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TABLE OF CONTENTS
Item 8. Financial Statements and Supplementary Data
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One) | ||
ý |
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2012 |
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o |
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from to |
Commission file number 001-33135
AdCare Health Systems, Inc.
(Exact name of registrant as specified in its charter)
Ohio
(State or other jurisdiction of incorporation or organization) |
31-1332119
(I.R.S. Employer Identification No.) |
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1145 Hembree Road, Roswell, GA (Address of principal executive offices) |
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30076-1122 (Zip Code) |
Registrant's telephone number including area code (678) 869-5116
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Name of each exchange on which registered | |
---|---|---|
Common Stock, no par value | NYSE MKT | |
Preferred Stock, no par value | NYSE MKT |
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No ý
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company ý |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
The aggregate market value of AdCare Health Systems, Inc., common stock held by non-affiliates as of June 29, 2012, the last business day of the registrant's most recently completed second fiscal quarter, was $42,035,226. The number of shares of AdCare Health Systems, Inc., common stock, no par value, outstanding as of June 24, 2013 was 14,788,288.
AdCare Health Systems, Inc.
Form 10-K
Table of Contents
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Special Note Regarding Forward Looking Statements
Certain statements contained in this Annual Report on Form 10-K (this "Annual Report") in Part II, Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere are "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control and which may cause the actual results, performance, or achievements of AdCare Health Systems, Inc. to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "predict," "could," "intend," "target," "potential" and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation, those described in Part I, Item 1A., "Risk Factors," and elsewhere in this Annual Report and those described from time to time in our future reports filed with the Securities and Exchange Commission (the "SEC") under the Exchange Act.
All written or oral forward-looking statements that are made by or are attributable to us are expressly qualified in their entirety by this cautionary notice. Our forward-looking statements apply only as of the date of this Annual Report. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date of this Annual Report, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events or otherwise.
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Overview
AdCare Health Systems, Inc. ("AdCare") through its subsidiaries (together, the "Company" or "we"), own and manage skilled nursing facilities and assisted living facilities in the states of Alabama, Arkansas, Georgia, Missouri, North Carolina, Ohio, Oklahoma, and South Carolina. As of December 31, 2012, AdCare, through its wholly owned separate operating subsidiaries, owns, leases and manages 50 facilities consisting of 46 skilled nursing facilities, three assisted living facilities and one independent living/senior housing facility which total approximately 5,000 beds. Our facilities provide a range of health care services to patients and residents, including, but not limited to, skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term residents and short-stay patients. As of December 31, 2012, of the total 50 facilities, we owned and operated 26 facilities, leased and operated 11 facilities, and managed 13 facilities (including one consolidated variable interest entity).
The skilled nursing and assisted living facilities provide services to individuals needing long-term care in a nursing home or assisted living setting and management of those facilities. Through our subsidiaries, we provide a full complement of administrative services as well as consultative services that permit our local facility leadership teams to better focus on the delivery of healthcare services. We also provide these services to unaffiliated third party long term care operators and/or owners with whom we enter into management contracts. We currently provide these services to five unaffiliated facility owners. Each of our facilities is led by highly dedicated individuals who are responsible for key operational decisions at their facilities. Facility leaders and staff are trained and motivated to pursue superior clinical outcomes, high patient and family satisfaction, operating efficiencies and financial performance at their facilities. In addition, our facility leaders are enabled and motivated to share real-time operating data and otherwise benchmark clinical and operational performance against their peers in other facilities in order to improve clinical care, maximize patient satisfaction and augment operational efficiencies, promoting the sharing of best practices.
Much of our historical growth can be attributed to our expertise in acquiring under-performing facilities and transforming them into market leaders in clinical quality, staff competency, employee loyalty and financial performance. We intend to continue to grow our revenue and earnings by:
Our principal executive offices are located at 1145 Hembree Road, Roswell, GA 30076, and our telephone number is (678) 869-5116. We maintain a website at www.adcarehealth.com.
Company History
AdCare is an Ohio corporation. We were incorporated on August 14, 1991 under the name Passport Retirement, Inc. In 1995, we acquired substantially all of the assets and liabilities of AdCare Health Systems, Inc. and changed our name to AdCare Health Systems, Inc.
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Acquisitions and Dispositions
We have embarked on a strategy to grow our business through acquisitions and leases of senior care facilities and businesses providing services to those facilities. During the year ended December 31, 2012, the Company acquired a total of 11 skilled nursing facilities and one assisted living facility described further below. The total purchase price for each acquisition is after final closing adjustments. The Company incurred a total of $2.0 million of acquisition costs related to these acquisitions in 2012 and has recorded the cost in the "Other Income (Expense)" section of the Consolidated Statements of Operations included in Part II, Item 8., "Financial Statements and Supplementary Data."
Acquisitions
Eaglewood Care Center and Eaglewood Village. On January 1, 2012, the Company acquired a 113-bed skilled nursing facility located in Springfield, Ohio, known as Eaglewood Care Center, and an 80-bed assisted living facility located in Springfield, Ohio known as Eaglewood Village. The total purchase price was $12.4 million.
Little Rock, Northridge and Woodland Hills. On April 1, 2012, the Company acquired a 154-bed skilled nursing facility located in Little Rock, Arkansas, known as Little Rock Health & Rehab, a 140-bed skilled nursing facility located in North Little Rock, Arkansas, known as Northridge Healthcare and Rehabilitation, and a 140-bed skilled nursing facility located in Little Rock, Arkansas, known as Woodland Hills Healthcare and Rehabilitation. The total purchase price was $27.2 million.
Abington Place. On April 30, 2012, the Company acquired a 120-bed skilled nursing facility located in Little Rock, Arkansas, known as Abington Place. The total purchase price was $3.6 million.
Glenvue Nursing Home. On July 2, 2012, the Company acquired a 160-bed skilled nursing facility located in Glennville, Georgia, known as Glenvue Nursing. The total purchase price was $8.2 million.
Quail Creek Health and Rehab. On July 3, 2012, the Company acquired a 118-bed skilled nursing facility located in Oklahoma City, Oklahoma, known as Quail Creek Health and Rehab. The total purchase price was $6.2 million including with assumed fair valued indebtedness of $3.2 million.
Companions Specialized Care Center. On August 17, 2012, the Company acquired a 121-bed skilled nursing facility located in Tulsa, Oklahoma, known as Companions Specialized Care Center. The total purchase price was $5.9 million.
Sumter Valley Nursing and Rehab. On December 31, 2012, the Company acquired a 96-bed skilled nursing facility located in Sumter, South Carolina, known as Sumter Valley Nursing and Rehab. The total purchase price was $5.6 million.
Georgetown Healthcare and Rehab. On December 31, 2012, the Company acquired an 84-bed skilled nursing facility located in Georgetown, South Carolina, known as Georgetown Healthcare and Rehab. The total purchase price was $4.2 million.
Northwest Nursing Center. On December 31, 2012, the Company acquired an 88-bed skilled nursing facility located in Oklahoma City, Oklahoma, known as Northwest Nursing Center. The total purchase price was $3.0 million.
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The following tables provide summary information regarding our acquisitions and facility composition (excluding discontinued operations) for the periods indicated:
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December 31, | ||||||
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2012 | 2011 | |||||
Cumulative number of facilities |
50 | 37 | |||||
Cumulative number of operational beds |
4,996 | 3,603 |
|
|
Number of Facilities as of December 31, 2012 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State
|
Number of
Operational Beds/Units |
Owned | VIE | Leased |
Managed for
Third Parties |
Total | |||||||||||||
Alabama |
408 | 2 | 1 | | | 3 | |||||||||||||
Arkansas |
1,041 | 10 | | | | 10 | |||||||||||||
Georgia |
1,514 | 4 | | 9 | | 13 | |||||||||||||
Missouri |
80 | | | 1 | | 1 | |||||||||||||
North Carolina |
106 | 1 | | | | 1 | |||||||||||||
Ohio |
785 | 4 | | 1 | 4 | 9 | |||||||||||||
Oklahoma |
882 | 3 | | | 8 | 11 | |||||||||||||
South Carolina |
180 | 2 | | | | 2 | |||||||||||||
Total |
4,996 | 26 | 1 | 11 | 12 | 50 | |||||||||||||
Facility Type |
|||||||||||||||||||
Skilled Nursing |
4,697 | 24 | | 11 | 11 | 46 | |||||||||||||
Assisted Living |
216 | 2 | 1 | | | 3 | |||||||||||||
Independent Living |
83 | | | | 1 | 1 | |||||||||||||
Total |
4,996 | 26 | 1 | 11 | 12 | 50 | |||||||||||||
During 2012, we acquired 12 facilities (eleven skilled nursing facilities and one assisted living facility), bringing our Company's then total bed count to 4,996 at December 31, 2012. During 2011, we acquired 11 facilities (ten skilled nursing facilities and one assisted living facility), bringing our Company's then total bed count to 3,603 at December 31, 2011.
We are currently evaluating acquisition opportunities in addition to those described above and we continue to seek new opportunities to further implement our growth strategy. No assurances are made that we will be able to complete any such acquisitions on terms acceptable to us, if at all.
Dispositions
As part of the Company's strategy to focus on the growth of skilled nursing facilities, the Company decided in the fourth quarter of 2011 to exit the home health business. In the fourth quarter of 2012, the Company continued this strategy and entered into an agreement to sell six assisted living facilities located in Ohio. The Company also entered into a sublease arrangement in the fourth quarter of 2012 to exit the operations of a skilled nursing facility in Jeffersonville, Georgia. The results of operations and cash flows for the home health business, the six Ohio assisted living facilities and the Jeffersonville, Georgia skilled nursing facility are reported as discontinued operations. Current assets and liabilities of the disposal groups are classified as such in the Consolidated Balance Sheets at December 31, 2012 and 2011 included in Part II, Item 8, "Financial Statements and Supplementary Data."
Growth Strategy
Our objective is to be the provider of choice for health care and related services to the elderly in the communities in which we operate. We intend to grow our business through numerous initiatives.
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We expect to continue to increase occupancy rates and revenue per occupied unit at our facilities. We believe that our current operations serve as the foundation on which we can build a large fully-integrated senior living company. We will target attractive geographic markets by using our existing infrastructure and operating model, to provide a broad range of high quality care in a cost-efficient manner.
Organic Growth. We intend to focus on improving our operating margins within all of our facilities. We continually seek to maintain and improve by:
Pursue Strategic Acquisitions. We believe that our current infrastructure and extensive contacts within the industry will continue to provide us with the opportunity to evaluate numerous acquisition opportunities. We believe there is a significant opportunity for growth with a private to public arbitrage and opportunity to increase our operating margins by evaluating and potentially targeting the acquisition of complementary businesses which provide services to skilled nursing facilities.
Fragmentation in the Industry Provides Acquisition and Consolidation Opportunities. The senior living industry is highly fragmented and we believe that this provides significant acquisition and consolidation opportunities. We believe that the limited capital resources available to many small, private operators impedes their growth and exit prospects. We believe that we are well positioned to approach strategic small private operators and offer to them exit strategies which are not currently available as well as the ability to grow their business.
Emphasize Employee Training and Retention. We devote special attention to the hiring, screening, training, supervising and retention of our employees and caregivers. We have adopted comprehensive recruiting and screening programs for management positions that utilize corporate office team interviews and background and reference checks. We believe our commitment to and emphasis on quality hiring practices, employee training and retention differentiates us from many of our competitors.
Positioned for Growth. Our strategy typically begins with the acquisition of an independently owned, often times family operated, skilled nursing facility. We then utilize our proven clinical management and marketing programs to increase the proportion of more clinically complex sub-acute patients. These patients generate higher revenue per patient day. In many situations these patients are also more profitable. Additionally we are able to leverage our enhanced purchasing power and increase operating profit by providing more cost effective supplies and ancillary services. These management practices also assist in providing quality care to our patients and residents..
Pursue Management Contracts. We intend to pursue management opportunities for senior living communities. We believe that our management infrastructure and proven operating track record will allow us to take advantage of increased opportunities in the senior living market for new management contracts for third-party operators.
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Operating Strategy
Our operating philosophy is to provide affordable, quality care to our patients and residents. We execute this strategy by empowering and supporting our local leadership teams at the facilities. These facility teams are supported by seasoned regional staff that provide consultative assistance from both a clinical and operations perspective. Additionally, we provide centralized back office administrative services to the facilities such as accounting, payroll and accounts payable processing, purchasing, and IT support. Centralizing these non-patient centric activities is more efficient and cost effective and frees up facility staff to focus on patient care.
Increase Revenues and Profitability at Existing Facilities. Our strategy includes increasing facility revenues and profitability levels through increasing occupancy levels, increasing the percentage of sub-acute patients, maximizing reimbursement rates as appropriate, providing additional services to our current residents, and containing costs. Ongoing initiatives to promote higher occupancy levels and appropriate payor and case mixes at our senior living facilities include corporate programs to promote specialized care and therapy services as well as initiatives to improve customer service and develop safety programs to improve worker compensation insurance rates.
Offer Services Based on Level of Care. Our range of products and services is continually expanding to meet the evolving needs of our patients and residents. We have developed a variety of special clinical programs and care offerings that are responsive to particular geographic markets.
Improve Operating Efficiencies. We actively monitor and manage our operating costs. By having an established portfolio of properties, we believe that we have a platform to achieve operating efficiencies through economies of scale in the purchase of bulk items, such as food, and in the spreading of fixed costs, such as corporate overhead, over a larger revenue base, and the ability to provide more effective management supervision and financial controls.
Increase Occupancy Through Emphasis on Marketing Efforts. We emphasize strong corporate support for the marketing of our various local facilities. At a local level, our sales and marketing efforts are designed to promote higher occupancy levels and optimal payor mix. Management believes that the long-term care industry is fundamentally a local industry in which both patients and residents and the referral sources for them are based in the immediate local geographic area of the facility.
Promote an Internally-Developed Marketing Program. We focus on the identification and provision of services needed by the community. We assist each facility administrator in analysis of local demographics and competition with a view toward complementary service development. Our belief is that this locally based marketing approach, coupled with strong corporate monitoring and support, provides an advantage over regional competitors.
Operate the Facility Based Management Model. We hire an administrator/manager and director of nursing for each of our skilled nursing facilities and provide them with autonomy, responsibility and accountability. We believe this allows us to attract and retain higher quality administrators and directors of nursing. This leadership team manages the day-to-day operations of each facility, including oversight of the quality of care, delivery of resident services, and monitoring of the financial performance and marketing functions. We actively recruit personnel to maintain adequate staffing levels at our existing facilities and provide financial and budgeting assistance for our administrators, directors of nursing and department managers.
Industry Trends
The skilled nursing industry has evolved to meet the growing demand for post-acute and custodial healthcare services generated by an aging population, increasing life expectancies and the trend toward shifting of patient care to lower cost settings. The growth of the senior population in the United States
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continues to increase healthcare costs, often faster than the available funding from government-sponsored healthcare programs. In response, federal and state governments have adopted cost-containment measures that encourage the treatment of patients in more cost-effective settings such as skilled nursing facilities, for which the staffing requirements and associated costs are often significantly lower than acute care hospitals, inpatient rehabilitation facilities and other post-acute care settings. As a result, skilled nursing facilities are generally serving a larger population of higher acuity patients than in the past.
The skilled nursing industry is large and highly fragmented, characterized predominantly by numerous local and regional providers. We believe this fragmentation provides significant acquisition and consolidation opportunities for us. Additionally, based on a decrease in the number of skilled nursing facilities over the past few years, we expect that the supply and demand balance in the skilled nursing industry will continue to improve due to the shift of patient care to lower cost settings, an aging population and increasing life expectancies.
We also anticipate that as life expectancy continues to increase in the United States, the overall demand for skilled nursing services will increase. At present, the primary market demographic for skilled nursing services is primarily individuals age 75 and older. According to the 2010 U.S. Census, there were over 40 million people in the United States in 2010 that are over 65 years old. The 2010 U.S. Census estimates this group is one of the fastest growing segments of the United States population and is expected to more than double between 2000 and 2030.
We believe the skilled nursing industry has been and will continue to be impacted by several other trends. The use of long-term care insurance is increasing among seniors as a means of planning for the costs of skilled nursing services. In addition, as a result of increased mobility in society, reduction of average family size, and the increased number of two-wage earner couples, more seniors are looking for alternatives outside the family for their care.
Medicare and Medicaid Reimbursement
Rising healthcare costs due to a variety of factors, including an aging population and increasing life expectancies, has generated growing demand for post-acute healthcare services in recent years. In an effort to mitigate the cost of providing healthcare benefits, third-party payors including Medicare, Medicaid, managed care providers, insurance companies and others have increasingly encouraged the treatment of patients in lower-cost care settings. As a result, in recent years skilled nursing facilities, which typically have significantly lower cost structures than acute care hospitals and certain other post-acute care settings, have generally been serving larger populations of higher-acuity patients than in the past. However, Medicare and Medicaid reimbursement rates are subject to change from time to time and reduction in rates could materially and adversely impact our revenue.
Revenue derived directly or indirectly from Medicare reimbursement has historically comprised a substantial portion of our consolidated revenue. Medicare reimburses our skilled nursing facilities under a prospective payment system ("PPS") for certain inpatient covered services. Under the PPS, facilities are paid a predetermined amount per patient, per day, based on the anticipated costs of treating patients. The amount to be paid is determined by classifying each patient into a resource utilization group ("RUG") category that is based upon each patient's acuity level. In October 2010, the number of RUG categories was expanded from 53 to 66 as part of the implementation of the RUGs IV system and the introduction of a revised and substantially expanded patient assessment tool called the Minimum Data Set, version 3.0.
On July 29, 2011, the Centers for Medicare & Medicaid Services ("CMS") issued a final rule providing for, among other things, a net 11.1% reduction in PPS payments to skilled nursing facilities for CMS's fiscal year 2012 (which began October 1, 2011) as compared to PPS payments in CMS's fiscal year 2011 (which ended September 30, 2011). The 11.1% reduction is on a net basis, after the
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application of a 2.7% market basket increase, and reduced by a 1.0% multi-factor productivity adjustment required by the Patient Protection and Affordable Care Act of 2010 ("PPACA"). The final CMS rule also adjusted the method by which group therapy is counted for reimbursement purposes, and changed the timing in which patients who are receiving therapy must be reassessed for purposes of determining their RUG category.
The Middle Class Tax Relief and Job Creation Act of 2012 was signed into law on February 22, 2012, extending the Medicare Part B outpatient therapy cap exceptions process through December 31, 2012. The statutory Medicare Part B outpatient therapy cap for occupational therapy ("OT") was $1,880 for 2012, and the combined cap for physical therapy ("PT") and speech-language pathology services ("SLP") was also $1,880 for 2012. This is the annual per beneficiary therapy cap amount determined for each calendar year. Similar to the therapy cap, Congress established a threshold of $3,700 for PT and SLP services combined and another threshold of $3,700 for OT services. All therapy services rendered above the $3,700 amount are subject to manual medical review and may be denied unless pre-approved by the provider's Medicare Administrative Contractor. The law requires an exceptions process to the therapy cap that allows providers to receive payment from Medicare for medically necessary therapy services above the therapy cap amount. Beginning October 1, 2012, some therapy providers may submit requests for exceptions (pre-approval for up to 20 therapy treatment days for beneficiaries at or above the $3,700 threshold) to avoid denial of claims for services above the threshold amount. The $3,700 figure is the defined threshold that triggers the provision for an exception request. Prior to October 1, 2012, there was no provision for an exception request when the threshold was exceeded.
On July 27, 2012, CMS issued a final rule providing for, among other things, a net 1.8% increase in PPS payments to skilled nursing facilities for CMS's fiscal year 2013 (which began on October 1, 2012) as compared to PPS payments to skilled nursing facilities in CMS's fiscal year 2012 (which ended September 30, 2012). The 1.8% increase was on a net basis, reflecting the application of a 2.5% market basket increase, less a 0.7% multi-factor productivity adjustment mandated by PPACA. This increase is offset by the 2% sequestration reduction, discussed below, which became effective April 1, 2013.
On January 1, 2013 the American Taxpayer Relief Act of 2012 (the "ATRA") extended the therapy cap exception process for one year. The ATRA also made additional changes to the Multiple Procedure Payment Reduction previously implemented in 2010. The existing discount to multiple therapy procedures performed in an outpatient environment during a single day was 25%. Effective April 1, 2013, ATRA increased the discount rate by an additional 25% to 50%. The ATRA additionally delayed the sequestration reductions of 2% to all Medicare payments until April 1, 2013.
On May 8, 2013, CMS issued a proposed rule providing for an increase of 1.4% in PPS payments to skilled nursing facilities for CMS's fiscal year 2014 (which begins October 1, 2013) as compared to the PPS payments in CMS's fiscal year 2013 (which ends September 30, 2013). The proposed 1.4% increase is on a net basis, after the application of a 2.3% market basket increase reduced by a 0.5% forecast error correction and further reduced by a 0.4% multifactor productivity adjustment required by PPACA.
Should future changes in PPS include further reduced rates or increased standards for reaching certain reimbursement levels (including as a result of automatic cuts tied to federal deficit cut efforts or otherwise), our Medicare revenues derived from our skilled nursing facilities) could be reduced, with a corresponding adverse impact on our financial condition or results of operation.
We also derive a substantial portion of our consolidated revenue from Medicaid reimbursement, primarily through our skilled nursing business. Medicaid programs are administered by the applicable states and financed by both state and federal funds. Medicaid spending nationally has increased significantly in recent years, becoming an increasingly significant component of state budgets. This, combined with slower state revenue growth and other state budget demands, has led both the federal government to institute measures aimed at controlling the growth of Medicaid spending (and in some instances reducing it).
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Historically, adjustments to reimbursement under Medicare and Medicaid have had a significant effect on our revenue and results of operations. Recently enacted, pending and proposed legislation and administrative rulemaking at the federal and state levels could have similar effects on our business. Efforts to impose reduced reimbursement rates, greater discounts and more stringent cost controls by government and other payors are expected to continue for the foreseeable future and could adversely affect our business, financial condition and results of operations. Additionally, any delay or default by the federal or state governments in making Medicare and/or Medicaid reimbursement payments could materially and adversely affect our business, financial condition and results of operations.
Revenue Sources
Total Revenue by Payor Sources. We derive revenue primarily from the Medicaid and Medicare programs, private pay patients and managed care payors. Medicaid typically covers patients that require standard room and board services, and provides reimbursement rates that are generally lower than rates earned from other sources. We monitor our patient mix, which is the percentage of non-Medicaid revenue from each of our facilities, to measure the level received from each payor across each of our business units. We intend to continue our focus on enhanced care offerings for high acuity patients.
Medicaid. Medicaid is a state-administered program financed by state funds and matching federal funds. Medicaid programs are administered by the states and their political subdivisions, and often go by state-specific names. Medicaid programs generally provide health benefits for qualifying individuals, and may supplement Medicare benefits for financially needy persons aged 65 and older. Medicaid reimbursement formulas are established by each state with the approval of the federal government in accordance with federal guidelines. Seniors who enter skilled nursing facilities as private pay clients can become eligible for Medicaid once they have substantially depleted their assets. Medicaid is the largest source of funding for nursing home facilities.
Private and Other Payors. Private and other payors consist primarily of individuals, family members or other third parties who directly pay for the services we provide.
Medicare. Medicare is a federal program that provides healthcare benefits to individuals who are 65 years of age or older or are disabled. To achieve and maintain Medicare certification, a skilled nursing facility must meet the CMS, "Conditions of Participation", on an ongoing basis, as determined in periodic facility inspections or surveys conducted primarily by the state licensing agency in the state where the facility is located. Medicare pays for inpatient skilled nursing facility services under the prospective payment system. The prospective payment for each beneficiary is based upon the medical condition of and care needed by the beneficiary. Medicare skilled nursing facility coverage is limited to 100 days per episode of illness for those beneficiaries who require daily care following discharge from an acute care hospital.
Managed Care and Private Insurance. Managed care patients consist of individuals who are insured by a third-party entity, typically a senior health maintenance organization ("HMO") plan, or who are Medicare beneficiaries who have assigned their Medicare benefits to a senior HMO plan. Another type of insurance, long-term care insurance, is also becoming more widely available to consumers, but is not expected to contribute significantly to industry revenues in the near term.
Billing and Reimbursement. Our revenue from government payors, including Medicare and state Medicaid agencies, is subject to retroactive adjustments in the form of claimed overpayments and underpayments based on rate adjustments and asserted billing and reimbursement errors. We believe billing and reimbursement errors, disagreements, overpayments and underpayments are common in our industry, and we are regularly engaged with government payors and their fiscal intermediaries in reviews, audits and appeals of our claims for reimbursement due to the subjectivity inherent in the processes related to patient diagnosis and care, recordkeeping, claims processing and other aspects of
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the patient service and reimbursement processes, and the errors and disagreements those subjectivities can produce.
We employ accounting, reimbursement and compliance specialists who train, mentor and assist our clerical, clinical and rehabilitation staffs in the preparation of claims and supporting documentation, regularly monitor billing and reimbursement practices within our facilities, and assist with the appeal of overpayment and recoupment claims generated by governmental, fiscal intermediary and other auditors and reviewers. In addition, due to the potentially serious consequences that could arise from any impropriety in our billing and reimbursement processes, we investigate all allegations of impropriety or irregularity relative thereto.
