00 of interest had accrued for the prior
month (the "PRIOR MONTH") on the portion of the Pool 1 Loan
advanced with respect to the Pool 1 Properties other than the
JV Properties; and the Borrower paid no interest on such day;
and Lenders advanced the entire $100.00 of interest due on
that day (there being sufficient funds remaining in the
Interest Reserve to do so): and the financial reports for the
Project for the Prior Month received by Agent by the end of
the month following the Prior Month show that the Net Cash
Flow from the Pool 1 Properties other than the JV Properties
for the Prior Month was $30.00 (and that the Net Cash Flow for
the Project for the Prior Month was less than $30.00). The
entire advance of $100.00 would be added to the principal
balance of the Loan on the date of the advance. If Agent sends
Borrower a notice stating that the Interest Reserve was
overadvanced by $30.00, Borrower would then be obligated to
pay back the $30.00 within two (2) Business Days after
Borrower received such notice. Upon receipt of the $30.00 by
Agent, the principal balance would be reduced as of that date
by $30.00, the Interest Reserve would be increased by the
$30.00 repayment, and such partial prepayment of principal
would be allowed without penalty of any sort and without the
applicability of any Exit Fee. Nothing in this example should
be construed to either (i) relieve Borrower of its obligation
to have paid the $30.00 on the first day of the month
following the Prior Month, or (ii) require Lenders to have
advanced the $30.00.
"NET CASH FLOW" for any period means all gross revenue ("GROSS
REVENUE") collected from or in connection with the Project during such period
(including rents, other occupancy payments, fees and other amounts paid by
residents of the Project, expense reimbursements, interest income and forfeited
security deposits); less (a) Operating Expenses actually paid during such period
(including a management fee not to exceed five percent (5%) of effective gross
income), and (b) deposits into reserves approved by Agent or required by the
Loan Documents; provided, however, that amounts included in such reserves shall
not also be included as an expense upon disbursement from such reserves.
1.1.4. LENDERS' OBLIGATIONS ARE SEVERAL, NOT JOINT.
Notwithstanding any other provision of this Article I to the contrary, each
Lender's agreement to make disbursements of the Loan under this Agreement shall
be several, and not joint, and in the amount of their respective Pro Rata Share
of the amount of such disbursement.
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1.2. LOAN TERM.
MATURITY DATE. The Loan shall mature on August 31, 2003 (the
"MATURITY DATE") or any earlier date on which the Loan shall be required to be
paid in full, whether by acceleration or otherwise.
1.3. INTEREST RATE. Borrower shall pay interest on the outstanding
principal balance of the Loan at a floating rate per annum equal to the Base
Rate plus three and forty-five one-hundredths percent (3.45%) (the aggregate
rate referred to as the "INTEREST RATE"). "BASE RATE" shall mean the rate
published each day in The Wall Street Journal for notes maturing three (3)
months after issuance under the caption "Money Rates, London Interbank Offered
Rates (LIBOR)". The Interest Rate for each calendar month shall be fixed based
upon the Base Rate published prior to and in effect on the first (1st) business
day of such month; provided, however, the Interest Rate for August, 2000 shall
be fixed based upon the Base Rate published prior to and in effect on the first
(1st) business day prior to the Closing Date. Interest shall be calculated based
on a 360 day year and charged for the actual number of days elapsed.
1.4. PAYMENTS.
1.4.1. INTEREST PAYMENTS. Borrower shall make interest
payments monthly in arrears on the first (1st) day of each month, commencing on
October 1, 2000, computed on the outstanding principal balance of the Loan at
the Interest Rate.
1.4.2. PRINCIPAL PAYMENTS. Beginning on March 1, 2002 and on
the first (1st) day of each month thereafter until the Maturity Date, Borrower
shall make monthly principal amortization payments each in an amount equal to
the outstanding principal balance of the Loan on the last day of February, 2002
(excluding accrued interest due and payable March 1, 2002), divided by 300
(representing a twenty-five (25) year straight-line amortization); provided,
however, if any portion of the principal balance of the Loan is subsequently
prepaid in accordance with Section 1.6 below, the required monthly payment of
principal shall be reduced by the same proportion as the prepaid principal is to
the outstanding principal balance immediately prior to such prepayment.
1.5. SOURCES AND USES. The sources and uses of funds for the
contemplated transaction are as follows:
<TABLE>
<CAPTION>
SOURCES USES
------- ----
<S> <C> <C> <C>
Loan: Cash to Borrower: $23,570,000
-- Initial Funding (Pool 1) $24,520,000 Pool 2 Loan $18,380,000
--Aggregate Initial Funding Reserves: $ 2,100,000
(Pool 2) $18,380,000 Lender Fee: $ 450,000
Holdbacks: Lender Closing Costs: $ 350,000
--Interest (Pool 1) $ 300,000 Other Closing Costs: $ 150,000
--Pool 2 $ 1,800,000
Total: $45,000,000 Total: $45,000,000
</TABLE>
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<PAGE> 9
Borrower shall deliver such information and documentation as
Agent shall request to verify that the sources and uses are as indicated above.
A reduction in project costs for the Pool 2 Properties shall result in an equal
reduction in the amount of the Loan.
1.6. PREPAYMENTS OF LOAN. Borrower may not prepay any of the
outstanding principal balance of the Loan prior to March 1, 2001. Thereafter,
Borrower may prepay the outstanding principal balance of the Loan in full at any
time; provided Borrower gives Agent at least thirty (30) days prior written
notice and pays Agent, for the benefit of Lenders, the Exit Fee then due. After
March 1, 2001 Borrower may prepay the outstanding principal balance of the Pool
1 Loan and/or Pool 2 Loan in part at any time upon at least thirty (30) days
prior written notice thereof, and, so long as no default exists hereunder or
under any of the other Loan Documents, Agent shall release those certain Pool 1
Properties and/or Pool 2 Properties requested by Borrower, upon Borrower's
satisfaction of each of the following conditions precedent, each as determined
by Agent:
1.6.1. Lenders shall have disbursed the entire Initial Pool 2
Funding Amount;
1.6.2. Borrower shall pay the Release Price associated with
each Property to be released, in the amounts set forth on Exhibit D hereto;
1.6.3. The amount of debt to be repaid in any single repayment
shall not be less than $10,000,000;
1.6.4. After the repayment, the outstanding principal balance
of the Loan shall not be less than $10,000,000;
1.6.5. The remaining Properties shall have achieved a Debt
Coverage Ratio of at least 1.05:1.00 or the level otherwise required by Section
7.1(i) herein for the immediately preceding three (3) months, whichever is
higher;
1.6.6. The Debt Coverage Ratio achieved by the remaining
Properties for the immediately preceding three (3) months shall not be lower
than the Debt Coverage Ratio achieved by the remaining Properties together with
the Properties to be released for the immediately preceding three (3) months;
provided, however, this requirement shall not apply if the remaining Properties
achieved a Debt Coverage Ratio of at least 1.15:1.00 and a Project Yield of at
least twelve percent (12%), each over the immediately preceding three (3)
months;
1.6.7. The Net Value of the AHC Properties shall meet or
exceed the requirements of Section 1.7.2 herein based upon the Debt Coverage
Ratio of the remaining Properties for the preceding three (3) months;
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1.6.8. The remaining Properties shall provide a Project Yield
of at least eleven percent (11%) for the immediately preceding three (3) months;
1.6.9. Borrower shall pay Agent, for the benefit of Lenders,
an amount equal to the Proportionate Exit Fee with respect to the Properties
being released as set forth on Exhibit D hereto; and
1.6.10. Alterra (or an affiliate of Alterra) shall have
acquired, free and clear of all liens and encumbrances and rights to purchase
(other than those in favor of Agent), all partnership and membership interests
(of every sort and nature) in all of the Joint Ventures, and either enter into
an Assignment thereof in favor of Agent satisfactory to Agent, or cancel all of
the JV Leases and have Borrower enter into Management Contracts with Alterra
with respect to such Properties (together with Collateral Assignments of
Management Agreements in favor of Agent with respect thereto).
"DEBT COVERAGE RATIO" means the ratio of (i) Net Operating
Income from the Project for a particular period, to (ii) payments of interest
and principal due on the Loan for the same period; provided, however, solely for
purposes of calculating the Debt Coverage Ratio, the interest rate in effect for
any period shall be deemed not to be greater than the initial Interest Rate plus
two percent (2%) and not less than the initial Interest Rate less two percent
(2%).
"PROJECT YIELD" means the quotient, of (x) the Net Operating
Income for the applicable period from the Properties subject to the Loan, as
determined by Agent's audit, at Borrower's expense, or as determined by Agent,
divided by (y) the then current outstanding principal balance of the Loan plus
all accrued but unpaid interest thereon.
1.7. AHC PROPERTIES. Borrower represents and warrants to Agent and
Lenders that AHC Purchaser, Inc. ("AHC") owns the real property listed on
Exhibit E hereto (the "AHC PROPERTIES"), subject to the GMAC Loan, but free of
all loans and security interests in favor of others, other than real estate
taxes not yet due and payable and purchase money financing and liens permitted
under the GMAC Loan Documents. A breach of any of the following requirements
with respect to the AHC Properties, AHC Holding or AHC, as determined by Agent,
shall be a default under this Agreement:
1.7.1. None of the AHC Properties may hereafter be sold,
transferred, encumbered, ground leased, master leased or refinanced without
Agent's and Requisite Lenders' prior written consent; provided, however, so long
as Borrower provides Agent with reasonable advance notice thereof together with
such financial information or other evidence as Agent may reasonably require to
show that following any such transaction the Net Value of the AHC Properties
will continue to meet or exceed the amounts required under subsection 1.7.2
below, then AHC may enter into such a transaction.
1.7.2. The market value of the AHC Properties, net of AHC's
aggregate liabilities, including without limitation, the GMAC Loan (the "NET
VALUE"), all as determined by Agent based in part on historical operating
statements for such Properties,
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shall not be less than the value specified below corresponding to the actual
Debt Coverage Ratio of the Project for the immediately preceding three (3)
months:
<TABLE>
<CAPTION>
Debt Coverage Ratio of the Project Minimum Net Value of AHC Properties
---------------------------------- -----------------------------------
<S> <C>
less than 1.00:1.00 $20,000,000
1.00:1.00 $15,000,000
1.05:1.00 $10,000,000
1.10:1.00 $ 5,000,000
1.20:1.00 $ 0
</TABLE>
1.7.3. AHC shall maintain a debt service coverage ratio (Net
Operating Income for the AHC Properties divided by payments of interest and
principal due on any loans encumbering the AHC Properties for the same period)
of at least 1.35:1.00; provided, however, solely for purposes of calculating the
debt service coverage ratio, the interest rate in effect for any period shall be
deemed not to be greater than the interest rate under the GMAC Loan in effect on
the Closing Date, plus two percent (2%), and not less than the interest rate
under the GMAC Loan in effect on the Closing Date, less two percent (2%).
