EXHIBIT C - FORM OF LOAN AND SECURITY AGREEMENT
EXHIBIT C
FORM OF LOAN AND SECURITY AGREEMENT
Resolution 99-18
Draft #4
OS/28/99
BMO #3195
LOAN AND SECURITY AGREEMENT
between
CITY OF CLEARWATER, FLORIDA
AND
BEF, INC.
City of Clearwater, Florida
Housing Revenue Bonds
(BEF, Inc. Project)
Dated as of July 1, 1999
This Instrument Prepared by:
Robert C. Reid, Esq.
Bryant, Miller and Olive, P.A.
201 South Monroe Street
Suite 500
Tallahassee, Florida 32301
Section 1. 1.
Section 1.2.
Section 1.3.
Section 2.1.
Section 2.2.
Section 2.3
Section 2.4.
Section 3. 1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
Section 3.7.
Section 3.8
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
Section 4.6.
Section 4.7
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Interpretation ................................... 19
Captions and Headings ............................. 20
ARTICLE II
REPRESENT A TIONS
Representations and Covenants of the Issuer . . . . . . . . . . . . . . . . 21
Representations and Covenants of the Company. . . . . . . . . . . . . . 21
Tax Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . 22
Use of Proiect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE SERIES 1999 BONDS
Acquisition. Construction. Installation. Equipment and Improvement
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Issuance of the Series 1999 Bonds: Application of Proceeds: Company
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Disbursements from the Proiect Fund . . . . . . . . . . . . . . . . . . . . 29
Company Required to Pay Costs in Event Project Fund Insufficient . 31
Completion Date .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Investment of Fund Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Loan Repayment: Delivery of Notes and Mortgage ........... 33
Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Place of Payments ................................ 36
Obligations Unconditional ........................... 36
Assignment of Agreement and Revenues . . . . . . . . . . . . . . . . . . 36
Application of Certain Moneys ........................ 36
Issuer's Right of Purchase ........................... 37
Section 5. 1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
Section 5.6.
Section 5.7.
Section 5.8.
Section 5.9.
Section 5.10.
Section 5.11.
Section 5.12.
Section 5.13.
Section 5.14.
Section 5.15.
Section 5.16.
Section 5.17.
Section 5.18.
Section 5.19.
Section 5.20.
Section 5.21
[Section 5.22
Section 5.23.
Section 5.24.
Section 5.25.
Section 6.1.
Section 6.2.
Section 7. 1.
Section 7.2.
Section 7.3.
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Pledge of Revenues. Security Interest and Transfer of Intangibles .. 38
Debt Service Coverage Ratio ......................... 39
Calculation of Principal and Interest Requirements . . . . . . . . . . . . 40
Permitted Debt .................................. 41
Parity Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Restrictions on Disposition of Property: Lease or Use of Proiect . . . 46
Permitted Encumbrances ......... . . . . . . . . . . . . . . . . . . . 48
Maintenance of Corporate Existence . . . . . . . . . . . . . . . . . . . . . 50
Annual Audit and Periodic Report . . . . . . . . . . . . . . . . . . . . . . 52
Perfection of Security Imerest . . . . . . . . . . . . . . . . . . . . . . . . . 53
Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Company Not to Adversely Affect the Exclusion From Gross Income of
Interest on Tax-Exempt Bonds. . . . . . . . . . . . . . . . . . . . . . . . . 56
Litigation Notice ............. . . . . . . . . . . . . . . . . . . . . 56
Governmental Permits and Regulations . . . . . . . . . . . . . . . . . . . 57
Annual Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Project as Public Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Restriction Against Religious Activities . . . . . . . . . . . . . . . . . . . 58
Application of Revenues: Renewal and Replacement Fund . . . . . . . 58
Purchase of Tender Bonds by Company . . . . . . . . . . . . . . . . . . . 59
Minimum Liquid Reserve and Operating Reserve Amount . . . . . . . 59
Special Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Liquidity Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Trade Payable Covenant ............................ 60
Occupancy Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VI
REDEMPTION OF BONDS
Optional Redemption .............................. 61
Mandatory Redemption or Purchase . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Remedies on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
No Remedy Exclusive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. . . . . . . . . . . . . 65
Section 7.5. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.6. Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8. 1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
Section 8.7.
Section 8.8.
Section 8.9.
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
ARTICLE VIII
MISCELLANEOUS
Term of Agreement ............................... 67
Amounts Remaining in Funds . . . . . . . . . . . . . . . . . . . . . . . . . 67
Notices ....................................... 67
Extent of Covenants of the Issuer: No Personal Liability . . . . . . . . 67
Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Amendments and Supplements ........................ 68
Execution of Counterparts ........................... 68
Severability .................................... 68
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SERIES 1999 NOTES
DESCRIPTION OF THE PROJECT
PROJECT SITE
FORM OF DISBURSEMENT REQUEST
EXISTING PERMITTED LIENS
EXCLUDED PROPERTY
111
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT made and entered into as of July 1, 1999,
between the CITY OF CLEARWATER, FLORIDA, a municipal corporation, duly created and
validly existing under the laws of the State of Florida (the "Issuer"), and BEF, INC., a Florida
not-for-profit corporation duly organized and validly existing under the laws of the State of
Florida (the "Company");
A. Pursuant to the provisions of the Act, the Issuer has determined to issue, sell and
deliver its Series 1999 Bonds and to loan the proceeds derived from the sale thereof to the
Company to assist in the financing of the Project Costs.
B. The Company and the Issuer each have full right and lawful authority to enter into
this Agreement and to perform and observe the provisions hereof on their respective parts to be
performed and observed.
NOW THEREFORE, in consideration of the premises and the mutual representations and
agreements hereinafter contained, the parties hereto agree as follows (provided that any obligation
of the Issuer created by or arising out of this Agreement shall never constitute a general debt of
the Issuer nor give rise to any pecuniary liability of the Issuer but shall be payable solely out of
the Revenues):
1
ARTICLE I
DEFINITIONS
Section 1.1. Use of Defined Terms. Capitalized terms used in this Agreement shall have
the meanings set forth below unless the context or use clearly indicates another meaning or intent.
Such definitions shall be equally applicable to the singular, possessive and plural forms of any of
the words and terms defined therein.
"Act" means the Florida Constitution, the Charter of the Issuer and Chapter 154, Parts II
and III of Chapter 159, and Chapter 166, Florida Statutes, as amended and other applicable
provisions of law.
"Additional Bonds" means the Additional Bonds issued under the provisions of Section
2.05 of the Indenture.
"Additional Notes" means any non-negotiable promissory note or notes, in addition to the
Series 1999 Notes, delivered by the Mortgagor to the Trustee in connection with the issuance of
Additional Bonds as provided in this Agreement.
"Additional Payments" means the payments required to be paid by the Mortgagor under
Section 4.2 of this Agreement.
"Adjusted Rate" means the interest rate borne by the Series 1999B Bonds determined in
the manner set forth in Section 2.03(b) of the Indenture.
"Affiliate" means a Person which controls or is controlled by the Company or is under
common control with the Company, as follows: (A) one Person shall be deemed to control
another if it owns more than 50% of the outstanding voting stock of or other equity interest in the
other, or it has the power to elect more than 50% of the governing body of the other; and (B) such
control may be exercised by one Person over another directly, indirectly through control over a
third party, or jointly with one or more controlled third parties.
"Agreement" means this Loan and Security Agreement dated as of July 1, 1999 between
the Issuer and the Company, as amended or supplemented from time to time.
"Annual Cash Operating Expense" means, as of any date of determination thereof, the
expenses of operating the Project, other than depreciation, amortization and other non-cash items,
for the preceding 365 days, all as determined in accordance with generally accepted accounting
principles.
"Appraiser" means a Person designated by the Authorized Company Representative, with
written notice to the Trustee, who (i) is a member of the American Appraisal Institute, (ii) has no
2
interest, direct or indirect, in the Company other than payment for services and (iii) in the case
of an individual, is not a member, director, trustee, officer or employee of the Company or, in
the case of another Person, has no partner, member, director, trustee, officer or employee who
is a member, director, trustee, officer or employee of the Company. In the event that the
American Appraisal Institute should cease to exist, the term "Appraiser" shall mean a Person,
designated by the Company with written notice to the Trustee and not objected to by the Trustee
within 10 days after receipt of such notice, which objection shall not be unreasonably interposed,
who is recognized as qualified to appraise the value of buildings, furnishings and equipment
comparable to the Project and who does not have any relationship prohibited in the preceding
sentence.
"Arbitrage Rebate Agreement" means the Arbitrage Rebate Agreement dated as of
May 1, 1999 among the Issuer, the Company and the Trustee.
"Architect" means a Person, designated by the Authorized Company Representative, with
written notice to the Trustee, who or which Architect (i) is licensed or permitted to practice
architecture or engineering in the State, (ii) has no interest, direct or indirect, in the Company and
(iii) in the case of an individual, is not a member, director, trustee, officer or employee of the
Company or, in the case of another Person, has no partner, member, director, trustee, officer or
employee who is a member, director, trustee, officer or employee of the Company.
"Assignment" means the Assignment of Mortgage and Security Agreement of even date
with the Mortgage, from the Issuer to the Trustee, as amended or supplemented from time to time.
"Auditor" means a recognized firm of independent certified public accountants of good
repute, designated by the Authorized Company Representative, which is licensed or permitted to
practice as accountants and auditors in the State.
"Authenticating Agent" means the Trustee, as Registrar for the Bonds and any bank, trust
company or other person designated as an Authenticating Agent for the Bonds by or in accordance
with Section 6.13 of the Indenture, each of which shall be a transfer agent registered in
accordance with section 17A(c) of the Securities Exchange Act of 1934, as amended.
"Authorized Company Representative" means the person at the time designated to act
on behalf of the Company by its Chief Executive Officer by written certificate furnished to the
Trustee and the Issuer, which certificate may designate an alternate or alternates. In the event that
all persons so designated become unavailable or unable to act and the Company fails to designate
a replacement within ten (10) days after such unavailability or inability to act, the Trustee may
appoint an interim Authorized Company Representative until such time as the Company designates
that person.
3
"Authorized Denominations" means (a) with respect to the Series 1999 Bonds, $100,000
or any integral multiple of $5,000 in excess thereof, and (b) with respect to Additional Bonds, the
denominations authorized in the applicable Supplemental Indenture.
"Authorized Official" means the Mayor-Commissioner, Vice Mayor, City Manager, or
Assistant City Manager of the Issuer, or such other officer of the Issuer as may be designated in
writing to the Trustee and the Company by the Issuer.
"Bond Counsel" means Bryant, Miller and Olive, P.A., Tallahassee, Florida or such other
tlrm of attorneys approved by the Issuer of nationally recognized standing in the field of municipal
finance law whose opinions are generally accepted by underwriters and other purchasers of
obligations issued by state and local governments.
"Bond Fund" means the Bond Fund created by the Section 5.01 of the Indenture.
"Bond Purchase Agreement" or "Purchase Agreement" means, with respect to the Series
1999 Bonds, the Bond Purchase Agreement among the Issuer, the Company and the original
purchaser of the Series 1999 Bonds; and as to any Additional Bonds, any bond purchase
agreement for which provision is made to purchase such Bonds by the original purchaser thereof.
"Bond Year" has the meaning set forth in the Arbitrage Rebate Agreement.
"Bonds" means the Series 1999 Bonds and any Additional Bonds.
"Business Day" or "business day" means any day of the year on which banks in any of
the cities in which the principal oftlce of the Trustee or of the designated oftlce of any Paying
Agent are located are not required or authorized by law to remain closed and on which the Trustee
and any Paying Agent and the New York Stock Exchange, Inc. are open for business.
"Capitalized Interest" means accrued interest, if any, received upon the sale of the Bonds
plus any interest to become due and payable on the Bonds, which is included in the principal
amount of the Bonds, and deposited in the Bond Fund and used to pay interest on the Bonds, until
completion of a related project.
"Chicago Time" means the time on any given day in the City of Chicago, Illinois, whether
such time be Central Standard Time or Central Daylight Savings Time.
"Code" means the Internal Revenue Code of 1986, as amended, the Treasury Regulations
(whether proposed, temporary or tlnal) under the Code or the Statutory predecessor of the Code,
and any amendments of, or successor provisions to, the foregoing and any official rulings,
announcements, notices, procedures and judicial determinations regarding any of the foregoing,
all as and to the extent applicable. Unless otherwise indicated, reference to a Section means the
4
Section of the Code, including such applicable Treasury Regulations, rulings, announcements,
procedures, and determinations pertinent to that Section.
"Commercial Code" means the Uniform Commercial Code as enacted in the State, as
from time to time amended or supplemented.
"Company" means BEF, Inc., Inc., a Florida not-for-profit corporation and its lawful
successors and assigns, to the extent permitted by the Agreement.
"Company Documents" mean this Agreement, the Notes, the Mortgage and the Bond
Purchase Agreement.
"Completion Date" means the date of completion of the Project to be specified in the
certificate furnished by the Company pursuant to Section 3.6 of this Agreement.
"Computation Date" shall have the meaning set forth in the Arbitrage Rebate Agreement.
"Consultant" means a firm of nationally-recognized consultants, designated by the
Authorized Company representative with written notice to the Trustee and, so long as the Series
1999 Bonds are Outstanding, B.c. Ziegler and Company, which Consultant (i) is knowledgeable
in both the operations and fiscal management of continuing care or similar health care facilities,
(ii) has a good reputation for skill and experience in that work, (iii) has no interest, direct or
indirect, in the Company, and (iv) has no partner, principal, member, director, trustee, officer
or employee who is a member, director, trustee, officer or employee of the Company.
"Continuing Disclosure Certificate" means the Continuing Disclosure Certificate dated
as of July 1, 1999 of the Company.
"Days Cash on Hand" means, as of any date of determination thereof, the product of 365
times a fraction, the numerator of which is the sum of cash, readily marketable securities and
other investments of the Company not held by the Trustee as of such date and the denominator
of which is Annual Cash Operating Expense.
"Debt" means all obligations for borrowed money and installment sale and capitalized lease
obligations incurred or assumed by the Company and any guaranty by the Company of
indebtedness of any other Person, but shall not be deemed to include (a) obligations under
contracts for supplies, services and pensions allocable to current operating expenses during the
current or future Fiscal Years in which the supplies are to be delivered, the services rendered or
the pensions paid, and (b) payments payable in the current or future Fiscal Years under leases not
intended to evidence the acquisitions of capital assets.
"Debt Service Charges" mean, for any period or date, the principal of and premium, if
any, and interest on the Bonds accruing for that period or due and payable on that date. In
5
determining Debt Service Charges accruing for any period or due and payable on any date,
mandatory sinking fund requirements accruing for that period or due on that date shall be
included.
"Debt Service Coverage Ratio" means the ratio of Net Income Available for Debt Service
for the period in question to the maximum Principal and Interest Requirements of the Company
on outstanding Long-Term Debt for the then current or any succeeding Fiscal year, determined
as of the first day of such period. The calculation of the Debt Service Coverage Ratio shall be
made in accordance with Section 5.2 of this Agreement, except as may be otherwise provided in
other Sections of this Agreement.
"Debt Service Reserve Fund" means the Debt Service Reserve Fund created in Section
5.01 of the Indenture.
"Debt Service Reserve Requirement" means with respect to the Series 1999 Bonds, as
of the date of any calculation, an amount equal to $ . In the event Additional
Bonds are issued, the Debt Service Reserve Requirement, if any, with respect to those Additional
Bonds shall be the lesser of (i) 10% of the proceeds of such Additional Bonds, (ii) the Maximum
Principal and Interest Requirements on such Additional Bonds or (iii) 125 % of the average
Principal and Interest Requirements on such Additional Bonds. No such Additional Bonds shall
be secured by the Debt Service Reserve Fund established for the Series 1999 Bonds.
"Default" means any circumstance which, with the passage of time or the giving of notice
or both, would constitute an "Event of Default" as defined in Section 7.1 of this Agreement or
7.01 of the Indenture, respectively.
"Defeasance Obligations" means:
(a) direct obligations of the United States of America (including obligations
issued or held in book-entry form on the books of the Department of the Treasury of the
United States of America), or obligations the timely payment of the principal of and
interest on which is unconditionally guaranteed by the United States of America,
(b) certificates which evidence ownership of the right to the payments of the
principal of and interest on obligations described in clause (a) or in specified portions
thereof, including without limitation, portions consisting solely of the principal thereof or
solely of the interest thereon, or
(c) obligations of any state or any political subdivision of any state, other than
the Issuer, which are rated by a Rating Service in the highest category for long-term debt,
the interest on which is excluded from gross income for federal income tax purposes and
the full and timely payment of the principal of and any premium and the interest on which
is unconditionally payable from obligations of the character described in (a) or (b) above.
6
"Disbursement Request" means a written order to the Trustee for disbursement from the
Project Fund substantially in the form of Exhibit 0 attached to this Agreement.
"Eligible Investments" mean
(a) obligations issued or guaranteed as to full and timely payment by the United
States of America or by any Person controlled or supervised by or acting as an
instrumentality of the United States of America pursuant to authority granted by
Congress;
(b) obligations issued or guaranteed by any state or political subdivision thereof,
which obligations are rated in the highest category if rated as short therm obligations by
a Rating Service;
(c) commercial or finance paper which is rated in the highest rating category
by a Rating Service;
(d) deposit accounts, bankers' acceptances, certificates of deposit or bearer
deposit notes in one or more banks or trust companies (including without limitation, the
Trustee or any bank affiliated with the Trustee) organized under the laws of the United
States of America or any state thereof, the senior debt obligations of which bank or trust
company at the time of purchase of such instruments are rated in one of the three highest
rating categories by a Rating Service or which instruments are secured by a security
interest in obligations described in (a) above or which are fully insured by the FDIC;
(e) any repurchase agreement: (i) with any bank, including the Trustee and its
affiliates, or any broker-dealer with retail customers that falls under the protection of the
Securities Investors Protection Corporation; (ii) which is secured by collateral of the type
specified in (a) and (b) above which collateral (1) is in the possession of the Trustee or a
third party acting solely as agent for the Trustee, (2) is not subject to any third party
claims, and (3) has a market value (determined at least once every 14 days) at least equal
to the amount invested in the repurchase agreement; and (iii) which permits the Trustee
to liquidate the collateral immediately upon failure to maintain the collateral at the required
level; or
(t) money market funds invested solely in securities listed in (a) above;
provided that any investment or deposit described above is not prohibited by applicable
law.
"Entrance Fees" shall mean the fees, other than monthly service charges paid by the
residents of the Mortgaged Property to the Company for the purpose of obtaining the right to
reside in the Mortgaged Property, including any Refundable Resident Deposits described in
7
Residency Agreements with respect to the Mortgaged Property, but shall not include any such
amounts that are (i) escrowed pursuant to the requirements of Chapter 651, Florida Statutes or any
similar law unless and until such amounts are released from such escrow to the Company or (ii)
escrows otherwise set aside pursuant to the requirements of any Residency Agreement prior to
occupancy of the unit covered by such Residency Agreement (which amounts shall be included
if and when such occupancy occurs).
"Event of Default" means an Event of Default as defined in Section 7.1 of this Agreement
and in Section 7.01 of the Indenture.
