RIDGELAND, MISSISSIPPI
LOAN AGREEMENT
THIS AGREEMENT, made and entered into as of the 28th day of December,1998, by
and between RIDGELAND ASSISTED LIVING, LLC, a Washington limited liability
company (hereinafter called "Borrower"), and GUARANTY FEDERAL BANK, F.S.B., a
federal savings bank (hereinafter called "Lender");
WITNESSETH:
WHEREAS, Borrower has obtained from Lender a Commitment (as hereinafter defined)
for a Loan (as hereinafter defined); and WHEREAS, Borrower and Lender wish to
enter into this Agreement in order to set forth the terms and conditions of the
Loan to be made in accordance with the Commitment; NOW THEREFORE, in
consideration of the mutual promises hereinafter contained and of other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall have the
meanings shown:
(a) "Administrative Notices". All (i) Deficiency Notices, (ii)
all Agency inspection reports, audits, surveys, investigations, reviews and
evaluations, and (iii) all notices and written communications from any state or
any Agency relating to material adjustments in reimbursement amounts or to rate
reviews, modifications of rates, inflation adjustments, rate agreements and the
like.
(b) "Agency". The Health Care Financing Administration, the Drug
Enforcement Administration, the Environmental Protection Agency, any other state
or federal licensing or regulatory authority (including any licensing or
regulatory authority responsible for administering or dispensing Medicaid or
Medicare payments or any other third party payor billing policies, procedures,
limitations or restrictions), or any other public or private agency or
organization, including without limitation, any public or private accreditation
agency or organization.
(c) "Assignment of Leases and Rents". The Assignment of Leases and Rents of even
date herewith from Borrower to Lender covering certain leases and other
interests described therein, providing a source of future payment of the Note.
(d) "Certificate of Non Foreign Status". A certificate by Borrower as required
by Section 1445 of the Internal Revenue Code of 1986.
(e) "Collateral Assignment of Agreements Affecting Real Estate". The Collateral
Assignment of Agreements Affecting Real Estate as provided for herein and in the
form approved by Lender.
(f) "Commitment". A commitment agreement dated December 28,1998, by and between
Lender and Borrower, in which Lender agrees to lend, and Borrower agrees to
borrow and take down, the Loan in accordance with the terms, provisions and
conditions set forth therein, together with all modifications and amendments to
said commitment agreement.
(g) "Escrow and Security Agreement". An Escrow and Security Agreement made by
Borrower for the benefit of Lender.
(h) "Deed of Trust". A Deed of Trust, Mortgage and Security Agreement of even
date herewith, conveying the Premises to the Trustee named therein, and granting
a security interest in certain property and rights, to secure the payment of the
Note.
(i) "Emeritus Properties". Emeritus Properties XI, LLC, a Washington limited
liability company.
(j) "Facility". An assisted living facility.
(k) "Deficiency Notices". All notices and other written communications from any
Agency, Governmental Authority or agent which licenses, regulates, certifies,
accredits or evaluates the Borrower, the Premises or the Borrower's operation of
the Premises alleging that the Borrower, the Premises or the Borrower's
operation of the Premises in whole or in part fails to comply or, if corrective
action is not taken, shall fail to comply with, any or all of the Agency's or
Governmental Authority's requirements for and conditions of licensing,
regulation, certification or accreditation by or participation in programs of
the Agency or Governmental Authority or otherwise relating to the continuous
operation of all or any portion of the Premises or the Borrower's programs or
its eligibility or entitlement to receive reimbursement from any Agency or
Governmental Authority.
(1) "Financing Statement". A Financing Statement executed by Borrower in favor
of Lender, perfecting the security interest in personal property created by the
Deed of Trust.
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(m) "GAAP". Generally accepted accounting principles, as from
time-to-time in effect in the United States of America, or such alternative
accounting standard as may be acceptable to the Lender, consistently applied.
(n) "Governmental Authority". The United States, the State, the county, and the
city, or any other political subdivision in which the Land is located, and any
other political subdivision, agency or instrumentality exercising jurisdiction
over Borrower, Guarantor or the Premises.
(o) "Governmental Requirements". All laws, ordinances, statutes, codes, rules,
regulations, orders and decrees of any Governmental Authority applicable to
Borrower, Guarantor or the Premises.
(p) "Guaranty". A Guaranty of even date herewith made by Emeritus Corporation, a
Washington corporation (hereinafter called "Guarantor").
(q) "Improvements". The improvements constructed on the Land.
(r) "Land". The real property described in Exhibit A attached hereto and made a
part hereof.
(s) "Licenses". Any and all licenses, certificates of need, certificate of need
waivers, operating permits, franchises, and other licenses, authorizations,
certifications, permits, or approvals, other than construction permits, issued
by, or on behalf of, any Governmental Authority now existing or at any time
hereafter issued, with respect to the acquisition, construction, renovation,
expansion, leasing, ownership and/or operation of the Premises, accreditation of
the Premises, and/or the participation or eligibility for participation in any
third party payor or reimbursement programs (but specifically excluding any and
all Participation Agreements), any and all operating licenses issued by any
Governmental Authority, any and all pharmaceutical licenses and other licenses
related to the purchase, dispensing, storage, prescription or use of drugs,
medications, and other "controlled substances," and any and all licenses
relating to the operation of food or beverage facilities or amenities, if any.
(t) "Liquid Assets" means (i) cash on hand or on deposit in banks, (ii) readily
marketable securities issued by the United States, (iii) readily marketable
commercial paper rated A-1 by Standard & Poor's Corporation (or a similar rating
by any similar organization that rates commercial paper), (iv) certificates of
deposit issued by commercial banks operating in the United States with
maturities of one year or less. and (v) publicly traded stocks and bonds.
(u) "Loan". A loan in the principal amount of Five Million Six Hundred Thousand
and No/100 Dollars ($5,600,000.00) from Lender to Borrower, secured by a first
lien on the Premises (as hereinafter defined), as more fully described in the
Commitment.
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(v) "Loan Documents". This Agreement, the documents described in certain
subsections of this Section I.1 pertaining to the Loan and all other documents
securing, evidencing or executed in connection with the Loan.
(w) "Managed Care Plans". Any health maintenance organization. preferred
provider organization, individual practice association, competitive medical
plan, referral service or similar arrangement, entity, organization, or Person.
(x) "Manager". Emeritus Corporation, or such other party or parties who, with
the prior written approval of Lender, enter into a Management Agreement with
Borrower.
(y) "Material Adverse Change". As to the specified Person, a material adverse
change in the business, operations, property, condition (financial or otherwise)
or prospects of such Person and, in addition, as to the Borrower, any material
adverse change in (i) the ability of the Borrower to perform its obligations
under this Agreement or any of the other Loan Documents or (ii) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Lender hereunder or thereunder.
(z) "Note". A promissory note of even date herewith payable to the order of
Lender and in the principal amount of the Loan.
(aa) "Notice and Agreement". An instrument executed by Borrower and Lender
pursuant to Subsection 26.02 of the Texas Business and Commerce Code.
(bb) "Obligations". The unpaid principal of and interest on any promissory note
or other indebtedness (including, without limitation, interest accruing after
the maturity of any promissory note or indebtedness and interest accruing
thereon after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) and all
other obligations and liabilities, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred, whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel) or otherwise.
