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EXHIBIT 10.31
FORM OF LOAN AGREEMENT
THIS AGREEMENT dated as of the , by and
among , a Delaware corporation ("Borrower") and CAPSTONE
CAPITAL OF PENNSYLVANIA, INC., a Pennsylvania corporation ("Lender").
Borrower has requested that the Lender make a loan to the Borrower in
the principal sum of up to $ and Lender has agreed to make such loan
upon the terms and conditions hereinafter set forth.
NOW THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING, PRINCIPALS, UCC TERMS
1.1 As used in this Agreement, the following terms shall have the
meanings unless the context hereof shall otherwise indicate:
"Accounts" means all accounts including accounts receivable
arising from the operation of the Facility, including but not limited to,
rights to payment for goods sold or leased or for services rendered, not
evidenced by an Instrument, and specifically including rights to payment from
Reimbursement Contracts.
"Applicable Environmental Laws" means any applicable federal,
state or local laws, rules or regulations pertaining to the environment, or
petroleum products, or radon radiation, or oil or hazardous substances,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), and the Federal
Emergency Planning and Community Right-To-Know Act of 1986, as amended. The
terms "hazardous substance" and "release" shall have the meanings specified in
CERCLA, and the terms "solid waste", "disposal", "dispose", and "disposed"
shall have the meanings specified in RCRA, except that if such acts are amended
to broaden the meanings thereof, the broader meaning shall apply herein
prospectively from and after the date of such amendment; notwithstanding the
foregoing, provided, to the extent that the laws of the State of Pennsylvania
establish a meaning for "hazardous substance" or "release" which is broader
than that specified in CERCLA, as CERCLA may be amended from time to time, or a
meaning for "solid waste", "disposal", and "disposed" which is broader than
specified in RCRA, as RCRA may be amended from time to time, such broader
meanings under said state law shall apply in all matters relating to the laws
of such State.
"Applicable Rate" shall have the meaning set forth in the
Note.
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"Assignment of Rents" shall mean that certain Assignment of
Rents and Leases of even date herewith from Borrower in favor of Lender.
"Audited Financial Statement" means an audited financial
statement prepared by a nationally recognized accounting firm or independent
certified public accounting firm acceptable to Lender, prepared in accordance
with GAAP, certified with an unqualified opinion and including a balance sheet,
a statement of income and expenses, a statement of changes in financial
position, cash flow, and a break down of source and application of all funds
for the year ended.
"Business Day" means a day, other than Saturday or Sunday and
legal holiday, when Lender is open for business.
"Closing Date" shall mean the date on which all or any part
of the Loan is disbursed by Lender to Borrower or for the benefit of Borrower.
"Collateral" means, collectively, the Property, Improvements,
Equipment, Rents, Accounts, General Intangibles, Instruments, Inventory, Money,
and (to the full extent assignable) Permits, and all Proceeds, all whether now
owned or hereafter acquired, and including replacements, additions, accessions,
substitutions, and products, 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.
"Cross-Collateralization Agreement" shall mean that certain
Cross-Collateralization and Cross-Default Agreement to be entered into from
Borrower and an affiliate of Borrower to Lender.
"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 two percentage
points (2%) in excess of the Applicable Rate then accruing on the outstanding
principal balance of the Loan.
"Equipment" means all fixtures and equipment located on,
attached to or used or useful in connection with the Facility, including, but
not limited to, beds, linen, televisions, carpeting, telephones, cash
registers, computers, lamps, glassware, rehabilitation equipment, restaurant
and kitchen equipment; provided, however, that with respect to any items which
are leased and not owned, the Equipment shall include the leasehold interest
only together with any options to purchase any of said items and any additional
or greater rights with respect to such items hereafter acquired (but nothing
herein shall permit the leasing of any Equipment except as otherwise expressly
permitted in Section 5.2(g) or otherwise herein unless Lender's written consent
is first obtained).
"Event of Default" means any "Event of Default" as
hereinafter defined.
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"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.
"Facility" means the personal care facility presently known
as and sometimes referred to herein as
.
"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 general intangibles and other
intangible personal property arising out of or connected with the Property or
Facility (other than Accounts, Rents, Instruments, Inventory, Money and
Permits), including, without limitation, things in action, contract rights and
other rights to payment" of money.
"Guarantor" means Balanced Care Corporation, a Delaware
corporation.
"Guaranty" means, that certain Guaranty of Payment and
Performance of even date herewith by Guarantor in favor of Lender.
"Improvements" means the existing personal care facility and
improvements at the Property.
"Indebtedness" means any (i) obligations for borrowed money,
(ii) obligations representing the deferred purchase price of property other
than accounts payable arising in connection with the purchase of inventory
customary in the trade, (iii) obligations, whether or not assumed, secured by
Liens or payable out of the proceeds or production from 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.
"Indemnity Agreement" means that certain Indemnity Agreement
of even date herewith from the Borrower and the Guarantor in favor of Lender.
"Instruments" means all instruments, chattel paper, documents
or other writings obtained from or in connection with the operation of the
Property or Facility (including, without limitation, all ledger sheets,
computer records and printouts, data bases, programs, books of account and
files relating thereto).
"Inventory" means all inventory from time to time used at the
Facility, including, but not limited to, food, beverages, other comestibles,
soap, paper supplies, medical supplies, drugs
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and all other such goods, wares and merchandise held for sale to or for
consumption or use by guests, residents or patients of the Facility, including
all such goods that are returned or repossessed.
"Lien" means any voluntary or involuntary mortgage, security
deed, deed of trust, deed to secure debt, lien, pledge, assignment, security
interest, title retention agreement, financing lease, levy execution, seizure,
judgement, 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 $5,875,000
to be made by Lender to the Borrower pursuant to this Agreement.
"Loan Documents" means, collectively, this Agreement, the
Note, the Assignment of Rents, the Mortgage, the Indemnity Agreement, the
Subordination Agreement, the Cross-Collateralization Agreement and the
Guaranty, 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.
"Loan Term" means the period from the date hereof until the
Maturity Date.
"Management Agreement" means any that certain Management
Agreement dated as of ____________________ between Borrower and Manager pursuant
to which Manager will manage the Facility for Borrower, and any replacement or
other management agreement for the Facility hereafter approved in writing by
Lender.
