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EXHIBIT 10.59
PROJECT LOAN AGREEMENT
(GOOD SAMARITAN)
THIS PROJECT LOAN AGREEMENT (this "Agreement") is made and entered
into to be effective as of December 27, 1996, between GMAC-CM Commercial
Mortgage Corporation, with offices for purposes of this Agreement at 0000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (hereinafter referred to
as "Lender"), Advocat Inc., a Delaware corporation (hereinafter referred to as
"Advocat"), Diversicare Management Services Co. (the "Borrower" or "DMS"), a
Tennessee corporation and wholly-owned subsidiary of Advocat, Diversicare
Leasing Corp. ("DLC"), a Tennessee corporation and wholly-owned subsidiary of
AFI (defined below), Advocat Ancillary Services, Inc. ("AAS"), a Tennessee
corporation and wholly-owned subsidiary of the Borrower, Diversicare Canada
Management Services Co., Inc. ("DCMS"), a corporation organized under the laws
of Canada and wholly-owned subsidiary of DLC, First American Health Care, Inc.
("FAHC"), an Alabama corporation and wholly-owned subsidiary of DLC,
Diversicare Leasing Corp. of Alabama ("DLCA"), an Alabama corporation and
wholly-owned subsidiary of DLC, Advocat Distribution Services, Inc. ("ADS"), a
Tennessee corporation and wholly-owned subsidiary of DMS, and Advocat Finance,
Inc. ("AFI"), a Delaware corporation and wholly-owned subsidiary of DMS (DLC,
AAS, DCMS, DGP, FAHC, ADS, DLCA and AFI, together with any other subsidiaries
of Advocat or of the Subsidiaries formed or acquired after the date hereof, are
sometimes hereinafter referred to collectively as the "Subsidiaries"),
1. Pursuant to the terms of a Master Commitment Letter from
GMAC-CM accepted by Advocat on October 22, 1996, the Lender agreed to loan to
the Borrower, Advocat, and the Subsidiaries, in accordance with the terms of
such letter, sums not to exceed $40,000,000 (the "Acquisition Line");
2. The Lender, the Borrower, Advocat, the Subsidiaries and First
American National Bank, a national banking association ("First American"), have
executed a certain Master Credit and Security Agreement of even date herewith
setting forth some of the terms and conditions for project loan advancements
under the Acquisition Line (the "Master Loan Agreement");
3. The Borrower has requested a project loan disbursement under
the Acquisition Line in the amount of $745,000.00;
4. The Lender, the Borrower, Advocat and the Subsidiaries desire
to enter into this Agreement to set forth additional terms and conditions of
the $745,000.00 project loan advance under the Acquisition Line; and
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5. As a condition of making the above referenced loan, the
Subsidiaries and Advocat have agreed to absolutely and unconditionally
guarantee the proper payment and performance of the "Guaranty Obligations" as
described in the Guaranty Agreement (defined below).
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:
"ACTUAL MANAGEMENT FEES" shall mean actual management fees
paid or incurred in connection with operation of the Nursing Home.
"ASSUMED MANAGEMENT FEES" means assumed management fees of
five percent (5%) of net patient revenues of the Nursing Home (after Medicaid
and Medicare contractual adjustments).
"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 collectively (i) the commitment
letter issued by Lender and accepted by Borrower dated October 14, 1996 and
(ii) the master commitment letter issued by Lender and accepted by Borrower
dated.
"DEBT SERVICE COVERAGE FOR THE NURSING HOME" means a ratio in
which the first number is the sum of pre-tax income of the Borrower from the
operations of the Nursing Home as set forth in the quarterly statements
provided to Lender (without deduction for Actual Management Fees paid or
incurred), 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 and non-cash expenses or allowances for depreciation and
amortization of the Nursing Home for said period, less either Assumed
Management Fees or Actual Management Fees (based upon the covenant to which
such definition relates) and the second number is the sum of the current
portion of the Long Term Debt incurred for the benefit of the Nursing Home
(including Long Term Debt attributable to the Loan but excluding
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the outstanding principal balance of the Loan due on the Maturity Date) plus
the interest expenses for the Nursing Home (including interest on the Loan) 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" means a per annum rate equal to four percentage
points (4%) plus the LIBOR Rate (as defined in the Note).
"EVENT OF DEFAULT" means any "Event of Default" as defined in
Article VII hereof.
"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.
"FIRST AMERICAN DOCUMENTS" means, collectively, all documents
executed by Borrower, Guarantors or any subsidiary of Borrower or Guarantors
with (or in favor of) Lender and First American in connection with a certain
$10,000,000.00 working capital line of credit some or all of which has been or
will be funded by First American.