(cc) "Operating Agreements and Management Contracts". Any and all contracts and
agreements previously, now- or at any time hereafter entered into by the
Borrower with respect to the acquisition, construction, renovation, expansion.
ownership, operation, maintenance, use or management of the Premises or
otherwise concerning the operations and business of the Premises, including,
without limitation, the Management Agreement, any and all service and
maintenance contracts, any employment contracts, any and all management
agreements, any and all consulting agreements, laboratory servicing agreements,
pharmaceutical contracts, physician, other clinician or other professional
services provider contracts, therapy referral, food and beverage service
contracts, and other contracts for the operation and maintenance of, or
provision of services to, the Premises.
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Page 5 missing
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BORROWER
3.1 Representations. Warranties and Covenants of Borrower. Borrower hereby
represents, warrants and covenants to Lender that:
(a) Deed of Trust. All of the representations and warranties of Borrower under
the Deed of Trust are true and correct.
(b) Financial Statements. The financial statements and information regarding
Borrower heretofore delivered to Lender are true and correct in all material
respects, having been prepared in accordance with GAAP, and fairly present the
financial condition of Borrower as of the date thereof. No Material Adverse
Change has occurred in the financial condition of Borrower reflected therein
since the date thereof.
(c) Brokerage Commissions. Any brokerage commissions due to any broker with whom
Borrower has dealt in connection with the transaction contemplated hereby have
been paid in full and any such commissions coming due in the future will be
promptly paid by Borrower. Borrower agrees to and shall indemnify Lender from
any liability, claims or losses arising by reason of any such brokerage
commissions. This provision shall survive the repayment of the Loan made in
connection herewith and shall continue in full force and effect so long as the
possibility of such liability, claims or losses exists.
(d) No Homestead. The Land and the Improvements thereon do not and will not
constitute the residential or business homestead of Borrower.
(e) Certain Payments. Neither the Borrower nor any director, officer, member,
partner, employee or agent of the Borrower acting for or on behalf of the
Borrower has paid or caused to be paid, directly or indirectly, in connection
with the business of the Borrower any bribe, kickback or similar payment to any
Governmental Authority or any agent of any supplier.
(f) Operating Agreements and Management Contracts. The Borrower has furnished to
the Lender photocopies of all material Operating Agreements and Management
Contracts entered into with the Borrower, and all amendments, supplements and
modifications thereto. With respect to each such Operating Agreement and
Management Contract, (i) such Operating Agreement and Management Contract is or
will be at the time execution and delivery thereof valid and binding on the
parties thereto and in full force and effect, (ii) no default has occurred or is
continuing under the terms thereof, and no event has occurred which, with the
giving of notice or the lapse of time, or both, would constitute a default
thereunder, and no party thereto has attempted or threatened to terminate any
such Operating Agreement and Management Contract, (iii) the Borrower has not
made any previous assignment of the Operating Agreements and Management
Contracts to any Person. except as security for loans and other financial
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accommodations, if any, which are to be paid with the proceeds of the Loan and
are to be terminated promptly following the date hereof, and (iv) no financing
statement covering any of the Operating Agreements and Management Contracts is
on file in any public office, except for those financing statements relating to
loans and other financial accommodations which are to be paid with the proceeds
of the Loan and are to be terminated promptly following the date hereof.
(g) Participation Agreements.
(i) The Borrower has furnished to the Lender, on or before the date hereof,
all material Participation Agreements entered into with the Borrower, including
all amendments, supplements and modifications thereto.
(ii) Each Participation Agreement (A) is or will be at the time of
execution and delivery thereof the valid and binding obligation of the parties
thereto and in full force and effect, (B) provides for payment to the Borrower
of allowable costs incurred by the Borrower in the provision of services to
patients and/or residents, and (C) no default has occurred or is continuing
under the terms thereof and no event has occurred, which, upon the giving of
notice or the lapse of time or both, would constitute a default under the terms
thereof.
(iii) Borrower does not participate in any Medicare or Medicaid payment and
reimbursement programs. (h) Xxxx-Xxxxxx Act. The Borrower has not, nor to the
best of the Borrower's knowledge, has any prior owner of the Premises during the
twenty (20) year period immediately preceding the date hereof, received any
funds to finance the construction and/or acquisition of the Premises pursuant to
Title VI of the Public Health Service Act (commonly referred to as the
Xxxx-Xxxxxx Act) or Title XVI of the Public Health Service Act.
(i) Eligibility. The Borrower is eligible for third party payments under, and in
connection with, any and all Participation Agreements to which it is presently a
party.
(j) Patient Admission Agreements and Resident Agreements. Each Patient Admission
Agreement and Resident Agreement to which the Borrower is a party is or will be
valid and binding on the parties thereto, is or will be at the time of execution
and delivery thereof in full force and effect and any payments due to the
Borrower thereunder are not and will not be evidenced by, any chattel paper or
instrument.
(k) Fraud and Abuse. The Borrower, its directors, officers and employees and
other Persons providing services on behalf of the Borrower have not engaged in
any activities which are in violation of Sections 1128A, 1128C or 1877 of the
Social Security Act (42 U.S.C. xx.xx. 1320a-7a. 1320a-7c and 1395nn), the False
Claims Act (31 U.S.C. ss.
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3729 et seq.), the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. ss. 3801
et seq.) or other federal or state laws and regulations, including, but not
limited to, the following:
(i) knowingly and willfully making or causing to be made a false statement
or representation of a material fact in any application for any benefit or
payment;
(ii) knowingly and willfully making or causing to be made a false statement
or representation of a material fact for use in determining rights to any
benefit or payment;
(iii) failing to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with intent to fraudulently secure such benefit
or payment;
(iv) knowingly and willfully offering, paying, soliciting, or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind (A) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service, (B) in return for purchasing, leasing or ordering, or arranging
for or recommending, leasing or ordering any good, facility, service or item; or
(v) billing a patient, resident or payor for health services specified in
42 U.S.C. ss. 1395nn or any other similar or comparable federal or state laws,
or providing such health services to a patient or resident, upon a referral from
a physician where such physician has a financial relationship with the Borrower
to which no exception applies under each of the applicable laws. (1) Licenses
and Certifications. The Borrower has obtained all Licenses. necessary or
desirable under all Governmental Requirements for the operation of the Premises
as a Facility. With respect to each License the Borrower possesses or has
applied for, (i) no default has occurred or is continuing under the terms
thereof, and no event has occurred which, with the giving of notice or the lapse
of time, or both, would constitute a breach of any condition to the issuance,
maintenance, renewal and/or continuance thereof, (ii) the Borrower has paid all
fees, charges and other expenses to the extent due and payable with respect to,
and has provided all information and otherwise complied with all material
conditions precedent to, the issuance. maintenance, renewal and continuance of
such License, (iii) none of the Licenses are conditional, provisional,
probationary or restricted in any way, except temporarily as a result of the
change in ownership, (iv) the Borrower has not received any notice from any
Governmental Authority relating to any actual or pending suspension, revocation,
restriction, or imposition of any probationary use of such License, nor has any
License been materially amended, supplemented, rescinded, terminated, or
otherwise modified except as
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otherwise disclosed in writing to, and approved by, the Lender, (v) the Borrower
has not made any previous assignment of any of the Licenses to any Person,
except as security for loans and other financial accommodations, if any, which
are to be paid with the proceeds of the Loan and are to be terminated promptly
following the date hereof, (vi) no financing statement covering any of the
Licenses has been executed by the Borrower or is on file in any public office,
except for those financing statements relating to loans and other financial
accommodations, if any, which are to be paid with the proceeds of the Loan and
are to be terminated promptly following the date hereof, and (vii) each License
has been issued for a period of at least twelve (12) months from the date of
issuance or for such lesser time to the extent the issuance for less than twelve
(12) months is not the consequence of any sanctions imposed by any Governmental
Authority.