"Manager" means BCC Development and Management Co., a
Delaware corporation, which will manage the Facility for Borrower pursuant to
the Management Agreement (or any replacement or other manager of the Facility
hereafter approved in writing by the Lender).
"Maturity Date" means December 30, 1997; provided, however,
that so long as no Default or Event of Default exists under the Loan Documents
on December 30, 1997, and Borrower pays Lender all accrued interest on the Loan
on December 30, 1997, Borrower may, upon fifteen (15) days written notice to
Lender, extend the Maturity Date until March 30, 1998.
"Note" means the Promissory Note of even date herewith in the
principal amount of the Loan payable by Borrower to the order of Lender.
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"Person" means any person, firm, corporation, partnership,
limited liability company, trust or other entity.
"Permits" means all licenses, permits, certificates,
approvals, authorizations and registrations obtained from any governmental or
quasi-governmental authority and used or useful in connection with the
ownership, operation, use or occupancy of the Property 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.
"Proceeds" means all proceeds (whether cash or non-cash,
moveable or immovable, tangible or intangible), 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 real estate in ,
, as more particularly described in Exhibit A, hereto, upon which
the Facility is located.
"Reimbursement Contracts" means all contracts and rights
pursuant to reimbursement or third party payor programs and contracts for the
Facility which are now or hereafter in effect with respect to residents or
patients qualifying for coverage under the same, including but not limited to,
Medicaid, Medicare, any successor program or other similar reimbursement
program (whether operated by a governmental or quasi-governmental agency or by
a private Person) and private insurance agreements.
"Rents" shall mean all rent and other payments of whatever
nature from time to time payable pursuant to any lease of the Property or
Facility or any part thereof, including, but not limited to, leases of retail
space or other space at the Property for retail businesses such as newsstands,
barbershops, beauty shops, physicians' offices, pharmacies and specialty shops.
"Subordination Agreement" means that certain Consent and
Subordination Agreement of even date herewith among Borrower, Manager and
Lender.
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 Uniform Commercial Code in effect in the state in
which Collateral for the Loan Obligations is located.
1.4 All accounting terms used in this Agreement shall be
construed in accordance with GAAP, except as otherwise defined.
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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
thereof.
ARTICLE II
TERMS OF THE LOAN
2.1 THE LOAN. Borrower has agreed to borrow 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 the 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 INTEREST RATE.
(a) The outstanding principal balance of the Loan will bear
interest at the Applicable Rate.
(b) All interest on the outstanding principal balance of the
Loan shall be calculated on the basis of a 360-day year by multiplying the
outstanding principal amount by the applicable per annum rate, multiplying the
product thereof by the actual number of days elapsed, and dividing the product
so obtained by 360.
2.4 REPAYMENT OF LOAN. Each payment of the Loan Obligations shall be
paid directly to the Lender in lawful money of the United States of America at
the following address:
Capstone Capital of Pennsylvania, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
or such other place as the Lender shall designate in writing to the Borrower.
Each payment shall be paid in immediately available funds by 2:00 p.m.
Birmingham, Alabama time on the date such payment is due, except if such date
is not a Business Day such payment shall then be due on the first Business Day
after such date, but interest shall continue to accrue until the date payment
is received. Any payment received after 2:00 p.m. Birmingham, Alabama time
shall be deemed to
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have been received on the immediately following Business Day for all purposes,
including, without limitation, the accrual of interest on principal.
2.5 LATE CHARGES ON OVERDUE INSTALLMENTS; DEFAULT RATE; COLLECTION
COSTS; PREPAYMENT.
(a) If any scheduled payment of principal, interest, or any
other agreed charge, is not made on or before the fifth (5th) day after the
same became due, Borrower agrees to pay Lender a late charge equal to five
percent (5%) of the amount of the payment or charge which is in default (except
that with respect to any final balloon payment of principal such charge shall
be based upon the immediately preceding monthly payment amount).
(b) Upon the occurrence of any Event of Default unless waived
by Lender in Lender's sole discretion, Borrower agrees to pay interest to
Lender at the Default Rate on the aggregate outstanding Loan Obligations
(including accrued interest) until such Loan Obligations are paid in full.
(c) Borrower will also pay to Lender, in addition to the
amount due, all reasonable costs of collecting, securing, or attempting to
collect or secure the Note actually incurred by Lender, including, without
limitation, court costs and reasonable attorneys' fees, including, without
limitation, reasonable attorneys' fees for preparation of litigation and in any
appellate and bankruptcy proceedings.
(d) The Loan will be prepayable at any time without any
prepayment premium.
2.6 USURY PROVISIONS. In no event shall the amount of interest due or
payable hereunder exceed the maximum rate of interest allowed by applicable
law, and in the event any such payment is inadvertently paid by Borrower or
inadvertently received by Lender, then such excess sum shall be credited as a
payment of principal, unless Lender elects to have such excess sum refunded to
Borrower forthwith, which refund Borrower hereby agrees to accept. It is the
express intent hereof that Borrower not pay and Lender not receive, directly or
indirectly, interest in excess of that which may be legally paid by Borrower
under applicable law.
2.7 MISCELLANEOUS.
(a) With respect to the amounts due under the Note, Borrower
waives the following to the fullest extent permitted by law:
(1) All rights of exemption of property from levy or
sale under execution or other process for the
collection of debts under the Constitution or laws
of the United States or any state thereof; and
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(2) Demand, presentment, protest, notice of
dishonor, notice of nonpayment, diligence in
collection, and all other requirements necessary to
enforce the Note; and
(3) Any further receipt by Lender or acknowledgment
by Lender of any Collateral now or hereafter
deposited with Lender as security for the Loan.
2.8 ORIGINATION FEE; ANNUAL DUE DILIGENCE FEE. Borrower will pay to
Lender an origination fee of $ and a Facility due diligence and
underwriting fee of $ , which fees are due and deemed earned as of the date
hereof.
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loan
to the Borrower, the Borrower represents and warrants to Lender as follows:
3.1 EXISTENCE, POWER AND QUALIFICATION. Borrower is a corporation duly
organized, validly existing in good standing under the laws of the state of its
formation as set forth in the heading of this Agreement, 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.
3.2 POWER OF AUTHORITY. Borrower has full power and authority to
borrow hereunder and to incur the obligations provided for herein and in each
of the other Loan Documents to which Borrower is a party, all of which have
been authorized by all proper and necessary action of its members.
