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EXHIBIT 10.5
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 4th day of
June, 1999, by and between DIVERSICARE ASSISTED LIVING SERVICES NC I, LLC, a
Delaware limited liability company (together with its successors and assigns,
the "Borrower"), and GMAC COMMERCIAL MORTGAGE CORPORATION, a California
corporation (together with its successors and assigns, the "Lender").
R E C I T A L S:
1. Borrower has requested that the Lender make a loan to Borrower in
the principal sum of $12,770,000 (the "Loan").
2. Lender has agreed to make the Loan on the terms and conditions
hereinafter set forth.
A G R E E M E N T:
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS.
1.1 As used in this Agreement, the following terms shall have the
following meanings unless the context hereof shall otherwise indicate:
"Accounts" means any rights of Borrower arising from the
operation of the Facilities to payment for goods sold or leased or for services
rendered, not evidenced by an Instrument, including, without limitation, (i) all
accounts arising from the operation of the Facilities, (ii) all moneys and
accounts held by Lender pursuant to Section 4.12 of this Agreement, and (iii)
all rights to payment from Medicaid programs, or similar state or federal
programs, boards, bureaus or agencies and rights to payment from patients,
residents, private insurers, and others arising from the operation of the
Facilities, including rights to payment pursuant to Reimbursement Contracts.
Accounts shall include the proceeds thereof (whether cash or noncash, moveable
or immoveable, tangible or intangible) received from the sale, exchange,
transfer, collection or other disposition or substitution thereof.
"Acquisition Line" means the $40,000,000 non-revolving line of
credit extended by the Lender to Advocat for the sole purpose of acquisitions of
healthcare related facilities, pursuant to a Commitment Letter accepted October
22, 1996.
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"Actual Management Fees" means actual management fees paid or
incurred in connection with operation of a Facility.
"Advocat" means Advocat, Inc., a Delaware corporation.
"Affiliate" means, with respect to any Person, (i) each Person
that controls, is controlled by or is under common control with such Person,
(ii) each Person that, directly or indirectly, owns or controls, whether
beneficially or as a trustee, guardian or other fiduciary, any of the Stock of
such Person, and (iii) each of such Person's officers, directors, members, joint
venturers and partners.
"Allocated Loan Amount" means, with respect to a Facility, the
portion of the Loan allocated to such Facility, as set forth on Schedule A
attached hereto.
"Assignment of Leases and Rents" means that certain Assignment
of Leases and Rents of even date herewith by and between Lender and Borrower.
"Assignment of Licenses" means that certain Assignment of
Licenses, Permits and Contracts executed by the Borrower in favor of the Lender.
"Assumed Management Fees" means assumed management fees of
five percent (5%) of net patient revenues of a Facility (after Medicaid
contractual adjustments).
"Bridge Loan" means the loan to Diversicare Assisted Living
Services NC, LLC extended by the Working Capital Lender and AmSouth Bank.
"Business Day" means a day on which commercial banks are not
authorized or required by law to close in New York, New York.
"Closing Date" means the date on which all or any part of the
Loan is disbursed by the Lender to or for the benefit of Borrower.
"Collateral" means, collectively, the Property, Improvements,
Equipment, Rents, Accounts, General Intangibles, Instruments, Inventory, Money,
Permits (to the full extent assignable), Reimbursement Contracts, and all
Proceeds, all whether now owned or hereafter acquired, and including
replacements, additions, accessions, substitutions, and products thereof and
thereto, and all other property which is or hereafter may become subject to a
Lien in favor of Lender as security for any of the Loan Obligations.
"Commitment Letter" means the commitment letter issued by
Lender to Borrower dated February 19, 1999.
"Debt Service Coverage" means a ratio in which the first
number is the sum of net pre-tax income of the Borrower from the normal
operations of a Facility as set forth in the quarterly statements provided to
Lender (without deduction for Actual Management Fees paid or incurred),
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calculated based upon the preceding twelve (12) months (or such lesser period as
shall have elapsed following the closing of the Loan), plus interest expense, to
the extent deducted in determining net income, plus non-cash expenses or
allowances for depreciation and amortization of the Facility for said period,
less either Assumed Management Fees or Actual Management Fees, as applicable,
and the second number is the sum of the scheduled principal amounts due (even if
not paid) on such Facility's Allocated Loan Amount (excluding the amount of any
prepayment made during such period) for the applicable period plus the interest
expense on such Facility's Allocated Loan Amount for the applicable period. In
calculating "pre-tax income", Extraordinary Income and Extraordinary Expenses
shall be excluded.
"Default" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both, would
constitute an Event of Default.
"Default Rate" shall have the meaning given to that term in
the Note.
"Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Property and/or the
Improvements.
"Environmental Reserve Agreement" means that certain
Environmental Reserve Escrow and Security Agreement of even date herewith
between Lender and Borrower.
"Equipment" means all beds, linen, televisions, carpeting,
telephones, cash registers, computers, lamps, glassware, rehabilitation
equipment, restaurant and kitchen equipment, and other fixtures and equipment
owned by Borrower located on, attached to or used or useful in connection with
any of the Property or the Facilities and all renewals and replacements thereof
and substitutions therefor; provided, however, that with respect to any items
which are leased for the benefit of a Facility and not owned by Borrower, the
Equipment shall include the leasehold interest only of Borrower together with
any options to purchase any of said items and any additional or greater rights
with respect to such items which Borrower may hereafter acquire, but the
foregoing shall not be construed to mean that such leasing shall be permitted
hereunder and under the other Loan Documents.
"Event of Default" means any "Event of Default" as defined
in Article VII hereof.
"Extraordinary Income and Extraordinary Expenses" means
material items of a character significantly different from the typical or
customary business activities of Borrower which would not be expected to recur
frequently and which would not be considered as recurring factors in any
evaluation of the ordinary operating processes of Borrower's business, and which
would be treated as extraordinary income or extraordinary expenses under GAAP.
"Exhibit" means an Exhibit to this Agreement, unless the
context refers to another document, and each such Exhibit shall be deemed a part
of this Agreement to the same extent as if it were set forth in its entirety
wherever reference is made thereto.
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"Facilities" means the six (6) adult care facilities described
on Schedule A attached hereto, as they may now or hereafter exist, together with
any other general or specialized care facilities, if any (including any
Alzheimer's care unit, subacute, and any skilled care facilities), now or
hereafter operated on the Property; each of the Facilities, individually, is
herein called a "Facility".
"GAAP" means, as in effect from time to time, generally
accepted accounting principles consistently applied as promulgated by the
American Institute of Certified Public Accountants.
"General Intangibles" means all intangible personal property
of Borrower arising out of or connected with the Property or the Facilities and
all renewals and replacements thereof and substitutions therefor (other than
Accounts, Rents, Instruments, Inventory, Money, Permits, and Reimbursement
Contracts), including, without limitation, things in action, contract rights and
other rights to payment of money.
"Governmental Authority" means any board, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision of any of them, that has or acquires jurisdiction over the
Property and/or the Improvements or the use, operation or improvement of the
Property.
"Guarantors" mean Advocat, Diversified Management Services
Co., Advocat Finance, Inc., Diversicare Assisted Living Services, Inc.,
Diversicare Assisted Living Services NC, LLC and Diversicare Assisted Living
Services NC II, LLC.
"Guaranty Agreements" means those certain Guaranty Agreements
of even date herewith from Guarantors to Lender.
"Hazardous Materials" means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or-could become
friable; underground storage tanks, whether empty or containing any substance;
any substance the presence of which on the Property is prohibited by any
federal, state or local authority; any substance that requires special handling;
and any other material or substance now or in the future defined as a "hazardous
substance," "hazardous material," "hazardous waste," "toxic substance," "toxic
pollutant," "contaminant," or "pollutant" within the meaning of any Hazardous
Materials Law.
"Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials and apply to Borrower or to the Property and/or the
Improvements. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., the Toxic Substance
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Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C.
Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, and their state analogs.
"Improvements" means all buildings, structures and
improvements of every nature whatsoever now or hereafter situated on the
Property, including, but not limited to, all gas and electric fixtures,
radiators, heaters, engines and machinery, boilers, ranges, elevators and
motors, plumbing and heating fixtures, carpeting and other floor coverings,
water heaters, awnings and storm sashes, and cleaning apparatus which are or
shall be attached to the Property or said buildings, structures or improvements.
"Indebtedness" means any (i) obligations for borrowed money,
(ii) obligations, payment for which is being deferred by more than thirty (30)
days, representing the deferred purchase price of property other than accounts
payable arising in connection with the purchase of inventory customary in the
trade and in the ordinary course of Borrower's business, (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from the Accounts and/or property now or hereafter owned or acquired,
and (iv) the amount of any other obligation (including obligations under
financing leases) which would be shown as a liability on a balance sheet
prepared in accordance with GAAP.
"Instruments" means all instruments, chattel paper, documents
or other writings obtained from or in connection with the operation of the
Property or the Facilities (including, without limitation, all ledger sheets,
computer records and printouts, data bases, programs, books of account and files
relating thereto).
"Inventory" means all inventories of food, beverages and other
comestibles held by Borrower for sale or use at or from the Property or the
Facilities, and soap, paper supplies, medical supplies, drugs and all other such
goods, wares and merchandise held by Borrower for sale to or for consumption by
guests, patients or residents of the Property or the Facilities and all such
other goods returned to or repossessed by Borrower.
"Lien" means any voluntary or involuntary mortgage, security
deed, deed of trust, lien, pledge, assignment, security interest, title
retention agreement, financing lease, levy, execution, seizure, judgment,
attachment, garnishment, charge, lien or other encumbrance of any kind,
including those contemplated by or permitted in this Agreement and the other
Loan Documents.
"Loan" means the Loan in the principal sum of $12,770,000 made
by Lender to Borrower as of the date hereof.
"Loan Documents" means, collectively, this Agreement, the
Assignment of Leases and Rents, the Note, the Environmental Reserve Agreement,
the Assignment of Licenses, the Guaranty Agreements, the Mortgage, and the
Subordination Agreement, together with any and all other documents executed by
Borrower or others, evidencing, securing or otherwise relating to the Loan.
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"Loan Obligations" means the aggregate of all principal and
interest owing from time to time under the Note and all expenses, charges and
other amounts from time to time owing under the Note, this Agreement, or the
other Loan Documents, together with the Borrower's obligations, as a Guarantor,
for the Related Loan, and all covenants, agreements and other obligations of
Borrower from time to time owing to, or for the benefit of, Lender pursuant to
the Loan Documents.
"Management Agreement" means that certain Management Agreement
dated as of May 26, 1999, by and between Manager and Borrower, obligating the
Manager to operate and manage the Facilities.
"Manager" means Diversicare Management Services Co., a
Tennessee corporation, and any successor manager of the Facilities approved by
Lender in writing.
"Maturity Date" means July 1, 2002.
"Medicaid" means that certain program of medical assistance,
funded jointly by the federal government and the States, for impoverished
individuals who are aged, blind and/or disabled, and/or members of families with
dependent children, which program is more fully described in Title XIX of the
Social Security Act (42 U.S.C. xx.xx. 1396 et seq.) and the regulations
promulgated thereunder.
"Money" means all monies, cash, rights to deposit or savings
accounts or other items of legal tender obtained from or for use in connection
with the operation of the Facility.
"Mortgage" means collectively those certain Deeds of Trust and
Security Agreements, of even date herewith, from the Borrower in favor of or for
the benefit of Lender and covering the Property.
"Note" means the Promissory Note of even date herewith in the
principal amount of the Loan payable by Borrower to the order of Lender.
"O&M Program" means a written program of operations and
maintenance established or approved in writing by Lender relating to any
Hazardous Materials in, on or under the Property or Improvements.
"Overline Facility" means the $10,000,000 temporary working
capital loan extended by the Working Capital Lender to Advocat.
"Permits" means all licenses, permits and certificates used or
necessary in connection with the ownership, operation, use or occupancy of the
Property and/or the Facility, including, without limitation, business licenses,
state health department licenses, food service licenses, licenses to conduct
business, certificates of need and all such other permits, licenses and rights,
obtained from any governmental, quasi-governmental or private person or entity
whatsoever concerning ownership, operation, use or occupancy.
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"Permitted Encumbrances" has the meaning given to that term
in Section 5.2 hereof.
"Person" means any natural person, firm, trust, corporation,
partnership, limited liability company, trust and any other form of legal
entity.
"Proceeds" means all proceeds (including proceeds of insurance
and condemnation) from the sale, exchange, transfer, collection, loss, damage,
disposition, substitution or replacement of any of the Collateral.
"Property" means the tracts of real estate located in North
Carolina, which are more particularly described in Exhibit "A" hereto, upon
which the Facilities are located.
"Reimbursement Contracts" means all third party reimbursement
contracts for the Facility which are now or hereafter in effect with respect to
residents or patients qualifying for coverage under the same, including Medicaid
and private insurance agreements, and any successor program or other similar
reimbursement program and/or private insurance agreements.
"Related Loan" means that certain loan in the principal amount
of $12,480,000 extended by the Lender to Diversicare Assisted Living Services NC
II, LLC, an Affiliate of the Borrower.
"Rents" means all rent and other payments of whatever nature
from time to time payable pursuant to leases of the Property or the Facilities,
or for retail space or other space at the Property (including, without
limitation, rights to payment earned under leases for space in the Improvements
for the operation of ongoing retail businesses such as newsstands, barbershops,
beauty shops, physicians' offices, pharmacies and specialty shops).
Single-Purpose Entity" means a Person which owns no interest
or property other than the Property and the Improvements.
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests, participating or other
equivalents (regardless of how designated) in a corporation, limited liability
company, partnership or any equivalent entity, whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Subordination Agreement" means that certain Subordination of
Management Agreement of even date herewith by and among Borrower, Manager, and
Lender.
"Working Capital Lender" means First American National Bank, a
national banking association with a principal place of business in Nashville,
Tennessee.
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"Working Capital Loan" means the $10,000,000 line of credit
extended by the Working Capital Lender to Advocat and certain of the Guarantors,
secured by, among other collateral, a first lien on the Borrower's Accounts.
1.2 Singular terms shall include the plural forms and vice versa, as
applicable, of the terms defined.
1.3 Terms contained in this Agreement shall, unless otherwise defined
herein or unless the context otherwise indicates, have the meanings, if any,
assigned to them by the Uniform Commercial Code in effect in the State of North
Carolina.
1.4 All accounting terms used in this Agreement shall be construed in
accordance with GAAP, except as otherwise specified.
1.5 All references to other documents or instruments shall be deemed to
refer to such documents or instruments as they may hereafter be extended,
renewed, modified, or amended and all replacements and substitutions therefor.
1.6 All references herein to "Medicaid" shall be deemed to include any
successor program thereto.
ARTICLE II
TERMS OF THE LOAN
2.1 THE LOAN. Borrower has agreed to borrow the Loan from Lender, and
Lender has agreed to make the Loan to Borrower, subject to Borrower's compliance
with and observance of the terms, conditions, covenants, and provisions of this
Agreement and the other Loan Documents, and Borrower has made the covenants,
representations, and warranties herein and therein as a material inducement to
Lender to make the Loan.
2.2 SECURITY FOR THE LOAN. The Loan will be evidenced, secured and
guaranteed by the Loan Documents.