"Excess Earnings" means, as to the Tax-Exempt Bonds of any issue as of each
Computation Date for that issue, an amount determined in accordance with Section 148(f) of the
Code equal to the sum of (a) plus (b) where:
(a) Is the excess of
(i) the aggregate amount earned from the date the Tax-Exempt Bonds
are invested (other than investments attributable to an excess described in this
clause (a)), taking into account any gain or loss on the disposition of nonpurpose
investments, over
(ii) the amount that would have been earned if the amount of the gross
proceeds of the Tax-Exempt Bonds of such issue invested in those nonpurpose
investments (other than investments attributable to an excess described in this
clause (a)) had been invested at a rate equal to the yield on the Bonds; and
(b) any income attributable to the excess described in clause (a) above, taking
into account any gain or loss on the disposition of investments.
The foregoing sums shall be determined in accordance with Section 148(t) of the Code.
As used herein, the terms "gross proceeds," "nonpurpose obligations" and "yield" have the
meanings assigned to them for purposes of Section 148 of the Code.
"Excluded Property" means the property described in Exhibit F of this Agreement, if any.
"Exempt Person" means (i) any organization described in Section 501(c)(3) of the Code
and exempt from taxes under Section 501(a) of the Code, and (ii) a "government unit" as that term
is used in Sections 103 and 145 of the Code.
"Existing Facilities" means the buildings, equipment and improvements located on the
Project Site on the date of execution and delivery of this Agreement.
8
"Extendables Purchase Fund" means the Extendables Purchase Fund created pursuant
to Section 4.10 of the Indenture.
"Fiscal Year" means, with respect to the Company, the period commencing on
1 of each year and ending on the 30 of the following year or such other fiscal year
as may hereafter be designated by the Company to the Trustee in writing.
"Force Majeure" means any of the causes, circumstances or events described as
constituting Force Majeure in Section 7.1 of this Agreement or Section 6.2 of the Mortgage.
"Governmental Restrictions" means federal, State or other applicable governmental laws
or regulations affecting the Company or its facilities and placing restrictions and limitations on
the rates, fees and charges to be fixed, charged and collected by the Company or any other
operator of the Company's facilities; provided, however, that no change in law or regulation shall
be deemed applicable by reason of this definition if such change would in any way constitute an
impairment of the rights of the Issuer, a Holder, the Company or any other operator of the
Mortgaged Property or the Trustee under this Agreement or the Indenture.
"Holder" or "Holder of a Bond" means the person in whose name a bond is registered
on the Register.
"Immediate Notice" means notice by telephone, telegram, telex, telecopy or other
telecommunication device, receipt of which has been confirmed by the recipient, promptly
followed by written notice by overnight carrier or delivery service, expenses prepaid, to such
addresses.
"Indenture" means the Trust Indenture dated as of July 1, 1999 between the Issuer and
the Trustee, as amended or supplemented from time to time.
"Independent Counsel" means an attorney or firm of attorneys acceptable to the Company
and duly admitted to practice law before the highest court of the State.
"Initial Bondholders"
"Initial Interest Rate" means, the interest rate applicable from the dated date of the Series
1999 Bonds to and including at the Initial Rate Change Date.
"Initial Rate Change Date" means the tirst date on which the Series 1999B Bonds change
to another interest rate, which shall be [November 15, 20_J.
"Insurance Consultant" means a Person designated by the Authorized Company
Representative, with written notice to the Trustee, who or which Insurance Consultant is (i)
qualified to survey risks and to recommend insurance coverage for facilities comparable to the
9
Mortgaged Property and for organizations engaged in operations similar to those of the Company,
(ii) has a favorable reputation for skill and experience in making those surveys and
recommendations, (iii) has no interest, direct or indirect, in the Company other than payment for
services and (iv) in the case of an individual, is not a member, director, trustee, officer or
employee of the Company or, in the case of another Person, has no partner, member, director,
trustee, officer or employee who is a member, director, trustee, officer or employee of the
Company; provided that so long as the foregoing requirements are satisfied, the Insurance
Consultant may be a broker or agent with whom the Company transacts business; and provided
further that the collection of reasonable fees for services rendered does not constitute an interest
in the Company for this purpose.
"Insurance Requirements" means all requirements respecting the Mortgaged Property,
or any part thereof, imposed by any policies of insurance in force at any time with respect to any
of the buildings, improvements, machinery, furnishings or equipment constituting a part of the
Mortgaged Property.
"Interest Payment Account" shall mean the Interest Payment Account within the Bond
Fund created in Section 5.01 of the Indenture.
"Interest Payment Date" or "Interest Payment Dates" means, as to the Series 1999
Bonds, the date or dates set forth as such in the form of Series 1999 Bond attached as Exhibit A
to the Indenture, and as to Additional Bonds, each date or dates designated as an "Interest
Payment Date" or "Interest Payment Dates" in the form of Bond for which provision is made in
the applicable Supplemental Indenture.
"Interest Rate for Advances" means the lesser of (i) the Prime Rate or (ii) the maximum
interest rate permitted by applicable law.
"Investor Letter" means the Investment Letter to be delivered by the purchaser of the
Series 1999 Bonds to the Issuer and the Trustee substantially in the form attached as Exhibit B to
the Indenture.
"Issuance Expenses" means all costs and expenses payable by the Issuer which are
incidental to the issuance of the Bonds and shall include, but not be limited to, fees and expenses
of consultants, advisors, accountants, Bond Counsel and other legal counsel to the Issuer, costs
and expenses of printing such Bonds and disclosure documents relating thereto, fees of bond rating
services, charges for CUSIP numbers, charges of any clearing agent, charges of the Depository
Trust Company ("DTC") and other securities depositories, charges payable to the Municipal
Securities Rulemaking Board, Public Securities Association and wire services, charges for
telephone, telegraph, telecopier, telex and fax services, postage and express charges, costs of
federal funds, closing costs (including all legally permitted costs of travel, food and lodging of
officials and employees of the Issuer incurred in connection with attending any closing or
preclosing or any meeting relating to the issuance of the Bonds), any costs incurred in connection
10
with the sale of the Bonds, including costs incurred in any public or negotiated sale thereof, and
placement fees, costs of compliance with the securities laws of any state in which Bonds are to be
offered and sold, the initial fees of the Trustee, Registrar, Paying Agent and Authenticating
Agent, and other similar expense; provided that the term shall not include any underwriter's
discount which is taken into account in the sale price (or any costs and expenses paid by the
underwriter which are not to be reimbursed by the Issuer).
"Issuer" means City of Clearwater Florida, a municipal corporation duly created and
validly existing under the laws of the State of Florida including, particularly, the Act, and its
successor public bodies.
"Issuer Documents" means this Agreement, the Assignment and the Indenture.
"Loan" means a loan by the Issuer to the Company of the proceeds received from the sale
of Bonds.
"Loan Payment Date" means (i) the fifth Business Day immediately preceding the last day
of each calendar month and (ii) the fifth Business Day immediately preceding the date on which
any principal of or interest or any premium on the Bonds shall be due and payable, whether at
maturity, upon acceleration, call for redemption or otherwise.
"Loan Payments" means the amounts required to be paid by the Company in repayment
of the Loan pursuant to Section 4.1 of this Agreement.
"Long-Term Debt" means Debt having an original maturity greater than one year
(including demand notes with alternative stated maturities of less than one year unless and until
a demand for the payment thereof shall have been made) or renewable at the option of the obligor
for a period greater than one year from the date of original incurrence or issuance thereof, which
shall not include the current portion of such Long-Term Debt as determined in accordance with
generally accepted accounting principles.
"Maximwn Principal and Interest Requirement" means as to any Series of Bonds, the
maximum Principal and Interest Requirement coming due on such Bonds in any Fiscal Year,
provided that the Maximum Principal and Interest Requirement for any Long Term Debt shall be
disregarded for any period during which the interest on such Long Term Debt is funded from the
proceeds thereof.
"Net Proceeds," when used with respect to any insurance proceeds or condemnation
award, means the gross proceeds thereof less the payment of all expenses, including attorneys'
fees incurred in connection with the collection of such gross proceeds.
"Notes" means the Series 1999 Notes and any Additional Notes.
11
"Notice Address" means
(a) As to the Issuer:
(b) As to the Company:
(c) As to the Trustee:
(d) As to the
Remarketing Agent:
Margaret L. Simmons, CPA
Financial Services Administrator
City of Clearwater, Florida
100 South Myrtle Avenue
Clearwater, Florida 33758
copy to:
Pamela Akin, Esq.
City Attorney
112 South Osceola Avenue
Clearwater, Florida
BEF, Inc.
1601 Jack Street, Suite 200
Fort Myers, Florida 33901
Attention: Gerard A. McHale, Jr.
SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida, 32801
Attention: Corporate Trust Department
B.C. Ziegler and Company
1 South Wacker Drive, Suite 3080
Chicago, Illinois 60606
Attention: President
or such different address, notice of which is given under Section 8.3 of this Agreement or Section
12.03 of the Indenture.
"Opinion of Bond Counsel" means an opinion in writing signed by a Bond Counsel
satisfactory to the Trustee.
"Opinion of Counsel" means an opinion in writing signed by an attorney or firm of
attorneys not unsatisfactory to the Trustee, who may be counsel to the Company.
"Optional Tender Date" means, with respect to the Series 1999B Bonds, each Rate
Change Date.
12
"Outstanding Bonds," "Bonds Outstanding" or "Outstanding" as applied to Bonds,
mean, as of the applicable date, all Bonds which have been authenticated and delivered, or which
are being delivered by the Trustee under the Indenture, except:
(a) Bonds cancelled upon surrender, exchange or transfer, or cancelled because
of payment or redemption on or prior to that date;
(b) Bonds, or the portion thereof, for the payment, redemption or purchase for
cancellation of which sufficient moneys have been deposited and credited with the Trustee
or any Paying Agents on or prior to that date for that purpose (whether upon or prior to
the maturity or redemption date of those Bonds); provided, that if any of those Bonds are
to be redeemed prior to their maturity, notice of that redemption shall have been given or
arrangements satisfactory to the Trustee shall have been made for giving notice of that
redemption, or waiver by the affected Holders of that notice satisfactory in form to the
Trustee shall have been filed with the Trustee;
(c) Bonds, or the portion thereof, which are deemed to have been paid and
discharged or caused to have been paid and discharged pursuant to the provisions of the
Indenture;
(d) Bonds in lieu of which others have been authenticated under Section 3.07
of the Indenture; and
(e) Any Bond as to which an election to tender has been duly submitted and not
withdrawn and moneys are held in trust by the Tender Agent for the purpose of purchase
of such Bond.
"Parity Debt" means any obligation of the Company permitted to be incurred as Parity
Debt in Section 5.5 of this Agreement.
"Paying Agent" means any bank or trust company designated as a Paying Agent by or in
accordance with Section 6.12 of the Indenture.
"Pennitted Debt" means the liabilities, obligations and Debt permitted in Section 5.4 of
this Agreement.
"Pennitted Encumbrances" shall have the meaning assigned such term in Section 5.7 of
this Agreement.
"Person" or words importing persons, means firms, associations, partnerships (including
without limitation, general and limited partnerships), joint ventures, societies, estates, trusts,
corporations, public or governmental bodies, other legal entities and natural persons.
13
"Plans and Specifications" means the plans and specifications describing a project as
prepared and on file with the Trustee, as they may be changed from time to time.
"Prime Rate" means that interest rate announced from time to time by the Trustee in its
lending capacity as a bank as its "prime rate" or "base rate."
"Principal and hlterest Requirements" means, for any period or date, as applied to any
Debt means the sum of the principal of and premium, if any, and interest (determined for variable
rate date at the highest rate payable on such date) on any Outstanding Debt accruing for that
period or due and payable on that date; provided that for this purpose, the term Debt does not
include indebtedness for which provision for payment has been made in accordance with the terms
of the instruments evidencing or securing such indebtedness. In determining Principal and Interest
Requirements accruing for any period or due and payable on any date, mandatory sinking fund
requirements on any Debt for that period or on that date shall be included, and principal maturities
and mandatory sinking fund requirements for a prior period or on a prior date shall be excluded.
"Principal Payment Account" means the Principal Payment Account within the Bond
Fund created in Section 5.01 of the Indenture.
"Private Business Use" means use, directly or indirectly (i) in a trade or business carried
on by any Private Person (other than a Tax-Exempt Organization) other than use as a member of,
and on the same basis as, the general public, or (ii) in any activity carried on by a Tax-Exempt
Organization (other than use as a member of, and on the same basis as, the general public) which
is an "unrelated trade or business" activity within the meaning of Section 513 (a) of the Code.
"Private Person" means any person, firm, entity or individual, including a Tax-Exempt
Organization other than a governmental unit as that term is used in Section 145 of the Code.
"Project" means the capital improvements described in Exhibit B to this Agreement (and
more particularly described in the Plans and Specifications related thereto), together with any
additions, modifications and substitutions to those facilities, including all furnishings, machinery,
equipment and other tangible personal property.
"Project Budget" means the budget and trade and materials, breakdown and scheduled
values for the Project.
"Project Costs" has the meaning assigned such term in Section 3.4 of this Agreement.
"Project Fund" means the Project Fund created in Section 5.01 of the Indenture.
"Project Site" means the real estate described in Exhibit C to this Agreement, and any
additions thereto, less any removals therefrom made in the manner permitted by this Agreement.
14
"Property" means any and all rights, title and interest of the Company in and to property
(including cash and cash equivalents) whether real or personal, tangible or intangible and wherever
situated, but excluding Excluded Property.
"Rate Change Date" means, with respect to the Series 1999B Bonds, the Initial Rate
Change Date and any rate change date selected by the Company pursuant to Section 2.03(b) of
the Indenture.
"Rate Period" means, with respect to the Series 1999B Bonds, the period commencing on
each Rate Change Date and ending on and including the date preceding the next Rate Change
Date, or the maturity date thereof.
"Rating Service" means Fitch mCA, Moody's Investors Service, Inc. or Standard &
Poor's Ratings Services Group, each of New York, New York or their respective successors.
"Rebate Amount" means the amount of Excess Earnings computed as of the most recent
prior Computation Date which are required to be paid to the United States of America under
Section 148(t) of the Code.
"Rebate Fund" means the Rebate Fund created in Section 5.01 of the Indenture.
"Refunding Debt" means Debt incurred for the purpose of refinancing or refunding all
or any portion of any Outstanding Debt of the Company.
"Register" means the books kept and maintained for the registration and transfer of Bonds
pursuant to Section 3.06 of the Indenture.
"Registrar" means the Trustee or such other bank, trust company or person as may be
designated from time to time by the Issuer with the approval of the Company.
"Regular Record Date" or "Record Date" means, with respect to any Bond, the last day
(whether or not a Business Day) of the calendar month next preceding an Interest Payment Date
applicable to that Bond.
"Regulatory Body" means any federalm,state or local government, department, agency,
authority or instrumentality (other than the Issuer) and other public or private body, including
accrediting organizations, having regulatory jurisdiction and authority over the Company or its
facilities or operations.
"Remarketing Agent" means the Remarketing Agent appointed and servmg a such
pursuant to Section 4.15 of the Indenture, initially B. C. Ziegler and Company.
15
"Remarketing Agreement" means the Remarketing Agreement between the Company and
the Remarketing Agent then serving under the Indenture.
"Renewal and Replacement Fund" shall mean the Renewal and Replacement Fund
created under section 5. 19 of this Agreement.
"Reset Rate" means, with respect to the Series 1999 Bonds, the adjusted rate of interest
born on the Series 1999B Bonds determined as provided in Section 2.03(b) of the Indenture.
"Revenues" means all present and future revenues received by or on behalf of the
Company from whatever source derived, including without limitation, all
(a) Entrance Fees, cash, accounts, deposits, chattel paper, instruments, documents,
money and general intangibles, including without limitation, contract rights and rights to
payment (i) for goods and properties sold or leased or for services rendered, (ii) under
agreements respecting governmental and private insurance arrangements, and (iii) from any
insurance, condemnation award or agreement in lieu of a condemnation award resulting
from eminent domain proceedings,
(b) income from, and revenues realized upon the liquidation or sale of, securities held
by or on behalf of the Company,
(c) proceeds of those items constituting Revenues to which reference is made in
clauses (a) and (b) above, and
(d) gifts, grants, bequests, contributions and donations, including without limitation,
the unrestricted income and profits therefrom,
provided that Revenues do not include
(i) gifts, grants, bequests, contributions and donations to the extent restricted
specifically to a particular purpose inconsistent with their use for the making of payments
into any of the Special Funds,
(ii) the proceeds of any borrowing to the extent that those proceeds are required to
be excluded from Revenues by the terms of the borrowing,
(iii) the proceeds of non-recourse Debt secured by and payable solely from Property
financed by such non-recourse Debt and all revenues derived from or attributable to
Property financed with the proceeds of such non-recourse Debt,
(iv) revenues derived from Excluded Property, or
16
(v) amounts on deposit in the Operating Reserve.
"Series 1999 Bonds" means collectively, the Series 1999A Bonds, the Series 1999B Bonds
and the Series 1999C Bonds.
"Series 1999A Bonds" means the $
Revenue Bonds, Series 1999A (BEF, Inc. Project).
City of Clearwater, Florida
"Series 1999B Bonds" means the $ City of Clearwater, Florida,
Revenue Bonds, Series 1999B (BEF, Inc. Project), Extendable Rate Adjustable SecuritiesSM
(EXTRASSM).
"Series 1999C Bonds" means the $
Taxable Revenue Bonds, Series 1999C (BEF, Inc. Project).
City of Clearwater, Florida
"Series 1999 Note" means the non-negotiable promissory note of the Company in the
aggregate principal amount of $ of even date with the Series 1999A Bonds,
the Series 1999B Bonds and the Series 1999C Bonds, substantially in the form attached to this
Agreement as Exhibit "A," executed and delivered by the Company to the Trustee in connection
with the issuance of the Series 1999 Bonds.
"Special Funds" means the Special Funds created pursuant to Section 5.01 of the Indenture,
other than the Rebate Fund.
"Special Interest Payment Date" means the Special Interest Payment Date created in
Section 7.07(d) of the Indenture.
"Special Record Date" means, with respect to any Bond, the date established by the Trustee
in connection with the payment of overdue interest on that Bond pursuant to Section 3.05 of the
Indenture.
"State" means the State of Florida.
"Supplemental Indenture" means any indenture supplemental to the Indenture entered into
between the Issuer and the Trustee in accordance with Article VIII of the Indenture.
"Taxable Bond" means any obligation, or issue of obligations which at the time of issuance
under the Indenture is not intended to be a Tax-Exempt Bond.
"Tax-Exempt Bond" means any obligation, or issue of obligations, the interest on which
is, or is intended to be, excluded from gross income for federal income tax purposes within the
meaning of Section 103 of the Code.
17
"Tender Agent" means the Tender Agent referred to in Sections 4.10 and 6.14 of the
Indenture, which Tender agent shall initially be the Trustee, serving as agent for Registered
Owners of Put Option Bonds who shall have elected to tender such Bonds for purchase.
"Tender Purchase Price" shall have the meaning assigned in Section 4.09(a) of the
Indenture.
"Tender Withdrawal" shall have the meaning assigned in Section 4.11 of the Indenture.
"Term Bonds" means, with respect to the Series 1999 Bonds, those Series 1999 Bonds
designated as Term Bonds in Section 2.03(a) of the Indenture.
"Total Operating Revenues" means, for any period, the sum of the Company's (a)
operating revenues, less provision for uncollectible accounts, charity cases and any contractual
adjustments, plus (b) all other operating revenues.