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 the
Borrower, enforceable in accordance with its respective terms and does not
violate, conflict with, or constitute any default under any law, government
regulation, decree, judgment, the Borrower's articles of organization or any
other agreement or instrument binding upon the Borrower.
3.4 PENDING MATTERS. No action or investigation is pending or
threatened before or by any state or federal court or administrative agency
which might result in any material adverse change in the financial condition,
operations or prospects of the Borrower or any lower
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reimbursement rate under the Reimbursement Contracts. Borrower is not in
violation of any agreement, the violation of which might reasonably be expected
to have a materially adverse effect on its business or assets, and Borrower is
not in violation of any order, judgment, or decree of any state or federal
court, or any statute or governmental regulation to which it is subject.
3.5 FINANCIAL STATEMENTS ACCURATE. All financial statements heretofore
or hereafter provided by the Borrower are and will be true and complete in all
material respects as of their respective dates and fairly and will fairly
present the financial condition of the Borrower, and there are no 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 respective financial
statements of the Borrower and each Guarantor have been prepared in accordance
with GAAP. There has been no material adverse change in the financial
condition, operations, or prospects of the Borrower since the dates of such
statements except as fully disclosed in writing with the delivery of such
statements.
3.6 COMPLIANCE WITH LAWS. The Facility is duly licensed as a personal
care facility under the laws of the State of Pennsylvania. The licensed
capacity of the Facility is set forth in Exhibit B hereto. To the best of
Borrower's knowledge, the Facility is in compliance in all material respects
with the applicable provisions of personal care 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 square footage requirements per bed) are required for the
Facility to operate at the foregoing licensed capacity. All Reimbursement
Contracts are in full force and effect with respect to the Facility, and
Borrower and Manager are in good standing with the respective governmental,
quasi-governmental and other third party payors and regulatory agencies under
such applicable personal care facility licenses and Reimbursement Contracts.
Borrower is current in payment of all so-called provider specific taxes or
other assessments with respect to such Reimbursement Contracts. The Facility is
currently operated at the bed capacity set forth in Exhibit B.
3.7 TRANSFER OF LICENSE OR BED CAPACITY. Neither the Borrower nor
Manager has granted to any third party the right to reduce the number of
licensed beds or available units in the Facility or to apply for approval to
move the right to any or all of the personal care facility beds or units to any
other location. In the event the Management Agreement is terminated or Lender
acquires the Facility through foreclosure or otherwise, Borrower shall fully
cooperate with Lender, a subsequent lessee, subsequent manager, or subsequent
purchaser in obtaining a certificate of need or any other necessary
governmental approvals from the applicable state health care regulatory agency
and in applying for and receiving a license to operate the Facility and
certification to receive payments pursuant to Reimbursement Contracts for
patients or residents qualifying for coverage thereunder.
3.8 PAYMENT OF TAXES. The Borrower has filed all federal, state and
local tax returns which are required to be filed and has paid, or made adequate
provisions for the payment of, all
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taxes which have or may become due pursuant to such returns or to assessments
received by Borrower, including, without limitation, provider taxes.
3.9 TITLE TO COLLATERAL. The Borrower has good and marketable title to
all of the Collateral, subject to no Lien except those Liens specifically
permitted by this Agreement. If any other Lien is hereafter determined to
exist, Borrower shall within thirty (30) days following written notice from
Lender remove any such Lien.
3.10 PRIORITY OF MORTGAGE. To the best of Borrower's knowledge, the
Mortgage constitutes a first lien upon and security interest in the real and
personal property described therein, prior to all other Liens, including those
which may hereafter accrue, excepting only those Liens specifically permitted
by this Agreement or those "Permitted Encumbrances" specifically set forth in
the Mortgage. If any other Lien is hereafter determined to exist, Borrower
shall within thirty (30) days following written notice from Lender remove any
such Lien.
3.11 LOCATION OF THE CHIEF EXECUTIVE OFFICES. The Borrower's principal
place of business and chief place of business are set forth in Exhibit C
hereto.
3.12 DISCLOSURE. All information furnished or to be furnished by
Borrower to the 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 the Lender a true and accurate knowledge of the subject
matter.
3.13 TRADE NAMES. Neither Borrower nor, to the best of Borrower's
knowledge, the Facility has changed its name or been known by any other name
within the last five (5) years.
3.14 ERISA. The Borrower is in compliance with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
3.15 OWNERSHIP. The ownership of the Borrower is correctly and
accurately set forth in Exhibit D hereto.
3.16 PROCEEDING PENDING. There are no proceedings pending or, to the
best of Borrower's knowledge, threatened to acquire any power of condemnation
or eminent domain with respect to any part of the Property, or to enjoin or
similarly prevent or restrict the use of the Property or the operation of the
Facility in any manner.
3.17 COMPLIANCE WITH OTHER APPLICABLE LAWS. The Improvements and the
Property comply with all covenants and restrictions of record and applicable
laws, ordinances, rules and regulation, including, without limitation, all
laws, ordinances, rules and regulations relating to zoning (or is a valid
non-conforming use, lot or structure), set back requirements and applicable
building codes, and to the best of Borrower's knowledge, there are no waivers
of any building codes
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in respect of the Facility. Borrower has not received any notice from applicable
authorities of noncompliance with the Americans with Disabilities Act and
regulations thereunder. Borrower agrees to indemnify and hold Lender harmless
from any fines or penalties assessed or any corrective costs incurred by Lender
if the Improvements or the Property, or any part thereof, is hereafter
determined to be in violation of any covenants or restrictions of record or any
applicable laws, ordinances, rules or regulations, and such indemnity shall
survive any foreclosure or deed in lieu of foreclosure.