1.7.4. Borrower shall deliver to Agent, at least thirty (30)
days after the end of each calendar quarter and seven (7) days prior to each
Initial Pool 2 Funding Amount disbursement, financial reports for AHC Holding,
AHC and the AHC Properties, in a form acceptable to Agent, demonstrating
compliance with the above requirements for the previous three (3) months.
1.7.5. "GMAC LOAN" means a certain loan or loans made by GMAC
Commercial Mortgage Corporation ("GMAC") to AHC in the aggregate principal
amount of Sixty Million Dollars ($60,000,000.00) evidenced by a Loan Agreement
dated as of January 28, 2000 and the "Loan Documents" as defined therein.
1.7.6. Not more often than once per quarter Borrower may
request the right to substitute other properties for one or more of the AHC
Properties, subject to the following conditions: (i) all Pool 2 Properties must
be Funded Pool 2 Properties before Borrower shall make any such request; (ii)
Agent may accept or deny such request in its sole but reasonable discretion;
(iii) Agent shall determine the value of the AHC Property to be released and the
properties to be added in its sole reasonable discretion; (iv) Borrower shall
provide Agent with any information regarding such properties reasonably
requested by Agent, including without limitation, appraisals, environmental
reports and engineering reports, all to be prepared at Borrower's sole cost; (v)
regardless of whether or not Agent accepts or denies Borrower's request,
Borrower shall reimburse Agent for all reasonable costs incurred by Agent in
evaluating such request, including without limitation, legal fees, accounting
audits, appraisals and any costs in connection with the negotiation or
preparation of documents; (vi) if Agent accepts such request, all documentation
shall be in a form reasonably required by
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Agent and Borrower shall pay all taxes, filing fees and recording fees in
connection with the substitution; and (vii) if Agent accepts such request,
Borrower shall remain bound by the conditions of this Section 1.7, which
conditions shall apply to both the remaining AHC Properties, if any, and the
substituted properties. Notwithstanding Borrower's rights above to substitute
the AHC Properties, Borrower shall have no right to substitute any of the
Properties constituting the Project.
1.8. EXIT FEE. As additional consideration for entering into this
Agreement and making the Loan, Borrower shall, on the date payment in full of
the Loan is made, pay to Agent for the benefit of Lenders, an amount (the "FINAL
EXIT FEE") equal to (A) Four Hundred Fifty Thousand and No/100 Dollars
($450,000.00), less (B) the sum of the Proportionate Exit Fees, if any, paid to
Agent, for the benefit of Lenders, pursuant to Section 1.6 above, plus (C) if
the Loan is repaid in full prior to March 1, 2001, the amount of interest Agent
estimates would have been payable under this Agreement with respect to the Loan
from and after the date the Loan is repaid in full through February 28, 2001
(whether at maturity, prepayment, acceleration or otherwise).
1.9. DELIVERY OF NOTES. Borrower shall execute and deliver to each
Lender a Note or Notes to evidence the Loan, such Note(s) to be in the principal
amount of such Lender's Pro Rata Share of the Loan. In the event of an
assignment under Section 8.1 below, Borrower shall, upon surrender of the
assigning Lender's Note(s), issue new Note(s) to reflect the interests of the
assigning Lender and the Person to which interests are to be assigned.
ARTICLE II
SECURITY
2.1. COLLATERAL. The Loan and all other indebtedness and obligations
under the Loan Documents shall be secured by the following (collectively, the
"COLLATERAL"): (a) the Mortgages, (b) the Assignments of Leases, (c) the Pledge,
(d) the Assignments, and (e) any other collateral or security described in this
Agreement or reasonably required by Agent or Lenders in order to secure the Loan
as contemplated by this Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Lenders' obligation to disburse the Initial Pool 1 Funding
Amount and each disbursement of the Pool 2 Loan is subject to satisfaction of
all of the following conditions:
3.1. LOAN DOCUMENTS. Agent shall have received the following Loan
Documents, all in form and substance satisfactory to Agent:
(a) this Agreement;
(b) the Notes;
(c) the Mortgages;
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(d) the Assignments of Leases;
(e) such Uniform Commercial Code financing statements as
Lender may require;
(f) a guaranty (the "GUARANTY") executed by Alterra;
(g) a hazardous wastes indemnity agreement ("ENVIRONMENTAL
INDEMNITY") executed by Borrower and Alterra;
(h) an assignment of the management contract for each Property
(collectively, the "MANAGEMENT CONTRACTS") between Borrower or a Joint
Venture, as applicable, and Alterra as manager;
(i) the Pledge;
(j) the Assignments and the SNDAs; and
(k) Subordination Agreements with respect to any leases or
subleases of the Properties located in California, Kansas, Florida and
Texas, executed by Borrower as lessor, or a Joint Venture, as sublessor,
and Alterra as tenant (collectively, the "SUBORDINATIONS").
3.2. BORROWER'S EQUITY. On the Closing Date, Agent shall have received
evidence satisfactory to Agent that Borrower has invested cash equity in the
Project in an aggregate amount not less than Fifteen Million and No/100 Dollars
($15,000,000.00) ("BORROWER'S EQUITY").
3.3. APPRAISAL. Agent shall obtain an appraisal report for the Project,
in form and content acceptable to Agent, prepared by an independent MAI
appraiser in accordance with the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA") and the regulations promulgated pursuant to such act.
3.4. TITLE POLICY AND ENDORSEMENTS. Agent shall have received a
commitment for title insurance in an amount and issued by a title insurance
company satisfactory to Agent. On the Closing Date, Agent shall receive title
insurance policies (collectively, the "TITLE POLICY"), acceptable to Agent,
insuring marketability of title and insuring that the lien of each of the
Mortgages is a valid first lien on the respective Property, subject only to
exceptions to title approved by Agent. The Title Policy shall also contain any
reinsurance and endorsements required by Agent including without limitation
creditors' rights, zoning 3.1 (with parking), negative amortization, survey,
access, tax parcel, subdivision, contiguity, non-imputation, variable rate,
usury, last dollar, first loss, tie-in, subsequent disbursements and extended
coverage endorsements (Comprehensive Form 1), to the extent available in the
state where the respective Property is located.
3.5. SURVEY. Agent shall have received and approved a survey of each of
the Properties and the Improvements thereon, dated no more than forty-five (45)
days prior to
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the Closing Date, prepared by a registered land surveyor in accordance with the
1992 American Land Title Association/ American Congress on Surveying and Mapping
Standards and certified in favor of Lenders and Agent and the title insurer. The
surveyor shall certify that each Property is not in a flood hazard area as
identified by the Secretary of Housing and Urban Development. The surveys shall
be sufficient for the title insurer to remove the general survey exception.
3.6. ENVIRONMENTAL REPORT. Agent shall have received a Phase I
Environmental audit of each of the Properties. The audit shall (i) be addressed
to Agent and Lenders; (ii) state that Agent and Lenders may rely thereon; and
(iii) be acceptable to Agent in its sole discretion.
3.7. LEASES. All leases, licenses and other agreements with regard to
the occupancy of each of the Properties (whether entered into by Borrower, a
Joint Venture or Alterra), including patient and resident care agreements and
service agreements which include an occupancy agreement (collectively, "LEASES")
shall be in form and substance reasonably acceptable to Agent, except for
month-to-month non-residential leases of less than 500 square feet ("EXCLUDED
LEASES"). Borrower shall submit for Agent's approval a copy of the form of
residential Lease Borrower proposes to utilize at each of the Properties, and
all residential Leases entered into after the Closing Date shall be on forms
reasonably approved by Agent without material modifications. Agent must approve
all non-residential Leases of any part of the Project (other than Excluded
Leases). On the Closing Date: (a) all existing Leases (other than Excluded
Leases) shall be in full force and effect and (b) Borrower shall submit a
certified rent roll for each of the Pool 1 Properties, certifying that all
existing Leases are listed therein. If any non-residential Leases (other than
Excluded Leases) exist or are hereafter entered into with respect to a Property,
each tenant thereunder shall execute and deliver to Agent prior to the Closing
or prior to execution thereof by Borrower, as applicable, a subordination and
attornment agreement in a form acceptable to Agent.
3.8. INSURANCE. Borrower shall have provided Agent with and Agent shall
have approved copies of certificates evidencing the insurance policies required
to be delivered pursuant to the Mortgages.
3.9. COMPLIANCE WITH LAWS. Borrower shall have submitted and Agent
shall have approved (a) a final certificate of occupancy (or the equivalent) for
each of the Properties and the Improvements thereon for which a disbursement has
been made, (b) evidence satisfactory to Agent that each of the Properties and
the Improvements thereon comply in all material respects with all applicable
laws (including, without limitation, all building, zoning, density, land use,
ordinances, regulations and planning requirements), covenants, conditions and
restrictions, subdivision requirements (including, without limitation, parcel
maps), and environmental impact and other environmental requirements.
3.10. COMMITMENT FEE. Borrower shall have paid Agent a commitment fee
in the amount of Four Hundred Fifty Thousand and No/100 Dollars ($450,000.00)
which commitment fee shall be nonrefundable and shall be deemed fully earned
upon receipt.
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3.11. AUDIT REQUIREMENT. Agent shall have received an audit of the
Project which is satisfactory to Agent.
3.12. MANAGEMENT CONTRACTS. Agent shall have approved the Management
Contracts.
3.13. GMAC LOAN DOCUMENTS. The documents evidencing the GMAC Loan
shall be acceptable to Agent and shall permit the execution and performance of
the Pledge.
3.14. ADDITIONAL ITEMS. Agent shall have received such other items as
Agent may reasonably require.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
As an inducement to Lenders to disburse the Loan, Borrower
hereby represents and warrants to Lenders and Agent as follows, which
representations and warranties shall be true as of the date hereof and shall
remain true throughout the term of the Loan:
4.1. BORROWER EXISTENCE. Borrower is a corporation duly formed,
validly existing and in good standing under the laws of the State of Delaware
with its principal place of business in Milwaukee, Wisconsin. Borrower is in
good standing and authorized to transact business in each of the states in which
the Properties are located. The Loan Documents have each been duly authorized,
executed and delivered and each constitutes the duly authorized, valid and
legally binding obligation of Borrower and the Principals, as the case may be,
enforceable against Borrower and the Principals, as the case may be, in
accordance with their respective terms.
4.2. STOCKHOLDERS.
4.2.1. STOCKHOLDER'S EXISTENCE. Alterra is a corporation duly formed,
validly existing and in good standing under the laws of the State of Delaware
with its principal place of business in Milwaukee, Wisconsin. Alterra is in good
standing and authorized to transact business in Wisconsin and in each of the
other states in which the Properties and its other material assets are located.
4.2.2. PRINCIPALS. "PRINCIPALS" shall mean Alterra, AHC, AHC Holding
and each Joint Venture.
4.2.3. OWNERSHIP OF BORROWER. Alterra owns one hundred percent (100%)
of the issued and outstanding stock in Borrower free and clear of all liens,
claims, encumbrances and rights of others.
4.3. AUTHORITY. The Board of Directors of Borrower and the Executive
Committee thereof shall have authority to make all material business decisions
(including a sale or refinance) for Borrower during the term of the Loan.