2.3 RELEASE OF A FACILITY. So long as no Event of Default has occurred
and is continuing, a Facility may be released from the lien and security
interest of the Mortgage and the other Loan Documents if, after giving effect to
such release, the Facilities remaining subject to the Mortgage and the other
Loan Documents would have a combined Debt Service Coverage equal to the greater
of (a) 1.25 to 1.0 or (b) the Debt Service Coverage for all Facilities
(including the to-be-released Facility) for the testing period immediately
preceding such proposed release. The provisions of this Section 2.3 may be
utilized by the Borrower in the event of a sale or refinancing of a Facility,
and the damage, destruction or condemnation of a Facility.
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ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, and to make the Loan to
Borrower, Borrower represents and warrants to Lender as follows:
3.1 EXISTENCE, POWER AND QUALIFICATION. Borrower is a duly organized
and validly existing limited liability company, organized under the laws of the
State of Delaware, has the power to own its properties and to carry on its
business as is now being conducted, and is duly qualified to do business and is
in good standing in every jurisdiction in which the character of the properties
owned by it or in which the transaction of its business makes its qualification
necessary, specifically including, without limitation, the State of North
Carolina.
3.2 POWER AND AUTHORITY. Borrower has full power and authority to
borrow the indebtedness evidenced by the Note and to incur the Loan Obligations
provided for herein, all of which have been authorized by all proper and
necessary limited liability company action on the part of the Borrower. All
consents, approvals, authorizations, orders or filings of or with any court or
governmental agency or body, if any, required for the execution, delivery and
performance of the Loan Documents by the Borrower have been obtained or made.
3.3 DUE EXECUTION AND ENFORCEMENT. Each of the Loan Documents to which
Borrower is a party constitutes a valid and legally binding obligation of
Borrower, enforceable in accordance with its respective terms (except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium, or other laws relating to the rights of creditors
generally and by general principles of equity) and does not violate, conflict
with, or constitute any default under any law, government regulation, decree,
judgment, Borrower's articles of organization or operating agreement, or any
other agreement or instrument binding upon Borrower.
3.4 SINGLE PURPOSE ENTITY. Borrower is a Single Purpose Entity.
3.5 PENDING MATTERS.
a. Operations; Financial Condition. No action or investigation is
pending or, to the best of Borrower's knowledge, threatened before or by any
court or administrative agency which might result in any material adverse change
in the financial condition, operations or prospects of Borrower or any lower
reimbursement rate under the Reimbursement Contracts. The Borrower is not in
violation of any agreement, the violation of which might reasonably be expected
to have a material adverse effect on its business or assets, and the Borrower is
not in violation of any order, judgment, or decree of any court, or any material
violation of statute or governmental regulation to which it is subject.
b. Condemnation or Casualty. There are no proceedings pending, or,
to the best of Borrower's knowledge, threatened, to acquire through the exercise
of any power of condemnation, eminent domain or similar proceeding any part of
the Property, the Improvements or any interest
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therein, or to enjoin or similarly prevent or restrict the use of the Property
or the operation of any Facility in any manner. None of the Improvements is
subject to any unrepaired casualty or other damage.
3.6 FINANCIAL STATEMENTS ACCURATE. All financial statements heretofore
or hereafter provided by Borrower are and will be true and complete in all
material respects as of their respective dates and fairly present the respective
financial condition of Borrower, and there are no material liabilities, direct
or indirect, fixed or contingent, as of the respective dates of such statements
which are not reflected therein or in the notes thereto or in a written
certificate delivered with such statements. The financial statements of the
Borrower have been prepared in accordance with GAAP. There has been no material
adverse change in the financial condition, operations, or prospects of Borrower
since the dates of such statements except as fully disclosed in writing with the
delivery of such statements. All financial statements of the operations of each
Facility heretofore or hereafter provided to Lender are and will be true and
complete in all material respects as of their respective dates.
3.7 COMPLIANCE WITH FACILITY LAWS. Each Facility is duly licensed and
is currently operated at the unit and/or bed level shown on Exhibit "F" attached
hereto, under the applicable laws of the state where the Property is located.
Borrower is the lawful owner of all Permits for each Facility, including,
without limitation, the Adult Care Home License issued by the North Carolina
Department of Health and Human Services (the "Adult Care Home License"), which
(a) are in full force and effect, (b) constitute all of the permits, licenses
and certificates required for the use, operation and occupancy thereof, (c) have
not been pledged as collateral for any other loan or Indebtedness, (d) are held
free from restrictions or any encumbrance which would materially adversely
affect the use or operation of any Facility, and (e) are not provisional,
probationary or restricted in any way. The Borrower and Manager as well as the
operation of each Facility are in compliance in all material respects with the
applicable provisions of assisted living facility laws, rules, regulations and
published interpretations to which the Facility is subject. No waivers of any
laws, rules, regulations, or requirements (including, but not limited to,
minimum foot requirements per bed) are required for a Facility to operate at the
current licensed bed or unit capacity. All Reimbursement Contracts, if any, are
in full force and effect with respect to each Facility, and Borrower and Manager
are in good standing with all the respective agencies governing such applicable
licenses, program certification, and Reimbursement Contracts. Borrower and
Manager are current in the payment of all so-called provider specific taxes or
other assessments with respect to such Reimbursement Contracts. Borrower will
maintain or cause Manager to maintain (without allowing to lapse) the Adult Care
Home License, and any required Permits. In the event Lender acquires a Facility
through foreclosure or otherwise, neither Lender nor a subsequent manager, a
subsequent lessee or any subsequent purchaser (through foreclosure or otherwise)
is currently required to obtain a certificate of need prior to applying for and
receiving an Adult Care Home License to operate such Facility and certification
to receive Medicaid payments (and its successor programs) for patients having
coverage thereunder provided that no service or bed or unit complement is
changed.
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3.8 MAINTAIN CAPACITY. Neither Borrower nor the Manager has granted to
any third party the right to reduce the number of licensed beds or units in any
Facility or to apply for approval to transfer the right to any and all of the
licensed beds or units to any other location.
3.9 COMPLIANCE. Each Facility is in compliance with all requirements
for participation in Medicaid. Each Facility is in conformance in all material
respects with all insurance, reimbursement and cost reporting requirements and
has a current provider agreement which is in full force and effect under
Medicaid.
3.10 THIRD-PARTY PAYORS. There is no threatened or pending revocation,
suspension, termination, probation, restriction, limitation, or nonrenewal
affecting Borrower, Manager or any Facility or any participation or provider
agreement with any third-party payor, including Medicaid, Blue Cross and/or Blue
Shield, and any other private commercial insurance managed care and employee
assistance program (such programs, the "Third-Party Payors' Programs") to which
Borrower or Manager presently is subject. All Medicaid and private insurance
cost reports and financial reports submitted by Borrower or Manager are and will
be materially accurate and complete and have not been and will not be misleading
in any material respects. No cost reports for the Facility remain "open" or
unsettled, except as otherwise disclosed.
3.11 GOVERNMENTAL PROCEEDINGS AND NOTICES. Neither Borrower nor Manager
nor any Facility is currently the subject of any proceeding by any governmental
agency, and no notice of any violation has been received by Borrower or Manager
from a governmental agency that would, directly or indirectly, or with the
passage of time:
a. Have a material adverse impact on Borrower's ability to accept
and/or retain residents or result in the imposition of a fine, a sanction, a
lower rate certification or a lower reimbursement rate for services rendered to
eligible residents;
b. Modify, limit or annul or result in the transfer, suspension,
revocation or imposition of probationary use of any of the Permits; or
c. Affect Borrower's continued participation in the Medicaid
programs or any other Third-Party Payors' Programs, or any successor programs
thereto, at current rate certifications.
3.12 PHYSICAL PLANT STANDARDS. To the best of Borrower's knowledge,
each Facility and the use thereof complies in all material respects with all
applicable local, state and federal building codes, fire codes, zoning codes,
use restrictions, health care, health care facility and other similar regulatory
requirements (the "Physical Plant Standards"), and no waivers of Physical Plant
Standards exist at any Facility.
3.13 PLEDGES OF RECEIVABLES. Except to secure the Working Capital Loan,
the Borrower has not pledged its Accounts as collateral security for any loan or
indebtedness other than the Loan.
3.14 PAYMENT OF TAXES AND PROPERTY IMPOSITIONS. Borrower has filed all
federal, state, and local tax returns which it is required to file and has paid,
or made adequate provision for the
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payment of, all taxes which are shown pursuant to such returns or are required
to be shown thereon or to assessments received by Borrower, including, without
limitation, provider taxes. All such returns are complete and accurate in all
respects. Borrower has paid or made adequate provision for the payment of all
applicable water and sewer charges, government assessments, ground rents (if
applicable) and Taxes (as defined in the Mortgage) with respect to the Property.
3.15 TITLE TO COLLATERAL. Borrower has good and marketable title to all
of the Collateral, subject to no lien, mortgage, pledge, encroachment, zoning
violation, or encumbrance, except Permitted Encumbrances, which Permitted
Encumbrances do not and will not materially interfere with the security intended
to be provided by the Mortgage or the current use or operation of the Property
and or the current ability of the Facility to generate net operating income
sufficient to service the Loan. Except as shown on the current as-built survey
for each Facility provided by Borrower to Lender in connection with the Loan,
all Improvements situated on the Property are situated wholly within the
boundaries of the Property.
3.16 PRIORITY OF MORTGAGE. The Mortgage constitutes a valid first lien
against the real and personal property described therein, prior to all other
liens or encumbrances, including those which may hereafter accrue, excepting
only "Permitted Encumbrances", which Permitted Encumbrances do not and will not
materially and adversely affect (a) the ability of the Borrower to pay in full
the principal of and interest on the Note when due, (b) the security (and its
value) intended to be provided by the Mortgage or (c) the current use of the
Property and the Improvements.
3.17 LOCATION OF CHIEF EXECUTIVE OFFICES. The location of Borrower's
principal place of business and chief executive office is set forth on Exhibit
"B" hereto.
3.18 DISCLOSURE. All information furnished or to be furnished by
Borrower to Lender in connection with the Loan or any of the Loan Documents, is,
or will be at the time the same is furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to
provide Lender with true and accurate knowledge of the subject matter.
3.19 TRADE NAMES. Neither Borrower nor any Facility has changed its
name, been known by any other name, or been a party to a merger, reorganization
or similar transaction within the last five (5) years.
3.20 ERISA. Borrower is in compliance with all applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
3.21 OWNERSHIP. The ownership interests of the Persons comprising the
Borrower and each of the respective interests in the Borrower are correctly and
accurately set forth on Exhibit "C" hereto.
3.22 COMPLIANCE WITH APPLICABLE LAWS. Each Facility and its operations
and the Property comply in all material respects with all covenants and
restrictions of record and applicable laws, ordinances, rules and regulations,
including, without limitation, the Americans with Disabilities Act (to the
extent required) and the regulations thereunder, and all laws, ordinances,
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rules and regulations relating to zoning, setback requirements and building
codes and there are no waivers of any building codes currently in existence for
any Facility.
3.23 SOLVENCY. Borrower is solvent for purposes of 11 U.S.C. ss.548,
and the borrowing of the Loan will not render Borrower insolvent for purposes of
11 U.S.C. ss.548.
3.24 OTHER INDEBTEDNESS. Borrower has no outstanding Indebtedness,
secured or unsecured, direct or contingent (including any guaranties), other
than (a) the Loan, (b) the Related Loan, (c) the Working Capital Loan, (d) the
Overline Facility and (e) indebtedness which represents trade payables or
accrued expenses incurred in the ordinary course of business of owning and
operating the Property; no other debt will be secured (senior, subordinate or
pari passu) by the Property.
3.25 OTHER OBLIGATIONS. Except as disclosed in Section 3.24, Borrower
has no material financial obligation under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Borrower is a
party or by which Borrower or the Property is otherwise bound, other than
obligations incurred in the ordinary course of the operation of the Property and
other than obligations under the Mortgage and the other Loan Documents.
3.26 FRAUDULENT CONVEYANCES. Borrower (1) has not entered into this
Agreement or any of the other Loan Documents with the actual intent to hinder,
delay, or defraud any creditor and (2) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, to the best of Borrower's
knowledge, the fair saleable value of Borrower's assets exceeds and will,
immediately following the execution and delivery of the Loan Documents, be
greater than Borrower's probable liabilities, including the maximum amount of
its contingent liabilities or its debts as such debts become absolute and
mature. Borrower's assets do not and, immediately following the execution and
delivery of the Loan Documents will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Borrower).
3.27 MANAGEMENT AGREEMENT. The Management Agreement is in full force
and effect and there are no defaults (either monetary or nonmonetary) by the
Manager thereunder.
3.28 REPRESENTATIONS AND WARRANTIES. Borrower agrees that its
representations and warranties and covenants contained herein are true and
correct as of the date hereof and shall survive closing of the Loan.
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ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees with and covenants unto the Lender that until the Loan
Obligations have been paid in full, Borrower shall:
4.1 PAYMENT OF LOAN/PERFORMANCE OF LOAN OBLIGATIONS. Duly and
punctually pay or cause to be paid the principal and interest of the Note in
accordance with its terms and duly and punctually pay and perform or cause to be
paid or performed all Loan Obligations hereunder and under the other Loan
Documents.
4.2 MAINTENANCE OF EXISTENCE. Maintain its existence as a Delaware
limited liability company, and, in each jurisdiction in which the character of
the property owned by it or in which the transaction of its business makes
qualification necessary, maintain good standing.
4.3 ACCRUAL AND PAYMENT OF TAXES. During each fiscal year, make
accurate provision for the payment of all current tax liabilities of all kinds
(including, without limitation, federal and state income taxes, franchise taxes,
payroll taxes, provider taxes (to the extent necessary to participate in and
receive maximum funding pursuant to Reimbursement Contracts) and Taxes (as
defined in the Mortgage)), all required withholding of income taxes of
employees, all required old age and unemployment contributions, and all required
payments to employee benefit plans, and pay the same when they become due.