ARTICLE IV.
COVENANTS OF BORROWER
4.1 Borrower hereby covenants and agrees with Lender as follows:
(a) Commitment. Borrower shall permit no Borrower default under the terms of the
Commitment.
(b) Title Insurance. Borrower shall furnish to Lender, at Borrower's expense, a
mortgagee title insurance policy (herein called the "Mortgagee Title Policy")
showing Lender as the insured thereunder, in the amount of the Loan and in form
and substance and written by the Title Company on behalf of an underwriter
reasonably satisfactory to Lender insuring a valid first lien upon the Premises
by virtue of the Deed of Trust and containing no exceptions except those
specifically waived in writing by Lender. If the underwriter issuing the
Mortgagee Title Policy becomes insolvent or is placed in receivership or for any
other reason such Policy becomes unenforceable, Borrower shall furnish Lender,
at Borrower's expense, another mortgagee title insurance policy in the amount
and in substitution for the original Mortgagee Title Policy and meeting the
above requirements.
(c) Insurance. Borrower shall obtain and maintain such
insurance or evidence of insurance as Lender may reasonably require, including
but not limited to the following:
(i) Public Liability and Worker's Compensation Insurance - a certificate
from an insurance company indicating the Borrower is covered to the satisfaction
of Lender by public liability and worker's compensation insurance.
(ii) Business Interruption Insurance - business interruption insurance
equal to not less than twelve (12) months estimated gross revenues less expenses
not ordinarily incurred during the period of business interruption.
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(iii) Other Insurance - such other insurance as may be required by the Deed
of Trust.
(d) Collection of Insurance Proceeds. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any insurance or other proceeds lawfully or
equitably payable to it in connection with the transactions contemplated hereby
and the collection of any indebtedness or obligation of Borrower to Lender
incurred hereunder (including the payment by Borrower of the expense of an
independent appraisal on behalf of Lender in case of a fire or other casualty
affecting the Premises).
(e) Indemnity of Lender. Borrower shall indemnify and hold harmless Lender (for
purposes of this subsection, the term "Lender" shall include the directors,
officers, employees and agents of Lender and any persons or entities owned or
controlled by, owning or controlling, or under common control or affiliated with
Lender) from and against, and reimburse them for, all claims, demands,
liabilities, losses, damages, causes of action, judgments, penalties, costs and
expenses (including, without limitation, reasonable attorney's fees) which may
be imposed upon, asserted against or incurred or paid by them by reason of, on
account of or in connection with any bodily injury or death or property damage
occurring in or upon or in the vicinity of the Premises through any cause
whatsoever or asserted against them on account of any act performed or omitted
to be performed hereunder or on account of any transaction arising out of or in
any way connected with the Premises or with this Agreement or any other Loan
Document. WITHOUT LIMITATION, IT IS THE INTENTION OF BORROWER AND BORROWER
AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH
RESPECT TO CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION,
JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTURNEY'S FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY STRICT
LIABILITY. HOWEVER, SUCH INDEMNITIES SHALL NT APPLY TO ANY INDEMNIFIED PARTY TO
THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. The foregoing
indemnities shall survive the termination of this Agreement, the foreclosure of
the Deed of Trust or conveyance in lieu of foreclosure and the repayment of the
loan and the discharge and release of the Loan Documents. Any amount to be paid
hereunder shall be subject to and governed by the provisions of Section 4.2
hereof.
(f) Expenses and Approval of Documents. Borrower shall pay all costs of closing
the Loan and all expenses of Lender with respect thereto, including but not
limited to, reasonable legal fees (including legal fees incurred by Lender
subsequent to the closing of the Loan but incurred in connection with the
disbursement or collection of the Loan), title insurance premiums and other
charges of the title company issuing the Mortgagee Title Policy, appraisal fees,
consulting architect fees, consulting inspection fees. advances,
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recording expenses, surveys, intangible taxes, expenses of foreclosure
(including reasonable attorneys' fees) and similar items, and shall allow all
closing papers, Loan Documents and other legal matters to be subject to the
approval of Lender's attorneys.
(g) Further Assurances. Borrower shall sign and deliver to Lender such
documents, instruments, assignments and other writings, and do such other acts
necessary or desirable, to preserve and protect the collateral at any time
securing or intended to secure the Note, as Lender may require; and shall do and
execute all and such further lawful and reasonable acts, conveyances and
assurances in the law for the better and more effective carrying out of the
intents and purposes of this Agreement as Lender shall reasonably require from
time to time.
(h) Appraisal. Borrower shall submit from time to time, within thirty (30) days
following written request of Lender, which request may not be made earlier than
one (1) year after the date of the Appraisal furnished pursuant to the
Commitment and not more often than annually thereafter, an MAI appraisal of the
Premises by a licensed appraiser satisfactory to Lender, such appraisal to be in
the form and amount satisfactory to Lender. In lieu of obtaining an appraisal
from Borrower hereunder, but subject to the limitation set forth in the previous
sentence, Lender may itself obtain the appraisal and Borrower shall pay the cost
thereof to Lender within thirty (0) days following written request of Lender.
(i) Cooperation Regarding Financial Condition. Borrower shall cooperate with
Lender and its representatives to the end that Lender shall be fully apprised
regarding the continuing financial condition of Borrower and, upon reasonable
request of Lender or any of its representatives, will furnish Lender or such
representatives such documents. instruments, financial statements or other
information considered necessary or useful by Lender or its representatives in
connection with the review and understanding of the financial condition of
Borrower as it may exist from time to time.
(j) Management Agreement. Lender hereby approves Manager as the manager for the
Premises pursuant to terms and conditions of the Management Agreement furnished
by Borrower to Lender. Borrower shall (i) permit no default under the terms of
the Management Agreement, (ii) waive none of the obligations of Manager
thereunder, (iii) do no act which would relieve Manager from its obligations
thereunder, and (iv) enter into no material amendment, modification or
termination of the Management Agreement without the prior written consent of
Lender.
(k) Resident Agreements. Borrower shall submit to the Lender when requested by
the Lender, all information reasonably requested by the Lender with respect to
all Resident Agreements.
(l) Lessee Information. Borrower shall submit to the Lender when requested by
the Lender, all information on all tenant leases, if any, other than Patient
Admission Agreements or Resident Agreements, reasonably required to be included
in a rent roll.