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4.4. CORPORATE DOCUMENTS. A true and complete copy of the articles
of incorporation and by-laws, partnership agreements and operating agreements,
as applicable, of Borrower and each Principal and all other documents creating
and governing Borrower and each Principal, respectively, including without
limitation, the Subscription Agreement between Alterra and various accredited
investors referencing a delivery date not later than December 31, 1999, the
Subscription Agreement (Second Offering) between Alterra and various accredited
investors referencing a delivery date not later than February 4, 2000 and the
Joint Venture Agreement dated as of March 31, 1999 between Alterra (then known
as Alternative Living Services, Inc.) and Elderly Living VIII, Limited
Partnership (the "JOINT VENTURE AGREEMENT") (collectively, the "INCORPORATION
DOCUMENTS") have been furnished to Agent. There are no other agreements, oral or
written, among any of the owners of any ownership interests in Borrower, AHC
Holding or AHC relating to any of them. There are no other agreements to which
Alterra or any Joint Venture is a party which would affect, modify or supercede
the Incorporation Documents of Alterra or any Joint Venture. The Incorporation
Documents were duly executed and delivered, are in full force and effect, and
binding upon and enforceable in accordance with their terms. The Incorporation
Documents constitute the entire understanding among the shareholders of
Borrower, AHC and AHC Holding, respectively. No breach exists under the
Incorporation Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time would constitute a breach under
the Incorporation Documents.
4.5. OTHER AGREEMENTS. Neither Borrower nor any Principal (excluding
Alterra) is in default under any material contract, agreement or commitment to
which it is a party. Alterra is not in default, beyond any applicable notice and
cure periods, under any material contract, agreement or commitment to which it
is a party. The execution, delivery and compliance with the terms and provisions
of this Agreement and the Loan Documents will not (i) to the best of Borrower's
knowledge, violate any provisions of law or any applicable regulation, order or
other decree of any court or governmental entity, or (ii) conflict or be
inconsistent with, or result in any default under, any contract, agreement or
commitment to which Borrower or any Principal is bound. Borrower has delivered
to Agent copies of any agreements (including leases) between Borrower and any
Affiliate related in any way to the Project and any other agreements or
documents materially affecting the use and operation of the Project.
4.6. PROPERTIES. Fee simple title to each Property is owned by
Borrower free and clear of all liens, claims, encumbrances, covenants,
conditions and restrictions, security interests and claims of others, except
only such exceptions shown on the Title Policy (subject to Borrower's
obligations herein to remove any mechanic's liens or other title exceptions) as
have been approved in writing by Agent. To the best of Borrower's knowledge,
each Pool 1 Property and the Improvements thereon is in compliance in all
material respects with all zoning requirements, building codes, subdivision
improvement agreements, and all covenants, conditions and restrictions of
record. On or before the Initial Pool 2 Funding Amount is disbursed for a
particular Pool 2 Property, such Pool 2 Property and the Improvements thereon
will be, to the best of Borrower's knowledge, in compliance in all material
respects with all zoning requirements, building codes, subdivision improvement
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agreements, and all covenants, conditions and restrictions of record. The zoning
and subdivision approval of each Property and the right and ability to, use or
operate the Improvements are not in any way dependent on or related to any real
estate other than such Property. To the best of Borrower's knowledge, there are
no, nor are there any alleged or asserted, violations of law, regulations,
ordinances, codes, permits, licenses, declarations, covenants, conditions, or
restrictions of record, or other agreements relating to the Project, or any part
thereof.
4.7. PROPERTY ACCESS. Each Property is accessible through fully
improved and dedicated roads accepted for maintenance and public use by the
public authority having jurisdiction.
4.8. UTILITIES. All utility services necessary and sufficient for
the use or operation of each Property and the Improvements thereon are available
including water, storm, sanitary sewer, gas, electric and telephone facilities.
4.9. FLOOD HAZARDS/WETLANDS. No Property is situated in an area
designated as having special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended, or as a wetlands by any governmental entity
having jurisdiction over any Property.
4.10. TAXES/ASSESSMENTS. There are no unpaid or outstanding real
estate or other taxes or assessments on or against any Property or Improvements
or any part thereof, except general real estate taxes not yet due or payable.
Copies of the current general real estate tax bills with respect to each
Property and the Improvements thereon have been delivered to Agent. Said bills
cover the entire Project and do not cover or apply to any other property. There
is no pending or contemplated action pursuant to which any special assessment
may be levied against any portion of the Project.
4.11. EMINENT DOMAIN. There is no eminent domain or condemnation
proceeding pending or, to the best of Borrower's knowledge threatened, relating
to any Property or Improvements.
4.12. LITIGATION.
4.12.1. Except as set forth in Exhibit C, there is no litigation,
arbitration or other proceeding or governmental investigation pending or, to the
best of Borrower's knowledge, threatened against or relating to Borrower or any
of its property, assets, or business, including the Project, which if decided
adversely would affect the business, affairs, assets or financial condition of
Borrower, the Project, or the prospects for repayment of the Loan.
4.12.2. Except as set forth in Exhibit C, there is no litigation,
arbitration or other proceeding or governmental investigation (collectively, a
"PROCEEDING") pending or, to the best of Borrower's knowledge, threatened
against or relating to Alterra or any of its property, assets, or business and
for which Alterra's insurance company has designated a
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reserve greater than $500,000 or which, if decided adversely would reasonably be
expected to result in liability to Alterra in excess of $500,000.
4.12.3. Except as set forth in Exhibit C, there is no Proceeding
pending or, to the best of Borrower's knowledge, threatened against or relating
to AHC, AHC Holding or any of their respective property, assets, or business,
including the AHC Properties, which if decided adversely would reasonably be
expected to have a material adverse effect on the business, affairs, assets or
financial condition of AHC, AHC Holding, the AHC Properties, or the prospects
for repayment of the GMAC Loan. For purposes of this subsection 4.12.3 only, an
uninsured claim in excess of $250,000 arising out of any Proceeding shall be
deemed to have a material adverse effect.
4.13. ACCURACY. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement furnished to Agent by
Borrower or the Principals contains any untrue statement of a material fact or
omits to state a material fact which would affect any Lenders' decision to make
the Loan.
4.14. FOREIGN OWNERSHIP. Neither Borrower nor any Principal is or
will be held, directly or indirectly, by a "FOREIGN CORPORATION", "FOREIGN
PARTNERSHIP", "FOREIGN TRUST", "FOREIGN ESTATE", "FOREIGN PERSON", "AFFILIATE"
of a "FOREIGN PERSON" or a "UNITED STATES INTERMEDIARY" of a "FOREIGN PERSON"
within the meaning of IRC Sections 897 and 1445, the Foreign Investments in Real
Property Tax Act of 1980, the International Foreign Investment Survey Act of
1976, the Agricultural Foreign Investment Disclosure Act of 1978, or the
regulations promulgated pursuant to such Acts or any amendments to such Acts.
4.15. SOLVENCY. Neither Borrower, nor any Principal is insolvent and
there has been no: (i) assignment made for the benefit of the creditors of any
of them; (ii) appointment of a receiver for any of them or for the property of
any of them; or (iii) bankruptcy, reorganization, or liquidation proceeding
instituted by or against any of them.
4.16. FINANCIAL STATEMENT/NO CHANGE. Borrower has heretofore
delivered to Agent copies of the financial statements dated June 30, 2000 of
Borrower, Alterra and AHC. Said financial statements were prepared on a basis
consistent with that of preceding years, and all of such financial statements
present fairly the financial condition of Borrower, Alterra and AHC as of the
dates in question and the results of operations for the periods indicated. Since
the dates of such statements, there has been no material adverse change in the
business or financial condition of either Borrower, Alterra or AHC. Neither
Borrower nor Alterra nor AHC has any material contingent liabilities not
provided for or disclosed in said financial statements. AHC has delivered
collateral value statements for the AHC Properties prepared on a basis which is
acceptable to Agent and certified as true and correct by AHC. There has been no
material adverse change since June 30, 2000 in the business operations, credit,
prospects or financial condition of Borrower, Alterra, AHC or the Project.
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4.17. SINGLE ASSET ENTITIES.
4.17.1. Borrower: (i) does not hold, directly or indirectly,
any ownership interest (legal or equitable) in any real or personal property
other than the interest which it owns in the Project, any personal property used
in connection therewith, any Leases thereof and any contract rights with respect
thereto; (ii) is not a shareholder or partner or member of any other entity; and
(iii) does not conduct any business other than the ownership, management and
operation of the Property.
4.17.2. AHC: (i) does not hold, directly or indirectly, any
ownership interest (legal or equitable) in any real or personal property other
than the interest which it owns in the AHC Properties, the Improvements thereto,
any personal property used in connection therewith, any Leases thereof and any
contract rights with respect thereto; (ii) is not a shareholder or partner or
member of any other entity; (iii) does not conduct any business other than the
ownership, management and operation of the AHC Properties; and (iv) does not
have any employees.
4.17.3. AHC Holding: (i) does not hold, directly or indirectly,
any ownership interest (legal or equitable) in any real or personal property
other than the interest which it owns in AHC; (ii) is not a shareholder or
partner or member of any entity other than AHC; (iii) does not conduct any
business other than the ownership of the stock of AHC; (iv) does not have any
outstanding debts or liabilities, other than a pledge of the stock of AHC in
favor of GMAC; and (v) does not have any employees.
4.17.4. Each Joint Venture (i) does not hold, directly or
indirectly, any ownership interest (legal or equitable) in any real or personal
property other than the interest which it owns as tenant in the corresponding
Property listed on Exhibit F; (ii) is not a shareholder or partner or member of
any other entity; (iii) does not conduct any business other than pursuant to its
tenancy of its respective JV Property; and (iv) does not have any employees.
4.18. NO BROKER. No brokerage commission or finder's fee is owing to
any broker or finder arising out of any actions or activity of Borrower in
connection with the Loan.
4.19. YEAR 2000 COMPLIANCE. Borrower has made an assessment of the
microchip and computer-based systems and the software used in its business and
has determined that it is "YEAR 2000 COMPLIANT". For purposes of this paragraph,
"YEAR 2000 COMPLIANT" means that all software, embedded microchips and other
processing capabilities utilized by, and material to the business operations or
financial condition of, Borrower are able to interpret, store, transmit, receive
and manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenarios in relation to dates in and after the Year
2000. Borrower is not aware of any circumstances that would be reasonably likely
to result in a material adverse change in the business or financial condition of
Borrower as a result of Borrower's failure to become Year 2000 Compliant prior
to January 1, 2000. Borrower will promptly notify Agent if Borrower becomes
aware of any such circumstances after the date hereof.
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4.20. EMPLOYEES. Borrower does not have any employees and shall not
have any employees until after the date on which the entire principal balance of
the Loan and all interest thereon and all other sums due pursuant to the Loan
Documents have been repaid in full (the "REPAYMENT DATE").
