EXHIBIT 10.14
WORKING CAPITAL LOAN AGREEMENT
$2.0 MILLION REVOLVING CREDIT FACILITY BETWEEN
OMEGA HEALTHCARE INVESTORS, INC., AS LENDER,
AND
SENIOR CARE FLORIDA LEASING, LLC,
SENIOR CARE GOLFVIEW, LLC,
SENIOR CARE GOLFCREST, LLC,
SENIOR CARE SOUTHERN PINES, LLC, AND
SENIOR CARE CEDAR HILLS, LLC, AS BORROWERS
APRIL 1, 2003
TABLE OF CONTENTS
Section Page
------- ----
Section 1 - Definitions....................................................1
Section 2 - Warranties and Representations.................................7
Section 3 - The Loan.......................................................9
Section 4 - Advance Procedures; Limit on Advances.........................10
Section 5 - Conditions Precedent to Advances..............................11
Section 6 - Security and Release of Collateral............................12
Section 7 - Affirmative Covenants.........................................13
Section 8 - Negative Covenants............................................15
Section 9 - Application of Proceeds.......................................16
Section 10 - Events of Default and Remedies................................16
Section 11 - Acceptance of Proceeds........................................17
Section 12 - Miscellaneous.................................................18
WORKING CAPITAL LOAN AGREEMENT
This Working Capital Loan Agreement (this "Agreement") is made as of
April 1, 2003, between Omega Healthcare Investors, Inc., a Maryland corporation
(the "Lender"), and Senior Care Florida Leasing, LLC, a Delaware limited
liability company ("Senior Care Florida"), Senior Care Golfview, LLC, a Delaware
limited liability company ("Golfview"), Senior Care Golfcrest, LLC, a Delaware
limited liability company ("Golfcrest"), Senior Care Southern Pines, LLC, a
Delaware limited liability company ("Southern Pines"), and Senior Care Cedar
Hills, LLC, a Delaware limited liability company ("Cedar Hills").
RECITALS:
A. The four (4) Florida Emerald Facilities are owned by the
Emerald Operating Entities. The Emerald Operating Entities are wholly-owned
subsidiaries of Emerald Healthcare.
B. Pursuant to the Omega Mortgage Documents, the Lender has made
a loan to Emerald Healthcare which is secured by, among other things, mortgages
granted by the Emerald Operating Entities covering the Florida Emerald
Facilities.
C. Contemporaneously with the execution of this Agreement, Senior
Care Florida has entered into a Master Lease with the Emerald Operating
Entities, pursuant to which the Emerald Operating Entities will lease the
Florida Emerald Facilities to Senior Care Florida (the "Senior Care Master
Lease").
D. The Sublessees are wholly-owned subsidiaries of Senior Care
Florida.
E. The Sublessees are subleasing the Florida Emerald Facilities
from Senior Care Florida pursuant to Sublease Agreements dated the same date as
this Agreement (each a "Sublease" and, collectively, the "Subleases").
F. The Borrowers have requested that the Lender extend the credit
facility described below, the proceeds of which will be used by the Borrowers
for the purpose of funding working capital at the Florida Emerald Facilities.
G. The Lender is willing to extend the credit facility on the
terms and subject to the conditions set forth in this Agreement.
The parties agree as follows:
SECTION 1 - DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following definitions shall apply for purposes of this Agreement:
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"Account" means any right to payment for goods sold or leased or
services rendered, whether or not evidenced by an instrument or chattel paper,
including, without limitation, the right to payment of management and/or
consulting fees.
"Account Debtor" means any Person obligated on any Account of a
Borrower, including without limitation, any Insurer and any Medicaid/Medicare
Account Debtor.
"Advance" means an advance of Loan proceeds to or for the account of
the Borrower.
"Advance Date" means a Business Day on which an Advance is made.
"Affiliate" means, when used with respect to any corporation, limited
liability company or partnership, any person who directly or indirectly controls
or is controlled by or is under common control with such corporation, limited
liability company or partnership. For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, through the majority
ownership of voting securities, partnership interests or other equity interests.
The term "person" shall mean any natural person, trust, partnership,
corporation, joint venture or other legal entity.
"Agreement" means this Working Capital Loan Agreement, as this
Agreement hereafter may be amended.
"Borrower" and "Borrowers" are Senior Care Florida, Golfview,
Golfcrest, Southern Pines and Cedar Hills.
"Borrowing Base" means, on any date of determination, an amount equal
to 80% of the net amount of Eligible Accounts; provided that the percentage set
forth above may be increased pursuant to Section 4.3.2, all as evidenced by the
most recent Borrowing Base Certificate; and provided further, that prior to
August 31, 2003, the Borrowing Base shall not be less than One Million Dollars
($1,000,000).
"Borrowing Base Certificate" means a certificate in the form and
substance acceptable to the Lender delivered by the Borrowers to the Lender
pursuant to the terms of this Agreement.
"Collateral" means all of the real property and tangible and intangible
personal property now or hereafter serving as security for the obligations of a
Borrower or any of its Affiliates to the Lender or any of its Affiliates,
including but not necessarily limited to that described in Section 5 of this
Agreement.
"Collateral Documents" means the Security Agreements, the Pledge
Agreement, the Guaranty, the Non-disturbance Agreement and all other documents
and agreements that evidence, secure or otherwise relate to the Loan, this
Agreement, the Security Agreements, the Pledge Agreements, the Guaranty, the
Non-disturbance Agreement, and the transactions
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contemplated by such agreements, and all renewals, extensions, amendments,
modifications or replacements of any of the foregoing.