"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.
"GUARANTY AGREEMENT" means collectively (i) that certain
Guaranty Agreement of even date herewith from Advocat to Lender, (ii) that
certain Guaranty Agreement of even date herewith from DLC to Lender, and (iii)
that certain Guaranty Agreement of even date herewith from all other
Subsidiaries to Lender (the foregoing guarantors hereinafter the "Guarantors").
"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.
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"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 $745,000.00 made
by Lender to Borrower as of the date hereof.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Note, the Guaranty Agreement, the Mortgage, together with any and all other
documents executed by Borrower or others, evidencing, securing or otherwise
relating to the Loan.
"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 and all covenants, agreements and other obligations from
time to time owing to, or for the benefit of, Lender pursuant to the Loan
Documents.
"LONG TERM DEBT" means all obligations (including capital
lease obligations) which are due more than one (1) year from the date as of
which the computation thereof is made.
"MANAGEMENT AGREEMENT" means that certain Management Agreement
dated December 27, 1996 between Manager and Borrower, obligating the Manager to
operate and manage the Nursing Home.
"MANAGER" means DIVERSICARE MANAGEMENT SERVICES CO., and any
successor manager of the Nursing Home approved by Lender in writing.
"MATURITY DATE" means December 1, 1999.
"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 for members of families
with dependent children, which program is more fully described in Title XIX of
the Social Security Act (42 U.S.C. Section Section 1396 et seq.) and the
regulations promulgated thereunder.
"MEDICARE" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, skilled nursing homes, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of
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the Social Security Act (42 U.S.C. Section 1395 et seq.) and the
regulations promulgated thereunder.
"MORTGAGE" means that certain Mortgage and Security Agreement
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.
"NURSING HOME" means the nursing home facility known as "Good
Samaritan Nursing Home", presently a 60-bed licensed skilled nursing facility
located on the Property, as it 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 assisted care living facility), now or hereafter
operated on the Property.
"PROPERTY" means the real estate located in St. Petersburg,
Pineallas County, Florida, which is more particularly described in the
Mortgage, upon which the Nursing Home is located.
"REIMBURSEMENT CONTRACTS" means all third party reimbursement
contracts for the Nursing Home which are now or hereafter in effect with
respect to residents or patients qualifying for coverage under the same,
including Medicare, Medicaid and private insurance agreements, and any
successor program or other similar reimbursement program and/or private
insurance agreements.
"RENTS" means all rent and other payments of whatever nature
from time to time payable pursuant to leases of the Property or the Nursing
Home, 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).
ARTICLE II
TERMS OF THE LOAN
[RESERVED]
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
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To induce Lender to enter into this Agreement, and to make the Loan to
Borrower, Borrower, Advocat and the Subsidiaries represent and warrant to
Lender as follows:
3.1 TITLE TO COLLATERAL. DLC has good and marketable title to all
of the Collateral, subject to no lien, mortgage, pledge, encroachment, zoning
violation, or encumbrance, except those Liens permitted by this Agreement, none
of which Liens materially interfere with the security intended to be provided
by the Mortgage or the current use of the Property and the Improvements. All
Improvements situated on the Property are situated wholly within the boundaries
of the Property.
3.2 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 those Liens permitted by this Agreement or those "Permitted
Encumbrances" specifically set forth in the Mortgage, none of which Permitted
Encumbrances materially interfere with the security intended to be provided by
the Mortgage or the current use of the Property and the Improvements.
3.3 MANAGEMENT AGREEMENT. The Management Agreement is in full
force and effect and there are no defaults (either monetarily or
non-monetarily) by the Manager or Borrower thereunder.
ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER
Borrower, Advocat and the Subsidiaries agree with and covenant unto
the Lender that until the Loan Obligations have been paid in full, Borrower,
Advocat and the Subsidiaries shall:
4.1 FINANCIAL AND OTHER INFORMATION. Provide Lender, and cause
the Guarantors and the Manager to provide to Lender, 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
the fiscal years of the Borrower and Guarantors, audited and consolidated
financial statements of Borrower and Guarantors, 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 the chief financial officer of Borrower
and Guarantors, as the case may be, to be true and correct.