4.21. AHC HOLDING AND AHC. AHC Holding is a corporation, duly formed,
validly existing and in good standing under the laws of the State of Delaware
with its principal place of business in Milwaukee, Wisconsin. AHC is a
corporation, duly formed, validly existing and in good standing under the laws
of the State of Delaware with its principal place of business in Wichita,
Kansas. AHC is in good standing and authorized to transact business in each of
the states in which the AHC Properties are located. The execution and
performance of the Pledge by Alterra will not violate, be in conflict with, or
result in a default under, any contract, agreement or commitment to which any
Principal or Borrower is bound. Alterra owns 100% of the outstanding capital
stock of AHC Holding free and clear of any liens, encumbrances or rights to
purchase. AHC Holding owns 100% of the outstanding capital stock of AHC free and
clear of any liens, encumbrances or rights to purchase except for a pledge
thereof to GMAC as security for the GMAC Loan. No person or entity has any right
to have any capital stock of AHC or AHC Holding issued (whether through the
exercise of options, warrants or otherwise). AHC owns fee simple title to the
AHC Properties. AHC does not have any liabilities other than the GMAC Loan,
which is not greater than Sixty Million and No/100 Dollars ($60,000,000.00), and
indebtedness permitted by the GMAC Loan Documents. Neither AHC nor AHC Holding
is in default of any of its obligations under or with respect to the GMAC Loan
or any other material agreement, instrument or other document to which AHC or
AHC Holding is bound or by which any property of AHC or AHC Holding is
encumbered.
4.22. JOINT VENTURES. The Joint Venture tenants listed on Exhibit F
are either limited partnerships or limited liability companies, as applicable,
duly formed, validly existing and in good standing under the laws of the State
of Delaware and in good standing in the state in which their respective tenancy
exists, with their respective principal places of business in the state in which
their respective tenancy exists. The execution and performance of the SNDAs by
the Joint Ventures will not violate, be in conflict with, or result in a default
under, any contract, agreement or commitment to which Borrower or any Principal
is bound. Alterra is the general partner or manager of each Joint Venture.
ARTICLE V
AFFIRMATIVE COVENANTS
5.1. INSPECTION. Subject to the rights of tenants under Leases,
Agent and its and Lenders' authorized agents may enter upon and inspect the
Project at all reasonable times upon notice given orally or in writing to
Borrower. Agent, at Borrower's expense, shall retain one or more independent
consultants to periodically inspect the Project and all documents, drawings,
plans, and consultants' reports relating thereto. On the first (1st) day of each
month during the term of the Loan, Borrower shall pay to Agent, in addition to
all other amounts due under the Loan Documents, the sum of Two Hundred Fifty and
No/100 Dollars ($250.00) for each Pool 1 Property and Funded Pool 2 Property,
which Agent shall
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apply against the cost of the aforesaid inspections. If Agent does not inspect a
particular Pool 1 Property or Funded Pool 2 Property at least once per year,
Agent shall refund the inspection fees for such Property paid by Borrower for
such year.
5.2. BOOKS AND RECORDS/AUDITS. Borrower shall keep and maintain at
all times at Borrower's address stated below, or such other place as Agent may
approve in writing, complete and accurate books of accounts and records adequate
to reflect the results of the operation of the Project on a Property-by-Property
basis (including computations of Net Cash Flow) and to provide the financial
statements required to be provided to Agent pursuant to Section 5.3 below and
copies of all written contracts, correspondence, reports of Agent's independent
consultant, if any, and other documents affecting the Project. Agent and its
designated agents shall have the right to inspect and copy any of the foregoing.
Additionally, Agent may audit and determine, in Agent's sole and absolute
discretion, the accuracy of Borrower's records and computations. The costs and
expenses of the audit shall be paid by Borrower if the audit discloses a
monetary variance in any financial information or computation (including the
computation of Net Cash Flow) equal to or greater than the greater of: (i) five
percent (5%); or (ii) Twenty-Five Thousand and No/100 Dollars ($25,000.00) more
than any computation submitted by Borrower.
5.3. FINANCIAL STATEMENTS; BALANCE SHEETS. Borrower shall furnish to
Agent and shall cause the Principals to furnish to Agent such financial
statements and other financial information as Agent may from time to time
reasonably request. All such financial statements shall show all material
contingent liabilities and shall accurately and fairly present the results of
operations and the financial condition of Borrower at the dates and for the
period indicated. Without limitation of the foregoing, Borrower shall furnish to
Agent and shall cause Principals to furnish to Agent the following statements:
5.3.1. MONTHLY AND ANNUAL OPERATING STATEMENTS. Statements of
the operation of the Project and of the AHC Properties (including monthly
operating statements and monthly schedules of receivables) as of the last day of
each month, to be delivered within thirty (30) days after the end of each month
and certified by Borrower or AHC, as applicable, as true, correct, and complete,
and yearly statements of the operation of the Project and of the AHC Properties,
to be delivered within ninety (90) days after the end of each fiscal year and
certified by Borrower or AHC, as applicable, as true, correct, and complete. A
current, certified rent roll for the Project shall be delivered to Agent prior
to the funding of any Pool 2 Property and upon Agent's written request.
5.3.2. ANNUAL BALANCE SHEETS AND FINANCIAL STATEMENTS. Within
ninety (90) days of the end of each fiscal year of Alterra: (i) annual audited
consolidated financial statements of Alterra, prepared in accordance with
generally accepted accounting principles and fairly presenting in all material
respects the consolidated financial position of Alterra and its consolidated
subsidiaries; and (ii) annual unaudited financial statements of Borrower, AHC
and AHC Holding, prepared on a basis consistent with Alterra's financial
statements and fairly presenting the financial position of Borrower, AHC or AHC
Holding, as applicable.
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5.3.3. AUDITS. If Borrower fails to furnish or cause to be
furnished promptly any report required by this Section 5.3, or if Agent
reasonably deems such reports to be unacceptable as to form or scope, Agent may
elect (in addition to exercising any other right and remedy) to conduct an audit
of all books and records of Borrower and/or such other Principal which in any
way pertain to the Project and to prepare the statement or statements which
Borrower failed to procure and deliver. Such audit shall be made and such
statement or statements shall be prepared at Agent's option, either internally
by Agent or by an independent firm of certified public accountants to be
selected by Agent. Borrower shall pay all reasonable costs and expenses of the
audit and other services, whether performed internally or by an independent
firm, which costs and expenses shall be immediately due and payable with
interest thereon at the default rate contained in the Notes.
5.4. USE OF PROCEEDS. Borrower shall use the proceeds of the Loan for
proper business purposes. No portion of the proceeds of the Loan shall be used
by Borrower in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Act of 1933 or the Securities Exchange Act
of 1934.
5.5. NOTICE OF LITIGATION OR DEFAULT. Borrower shall promptly provide
Agent with:
(a) without in any way limiting clause (c) or (d) below,
written notice of any litigation, arbitration, or other proceeding or
governmental investigation pending or, to Borrower's or any Principal's
knowledge, threatened against or relating to Borrower, any Principal
(other than Alterra), or the Project or the AHC Properties which if
decided adversely would reasonably be expected to result in an
uninsured loss of at least $250,000;
(b) without in any way limiting clause (c) or (d) below,
written notice of any litigation, arbitration, or other proceeding or
governmental investigation pending or, to Borrower's or any Principal's
knowledge, threatened against or relating to Alterra, or any of its
property, assets or business, which if decided adversely would
reasonably be expected to result in an uninsured loss of at least
$500,000;
(c) a copy of all notices of default and violations of laws,
regulations, codes, ordinances and the like received by Borrower or any
Principal relating to Borrower, Alterra (but only with respect to the
Project or the AHC Properties), any Principal (other than Alterra), the
Collateral, the Project or the AHC Properties, and which is required to
be reported to the national office of Alterra pursuant to the reporting
guidelines attached hereto as Exhibit B or which is actually reported
to or filed with the national office of Alterra; and
(d) a copy of all notices of default received by AHC or AHC
Holding with respect to the GMAC Loan.
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5.6. AFFILIATE TRANSACTIONS. Prior to entering into any agreement with
an Affiliate pertaining to the Project, Borrower shall deliver to Agent a copy
of such agreement, which shall be satisfactory to Agent in its sole discretion.
If requested by Agent, such agreement shall provide Agent the right to terminate
it upon Agent's or Lenders' (or their designee's) acquisition of the Project
through foreclosure, a deed-in-lieu of foreclosure, UCC sale or otherwise.
"AFFILIATE" means with respect to any individual, trust,
estate, partnership, limited liability company, corporation or any other
incorporated or unincorporated organization (each a "PERSON"), a Person that
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with Borrower or any Principal; any
officer, director, partner or shareholder of such Borrower or any Principal; any
relative of any of the foregoing. The term "CONTROL" means possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
5.7. ADVERTISEMENT. Borrower agrees to allow Agent and Lenders to
advertise in the various news or financial media that Agent and Lenders have
provided financing to Borrower.
5.8. CORONA, CALIFORNIA PARKING LOT. Borrower shall use all reasonable
efforts to cause Alterra to acquire fee simple title to the parking lot (the
"PARKING LOT") adjacent to the Corona, California Property as soon as possible
after the Closing Date, and immediately thereafter cause Alterra to convey such
title to Borrower. Agent acknowledges that Alterra has an option (which it has
exercised) to purchase the Parking Lot from the current owner and such owner is
in default of its obligations thereunder. Borrower will notify Agent in writing
upon Alterra's and Borrower's acquisition of the Parking Lot and Borrower shall
execute, and Borrower shall cause Alterra to execute, all documents requested by
Agent to add the Parking Lot to the Collateral and the lien of the applicable
Mortgage.
ARTICLE VI
NEGATIVE COVENANTS
6.1. NO AMENDMENTS. Borrower shall not amend, modify or terminate, or
permit the amendment, modification or termination of:
(a) the Articles of Incorporation or By-Laws of Borrower, AHC
or AHC Holding;
(b) the Management Contracts;
(c) until such time as Alterra acquires 100% of the ownership
interests in a Joint Venture, the Limited Partnership Agreements or
Operating Agreements of such Joint Venture, such JV Lease;
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(d) until such time as Alterra acquires 100% of the ownership
interests in the Joint Venture with respect to the Winter Haven,
Florida Property, the Joint Venture Agreement as it relates to the
Winter Haven, Florida Property; or
(e) any other lease or sublease to Alterra by Borrower or a
Joint Venture with respect to the Properties in California, Kansas,
Florida and Texas.
6.2. NO ADDITIONAL INDEBTEDNESS. Borrower shall not, without Agent's
and Lenders' prior written consent, incur additional indebtedness, except for
trade payables in the ordinary course of business and purchase money
indebtedness incurred with respect to personal property used at the Property not
to exceed $200,000 each with respect to the Winter Haven, Florida Property and
Frederick, Maryland Property and $100,000 with respect to any other Property at
any time outstanding.