3.18 ENVIRONMENTAL MATTERS. Neither the Property nor Borrower's use or
operation of the Property is in violation of or subject to any existing,
pending, or to the best of Borrower's and Guarantor's knowledge, threatened
investigation or inquiry by any governmental authority or any remedial
obligations under any Applicable Environmental Law, and there are no facts,
conditions or circumstances known to it that require reporting or disclosure to
any applicable governmental authority; Borrower has not obtained and to the
best of its knowledge is not required to obtain any permits, licenses, or
similar authorizations to construct, occupy, operate or use any buildings,
improvements, fixtures or equipment in connection with the Property by reason
of any environmental laws, rules or regulations, except as disclosed in writing
to Lender; to the best of Borrower's knowledge no oil or petroleum products or
derivatives, toxic or hazardous substances or solid wastes have been disposed
of or released on the Property by Borrower unless done in accordance with
Applicable Environmental Law, and Borrower agrees that it shall not in its use
of the Property dispose of or release oil or petroleum products or derivatives,
toxic or hazardous substances or solid wastes on the Property unless done in
accordance with Applicable Environmental Law. Notwithstanding anything to the
contrary herein, Borrower shall indemnify and hold Lender harmless from and
against any fines, charges, expenses, fees, reasonable attorneys' fees and
costs incurred by Lender because the Property, or the Borrower's use or
operation of the Real Property, including any improvements thereon (whether or
not due to any fault of Borrower but not due to any fault of the Lender while
Lender is in actual possession of the Property) is hereafter determined to be
in violation of any Applicable Environmental Law, rules or regulations due to
causes occurring during Borrower's possession and/or ownership of the Property,
and this indemnity shall survive the payment of the Obligations (as that term
is defined in the Mortgage), the expiration of the lien under the Mortgage, the
release or any foreclosure of the Mortgage or the transfer of the Property in
lieu of foreclosure. In the event the Property is determined by any
governmental agency or otherwise to be in violation of any Applicable
Environmental Laws, rules or regulations relating to the environment
(including, without limitation, any determination that oil or petroleum
products or derivatives, toxic or hazardous substances have been released or
disposed of on the Property such that the presence of such oil or petroleum
products or derivatives, toxic or hazardous substances is in violation of any
federal, state or local laws, rules or regulations, whether or not the same
were placed thereon by Borrower), Borrower shall within the time period
permitted by any applicable governmental agency having jurisdiction thereof and
in any event within sixty (60) days of written notice from Lender, whichever is
sooner, commence such action as may be necessary and approved by the applicable
governmental agencies having jurisdiction thereof to bring the Property into
compliance with the Applicable Environmental Law, rules and regulations
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and continue such action with all due diligence until the Property is in
compliance, and upon Borrower's failing to do so, the same shall constitute an
Event of Default.
Borrower represents and warrants to Lender that the Property
(i) contains no facilities that are subject to reporting (by either Borrower or
Manager thereon or other person or entity in possession or occupancy of any
portion thereon) under Section 312 of the Federal Emergency Planning and
Community Right-To-Know Act of 1986 (42 U.S.C. Section 11022); is not the site
of any underground storage tanks for which notification is required under 42
U.S.C. Section 6991a and applicable state or local law; and (ii) is not listed
on the Comprehensive Environmental Response, Compensation, and Liability
Information System in accordance with Section 116 of CERCLA (42 U.S.C. Section
9616).
3.19 SOLVENCY. Borrower represents and warrants that it is solvent
within the meaning of 11 U.S.C. Section 548 and GAAP, and the borrowing of the
Loan will not render the Borrower insolvent within the meaning of 11 U.S.C.
Section 548 and GAAP.
3.20 ROADS AND UTILITIES. All public utility and sanitary sewage
disposal systems necessary for the use of the Facility are available and proper
connections are in place at the Facility, and dedicated and publicly maintained
roads necessary for the full use of the Facility for its intended purpose have
been completed and are contiguous with the boundary of the Property at each
entrance and exit presently utilized by the Property.
ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER AND GUARANTOR
Borrower agrees with and covenants unto the Lender that until the Loan
Obligations have been paid in full, the 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, 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
qualification and good standing.
4.3 ACCRUAL AND PAYMENT OF TAXES. During each fiscal year, accrue all
current tax liabilities of all kinds (including, without limitation, federal
and state income taxes, franchise taxes, payroll taxes, and so-called provider
specific taxes (to the extent necessary to participate in and receive maximum
funding pursuant to Reimbursement Contracts)), all required withholding of
income taxes of employees, all required old age and unemployment contributions,
and all required
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payments to employee benefit plans, and pay the same when they become due,
provided Borrower may contest certain taxes in the manner and to the extent
permitted in the Mortgage provided the requirements of the Mortgage are
satisfied.
4.4 INSURANCE. At all times while Borrower is indebted to Lender,
maintain (or cause to be maintained) and require each Manager to maintain the
following insurance:
(a) Liability insurance (including professional liability) in
an amount equal to at least $1,000,000 per occurrence, $3,000,000 aggregate,
with a $5,000,000 umbrella policy. All such liability insurance shall be
written on an occurrence basis and name the Lender as an additional insured;
(b) "All-risk" broad form coverage on the Improvements,
Equipment and Inventory in an amount not less than the replacement cost
thereof, with endorsements insuring against such potential causes of loss as
shall be reasonably required by Lender, including, but not limited to, loss or
damage from (i) earthquake and subsidence (if reasonably requested by Lender),
and (ii) flood, unless evidence satisfactory to Lender is provided that all of
the Property is located in an area which is designated as not being in a flood
hazard area;
(c) Business income insurance (including rental value if any
Property or Improvements is leased in whole or part) equal to not less than
twelve (12) months estimated gross revenues less expenses not ordinarily
incurred during the period of business interruption (but not less than twelve
(12) months anticipated rents if the Property or Improvements is leased in
whole or part); and
(d) Workers' compensation insurance as required by the laws
of the State of Pennsylvania.
Each of the policies described in 4.4(b) and 4.4(c) shall name Lender
as mortgagee and loss payee under a standard non-contributory mortgagee and
lender loss payable clause, and shall provide that Lender shall receive not
less than thirty (30) days written notice prior to cancellation (except in the
case of non-payment of premium, in which event the Lender shall receive not
less than ten (10) days written notice prior to cancellation). The proceeds of
either of the policies described in 4.4(b) and 4.4(c) shall be payable by check
payable to Lender or jointly payable to Borrower and to Lender, and shall be
delivered to Lender, and such proceeds (after deducting Lender's costs and
expenses of obtaining such proceeds) shall be applied by Lender, at Lender's
sole option, either (i) to the full or partial payment or prepayment of the
Loan Obligations (without prepayment premium), or (ii) to the repair and/or
restoration of the Improvements, Equipment and Inventory damaged or taken, or
Lender may release the net proceeds to the Borrower.