"Eligible Account" means those accounts of the Borrowers, on a
consolidated basis, that meet the following criteria:
(a) the Account arises from services provided or
performed by the Borrowers in the ordinary course of the Borrowers'
business under an enforceable contract, and such services have been
provided or performed for the appropriate account debtors in accordance
with such contract;
(b) the title of the Borrowers to the Account is absolute
and is not subject to any prior assignment, claim, lien or security
interest;
(c) the Account is in the amount shown on the books of
the Borrowers, and on any invoice or statement delivered to Lender is
owing to the Borrowers, and no partial payment has been made thereon by
anyone;
(d) the Account is not subject to any claim of reduction,
counterclaim, setoff, recoupment, or any claim for credits, allowances
or adjustments by the Account Debtor because of unsatisfactory
services, or for any other reason which has been asserted to Borrower
or is known to Borrowers, except for customary discounts allowed for
prompt payment;
(e) the Account is due and payable not more than thirty
(30) days from the date of the invoice therefore;
(f) the Account is not more than one hundred twenty (120)
days old, dating from the original invoice dates (not due dates) as set
forth in the terms or the respective invoices;
(g) the Account does not arise out of a contract with, or
order from, an Account Debtor that, by its terms, forbids or makes the
assignment of that account to Lender void or unenforceable;
(h) none of the Borrowers has received any note, trade
acceptance, draft or other instrument with respect to or in payment of
the Account, and if any such instrument is received, the Borrowers will
immediately notify Lender and, at the latter's request, endorse or
assign and deliver the same to Lender;
(i) none of the Borrowers nor Lender has received any
notice of the dissolution, termination of existence, insolvency,
business failure, appointment of a receiver for any part of the
property of, assignment for the benefit of creditors by, or the filing
of a petition in bankruptcy or the commencement of any proceeding under
any bankruptcy or insolvency laws by or against the Account Debtor;
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(j) the Account Debtor is not an Affiliate of any
Borrower, or in any way related by common ownership to any Borrower;
(k) the Account is not owed by an Account Debtor having
its principal place of business or executive office outside the United
States;
(l) the Account is not owed by an Account Debtor (other
than a Medicaid/Medicare Account Debtor) with respect to which the
total unpaid Accounts of such Account Debtor exceed ten percent (10%)
of the net amount of all Eligible Accounts (including Medicaid/Medicare
Account Debtors); and
(m) no material covenant, representation or warranty
contained in this Agreement or the Collateral Documents has been
breached with respect to such Account.
"Emerald Healthcare" means Emerald Healthcare, Inc., a Florida
corporation.
"Emerald Operating Entities" means Emerald-Cedar Hills, Inc.,
Emerald-Golfview, Inc., Emerald-Golfcrest, Inc. and Emerald-Southern Pines, Inc.
"Event of Default" has the meaning given such term in Section 10 of
this Agreement.
"Financing Statement" means the Financing Statement executed by the
Borrowers and delivered to the Lender for filing pursuant to Section 6 of this
Agreement.
"Florida Emerald Facility" means one of, and "Florida Emerald
Facilities" means one or more of, the following skilled nursing facilities:
FACILITY NAME LOCATION
------------- --------
Golfview Nursing Home 0000 00xx Xxxxxx Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000
Golfcrest Nursing Home 000 Xxxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000
Southern Pines Nursing Center 0000 Xxxxxxxx Xxxxxx, Xxx Xxxx Xxxxxx, Xxxxxxx 00000
Cedar Hills Nursing Center 0000 Xxxx Xxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U. S.
accounting profession), which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means and includes any federal, state,
District of Columbia, county, municipal, or other government and any department,
commission, board, bureau, agency or instrumentality thereof, whether domestic
or foreign.
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"Guaranty" means that certain Guaranty dated the same date as this
Agreement from Advocat, Inc., a Delaware corporation, Advocat Finance, Inc., a
Delaware corporation, and Diversicare Management Services, Inc., a Tennessee
corporation, in favor of Lender.
"Insurer" means a Person that insures a Patient against certain of the
costs incurred in the receipt by such Patient of Medical Services, or that has
an agreement with a Borrower to compensate a Borrower for providing services to
a Patient.
"Lender" is defined in the preamble to this Agreement.
"Loan" means the working capital loan described in this Agreement.
"Loan Balance" means, at any time, the then outstanding principal
balance of the Loan.
"Material Adverse Effect" means any material adverse effect whatsoever
upon (a) the validity, performance or enforceability of any Transaction
Document, (b) the properties, contracts, business operations, profits or
condition (financial or otherwise) of a Borrower, or (c) the ability of a
Borrower to fulfill its obligations under the Transaction Documents.
"Maximum Loan Amount" means Two Million Dollars ($2,000,000) during the
first twenty-four months after the date of this Agreement. In the twenty-fifth
month after the date of this Agreement, and each subsequent month thereafter, on
the first day of such month, the Maximum Loan Amount shall decrease by Ten
Thousand Dollars ($10,000).
"Medicaid/ Medicare Account Debtor" means any Account Debtor which is
(a) the United States of America acting under the Medicaid/Medicare program
established pursuant to the Social Security Act, (b) any state or the District
of Columbia acting pursuant to a health plan adopted pursuant to Title XIX of
the Social Security Act or (c) any agent, carrier, administrator or intermediary
for any of the foregoing.
"Medical Services" means medical and health care services provided to a
Patient, including, but not limited to, medical and health care services
provided to a Patient and performed by a Borrower which are covered by a policy
of insurance issued by an Insurer, and includes physician services, nurse and
therapist services, dental services, hospital services, skilled nursing facility
services, comprehensive outpatient rehabilitation services, home health care
services, residential and out-patient behavioral healthcare services, and
medicine or health care equipment provided by a Borrower to a Patient for a
necessary or specifically requested valid and proper medical or health purpose.
"Non-disturbance Agreement" means the Subordination, Non-Disturbance,
and Attornment Agreement dated the same date as this Agreement by and among
Lender, Florida Lessor - Emerald, Inc., a Maryland corporation, Senior Care
Florida, and the Emerald Operating Entities.