6.3. NO COMMINGLING FUNDS. Within ninety (90) days of the Closing Date
Borrower shall have in place a separate bank account into which all money owed
to Borrower (and no other money) shall be deposited (the "ACCOUNT"). Once the
Account is in place, Borrower shall not commingle the funds in the Account with
any other funds; provided, however, that Borrower may make distributions from
the Account (if not otherwise prohibited hereunder) to Alterra as its
shareholder owner so long as no Event of Default is continuing. The Account
shall be subject to a lockbox agreement in favor of Agent and in form reasonably
satisfactory to Agent, providing that during the continuance of an Event of
Default, no funds may be transferred from the Account except to Agent or to
unaffiliated third parties for the payment of Operating Expenses for any
Property.
6.4. PROPERTY MANAGER. Borrower shall not, and Borrower shall not
permit a Joint Venture to, change Alterra as the manager of, or amend or
terminate the Management Contract for, any Property without Agent's and
Requisite Lenders' prior written consent, which shall not be unreasonably
withheld.
6.5. LIENABLE WORK. No excavation, construction, earth work, site work
or any other mechanic's lienable work shall be done to or for the benefit of any
Property, without Agent's approval, except for completion of construction of the
Pool 2 Properties and normal repair and maintenance in the ordinary course of
business.
6.6. CONVERSION. Borrower shall not, and shall not permit, the Project
or any portion thereof to be converted or take any preliminary actions which
could lead to a conversion to condominium or cooperative form or ownership.
6.7. USE OF PROPERTY. Unless required by applicable law, Borrower shall
not permit changes in the use of any Pool 1 Property from the use existing at
the Closing Date and in the use of any Pool 2 Property from the use existing as
of the date of disbursement of the Initial Pool 2 Funding Amount for such Pool 2
Property. Borrower shall not, and Borrower shall not permit a Joint Venture to,
initiate or acquiesce in a change in the plat of subdivision, or zoning
classification of any Property without Agent's prior written consent.
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6.8. TRANSFERS OF INTEREST IN ALTERRA. Without Agent's prior written
approval, Borrower shall not cause or permit Alterra to enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or sell all or substantially all of
its assets or allow its stock to cease to be publicly traded on a national
exchange; provided that, notwithstanding the foregoing Alterra may merge or
consolidate with or into any Person, provided that:
(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 (computed in each case in accordance with
generally accepted accounting principals consistently applied);
(ii) the surviving corporation (or in the event of a
triangular merger in which Alterra common stock is converted into
common stock of the parent company of the other constituent corporation
to such merger or consolidation (the "PARENT"), the Parent is a
publicly held corporation immediately after giving effect to such
merger or consolidation;
(iii) such Person is a company in the healthcare business or
hospitality business with experience operating and/or managing
healthcare facilities;
(iv) at least two of the four persons serving Alterra
immediately 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 Agent, in its sole reasonable discretion, shall
determine the Person or Persons that shall be required to assume the
obligations of Alterra under the Guaranty and Environmental Indemnity
following such merger or consolidation, including without limitation,
Alterra's past, current and future obligations and liabilities under
the Guaranty and Environmental Indemnity and each other Loan Document
to which Alterra is a party, pursuant to an assumption agreement in
form and substance satisfactory to the Agent, and Agent shall have
received such assumptions;
(vi) the Agent shall have received such other documents,
agreements, certificates, legal opinions and information (in form and
substance satisfactory to the Agent) which may be reasonably requested
by the Agent;
(vii) no default under the Loan Documents or Event of Default
has occurred and is continuing or would result therefrom; and
(viii) Borrower shall reimburse Agent and Lenders for all
costs and expenses incurred by them pursuant to the matters described
in this Section 6.8, including
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without limitation, any negotiation, review and preparation of
documents, legal fees, and any transaction costs.
If Borrower violates any provision of this Section 6.8, Agent shall have the
right but not the obligation to accelerate the Maturity Date to a date which is
not less than ninety (90) days after Agent provides written notice of such
acceleration to Borrower.
ARTICLE VII
EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS; REMEDIES
7.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) Failure of Borrower to pay, within five (5) days of the
due date, any of the payment obligations of Borrower to Agent or
Lenders ("INDEBTEDNESS"), including any payment due under the Notes or
this Agreement; or
(b) Failure of Borrower to strictly comply with the provisions
of Section 1.7 (AHC Properties), 4.17 (single asset entity) or 5.1
(inspection) of this Agreement; or
(c) Breach of any covenant, representation or warranty other
than as set forth in subsections (a) and (b) above which is not cured
within thirty (30) days after notice; provided, however, if such breach
cannot by its nature be cured within thirty (30) days, and Borrower
diligently pursues the curing thereof (and then in all events cures
such failure within sixty (60) days after the original notice thereof),
Borrower shall not be in default hereunder; or
(d) A petition under any Chapter of Title 11 of the United
States Code or any similar law or regulation is filed by or against
Borrower or any Principal (and in the case of an involuntary petition
in bankruptcy, such petition is not discharged within sixty (60) days
of its filing), or a custodian, receiver or trustee for any of the
Project is appointed, or Borrower or any Principal makes an assignment
for the benefit of creditors, or any of them are adjudged insolvent by
any state or federal court of competent jurisdiction, or any of them
admit their insolvency or inability to pay their debts as they become
due or an attachment or execution is levied against any of the Project;
or
(e) The occurrence of a default and the expiration of any cure
period applicable thereto under any Management Contract or any Loan
Document or any JV Lease; or
(f) Borrower shall default in the payment of any indebtedness
(other than the Indebtedness), and such default is declared and is not
cured within the time, if any, specified therefor in any agreement
governing the same; or
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(g) The occurrence of a default under or with respect to the
GMAC Loan, and such default is declared and is not cured within the
time, if any, specified therefor in any agreement governing the same;
or
(h) Any statement, report or certificate made or delivered to
Agent or any Lender by Borrower or any Principal is not materially true
and complete at any time; or
(i) The Debt Coverage Ratio for the Project shall fall below
the following levels for the following periods:
(i) 1.05:1.00 for the period of December 1, 2001
through February 28, 2002;
(ii) 1.15:1.00 for the period of March 1, 2002
through May 30, 2002;
(iii) 1.20:1.00 for the period of June 1, 2002
through August 31, 2002; or
(iv) 1.25:1.00 for the period of September 1, 2002
through November 30, 2002; or
(j) Alterra (or an Affiliate of Alterra) fails prior to August
18, 2001, to acquire, free and clear of all liens and encumbrances and
rights to purchase (other than those in favor of Agent), all
partnership interests (of every sort and nature) in all of the Joint
Ventures which are limited partnerships, and either enter into an
Assignment thereof in favor of Agent satisfactory to Agent, or cancel
all of the JV Leases with JV Entities which are limited partnerships
and have Borrower enter into Management Contracts with Alterra with
respect to such Properties (together with Collateral Assignments of
Management Agreements in favor of Agent with respect thereto); or
(k) Alterra (or an Affiliate of Alterra) fails prior to March
1, 2001, to acquire, free and clear of all liens and encumbrances and
rights to purchase (other than those in favor of Agent), all membership
interests (of every sort and nature) in the Sterling Cottage of Winter
Haven LLC Joint Venture, and either enter into an Assignment thereof in
favor of Agent satisfactory to Agent, or cancel the JV Lease with
respect to such JV Entity and have Borrower enter into a Management
Contract with Alterra with respect to such Property (together with a
Collateral Assignment of Management Agreement in favor of Agent with
respect thereto); or
(l) Alterra ceases to be the manager of any limited liability
company that is a Joint Venture or Alterra ceases to be the sole
general partner of any limited partnership that is a Joint Venture.
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7.2. ACCELERATION; REMEDIES. Upon the occurrence of an Event of
Default, at the option of Agent or at the direction of Requisite Lenders, the
Indebtedness shall become immediately due and payable without notice to Borrower
and Agent and Lenders shall be entitled to all of the rights and remedies
provided in the Loan Documents or at law or in equity. Each remedy provided in
the Loan Documents is distinct and cumulative to all other rights or remedies
under the Loan Documents or afforded by law or equity, and may be exercised
concurrently, independently, or successively, in any order whatsoever.
ARTICLE VIII
ASSIGNMENT AND PARTICIPATION
8.1. ASSIGNMENTS AND PARTICIPATIONS.
8.1.1. ASSIGNMENTS. Each Lender may from time to time assign,
subject to the terms of an Assignment and Acceptance Agreement in a form
prescribed by Agent, its rights and delegate its obligations under this
Agreement to another Person, provided that (a) such Lender (excluding Heller)
shall first obtain the written consent of Agent, which consent shall not be
unreasonably withheld; (b) the Pro Rata Share (defined below) of the Loan being
assigned shall in no event be less than the lesser of (i) $5,000,000.00 and (ii)
the entire amount of the Pro Rata Share of the Loan of the assigning Lender; and
(c) upon the consummation of each such assignment the assigning Lender shall pay
Agent an administrative fee of $3,500.00 (the foregoing conditions set forth in
clauses (a), (b) and (c) may, however, be waived by Agent in its sole
discretion). In the case of an assignment authorized under this Section 8.1, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were an initial Lender hereunder, subject to
the applicable Assignment and Acceptance Agreement. The assigning Lender shall
be relieved of its obligations hereunder with respect to its Pro Rata Share of
the Loan or assigned portion thereof. Borrower hereby acknowledges and agrees
that any assignment will give rise to a direct obligation of Borrower to the
assignee and that the assignee shall be considered to be a Lender hereunder.
Except as provided in this subsection 8.1.1, and notwithstanding other
provisions of this Agreement or the other Loan Documents which may be to the
contrary, no Lender shall assign or sell participations in this Agreement, the
other Loan Documents or the Loan.
"PRO RATA SHARE" means, with respect to any Lender, the
percentage obtained by dividing (i) the outstanding principal amount of
the Loan funded by such Lender by (ii) the outstanding principal amount
of the Loan, as such percentage may be adjusted by assignments
permitted by Section 8.1.
8.1.2. RECORDING OF ASSIGNMENTS. Agent shall maintain at its
office in Chicago, Illinois a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender pursuant to the terms hereof from time to time (the "REGISTER"). The
entries in the Register shall be presumptive evidence of the amounts due and
owing to each Lender in the absence of manifest error. Borrower, Agent and each
Lender may treat each Person whose name is recorded in the Register
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pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrower and any
Lender, at any reasonable time upon reasonable prior notice.
8.1.3. ACCEPTANCE OF ASSIGNMENT BY AGENT. Upon its receipt of
a duly completed Assignment and Acceptance Agreement executed by an assigning
Lender and its assignee (together with the Notes subject to such assignment) and
the administrative fee referred to above, Agent shall (subject to the consent of
Agent to such assignment, if required) (1) accept such Assignment and Acceptance
Agreement, (2) record the information contained therein in the Register to
reflect such Assignment and Acceptance Agreement and (3) give prompt notice
thereof to Borrower and Lenders. Upon request by Agent, Borrower shall promptly
execute and deliver to Agent Notes evidencing the Indebtedness owed by Borrower
to the assignee and, if applicable, the assigning Lender, after giving effect to
the assignment. Agent shall cancel the Notes delivered to it by the assigning
Lender and deliver the new Notes to the assignee and, unless the assigning
Lender has assigned all of its interests under this Agreement, the assigning
Lender.