4.4 INSURANCE. Maintain the following insurance coverages with respect
to the Property and each Facility:
a. Insurance against loss or damage by fire, casualty and other
hazards as now are or subsequently may be covered by a "special risk" policy or
a policy covering "special" causes of loss, with such endorsements as Lender may
from time to time reasonably require and which are customarily required by
institutional lenders of similar properties similarly situated, including,
without limitation, building ordinance law, lightning, windstorm, civil
commotion, hail, riot, strike, water damage, sprinkler leakage, collapse,
malicious mischief, explosion, smoke, aircraft, vehicles, vandalism, falling
objects and weight of snow, ice or sleet, and covering the Facility in an amount
equal to 100% of the full insurable replacement value of the Facility (exclusive
of footings and foundations below the lowest basement floor) without deduction
for depreciation. The determination of the replacement cost amount shall be
adjusted annually to comply with the requirements of the insurer issuing the
coverage or, at Lender's election, by reference to such indexes, appraisals or
information as Lender determines in its reasonable discretion, and, unless the
insurance required by this paragraph shall be effected by blanket and/or
umbrella policies in accordance with the requirements of this Agreement, the
policy shall include inflation guard coverage that ensures that the policy
limits will be increased over time to reflect the effect of inflation. Each
policy shall, subject to Lender's approval, contain (i) a replacement cost
endorsement, without deduction for depreciation, (ii) either an agreed amount
endorsement or a waiver of any co-insurance provisions, and (iii) an ordinance
or law coverage or enforcement endorsement if the Improvements or the use
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of the Property constitutes any legal nonconforming structures or uses, and
shall provide for deductibles in such amounts as Lender may permit in its sole
discretion.
b. Commercial general liability insurance under a policy containing
"Comprehensive General Liability Form" of coverage (or a comparably worded form
of coverage) and the "Broad Form CGL" endorsement (or a policy which otherwise
incorporates the language of such endorsement), providing coverage on an
occurrence (not "claims made") basis, which policy shall include, without
limitation, coverage against claims for personal injury, bodily injury, death
and property damage liability with respect to the Facility and the operations
related thereto, whether on or off the Property, and the following coverages:
Employee as Additional Insured, Product Liability/Completed Operations; Broad
Form Contractual Liability, Independent Contractor, Personal Injury and
Advertising Injury Protection, Medical Payment (with a minimum limit of $5,000
per person), Broad Form Cross Suits Liability Endorsement, where applicable,
hired and non-owned automobile coverage (including rented and leased vehicles),
and, if any alcoholic beverages shall be sold, manufactured or distributed in
the Facility, liquor liability coverage, all of which shall be in such amounts
as Lender may from time to time reasonably require, but not less than One
Million Dollars ($1,000,000) per occurrence, Two Million Dollars ($2,000,000) in
the aggregate and with umbrella coverage not less than Three Million Dollars
($3,000,000). If such policy shall cover more than one property, such limits
shall apply on a "per location" basis. If any health club facilities or swimming
pools are located at a Facility, the foregoing amounts shall be increased to
Three Million Dollars ($3,000,000), Six Million Dollars ($6,000,000) and Fifteen
Million Dollars ($15,000,000), respectively. Such liability policy shall delete
the contractual exclusion under the personal injury coverage, if possible, and
if available, shall include the following endorsements: Notice of Accident,
Knowledge of Occurrence, and Unintentional Error and Omission.
c. Professional liability insurance coverage in an amount equal to
not less than One Million Dollars ($1,000,000) per occurrence and Three Million
Dollars ($3,000,000) in the aggregate and insuring Borrower for acts occurring
prior to the date of the Loan.
d. Business interruption insurance, which may be in the form of
Blanket Earnings and Extra Expense coverage (i) covering the same perils of loss
as are required to be covered by the property insurance required under Section
4.4(a) above, (ii) in an amount equal to the projected annual net income from
the Facility plus carrying costs and extraordinary expenses of the Property for
a period of twelve (12) months, based upon Borrower's reasonable estimate
thereof as approved by Lender, (iii) including either an agreed amount
endorsement or a waiver of any co-insurance provisions, so as to prevent
Borrower, Lender and any other insured thereunder from being a co-insurer, and
(iv) providing that any covered loss thereunder shall be payable to Lender.
e. During the period of any new construction on the Property,
a so-called "Builder's All-Risk Completed Value" or "Course of Construction"
insurance policy in non-reporting form for any improvements under construction,
including, without limitation, for demolition and increased cost of construction
or renovation, in an amount equal to 100% of the estimated replacement cost
value on the date of completion, including "soft cost" coverage, and Workers'
Compensation Insurance covering all persons engaged in such construction, in an
amount at least equal to the minimum required by law. In addition, each
contractor and subcontractor shall be
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required to provide Lender with a certificate of insurance for (i) workers'
compensation insurance covering all persons engaged by such contractor or
subcontractor in such construction in an amount at least equal to the minimum
required by law, and (ii) general liability insurance showing minimum limits of
at least $5,000,000, including coverage for products and completed operations.
Each contractor and subcontractor also shall cover Borrower and Lender as an
additional insured under such liability policy and shall indemnify and hold
Borrower and Lender harmless from and against any and all claims, damages,
liabilities, costs and expenses arising out of, relating to or otherwise in
connection with its performance of such construction.
f. If a Facility contains steam boilers, steam pipes, steam
engines, steam turbines or other high pressure vessels, insurance covering the
major components of the central heating, air conditioning and ventilating
systems, boilers, other pressure vessels, high pressure piping and machinery,
elevators and escalators, if any, and other similar equipment installed in the
Improvements, in an amount equal to one hundred percent (100%) of the full
replacement cost of the Facility, which policies shall insure against physical
damage to and loss of occupancy and use of the Improvements arising out of an
accident or breakdown covered thereunder.
x. Xxxxx insurance with a deductible not to exceed Three Thousand
Dollars ($3,000), or such greater amount as may be satisfactory to Lender in its
sole discretion, and in an amount equal to the full insurable value of the
Facility or the maximum amount available, whichever is less, from the "flood
pool", if the Facility is located in an area designated by the Secretary of
Housing and Urban Development or the Federal Emergency Management Agency as
having special flood hazards.
h. Workers' compensation insurance or other similar insurance
which may be required by governmental authorities or applicable legal
requirements in an amount at least equal to the minimum required by law, and
employer's liability insurance with a limit of Five Hundred Thousand Dollars
($500,000) per accident and per disease per employee, and Five Hundred Thousand
Dollars ($500,000) in the aggregate for disease arising in connection with the
operation of the Property.
i. Such other insurance coverages, in such amounts, and such other
forms and endorsements, as may from time to time be required by Lender and which
are customarily required by institutional lenders to similar properties,
similarly situated, including, without limitation, coverages against other
insurable hazards (including, by way of example only, earthquake, sinkhole and
mine subsidence), which at the time are commonly insured against and generally
available.
All insurance required under this Section 4.4 shall have a term of
not less than one year and shall be in the form and amount and with deductibles
as, from time to time, shall be reasonably acceptable to Lender, under valid and
enforceable policies issued by financially responsible insurers either licensed
to transact business in the State where the Facility is located, or obtained
through a duly authorized surplus lines insurance agent or otherwise in
conformity with the laws of such State, with (a) a rating of not less than the
third (3rd) highest rating category by either Standard & Poor's Ratings Group,
Duff & Xxxxxx Credit Rating Co., Xxxxx'x Investors Service, Inc., Fitch
Investors Service, Inc. or any successors thereto, or (b) an A:V rating in
Best's Key Rating
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Guide; provided, however, that if the initial principal balance of the Loan is
greater than Seven Million Five Hundred Thousand Dollars ($7,500,000.00), such
insurer must, in lieu of such Best's rating, have a long term senior debt rating
of at least "A" by Standard & Poor's Ratings Group. On the date hereof, the
Borrower's professional liability insurance carrier does not meet the above
requirements, and the Borrower acknowledges that it shall have one hundred
twenty (120) days from the date hereof to provide either a carrier meeting such
requirements or a "cut-through" endorsement satisfactory in all respects to the
Lender. Originals or certified copies of all insurance policies shall be
delivered to and held by Lender. All such policies shall name Lender as an
additional insured, shall provide for loss payable solely to Lender and shall
contain: (i) standard "non-contributory mortgagee" endorsement or its equivalent
relating, inter alia, to recovery by Lender notwithstanding the negligent or
willful acts or omissions of Borrower and notwithstanding (a) occupancy or use
of the Facility for purposes more hazardous than those permitted by the terms of
such policy, (b) any foreclosure or other action taken by Lender pursuant to the
Mortgage upon the occurrence of an Event of Default, or (c) any change in title
or ownership of the Facility; and (ii) a provision that such policies shall not
be canceled or amended, including, without limitation, any amendment reducing
the scope or limits of coverage, or failed to be renewed, without at least
thirty (30) days prior written notice to Lender in each instance. With respect
to insurance policies which require payment of premiums annually, not less than
thirty (30) days prior to the expiration dates of the insurance policies
obtained pursuant to this Agreement, Borrower shall pay such amount, except to
the extent Lender is escrowing sums therefor pursuant to the Loan Documents. Not
less than thirty (30) days prior to the expiration dates of the insurance
policies obtained pursuant to this Agreement, originals or certified copies of
renewals of such policies (or certificates evidencing such renewals) bearing
notations evidencing the payment of premiums or accompanied by other evidence
satisfactory to Lender of such payment, which premiums shall not be paid by
Borrower through or by any financing arrangement, shall be delivered by Borrower
to Lender. Borrower shall not carry separate insurance, concurrent in kind or
form or contributing in the event of loss, with any insurance required under
this Section 4.4. If the limits of any policy required hereunder are reduced or
eliminated due to a covered loss, Borrower shall pay the additional premium, if
any, in order to have the original limits of insurance reinstated, or Borrower
shall purchase new insurance in the same type and amount that existed
immediately prior to the loss.
If Borrower fails to maintain and deliver to Lender the
original policies or certificates of insurance required by this Agreement,
Lender may, at its option, procure such insurance and Borrower shall pay or, as
the case may be, reimburse Lender for, all premiums thereon promptly, upon
demand by Lender, with interest thereon at the Default Rate from the date paid
by Lender to the date of repayment and such sum shall constitute a part of the
Loan Obligations.
The insurance required by this Agreement may, at the option of
Borrower, be effected by blanket and/or umbrella policies issued to Borrower or
to an Affiliate of Borrower covering the Facility and the properties of such
Affiliate; provided that, in each case, the policies otherwise comply with the
provisions of this Agreement and allocate to the Facility, from time to time,
the coverage specified by this Agreement, without possibility of reduction or
coinsurance by reason of, or damage to, any other property (real or personal)
named therein. If the insurance required by this Agreement shall be effected by
any such blanket or umbrella policies, Borrower shall furnish to
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Lender original policies or certified copies thereof, with schedules attached
thereto showing the amount of the insurance provided under such policies which
is applicable to the Facility.
Neither Lender nor its agents or employees shall be liable for
any loss or damage insured by the insurance policies required to be maintained
under this Agreement; it being understood that (i) Borrower shall look solely to
its insurance company for the recovery of such loss or damage, (ii) such
insurance company shall have no rights of subrogation against Lender, its agents
or employees, and (iii) Borrower shall use its best efforts to procure from such
insurance company a waiver of subrogation rights against Lender. If, however,
such insurance policies do not provide for a waiver of subrogation rights
against Lender (whether because such a waiver is unavailable or otherwise), then
Borrower hereby agrees, to the extent permitted by law and to the extent not
prohibited by such insurance policies, to waive its rights of recovery, if any,
against Lender, its agents and employees, whether resulting from any damage to
the Facility, any liability claim in connection with the Facility or otherwise.
If any such insurance policy shall prohibit Borrower from waiving such claims,
then Borrower must obtain from such insurance company a waiver of subrogation
rights against Lender.
If loss or damage to a Facility is equal to or less than
$25,000 and there shall exist no Default or Event of Default at the time, the
insurance proceeds shall be made available to the Borrower for the sole purpose
of the repair and restoration of the Facility, to the same quality and condition
as existed prior to such loss or damage.
If the loss or damage insured by the casualty insurance
policies required to be maintained under this Agreement exceeds $25,000, Lender
may make the net proceeds of insurance or condemnation (after payment of
Lender's reasonable costs and expenses) available to Borrower for Borrower's
repair, restoration and replacement of the Improvements, Equipment and Inventory
damaged or taken on the following terms and subject to Borrower's satisfaction
of the following conditions:
a. The aggregate amount of all such proceeds shall not exceed
the aggregate amount of all such Loan Obligations.
b. At the time of such loss or damage and at all times
thereafter while Lender is holding any portion of such proceeds, there shall
exist no Default or Event of Default;
c. The Improvements, Equipment, and Inventory for which loss
or damage has resulted shall be capable of being restored to its preexisting
condition and utility in all material respects with a value equal to or greater
than that which existed prior to such loss or damage and such restoration shall
be capable of being completed prior to the earlier to occur of (i) the
expiration of business interruption insurance as determined by an independent
inspector or (ii) the Maturity Date;
d. Within thirty (30) days from the date of such loss or
damage Borrower shall have given Lender a written notice electing to have the
proceeds applied for such purpose;
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e. Within sixty (60) days following the date of notice under
the preceding subparagraph (c) and prior to any proceeds being disbursed to
Borrower, Borrower shall have provided to Lender all of the following:
(i) complete plans and specifications for restoration,
repair and replacement of the Improvements, Equipment,
and Inventory damaged to the condition, utility and
value required by (b) above,
(ii) if loss or damage exceeds $100,000, fixed-price or
guaranteed maximum cost bonded construction contracts
for completion of the repair and restoration work in
accordance with such plans and specifications,
(iii) builder's risk insurance for the full cost of
construction with Lender named under a standard
mortgagee loss-payable clause,
(iv) such additional funds as in Lender's reasonable
opinion are necessary to complete such repair,
restoration and replacement, and
(v) copies of all permits and licenses necessary to
complete the work in accordance with the plans and
specifications;
f. Lender may, at Borrower's expense, retain an independent
inspector to review and approve plans and specifications and completed
construction and to approve all requests for disbursement, which approvals shall
be conditions precedent to release of proceeds as work progresses;
g. No portion of such proceeds shall be made available by
Lender for architectural reviews or for any other purposes which are not
directly attributable to the cost of repairing, restoring or replacing the
Improvements, Equipment and Inventory for which a loss or damage has occurred
unless the same are covered by such insurance;
h. Borrower shall diligently pursue such work and shall
complete such work prior to the earlier to occur of the expiration of business
interruption insurance or the Maturity Date;
i. The damaged Facility continues to achieve the Debt Service
Coverage requirements set forth in Section 4.12 below;
j. Each disbursement by Lender of such proceeds and deposits
shall be funded subject to conditions and in accordance with disbursement
procedures which a commercial construction lender would typically establish in
the exercise of sound banking practices and shall be made only upon receipt of
disbursement requests on an AIA G702/703 form (or similar form approved by
Lender) signed and certified by Borrower and, if required by the Lender, its
architect and general contractor with appropriate invoices and lien waivers as
required by Lender;
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k. Lender shall have a first lien security interest in all
building materials and completed repair and restoration work and in all fixtures
and equipment acquired with such proceeds, and Borrower shall execute and
deliver such mortgages, deeds of trust, security agreements, financing
statements and other instruments as Lender shall request to create, evidence, or
perfect such lien and security interest; and
l. In the event and to the extent such proceeds are not
required or used for the repair, restoration and replacement of the
Improvements, Equipment and Inventory for which a loss or damage has occurred,
or in the event Borrower fails to timely make the election to have insurance
proceeds applied to the restoration of the Improvements, Equipment, or
Inventory, or, having made such election, fails to timely comply with the terms
and conditions set forth herein, or, if the conditions set forth herein for such
application are otherwise not satisfied, then Lender shall be entitled without
notice to or consent from Borrower to apply such proceeds, or the balance
thereof, at Lender's option either (i) to the full or partial payment or
prepayment of the Loan Obligations (without premium) in the manner aforesaid, or
(ii) to the repair, restoration and/or replacement of all or any part of such
Improvements, Equipment and Inventory for which a loss or damage has occurred.
Borrower appoints Lender as Borrower's attorney-in-fact to
cause the issuance of or an endorsement of any insurance policy to bring
Borrower into compliance herewith and, as limited above, at Lender's sole
option, to make any claim for, receive payment for, and execute and endorse any
documents, checks or other instruments in payment for loss, theft, or damage
covered under any such insurance policy; however, in no event will Lender be
liable for failure to collect any amounts payable under any insurance policy.