"Note" means any promissory note executed and delivered by one or more
Borrowers pursuant to this Agreement, together with all renewals, extensions,
amendments, modifications
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or replacements thereof, including without limitation the Secured Working
Capital Promissory Note dated the same date as this Agreement from the Borrowers
in favor of the Lender.
"Notice of Requested Borrowing" has the meaning given such term in
Section 4.1 of this Agreement.
"Omega Mortgage Documents" means the Mortgages and the Amended
Transaction Documents, as each is defined in the Non-disturbance Agreement, and
all other documents and agreements that evidence, secure or otherwise relate to
the Mortgages and the Amended Transaction Documents, and the transactions
contemplated by such agreements, and all renewals, extensions, amendments,
modifications or replacements of any of the foregoing.
"Ordinary Course" means, when used with respect to a Borrower, any
activity performed in accordance with the historical or customary practices of
such Borrower.
"Patient" means any Person receiving Medical Services from a Borrower
and all Persons legally liable to pay a Borrower for such Medical Services other
than Insurers.
"Permitted Liens" means (a) security interests, mortgages and liens in
favor of the Lender; (b) liens for taxes not delinquent or, in a jurisdiction
where payment of taxes is deferred during the period of any contest, being
contested in good faith by appropriate proceedings as prescribed by law, with
adequate reserves therefor being set aside on the Borrowers' books; and (c)
inchoate materialmens', mechanics', workmens', repairmens' or other like liens
arising in the Ordinary Course and, in each case, not delinquent.
"Person" means an individual, partnership, corporation, trust, joint
venture, joint stock company, limited liability company, association,
unincorporated organization, Governmental Authority, or any other entity.
"Pledge Agreements" means the separate Pledge Agreements dated the same
date as this Agreement in favor of the Lender pledging 100% of the outstanding
equity interests in each of the Borrowers.
"Replacement Master Lease" means the form of Amended and Restated
Master Lease executed and to be delivered pursuant to the Non-disturbance
Agreement.
"Security Agreements" means the separate Security Agreements dated the
same date as this Agreement from each of the Borrowers in favor of the Lender.
"Senior Care Master Lease" is defined in Recital B to this Agreement.
"Sublessees" means Golfview, Golfcrest, Southern Pines and Cedar Hills.
"Subleases" is defined in Recital C to this Agreement.
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"Transaction Documents" means this Agreement, the Note, the Collateral
Documents, the Replacement Master Lease, the Senior Care Master Lease, the
Subleases, and all other documents and agreements that evidence, secure or
otherwise relate to the Loan, this Agreement, the Note, the Collateral
Documents, the Replacement Master Lease, the Senior Care Master Lease, the
Subleases, and the transactions contemplated by such agreements, and all
renewals, extensions, amendments, modifications or replacements of any of the
foregoing.
"Termination Date" means the date that is the earlier to occur of (i)
December 31, 2005, and (ii) four (4) months after the termination of the later
to terminate of the Senior Care Master Lease or the Replacement Master Lease.
"UCC" means the Uniform Commercial Code.
SECTION 2 - WARRANTIES AND REPRESENTATIONS
To induce the Lender to enter into this Agreement and to make the Loan,
the Borrowers represent and warrant to the Lender that the following statements
are true, correct and accurate both before and after giving effect to the
transactions contemplated by the Transaction Documents:
2.1 Each of the Borrowers is a limited liability company duly
organized and validly existing under the laws of the State of Delaware. Senior
Care Florida owns legal and equitable title to 100% of outstanding equity
interests in each Sublessee. Diversicare Leasing Corp., a Tennessee corporation,
owns legal and equitable title to 100% of the outstanding equity interests
Senior Care Florida.
2.2 The Borrowers have all requisite legal power and authority and
all necessary licenses and permits to own and operate the Florida Emerald
Facilities. The Borrowers are in compliance with all laws, rules, and
regulations, the non-compliance with which would have a Material Adverse Effect.
2.3 Neither this Agreement nor any other written statement
furnished by or on behalf of the Borrowers to the Lender in connection with the
negotiation of the Loan contains any untrue statement of a material fact.
2.4 There are no proceedings pending, or, to the Borrowers'
knowledge threatened, before any court, governmental authority or arbitration
board or tribunal, against or affecting the Borrowers, or any one or more of
them, that might have a Material Adverse Effect. The Borrowers are not in
default with respect to any order, judgment or decree of any court, governmental
authority or arbitration board or tribunal.
2.5 The Borrowers have full power and authority to execute,
deliver and perform the Transaction Documents; the execution, delivery and
performance of the Transaction Documents required to be given hereunder by the
Borrowers have been duly authorized by appropriate action and will not violate
the provisions of the articles of incorporation or organization, operating
agreement or bylaws of the Borrowers or of any law, rule, judgment, order,
agreement or
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instrument to which a Borrower is a party or by which it is bound, or to which
any of its assets are subject, nor do the same require any approval or consent
of any public authority or other third party; and the Transaction Documents have
been duly executed and delivered by, and are the valid and binding obligations
of, the parties thereto, enforceable in accordance with their terms.
2.6 The execution, delivery and performance by a Borrower of each
Transaction Document to which it is a party, the issuance, delivery and
performance of the Note, and the consummation of the transactions contemplated
hereby or related hereto do not and will not (a) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any contractual obligation of a Borrower, or (b) require any approval or
consent of any governmental authority or other person or entity that, as of the
date of this Agreement, has not been obtained in writing and delivered to the
Lender.
2.7 All of the equity interests of the Borrowers are validly
issued, fully paid and nonassessable.
2.8 None of the Borrowers is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any contractual obligation of a Borrower, and no condition exists
that, with the giving of notice or the lapse of time, or both, would constitute
such a default.