Whether information about our billing and reimbursement processes is obtained from external sources or activities such as Medicare and Medicaid audits or probe reviews or our regular day-to-day monitoring and training activities, we collect and utilize such information to improve our billing and reimbursement functions and the various processes related thereto. We continually strive to improve the efficiency and accuracy of all of our operational and business functions, including our billing and reimbursement processes. The table below sets forth our annual revenue by payor source during the year ended December 31, 2012 and 2011. Management fees of $2.2 million and $1.6 million in 2012 and 2011, respectively, are included in other.
|
Year Ended December 31, | ||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
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2012 | 2011 | |||||
Annual Revenue by Payor
|
|||||||
Medicaid |
$ | 108,459 | $ | 75,779 | |||
Medicare |
58,181 | 42,524 | |||||
Other |
35,018 | 19,909 | |||||
Total |
$ | 201,658 | $ | 138,212 | |||
Competition
Our ability to compete successfully varies from location to location and depends on a number of factors, including the number of competing facilities in the local market, the types of services available, our local reputation for quality care of patients, the commitment and expertise of our staff and physicians, our local service offerings and treatment programs, the cost of care in each locality, and the physical appearance, location, age and condition of our facilities. We are in a competitive, yet fragmented, industry. While there are several national and regional companies that provide retirement living alternatives, we anticipate that our primary source of competition will be the smaller regional and local development and management companies. There is limited, if any, price competition with respect to Medicaid and Medicare patients, since revenues for services to such patients are strictly controlled and are based on fixed rates and cost reimbursement principles. Although the degree of success with which our facilities compete varies from location to location, management believes that its facilities generally compete effectively with respect to these factors. Our competitors include assisted living communities and other retirement facilities and communities, home health care agencies, nursing homes, and convalescent centers, some of which operate on a not-for-profit or charitable basis. Our nursing homes and assisted living facilities compete with both national and local competitors. We also compete with other health care companies for facility acquisitions and management contracts. We give no assurance that additional facilities and management contracts can be acquired on favorable terms.
We seek to compete effectively in each market by establishing a reputation within the local community for quality of care, attractive and comfortable facilities, and providing specialized healthcare with an ability to care for high-acuity patients. We believe that the average cost to a third-party payor for the treatment of our typical high-acuity patient is lower if that patient is treated in one of our skilled nursing facilities than if that same patient were to be treated in an inpatient rehabilitation
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facility or long-term acute-care hospital. We face direct competition from alternative facilities in our markets for residents. The skilled nursing facilities operated by us compete with other facilities in their respective markets, including rehabilitation hospitals and other "skilled" and personal care residential facilities. Some of these providers are not-for-profit organizations with access to sources of funds not available to our centers. In addition, our facilities also face competition for employees.
Increased competition could limit our ability to expand our business. We believe that the most important competitive factors in the long-term care business are: a nursing center's local reputation with the local community and other healthcare providers, such as acute care hospitals, physicians, religious groups, other community organizations, managed care organizations, and a patient's family and friends; physical plant condition; the ability to identify and meet particular care needs in the community; the availability of qualified personnel to provide the requisite care; and the rates charged for services.
Increased competition could limit our ability to attract and retain patients, maintain or increase rates or to expand our business. Many of our competitors have greater financial and other resources than we have, may have greater brand recognition and may be more established in their respective communities than we are. Competing companies may also offer newer facilities or different programs or services than we do and may as a result be more attractive to our current patients, to potential patients and to referral sources. Some of our competitors may accept lower profit margins than we do, which could present significant price competition, particularly for managed care and private pay patients.
Government Regulation
The health care industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, government health care program participation requirements, reimbursement for patient services, certificates of need, quality of patient care and Medicare and Medicaid fraud and abuse. Over the last several years, government activity has increased with respect to investigations and allegations concerning possible violations by health care providers of fraud and abuse statutes and regulations as well as laws and regulations governing quality of care issues in the skilled nursing profession in general. Violations of these laws and regulations could result in exclusion from government health care programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Compliance with such laws and regulations is subject to ongoing government review and interpretation, as well as regulatory actions in which government agencies seek to impose fines and penalties.
Licensure and Certification. Certain states administer a certificate of need program, which applies to the incurrence of capital expenditures, the offering of certain new institutional health services, the cessation of certain services and the acquisition of major medical equipment. Such legislation also stipulates requirements for such programs, including that each program be consistent with the respective state health plan in effect pursuant to such legislation and provide for penalties to enforce program requirements. To the extent that certificates of need or other similar approvals are required for expansion of our operations, either through acquisitions, expansion or provision of new services or other changes, such expansion could be affected adversely by the failure or inability to obtain the necessary approvals, changes in the standards applicable to such approvals or possible delays and expenses associated with obtaining such approvals.
Skilled nursing homes and assisted living facilities are required to be individually licensed or certified under applicable state law and as a condition of participation under the Medicare program. In addition, healthcare professionals and practitioners are required to be licensed in most states. We believe that our operating companies and personnel that provide these services have all required
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regulatory approvals necessary for our current operations. The failure to obtain, retain or renew any required license could adversely affect our operations, including our financial results.
Health Reform Legislation. In recent years, there have been numerous initiatives on the federal and state levels for comprehensive reforms affecting the payment for, the availability of and reimbursement for healthcare services in the United States. These initiatives have ranged from proposals to fundamentally change federal and state healthcare reimbursement programs, including the provision of comprehensive healthcare coverage to the public under governmental funded programs, to minor modifications to existing programs. PPACA, which was passed in 2010 and has implementation timing and costs and regulatory implications that are still uncertain in many respects, is among the most comprehensive and notable of these legislative efforts, and its full effects on us and others in our industry are still in many ways difficult to predict. The content or timing of any future health reform legislation, and its impact on us, is impossible to predict. If significant reforms are made to the U.S. healthcare system, those reforms may have an adverse effect on our financial condition and results of operations.
While many of the provisions of PPACA will not take effect for several years or are subject to further refinement through the promulgation of regulations, some key provisions of PPACA are presently effective:
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provision substantially tightens the repayment and reporting requirements generally associated with the operations of health care providers to avoid False Claims Act exposure.
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On June 28, 2012, the United States Supreme Court ruled that the enactment of PPACA did not violate the Constitution of the United States. This ruling permits the implementation of most of the provisions of PPACA to proceed. The provisions of PPACA discussed above are examples of recently enacted federal health reform provisions that we believe may have a material impact on the long-term care profession generally and on our business. However, the foregoing discussion is not intended to constitute, nor does it constitute, an exhaustive review and discussion of PPACA. It is possible that other provisions of PPACA may be interpreted, clarified, or applied to our businesses in ways that could have a material impact on our business, financial condition and results of operations. Similar federal and/or state legislation that may be adopted in the future could have similar effects.
In addition, we incur considerable administrative costs in monitoring the changes made within the various reimbursement programs in which we participate, determining the appropriate actions to be taken in response to those changes, and implementing the required actions to meet the new requirements and minimize the repercussions of the changes to our organization, reimbursement rates and costs.
Medicare and Medicaid. Medicare is a federally-funded and administered health insurance program for the aged and for certain chronically disabled individuals. Part A of the Medicare program covers inpatient hospital services and certain services furnished by other institutional providers such as skilled nursing facilities. Part B covers the services of doctors, suppliers of medical items, various types of outpatient services and certain ancillary services of the type provided by long-term and acute care facilities. Medicare payments under Part A and Part B are subject to certain caps and limitations, as provided in Medicare regulations. Medicare benefits are not available for intermediate and custodial levels of nursing center care or for assisted living center arrangements.
Medicaid is a medical assistance program for the indigent, operated by individual states with financial participation by the federal government. Criteria for medical indigence and available Medicaid benefits and rates of payment vary somewhat from state to state, subject to certain federal requirements. Basic long-term care services are provided to Medicaid beneficiaries, including nursing, dietary, housekeeping and laundry, restorative health care services, room and board and medications. Federal law requires that a state Medicaid program must provide for a public process for determination of Medicaid rates of payment for nursing center services. Under this process, proposed rates, the methodologies underlying the establishment of such rates and the justification for the proposed rates are published. This public process gives providers, beneficiaries and concerned state patients a reasonable opportunity for review and comment. Certain of the states in which we now operate are actively seeking ways to reduce Medicaid spending for nursing center care by such methods as capitated payments and substantial reductions in reimbursement rates.
As a component of CMS administration of the government's reimbursement programs, a new ratings system was implemented in December 2008 to assist the public in choosing a skilled care provider. The system is an attempt to simplify all the data for each nursing center to a "Star" ranking. The overall Star rating is determined by three components (three years survey results, quality measure calculations, and staffing data), with each of the components receiving star rankings as well. We will continue to strive to achieve high rankings for our facilities, as well as assuring that our rankings are correct and appropriately reflect our quality results.
Health Insurance Portability and Accountability Act of 1996 Compliance. There are numerous legislative and regulatory requirements at the federal and state levels addressing patient privacy and security of health information. The Health Insurance Portability and Accountability Act of 1996 ("HIPAA") contains provisions that require us to adopt and maintain business procedures designed to protect the privacy, security and integrity of patients' individual health information. States also have laws that apply to the privacy of healthcare information. We must comply with these state privacy laws to the extent that they are more protective of healthcare information or provide additional protections
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not afforded by HIPAA. HIPAA's security standards were designed to protect electronic information against reasonably anticipated threats or hazards to the security or integrity of the information and to protect the information against unauthorized use or disclosure. These standards have had and are expected to continue to have a significant impact on the health care industry because they impose extensive requirements and restrictions on the use and disclosure of identifiable patient information. In addition, HIPAA established uniform standards governing the conduct of certain electronic healthcare transactions and protecting the privacy and security of individually identifiable health information. The Health Information Technology for Clinical Health Act of 2009 expanded the requirements and noncompliance penalties under HIPAA and requires correspondingly intensive compliance efforts by companies such as ours, including self-disclosures of breaches of unsecured health information to affected patients, federal officials, and, in some cases, the media. On January 25, 2013, the Department of Health and Human Services promulgated new HIPAA privacy, security, and enforcement regulations, which increase significantly the penalties and enforcement practices of the Department regarding HIPAA violations. We implemented or upgraded computer and information systems as we believe necessary to comply with the new regulations. We believe that we are in substantial compliance with applicable state and federal regulations relating to privacy and security of patient information. However, if we fail to comply with the applicable regulations, we could be subject to significant penalties.
Employees
As of December 31, 2012, excluding discontinued operations, we had approximately 4,400 total employees of which 2,900 were full time employees.
The following are certain risk factors that could affect our business, operations and financial condition. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Annual Report because these factors could cause the actual results and conditions to differ materially from those projected in forward-looking statements. This section does not describe all risks applicable to our business, and we intend it only as a summary of certain material factors. If any of the following risks actually occur, our business, financial condition or results of operations could be negatively affected. In that case, the trading price of our common stock and our Series A Preferred Stock could decline.
Health care reform may affect our profitability and may require us to change the way our business is conducted.
Health care is an area of extensive and frequent regulatory change. The manner and the extent to which health care is regulated at the federal and state level is evolving. Changes in the laws or new interpretations of existing laws may have a significant effect on our methods and costs of doing business. Our success will depend partially on our ability to satisfy the applicable regulations and requirements and to procure and maintain required licenses. Our operations could also be adversely affected by, among other things, regulatory developments such as mandatory increases in the scope and quality of care given to the residents and revisions in licensing and certification standards. We are and will continue to be subject to varying degrees of regulation and licensing by health or social service agencies. We believe that our operations do not presently violate any existing federal or state laws, but we make no assurances that federal, state, or local laws or regulatory procedures which might adversely affect our business, financial condition, results of operations or prospects will not be expanded or imposed. A failure to comply with applicable requirements could cause us to be fined or could cause the cessation of our business, which would have a material adverse effect on our Company.
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In March 2010, the PPACA and the Health Care and Education Reconciliation Act of 2010 were signed into law. Together, these two measures make the most sweeping changes to the U.S. health care system since the creation of Medicare and Medicaid. These new laws include a large number of health care related provisions scheduled to take effect over the next four years, including expanding Medicaid eligibility, requiring most individuals to have health insurance, establishing new regulations on health plans, establishing health insurance exchanges and modifying certain payment systems to encourage more cost-effective care and a reduction of inefficiencies and waste, including new tools to address fraud and abuse. As the implementation of, and rulemaking with respect to, these measures is ongoing, we are unable to accurately predict the effect these laws or any future legislation or regulation will have on us or our operations, including future reimbursement rates and occupancy in our inpatient facilities.
Our business depends on reimbursement under federal and state programs, and federal and state legislation or other changes to reimbursement and other aspects of Medicaid and Medicare may reduce or otherwise adversely affect reimbursement amounts.
A substantial portion of our revenue is derived from third-party payors, including Medicare and Medicaid programs. Our business, financial condition, results of operations and prospects would be adversely affected in the event that reimbursement rates under these programs are reduced or rise more slowly than the rate at which our costs increase or if there are changes in the way these programs pay for services. For example, services for which we are currently reimbursed by Medicaid and Medicare may not continue to be reimbursed at adequate levels or at all, or further limits on the scope of services being reimbursed, delays or reductions in reimbursement or changes in other aspects of reimbursement could occur, each of which could adversely impact our business, financial condition, results of operations and prospects.
The Medicaid and Medicare programs are subject to statutory and regulatory changes affecting, among other things, base rates or basis of payment, retroactive rate adjustments, annual caps that limit the amount that can be paid (including deductible and coinsurance amounts) for rehabilitation therapy services rendered to Medicare beneficiaries, administrative or executive orders and government funding restrictions, all of which may materially adversely affect the rates and frequency at which these programs reimburse us for our services.
For example, on July 29, 2011, CMS announced a final rule reducing Medicare skilled nursing facility PPS payments in fiscal year 2012 by $3.87 billion, or 11.1% lower than payments for fiscal year 2011. Moreover, CMS effectively reduced our Medicare reimbursement rates by nearly 11.7% by reducing rates as well as implementing changes to the RUG classification system. Similarly, in July 2011, Ohio Medicaid implemented reductions to the reimbursement rates of 6%.
On August 2, 2011, President Obama signed into law the Budget Control Act of 2011, which requires the federal budget to include automatic spending reductions beginning in 2012, including reduction of not more than 2% to Medicare providers, but exempting reductions to certain Medicaid and Medicare benefits. With respect to Medicare, these automatic reductions went into effect on April 1, 2013. Also, on March 15, 2013, the Medicare Payment Advisory Commission recommended that Congress eliminate the market basket update and revise the prospective payment system to result in 2014 in a 4% reduction in Medicare payments to skilled nursing facilities, with subsequent reductions to follow. We are unable to accurately predict the impact these automatic and potential reductions will have on our business, and those reductions could materially adversely affect our business, financial condition, results of operations and prospects.
Recent federal governmental proposals could limit the states' use of provider tax programs to generate revenue for their Medicaid expenditures, which could result in a reduction in our reimbursement rates under Medicaid. To generate funds to pay for the increasing costs of the Medicaid
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program, many states utilize financial arrangements commonly referred to as "provider taxes." Under provider tax arrangements, states collect taxes from healthcare providers and then use the revenue to pay the providers as a Medicaid expenditure, which allows the states to then claim additional federal matching funds on the additional reimbursements. Current federal law provides for a cap on the maximum allowable provider tax as a percentage of the provider's total revenue. There is no assurance that federal law will continue to provide matching federal funds on state Medicaid expenditures funded through provider taxes, or that the current caps on provider taxes will not be reduced. Any discontinuance or reduction in federal matching of provider tax-related Medicaid expenditures could have a significant and adverse effect on states' Medicaid expenditures and, as a result, could have a material and adverse effect on our business, financial condition, results of operations and prospects.
We cannot currently estimate the magnitude of the potential Medicare and Medicaid rate or payment reductions, the impact of the failure of these programs to increase rates to match increasing expenses or the impact on us of potential Medicare and Medicaid policy changes, but they may be material to our operations and affect our future results of operations. We are unable to accurately predict whether future Medicare and Medicaid rates and payments will be sufficient to cover our costs. Future Medicare and Medicaid rate declines or a failure of these rates or payments to cover our costs could result in our experiencing materially lower earnings or losses.
We conduct business in a heavily regulated industry, and changes in, or violations of, regulations may result in increased costs or sanctions that reduce our revenue and profitability.
As a result of our participation in the Medicaid and Medicare programs, we are subject to, in the ordinary course of business, various governmental reviews, inquiries, investigations and audits by federal and state agencies to verify our compliance with these programs and laws and regulations applicable to the operation of, and reimbursement for, skilled nursing and assisted living facilities and our other operating areas. These regulations include those relating to licensure, conduct of operations, ownership of facilities, construction of new facilities and additions to existing facilities, allowable costs, services and prices for services.
Recently, the federal government has imposed extensive enforcement policies resulting in a significant increase in the number of inspections, citations of regulatory deficiencies and other regulatory sanctions, including terminations from the Medicare and Medicaid programs, denials of payment for new Medicare and Medicaid admissions and civil monetary penalties. If we fail to comply, or are perceived as failing to comply, with the extensive laws and regulations applicable to our industry, then we may become ineligible to receive government program reimbursement, be required to refund amounts received from Medicare, Medicaid or private payors, suffer civil or criminal penalties, suffer damage to our reputation or be required to significantly change the way we operate our business.
We operate in multiple states and the applicable regulatory provisions in each state are subject to changes over time. We continue to monitor state regulatory provisions applicable to our business to facilitate compliance with any revised or newly issued rules and policies.
Federal and state healthcare fraud and abuse laws regulate both the provision of services to government program beneficiaries and the methods and requirements for submitting claims for services rendered to such beneficiaries. Under these laws, individuals and organizations can be penalized for submitting claims for services that are not provided, that have been inadequately provided, billed in an incorrect manner or other than as actually provided, not medically necessary, provided by an improper person, accompanied by an illegal inducement to utilize or refrain from utilizing a service or product, or billed or coded in a manner that does not otherwise comply with applicable governmental requirements. Penalties also may be imposed for violation of anti-kickback and patient referral laws.
Federal and state governments have a range of criminal, civil and administrative sanctions available to penalize and remediate healthcare fraud and abuse, including exclusion of the provider from
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participation in the Medicare and Medicaid programs, fines, criminal and civil monetary penalties and suspension of payments and, in the case of individuals, imprisonment. We also are subject to potential lawsuits under a federal whistleblower statute designed to combat fraud and abuse in the health care industry. These lawsuits can involve significant monetary awards to private plaintiffs who successfully bring these suits.
We believe that we maintain and follow policies and procedures that are sufficient to ensure that our facilities will operate in substantial compliance with these anti-fraud and abuse requirements and other Medicare and Medicaid program criteria. While we believe that our business practices are consistent with Medicare and Medicaid criteria, those criteria are often vague and subject to change and interpretation.
We are unable to accurately predict the future course of federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations, or the intensity of federal and state enforcement actions. An adverse review, inquiry, investigation or audit could result in:
An expanded federal program is underway to recover Medicare overpayments.
The Medicare Modernization Act of 2003 established a three year demonstration project to recover overpayments and identify underpayments on Medicare claims from hospitals, skilled nursing facilities and home health agencies through a review of claims previously paid by Medicare beginning in October, 2007. Medicare contracted nationwide with third parties known as Recovery Audit Contractors ("RAC") to conduct these reviews commonly referred to as RAC Audits. Due to the success of the program, the Tax Relief and Health Care Act of 2006 made the program permanent and mandated its expansion to all 50 states in 2010. We are also subject to other audits under various government programs, including Zone Program Integrity Contractors, Program Safeguard Contractors and Medicaid Integrity Contractors, in which third-party firms engaged by CMS conduct extensive reviews of claims data and medical and other records to identify potential improper government payments. We make no assurances that our claims will not be selected for any such audits in the future and, if they are selected for any such audit, the extent to which these audits may have a material adverse effect on our business, financial condition, results of operations and prospects.
We are subject to claims under the self-referral and anti-kickback legislation.
In the United States, various state and federal laws regulate the relationships between providers of health care services, physicians and other clinicians. In particular, various laws, including federal and state anti-kickback and anti-fraud statutes, prohibit certain business practices and relationships that might affect the provision and cost of health care services reimbursable under Medicare and Medicaid programs, including the payment or receipt of compensation for the referral of patients whose care will be paid by federal governmental programs. Sanctions for violating the anti-kickback and anti-fraud statutes include criminal penalties and civil sanctions, including fines and possible exclusion from governmental programs such as Medicare and Medicaid.
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These laws and regulations are complex, and limited judicial or regulatory interpretation exists. While we make every effort to ensure compliance, we make no assurances that governmental officials charged with responsibility for enforcing the provisions of these laws and regulations will not assert that one or more of our arrangements are in violation of the provisions of such laws and regulations. Violations of these laws may result in substantial civil or criminal penalties for individuals or entities, including large civil monetary penalties and exclusion from participation in the Medicare or Medicaid programs. Such exclusion or penalties, if applied to us, could have a material adverse effect on our business, financial condition, results of operations and prospects.
We are required to comply with laws governing the transmission and privacy of health information.
HIPAA requires us to comply with standards for the exchange of health information within our Company and with third parties, such as payors, business associates and patients. These include standards for common health care transactions, such as claims information, plan eligibility, payment information and the use of electronic signatures, unique identifiers for providers, employers, health plans and individuals, and security, privacy and enforcement. If we are found to be in violation of the privacy or security rules under HIPAA or other federal or state laws protecting the confidentiality of patient health information, we could be subject to criminal penalties and civil sanctions, which could increase our liabilities, harm our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business, financial condition, results of operations and prospects.
We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and manage or support a variety of business processes, including medical records, financial transactions and records, personal identifying information, payroll data and workforce scheduling information. We purchase some of our information technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential patient, resident and other customer information, such as individually identifiable information, including information relating to health protected by HIPAA. Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems' improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches can create system disruptions or shutdowns or the unauthorized disclosure of confidential information. If personal or otherwise protected information of our patients is improperly accessed, tampered with or distributed, we may incur significant costs to remediate possible injury to the affected patients and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential patient health information. Any failure to maintain proper functionality and security of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition, results of operations and prospects.
We intend to continue to expand our business through acquisitions.
Our business model calls for seeking to acquire existing cash flowing operations and to expand our operations by pursuing an acquisition growth strategy to acquire and lease long-term care facilities, primarily skilled nursing facilities. Our success will largely depend on our ability to finance the new
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acquisitions and implement and integrate the new acquisitions into our management systems. As a result, we expect to experience all of the risks that generally occur with rapid expansion such as:
If we are unable to successfully integrate the operations of an acquired property or business into our operations, we could be required to undertake unanticipated changes. These changes could increase our operating costs and have a material adverse effect on our business, financial condition, results of operations and prospects.
We continue to seek acquisitions and other strategic opportunities that may require a significant amount of management resources and costs.
We continue to seek acquisitions and other strategic opportunities. Accordingly, we are often engaged in evaluating potential transactions and other strategic alternatives. In addition, from time to time, we engage in preliminary discussions that may result in one or more transactions. Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transaction, we may devote a significant amount of our management resources to such transactions, which could negatively impact our existing and continuing operations. In addition, we may incur significant costs in connection with exploring and targeting acquisitions, regardless of whether these acquisitions are completed. In the event that we consummate an acquisition or strategic alternative in the future, there is no assurance that we would complete the acquisition or fully realize the potential benefit of such a transaction even if it is completed.
We will require additional financing in order to fund future acquisitions.
The pursuit of our growth strategy and the acquisition of new skilled nursing facilities may involve significant cash expenditures, debt incurrence, capital expenditures, additional operating losses, amortization of the intangible assets of acquired companies, dilutive issuances of equity securities and other expenses that could have a material adverse effect on our business, financial condition, results of operations and prospects.
During 2013, we will need to obtain additional financing to implement our expansion strategy and fund our acquisitions. We are currently exploring several financing alternatives and may seek to raise additional capital through the sale of additional debt or equity securities. As of December 31, 2012, we had an accumulated deficit of $25.8 million and a working capital deficit of approximately $5.9 million. Our cumulative losses have, in the past, made it difficult for us to borrow adequate funds on what management believed to be commercially reasonable terms. There is no assurance that we will succeed in obtaining financing or will be able to raise additional capital through the issuance of debt or equity securities on terms acceptable to us, or at all, or that any financing obtained will not contain restrictive
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covenants that limit our operating flexibility. If we are unable to secure such additional financing, then we may be required to delay or modify our expansion plans. If we raise capital for new acquisitions through the sale of equity securities, then our shareholders may experience dilution.
We may be unable to complete future facility or business acquisitions at attractive prices or at all, which may adversely affect our revenue and financial condition.
The profitability of our operations relies on acquiring existing cash flowing operations and expanding our operations by acquiring and leasing long-term care facilities, primarily skilled nursing facilities.
We face competition for the acquisition of these facilities and related businesses and expect this competition to increase. Based upon factors such as our ability to identify suitable acquisition candidates, the purchase price of the facilities, prevailing market conditions, the availability of leadership to manage new facilities and our willingness to take on new operations, the rate at which we have historically acquired facilities has fluctuated significantly. In the future, we anticipate the rate at which we may acquire facilities will continue to fluctuate, which may affect our revenue and financial condition.
In undertaking acquisitions, we may be adversely impacted by costs, liabilities and regulatory issues that may adversely affect our operations.
