1
EXHIBIT 10.17
PROMISSORY NOTE
$73,500,000.00 January 4, 1996
1. FOR VALUE RECEIVED, FORT AUSTIN LIMITED PARTNERSHIP, a Texas
limited partnership ("BORROWER"), promises to pay to the order of GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("LENDER"), the sum of
SEVENTY-THREE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($73,500,000.00), or so much thereof as shall be advanced by Lender from time
to time on the loan (the "LOAN") which is evidenced hereby and governed by that
Loan Agreement of even date herewith between Lender and Borrower (the "LOAN
AGREEMENT"), with interest on the unpaid balance of such amount from the date
of the initial disbursement hereunder (the "INITIAL DISBURSEMENT") at the rate
or rates of interest specified in the Loan Agreement.
The Loan is further evidenced by that Promissory Note dated as
of April 1, 1992, in the stated principal amount of $24,000,000, executed by
Xxxxxxxx, bearing interest and being payable to the order of Lender, as
modified by First Modification Agreement dated May 27, 1993, among Borrower,
Lender and American Retirement Corporation ("ARC"), as endorsed payable to the
order of GENEL Company, Inc. ("GENEL"), as further modified by Second Renewal,
Extension and Modification Agreement dated June 14, 1994 among Borrower, GENEL
and ARC, as further modified by Third Renewal, Extension and Modification
Agreement dated October 31, 1994 among ARC, ARC Fort Austin Properties, Inc., a
Tennessee corporation, and Fort Austin Associates Limited Partnership, a Texas
limited partnership (collectively, "GUARANTORS"), Borrower and GENEL, as
endorsed payable to the order of Lender, and as further modified by Fourth
Renewal, Extension and Modification Agreement of even date herewith among
Borrower, Lender and Guarantors (as modified, the "OTHER NOTE"). This Note and
the Other Note are secured by those Deeds of Trust and Security Agreements and
that Open-End Mortgage and Security Agreement (collectively the "MORTGAGE") on
real property and improvements known as the Santa Catalina Retirement Community
located in the City of Tucson, Pima County, Arizona ("SANTA CATALINA"), the
Summit at Westlake Retirement Community in the City of Xxxxxx, Xxxxxx County,
Texas ("SUMMIT"), the Broadway Plaza at Cityview Retirement Community in the
City of Fort Worth, Tarrant County, Texas ("BROADWAY"), the Parkplace
Retirement Community in the City of Denver, Denver County, Colorado
("PARKPLACE"), the Westlake Village Retirement Community in the City of
Cleveland, Cuyahoga County, Ohio ("WESTLAKE"), and The Hampton at Post Oak Road
Retirement Community in the City of Houston, Xxxxxx County, Texas ("HAMPTON")
and described therein (collectively, the "MORTGAGED PROPERTY") and by other
security given or to be given to Lender as collateral for the Loan. All other
documents or instruments executed to evidence, secure or otherwise in
connection with the Loan are collectively referred to herein as the "OTHER
SECURITY DOCUMENTS."
To the extent of payments against the principal balance from
applications in lieu of impounds for taxes and assessments and in lieu of
reserves for Capital Expenditures (as defined
1
2
in the Loan Agreement), the Loan shall be a "revolving line of credit"; that
is, portions of the principal sum of this Note may be advanced, repaid, and
readvanced. The books and records of Xxxxxx shall be prima facie evidence of
all sums due Lender under this Note and the Other Security Documents.
2. PAYMENTS. Interest shall accrue on this Note and interest and
principal shall be payable on this Note as provided in the Loan Agreement. The
entire principal amount of this Note, together with all accrued but unpaid
interest thereon, any and all unpaid late charges and interest due at the
Default Rate (as defined in the Loan Agreement), and all other amounts owing
under this Note, the Other Note, and the Other Security Documents (the
"MATURITY OBLIGATIONS") shall be due and payable to Lender on December 31, 2002
(the "MATURITY DATE").
3. PAYMENTS; APPLICATION. All payments due under this Note are
payable at P.O. Box 102771, Atlanta, Georgia 30368-0771 or at such other place
as Lender or other holder hereof shall notify Borrower in writing.