8.1.4. PARTICIPATIONS. Heller may sell (and buy back)
participations in all or any part of its Pro Rata Share of the Loan to (from)
another Person. All amounts payable by Borrower hereunder shall be determined as
if Heller had not sold such participation and the holder of any such
participation shall not be entitled to require Heller to take or omit to take
any action hereunder except action directly effecting (i) any reduction in the
principal amount or interest rate payable; (ii) any extension of the date fixed
for any payment of interest payable; or (iii) any release of all or
substantially all of the Collateral (except if the sale, disposition or release
of such Collateral is permitted hereunder or under any other Loan Document).
Borrower hereby acknowledges and agrees that any participation will give rise to
a direct obligation of Borrower to the participant, and the participant shall
for purposes of Sections 8.4 and 9.7 be considered to be a Lender hereunder.
8.1.5. OTHER MATTERS. Except as otherwise provided in this
Section 8.1, no Lender shall, as between Borrower and that Lender, be relieved
of any of its obligations hereunder as a result of any assignment of, or
granting of a participation in, all or any part of the Loans, the Notes, the
Indebtedness or other obligations owed to such Lender. Each Lender may furnish
any information concerning Borrower and the Principals in the possession of that
Lender from time to time to assignees and participants (including prospective
assignees and participants). Borrower agrees that it will use its best efforts
to assist and cooperate with Agent and any Lender in any manner reasonably
requested by Agent or such Lender to effect the sale of a participation or an
assignment described above, including without limitation assistance in the
preparation of appropriate disclosure documents or placement memoranda.
8.2. AGENT.
8.2.1. APPOINTMENT. Each Lender hereby designates and appoints
Heller as its Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent to execute and deliver the Loan
Documents and to take such
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action or to refrain from taking such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers as
are set forth herein or therein, together with such other powers as are
reasonably incidental thereto. Agent is authorized and empowered to amend,
modify, or waive any provisions of this Agreement or the other Loan Documents on
behalf of Lenders subject to the requirement that certain of Lenders' consent be
obtained in certain instances as provided in this Section 8.2 and 8.3. The
provisions of this Section 8.2 are solely for the benefit of Agent and Lenders
and neither Borrower nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrower or any other Person. Agent
may perform any of its duties hereunder, or under the Loan Documents, by or
through its agents or employees.
8.2.2. NATURE OF DUTIES. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of Borrower and Principals in connection with
the extension of credit hereunder and shall make its own appraisal of the
creditworthiness of Borrower and Principals, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than as
expressly required herein). If Agent seeks the consent or approval of any
Lenders to the taking or refraining from taking any action hereunder, then Agent
shall send notice thereof to each Lender. Agent shall promptly notify each
Lender any time that the Requisite Lenders have instructed Agent to act or
refrain from acting pursuant hereto.
8.2.3. RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Agent shall not be liable for any apportionment
or distribution of payments made by it in good faith and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but neither Agent
nor any of its agents or representatives shall be responsible to any Lender for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of
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the Loan Documents or the transactions contemplated thereby, or for the
financial condition of any of Borrower, Principals or Lenders. Agent shall not
be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this Agreement or any of the
Loan Documents or the financial condition of any of Borrower, Principals or
Lenders, or the existence or possible existence of any default hereunder or
Event of Default. Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Loan Documents Agent is permitted or required to take or to grant,
and if such instructions are promptly requested, Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan Documents until it
shall have received such instructions from Requisite Lenders or all or such
other portion of the Lenders as shall be prescribed by this Agreement. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders and, notwithstanding the instructions of Requisite Lenders,
Agent shall have no obligation to take any action if it believes, in good faith,
that such action exposes Agent to any liability for which it has not received
satisfactory indemnification in accordance with subsection 8.2.5 below.
"REQUISITE LENDERS" means Lenders (other than Defaulting Lenders)
having sixty-six and two-thirds percent (66-2/3%) or more of the outstanding
principal balance of the Loan of all Lenders that are not Defaulting Lenders.
8.2.4. RELIANCE. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, facsimile, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder. Agent shall be entitled to rely upon the advice of legal counsel,
independent accountants, and other experts selected by Agent in its sole
discretion.
8.2.5. INDEMNIFICATION. Lenders will reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and
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cease, or not commence, to do the acts indemnified against even if so directed
by Requisite Lenders until such additional indemnity is furnished. The
obligations of Lenders under this subsection 8.2.5 shall survive the payment in
full of the Indebtedness and the performance in full of all other obligations of
Borrower or any Principal to Agent and/or Lenders under any of the Loan
Documents (the "OBLIGATIONS") and the termination of this Agreement.
8.2.6. HELLER INDIVIDUALLY. With respect to its obligations
under the Loan, Heller shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "LENDERS" (as defined
above) or "REQUISITE LENDERS" or any similar terms shall, unless the context
clearly otherwise indicates, include Heller in its individual capacity as a
Lender or one of the Requisite Lenders. Heller may lend money to, acquire equity
or other ownership interests in, and generally engage in any kind of banking,
trust or other business as if it were not acting as Agent pursuant hereto.
8.2.7. SUCCESSOR AGENT.
(A) RESIGNATION. Agent may resign from the performance of all
its agency functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (b) below or as otherwise provided below.
(B) APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation pursuant to clause (a) above, Requisite Lenders shall appoint a
successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. If a successor Agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (a) above, the retiring Agent, upon notice to Borrower,
shall then appoint a successor Agent who shall serve as Agent until such time,
if any, as Requisite Lenders appoint a successor Agent as provided above.
(C) SUCCESSOR AGENT. Upon the acceptance of any appointment as
Agent under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation as Agent, the provisions of this Section 8.2 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
(D) RELEASE OF COLLATERAL. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any lien
granted to or held by Agent upon any Collateral (i) upon termination of the Loan
and payment and satisfaction of all Indebtedness and Obligations (other than
contingent indemnification obligations to the extent no claims giving rise
thereto have been assented); or (ii) constituting property being sold or
disposed or if Borrower certifies to Agent that the sale or disposition is made
in compliance with the
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provisions of this Agreement (and Agent may rely in good faith conclusively on
any such certificate, without further inquiry).
8.2.8. COLLATERAL MATTERS.
(A) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in this subsection 8.2.8(a)),
each Lender agrees to confirm in writing, upon request by Agent or Borrower, the
authority to release any Collateral conferred upon Agent. Upon receipt by Agent
of any required confirmation from the Requisite Lenders of its authority to
release any particular item or types of Collateral, and upon at least ten (10)
Business Days prior written request by Borrower, Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the liens granted to Agent upon such Collateral;
provided, however, that (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligation or entail any consequence other than the release of such
liens without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Indebtedness or Obligations or any liens
upon (or obligations of any Lender, in respect of), all interests retained by
any Lender, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(B) ABSENCE OF DUTY. Agent shall have no obligation whatsoever
to any Lender or any other Person to assure that the property covered by the
Loan Documents exists or is owned by Borrower or Alterra, as applicable, or is
cared for, protected or insured or has been encumbered or that the liens granted
to Agent have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this subsection 8.2.8 or in any of the Loan
Documents, it being understood and agreed that in respect of the property
covered by the Loan Documents or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in property covered by the Loan Documents as one of the
Lenders and that Agent shall have no duty or liability whatsoever to any of the
other Lenders, provided that Agent shall exercise the same care which it would
in dealing with loans for its own account.
(C) AGENCY PROVISIONS RELATING TO COLLATERAL.
(i) The Agent is hereby authorized on behalf of all
Lenders, without the necessity of any notice to or further
consent from any Lender, at any time and from time to time, to
take any actions with respect to any Collateral for the Loan
or any Loan Document which may be necessary to preserve and
maintain such Collateral or to perfect and maintain perfected
the liens upon such Collateral granted pursuant to this
Agreement and the other Loan Documents.
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(ii) Should the Agent commence any proceeding or in
any way seek to enforce the Agent's or the Lenders' rights or
remedies under the Loan Documents, irrespective of whether as
a result thereof the Agent shall acquire title to any
Collateral, each Lender, upon demand therefor from time to
time, shall contribute its Pro Rata Share of the reasonable
costs and/or expenses of any such enforcement or acquisition,
including, but not limited to, fees of receivers or trustees,
court costs, title company charges, filing and recording fees,
appraiser's fees and fees and expenses of attorneys to the
extent not otherwise reimbursed by Borrower. Without limiting
the generality of the foregoing, each Lender shall contribute
its Pro Rata Share of all reasonable out of pocket costs and
expenses incurred by the Agent (including reasonable
attorneys' fees and expenses but excluding any administrative
fees payable to Agent hereunder) if the Agent employs counsel
for advice or other representation (whether or not any suit
has been or shall be filed) with respect to any Collateral for
the Loan or any part thereof, or any of the Loan Documents, or
the attempt to enforce any security interest or lien on any
Collateral, or to enforce any rights of the Agent or the
Lenders or any of Borrower's or any other party's obligations
under any of the Loan Documents, but not with respect to any
dispute between any Agent and any other Lender(s). It is
understood and agreed that in the event the Agent determines
it is necessary to engage counsel for Lenders from and after
the occurrence of a default or an Event of Default, said
counsel shall be selected by the Agent and written notice of
such selection, together with a copy of such counsel's
engagement letter and fee estimate, shall be delivered to the
Lenders.
(iii) In the event that all or any portion of the
Collateral for the Loan is acquired by the Agent as the result
of the exercise of any remedies hereunder or under any other
Loan Document, or is retained in satisfaction of all or any
part of Borrower's obligations under the Loan Documents, title
to any such Collateral or any portion thereof shall be held in
the name of one or more of the Agent or a nominee or
subsidiary of on or more of the Agent, as agent, for the
ratable benefit of the Agent and the Lenders. The Agent shall
prepare a recommended course of action for such Collateral
(the "POST-DEFAULT PLAN"), which shall be subject to the
approval of the Requisite Lenders. The Agent shall administer
the Collateral in accordance with the Post Default Plan, and
upon demand therefor from time to time, each Lender will
contribute its Pro Rata Share of all reasonable out of pocket
costs and expenses incurred by the Agent pursuant to the
Post-Default Plan, including without limitation, any operating
losses and all necessary operating reserves. To the extent
there is net operating income from such Collateral, the Agent
shall, in accordance with the Post-Default Plan, determine the
amount and timing of distributions to Lenders. All such
distributions shall be made to Lenders in accordance with
their respective Pro Rata Share. In no event shall the
provisions of this subsection or the Post-Default Plan require
any Agent or
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any Lender to take an action which would cause such Lender to
be in violation of any applicable regulatory requirements.