4.5 FINANCIAL AND OTHER INFORMATION. Provide Lender, or cause the
Manager or Guarantors to provide to Lender, at its address set forth in Section
8.7 and at GMAC Commercial Mortgage Corporation, 0000 Xxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxx 00000, the following financial statements and
information on a continuing basis during the term of the Loan:
a. Within one hundred twenty (120) days after the end of each
fiscal year of Advocat, audited financial statements of Advocat prepared by a
nationally recognized accounting firm or independent certified public accountant
acceptable to Lender, which statements shall be prepared in accordance with
GAAP, and shall include a balance sheet and a statement of income and expenses
for the year then ended, certified by a financial officer of Advocat to be true
and correct.
b. Within one hundred twenty (120) days after the end of each
fiscal year of the Borrower, unaudited and consolidating financial statements of
the Borrower prepared by a nationally recognized accounting firm or independent
certified public accountant acceptable to Lender, which statements shall be
prepared in accordance with GAAP, and shall include a balance sheet and a
statement of income and expenses for the year then ended, and, shall be
certified as true and correct in all material respects by a financial officer of
the Borrower.
c. Within forty-five (45) days after the end of each fiscal
quarter of each Facility and Borrower, unaudited financial statements of the
operations of such Facility and Borrower
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prepared in accordance with GAAP, which statements shall include a balance sheet
and statement of income and expenses for the quarter then ended, and shall be
certified as true and correct in all material respects by a financial officer of
Borrower to be true and correct.
d. Within forty-five (45) days after the end of each fiscal
quarter of Advocat, unaudited financial statements of Advocat, prepared in
accordance with GAAP, which shall include a balance sheet and statement of
income and expenses for the quarter then ended, and shall be certified as true
and correct in all material respects by a financial officer of Advocat to be
true and correct.
e. Within forty-five (45) days of the end of each calendar
quarter, a statement of the number of bed days available and the actual patient
days incurred for the quarter, together with quarterly census information of
each Facility as of the end of such quarter in sufficient detail to show
patient-mix (i.e., private, Medicaid) on a daily average basis for such year
through the end of such quarter, certified by the chief financial officer of
Borrower to be true and correct. Such statements of the Facility shall be
accompanied by the Summary of Financial Statements and Census Data attached
hereto as Exhibit "D".
f. Upon request by Lender, as soon as available, but in no
event more than thirty (30) days after the filing deadline, as may be extended
from time to time, copies of all federal, state and local tax returns of
Borrower and federal income tax returns for each Guarantor, together with all
supporting documentation and required schedules.
g. Within twenty (20) days of filing or receipt, all Medicaid
cost reports and any amendments thereto filed with respect to each Facility, and
all responses, audit reports, or other inquiries with respect to such cost
reports.
h. Within twenty (20) days of receipt, a copy of the Medicaid
Rate Calculation Worksheet (or the equivalent thereof) issued by the appropriate
Medicaid Agency for the Facility.
i. Within six (6) business days of receipt, any and all
notices (regardless of form) from any and all licensing and/or certifying
agencies that any Facility license and/or the Medicaid certification of a
Facility is being downgraded to a substandard category, revoked, or suspended or
that any such action is pending or being considered.
j. Upon Lender's request, evidence of payment by Borrower of
any applicable provider bed taxes or similar taxes.
k. Within one hundred twenty (120) days of the Borrower's
fiscal year end, and more frequently if reasonably requested by Lender, an aged
accounts receivable report of the Facility in sufficient detail to show amounts
due from each class of patient-mix (i.e., private and Medicaid) by the account
age classifications of 30 days, 60 days, 90 days, 120 days, and over 120 days.
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l. Within ten (10) business days of receipt, copies of all
licensure and certification survey reports and statements of deficiencies (with,
if determined at the time, plans of correction attached thereto or as soon
thereafter as reasonably possible).
m. Within forty-five (45) days of the end of each calendar
quarter, a certificate of the chief financial officer of the Borrower confirming
compliance with the covenants and requirements set forth above.
The Lender reserves the right to require that the annual
financial statements of the Borrower be audited and prepared by a nationally
recognized accounting firm or independent certified public accountant acceptable
to Lender if (i) an Event of Default exists, (ii) if required by internal policy
or by any investor in any securities backed in whole or in part by the Loan or
any rating agency rating such securities, or (iii) if Lender has reasonable
grounds to believe that the unaudited financial statements do not accurately
represent the financial condition of the Borrower.
The Lender further reserves the right to require such other
financial information of Borrower, any Guarantor, Manager and/or any Facility,
in such form and at such other times (including monthly or more frequently, but
not more frequently than reasonable) as Lender shall reasonably deem necessary,
and Borrower agrees promptly to provide or to cause to be provided, such
information to Lender. All financial statements must be in the form and detail
as Lender may from time to time reasonably request.
4.6 COMPLIANCE CERTIFICATE. (a) At the time of furnishing the
quarterly operating statements required under the foregoing Section, furnish to
Lender a compliance certificate in the form attached hereto as Exhibit "E"
executed by the chief financial officer, of the Borrower; and
(b) Upon Lender's written request, furnish Lender with a
certificate stating that Borrower has complied with and is in compliance with
all terms, covenants and conditions of the Loan Documents to which Borrower is a
party and that there exists no Default or Event of Default or, if such is not
the case, that one or more specified events have occurred, and that the
representations and warranties contained herein are true and correct with the
same effect as though made on the date of such certificate.
4.7 BOOKS AND RECORDS. Keep and maintain at all times at
Kernersville, North Carolina, and upon Lender's request shall make available at
each Facility, complete and accurate books of account and records (including
copies of supporting bills and invoices) adequate to reflect correctly the
results of the operation of each Facility, and copies of all written contracts,
leases (if any), and other instruments which affect the Property, which books,
records, contracts, leases (if any) and other instruments shall be subject to
examination and inspection at any reasonable time by Lender (upon reasonable
advance notice, which for such purposes only may be given orally, except in the
case of an emergency or following an Event of Default, in which case no advance
notice shall be required) provided, however, that if an Event of Default has
occurred and is continuing, Borrower shall deliver to Lender upon written demand
all books, records, contracts, leases (if any) and other instruments relating to
a Facility or its operation and Borrower authorizes Lender to obtain a credit
report on Borrower at any time.
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4.8 PAYMENT OF INDEBTEDNESS. Duly and punctually pay or cause to be
paid all other Indebtedness now owing or hereafter incurred by Borrower in
accordance with the terms of such Indebtedness, except such Indebtedness owing
to those other than Lender which is being contested in good faith and with
respect to which any execution against properties of Borrower has been
effectively stayed and for which reserves and collateral for the payment and
security thereof have been established as determined by Lender in its sole
discretion.
4.9 RECORDS OF ACCOUNTS. Maintain all records, including records
pertaining to the Accounts of Borrower, at the chief executive office of
Borrower as set forth in this Agreement.
4.10 CONDUCT OF BUSINESS. Conduct, or cause the Manager to conduct,
the operation of each Facility at all times in a manner consistent with the
level of operation of such Facility as of the date hereof, including without
limitation, the following:
(i) to maintain the standard of care for the residents of
the Facility at all times at a level necessary to
ensure quality care for the residents of the Facility
in accordance with customary and prudent industry
standards;
(ii) to operate the Facility in a prudent manner and in
compliance with applicable laws and regulations
relating thereto and cause all Permits, Reimbursement
Contracts, and any other agreements necessary for the
use and operation of the Facility or as may be
necessary for participation in the Medicaid or other
applicable reimbursement programs to remain in effect
without reduction in the number of licensed beds or
units authorized for use in the Medicaid or other
applicable reimbursement programs;
(iii) to maintain sufficient Inventory and Equipment of
types and quantities at the Facility to enable Borrower
adequately to perform operations of the Facility;
(iv) to keep all Improvements and Equipment located on or
used or useful in connection with the Facility in good
repair, working order and condition, reasonable wear
and tear excepted, and from time to time make all
needed and proper repairs, renewals, replacements,
additions, and improvements thereto to keep the same in
good operating condition;
(v) to maintain sufficient cash in the operating accounts
of the Facility in order to satisfy the working capital
needs of the Facility; and
(vi) to keep all required Permits current and in full force
and effect.
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4.11 PERIODIC SURVEYS. Furnish or cause Manager to furnish to
Lender within six (6) business days of receipt a copy of any Medicaid or other
licensing agency survey or report and any statement of deficiencies and/or any
other report indicating that any action is pending or being considered to
downgrade any Facility to a substandard category, and within the time period
required by the particular agency for furnishing a plan of correction also
furnish or cause to be furnished to Lender a copy of the plan of correction
generated from such survey or report for the Facility, and correct or cause to
be corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in Medicaid or other reimbursement program
pursuant to any Reimbursement Contract for existing patients or for new patients
to be admitted with Medicaid coverage, by the date required for cure by such
agency (plus extensions granted by such agency).
4.12 DEBT SERVICE COVERAGE REQUIREMENTS.
a. Achieve (commencing with the closing of the Loan), and,
within forty-five (45) days after the end of each fiscal quarter of Borrower,
provide evidence satisfactory to the Lender of the achievement of, the following
Debt Service Coverage ratios:
(i) a Debt Service Coverage for each Facility,
individually, after deduction of Actual Management
Fees, of not less than 1.0 to 1.0, to be tested
quarterly based on the operation of the individual
Facility for the prior twelve (12) months;
(ii) a Debt Service Coverage for each Facility,
individually, after deduction of Assumed Management
Fees, of not less than 1.10 to 1.0, to be tested
quarterly based on the operation of the individual
Facility for the prior twelve (12) months ; and
(iii) a Debt Service Coverage for the Facilities, combined,
after deduction of Assumed Management Fees, of not less
than 1.25 to 1.0, to be tested quarterly based on the
combined operations of the Facilities for the prior
twelve (12) months.
b. If Borrower fails to achieve or provide evidence of
achievement of the Debt Service Coverage, upon fifteen (15) days written notice
to Borrower, Borrower will deposit with Lender additional cash or other liquid
collateral in an amount which, when added to the first number of the Debt
Service Coverage calculation, would have resulted in the noncomplying Debt
Service Coverage requirement having been satisfied. If such failure continues
for two (2) consecutive quarters, upon fifteen (15) days written notice to
Borrower, Borrower will deposit with Lender additional cash or other liquid
collateral (with credit for amounts currently being held by Lender pursuant to
the foregoing sentence), in an amount which, if the same had been applied on the
first day of the prior twelve (12) month period to reduce the outstanding
principal indebtedness of the Loan Obligations, would have resulted in the
noncomplying Debt Service Coverage requirement having been satisfied, Borrower
agrees promptly to provide such additional cash or other liquid collateral,
which shall be held for an additional two (2) consecutive quarters. Such
additional Collateral will be held by the Lender in a standard custodial
account, and shall constitute additional
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collateral for the Loan Obligations and an "Account" as defined in this
Agreement, and, upon the occurrence of an Event of Default, may be applied by
the Lender, in such order and manner as the Lender may elect, to the reduction
of the Loan Obligations. Borrower shall not be entitled to any interest earned
on such additional Collateral. Provided that there is no outstanding Default or
Event of Default, such additional Collateral which has not been applied to the
Loan Obligations will be released by the Lender at such time as Borrower
provides the Lender with evidence that the required Debt Service Coverage
requirements outlined above have been achieved and maintained (without regard to
any cash deposited pursuant to this Section 4.12) as of the end of each of two
(2) consecutive quarters. Notwithstanding the foregoing, Lender will agree to
forbear from requiring Borrower to post such cash or additional collateral if
any one Facility fails to meet the required individual Debt Service Coverage as
long as (i) there is no other outstanding Event of Default and (ii) the Debt
Service Coverage on a combined basis for all Facilities is at least 1.4 to 1.0.
However, Lender shall have the right to terminate its forbearance and to require
that the Borrower post such additional collateral if said Facility fails to meet
its required individual Debt Service Coverage ratios for more than four (4)
consecutive quarters.
4.13 OCCUPANCY. Maintain or cause to be maintained an average
annual occupancy for the Facilities, combined, of eighty percent (80%) or
higher, based on the number of licensed beds or units shown on Exhibit "F".
4.14 CAPITAL EXPENDITURES. Maintain each Facility in good condition
and make minimum capital expenditures for each Facility in each fiscal year in
the amount of $250 per licensed bed or unit (which capital expenditures may
include those necessary for ordinary repairs and routine maintenance), and,
within forty-five (45) days of the end of such fiscal year, provide evidence
thereof satisfactory to Lender. In the event that Borrower shall fail to do so,
Borrower shall, upon Lender's written request, immediately establish and
maintain a capital expenditures reserve fund with Lender equal to the difference
between the required amount per licensed bed or unit and the amount per licensed
bed or unit actually spent by the Borrower. Borrower grants to Lender a right of
setoff against all moneys in the capital expenditures reserve fund, and Borrower
shall not permit any other Lien to exist upon such fund. The proceeds of such
capital expenditures reserve fund will be disbursed monthly upon Lender's
receipt of satisfactory evidence that Borrower has made the required capital
expenditures. Upon Borrower's failure to adequately maintain any Facility in
good condition, ordinary and reasonable wear and tear excepted, Lender may, but
shall not be obligated to, make such capital expenditures and may apply the
moneys in the capital expenditures reserve fund for such purpose. To the extent
there are insufficient moneys in the capital expenditures reserve fund for such
purposes, all funds advanced by Lender to make such capital expenditures shall
constitute a portion of the Loan Obligations, shall be secured by the Mortgage
and shall accrue interest at the Default Rate until paid. Upon an Event of
Default, Lender may apply any moneys in the capital expenditures reserve fund to
the Loan Obligations, in such order and manner as Lender may elect. For any
partial fiscal year during which the Loan is outstanding, the required
expenditure amount shall be prorated by multiplying the total of the required
amount per licensed bed or unit by a fraction, the numerator of which is the
number of days during such year for which all or part of the Loan is outstanding
and the denominator of which is the number of days in such year.
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4.15 MANAGEMENT AGREEMENT. Maintain the Management Agreement in
full force and effect and timely perform all of Borrower's obligations
thereunder and enforce performance of all obligations of the Manager thereunder
and not permit the termination, amendment or assignment of the Management
Agreement unless the prior written consent of Lender is first obtained, which
consent shall not be unreasonably withheld. Borrower will enter and cause the
Manager to enter into the Subordination Agreement. Borrower will not enter into
any other management agreement without Lender's prior written consent, which
consent shall not be unreasonably withheld.
4.16 UPDATED APPRAISALS. For so long as the Loan remains
outstanding, if any Event of Default shall occur hereunder, or if, in Lender's
reasonable business judgment, a material depreciation in the value of the
Property shall have occurred, then in any such event, Lender may cause the
Property to be appraised by an appraiser selected by Lender, and in accordance
with Lender's appraisal guidelines and procedures then in effect, and Borrower
agrees to cooperate in all respects with such appraisals and furnish to the
appraisers all requested information regarding the Property and the Facilities.
Borrower agrees to pay all reasonable costs incurred by Lender in connection
with such appraisal which costs shall be secured by the Mortgage and shall
accrue interest at the Default Rate until paid.