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(m) Conduct of Business and Compliance with Laws. The Borrower shall (i) do or
cause to be done all things necessary to obtain, enter into, preserve and keep
in full force and effect its existence and material rights and, if appropriate,
construction permits and all material Licenses, Participation Agreements, and
Operating Agreements and Management Contracts which are necessary for its
business and the operation of the Premises as a Facility, (ii) engage in and
continue to engage only in the business of owning and operating the Facility and
related services, (iii) observe the valid requirements of Governmental
Authorities and agents and perform the terms of all Participation Agreements,
the noncompliance with or the nonobservance of which might materially interfere
with the performance of its obligations under the Loan Documents or the proper
or prudent conduct of its business or the Premises. and (iv) comply -ith all
Governmental Requirements, including, without limitation, the Occupational
Safety and Health Act of 1970, regulations issued under the Omnibus Budget
Reconciliation Act of 1987, any Governmental Requirement relating to "informed
consents" and rights of patients and/or residents, qualifications of staff,
staffing requirements and delivery of services in a manner sufficient to protect
the health and safety of patients and/or residents. In addition, the Borrower
covenants and agrees that it will:
(i) maintain in full force and effect all Licenses necessary to the
ownership and/or operation of the Premises, including, without limitation, the
license to operate the Premises, Licenses and other approvals related to the
storage, dispensation, use, prescription and disposal of drugs, medications and
other "controlled substances" and, to the extent offered by the Borrower, the
maintenance of cafeteria and other food and beverage facilities or services;
(ii) administer, maintain and operate (or will cause to be administered,
maintained and operated) the Premises as a revenue-producing Facility;
(iii) obtain, maintain and comply with all conditions for the continuance
of, all Licenses necessary or desirable for the operation of the Premises as a
Facility;
(iv) obtain, maintain and comply with all conditions for the continuance of
each of the Licenses:
(v) maintain or cause to be maintained the standard of care for the
residents of the Premises at all times at a level necessary to insure a level
of quality care and services for the patients and/or residents of the
Premises no less than the prudent industry standard for a Facility;
(vi) maintain or cause to be maintained a standard of care in the storage,
use, transportation and disposal of all medical equipment, medical supplies,
medical products and medical waste, of any kind and in any form. that is in
accordance with, at least, that of the prudent industry standard and in
conformity with all Governmental Requirements;
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(vii) operate or cause to be operated the Premises in a prudent manner in
compliance with Governmental Requirements relating thereto and cause all
Licenses, permits, certificates of need, reimbursement contracts, and any other
agreements necessary for the use and operation of the Premises or as may be
necessary for participation in the applicable reimbursement programs to remain
in effect without reduction in the number of licensed beds or beds authorized
for use in applicable reimbursements programs;
(viii) correct or cause to be corrected any deficiency set forth in any
Medicare, Medicaid or other Agency statement of deficiencies, the curing of
which is a condition of continued licensure or for accreditation of the Premises
or for (1) full participation in Medicare. Medicaid or other third party payor
or reimbursement programs offered by any other Governmental Authority or third
party private payor (including Blue Cross and Blue Shield, Managed Care Plans,
and employee assistance plans) in which the Borrower presently participates and
which are material to the continued ability of the Borrower to operate the
Premises in a manner consistent with the provisions of the Loan Documents and to
pay the Borrower's Obligations as and when due and payable, or (2) existing
patients or for new patients to be admitted with coverage under any of the
foregoing third party payor and reimbursement programs, all by the date required
for cure by such Agency (plus extension granted by such Agency);
(ix) maintain or cause to be maintained sufficient inventory and equipment
of types and quantities at the Premises to enable the Borrower or the Manager of
the Premises to operate the Premises adequately, as a Facility and in a manner
which will enable the Borrower to comply with the provisions of the Loan
Documents; and
(x) maintain or cause to be maintained all deposits, including, without
limitation, deposits relating to patients or Patient Admission Agreements or
Resident Agreements in accordance with customary and prudent business practices
and all Governmental Requirements. Any bond or other instrument which the
Borrower, or any manager of the Premises, as the case may be, is permitted to
hold in lieu of cash deposits under any applicable Governmental Requirement
shall be maintained in full force and effect unless replaced by cash deposits.
shall be issued by an institution reasonably satisfactory to the Lender, shall.
If permitted pursuant to Governmental Requirements, name the Lender as the payee
or mortgagee thereunder (or at the Lender's Option. be fully assignable to the
Lender) and shall, in all material respects, comply with all applicable
Governmental Requirements and otherwise be reasonably satisfactory to the
Lender. Following the occurrence and during the continuance of any event of
default under the Loan Documents, the Borrower or Manager of the Premises as the
case may be shall. Upon the Lender's request, if permitted by applicable
Governmental Requirements, turn over to the Lender the deposits (and any
interest earned thereon) with respect to the Premises,
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to be held by the Lender subject to the terms of any applicable Operating
Agreements and Management Contracts.
(n) Insurance. The Borrower shall ensure that all healthcare providers with
whom the Borrower contracts to provide services at the Premises are insured
against claims arising from such services (including, without limitation,
malpractice coverage). (o) Notices. The Borrower shall promptly notify the
Lender in writing upon obtaining knowledge of the occurrence of any of the
following which could result in a Material Adverse Change:
(i) the receipt by the Borrower of any notice, claim or demand from any
Governmental Authority which alleges that the Borrower is in violation of any of
the terms of, or has failed to comply with any Governmental Requirement
regulating its operation and business, including, but not limited to, the Health
Care Financing Administration or any division thereof, the Occupational Safety
and Health Act and the Environmental Protection Act;
(ii) The actual, threatened or pending (A) revocation, suspension,
probation, restriction, limitation, forfeiture or refusal to renew of any
License, or (B) decertification, revocation, suspension, probation, restriction,
limitation, forfeiture or refusal to renew any participation or eligibility in
any third party payor program in which the Borrower presently participates or is
eligible, including, without limitation, Medicare, Medicaid, CAMPUS, Blue Cross
and Blue Shield, any Managed Care Plan, private insurer or employee assistance
program, or any accreditation of the Borrower, which actual or threatened or
pending decertification, revocation, suspension, probation, restriction,
limitation, forfeiture or refusal to renew could have a Material Adverse Change
or could adversely affect the ability of the Borrower to repay the Loan or
comply with the provisions of the Loan Documents, or (C) the issuance or pending
issuance of any License for a period of less than twelve (12) months, as a
consequence of sanctions imposed by any Governmental Authority or agent, or (D)
the assessment or threatened or pending assessment, of any civil or criminal
penalties by any Governmental Authority or agent, any third party payor or any
accreditation organization; or
(iii) any action, including, but not limited to the amendment of any
License, or the issuance of any new License or certification for the Premises,
under which the Borrower proposes (A) to develop a new facility or service, (B)
change any existing facility or service, or (C) to eliminate any existing or
proposed service, which action requires the Borrower to seek either a
certificate of need approval or exemption from certificate of need review or
which requires amendment of any License or the issuance of any new License or
certificate for the Premises. in each case describing in detail satisfactory to
the Lender in its sole discretion the nature thereof and the action the Borrower
proposes to take with respect thereto.
14
(p) Deficiency Notices. Without implying any limitation on any other provisions
of this Agreement or any of the other Loan Documents, the Borrower will furnish
to the Lender immediately after receipt thereof copies of all material (A)
Deficiency Notices, (B) Agency inspection reports, audits, surveys,
investigations, reviews or evaluations, (C) notices and written communications
from any State or any Agency relating to material adjustments in reimbursement
amounts or to rate reviews, modifications of rates, inflation adjustments, rate
agreements or the like, and (D) responses by, or on behalf of, the Borrower with
respect to any of the foregoing. The Borrower shall promptly commence and
diligently pursue the correction of the subject of each Deficiency Notice, and
shall correct the subject of the Deficiency Notice promptly, but in any event
prior to the expiration of any period allowed by the Agency for correction. The
Borrower shall, at the Lender's request, promptly provide from time to time such
cost estimates, reports and other information as the Lender reasonably may
require to demonstrate to the Lender's satisfaction that the Borrower has the
financial and other ability to effect the correction and is taking the actions
required by this Section.
(q) Participation in Reimbursement Program. The Borrower will participate in any
and all plans and programs for third party payment and/or reimbursement from,
and claims against, private insurers, employee assistance programs and plans or
programs for payment and/or reimbursement from federal, state and local
governmental agencies and/or private or quasi-public insurers as shall be
necessary for the prudent conduct of the Borrower's business. The Borrower shall
comply with any and all conditions, rules, regulations, standards, procedures
and decrees necessary to maintain the Borrower's participation in any such third
party payor or reimbursement programs or plans.