4. DEFAULT. If Borrower fails to pay any installment of interest
or any principal on this Note or on the Other Note for five (5) days after the
same shall become due or upon the happening of any "Event of Default" as
defined in the Mortgage or any of the Other Security Documents, then and in any
such event Lender may at its option declare the entire unpaid balance of this
Note, together with interest accrued hereon, to be immediately due and payable
and Lender may proceed to exercise any rights or remedies that it may have
under the Mortgage, under the Other Security Documents, under this Note or
under any other agreement relating to the Loan or such other rights and
remedies which Lender may have at law, equity or otherwise. In the event of
such acceleration, Borrower may discharge its obligations to Lender by paying
the Maturity Obligations, with interest at the Default Rate accruing from the
date such acceleration is declared, plus any applicable prepayment premium
provided for in the Loan Agreement, or if no prepayment is then permitted, a
prepayment premium equal to five percent (5%) of the unpaid balance of the
Loan.
5. COSTS OF COLLECTION. If this Note is turned over to an
attorney at law for collection after default, in addition to the Maturity
Obligations, Lender shall be entitled to collect all costs of collection,
including but not limited to attorneys' fees incurred in connection with
protection of or realization of collateral or in connection with any of
Lender's collection efforts, whether or not suit on this Note or any
foreclosure proceeding is filed, and all such costs and expenses shall be
payable on demand and shall also be secured by the Mortgage and the Other
Security Documents.
6. NO WAIVER. No failure on the part of Lender or other holder
hereof to exercise any right or remedy hereunder, whether before or after the
happening of a default, shall constitute a waiver thereof, and no waiver of any
past default shall constitute waiver of any future default or of any other
default. No failure to accelerate the debt evidenced hereby by reason of
default hereunder, or acceptance of a past-due installment, or indulgence
granted from time to time shall be construed to be a waiver of the right to
insist upon prompt payment thereafter or to impose late
2
3
charges retroactively or prospectively, or shall be deemed to be a novation of
this Note or as a reinstatement of the debt evidenced hereby or as a waiver of
such right of acceleration or any other right, or be construed so as to
preclude the exercise of any right which Lender may have, whether by the laws
of the State of Texas, by agreement, or otherwise; and Borrower and each
endorser or guarantor hereby expressly waives the benefit of any statute or
rule of law or equity which would produce a result contrary to or in conflict
with the foregoing. This Note may not be changed orally, but only by an
agreement in writing signed by the party against whom such agreement is sought
to be enforced.
7. WAIVERS. Borrower, for itself and its heirs, successors and
assigns, and each endorser or guarantor of this Note, for its heirs, successors
and assigns, hereby waives presentment, protest, demand, diligence, notice of
dishonor and of nonpayment, and waives and renounces all rights to the benefits
of any statute of limitations and any moratorium, appraisement, exemption or
homestead right now provided or which may hereafter be provided by any federal
or state statute, including but not limited to exemptions provided by or
allowed under the Bankruptcy Reform Act of 1978, both as to itself personally
and as to all of its or their property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any
and all extensions, renewals and modifications hereof.
8. JOINT AND SEVERAL. If Borrower consists of more than one (1)
person, corporation or other entity, the obligations and liabilities of such
persons, corporations or other entities under this Note and under the Mortgage
and the Other Security Documents shall be joint and several, and the word
"Borrower" shall mean all or some or any of them.