In acquiring new facilities, we may be adversely impacted by unforeseen liabilities attributable to prior providers who operated those facilities, against whom we may have little or no recourse. Even if we improve operations and patient care at facilities that we have acquired, we still may face post-acquisition regulatory issues related to pre-acquisition events. These may include, without limitation, payment recoupment related to our predecessors' prior noncompliance, the imposition of fines, penalties, operational restrictions or special regulatory status. Further, we may incur post-acquisition compliance risk due to the difficulty or impossibility of immediately or quickly bringing non-compliant facilities into full compliance. Diligence materials pertaining to acquisition targets, especially the underperforming facilities that often represent the greatest opportunity for return, are often inadequate, inaccurate or impossible to obtain, sometimes requiring us to make acquisition decisions with incomplete information. Despite our due diligence procedures, facilities that we have acquired or may acquire in the future may generate unexpectedly low returns, may cause us to incur substantial losses, may require unexpected levels of management time, expenditures or other resources or may otherwise not meet a risk profile that our investors find acceptable.
In addition, we might encounter unanticipated difficulties and expenditures relating to any of the acquired facilities, including contingent liabilities. For example, when we acquire a facility, we may assume the facility's existing Medicare provider number for purposes of billing Medicare for services. If CMS later determined that the prior owner of the facility had received overpayments from Medicare for the period of time during which it operated the facility, or had incurred fines in connection with the operation of the facility, CMS could hold us liable for repayment of the overpayments or fines. If the prior operator is defunct or otherwise unable to reimburse us, we may be unable to recover these funds. We may be unable to improve every facility that we acquire. In addition, operation of these facilities may divert management time and attention from other operations and priorities, negatively impact cash flows, result in adverse or unanticipated accounting charges or otherwise damage other areas of our Company if they are not timely and adequately improved.
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We may not be able to successfully integrate acquired facilities and businesses into our operations, and we may not achieve the benefits we expect from any of our facility acquisitions.
We may not be able to efficiently or effectively integrate newly acquired facilities with our existing operations, culture and systems. The process of integrating acquired facilities into our existing operations may result in unforeseen operating difficulties, divert management's attention from existing operations or require an unexpected commitment of staff, financial or other resources, and the integration process may ultimately be unsuccessful. We recognize the importance of maintaining adequate staffing and supervision in our facilities at all times to ensure a high quality of care for our patients and residents. The financial benefits we expect to realize from many of our acquisitions rely largely upon our ability to improve performance, overcome regulatory deficiencies, increase and maintain occupancy and control costs. If we are unable to accomplish any of these objectives at facilities we acquire, we may not realize the expected benefits, which may have a material adverse effect on our business, financial condition, results of operations and prospects.
State efforts to regulate the construction or expansion of health care providers could impair our ability to expand our operations or make acquisitions.
Some states require health care providers (including skilled nursing facilities, hospices and assisted living facilities) to obtain prior approval, in the form of a Certificate of Need ("CON"), for the purchase, construction or expansion of health care facilities, capital expenditures exceeding a prescribed amount or changes in services or bed capacity. To the extent that we are unable to obtain any required CON or other similar approvals, our expansion could be materially adversely affected. Additionally, failure to obtain the necessary state approvals can also result in sanctions or adverse action on the facility's license and adverse reimbursement action. No assurances are given that we will be able to obtain a CON or other similar approval for any future projects requiring this approval or that such approvals will be timely.
Circumstances that adversely affect the ability of seniors, or their families, to pay for our services could have material adverse effects on our business, financial condition, results of operations and prospects.
Approximately 6% of our skilled nursing occupants and nearly all of the occupants of our assisted living facilities rely on their personal investments and wealth to pay for their stay in our facilities. We expect to continue to rely on the ability of our residents to pay for our services from their own financial resources. Inflation, continued high levels of unemployment, declines in market values of investments and home prices, or other circumstances that may adversely affect the ability of the elderly or their families to pay for our services could have a material adverse effect on our business, financial condition, results of operations and prospects.
We depend largely upon reimbursement from third-party payors, and our business, financial condition, results of operations and prospects could be adversely affected by any changes in the mix of patients in our facilities as well as payor mix and payment methodologies.
Our revenue is affected by the percentage of our patients who require a high level of skilled nursing and rehabilitative care, whom we refer to as high acuity patients, and by our mix of payment sources. Changes in our patient mix, as well as our payor mix among Medicaid, Medicare, private payors and managed care companies, may significantly affect our profitability because we generally receive higher reimbursement rates for certain patients, such as rehabilitation patients, and because the payors reimburse us at different rates. As a result, changes in the case mix of patients as well as the payor mix may significantly affect our profitability. Particularly, a significant increase in Medicaid patients will have a material adverse effect on our business, financial condition, results of operations and prospects, especially if states operating Medicaid programs continue to limit, or more aggressively seek limits on, reimbursement rates.
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We operate in an industry that is highly competitive.
The long-term care industry is highly competitive and we believe that it will become even more competitive in the future. We face direct competition for the acquisition of facilities, and in turn, we face competition for employees and patients. Our assisted living facilities and nursing homes face competition from skilled nursing, assisted living, independent living facilities, homecare services, community-based service programs, retirement communities and other operations that provide services comparable to those offered by us.
We compete with national companies with respect to both our skilled nursing and assisted living facilities. Additionally, we also compete with local and regional based entities. Many of these competing companies have greater financial and other resources than we have. Failure to effectively compete with these companies may have a material adverse effect on our business, financial condition, results of operations and prospects.
Our ability to compete is based on several factors, including, without limitation, building age, appearance, reputation, availability of patients, survey history and CMS rankings. We make no assurances that increases in competition in the future will not adversely affect our business, financial condition, results of operations and prospects.
The cost to replace or retain qualified personnel may affect our business, financial condition, results of operations and prospects, and we may not be able to comply with the staffing requirements of certain states.
We could experience significant increases in our costs due to shortages in qualified nurses, health care professionals and other key personnel. We compete with other providers of home health care, nursing home care, and assisted living with respect to attracting and retaining qualified personnel, and the market is competitive. Because of the small markets in which we operate, shortages of nurses and trained personnel may require us to enhance our wage and benefit package in order to compete and attract qualified employees from more metropolitan areas. Further, acquisitions of new facilities may require us to pay increased compensation or offer other incentives to retain key personnel and other employees in any newly acquired facilities. Increased competition in the future with respect to attracting and maintaining key personnel could limit our ability to attract and retain residents or to expand our business.
Certain states in which we currently operate, or may operate in the future, may have adopted minimum staffing standards, and additional states may also establish similar requirements in the future. Our ability to satisfy these requirements will depend upon our ability to attract and retain qualified, nurses, certified nurses' assistants and other personnel. Failure to comply with these requirements may result in the imposition of fines or other sanctions. If states do not appropriate sufficient additional funding, through Medicaid appropriations or otherwise, to pay for any additional operating costs resulting from minimum staffing requirements, then our business, financial condition, results of operations and prospects may be adversely affected.
To date, we have been able to adequately staff all of our operations and future operations following an acquisition. However, we make no assurances that the ability to adequately staff all of our operations will continue in the future. Additionally, increasing employee health and workers' compensation insurance costs may materially and negatively affect our profitability. We provide no assurances that our labor costs will not increase or that any increase will be matched by corresponding increases in rates we charge to facility residents. Our ability to control labor costs will significantly effect on our business, financial condition and results of operation in the future.
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Successful union organization of our employees may adversely affect our business, financial condition, results of operations and prospects.
Periodically, labor unions attempt to organize our employees. Although we currently have no collective bargaining agreements with unions with respect to our employees or our facilities, there is no assurance that this will continue to be the case in the future. If future federal legislation makes it easier for employee groups to unionize, then groups of our employees may seek union representation. If more of our employees unionize, we could experience business interruptions, work stoppages, declines in service levels due to union specific rules or increased operating expenses that may adversely affect our business, financial condition, results of operations and prospects.
If we lose our key management personnel, we may not be able to successfully manage our business or achieve our objectives, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
We are dependent on our management team, and our future success depends largely upon the management experience, skill, and contacts of our management, and the loss of any of our key management team could harm our business. If we lose the services of any or all of our management team, we may not be able to replace them with similarly qualified personnel, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Termination of assisted living resident agreements and resident attrition could adversely affect our revenues and earnings.
State regulations governing assisted living facilities typically require a written resident agreement with each resident. Most of these regulations also require that each resident have the right to terminate our assisted living resident agreement for any reason on reasonable notice. Consistent with these regulations, most resident agreements allow residents to terminate their agreements on 30 days' notice. Unlike typical leasing relationships which require a commitment of one year or more, we cannot contract with our residents for longer periods of time. In event that a substantial number of residents elect to terminate their resident agreements at or around the same time, our revenues and earnings could be materially and adversely affected.
Environmental compliance costs and liabilities associated with our facilities may have a material adverse effect on our business, financial condition, results of operations and prospects.
We are subject to various federal, state and local environmental and health and safety laws and regulations with respect to our facilities. These laws and regulations address various matters, including asbestos, fuel oil management, wastewater discharges, air emissions, medical wastes and hazardous wastes. The costs of complying with these laws and regulations and the penalties for non-compliance can be substantial. For example, with respect to our owned and leased property, we may be held liable for costs relating to the investigation and cleanup of any of our owned or leased properties from which there has been a release or threatened release of a regulated material as well as other properties affected by the release. In addition to these costs, which are typically not limited by law or regulation and could exceed the property's value, we could be liable for certain other costs, including, without limitation, governmental fines and injuries to persons, property or natural resources. Further, some environmental laws create a lien on the contaminated site in favor of the government for damages and the costs it incurs in connection with the contamination. While we are not aware of any potential environmental problems, no assurances are made that such problems and the costs associated with them will not arise in the future. If any of our properties were found to violate environmental laws, we may be required to expend significant amounts of time and money to rehabilitate the property, and we may be subject to significant liability. Any environmental compliance costs and liabilities incurred may have a material adverse effect on our business, financial condition, results of operations and prospects.
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Disasters and other adverse events may seriously harm our business.
Our facilities and residents may suffer harm as a result of natural or man-made disasters such as storms, earthquakes, hurricanes, tornadoes, floods, fires, terrorist attacks and other conditions. Such events may disrupt our operations, harm our patients and employees, severely damage or destroy one more of our facilities, harm our business, reputation and financial performance, or otherwise cause our business to suffer in ways that cannot currently be predicted.
The nature of business exposes us to certain litigation risks.
The provision of health care services entails an inherent risk of liability. In recent years, participants in the long-term care industry have become subject to an increasing number of lawsuits alleging malpractice, negligence, product liability or other related legal theories. In several well publicized instances, private litigation by residents of senior living facilities for alleged abuses has resulted in large damage awards against other operating companies. Certain lawyers and firms specialize in bringing litigation against companies such as ours. As a result of this litigation, our cost of liability insurance has increased during the past few years.
We currently maintain liability insurance. This insurance is intended to cover malpractice and other lawsuits. Although we believe that it is in keeping with industry standards, no assurances are made that claims in excess of our limits will not arise. Any such successful claims could have a material adverse effect upon our business, financial condition, results of operations and prospects. Claims against us, regardless of their merit or eventual outcome, may also have a material adverse effect upon our ability to attract and retain patients and key personnel. In addition, our insurance policies must be renewed annually, and no assurances are made that we will be able to retain coverage in the future or, if coverage is available, that it will be available on acceptable terms.
We are subject to possible conflicts of interest; we have engaged in, and expect to continue to engage in, transactions with parties that may be considered related parties.
From time to time, we have engaged in various transactions with Christopher Brogdon, Vice Chairman of the Board of Directors, owner of greater than 10% of our outstanding common stock and former Chief Acquisition Officer of the Company. These transactions, along with other related party transactions, are described in Note 22 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data."
We believe that our affiliations with Mr. Brogdon, and other related parties have been, and will be, beneficial to us. Although we do not believe the potential conflicts have adversely affected, or will adversely affect, our business, others may disagree with this position. In the past, in particular following periods of financial instability, shareholder litigation and dissident shareholder director nominations and shareholder proposals have often been instituted against companies alleging conflicts of interest in business dealings with officers, directors and other affiliates. Our relationships with Mr. Brogdon and other related parties may give rise to such litigation, nominations or proposals which could result in substantial costs to us and a diversion of our resources and our management's attention, whether or not any allegations made are substantiated.
The costs of being publicly owned may strain our resources and impact our business, financial condition, results of operations and prospects.
As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act"). The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls for financial reporting. We are required to document and test our internal control procedures in order to
27
satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal controls over financial reporting.
These requirements may place a strain on our systems and resources and have required us, and may in the future require us, to hire additional accounting and financial resources with appropriate public company experience and technical accounting knowledge. In addition, failure to maintain such internal controls could result in us being unable to provide timely and reliable financial information which could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities or cause us to be late in the filing of required reports or financial results. Any of the foregoing events could have an adverse effect on our business, financial condition, results of operations and prospects.
We have a history of operating losses and may incur losses in the future.
For the year ended December 31, 2012, for amounts attributable to the Company, we had a net loss of $6.9 million compared to a net loss of $6.2 million for the year ended December 31, 2011. We make no assurances that we will be able to operate profitably. As of December 31, 2012, we have a working capital deficit of approximately $5.9 million.
We intend to seek to improve our liquidity and profitability in future years by:
We believe the foregoing actions, if taken, will provide the opportunity for the Company to improve liquidity and achieve profitability. No assurances are made that such improvements or achievements will occur.
Our business requires us to make capital expenditures to maintain and improve our facilities.
Our facilities sometimes require capital expenditures to address ongoing required maintenance and to make them attractive to residents. Physical characteristics of senior living facilities and rehabilitation centers are mandated by various governmental authorities; and changes in these regulations may require us to make significant expenditures. In addition, we often are required to make significant capital expenditures when we acquire new facilities in pursuit of our growth strategy. Our available financial resources may be insufficient to fund these expenditures.
Our substantial debt could adversely affect our cash flow and impair our ability to raise additional capital.
As of December 31, 2012, we had approximately $171.9 million in indebtedness, including current maturities and discontinued operations. We may also obtain additional short-term and long-term debt to meet future capital needs, including to fund acquisitions, subject to certain restrictions under our existing indebtedness, which would increase our total debt. Our substantial amount of debt could have negative consequences to our business. For example, it could:
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In addition, our ability to borrow funds in the future will depend in part on the satisfaction of the covenants in our credit facilities and other debt agreements. If we are unable to satisfy the financial covenants contained in those agreements, or are unable to generate cash sufficient to make required debt payments, the lenders and other parties to those arrangements could accelerate the maturity of some or all of our outstanding indebtedness.
We may not have sufficient liquidity to meet our capital needs.
For the year ended and as of December 31, 2012, we had a net loss of $7.5 million and negative working capital of $5.9 million. At December 31, 2012, we had $15.9 million in cash and cash equivalents and $171.9 million in indebtedness, including current maturities and discontinued operations, of which $23.0 million is current debt (including the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013 and approximately $3.7 million of mortgage notes included in liabilities of disposal group).
Based on existing cash balances, anticipated cash flows for the year ending December 31, 2013, and new sources of capital, we believe there will be sufficient funds for our operations, scheduled debt service, and capital expenditures at least through the next 12 months. On a longer term basis, we have approximately $80.4 million of debt payments and maturities due between 2014 and 2016, excluding convertible promissory notes which are convertible into shares of common stock. We believe our long-term liquidity needs will be satisfied by these same sources, as well as borrowings as required to refinance indebtedness.
In order to satisfy these capital needs, we intend to: (i) improve our operating results by increasing facility occupancy, optimizing our payor mix by increasing the proportion of sub-acute patients within our skilled nursing facilities, continuing our cost optimization and efficiency strategies and acquiring additional long-term care facilities with existing operating cash flow; (ii) expand our borrowing arrangements with certain existing lenders; (iii) refinance current debt where possible to obtain more favorable terms; and (iv) raise capital through the issuance of debt or equity securities. We anticipate that these actions, if successful, will provide the opportunity for us to maintain liquidity on a short and long term basis, thereby permitting us to meet our operating and financing obligations for the next 12 months and provide for the continuance of our acquisition strategy. However, there is no guarantee that such actions will be successful or that anticipated operating results will be achieved. We currently have limited borrowing availability under our existing revolving credit facilities. If the Company is unable to improve operating results, expand existing borrowing agreements, refinance current debt, or raise capital through the issuance of securities, or the convertible promissory notes due October 2013 are not converted into common stock and are required to be repaid by us in cash, then the Company may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans.
An increase in market interest rates could increase our interest costs on existing and future debt.
We have incurred and expect in the future to incur floating rate indebtedness in connection with our acquisition of new facilities, as well as for other purposes. Accordingly, increases in interest rates
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would increase the Company's interest costs. These increased costs could make the financing of any acquisition more costly and could limit our ability to refinance existing debt when it matures.
We do not currently pay cash dividends on our common stock and do not anticipate doing so in the future.
We have never declared or paid any cash dividends on our common stock. We intend to retain any future earnings after payment of dividends on our Series A Preferred Stock to fund our operations and, therefore, we currently do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, no cash dividends may be declared or paid on our common stock unless full cumulative dividends on our Series A Preferred Stock have been, or contemporaneously are, declared and paid, or declared and a sum sufficient for the payment thereof is set apart for payment, for all past dividend periods.
We could be prevented from paying dividends on our Series A Preferred Stock and our common stock.
We are a holding company, and we have no significant operations. We rely primarily on dividends and other distributions from our subsidiaries to us so we may, among other things, pay dividends on our stock, if and to the extent declared by the Board of Directors. The ability of our subsidiaries to pay dividends and other distributions to us depends on their earnings and is restricted by the terms of certain agreements governing their indebtedness. If our subsidiaries are in default under such agreements, then they may not pay dividends or other distributions to us.
In addition, we may only pay dividends on our stock if we have funds legally available for the payment of dividends and such payment is not restricted or prohibited by law, the terms of any shares with higher priority with respect to dividends or any documents governing our indebtedness. Our loan agreement with KeyBank National Association ("KeyBank") prohibits the payment of dividends on our stock if we fail to comply with certain financial covenants or if a default or event of default under the loan agreement has occurred. As such, we could become unable, on a temporary or permanent basis, to pay dividends on our stock, including our Series A Preferred Stock. In addition, future debt, contractual covenants or arrangements we or our subsidiaries enter into may restrict or prevent future dividend payments.
The payment of any future dividends on our stock will be at the discretion of the Board of Directors and will depend, among other things, the earnings and results of operations of our subsidiaries, their ability to pay dividends and other distributions to AdCare under agreements governing their indebtedness, our financial condition and capital requirements, any debt service requirements and any other factors the Board of Directors deems relevant.
The price of our stock, in particular our common stock, has fluctuated, and a number of factors may cause the price of our stock to decline.
The market price of our stock has fluctuated and could fluctuate significantly in the future as a result of various factors and events, many of which are beyond our control. These factors may include:
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In addition, the market price of our Series A Preferred Stock will also depend upon:
Furthermore, the stock market in recent years has experienced sweeping price and volume fluctuations that often have been unrelated to the operating performance of affected companies. These market fluctuations may also cause the price of our stock to decline.
In the event of fluctuations in the price of our stock, shareholders may be unable to resell shares of our stock at or above the price at which they purchased such shares. Additionally, due to fluctuations in the price of our stock, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on past results as an indication of future performance.
Our directors and officers substantially control all major decisions.
Our directors and officers beneficially own approximately 22.4% of our outstanding common stock. Therefore, our directors and officers will be able to influence major corporate actions required to be voted on by shareholders, such as the election of directors, the amendment of our charter documents and the approval of significant corporate transactions such as mergers, reorganizations, sales of substantially all of our assets and liquidation. Furthermore, our directors will be able to make decisions affecting our capital structure, including decisions to issue additional capital stock, implement stock repurchase programs and incur indebtedness. This control may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in their best interest.
No assurance is made that Brogdon Family, LLC will commence a tender offer for the common stock or that, if commenced, such tender offer will be completed on terms acceptable to our shareholders or at all.
On April 17, 2013, Brogdon Family, LLC ("Brogdon Family"), an affiliate of Christopher Brogdon, our Vice Chairman and beneficial owner of greater than 10% of the common stock, informed the Board of Directors of Brogdon Family's interest in commencing an unsolicited tender offer to acquire, at a price of $8.00 per share, such number of shares of common stock that would result in Mr. Brogdon beneficially owning at least 55%, but no more than 75%, of the outstanding shares of common stock (the "Tender Offer"). Brogdon Family also informed the Board of Directors, or otherwise disclosed, that the Tender Offer will be subject to certain conditions, including, but not limited to: (i) the valid tender of shares of common stock totaling at least 55% of the issued and
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outstanding common stock when added to the shares of common stock held by Brogdon Family and its affiliates; (ii) the absence of litigation regarding the Tender Offer; (iii) the absence of any governmental order being entered enjoining the Tender Offer (and that such order is not anticipated being entered); (iv) the receipt of any required governmental approvals; and (v) Brogdon Family obtaining appropriate financing.
We do not control if or when Brogdon Family commences the Tender Offer or, if commenced, the ultimate terms of the Tender Offer, including the price offered for the common stock. No assurance is made that Brogdon Family will commence the Tender Offer or that, if commenced, it will be completed on terms acceptable to our shareholders or at all.
If and when the Tender Offer is commenced, then, consistent with its fiduciary duties and as required by applicable law, the Board of Directors, in consultation with our independent financial and legal advisors (a) will review the Tender Offer to determine the course of action that it believes is in the best interests of us and our shareholders and (b) will advise shareholders of its formal position regarding the Tender Offer within ten business days after its commencement by making available to our shareholders and filing with the SEC a solicitation/recommendation statement on Schedule 14D-9.
If the Tender Offer is commenced, then we will file a solicitation/recommendation statement with the SEC. INVESTORS AND ALL OF OUR SECURITY HOLDERS ARE URGED TO READ SUCH STATEMENT AND ANY OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. INVESTORS AND SECURITY HOLDERS WILL BE ABLE TO OBTAIN FREE COPIES OF THESE DOCUMENTS (WHEN AVAILABLE) AND OTHER DOCUMENTS FILED WITH THE SEC BY US THROUGH THE WEBSITE MAINTAINED BY THE SEC AT http://www.sec.gov.
Takeover defense provisions in Ohio law and our charter documents may delay or prevent takeover attempts thereby preventing our shareholders from realizing a premium on their common stock.
Various provisions of Ohio corporation law and of our charter documents may inhibit changes in control not approved by our Board of Directors and may have the effect of depriving our investors of an opportunity to receive a premium over the prevailing market price of our common stock in the event of an attempted hostile takeover. In addition, the existence of these provisions may adversely affect the market price of our common stock. These provisions include:
Our Board of Directors can use these and other provisions to prevent, delay or discourage a change in control of the Company or a change in our management. Any such delay or prevention of a change in control or management could deter potential acquirers or prevent the completion of a takeover transaction pursuant to which our shareholders could receive a substantial premium over the current market price of our common stock, which in turn may limit the price investors might be willing to pay for our common stock.
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Provisions in our charter documents provide for indemnification of officers and directors, which could require us to direct funds away from our business and future operations.
Our charter documents provide for the indemnification of our officers and directors. We may be required to advance costs incurred by an officer or director and to pay judgments, fines and expenses incurred by an officer or director, including reasonable attorneys' fees, as a result of actions or proceedings in which our officers and directors are involved by reason of being or having been an officer or director of our Company. Funds paid in satisfaction of judgments, fines and expenses may be funds we need for the operation and growth of our business.
Item 1B. Unresolved Staff Comments
Disclosure pursuant to Item 1B of Form 10-K is not required to be provided by smaller reporting companies.
Facilities
As of December 31, 2012, we operated 50 facilities in eight states with the operational capacity to serve approximately 4,996 residents. Of the facilities, we owned and operated 26 facilities, leased and operated 11 facilities, and managed 13 facilities (including one consolidated variable interest entity.
The following table provides summary information regarding the number of operational beds at our facilities as of December 31 (excluding discontinued operations):
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||
Cumulative number of facilities |
50 | 37 | |||||
Cumulative number of operational beds |
4,996 | 3,603 |
|
|
Number of Facilities | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State
|
Number of
Operational Beds/Units |
Owned | VIE | Leased |
Managed
for Third Parties |
Total | |||||||||||||
Alabama |
408 | 2 | 1 | | | 3 | |||||||||||||
Arkansas |
1,041 | 10 | | | | 10 | |||||||||||||
Georgia |
1,514 | 4 | | 9 | | 13 | |||||||||||||
Missouri |
80 | | | 1 | | 1 | |||||||||||||
North Carolina |
106 | 1 | | | | 1 | |||||||||||||
Ohio |
785 | 4 | | 1 | 4 | 9 | |||||||||||||
Oklahoma |
882 | 3 | | | 8 | 11 | |||||||||||||
South Carolina |
180 | 2 | | | | 2 | |||||||||||||
Total |
4,996 | 26 | 1 | 11 | 12 | 50 | |||||||||||||
Facility Type |
|||||||||||||||||||
Skilled Nursing |
4,697 | 24 | | 11 | 11 | 46 | |||||||||||||
Assisted Living |
216 | 2 | 1 | | | 3 | |||||||||||||
Independent Living |
83 | | | | 1 | 1 | |||||||||||||
Total |
4,996 | 26 | 1 | 11 | 12 | 50 | |||||||||||||
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Corporate Office
Our corporate office is located in Roswell, Georgia. We own the office building which contains approximately 10,000 square feet of office space. In addition, we have a month-to-month lease for a total of approximately 2,000 square feet of office space in the Atlanta, Georgia area.