"Trustee" means SunTrust Bank, Central Florida, National Association, a national banking
association, Orlando, Florida, until a successor Trustee shall have become such pursuant to the
applicable provisions of the Indenture, and thereafter "Trustee" shall mean the successor Trustee.
"Unassigned Rights" means the rights of the Issuer under this Agreement to (a) receive
Additional Payments as contemplated in Section 4.2 of this Agreement; (b) to purchase the Project
as contemplated by Section 4.7 of this Agreement; (c) to be held harmless and indemnified under
Section 5.12 of this Agreement; (d) to exercise with the consent, but not to the exclusion, of the
Trustee any remedies which are authorized to be exercised by the Issuer under this Agreement in
connection with an Event of Default; (e) to be reimbursed, to the extent permitted by law, for
attorney's fees and expenses under Section 7.4 of this Agreement; and (f) to execute amendments
to this Agreement.
"Unremarketed Bonds" shall have the meaning assigned in Section 4.10 of the Indenture.
Section 1.2. Interpretation. Any reference herein to the Issuer, or to any member or
officer of the Issuer, includes entities or officials succeeding to their respective functions, duties
or responsibilities pursuant to or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the State or the Act, or to a
section, provision or chapter of the Florida Statutes, as amended, or Laws of Florida, includes that
section, provision or chapter as amended, modified, revised, supplemented or superseded from
time to time; provided, that no amendment, modification, revision, supplement or superseding
section, provision or chapter shall be applicable solely by reason of this provision, if it constitutes
in any way an impairment of the rights or obligations of the Issuer, the Holders, the Trustee or
the Company under this Agreement.
18
Unless the context indicates otherwise, the terms "hereof," "hereby," "herein," "hereto,"
"hereunder" and similar terms refer to this Agreement; and the term "hereafter" means after, and
the term "heretofore" means before, the date of delivery of the Series 1999 Bonds. Words of any
gender include the correlative words of the other genders, unless the sense indicates otherwise.
Section 1.3. Captions and Headings. The captions and headings in this Agreement are
solely for convenience of reference and in no way define, limit or describe the scope or intent of
any articles, sections, subsections, paragraphs or subparagraphs or clauses hereof.
(End of Article I)
19
ARTICLE II
REPRESENTATIONS
Section 2. 1. Representations and Covenants of the Issuer. The Issuer represents that:
(a) It is duly created and validly existing under the laws of the State;
(b) It has duly accomplished all conditions necessary to be accomplished by it prior
to the issuance and delivery of the Series 1999 Bonds and the execution and delivery of this
Agreement and the Indenture;
(c) It is not in violation of or in cont1ict with any provisions of the laws of the State
which would impair its ability to carry out its obligations contained in this Agreement, the
Mortgage or the Indenture;
(d) It is empowered (i) to enter into the transactions contemplated by this
Agreement, the Mortgage and the Indenture and (ii) to issue, sell and deliver the Series 1999
Bonds as provided in the Indenture;
(e) It has duly authorized the execution, delivery and performance of this
Agreement, the Mortgage, the Assignment and the Indenture; and
(f) It will do all things in its power in order to maintain its existence or assure the
assumption of its obligations under this Agreement, the Mortgage and the Indenture by any
successor public body.
Section 2.2.
and covenants that:
Representations and Covenants of the Company. The Company represents
(a) It is a not-for-profit corporation duly organized and validly existing under the laws of
the State no part of the net earnings of which inure or may inure lawfully to the benefit of any
member or private individual;
(b) It has full power and authority to execute, deliver and perform this Agreement, the
Mortgage, the Continuing Disclosure Certificate and the Series 1999 Note and to enter into and
carry out the transactions contemplated by those documents. The execution, delivery and
performance of said agreements do not, and will not, violate any provision of law applicable to
the Company or the Company's Articles of Incorporation or Bylaws and do not, and will not,
cont1ict with or result in a default under any agreement or instrument to which the Company is
a party or by which it or any of its respective property is bound. This Agreement, the Mortgage,
the Continuing Disclosure Certificate and the Series 1999 Note have, by proper action, been duly
authorized, executed and delivered by the Company and all steps necessary have been taken to
20
constitute this Agreement, the Mortgage, the Continuing Disclosure Certificate and the Series
1999 Note valid and binding obligations of the Company;
(c) The Project will preserve existing employment and serve the health care needs of the
community;
(d) The Project will be completed in accordance with the Plans and Specifications and the
Project will be operated and maintained in such manner as to conform with all applicable zoning,
planning, building, environmental and other applicable governmental regulations and as to be
consistent with the Act;
(e) It presently intends to use or operate the Project and the Existing Facilities of which
it is a part as a continuing care retirement facility until the date on which the Bonds have been
fully paid and knows of no reason why the Project and Existing Facilities will not be so operated.
If, in the future, there is a cessation of that operation, it will use its best efforts to resume that
operation or accomplish an alternate use by the Company or others which will be consistent with
the Act and the Code;
(f) It is an organization described in Section 501(c)(3) of the Code and has received a
determination letter from the Internal Revenue Service to such effect, which determination letter
has not been adversely modified, limited or revoked. It has not been notified by the Internal
Revenue Service of, and has no knowledge of any facts or circumstances that would form the basis
for the revocation of its status as an organization described in said Section of the Code. It has not
taken and will not take any actions that would jeopardize its status as such organization; and
(g) It has obtained a certificate of need for all portions of the Project for which a
certificate of need is required under State law and has complied with all conditions and
requirements of those certificates.
Section 2.3 Tax Covenants of the Company. For so long as any Tax-Exempt Bonds
(including, without limitation, the Series 1999 Bonds) remain outstanding the Company hereby
covenants as follows:
(a) It will comply with, and timely make or cause to be made all filings required by, all
effective rules, rulings or Regulations promulgated by the Department of the Treasury or the
Internal Revenue Service;
(b) It will continue to conduct its operations in a manner that will result in its continuing
to qualify as an organization described in Section 501(c)(3) of the Code including but not limited
to the timely filing of all returns, reports and requests for determination with the Internal Revenue
Service and the timely notification of the Internal Revenue Service of all changes in its
organization and purposes from the organization and purposes previously disclosed to the Internal
Revenue Service;
21
(c) It will not divert any substantial part of its income for the purpose or purposes other
than those for which it is organized and operated;
(d) It will not use or invest the proceeds of the Series 1999 Bonds or any other amounts
held by the Trustee under the Indenture or any investment earnings thereon in a manner that will
result in the Tax-Exempt Bonds becoming "private activity bonds" (other than qualified 501(c)(3)
bonds) within the meaning of Sections 141 and 145 of the Code;
(e) It will not use or permit to be used more than tive percent (5 %) of the proceeds of the
Tax-Exempt Bonds (including any amounts used to pay costs associated with issuing such Tax-
Exempt Bonds), including all investment income earned on such proceeds directly or indirectly,
in any trade or business carried on by any person who is not an Exempt Person. For purposes of
the preceding sentence, use of the proceeds by an organization described in Section 501(c)(3) of
the Code with respect to an "unrelated trade or business," determined in accordance with Section
513(a) of the Code, does not constitute a use by an Exempt Person;
(f) It will not use or permit the use of any portion of the proceeds of the Tax-Exempt
Bonds, including all investment income earned on such proceeds prior to the Completion Date,
directly or indirectly, to make or finance loans to persons, who are not a governmental unit or an
organization described in Section 501(c)(3) of the Code. For purposes of the preceding sentence,
a loan to an organization described in Section 501(c)(3) of the Code for use with respect to an
"unrelated trade or business", does not constitute a loan to such a unit or organization;
(g) It will not cause the Tax-Exempt Bonds to be treated as "federally guaranteed"
obligations for purposes of Section 149 of the Code, as may be modified in any applicable rules,
rulings, policies, procedures, regulations or other ofticial statements promulgated or proposed by
the Department of the Treasury or the Internal Revenue Service with respect to "federally
guaranteed" obligations described in Section 149 of the Code. For purposes of this paragraph,
the Tax-Exempt Bonds shall be treated as "federally guaranteed" if (i) all or any portion of the
principal or interest is or will be guaranteed directly or indirectly by the United States of America
or any agency or instrumentality thereof, or (ii) 5 % or more of the proceeds of the Tax-Exempt
Bonds will be (A) used in making loans the payment of principal or interest with respect to which
is to be guaranteed in whole or in part by the United States of America or any agency or
instrumentality thereof, or (B) invested directly or indirectly in federally insured deposited or
accounts, and (iii) such guarantee is not described in Section 149(b) of the Code;
(h) It shall do all things which are necessary in order to comply with the provisions of
Section 148 of the Code, including but not limited to subsection (f) of said Section 148 of the
Code, with respect to the Tax-Exempt Bonds, including but not limited to the following:
(A) Consult with such counsel, certitied public accountants and rebate compliance experts
as shall be necessary to permit such compliance;
22
(B) Keep such records of funds in its possession which constitute "gross proceeds" of the
Tax-Exempt Bonds as defined in Section 148(1) of the Code and to direct the Trustee
to keep records of funds and investments in the Trustee's possession which constitute
such "gross proceeds" in order that information necessary for the calculation of rebate
payments due to the United States of America may be calculated;
(C) Make or cause certified public accountants or rebate compliance experts to make such
calculations at the times and in the manner required by Section 148(1) of the Code and
the Indenture and otherwise comply with Section 5.05, 5.06 and 5.07 of the
Indenture;
(D) File or cause to be filed copies of all rebate calculations with the Trustee;
(E) Prepare or cause to be prepared such reports, returns or statements as may be required
to be filed from time to time with the Internal Revenue Service or the United States
of America pursuant to the provisions of Section 148(1) of the Code, and execute any
such reports, returns or statements as it is required to execute, direct the Trustee to
execute any such reports, returns or statements as the Trustee may be required to
execute and direct the Issuer to execute such reports, returns or statements as the
Issuer may be required to execute;
(F) Timely file or cause to be filed such reports, returns and statements as are required
to be filed with the Internal Revenue Service or the United States of America;
(G) Provide or cause to be provided to the Trustee for deposit in the Rebate Fund moneys
which are sufficient to pay when due all rebate payments with respect to the
Tax-Exempt Bonds required to be paid by Section 148(1) of the Code;
(H) Direct the Trustee to pay from the Rebate Fund all rebate payments due at the times
required by Section 148(1) of the Code;
(I) Payor cause to be paid to the Trustee, for deposit in the Rebate Fund, and direct the
Trustee to pay from the Rebate Fund directly to the Internal Revenue Service or the
United States of America, as appropriate, any amounts required to be paid to correct
any errors made in the calculation in payment of rebate, including any arrearages of
rebate, interest thereon or penalties attributable thereto which are required to be paid
in order to cause the Tax-Exempt Bonds to comply, to have complied, or to continue
to comply with the provisions of Section 148(1) of the Code; and
(1) Invest any funds in its possession which constitute "gross proceeds" of the
Tax-Exempt Bonds (within the meaning of Section 148(t) of the Code) in such manner
as will not cause the Tax-Exempt Bonds to become "arbitrage bonds" within the
meaning of Section 148 of the Code. As to funds held by the Trustee, it shall direct
23
investments to be made by the Trustee in such manner as shall not cause the
Tax-Exempt Bonds to become "arbitrage bonds." The Company shall keep records
of the investment of "gross proceeds" of the Tax-Exempt Bonds and shall direct the
Trustee as to the keeping of records of investments of "gross proceeds" of the
Tax-Exempt held by the Trustee in a manner which reflects the information necessary
in order to permit the Company or its accountants or other arbitrage and rebate
compliance experts to make calculations as to the yield on such investments and as
necessary to calculate the Issuer's rebate obligation with respect to the Tax-Exempt
Bonds. The Company shall comply with its representations set forth in the Arbitrage
Rebate Agreement which shall be included in the transcript for the Tax-Exempt Bonds
and shall, as necessary, consult with Bond Counsel, its certified public accountants
and arbitrage and rebate experts to the extent necessary to assure compliance with the
provisions of this Section of this Agreement. With respect to the investment of any
"gross proceeds" of the Tax-Exempt Bonds, made by the Company or made by the
Trustee at the direction of the Company, the Company will not make, or enter into
any agreement to make or direct the Trustee to make, a "prohibited payment" (as that
term is used for purposes of Section 148 of the Code).
The Company through the Authorized Company Representative, may elect to make
calculations and cause rebates to be paid more frequently than required under Section 148(t)
of the Code. However, it shall only be required to make calculations and pay rebate at the
times required to achieve such compliance. Whenever such calculations are made, the
Company shall payor cause to be paid to the Trustee for deposit in the Rebate Fund an
amount sufficient to cause the balance in the Rebate Fund to equal the Issuer's accrued but
unpaid rebate liability as calculated through the most recent calculation date. If the
Company's certified public accountants require its financial statements to reflect the
estimated rebate obligation as an accrued liability, the Company shall cause to be deposited
with the Trustee for deposit in the Rebate Fund an amount equal to such estimated accrued
rebate liability. Except for the Company's right under the Indenture to receive excess
moneys in the Rebate Fund, the Company shall have no right, title or interest in moneys in
the Rebate Fund which are to be held under the Indenture for the benefit of the federal
government of the United States of America.
(i) The net proceeds of the Tax-Exempt Bonds and any investment earnings thereon shall
be applied solely for the purposes set forth in this Agreement and in the Indenture and no amount
of net proceeds of the Tax-Exempt Bonds in excess of two percent (2 %) of the lesser of (A) the
aggregate face amount of the Tax-Exempt Bonds or (B) the proceeds of the Tax-Exempt Bonds
will be expended to pay the costs of issuing such issue of the Tax-Exempt Bonds, as required by
Section 147(g) of the Code.
U) It will not use or invest the proceeds of the Tax-Exempt Bonds or any other amounts
held by the Trustee under the Indenture or any investment earnings thereon in a manner that will
violate the provisions of Section 149(d)(3) or (4) of the Code;
24
(k) The average maturity of the Tax-Exempt Bonds will not exceed one hundred twenty
percent (120 %) of the reasonably expected economic life of any property the cost of which was
financed or refinanced with the net proceeds of the Tax-Exempt Bonds, taking into account the
respective cost of each item comprising such property which was financed with the net proceeds
of the Tax-Exempt Bonds. For purposes of the preceding sentence, the reasonably expected
economic life of each item of property shall be determined as of the later of (i) the date on which
the Tax-Exempt Bonds are issued or (ii) the date(s) on which such item of Project property is
placed in service (or expected to be placed in service). In addition, land shall not be taken into
account in determining the reasonably expected economic life of such property, except that, in the
event twenty-five percent (25%) or more of the proceeds of the Tax-Exempt Bonds have been
expended for land, such land shall be treated as having an economic life of thirty (30) years and
shall be taken into account for purposes of determining the reasonably expected economic life of
such property;
(1) No amount of the proceeds of the Tax-Exempt Bonds will be used, directly or
indirectly, to provide any airplane, sky-box or other private luxury box, facility primarily used
for gambling, store the principal business of which is the sale of alcoholic beverages for
consumption off premises or health club facility (except a health club facility related to the Section
501(c)(3) exempt purposes of the Company); and
(m) It will comply with the information reporting requirements of Section 149(e)(2) of the
Code;
(n) Proceeds of the Tax-Exempt Bonds not in excess of the lesser of: (A) 10% of the
proceeds of the Tax-Exempt Bonds; or (B) 125% of average annual debt service on the
Tax-Exempt Bonds; or (C) 100% of the maximum annual debt service on the Tax-Exempt Bonds,
shall be used to fund a reasonably required reserve or replacement fund described in Section
148(d) of the Code; for purposes of (B) and (C) of this subsection (n) average annual debt service
and maximum annual debt service on any variable rate Tax-Exempt Bonds shall be determined as
if such Series 1999 Bonds were issued bearing interest at a fixed rate equal to the fixed interest
rate at which such Series 1999 Bonds could have been sold on the date of sale;
(0) All of the property to be acquired with proceeds of the Tax-Exempt Bonds or
investment income therein shall be owned by an Exempt Person, as required by Section 145(a)
of the Code;
(p) No other governmental obligations shall be issued within fifteen (15) days of the Series
1999 Bonds pursuant to a common plan of tinancing or marketing with the Series 1999 Bonds that
will be paid out of substantially the same source of funds (or will have substantially the same
claim to be paid out of substantially the same source of funds) as the Series 1999 Bonds;
(q) At the time any issue of Tax-Exempt Bonds is issued, the principal amount of such
Tax-Exempt Bonds plus the principal amount of outstanding tax exempt non-hospital bonds
25
allocated to any Section 501(c)(3) organization which is or will be a test-period beneficiary (as
such term is used in Section 145(b) of the Code) of the Tax-Exempt Bonds does not and will not
exceed $150,000,000 for purposes of Section 145(b) of the Code;
(r) The information to be furnished by the Company and used by the Issuer in preparing
the certification pursuant to Section 148 of the Code and information statement (Form 8038)
pursuant to Section 149(e) of the Code, is accurate and complete as of the date of the issuance of
the Tax-Exempt Bonds; and
(s) It will require, in connection with any lease or grant by the Company of the use of any
portion of the Project, that the lessee, sublessee, manager or other user of any portion of the
Project shall not violate the covenants set forth in this section and use that portion of the Project
in any manner which would violate the covenants set forth in this section;
The terms "Bond Year," "debt service," "gross proceeds," "higher yielding investments,"
"net proceeds," "proceeds," and "yield" have the meanings assigned to them for purposes of
Section 148 of the Code.
Section 2.4. Use of Project. Except to the extent permitted by paragraph (e) of Section
2.3, the Company will not use the Project or suffer or permit the Project to be used (i) in an
"unrelated trade or business" as defined in Section 513(a) of the Code or (ii) directly or indirectly
for a Private Business Use by any Private Person unless such arrangement is pursuant to a contract
that satisfies the criteria of the Code.
(End of Article II)
26
ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE SERIES 1999 BONDS
Section 3. 1. Acquisition. Construction. Installation. Equipment and Improvement. The
Company (a) is acquiring and/or refinancing the Project in conjunction with the issuance of the
Series 1999 Bonds and shall improve and renovate that portion of the Project consisting of the
Core Building on the Project Site with all reasonable dispatch and in accordance with the Plans
and Specifications, (b) shall pay when due all fees, costs and expenses incurred in connection
therewith from funds made available therefor in accordance with this Agreement or otherwise, and
(c) shall ask, demand, sue for, levy, recover and receive all those sums of money, debts and other
demands whatsoever which may be due, owing and payable under the terms of any contract,
order, receipt, writing and instruction in connection therewith and shall enforce the provisions of
any contract, agreement, obligation, bond or other performance security with respect thereto. It
is understood that the Project is that of the Company and any contracts made by the Company with
respect thereto, whether acquisition contracts, construction contracts or otherwise, or any work
to be done by the Company on the Project are made or done by the Company in its own behalf
and not as agent or contractor for the Issuer.
Section 3.2. Plans and Specifications. The Company may revise the Plans and
Specifications from time to time, provided that no revision shall be made which would cause the
Project not to be a "project" as defined in the Act or which would cause interest on the Bonds to
be or to become included in the gross income of the Holder for federal income tax purposes. The
Company will provide revised Plans and Specifications to the Trustee, at its Notice Address,
within 30 days of any such revisions.