4.17 COMPLY WITH COVENANTS AND LAWS. Comply, in all material
respects, with all applicable covenants and restrictions of record and all laws,
ordinances, rules and regulations and keep the Facilities and the Property in
compliance with all applicable laws, ordinances, rules and regulations,
including, without limitation, the Americans with Disabilities Act and
regulations promulgated thereunder, and laws, ordinances, rules and regulations
relating to zoning, health, building codes, setback requirements, Medicaid laws
and keep the Permits for the Facilities in full force and effect.
4.18 TAXES AND OTHER CHARGES. Subject to Borrower's right to
contest the same as set forth in Section 9(c) of the Mortgage, pay all taxes,
assessments, charges, claims for labor, supplies, rent, and other obligations
which, if unpaid, might give rise to a Lien against property of Borrower, except
Liens to the extent permitted by this Agreement.
4.19 COMMITMENT LETTER. Provide all items and pay all amounts
required by the Commitment Letter. If any term of the Commitment Letter shall
conflict with the terms of this Agreement, this Agreement shall govern and
control. As to any matter contained in the Commitment Letter, and as to which no
mention is made in this Agreement or the other Loan Documents, the Commitment
Letter shall continue to be in effect and shall survive the execution of this
Agreement and all other Loan Documents.
4.20 NOTICE OF FEES OR PENALTIES. Immediately notify Lender, upon
Borrower's knowledge thereof, of the assessment by any state or any Medicaid,
health or licensing agency of any fines or penalties against Borrower, Manager
or any Facility.
4.21 INTENTIONALLY DELETED.
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4.22 CAPITAL IMPROVEMENTS AND REPAIRS. Commence immediately and
complete within 180 days from the date hereof the repairs listed on Schedule
4.22 attached hereto.
4.23 LOAN CLOSING CERTIFICATION. Immediately notify Lender, in
writing, in the event any representation, warranty or covenant contained herein
or in that certain Loan Closing Certification, executed by Borrower for the
benefit of Lender of even date herewith, becomes untrue or there shall have been
any material adverse change in any such representation, warranty or covenant.
4.24 ADVOCAT FINANCIAL COVENANTS. Borrower, and Advocat, by the
execution and delivery of its Guaranty Agreement, agree to cause compliance with
the following:
a. Advocat shall maintain a current ratio of not less
than 1.25 to 1.00 at all times.
For purposes of calculating the "current ratio", the
following debt will be excluded from current maturities of long term debt:
(i) the principal balance outstanding under the
Acquisition Line;
(ii) the principal balance outstanding under the
Working Capital Loan or the Overline
Facility; and
(iii) the outstanding principal balance on the
Bridge Loan, which remains outstanding
following the closing of the Loan and the
Related Loan.
Current maturities of long term debt shall include an
assumed amortization of five percent (5%) of the principal outstanding balance
under the Acquisition Line.
b. Advocat shall maintain a ratio of "Adjusted Funded
Debt" (defined below) to "EBITDAR" (defined below) of not more than 8.0 to 1.0
through December 30, 1999, and 7.5 to 1.0 on December 31, 1999, and thereafter.
For purposes of this Section 4.24, "Adjusted Funded
Debt" means the sum of (i) "Funded Debt" (defined below) plus (ii) the product
of (A) 8 multiplied by (B) lease expense for the preceding four (4) quarters.
For purposes hereof, EBITDAR shall mean the sum of earnings before interest,
taxes, depreciation, amortization and rent/lease expense (excluding accounts
receivable of Texas Diversicare Limited Partnership), calculated for the
immediately preceding twelve (12) month period. In addition, for purposes of
calculating EBITDAR, EBITDAR will include non-recurring charges as quantified in
the December 31, 1998 audited statement of operations and defined in Note 16 of
the December 31, 1998 audit report. EBITDAR will also add back the non-recurring
charge of $433,440 taken in the first quarter of fiscal year 1999 relating to an
accounting change (SOP 98-5).
For purposes of this Section 4.24, "Funded Debt"
means all indebtedness for money borrowed, deferred purchase money obligations
(other than accounts payable arising in the
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ordinary course of business with terms less than 270 days and which are not
renewable or extendable at the option of the obligor), capitalized leases,
conditional sales contracts and similar title retention debt instruments. This
calculation shall include all Funded Debt of other entities or persons
guaranteed by the Borrower, or supported by a letter of credit issued for the
account of the Borrower. Funded Debt shall also include the redemption amount
with respect to any stock of the Borrower required to be redeemed within the
twelve months following the date of determination.
c. Advocat shall maintain a minimum fixed charge
coverage ratio of not less than 1.0 to 1.0 through December 31, 1999, and 1.05
to 1.0 at all times thereafter (measured quarterly on a rolling four (4) quarter
basis). The fixed charge coverage ratio shall mean EBITDAR divided by the sum of
current maturities of long-term debt plus interest expenses plus lease expenses.
Current maturities will include five percent (5%) of the then outstanding
principal balance under the Acquisition Line. Current maturities shall exclude:
(i) the principal balance outstanding under the
Acquisition Line;
(ii) the principal balance outstanding under the
Working Capital Loan or the Overline
Facility; and
(iii) the outstanding principal balance on the
Bridge Loan, which remains outstanding
following the closing of the Loan and the
Related Loan.
d. Advocat shall maintain a minimum "Tangible Net Worth"
(defined below) of $24,000,000 as of the date hereof. Such minimum Tangible Net
Worth shall increase (but shall not decrease) on a quarterly basis by a minimum
of 75% of Advocat's calendar quarterly net income (but not loss) beginning with
the fiscal quarter ended June 30, 1999 plus 100% of additions to capital.
e. Advocat shall provide to the Lender a certificate no
later than 45 days after the end of each fiscal quarter, certifying compliance
with the covenants in this Section 4.24.
ARTICLE V
NEGATIVE COVENANTS OF BORROWER
Until the Loan Obligations have been paid in full, Borrower shall not:
5.1 ASSIGNMENT OF LICENSES AND PERMITS. Assign or transfer any of its
interest in the Permits, or Reimbursement Contracts (including rights to payment
thereunder) pertaining to any Facility, or assign, transfer, or remove or permit
any other person to assign, transfer, or remove any records pertaining to a
Facility including, without limitation, patient records, medical and clinical
records (except for removal of such patient records as directed by the residents
owning such records or by governmental or judicial direction or order), without
Lender's prior written consent, which consent may be granted or refused in
Lender's sole discretion.
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5.2 NO LIENS; EXCEPTIONS. Create, incur, assume or suffer to exist
any Lien upon or with respect to any Facility or any of its properties, rights,
income or other assets relating thereto, including, without limitation, the
Collateral, whether now owned or hereafter acquired, other than the following
permitted Liens ("Permitted Encumbrances"):
a. Liens at any time existing in favor of the Lender;
b. Liens which are permitted under the terms of the Lender's
title insurance policies insuring the Mortgage;
c. Inchoate Liens arising by operation of law for the purchase
of labor, services, materials, equipment or supplies, provided payment shall not
be delinquent and, if such Lien is a lien upon any of the Property or
Improvements, such Lien must be fully disclosed to Lender and bonded off and
removed from the Property and Improvements within thirty (30) days of its
creation in a manner satisfactory to Lender;
d. Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for money borrowed or
for credit received with respect to property acquired) entered into in the
ordinary course of business as presently conducted or to secure obligations for
surety or appeal bonds;
e. Liens for current year's taxes, assessments or governmental
charges or levies not yet due and payable;
f. Liens on Accounts securing the Working Capital Loan and the
Overline Facility; and
g. Liens securing purchase money loans not to exceed $300,000
in the aggregate at any one time outstanding.
5.3 MERGER, CONSOLIDATION, ETC. Consummate any merger,
consolidation or similar transaction, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now or hereafter acquired), without the
prior written consent of the Lender, which consent may be granted or refused in
Lender's sole discretion.
5.4 MAINTAIN SINGLE-PURPOSE ENTITY STATUS.
a. Dissolve or terminate or materially amend the terms of its
articles of organization or operating agreement, the terms of which require
Borrower to be a Single-Purpose Entity;
b. enter into any transaction of merger or consolidation, or
liquidate or dissolve itself (or suffer any liquidation or dissolution), or
acquire by purchase or otherwise all or
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substantially all the business or assets of, or any Stock or other evidence of
beneficial ownership of, any Person;
c. guarantee or otherwise become liable on or in connection
with any obligation of any other Person, except for the Related Loan, the
Working Capital Loan and the Overline Facility;
d. at any time own any encumbered asset other than (i) the
Property, and (ii) incidental personal property necessary for the operation of
the Property;
e. at any time be engaged directly or indirectly, in any
business other than the ownership, management and operation of the Property;
f. enter into any contract or agreement with any general
partner, principal, member or Affiliate of Borrower or any Affiliate of any
general partner, principal or member of Borrower (other than the Management
Agreement) except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arm's-length basis
with third parties other than an Affiliate;
g. incur, create or assume any indebtedness, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Loan, (ii) the Working Capital Loan, (iii) the Overline Facility,
(iv) the Related Loan, and (v) indebtedness which represents trade payables or
accrued expenses incurred in the ordinary course of business of owning and
operating the Property; no other debt will be secured (senior, subordinate or
pari passu) by the Property;
h. make any loans or advances for borrowed money to any third
party (including any Affiliate);
i. become insolvent or fail to pay its debts from its assets
as the same shall become due;
j. fail to do all things necessary to preserve its existence
as a Single-Purpose Entity, and will not, nor will any member thereof, amend,
modify or otherwise change its articles of organization or operating agreement
in a manner which adversely affects Borrower's existence as a Single-Purpose
Entity;
k. fail to conduct and operate its business as presently
conducted and operated;
l. fail to maintain books and records and bank accounts
separate from those of its Affiliates, including its members, general partners
or shareholders, as applicable;
m. fail to at all times hold itself out to the public as a
legal entity separate and distinct from any other entity (including any
Affiliate thereof, including any member of Borrower or any Affiliate of the
general partner or any member or shareholder of Borrower, as applicable);
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n. fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;
o. seek the dissolution or winding up, in whole or in part,
of Borrower;
p. commingle the funds and other assets of Borrower with those
of any general partner, any member, any shareholder, any Affiliate or any other
Person except for daily sweeps to a master account for Borrower and its
Affiliates from which necessary operating funds will be disbursed to a control
account in the name of Borrower;
q. fail to maintain its assets in such a manner that it is not
costly or difficult to segregate, ascertain or identify its individual assets
from those of any Affiliate or any other Person; and
r. hold itself out to be responsible for the debts or
obligations of any other Person, except for the Related Loan, the Working
Capital Loan and the Overline Facility.
5.5 CHANGE OF BUSINESS. Make any material change in the nature of
its business as it is being conducted as of the date hereof.
5.6 CHANGES IN ACCOUNTING. Change its methods of accounting,
unless such change is permitted by GAAP, and provided such change does not have
the effect of curing or preventing what would otherwise be an Event of Default
or Default had such change not taken place.
5.7 ERISA FUNDING AND TERMINATION. Permit (a) the funding
requirements of ERISA with respect to any employee plan to be less than the
minimum required by ERISA at any time, or (b) any employee plan to be subject to
involuntary termination proceedings at any time.
5.8 TRANSACTIONS WITH AFFILIATES. Enter into any transaction
(other than the Management Agreement) with any Affiliate of Borrower other than
in the ordinary course of its business and on fair and reasonable terms no less
favorable to Borrower than those it could obtain in a comparable arms-length
transaction with a Person not an Affiliate.
5.9 TRANSFER OF OWNERSHIP INTERESTS. Except for the pledge of
membership interests to secure the Working Capital Loan, permit a change in the
ownership interests of the Persons comprising the Borrower unless the written
consent of the Lender is first obtained, which consent may be granted or refused
in Lender's sole discretion.
5.10 CHANGE OF USE. Alter or change the use of any Facility or
permit any management agreement other than the Management Agreement or enter
into any operating lease for a Facility, unless Borrower first notifies Lender
and provides Lender a copy of the proposed lease agreement or management
agreement, obtains Lender's written consent thereto, which consent may be
withheld in Lender's sole discretion, and obtains and provides Lender with a
subordination agreement in form
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satisfactory to Lender, as determined by Lender in its sole discretion, from
such manager or lessee subordinating to all rights of Lender.
5.11 PLACE OF BUSINESS. Change its chief executive office or its
principal place of business without first giving Lender at least thirty (30)
days prior written notice thereof and promptly providing Lender such information
and amendatory financing statements as Lender may request in connection
therewith.
5.12 ACQUISITIONS. Directly or indirectly, purchase, lease, manage,
own, operate, or otherwise acquire any property or other assets (or any interest
therein) which are not used in connection with the operation of the Facilities.
ARTICLE VI
ENVIRONMENTAL HAZARDS
6.1 PROHIBITED ACTIVITIES AND CONDITIONS. Except for matters
covered by a written program of operations and maintenance approved in writing
by Lender (an "O&M Program") or matters described in Section 6.2, Borrower shall
not cause or permit any of the following:
a. The presence, use, generation, release, treatment,
processing, storage, handling, or disposal-of any Hazardous Materials in, on or
under the Property or any Improvements;
b. The transportation of any Hazardous Materials to, from, or
across the Property;
c. Any occurrence or condition on the Property or in the
Improvements or any other property of Borrower that is adjacent to the Property,
which occurrence or condition is or may be in violation of Hazardous Materials
Laws; or
d. Any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Property, the Improvements or any
property of Borrower that is adjacent to the Property.
The matters described in clauses (a) through (d) above are referred to
collectively in this Article VI as "Prohibited Activities and Conditions" and
individually as a "Prohibited Activity and Condition."
6.2 EXCLUSIONS. Notwithstanding any other provision of Article
VI to the contrary, "Prohibited Activities and Conditions" shall not include the
safe and lawful use and storage of quantities of (i) pre-packaged supplies,
medical waste, cleaning materials and petroleum products customarily used in the
operation and maintenance of comparable Facilities, (ii) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for
consumer use and used by occupants of the Facility; (iii) petroleum products
used in the operation and maintenance of motor vehicles from time to time
located on the Property's parking areas, or stored in underground
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or above ground storage tanks used in the operation of any Facility; and (iv)
nonfriable asbestos or asbestos-containing materials currently located at any
Facility as shown in the Phase I Environmental Reports prepared by Xxxxx
Engineering for Lender in connection with the Loan, so long as all of the
foregoing are used, stored, handled, transported and disposed of in compliance
with Hazardous Materials Laws.
6.3 PREVENTIVE ACTION. Borrower shall take all appropriate
steps (including the inclusion of appropriate provisions in any Leases approved
by Lender which are executed after the date of this Agreement) to prevent its
employees, agents, contractors, tenants and occupants of the Facility from
causing or permitting any Prohibited Activities and Conditions.
6.4 O & M PROGRAM COMPLIANCE. If an O&M Program has been
established with respect to Hazardous Materials, Borrower shall comply in a
timely manner with, and cause all employees, agents, and contractors of Borrower
and any other persons present on the Property to comply with the O&M Program.