Notwithstanding the foregoing, Lender agrees that Lender shall make
the net proceeds of insurance (after payment of Lender's costs and expenses)
available to Borrower for Borrower's
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14
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) 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;
(b) The Improvements, Equipment and Inventory for which loss
or damage has resulted shall be capable of being restored to its
pre-existing condition and utility in all material respects with a
value equal to or greater than prior to such loss or damage and shall
be capable of being completed prior to the Maturity Date;
(c) 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;
(d) Within ninety (90) 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 $50,000, 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 opinion are
necessary to complete the repair, restoration and replacement,
and
(v) copies of all permits and licenses necessary to
complete the work in accordance with the plans and
specifications.
(e) Lender may, at Borrower's expense, retain an independent
inspector to review and approve plans and specifications and completed
construction and to
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15
approve all requests for disbursement, which approvals shall be
conditions precedent to release of proceeds as work progresses;
(f) 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;
(g) Borrower shall commence such work within one hundred
twenty (120) days of such loss or damage and shall diligently pursue
such work to completion;
(h) 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 the Borrower and its architect and general contractor
with appropriate invoices and lien waivers as required by Lender;
(i) Lender shall have a first lien and 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
(j) 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 such election
or having made such election fails to timely comply with the terms and
conditions set forth herein, 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 prepayment 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, or Lender may
release the balance of such proceeds to the Borrower.
Notwithstanding the above, Borrower shall have additional time to comply with
paragraphs (d) and (g) provided that it is in good faith attempting to comply
with such paragraphs; provided, however, that in no event shall such additional
time exceed sixty (60) days beyond the time period provided
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16
in paragraphs (d) and (g) respectively, unless waived by Lender and such waiver
shall not be unreasonably withheld.
Borrower appoints Lender as Borrower's attorney-in-fact to cause the
issuance of or an endorsement of any 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 the following
financial statements and information on a continuing basis:
(a) Within one hundred twenty (120) days after the end of
each fiscal year of Borrower, Guarantor and Manager: (i) Audited financial
statements of Guarantor prepared by a nationally recognized accounting firm or
an independent certified public accounting firm acceptable to the Lender,
prepared in accordance with GAAP, including a balance sheet, a statement of
income and expenses, a statement of changes in financial position, cash flow
and a breakdown or source and application of all funds, for the year then
ended; (ii) unaudited financial statements of the Borrower and Manager prepared
by a nationally recognized accounting firm or an independent certified public
accounting firm acceptable to the Lender, prepared in accordance with GAAP,
including a balance sheet, a statement of income and expenses, a statement of
changes in financial position, cash flow and a breakdown of source and
application of all funds, for the year then ended; (iii) separate financial
statements on the operations of the Facility certified by Borrower or Manager,
as the case may be, to be true and correct, and prepared from the books and
records of Borrower or Manager, as the case may be, in accordance with sound
accounting principles applied on a consistent basis from year to year, in form
and detail satisfactory to Lender, including a balance sheet and income
statement; (iv) separate financial statements of any lessee of the Facility.
(b) Within forty-five (45) days after the end of each fiscal
quarter, unaudited financial statements of the Borrower, Manager and Guarantor
for the quarter then ended, prepared in accordance with GAAP, and certified by
the Borrower, Manager, and Guarantor, respectively, to be true and correct.
(c) Within forty-five (45) days after the end of each fiscal
quarter, a current year-to-date operating statement for the Facility as of the
end of such quarter and the quarterly financial statement and census status for
the Facility in the form and detail set forth in Exhibit G hereto, properly
completed and certified by the Borrower to be true and correct.
(d) Upon fifteen (15) days of the Lender's written request,
an aged accounts receivable report of the Facility in sufficient detail to show
amounts due from each class of patient by the account age classifications of 30
days, 60 days, 90 days, 120 days, and over 120 days, and
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monthly census information of the Facility in sufficient detail to show
patient-mix on a daily average basis for such month, certified by the Borrower
to be true and correct.
(e) Upon five (5) days of the receipt by the Borrower or
Facility, any and all notices (regardless of form) from any licensing and/or
certifying agency.
(f) Within ten (10) business days of the actual filing of
cost reports of the Facility with the Medicaid agency, if applicable, furnish
to Lender a complete and accurate copy of the annual Medicaid cost report for
the facility, and promptly furnish Lender any amendments filed with respect to
such reports and all responses or inquiries with respect to such reports.
(g) Such financial statements of Guarantor and other Persons
as and when required in any of the Loan Documents.
(h) Upon Lender's request, evidence of payment by Borrower of
any applicable provider bed taxes or similar taxes, which Borrower agrees to
pay.
The Lender reserves the right to require such other financial
information (including tax returns, detailed cash flow information and
contingent liability information) of Borrower and Guarantor, all at such time
as Lender shall deem necessary, and Borrower agrees promptly to provide such
information to Lender. All financial statements must be in the form and detail
as the Lender shall from time to time request.
Lender may sell participation interests in the Loan, may sell or
transfer the Loan, or place the Loan in a pooling of Loans for syndication and
sale of interests therein to investors. In such event Borrower consents to the
Lender's disclosure and distribution of financial and other information of
Borrower that has been provided by Borrower to Lender pursuant to this
Agreement to prospective participation, purchasers, investors, rating agencies
and others involved in any participation , sale, pooling or syndication.
4.6 COMPLIANCE CERTIFICATE. At the time of furnishing the quarterly
financial statements and census data for the Facility required under the
foregoing Section, furnish to Lender a compliance certificate in the form
attached hereto as Exhibit E with all information completed and certified by
the chief financial officer of the Borrower as true and correct.
4.7. BOOKS AND RECORDS. Upon reasonable notice from Lender, permit,
and require Manager to permit, Persons designated by Lender to inspect the
Property and Improvements and books and records of the Borrower, Manager and
the Facility with officers of Borrower or of Manager as designated by Lender,
all at such times as Lender shall request.
4.8 PAYMENT OF INDEBTEDNESS. Duly and punctually pay or cause to be
paid all other Indebtedness now owing or hereafter incurred by the Borrower in
accordance with the terms of such Indebtedness, except such Indebtedness owing
to those other than Lender which is being
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contested in good faith and with respect to which any execution against
properties of the Borrower has been effectively stayed and for which reserves
adequate for payment have been established.