Section 3.3. Issuance of the Series 1999 Bonds: Application of Proceeds: Company
Equity. (a) To provide funds to make the Loan for purposes of assisting in paying the Project
Costs, the Issuer will issue, sell and deliver the Series 1999 Bonds. The Series 1999 Bonds will
be issued pursuant to the Indenture in the aggregate principal amount, will bear interest, will
mature and will be subject to redemption as set forth therein. The Company hereby approves the
terms and conditions of the Indenture and the Series 1999 Bonds, and the terms and conditions
under which the Series 1999 Bonds will be issued, sold and delivered.
The proceeds from the sale of the Series 1999 Bonds shall be paid to the Trustee and
deposited as follows:
A sum equal to any accrued interest shall be deposited in the Interest Payment Account.
A sum equal to $
shall be deposited in the Debt Service Reserve Fund.
The balance of the proceeds shall be deposited in the Project Fund.
27
(b) Pending disbursement pursuant to Section 3.4 hereof, the proceeds so deposited in
the Project Fund, together with any investment earnings thereon, shall constitute a part of the
Revenues assigned by the Issuer to the payment of Debt Service Charges as provided in the
Indenture.
Section 3.4. Disbursements from the Proiect Fund. Subject to the provisions of
Sections 2.3 and 2.4 above, and subject to the provisions set forth below, disbursements from the
Project Fund shall be made only to reimburse or pay the Company, or any person designated by
the Company, for the following costs (collectively, the "Project Costs") to the extent set forth in
the Project Budget:
(a) costs incurred directly or indirectly for or in connection with the acquiring, renovating
or improving of real and personal property comprising the Project, including costs incurred in
respect of the Project for preliminary planning and studies; architectural, legal, engineering,
accounting, consulting, supervisory and other services; labor, services and materials; and
recording of documents and title work;
(b) premiums attributable to any surety bonds and insurance required to be taken out and
maintained during the construction period with respect to the Project Site and the Project
Facilities;
(c) taxes, assessments and other governmental charges in respect of the Project that may
become due and payable during the construction period;
(d) costs incurred directly or indirectly in seeking to enforce any remedy against any
contractor or subcontractor in respect of any actual or claimed default under any contract relating
to the Project;
(e) tinancial, legal, accounting, printing and engraving fees, charges and expenses, and
all other such fees, charges and expenses incurred in connection with the authorization, sale,
issuance and delivery of the Series 1999 Bonds, including, without limitation, the fees and
expenses of the Trustee, the Registrar, the Authenticating Agent and any paying agent properly
incurred under the Indenture, provided that the costs of issuance of the Series 1999 Bonds financed
by the Tax-Exempt Bonds shall not exceed two percent (2 %) of the proceeds of the Tax-Exempt
Bonds within the meaning of Section 147 (g) of the Code and Treasury Regulations Section 1. 150-
1; for purposes hereof, "proceeds" means the issue price of the Tax-Exempt Bonds less accrued
interest;
(t) any other costs, expenses, fees and charges properly chargeable, under the Act, to the
cost of the Project; and
(g) interest on the Series 1999 Bonds.
28
Provided, no funds shall be disbursed for rehabilitation of the Project to be completed by
the Company as part of the Project until the Company delivers to the Trustee (i) an executed
construction contract in a form and content acceptable to the Company and for a guaranteed
maximum price acceptable to the Company; and (ii) a payment and performance bond in a form
and content and issued by a company acceptable to the Company.
Any disbursements from any account within the Project Fund for the payment of Project
Costs shall be made by the Trustee only upon the written order of the Authorized Company
Representative accompanied by a certificate of the Architect on standard AlA Forms G702 or
G703 confirming, among other things, the percentage of completion of the Project. Each such
written order shall be in substantially the form of the disbursement request attached hereto as
Exhibit D and shall be consecutively numbered and accompanied by invoices or other appropriate
documentation supporting the payments or reimbursements requested. The Authorized Company
Representative also shall provide the Trustee with either appropriate mechanics' lien affidavits or
waivers from each payee under each such written order or with evidence or documentation
satisfactory to the Trustee that provision against the filing of any mechanics' or similar liens with
respect to the payment being made has been taken by the Company by deposit or bonding. In case
any contract or the mechanics lien law of the State provides for the retention by the Company of
a portion of the contract price, there shall be paid from the Project Fund only the net amount
remaining after deduction of any such portion, and only when that retained amount is due and
payable may it be paid from the Project Fund.
Any moneys in the Project Fund remaining after the Completion Date and payment, or
provision for payment, in full of the Project Costs, at the direction of the Authorized Company
Representative, promptly shall be
(i) used to acquire, construct, install, equip and improve such additional real or
personal property in connection with the Project as is designated by the Authorized
Company Representative and the acquisition, renovation and improvement of which will be
such as is permitted under the Act and provided that any such direction shall be
accompanied by a representation of the Company, by an Authorized Company
Representative, and such other evidence deemed reasonably necessary and satisfactory to
the Trustee that the average reasonably expected economic life of any such additional
property, together with other property theretofore acquired with the proceeds of the Series
1999 Bonds, will not be less than 5/6ths of the average maturity of the Series 1999 Bonds;
(ii) used for the purchase of Series 1999 Bonds in the open market for the purpose
of cancellation at prices not exceeding the face value thereof plus accrued interest thereon
to the date of payment therefor;
(iii) paid into the Bond Fund to be applied to the redemption of the Series 1999
Bonds; or
29
(iv) a combination of the foregoing as is provided in such direction.
In all such cases, any payments made pursuant to this paragraph shall be made only to the extent
that such use or application will not, in the opinion of Bond Counsel, cause the interest on the
Tax-Exempt Bonds to be includible in the gross income of the Holders for federal income tax
purposes.
Section 3.5. Company Required to Pay Costs in Event Proiect Fund Insufficient. If
moneys in the Project Fund are not sufficient to pay all Project Costs, the Company nonetheless
will complete the Project in accordance with the Plans and Specifications and, unless Additional
Bonds shall have been issued for that purpose, shall pay all such additional Project Costs from its
own funds. The Company shall pay all costs of issuing the Series 1999 Bonds to the extent those
costs exceed the limitation imposed by Section 147(g) of the Code. The Company shall not be
entitled to any reimbursement for any such additional Project Costs or payment of issuance costs
from the Issuer, the Trustee or any Holder; nor shall it be entitled to any abatement, diminution
or postponement of the Loan Payments.
Section 3.6. Completion Date. The Company shall notify the Issuer and the Trustee
of the Completion Date by a certificate signed by the Authorized Company Representative stating:
(a) The date on which the rehabilitation of the Project was substantially completed,
(b) That all other facilities necessary in connection with the Project have been acquired,
renovated and improved,
(c) That the Project conforms with all applicable zonmg, planning, building,
environmental and other similar governmental regulations,
(d) That all Project Costs then or theretofore due and payable have been paid, and
(e) The amounts which the Trustee shall retain in the Project Fund for the payment of
Project Costs not yet due or for liabilities which the Company is contesting or which otherwise
should be retained and the reasons such amounts should be retained.
Such Certificate shall be accompanied by a final certificate of the Architect. The certificate may
state that it is given without prejudice to any rights against third parties which then exist or
subsequently may come into being. The Authorized Company Representative shall include with
such certiticate a statement specifically describing all items of personal property comprising a part
of the Project. The certificate shall be delivered as promptly as practicable after the occurrence
of the events and conditions referred to in subsections (a) through (d) of this Section.
30
The Owner shall, as a condition to final disbursement from the Project Fund for Project
Costs, deliver to the Trustee (a) final lien waivers, contractor affidavits, and other documentation
required by the construction lien laws of the State and an as-completed survey of the Project
Section 3.7. Investment of Fund Moneys. At the oral request, promptly confirmed in
writing, of the Authorized Company Representative, any moneys held as part of the Bond Fund,
the Project Fund, the Reserve Fund or the Rebate Fund shall be invested or reinvested by the
Trustee in Eligible Investments.
Section 3.8 Additional Bonds. At the request of the Company and for the purposes
and upon fultillment of the conditions specitied in the Indenture, the Issuer may (but shall not be
required to) provide for the issuance, sale and delivery of Additional Bonds and loan the proceeds
from the sale thereof to the Company and the Company shall execute and deliver one or more
Additional Notes and supplements hereto as provided in Section 4.1 hereof.
(End of Article III)
31
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Section 4.1. Loan Repayment: Delivery of Notes and Mortgage. Upon the terms and
conditions of this Agreement, the Issuer will make Loans to the Company. In consideration of
and in repayment of the Loans, the Company shall make, as Loan Payments, payments which
correspond, as to amount, to the Debt Service Charges payable on each series of Bonds. All such
Loan Payments shall be paid to the Trustee in accordance with the terms of the Series 1999 Note
and any Additional Notes for the account of the Issuer and shall be held and disbursed in
accordance with the provisions of the Indenture and this Agreement for application to the payment
of Debt Service Charges.
The Company agrees to repay the Loans by paying to the Trustee on or before the
twenty-fifth day of each calendar month and such other day upon which other payments may be
required under the terms of this Agreement or the Indenture (a "Loan Payment Date"), in federal
or other funds immediately available on such date, the sum which, together with any moneys on
deposit in the Bond Fund available for such purpose, is sufficient to pay the following amounts:
(a) commencing November 15, 1999, not less than the approximate equal monthly amount
necessary, together with the moneys on deposit in the Interest Payment Account (or the respective
subaccount in the Project Fund with respect to Capitalized Interest) and available for that purpose
on that date, to pay in full the interest due on the Bonds on the next succeeding Interest Payment
Date;
(b) commencing twelve (12) months prior to the first calendar month in which any
principal is due on the Bonds, not less than the approximate equal monthly amount necessary to
pay in full the principal of the Bonds that will become due and payable on the next succeeding
principal payment date (whether by payment at stated maturity or by mandatory sinking fund
redemption); less (1) in each case, the moneys on deposit in the Principal Payment Account and
available for that purpose on that date, and (2) in the case of redemption pursuant to the
mandatory redemption requirements described in Section 4.02 of the Indenture, the amount, if
any, of credit described in Section 4.02 of the Indenture;
which amounts required to be deposited into the Bond Fund may be deposited in the form of either
or both money or Eligible Investments of those maturities which will be sufficient without further
investment or reinvestment to produce the amounts required to be on deposit at least five days
prior to the first day of the succeeding month; and
32
Additionally, the Company shall also pay the sum which, together with any moneys on
deposit in the Bond Fund available for such purpose is sufficient to pay the following amounts:
(w) any amount due in connection with a redemption of Series 1999 Bonds (other than a
mandatory sinking fund redemption), such that the Trustee receives such funds not later than 45
days prior to the redemption date;
(x) (i) in any month in which the amount on deposit in the Debt Service Reserve
Fund falls below the Debt Service Reserve Requirement because moneys are
transferred from the Debt Service Reserve Fund to the Bond Fund to make up a
deficiency in the Bond Fund (as permitted under the provisions of Section 5.06 of the
Indenture), not less than one-twelfth (l/12th) of the amount so transferred until the
balance in the Debt Service Reserve Fund equals the Debt Service Reserve
Requirement, and
(ii) on or prior to each Loan Payment Date, beginning in the month following
the month in which the Company receives notice pursuant to Section 5.11 of the
Indenture that the balance in the Debt Service Reserve Fund is below an amount equal
to ninety percent (90%) of the Debt Service Reserve Requirement, an amount not less
than one-fourth of the deficiency determined pursuant to Section 5.11 of the Indenture
until the balance in the Debt Service Reserve Fund equals the Debt Service Reserve
Requirement;
(y) Any amount due the Trustee, the Paying Agent, the Registrar, the Authenticating
Agent, or the Tender Agent which shall have then accrued and become payable; and
(z) any other amounts which will become due and payable under this Agreement or the
Indenture including any amount which may be necessary to make up any previous deficiency in
any of the payments described above and to make up any deficiency or loss in the respective funds
or accounts to which payments are required to be made.
The Company shall be entitled to a credit against the Loan Payments next required to be
made to the extent that the balance of the Bond Fund is then in excess of amounts required (a) for
the payment of Bonds theretofore matured (or principal thereof which has become due and
payable) or theretofore called for redemption, (b) for the payment of interest for which checks or
drafts have been drawn and mailed by the Trustee, and (c) to be deposited in the Bond Fund by
the Indenture for use other than for the payment of Debt Service Charges on the Interest Payment
Date next following the applicable Loan Payment Date. In any event, however, that if on one
Business Day prior to any Interest Payment Date or any other date on which any Debt Service
Charges shall be due and payable, the balance in the Bond Fund is insufficient to make required
payments of Debt Service Charges, the Company forthwith will pay to the Trustee, for the account
of the Issuer and for deposit into the Bond Fund, any such deficiency.
33
The Company's obligations under the Notes and this Agreement shall be secured by the
Mortgage. To secure the Company's performance of its obligation under this Agreement and the
Series 1999 Note, concurrently with the issuance and delivery of the Series 1999 Bonds and the
Series 1999 Note, the Company shall execute the Mortgage and deliver the same to the Issuer.
The Issuer shall, upon the Company's execution and delivery of the Mortgage, execute the
Assignment and deliver same to the Trustee.
In connection with the issuance of any Additional Bonds, the Company shall execute and
deliver to the Trustee one or more Additional Notes in a form substantially similar to the form of
the Series 1999 Note together with a supplement hereto, providing, among other things for the
use of the proceeds of such Additional Bonds. All such Additional Notes shall:
(a) Provide for payments of interest equal to the payments of interest on the
corresponding Additional Bonds;
(b) Require payments of principal and redemption payments and any premium equal
to the payments of principal, prepayments and sinking fund payments and any premium on
the corresponding Additional Bonds;
(c) Require all payments on any such Additional Notes to be made no later than one
business day prior to the due dates for the corresponding payments of Debt Service Charges
to be made on the corresponding Additional Bonds; and
(d) Contain by reference or otherwise optional and mandatory redemption provisions
and provisions in respect of the optional and mandatory acceleration or prepayment of
principal and any premium corresponding with the redemption and acceleration provisions
of the corresponding Additional Bonds.
All Notes shall secure equally and ratably all Outstanding Bonds, except that, so long as no
Event of Default has occurred and is subsisting hereunder, payments by the Company on any of
the Notes shall be used by the Trustee to make a like payment of Debt Service Charges on the
corresponding Bonds in connection with which those Notes were delivered and shall constitute
Loan Payments made in respect of the related Bonds.
Upon payment in full, in accordance with the Indenture, of the Debt Service Charges on any
or all series of Bonds, whether at maturity or by redemption or otherwise, or upon provision for
the payment thereof having been made in accordance with the provisions of the Indenture, (i) the
Notes issued concurrently with such corresponding Bonds of the same maturity, bearing the same
interest rate and in an amount equal to the aggregate principal amount of the Bonds so surrendered
and cancelled or for the payment of which provision has been made, shall be deemed fully paid,
the obligations of the Company thereunder shall be terminated, and any of those Notes shall be
surrendered by the Trustee to the Company, and shall be cancelled by the Company, or (ii) in the
event there is only one Note, an appropriate notation shall be endorsed thereon evidencing the date
34
and amount of the principal payment or prepayment equal to the Bonds so paid, or with respect
to which provision for payment has been made, and that Note shall be surrendered by the Trustee
to the Company for cancellation if all Bonds shall have been paid (or provision made therefor) and
cancelled as aforesaid. Unless the Company is entitled to a credit under express terms of this
Agreement or the Notes, all payments on each of the Notes shall be in the full amount required
thereunder.
Except for such interest of the Company as may hereafter arise pursuant to Section 8.2
hereof or Section 5.09 of the Indenture, the Company and the Issuer each acknowledge that
neither the Company nor the Issuer has any interest in the Bond Fund and any moneys deposited
therein shall be in the custody of and held by the Trustee in trust for the benefit of the Holders.
Section 4.2.
Additional Payments.
(a) The Company shall pay to the Issuer, as Additional Payments hereunder, any and all
costs and expenses incurred or to be paid by the Issuer in connection with the issuance and
delivery of the Series 1999 Bonds and Additional Bonds, any indemnification due from the
Company to the Issuer or otherwise related to actions taken by the Issuer under this Agreement
or the Indenture.
(b) The Company shall pay to the Trustee, the Registrar, the Paying Agent, the
Authenticating Agent and the Tender Agent, as Additional Payments their reasonable fees, charges
and expenses for acting as such under the Indenture and any indemnification due the Trustee, the
Registrar, the Paying Agent, the Authenticating Agent and the Tender Agent from the Company.
Section 4.3. Place of Payments. The Company shall make all Loan Payments directly
to the Trustee at its corporate trust office. Additional Payments shall be made directly to the
person or entity to whom or to which they are due.
Section 4.4. Obligations Unconditional. The obligations of the Company to make Loan
Payments and Additional Payments shall be absolute and unconditional, and the Company shall
make such payments without abatement, diminution or deduction regardless of any cause or
circumstances whatsoever including, without limitation, any defense, set-off, recoupment or
counterclaim which the Company may have or assert against the Issuer, the Trustee or any other
Person.
Section 4.5. Assignment of Agreement and Revenues. To secure the payment of Debt
Service Charges, the Issuer shall assign, by the Indenture, its rights under and interest in this
Agreement (except for the Unassigned Rights) and the Revenues to the Trustee. The Company
hereby agrees and consents to those assignments.
Section 4.6. Application of Certain Moneys. Any amount deposited in the Bond Fund
pursuant to Section 4.4,5.2 or 5.3 of the Mortgage shall be used, to the extent practicable at the
35
direction of the Company, for the purchase of Bonds in the open market for purposes of
cancellation or for the redemption of Bonds within one year of receipt of that amount, if permitted
pursuant to the extraordinary optional redemption provisions in Section 4.03 of the Indenture.
If, in the opinion of the Trustee, that is not practicable or there is any balance remaining after that
application, the remaining amount shall be credited against the portion of the next succeeding
Loan Payment as represents the payment of principal of the Bonds to become due and payable on
the applicable Interest Payment Date.
Section 4.7 Issuer's Right of Purchase. The Issuer, during any period the Series 1999
Bonds are Outstanding, shall have the right, but not the obligation, to purchase the Cove Building
following an Event of Default hereunder by paying the Outstanding principal amount of the Series
1999 Bonds. In either such event, prior to such purchase, the Issuer shall deliver written notice
of its election to purchase the Cove Building.
(End of Article IV)
36
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1. Pledge of Revenues. Security Interest and Transfer of Intangibles. To
secure the prompt payment of all Loan Payments, Additional Payments and other amounts
payable, and the observance and performance by the Company of all of its covenants, agreements
and obligations under this Agreement, and to protect the prompt payment of any Parity Debt, the
Company assigns hereby to the Issuer, grants hereby to the Issuer to the extent permitted by law
on the date hereof, and covenants, agrees and acknowledges that subject to Permitted
Encumbrances the Issuer has and shall continue to have an assignment of and a first lien security
interest in all Revenues. That assignment and the grant of that security interest are and shall be
on a parity with any assignment made or security interest granted by the Company as contemplated
in this Section, subject to the provisions of Sections 5.4 and 5.5 hereof and Section 2.7 of the
Mortgage.