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b. Within one hundred twenty (120) days after the end of
the fiscal year of the Manager, audited and consolidated financial statements
of the Manager 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 Manager to be true and correct.
c. Within forty-five (45) days after the end of each
month, unaudited monthly financial statements of the Borrower and of the
operations of the Nursing Home, prepared in accordance with GAAP, which such
statements shall include a balance sheet and statement of income and expenses
for the month then ended, certified by a financial officer of the Borrower to
be true and correct.
d. Within forty-five (45) days of the end of each
calendar quarter, unaudited financial statements of the Guarantors, prepared in
accordance with GAAP, which such statements shall include a balance sheet and
statement of income and expenses for the quarter then ended, certified by a
chief financial officer of the Guarantors to be true and correct.
e. Within forty-five (45) days of the end of each
calendar quarter, unaudited financial statements of the Manager, prepared in
accordance with GAAP, which such statements shall include a balance sheet and
statement of income and expenses for the quarter then ended, certified by a
financial officer of the Manager to be true and correct.
f. 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 the Nursing Home as of the end of such quarter in sufficient
detail to show patient-mix (i.e., private, Medicare, Medicaid, and V.A.) 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 Nursing Home shall be accompanied by the Summary of Financial
Statements and Census Data attached hereto as Exhibit "A".
g. 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
Guarantors, together with all supporting documentation and required schedules.
h. Within ten (10) days of filing or receipt, all
Medicaid cost reports and any amendments thereto filed with
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respect to the Nursing Home, and all responses, audit reports, or other
inquiries with respect to such cost reports.
i. Within ten (10) days of receipt, a copy of the
Medicaid Rate Calculation Worksheet (or the equivalent thereof) issued by the
appropriate Medicaid Agency for the Nursing Home.
j. Within ten (10) days of receipt, copies of all
licensure and certification survey reports and statements of deficiencies with
a copy of the Borrower's correction response, as executed and delivered to the
appropriate party, attached thereto.
k. Within three (3) days of receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying agencies that
the Nursing Home license and/or the Medicare and/or Medicaid certification of
the Nursing Home is being downgraded to a substandard category, revoked, or
suspended or that any such action is pending.
l. Upon Lender's request, evidence of payment by
Borrower or Manager of any applicable provider bed taxes or similar taxes,
which taxes Borrower agrees to pay.
m. If requested by Lender, within fifteen (15) days of
Lender's request, an aged accounts receivable report of the Nursing Home in
sufficient detail to show amounts due from each class of patient-mix (i.e.,
private, Medicare, Medicaid and V.A.) by the account age classifications of 30
days, 60 days, 90 days, 120 days, and over 120 days.
n. Within forty-five (45) days of the end of each
calendar quarter, a certificate of the chief financial officer of the Borrower,
Guarantors and Manager 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, Guarantors and Manager 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, or (ii) if
Lender has reasonable grounds to believe that the unaudited financial
statements do not accurately represent the financial condition of the Borrower,
Guarantors or Manager as the case may be.
The Lender further reserves the right to require such other financial
information of Borrower, Guarantors, Manager and/or the Nursing Home, in such
form and at such other times (including monthly or more frequently) as Lender
shall 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.
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4.2 COMPLIANCE CERTIFICATE. 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 "B"
executed by its chief financial officer.
4.3 DEBT SERVICE COVERAGE REQUIREMENTS.
(a) Commencing with the closing of the Loan and
thereafter on the first day of each fiscal quarter, provide evidence to Lender
within fifteen (15) days of such date of the achievement and maintenance of the
following quarterly Debt Service Coverage ratios based upon operations for the
previous twelve (12) months:
(i) a Debt Service Coverage for the Nursing Home,
after deduction of Actual Management Fees, of not less than
1.0 over 1.0;
(ii) a Debt Service Coverage for the Nursing Home,
after deduction of Assumed Management Fees, of not less than
1.10 over 1.0; and
(iii ) a combined Debt Service Coverage for the
combined operations of the Nursing Home, Xxxxx Xxxx Nursing
Home of Houston, Texas, Pinedale Nursing Home of Newport,
Arkansas, and Windsor House Nursing Home of Huntsville,
Alabama, after deduction of Assumed Management Fees, of not
less than 1.25 over 1.0.
(b) If DLC fails to achieve or provide evidence of
achievement of the above Debt Service Coverages upon fifteen (15) days written
notice to DLC, Borrower and the Guarantors 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 requirement having been satisfied. If such failure
continues for two (2) consecutive quarters, on the third consecutive quarter,
if DLC again fails to achieve or provide evidence of the achievement of the
Debt Service Coverages required above, upon fifteen (15) days written notice to
DLC, Borrower and the Guarantors 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 (1st) day of such twelve (12) month period (or such lesser
period as shall have elapsed following the closing of the Loan) to reduce the
outstanding principal indebtedness of the Loan Obligations, would have resulted
in the noncomplying debt service coverage requirement having been satisfied,
and Borrower and the Guarantors agree promptly to provide such additional cash
or other liquid collateral. Such additional collateral shall constitute and
will be held by the Lender in a standard custodial
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account, and shall constitute additional Collateral for the Loan Obligations
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 and the Guarantors 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
DLC 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 4.11) as of the end of each of
two (2) consecutive quarters.