2.9 Lender may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by a Borrower with respect
to any Account or Accounts. Unless otherwise indicated in writing to Lender,
with respect to each Eligible Account, the Borrowers represent that:
(a) The Account is genuine and in all respects what it
purports to be, and is not evidenced by a judgment;
(b) The Account arises out of a completed, bona fide sale
and delivery of goods or rendition of Medical Services by a Borrower in
the Ordinary Course and in accordance with the terms and conditions of
all purchase orders, contracts, certification, participation,
certificate of need, or other documents relating thereto and forming a
part of the contract between a Borrower and the Account Debtor;
(c) The Account is for a liquidated amount maturing as
stated in a duplicate claim or invoice covering such sale or rendition
of Medical Services, a copy of which has been furnished or is available
to Lender;
(d) The Account, and Lender's security interest in such
Account, is not, and will not, be in the future, subject to any offset,
lien, deduction, defense, dispute, counterclaim or any other adverse
condition asserted to Borrowers or is known to Borrowers, and each such
Account is absolutely owing to a Borrower and is not contingent in any
respect or for any reason;
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(e) There are no facts, events or occurrences known to
Borrowers which in any way impair the validity or enforceability of any
Accounts or tend to reduce the amount payable thereunder from the face
amount of the claim or invoice and statements delivered to Lender with
respect thereto;
(f) The Account Debtor under the Account had the capacity
to contract at the time any contract or other document giving rise to
the Account was executed and such Account Debtor is solvent;
(g) There are no proceedings or actions known to
Borrowers which are threatened or pending against any Account Debtor
under the Account which might result in any material adverse change in
such Account Debtor's financial condition or the collectibility of such
Account;
(h) The Account has been billed and forwarded to the
Account Debtor for payment in accordance with applicable laws and in
material compliance and conformity with any and requisite procedures,
requirements and regulations governing payment by such Account Debtor
with respect to such Account, and such Account if due from a
Medicaid/Medicare Account Debtor is properly payable directly to a
Borrower; and
(i) Each Borrower has obtained and currently has all
certificates of need, Medicaid and Medicare provider numbers, licenses,
permits and authorizations that are necessary in the generation of such
Accounts.
SECTION 3 - THE LOAN
3.1 The Loan shall be Advanced subject to and in conformity with
the following terms and conditions:
Loan Maximum Maximum Loan Amount.
Minimum Draw $10,000
Frequency of Draws No more frequently than monthly.
Payments As set forth in the Note.
Due Date As set forth in the Note.
Interest Rate As set forth in the Note.
Purpose Advances shall be used solely for
working capital at the Florida
Emerald Facilities.
3.2 Subject to the terms and conditions of this Agreement, the
Lender shall be obligated from time to time to make Advances subject to and in
accordance with the terms and conditions contained in this Agreement.
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3.3 The Borrower may terminate this credit facility at any time
upon thirty (30) days' prior written notice to the Lender and payment in full of
the Loan Balance and all accrued and unpaid interest. Upon the expiration of
thirty (30) days after delivery of such notice to the Lender, the Lender shall
have no further obligation to make any further Advances. Except as expressly
provided in this Section, termination of the credit facility by the Borrower
pursuant to this Section shall not modify or otherwise affect the rights or
obligations of the parties under any of the Transaction Documents as then in
effect.
3.4 Interest on Advances shall be computed on the basis of a
360-day year and the actual number of days elapsed in the period during which it
accrues. In computing interest on any Advance, the date of the making of the
Advance shall be included and the date payment is received shall be excluded;
provided, that if an Advance is repaid on the same day on which it is made, one
day's interest shall be paid on that Advance.
SECTION 4 - ADVANCE PROCEDURES; LIMIT ON ADVANCES
4.1 The Borrowers shall give the Lender notice of its request for
each Loan Advance (each a "Notice of Requested Borrowing") not later than 12:00
noon, Baltimore, Maryland time, at least five (5) Business Days before the date
upon which such Advance is requested to be made. Subject to the terms and
conditions of this Agreement, the proceeds of each such requested Advance shall
be made available to the Borrower by wire transfer of funds to the Borrower's
account specified in the Notice of Requested Borrowing. The Notice of Requested
Borrowing shall include the following:
(1) The amount of the Advance requested; and
(2) A certification from an officer of Lessee that (A) no
Event of Default exists, and (B) no event has
occurred or condition exists that with the giving of
notice or the passage of time, or both, would
constitute an Event of Default.
4.2 Each Advance shall be limited to the lesser of
(1) the Maximum Loan Amount minus the Loan Balance on the
Advance Date; and
(2) the Borrowing Base minus the Loan Balance and the
amount of unpaid interest on the Loan on the Advance
Date.
4.3 Borrowing Base.
4.3.1. Notwithstanding anything to the contrary contained in
this Agreement or in any other Transaction Document, the Loan Balance
hereunder shall at no time exceed the lesser of (i) the Borrowing Base
and (ii) the Maximum Loan Amount. The Borrower agrees that if at any
time any such excess shall arise, it shall, without presentment,
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demand, protest or notice of any kind from the Lender, all of which it
hereby expressly waives, immediately repay Loans in the amount
necessary to eliminate such excess.
4.3.2. The Borrowing Base will be redetermined by the Lender
once a month upon receipt of the Borrowing Base Certificates described
in Section 4.3.3. In addition, the Lender may redetermine the Borrowing
Base at other times in its discretion as necessary to reduce the
Borrowing Base as a result of its reasonable determination that
Accounts included therein are no longer Eligible Accounts. The Lender
may in the exercise of its discretion in determining the Borrowing
Base, at any time and from time to time, increase the advance
percentages to be applied to Eligible Accounts which are set forth in
the definition of "Borrowing Base" in Section 1.