4.9 RECORDS OF ACCOUNTS. Maintain all records, including records
pertaining to the Accounts of the Facility, at the chief executive office of
Borrower as set forth in this Agreement or at the Facility.
4.10 NOTICE OF LOSS. Immediately notify the Lender of any event
causing a loss or depreciation in value of the Borrower's assets in excess of
$50,000 and the amount of such loss or depreciation, except Borrower shall not
be required to notify Lender of depreciation in Equipment resulting from
ordinary use thereof.
4.11 CONDUCT OF BUSINESS. Cause the operation of the Facility to be
conducted at all times in accordance with prudent operating standards and
procedures. Without limiting the foregoing, Borrower shall:
(i) maintain the standard of care for the patients or
residents of the Facility at all times at a level necessary to ensure a quality
care for the patients or residents of the Facility;
(ii) operate the Facility in a prudent manner in material
compliance with applicable laws and regulations relating thereto and cause all
licenses, permits, certificates of need, 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, Medicare, or other applicable
reimbursement programs to remain in effect without reduction in the number of
licensed beds or beds authorized for use in Medicaid, Medicare, or other
applicable reimbursement program;
(iii) maintain sufficient Inventory and Equipment of types
and quantities at the Facility to enable Borrower and Manager adequately to
perform operations of the Facility;
(iv) 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.
4.12 PERIODIC SURVEYS. Furnish (or cause Manager to furnish) to Lender
within ten (10) days of receipt a copy of any Medicare, Medicaid, licensing
agency or reimbursement agency survey or report and any statement of
deficiencies, 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, Medicare or other reimbursement program pursuant to any Reimbursement
Contract for existing patients or residents or for new patients or residents to
be
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admitted with Medicaid, Medicare or Reimbursement Contract coverage, by the date
required for cure by such agency (plus extensions granted by such agency).
4.13 MANAGEMENT AGREEMENT. Maintain the Management Agreement in full
force and effect and timely perform all of its obligations thereunder and
enforce performance of all obligations of the Manager thereunder, and not
permit the termination or amendment of the Management Agreement unless the
prior written consent of Lender is first obtained. Borrower will enter into and
cause Manager to enter into the Subordination Agreement, subordinating
Manager's interest in the Property and Facility and all fees and other rights
of Manager pursuant to the Management Agreement to the rights of Lender
pursuant to the Loan Documents.
4.14 UPDATED APPRAISALS. For so long as the Loan remains outstanding,
if any Event of Default shall occur hereunder, or if any external regulatory
authority having jurisdiction over Lender shall so require, or if, in Lender's
reasonable 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, the Improvements and the
Facility and pay all reasonable costs incurred by Lender in connection with
such reappraisals for the Facility.
4.15 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 Facility, the Improvements, and
the Property in compliance in all material respects with all applicable laws,
ordinances, rules and regulations, including, without limitation, laws,
ordinances, rules and regulations relating to zoning, health, building codes,
setback requirements, Medicaid, Medicare and Applicable Environmental Laws.
4.16 TAXES AND OTHER CHARGES. Pay all taxes, assessments, charges,
claims for labor, supplies, rent, and other obligations which either (a)
contribute provider bed taxes or similar taxes necessary to achieve full
available funding under any then applicable Reimbursement Contract or (b) might
give rise to a Lien against property of Borrower, if unpaid, except Liens to
the extent permitted by this Agreement.
4.17 REPAIR BOND. Maintain in effect a termite and wood boring pest
repair bond for the Facility satisfactory to Lender.
4.18 CERTIFICATE. 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 with the same effect
as though made on the date of such certificate.
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4.19 REPORT AND NOTICES Furnish promptly to Lender such information as
Lender may reasonably require regarding the Project; notify Lender promptly of
any material deficiencies asserted or liens filed by the Internal Revenue
Service against Borrower or Guarantor; notify Lender promptly of any
condemnation or similar proceedings with respect to any of the Property or
Improvements, any proceeding seeking to enjoin the Project or intended use of
any of the Improvements (including the Project), and of all material changes in
governmental requirements pertaining to the Property or Project, utility
availability, anticipated costs of completion of the Project, and any other
maters which could reasonably be expected to adversely affect Borrower's
ability to perform its obligations under this Agreement to the extent Borrower
becomes aware of the same.
4.20 LIST OF CONTRACTORS, SUBCONTRACTORS AND MATERIALMEN. Upon
Lender's written request, notify Lender promptly of the names and addresses of
all contractors, subcontractors and materialmen who are employed in connection
with the construction of the Project.
4.21 OWNERSHIP OF PROPERTY. Furnish to Lender, if Lender so requests,
the contracts, bills of sale, receipted vouchers, and agreements, or any of
them, under which Borrower claims title to the materials, articles, fixtures
and other personal property used or to be used in the construction or equipping
of the Project.
ARTICLE V
NEGATIVE COVENANTS OF THE BORROWER
Until the Loan Obligations have been paid in full, Borrower shall not:
5.1 ASSIGNMENT OF LICENSES AND PERMITS. Assign or transfer, or permit
the assignment or transfer of, any interest in any Permits or, to the extent
hereafter in effect, any Reimbursement Contracts (including rights to payment
thereunder), or assign, transfer, or remove or permit any other person to
assign, transfer, or remove any records pertaining to the Facility, including,
without limitation, residents' records, medical and clinical records (except
for removal of such residents' records as directed by the residents owning such
records), without Lender's prior written consent, which consent may be granted
or refused in Lender's reasonable discretion.
5.2 NO LIENS; EXCEPTIONS. Create, incur, assume or suffer to exist any
Lien upon or with respect to any of the Collateral, whether now owned or
hereafter acquired, other than the following permitted Liens:
(a) Liens at any time existing in favor of the Lender;
(b) Liens which are listed in Exhibit F attached hereto;
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(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 the Property or
Improvements, which Lien is fully subordinate to the Mortgage, and is disclosed
to Lender and bonded off and removed from the Property and Improvements in a
manner satisfactory to Lender;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of statutory
obligations (provided Borrower complies with all obligations with respect to
such insurance, benefits and statutory obligations);
(e) Liens for current year's taxes, assessments or
governmental charges or levies provided payment thereof shall not be
delinquent; and
(f) "Permitted Encumbrances" upon the Property, as defined in
the Mortgage; and
(g) Personal property leases or purchase money liens for
acquisition of office machines, copiers, computer equipment and other
equipment, hereafter leased or acquired, which is not necessary for the
continued operation of the Facility or the normal daily activities of or care
of residents, provided further that if any such equipment is leased such lease
must have been submitted to Lender, must be limited to equipment utilized at
the Property only and must be maintained free from default by Borrower.
