Master Construction Line of Credit Agreement

EXHIBIT 10.60


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$200,000,000
MASTER CONSTRUCTION LINE OF CREDIT AGREEMENT


DATED AS OF
OCTOBER 6, 1998


AMONG


ALTERNATIVE LIVING SERVICES, INC.
AS THE MAKER OF THE NOTES
AND AS GUARANTOR
OF OBLIGATIONS OF ITS SUBSIDIARIES AND AFFILIATES
WHICH ARE BORROWERS


EACH OF THE BORROWERS
WHICH BECOMES A PARTY HERETO
PURSUANT TO A JOINDER SUPPLEMENT
AS BORROWERS


THE LENDING INSTITUTIONS NAMED HEREIN
AS LENDERS


THE CO-AGENTS NAMED HEREIN
AS CO-AGENTS


AND


KEY CORPORATE CAPITAL INC.
AS ADMINISTRATIVE AGENT


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TABLE OF CONTENTS


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SECTION 1. DEFINITIONS AND TERMS...........................................................................2
1.1. CERTAIN DEFINED TERMS...........................................................................2
1.2. COMPUTATION OF TIME PERIODS....................................................................19
1.3. ACCOUNTING TERMS...............................................................................19
1.4. TERMS GENERALLY................................................................................19


SECTION 2. AMOUNT AND TERMS OF LOANS......................................................................19
2.1. COMMITMENTS FOR LOANS; COMPANY TO ACT ON BEHALF OF ALL BORROWERS;
MINIMUM BORROWING AMOUNTS, ETC.................................................................19
2.2. PROJECT QUALIFICATION; APPROVAL OF PROJECT PACKAGES BY REQUIRED LENDERS, ETC...................22
2.3. DRAW REQUESTS AND PROCEDURES...................................................................25
2.4. NOTICE OF BORROWING............................................................................27
2.5. DISBURSEMENT OF FUNDS..........................................................................28
2.6. NOTES; AND LOAN ACCOUNTS.......................................................................28
2.7. MATURITY.......................................................................................29
2.8. CONVERSIONS....................................................................................31
2.9. INTEREST.......................................................................................32
2.10. INTEREST PERIODS...............................................................................32
2.11. INCREASED COSTS, ILLEGALITY, ETC...............................................................33
2.12. BREAKAGE COMPENSATION..........................................................................35
2.13. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS...............................................35


SECTION 3. FEES...........................................................................................36
3.1. TRANCHE B COMMITMENT FEE.......................................................................36
3.2. OTHER FEES.....................................................................................36


SECTION 4. COMMITMENTS....................................................................................36
4.1. VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS.................................................36
4.2. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC......................................................36
4.3. EXTENSION OF COMMITMENT PERIOD TERMINATION DATES...............................................37
4.4. SYNTHETIC LEASING PROPOSALS....................................................................38


SECTION 5. PAYMENTS.......................................................................................38
5.1. VOLUNTARY PREPAYMENTS..........................................................................38
5.2. MANDATORY PREPAYMENTS..........................................................................39
5.3. METHOD AND PLACE OF PAYMENT....................................................................40
5.4. NET PAYMENTS...................................................................................40


SECTION 6. CONDITIONS PRECEDENT...........................................................................42
6.1. CONDITIONS PRECEDENT AT EFFECTIVE DATE.........................................................42
6.2. CONDITIONS PRECEDENT AT CLOSING DATE OF INITIAL BORROWING BY ANY BORROWER......................43
6.3. CONDITIONS PRECEDENT FOR SUBSEQUENT BORROWINGS BY ANY BORROWER FOR A PROJECT...................50
6.4. CONDITIONS PRECEDENT TO ALL LOANS..............................................................51