The Company will execute and cause to be delivered any instruments or documents which
may be necessary or reasonably requested by the Trustee to perfect or maintain, to the extent
permitted by law on the date hereof, that assignment and security interest or to give public notice
thereof. The Trustee may obtain and rely upon advise of Company counsel in determining what
actions and instruments are necessary under this paragraph.
The foregoing provisions of this Section constitute an absolute and present assignment of
the Revenues, subject however to the conditional permission given hereunder to the Company to
collect and use Revenues during a period while no Event of Default shall have occurred and be
continuing under this Agreement. Upon the occurrence and continuation of an Event of Default,
that permission shall terminate, and the Revenues will be required to be immediately deposited
with the Trustee. The existence or exercise of the permission herein granted to the Company shall
not be construed or operate to subordinate the assignment made or the security interest granted in
this Section, in whole or in part, to any subsequent assignment made or security interest granted
by the Company and shall not be construed or operate to affect in any way the Company I s
obligation to make the Loan Payments or the Additional Payments.
Upon the occurrence of an Event of Default and during the continuation thereof, the Trustee
shall have, in addition to all other rights and remedies, the rights and remedies of a secured party
under the Uniform Commercial Code of the State, including the right to request any Person having
an obligation to the Company to make payment on such obligation directly to the Trustee, and any
such Person is hereby authorized and directed, upon such request, to make such payment directly
to the Trustee. Further, upon the occurrence of an Event of Default and during the continuation
thereof and subject to any non-disturbance and attornment agreement which may be in effect, the
Trustee shall have the right to renegotiate, modify, cancel, waive any default with respect to, and
otherwise take all actions in lieu of the Company with respect to any agreement covering
residential units in the Project.
37
The Company hereby irrevocably designates and appoints the Trustee as the true and lawful
attorney of the Company, for any period during which an Event of Default shall have occurred
and be continuing, and authorizes the Trustee as such attorney, either in the name of the Trustee
or in the name of the Company, (i) to take any and all actions with respect to this Agreements
covering residential units in the Project which the Trustee may deem necessary or desirable and
(ii) to demand, sue for, collect, compromise, compound, receive, give receipts for, and give
acquittances for any and all Revenues and to take any and all actions to realize cash proceeds from
the Revenues which the Trustee may deem necessary or desirable, including the power to open
and dispose of mail addressed to the Company and to endorse in the name of the Company any
checks, drafts, notes or other instruments received in payment of or on account of such Revenues.
The Company represents and warrants that (i) it has full power and authority and has the
lawful right to assign and grant a first lien security interest in the Revenues as provided herein,
and (ii) the Revenues are free and clear of all encumbrances other than Permitted Encumbrances.
The Company warrants fully the title thereto and to every part thereof, and covenants and agrees
to defend that title against the claims of all Persons and to maintain, except for Permitted
Encumbrances and to the extent provided otherwise herein, the priority of the assignment of and
the security interest granted in the Revenues.
In connection with the incurrence of Parity Debt pursuant to and as permitted by Section 5.5
hereof, the Company may assign or grant to the owner of that Parity Debt a security interest in
all or any part of the Revenues on a parity with the assignment made and the security interest
granted pursuant to the preceding provisions of this Section. Any assignment made or security
interest granted pursuant to the immediately preceding sentence shall be made upon substantially
the same terms as are used in this Section in making the assignment and granting the security
interest in this Section.
Except for Permitted Encumbrances and as otherwise authorized expressly in this
Agreement, the Company covenants and agrees not to do or suffer anything to be done whereby
any of the Revenues with respect to which an assignment is made or a security interest is granted
in this Section may be encumbered by any lien, charge, security interest or assignment.
The Company shall not permit any of its Property (other than Excluded Property) to become
subject to any security interest, lien, charge or encumbrance not constituting a Permitted
Encumbrance and not otherwise permitted under the terms of this Agreement.
Section 5.2. Debt Service Cover~e Ratio. The Company shall fix, charge and collect,
or cause to be fixed, charged and collected, fees, rentals, rates and charges for the use of the
Mortgaged Property and services provided or to be provided in connection therewith, that shall
be at least sufticient to produce in each full Fiscal Year following completion of the Project a Debt
Service Coverage Ratio for such Fiscal Year that is not less than 1.30. On or before the one
hundred and twentieth day following the end of each Fiscal Year, beginning with the first full
Fiscal Year after completion of the Project, the Company shall notify the Trustee of the Debt
38
Service Coverage Ratio for such Fiscal Year. If the Debt Service Coverage Ratio, as calculated
for any Fiscal Year, is less than 1.30, the Company (i) shall notify the Trustee of the Company's
failure to achieve the Debt Service Coverage Ratio, (ii) take all action necessary to cause the fees,
rentals, rates and charges imposed and collected by it in connection with its operation of the
Mortgaged Property to produce the amount required by such paragraph, and (iii) employ a
Consultant to submit to the Trustee a written report and recommendations with respect to the fees,
rentals, rates and charges imposed and collected by the Company and other items of Revenues in
connection with its operation of the Mortgaged Property and with respect to improvements or
changes in the operations or management of or the services rendered by the Company.
The Company shall follow any reasonable recommendation of the Consultant retained by
or on behalf of the Company pursuant to this Section. If the Company revises or adjusts or causes
to be revised or adjusted its fees, rentals, rates, charges and other Revenues, operating costs,
occupant mix, intensity or scope of service or marketing approach in conformity with the
recommendations of the Consultant and otherwise follows such recommendations of the
Consultant, then the Company I s failure to achieve the Debt Service Coverage Ratio of 1. 30 in any
Fiscal Year shall not constitute an Event of Default under this Agreement.
Until such time as the Company shall achieve the Debt Service Coverage Ratio of 1.30, the
Trustee may require the Consultant to update its report and to file such additional reports or
recommendations as may reasonably be requested by the Trustee from time to time.
If approvals of any regulatory or supervisory authority are required in order to fix, charge,
collect and otherwise implement any fees, rentals, rates, charges and other Gross Revenues
required by the operation of this Section (including, without limitation, any fees, rentals, rates,
charges and other Revenues recommended by the Consultant), the Company shall take all action
within its power to obtain such approvals in the most expeditious manner available to the
Company.
The Company shall mail a copy of any report of any Consultant filed with the Trustee in
accordance with this Section to any Holder who has made written request therefor of the
Company, and so long as the Series 1999 Bonds are Outstanding, B.C. Ziegler and Company.
If the Company fails to retain a Consultant as required herein the Trustee may, at the
expense of the Company, retain such Consultant and the Company shall pay such expense as an
Additional Payment.
Section 5.3. Calculation of Principal and Interest Requirements. For all purposes of
this Agreement, the following shall apply to the calculation of the Principal and Interest
Requi rements:
(a) Principal and Interest Requirements on Outstanding Long-Term Debt, or portions
thereof, shall not be included in the computation of the Principal and Interest Requirements until
39
the Fiscal Year in which such principal or interest, or portions thereof, first become payable from
sources other than amounts deposited in trust, escrowed or otherwise set aside for the payment
thereof (including, without limitation, capitalized interest and accrued interest so deposited into
trust, escrowed or otherwise set aside) with the Trustee or another Person approved by the
Trustee.
(b) Principal and Interest Requirements on any Long-Term Debt having a single principal
maturity and no sinking fund redemption requirements, or having a principal amount due in any
Fiscal Year which exceeds 25% of the total principal amount of such Long-Term Debt may be
recast, at the election of the Authorized Company Representative, on the assumption that the
principal amount of such Debt is to be amortized on a level debt service basis over 20 years and
bearing interest at its stated rate or rates.
(c) The interest rate on any variable rate Long-Term Debt shall be assumed to be, in any
future period for which the calculation is being made, the rate per annum which was in effect as
of the last day of the calendar month next preceding the month in which the calculation of the
Debt Service Coverage Ratio is being made or, if no rate was in effect on such day, then the rate
per annum which was in effect on the date on which such variable rate Long-Term Debt was
issued or incurred.
(d) In the case of guarantees of debt which would constitute Long-Term Debt if such debt
were Debt of the Company, 20% of the principal and interest due on the guaranteed debt
(calculated as provided in this Section) shall be deemed to be Principal and Interest Requirements
of the Company. However, if the Company makes or has made a payment pursuant to a guaranty,
100% of the principal and interest due on the guaranteed debt shall be deemed to be Principal and
Interest Requirements of the Company unless and until 24 months have elapsed from the last of
such payments, at which time 20% of the principal and interest requirements on the guaranteed
debt shall be counted.
(e) No Debt shall be counted more than once.
(f) Principal and Interest Requirements on Debt secured by and payable solely from the
revenues and/or property associated with a project financed with such Debt and with no recourse
directly or indirectly to any other Property or revenues of the Company shall not be included in
the Principal and Interest Requirements for purposes of calculating the Debt Service Coverage
Ratio.
Section 5.4. Permitted Debt. Effective as of the date of delivery of the Series 1999
Bonds, the Company will not incur or permit to remain outstanding any Debt other than its Debt
obligations with respect to the Series 1999 Bonds and any additional Permitted Debt described
below (provided that at the time of incurrence of any additional Debt, no Event of Default or
event which with notice or lapse of time, or 1x>th, would constitute an Event of Default shall have
occurred and be continuing under this Agreement):
40
(a) Long-Term Debt (variable or fixed rate), provided that the requirements of
[subparagraph (i) QI} subparagraph (ii) or subparagraph (iii) are satisfied and, if such Debt shall
be Parity Debt, the requirements of Section 5.5 hereof shall be satisfied:
[(i) the principal amount of the Long-Term Debt proposed to be incurred, together
with the currently Outstanding principal amount of any other Long-Term Debt previously
incurred pursuant to this subparagraph (a)(i) of Section 5.4, does not exceed 10% of the
Total Operating Revenues as shown on or calculable from the audited tinancial statements
of the Company for the most recent Fiscal Year for which audited financial statements have
been delivered to the Trustee, or]
(ii) the Company shall have delivered to the Trustee a certificate of the Company's
Auditor to the effect that (A) for each of the two most recent Fiscal Years for which audited
financial statements have been delivered to the Trustee, the Debt Service Coverage Ratio,
calculated as if the Long-Term Debt proposed to be incurred had been outstanding in those
years, was not less than 1.35x; or (B) for the most recent Fiscal Year for which audited
financial statements have been delivered to the Trustee, the Debt Service Coverage Ratio,
calculated as if the Long-Term Debt proposed to be incurred had been outstanding in such
year, was not less than 1.50x; or
(iii) the Company shall have delivered to the Trustee the following:
(A) a certificate of the Company's Auditor to the effect that for the most recent
Fiscal Year for which audited financial statements have been delivered to the Trustee,
the Debt Service Coverage Ratio, calculated without including the Long-Term Debt
proposed to be incurred, was at least 1.25x and
(B) a report or opinion of a Consultant or an Auditor to the effect that the
forecasted Debt Service Coverage Ratio (including the Long-Term Debt proposed to
be incurred) for each of the first two full Fiscal Years following the completion of the
acquisition, construction, renovation or replacement being paid for with the proceeds
of such additional Long-Term Debt, or following the incurrence of Long-Term Debt
for refunding purposes, is not less than 1.25x;
provided; however, that in the event that a Consultant shall deliver a report to the Trustee
to the effect that Governmental Restrictions then in existence do not permit or by their
application make it impracticable for the Company to produce the required ratios set forth
above and the borrowing is necessary to maintain and preserve the Company's property,
plant and equipment or to maintain or enhance the Company's market position, then such
ratios shall be reduced to the highest practicable ratios then permitted by such laws or
regulations but in no event less than 1.00 in case of subparagraphs (A) and (B).
41
(b) Refunding Debt (variable or fixed rate); provided that the reports or opinions set forth
in paragraph (a) of this Section 5.4 shall be delivered unless at the time of issuance of such
Refunding Debt and after giving effect thereto and to the application of the proceeds thereof the
aggregate maximum annual Principal and Interest Requirements of the Company (determined in
the same manner as if a calculation of the Debt Service Coverage Ratio were being made) on all
Long- Term Debt then to be outstanding (i.e., after issuance of the Refunding Debt) does not
exceed the aggregate maximum annual Principal and Interest Requirements of the Company
(determined as aforesaid) on all Long-Term Debt outstanding immediately prior to the issuance
of such Refunding Debt by more than ten percent (10 % ).
(c) Short- Term Debt (variable or fixed rate); provided that the combined Outstanding
principal amount of Short-Term Debt incurred pursuant to this paragraph (c) of this Section, does
not exceed 10% of the Total Operating Revenues as shown on or calculable from the audited
financial statements of the Company for the most recent Fiscal Year for which financial statements
have been delivered to the Trustee. For a period of 20 consecutive days during each Fiscal Year
no Short-Term Debt shall be outstanding in excess of 5 % of such Total Operating Revenues.
(d) Nonrecourse Debt secured by and payable solely from property associated with the
Project financed by such nonrecourse Debt (which shall be property other than the Mortgaged
Property) with no recourse directly or indirectly to any other property or assets of the Company.
(e) Interim Debt incurred in anticipation of being retinanced with Long-Term Debt;
provided that, at the time such Interim Debt is incurred or assumed, there shall be delivered to
the Trustee:
(i) a certiticate of an Authorized Company Representative stating that the Company
reasonably expects to refinance the Interim Debt by the issuance of Long-Term Debt within
the next 60 months;
(ii) reports or opinions of the type required by either subsection (a)(ii) or (a)(iii) of
this Section 5.4 demonstrating that all requirements of either subsection would be met if
such Interim Debt were then being issued as Long-Term Debt maturing as provided in
Section 5.3(b); and
(iii) either (x) evidence that such Interim Debt is secured by an irrevocable extension
of credit, or an agreement to purchase such Interim Debt from the holder thereof or (y) a
written statement of an investment banker, experienced in the underwriting of Long-Term
Debt of the type in anticipation of which such Interim Debt is proposed to be incurred or
assumed, to the effect that Long-Term Debt maturing over the term and bearing interest at
the rate referred to in the foregoing paragraph (ii) would, if then being offered, be
marketable on reasonable and customary terms;
42
provided that in no event shall the outstanding principal amount of Interim Debt outstanding
at any time exceed 10% of Total Operating Revenues as shown on or calculable from the
audited financial statements of the Company for the most recent Fiscal Year for which
financial statements have been delivered to the Trustee.
(f) Any continuing obligation of the Company to pay principal of and interest on Debt
which is deemed to be discharged or defeased in accordance with the terms of the instrument or
instruments creating or evidencing such Debt; provided, however, that there is delivered to the
Trustee a letter from an Auditor verifying the adequacy of any escrow established in connection
with the discharge or defeasance of such Debt.
(g) [Debt subordinate to the Bonds in right of payment if the written instruments
evidencing the subordinated Debt include provisions to the effect that upon any acceleration of
amounts due with respect to such subordinated Debt or upon any dissolution, liquidation or
reorganization of the Company in bankruptcy, insolvency, receivership or other proceedings, no
payment shall be made with respect to such subordinated Debt until after all payments due with
respect to Bonds and Parity Debt have been made in full. The Company's compliance with the
provisions of this subparagraph shall be evidenced by delivery to the Trustee, not less than ten
days prior to the incurrence of such subordinated Debt, of (i) copies of all instruments relating to
the subordinated Debt and (ii) an opinion, satisfactory in form and substance to the Trustee, of
Independent Counsel to the effect that those instruments comply with the restrictions of this
subparagraph and are legal, valid, binding and enforceable, with appropriate exceptions for
bankruptcy, insolvency and similar laws and for equitable principles.]
Except as provided otherwise herein, including, without limitation, Sections 5.5 and 5.7,
the Debt, liability or obligation of the Company to pay principal, interest, rent, charges,
guarantees and other amounts under any Debt, liability or obligation or any lease, promissory note
or other instrument or document related thereto, shall be unsecured at all times; provided that the
Company may grant a lien on its Revenues and a mortgage on or a security interest in the Project
provided that such lien, mortgage and security interest shall specifically be made subordinate to
the lien on Revenues and security interest on the Project herein created and the mortgage and
security interest created in the Mortgage and there shall be no right to foreclose or otherwise
enforce such lien or mortgage so long as the lien and security interest of this Agreement and the
mortgage and security interest of the Mortgage are not being foreclosed or enforced.
Debt incurred under one paragraph of this Section may be reclassified to another paragraph
of this Section if, following such reclassification, the Company will be in compliance with the
provisions of this Section, calculated as if such Debt was incurred on the date of such
reclassification.
Section 5.5. Parity Debt. So long as there does not exist an Event of Default and
subject to the conditions provided herein, the Company has the right to incur Parity Debt, secured
by the Mortgaged Property (as defined in the Mortgage) on a parity with the Series 1999 Bonds,
43
for paying costs of any improvements, completing any improvement, financing acquisitions or
start-up costs of new programs and services and equity contributions in joint ventures or similar
investment opportunities, or refunding or advance refunding all or any portion of any series of
Bonds or any Parity Debt, or any combination of such purposes. The costs of any improvements
for which Parity Debt may be incurred is not restricted by the definition of the term "costs of
health care facilities" contained in the Act.
Prior to the incurrence of any Parity Debt, the Company will provide evidence satisfactory
to the Trustee that each of the following conditions has been satisfied and will deliver to the
Trustee the following instruments and documents:
(a) any certifications, reports or opinions required under Section 5.4 to evidence that the
Parity Debt is Permitted Debt;
(b) any instrument or document evidencing the Parity Debt, which shall include:
(i) a cross default provision with respect to this Agreement, the Mortgage and the
Indenture,
(ii) provisions (which may be contained in a separate agreement to which the
Trustee is a party) to the effect that, prior to exercising any remedies upon a default or event
of default by the Company under any instrument or document relating to the Parity Debt,
the holders of the Parity Debt (or a trustee representing their interests) shall cooperate with
the Trustee to the end that the interests of those holders and the Holders shall be protected
equally and ratably, and
(iii) a provision that all Parity Debt and all indebtedness, liabilities and obligations
of the Company under this Agreement and the Indenture shall be payable from the Revenues
secured equally and ratably by all security provided for either or both, except that Parity
Debt shall not be protected or secured by the Special Funds;
(c) any instrument or document evidencing due authorization for the incurrence by the
Company of the Parity Debt;
(d) a certificate of the Authorized Company Representative that the Company is not in
default under this Agreement, the Mortgage or the Indenture; and
(e) an opinion of Independent Counsel that the Parity Debt is legal, valid, binding and
enforceable in accordance with its terms subject to usual exceptions for creditors' rights, equity
and public policy.
In connection with the incurrence of Parity Debt, there shall be delivered to the Trustee an
opinion, satisfactory in form and substance to the Trustee, of Independent Counsel to the effect
44
that each of the instruments and documents described in this Section complies with the
requirements of this Section and is a legal, valid, binding and enforceable obligation of the parties
signatory thereto and of the owners and holders of the Parity Debt, with appropriate exceptions
for bankruptcy, insolvency and similar laws and for equitable principles. That opinion shall be
delivered to the Trustee at least ten (10) days prior to the incurrence of the Parity Debt or within
any shorter period which shall be satisfactory to the Trustee.
The Company will take all actions (including without limitation, amending or supplementing
the Indenture, this Agreement and any other collateral instrument or document) and will execute,
deliver, file and record all instruments and documents of security which are required by this
Agreement or the Indenture, which relate to the Parity Debt, which are required by law, or which
the Company, the Issuer or the Trustee determines to be necessary or advisable, upon the advice
of Independent Counsel, to make or grant to the holders of the Parity Debt a right for payment
from and an assignment of and a security interest in any property, or to secure those holders
otherwise, on a parity with that of all other holders of Parity Debt and the Holders.