All costs of performance of Borrower's obligations under any O&M Program shall
be paid by Borrower, and Lender's out-of-pocket costs incurred in connection
with the monitoring and review of the O&M Program and Borrower's performance
shall be paid by Borrower upon demand by Lender. Any such out-of-pocket costs of
Lender which Borrower fails to pay promptly shall become an additional part of
the Loan Obligations.
6.5 BORROWER'S ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender that, except as previously disclosed
by Borrower to Lender in writing or in the Phase I Environmental Reports
prepared for Lender by Xxxxx Engineering (the "Environmental Reports"):
a. Borrower has not at any time caused or permitted any
Prohibited Activities and Conditions.
b. No Prohibited Activities and Conditions exist or, to the
best knowledge of Borrower, have existed.
c. The Property and the Improvements do not now contain any
underground storage tanks, and, to the best of Borrower's knowledge after
reasonable and diligent inquiry, the Property and the Improvements have not
contained any underground storage tanks in the past. If there is an underground
storage tank located on the Property or the Improvements which has been
previously disclosed by Borrower to Lender in writing or in the Environmental
Reports, that tank complies with all requirements of Hazardous Materials Laws,
except as disclosed in the Environmental Reports.
d. Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of Hazardous
Materials. Without limiting the generality of the foregoing, Borrower has
obtained all Environmental Permits required for the operation of the Property
and the Improvements in accordance with Hazardous Materials Laws now in effect
and all such Environmental Permits are in full force and effect. No event has
occurred with
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respect to the Property and/or Improvements that constitutes, or with the
passing of time or the giving of notice would constitute, noncompliance with the
terms of any Environmental Permit.
e. There are no actions, suits, claims or proceedings pending
or, to the best of Borrower's knowledge after reasonable and diligent inquiry,
threatened that involve the Property and/or the Improvements and allege, arise
out of, or relate to any Prohibited Activity and Condition.
f. Borrower has not received any complaint, order, notice of
violation or other communication from any Governmental Authority with regard to
air emissions, water discharges, noise emissions or Hazardous Materials, or any
other environmental, health or safety matters affecting the Property, the
Improvements or any other property of Borrower that is adjacent to the Property.
The representations and warranties in this Article VI shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the Loan evidenced by the Note, until the Loan
Obligations have been paid in full.
6.6 NOTICE OF CERTAIN EVENTS. Borrower shall promptly notify
Lender in writing of any and all of the following that may occur:
a. Borrower's discovery of any Prohibited Activity and
Condition.
b. Borrower's receipt of or knowledge of any complaint, order,
notice of violation or other communication from any Governmental Authority or
other person with regard to present, or future alleged Prohibited Activities and
Conditions or any other environmental, health or safety matters affecting the
Property, the Improvements or any other property of Borrower that is adjacent to
the Property.
c. Any representation or warranty in this Article VI which
becomes untrue at any time after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower
of, or result in a waiver of, any obligation under this Agreement, the Note, or
any of the other Loan Documents.
6.7 COSTS OF INSPECTION. Borrower shall pay promptly the costs of
any environmental inspections, tests or audits required by Lender in connection
with any foreclosure or deed in lieu of foreclosure, or, if required by Lender,
as a condition of Lender's consent to any "Transfer" (as defined in the
Mortgage), or required by Lender following a reasonable determination by Lender
that Prohibited Activities and Conditions may exist. Any such costs incurred by
Lender (including the fees and out-of-pocket costs of attorneys and technical
consultants whether incurred in connection with any judicial or administrative
process or otherwise) which Borrower fails to pay promptly shall become an
additional part of the Loan Obligations.
6.8 REMEDIAL WORK. If any investigation, site monitoring,
containment, clean-up, restoration or other remedial work ("Remedial Work") is
necessary to comply with any Hazardous Materials Laws or order of any
Governmental Authority that has or acquires jurisdiction over the Property, the
Improvements or the use, operation or improvement of the Property under any
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Hazardous Materials Laws, Borrower shall, by the earlier of (1) the applicable
deadline required by Hazardous Materials Laws or (2) 30 days after notice from
Lender demanding such action, begin performing the Remedial Work, and thereafter
diligently prosecute it to completion, and shall in any event complete such work
by the time required by applicable Hazardous Materials Laws. If Borrower fails
to begin on a timely basis or diligently prosecute any required Remedial Work,
Lender may, at its option, cause the Remedial Work to be completed, in which
case Borrower shall reimburse Lender on demand for the cost of doing so. Any
reimbursement due from Borrower to Lender shall become part of the Loan
Obligations.
6.9 COOPERATION WITH GOVERNMENTAL AUTHORITIES. Borrower shall
cooperate with any inquiry by any Governmental Authority and shall comply with
any governmental or judicial order which arises from any alleged Prohibited
Activity and Condition.
6.10 INDEMNITY.
a. Borrower shall hold harmless, defend and indemnify (i)
Lender, (ii) any successor owner or holder of the Note, (iii) the officers,
directors, partners, agents, shareholders, employees and trustees of any of the
foregoing, and (iv) the heirs, legal representatives, successors and assigns of
each of the foregoing (together, the "Indemnitees") against all proceedings,
claims, damages, losses, expenses, penalties and costs (whether initiated or
sought by any Governmental Authority or private parties), including fees and out
of pocket expenses of attorneys and expert witnesses, investigatory fees, and
remediation costs, whether incurred in connection with any judicial or
administrative process or otherwise, arising directly or indirectly from any of
the following except to the extent the same relate solely to Hazardous Materials
first introduced to the Property or any part thereof by anyone other than
Borrower following foreclosure of the Mortgage (or the delivery and acceptance
of a deed in lieu of such foreclosure) or the sale or transfer of the Property
or part thereof by Borrower with Lender's consent subject to the Mortgage):
1. Any breach of any representation or warranty of Borrower
in this Article VI.
2. Any failure by Borrower to perform any of its
obligations under this Article VI.
3. The existence or alleged existence of any Prohibited
Activity and Condition.
4. The presence or alleged presence of Hazardous Materials
in, on, or around under the Property, the Improvements or any property of
Borrower that is adjacent to the Property, or
5. Actual or alleged violation of any Hazardous Materials
Laws.
b. Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. Notwithstanding anything contained
herein, any Indemnitee may
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elect to defend any claim or legal or administrative proceeding at the
Borrower's expense if such Indemnitee has reason to believe that its interests
are not being adequately represented or diverge from other interests being
represented by such counsel (but Borrower shall be obligated to bear the expense
of at most only one such separate counsel). Nothing contained herein shall
prevent an Indemnitee from employing separate counsel in any such action at any
time and participating in the defense thereof at its own expense.
c. Borrower shall not, without the prior written consent of
those Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim") settle or compromise the Claim if the settlement (1)
results in the entry of any judgment that does not include as an unconditional
term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender or (2) may
materially and adversely affect any Indemnitee, as determined by such Indemnitee
in its sole discretion.
d. The liability of Borrower to indemnify the Indemnitees
shall not be limited or impaired by any of the following, or by any failure of
Borrower or any Guarantor to receive notice of or consideration for any of the
following:
1. Any amendment or modification of any Loan Document.
2. Any extensions of time for performance required by any
of the Loan Documents.
3. The accuracy or inaccuracy of any representations and
warranties made by Borrower under this Agreement or any other Loan Document.
4. The release of Borrower or any other person, by Lender
or by operation of law, from performance of any obligation under any of the
Loan Documents.
5. The release or substitution in whole or in part of any
security for the Loan Obligations.
6. Lender's failure to properly perfect any lien or
security interest given as security for the Loan Obligations.
e. Borrower shall, at its own cost and expense, do all of the
following:
1. Pay or satisfy any judgment or decree that may be
entered against any Indemnitee or Indemnitees in any legal or administrative
proceeding incident to any matters against which Indemnitees are entitled to be
indemnified under this Article VI.
2. Reimburse Indemnitees for any expenses paid or incurred
in connection with any matters against which Indemnitees are entitled to be
indemnified under this Article VI.
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3. Reimburse Indemnitees for any and all expenses,
including fees and costs of attorneys and expert witnesses, paid or incurred in
connection with the enforcement by Indemnitees of their rights under this
Article VI, or in monitoring and participating in any legal or administrative
proceeding.
f. In any circumstances in which the indemnity under this
Article VI applies, Lender may employ its own legal counsel and consultants to
prosecute, defend or negotiate any claim or legal or administrative proceeding
and Lender, with the prior written consent of Borrower (which shall not be
unreasonably withheld, delayed or conditioned) may settle or compromise any
action or legal or administrative proceeding. Borrower shall reimburse Lender
upon demand for all costs and expenses incurred by Lender, including all costs
of settlements entered into in good faith, and the fees and out of pocket
expenses of such attorneys and consultants.
g. The provisions of this Article VI shall be in addition to
any and all other obligations and liabilities that Borrower may have under the
applicable law or under the other Loan Documents, and each Indemnitee shall be
entitled to indemnification under this Article VI without regard to whether
Lender or that Indemnitee has exercised any rights against the Property and/or
the Improvements or any other security, pursued any rights against any
guarantor, or pursued any other rights available under the Loan Documents or
applicable law. If Borrower consists of more than one person or entity, the
obligation of those persons or entities to indemnify the Indemnitees under this
Article VI shall be joint and several. The obligations of Borrower to indemnify
the Indemnitees under this Article VI shall survive any repayment or discharge
of the Loan Obligations, any foreclosure proceeding, any foreclosure sale, any
delivery of any deed in lieu of foreclosure, and any release of record of the
lien of the Mortgage.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default" hereunder:
a. The failure by Borrower to pay any installment of
principal, interest, or other payments required under the Note, within five (5)
business days after the same becomes due; or
b. Borrower's violation of any covenant set forth in Article V
hereof; or
c. Borrower's failure to deliver or cause to be delivered the
financial statements and information set forth in Section 4.5 above within the
times required and such failure is not cured within thirty (30) days following
Lender's written notice to Borrower thereof; or
d. The failure of Borrower properly and timely to perform or
observe any covenant or condition set forth in this Agreement (other than those
specified in (a), (b) and (c) of this Section) or any other Loan Documents which
is not cured within any applicable cure period as set
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forth herein or in such other Loan Document, or, if no cure period is specified
therefor, is not cured within thirty (30) days of Lender's notice to Borrower of
such Default; provided, however, that if such default cannot be cured within
such thirty (30) day period, such cure period shall be extended for an
additional sixty (60) days, as long as Borrower is diligently and in good faith
prosecuting said cure to completion.
e. The filing by Borrower or any Guarantor or Manager of a
voluntary petition, or the adjudication of any of the aforesaid Persons, or the
filing by any of the aforesaid Persons of any petition or answer seeking or
acquiescing, in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, or if any of the aforesaid
Persons should seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator for itself or of all or any substantial part of
its property or of any or all of the rents, revenues, issues, earnings, profits
or income thereof, or the mailing of any general assignment for the benefit of
creditors or the admission in writing by any of the aforesaid Persons of its
inability to pay its debts generally as they become due; or
f. The entry by a court of competent jurisdiction of an order,
judgment, or decree approving a petition filed against Borrower or any Guarantor
or Manager which petition seeks any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency, or other relief for debtors, which order, judgment or
decree remains unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive) from the date of entry thereof, or the appointment
of any trustee, receiver or liquidator of any of the aforesaid Persons or of all
or any substantial part of its properties or of any or all of the rents,
revenues, issues, earnings, profits or income thereof, which appointment shall
remain unvacated and unstayed for an aggregate of sixty (60) days (whether or
not consecutive); or
g. Unless otherwise permitted hereunder or under any other
Loan Documents, the sale, transfer, lease, assignment, or other disposition,
voluntarily or involuntarily, of the Collateral, or any part thereof, or, except
for Permitted Encumbrances, any further encumbrance of the Collateral, unless
the prior written consent of Lender is obtained; or
h. The failure of Borrower to take the corrective measures
required in this Agreement within the time periods specified following Lender's
demand because a Debt Service Coverage has not been met; or
i. Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of Borrower or any
Guarantor or Manager pursuant to or in connection with this Agreement
(including, without limitation, representations and warranties contained herein
or in any Loan Documents) or as an inducement to Lender to make the Loan to
Borrower, (i) proves to have been false in any material respect at the time when
the facts therein set forth were stated or certified, or (ii) proves to have
omitted any substantial contingent or unliquidated liability or claim against
Borrower, or (iii) on the date of execution of this Agreement there shall have
been any material adverse change in any of the facts previously disclosed by any
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such certificate, statement, representation, warranty or audit, which change
shall not have been disclosed to Lender in writing at or prior to the time of
such execution; or
j. The failure of Borrower to correct or cause the Manager to
correct, within the time deadlines set by any applicable Medicaid or licensing
agency, any deficiency which would result in the following actions by such
agency with respect to the Facility:
1. a termination of any Reimbursement Contract or any
Permit; or
2. a ban on new admissions generally or on admission of
patients otherwise qualifying for Medicaid coverage; or
k. The Borrower, Manager or any Facility should be assessed
fines or penalties by any state or any Medicaid, health or licensing agency
having jurisdiction over such Persons or Facility in excess of $50,000; or
l. A final judgment shall be rendered by a court of law or
equity against Borrower, or Manager or any Guarantor in excess of $100,000, and
the same shall remain undischarged for a period of thirty (30) days, unless such
judgment is either (i) fully covered by collectible insurance and such insurer
has within such period acknowledged such coverage in writing, or (ii) although
not fully covered by insurance, enforcement of such judgment has been
effectively stayed, such judgment is being contested or appealed by appropriate
proceedings and Borrower or any Guarantor or Manager, as the case may be, has
established reserves adequate for payment in the event such Person is ultimately
unsuccessful in such contest or appeal and evidence thereof is provided to
Lender; or
m. The occurrence of any material adverse change in the
financial condition or prospects of Borrower or any Guarantor or Manager, or the
existence of any other condition which, in Lender's reasonable determination,
constitutes a material impairment of any such Person's ability to operate the
Facility or of such Person's ability to perform their respective obligations
under the Loan Documents, and is not remedied within thirty (30) days after
written notice; or
n. The occurrence of any Event of Default under (and as
defined in the loan documents relating to) the Related Loan.
Notwithstanding anything in this Section, all requirements
of notice shall be deemed eliminated if Lender is prevented from declaring an
Event of Default by bankruptcy or other applicable law. The cure period, if any,
shall then run from the occurrence of the event or condition of Default rather
than from the date of notice.
7.2 REMEDIES. Upon the occurrence of any one or more of the foregoing
Events of Default, the Lender may, at its option:
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a. Declare the entire unpaid principal of the Loan Obligations
to be, and the same shall thereupon become, immediately due and payable, without
presentment, protest or further demand or notice of any kind, all of which are
hereby expressly waived.
b. Proceed to protect and enforce its rights by action at law
(including, without limitation, bringing suit to reduce any claim to judgment),
suit in equity and other appropriate proceedings including, without limitation,
for specific performance of any covenant or condition contained in this
Agreement.
c. Exercise any and all rights and remedies afforded by the
laws of the United States, the states in which any of the Property or other
Collateral is located or any other appropriate jurisdiction as may be available
for the collection of debts and enforcement of covenants and conditions such as
those contained in this Agreement and the Loan Documents.
d. Exercise the rights and remedies of setoff and/or banker's
lien against the interest of Borrower in and to every account and other property
of Borrower which is in the possession of the Lender or any person who then owns
a participating interest in the Loan, to the extent of the full amount of the
Loan.
e. Exercise its rights and remedies pursuant to any other Loan
Documents.