(r) Cost Reports. The Borrower will prepare and file all applicable cost reports
to all third party payors to the extent required by any such third party pavor
and will notify the Lender of any disallowance or settlement of any cost report
which the Borrower has disclosed to the Lender as being open or unsettled as of
the date hereof to the extent any such disallowance or settlement would have a
Material Adverse Change on the Borrower.
(s) Census Report and Surveys. The Borrower will furnish to the Lender promptly
following the request of the Lender reports of the Borrower's periodic patient
or resident census with a breakdown with respect to the source of payment,
licensure survey results, accreditation survey results and such other
information relating to the operation of the Premises as may reasonably be
requested by the Lender from time to time.
(t) Renewal of Agreements. The Borrower will take any and all steps necessary to
renew all Participation Agreements, Patient Admission Agreements, Resident
Agreements, and Operating Agreements and Management Contracts, except to the
extent that the Borrower deems such renewal to be, in the exercise of prudent
business judgment, contrary to the best interests of the Borrower.
15
(u) Specific Licensing Requirements. The Borrower shall at all times maintain
the Premises as a properly licensed Facility in accordance with all Governmental
Requirements and Licenses.
(v) Financial Statements. The Borrower shall provide Lender and cause the
Guarantor and the Manager to provide to Lender, the following financial
statements and information on a continuing basis during the term of the Loan:
(i) Beginning with calendar year end 1998, within ninety (90) days after
the end of each calendar year, unaudited financial statements of Borrower, which
statements shall be prepared in accordance with GAAP, and shall include a
balance sheet and statement of income and expenses for the year then ended.
Lender reserves the right to require, in its sole discretion, annual audited
financial statements of Borrower.
(ii) Once each month within thirty (30) days after month end, unaudited
monthly financial statements of the operations of the Premises, prepared in
accordance with GAAP, which statements shall include a balance sheet and
statement of income and expenses for the month then ended, together with a rent
roll of the Premises as of the end of such month, certified by a representative
of Borrower to be true and correct to the best of the representative's knowledge
and belief. Such statements shall also be prepared on a "rolling" quarterly
basis. Such statements of the Premises shall be accompanied by the information
required pursuant to the Summary of Financial Statements and Census Data (in the
form attached hereto as Schedule I), which information shall be provided in the
format utilized by Borrower and certified by a representative of the Borrower to
be true and correct.
(iii) The financial statements and information required of Guarantor under
the Guaranty.
(iv) The financial statements required under this Agreement shall be
accompanied by a Certificate Accompanying Financial Statements in the form
attached hereto as Schedule II.
(v) The Lender further reserves the right to require such other financial
information of Borrower, the Guarantor, Manager and/or the Premises, in such
form and at such other times (including monthly or more frequently) as Lender
reasonably 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.
(w) Capital Improvements. Borrower shall make minimum annual capital
expenditures (or maintain a reserve for such expenditures) for the Premises in
each fiscal year, in the amount of $250.00 per unit (which such capital
expenditures mav include
16
ordinary repairs needed to maintain or improve the conditions of the Premises),
and within ninety (90) days of the end of such fiscal year, provide evidence
thereof satisfactory to Lender. In the event that Borrower shall fail to do so,
Borrower shall, upon Lender's written request, immediately establish and
maintain a capital expenditures reserve fund with Lender equal to the difference
between the required amount per unit and the amount per unit actually spent by
the Borrower. Borrower grants to Lender a right of setoff against all moneys in
the capital expenditures reserve fund, and Borrower shall not permit any other
lien to exist upon such fund. The proceeds of such capital expenditures reserve
fund will be disbursed upon Lender's receipt of satisfactory evidence that
Borrower has made the required capital expenditures. Upon Borrower's failure to
adequately maintain the Premises 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, shall be secured by the Deed of Trust and shall accrue
interest at the Default Rate (as such term is 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, 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 Premises shall count towards the capital
s expenditures requirement. For any partial fiscal year during which the Loan is
outstanding, the required expenditures amount shall be prorated by multiplying
the required amount per unit by a fraction, the numerator of which is the number
of days during such year for which all or part of the Loan is outstanding and
the denominator of which is the number of days in such year. (x) Debt Coverage
Ratio. During the first year of the Loan, the Premises shall continuously
maintain a Debt Coverage Ratio (as such term is defined in the Note) of at least
1.0 to 1. During the second year of the Loan, the Premises shall continuously
maintain a Debt Coverage Ratio of at least 1.15 to 1. During the Extension
Period (as such term is defined in the Note), the Premises shall continuously
maintain a Debt Coverage Ratio of at least 1.3 to l. Each of the foregoing shall
be measured on a "rolling" quarter basis.
(y) Debt Coverage Escrow. If Borrower fails to achieve or provide evidence of
achievement of a minimum Debt Coverage Ratio of 1.0 to l, upon the closing of
the Loan, or if such failure occurs after the closing of the Loan, then upon
fifteen (15) days written notice to Borrower, Borrower will deposit with
Lender cash or other liquid collateral in an amount which, when added to the
first number of the debt coverage ratio calculation, would have resulted in
the noncomplying debt coverage requirement having been satisfied. If such
failure continues for two (2) consecutive quarters, on the third consecutive
quarter, if Borrower again fails to achieve or provide evidence of the
achievement of the Debt Coverage Ratio of 1.0 to l, upon fifteen (I5) days
written notice to Borrower, Borrower will deposit with Lender additional cash
or other liquid collateral (with credit for amounts currently being held by
Lender pursuant to the foregoing
17
sentence), in an amount which, if the same had been applied on the first day to
reduce the outstanding principal indebtedness of the Loan, would have resulted
in the noncomplying debt coverage requirement having been satisfied, and
Borrower agrees 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 account, and shall constitute additional
collateral for the Loan 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. Borrower shall not be entitled to any interest earned on
such additional collateral, unless the escrow is over $500,000, in which event
the escrow will be deposited in a money market account. Provided that there is
no outstanding event of default, and no event has occurred which with the
passage of time or giving of notice or both would constitute an event of
default, such additional collateral which has not been applied to the Loan will
be released by the Lender at such time as Borrower provides the Lender with
evidence that the Debt Coverage Ratio of 1.0 to 1 has been achieved and
maintained (without regard to any cash deposited pursuant to this Section 4.1
(y)) for six (6) consecutive months. All amounts deposited by Borrower pursuant
to this Section 4.1(y) are referred to as "Debt Coverage Reserve Funds".
(z) Debt Service Escrow. On the date of this Agreement, Borrower shall establish
the Debt Service Reserve Funds Escrow Account (as such term is defined in the
Escrow and Security Agreement). At such time as the Premises has maintained a
Debt Coverage Ratio of at least l.25 to 1 for three (3) consecutive months and
provided no event of default or event which with the passage of time or giving
of notice, or both, would constitute an event of default has occurred, Lender
will release to Borrower the funds held in the Debt Service Reserve Funds Escrow
Account.
(aa) Repairs. Within 120 days of the date hereof, Borrower shall complete the
repairs described in Article IV of that certain Property Review Summary dated
December 1,1998 prepared by AECC, Inc. with respect to the Property.
(bb) Licenses. To the extent within Borrower's control, Borrower will not allow
any breach, withdrawal, rating reduction, restriction, suspension, probation,
failure to renew, cancellation, rescission, termination, lapse or forfeiture of
any License, permit, right, franchise or privilege necessary for the ownership
or operation of the Premises for the purposes for which the Premises is
intended.