4.3.3. The Borrowers shall keep accurate and complete
records of its Accounts and, as frequently as the Lender shall require,
but not less frequently than once per month on the tenth Business Day
following the last day of each fiscal month, the Borrowers shall
deliver to the Lender a Borrowing Base Certificate covering all of its
Accounts, together with (if requested by the Lender) formal written
assignments of such Accounts and copies of the invoices related
thereto. The Borrowers shall also make available to the Lender for its
inspection, upon demand, the original copy of all documents (and will
deliver any such original copy to the Lender if required by the Lender
to enforce its rights and remedies hereunder), including, without
limitation, repayment histories, present status reports and shipment
reports, relating to the Accounts included in any Borrowing Base
Certificate and such other matters and information relating to the
status of then existing Accounts as the Lender shall reasonably
request.
4.3 Subject to the terms and conditions of this Agreement, amounts
borrowed under the Loan may be repaid and re-borrowed.
4.4 In any event, the obligation of the Lender to make Advances
shall cease on the first to occur of (i) an Event of Default, and (ii) the
Termination Date.
SECTION 5 - CONDITIONS PRECEDENT TO ADVANCES
In addition to the other conditions precedent to Advances described in
this Agreement, each Loan advance requested under this Agreement shall be
subject to prior satisfaction of the following conditions:
5.1 The Borrowers, or any one of them, shall have received and
shall maintain all governmental licenses, approvals and permits as are necessary
to enable a Borrower to lawfully lease and operate the Florida Emerald
Facilities from and after the Date of this Agreement and shall have satisfied
any and all conditions to the effectiveness thereof; provided, however, that as
of the date of this Agreement such licenses, approvals and permits may be
provisional licenses, approvals or rights to occupy in which case the Borrowers
shall use diligent efforts to satisfy all conditions for such licenses,
approvals or rights to become permanent in a timely manner.
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5.2 The representations and warranties contained herein and in the
other Transaction Documents shall be true, correct and accurate in all material
respects on and as of the Advance Date of such requested Advance, except for
those relating to specific dates or time periods and as changed as permitted by
this Agreement.
5.3 The Borrowers shall have performed in all material respects
all agreements and satisfied all conditions that this Agreement and each of the
other Transaction Documents provides shall be performed by a Borrower on or
before such Advance Date.
5.4 No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender from
making such advance.
5.5 There shall not be pending or, to the best of Borrowers'
knowledge threatened: (a) any action, suit, proceeding, governmental
investigation or arbitration against or affecting a Borrower or an Affiliate, or
any property of a Borrower or an Affiliate, that, in the opinion of the Lender,
could reasonably be expected to have a Material Adverse Effect upon a Borrower
or an Affiliate; and (b) there shall have occurred no development in any action,
suit, proceeding, governmental investigation or arbitration previously disclosed
to the Lender pursuant to this Agreement, that, in the opinion of the Lender,
could reasonably be expected to have a Material Adverse Effect upon a Borrower
or an Affiliate. No injunction or other restraining order shall have been issued
and no hearing to cause an injunction or other restraining order shall be
pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, this Agreement or the making of the Loan
hereunder.
5.6 Since the date of the most recent financial statements
submitted to the Lender pursuant to the Transaction Documents, nothing shall
have occurred or become known that the Lender shall have determined has a
Material Adverse Effect upon a Borrower or an Affiliate.
5.7 No Event of Default shall exist and be continuing.
5.8 No event has occurred or condition exists that with the giving
of notice or the passage of time, or both, would constitute an Event of Default.
5.9 The Lender shall have received a Notice of Requested Borrowing
at the time and in the form required by Section 4.1 above. The furnishing by the
Borrower of a Notice of Requested Borrowing shall be deemed to constitute a
representation and warranty of the Borrower to the effect that all the
conditions set forth in this Agreement for the requested advance are satisfied
as of the date of delivery and will be satisfied on the applicable Advance Date.
5.10 The Transaction Documents (other than the Senior Care Master
Lease and the Subleases if promptly replaced by the Replacement Master Lease
pursuant to the terms of the Non-disturbance Agreement) shall remain in full
force and effect.
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SECTION 6 - SECURITY AND RELEASE OF COLLATERAL
6.1 Without limiting the terms and conditions of any of the
Transaction Documents, to secure payment of all obligations and indebtedness of
the Borrowers to the Lender under this Agreement and all other indebtedness and
obligations now and hereafter owing by the Borrowers and their Affiliates to the
Lender or any of its Affiliates, the Borrowers shall execute and deliver to the
Lender (or, in the case of documents to be executed and delivered by others,
shall cause such documents to be executed and delivered to the Lender):
(a) the Note;
(b) the Security Agreements;
(c) the Pledge Agreement;
(d) the Guaranty;
(f) the Non-disturbance Agreement; and
(e) all financing statements, assignments, documents of
title, and other documents, agreements, and
instruments as the Lender reasonably may request in
connection with the creation, perfection and priority
of any security described above.
SECTION 7 - AFFIRMATIVE COVENANTS
Beginning on the date of this Agreement and continuing until the Lender
has no further obligation to make advances of the Loan to the Borrowers pursuant
to this Agreement and the Loan and all other indebtedness of the Borrowers to
the Lender under the Transaction Documents have been repaid in full, the
Borrowers shall:
7.1 Furnish to the Lender any and all certificates and reports
concerning the condition of the Florida Emerald Facilities or compliance with
the Transaction Documents or this Agreement, as and when the same are so
furnished to such other party or parties. In addition, the Borrowers shall
furnish to the Lender within ten (10) Business Days after receipt of Lender's
request, such other information, books and records as the Lender may reasonably
request, in such form and at such time and place as the Lender may reasonably
request, concerning the Borrowers' activities and plans that are prepared by or
for one or more of the Borrowers in the Ordinary Course.
7.2 Promptly inform the Lender of the occurrence of any Event of
Default, or of any occurrence that, with the giving of notice or the lapse of
time, or both, would be an Event of Default, and of any other occurrence that
has a Material Adverse Effect; grant to the Lender or its representatives the
right to examine the Borrowers' books and records and the Collateral at any
reasonable time or times on reasonable notice; maintain complete and accurate
books and records of its transactions in accordance with good accounting
practices; and furnish to the
13
Lender any information that it reasonably may request concerning the Borrowers'
financial affairs that is prepared by or for a Borrower in the Ordinary Course
within ten (10) Business Days after receipt of a request for that information.