We are party to various legal actions and administrative proceedings and are subject to various claims arising in the ordinary course of business, including claims that our services have resulted in injury or death to the residents of our facilities and claims related to employment, staffing requirements and commercial matters. Although we intend to vigorously defend ourselves in these matters, there is no assurance that the outcomes of these matters will not have a material adverse effect on our business, results of operations and financial condition.
We operate in an industry that is extremely regulated. As such, in the ordinary course of business, we are continuously subject to state and federal regulatory scrutiny, supervision and control. Such regulatory scrutiny often includes inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. In addition to being subject to direct regulatory oversight of state and federal regulatory agencies, our industry is frequently subject to the regulatory practices, which could subject us to civil, administrative or criminal fines, penalties or restitutionary relief, and reimbursement authorities could also seek the suspension or exclusion of the provider or individual from participation in their program. We believe that there has been, and will continue to be, an increase in governmental investigations of long-term care providers, particularly in the area of Medicare/Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Adverse determinations in legal proceedings or governmental investigations against or involving us, whether currently asserted or arising in the future, could have a material adverse effect on our business results of operations and financial condition.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is listed for trading on the NYSE MKT LLC under the symbol "ADK". The high and low sales prices of our common stock during the quarters listed below were as follows:
|
|
High | Low | ||||||
---|---|---|---|---|---|---|---|---|---|
"ADK" |
|||||||||
2012 |
First Quarter | $ | 4.89 | $ | 3.68 | ||||
|
Second Quarter | $ | 3.96 | $ | 3.32 | ||||
|
Third Quarter | $ | 4.70 | $ | 3.47 | ||||
|
Fourth Quarter | $ | 5.35 | $ | 3.89 |
|
|
High | Low | ||||||
---|---|---|---|---|---|---|---|---|---|
2011 |
First Quarter | $ | 5.09 | $ | 3.90 | ||||
|
Second Quarter | $ | 6.31 | $ | 4.66 | ||||
|
Third Quarter | $ | 6.69 | $ | 4.15 | ||||
|
Fourth Quarter | $ | 4.71 | $ | 3.70 |
Based on information supplied from our transfer agent, there were approximately 500 shareholders of record of our common stock as of June 24, 2013.
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We have never declared or paid any cash dividends with respect to our common stock. Our ability to pay dividends will depend upon our future earnings and net worth. We are restricted by Ohio law from paying dividends on our common stock while insolvent or if such payment would result in a reduction of our stated capital below the required amount. In addition, no cash dividends may be declared or paid on our common stock unless full cumulative dividends on our Series A Preferred Stock have been, or contemporaneously are, declared and paid, or declared and a sum sufficient for the payment thereof is set apart for payment, for all past dividend periods. Furthermore, our loan agreement with KeyBank prohibits the payment of dividends on our stock if we fail to comply with certain financial covenants or if a default or event of default under the loan agreement has occurred.
Except for payment of dividends on our Series A Preferred Stock, we currently intend to retain any future earnings to fund the operation and growth of our business. We do not anticipate paying cash dividends in the foreseeable future.
Equity Compensation Plan Information
The following table sets forth additional information as of December 31, 2012, concerning shares of our common stock that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements, divided between plans approved by our shareholders and plans or arrangements not submitted to the shareholders for approval. The information includes the number of shares covered by and the weighted average exercise price of, outstanding options and other rights and the number of shares remaining available for future grants excluding the shares to be issued upon exercise of outstanding options, warrants, and other rights.
|
(a) | (b) | (c) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Plan Category
|
Number of
Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights |
Number of
Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
|||||||
Equity compensation plans approved by security holders(1) |
1,350,861 | $ | 4.57 | 1,675,239 | ||||||
Equity compensation plan not approved by security holders(2) |
3,767,481 | $ | 3.40 | | ||||||
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to purchase 250,000 shares of our common stock at an exercise price of $5.30 per share. This warrant is subject to certain anti-dilution adjustments, and, therefore, was adjusted on October 1, 2011 and October 22, 2012 for a 5% stock dividend. As a result, the warrant now represents the right to purchase 275,625 shares at an exercise price of $4.81 per share.
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Item 6. Selected Financial Data
Disclosure pursuant to Item 6 of Form 10-K is not required to be provided by smaller reporting companies.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
We own and operate skilled nursing and assisted living facilities in the states of Alabama, Arkansas, Georgia, Missouri, North Carolina, Ohio, Oklahoma, and South Carolina. As of December 31, 2012, through our wholly owned separate operating subsidiaries, we operate 50 facilities comprised of 46 skilled nursing facilities, three assisted living facilities and one independent living/senior housing facility totaling approximately 5,000 beds. Our facilities provide a range of health care services to their patients and residents including, but not limited to, skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term residents and short-stay patients. As of December 31, 2012, of the total 50 facilities, we owned and operated 26 facilities, leased and operated 11 facilities, and managed 13 facilities (including one consolidated variable interest entity). As part of our strategy to focus on the growth of skilled nursing facilities, we decided in the fourth quarter of 2011 to exit the home health business; and accordingly, this business is reported as discontinued operations. We sold the assets of the home health business in 2012. Additionally, in the fourth quarter of 2012 we entered into an agreement to sell six assisted living facilities located in Ohio and executed a sublease arrangement to exit the skilled nursing business in Jeffersonville, Georgia. The six Ohio assisted living facilities and the Jeffersonville, Georgia skilled nursing facility have an aggregate of 313 units in service. These seven facilities are also reported as discontinued operations. We sold the assets of four of the six Ohio assisted living facilities in December 2012, one in February 2013, and the other in May 2013.
As further discussed in the footnotes to the Consolidated Financial Statements included in this Annual Report (see Note 20, Variable Interest Entities , and Note 22, Related Party Transactions ), effective August 1, 2011 entities (the "Oklahoma Owners") controlled by Christopher Brogdon (Vice Chairman of the Board of Directors, owner of greater than 10% of the outstanding common stock and former Chief Acquisition Officer of the Company) and his spouse, Connie Brogdon, (related parties to the Company), acquired five skilled nursing facilities located in Oklahoma (the "Oklahoma Facilities"). The Company entered into a Management Agreement with the Oklahoma Owners pursuant to which a wholly-owned subsidiary of the Company supervises the management of the Oklahoma Facilities for a monthly fee equal to 5% of the monthly gross revenues of the Oklahoma Facilities. Upon acquisition, the Company concluded it was the primary beneficiary of the Oklahoma Owners and pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 810-10, ConsolidationOverall , consolidated the Oklahoma Owners in its 2011 consolidated financial statements.
During the process of finalizing the 2012 financial statements, the Company reassessed its prior conclusion that it should consolidate the Oklahoma Owners. In the reassessment process, the Company concluded that it should not have consolidated the Oklahoma Owners. The Company has deconsolidated the Oklahoma Owners effective January 1, 2012 and the balance sheet, operations and cash flows of the Oklahoma Owners are not included in the Company's 2012 consolidated financial statements. The Company further concluded that including the Oklahoma Owners in its 2011 financial statements was not material to such consolidated financial statements and therefore no adjustments have been made to the previously issued 2011 financial statements. Note 20, Variable Interest Entities , in the Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data," includes summarized financial statements of the Oklahoma Owners for 2011 that are included in the Company's 2011 consolidated financial statements.
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Liquidity
For the year ended and as of December 31, 2012, we had a net loss of $7.5 million and negative working capital of $5.9 million. At December 31, 2012, we had $15.9 million in cash and cash equivalents and $171.9 million in indebtedness, including current maturities and discontinued operations, of which $23.0 million is current debt (including the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013 and approximately $3.7 million of mortgage notes included in liabilities of disposal group). Our ability to achieve profitable operations is dependent on continued growth in revenue and controlling costs.
We anticipate that scheduled debt service (excluding outstanding convertible promissory notes but including principal, interest, collateral and capital improvement fund or other escrow deposits) will total approximately $17.2 million and cash outlays for acquisition costs, maintenance capital expenditures, dividends on our Series A Preferred Stock and income taxes will total approximately $4.7 million for the year ending December 31, 2013. Debt service requirements for the year ending December 31, 2013 include approximately $1.9 million of bullet maturities that the Company believes could be refinanced on a longer term basis. In recent periods, we have refinanced shorter term acquisition debt, including seller notes, with traditional longer term mortgage notes, some of which have been executed under government guaranteed lending programs. Although, we anticipate the conversion to common stock of the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013, we believe that our anticipated cash flow and committed funding sources would allow us to pay these notes in cash. These promissory notes are convertible into shares of common stock of the Company at $3.73 per share. The closing price of the common stock exceeded $4.00 per share from January 1, 2013 through July 5, 2013, except for the last three trading days in March 2013. As discussed further below, if we were required to pay these notes in cash, then the Company may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans due to our limited liquidity in such an event.
We estimate that cash flow from operations, including approximately $2.0 million cash outlay for costs with respect to the Audit Committee review and inquiry discussed in Part II, Item 9A. "Controls and Procedures," and other working capital changes will be approximately $17.8 million for the year ending December 31, 2013. The Company expanded its existing credit facility with Gemino Healthcare Finance, LLC ("Gemino"): (i) in May 2013, to refinance and include one of the facilities the Company acquired in December 2012; and (ii) in June 2013, to refinance and include two additional facilities the Company also acquired in December 2012. We routinely have ongoing discussions with existing and potential new lenders to refinance current debt on a longer term basis. We have been successful in recent years in raising new equity capital and believe, based on recent discussions that these markets will continue to be available to us for raising capital in 2013.
Based on existing cash balances, anticipated cash flows for the year ending December 31, 2013, and new sources of capital, we believe there will be sufficient funds for our operations, scheduled debt service, and capital expenditures at least through the next 12 months. On a longer term basis, we have approximately $80.4 million of debt payments and maturities due between 2014 and 2016, excluding convertible promissory notes which are convertible into shares of common stock. We believe our long-term liquidity needs will be satisfied by these same sources, as well as borrowings as required to refinance indebtedness.
In order to satisfy these capital needs, we intend to: (i) improve our operating results by increasing facility occupancy, optimizing our payor mix by increasing the proportion of sub-acute patients within our skilled nursing facilities, continuing our cost optimization and efficiency strategies and acquiring additional long-term care facilities with existing operating cash flow; (ii) expand our borrowing
38
arrangements with certain existing lenders; (iii) refinance current debt where possible to obtain more favorable terms; and (iv) raise capital through the issuance of debt or equity securities. We anticipate that these actions, if successful, will provide the opportunity for us to maintain liquidity on a short and long term basis, thereby permitting us to meet our operating and financing obligations for the next 12 months and provide for the continuance of our acquisition strategy. However, there is no guarantee that such actions will be successful or that anticipated operating results will be achieved. We currently have limited borrowing availability under our existing revolving credit facilities. If the Company is unable to improve operating results, expand existing borrowing agreements, refinance current debt, or raise capital through the issuance of securities, or the convertible promissory notes due October 2013 are not converted into common stock and are required to be repaid by us in cash, then the Company may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans.
Acquisitions
We have embarked on a strategy to grow our business through acquisitions and leases of senior care facilities and businesses providing services to those facilities. During the year ended December 31, 2012, the Company acquired a total of eleven skilled nursing facilities and one assisted living facility described further below. The total purchase price for each acquisition is after final closing adjustments. The Company has incurred a total of $2.0 million of acquisition costs related to these acquisitions and has recorded the cost in the "Other Income (Expense)" section of the Consolidated Statements of Operations included in Part II, Item 8, "Financial Statements and Supplementary Data."
Eaglewood Care Center and Eaglewood Village
On January 1, 2012, the Company acquired a 113-bed skilled nursing facility located in Springfield, Ohio, known as Eaglewood Care Center, and an 80-bed assisted living facility located in Springfield, Ohio, known as Eaglewood Village. The total purchase price was $12.4 million.
Little Rock, Northridge and Woodland Hills
On April 1, 2012, the Company acquired a 154-bed skilled nursing facility located in Little Rock, Arkansas, known as Little Rock Health & Rehab, a 140-bed skilled nursing facility located in North Little Rock, Arkansas, known as Northridge Healthcare and Rehabilitation, and a 140-bed skilled nursing facility located in Little Rock, Arkansas, known as Woodland Hills Healthcare and Rehabilitation. The total purchase price was $27.2 million.
Abington Place
On April 30, 2012, the Company acquired a 120-bed skilled nursing facility located in Little Rock, Arkansas, known as Abington Place. The total purchase price was $3.6 million after final closing adjustments.
Glenvue Nursing Home
On July 2, 2012, the Company acquired a 160-bed skilled nursing facility located in Glennville, Georgia, known as Glenvue Nursing. The total purchase price was $8.2 million.
Quail Creek Health and Rehab
On July 3, 2012, the Company acquired a 118-bed skilled nursing facility located in Oklahoma City, Oklahoma, known as Quail Creek Health and Rehab. The total purchase price was $6.2 million including assumed fair valued indebtedness of $3.2 million.
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Companions Specialized Care Center
On August 17, 2012, the Company acquired a 121-bed skilled nursing facility located in Tulsa, Oklahoma, known as Companions Specialized Care Center. The total purchase price was $5.9 million.
Sumter Valley Nursing and Rehab
On December 31, 2012, the Company acquired a 96-bed skilled nursing facility located in Sumter, South Carolina, known as Sumter Valley Nursing and Rehab. The total purchase price was $5.6 million.
Georgetown Healthcare and Rehab
On December 31, 2012, the Company acquired an 84-bed skilled nursing facility located in Georgetown, South Carolina, known as Georgetown Healthcare and Rehab. The total purchase price was $4.2 million.
Northwest Nursing Center
On December 31, 2012, the Company acquired an 88-bed skilled nursing facility located in Oklahoma City, Oklahoma, known as Northwest Nursing Center. The total purchase price was $3.0 million.
Segments
Consistent with our strategy to focus on the growth of our skilled nursing facilities and in light of our sale of the majority of our assisted living facilities (the completed sale of four of our assisted living facilities located in Ohio in fourth quarter of 2012), beginning in the fourth quarter of 2012, we only evaluate operating performance for our 46 skilled nursing facilities, our remaining three assisted living facilities and one independent living facility on a combined basis. Through the third quarter of 2012, we previously evaluated our operations under three segments: skilled nursing facilities ("SNF"), assisted living facilities ("ALF"), and Corporate & Other. Accordingly, management discussion and analysis on a segment basis is not included herein.
Primary Performance Indicators
We focus on two primary indicators in evaluating our financial performance. Those indicators are facility occupancy and patient mix. Facility occupancy is important as higher occupancy generally leads to higher revenues. In addition, concentrating on increasing the number of Medicare covered admissions ("the patient mix") helps in increasing revenues. We include commercial insurance covered admissions that are reimbursed at the same level as those covered by Medicare in our Medicare utilization percentages and analysis. We also evaluate "Same Facilities" and "Recently Acquired Facilities" results. Same Facilities represent those owned and leased facilities we began to operate prior to January 1, 2011. Recently Acquired Facilities results represents those owned and leased facilities we began to operate subsequent to January 1, 2012.
The tables below reflect our 2012 and 2011 patient care revenue key performance indicators for our skilled nursing facilities excluding discontinued operations. Excluding discontinued operations, our assisted living facilities represent approximately 2% and 1% of our total consolidated revenues in 2012 and 2011, respectively.
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|
Year Ended
December 31, |
||||||
---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||
Same Facilities |
85.9 | % | 88.4 | % | |||
Recently Acquired Facilities |
71.2 | % | 78.2 | % | |||
Total |
78.8 | % | 86.0 | % |
We continue our work towards maximizing the number of patients covered by Medicare where our operating margins are higher.
|
Same
Facilities |
Recently
Acquired Facilities |
Total |
Same
Facilities |
Recently
Acquired Facilities |
Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 | 2012 | 2012 | 2011 | 2011 | 2011 | |||||||||||||
Medicare |
15.4 | % | 12.7 | % | 14.4 | % | 15.0 | % | 10.6 | % | 14.1 | % | |||||||
Medicaid |
72.6 | % | 72.6 | % | 72.4 | % | 74.8 | % | 78.9 | % | 75.6 | % | |||||||
Other |
12.0 | % | 14.7 | % | 13.2 | % | 10.2 | % | 10.5 | % | 10.3 | % | |||||||
Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||
SNF Analysis by State For the Year Ended December 31, 2012:
State
|
Operational
Beds at Period End |
Period's
Average Operational Beds |
Occupancy
(Operational Beds) |
Medicare
Utilization (Skilled %ADC) |
2012
Total Revenues |
Medicare
(Skilled) $PPD |
Medicaid
$PPD |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Alabama |
304 | 304 | 79.4 | % | 11.4 | % | $ | 18,341 | $ | 384.68 | $ | 178.26 | ||||||||||
Arkansas |
1,009 | 869 | 63.3 | % | 13.2 | % | 41,929 | 389.72 | 172.79 | |||||||||||||
Georgia |
1,514 | 1,448 | 87.8 | % | 14.9 | % | 97,957 | 457.08 | 155.78 | |||||||||||||
Missouri |
80 | 80 | 65.4 | % | 17.0 | % | 3,560 | 407.05 | 133.34 | |||||||||||||
North Carolina |
106 | 106 | 83.7 | % | 18.6 | % | 7,353 | 456.49 | 160.74 | |||||||||||||
Ohio |
293 | 293 | 83.7 | % | 15.8 | % | 20,989 | 461.20 | 162.91 | |||||||||||||
Oklahoma |
318 | 100 | 72.6 | % | 13.9 | % | 5,053 | 432.60 | 134.85 | |||||||||||||
South Carolina |
180 | | | | | | | |||||||||||||||
Total |
3,804 | 3,200 | 78.8 | % | 14.4 | % | $ | 195,182 | $ | 436.66 | $ | 161.57 | ||||||||||
SNF Analysis by State For the Year Ended December 31, 2011:
State
|
Operational
Beds at Period End |
Period's
Average Operational Beds |
Occupancy
(Operational Beds) |
Medicare
Utilization (Skilled %ADC) |
2011
Total Revenues |
Medicare
(Skilled) $PPD |
Medicaid
$PPD |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Arkansas |
498 | 143 | 72.2 | % | 14.1 | % | $ | 7,565 | $ | 388.00 | $ | 168.35 | ||||||||||
Alabama |
304 | 304 | 83.6 | % | 11.1 | % | 18,452 | 385.54 | 172.74 | |||||||||||||
Georgia |
1,380 | 1,263 | 89.6 | % | 14.7 | % | 81,849 | 477.17 | 141.72 | |||||||||||||
Missouri |
80 | 13 | 55.8 | % | 16.9 | % | 512 | 441.19 | 119.92 | |||||||||||||
North Carolina |
106 | 106 | 93.1 | % | 18.6 | % | 7,986 | 448.88 | 156.09 | |||||||||||||
Ohio |
293 | 194 | 83.5 | % | 15.5 | % | 13,670 | 357.19 | 154.00 | |||||||||||||
Oklahoma |
314 | 132 | 73.1 | % | 7.3 | % | 5,103 | 371.11 | 123.55 | |||||||||||||
Total |
2,975 | 2,155 | 86.0 | % | 14.1 | % | $ | 135,137 | $ | 445.80 | $ | 148.13 | ||||||||||
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Medicare reimbursement rates and procedures are subject to change from time to time, which could materially impact our revenues. Medicare reimburses our skilled nursing facilities under PPS for certain inpatient-covered services. Under the PPS, facilities are paid a predetermined amount per patient, per day, based on the anticipated costs of treating patients. The amount to be paid is determined by classifying each patient into a RUG category that is based upon each patient's acuity level. On July 29, 2011, CMS announced a final rule reducing Medicare skilled nursing facility PPS payments in fiscal year 2012 by $3.87 billion, or 11.1% lower than payments for fiscal year 2011. CMS announced it is recalibrating the case-mix indexes ("CMI") for fiscal year 2012 to restore overall payments to their intended levels on a prospective basis. Each RUG group consists of CMIs that reflect a patient's severity of illness and the services that a patient requires in the skilled nursing facility. In transitioning from the previous classification system to the new RUG-IV, CMS adjusted the CMIs for fiscal year 2011 based on forecasted utilization under this new classification system to establish parity in overall payments. The fiscal year 2011 recalibration of the CMIs will result in a reduction to skilled nursing facility payments of $4.47 billion, or 12.6%. However, this reduction would be partially offset by the fiscal year 2012 update to Medicare payments to skilled nursing facilities. The update, a 1.7% or $600 million increase, reflects a 2.7% market basket increase, reduced by a 1.0% multi-factor productivity ("MFP") adjustment mandated by the PPACA. The combined MFP-adjusted market basket increase and the fiscal year 2012 recalibration will yield a net reduction of $3.87 billion, or 11.1%.
Divestitures
As part of the Company's strategy to focus on the growth of its skilled nursing segment, the Company decided in the fourth quarter of 2011 to exit the home health segment of the business. In the fourth quarter of 2012, the Company continued this strategy and entered into an agreement to sell six assisted living facilities located in Ohio. The Company also entered into a sublease arrangement in the fourth quarter of 2012 to exit the operations of a skilled nursing facility in Jeffersonville, Georgia. The results of operations and cash flows for the home health business, the six Ohio assisted living facilities and the Jeffersonville, Georgia skilled nursing facility are reported as discontinued operations in 2012 and 2011.
Total revenues from discontinued operations were $14.3 million and $14.9 million, respectively; in 2012 and 2011. Net income (loss) from discontinued operations was $7.2 million and ($1.2) million, respectively, in 2012 and 2011. Interest expense included in discontinued operations was $0.6 million and $0.8 million in 2012 and 2011, respectively. Income tax benefit included in discontinued operations was ($0.02) million and ($0.2) million in 2012 and 2011, respectively. The 2012 net income from discontinued operations includes a gain on sale of $6.7 million which includes a $6.9 million gain on the sale of four of the six Ohio assisted living facilities sold for $16.1 million in December 2012 and a $0.2 million loss on the exit of the Jeffersonville, Georgia leased business operation. The 2011 net loss from discontinued operations includes a $1.8 million goodwill impairment charge pertaining to the home health segment business.
Critical Accounting Policies
We prepare our financial statements in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. We base our estimates on historical experience, business knowledge and on various other assumptions that we believe to be reasonable under the circumstances at the time. Actual results may vary from our
42
estimates. These estimates are evaluated by management and revised as circumstances change. We believe that the following represents our critical accounting policies:
Consolidation with Entities in Which We Have Determined to Have a Controlling Financial Interest
Arrangements with other business enterprises are evaluated, and those in which AdCare is determined to have controlling financial interest are consolidated. Guidance is provided by FASB ASC Topic 810-10, ConsolidationOverall, which addresses the consolidation of business enterprises to which the usual condition of consolidation (ownership of a majority voting interest) does not apply. This interpretation focuses on controlling financial interests that may be achieved through arrangements that do not involve voting interests. It concludes that, in absences of clear control through voting interests, a company's exposure (variable interest) to the economic risks and potential rewards from the variable interest entity's assets and activities are the best evidence of control. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary is required to consolidate the assets, liabilities and results of operations of the variable interest entity in its financial statements.
We have evaluated and concluded that as of December 31, 2012, we have one relationship with a variable interest entity in which we have determined that we are the primary beneficiary required to consolidate the entity. See Note 20 to our consolidated financial statements included in Part II, Item 8., "Financial Statements and Supplementary Data."
As further discussed in the footnotes to the Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data." (see Note 20, Variable Interest Entities, and Note 22, Related Party Transactions), effective August 1, 2011 entities (the "Oklahoma Owners") controlled by Mr. Brogdon and his spouse, Connie Brogdon, (related parties to the Company), acquired five skilled nursing facilities located in Oklahoma (the "Oklahoma Facilities"). The Company entered into a Management Agreement with the Oklahoma Owners pursuant to which a wholly-owned subsidiary of the Company supervises the management of the Oklahoma Facilities for a monthly fee equal to 5% of the monthly gross revenues of the Oklahoma Facilities. Upon acquisition, the Company concluded it was the primary beneficiary of the Oklahoma Owners and pursuant to FAS Topic 810-10, ConsolidationOverall , consolidated the Oklahoma Owners in its 2011 consolidated financial statements.
During the process of finalizing the 2012 financial statements, the Company re-assessed its prior conclusion that it should consolidate the Oklahoma Owners. In the reassessment process, the Company concluded that it should not have consolidated the Oklahoma Owners. The Company has deconsolidated the Oklahoma Owners effective January 1, 2012 and the balance sheet, operations and cash flows of the Oklahoma Owners are not included in the Company's 2012 consolidated financial statements. The Company further concluded that including the Oklahoma Owners in its 2011 financial statements was not material to such consolidated financial statements and therefore no adjustments have been made to the previously issued 2011 financial statements.
Revenue Recognition
Our revenue recognition policies involve judgments about Medicare and Medicaid rate calculations. These judgments are based principally upon our experience with these programs and our knowledge of current rules and regulations applicable to these programs. We recognize revenues when services are provided and these amounts are reported at their estimated net realizable amounts. Some Medicare and Medicaid revenues are subject to audit and retroactive adjustment and sometimes retroactive legislative changes.
43
Patient Care Receivables
Patient care receivables are reported net of allowances for doubtful accounts. The administrators and managers of our properties evaluate the adequacy of the allowance for doubtful accounts on a monthly basis, and adjustments are made if necessary. Approximately 87% of our revenue in our nursing facilities is derived from Medicare and Medicaid qualifying residents. Charges to these payers are evaluated monthly to insure that revenue is recorded properly and that any adjustments necessitated by our contractual arrangement with these payers are recorded in the month incurred.