(cc) Agreements. To the extent within Borrower's control, Borrower will not
allow any breach, withdrawal, restriction, suspension, probation, failure to
renew, cancellation, rescission, termination, lapse, alteration, forfeiture or
modification of any material Participation Agreement or any material Operating
Agreements and Management Contracts.
(dd) Amendments: Terminations. Borrower wi11 not amend or terminate or agree to
amend or terminate any material License or consent to a waiver of, or waive, any
material provisions thereof or amend or terminate or agree to amend or
terminate, any
18
material Participation Agreement or any material Operating Agreements and
Management Contracts.
(ee) Single Asset Entity. Borrower will not (a) acquire any real or personal
property other than the Premises and personal property related to the operation
and maintenance of the Premises; (b) operate any business other than the
management and operation of the Premises, or (c) maintain its assets in a way
difficult to segregate and identity.
(f) Liquidity. Throughout the term of the Loan, Guarantor shall maintain Liquid
Assets of at least $5,000,000.00. 4.2 Failure to Perform. If Borrower fails to
perform any act or to take any action or to pay any amount provided to be paid
by it under the provisions of any of the covenants and agreements contained in
this Agreement, Lender may but shall not be obligated to perform or cause to be
performed such act or take such action or pay such money, and any expenses so
incurred by Lender and any money so paid by Lender shall be an advance against
the Note and shall bear interest from the date of making such payment until paid
at the rate of interest payable on matured but unpaid principal of or interest
on the Note and shall be part of the indebtedness secured by the Deed of Trust,
and Lender upon making any such payment shall be subrogated to all rights of the
person, corporation or body politic receiving such payment.
ARTICLE V.
LOAN FUNDING
5.1 Loan Funding. The funding of the Loan shall take place in the offices of
Lender or at such other place as Lender may designate.
5.2 Conditions Precedent to Loan Funding. Except as otherwise provided herein,
the following shall be conditions precedent to Lender's obligations to fund the
Loan:
(a) Representations and Warranties. On the date of disbursal of the Loan
(hereinafter called the "Loan Funding Date"), all of Borrower's representations
and warranties contained herein or in any other Loan Document or in the
Commitment shall be true and correct in all material respects.
(b) Covenants and Agreements. On the Loan Funding Date. Borrower shall have
performed each covenant and agreement to be performed by Borrower on or before
the Loan Funding Date pursuant to this Agreement, any other Loan Document or the
Commitment, within the time specified.
(c) Due Execution and Recording of Loan Documents. Borrower shall have delivered
to Lender evidence, in form satisfactory to Lender, that the Loan Documents
19
have each been duly executed and constitute valid, binding documents,
enforceable in accordance with their respective terms and have been filed or
recorded, as appropriate, in all proper offices.
(d) Mortgagee Title Policy. Borrower shall have furnished Lender with the
Mortgagee Title Policy.
(e) Insurance. Borrower shall have obtained the insurance and delivered all
policies and certificates required hereunder. Appraisal. Borrower shall have
furnished Lender or paid Lender's cost of acquiring an MAI appraisal of the
Premises and the Improvements by a licensed appraiser satisfactory to Lender,
such appraisal to be in the form and amount reasonably satisfactory to Lender.
(g) Survey. Borrower shall have furnished to Lender a certified plat of survey
of the Premises made by a licensed surveyor or civil engineer satisfactory to
Lender meeting the requirements contained in the Pre-Closing Document List
furnished Borrower by Lender.
(h) Zoning and Compliance With Laws. Borrower shall have delivered to Lender
evidence, in form reasonably satisfactory to Lender, that the Premises are zoned
for the use for which the Improvements are designed and are otherwise in
compliance with all applicable Governmental Requirements, including, if
applicable, all provisions of environmental statutes.
(i) Certificates of Occupancy and Other Permits. Borrower shall have furnished
Lender (A) complete and true copies of the certificates of occupancy (if
reasonably available) and any other permits, licenses or certificates which are
required in connection with the Improvements, issued by the appropriate
Governmental Authorities with jurisdiction over the Premises, and (B) a
certificate by Borrower that no proceedings of any kind are pending or
threatened by any person, firm, corporation or public agency with respect to the
revocation or suspension of any permits, licenses or certificates.
(j) Tax Service. If required by Lender, Borrower shall have furnished Lender a
real estate tax reporting service contract in form satisfactory to Lender by
which Lender shall receive periodic notices of all taxes, assessments and bonds
encumbering the Premises.
(k) Other Documents. Borrower shall have delivered to Lender such other
documents and certificates as Lender or Lender's counsel may reasonably request.
(l) Management Agreement. Lender shall have received and approved the Management
Agreement. All modifications and amendments to the Management
20
Agreement or any termination of the Management Agreement must be approved
by Lender.
(m) Subordination of Management Agreement. Borrower shall have furnished Lender
with the executed Subordination of Management Agreement.
(n) Commitment Fee. Borrower shall have paid to Lender the commitment fee in the
sum of $56,000 as required by the Commitment.
ARTICLE VI.
DEFAULTS
6.1 Event of Default. An "event of default" shall be deemed to have occurred
hereunder if:
(a) A default (as such term is defined therein) occurs under the Deed of Trust;
or
(b) Borrower breaches or fails timely and properly to observe, keep or perform
any covenant, agreement, warranty or condition herein required to be observed,
kept or performed, other than those referred to in any other subsection hereof,
if such failure continues for thirty (30) days after receipt b% Borrower of
written notice and demand for the performance of such covenant, agreement,
warranty or condition, provided that if Borrower shall within such thirty (30)
day period commence action to cure such failure but is unable, by reason of the
nature of the performance required, to cure same within such period, and if
Borrower continues such action thereafter diligently and without unnecessary
delays, Borrower shall not be in default-hereunder until the expiration of a
period of time as may be reasonably necessary to cure such failure, provided
further that in any event Borrower shall be in default hereunder if such failure
is not cured on or before ninety (90) days after receipt by Borrower of the
above described written demand for performance; or
(c) Any involuntary, imposed, required, actual, threatened or pending
revocation, suspension, termination, probation, restriction, limitation,
forfeiture or refusal to remedy, any License necessary or material to the
operation of the Premises as a Facility; or
(d) Any termination of or refusal to remedy any participation or eligibility in
any third party payor program in which the Borrower presently participates or is
eligible to participate and which is material to the operation or the financial
condition of the Premises (other than with respect to any third party payor
program (except Medicare or Medicaid), private insurer or payor, employee
assistance program, Managed Care Plan, or accreditation which the Borrower
reasonably deems, in the exercise of prudent business
21
judgment, to be unnecessary to the successful operation of the
Premises and the ability of the Premises to generate and collect sufficient
revenues to pay all of its obligations as and when due and payable); or
(e) A final unappealable determination that the Borrower or any shareholders,
partners, members, directors, officers, employees or agents of the Borrower
violated Section 1128A, 1128C or 1877 of the Social Security Act (42 U.S.C.
xx.xx. 1320a-7a, 1320a-7c and 1395nn), the False Claims Act ( 31 U.S.C. ss.
3729 et seq.), the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. ss.
3801 et seq.) or other similar Governmental Requirements, if the same could
result in a Material Adverse Change: or
(f) A default occurs under Subsection 4.1 (ff).
(g) Borrower fails to make any deposit required pursuant to Subsection 4.1 (y)
or (z) within fifteen (15) days of demand therefor.