As a condition to the incurrence of the Parity Debt, the Company shall execute, deliver, file
and record and cause to be executed, delivered, filed and recorded all instruments and documents
which are required by this Agreement or the Indenture, which relate to the Parity Debt, which are
required by law or which the Company, the Issuer or the Trustee determines to be necessary or
advisable, upon the advice of Independent Counsel, to make or grant to the Trustee an assignment
of and a security interest in any property which is the subject of an assignment made or a security
interest granted to the holders of the Parity Debt and not made or granted theretofore to the
Trustee, or to secure the Trustee otherwise, on a parity with those holders.
The actions taken pursuant to this Section shall be taken to the end that all of the outstanding
Parity Debt and all Outstanding Bonds shall be of equal rank and shall be entitled to share on a
parity in all security granted under this Agreement in Revenues, except that Parity Debt shall not
be protected or secured by the Special Funds or any Issuer Document.
Within a reasonable period, not to exceed 180 days, following the issuance of any Parity
Debt, the Company shall deliver to the Trustee conformed copies of all instruments and documents
supporting or evidencing the Parity Debt.
Section 5.6. Restrictions on Disposition of Property: Lease or Use of Proiect. The
Company covenants that it will not sell, lease or otherwise dispose of its Property except as
permitted by this Section or by other provisions of this Agreement.
(a) Subject to Article IV and Section 7.2 of the Mortgage, the Company may sell,
transfer, lease, trade, conveyor otherwise dispose of any Property if: (i) the disposition is in the
ordinary course of the Company's business, (ii) the disposition is in exchange for or results in the
receipt of property of equal or greater value and usefulness, (iii) the disposition of the Property
is for its fair market value and on terms no less favorable than would be obtained in an arm's
45
length transaction and such disposition will not cause the Company to be in breach of any of its
covenants under this Agreement, or (iv) all such dispositions in any consecutive twelve month
period does not exceed five percent of the total revenue of the Company for the same period and
such disposition will not cause the Company to fail to be in compliance with the rate covenant set
forth in Section 5.2 hereof or the liquidity covenant set forth in Section 5.23 hereof.
(b) Subject to Article IV and Section 7.2 of the Mortgage, the Company may sell,
transfer, lease, trade, conveyor otherwise dispose of any real or personal Property if in the
reasonable judgment of the Company set forth in a certificate delivered to the Trustee and signed
by an Authorized Company Representative, the Property so disposed is, or is expected to become
within the next 24 months, inadequate, obsolete, worn out, unsuitable, undesirable, unprofitable
or unnecessary and the sale, lease, removal or other disposition of the Property will not impair
the structural soundness, efficiency or economic value of the remaining Property.
This Section shall not be construed to limit the rights of the Company to transfer or
otherwise dispose of its cash or investments in connection with arm's length transactions which
are undertaken for the purpose of investing or reinvesting cash or investments of the Company.
The Issuer and the Trustee shall execute such documents as are necessary to release any
security interest it may have in Property which the Company disposes of in accordance with and
as permitted by this Agreement.
(c) Additionally, with respect to the lease or grant of use of the Project, the following
additional conditions shall apply:
(i) No such grant or lease shall relieve the Company from its obligations under this
Agreement, the Indenture, the Mortgage or the Notes;
(ii) In connection with any such grant or lease the Company shall retain such rights
and interests as will permit it to comply with its obligations under this Agreement, the
Indenture, the Mortgage and the Notes;
(iii) No such grant or lease shall impair materially the purposes of the Act to be
accomplished by operation of the Project as herein provided; and
(iv) Any such grant or lease (i) shall be subject to the terms and conditions of this
Agreement, including, without limitation, those provisions with respect to the maintenance,
operation and insuring of the Project, (ii) shall expressly prohibit the lessee or user from
assigning its interest to others or subleasing the Project or any part thereof or granting to
others any use of the Project or any part thereof, and (iii) shall contain provisions deemed
by Bond Counsel to be necessary to comply with the Act, the Code, and this Agreement.
46
Section 5.7. Permitted Encumbrances. Effective as of the date of delivery of the Series
1999 Bonds, the Company covenants that it will not create or suffer to be created or exist any
mortgage, lien, security interest, charge or other encumbrance ("Lien") on any of its Property
except for Permitted Encumbrances, which shall consist of the following:
(a) the Mortgage, and the liens existing on the Project as of the date of delivery of this
Agreement, as listed in Exhibit E hereof;
(b) any liens securing all Bonds and Parity Debt;
(c) liens arising by reason of good faith deposits by the Company in connection with
tenders, leases of real estate, bids or contracts (other than contracts for the payment of money),
deposits by the Company to secure public or statutory obligations, or to secure, or in lieu of,
surety, stay or appeal bonds and deposits as security for the payment of taxes or assessments or
other similar charges;
(d) any liens arising by reason of deposits with, or the giving of any form of security to,
any governmental agency or any body created or approved by law or governmental regulation for
any purpose at any time as required by law or governmental regulation (i) as a condition to the
transaction of any business or the exercise of any privilege or license, or (ii) to enable the
Company to maintain self-insurance or to participate in any funds established to cover any
insurance risks or in connection with workers' compensation, unemployment insurance, old age
pensions or other social security, or to share in the privileges or benefits required for companies
participating in such arrangements;
(e) any judgment lien or mechanic lien against the Company, so long as the finality of
such judgment is being contested and execution thereon is stayed or provision for payment of the
judgment has been made in accordance with applicable law or by the deposit of cash or
investments with the Trustee or a commercial bank or trust company acceptable to the Trustee or
adequate insurance coverage is available to satisfy such judgment;
(f) such defects, irregularities, encumbrances, patent reservations, utility easements,
access and other easements and rights-of-way, restrictions, exceptions and clouds on title as do
not, in the reasonable determination of the Company, as evidenced by a certificate of an
Authorized Company Representative delivered to the Trustee, materially adversely affect the
interest of the holders of Bonds and Parity Debt and as do not materially interfere with or impair
the operations being conducted in connection with the Property affected thereby (or, if no
operations are being conducted therein, the operations, if any, for which such Property was
designed or last modified);
(g) any mortgage, security interest, lien, charge or encumbrance securing nonrecourse
Debt, as described and permitted under Section 5.4(d) of this Agreement (including a pledge of
the revenues derived from the Property tinanced by such nonrecourse Debt which may be superior
47
to the pledge of Revenues under Section 5.1 of this Agreement) and which do not extend to any
Property other than that acquired with the proceeds of such nonrecourse Debt;
(h) any security interest, lien, charge or encumbrance upon Revenues or other current
assets of the Company securing Short-Term Debt permitted under Section 5.4(c) of this
Agreement;
(i) any security interest in Property which may be granted to secure Parity Debt as
permitted under Section 5.5 of this Agreement;
(j) liens on proceeds of Debt (and investment income on such proceeds) that secure
payment of such Debt;
(k) encumbrances arising from grants, charitable contributions or donations, loans and/or
guarantees of Debt by federal, state and local governments or agencies thereof;
(1) liens for taxes, special assessments or other governmental charges not then delinquent
or being contested in accordance with the provisions of this Agreement;
(m) liens resulting from governmental regulations on the use of property;
(n) purchase money liens securing permitted Debt incurred within 90 days of the date of
acquisition of Property subject to such lien so long as such lien is limited to the Property so
acquired and the Debt secured thereby does not exceed the lesser of the cost or the fair market
value of the Property so acquired;
(0) mortgages, liens, charges and encumbrances existing on the date on which property
which has not theretofore been owned by the Company is acquired by the Company, so long as
on the date of such acquisition a certificate of an Authorized Company Representative is delivered
to the Trustee contirming that the fair market value of such property, as certified by an Appraiser,
is at least equal to the then outstanding principal balance of all Debt secured by such liens, charges
and encumbrances; and
(p) leases of real Property or agreements relating to the use of space within real Property
for anyone or more of the following purposes (subject to applicable zoning requirements and
restrictions) :
(i) the proVISIon of health care services such as, but not limited to, patient
examinations, medical treatment, physical and occupational therapy, psychiatric or
psychological or social counseling,
(ii) resident or employee convenience activities such as, but not limited to, banking
serVIces, travel agencies, gift shops, snack shops, barber or beauty shops, doctors' or
48
dentists' offices and accommodations, flower shops, counseling services, pharmacy and
living accommodations for persons providing services within the Project,
(iii) in connection with arrangements with or for the benefit of physicians, nurses,
paramedics, counselors, or other persons providing health and medical or health and medical
support or rehabilitation services to the residents of the Company's facilities, so long as the
Trustee shall have received a certificate of an Authorized Company Representative
confirming that either (A) as of the date of attachment thereof such liens, charges,
encumbrances and leases, both individually and in the aggregate, do not materially and
adversely affect Net Income Available for Debt Service and the lessor has retained the right
to increase the rents payable thereunder to satisfy any recommendations of a Consultant
rendered pursuant to Section 5.2 of this Agreement, (B) the book value of the Property of
the Company (other than that tinanced with the proceeds of nonrecourse Debt) encumbered
by liens, charges, encumbrances or leases described in this clause (iii) does not exceed 3 %
of the book value of all Property of the Company (other than that tinanced with the proceeds
of nonrecourse Debt) or (C) one of the tests for disposition of Property set forth in Section
5.6 of this Agreement would be satistied if the attachment of such lien, charge or
encumbrance or the execution of such lease were deemed a sale or other disposition of such
Property,
(iv) in connection with leases to residents for residential purposes,
(v) other purposes so long as such lease (A) shall be, as of the date of the execution
thereof, upon terms no less favorable to the lessor than "arm's length" and (B) shall permit
the lessor to adjust the rents payable thereunder to satisfy the recommendations of a
Consultant delivered pursuant to Section 5.2 of this Agreement.
Section 5.8. Maintenance of Corporate Existence. The Company covenants and agrees
that during the term of this Agreement it will maintain its corporate existence as a nonprofit
"health care agency" as defined in the Act with all of its present rights and franchises, except as
permitted otherwise hereunder. In particular, the Company will not:
(i) dissolve, sell, transfer or otherwise dispose of all or substantially all of its assets
(either in a single transaction or a series of related transactions);
(ii) consolidate with or merge into another Person; or
(iii) permit one or more other Persons to consolidate with or merge into it;
provided that the Company may, without violating the covenants, agreements and obligations
contained in this Section, consolidate with or merge into one or more other Persons, permit one
or more other Persons to consolidate with or merge into it, or sell or transfer to one or more other
Persons all or substantially all of the Company I s assets as an entirety and thereafter dissolve if
49
(a) such Person or Persons (the "Transferee") (i) is organized and existing under the
laws of the United States, one of the states or territories of the United States or the District
of Columbia, (ii) is qualified to transact business as now and as intended to be transacted
by the Company and possesses all governmental powers and approvals necessary to own or
operate the Company's properties, (iii) is a governmental unit, as that term is used in
Section 145 of the Code, or an organization described in Section 501(c)(3) of the Code and
(iv) expressly assumes in writing all of the covenants, agreements and obligations of the
Company under this Agreement, the Notes, the Mortgage, the Indenture and all other
instruments and documents executed and delivered by the Company in connection with the
then Outstanding Bonds by an instrument or document satisfactory in form and substance
to the Trustee; and
(b) the Company shall have furnished to the Trustee an opinion of Bond Counsel
that the consolidation, merger, sale or other transfer does not affect adversely the validity
of the Outstanding Tax-Exempt Bonds or the exclusion from gross income for federal
income tax of the interest on Outstanding Bonds which have theretofore been delivered
accompanied by an Opinion of Bond Counsel that interest thereon is excludable from gross
income for federal income tax purposes; and
(c) the consolidation, merger, sale or other transfer does not affect adversely (i) the
priority or the status of this Agreement as a legal, valid and binding agreement or its
enforceability and (ii) the priority or the status of the lien of the Mortgage; and
(d) the Company causes to be delivered to the Trustee (i) a written report of a
Consultant, dated not more than 90 days prior to the consolidation, merger, sale or other
transfer, to the effect that, based on audited financial statements of the Company and the
Transferee for such Fiscal Year, assuming that such merger, consolidation, sale or other
transfer occurred as of the last day of the most recent Fiscal Year for which audited
financial statements are available and with any adjustments for differing Fiscal Years, the
Company would have been able to issue one dollar in Parity Debt in accordance with the
provisions of Section 5.5 hereof and (ii) a written opinion of a Consultant stating that, after
giving effect to the consolidation, merger, sale or other transfer, the net worth of the
Transferee will be at least 100% of the net worth of the Company immediately preceding
the consolidation, merger, sale or other transfer; and
(e) the Trustee shall have received an opinion of Independent Counsel, satisfactory
to the Trustee in form and substance, and based upon certifications and examinations
satisfactory to the Trustee, to the effect that
(i) immediately after the consolidation, merger, sale or other transfer, the
Transferee will not be in default in the observance or performance of any covenants,
agreements or obligations hereunder, including without limitation, Section 5.4 hereof,
50
(ii) the assumption by the Transferee of the Company's covenants, agreements
and obligations hereunder constitutes a legal, valid, binding and enforceable obligation
of the Transferee, with appropriate exceptions for bankruptcy, insolvency and similar
laws and for equitable principles, and
(iii) the Company and the Transferee are authorized by the laws of the State
(and other appropriate jurisdictions) to effect the consolidation, merger, sale or other
transfer and the consolidation, merger, sale or other transfer is permitted hereby.
If a consolidation, merger, sale or other transfer occurs as provided in this Section, the
provisions of this Section shall continue to be in full force and effect, and no further
consolidation, merger, sale or other transfer shall be made except in compliance with the
provisions of this Section.
Section 5.9. Annual Audit and Periodic Report. The Company covenants and agrees
that it will keep true and proper books of records and accounts in which full and correct entries
will be made of all of its business transactions, and that it will reflect in its financial statements
the revenues subject to the assignment of Revenues made in Section 5. 1 hereof, all in accordance
with generally accepted accounting principles.
The Company will have an annual audit made by the Auditor of its financial statements in
accordance with generally accepted auditing standards. So long as any Bonds are outstanding, the
Company will deliver to the Trustee, such Holders as shall make written requests therefor to the
Company and, so long as the Series 1999 Bonds are outstanding, B.C. Ziegler and Company,
promptly within 120 days after the end of each Fiscal Year of the Company,
(a) a copy of the Company's audited financial statements, including without
limitation, a balance sheet or statements of assets, liabilities and fund balances as of the end
of that Fiscal Year, statements of revenues and expenses or margin, and statements of cash
flows for that Fiscal Year, and
(b) a certificate signed on behalf of the Company by the persons performing the
functions of the administrator or chief financial officer of the Company, which shall state
(i) to the best of the knowledge of each of the officers executing the
certificate, based solely on an examination of the latest financial audits, review of the
corporate minutes or record of proceedings of the Company I s Board of Directors and
its Finance, Executive, Building and Property Committees (or such other major
standing committees then in existence), there are no Defaults or Events of Default
under this Agreement, the Indenture or the Mortgage or defaults or events of default
under the provisions of any Debt instrument or document and, without further
examination or investigation, to the best of that officer's knowledge, no Default or
Event of Default exists on the part of the Issuer under the Indenture, or
51
(ii) if in any case, a Default, Event of Default, default or event of default
described in or identified pursuant to subparagraph (a) has occurred and is continuing,
specifying the nature thereof and any action which the Company is taking or proposes
to take with respect thereto.
While the Series 1999 Bonds are outstanding, the Company will furnish quarterly unaudited
financial statements and any other such information as may be reasonably requested to the Trustee,
the Initial Bondholders and B. C. Ziegler and Company within 45 days of the end of each quarter.
For purposes of this Section, the term "default" means a default as defined with respect to
the relevant document or instrument or any circumstance which is a violation thereof or, with the
passage of time or the giving of notice or both, would constitute an event of default thereunder.
Section 5. 10. Perfection of Security Interest. At the Company's expense, the Company
will cause any required or advisable filing, registration, recording, refiling, reregistration or
rerecording to be made on behalf of the Issuer at the times, in the manner and in the places, and
will pay all recording, registration, filing or other taxes, fees and other charges, therefor, all in
accordance with all applicable statutes and regulations. Promptly after any filing, registration,
recording, refiling, reregistration or rerecording, the Company will deliver to the Trustee a
certificate of an Authorized Company Representative or an opinion of Independent Counsel
addressed to the Trustee and acceptable to the Trustee, to the effect that the filing, registration,
recording, retiling, reregistration or rerecording has been duly accomplished and setting forth the
particulars thereof.
Section 5. 11. Right of Inspection. Subject to reasonable security and safety regulations
and upon reasonable notice, the Issuer, the Trustee, and, so long as the Series 1999 Bonds are
outstanding, B. C. Ziegler and Company, and their respective agents, shall have the right during
normal business hours to inspect the Mortgaged Property.
Section 5.12. Indemnification. The Company (i) releases the Issuer, the members of the
City Commission of the Issuer, its staff, agents, employees and consultants (collectively, the
"Indemnified Parties") from, (ii) covenants and agrees that the Indemnified Parties will not be
liable for, and (iii) covenants and agrees to indemnify the Indemnified Parties for and to hold the
Indemnified Parties harmless against, all liabilities, claims, costs, losses and expenses (including
without limitation, to the extent permitted by law, reasonable attorneys' fees and expenses), joint
or several, imposed upon or asserted against the Indemnified Parties on account of or resulting
from the issuance of the Bonds, its execution, participation in or functioning under the Issuer
Documents and will reimburse any legal or other expenses incurred reasonably by the Indemnified
Parties in connection with investigating or defending any such liability, claim, cost, loss, expense,
action or proceeding; provided, however, that indemnification under this Section shall not extend
to damages resulting from any matter not related to its capacity hereunder or as issuer of the
Bonds.
52
The Company covenants and agrees further, that to the extent permitted by applicable law,
the Company shall assume liability for and indemnify, reimburse, protect, save and hold harmless
the Trustee, acting in its capacity as Trustee under the Indenture or as Authenticating Agent,
Paying Agent, Registrar or Tender Agent or in any other capacity in connection with the Bonds
(collectively, the "Indemnified Fiduciaries") and the respective survivors, assigns, agents,
employees, officers and directors from and against any and all liabilities, damages, penalties,
claims, actions, suits, costs, expenses and disbursements, including legal fees and expenses, of
whatsoever kind and nature (an "Indemnified Obligation") imposed on, asserted against or
reasonably incurred by the Indemnified Fiduciaries in any way relating to or arising out of the
Issuer Documents or any of the transactions contemplated thereby, except that the Company shall
not be required to indemnify the Indemnified Fiduciaries for any Indemnified Obligations
determined by a court of competent jurisdiction to have been the direct result of the gross
negligence or willful misconduct of an Indemnified Fiduciary.