SECTION 7. REPRESENTATIONS AND WARRANTIES.................................................................52
7.1. CORPORATE STATUS, ETC..........................................................................52
7.2. SUBSIDIARIES...................................................................................52
7.3. CORPORATE POWER AND AUTHORITY, ETC.............................................................52
7.4. NO VIOLATION...................................................................................52
7.5. GOVERNMENTAL APPROVALS.........................................................................52
7.6. LITIGATION.....................................................................................53
7.7. USE OF PROCEEDS; MARGIN REGULATIONS............................................................53


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7.8. FINANCIAL STATEMENTS, ETC......................................................................53
7.9. NO MATERIAL ADVERSE CHANGE.....................................................................54
7.10. TAX RETURNS AND PAYMENTS.......................................................................54
7.11. TITLE TO PROPERTIES, ETC.......................................................................54
7.12. LAWFUL OPERATIONS, ETC.........................................................................54
7.13. ENVIRONMENTAL MATTERS..........................................................................54
7.14. COMPLIANCE WITH ERISA..........................................................................55
7.15. INTELLECTUAL PROPERTY, ETC.....................................................................55
7.16. INVESTMENT COMPANY.............................................................................55
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS..........................................................55
7.18. YEAR 2000 COMPUTER MATTERS.....................................................................56
7.19. SECURITY INTERESTS.............................................................................56
7.20. TRUE AND COMPLETE DISCLOSURE...................................................................56


SECTION 8. AFFIRMATIVE COVENANTS..........................................................................57
8.1. REPORTING REQUIREMENTS.........................................................................57
8.2. BOOKS, RECORDS AND INSPECTIONS.................................................................60
8.3. INSURANCE......................................................................................60
8.4. PAYMENT OF TAXES AND CLAIMS....................................................................60
8.5. CORPORATE FRANCHISES...........................................................................61
8.6. GOOD REPAIR....................................................................................61
8.7. COMPLIANCE WITH STATUTES, ETC..................................................................61
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS.............................................................61
8.9. CORPORATE FORMALITIES..........................................................................62
8.10. CASUALTY AND CONDEMNATION......................................................................62
8.11. HEDGE AGREEMENTS, ETC..........................................................................63
8.12. JOINT VENTURE ARRANGEMENTS INVOLVING BORROWERS OR PROJECTS.....................................63
8.13. CERTAIN LEASES AFFECTING A PROJECT.............................................................65
8.14. PERFORMANCE OF PERMANENT CREDIT AGREEMENT, ETC.................................................65
8.15. SENIOR DEBT....................................................................................66


SECTION 9. NEGATIVE COVENANTS.............................................................................66
9.1. CHANGES IN BUSINESS............................................................................66
9.2. CONSOLIDATION, MERGER OR SALE OF ASSETS, ETC...................................................66
9.3. LIENS..........................................................................................68
9.4. INDEBTEDNESS...................................................................................69
9.5. MINIMUM CONSOLIDATED NET WORTH.................................................................69
9.6. RATIO OF CONSOLIDATED SENIOR INDEBTEDNESS TO CONSOLIDATED TOTAL CAPITALIZATION.................70
9.7. INTEREST COVERAGE RATIO........................................................................70
9.8. TRANSACTIONS WITH AFFILIATES...................................................................70
9.9. MODIFICATIONS, ETC. OF PERMANENT CREDIT AGREEMENT, ETC.........................................70


SECTION 10. EVENTS OF DEFAULT..............................................................................70
10.1. EVENTS OF DEFAULT..............................................................................70
10.2. ACCELERATION, ETC..............................................................................73
10.3. APPLICATION OF LIQUIDATION PROCEEDS............................................................74


SECTION 11. THE ADMINISTRATIVE AGENT.......................................................................75
11.1. APPOINTMENT....................................................................................75
11.2. DELEGATION OF DUTIES...........................................................................75
11.3. EXCULPATORY PROVISIONS.........................................................................75
11.4. RELIANCE BY ADMINISTRATIVE AGENT...............................................................75
11.5. NOTICE OF DEFAULT..............................................................................76
11.6. NON-RELIANCE...................................................................................76
11.7. INDEMNIFICATION................................................................................76
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY................................................77
11.9. SUCCESSOR ADMINISTRATIVE AGENT.................................................................77