5.3 MERGER, CONSOLIDATION, ETC. Without the prior written consent of
Lender, which consent shall not be unreasonably withheld or delayed, enter into
any merger, consolidation or similar transaction, or sell, assign, lease
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now or hereafter acquired).
5.4 DISPOSITION OF A MATERIAL PORTION OF ITS ASSETS. Sell, lease,
transfer or otherwise dispose of any material portion of its assets, unless any
such disposition is of property other than the Collateral and is in the
ordinary course of business for a full and fair consideration, which in no
event shall include a transfer for full or partial satisfaction of a
preexisting debt.
5.5 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Except as hereinafter
provided or as otherwise consented to by Lender in writing, declare or pay any
dividends, or purchase, redeem, retire, or otherwise acquire for value, any of
its membership interests now or hereafter outstanding, return any membership
interests to its members as such, or make any distribution of assets to its
members; provided Borrower may make cash distributions not in excess of current
net income after payment of any capital improvements to the Facility required
by this Agreement.
5.6 CHANGE IN BUSINESS. Make any material change in the nature of its
business or the business of the Facility as it is being conducted as of the
date hereof.
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5.7 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.
5.8 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, (b) any employee plan to be subject to involuntary
termination proceedings at any time.
5.9 TRANSFER OF STOCK INTERESTS. Permit the transfer of more than
twenty-five percent (25%) of any of the stock of Borrower without the prior
written consent of Lender, which consent may be granted or required by Lender
in its sole discretion, unless such transfer is in connection with a registered
public offering.
5.10 CHANGE OF USE. Alter or change the use of the Facility or enter
into any management agreement or lease of the Facility other than the
Management Agreement unless Borrower first notifies Lender and provides Lender
a copy of the proposed management agreement or lease, obtains Lender's written
consent thereto and obtains and provides Lender with a subordination agreement
in form satisfactory to Lender from such manager or lessee subordinating to all
rights of Lender and a Security Agreement satisfactory to Lender from any
lessee conforming to the requirements of Section 5.2 hereof.
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 as Lender may request in connection therewith.
ARTICLE VI
EVENTS OF DEFAULT
6.1 The occurrence of any of the events listed in this Article shall
constitute in "Event of Default" hereunder:
(a) The failure by Borrower to pay any installment of
principal, interest, or other charges required under the Note, as and when the
same come due; or
(b) The Borrower's violation of any covenant set forth in
Article V; or
(c) 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) and (b) of this Section) or any other Loan Documents which 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
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(d) The occurrence of any Event of Default (other than those
specified in (a), (b) or (c) of this Section) under any other Loan Documents;
or
(e) The filing by the Borrower or Guarantor of a voluntary
petition in bankruptcy or the adjudication of any of the aforesaid Persons as a
bankrupt or insolvent, 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 its property or of any or all of the rents, revenues, issues,
earnings, profits or income thereof, or the making 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 the Borrower or
Guarantor, which such petition seeks any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future federal, state or other state 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 ninety (90) 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 ninety (90) days (whether or
not consecutive); or
(g) Except as otherwise permitted in this Agreement, the sale
or other transfer by Manager of any of its capital stock, unless the written
consent of the Lender is first obtained, which consent may be granted or
refused by the Lender in its reasonable discretion; or
(h) Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by on behalf of the Borrower, Manager
or Guarantor pursuant to or in connection with this Agreement or otherwise
(including, without limitation, representations and warranties contained herein
or in any Loan Documents) or as an inducement to Lender to extend any credit to
or to enter into this or any other agreement with Borrower or Guarantor in
connection with this Loan or other loans now existing or hereafter created,
proved to have been false in any material respect at the time when the facts
therein set forth were stated or certified, or proves to have omitted any
substantial contingent or unliquidated liability or claim against Borrower or
Guarantor, or on the date of execution of this Agreement there shall have been
any materially adverse change in any of the facts previously disclosed by any
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
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(i) The failure of Borrower to timely cure any deficiency
required to be corrected pursuant to Section 4.12 of this Agreement; or
(j) The Facility, Manager or the Borrower should be assessed
fines or penalties in excess of $50,000 in the aggregate in any calendar year
by any state or any Medicare, Medicaid, health reimbursement or licensing
agency having jurisdiction over Borrower, Manager or Facility; or
(k) A final judgment shall be rendered by a court of law or
equity against Borrower or Guarantor and the same shall remain undischarged for
a period of ninety (90) days, unless such judgment (i) is fully covered by
collectible insurance and such insurer has within such period acknowledged such
coverage in writing, (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 Guarantor, as the case
may be, has established reserves adequate for payment in the event Borrower or
Guarantor is ultimately unsuccessful in such contest or appeal and evidence
thereof is provided to Lender, or (iii) does not have a material adverse effect
on Borrower or Guarantor; or
(l) The occurrence of any materially adverse change in the
financial condition or prospects of Borrower, Guarantor, or Manager, or the
existence of any other condition which, in Lender's reasonable determination,
constitutes an impairment of Borrower's or Guarantor's ability to perform its
obligations under the Loan Documents or Manager's ability to perform its
obligations under the Management Agreement, which change in condition or
prospects is not remedied within thirty (30) days of written notice from Lender
to Borrower.
Notwithstanding anything in this Section, all requirements of
notice shall be deemed eliminated if Lender is prevented from giving such
notice 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.
6.2 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 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.
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(c) Exercise any and all rights and remedies afforded by the
laws of the United States, the state in which 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 the Borrower in and to every account and
other property of the 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.
(f) All rights and remedies of Lender under the terms of this
Agreement, the Note, any of the other Loan Documents, and any applicable
statutes or rules of law shall be cumulative and may be exercised successively
or concurrently.
ARTICLE VII
MISCELLANEOUS
7.1 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 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 Event of Default under this Agreement or any
of the other Loan Documents shall extend to or shall affect any subsequent or
other then existing Event of Default or shall impair any rights, remedies or
powers of Lender.