The Company covenants and agrees further, as to all representations, warranties, covenants,
agreements and obligations of the Company under the Company Documents or in any other
instrument or document delivered by the Company in connection with the authorization, issuance
or sale of or performance under the Bonds and the provision of any information concerning the
Mortgaged Property, the Company's properties, management, history, operations or financial
status or forecasts, or any other matter, including without limitation, that information contained
in the [Preliminary Official Statement] and the [Official Statement] relating to the Series 1999
Bonds, each as amended or supplemented from time to time, prepared in connection with the
issuance and sale of the Bonds,
(a) to assume the cost of, and to indemnify the Issuer and the Trustee and to hold
them harmless against, all liabilities, claims, costs, losses and expenses, not paid from
proceeds of the Bonds, to which the Issuer or the Trustee may become subject, and
(b) to reimburse the Issuer and the Trustee for all out-of-pocket, legal and other
expenses (including without limitation, to the extent permitted by law, reasonable attorneys'
fees) incurred by the Issuer or the Trustee in connection therewith, with investigating any
of those liabilities, claims, costs, losses or expenses, or with defending against any actions,
claims or proceedings, except in each case to the extent related to information regarding the
Issuer or the Trustee furnished solely by the Issuer or the Trustee, as the case may be, which
was not provided by or in the name or on behalf of the Company or any other person.
At the request and the expense of the Company, the Issuer and the Trustee shall cooperate
in making any investigation and defense of any action, claim or proceeding and shall assert
appropriately the rights, privileges and defenses which are available to the Issuer or the Trustee,
as the case may be, in connection therewith; provided that the Company hereby indemnifies the
Issuer and the Trustee and agrees to hold the Issuer and the Trustee harmless with respect to any
and all costs, losses or expenses in any way incurred or relative to such cooperation, defense or
assertion.
53
In case any action, claim or proceeding is brought or asserted against the Issuer or the
Trustee with respect to which indemnification may be sought under this Section, the Issuer or the
Trustee, as the case may be, shall give written notice thereof promptly to the Company. No
failure of the Issuer or the Trustee to give, and no delay in giving, that notice shall relieve the
Company to any extent from any of its covenants, agreements or obligations under this Section,
unless that failure or delay is not reasonable and materially prejudices the defense by the Company
of the action, claim or proceeding, and only to the extent of the prejudice. The failure to give that
notice shall not relieve the Company from any obligation which it may have to the Issuer or the
Trustee, as the case may be, otherwise than under this Section.
In case any action, claim or proceeding is brought against the Issuer or the Trustee, and the
Issuer or the Trustee, as the case may be, notifies the Company of the commencement thereof and
of its right to indemnification, the Company may, or if so requested by the Issuer or the Trustee
shall, participate therein or assume the defense thereof, with counsel approved by the Issuer or
the Trustee (such approval not to be unreasonably withheld), as the case may be; provided that,
except as provided below, the Company shall not be liable for the expenses of more than one
separate counsel representing the Issuer and one separate counsel representing the Trustee, as the
case may be, in the action, claim or proceeding.
After notice from the Company to the Issuer or the Trustee, as the case may be, of an
election by the Company so to assume the defense thereof, the Company shall be liable to the
Issuer or the Trustee, as the case may be, under this Section for any legal or other expenses
incurred subsequently at the request of the Company by the Issuer or the Trustee in connection
with that defense. Notwithstanding any provision herein, the Issuer and the Trustee shall have the
right to assert and prosecute any and all counterclaims or crossclaims in connection with any
action in which either is named as a party.
If the Company shall not have employed counsel to have charge of the defense of the action,
claim or proceeding, or if the Issuer or the Trustee, as the case may be, shall have concluded
reasonably that there may be a defense available to it which is different from or in addition to
those available to the Company (i) the Company shall not have the right to direct the defense of
the action, claim or proceeding on behalf of the Issuer or the Trustee, as the case may be, if there
is or reasonably appears to be a contlict of interest between the Company, on the one hand, and
the Issuer or the Trustee, on the other hand, and (ii) reasonable legal and other expenses incurred
by the Issuer or the Trustee (including without limitation, to the extent permitted by law,
reasonable attorneys' fees and expenses) shall be borne by the Company.
The release and indemnification pursuant to this Section are intended to and shall include
the release and indemnification of all affected officials, directors, officers and employees of the
Issuer and the Trustee, respectively, to the same extent and subject to the same terms as are the
release and indemnification of the Issuer and the Trustee, respectively. The release and
indemnification are intended to and shall be enforceable by each indemnified Person to the full
extent permitted by law. All amounts payable under this Section, together with interest thereon
54
at the Interest Rate for Advances from the date of any payment of any amount by the indemnified
Person, shall constitute Additional Payments and shall be paid by the Company on demand by the
indemnified Person. In any action brought to collect those Additional Payments, the indemnified
Person shall be entitled to the recovery of the Additional Payments, except as limited by law or
judicial order or decision.
The covenants, agreements and obligations of the Company under this Section shall survive
the payment of the Series 1999 Bonds.
Section 5.13. Company Not to Adversely Affect the Exclusion From Gross Income of
Interest on Tax-Exempt Bonds. The Company hereby represents that it has taken and caused to
be taken, and covenants that it will take and cause to be taken, all actions that may be required
of it, alone or in conjunction with the Issuer, for the interest on the Tax-Exempt Bonds to be and
remain excluded from gross income for federal income tax purposes, and represents that it has not
taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be
taken on its behalf, any actions that would adversely affect such exclusion under the provisions
of the Code.
Section 5.14. Litigation Notice. The Company shall give the Trustee prompt notice of
any action, suit or proceeding by it or against it at law or in equity, or before any governmental
instrumentality or agency, or of any of the same which may be threatened, which, if adversely
determined, would materially impair the right of the Company to carry on the business which is
contemplated in connection with the Mortgaged Property, or would materially and adversely affect
its business, operations, properties, assets or condition.
Section 5.15. Governmental Permits and Regulations. The Company shall comply with
all valid governmental regulations applicable to it and its operations and properties and shall obtain
and keep in force all permits and licenses necessary therefor.
Section 5.16. Annual Budgets. So long as any amount shall remain unpaid under the
Notes, the Company will prepare and adopt an annual budget for each fiscal year covering the
operation of the Project and all other operations of the Company. Each such annual budget shall
be prepared and submitted to the Board of Directors of the Company at least thirty (30) days prior
to the commencement of the fiscal year to which it applies, and such annual budget shall be
approved and adopted by the Board of Directors prior to the commencement of such fiscal year.
If an annual budget is not adopted for any new fiscal year prior to the commencement thereof,
then the annual budget (if any) in effect as of the end of the next preceding fiscal year shall be
used for such new fiscal year until replaced by an annual budget adopted therefor in accordance
with the provisions of this Section.
The annual budget for each fiscal year shall contain (i) a projection of all Revenues expected
to be received by the Company during each such fiscal year, (ii) a projection of all expenses
expected to be incurred by the Company during each calendar month of such fiscal year, retlecting
55
a reasonable breakdown of such projected expenses into separate accounts, (iii) a projection of the
debt service payments and any additions to or replenishments of reserves required during each
calendar month of such fiscal year with respect to the Bonds and any indebtedness of the Company
permitted by this Agreement, together with a corresponding projection of the Net Income
Available for Debt Service during each such calendar month, (iv) a projected balance sheet for
the Company as of the end of each quarterly accounting period during such fiscal year, (v) a
schedule of capital expenditures (including all installment purchases) proposed to be made by the
Company during such fiscal year, including in the schedule of such capital expenditures, any
proposed lease having a term in excess of one year, irrespective of whether such lease is required
to be capitalized under generally accepted accounting principles, and (vi) such other statistical
information related to the projected operations of the Company as the Company may deem useful.
[Within 30 days of the adoption of its Annual Budget for each fiscal year the Company shall
provide a copy of the same to the Trustee, B.C. Ziegler and Company and the Florida Department
of Insurance in accordance with Chapter 651, Florida Statutes.]
Section 5.17. Proiect as Public Facility. The Company shall, during the term of this
Agreement, operate the Project and any portion of the Existing Facilities of which it is a part
without discrimination as to race, creed, color, sex or national origin, for the public purpose of
providing better health care for the inhabitants of Pinellas County and the State by enhancing the
availability, etliciency and economy of continuing care retirement facilities for the elderly and the
services rendered thereby. During the term of this Agreement and so long as there is no Event
of Default under this Agreement, the Company shall have sole and exclusive charge of the
operation of the Project and any portion of the Existing Facilities of which it is a part.
Section 5.18. Restriction Against Religious Activities. The Company will use the
Project and any portion of the Existing Facilities of which it is a part only in furtherance of the
lawful corporate purposes of the Company and will not use the Project and any portion of the
Existing Facilities of which it is a part as a facility used primarily in connection with any part of
the program of a school or department of divinity for any religious denomination or for the
training of ministers, priests, rabbis or other similar persons in the field of religion. The
foregoing restrictions, however, shall not be construed to prevent the Company from (i)
maintaining a chapel, (ii) conducting education programs on any subject with one or more
institutions, whether or not sectarian, or (iii) implementing pastoral care programs of the kind
permitted or provided by continuing care facilities for the elderly generally.
Section 5.19. Application of Revenues: Renewal and Replacement Fund. (a) The
Company hereby covenants that all Revenues received shall be applied in each month in the
following manner and in the following order of priority:
(1) To the payment of all Loan Payments and any other payments required by this
Agreement, the Notes, the Mortgage or the Indenture, including any deficiencies for such
payments;
56
(2) To the payment of Operating Expenses in accordance with the annual budget for
the Mortgaged Property, as may be amended from time to time with the approval of its
Board of Directors.
(3) [To the Renewal and Replacement Fund in the amount of $ or such
lesser amount as is necessary to cause the total amount on deposit in the Renewal and
Replacement Fund to equal $ .]
(4) To any other lawful purpose.
(b) The Company shall create and maintain a separate fund to defray the costs of capital
improvements to the Mortgaged Property (herein called the"Renewal and Replacement Fund").
Moneys in the Renewal and Replacement Fund may be applied by the Company for the
purpose of paying the cost of making improvements, extensions and repairs to the Mortgaged
Property that are of a capital nature and for the purpose of reimbursing the Company for the costs
of any such improvements, extensions or repairs theretofore made and not previously reimbursed.
In addition the moneys on deposit in the Renewal and Replacement Fund may be used by the
Company to make Loan Payments or Rebate Payments to the Trustee in order to prevent the
occurrence of an Event of Default when other funds of the Company are not sufficient.
Section 5.20. Purchase of Tender Bonds by Company. The Company covenants to
purchase U nremarketed Bonds from existing cash balances (excluding any funds held in Special
Funds other than the Extendables Purchase Fund) to the extent of all unrestricted Cash on Hand
in excess of 290 Days Cash on Hand.
Section 5.21 [Reserved]
[Section 5.22 Special Covenants. Insert any special covenants requested by the Issuer
related to the Project.]
Section 5.23. Liquidity Covenant. The Company will deliver a certificate executed by
an Authorized Company Representative within 120 days following the end of each Fiscal Year of
the Company, commencing with the Fiscal Year ending , 200 , stating that its Days
- -
Cash on Hand was [to be provided following receipt of the feasibility report].
In the event the Company is not in compliance with this Section 5.23 as of the end of any
Fiscal Year, the Company shall (i) notify the Trustee of the Company's failure to achieve the
required Days Cash on Hand, (ii) take all reasonable steps to cause the fees, rentals, rates and
charges imposed and collected and the expenses incurred in the operation of the Project to produce
the required Days Cash on Hand and (iii) employ a Consultant to submit to the Trustee and the
Company a written report and recommendations with respect to such items of income and
57
expenses collected or incurred by the Company to enable the Company to obtain and maintain
sufficient Days Cash on Hand.
The Company agrees that it will, to the extent commercially feasibility and permitted by any
applicable Government Restrictions, comply with and implement the recommendations of the
Consultant. If the Company revises or adjusts its operation in conformity with the
recommendations of the Consultant and otherwise follows such recommendations of the
Consultant, the Company's failure to achieve the required Days Cash on Hand as of the end of
any Fiscal Year shall not constitute an Event of Default under this Agreement.
Until such time as the Company has come into compliance with the Days Cash on Hand
requirement of this Section 5.23, the Company may require the Consultant to update its report and.
to tile additional reports or recommendations as may be reasonably required by the Trustee from
time to time.
If the Company fails to retain a Consultant as required herein the Trustee may, at the
expense of the Company, retain such Consultant and the Company shall pay such expenses as an
Additional Payment.
Section 5.24. Trade Payable Covenant. The Company shall maintain not less than 90%
of its operating trade pay abIes aged no more than 60 days and the remaining 10% of all operating
trade pay abIes aged no more than 90 days, commencing with the Fiscal Year ending
200 .
Section 5.25. Occupancy Covenant. The Company will deliver to the Trustee a
certificate of an Authorized Company Representative within 30 days of the end of each fiscal
quarter, commencing , 200 , stating that the Project has met the quarterly Occupancy
- -
Target. The Company hereby covenants to comply with the following quarterly Occupancy
Targets [to be provided with the feasibility study].
Should the Project achieve 90% occupancy by , 200 , the Company shall be
- -
required to maintain 90 % occupancy, which occupancy level requirement shall be reviewed
annually on each successive _, [provide the terms of such review]. Should the
Company fail to meet the Occupancy Target on an annual basis, a report shall be filed with the
Trustee setting forth the corrective actions to be taken by the Company. Failure to meet the
Occupancy Target on an annual basis will result in the Company having to file quarterly
occupancy reports with the Trustee. In the event the Company fails to meet the Occupancy
Targets for any two consecutive fiscal quarters, the Company shall employ a Consultant to submit
to the Trustee and the Company a written report and recommendations with respect to actions to
be taken to increase occupancy of the Project.
The Company agrees that it will, to the extent commercially feasible and permitted by any
applicable Government Restrictions, comply with and implement the recommendations of the
58
Consultant. If the Company reVIses or adjusts its operation in conformity with the
recommendations of the Consultant and otherwise follows such recommendations of the
Consultant, the Company's failure to achieve the required Occupancy Targets as of the end of any
fiscal quarter shall not constitute an Event of Default under this Agreement.
Until such time as the Company has come into compliance with the Occupancy Target
requirement of this Section 5.24, the Company may require the Consultant to update its report and
to tIle additional reports or recommendations as may be reasonably required by the Trustee from
time to time.
If the Company fails to retain a Consultant as required herein the Trustee may, at the
expense of the Company, retain such Consultant and the Company shall pay such expenses as an
Additional Payment.
59
ARTICLE VI
REDEMPTION OF BONDS
Section 6.1. Optional Redemption. If, at any time under the Indenture or any of the
Bonds, the Company may elect to cause the Issuer or the Trustee to call any of the Bonds for
redemption or may require the Trustee to purchase Bonds, it may exercise such election, not less
than forty-five (45) days prior to the date of such redemption or purchase, by notifying the Trustee
in writing of its exercise of such election and delivering to the Trustee therewith moneys sufficient
for such purpose. Pending application for those purposes, any moneys so delivered shall be held
by the Trustee in a special account in the Bond Fund and delivery of those moneys shall not
operate to abate or postpone Loan Payments or Additional Payments otherwise becoming due or
to alter or suspend any other obligations of the Company under this Agreement.
Section 6.2. Mandatory Redemption or Purchase. If, at any time under any provision
of the Indenture or any of the Bonds, any Bonds are required to be redeemed or purchased or if
the Issuer, the Trustee, any Holder or any other person has exercised any election to require any
of the Bonds to be called for redemption or purchase, then the Company shall deliver to the
Trustee, on or before one business day of the Trustee prior to the date on which such Bonds are
to be redeemed or purchased, the moneys (in immediately available funds) needed to redeem or
purchase such Bonds. In the case of the Series 1999 Bonds, the Series 1999 Bonds are subject to
mandatory and extraordinary redemption in accordance with Sections 4.01 and 4.02 of the
Indenture.
(End of Article VI)
60
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7. 1.
Events of Default. Each of the following shall be an Event of Default:
(a) The Company shall fail to pay any Loan Payment on or prior to the date on which that
Loan Payment is due and payable.
(b) The Company shall fail to deliver to the Trustee, or cause to be delivered on its behalf,
the moneys needed to redeem any outstanding Bonds in the manner and at the time required as
provided in Article VI of this Agreement.
(c) The Company shall fail to observe and perform any other agreement, term or
condition contained in this Agreement, and that failure continues for a period of thirty (30) days
after written notice of that failure is given to the Company by the Issuer or the Trustee or such
longer period specified in the covenants set forth elsewhere herein, or for such longer period as
the Trustee may agree to in writing; provided, that if the failure is other than the payment of
money and is of such nature that it cannot be corrected within the applicable period, that failure
shall not constitute an Event of Default so long as the Company institutes curative action within
the applicable period and diligently pursues that action to completion.
(d) The Company shall:
(i) Admit in writing its inability to pay its debts generally as they become due;
(ii) Have an order for relief entered in any case commenced by or against it under
the federal bankruptcy laws, as now or hereafter in effect;
(iii) Commence a proceeding under any other federal or state bankruptcy,
insolvency, reorganization or similar law, or have such a proceeding commenced against
it and either have an order of insolvency or reorganization entered against it or have the
proceeding remain undismissed and unstayed for ninety (90) days;
(iv) Make a general assignment for the benefit of creditors; or
(v) Have a receiver or trustee appointed for it or for the whole or any substantial
part of its property.
(e) Any representation or warranty made by the Company herein or any statement in any
report, certificate, financial statement or other instrument furnished in connection with this
Agreement or with the purchase of the Bonds shall at any time prove to have been false or
misleading in any material respect when made or given.
61
(t) There shall have occurred an "Event of Default" as defined in Section 6.2(c) or (d)
of the Mortgage.
Notwithstanding the foregoing, if, by reason of Force Majeure, the Company is unable to
perform or observe any agreement, term or condition hereof which would give rise to an Event
of Default under subsection (c) hereof, the Company shall not be deemed in default during the
continuance of such inability. However, the Company shall promptly give notice to the Trustee
and the Issuer of the existence of an event of Force Majeure and shall use its best efforts to
remove the effects thereof; provided that the settlement of strikes or other industrial disturbances
shall be entirely within its discretion. The term Force Majeure shall mean, without limitation, the
following:
(i) Acts of God; strikes, lockouts or other industrial disturbances; acts of public
enemies; orders or restraints of any kind of the government of the United States of America
or of the State or any of their departments, agencies, political subdivisions or officials, or
any civil or military authority; insurrections; civil disturbances; riots; epidemics; landslides;
lightning; earthquakes; fires; hurricanes; tornados; storms; falling space debris; droughts;
floods; killer bees; arrests; restraint of government and people; explosions; breakage,
malfunction or accident to facilities, machinery, transmission pipes or canals; partial or
entire failure of utilities; shortages of labor, materials, supplies or transportation; or
(ii) Any cause, circumstance or event not reasonably within the control of the
Company.
The declaration of an Event of Default under subsection (d) above, and the exercise of
remedies upon any such declaration, shall be subject to any applicable limitations of federal
bankruptcy law affecting or precluding that declaration or exercise during the pendency of or
immediately following any bankruptcy, liquidation or reorganization proceedings.
Section 7.2. Remedies on Default. Whenever an Event of Default shall have happened
and be subsisting, anyone or more of the following remedial steps may be taken:
(a) If acceleration of the principal amount of the Bonds has been declared pursuant to
Section 7.03 of the Indenture, the Trustee shall declare all Loan Payments to be immediately due
and payable, whereupon the same shall become immediately due and payable.