ARTICLE VIII
MISCELLANEOUS
8.1 WAIVER. No remedy conferred upon, or reserved to, the Lender
in this Agreement or any of the other Loan Documents is intended to be exclusive
of any other remedy or remedies, and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing in law or in equity. Exercise of or omission to exercise any
right of the Lender shall not affect any subsequent right of Lender to exercise
the same. No course of dealing between Borrower and Lender or any delay on the
Lender's part in exercising any rights shall operate as a waiver of any of the
Lender's rights. No waiver of any Default under this Agreement or any of the
other Loan Documents shall extend to or shall affect any subsequent or other
then existing Default or shall impair any rights, remedies or powers of Lender.
8.2 COSTS AND EXPENSES. Borrower will bear all taxes, fees and
expenses (including actual and reasonable attorneys' fees and expenses of
counsel for Lender) in connection with the Loan, the Note, the preparation of
this Agreement and the other Loan Documents (including any amendments hereafter
made), and in connection with any modifications thereto and the recording of any
of the Loan Documents. If, at any time, a Default occurs or Lender becomes a
party to any suit or proceeding in order to protect its interests or priority in
any Collateral for any of the Loan Obligations or its rights under this
Agreement or any of the Loan Documents, or if Lender is made a party to any suit
or proceeding by virtue of the Loan, this Agreement or any Collateral and as a
result of any of the foregoing, the Lender employs counsel to advise or provide
other representation
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with respect to this Agreement, or to collect the balance of the Loan
Obligations, or to take any action in or with respect to any suit or proceeding
relating to this Agreement, any of the other Loan Documents, any Collateral,
Borrower, Manager, or any Guarantor or to protect, collect, or liquidate any of
the security for the Loan Obligations, or attempt to enforce any security
interest or lien granted to the Lender by any of the Loan Documents, then in any
such events, all of the actual and reasonable attorney's fees arising from such
services, including attorneys' fees for preparation of litigation and in any
appellate or bankruptcy proceedings, and any expenses, costs and charges
relating thereto shall constitute additional obligations of Borrower to the
Lender payable on demand of the Lender. Without limiting the foregoing, Borrower
has undertaken the obligation for payment of, and shall pay, all recording and
filing fees, revenue or documentary stamps or taxes, intangibles taxes, and
other taxes, expenses and charges payable in connection with this Agreement, any
of the Loan Documents, the Loan Obligations, or the filing of any financing
statements or other instruments required to effectuate the purposes of this
Agreement, and should Borrower fail to do so, Borrower agrees to reimburse
Lender for the amounts paid by Lender, together with penalties or interest, if
any, incurred by Lender as a result of underpayment or nonpayment. Such amounts
shall constitute a portion of the Loan Obligations, shall be secured by the
Mortgage and shall bear interest at the Default Rate from the date advanced
until repaid.
8.3 PERFORMANCE OF LENDER. At its option, upon Borrower's failure
to do so, the Lender may make any payment or do any act on Borrower's behalf
that Borrower or others are inquired to do to remain in compliance with this
Agreement or any of the other Loan Documents, and Borrower agrees to reimburse
the Lender, on demand, for any payment made or expense incurred by Lender
pursuant to the foregoing authorization, including, without limitation,
attorneys' fees, and until so repaid any sums advanced by Lender shall
constitute a portion of the Loan Obligations, shall be secured by the Mortgage
and shall bear interest at the Default Rate from the date advanced until repaid.
8.4 INDEMNIFICATION. Except to the extent caused solely by the
gross negligence or willful misconduct or illegal activity of Lender or its
agents, Borrower shall, at its sole cost and expense, protect, defend, indemnify
and hold harmless the Indemnified Parties from and against any and all claims,
suits, liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, diminutions
in value, fines, penalties, charges, fees, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to reasonable
attorneys' fees and other costs of defense) imposed upon or incurred by or
asserted against Lender by reason of (a) ownership of the Note, the Mortgage,
the Property or any interest therein or receipt of any Rents; (b) any amendment
to, or restructuring of, the Loan Obligations and/or any of the Loan Documents;
(c) any and all lawful action that may be taken by Lender in connection with the
enforcement of the provisions of the Mortgage or the Note or any of the other
Loan Documents, whether or not suit is filed in connection with same, or in
connection with Borrower, any Guarantor and/or any member thereof becoming a
party to a voluntary or involuntary federal or state bankruptcy, insolvency or
similar proceeding; (d) any accident, injury to or death of persons or loss of
or damage to property occurring in, on or about the Property, the Improvements
or any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (e) any use, nonuse or condition in, on
or about the Property, the Improvements or
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any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (f) any failure on the part of
Borrower, or any Guarantor to perform or comply with any of the terms of this
Agreement or any of the other Loan Documents; (g) any claims by any broker,
person or entity claiming to have participated on behalf of Borrower in
arranging the making of the Loan evidenced by the Note; (h) any failure of the
Property to be in compliance with any applicable laws; (i) performance of any
labor or services or the furnishing of any materials or other property with
respect to the Property, the Improvements or any part thereof; (j) the failure
of any person to file timely with the Internal Revenue Service an accurate Form
1099-b, statement for recipients of proceeds from real estate, broker and barter
exchange transactions, which may be required in connection with the Mortgage, or
to supply a copy thereof in a timely fashion to the recipient of the proceeds of
the transaction in connection with which the Loan is made; (k) any
misrepresentation made to Lender in this Agreement or in any of the other Loan
Documents; (l) any tax on the making and/or recording of the Mortgage, the Note
or any of the other Loan Documents; (m) the violation of any requirements of the
Employee Retirement Income Security Act of 1974, as amended; (n) any fines or
penalties assessed or any corrective costs incurred by Lender if the Facility or
any part of the Property is determined to be in violation of any covenants,
restrictions of record, or any applicable laws, ordinances, rules or
regulations; or (o) the enforcement by any of the Indemnified Parties of the
provisions of this Section 8.4. Any amounts payable to Lender by reason of the
application of this Section 8.4 shall become immediately due and payable and
shall constitute a portion of the Loan Obligations, shall be secured by the
Mortgage and shall accrue interest at the Default Rate. The obligations and
liabilities of Borrower under this Section 8.4 shall survive any termination,
satisfaction, assignment, entry of a judgment of foreclosure or exercise of a
power of sale or delivery of a deed in lieu of foreclosure of the Mortgage
except to the extent such obligations and liabilities arise solely out of events
or circumstances first occurring after any termination, satisfaction,
foreclosure, or delivery of a deed in lieu of foreclosure of the Mortgage or the
transfer or sale of the Property by the Borrower with Lender's consent subject
to the Mortgage. For purposes of this Section 8.4, the term "Indemnified
Parties" means Lender and any Person who is or will have been involved in the
origination of the Loan, any Person who is or will have been involved in the
servicing of the Loan, any Person in whose name the encumbrance created by the
Mortgage is or will have been recorded, any Person who may hold or acquire or
will have held a full or partial interest in the Loan (including, without
limitation, any investor in any securities backed in whole or in part by the
Loan) as well as the respective directors, officers, shareholder, partners,
members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including, without limitation, any other Person
who holds or acquires or will have held a participation or other full or partial
interest in the Loan or the Property, whether during the term of the Mortgage or
as a part of or following a foreclosure of the Loan and including, without
limitation, any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender's assets and business).
8.5 HEADINGS. The headings of the Sections of this Agreement are
for convenience of reference only, are not to be considered a part hereof, and
shall not limit or otherwise affect any of the terms hereof.
8.6 SURVIVAL OF COVENANTS. All covenants, agreements,
representations and warranties made herein and in certificates or reports
delivered pursuant hereto shall be deemed to have been
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material and relied on by Lender, notwithstanding any investigation made by or
on behalf of Lender, and shall survive the execution and delivery to Lender of
the Note and this Agreement.
8.7 NOTICES, ETC. Any notice or other communication required or
permitted to be given by this Agreement or the other Loan Documents or by
applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery (to the person or department if one is
specified below) with receipt acknowledged by the recipient thereof, (b) three
(3) Business Days following the date deposited in the U.S. mail, certified or
registered, with return receipt requested, or (c) one (1) Business Day following
the date deposited with Federal Express or other national overnight carrier, and
in each case addressed as follows:
If to Borrower:
000 Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
with a copy to:
Xxxx X. Xxxxxx, XX, Esq.
Xxxxxxx, Xxxxxx, Xxxx, Xxxxxxx & Manner, PC
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
If to Lender:
GMAC Commercial Mortgage Corporation
000 Xxxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
ATTN: Servicing Department
with a copy to:
Xxx X. Xxxxx, Esq.
Walston, Wells, Xxxxxxxx & Xxxxx, LLP
000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Either party may change its address to another single address by notice given as
herein provided, except any change of address notice must be actually received
in order to be effective.
8.8 BENEFITS. All of the terms and provisions of this Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns. No Person other than
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Borrower or Lender shall be entitled to rely upon this Agreement or be entitled
to the benefits of this Agreement.
8.9 PARTICIPATION. Borrower acknowledges that Lender may, at its
option, sell participation interests in the Loan or to other participating banks
or Lender may (but shall not be obligated to) assign its interest in the Loan to
its affiliates or to other assignees (the "Assignee") to be included as a pool
of properties to be financed in a proposed Real Estate Mortgage Investment
Conduit (REMIC). Borrower agrees with each present and future participant in the
Loan or Assignee of the Loan that if an Event of Default should occur, each
present and future participant or Assignee shall have all of the rights and
remedies of Lender with respect to any deposit due from the Borrower. The
execution by a participant of a participation agreement with Lender, and the
execution by the Borrower of this Agreement, regardless of the order of
execution, shall evidence an agreement between Borrower and said participant in
accordance with the terms of this Section. If the Loan is assigned to the
Assignee, the Assignee will engage an underwriter (the "Underwriter"), who will
be responsible for the due diligence, documentation, preparation and execution
of certain documents required in connection with the offering of interests in
the REMIC. Borrower agrees that Lender may, at its sole option and without
notice to or consent of the Borrower, assign its interest in the Loan to the
Assignee for inclusion in the REMIC and, in such event, Borrower agrees to
provide the Assignee with such information as may be reasonably required by the
Underwriter in connection therewith or by an investor in any securities backed
in whole or in part by the Loan or any rating agency rating such securities.
Borrower irrevocably waives any and all right it may have under applicable law
to prohibit such disclosure, including, but not limited to, any right of privacy
(except as to the rights of any patients or residents of any Facility), and
consents to the disclosure of such information to the Underwriter, to potential
investors in the REMIC, and to such rating agencies.
8.10 SUPERSEDES PRIOR AGREEMENTS; COUNTERPARTS. This Agreement and
the instruments referred to herein supersede and incorporate all
representations, promises, and statements, oral or written, made by Lender in
connection with the Loan. This Agreement may not be varied, altered, or amended
except by a written instrument executed by an authorized officer of the Lender.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, but such counterparts shall
together constitute one and the same instrument.
8.11 LOAN AGREEMENT GOVERNS. The Loan is governed by terms and
provisions set forth in this Loan Agreement and the other Loan Documents and in
the event of any irreconcilable conflict between the terms of the other Loan
Documents and the terms of this Loan Agreement, the terms of this Loan Agreement
shall control; provided, however, that in the event there is any apparent
conflict between any particular term or provision which appears in both this
Loan Agreement and the other Loan Documents, and it is possible and reasonable
for the terms of both this Loan Agreement and the Loan Documents to be performed
or complied with, then, notwithstanding the foregoing, both the terms of this
Loan Agreement and the other Loan Documents shall be performed and complied
with.
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8.12 CONTROLLING LAW. THE PARTIES HERETO AGREE THAT THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA AND
THE PARTIES HERETO SUBMIT (AND WAIVE ALL RIGHTS TO OBJECT) TO NON-EXCLUSIVE
PERSONAL JURISDICTION IN THE STATE OF NORTH CAROLINA, FOR THE ENFORCEMENT OF ANY
AND ALL OBLIGATIONS UNDER THE LOAN DOCUMENTS, EXCEPT THAT IF ANY SUCH ACTION OR
PROCEEDING ARISES UNDER THE CONSTITUTION, LAWS OR TREATIES OF THE UNITED STATES
OF AMERICA, OR IF THERE IS A DIVERSITY OF CITIZENSHIP BETWEEN THE PARTIES
THERETO, SO THAT IT IS TO BE BROUGHT IN A UNITED STATES DISTRICT COURT, IT SHALL
BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH
CAROLINA OR ANY SUCCESSOR FEDERAL COURT HAVING ORIGINAL JURISDICTION.
8.13 WAIVER OF JURY TRIAL. TO THE EXTENT ENFORCEABLE UNDER
APPLICABLE LAW, BORROWER AND LENDER HEREBY WAIVE ANY RIGHT THAT THEY MAY HAVE TO
A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN OR
(B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY
DEALINGS OF LENDER AND/OR BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR IN
CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND
REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP
OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER
AND LENDER AGREE THAT EITHER PARTY MAY FILE A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF
EITHER PARTY HERETO TO IRREVOCABLY WAIVE THEIR RIGHTS TO TRIAL BY JURY AS AN
INDUCEMENT OF LENDER TO MAKE THE LOAN AND THAT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER (WHETHER OR NOT MODIFIED
HEREIN) BETWEEN BORROWER AND LENDER SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.14 INTEREST LIMITATION. Notwithstanding anything to the contrary
contained herein or in the Mortgage or in any other of the Loan Documents, the
effective rate of interest on the obligation evidenced by the Note shall not
exceed the lawful maximum rate of interest permitted to be paid. Without
limiting the generality of the foregoing, in the event that the interest charged
under the Note results in an effective rate of interest higher than that
lawfully permitted to be paid, then such charges shall be reduced by the sum
sufficient to result in an effective rate of interest permitted and any amount
which would exceed the highest lawful rate already received and held by the
Lender shall be applied to a reduction of principal and not to the payment of
interest. Borrower agrees that
45
46
for the purpose of determining highest rate permitted by law, any non-principal
payment (including, without limitation, late fees and other fees) shall be
deemed, to the extent permitted by law, to be an expense, fee or premium rather
than interest. This provision shall control every other provision of the Note
and the other Loan Documents with respect to the changing, collecting and
payment of interest on the indebtedness evidenced by the Note.
46
47
WITNESS: BORROWER:
DIVERSICARE ASSISTED LIVING SERVICES
/s/ Xxxxxx Xxxxxxx NC I, LLC, a Delaware limited liability company
------------------------
By: Diversicare Assisted Living Services NC, LLC,
a Tennessee limited liability company
Xxxxxx Xxxxxxx Its: Sole Member
------------------------
[Print Name] By: /s/ Xxxxxxx X. Xxxxxxx, M.D.
-------------------------------
Name: Xxxxxxx X. Xxxxxxx, M.D.