(h) A default occurs under Subsection 4.1 (aa).
ARTICLE VII.
REMEDIES
7.1 Remedies. Upon the occurrence of any one or more of the events of default
set out in Article VI hereof, Lender shall at its option be entitled to proceed
to exercise any of the following remedies:
(a) Borrower agrees that the occurrence of such event of default shall
constitute a default under each of the Loan Documents, thereby entitling Lender
(i) to exercise any of the various remedies therein provided including the
acceleration of the indebtedness evidenced by the Note and the foreclosure of
the Deed of Trust and (ii) cumulatively to exercise all other rights, options
and privileges provided by law.
(b) Lender shall have the right at any time and from time to time, without
notice to Borrower (any such notice being expressly waived), to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held, and any other indebtedness at any time owing by Lender
to or for the credit or the account of Borrower, against any and all of the
indebtedness of Borrower evidenced by the Note or this Agreement and/or secured
by the Deed of Trust, irrespective of whether or not Lender shall have made any
demand under this Agreement or the Note and although such indebtedness may be
unmatured. Lender agrees to notify Borrower promptly after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of Lender under this
subsection are in addition to any other rights and remedies (including, without
limitation, other
22
rights of set-of which Lender may have under the Note or the other Loan
Documents or otherwise.
ARTICLE VIII.
GENERAL CONDITIONS
8.1 Rights of Third Parties. All conditions of the obligations of Lender
hereunder, including the obligation to make advances, are imposed solely and
exclusively for the benefit of Lender and its successors and assigns and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will make
advances or refuse to make advances in the absence of strict compliance with any
or all thereof and no other person shall, under any circumstances, be deemed to
be a beneficiary of such conditions, any and all of which may be freely waived
in whole or in part by Lender at any time if in its sole discretion it deems it
desirable to do so.
8.2 Waivers. No waiver of or consent to any departure from any provision hereof
shall be effective unless in writing and signed by Lender and shall be effective
only in the specific instance for the purpose for which given and to the extent
specified in such writing. No waiver of any default hereunder shall affect or
constitute a waiver of any later default. No delay or omission of Lender to
exercise any right or remedy upon the happening of any event of default shall
impair any such right or remedy or be deemed to be a waiver of such event of
default.
8.3 Evidence of Satisfaction of Conditions. Any condition of this Agreement
which requires the submission of evidence of the existence or nonexistence of a
specified fact or facts implies as a condition the existence or nonexistence, as
the case may be, of such fact or facts, and Lender shall, at all times, be free
independently to establish to its satisfaction and in its absolute discretion
such existence or nonexistence.
8.4 Assignment by Borrower. Anything to the contrary herein notwithstanding,
Borrower shall have no right to assign its rights hereunder or the proceeds of
the Loan without the written consent of Lender and any such assignment or
purported assignment shall, at Lender's option, relieve Lender from all further
obligations hereunder and shall constitute a default under this Agreement.
8.5 Successors and Assigns Included in Parties. Whenever in this Agreement one
of the parties hereto is named or referred to, the heirs, lega1 representatives,
successors and assigns of such party shall be included and all covenants and
agreements contained in this Agreement by or on behalf of the Borrower or by or
on behalf of Lender shall bind and inure to the benefit of their respective
heirs, legal representatives, successors and assigns, whether so expressed or
not.
8.6 Exercise of Rights and Remedies. All rights and remedies of Lender hereunder
or under the Note or under the Deed of Trust or under any other Loan Document
shall be separate, distinct and cumulative and no single, partial or full
exercise of any right or remedy shall exhaust
23
the same or preclude Lender from thereafter exercising in full or in part the
same right or remedy or from concurrently or thereafter exercising any other
right or remedy which Lender may have hereunder, under the Note o: Deed of Trust
or any other Loan Document, or at law or in equity, and each and every such
right and remedy may be exercised at any time or from time to time.
8.7 Headings. The headings of the sections and subsections of this Agreement are
for the convenience of reference only, are not to be considered a part hereof
and shall not limit or otherwise affect any of the terms hereof.
8.8 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
ANP OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS (WITHOUT GIVING EFFECT TO TEXAS' PRINCIPLES OF CONFLICTS OF LAW),
EXCEPT TO THE EXTENT (A) OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO
THE CREATION. PFRFECTION. FORECLOSURE AND ENFORCEMENT OF RIGHTS AND REMEDIES
AGAINST THE PREMISES. WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF MISSISSIPPI, AND (B) THAT THE LAWS OF THE UNITED STATES OF AMERICA AND ANY
RULES, REGULATIONS, OR ORDERS ISSUED OR PROMULGATED THEREUNDER, APPLICABLE TO
THE AFFAIRS AND TRANSACTIONS ENTERED INTO BY LENDER OTHERWISE PREEEMPT
MISSISSIPPI OR TEXAS LAW: IN WHICH EVENT SUCH FEDERAL LAW SHALL CONTROL.
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
TEXAS OF FEDERAL COURT SITTING IN DALLAS, TEXAS OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, AND BORROWER
HEREBY AGREES AND CONSENTS THAT. IN ADDITION TO ANY METHODS OF SERVICE OR
PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVTCE OF PROCESS IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS,
TEXAS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL. RETURN RECEIPT REQUESTED,
DIRECTED TO BORROWER AT THE ADDRESS OF BORROWER FOR THE GIVING OF NOTICES UNDER
SECTION 8.14 HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN SO MAILED.
8.9 Supplement to Deed of Trust. The provisions of this Agreement are not
intended to supersede the provisions of the Deed of Trust but shall be construed
as supplemental thereto. In the event of any inconsistency between the
provisions hereof and the Deed of Trust, it is intended that, during the
applicability of this Agreement, this Agreement shall be controlling.
8.10 Usury. It is the intent of Lender and Borrower in the execution of the
Note, this Agreement and all other instrunents now or hereafter securing the
Note or executed in connection therewith or under any other written or oral
agreement by Borrower in favor of Lender to contract in strict compliance with
applicable usury law. In furtherance thereof, Lender and Borrower stipulate and
agree that none of the terms and provisions contained in the Note,
24
this Agreement or any other instrument securing the Note or executed in
connection herewith, or in any other written or oral agreement by Borrower in
favor of Lender, shall ever be construed to create a contract to pay for the
use, forbearance or detention of money, interest at a rate in excess of the
maximum interest rate permitted to be charged by applicable law; neither
Borrower nor any Guarantor, endorsers or other parties now or hereafter becoming
liable for payment of the Note or the other indebtedness secured by the Loan
Documents shall ever be obligated or required to pay interest on the Note or on
indebtedness arising under any instrument securing the Note or executed in
connection therewith, or in any other written or oral agreement by Borrower in
favor of Lender, at a rate in excess of the maximum interest that may be
lawfully charged under applicable law; and that the provisions of this Section
shall control over all other provisions of the Note, this Agreement and any
other instruments now or hereafter securing the Note or executed in connection
herewith or any other oral or written agreements which may be in apparent
conflict herewith. Lender expressly disavows any intention to charge or collect
excessive unearned interest or finance charges in the event the maturity of the
Note is accelerated. If maturity of the Note shall be accelerated for any reason
or if the principal of the Note is paid prior to the end of the term of the
Note, and as a result thereof the interest received for the actual period of
existence of the Loan exceeds the applicable maximum lawful rate, Lender shall,
at its option, either refund to Borrower the amount of such excess or credit the
amount of such excess against the principal balance of the Note then outstanding
and thereby shall render inapplicable any and all penalties of any kind provided
by applicable law as a result of such excess interest. In the event that Lender
shall contract for, charge or receive any amounts and/or any other thing of
value which are determined to constitute interest which would increase the
effective interest rate on the Note or the other indebtedness secured by the
Loan Documents to a rate in excess of that permitted to be charged by applicable
law, an amount equal to interest in excess of the lawful rate shall, upon such
determination, at the option of Lender, be either immediately returned to
Borrower or credited against the principal balance of the Note then outstanding
or the other indebtedness secured by the Loan Documents, in which event any and
all penalties of any kind under applicable law as a result of such excess
interest shall be inapplicable. By execution of this Agreement, Borrower
acknowledges that it believes the Loan to be non-usurious and agrees that if, at
any time, Borrower should have reason to believe, that the Loan is in fact
usurious, it will give Lender notice of such condition and Borrower agrees that
Lender shall have ninety (90) days after receipt of such notice in which to make
appropriate refund or other adjustment in order to correct such condition if in
fact such exists. The term "applicable law" as used in this Section shall mean
the laws of the State of Texas or the laws of the United States, whichever laws
allow the greater rate of interest, as such law now exist or may be changed or
amended or come into effect in the future.