7.2 COSTS AND EXPENSES. Borrower will bear all taxes, fees and
expenses (including 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, an Event of 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 Obligation 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 for any Loan Obligations
and as a result of any of the foregoing, the Lender employs counsel to advise
or provide other representation 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
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other Loan Documents, any Collateral for any of the Loan Obligations, the
Borrower, or Guarantor, or to protect, collect, or liquidate any of the
Collateral for the Loan Obligations, the Borrower, or Guarantor, or to protect,
collect, or liquidate any of the Collateral 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 attorney's fees arising from
such services, including fees on appeal and in any bankruptcy proceedings, and
any expenses, costs and charges relating thereto shall constitute additional
obligations of Borrower to 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, transfer
taxes, recording 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. This Section shall survive repayment of the
remaining Loan Obligations.
7.3 PERFORMANCE OF LENDER. At its option, upon Borrower's failure to
do so, the Lender may make any payment or do any act on the Borrower's behalf
that the Borrower or others are required 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,
reasonable attorneys' fees, and until so repaid any sums advanced by Lender
shall bear interest at the Default Rate from the date advanced until repaid.
7.4 HEADINGS. The headings of 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.
7.5 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.
7.6 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), (b) three (3) days following the date deposited in U.S. mail,
certified or registered, with return receipt requested, or (c) one (1) day
following the date deposited with Federal Express or other national overnight
carrier, and in each case addressed as follows:
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If to Borrower:
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxx
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Director of Legal Affairs
Balanced Care Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
If to the Lender to:
Capstone Capital of Pennsylvania, Inc
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. XxXxxxx
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Johnston, Barton, Xxxxxxx & Xxxxxx
0000 XxXxxxx/Xxxxxxx Xxxxx
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
In addition, the Lender shall use its best efforts to notify the other
parties by facsimile in the event of a default hereunder; provided, however,
that its failure to do so will not render notice, as provided above,
ineffective.
Any party may change its address to another single address by notice
given as herein provided, except that any change of address must be actually
received in order to be effective.
7.7 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 Borrower or Lender shall be
entitled to rely upon this Agreement or be entitled to the benefits of this
Agreement.
7.8 PARTICIPATION. Borrower acknowledges that Lender may, at its
option, sell participation interests in, or assign all of its interest in, the
Loan. Borrower agrees with each present and future participant or owner of the
Loan that if an Event of Default should occur, each
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present and future participant or owner 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.
7.9 SUPERSEDES PRIOR AGREEMENTS; COUNTERPARTS. This Agreement and the
Loan Documents referred to herein supersede and incorporate all
representations, promises, and statements, oral and 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 Borrower and 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.
7.10 CONTROLLING LAW. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND
EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ALABAMA. THE LENDER'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED IN JEFFERSON COUNTY IN THE STATE OF ALABAMA, AND THE
BORROWER AGREES THAT THIS AGREEMENT SHALL BE HELD BY LENDER AT SUCH PRINCIPAL
PLACE OF BUSINESS, AND THE HOLDING OF THIS AGREEMENT BY LENDER THEREAT SHALL
CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF BORROWER WITH JEFFERSON COUNTY AND
THE STATE OF ALABAMA FOR THE PURPOSE OF CONFERRING JURISDICTION UPON THE
FEDERAL AND STATE COURTS PRESIDING IN SUCH COUNTY AND STATE. BORROWER CONSENTS
THAT ANY LEGAL ACTION OR PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE
CIRCUIT COURT OF THE STATE OF ALABAMA, JEFFERSON COUNTY ALABAMA OR THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA AND ASSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR
PROCEEDING INVOLVING THIS AGREEMENT. NOTHING HEREIN SHALL LIMIT THE
JURISDICTION OF ANY OTHER COURT.
7.11 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER AND GUARANTOR HEREBY WAIVE ANY RESPECTIVE RIGHT THAT THEY MAY
HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SET OFF, 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 AND GUARANTOR WITH RESPECT
TO THE LOAN DOCUMENTS OR IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF
ANY PARTY'S RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE
CONDUCT OR
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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 GUARANTOR AGREE THAT LENDER MAY FILE A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND
BARGAINED AGREEMENT OF BORROWER AND GUARANTOR IRREVOCABLY TO WAIVE THEIR
RESPECTIVE 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 GUARANTOR WITH
LENDER SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
[SIGNATURES ON FOLLOWING PAGE]
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30
BORROWER:
a Delaware corporation
By: /s/ XXXXX X. XXXXX
------------------------------
XXXXX X. XXXXX, VICE PRESIDENT
LENDER:
CAPSTONE CAPITAL OF PENNSYLVANIA, INC.
a Pennsylvania corporation
By: /s/ XXXXX X. XXXXXXX
------------------------------------------
XXXXX X. XXXXXXX, ASSISTANT VICE PRESIDENT
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SCHEDULE TO EXHIBIT 10.31 FILED PURSUANT TO INSTRUCTION 2 OF ITEM 601(a) OF
REGULATION S-K
LOAN AGREEMENT
--------------
PROJECT PARTIES FACILITY LOAN AMOUNT ORIGINATION FEE/FACILITY DATE
------- ------- -------- ----------- DUE DILIGENCE AND ----
UNDERWRITING FEE
----------------
Darlington, PA BCC at Darlington, Xxxxxxx $5,875,000.00 $58,750.00/$3,000.00 9/30/97
Inc. (Borrower), and Personal
Capstone Capital of Care Home
Pennsylvania, Inc.
(Lender)
Butler, PA Balanced Care at Silver Haven $246,000.00 $91,500.00/$3,000.00 10/31/97
Butler, Inc.
(Borrower) and
Capstone Capital of
Pennsylvania, Inc.
(Lender)
Sarver, PA Balanced Care at Sterling $286,000.00 N/A 10/31/97
Sarver, Inc. Care of
(Borrower) and Sarver
Capstone Capital of
Pennsylvania, Inc.
(Lender)
Saxonburg, PA Balanced Care at Sterling $8,618,000.00 N/A 10/31/97
Saxonburg, Inc. Care of
(Borrower) and Saxonburg
Capstone Capital of
Pennsylvania, Inc.
(Lender)