Title: Chief Manager and President
WITNESS: LENDER:
GMAC COMMERCIAL MORTGAGE
CORPORATION, a California
corporation
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxx Xxxxxx (Seal)
------------------------ -----------------------------------
Xxxxx Xxxxxx Xxxxxx
Senior Vice President
48
EXHIBIT "A"
[LEGAL DESCRIPTION]
49
EXHIBIT A
CARTERET
COUNTY
RECORD LEGAL DESCRIPTION
Beginning at an existing iron pin located in the eastern margin of
the 260 foot right-of-way of U.S. Highway 70 and the southern margin of the 60
foot right-of-way of Xxxxxx Boulevard, and from said beginning along the
southern margin of Xxxxxx Boulevard, S 77 degree 07' 01" E 491.54 feet to an
existing iron pin in the western margin of the 60 foot right-of-way of Xxxxxxx
Drive; thence along the western margin of the 60 foot right-of-way of Xxxxxxx
Drive, S 20 degree 50'52" W 234.24 feet to an existing iron pin in the line of
J & D Properties; thence along the line of J & D Properties, N 65 degree
10'05" W 422.52 feet to an existing concrete monument located in the eastern
margin of the 260 foot right-of-way of U.S. Highway 70; thence with the eastern
margin of U.S. Highway 70, N 11 degree 23'51" W 86.40 feet to an existing
concrete monument, and N 04 degree 04'03" E 66.53 feet to the point and place
of BEGINNING, containing 1.96 acres as per plat and survey of Xxxxx X. Xxxxxx,
R.L.S. dated 2-5-96.
For further reference see Deed Book 693, Page 297, Carteret County Registry.
50
EXHIBIT A
NEW HANOVER COUNTY
RECORD
LEGAL DESCRIPTION:
Beginning at an existing iron pipe located in the northern margin of
the 50 foot right-of-way of Goldsboro Avenue, said existing iron pipe being near
the intersection of 0xx Xxxxxx xxx Xxxxxxxxx Xxxxxx and being the southeast
corner of Xxxxxx X. Winner, thence along the line of Winner as follows: N
01'52'00" E 154.93 feet to an existing iron pipe, and N 88' 07'00"W 250.53 feet
to an existing iron pipe in the line of Landmark Organization, Inc., thence
along the line of Landmark Organization, Inc. N. 01' 55' 46"E 302.82 feet to an
existing iron pipe in the southern margin of lot 60, Ocean Ridge Subdivision,
Section 2 (map book 35, page 4), thence along the southern margin of xxx 00, 00,
00, 00 and the retention pond of Ocean Ridge Subdivision, Section 2, (map book
35, page 4), S 87' 49' 00"E 550.73 feet to an existing iron pipe in the line of
Xxxxx X. and Xxxx X. Xxxxxxxxx, thence along the line of Xxxxxxxxx S 01' 55'
46"W 299.76 feet to an existing iron pipe located in the line of Xxxxxx X. and
Xxxxx X. Winner, thence along a ditch along the line of Winner and Xxxxxxx
Xxxxxxx Winner N 88' 09' 00"W 249.98 feet to an existing iron pipe in the line
of Xxxxxxx Xxxxxxx Winner, thence along the line of Xxxxxxx Xxxxxxx Winner S 01'
54' 44"W 154.93 feet to an existing iron pipe located in the northern margin of
the 50 foot right-of-way of Goldsboro Avenue, thence along the northern margin
of the right-of-way of Goldsboro Avenue N 88' 09' 00"W 49.99 feet to the point
and place of beginning, containing 3.98 total acres, inclusive, of a 50 foot
ingress and egress easement as shown on plat and survey of Xxxxx X. Xxxxxx, R.
L. S. dated 2-22-96.
51
EXHIBIT A
XXXXXXXX COUNTY
RECORD
LEGAL DESCRIPTION
BEGINNING at point located in the Southern half of the right-of-way
of N.C. State Road 1583, said point being the Southeast corner of Xxxxxx Arch
Xxxxxxxxx, Xxxxx Xxx and Xxxxx Xxx (D.B. 1184, Page 69), and from said
beginning along the line of Xxxxxxxxx, et al, N. 08' 16' 54" E. 330.16 feet to
an existing iron pipe in the line of Xxxxxx Arch Xxxxxxxxx (D.B. 1058, Page
585); thence along the line of Xxxxxxxxx, S. 86' 12' 03" E 107.22 feet to an
existing iron pipe in the line of Xxxxxxx Estates, Section One (P.B. 15, Page
189); thence along Xxxxxxx Xxxxxxx, Xxxxxxx Xxx, Xxx 00, S. 19' 31' 09" W.
37.44 feet to an existing iron pipe, S. 08' 15' 12" W. 69.16 feet to an
existing iron pipe and N. 73' 03' 37" E. 54.40 feet to an existing iron pipe
located in the line of Xxx 00 xx Xxxxxxx Xxxxxxx, Xxxxxxx Xxx; thence along the
line of Lot 85 as follows: S. 14' 02' 40" E. 92.98 feet to an existing iron
pipe and N. 64' 51' 15" E. 164.03 feet to an existing iron pipe located in the
western margin of the 60 foot right-of-way of Lakeview Drive; thence along the
Southern margin of Lakeview Drive, S. 77' 29' 51' E. 88.98 feet to an existing
iron pipe located in the line of Xxx 00 xx Xxxxxxx Xxxxxxx, Xxxxxxx Xxx; thence
along the line of Lot 72, N. 48' 16' 10' E. 115.00 feet to an existing iron
pipe located in the line of Xxxxx X. Xxxxxx; thence along the line of Xxxxx X.
Xxxxxx S. 24' 44' 05' E. 241.96 feet to an existing iron pipe and S. 45' 04'
43' W. 385.18 feet, and crossing an existing iron pipe in the Northeastern
margin of the 60 foot right-of-way of N.C. State Road 1583 (Dairy Road) to a
point located within the right-of-way of said N.C. State Road 1583; thence
along the line located within the right-of-way of N.C. State Road 1583 as
follows; N. 44' 54' 49' W. 30.00 feet to a point, N. 47' 17' 49' W. 100.00 feet
to point, N. 51' 56' 49' W. 100.00 feet to a point, N. 59' 50' 34' W. 98.93
feet to a point, N. 08' 15' 11' E. 16.38 feet to a point, and N. 86' 12' 03' W.
100.00 feet to the point and place of the BEGINNING, containing 4.23 total
acres as per plat and survey of Xxxxx X. Xxxxxx, R.L.S., dated 2-21-96.
For further reference see Deed book 1159, Page 809 and Deed
Book 1173, Page 536 Xxxxxxxx County Registry.
52
RECORD
LEGAL DESCRIPTION
XXXXX COUNTY
BEING KNOWN AS HERITAGE CARE AND SEVEN LAKES,
XXXXX COUNTY, SEVEN LAKES, NORTH CAROLINA.
Beginning at a concrete monument in the Southeastern right-of-way of
XxXxxxxx street, said monument being North 36' 18' 06" East 1,437.55 feet from
North Carolina grid monument "PIT", N.C. grid coordinates-552,447.798,
E-1,824,067.841; running thence North 61' 17' 30" West 67.13 feet to a stake;
thence North 34' 37' 45" West 198.23 feet to a stake in line of Xxxxx Xxxxxxx;
thence with Xxxxxxx line North 55' 10' 05" East 499.97 feet to a concrete
monument, corner of Xxxxxxx; thence with line North 55' 22' 11" East 364.96 feet
to a concrete monument; thence South 34' 37' 30" East 452.45 feet to a stake;
thence South 47' 07' 45" West 298.59 feet to a stake; thence South 42' 52' 15"
East 40.99 feet to a stake; thence South 47' 07' 45" West 500.00 feet to a stake
in the Eastern line of said proposed street; thence with said line of said
proposed street North 42' 52' 15" West 351.23 feet to the Beginning. Containing
10.29 acres and being a portion of the property conveyed to Commercial Lands
Company by deed from XxxXxxxxx Xxxxx, Sr., et ex, et al recorded in Book 467,
page 706, Xxxxx County Registry.
53
EXHIBIT A
XXXXXXX COUNTY
RECORD
LEGAL DESCRIPTION:
That certain tract or parcel of land lying and being located in North
Clinton Township, Xxxxxxx County, North Carolina, fronting on Xxxxxx Xxxx,
(formerly listed in chain of title deeds as Pine Ridge Drive), adjoining Xxxxxxx
Broadcasting Company, Xxxxx Xxxx and Xxxx Xxxxx, being the same land described
in Deed Book 1198, page 925, of the Xxxxxxx County Registry, containing 8,229
acres Acres and being further described as follows;
Beginning at a point in the south line of Xxxxxx Xxxx, said point being
located 861.52 feet from the center of U S Highway #421, running thence with the
line of Xxxxxxx Broadcasting Company S 04' 46' 54"E 499.90 feet, thence with the
line of Xxxxx Xxxx S 85' 52' 59"W 423.85 feet and N 73' 47' 02"W 505.12 feet,
thence with the line of Xxxx Xxxxx N 03' 44' 39"E 179.68 feet to the south line
of Xxxxxx Xxxx, running thence with the south line of Xxxxxx Xxxx a curve having
a chord of N 72' 34' 36"E 238.34 feet, a radius of 395.39 feet and an arc of
242.10 feet; and another curve having a chord of N 70' 06' 53" E 322.35 feet, a
radius of 619.52 feet and an arc of 326.10 feet, and N 85' 11' 39"E 324.99 feet
to the point of beginning, the property described herein being shown on map by
Xxxxx X. Xxxxxx, Registered Land Surveyor, entitled "Heritage Care of Clinton",
dated Sept. 24, 1997.
54
EXHIBIT A
XXXXXX COUNTY
RECORD
LEGAL DESCRIPTION
THAT CERTAIN PROPERTY BEING KNOWN AS HERITAGE RETIREMENT CENTER, XXXXXX
TOWNSHIP, XXXXXX COUNTY, NORTH CAROLINA AND DESCRIBED AS FOLLOWS;
BEGINNING at an existing iron pipe being the northwest corner of the
herein described tract and being approximately 0.3 miles from the intersection
of U.S. Highway 264 and U.S. Highway 301 and from said beginning along the
southern margin of U.S. Xxxxxxx 000 Xxxx Xxxx Xxxxxx S. 64' 44' 29" E. 558.00
feet to an existing iron pipe in the line now, or formerly Xxxxxx X. Xxxxx,
thence along the line now or formerly Xxxxxx X. Xxxxx S. 19' 40' 40" W. 155.97
feet and S. 18' 27' 41" W. 337.14 feet to an existing iron pipe in the line now
or formerly Xxxxxxx X. Xxxxx, et al; thence along the line of Xxxxxxx X. Xxxxx,
et al, as follows; N. 64' 44' 29" W. 555.07 feet to an existing iron pipe, N.
25' 15' 31" E. 72.00 feet to an existing iron pipe, N. 64' 44' 29" W. 58.00 feet
to an existing iron pipe, and N. 25' 15' 31" E. 418.00 feet to the point and
place of BEGINNING, containing 6.478 acres total, as per plat and survey of
Xxxxxx - Xxxxx & Associates dated August 1, 1995.
55
EXHIBIT "B"
LOCATION OF CHIEF EXECUTIVE OFFICES
Principal Place of Business
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Chief Executive Xxxxxx
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
56
EXHIBIT "C"
OWNERSHIP
Diversicare Assisted Living Services NC, LLC, a Tennessee
limited liability company, is the sole member of Borrower and
owns 100% of the membership interest of Borrower.
57
EXHIBIT "D"
SUMMARY OF FINANCIAL STATEMENTS
AND CENSUS DATA
Facility Name: _________________________________________________
Report Date: ___________________________________________________
QUARTER QUARTER QUARTER 12 MONTH
ENDING ENDING ENDING ENDING
(DATE) (DATE) (DATE) (DATE)
CENSUS DATA
Total Number
of Beds [UNITS]: _______ _______ _______ _______
Number of Days in
Period: _______ _______ _______ _______
Total Patient Days
Available: _______ _______ _______ _______
Patient Utilization
Days:
Medicaid _______ _______ _______ _______
Private _______ _______ _______ _______
Medicare _______ _______ _______ _______
Other _______ _______ _______ _______
Total Utilization
Days: _______ _______ _______ _______
CASH FLOW ANALYSIS
Total Routine Patient
Revenue: _______ _______ _______ _______
Total Net
Revenues: _______ _______ _______ _______
Total
Expenses: _______ _______ _______ _______
Pre-Tax
58
Income: _______ _______ _______ _______
ADD BACK
Depreciation and
Amortization: _______ _______ _______ _______
Interest on
Mortgage: _______ _______ _______ _______
Facility Lease
Expense (if
applicable): _______ _______ _______ _______
Management
Fees: _______ _______ _______ _______
Extraordinary
Items: _______ _______ _______ _______
Net Operating
Income: _______ _______ _______ _______
I hereby certify the above to be true and correct. Dated this ____ day of
________________, 199_.
By: _______________________________
Its: ______________________________
59
EXHIBIT "E"
COMPLIANCE CERTIFICATE
GMAC Commercial Mortgage Corporation
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
RE: Loan Agreement dated __________, 1999 (together with amendments, if
any, the "Loan Agreement") by and between GMAC Commercial Mortgage
Corporation, as Lender, and Diversicare Assisted Living Services NC
I, LLC, as Borrower
The undersigned officer of the above named Borrower, does hereby certify that
for the quarterly financial period ending ____________________:
1. No Default or Event of Default has occurred or exists except
--------------------.
2. The Debt Service Coverage for each Facility after deduction of Actual
Management Fees for the preceding twelve (12) months (or such lesser period
as shall have elapsed following the closing of the Loan) through the end of
such period was:
Required: 1.0 to 1.0
Actual: _____ to 1.0
The manner of calculation is attached.
3. The Debt Service Coverage for each Facility after deduction of Assumed
Management Fees for the preceding twelve (12) months (or such lesser period
as shall have elapsed following the closing of the Loan) through the end of
such period was:
Required: 1.1 to 1.0
Actual: _____ to 1.0
The manner of calculation is attached.
4. The Debt Service Coverage for the Facilities, combined, after deduction of
Assumed Management Fees for the preceding twelve (12) months (as such
lesser period as shall have elapsed following the closing of the Loan)
through the end of such period was:
Required: 1.25 to 1.0
Actual: _____ to 1.0
60
The manner of calculation is attached.
5. The fiscal year to date average annual occupancy for the Facilities
combined:
Required: Not less than 80%
Actual: __________
6. The capital expenditures per licensed bed [UNIT] was: [ANNUAL COMPLIANCE
CERTIFICATE ONLY]
Required: $250 per licensed bed [UNIT].
Actual: $______ per licensed bed [UNIT].
Evidence of such capital expenditures is attached.
7. All representations and warranties contained in the Loan Agreement and
other Loan Documents are true and correct in all material respects as
though given on the date hereof, except
_______________________________________________________
___________________________________________________.
8. All information provided herein is true and correct.
9. Capitalized terms not defined herein shall have the meanings given to such
terms in the Loan Agreement.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Dated this the _____ day of ________________, ____.
61
EXHIBIT "F"
LICENSED BEDS FOR EACH
FACILITY
Facility Number of Beds
Xxxxxx Rest Home 61
Xxxxxxx'x Rest Home 61
Xxxxxxx Restful Manor 60
Heritage Care of Seven Lakes 60
Heritage Care of Clinton 60
Heritage Retirement Center of Xxxxxx 142
62
SCHEDULE 4.22
[REPAIRS]