Asset Impairment
We evaluate our property and equipment and other long-lived assets, other than goodwill and other indefinite lived intangibles, on an annual basis to determine if facts and circumstances suggest that the assets may be impaired or that the estimated depreciable life of the asset may need to be changed such as significant physical changes in the property, significant adverse changes in general economic conditions, and significant deteriorations of the underlying cash flows or fair values of the property. The need to recognize impairment is based on estimated future cash flows from a property compared to the carrying value of that property. If recognition of impairment is necessary, it is measured as the amount by which the carrying amount of the property exceeds the fair value of the property.
For goodwill and other indefinite lived intangibles, we perform an annual impairment test in the fourth quarter of each year or earlier if there are indications of potential impairment.
Our asset impairment analysis is consistent with the fair value measurements described in ASC Topic 820, Fair Value Measurements and Disclosures . We recorded an impairment to goodwill of $1.8 million in 2011 due to our discontinuation of the home health segment. In 2012, the Company recognized impairment charges totaling $0.5 million related to its former corporate office building in Springfield, Ohio and an administrative office building in Rogers, Arkansas. Both of these office buildings are held for sale at December 31, 2012 with the planned sale to occur in 2013.
If our estimates or assumptions with respect to a property change in the future, we may be required to record additional impairment charges for our assets.
Self-Insurance Accruals
As of October 1, 2012, the Company is self-insured for employee medical claims and has a large deductible workers' compensation plan (in all states except for Ohio, where workers' compensation is covered under a premium-only policy provided by the Ohio Bureau of Worker's Compensation, a state funded program required by Ohio's monopolistic workers' compensation system). Determining reserves for healthcare losses and costs that we have incurred as of the end of a reporting period involves significant judgments based upon our experience and our expectations of future events, including projected settlements for pending claims, known incidents which we expect may result in claims, estimates of incurred but not yet reported claims, expected changes in premiums for insurance provided by insurers whose policies provide for retroactive adjustments, estimated litigation costs and other factors. Since these reserves are based on estimates, the actual expenses we incur may differ from the amount reserved. We regularly adjust these estimates to reflect changes in the foregoing factors, our actual claims experience, recommendations from our professional consultants, changes in market conditions and other factors; it is possible that such adjustments may be material.
Business Combinations
The Company follows ASC Topic 805, Business Combinations ("ASC 805") , which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the
44
identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree as well as the goodwill acquired or gain recognized in a bargain purchase. The guidance also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. During 2012, we expensed approximately $2.0 million in acquisition costs related to the transactions discussed in Note 19 of the Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data." ASC 805 requires that we make certain valuations to determine the fair value of assets acquired and the liabilities assumed. Such valuations require us to make significant estimates, judgments and assumptions, including projections of future events and operating performance.
Stock-Based Compensation
We recognize compensation cost for all share-based payments granted after January 1, 2006 based on various vesting criteria over the requisite service period. We calculate the recognized and unrecognized stock-based compensation using the Black-Scholes-Merton option valuation method, which requires us to use certain key assumptions to develop the fair value estimates. These key assumptions include expected volatility, risk-free interest rate, expected dividends and expected term. During the years ended December 31, 2012 and 2011, we recorded share-based compensation charges for various employee and non-employee services totaling approximately $1.0 million and $1.0 million, respectively. Stock-based compensation expense is a non-cash expense and such amounts are included as a component of general and administrative expenses.
Income Taxes
As required by ASC Topic 740, Income Taxes ("ASC 740"), we determine deferred tax assets and liabilities based upon differences between financial reporting and tax bases of assets and liabilities and measure them using the enacted tax laws that will be in effect when the differences are expected to reverse. At December 31, 2012 we maintain a valuation allowance of approximately $8.0 million to reduce the deferred tax assets by the amount we believe is more likely than not to not be utilized through the turnaround of existing temporary differences, future earnings, or a combination thereof. In future periods, we will continue to assess the need for and adequacy of the remaining valuation allowance. We follow the relevant ASC 740 guidance when accounting for uncertainty in income taxes. The guidance provides information and procedures for financial statement recognition and measurement of tax positions taken, or expected to be taken, in tax returns.
Results of Operations
Same and Recently Acquired Facility Patient Care Revenue Analysis:
|
Total Patient Care
Revenues Year Ended December 31, |
||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
|
2012 | 2011 | |||||
Same Facilities |
$ | 112,811 | $ | 111,682 | |||
Recently Acquired Facilities |
86,691 | 24,910 | |||||
Total |
$ | 199,502 | $ | 136,592 | |||
45
Continuing Operations:
|
Year Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Amounts in 000's, except per share data)
|
2012 | 2011 | Change |
Percent
Change |
|||||||||
Revenues: |
|||||||||||||
Patient care revenues |
$ | 199,502 | $ | 136,592 | $ | 62,910 | 46 | % | |||||
Management revenues |
2,156 | 1,620 | 536 | 33 | % | ||||||||
Total revenues |
201,658 | 138,212 | 63,446 | 46 | % | ||||||||
Expenses: |
|||||||||||||
Cost of services (exclusive of facility rent, depreciation and amortization) |
168,207 | 111,819 | 56,888 | 50 | % | ||||||||
General and administrative expenses |
17,005 | 13,281 | 3,724 | 28 | % | ||||||||
Facility rent expense |
7,689 | 7,193 | 496 | 7 | % | ||||||||
Depreciation and amortization |
6,805 | 3,359 | 3,446 | 103 | % | ||||||||
Salary retirement and continuation costs |
43 | 1,451 | (1,408 | ) | (97 | )% | |||||||
Total expenses |
199,749 | 137,103 | 62,646 | 46 | % | ||||||||
Income from Operations |
1,909 | 1,109 | 800 | 72 | % | ||||||||
Other Income (Expense): |
|||||||||||||
Interest expense, net |
(13,224 | ) | (7,381 | ) | (5,843 | ) | (79 | )% | |||||
Acquisition costs, net of gains |
(1,962 | ) | (1,163 | ) | (799 | ) | (69 | )% | |||||
Derivative (loss) gain |
(1,741 | ) | 957 | (2,698 | ) | (282 | )% | ||||||
Gain (Loss) on extinguishment of debt |
500 | (141 | ) | 641 | (455 | )% | |||||||
Gain (Loss) on disposal of assets |
2 | (111 | ) | 113 | 102 | % | |||||||
Other income |
(124 | ) | 551 | (675 | ) | (122 | )% | ||||||
Total other expense, net |
(16,549 | ) | (7,288 | ) | (9,261 | ) | (127 | )% | |||||
Loss from Continuing Operations Before Income Taxes |
(14,640 | ) | (6,179 | ) | (8,461 | ) | (137 | )% | |||||
Income tax (expense) |
(97 | ) | (215 | ) | 118 | 55 | % | ||||||
Loss from Continuing Operations |
$ | (14,737 | ) | $ | (6,394 | $ | (8,343 | ) | (130 | )% | |||
Patient Care Revenues Total patient care revenues increased by $62.9 million, or 46.1% from 2011 to 2012, primarily as a result of the facilities acquired in 2012, full year of operations in 2012 for facilities acquired in 2011 and the optimization of resident mix.
Management Revenues Management revenues (net of eliminations) increased by $0.5 million, or 33.1%. In 2011 the management fee charged to the Oklahoma Owners was eliminated in the process of consolidating the Oklahoma Owners as a consolidated variable interest entity. Upon deconsolidation of the Oklahoma Owners in 2012, the management fee is recognized as a third party transaction.
Cost of Services Cost of services increased by $56.4 million, or 50.4%, in 2012 as compared to 2011 primarily from the acquisitions in both years. Cost of services as a percentage of patient care revenue increased slightly from 81.9% in 2011 to 84.3% in 2012. The increase in cost of services as a percentage of patient care revenue is primarily due to the effect in 2012 from the operations of certain 2012 acquired facilities prior to the Company achieving completion of its cost reduction optimization strategy for acquired facilities.
General and Administrative General and administrative costs increased by $3.7 million to $17.0 million in 2012 from $13.3 million in 2011. We increased our corporate overhead structure throughout 2012 in response to the growth needs and opened an accounting service center located in Roswell, Georgia during the second quarter of 2011. As a percentage of revenue, general and administrative costs declined to 8.4% in 2012 compared to 9.5% in 2011 reflecting increased leverage of our fixed costs over the scale of expanding operations from acquisitions.
46
Facility Rent Expense Facility rent expenses increased by $0.5 million, or 6.9% from 2011 to 2012. The increase in facility rent expense is due to annual increases in lease rates and the addition of one new leased facility in the fourth quarter of 2011.
Depreciation and Amortization Depreciation and amortization increased $3.4 million in 2012 compared to 2011. The depreciation increase is directly related to acquisition activity that was not included in the 2011 results and the impairment charges of $0.4 million to write down the carrying value of an office building located in Rogers, Arkansas and $0.1 million to reduce the net book value of the Company's former Springfield, Ohio office to net realizable value. In addition, the acquisitions resulted in intangibles that are being amortized during the period.
Salary Retirement and Continuation Costs In 2011, we incurred certain retirement and salary continuation costs of approximately $1.5 million related to separation agreements with prior officers of the Company.
Interest Expense, net Interest expense, net increased $5.8 million, or 79.1% from 2011 to 2012. We have entered into numerous debt instruments in relation to our growth strategy for the acquisition of the facilities which began in the third quarter of 2010.
Acquisition Costs, net of Gains For 2012, acquisition costs were $2.0 million, compared to $1.2 million for 2011. In 2011 we recognized bargain purchase gains of $1.1 million partially offset by $2.3 million of acquisition costs related to the 2011 acquisitions. No bargain purchase gains were recognized in 2012.
Derivative Gain/Loss For 2012, the derivative loss was $1.7 million compared to a gain of $1.0 million in 2011. The derivative is a product of a convertible debt instrument entered into during the third quarter of 2010. The expense associated with the derivative is subject to volatility based on a number of factors including increases or decreases in our stock price. Increases in our stock price generally result in increases in expense. Conversely, a decrease in our stock price generally results in the recognition of a gain in our statements of operations. The expense or gain recognized in a period is based on the fair value of the derivative instrument at the end of the year in comparison to the beginning of the year. The fair value of the derivative instrument was $3.6 million at December 31, 2012 compared to $1.9 million at December 31, 2011.
(Gain) Loss on Debt Extinguishment In March 2011, we issued a promissory note in the amount of $1.4 million. Subsequent to March 31, 2011, we repaid this promissory note. In June 2011, we recorded a loss on debt extinguishment related to a conversion of debt. In August 2011, we refinanced our Southland Care Center resulting in a loss on debt extinguishment. The total loss recognized in 2011 related to the unamortized deferred financing costs written-off upon in these transactions totaled $0.1 million. In 2012, a non-cash gain of $0.6 million was recognized in connection with a litigation settlement.
Other Income/(Expense) For 2012, other income, net was $0.1 million compared to $0.6 million in 2011. In 2011, the collections of receivables purchased in the acquisitions of five leased facilities in 2010 was $0.6 million more than expected resulting in additional income for 2011.
Income Tax Expense Income tax expense in 2012 is comparable to 2011 with a decrease of $0.1 million in income tax expense from 2011 to 2012.
Discontinued Operations:
As part of the Company's strategy to focus on the growth of its skilled nursing segment, the Company decided in the fourth quarter of 2011 to exit the home health segment of the business. The 2011 net loss from discontinued operations of $1.2 million includes a $1.8 million goodwill impairment
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charge pertaining to the home health business. The 2012 net income from discontinued operations of $7.2 million includes a gain on sale of $6.7 million.
Liquidity and Capital Resources
Liquidity is the measure of the Company's ability to have adequate cash or access to cash at all times in order to meet financial obligations when due, as well as to fund corporate expansion and other activities. Historically, the Company has met its liquidity requirements through a combination of net cash flow from operations, debt from third party lenders and issuances of debt and equity securities.
For the year ended and as of December 31, 2012, we had a net loss of $7.5 million and negative working capital of $5.9 million. At December 31, 2012, we had $15.9 million in cash and cash equivalents and $171.9 million in indebtedness, including current maturities and discontinued operations, of which $23.0 million is current debt (including the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013 and approximately $3.7 million of mortgage notes included in liabilities of disposal group). Our ability to achieve profitable operations is dependent on continued growth in revenue and controlling costs.
We anticipate that scheduled debt service (excluding outstanding convertible promissory notes but including principal, interest, collateral and capital improvement fund or other escrow deposits) will total approximately $17.2 million and cash outlays for acquisition costs, maintenance capital expenditures, dividends on our Series A Preferred Stock and income taxes will total approximately $4.7 million for the year ending December 31, 2013. Debt service requirements for the year ending December 31, 2013 include approximately $1.9 million of bullet maturities that the Company believes could be refinanced on a longer term basis. In recent periods, we have refinanced shorter term acquisition debt, including seller notes, with traditional longer term mortgage notes, some of which have been executed under government guaranteed lending programs. Although, we anticipate the conversion to common stock of the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013, we believe that our anticipated cash flow and committed funding sources would allow us to pay these notes in cash. These promissory notes are convertible into shares of common stock of the Company at $3.73 per share. The closing price of the common stock exceeded $4.00 per share from January 1, 2013 through July 5, 2013, except for the last three trading days in March 2013. As discussed further below, if we were required to pay these notes in cash, then the Company may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans due to our limited liquidity in such an event.
We estimate that cash flow from operations, including approximately $2.0 million cash outlay for costs with respect to the Audit Committee review and inquiry discussed in Part II, Item 9A. "Controls and Procedures," and other working capital changes will be approximately $17.8 million for the year ending December 31, 2013. The Company expanded its existing credit facility with Gemino Healthcare Finance, LLC ("Gemino"): (i) in May 2013, to refinance and include one of the facilities the Company acquired in December 2012; and (ii) in June 2013, to refinance and include two additional facilities the Company also acquired in December 2012. We routinely have ongoing discussions with existing and potential new lenders to refinance current debt on a longer term basis. We have been successful in recent years in raising new equity capital and believe, based on recent discussions that these markets will continue to be available to us for raising capital in 2013.
Based on existing cash balances, anticipated cash flows for the year ending December 31, 2013, and new sources of capital, we believe there will be sufficient funds for our operations, scheduled debt service, and capital expenditures at least through the next 12 months. On a longer term basis, we have approximately $80.4 million of debt payments and maturities due between 2014 and 2016, excluding convertible promissory notes which are convertible into shares of common stock. We believe our
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long-term liquidity needs will be satisfied by these same sources, as well as borrowings as required to refinance indebtedness.
In order to satisfy these capital needs, we intend to: (i) improve our operating results by increasing facility occupancy, optimizing our payor mix by increasing the proportion of sub-acute patients within our skilled nursing facilities, continuing our cost optimization and efficiency strategies and acquiring additional long-term care facilities with existing operating cash flow; (ii) expand our borrowing arrangements with certain existing lenders; (iii) refinance current debt where possible to obtain more favorable terms; and (iv) raise capital through the issuance of debt or equity securities. We anticipate that these actions, if successful, will provide the opportunity for us to maintain liquidity on a short and long term basis, thereby permitting us to meet our operating and financing obligations for the next 12 months and provide for the continuance of our acquisition strategy. However, there is no guarantee that such actions will be successful or that anticipated operating results will be achieved. We currently have limited borrowing availability under our existing revolving credit facilities. If the Company is unable to improve operating results, expand existing borrowing agreements, refinance current debt, or raise capital through the issuance of securities, or the convertible promissory notes due October 2013 are not converted into common stock and are required to be repaid by us in cash, then the Company may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans.
The following table presents selected data from our consolidated statement of cash flows for the periods presented:
|
Year Ended December 31, | ||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
|
2012 | 2011 | |||||
Net cash provided by operating activitiescontinuing operations |
$ | 1,124 | $ | 542 | |||
Net cash provided by operating activitiesdiscontinued operations |
403 | 1,450 | |||||
Net cash used in investing activitiescontinuing operations |
(70,853 | ) | (60,772 | ) | |||
Net cash provided by (used in) investing activitiesdiscontinued operations |
11,691 | (218 | ) | ||||
Net cash provided by financing activitiescontinuing operations |
72,609 | 62,722 | |||||
Net cash used in financing activitiesdiscontinued operations |
(6,221 | ) | (271 | ) | |||
Net change in cash and cash equivalents |
8,753 | 3,453 | |||||
Cash and cash equivalents at beginning of period |
7,364 | 3,911 | |||||
Cash decrease due to deconsolidation of variable interest entity |
(180 | ) | | ||||
Cash and cash equivalents at end of period |
$ | 15,937 | $ | 7,364 | |||
Year Ended December 31, 2012
Net cash provided by operating activitiescontinuing operations for the year ended December 31, 2012, was approximately $1.1 million consisting primarily of our income from operations less changes in working capital, and noncash charges (primarily depreciation and amortization, the derivative loss, share-based compensation, difference between straight-line rent and rent paid, and amortization of debt discounts and related deferred financing costs); all primarily the result of routine operating activity. The net cash provided by operating activitiesdiscontinued operations was approximately $0.4 million.
Net cash used in investing activitiescontinuing operations for the year ended December 31, 2012, was approximately $70.9 million. This is primarily the result of funding our acquisitions, including making escrow deposits as well as capital expenditures throughout the facilities and new computer
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software. Net cash provided by investing activitiesdiscontinued operations was approximately $11.7 million.
Net cash provided by financing activitiescontinuing operations was approximately $72.6 million for the year ended December 31, 2012. This is primarily the result of cash proceeds received from warrant exercises, increases in borrowings on the line of credit, and proceeds from debt financings to fund our acquisitions, partially offset by repayments of existing debt obligations. Net cash used in financing activitiesdiscontinued operations was approximately $6.2 million consisting of repayments of existing debt obligations.
Year Ended December 31, 2011
Net cash provided by operating activitiescontinuing operations for the year ended December 31, 2011, was $0.5 million consisting primarily of our income from operations less changes in working capital, and noncash charges (primarily depreciation and amortization, the derivative loss, share-based compensation, difference between straight-line rent and rent paid, and amortization of debt discounts and related deferred financing costs); all primarily the result of routine operating activity. The net cash provided by operating activitiesdiscontinued operations was approximately $1.4 million.
Net cash used in investing activitiescontinuing operations for the year ended December 31, 2011, was approximately $60.8 million. This is primarily the result of funding our acquisitions, including making escrow deposits as well as capital expenditures throughout the facilities and new computer software. Net cash used in investing activitiesdiscontinued operations was approximately $0.2 million for the year ended December 31, 2011.
Net cash provided by financing activitiescontinuing operations was approximately $62.7 million for the year ended December 31, 2011. This is primarily the result of cash proceeds received from warrant exercises, increases in borrowings on the line of credit, and proceeds from debt financings to fund our acquisitions, partially offset by repayments of existing debt obligations. Net cash used in financing activitiesdiscontinued operations was approximately $0.3 million consisting of repayments of existing debt obligations.
Total notes payable and other debt obligations as of December 31, 2012 and 2011 were as follows:
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
|
2012 | 2011 | |||||
Revolving credit facilities and lines of credit |
$ | 9,204 | $ | 8,651 | |||
Senior debtguaranteed by HUD |
9,699 | 15,738 | |||||
Senior debtguaranteed by USDA |
28,370 | 38,717 | |||||
Senior debtguaranteed by SBA |
6,189 | 5,087 | |||||
Senior debtbonds, net of discount |
16,265 | 6,176 | |||||
Senior debtother mortgage indebtedness |
75,188 | 24,063 | |||||
Other debt |
4,004 | 4,196 | |||||
Convertible debt issued in 2010, net of discount |
10,948 | 10,105 | |||||
Convertible debt issued in 2011 |
4,509 | 4,509 | |||||
Convertible debt issued in 2012 |
7,500 | | |||||
Total |
171,876 | 117,242 | |||||
Less current portion |
19,387 | 11,909 | |||||
Less portion included in liabilities of disposal group held for sale |
3,662 | 240 | |||||
Notes payable and other debt, net of current portion |
$ | 148,827 | $ | 105,093 | |||
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Scheduled Maturities
The schedule below summarizes the scheduled maturities as of December 31, 2012 for each of the next five years and thereafter. The 2013 maturities include $3.7 million related to the Vandalia HUD mortgage note classified as liabilities of disposal group held for sale at December 31, 2012 that was assumed by the buyer of the Hearth & Home of Vandalia assisted living facility that the Company sold in a transaction that closed in May 2013 (see Note 3 and Note 23 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data.").
|
Amounts in (000's) | |||
---|---|---|---|---|
2013 |
$ | 23,661 | ||
2014 |
20,561 | |||
2015 |
30,888 | |||
2016 |
41,000 | |||
2017 |
3,750 | |||
Thereafter |
52,789 | |||
Subtotal |
172,649 | |||
Less: unamortized discounts ($702 classified as current) |
(1,131 | ) | ||
Plus: unamortized premiums ($90 classified as current) |
358 | |||
Total notes and other debt |
$ | 171,876 | ||
Gemino Credit Facility
On September 20, 2012, AdCare terminated and paid off all amounts outstanding under that certain Credit Agreement, dated October 29, 2010, between Gemino and AdCare (the "Gemino Credit Facility"). The Gemino Credit Facility was a secured credit facility for borrowings up to $7.5 million, which was to mature on October 29, 2013. As of September 20, 2012, the amount outstanding in principal balance was approximately $4.2 million which was paid from funds made available to AdCare from a new credit facility entered into with The PrivateBank and Trust Company ("PrivateBank"). Interest accrued on the principal balance outstanding of the Gemino Credit Facility at an annual rate equal to LIBOR rate plus the applicable margin of 4.75% to 5.00%, depending on the principal amount outstanding. The Gemino Credit Facility contained various financial covenants and other restrictions, including a fixed charge cover ratio and maximum loan turn days, as well as borrowing base restrictions. No material early termination penalties were incurred by AdCare as a result of the termination.
At December 31, 2011, the outstanding balance of approximately $7.3 million for the Gemino Credit Facility was classified as current as a result of the required lockbox arrangement and subjective acceleration clauses.
Gemino-Bonterra Amendment
On September 20, 2012, ADK Bonterra/Parkview, LLC, a wholly owned subsidiary of AdCare ("Bonterra") entered into a Second Amendment to the Credit Agreement with Gemino ("Gemino-Bonterra Credit Facility"), which amended the original Credit Agreement dated April 27, 2011 between Bonterra and Gemino. The Gemino-Bonterra Credit Facility is a secured credit facility for borrowings up to $2.0 million. The amendment extends the term of the Gemino-Bonterra Credit Facility from October 29, 2013 to January 31, 2014 and amends certain financial covenants regarding Bonterra's fixed charge coverage ratio, maximum loan turn days and applicable margin. Interest accrues on the principal balance outstanding at an annual rate equal to the LIBOR rate plus the applicable margin of 4.75% to 5.00%, which fluctuates depending upon the principal amount outstanding. As of December 31, 2012, $1.3 million was outstanding under the Gemino-Bonterra Credit Facility.
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On December 20, 2012, Bonterra entered into a Third Amendment to the Credit Agreement with Gemino, which amended the original Credit Agreement, dated April 27, 2011, between Bonterra and Gemino. The Third Amendment altered the financial covenant in the original credit agreement to exclude the Oklahoma Owners under another credit agreement with Gemino from the covenant calculation of maximum loan turn days and acknowledges that Bonterra shall not be obligated, directly or indirectly, for any indebtedness or obligations of the Oklahoma Owners to Gemino.
PrivateBank Credit Facility
On September 20, 2012, in connection with the payoff of the Gemino Credit Agreement noted above, AdCare entered into a Loan and Security Agreement with PrivateBank ("PrivateBank Credit Facility"). Under the terms of the PrivateBank Credit Facility, PrivateBank provides $10.6 million principal amount for a three-year period on senior secured revolving credit facility limited to borrowing base restrictions and offset by a $0.7 million standby letter of credit at December 31, 2012, increasing to $2.5 million at July 31, 2013.
The PrivateBank Credit Facility matures on December 31, 2016. Interest is accrued on the principal balance at an annual rate of the greater of (i) 1% plus the prime interest rate per annum, or (ii) 5% per annum. Payments for the interest are due monthly and commenced on October 1, 2012. In addition, there is a non-utilization fee of 0.5% on the unused portion of the available credit. The PrivateBank Credit Facility may be prepaid at any time without premium or penalty, provided that such prepayment is accompanied by a simultaneous payment of all accrued and unpaid interest, through the date of prepayment. The PrivateBank Credit Facility is secured by a first priority security interest in the real property and improvements constituting nursing facilities owned and operated by AdCare. AdCare has unconditionally guaranteed all amounts owed to PrivateBank under the PrivateBank Credit Facility.
Proceeds from the PrivateBank Credit Facility were used to pay off all amounts outstanding under a separate $2.0 million credit facility with PrivateBank under which certain subsidiaries of AdCare were borrowers, and the Gemino Credit Facility.
On October 26, 2012, the Company and certain of its wholly owned subsidiaries, on the one hand, and PrivateBank entered into a Modification Agreement which amends the PrivateBank Credit Facility, dated as of September 20, 2012, between certain of the Company's wholly owned subsidiaries and PrivateBank. The Modification Agreement amends the loan agreement to: (i) allow PrivateBank to issue additional letters of credit for the account of the borrowers under the loan agreement; and (ii) change the total amount that may be issued under any letters of credit to $2.5 million. The modification agreement did not change the maximum amount that may be borrowed under the loan agreement by the borrowers, which remains at $10.6 million. As of December 31, 2012, $7.7 million was outstanding under the PrivateBank Credit Facility.