(D) LENDER ACTIONS AGAINST BORROWER OR THE COLLATERAL. Each
Lender agrees that it will not take any action, nor institute any actions or
proceedings, against Borrower or any other Person hereunder or under any other
Loan Documents with respect to exercising claims against the Borrower or rights
in any Collateral without the consent of the Requisite Lenders. With respect to
any action by the Agent to enforce the rights and remedies of the Agent and
Lenders with respect to the Borrower and any Collateral in accordance with the
terms of this Agreement, each Lender hereby consents to the jurisdiction of the
court in which such action is maintained.
8.2.9. AGENCY FOR PERFECTION. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's
security interest in assets which, in accordance with the Uniform Commercial
Code in any applicable jurisdiction, can be perfected only by possession. Should
any Lender (other than Agent) obtain possession of any such assets, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such assets to Agent or in accordance with Agent's instructions. Each
Lender agrees that it will not have any right individually to enforce or seek to
enforce any Loan Document or to realize upon any collateral security for the
Loans unless instructed to do so by Agent, it being understood and agreed that
such rights and remedies may be exercised only by Agent.
8.2.10. NOTICE OF DEFAULT. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default except with
respect to defaults in the payment of principal, interest and fees required to
be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Event of Default and stating that such notice is a "NOTICE OF DEFAULT".
Agent will notify each Lender of its receipt of any such notice. Agent shall
take such action with respect to such Event of Default as may be requested by
Requisite Lenders in accordance with this Article VIII. Unless and until Agent
has received any such request, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable or in the best interests of Lenders.
8.2.11. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may
undertake any of its duties as Agent hereunder and under any other Loan Document
by or through employees, agents, and attorneys-in-fact and shall not be liable
to Lenders, except as to money or securities received by them or their
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder and under any other Loan Document.
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8.3. AMENDMENTS, CONSENTS AND WAIVERS.
8.3.1. Except as otherwise provided in Section 8.2 or this
Section 8.3, and except as to matters set forth in other subsections hereof or
in any other Loan Document as requiring only Agent's consent, the consent of
Requisite Lenders and Borrower will be required to amend, modify, terminate, or
waive any provision of this Agreement or any of the other Loan Documents.
8.3.2. In the event Agent requests the consent of a Lender and
does not receive a written consent or denial thereof within [ten (10) Business
Days] after such Lender's receipt of such request, then such Lender will be
deemed to have denied the giving of such consent.
8.4. SET OFF AND SHARING OF PAYMENTS.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender is hereby authorized by
Borrower at any time or from time to time, with reasonably prompt subsequent
notice to Borrower (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (A) balances held
by such Lender at any of its offices for the account of Borrower, and (B) other
property at any time held or owing by such Lender to or for the credit or for
the account of Borrower, against and on account of any of the Indebtedness or
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such
other Lender's Pro Rata Share of the Indebtedness or Obligations as would be
necessary to cause all Lenders to share the amount so set off with each other
Lender in accordance with their respective Pro Rata Shares. Borrower agrees, to
the fullest extent permitted by law, that any Lender may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the
Indebtedness or Obligations and upon doing so shall deliver such amount so set
off to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5. DISBURSEMENT OF FUNDS.
Agent may, on behalf of Lenders, disburse funds to Borrower
for advances of the Loan requested in compliance with the provisions of this
Loan Agreement. Each Lender shall reimburse Agent on demand for all funds
disbursed on its behalf by Agent, or if Agent so requests, each Lender will
remit to Agent its Pro Rata Share of any portion of the Loan before Agent
disburses same to Borrower. If Agent elects to require that each Lender make
funds available to Agent, prior to a disbursement by Agent to Borrower, Agent
shall advise each Lender by telephone, facsimile or telecopy of the amount of
such Lender's Pro Rata Share of the advance requested by Borrower no later than
1:00 p.m. Chicago time on the funding date applicable thereto, and each such
Lender shall pay Agent such Lender's Pro Rata Share of such requested advance,
in same day funds, by wire transfer to Agent's account on such funding date. If
any Lender fails to pay the amount of its Pro Rata Share within one (1) Business
Day after Agent's demand, Agent shall promptly notify Borrower, and Borrower
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shall immediately repay such amount to Agent. Any repayment required pursuant to
this Section 8.5 shall be without premium or penalty, but with interest at the
Interest Rate. Nothing in this Section 8.5 or elsewhere in this Agreement or the
other Loan Documents, including without limitation the provisions of Section
8.6, shall be deemed to require Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights that Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.
8.6. PAYMENTS.
8.6.1. DISTRIBUTION AND APPORTIONMENT OF PAYMENTS.
(a) Subject to subsection 8.6.1(b), payments actually received
by Agent for the account of the Lenders shall be paid to them promptly after
receipt thereof by Agent, but in any event within five (5) Business Days,
provided that, if any such payments are not distributed to the Lenders within
five (5) Business Days after Agent's receipt thereof, Agent shall pay to such
Lenders interest thereon, at the lesser of (i) the overnight cost of funds at
which federal funds are made available to the Agent (such interest rate to
change automatically effective as of the date of each change in the overnight
cost of federal funds) and (ii) if the applicable payment represents repayment
of a portion of the principal of the Loan, the Interest Rate, from the date of
receipt of such funds by Agent until such funds are paid in immediately
available funds to such Lenders provided such funds are received by Agent not
later than 11:00 A.M. (Chicago time) on the date of receipt. All payments of
principal and interest in respect of the Loan, all payments of the fees
described in this Agreement (but not in any separate fee letter except to the
extent expressly set forth therein), and all payments in respect of any other
obligations of Borrower under the Loan Documents shall be allocated among such
of Lenders as are entitled thereto, in proportion of their respective Pro Rata
Shares or otherwise as provided herein or in the other Loan Documents or in the
Assignment and Acceptance Agreements, as the case may be. The Agent shall
distribute to each Lender at its primary address set forth herein or in its
Assignment and Acceptance Agreement, or at such other address as a Lender may
request in writing, such funds as it may be entitled to receive, provided that
the Agent shall in any event not be bound to inquire into or determine the
validity, scope or priority of any interest or entitlement of any Lender and may
suspend all payments and seek appropriate relief (including without limitation
instructions from the Requisite Lenders, or all Lenders, as applicable, or an
action in the nature of interpleader) in the event of any doubt or dispute as to
any apportionment or distribution contemplated hereby. The order of priority
herein is set forth solely to determine the rights and priorities of the Lenders
as among themselves and may at any time or from time to time be changed by the
Lenders as they may elect, in writing, without necessity of notice to or consent
of or approval by Borrower.
(b) If a Lender (a "DEFAULTING LENDER") defaults in making any
advance or paying any other sum payable by it hereunder, such sum together with
interest thereon at the Interest Rate from the date such amount was due until
repaid (such sum and interest thereon as aforesaid referred to, collectively, as
the "LENDER DEFAULT OBLIGATION") shall be payable by the Defaulting Lender (i)
to any Lender(s) which elect, at their sole option (and with no
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obligation to do so), to fund the amount which the Defaulting Lender failed to
fund or (ii) to the Agent or any other Lender which under the terms of this
Agreement is entitled to reimbursement from the Defaulting Lender for the
amounts advanced or expended. Notwithstanding any provision hereof to the
contrary, until such time as the Defaulting Lender has repaid the Lender Default
Obligation in full (i) all amounts which would otherwise be distributed to the
Defaulting Lender shall instead be applied first to repay the Lender Default
Obligation (to be applied first to interest at the Interest Rate and then to
principal) until the Lender Default Obligation has been repaid in full (whether
by such application or by cure by the Defaulting Lender) whereupon such Lender
shall no longer be a Defaulting Lender, and (ii) the Defaulting Lender's right
to consent to or approve of matters which are subject to the consent or approval
of Requisite Lenders or all Lenders shall be suspended, and for purposes of
consent and approval the definition of "REQUISITE LENDERS" and "ALL LENDERS"
shall be modified as if the Defaulting Lender were not a Lender. Any interest
collected from Borrower on account of principal advanced by any Lender(s) on
behalf of a Defaulting Lender shall be paid to the Lender(s) who made such
advance and shall be credited against the Defaulting Lender's obligation to pay
interest on the amount advanced at the Interest Rate. The provisions of this
Section shall apply and be effective regardless of whether an Event of Default
occurs and is then continuing, and notwithstanding (i) any other provision of
this Agreement to the contrary, (ii) any instruction of Borrower as to its
desired application of payments or (iii) the suspension of such Defaulting
Lender's right to vote on matters which are subject to the consent or approval
of Requisite Lenders, or all Lenders. The Agent shall be entitled to (i)
withhold or set off, and to apply to the payment of the Lender Default
Obligation any amounts to be paid to such Defaulting Lender under this
Agreement, and (ii) bring an action or suit against such Defaulting Lender in a
court of competent jurisdiction to recover the Lender Default Obligation and, to
the extent such recovery would not fully compensate the Lenders for the
Defaulting Lender's breach of this Agreement, to collect damages. In addition,
the Defaulting Lender shall indemnify, defend and hold Agent and each of the
other Lenders harmless from and against any and all claims, actions,
liabilities, damages, costs and expenses (including attorneys' fees and
expenses), plus interest thereon at the Interest Rate, for funds advanced by
Agent or any other Lender on account of the Defaulting Lender or any other
damages such entities may sustain or incur by reason of or as a direct
consequence of the Defaulting Lender's failure or refusal to abide by its
obligations under this Agreement.
(c) At least five (5) Business Days prior to the first date on
which interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of America,
or a state thereof, agrees that it will deliver to the Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, certifying
in either case that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes. Each Lender which so delivers a Form 1001 or 4224 further
undertakes to deliver to the Agent two additional copies of such form (or a
successor form) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent forms
so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested
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by the Agent, in each case certifying that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding of
any United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
8.6.2. RETURN OF PAYMENTS.
(a) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind together with interest thereon, for each
day from and including the date such amount is made available by Agent to such
Lender to but excluding the date of repayment to Agent, at the greater of the
Federal Funds Rate in effect on each such day (as determined by Agent) and a
rate determined by Agent in accordance with banking industry rules on interbank
compensation.
(b) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any requirement of law, court order or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
8.7. RESERVES. The Agent is hereby authorized on behalf of all Lenders,
without with necessity of any notice to or further consent from any Lender, at
any time and from time to time (i) to disburse the inspection fees collected
under Section 5.1 to pay for the inspections referred to therein (including
payment to Agent therefor), and (ii) to disburse all or any portion of any real
estate tax reserves maintained under the Mortgages.