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11.10. OTHER AGENTS...................................................................................77


SECTION 12. GUARANTY OF OBLIGATIONS AND COMPLETION;
OBLIGATION TO COVER OPERATING DEFICITS
AND SHORTAGES OF WORKING CAPITAL.............................................................77
12.1. UNDERTAKING OF COMPANY.........................................................................77
12.2. BANKRUPTCY.....................................................................................78
12.3. NATURE OF LIABILITY. ..........................................................................78
12.4. INDEPENDENT OBLIGATION.........................................................................79
12.5. AUTHORIZATION..................................................................................79
12.6. RELIANCE.......................................................................................79
12.7. SUBORDINATION..................................................................................79
12.8. WAIVER.........................................................................................79
12.9. LIMITATION ON ENFORCEMENT......................................................................80


SECTION 13. MISCELLANEOUS..................................................................................80
13.1. PAYMENT OF EXPENSES ETC........................................................................80
13.2. RIGHT OF SETOFF................................................................................81
13.3. NOTICES........................................................................................82
13.4. BENEFIT OF AGREEMENT...........................................................................82
13.5. NO WAIVER: REMEDIES CUMULATIVE.................................................................84
13.6. PAYMENTS PRO RATA..............................................................................84
13.7. CALCULATIONS: COMPUTATIONS.....................................................................84
13.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.........................85
13.9. RELEASE OF A BORROWER AND ITS PROJECT UPON REFINANCING OR OTHER PREPAYMENT, ETC................85
13.10. COUNTERPARTS...................................................................................86
13.11. EFFECTIVENESS..................................................................................86
13.12. HEADINGS DESCRIPTIVE...........................................................................86
13.13. AMENDMENT OR WAIVER............................................................................86
13.14. SURVIVAL OF INDEMNITIES........................................................................87
13.15. DOMICILE OF LOANS..............................................................................87
13.16. CONFIDENTIALITY................................................................................87
13.17. LENDER REGISTER................................................................................87
13.18. GENERAL LIMITATION OF LIABILITY................................................................88
13.19. NO DUTY........................................................................................88
13.20. LENDERS AND AGENT NOT FIDUCIARY TO COMPANY, ETC................................................88
13.21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................88
13.22. INTEREST/USURY.................................................................................88


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ANNEX I - INFORMATION AS TO LENDERS ANNEX II - INFORMATION AS TO SUBSIDIARIES ANNEX III - REQUIREMENTS FOR A TITLE COMMITMENT ANNEX IV - REQUIREMENTS FOR A PROPERTY SURVEY ANNEX V - REQUIREMENTS FOR A SURVEYOR'S CERTIFICATE ANNEX VI - QUALIFIED PROJECT CONSTRUCTION LOAN CHECKLIST EXHIBIT A-1 - FORM OF NOTE EXHIBIT A-2 - FORM OF JOINDER SUPPLEMENT EXHIBIT B-1 - FORM OF NOTICE OF BORROWING EXHIBIT B-2 - FORM OF NOTICE OF CONVERSION EXHIBIT B-3 - FORM OF ROLL UP REPORT EXHIBIT C-1 - FORM OF MORTGAGE EXHIBIT C-2 - FORM OF ASSIGNMENT OF LEASES EXHIBIT C-3 - FORM OF COLLATERAL ASSIGNMENT OF CONTRACTS AND PLANS EXHIBIT C-4 - FORM OF COLLATERAL ASSIGNMENT OF LICENSES AND PERMITS EXHIBIT C-5 - FORM OF ENVIRONMENTAL INDEMNITY AGREEMENT EXHIBIT D - FORM OF SUPPLEMENTAL RESERVE PLEDGE AGREEMENT EXHIBIT E - FORM OF PLEDGE AGREEMENT EXHIBIT F-1 - FORM OF OPINION OF SPECIAL COUNSEL
TO THE ADMINISTRATIVE AGENT EXHIBIT F-2 - FORM OF OPINION OF SPECIAL COUNSEL TO THE COMPANY EXHIBIT G - FORM OF PROJECT TAKE-OUT AGREEMENT EXHIBIT H - FORM OF ASSIGNMENT AGREEMENT EXHIBIT I - FORM OF PRELIMINARY INDICATION OF INCLUSION
TO BE ISSUED BY THE PERMANENT LENDER EXHIBIT J - FORM OF APPROVAL OR DISAPPROVAL BY LENDERS EXHIBIT K - FORM OF SECTION 5.4(B)(II) CERTIFICATE EXHIBIT L-1 - FORM OF MANAGEMENT CONTRACT EXHIBIT L-2 - FORM OF COMPANY LEASE EXHIBIT L-3 - FORM OF AFFILIATE LEASE EXHIBIT L-4 - FORM OF COMPANY SUBLEASE