Contemporary Healthcare Senior
On August 17, 2012 in conjunction with the acquisition of Companions Specialized Care Center in Tulsa, OK, two wholly owned subsidiaries of the Company entered into a Loan Agreement with Contemporary Healthcare Senior ("Contemporary") and issued a promissory note in favor of Contemporary for a principal amount of $600,000 ("Contemporary $600,000 Loan"). The Contemporary $600,000 Loan matures on August 20, 2015 and interest accrues on the principal balance at an annual rate of 9.0%. Payments for the interest and a portion of the principal in excess of the borrowing base are payable monthly, commencing on September 20, 2012. As of December 31, 2012, $0.2 million was outstanding under the Contemporary $600,000 Loan.
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Senior DebtGuaranteed by HUD
Hearth and Home of Vandalia
In connection with the Company's January 2012 refinancing of the assisted living facility known as Hearth and Home of Vandalia, owned by a wholly owned subsidiary of AdCare, the Company obtained a term loan, insured by U.S. Department of Housing and Urban Development ("HUD"), with a financial institution for a total amount of $3.7 million that matures in 2041. The HUD term loan requires monthly principal and interest payments with a fixed interest rate of 3.74%. Deferred financing costs incurred on the term loan amounted to $0.2 million and are being amortized to interest expense over the life of the loan. The HUD term loan has a prepayment penalty of 8% starting in 2014 declining by 1% each year through 2022. This mortgage note was assumed by the buyer in the closing of the sale of this facility that occurred in May 2013 pursuant to the terms of the sale agreement related to the sale of six of the Company's assisted living facilities located in Ohio (see Note 3 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data.").
Other Senior DebtGuaranteed by HUD
For three facilities, the Company has term loans insured by HUD a financial institution that totaled approximately $6.0 million at December 31, 2012. The combined HUD mortgage notes require monthly principal and interest payments of approximately $45,000 with fixed interest rates ranging from 5.95% to 7.25%. The notes mature at various dates starting in 2027 through 2038. Deferred financing costs incurred on these loans amounted to approximately $0.3 million and are being amortized to interest expense over the life of the notes. The loans have prepayment penalties of 3.5% to 6% through 2013 declining by 1% each year through 2022. The loans have certain restrictive covenants and HUD regulatory compliance requirements including maintenance of certain restricted escrow deposits and reserves for replacement.
Sale of Ohio ALFs
On December 28, 2012, AdCare sold four of its assisted living facilities located in Ohio and used a portion of the funds to pay off the principal balance of their HUD loans in the amount of $6.4 million. On February 28, 2013, AdCare completed the sale of one additional assisted living facility and used the proceeds to repay the principal balance of the HUD loan with respect to the facility in the amount of $1.9 million (see Note 23 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data.").
Senior DebtGuaranteed by USDA
For five facilities, the Company has term loans insured 70% to 80% by the USDA with financial institutions that totaled approximately $28.4 million at December 31, 2012. The combined USDA mortgage notes require monthly principal and interest payments of approximately $0.2 million adjusted quarterly with a variable interest rate of prime plus 1.0% to 1.75% with a floor of 5.50% to 6.00%. The notes mature at various dates starting in 2035 through 2036. Deferred financing costs incurred on these loans amounted to approximately $0.8 million and are being amortized to interest expense over the life of the notes. In addition, the loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 8% to 9% through 2013 declining by 1% each year capped at 1% for the remainder of the term.
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Senior DebtGuaranteed by SBA
Stone County
In June 2012, Mt. V Property Holdings, LLC. ("Stone County"), a wholly owned subsidiary of AdCare, entered into a loan agreement with the Economic Development Corporation of Fulton County (the "CDC"), an economic development corporation working with the SBA, in the amount of $1.3 million. The funding from the CDC loan of $1.3 million was used to satisfy a $1.3 million Metro City Bank loan that was used to acquire the assets of a skilled nursing facility located in Arkansas known as the Stone County Nursing and Rehabilitation facility.
The CDC loan matures in July 2032 and accrues interest at a rate of 2.42% per annum. The CDC loan is payable in equal monthly installments of principal and interest based on a twenty (20) year amortization schedule. The CDC loan may be prepaid, subject to prepayment premiums, during the first 10 years. There are also annual fees associated with the CDC loan, including an SBA guarantee fee. The CDC loan is secured by a second in priority security deed on the Stone County Nursing and Rehabilitation facility and guarantees from AdCare, the SBA and a wholly owned subsidiary of AdCare. As of December 31, 2012, $1.3 million was outstanding under the CDC loan.
Other Senior DebtGuaranteed by SBA
For three facilities, the Company has term loans insured 75% by the SBA with a financial institution that totaled approximately $4.9 million at December 31, 2012. The combined SBA mortgage notes require monthly principal and interest payments of approximately $28,000 with an interest rate of 2.42% to 5.5%. The notes mature at various dates starting in 2031 through 2036. Deferred financing costs incurred on these loans amounted to approximately $0.2 million and are being amortized to interest expense over the life of the note. In addition, the loans have an annual renewal fee for the SBA guarantee of 0.13% to 0.25% of the guaranteed portion. The loans have prepayment penalties ranging from 2.48% to 3.0% declining each year until year 10.
Senior DebtBonds, net of Discount
Eaglewood Village Bonds
In April 2012, a wholly owned subsidiary of AdCare entered into a loan agreement with the City of Springfield in the State of Ohio pursuant to which City of Springfield lent to such subsidiary the proceeds from the sale of City of Springfield's Series 2012 Bonds. The Series 2012 Bonds consist of $6.6 million in Series 2012A First Mortgage Revenue Bonds and $0.6 million in Taxable Series 2012B First Mortgage Revenue Bonds. The Series 2012 Bonds were issued pursuant to an April 2012 Indenture of Trust between the City of Springfield and the Bank of Oklahoma. The Series 2012A Bonds mature in May 2042 and accrue interest at a fixed rate of 7.65% per annum. The Series 2012B Bonds mature in May 2021 and accrue interest at a fixed rate of 8.5% per annum. Deferred financing costs incurred on the loan amounted to $0.6 million and are being amortized to interest expense over the life of the loan. The loan is secured by the Company's assisted living facility located in Springfield, Ohio known as Eaglewood Village and guaranteed by AdCare. There is an original issue discount of $0.3 million and restricted assets of $0.3 million related to this loan. As of December 31, 2012, $6.6 million was outstanding under the Series 2012A First Mortgage Revenue Bonds and $0.6 million was outstanding under the Taxable Series 2012B First Mortgage Revenue Bonds. The unamortized discount on the bonds was $0.2 million at December 31 2012.
Quail Creek
In July 2012, a wholly owned subsidiary of AdCare financed the purchase of a skilled nursing facility located in Oklahoma City, Oklahoma known as Quail Creek Nursing by the assumption of existing indebtedness under that certain Loan Agreement and Indenture of First Mortgage with The
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Bank of New York Mellon Global Corporate Trust, as assignee of The Liberty National Bank and Trust of that certain Bond Indenture, dated September 1, 1986, as amended as of September 1, 2001. The indebtedness under the Loan Agreement and Indenture consists of a principal amount of $2.8 million. In July of 2012, the purchase price allocation of fair value totaling $3.2 million was assigned to this indebtedness resulting in a $0.4 million premium that is being amortized to maturity. The loan matures in August 2016 and accrues interest at a fixed rate of 10.25% per annum. The loan is secured by the Quail Creek facility.
As of December 31, 2012, $2.8 million was outstanding under the Loan Agreement. The unamortized premium on the bonds was $0.4 million at December 31 2012.
Riverchase
The Company's consolidated variable interest entity, Riverchase Village ADK, LLC ("Riverchase"), has revenue bonds, in two series, issued by the Medical Clinical Board of the City of Hoover in the state of Alabama which the Company has guaranteed the obligation under the bonds.
The Series 2010A portion of $5.8 million matures on June 1, 2039. The Series 2010B portion of $0.5 million matures serially beginning on June 1, 2012 through June 1, 2017, with annual redemption amounts ranging from $75,000 to $100,000. The Series 2010A and 2010B bonds may be redeemed early beginning on June 1, 2012 through May 31, 2015 at a redemption price ranging from 101% to 103% of the principal amount plus accrued interest. Any early redemption after May 31, 2015 is at a redemption price of 100% of the principal amount plus accrued interest. The bonds require monthly payments of fixed interest of $38,000 at a weighted average effective interest rate of 7.9%.
As of December 31, 2012, $5.8 million was outstanding under the Series 2010A portion and $0.5 million was outstanding under the Series 2010 B portion of the bonds. The bonds contain an original issue discount that is being amortized over the term of the notes. The unamortized discount on the bonds was $0.2 million at December 31 2012.
Senior DebtOther Mortgage Indebtedness
Woodland Manor
In connection with the Company's January 2012 acquisition of the skilled nursing facility known as Woodland Manor, the Company entered into a loan agreement for $4.8 million with PrivateBank. The loan matures in December 2016 with a required final payment of $4.3 million and accrues interest at the LIBOR rate plus 4% with a minimum rate of 6% per annum. The loan requires monthly payments of principal and interest. Deferred financing costs incurred on the loan amounted to $0.1 million and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 5% through 2012 declining by 1% each year through 2015. The loan is secured by the Woodland Manor facility and guaranteed by AdCare. As of December 31, 2012, $4.7 million was outstanding under loan agreement.
Little Rock, Northridge and Woodland Hills
In connection with the Company's April 2012 acquisition of three skilled nursing facilities located in Arkansas known as Little Rock, Northridge and Woodland Hills, the Company entered into a loan agreement for $21.8 million with PrivateBank. The loan originally matured in March 2017 with a required final payment of $19.7 million and has since been amended. The loan accrues interest at the LIBOR rate plus 4% with a minimum rate of 6% per annum and requires monthly principal payments plus interest for total current monthly payments of $0.2 million. Deferred financing costs incurred on the loan amounted to $0.4 million and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 5% through 2012 declining by 1% each year through 2015. The
55
loan is secured by the three facilities and guaranteed by AdCare. The Company has $1.8 million of restricted assets related to this loan.
On June 15, 2012, the Company entered into a modification agreement with PrivateBank to modify the terms of the loan agreement. The loan modification agreement, among other things, amended the loan agreement to reflect a maturity date of March 30, 2013.
A portion of the PrivateBank loan with respect to the Northridge facility and Woodland Hills facility was paid off and refinanced with a portion of the proceeds from a new credit facility with KeyBank National Association ("KeyBank") on December 28, 2012, as discussed below. On December 28, 2012, certain subsidiaries of the Company entered into a Second Modification Agreement with PrivateBank which modified the loan agreement. The modification, among other things, extends the term of the PrivateBank loan from March 30, 2013 to December 31, 2016; releases certain subsidiaries of the Company related to the Northridge facility and Woodland Hills facility from liability under two of the promissory notes and other related documents under the credit facility; and reduces the total outstanding amount owed under the credit facility from $21.8 million to $13.7 million. As of December 31, 2012, $13.7 million was outstanding under loan agreement.
Abington Place Metro City Bank
In connection with the Company's June 2012 acquisition of the skilled nursing facility located in Little Rock, Arkansas known as Abington Place, a wholly owned subsidiary of AdCare, entered into a short-term loan agreement for $3.4 million with Metro City Bank. In August 2012, the maturity date was extended from September 2012 to January 2014. The note accrues interest at the prime rate plus 2.25% with a minimum rate of 6.25% per annum. Deferred financing costs incurred on the loan amounted to $0.1 million and are amortized to interest expense over the life of the loan. The loan was secured by the Abington Place facility and guaranteed by AdCare.
The Abington Metro City Bank loan was paid off and refinanced with Key Bank on December 28, 2012 as discussed below.
Stone County
In June 2012, Mt. V Property Holdings, LLC ("Stone County"), a wholly owned subsidiary of AdCare, entered into two loan agreements with Metro City Bank in the amounts of $1.3 million and $1.8 million. The purpose of these agreements was to refinance existing debt in the original principal amount of $3.1 million used to acquire the assets of a skilled nursing facility located in Arkansas known as the Stone County Nursing and Rehabilitation facility.
The $1.3 million loan from Metro City Bank was repaid with the funding from the CDC loan of $1.3 million. The $1.8 million Metro City Bank loan matures in June 2022 and accrues interest at the prime rate plus 2.25% with a minimum rate of 6.25% per annum. Deferred financing costs incurred on this loan amounted to $0.1 million and are being amortized to interest expense over the life of the loan. The Metro City Bank loan has a prepayment penalty of 10% for any prepayment through June 2013. The penalty is reduced by 1% each year until the loan maturity date. The Metro City Bank loan is secured by the Stone County Nursing and Rehabilitation facility and is guaranteed by AdCare. As of December 31, 2012, $1.8 million was outstanding under the Metro City Bank loan.
Glenvue
In July 2012, Glenvue Health & Rehabilitation, a wholly owned subsidiary of AdCare, financed the acquisition of a skilled nursing facility located in Glennville, Georgia, by entering into a loan agreement for $6.6 million with PrivateBank. The loan matures in July 2014 with a required final payment of $6.4 million and accrues interest at an annual rate of the greater of (i) 6.0% per annum; or (ii) the
56
LIBOR rate plus 4.0% per annum. The loan requires monthly payments of principal and interest. Deferred financing costs incurred on the loan amounted to $0.1 million and are being amortized to interest expense over the life of the loan. The loan is secured by the Glenvue facility and guaranteed by AdCare. As of December 31, 2012, $6.5 million was outstanding under the loan.
Companions Specialized Care
In August 2012, a wholly owned subsidiary of AdCare, financed the acquisition of a skilled nursing facility located in Tulsa, Oklahoma, known as Companions Specialized Care Center, by entering into a loan agreement for $5.0 million with Contemporary Healthcare Capital. The loan matures in August 2015 with a required final payment of $5.0 million and accrues interest at a fixed rate of 8.5% per annum. Deferred financing costs incurred on the loan amounted to $0.2 million and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 5% during the first year of the term and 1% during the second year of the term. The loan is secured by the Companions Specialized Care facility and guaranteed by AdCare. As of December 31, 2012, $5.0 million was outstanding under the loan.
Northridge, Woodland Hills and Abington
On December 28, 2012, the Company's wholly owned subsidiaries which own the Northridge, Woodland Hills and Abington facilities entered into a Secured Loan Agreement with the KeyBank National Association (the "KeyBank Credit Facility"). The KeyBank Credit Facility provides for a $16.5 million principal amount senior secured credit facility and matures on February 27, 2015; provided, however, that the KeyBank Borrowers may extend the maturity date by an additional six months if certain conditions are met. Interest on the KeyBank Credit Facility accrues on the principal balance thereof at an annual rate of 4.25% plus the current LIBOR rate. The KeyBank Credit Facility may be prepaid at any time without premium or penalty, provided that the KeyBank Borrowers pay any costs of KeyBank in re-employing such prepaid funds. AdCare Health Systems, Inc., AdCare Property Holdings, LLC, and AdCare Operations, LLC. have unconditionally guaranteed all amounts owing under the KeyBank Credit Facility.
Proceeds from the KeyBank Credit Facility were used to pay off all amounts outstanding under an unsecured promissory note, dated April 1, 2012, issued by the Company in favor of Strome Alpha Offshore Ltd. in the amount of $5.0 million; payoff of an existing credit facility with Metro City Bank with respect to the Abington facility in the amount of $3.4 million; and payoff of the portion of the PrivateBank Credit Facility which relates to the Northridge and Woodland Hills in the amount of $8.1 million. As of December 31, 2012, $16.5 million was outstanding under the KeyBank Credit Facility.
Sumter Valley and Georgetown
In connection with the closing of the Sumter and Georgetown facilities acquisition, two wholly owned subsidiaries of AdCare Sumter Valley Property Holdings, LLC and Georgetown HC&R Property Holdings, LLC entered into a Loan Agreement with Metro City Bank, dated December 31, 2012 in which Metro City Bank issued a promissory note for an aggregate principal amount of $7.0 million (the "Metro City Bank Loan"). The Metro City Bank Loan matures on February 1, 2014. Interest on the loan accrues on the principal balance thereof at an annual rate of 1.5% per annum plus the prime interest rate, to be adjusted quarterly (but in no event shall the total interest be less than 5.50% per annum), and payments for the interest are payable monthly, commencing on February 1, 2013. The entire outstanding principal balance of the loan, together with all accrued but unpaid interest thereon, is payable on February 1, 2014. AdCare and certain of its subsidiaries have unconditionally guaranteed all amounts owing under the Metro City Bank Loan. As of December 31, 2012, $7.0 million was outstanding under the Metro City Bank Loan.
57
Northwest
In connection with the acquisition of the Northwest Nursing Center facility, a wholly owned subsidiary of AdCare, issued a note pursuant to a Loan Agreement with First Commercial Bank, dated December 31, 2012, for a principal amount of $1.5 million. The note matures on December 31, 2017. Interest on the note accrues on the principal balance thereof at an annual rate equal to the prime interest rate (but in no event shall the interest rate be less than 5.00% per annum), and payments for the interest are payable monthly, commencing on January 31, 2013. The entire outstanding principal balance of the note, together with all accrued but unpaid interest thereon, is payable on December 31, 2017. AdCare and certain subsidiaries of the Company have unconditionally guaranteed all amounts owing under the note. As of December 31, 2012, $1.5 million was outstanding under the loan.
Hembree Road Building
In November 2012, in connection with the acquisition of AdCare's corporate offices at Hembree Road, Roswell, Georgia, a wholly owned subsidiary of AdCare issued a promissory note in favor of Fidelity Bank for a principal amount of $1.1 million. The note matures in December 2017. Interest on the note accrues on the principal balance thereof at a fixed rate of 5.5% per annum and payments for the interest and principal are due monthly, commencing in December 2012. The entire outstanding principal balance of the note, together with all accrued but unpaid interest thereon, is payable on December 31, 2017. As of December 31, 2012, $1.0 million was outstanding under the loan.
Senior DebtOther Mortgage Indebtedness
For five facilities the Company has obtained various term loans that totaled approximately $17.3 million at December 31, 2012. The combined mortgage notes require monthly principal and interest payments of approximately $0.1 million with interest rates of 6.00% to 6.25%. The notes mature at various dates starting in 2016 through 2031. Deferred financing costs incurred on these loans amounted to approximately $0.5 million and are being amortized to interest expense over the life of the notes.
The remaining mortgage note balance is related to the financing on the Company's former corporate headquarters in Springfield, Ohio with a balance of approximately $0.2 million at December 31, 2012. The mortgage requires fixed monthly payments of approximately $3,000 plus interest at LIBOR plus 3.00% maturing in 2017. The building was sold in June 2013 and the mortgage was paid.
Other Debt
Eaglewood Village Promissory Note
In January 2012, two wholly owned subsidiaries of AdCare issued a promissory note to the seller in the amount of $0.5 million in connection with the January 2012 acquisition of the assisted living facility located in Springfield, Ohio. The note matures in January 2014 and requires a final payment of $0.5 million. The note bears interest at 6.5% per annum payable monthly beginning in February 2012. The note requires monthly principal and interest payment. The note may be prepaid without penalty at any time.
Cantone Promissory Notes
In March 2012, AdCare issued an unsecured promissory note to Cantone Asset Management LLC in the amount of $3.5 million. In April 2012, AdCare issued another promissory note to Cantone Asset Management LLC in the amount of $1.5 million. In July 2012, these two promissory notes were refinanced through the issuance to Cantone Asset Management LLC of an 8% subordinated convertible note in the principal amount of $5.0 million.
58
The $5.0 million of promissory notes issued to Cantone Asset Management LLC was refinanced as part of the $7.5 million in subordinated convertible promissory notes issued in July 2012 that is discussed below.
Strome Note
In April 2012, AdCare issued an unsecured promissory note in the amount of $5.0 million to Strome Alpha Offshore Ltd. The promissory note matured in November 2012, and the Company paid off the promissory note on December 28, 2012, using the proceeds from the KeyBank Credit Facility discussed in Note 9 to our Consolidated Financial Statements included in this Annual Report. Interest accrued on the promissory note at a fixed rate of 10% per annum.
Sumter Valley Promissory Note
In connection with the acquisition of the facility known as Sumter Valley Nursing and Rehab in December 2012, a subsidiary of AdCare issued a promissory note to the seller of the facility in the amount of $0.3 million. Interest on the note accrues at a rate of 6% per annum. Principal and interest payments on the note shall be due and payable monthly, beginning on February 1, 2013, with a final payment due on the earlier of December 31, 2014, or the date upon which the Company refinances its loan relating to the Sumter facility. AdCare has unconditionally guaranteed all amounts owed under the note. At December 31, 2012, $0.2 million remained outstanding on this promissory note.
Georgetown Promissory Note
In connection with the acquisition of the facility known as Georgetown Healthcare and Rehab in December 2012, a subsidiary of AdCare issued a secured subordinated promissory note to the seller of the Georgetown facility in the amount of $1.9 million. Interest on the note accrues at a rate of 7% per annum. Interest payments on the note shall be due and payable monthly, beginning on February 1, 2013, with a final payment due on the earlier of December 31, 2013; or the date upon which the Company refinances its loan with Metro City Bank relating to the Georgetown Healthcare and Rehab Facility. AdCare has unconditionally guaranteed all amounts owing under the note.
Pinnacle Healthcare Promissory Notes
The Company previously issued promissory notes in the aggregate principal amount of $2.4 million. The notes mature March 1, 2014, and bear interest at 7% payable quarterly in arrears the first day of each December, March, June and September beginning December 1, 2011. The notes are subject to mandatory prepayment in the aggregate principal amount of $250,000 on each of March 1, 2013, June 1, 2013, September 1, 2013 and December 1, 2013 and a final payment of $150,000 on March 1, 2014. The notes may also be prepaid without penalty at any time. At December 31, 2012, $1.2 million remained outstanding.
Mountain Trace Promissory Notes
Mountain Trace ADK, LLC, a wholly owned subsidiary of AdCare, previously issued promissory notes in the aggregate principal amount of $1,000,000. The notes mature April 1, 2013, and bear interest at 11% payable quarterly in arrears the first day of each January, April, July and October beginning July 1, 2011. The notes may also be prepaid without penalty by providing fifteen days prior notice. The Company received proceeds of $0.9 million net of legal and other financing costs. At December 31, 2012, $0.2 million remained outstanding.
59
Convertible Debt
Subordinated Convertible Notes Issued in 2010
On October 26, 2010, the Company entered into a Securities Purchase Agreement with certain accredited investors to sell and issue to the Purchasers an aggregate of $11.1 million in principal amount of the Company's Subordinated Convertible Notes, bearing 10% interest per annum payable quarterly in cash in arrears beginning December 31, 2010.
On October 29, 2010, the Company entered into an amendment and joinder agreement to effectuate the sale of an additional $0.8 million in principal amount of Notes. The initial sale of $11.1 million in principal amount of Notes occurred on October 26, 2010, and the subsequent sale of $0.8 million in principal amount of Notes occurred on October 29, 2010. The notes mature in October 2013.
The Notes are convertible at the option of the holder into shares of common stock of the Company at a current conversion price of $3.73 (adjusted for a 5% stock dividends paid on October 14, 2011 and October 22, 2012, as further discussed in Note 10 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data.", and subject to adjustment for stock dividends, stock splits, combination of shares, recapitalization and other similar events) that is subject to future reductions if the Company issues equity instruments at a lower price. Since there is no minimum conversion price resulting in an indeterminate number of shares to be issued in the future, the Company determined an embedded derivative existed that was required to be bifurcated from the Notes and accounted for separately as a derivative liability recorded at fair value (see Note 15 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data."). At the time of initial measurement, the derivative had an estimated fair value of $2.6 million resulting in a discount on the Notes. The discount is being amortized over the term of the Notes. At December 31, 2012, the unamortized discount on the Notes was $0.7 million.
There was a conversion of a $0.2 million note that was part of the October 26, 2010 offering. It was recorded in two $0.1 million allotments. The first one converted in July 2011 at a price of $4.13 per share and resulted in the issuance of 18,160 shares. The second converted in November 2011 at a price of $3.92 and resulted in the issuance of 19,132 shares. As of December 31, 2012, $11.7 million was outstanding under the Notes.
Subordinated Convertible Notes Issued in 2011
On March 31, 2011, the Company entered into a Securities Purchase Agreement with certain accredited investors to sell and issue to the Purchasers an aggregate of $2.1 million in principal amount of the Company's Subordinated Convertible Notes. On April 29, 2011, the Company issued an additional $1.8 million in principal amount of the convertible debt issuance. On May 6, 2011, the Company issued an additional $0.6 in principal amount of the Notes. As of December 31, 2012, the total outstanding principal amount of the Notes is $4.5 million. Approximately $1.4 million of the proceeds obtained were used to repay the short-term promissory note that was issued March 31, 2011 and related accrued interest.
The Notes bear a 10% interest per annum and are payable quarterly in cash in arrears beginning June 30, 2011. The Notes mature on March 31, 2014. Debt issuance costs of $0.6 million are being amortized over the life of the Notes.
The Notes are convertible at the option of the holder into shares of common stock of the Company at a conversion price of $4.80 (adjusted for a 5% stock dividends paid on October 14, 2011 and October 22, 2012, as further discussed in Note 10 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data.", and subject to
60
adjustment for stock dividends, stock splits, combination of shares, recapitalization and other similar events). The initial conversion price is subject to adjustment for any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or other similar events. The Notes are unsecured and subordinated in right of payment to existing and future senior indebtedness.