ARTICLE IX
MISCELLANEOUS
9.1. EXPENDITURES AND EXPENSES. Borrower shall promptly pay all
reasonable Costs (defined below) incurred by Agent and/or Lenders in connection
with the documentation, closing, making disbursements (including disbursements
after the disbursement of the Initial Pool 1 Funding Amount), modification,
workout, collection or enforcement of the Loan or any of the Loan Documents (as
applicable) and all such Costs shall be included as additional Indebtedness
bearing interest at the Default Rate set forth in the Notes until paid;
provided, however, Borrower shall not be obligated to pay in excess of
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Three Hundred Seventy-Five Thousand and No/100 Dollars ($375,000.00) for Costs
with respect to Agent's and/or Lenders' third party reports (such as appraisals,
engineering reports and environmental reports), Property inspections, Property
due diligence and attorneys' fees (but specifically excluding, without
limitation, title insurance premiums and costs of preparation of surveys) which
are incurred (in each case) in connection with the disbursement of the Initial
Pool 1 Funding Amount and the Initial Pool 2 Funding Amount. For the purposes
hereof "COSTS" means all expenditures and expenses which may be paid or incurred
by or on behalf of Agent and/or Lenders including repair costs, payments to
remove or protect against liens, attorneys' fees (including fees of Agent's
and/or Lenders' inside counsel), receivers' fees, engineers' fees, accountants'
fees, independent consultants' fees (including environmental consultants), all
costs and expenses incurred in connection with any of the foregoing, Agent's
and/or Lenders' out-of-pocket costs and expenses related to any audit or
inspection of the Property (subject to the limitations contained in this
Agreement), outlays for documentary and expert evidence, stenographers' charges,
stamp taxes, publication costs, and costs (which may be estimates as to items to
be expended after entry of an order or judgment) for procuring all such
abstracts of title, title and UCC searches, and examination, title insurance
policies, Torrens' Certificates and similar data and assurances with respect to
title as Agent may deem reasonably necessary either to prosecute any action or
to evidence to bidders at any foreclosure sale of the Project the true condition
of the title to, or the value of, the Project.
9.2. DISCLOSURE OF INFORMATION. Agent and/or Lenders shall have the
right (but shall be under no obligation) to make available to any party for the
purpose of granting participations in or selling, transferring, assigning or
conveying all or any part of the Loan (including any governmental agency or
authority and any prospective bidder at any foreclosure sale of the Project) any
and all information which Agent and/or Lenders may have with respect to the
Project and Borrower, whether provided by Borrower, the Principals or any third
party or obtained as a result of any environmental assessments. Borrower and the
Principals agree that Agent and Lenders shall have no liability whatsoever as a
result of delivering any such information to any third party for the foregoing
purposes, and Borrower and the Principals, on behalf of themselves and their
successors and assigns, hereby release and discharge Agent and Lenders from any
and all liability, claims, damages, or causes of action, arising out of,
connected with or incidental to the delivery of any such information to any
third party for the foregoing purposes.
9.3. INTENTIONALLY OMITTED.
9.4. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Agent
and/or Lenders in exercising any right or remedy under any of the Loan
Documents, or otherwise afforded by applicable law, shall not be a waiver of or
preclude the exercise of any right or remedy. Agent's or Lenders' acceptance of
payment of any sum secured by any of the Loan Documents after the due date of
such payment shall not be a waiver of Agent's or Lenders' right to either
require prompt payment when due of all other sums so secured or to declare a
default for failure to make prompt payment. The procurement of insurance or the
payment of taxes or other liens or charges by Agent or Lenders shall not be a
waiver of Agent's or Lenders' right to accelerate the maturity of the Loan, nor
shall Agent's or Lenders' receipt of
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any awards, proceeds, or damages under Section 4 of the Mortgage operate to cure
or waive Borrower's or the Principal's default in payment of sums secured by any
of the Loan Documents. With respect to all Loan Documents, only waivers made in
writing by Agent and Lenders shall be effective against Agent and Lenders.
9.5. GOVERNING LAW; SEVERABILITY. The Loan Documents shall be governed
by and construed in accordance with the internal laws of the State of Illinois,
except that the provisions of the laws of the state in which each Mortgage is
recorded shall be applicable to the creation, perfection and enforcement of the
lien created by that Mortgage. The invalidity, illegality or unenforceability of
any provision of this Agreement shall not affect or impair the validity,
legality or enforceability of the remainder of this Agreement, and to this end,
the provisions of this Agreement are declared to be severable.
9.6. RELATIONSHIP. The relationship between Agent and Lenders, on the
one hand, and Borrower, on the other, shall be that of creditor-debtor only. No
term in this Agreement or in the other Loan Documents and no course of dealing
between the parties shall be deemed to create any relationship of agency,
partnership or joint venture or any fiduciary duty by Agent and/or Lenders to
any other party. Nothing contained in any Loan Document and no action taken by
Agent or any Lender pursuant hereto or thereto shall be deemed to constitute
Lenders to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt. The obligation of each Lender hereunder is
several and not joint and no Lender shall be responsible for the obligation or
commitment of any other Lender hereunder. In the event that any Lender at any
time should fail to make a Loan as herein provided, the Lenders, or any of them,
at their sole option, may make the Loan that was to have been made by the Lender
so failing to make such Loan.
9.7. INDEMNITY. Borrower shall indemnify, protect, hold harmless and
defend Agent and Lenders, their respective successors, assigns, shareholders,
directors, officers, employees, and agents from and against any and all loss,
damage, cost, expense (including attorneys' fees), and claims arising out of or
in connection with (a) the Project or the AHC Properties, (b) the Collateral,
(c) any act or omission of Borrower, any Principal, or their respective
employees or agents, whether actual or alleged, and (d) any and all brokers'
commissions or other costs of similar type by any party in connection with the
Loan, in each case except to the extent arising from the indemnitee's gross
negligence or willful misconduct. Upon written request by an indemnitee,
Borrower will undertake, at its own costs and expense, on behalf of such
indemnitee, using counsel satisfactory to the indemnitee, the defense of any
legal action or proceeding whether or not such indemnitee shall be a party and
for which such indemnitee is entitled to be indemnified pursuant to this
section. At Agent's or Requisite Lenders' option, Agent may, at Borrower's
expense, prosecute or defend any action involving the priority, validity or
enforceability of any of the Loan Documents.
9.8. NOTICE. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if
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served in person, when served; (b) if telecopied, on the date of transmission if
before 3:00 p.m. (Chicago time) on a business day; provided that a hard copy of
such notice is also sent pursuant to (c) or (d) below; (c) if by overnight
courier, on the first business day after delivery to the courier; or (d) if by
U.S. Mail, certified or registered mail, return receipt requested on the fourth
(4th) day after deposit in the mail postage prepaid.
<TABLE>
<S> <C>
Notices to Borrower: AHC Borrower I, Inc.
c/o Alterra Healthcare Corporation
Attn: Chief Financial Officer
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Telecopy: (414) 918-5055
with a copy to: Rogers & Hardin
Attn: Alan C. Leet
2700 International Tower
229 Peachtree Street
Atlanta, Georgia 30303
Telecopy: (404) 525-2224
Notices to Agent: Heller Healthcare Finance, Inc.
Loan No. 20-199
Attn: Manager, Portfolio Administration Group
2 Wisconsin Circle
Suite 400
Chevy Chase, Maryland 20815
Telecopy: (301) 664-9866
With a copy to: Heller Financial, Inc.
Real Estate Financial Services
Loan No. 20-199
Attn: Kevin McMeen, Senior Vice President
500 West Monroe Street
Chicago, Illinois 60661
Telecopy: (312) 441-7119
</TABLE>
9.9. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
AND CAPTIONS. The covenants and agreements contained in the Loan Documents shall
bind, and the rights thereunder shall inure to, the respective successors and
assigns of Agent, Lenders, Borrower and the Principals, subject to the
provisions of this Agreement. All covenants and agreements of Borrower and the
Principals shall be joint and several. In exercising any rights under the Loan
Documents or taking any actions provided for therein, Agent and Lenders may act
through their respective employees, agents or independent contractors as
authorized by Agent or Lenders, respectively. The captions and headings of the
paragraphs and sections of this Agreement are for convenience only and are not
to be used to interpret or define the provisions hereof.
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9.10. TERMS AND USAGE. As used in the Loan Documents "BUSINESS DAY"
means any day, other than a Saturday or a Sunday, when banks in Chicago,
Illinois are not required or authorized to be closed.
9.11. INTENTIONALLY OMITTED.
9.12. TIME OF ESSENCE. Time is of the essence of this Agreement and the
other Loan Documents and the performance of each of the covenants and agreements
contained herein and therein.
9.13. VENUE. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL
BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN
(10) DAYS AFTER THE SAME HAS BEEN POSTED.
9.14. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER, AGENT AND EACH
LENDER, AND BORROWER ACKNOWLEDGES THAT NEITHER LENDERS NOR AGENT NOR ANY PERSON
ACTING ON BEHALF OF THEM HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. BORROWER, LENDERS AND AGENT ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM
HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN
THEIR RELATED FUTURE DEALINGS. BORROWER, AGENT AND LENDERS FURTHER ACKNOWLEDGE
THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED)
IN THE SIGNING OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND IN THE MAKING
OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
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<PAGE> 44
9.15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and together shall
constitute the Agreement.
9.16. FINAL AGREEMENT. This Agreement (including the Senior Housing
Rider attached hereto and hereby made a part hereof), together with the other
Loan Documents, represents the entire agreement among Borrower, Principals,
Lenders and Agent and supersedes all prior agreements among the parties with
respect to the Loan.
9.17. AMENDMENTS. Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement, the
Notes or any of the other Loan Documents, or consent to any departure by any
party therefrom, shall in any event be effective unless the same shall be in
writing and signed by Requisite Lenders (or Agent, if expressly set forth
herein, in any Note or in any other Loan Document) and the Borrower, if
applicable; provided, that except to the extent permitted by the applicable
Assignment and Acceptance Agreement, no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (a) increase any Lender's Pro Rata Share of the Loan; (b) reduce the
principal of or the rate of interest on the Loan or the fees payable with
respect to the Loan; (c) extend any date fixed for any payment of interest or
fees; (d) change the definition of the term Requisite Lenders or the percentage
of Lenders which shall be required for Lenders to take any action hereunder; (e)
release Collateral (except if the sale, disposition or release of such
Collateral is permitted under Section 1.6 or 1.7 above or any other Loan
Document); (f) amend or waive this Section 9.17 or the definitions of the terms
used in this Section 9.17 insofar as the definitions affect the substance of
this Section 9.17; or (g) consent to the assignment, delegation or other
transfer by any party of any of its rights and obligations under any Loan
Document; and provided, further, that no amendment, modification, termination or
waiver affecting the rights or duties of Agent under any Loan Document shall in
any event be effective, unless in writing and signed by Agent, in addition to
all Lenders required to take such action. Notwithstanding anything to the
contrary in this Section 9.17, Agent and Borrower may execute amendments to this
Agreement and the other Loan Documents for the purpose of correcting
typographical errors without the consent of Lenders. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No notice to or demand on
Borrower or any other party in any case shall entitle Borrower or any other
party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 9.17 shall be binding upon each holder
of the Notes at the time outstanding, each future holder of the Notes and, if
signed by a party, upon such party.
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<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
has caused the same to be executed by their duly authorized representatives as
of the date first above written.
AHC BORROWER I, INC., a Delaware corporation,
as Borrower
By \s\ Mark W. Ohlendorf
------------------------------------------
Mark W. Ohlendorf
Its Vice President
HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation, as Agent and a Lender
By \s\ Raymond J. Lewis
------------------------------------------
Raymond J. Lewis
Its Executive Vice President
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