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MASTER CONSTRUCTION LINE OF CREDIT AGREEMENT, dated as of October 6, 1998, among the following:


(i) ALTERNATIVE LIVING SERVICES, INC., a Delaware
corporation (herein, together with its successors and assigns, the
"COMPANY");


(ii) each of the Borrowers which becomes a party hereto
pursuant to a Joinder Supplement;


(iii) the lending institutions listed in Annex I hereto
(each a "LENDER" and collectively, the "LENDERS");


(iv) BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a


national banking association, and SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking association, as Co-Agents; and


(v) KEY CORPORATE CAPITAL INC., a Michigan corporation,
as administrative agent (the "ADMINISTRATIVE AGENT"):


PRELIMINARY STATEMENTS:


(1) Unless otherwise defined herein, all capitalized terms used herein and defined in section 1 are used herein as so defined.


(2) The Company has applied to the Lenders for credit facilities to be made available to Subsidiaries and Affiliates of the Company (each of which will be a Borrower) to finance the construction by such Subsidiaries and Affiliates of Projects. While this Agreement contemplates that there may be multiple Borrowers hereunder, the Company's present intention is that there will be only a single Borrower hereunder and that any joint venture arrangements for a particular Project will not be reflected by means of the ownership of a Borrower but rather by means of an Affiliate Lease and other documentation entered into as contemplated by section 8.12 hereof. The Company contemplates that the number of Projects which may be financed hereunder could exceed 50 separate Projects. The Company has substantial experience in the development and construction of projects similar to the Projects to be financed hereunder, having constructed and developed over 180 such projects.


(3) The Company will issue Notes to the Lenders hereunder, evidencing the Loans made to the Borrowers. Whenever a Subsidiary or Affiliate of the Company first becomes a Borrower hereunder, such Subsidiary or Affiliate shall execute and deliver to the Administrative Agent a Joinder Supplement (a "JOINDER SUPPLEMENT"), substantially in the form attached hereto as Exhibit A-2, evidencing, among other things, (i) its primary obligation in respect of all Loans made to it hereunder, and (ii) its assumption of all of the obligations of a Borrower hereunder.


(4) As contemplated by the Joinder Supplement to which a Borrower is a party, such Borrower may, if requested by the Administrative Agent at any time, be required to execute and deliver to the Administrative Agent one or more Project Promissory Notes evidencing its obligations in respect of the Loans made to finance one or more of its Projects.


(5) It is contemplated that (i) the Tranche A Loans will be refinanced by the Permanent Lender pursuant to the Permanent Credit Agreement and the applicable Project Take-Out Agreements to which the Permanent Lender is a party, and (ii) if the Tranche B Activation Date occurs and Tranche B Loans are made, the Tranche B Loans will be refinanced by the Permanent Lender (through an increase in its commitment under the Permanent Credit Agreement), or by the Supplemental Permanent Lender pursuant to the Supplemental Permanent Credit Agreement, and the applicable Project Take-Out Agreements to which the Permanent Lender or the Supplemental Permanent Lender, as applicable, is a party.