Subordinated Convertible Notes Issued in 2012
AdCare entered into a Securities Purchase Agreement, dated as of June 28, 2012, with certain accredited investors pursuant to which the Company issued and sold such investors on July 2, 2012 an aggregate of $7.5 million in principal amount of the Company's 8.0% subordinated convertible promissory notes. The notes bear interest at 8% per annum and such interest is payable quarterly in cash in arrears beginning on September 30, 2012. The notes mature on July 31, 2015. The notes are unsecured and subordinated in right of payment to existing and future senior indebtedness of the Company. The $7.5 million principal amount of the notes includes a refinancing of existing indebtedness of $5.0 million of promissory notes issued to Cantone Asset Management LLC.
At any time on or after the six-month anniversary of the date of issuance of the notes, the notes are convertible at the option of the holder into shares of the Company's common stock at a conversion price equal to $3.97 per share (adjusted for a 5% stock dividend paid on October 22, 2012, as further discussed in Note 10 to our Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data.", and subject to adjustment for stock dividends, stock splits, combination of shares, recapitalization and other similar events).
If at any time on or after the six-month anniversary date, the weighted average price of the common stock for any 20 trading days within a period of 30 consecutive trading days equals or exceeds 200% of the conversion price and the average daily trading volume of the common stock during such 20 days exceeds 50,000 shares, then the Company may, subject to the satisfaction of certain other conditions, redeem the notes in cash at a redemption price equal to the sum of 100% of the principal amount being redeemed plus any accrued and unpaid interest on such principal.
In addition, the holders of a majority of the aggregate principal amount of notes then outstanding may require the Company to redeem all or any portion of the notes upon a change of control transaction, at a redemption price in cash equal to 110% of the redemption amount.
Approximately $23.7 million of the scheduled maturities in 2013, 2014 and 2015, relate to the subordinated convertible notes issued in 2010, 2011 and 2012. While management cannot predict with certainty, we anticipate that some holders of the subordinated convertible notes will elect to convert their subordinated convertible notes into common stock provided the common stock continues to trade above the applicable conversion price for such notes. The conversion prices are $3.73, $4.80 and $3.97 for the subordinated convertible notes issued in 2010, 2011 and 2012, respectively. If all of the subordinated convertible notes had been converted to common stock at December 31, 2012, then the Company would have been required to issue approximately 6.4 million shares of common stock.
Debt Covenant Compliance
As of December 31, 2012, the Company (including its consolidated variable interest entity) has over twenty different credit facilities (credit facilities, mortgage notes, bonds and other credit obligations) outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum EBITDA or EBITDAR, current ratios and tangible net worth requirements. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on subsidiary level (i.e.; facility, multiple facilities or a combination of subsidiaries comprising less than the Company's consolidated financial measurements). Some covenants are based on annual financial metric measurements whereas others are based on monthly or quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements. In recent periods, including as of December 31, 2012, the Company has not been in compliance with certain financial and administrative covenants. For each instance of such non-compliance, the Company has obtained waivers or amendments to such requirements including as necessary modifications to future covenant requirements or the elimination of certain requirements in future periods.
61
The following table includes financial covenant requirements as of the last measurement date as of or prior to December 31, 2012 where the Company was not in compliance with the financial covenant or it achieved compliance with the covenant requirement by a margin of 10% or less. The table also identifies the related credit facility, outstanding balance at December 31, 2012 and the next applicable future financial covenant requirement inclusive of adjustments to covenant requirements resulting from amendments executed subsequent to December 31, 2012.
Credit Facility
|
Balance at
December 31, 2012 (000's) |
Consolidated or
Subsidiary Level Covenant Requirement |
Financial Covenant |
Measurement
Period |
Min/Max
Financial Covenant Required |
Financial
Covenant Metric Achieved |
Future
Financial Covenant Metric Required |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
PrivateBankLine of Credit |
$ | 7,706 | Subsidiary | Rent and debt service coverage ratio | Quarterly | 1.10 | 1.38 | 1.10 | |||||||||||
|
Consolidated | Guarantor minimum debt service coverage ratio (DSCR) | Annual | 1.00 | 0.98 | * | 1.00 | ||||||||||||
|
Consolidated | Guarantor maximum leverage ratio | Annual | 11.00 | 10.25 | 11.00 | |||||||||||||
Contemporary Healthcare CapitalTerm Note |
$ |
5,224 |
Subsidiary |
Minimum implied current ratio |
Quarterly |
1.00 |
0.65 |
* |
1.00 |
||||||||||
and Line of CreditCompanion Care |
Subsidiary | Minimum liquidity (000's) | Quarterly | $ | 250 | $ | 22 | * | $ | 250 | |||||||||
PrivateBankMortgage NoteValley River |
$ |
11,495 |
Consolidated |
DSCR |
Annual |
1.00 |
0.98 |
* |
1.00 |
||||||||||
Square 1 USDATerm NoteHomestead |
$ |
3,529 |
Subsidiary |
Current ratio |
Quarterly |
1.00 |
0.22 |
* |
1.00 |
||||||||||
|
Subsidiary | Maximum debt to net worth | Quarterly | 9.00 | 9.47 | * | 9.00 | ||||||||||||
|
Subsidiary | Tangible net worth | Quarterly | 10.0 | % | 9.5 | %* | 0.10 | |||||||||||
PrivateBankLine of Credit and Term |
$ |
13,665 |
Subsidiary |
EBITDAR (000's) |
Monthly |
$ |
75 |
$ |
(22 |
)* |
$ |
0 |
|||||||
DebtCertain Arkansas Facilities |
Subsidiary | Fixed Charge Coverage Ratio (FCCR) | Quarterly | 1.05 | -1.02 | * | 1.05 | ||||||||||||
|
Consolidated | DSCR | Annual | 1.00 | 0.98 | * | 1.00 | ||||||||||||
|
Consolidated | Maximum Annual Leverage | Annual | 11.00 | 10.25 | 11.00 | |||||||||||||
KeyBankMortgage NoteWoodland Manor |
$ |
16,500 |
Consolidated |
FCCR |
Quarterly |
1.15 |
0.49 |
* |
0.85 |
||||||||||
PrivateBankMortgage NoteGlenvue |
$ |
6,550 |
Subsidiary |
DSCR |
Quarterly |
1.35 |
2.40 |
1.35 |
|||||||||||
|
Consolidated | DSCR | Annual | 1.00 | 0.98 | * | 1.00 | ||||||||||||
|
Consolidated | Maximum leverage | Annual | 11.00 | 10.25 | 11.00 | |||||||||||||
PrivateBankMortgage NoteWoodland Manor |
$ |
4,707 |
Subsidiary |
Minimum quarterly EBITDAR (000's) |
Quarterly |
$ |
250 |
$ |
12 |
* |
$ |
250 |
|||||||
|
Subsidiary | Minimum trailing twelve month FCCR | Quarterly | 1.10 | 1.05 | * | 1.10 | ||||||||||||
Medical Clinic Board of the City of HooverBonds |
$ |
6,290 |
VIE |
DSCR |
Annual |
1.20 |
0.09 |
* |
1.20 |
||||||||||
|
VIE | Days cash on hand | Annual | 15 | 0 | * | 15 | ||||||||||||
|
VIE | Trade payables | Annual | 10.0 | % | 44.0 | %* | 0.10 | |||||||||||
City of SpringfieldBonds |
$ |
7,230 |
Subsidiary |
DSCR |
Annual |
1.10 |
0.94 |
* |
1.10 |
||||||||||
|
Subsidiary | Days Cash on Hand | Annual | 15 | 0 | * | 15 | ||||||||||||
|
Subsidiary | Trade payables | Annual | 10.0 | % | 27.0 | %* | 0.10 |
62
Receivables
Our operations could be adversely affected if we experience significant delays in reimbursement from Medicare, Medicaid and other third-party revenue sources. Our future liquidity will continue to be dependent upon the relative amounts of current assets (principally cash and patient accounts receivable and current liabilities (principally accounts payable and accrued expenses). In that regard, accounts receivable can have a significant impact on our liquidity. Continued efforts by governmental and third-party payors to contain or reduce the acceleration of costs by monitoring reimbursement rates, by increasing medical review of bills for services, or by negotiating reduced contract rates, as well as any delay by the staff at our facilities in the processing of our invoices, could adversely affect our liquidity and results of operations.
Accounts receivable attributable to patient services of continuing operations totaled $24.7 million at December 31, 2012, compared to $17.2 million at December 31, 2011, representing approximately 45 days revenue in accounts receivable in both 2012 and 2011. The increase in accounts receivable is primarily the result of increased revenue in 2012.
The allowance for bad debt was $3.7 million and $1.3 million at December 31, 2012 and 2011, respectively. We continually evaluate the adequacy of our bad debt reserves based on patient mix trends, aging of older balances, payment terms and delays with regard to third-party payors, as well as other factors. We continue to evaluate and implement additional processes to strengthen our collection efforts and reduce the incidence of uncollectible accounts.
Inflation
We have historically derived a substantial portion of our revenue from the Medicare program. We also derive revenue from state Medicaid and similar reimbursement programs. Payments under these programs generally provide for reimbursement levels that are adjusted for inflation annually based upon the state's fiscal year for the Medicaid programs and in each October for the Medicare program. These adjustments may not continue in the future, and even if received, such adjustments may not reflect the actual increase in our costs for providing healthcare services.
Labor and supply expenses make up a substantial portion of our cost of services. Those expenses can be subject to increase in periods of rising inflation and when labor shortages occur in the marketplace. To date, we have generally been able to implement cost control measures or obtain increases in reimbursement sufficient to offset increases in these expenses. We may not be successful in offsetting future cost increases.
Off-Balance Sheet Arrangements
There were $0.7 million of outstanding letters of credit of December 31, 2012 that are pledged as collateral of borrowing capacity on the PrivateBank revolver.
Operating Leases
The Company leases certain office space and 11 skilled nursing facilities under non-cancelable operating leases, most of which have initial lease terms of ten to twelve years with rent escalation clauses and provisions for payments by the Company of real estate taxes, insurance and maintenance costs. Eight of the facilities were initiated in the third quarter of 2010, and two additional in the fourth quarter of 2010. One lease agreement was initiated in the fourth quarter of 2011. For the years ended December 31, 2012 and 2011, facility rent expense totaled $7.7 million and $7.2 million, respectively.
Eight of the Company's facilities are operated under a single master lease arrangement. The lease has a term of ten years into 2020. Under the master lease, a breach at a single facility could subject one or more of the other facilities covered by the same master lease to the same default risk. Failure to
63
comply with regulations or governmental authorities, such as Medicare and Medicaid provider requirements, is a default under the Company's master lease agreement. In addition, other potential defaults related to an individual facility may cause a default of the entire master lease agreement. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord. The Company is not aware of any defaults as of December 31, 2012.
Two of the Company's facilities are operated under a separate lease agreement. The lease is a single indivisible lease; therefore, a breach at a single facility could subject the second facility to the same default risk. The lease has a term of 12 years into 2022 and includes covenants and restrictions. A commitment is included that requires minimum capital expenditures of $375 per licensed bed per lease year at each facility which amounts to $0.1 million per year for both facilities. In recent periods, including as of December 31, 2012, the Company has not been in compliance with certain financial and administrative covenants of this lease agreement. The Company has obtained a waiver for each instance of such non-compliance.
Future minimum lease payments for each of the next five years ending December 31 are as follows:
|
(Amounts in
000's) |
|||
---|---|---|---|---|
2013 |
$ | 8,049 | ||
2014 |
7,569 | |||
2015 |
7,407 | |||
2016 |
7,274 | |||
2017 |
7,180 | |||
Thereafter |
21,639 | |||
Total |
$ | 59,118 | ||
The Company has also entered into lease agreements for various equipment used in the facilities. These leases are included in future minimum lease payments above.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure pursuant to Item 7A. of Form 10-K is not required to be reported by smaller reporting companies.
64
Item 8. Financial Statements and Supplementary Data
65
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
AdCare Health Systems, Inc.
We have audited the accompanying consolidated balance sheet of AdCare Health Systems, Inc. and subsidiaries (the Company) as of December 31, 2012, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AdCare Health Systems, Inc. and subsidiaries as of December 31, 2012 and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Atlanta, Georgia
July 8, 2013
66
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
AdCare Health Systems, Inc.
We have audited the accompanying consolidated balance sheet of AdCare Health Systems, Inc. and subsidiaries (the Company) as of December 31, 2011, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AdCare Health Systems, Inc. and subsidiaries as of December 31, 2011 and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, the Company is subject to certain risks and uncertainties.
/s/ BATTELLE & BATTELLE LLP
Dayton, OH
March 19, 2012
67
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in 000's)
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ | 15,937 | $ | 7,364 | |||
Restricted cash and investments |
1,742 | 1,883 | |||||
Accounts receivable, net |
26,037 | 18,782 | |||||
Prepaid expenses and other |
489 | 663 | |||||
Assets of disposal group held for sale |
6,159 | 47 | |||||
Total current assets |
50,364 | 28,739 | |||||
Restricted cash and investments |
7,215 | 4,870 | |||||
Property and equipment, net |
151,064 | 102,449 | |||||
Intangible assetsbed licenses |
2,471 | 1,189 | |||||
Intangible assetslease rights, net |
6,844 | 8,460 | |||||
Goodwill |
5,023 | 3,600 | |||||
Escrow deposits for acquisitions |
| 3,172 | |||||
Lease deposits |
1,720 | 1,685 | |||||
Deferred loan costs, net |
6,137 | 4,818 | |||||
Other assets |
3,611 | 122 | |||||
Total assets |
$ | 234,449 | $ | 159,104 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current Liabilities: |
|||||||
Current portion of notes payable and other debt |
$ | 6,941 | $ | 4,566 | |||
Current portion of convertible debt, net of discounts |
10,948 | | |||||
Revolving credit facilities and lines of credit |
1,498 | 7,343 | |||||
Accounts payable |
19,503 | 12,075 | |||||
Accrued expenses |
13,730 | 9,881 | |||||
Liabilities of disposal group held for sale |
3,662 | 240 | |||||
Total current liabilities |
56,282 | 34,105 | |||||
Notes payable and other debt, net of current portion: |
|||||||
Senior debt, net of discounts |
128,248 | 87,771 | |||||
Convertible debt, net of discounts |
12,009 | 14,614 | |||||
Revolving credit facilities |
7,706 | 1,308 | |||||
Other debt |
864 | 1,400 | |||||
Derivative liability |
3,630 | 1,889 | |||||
Other liabilities |
1,394 | 2,438 | |||||
Deferred tax liability |
104 | 86 | |||||
Total liabilities |
210,237 | 143,611 | |||||
Commitments and contingencies (Note 14) |
|||||||
Preferred stock, no par value; 1,000 shares authorized; 450 shares issued and outstanding at December 31, 2012, redemption amount $11,250; no shares issued or outstanding at December 31, 2011 |
9,159 | | |||||
Stockholders' equity: |
|||||||
Common stock and additional paid-in capital, no par value; 29,000 shares authorized; 14,659 and 12,803 shares issued and outstanding at December 31, 2012 and 2011, respectively |
41,644 | 35,047 | |||||
Accumulated deficit |
(25,753 | ) | (18,713 | ) | |||
Total stockholders' equity |
15,891 | 16,334 | |||||
Noncontrolling interest in subsidiaries |
(838 | ) | (841 | ) | |||
Total equity |
15,053 | 15,493 | |||||
Total liabilities and equity |
$ | 234,449 | $ | 159,104 | |||
See accompanying notes to consolidated financial statements
68
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000's, except per share data)
|
Year Ended
December 31, |
||||||
---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||
Revenues: |
|||||||
Patient care revenues |
$ | 199,502 | $ | 136,592 | |||
Management revenues |
2,156 | 1,620 | |||||
Total revenues |
201,658 | 138,212 | |||||
Expenses: |
|||||||
Cost of services (exclusive of facility rent, depreciation and amortization) |
168,207 | 111,819 | |||||
General and administrative expenses |
17,005 | 13,281 | |||||
Facility rent expense |
7,689 | 7,193 | |||||
Depreciation and amortization |
6,805 | 3,359 | |||||
Salary retirement and continuation costs |
43 | 1,451 | |||||
Total expenses |
199,749 | 137,103 | |||||
Income from Operations |
1,909 | 1,109 | |||||
Other Income (Expense): |
|||||||
Interest expense, net |
(13,224 | ) | (7,381 | ) | |||
Acquisition costs, net of gains |
(1,962 | ) | (1,163 | ) | |||
Derivative (loss) gain |
(1,741 | ) | 957 | ||||
Gain (loss) on extinguishment of debt |
500 | (141 | ) | ||||
Gain (loss) on disposal of assets |
2 | (111 | ) | ||||
Other income |
(124 | ) | 551 | ||||
Total other expense, net |
(16,549 | ) | (7,288 | ) | |||
Loss from Continuing Operations Before Income Taxes |
(14,640 | ) | (6,179 | ) | |||
Income tax expense |
(97 | ) | (215 | ) | |||
Loss from Continuing Operations |
(14,737 | ) | (6,394 | ) | |||
Income (Loss) from Discontinued Operations, net of tax |
7,197 | (1,158 | ) | ||||
Net Loss |
(7,540 | ) | (7,552 | ) | |||
Net Loss Attributable to Noncontrolling Interests |
656 | 1,388 | |||||
Net Loss Attributable to AdCare Health Systems, Inc. |
(6,884 | ) | (6,164 | ) | |||
Preferred stock dividend |
(156 | ) | | ||||
Net Income (Loss) Attributable to AdCare Health Systems, Inc. Common Stockholders |
$ | (7,040 | ) | $ | (6,164 | ) | |
Net Income (Loss) per Common Share attributable to AdCare Health Systems, Inc. Common StockholdersBasic: |
|||||||
Continuing Operations |
$ | (1.01 | ) | $ | (0.48 | ) | |
Discontinued Operations |
0.51 | (0.11 | ) | ||||
|
$ | (0.50 | ) | $ | (0.59 | ) | |
Net Income (Loss) per Common Share attributable to AdCare Health Systems, Inc. Common StockholdersDiluted: |
|||||||
Continuing Operations |
$ | (1.01 | ) | $ | (0.48 | ) | |
Discontinued Operations |
0.51 | (0.11 | ) | ||||
|
$ | (0.50 | ) | $ | (0.59 | ) | |
Weighted Average Common Shares Outstanding: |
|||||||
Basic |
14,033 | 10,491 | |||||
Diluted |
14,033 | 10,491 |
See accompanying notes to consolidated financial statements
69
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in 000's)
|
Common
Stock Shares |
Common
Stock and Additional Paid-in Capital |
Accumulated
Deficit |
Noncontrolling
Interests |
Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance, January 1, 2011 |
9,205 | $ | 26,612 | $ | (12,549 | ) | $ | 547 | $ | 14,610 | ||||||
Nonemployee warrants for services |
| 434 | | | 434 | |||||||||||
Nonemployee stock issuance for services |
40 | 206 | | | 206 | |||||||||||
Stock based compensation expense |
| 806 | | | 806 | |||||||||||
Exercises of options and warrants |
3,518 | 6,796 | | | 6,796 | |||||||||||
Stock issued from debt conversion |
40 | 193 | | | 193 | |||||||||||
Net loss |
| | (6,164 | ) | (1,388 | ) | (7,552 | ) | ||||||||
Balance, December 31, 2011 |
12,803 | 35,047 | (18,713 | ) | (841 | ) | 15,493 | |||||||||
Deconsolidation of variable interest entities |
| | | 660 | 660 | |||||||||||
Nonemployee warrants for services |
| 859 | | | 859 | |||||||||||
Stock based compensation expense |
| 715 | | | 715 | |||||||||||
Public stock offering, net |
1,223 | 3,779 | | | 3,779 | |||||||||||
Exercises of options and warrants |
101 | 137 | | | 137 | |||||||||||
Stock issued in acquisition |
196 | 756 | | | 756 | |||||||||||
Issuance of restricted stock |
336 | 351 | | | 351 | |||||||||||
Preferred stock dividend |
| | (156 | ) | | (156 | ) | |||||||||
Net loss |
| | (6,884 | ) | (656 | ) | (7,540 | ) | ||||||||
Balance, December 31, 2012 |
14,659 | $ | 41,644 | $ | (25,753 | ) | $ | (838 | ) | $ | 15,053 | |||||
See accompanying notes to consolidated financial statements
70
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in 000's)
|
Year Ended
December 31, |
||||||
---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||
Cash flows from operating activities: |
|||||||
Net Loss |
$ | (7,540 | ) | $ | (7,552 | ) | |
Loss (Income) from discontinued operations |
(7,197 | ) | 1,158 | ||||
Loss from continuing operations |
(14,737 | ) | (6,394 | ) | |||
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
6,805 | 3,359 | |||||
Warrants issued for services |
107 | 212 | |||||
Stock-based compensation expense |
891 | 806 | |||||
Lease expense in excess of cash |
430 | 700 | |||||
Amortization of deferred financing costs |
1,959 | 919 | |||||
Amortization of debt discounts |
817 | 901 | |||||
Derivative (gain) loss |
1,741 | (958 | ) | ||||
(Gain) Loss on debt extinguishment |
(500 | ) | 141 | ||||
Deferred tax expense |
104 | 7 | |||||
(Gain) Loss on disposal of assets |
(2 | ) | 126 | ||||
Gain on acquisitions |
| (1,104 | ) | ||||
Provision for bad debts |
4,700 | 1,596 | |||||
Non cash acquisition costs |
| 206 | |||||
Other noncash expenses |
40 | 80 | |||||
Changes in certain assets and liabilities, net of acquisitions: |
|||||||
Accounts receivable |
(12,415 | ) | (9,334 | ) | |||
Prepaid expenses and other |
101 | 522 | |||||
Other assets |
330 | (179 | ) | ||||
Accounts payable and other liabilities |
10,753 | 8,936 | |||||
Net cash provided by operating activitiescontinuing operations |
1,124 | 542 | |||||
Net cash provided by operating activitiesdiscontinued operations |
403 | 1,450 | |||||
Net cash provided by operating activities |
1,527 | 1,992 | |||||
Cash flow from investing activities: |
|||||||
Proceeds from sale of property and equipment |
3 | | |||||
Change in restricted cash and investments and escrow deposits for acquisitions |
(3,178 | ) | 1,070 | ||||
Lease deposits |
| (15 | ) | ||||
Acquisitions |
(61,901 | ) | (57,582 | ) | |||
Purchase of property and equipment |
(5,777 | ) | (4,245 | ) | |||
Net cash used in investing activitiescontinuing operations |
(70,853 | ) | (60,772 | ) | |||
Net cash provided by (used in) investing activitiesdiscontinued operations |
11,691 | (218 | ) | ||||
Net cash used in investing activities |
(59,162 | ) | (60,990 | ) | |||
Cash flows from financing activities: |
|||||||
Proceeds from debt |
92,476 | 51,864 | |||||
Repayment on notes payable |
(30,075 | ) | (2,053 | ) | |||
Change in lines of credit |
365 | 6,734 | |||||
Debt issuance costs |
(3,076 | ) | (618 | ) | |||
Exercise of options and warrants |
137 | 6,795 | |||||
Proceeds from stock issuances |
3,779 | | |||||
Proceeds from preferred stock issuances |
9,159 | | |||||
Dividends paid on preferred stock |
(156 | ) | | ||||
Net cash provided by financing activitiescontinuing operations |
72,609 | 62,722 | |||||
Net cash used in financing activitiesdiscontinued operations |
(6,221 | ) | (271 | ) | |||
Net cash provided by financing activities |
66,388 | 62,451 | |||||
Net Change in Cash |
8,753 | 3,453 | |||||
Cash, Beginning |
7,364 | 3,911 | |||||
Cash decrease due to deconsolidation of variable interest entities |
(180 | ) | | ||||
Cash, Ending |
$ | 15,937 | $ | 7,364 | |||
Supplemental Disclosure of Cash Flow Information: |
|||||||
Cash paid during the year for: |
|||||||
Interest |
$ | 13,023 | $ | 6,091 | |||
Income taxes |
$ | | $ | 197 | |||
Supplemental Disclosure of Non-Cash Activities: |
|||||||
Acquisitions in exchange for debt and equity instruments |
$ | 11,056 | $ | 3,150 | |||
Warrants issued for financing costs |
$ | 756 | $ | 330 | |||
Conversion of debt to equity |
| $ | 150 | ||||
Other assets acquired in exchange of debt |
| $ | 6,441 |
See accompanying notes to consolidated financial statements
71
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
AdCare Health Systems, Inc. and Subsidiaries ("AdCare" or "the Company"), owns and operates skilled nursing and, assisted living facilities in the states of Alabama, Arkansas, Georgia, Missouri, North Carolina, Ohio, Oklahoma and South Carolina as of December 31, 2012. The Company, through wholly owned separate operating subsidiaries, as of December 31, 2012, operates 50 facilities comprised of 46 skilled nursing facilities, three assisted living facilities and one independent living/senior housing facility totaling approximately 5,000 beds. The Company's facilities provide a range of health care services to their patients and residents including, but not limited to, skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term residents and short-stay patients. As of December 31, 2012, of the total 50 facilities, the Company owned and operated 26 facilities, leased and operated 11 facilities, and managed 13 facilities (including one consolidated variable interest entity). As part of the Company's strategy to focus on the growth of skilled nursing facilities, the Company decided in the fourth quarter of 2011 to exit the home health business; therefore, this business is reported as discontinued operations (see Note 3). The Company sold the assets of the home health business in 2012. Additionally, in the fourth quarter of 2012, the Company entered into an agreement to sell six assisted living facilities located in Ohio and executed a sublease arrangement to exit the skilled nursing business in Jeffersonville, Georgia. The six Ohio assisted living facilities and the Jeffersonville, Georgia skilled nursing facility have an aggregate of 313 units in service. These seven facilities are also reported as discontinued operations (see Note 3). The Company sold the assets of four of the six Ohio assisted living facilities in December 2012, one in February 2013, and one in May, 2013.