8.11 Invalid Provisions to Affect No Others. If fulfillment of any provision
hereof or any transaction related hereto at the time performance of such
provisions shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provisions herein
contained operates or would prospectively operate to invalidate this Agreement
in whole or in part, then such clause or provision only shall be held for
naught, as though not herein contained, and the remainder of this Agreement
shall remain operative and in full force and effect.
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8.12 Number and Gender. Whenever the singular or plural number, masculine or
feminine or neuter gender is used herein, it shall equally include the other.
8.13 Amendments. Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
8.14 Notice. Any notice or communication required or permitted hereunder shall
be given in writing; sent by (a) personal delivery, or (b) expedited delivery
service with proof of delivery, or (c) United States Mail: postage prepaid,
registered or certified mail, or (d) prepaid telegram, telex or telecopy,
addressed as follows:
To Lender: 0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Commercial Real Estate Lending Division
To Borrower: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
with a copy to: Xxxxx Xxxxxxxxx
The Xxxxxxxxx Group PLLC
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
or to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of telegram, telex or telecopy, upon
receipt.
8.15 Legal Proceedings. Lender shall have the right to commence, appear in, or
to defend any action or proceeding purporting to affect the rights or duties of
the parties hereunder or the payment of any funds, and in connection therewith
pay necessary expenses, employ counsel and pay its reasonable fees. Any such
expenditures shall be considered additional advances hereunder and shall bear
interest at the rate payable under the Note for installments of principal and/or
interest after maturity shall be secured by the Loan Documents and shall be paid
by Borrower to Lender upon demand.
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8.16 Assignment by Lender. Lender shall have the right to assign any portion of
this Agreement and/or the Loan to a responsible institutional lender and to
disseminate to such lender any information it has pertaining to the Loan,
including without limitation, complete and current credit information on
Borrower, any of its principals and any Guarantor. In the event of such an
assignment, Borrower will agree to such modifications to this Agreement as will
facilitate such assignment, provided that such modifications will not add to the
obligations of Borrower. It is understood that any assignment by Lender will not
result in additional cash expense to Borrower. Neither the shareholders, nor the
trustees of a real estate investment trust assignee shall be personally liable
for the obligations of such trust and Borrower will agree to look solely to the
trust property for the payment of any claim hereunder.
8. I 7 Lender Not a Joint Venturer. Notwithstanding anything to the contrary
herein contained, Lender, by entering into this Agreement or by any action taken
pursuant hereto; will not be deemed a partner or joint venturer with Borrower,
and Borrower will indemnify and hold Lender harmless from any and all damages
resulting from such a construction of the parties and their relationship.
8.18 Survival of Covenants. All covenants of either party contained herein shall
continue-and survive until the Loan has been fully paid and discharged.
8.19 Time Is of the Essence. Time is of the essence of this Agreement.
8.20 Waiver of Judicial Procedural Matters. BORROWER HEREBY EXPRESSLY AND
UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY LENDER IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS, ANY AND EVERY
RIGHT IT MAY HAVE TO (i) INJUNCTIVE RELIEF, (II) A TRIAL BY JURY, (III)
INTERPOSE ANY COUNTERCLAIM THEREIT (OTHER THAN A COMPULSORY COUNTERCLAIM) AND
(IV) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. Nothing herein contained shall prevent or prohibit Borrower from
instituting or maintaining a separate action against Lender with respect to any
asserted claim.
8.21 Loan Participation. Borrower acknowledges and agrees that Lender may, from
time to time, sell or offer to sell interests in the Loan and Loan Documents to
one or more participants. Borrower authorizes Lender to disseminate to such
participant or prospective participant, any information it has pertaining to the
Loan, including without limitation, complete and current credit information on
the Borrower, any of its principals and Guarantor, provided that such
participant or prospective participant shall agree to keep such information
confidential.
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IN WITNESS WHEREOF, Borrower and Lender have hereunto caused these presents to
be executed on the date first above written. RIDGELAND ASSISTED LIVING, LLC, a
Washington limited liability company
By: Emeritus Properties XI, LLC, a Washington limited liability company, Member
By: Emeritus Corporation, a Washington corporation, its Manager
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President of Finance
BORROWER
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GUARANTY FEDERAL BANK,
F.S.B, a federal savings bank
By:
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
LENDER
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PLEASE PROVIDE BORROWER'S FORM. FORM IS SUBJECT TO LENDER'S APPROVAL.
SCHEDULE I
MONTHLY/QUARTERLY FINANCIAL STATEMENT AND CENSUS DATA
Schedule II
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Loan Agreement dated December 28,1998 (the
"Agreement"), by and between Emeritus Properties X, LLC and Guaranty Federal
Bank, F.S.B. ("Lender"), which Agreement is in full force and effect on the date
hereof. Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 4.1(v) of the Agreement.
Together herewith the Borrower is furnishing to Lender the Borrower's financial
statements (the "Financial Statements") as at ____________ and for the period
then ended (the "Reporting Date"). The Borrower hereby represents, warrants, and
acknowledges to Lender that:
(a) the officer of the Borrower signing this instrument is the
duly elected, qualified and acting ________ of Borrower;
(b) the Financial Statements present fairly in all material
respects in accordance with GAAP the financial position of the
Borrower as of the Reporting Date and its results of operations and
cash flows for the periods covered thereby and satisfy the
requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
compliance [*noncompliance] as of the Reporting Date with the
requirements of Sections 4.1(w), (x), (y) and (ff) of the Agreement;
(d) to the best of Borrower's knowledge, on the Reporting Date,
the Borrower was, and on the date hereof the Borrower is, in full
compliance with the disclosure requirements of the Agreement, and no
default or event of default (as such term is defined in the Agreement)
otherwise existed on the Reporting Date or otherwise exists on the
date of this instrument [except for , which [is/are] more fully
described on a schedule attached hereto).
The officer of the Borrower signing this instrument hereby certifies
that he has reviewed the Loan Documents and the Financial Statements or has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to execute this certificate on behalf of the Borrower.
IN WITNESS WHEREOF, this instrument is executed as of
EMERITUS PROPERTIES X, LLC, a
Washington limited liability company
By: Emeritus Corporation, a
Washington corporation, its
Manager
By: _ _ Name:
Title: Vice President of
Finance