(6) The Lenders are willing to make Loans to the Borrowers, all subject to and upon the terms and conditions set forth herein and in the other Credit Documents.


NOW, THEREFORE, it is agreed:


SECTION 1. DEFINITIONS AND TERMS


1.1. CERTAIN DEFINED TERMS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires:


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"ACQUISITION" shall mean and include (i) any acquisition on a going concern basis (whether by purchase, lease or otherwise) of any facility and/or business operated by any person who is not a Subsidiary of the Company, and (ii) acquisitions of a majority of the outstanding equity or other similar interests in any such person (whether by merger, stock purchase or otherwise).


"ADMINISTRATIVE AGENT" shall have the meaning provided in the first paragraph of this Agreement and shall include any successor to the Administrative Agent appointed pursuant to section 11.9.


"AFFILIATE" shall mean, with respect to any person, any other person directly or indirectly controlling, controlled by, or under direct or indirect common control with such person. A person shall be deemed to control a second person if such first person possesses, directly or indirectly, the power (i) to vote 10% or more of the securities having ordinary voting power for the election of directors or managers of such second person or (ii) to direct or cause the direction of the management and policies of such second person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, (x) a director, officer or employee of a person shall not, solely by reason of such status, be considered an Affiliate of such person; and (y) neither the Administrative Agent nor any Lender shall in any event be considered an Affiliate of the Company or any other Credit Party or any of their respective Subsidiaries.


"AFFILIATE LEASE" shall have the meaning provided in section 6.2(d).


"AGREEMENT" shall mean this Master Construction Line of Credit Agreement, as the same may be from time to time further modified, amended and/or supplemented.


"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender, (i) such Lender's Domestic Lending Office in the case of Borrowings consisting of Prime Rate Loans and (ii) such Lender's Eurodollar Lending Office in the case of Borrowings consisting of Eurodollar Loans.


"APPRAISAL REPORT" shall have the meaning provided in section 2.2(a).


"APPRAISED FAIR MARKET VALUE" shall mean, when used with reference to a Project, the fair market value thereof, as determined by the Appraisal Report with respect thereto which has been approved by the Administrative Agent and the Lenders as provided in section 2.2(a).


"APPRAISED STABILIZED VALUE" shall mean, when used with reference to a Project, the estimated fair market value thereof on a going concern basis upon completion and achievement of at least 95% occupancy (or such lesser percentage as may be acceptable to the Required Lenders, in the exercise of their reasonable discretion). The Appraised Stabilized Value of a Project shall be determined without any reduction on account of any (i) special, extraordinary or other non-recurring charges or expenses associated with a new opening or lease-up, or (ii) operating deficits prior to full occupancy.


"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially in the form of Exhibit H hereto.


"ASSIGNMENT OF LEASES" shall have the meaning provided in section 6.2.


"AUTHORIZED OFFICER" shall mean with respect to any Credit Party any officer or employee of such Credit Party designated by such Credit Party as such in writing to the Administrative Agent.


"BANKRUPTCY CODE" shall have the meaning provided in section 10.1(h).


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"BORROWER" shall mean each Subsidiary or Affiliate of the Company which becomes a party hereto by virtue of the execution and delivery of a Joinder Supplement which is accepted by the Administrative Agent.


"BORROWING" shall mean the incurrence of Loans under a Facility by one or more Borrowers from all of the Lenders with Commitments under such Facility on a PRO RATA basis on a given date (or resulting from conversions on a given date), all of which Loans shall be the same Type of Loan, and in the case of Eurodollar Loans, all of which Loans shall have the same Interest Period.


"BUSINESS DAY" shall mean (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which shall be in the city in which the Payment Office is located a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between ba ...