7.3 Maintain insurance, including, but not limited to, fire and
extended coverage insurance, workers' compensation insurance, and casualty and
liability insurance with responsible insurance companies on each Florida Emerald
Facility and against such risks and in such amounts as is required by the Senior
Care Master Lease, or, if in effect, the Replacement Master Lease, and furnish
to the Lender upon its request the details with respect to that insurance and
satisfactory evidence of that insurance coverage. Each insurance policy required
under this Section 7.3 shall be, to the extent practicable, written or endorsed
so as to make losses, if any, payable to the Borrowers and the Lender as their
respective interests may appear, and shall include, where appropriate, a
mortgage clause or endorsement in favor of the Lender in form and substance
satisfactory to the Lender.
7.4 Pay and discharge, as often as the same may become due and
payable, all taxes, assessments and other governmental monetary obligations, of
whatever nature, that may be levied or assessed against it or any of its
properties, unless and to the extent only that in a jurisdiction where payment
of taxes and assessments is abated during the period of any contest, those taxes
or assessments shall be contested in good faith by appropriate proceedings and
that the Borrowers shall have set aside on its books adequate reserves with
respect to those taxes and assessments.
7.5 Pay and perform at the time such payment or performance is
due, all indebtedness and obligations owing by it, and pay all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable, except any indebtedness,
obligation or claim being contested in good faith by appropriate proceedings and
for which the Borrower shall have set aside on its books adequate reserves with
respect to such indebtedness, obligation or claim.
7.6 Maintain their existence as a corporation or limited liability
company under the laws of the State of Delaware; conduct and operate its
business in compliance with all laws, governmental rules, regulations, and
orders applicable to it, the failure to comply with which would or may have a
Material Adverse Effect.
7.7 Act prudently and in accordance with customary industry
standards in managing or operating its assets, properties, business and
investments and keep in good working order and condition, ordinary wear and tear
excepted, all of its assets and properties that are necessary to the conduct of
its business.
7.8 At all times preserve, renew and keep in full force and effect
the rights, licenses, permits, franchises, agency agreements, trade names,
patents, trademarks, copyrights, licenses and service marks, the loss of which
could have a Material Adverse Effect.
7.9 Permit representatives of the Lender, on reasonable notice,
during the Borrowers' normal business hours, to enter the Borrowers' premises,
review the Borrowers' business
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records, and interview the Borrowers' employees as reasonably required by the
Lender to conduct periodic audits of the Borrowers' business and the Borrowers'
compliance with its obligations under this Agreement.
7.10 If the Replacement Master Lease is not in effect, comply with
all of the terms and conditions of the Senior Care Master Lease.
7.11 If the Replacement Master Lease is in effect, comply with all
of the terms and conditions of the Replacement Master Lease.
If the Replacement Master Lease is in effect, to the extent any of the
provisions of this Section 7 are inconsistent with the terms of the Replacement
Master Lease, the Replacement Master Lease shall control.
SECTION 8 - NEGATIVE COVENANTS
Beginning on the date of this Agreement and continuing until the Lender
has no further obligation to make advances of the Loan to the Borrowers pursuant
to this Agreement and the Loan and all other indebtedness of the Borrowers to
the Lender under the Transaction Documents has been repaid in full, the
Borrowers shall not, without the prior written consent of the Lender:
8.1 Create or permit to exist any lien, mortgage, pledge,
attachment, garnishment, execution, or other legal process, or encumbrance on
any of the Collateral, except Permitted Liens.
8.2 Guarantee, endorse, assume or otherwise incur or suffer to
exist any contingent liability in respect of any obligation of any other person,
firm or corporation, except by the endorsement of negotiable instruments for
deposit or collection in the Ordinary Course.
8.3 Purchase or otherwise acquire all, or substantially all, of
the assets, obligations or capital stock or equity interests in any other person
or legal entity.
8.4 Subordinate any indebtedness owing to a Borrower by any
person, firm or corporation to indebtedness of that person, firm or corporation
owing to any other person, firm or corporation.
8.5 Engage, directly or indirectly, in any line of business other
than the operation of the Florida Emerald Facilities.
8.6 Issue, incur, assume or permit to remain outstanding any
indebtedness, other than indebtedness owing to the Lender or any of Lender's
Affiliates or indebtedness which has been subordinated to the indebtedness owed
to the Lender pursuant to written agreements in form and substance acceptable to
the Lender.
8.7 Change its fiscal year or method of accounting except as
required by GAAP.
15
8.8 Change its name without prior written approval from the
Lender; except that a Borrower may change its name if such Borrower has given
sixty (60) days' prior written notice of the name change to Lender and has taken
such action as the Lender deems necessary to continue the perfection of the
security interests and liens granted to the Lender under the Transaction
Documents.
SECTION 9 - APPLICATION OF PROCEEDS
The proceeds of the Loan shall be used by the Borrowers solely to fund
Borrowers' working capital needs at the Florida Emerald Facilities.
SECTION 10 - EVENTS OF DEFAULT AND REMEDIES
10.1 The following events shall constitute an "Event of Default"
under this Agreement, the occurrence of which shall entitle the Lender to pursue
any and all rights and remedies, legal and equitable, available to it under any
Transaction Document or otherwise. The occurrence of an Event of Default under
this Agreement shall constitute a default under each and every other Transaction
Document. The Lender's rights and remedies are cumulative and may be exercised
concurrently or successively from time to time. Any action by the Lender against
any property or party shall not serve to release or discharge any other
security, property or party in connection with this transaction. The Events of
Default are as follows:
(a) Failure to pay the principal or interest on the Borrowers'
present or future indebtedness to the Lender pursuant to this
Agreement and the other Transaction Documents, when and as the
same shall be due and payable, whether by acceleration or
otherwise;
(b) An Event of Default (whether described as an "Event of
Default", "Default", "Guaranty Default", "Security Agreement
Default" or similar term or not specifically defined) under
any Collateral Document or any other Transaction Document;
(c) An Event of Default under the Senior Care Master Lease or any
Sublease, or the Replacement Master Lease;
(d) An Event of Default occurs under the Omega Mortgage Documents
that is a result, directly or indirectly, of the actions or
inactions of a Borrower.