9. USURY. It is the intention of the parties to conform strictly
to applicable usury laws from time to time in force, and all agreements between
Borrower and Lender, whether now existing or hereafter arising and whether oral
or written, are hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or otherwise, shall the
amount paid or agreed to be paid to Lender or the holder hereof, or collected
by Lender or such holder, for the use, forbearance or detention of the money to
be loaned hereunder or otherwise, or for the payment or performance of any
covenant or obligation contained herein or in the Mortgage or in any Other
Security Documents, or in any other document evidencing, securing or pertaining
to the indebtedness evidenced hereby, exceed the maximum amount permissible
under applicable usury laws. If under any circumstances whatsoever fulfillment
of any provisions hereof or of the Mortgage or any Other Security Documents, at
the time performance of such provision shall be due, shall involve transcending
the limit of validity prescribed or permitted by law, including judicial
determination, then ipso facto, the obligation to be fulfilled shall be reduced
to the limit of such validity; and if under any circumstances Lender or any
other holder hereof shall ever receive any amount deemed interest by applicable
law which would exceed interest at the highest lawful rate, such amount that
would be excessive interest under applicable usury laws shall be applied to the
reduction of the principal amount owing hereunder or to other indebtedness
secured by the Mortgage and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and other
indebtedness, the excess shall be deemed to have been a payment made by mistake
and shall be refunded to
3
4
Borrower or to any other person making such payment on Xxxxxxxx's behalf. All
sums paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the indebtedness of Borrower evidenced hereby and outstanding from
time to time shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread from the date of disbursement of the proceeds of
this Note until payment in full of such indebtedness so that the actual rate of
interest on account of such indebtedness is uniform through the term hereof.
The terms and provisions of this paragraph shall control and supersede every
other provision of all agreements between Lender and Borrower and any endorser
or guarantor of this Note.
10. LIMITATION OF LIABILITY. Borrower shall not be personally
liable for the repayment of any of the principal of or interest due under this
Note or for any deficiency judgment which Lender may obtain after foreclosure
on its collateral after default by Borrower, provided, however, that Borrower
and any general partner of Borrower shall not be exonerated or exculpated for
any deficiency, loss or damage suffered by Lender as a result of the failure by
Borrower to comply with any of the terms or conditions of the Mortgage or any
of the Other Security Documents (other than the provisions relating to the
payment of principal, interest or late charges), including but not limited to
losses resulting from: (a) Borrower's failure to perform its obligation to
properly account to Lender as mortgagee for any proceeds of insurance or
condemnation proceeds as required by the Mortgage; (b) Borrower's failure to
comply with provisions of the Mortgage prohibiting the sale or further
encumbering of the collateral; (c) Xxxxxxxx's attempt to interfere with
Xxxxxx's rights under the Assignments of Rents and Leases (collectively the
"ASSIGNMENT OF RENTS AND LEASES") from Borrower to Lender, or any other
assignment of rents granted or any letter of credit issued in connection with
the Loan; (d) Xxxxxxxx's failure to apply proceeds of rents and other income of
the collateral toward the costs of maintenance and operation of the Mortgaged
Property and to the payment of taxes, lien claims, insurance premiums and debt
service and other indebtedness to the extent that the Mortgage or Other
Security Documents require such rents and income to be so applied; (e)
Borrower's entering into or modifying leases in violation of the provisions of
the Mortgage or the Assignment of Rents and Leases; (f) Borrower's collection
of rentals for periods of more than one month in advance under leases of the
Mortgaged Property; (g) the receipt by Borrower of monies in connection with
the modification of any existing or future lease or the entering into of a new
lease in violation of the applicable provisions of the Mortgage or the
Assignment of Rents and Leases; (h) damage or destruction to the Mortgaged
Property, including its electrical, plumbing, heating or air-conditioning
systems or its elevators, except as a result of casualty; (i) Borrower's
failure to pay for any loss, liability, damage, cost or expense (including
attorneys' fees) incurred by Lender in connection with any order, consent
decree, settlement, judgment or verdict arising from the deposit, storage,
disposal, burial, dumping, injecting, spilling, leaking, or other placement or