4.4 CAPITAL EXPENDITURES. Cause DLC to make minimum capital
expenditures for the Nursing Home in each fiscal year, in the amount of not
less than $250 per bed (which such capital expenditures may include ordinary
repairs needed to maintain or improve the conditions of the Nursing Home), and
within forty-five (45) days of the end of such fiscal year, to provide evidence
thereof satisfactory to Lender. In the event that DLC shall fail to do so,
Borrower and the Guarantors 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 bed and the amount per bed
actually spent by DLC. Borrower and Guarantors grant 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 upon Lender's
receipt of satisfactory evidence that DLC has made the required capital
expenditures. Upon Borrower's failure to adequately maintain the Nursing Home
in good condition, 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 as the
Default Rate (defined in the Note) 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. Routine
maintenance and repair expenses which are necessary to improve or maintain the
physical condition of the Nursing Home shall count towards the capital
expenditures requirement. For any partial fiscal year during which the Loan is
outstanding, the required expenditure amount shall be prorated by multiplying
the required amount per bed amount 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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ARTICLES V AND VI
[RESERVED]
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. A default under the First American Documents or under
the Master Loan Agreement or any document executed in favor of Lender and/or
First American by Borrower, Advocat or a Subsidiary in connection with the Loan
or any other loan made or to be made by Lender and/or First American to
Borrower, Advocat or the Subsidiaries; or
b. The failure of Borrower, Advocat or the Subsidiaries
properly and timely in any material respect to perform or observe any covenant
or condition set forth in this Agreement or any other Loan Documents which is
susceptible of being cured and is not cured within any applicable cure period
as set forth herein or, if no cure period is specified therefor, is not cured
within thirty (30) days of Lender's notice to Borrower of such Default; or
c. The failure of DLC to take the corrective measures
required in this Agreement within the time periods specified following Lender's
demand because the Debt Service Coverage for the Nursing Home has not been met;
or
Notwithstanding anything in this Section or in the Master Loan
Agreement, 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:
a. Declare the entire unpaid principal of the Loan
Obligations and all other obligations of Borrower, Advocat and the Subsidiaries
to Lender in connection with the Master Loan Agreement, whether now existing or
hereinafter incurred whether evidenced by notes, guaranties or other
instruments, 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.
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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 its rights and remedies pursuant to any
other Loan Documents and pursuant to the Master Loan Agreement.
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, Advocat or
the Subsidiaries, jointly and severally 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 INDEMNIFICATION. Borrower, Advocat or the Subsidiaries,
jointly and severally shall, at their sole cost and expense, protect, defend,
indemnify and hold harmless the Indemnified Parties (defined below) from and
against all 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, expenses, 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 (as defined in the
Mortgage); (b) any amendment to, or restructuring of, the Loan Obligations
and/or any of the Loan
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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 Guarantors and/or any partner,
joint venturer, member or shareholder 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 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 the Guarantors 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 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) any and all claims
and demands whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants, or agreements contained in the Lease Agreement or any
replacement or renewal thereof or substitution therefor; (j) 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, (k) 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; (l)
any material misrepresentation made to Lender in this Agreement or in any of
the other Loan Documents; (m) any tax on the making and/or recording of the
Mortgage, the Note or any of the other Loan Documents; (n) the violation of any
requirements of the Employee Retirement Income Security Act of 1974, as
amended; (o) any fines or penalties assessed or any corrective costs incurred
by Lender if the Nursing Home 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 (p) 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 (as defined in the Note). The obligations and liabilities of
Borrower and the Guarantors under this Section 8.4 shall survive any
termination, satisfaction, assignment, entry of a judgment of foreclosure or
exercise of a
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power of sale or delivery of a deed in lieu of foreclosure of 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).
8.3 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 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.
8.4 NOTICES, ETC. Any notice or other communication required or
permitted to be given by this Agreement shall be given in the manner provided
in the Master Loan Agreement.
8.5 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 the parties hereto shall be
entitled to rely upon this Agreement or be entitled to the benefits of this
Agreement.
8.6 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.