(e) Failure to pay, observe and discharge in the Ordinary Course
all indebtedness and other obligations of a Borrower to any
third party, unless the same is being contested in good faith
by appropriate proceedings in accordance with the procedures
set forth in the Senior Care Master Lease or in Article XII of
the Replacement Master Lease, as may then be applicable.
(f) The discovery by the Lender of any material inaccuracy in any
statement, assurance, representation, covenant, warranty, term
or condition by a Borrower
16
contained in this Agreement or in any document delivered or to
be delivered by or on behalf of the Borrowers pursuant to this
Agreement, which inaccuracy would result in a Material Adverse
Effect.
(g) The filing of a petition by or against a Borrower seeking
relief under the Federal Bankruptcy Code, 11 U.S.C. Sec. 101,
et seq., and any amendments thereto, or any similar law or
regulation, whether federal, state or local, not dismissed
within 30 days.
(h) The commencement of a proceeding by or against a Borrower
under any statute or other law providing for an assignment for
the benefit of creditors, the appointment of a receiver, or
any other similar law or regulation, whether federal, state or
local, not dismissed within 30 days.
(i) The garnishment, attachment, levy or other similar action
taken by or on behalf of any creditor of the Borrower, or any
of their respective properties which could have a Material
Adverse Effect.
10.2 The Lender may, at its option, terminate its obligation to
make Advances, without notice to the Borrowers: (a) upon the occurrence and
continuance of any Event of Default; or (b) upon the occurrence and continuance
of any event that, with the giving of notice or the lapse of time, or both,
would constitute an Event of Default.
10.3 Upon the occurrence and continuance of any Event of Default,
the Lender shall have the right (a) to declare all outstanding principal and
accrued interest on the Loan, and on any other indebtedness of the Borrowers, or
any one of them, to the Lender (whether or not arising under this Agreement) to
be immediately due and payable, without presentment, demand or notice of any
kind, all of which are hereby expressly waived by the Borrowers, and (b) to
exercise any and all remedies that it may have for default under any Transaction
Document or at law or in equity, and such remedies may be exercised concurrently
or separately until all of the Borrowers' indebtedness to the Lender (whether or
not arising under this Agreement) and each and every one of the Borrowers'
obligations to the Lender (whether or not arising under the Transaction
Documents) have been fully satisfied. In connection with the enforcement of any
such remedies of the Lender, the Lender and its employees, attorneys, agents and
other persons and entities designated by the Lender, shall have the right,
without notice, to enter the Borrowers' places of business for such purposes as
reasonably may be required to permit the Lender to preserve, protect, take
possession of and/or sell or otherwise dispose of any Collateral, and to store
the Collateral at the Borrowers' places of business, without charge, for such
periods as may be determined by the Lender.
SECTION 11 - ACCEPTANCE OF PROCEEDS
The acceptance of the proceeds of the Loan and any Advance shall
constitute the representation and warranty by the Borrowers to the Lender that
all of the applicable conditions specified herein have been satisfied as of that
time, except for such conditions that have been expressly waived in writing
hereunder by the Lender.
17
SECTION 12 - MISCELLANEOUS
12.1 The Borrowers shall reimburse the Lender for all reasonable
costs (including but not limited to reasonable fees and expenses for appraisers,
attorneys, architects, accountants, brokers, copy services, court reporters,
engineers, expert witnesses, overnight couriers, recording fees and taxes, title
and lien searches, and surveyors) incurred by the Lender in: (a) creating and
perfecting a first priority security interest in the Collateral; (b) preserving
and protecting the Collateral; (c) enforcing any provision of any of the
Transaction Documents; (d) collecting the Loan; and (e) foreclosing any lien or
security interest in any of the Collateral, or in taking action in lieu of
foreclosure.
12.2 The Borrowers acknowledges that the Lender shall have the
right, upon an Event of Default, or any event that with the giving of notice or
lapse of time, or both, would constitute an Event of Default, to set off any
indebtedness from time to time owing to the Borrowers by the Lender against any
indebtedness that shall at any time be due and payable by the Borrowers to the
Lender.
12.3 Each and every right granted to the Lender hereunder or under
any other Transaction Document, or allowed it by law or equity, shall be
cumulative and may be exercised from time to time. No failure on the part of the
Lender to exercise, and no delay in exercising, any right shall operate as a
waiver thereof or as a waiver of any other right. No single or partial exercise
by the Lender of any right or remedy shall preclude any other future exercise of
it or the exercise of any other right or remedy. No waiver or indulgence by the
Lender of any default shall be effective unless in writing and signed by the
Lender, nor shall a waiver on one occasion be construed as a bar to or waiver of
that right on any future occasion. This Agreement may not be amended except by a
writing signed by all the parties hereto.
12.4 The relationship between the Borrowers and the Lender is
solely that of borrower and lender. The Lender has no fiduciary responsibilities
to the Borrowers as a result of this Loan Agreement, the other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby. The Lender does not undertake any responsibility to the Borrowers to
review or inform the Borrowers of any matter in connection with any phase of the
Borrowers' business or operations. The Borrowers shall rely entirely upon its
own judgment with respect to its business, and any review, inspection,
supervision, or information supplied to the Borrowers by the Lender is for the
protection of the Lender and none of the Borrowers or any third party is
entitled to rely thereon.