release in, on or from the Mortgaged Property of asbestos or a "hazardous
substance" as defined in 42 U.S.C. Section 9601, et seq., as amended from time
to time, or any other toxic or hazardous waste or waste products; (j)
Borrower's failure to pay for any loss, liability or expense (including
attorney's fees) incurred by Lender arising out of any claim or allegation made
by Xxxxxxxx, its successors or assigns, or any creditor of Borrower, that this
Note or the transactions contemplated hereby establish a joint venture or
partnership arrangement between Borrower and Lender; (k) any failure on the
part of Borrower to comply with any local, state or
4
5
federal laws or regulations governing the operation of the Mortgaged Property
as nursing homes and personal care facilities, including but not limited to the
requirements of the Texas Department of Health, the Texas Department of Human
Services, and the Arizona Department of Health Services, the Ohio Department of
Health, the Ohio Department on Aging, the State of Ohio Fire Xxxxxxxx/local
fire department, Colorado Department of Public Health and Environment, the
Colorado Department of Healthcare Policy and Financing, or the United States
Department of Health and Human Services, and any requirements under Medicare
(Title XVIII of the Social Security Act of 1965) or Medicaid (Title XIX of the
Social Security Act of 1965); (l) any liability for professional malpractice or
negligence relating to the operation of the Mortgaged Property; (m) any claim
for brokerage commissions or finders' fees claimed by any broker or any other
party in connection with the Loan or the Mortgaged Property, or (n) the failure
of Borrower to account for all security deposits and other deposits received by
Borrower under any leases of the Mortgaged Property, as required by the
Assignment of Rents and Leases; and provided further, that the foregoing
limitations on Borrower's personal liability with respect to principal and
interest shall not impair the validity of the indebtedness secured by Xxxxxx's
collateral, or the lien on or security interest in the collateral, or the right
of Lender as mortgagee or secured party to foreclose and/or enforce the
collateral after default by Borrower. In the event any party shall have
guaranteed all or part of the Loan by separate written guaranty, none of the
foregoing limitations on Borrower's personal liability for payment of principal
and interest shall modify, diminish or discharge the personal liability of any
such guarantor as set forth in any such written guaranty. None of the
foregoing limitations on Xxxxxxxx's personal liability shall modify, diminish
or discharge the personal liability of Borrower or any individual under the
Hazardous Substances Indemnity Agreement executed and delivered by Borrower and
others of even date herewith or under any indemnification provisions of the
Mortgage or any of the Other Security Documents. Nothing herein shall be
deemed to be a waiver of any right which Lender may have under Sections 506(a),
506(b), 1111(b) or any other provision of the Bankruptcy Reform Act of 1978 to
file a claim for the full amount of the debt owing to Lender by Borrower or to
require that all collateral shall continue to secure all of the indebtedness
owing to Lender in accordance with this Note, the Mortgage and the Other
Security Documents.
11. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
APPLICABLE TO TRANSACTIONS IN TEXAS. Borrower hereby submits to personal
jurisdiction in the State of Texas for the enforcement of Xxxxxxxx's
obligations hereunder and under the Mortgage and the Other Security Documents,
and waives any and all personal rights under the law of any other state to
object to jurisdiction within the State of Texas for the purposes of litigation
to enforce such obligation of Borrower. In the event such litigation is
commenced, Xxxxxxxx agrees that, in addition to any other manner provided by
applicable law or court rule, service of process may be made and personal
jurisdiction over Xxxxxxxx obtained, by service of a copy of the summons,
complaint and other pleadings required
5
6
by applicable law to commence such litigation upon Xxxxxxxx's appointed Agent
for Service of Process in the State of Texas, which Agent Xxxxxxxx hereby
designates to be:
CT Corporation
000 Xxxxx Xx. Xxxx
Xxxxxx, Xxxxx 00000
12. RENEWAL, EXTENSION AND INCREASE. The indebtedness evidenced
by this Note is in renewal, extension and increase, but not in extinguishment,
of the indebtedness evidenced by that Promissory Note, dated October 31, 1994,
in the stated principal amount of $49,000,000, executed by Xxxxxxxx, bearing
interest and being payable to the order of GENEL as therein provided (the
"EXISTING NOTE"). The terms of this Note supersede and replace the terms of
the Existing Note.
Executed as of the date first written above.
FORT AUSTIN LIMITED PARTNERSHIP, a Texas
limited partnership
By: ARC FORT AUSTIN PROPERTIES, INC.,
a Tennessee corporation, General
Partner
By: /s/ W. E. Sheriff
-------------------------------
W. E. Sheriff, Chief Executive
Officer
6