(b) The Issuer or the Trustee may have access to, inspect, examine and make copies of
the books, records, accounts and financial data of the Company pertaining to the Project. In
accordance with applicable law, the Trustee or its designees, may
(i) enter and take possession of the Project, or any part thereof, by summary
proceedings or ejectment or otherwise, without terminating this Agreement,
62
(ii) collect rentals and enforce all other remedies of the Company under any leases
of, or assignments or grants of rights to use or occupy, the Project, or any part thereof, but
without being deemed to have affirmed the leases, assignments or grants,
(iii) enter into new leases, assignments and grants on any terms which the Trustee
may deem to be suitable for the Project, or any part thereof, which leases, assignments and
grants shall not be terminated or affected if the Company cures the Event of Default,
(iv) remove the Company, all other Persons and all property from the Project, or any
part thereof,
(v) hold, operate and manage the Project, or any part thereof, and
(vi) receive all earnings, income, rents, fees, charges, issues, profits, proceeds or
other sums accruing with respect thereto.
All amounts described in clauses (ii) or (vi) of the preceding sentence may be applied by the
Trustee to any costs of administration, operation, repair or maintenance of the Project, or any part
thereof, as the Trustee may deem reasonably useful, and the remaining balance shall be applied
to the Loan Payments, Additional Payments and other amounts payable, or to become payable,
under this Agreement, in the order of priority to be determined by the Trustee. Any balance of
the rents and other amounts remaining thereafter shall be paid promptly to the Company by the
Trustee, and the Trustee may hold the Company liable for the difference between those rents and
other amounts and the Loan Payments, Additional Payments and other amounts payable under this
Agreement.
(c) In accordance with applicable law all Revenues shall become payable immediately
directly to the Trustee, and the Trustee may take whatever steps it deems to be necessary or
advisable to notify payors of the Revenues of the Trustee's right thereafter to receive payments
of Revenues directly.
(d) The Issuer or the Trustee may pursue all remedies now or hereafter existing at law or
in equity to collect all amounts then due and thereafter to become due under this Agreement, the
Mortgage or the Notes or to enforce the performance and observance of any other obligation or
agreement of the Company under those instruments.
(e) The Trustee may exercise any or all of any combination of remedies under the
Mortgage, pursuant to the Assignment.
Notwithstanding the foregoing, the Issuer and the Trustee shall not be obligated to take any step
which in its opinion will or might cause it to expend time or money or otherwise incur liability
unless and until a satisfactory indemnity bond has been furnished to the Issuer and the Trustee at
no cost or expense to the Issuer or the Trustee. Any amounts collected as Loan Payments or
applicable to Loan Payments and any other amounts which would be applicable to payment of
63
Debt Service Charges collected pursuant to action taken under this Section shall be paid into the
Bond Fund and applied in accordance with the provisions of the Indenture or, if the outstanding
Bonds have been paid and discharged in accordance with the provisions of the Indenture, shall be
paid as provided in Section 5.08 of the Indenture for transfers of remaining amounts in the Bond
Fund.
The provisions of this Section are subject to the further limitation that the rescission by the
Trustee of its declaration that all of the Bonds are immediately due and payable also shall
constitute an annulment of any corresponding declaration made pursuant to paragraph (a) of this
Section and a waiver and rescission of the consequences of that declaration and of the Event of
Default with respect to which that declaration has been made, provided that no such waiver or
rescission shall extend to or affect any subsequent or other default or impair any right consequent
thereon.
Section 7.3. No Remedy Exclusive. No remedy conferred upon or reserved to the
Issuer or the Trustee by this Agreement is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement, the Mortgage or the Notes, or now or hereafter existing
at law, in equity or by statute. No delay or omission to exercise any right or power accruing upon
any default shall impair that right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than any notice required by law or for
which express provision is made herein.
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. If an Event of Default
should occur and the Issuer or the Trustee should incur expenses, including attorneys' fees, in
connection with the enforcement of this Agreement, the Indenture, the Mortgage, the Assignment
or the Notes or the collection of sums due thereunder, the Company shall reimburse the Issuer and
the Trustee, as applicable, for the expenses so incurred upon demand. If any such expenses are
not so reimbursed, the amount thereof, together with interest thereon from the date of demand for
payment at the Interest Rate for Advances, to the extent permitted by law, shall constitute
indebtedness hereunder which is secured by the Mortgage and in any action brought to collect that
indebtedness or to foreclose the Mortgage, the Trustee or the Issuer, as applicable, shall be
entitled to seek the recovery of those expenses in such action except as limited by law or by
judicial order or decision entered in such proceedings.
Section 7.5. No Waiver. No failure by the Issuer or the Trustee to insist upon the strict
performance by the Company of any provision hereof shall constitute a waiver of their right to
strict performance and no express waiver shall be deemed to apply to any other existing or
subsequent right to remedy the failure by the Company to observe or comply with any provision
hereof.
64
Section 7.6. Notice of Default. The Company shall notify the Trustee immediately if
it becomes aware of the occurrence of any Event of Default hereunder or of any fact, condition
or event which, with the giving of notice or passage of time or both, would become an Event of
Default.
(End of Article VII)
65
ARTICLE VIII
MISCELLANEOUS
Section 8. 1. Term of Agreement. This Agreement shall be and remain in full force and
effect from the date of delivery of the Series 1999 Bonds to the original purchasers until such time
as all of the Bonds shall have been fully paid (or provision made for such payment) pursuant to
the Indenture and all sums payable and any other documents executed and delivered by the
Company in connection with the execution and delivery of the Bonds by the Company under this
Agreement, the Indenture, the Mortgage and the Notes shall have been paid; except for obligations
of the Company under Sections 4.2, 5.5 and 5.12 hereof, which shall survive the termination and
this Agreement.
Section 8.2. Amounts Remaining in Funds. Any amounts in the Bond Fund remaining
unclaimed by the Holders of Bonds for four (4) years (or such earlier date as such funds would
be required by law to escheat to the State) after the due date thereof (whether at stated maturity,
by redemption or pursuant to any mandatory sinking fund requirements or otherwise) at the option
of the Company shall be deemed to belong to and shall be paid, at the written request of the
Company, to the Company by the Trustee as overpayment of Loan Payments. With respect to that
principal of and any premium and interest on the Bonds to be paid from moneys paid to the
Company pursuant to the preceding sentence, the Holders of the Bonds entitled to those moneys
shall look solely to the Company for the payment of those moneys. Further, any amounts
remaining in the Bond Fund, the Project Fund, the Reserve Fund, the Rebate Fund and any other
special funds or accounts created under this Agreement, the Mortgage or the Indenture after all
of the outstanding Bonds shall be deemed to have been paid and discharged under the provisions
of the Indenture and all other amounts required to be paid under this Agreement, the Notes, the
Mortgage and the Indenture have been paid, shall be paid to the Company to the extent that those
moneys are in excess of the amounts necessary to effect the payment and discharge of the
outstanding Bonds and pay other amounts due under the Indenture.
Section 8.3. Notices. All notices, certificates, requests or other communications
hereunder shall be in writing and shall be deemed to be sufficiently given when mailed by
registered or certified mail, postage prepaid, and addressed to the appropriate Notice Address.
A duplicate copy of each notice, certificate, request or other communication given hereunder to
the Issuer, the Company or the Trustee shall also be given to the others. The Company, the Issuer
and the Trustee, by notice given hereunder, may designate any further or different addresses to
which subsequent notices, certificates, requests or other communications shall be sent.
Section 8.4. Extent of Covenants of the Issuer: No Personal Liability. All covenants,
obligations and agreements of the Issuer contained in this Agreement or the Indenture shall be
etlective to the extent authorized and permitted by applicable law. No such covenant, obligation
or agreement shall be deemed to be a covenant, obligation or agreement of any present or future
member, otlicer, agent or employee of the Issuer in other than his official capacity, and neither
66
the members of the Issuer nor any official executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason of the issuance thereof
or by reason of the covenants, obligations or agreements of the Issuer contained in this Agreement
or in the Indenture.
Section 8.5. Binding Effect. This Agreement shall inure to the benefit of and shall be
binding in accordance with its terms upon the Issuer, the Company and its permitted successors
and assigns provided that this Agreement may not be assigned by the Company and may not be
assigned by the Issuer except to the Trustee pursuant to the Indenture or as otherwise may be
necessary to enforce or secure payment of Debt Service Charges.
Section 8.6. Amendments and Supplements. Except as otherwise expressly provided
in this Agreement or the Indenture, subsequent to the issuance of the Series 1999 Bonds and prior
to all conditions provided for in the Indenture for release of the Indenture having been met, this
Agreement may not be effectively amended, changed, modified, altered or terminated except in
accordance with the provisions of Article VIII of the Indenture, as applicable.
Section 8.7. Execution of Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all of which shall
constitute but one and the same instrument.
Section 8.8. Severability. If any provision of this Agreement, or any covenant,
obligation or agreement contained herein is determined by a court to be invalid or unenforceable,
that determination shall not affect any other provision, covenant, obligation or agreement, each
of which shall be construed and enforced as if the invalid or unenforceable portion were not
contained herein. That invalidity or unenforceability shall not affect any valid and enforceable
application thereof, and each such provision, covenant, obligation or agreement shall be deemed
to be effective, operative, made, entered into or taken in the manner and to the full extent
permitted by law.
67
Section 8.9. Governing Law. This Agreement shall be deemed to be a contract made
under the laws of the State and for all purposes shall be governed by and construed in accordance
with the laws of the State.
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement to be
duly executed in their respective names, all as of the date hereinbefore written.
(SEAL)
CITY OF CLEARWATER, FLORIDA
Attest:
By:
City Clerk
By:
Mayor -Commissioner
Approved as to form and
legal sufficiency
By:
City Attorney
By:
City Manager
(SEAL)
BEF, INC.
Attest:
By:
Secretary
By:
President
68
EXHIBIT A
Series 1999 Note
$
[Date]
FORM OF SERIES 1999 NOTE
BEF, Inc, (the "Company"), a corporation duly organized and validly existing under the
laws of the State of Florida (the "State") and qualified to transact business in the State, for value
received, promises to pay to the City of Clearwater, Florida, (the "Issuer"),
DOLLARS ($ )
and to pay interest (as hereinafter provided) on the unpaid balance of such principal sum from and
after 1, 1999, until the payment of such principal sum has been made.
This Note has been executed and delivered by the Company to the Trustee pursuant to a
certain Loan and Security Agreement (the "Agreement") dated as of July 1, 1999, between the
Issuer and the Company. Under the Agreement, the Issuer has loaned the Company the principal
proceeds received from the sale of the Issuer's $ aggregate principal amount of Health
Care Facilities Revenue Bonds, Series _ (BEF, Inc. Project), dated as of , 1999 (the
"Series _ Bonds"), to assist in the financing of (the "Project") and
the Company has agreed to repay such loan and interest thereon by making payments ("Loan
Payments") in the amounts required to pay the principal of, premium, if any, and interest on the
Series _ Bonds, collectively called the "Debt Service Charges," as and when due. The Series
_ Bonds have been issued, concurrently with the execution and delivery of this Note, pursuant
to, and are secured by, the Trust Indenture (the "Indenture"), dated as of July 1, 1999, between
the Issuer and First Union National Bank of Florida, a national banking association, as Trustee
(the "Trustee").
The principal hereof, prepayment premium, if any, and interest (including any Additional
Amount) herein shall be payable from time to time in amounts equal to the Debt Service Charges
becoming due and payable from time to time whether at scheduled payment dates or on account
of redemption or acceleration of the Series 1999 Bonds, or otherwise and shall be payable by the
Company to the Trustee on or before the twenty-fifth day of each calendar month and such other
days upon which payments may be required under the terms of the Agreement or the Indenture.
The unpaid principal amount of the Series 1999 Bonds outstanding from time to time shall
bear interest from the most recent Interest Payment Date to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for, from their Dated Date.
In addition to the Loan Payments, the Company shall pay to the Issuer and to the Trustee
all Additional Payments which may become payable to them under Section 4.2 of the Agreement.
The covenants contained in this paragraph shall survive (a) the payment and cancellation of this
Note, (b) the payment of the Series 1999 Bonds, (c) the termination of the Agreement and (d) the
discharge of the Indenture and each person who shall be entitled to payment of any Additional
Payments shall have a claim, enforceable against the Company, therefor.
All Loan Payments shall be payable in lawful money of the United States of America in
immediately available funds and shall be made to the Trustee at its designated corporate trust
office for the account of the Issuer and will be deposited by the Trustee in the Bond Fund created
by the Indenture. Except as otherwise provided in the Indenture, such Loan Payments shall be
used by the Trustee to pay the Debt Service Charges as and when due.
The obligation of the Company to make the Loan Payments and Additional Payments shall
be absolute and unconditional and the Company shall make such payments without abatement,
diminution or deduction regardless of any cause or circumstances whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Company may have or
assert against the Issuer, the Trustee or any other person.
This Note shall be prepaid, in whole or in part prior to stated maturity, as provided in the
Agreement if the Series 1999 Bonds are called for redemption, in whole or in part, as provided
in the Indenture. The Company shall have no right to prepay this Note except (i) pursuant to the
exercise by the Company of any right given in the Indenture to direct the redemption or purchase
of Series 1999 Bonds, (ii) upon the occurrence of a Determination of Taxability and a redemption
of the Series 1999 Bonds in accordance with Section 6.2 of the Agreement and (iii) to defease
Bonds as provided in the Indenture; in the latter case, principal of this Note shall be reduced by
the principal amount of Bonds defeased.
Whenever an event of default under Section 7.01 of the Indenture shall have occurred and,
as a result thereof, the principal of all Bonds then Outstanding, and interest accrued thereon, shall
have been declared to be immediately due and payable pursuant to Section 7.03 of the Indenture,
the unpaid principal amount of and accrued interest on this Note shall also be due and payable on
the date on which the Debt Service Charges on all of the Bonds shall have been declared due and
payable; provided that the annulment of a declaration of acceleration with respect to the Bonds
shall also constitute an annulment of any corresponding declaration of acceleration with respect
to this Note.
The Company's obligations under the Agreement and this Series _ Note are secured by
the Mortgage and Security Agreement (the "Mortgage") from the Company, as Mortgagor, to the
Issuer, as Mortgagee, dated as of July 1, 1999, as assigned by the Issuer to the Trustee pursuant
to an Assignment of Mortgage, dated as of July 1, 1999.
The Company hereby waives presentment, notice of dishonor and protest.
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its name
by its duly authorized officers as of
BEF, INC., a Florida not-for-profit
corporation
Attest:
By:
Title:
By:
Title:
ASSIGNMENT TO TRUSTEE
For value received, the undersigned hereby sells, assigns and transfers without recourse unto
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Trustee, under
the Indenture of Trust dated as of July 1, 1999, the within Note and all rights thereunder.
(SEAL)
CITY OF CLEARWATER, FLORIDA
By:
Mayor -Commissioner
ATTEST
By:
City Manager
Secretary
Approved as to form and
legal sufficiency
By:
City Attorney
EXHIBIT B
DESCRIPTION OF THE PROJECT
The Series 1999 Bonds will be issued for the principal purpose of financing the cost of acquisition,
construction and rehabilitation of various capital improvements to the Oaks of Clearwater
retirement facility consisting of 1 building, the Cove Building, located at 210 South Osceola,
Clearwater, Florida, including the following renovation projects to the Cove Building:
B-1
EXHIBIT C
PROJECT SITE
LEGAL DESCRIPTION - COVE BUILDING
[TO BE PROVIDED]
C-l
EXHIBIT D
FORM OF DISBURSEMENT REQUEST
STATEMENT NO. REQUESTING DISBURSEMENT OF FUNDS FROM
PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT
(dated as of July 1, 1999,
between City of Clearwater, Florida
and BEF, Inc, a Florida not-for-profit corporation)
Pursuant to Section 3.4 of the above-referred to Loan Agreement (the "Agreement")
between the City of Clearwater, Florida (the "Issuer") and BEF, Inc, a Florida not-for-profit
corporation (the "Company"), the undersigned Authorized Company Representative hereby
requests and authorizes SunTrust Bank, Central Florida, National Association, a national banking
association, as trustee (the "Trustee") and depository of the Project Fund created by the Indenture
(as defined in the Agreement), to pay to the Company or to the person(s) listed on the
Disbursement Schedule hereto, from the moneys deposited in the Project Fund, the aggregate sum
of $ to pay such person(s) or to reimburse the Company in full, as indicated in
the Disbursement Schedule, for the advances, payments and expenditures made by it in connection
with the items listed in the Disbursement Schedule.
In connection with the foregoing request and authorization, the undersigned hereby certifies
that:
(a) Each item for which disbursement is requested hereunder is properly payable
out of the Project Fund in accordance with the terms and conditions of the Agreement and
none of those items has formed the basis for any disbursement heretofore made from said
Project Fund.
(b) Each such item is or was necessary in connection with the acqUISItIOn,
construction, installation, equipment or improvement of the Project. as defined in the
Agreement.
(c) In the case of amounts requested hereunder for the payment of any item of labor
or materials subject to the Mechanics Lien Law of the State, the Company has received, or
will concurrently with payment receive and deliver to the Trustee, appropriate waivers of
any mechanics' or other liens with respect to each item for which disbursement is requested
hereunder.
(d) Each item for which disbursement is requested hereunder and the cost for each
such item, is as described in the information statement tiled by the Issuer in connection with
the issuance of the Series 1999 Bonds (as detined in the Agreement), as required by Section
149(e) of the Code; provided that if the foregoing statement is not true, attached hereto is
a computation evidencing that the average reasonably expected economic life of the
D-l
facilities which have been and will be paid for with money in the Project Fund is not less
than 5/6ths of the average maturity of the Series 1999 Bonds.
(e) This statement and all exhibits hereto, including the Disbursement Schedule,
shall be conclusive evidence of the facts and statements set forth herein and shall constitute
full warrant, protection and authority to the Trustee for its actions taken pursuant hereto.
(t) This statement constitutes the approval of the Company of each disbursement
hereby requested and authorized.
In connection with any item on the Disbursement Schedule which relates to payment or
reimbursement for labor, services, material, supplies and/or equipment relating to the acquisition,
construction and equipping of the Project, the undersigned further certifies as follows:
(1) That each person signing this request has no notice of any mechanic 's,
materialmen's, suppliers', vendors' or other similar lien or right to lien, chattel mortgage
or conditional sale contract, or other contract or obligation (other than those being contested
in good faith as permitted by Section 3.2 of the Mortgage, as defined in the Agreement),
which should be satisfied or discharged before payment is made of the item or items set
forth on the Disbursement Schedule opposite such person's name;
(2) That this request contains no request for payment on account of any portion of
an obligation which, as of the date of this request, is entitled to be retained under any
holdback or retainages provided for in any agreement; and
(3) That such labor or services were actually performed in a satisfactory manner
and such material, supplies, and/or equipment were actually used in the construction or
installation of the Project or were delivered at the Project Site (as defined in the Agreement)
and will be used for that purpose.
day of
,199_
This
Authorized Company Representative
D-2
DISBURSEMENT SCHEDULE
TO STATEMENT NO. REQUESTING AND AUTHORIZING
DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF
THE LOAN AGREEMENT between the City of Clearwater, Florida and BEF, Inc, a Florida
not-far-profit corporation.
PAYEE
AMOUNT
PURPOSE
D-3
EXHIBIT E
EXISTING PERMITTED LIENS
E-l
EXHIBIT F
EXCLUDED PROPERTY
G-l