12.5 This Agreement is made in the State of Maryland. The validity
of this Agreement, and the validity of any documents incorporated herein or
executed in connection herewith, and the construction, interpretation and
enforcement thereof, and the rights of the parties thereto, shall be determined
under and construed in accordance with the internal laws of the State of
Maryland, without regard to principles of conflicts of law.
12.6 Any and all notices or other communications required or
permitted under this Agreement shall be in writing, and shall be served either
personally or by certified United States mail with postage thereon full prepaid
addressed:
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To the Borrowers at:
Senior Care Florida Leasing, LLC
c/o Advocat, Inc.
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telefax No.: 615-771-7409
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: J. Xxxx Manner
Telefax No.: 000-000-0000
and to the Lender at:
Omega Healthcare Investors, Inc.
0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxx 000
Xxxxxxxx 00000
Attn.: Xxxxxx X. Xxxxx
Telephone No.: 410/000-0000
Facsimile No.: 410/427-8800
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxx Xxxxxx & Xxxxxx PLLC
000 Xxxxxx Xxx., X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Derwent
Telephone: (000) 000-0000
Fax: (000) 000-0000
or such other place or places as any party shall designate by written notice
served upon other parties.
Notice shall be deemed to have been given (a) on the date of personal delivery
to a Borrower or the transmission to a Borrower by facsimile to the number set
forth in this Section, or (b) on the date on which a duly authorized
representative of a Borrower acknowledges receipt of such written notice, or (c)
on the day after sending such written notice to a Borrower by a commonly
recognized overnight courier service, such as Federal Express, Purolator, UPS or
the like, or (d) on the third day after or by depositing the same in the United
States mail, postage prepaid, for delivery to a Borrower.
19
12.7 This Agreement shall be binding upon and shall inure to the
benefit of the Borrowers and the Lender and their respective successors and
assigns. The Borrowers shall not have any right to assign, transfer, hypothecate
or otherwise transfer or dispose of any of its rights or obligations under this
Agreement or the other Collateral Documents (voluntarily, by operation of law,
as security, by gift or otherwise) without the Lender's consent, which consent
may be withheld in the sole discretion of the Lender. The Lender may, without
the consent of the Borrower, assign, negotiate, pledge or otherwise hypothecate
all or any portion of this Agreement, or grant participations herein and in the
Collateral Documents, or in any of its rights or security hereunder or
thereunder, including, without limitation, the instruments securing the
Borrowers' obligations hereunder; provided, however, that the Lender promptly
will inform the Borrowers of any such assignment, negotiation, pledge or other
hypothecation and of the parties involved therewith. In connection with any
assignment or participation, the Lender may disclose to the proposed assignee or
participant any information that the Borrower is required to deliver to the
Lender pursuant to this Agreement.
12.8 The Borrowers waive and release any and all right that they
may have to require that the Lender marshal any of the Collateral. The Borrowers
shall upon the request of the Lender promptly execute and deliver to the Lender
a written statement, in form and substance reasonably satisfactory to the
Lender, identifying all of the Collateral in which the Lender holds an interest
as security for the Loan made pursuant to this Agreement. The Lender may file or
record such written statements in the appropriate public records as determined
by the Lender in its sole and absolute discretion.
12.9 Should any part, term or provision of this Agreement, or of
any documents incorporated herein or executed in connection herewith, be
determined by the courts to be illegal, unenforceable or in conflict with any
law of the State of Maryland, federal law or any other applicable law, the
validity and enforceability of the remaining portions or provisions of such
document(s) shall not be affected thereby.
12.10 The Borrowers shall execute any and all additional or
supplemental documentation as the Lender may reasonably require to give full
effect to the terms and conditions of this Agreement. The Borrowers authorize
the Lender to file such financing statements as it deems appropriate to perfect
its security interests in the Collateral.
12.11 Time is of the essence with respect to all provisions of this
Agreement.
12.12 The headings in this Agreement have been inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
12.13 This Agreement may be executed in one or more counterparts,
each of which shall be considered an original and all of which shall constitute
the same instrument.
12.14 This Agreement contains the entire agreement of the parties
hereto with respect to the subject matter hereof. The parties hereto shall not
be bound by any other different, additional or further agreements or
understandings except as consented to in writing by them.
20
12.15 The Recitals are incorporated into and form a part of this
Agreement.
12.16 The Lender and the Borrowers, after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Agreement or any related instrument
or agreement or any of the transactions contemplated by this Agreement or any
course of conduct, dealing, statements (whether oral or written), or actions of
either of them. Neither the Lender nor the Borrowers shall seek to consolidate,
by counterclaim or otherwise, any such action in which a jury trial has been
waived with any other action in which a jury trial cannot be or has not been
waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by either the Lender or Borrowers except by a written
instrument executed by both of them.
12.17 There are no third party beneficiaries of this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Working Capital Loan
Agreement as of the day and year first above written.
"BORROWERS":
SENIOR CARE FLORIDA LEASING, LLC, a SENIOR CARE GOLFVIEW, LLC
Delaware limited liability company SENIOR CARE GOLFCREST, LLC
SENIOR CARE SOUTHERN PINES, LLC
By: Diversicare Leasing Corp., its sole SENIOR CARE CEDAR HILLS, LLC
member
By: /s/ Xxxxxxx X. Council, III By: Senior Care Florida Leasing, LLC, its
----------------------------------- sole member
Name: Xxxxxxx X. Council, III
-----------------------------------
Its: President By: Diversicare Leasing Corp., its sole
----------------------------------- member
By: /s/ Xxxxxxx X. Council, III
--------------------------------------
Name: Xxxxxxx X. Council, III
--------------------------------------
Its: President
--------------------------------------
"LENDER":
Omega Healthcare Investors, Inc.
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxx
--------------------------
Its: CEO
--------------------------
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