8.7 LOAN AGREEMENT GOVERNS. The Loan is governed by terms and
provisions set forth in this Loan Agreement and the other
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Loan Documents and in the event of any irreconcilable conflict between the
terms of the other Loan Documents or the Master Loan Agreement and the terms of
this Loan Agreement, the terms of this Loan Agreement shall control; provided,
however, 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 or the Master Loan Agreement and it is possible and reasonable for
the terms of both this Loan Agreement and the Loan Documents or the Master Loan
Agreement to be performed or complied with then notwithstanding the foregoing
all of the terms of this Loan Agreement, the Master Loan Agreement and the
other Loan Documents shall be performed and complied with.
8.8 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 TENNESSEE AND THE
PARTIES HERETO SUBMIT (AND WAIVE ALL RIGHTS TO OBJECT) TO NON-EXCLUSIVE
PERSONAL JURISDICTION IN THE STATE OF TENNESSEE, 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
TENNESSEE OR ANY SUCCESSOR FEDERAL COURT HAVING ORIGINAL JURISDICTION.
8.9 WAIVER OF JURY TRIAL. BORROWER HEREBY WAIVES ANY RIGHT THAT
IT 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 AGREES THAT LENDER MAY FILE A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY,
AND BARGAINED AGREEMENT OF BORROWER IRREVOCABLY TO WAIVE ITS 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
properly executed as of the date first above written.
WITNESS: BORROWER:
DIVERSICARE MANAGEMENT SERVICES, CO.,
a Tennessee corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
LENDER:
WITNESS: GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation
/s/ X.X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx [Seal]
------------------------------ ------------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President
WITNESS: GUARANTORS:
ADVOCAT INC.,
a Delaware corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX XXXX XXXXXXXX XXXXXXX
Assistant Secretary Executive Vice President
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WITNESS: DIVERSICARE LEASING CORP.,
a Tennessee corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
ADVOCAT ANCILLARY SERVICES, INC.,
a Tennessee corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
DIVERSICARE
CANADA MANAGEMENT
SERVICES CO., INC., an Ontario,
Canada corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
DIVERSICARE GENERAL PARTNER, INC.,
a Texas corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
FIRST AMERICAN HEALTH CARE, INC.,
an Alabama corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
ADVOCAT DISTRIBUTION SERVICES, INC.,
a Tennessee corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
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ADVOCAT FINANCE, INC., a Delaware
corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
DIVERSICARE LEASING CORP. OF
ALABAMA, INC., an Alabama
corporation
/s/ C. Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxx [Seal]
------------------------------ ------------------------------------------
C. XXXXXXX XXXXXXXX Printed: XXXX XXXXXXXX XXXXXXX
Assistant Secretary Title: Executive Vice President
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STATE OF TENNESSEE )
COUNTY OF DAVIDSON )
I, a Notary Public of the County and State aforesaid, certify
that Xxxx Xxxxxxxx Xxxxxxx personally appeared before me this day and
acknowledged that she is the Executive Vice President of Diversicare Management
Services, Co., a Tennessee corporation, the Executive Vice President of
Diversicare Leasing Corp., a Tennessee corporation, the Executive Vice
President of Advocat Inc., a Delaware corporation, the Executive Vice President
of Advocat Ancillary Services, Inc., a Tennessee corporation, the Executive
Vice President of Diversicare Canada Management Services Co., Inc., an Ontario,
Canada corporation, the Executive Vice President of Diversicare General
Partner, Inc., a Texas corporation, the Executive Vice President of First
American Health Care, Inc., an Alabama corporation, the Executive Vice
President of Advocat Distribution Services, Inc., a Tennessee corporation, the
Executive Vice President of Advocat Finance, Inc., a Delaware corporation, the
Executive Vice President of Diversicare Leasing Corp. of Alabama, Inc., an
Alabama corporation, and that by authority duly given and as an act of said
corporation, the foregoing instrument was signed and sealed by him in the name
of and on behalf of said corporation.
Witness my hand and notarial stamp or seal this 27 day
of December, 1996.
/s/ Xxxxx Xxxxxxxx
----------------------------------------
Notary Public
My Commission Expires: 9-26-98
(STAMP OR SEAL)
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STATE OF ALABAMA )
COUNTY OF JEFFERSON )
I, a Notary Public of the County and State aforesaid, certify that
Xxxxxxx X. Xxxxx personally appeared before me this day and acknowledged that
he is Executive Vice President of GMAC Commercial Mortgage Corporation, a
California corporation, and that by authority duly given and as an act of the
corporation, the foregoing instrument was signed and sealed by him, as
Executive Vice President, in the name of and on behalf of the corporation.
Witness my hand and notarial stamp or seal this 19th day of December, 1996.
XXXXXX X. XXXXXXX
------------------------------------
Notary Public
My Commission Expires: 8-21-97
-------------
(STAMP OR SEAL)
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