Basis of Presentation
The accompanying consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles ("GAAP") in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").
Principles of Consolidation
The consolidated financial statements include the Company's majority owned and controlled subsidiaries. "VIEs" in which the Company has a variable interest have been consolidated as controlled subsidiaries when the Company is identified as the primary beneficiary. All intercompany transactions and balances have been eliminated through consolidation. For subsidiaries that are not wholly owned by the Company, the portions not controlled by the Company are presented as non-controlling interests in the consolidated financial statements.
As further discussed in Note 20, Variable Interest Entities , and Note 22, Related Party Transa ctions, effective August 1, 2011, entities (the "Oklahoma Owners") controlled by Christopher Brogdon and his spouse, Connie Brogdon (related parties to the Company) acquired five skilled nursing facilities located in Oklahoma (the "Oklahoma Facilities"). The Company entered into a Management Agreement with the Oklahoma Owners pursuant to which a wholly-owned subsidiary of the Company supervises the management of the Oklahoma Facilities for a monthly fee equal to 5% of the monthly gross revenues of the Oklahoma Facilities. Upon acquisition, the Company concluded it was the primary beneficiary of the Oklahoma Owners and pursuant to FASB ASC Topic 810-10, ConsolidationOverall , consolidated the Oklahoma Owners in its 2011 consolidated financial statements.
72
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
During the process of finalizing the 2012 consolidated financial statements, the Company reassessed its prior conclusion that it should consolidate the Oklahoma Owners. In the reassessment process, the Company concluded that it should not have consolidated the Oklahoma Owners. In the accompanying consolidated financial statements, the Company has deconsolidated the Oklahoma Owners effective January 1, 2012 and the balance sheet, operations and cash flows of the Oklahoma Owners are not included in the Company's 2012 consolidated financial statements. The Company further concluded that including the Oklahoma Owners in its 2011 consolidated financial statements was not material to such consolidated financial statements and therefore no adjustments have been made to the previously issued quarterly and annual 2011 consolidated financial statements. Note 20, Variable Interest Entities , includes summarized financial information of the Oklahoma Owners for 2011 that are included in the Company's 2011 consolidated financial statements. Note 20, Variable Interest Entities , includes summarized financial information of the Oklahoma Owners for 2011 that are included in the Company's 2011 consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported results of operations during the reporting period. Examples of significant estimates include allowance for doubtful accounts, contractual allowances for Medicare, Medicaid, and managed care reimbursements, deferred tax valuation allowance, fair value of derivative instruments, fair value of employee and nonemployee stock based awards, fair value estimation methods used to determine the assigned fair value of assets and liabilities acquired in acquisitions, and valuation of goodwill and other long-lived assets. Actual results could differ materially from those estimates.
Acquisition Policy
The Company periodically enters into agreements to acquire assets and/or businesses. The considerations involved in each of these agreements may include cash, financing, stock, and/or long-term lease arrangements for real properties. The Company evaluates each transaction to determine whether the acquired interests are assets or businesses. A business is defined as a self-sustaining integrated set of activities and assets conducted and managed for the purpose of providing a return to investors. A business consists of (a) inputs, (b) processes applied to those inputs, and (c) resulting outputs that are used to generate revenues. In order for an acquired set of activities and assets to be a business, it must contain all of the inputs and processes necessary for it to continue to conduct normal operations after the acquired entity is separated from the seller, including the ability to sustain revenue streams by providing its outputs to customers. An acquired set of activities and assets fails the definition of a business if it excludes one or more of the above items making it impossible to continue normal operations and sustain a revenue stream by providing its products and/or services to customers.
The Company currently operates its skilled nursing facilities in states that are subject to certificate of need ("CON") programs. The CON programs govern the establishment, construction, renovation and transferability of the rights to operate skilled nursing facilities ("SNFs"). In certain states, specifically Ohio, CON programs permit the transferability and sale of bed licenses separately from the facility. In other states, bed licenses are non-transferable separately and apart from the underlying
73
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
licensed facility. Through acquisitions completed in 2011 and 2012, the Company now operates in a number of states, including Alabama, Arkansas, Georgia, Missouri, North Carolina, Oklahoma, and South Carolina, where the bed licenses are not transferable separately from the facility.
The CON/bed license arises from contractual rights and is an identifiable intangible asset that the Company assigns a fair value in transactions accounted for as business combinations. In states where the CON/bed licenses are transferable separately from the facility, the intangible asset has been determined to have an indefinite life. Because the intangible asset is separable from the facility and has separate stand-alone value, for financial reporting purposes, the fair value assigned to the CON/license is classified as a separate intangible asset in the accompanying consolidated balance sheets.
In states where the CON/bed license is non-transferable separately from the facility, the CON/bed license and building are complimentary assets and therefore, the intangible asset is assigned a definite life and amortized over the estimated remaining useful life of the related building. As complimentary assets, the intangible asset has no value separate from the building and the estimated remaining useful lives of the intangible asset and building are equal. Therefore, the intangible asset and the building are classified together as "buildings" and are included in property and equipment in the consolidated balance sheets. As of December 31, 2012 and December 31, 2011, the value of such CON bed licenses, net of amortization, was $37.1 million and $25.6 million, respectively.
Cash and Cash Equivalents
The Company considers all unrestricted short-term investments with original maturities less than three months, which are readily convertible into cash, to be cash equivalents. Certain cash, cash equivalents and investment amounts are restricted for specific purposes such as mortgage escrow requirements and reserves for capital expenditures on U.S. Department of Housing and Urban Development ("HUD") insured facilities and other restricted investments are held as collateral for other debt obligations.
Investments
The Company has certain restricted investments that are limited as to use by certain debt obligations. These investments are classified as held-to-maturity investments because the Company has the positive intent and ability to hold the securities until maturity. Held-to-maturity investments are carried at amortized cost. These restricted investments are classified as noncurrent assets given their related maturity dates and the restrictions required by the long-term debt obligations.
Patient Care Receivables and Revenues
Patient care accounts receivable and revenues for the Company are recorded in the month in which the services are provided.
The Company provides services to certain patients under contractual arrangements with third-party payors, primarily under the federal Medicare and state Medicaid programs. Amounts paid under these contractual arrangements are subject to review and final determination by the appropriate government authority or its agent. In the opinion of management, adequate provision was made in the consolidated financial statements for any adjustments resulting from the respective government authorities' review.
74
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
For residents under reimbursement arrangements with third-party payors, including Medicaid, Medicare and private insurers, revenue is recorded based on contractually agreed-upon amounts on a per patient, daily basis.
Potentially uncollectible patient accounts are provided for on the allowance method based upon management's evaluation of outstanding accounts receivable at period-end and historical experience. Uncollected accounts that are written off are charged against allowance. As of December 31, 2012 and 2011, management recorded an allowance for uncollectible accounts of $3.7 million and $1.3 million, respectively.
Management Fee Receivables and Revenue
Management fee receivables and revenue are recorded in the month that services are provided. As of December 31, 2012 and 2011, management recorded an allowance for uncollectible management fee receivables of $0.0 million and $0.1 million, respectively.
Leases and Leasehold Improvements
At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating lease or capital lease. As of December 31, 2012, all of the Company's leased facilities are accounted for as operating leases. The Company records rent expense for operating leases that contain scheduled rent increases on a straight-line basis over the term of the lease. The accumulated difference between the straight-line expense recognition and the actual cash rent paid is reflected in Other Liabilities in the Consolidated Balance Sheet and was $1.4 and $1.0 million as of December 31, 2012 and 2011, respectively. The lease term is also used to provide the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements.
Earnings per Share
Basic earnings per share is computed by dividing net income or loss by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is similar to basic earnings per share except net income or loss is adjusted by the impact of the assumed issuance of convertible shares and the weighted-average number of common shares outstanding and includes potentially dilutive securities, such as options, warrants, non-vested shares, and additional shares issuable under convertible notes outstanding during the period when such potentially dilutive securities are not anti-dilutive. Potentially dilutive securities from option, warrants and unvested restricted shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options and warrants with exercise prices exceeding the average market value are used to repurchase common stock at market value. The incremental shares remaining after the proceeds are exhausted represent the potentially dilutive effect of the securities. Potentially dilutive securities from convertible promissory notes are calculated based on the assumed issuance at the beginning of the period, as well as any adjustment to income that would result from their assumed issuance. For 2012 and 2011, potentially dilutive securities of 13.9 million and 7.7 million were excluded from the diluted loss per share calculation because including them would have been anti-dilutive in both periods.
For the years ended December 31, 2012 and 2011, no potentially dilutive securities were included in the diluted earnings per share calculation because to do so would be anti-dilutive. The following
75
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
table provides a reconciliation of net income (loss) for continuing and discontinued operations and the number of common shares used in the computation of both basic and diluted earnings per share:
|
Years Ended December 31, | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||||||||||||||
(Amounts in 000's, except per share data)
|
Income
(loss) |
Shares(1) |
Per
Share |
Income
(loss) |
Shares(1) |
Per
Share |
|||||||||||||
Continuing Operations: |
|||||||||||||||||||
Loss from continuing operations |
$ | (14,737 | ) | $ | (6,394 | ) | |||||||||||||
Net loss attributable to noncontrolling interests |
656 | $ | 1,388 | ||||||||||||||||
Basic loss from continuing operations |
$ | (14,081 | ) | 14,033 | $ | (1.00 | ) | $ | (5,006 | ) | 10,491 | $ | (0.48 | ) | |||||
Preferred stock dividend |
(156 | ) | | $ | (0.01 | ) | | | | ||||||||||
Effect from options, warrants and non-vested shares |
| | | | | | |||||||||||||
Effect from assumed issuance of convertible shares(2) |
| | | | | | |||||||||||||
Diluted loss from continuing operations |
$ | (14,237 | ) | 14,033 | $ | (1.01 | ) | $ | (5,006 | ) | 10,491 | $ | (0.48 | ) | |||||
Discontinued Operations: |
|||||||||||||||||||
Basic income (loss) from discontinued operations |
$ | 7,197 | 14,033 | $ | 0.51 | $ | (1,158 | ) | 10,491 | $ | (0.11 | ) | |||||||
Diluted income (loss) from discontinued operations |
$ | 7,197 | 14,033 | $ | 0.51 | $ | (1,158 | ) | 10,491 | $ | (0.11 | ) | |||||||
Net Loss Attributable to AdCare: |
|||||||||||||||||||
Basic loss |
$ | (7,040 | ) | 14,033 | $ | (0.50 | ) | $ | (6,164 | ) | 10,491 | $ | (0.59 | ) | |||||
Diluted loss |
$ | (7,040 | ) | 14,033 | $ | (0.50 | ) | $ | (6,164 | ) | 10,491 | $ | (0.59 | ) |
Deferred Financing Costs
The Company records deferred financing costs associated with debt obligations. Costs are amortized over the term of the related debt using the straight-line method and are reflected as interest expense. The straight-line method yields results substantially similar to those that would be produced under the effective interest rate method.
Intangible Assets and Goodwill
Intangible assets consist of finite lived and indefinite lived intangibles. The Company's finite lived intangibles include lease rights and certain CON/bed licenses that are not separable from the associated buildings. Finite lived intangibles are amortized over their estimated useful lives. For the Company's
76
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
lease related intangibles, the estimated useful life is based on the terms of the underlying facility leases, currently averaging approximately ten years. For the Company's CON/bed licenses that are not separable from the buildings, the estimated useful life is based on the building life when acquired with an average estimated useful life of approximately 31 years. The Company evaluates the recoverability of the finite lived intangibles whenever an impairment indicator is present.
The Company's indefinite lived intangibles consist primarily of values assigned to CON/bed licenses that are separable from the buildings. The Company does not amortize goodwill or indefinite lived intangibles. On an annual basis, the Company evaluates the recoverability of the indefinite lived intangibles and goodwill by performing an impairment test. The Company performs its annual test for impairment during the fourth quarter of each year. There have been no required impairment adjustments to intangible assets and goodwill during 2012 or 2011 other than the impairment of goodwill related to Discontinued Operations (see Note 3).
Income Taxes
An asset or liability is recognized for the deferred tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. These temporary differences would result in taxable or deductible amounts in future years when the reported amounts of the assets are recovered or liabilities are settled. Deferred tax assets are also recognized for the future tax benefits from net operating loss and other carry forwards. A valuation allowance is provided if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. In evaluating the need to record or continue to reflect a valuation allowance, all items of positive evidence and negative evidence are considered.
The Company's taxable income includes all amounts attributable to AdCare, and excludes all non-controlling interests as these entities are not part of the consolidated tax group. The excluded entities are all pass-through entities that are not subject to corporate level income taxes. As such, the taxable income is passed on to other parties/entities that are not part of the consolidated financial statements.
The Company is subject to income taxes in the U.S. and numerous state and local jurisdictions. Judgment is required in evaluating uncertain tax positions. The Company recognizes a tax benefit only if it is more likely than not that a particular tax position will be sustained upon examination or audit. In general, the Company's tax returns filed for the 1996 through 2012 tax years are still subject to potential examination by taxing authorities. Interest and penalties related to uncertain tax positions, if any, are recorded as income tax expense in the consolidated financial statements.
Concentrations of Credit Risk
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, restricted investments, and accounts receivable. Cash and cash equivalents, restricted cash and restricted investments are held with various financial institutions. From time to time, these balances exceed the federally insured limits. These balances are maintained with high quality financial institutions which management believes limits the risk.
Accounts receivable are recorded at net realizable value. The Company performs ongoing evaluations of its residents and significant third-party payers with which they contract, generally not
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
requiring collateral. Management believes that credit risk with respect to accounts receivable from residents is limited based on the stature and diversity of the third-party payers with which they contract. The Company maintains an allowance for doubtful accounts which management believes is sufficient to cover potential losses. Delinquent accounts receivable are charged against the allowance for doubtful accounts once likelihood of collection has been determined. Accounts receivable are considered to be past due and placed on delinquent status based upon contractual terms, how frequently payments are received, and on an individual account basis.
Property and Equipment
Property and equipment are stated at cost. Expenditures for major improvements are capitalized. Depreciation commences when the assets are placed in service. Maintenance and repairs which do not improve or extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is recorded. Depreciation is recorded on a straight-line basis over the estimated useful lives of the respective assets. Property and equipment also includes bed license intangibles for States other than Ohio (where the building and bed license are deemed complimentary assets) and are amortized over the life of the building. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable.
In 2012, the Company recognized a $0.4 million impairment charge to write down the carrying value of an office building located in Rogers, Arkansas. The office building was acquired in a 2011 acquisition. The purchase price allocation for that acquisition was deemed finalized as of December 31, 2011. Subsequent to December 31, 2011, it was determined that the acquired office building would not be utilized and the building was not in use and was made available for sale as of March 31, 2012. The impairment charge represents a change in the fair value of the building from that utilized in the 2011 purchase price allocation to the estimated net realizable value, less cost to sell, as of December 31, 2012. The impairment charge is classified as depreciation expense in the consolidated statements of operations and is included in the Company's Skilled Nursing Facility segment.
An impairment charge of $0.1 million was also recognized in 2012 to reduce the net book value of the Company's former Springfield, Ohio corporate office to net realizable value. In 2012, the Company completed the transition of its corporate office from Springfield, Ohio, to Roswell, Georgia. The impairment charge is classified as depreciation expense in the consolidated statements of operations.
The Rogers, Arkansas and Springfield, Ohio office buildings are classified as assets of disposal group held for sale in the accompanying December 31, 2012 consolidated balance sheet. Subsequent to December 31, 2012, the Springfield, Ohio office building was sold for the approximate net book value and the Rogers, Arkansas office building remains for sale.
Advertising
Advertising costs are expensed as incurred. Advertising costs for the years ended December 31, 2012 and 2011 were approximately $0.4 million and $0.2 million, respectively.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock Based Compensation
Stock based compensation for employee options and warrants is measured at the grant date based upon the fair value of the awards and is recognized as compensation expense over the requisite service period, net of estimated forfeitures. The Company estimates the fair value of stock options and warrants using the Black-Scholes-Merton option-pricing model. The fair value of restricted stock awards is equal to the Company's stock price on the date of grant.
The Company issues warrants to non-employees from time to time for various services. The Company estimates the fair value of warrants using the Black-Scholes-Merton option-pricing model.
Fair Value Measurements and Financial Instruments
Accounting guidance establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
The respective carrying value of certain financial instruments of the Company approximates their fair value. These instruments include cash and cash equivalents, restricted cash and investments, accounts receivable, notes receivable, notes payable and other debt, and accounts payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short-term in nature and their carrying amounts approximate fair values, they are receivable or payable on demand, or the interest rates earned and/or paid approximate current market rates.
Derivative Instruments
The Company generally does not use derivative instruments to hedge exposures to certain risks. However, the Company entered into a securities purchase agreement with respect to the issuance of subordinated convertible notes in October 2010 which includes a conversion feature that is not afforded equity classification and embodies risks that are not clearly and closely related to the host debt agreement. As such, this conversion feature is an embedded derivative instrument that is required to be bifurcated from the debt instrument and reported separately as a derivative liability at fair value.
The Company estimates the fair value of the conversion feature derivative instrument by using the Black-Scholes-Merton option-pricing model because it embodies the requisite assumptions necessary to estimate the fair value of this instrument. Changes in fair value of this derivative instrument are reported in the consolidated statement of operations.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Insurance
The Company is self-insured for employee medical claims and has a large deductible workers' compensation plan (in all states except for Ohio, where workers' compensation is covered under a premium-only policy provided by the Ohio Bureau of Worker's Compensation, a state funded program required by Ohio's monopolistic workers' compensation system). Additionally, the Company maintains insurance programs, including general and professional liability, property, casualty, directors' and officers' liability, crime, automobile, employment practices liability and earthquake and flood. The Company believes that its insurance programs are adequate and where there has been a direct transfer of risk to the insurance carrier, the Company does not recognize a liability in the consolidated financial statements.
The Company's services subject it to certain liability risks which may result in malpractice claims being asserted against the Company if its services are alleged to have resulted in patient injury or other adverse effects. The Company carries policies to protect against such claims.
Employee medical insurance programs are offered as a component of the Company's employee benefits. As of December 31, 2012, all employee medical plans are self-insured and a liability for claims incurred but not reported or unsettled claims are recognized as a liability in the consolidated financial statements. Prior to October 1, 2012, employee medical plans were provided on an insured versus self-insured basis.
Discontinued Operations
As part of the Company's strategy to focus on the growth of skilled nursing facilities, the Company decided in the fourth quarter of 2011 to exit the home health business. In the fourth quarter of 2012, the Company continued this strategy and entered into an agreement to sell six assisted living facilities located in Ohio. The Company also entered into a sublease arrangement in the fourth quarter of 2012 to exit the operations of a skilled nursing facility in Jeffersonville, Georgia. The results of operations and cash flows for the home health business, the six Ohio assisted living facilities and the Jeffersonville, Georgia skilled nursing facility are reported as discontinued operations under FASB ASC Topic 205-20, Discontinued Operations (see Note 3). Assets and liabilities of the disposal groups to be sold or assumed by a buyer are classified held for sale in the consolidated balance sheets at December 31, 2012 and 2011. The Company sold the assets of four of the six Ohio assisted living facilities in December 2012, one in February 2013, and one in May, 2013.
Recently Issued Accounting Pronouncements
Effective January 1, 2012, the Company adopted FASB Accounting Standard Update ("ASU") 2010-06, Improving Disclosures About Fair Value Measurements, that amends previous guidance for fair value measurement and disclosure requirements. The revised guidance changes certain fair value measurement principles, clarifies the application of existing fair value measurements, and expands the disclosure requirements, particularly for Level 3 fair value measurements. Adoption of the amendments did not have a material impact on the Company's consolidated financial statements.
Effective January 1, 2012, the Company adopted FASB ASU 2011-07, Presentation of Bad Debt Expense , that requires health care entities to separately present bad debt expense related to patient care revenue as a reduction of patient care revenue (net of contractual allowances and discounts) on
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
the statement of operations for which the ultimate collection of all or a portion of the amounts billed or billable cannot be determined at the time services are rendered. Adoption of this update does not have an impact on the Company's consolidated financial statements since the Company assesses the ability to pay of its patients and residents prior to their admission to the Company's facilities.
Also effective January 1, 2012, the Company adopted FASB ASU 2011-08, IntangiblesGoodwill and Other , that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies are required to perform the two-step impairment test only if they conclude that the fair value of a reporting unit is more likely than not less than its carrying value. The Company adopted the accounting update for its goodwill impairment test performed for the year ended December 31, 2012.
In July, 2012, the FASB issued new accounting guidance intended to simplify how an entity tests indefinite-lived intangible assets for impairment. The guidance will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based upon a qualitative assessment, that it is more likely than not that the asset's fair value is less than its carrying amount. This accounting guidance is effective for the Company for the annual and any interim indefinite-lived intangible asset impairment tests performed for the year ending December 31, 2013.
Reclassifications
Certain reclassifications have been made to the 2011financial information to conform to the 2012 presentation. Reclassifications to 2011 financial information previously reported include reclassifications to reflect debt issued in connection with acquisitions on a gross basis, reflecting the proceeds from debt issuance as a financing activity, and the consideration transferred funded by the debt issuance as a component of the cost of acquisitions in investment activities in the consolidated statements of cash flows. The Company reclassified $2.7 million of goodwill acquired in conjunction with 2011 acquisitions that were previously reported as CON/bed licenses and included in property and equipment.
NOTE 2. LIQUIDITY AND PROFITABILITY
For the year ended and as of December 31, 2012, we had a net loss of $7.5 million and negative working capital of $5.9 million. At December 31, 2012, we had $15.9 million in cash and cash equivalents and $171.9 million in indebtedness, including current maturities and discontinued operations, of which $23.0 million is current debt (including the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013 and approximately $3.7 million of mortgage notes included in liabilities of disposal group). Our ability to achieve profitable operations is dependent on continued growth in revenue and controlling costs.
We anticipate that scheduled debt service (excluding outstanding convertible promissory notes but including principal, interest, collateral and capital improvement fund or other escrow deposits) will total approximately $17.2 million and cash outlays for acquisition costs, maintenance capital expenditures, dividends on our Series A Preferred Stock and income taxes will total approximately $4.7 million for the year ending December 31, 2013. Debt service requirements for the year ending December 31, 2013 include approximately $1.9 million of bullet maturities that the Company believes could be refinanced
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2. LIQUIDITY AND PROFITABILITY (Continued)
on a longer term basis. In recent periods, we have refinanced shorter term acquisition debt, including seller notes, with traditional longer term mortgage notes, some of which have been executed under government guaranteed lending programs. Although, we anticipate the conversion to common stock of the Company's outstanding convertible promissory notes with a principal amount in the aggregate of $11.7 million which mature in October 2013, we believe that our anticipated cash flow and committed funding sources would allow us to pay these notes in cash. These promissory notes are convertible into shares of common stock of the Company at $3.73 per share. The closing price of the common stock exceeded $4.00 per share from January 1, 2013 through July 5, 2013, except for the last three trading days in March 2013. As discussed further below, if we were required to pay these notes in cash, then the Company may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans due to our limited liquidity in such an event.
We estimate that cash flow from operations, including approximately $2.0 million cash outlay for costs with respect to the Audit Committee review and inquiry discussed in Part II, Item 9A. "Controls and Procedures," and other working capital changes will be approximately $17.8 million for the year ending December 31, 2013. The Company expanded its existing credit facility with Gemino Healthcare Finance, LLC ("Gemino"): (i) in May 2013, to refinance and include one of the facilities the Company acquired in December 2012; and (ii) in June 2013, to refinance and include two additional facilities the Company also acquired in December 2012. We routinely have ongoing discussions with existing and potential new lenders to refinance current debt on a longer term basis. We have been successful in recent years in raising new equity capital and believe, based on recent discussions that these markets will continue to be available to us for raising capital in 2013.
Based on existing cash balances, anticipated cash flows for the year ending December 31, 2013, and new sources of capital, we believe there will be sufficient funds for our operations, scheduled debt service, and capital expenditures at least through the next 12 months. On a longer term basis, we have approximately $80.4 million of debt payments and maturities due between 2014 and 2016, excluding convertible promissory notes which are convertible into shares of common stock. We believe our long-term liquidity needs will be satisfied by these same sources, as well as borrowings as required to refinance indebtedness.
In order to satisfy these capital needs, we intend to: (i) improve our operating results by increasing facility occupancy, optimizing our payor mix by increasing the proportion of sub-acute patients within our skilled nursing facilities, continuing our cost optimization and efficiency strategies and acquiring additional long-term care facilities with existing operating cash flow; (ii) expand our borrowing arrangements with certain existing lenders; (iii) refinance current debt where possible to obtain more favorable terms; and (iv) raise capital through the issuance of debt or equity securities. We anticipate that these actions, if successful, will provide the opportunity for us to maintain liquidity on a short and long term basis, thereby permitting us to meet our operating and financing obligations for the next 12 months and provide for the continuance of our acquisition strategy. However, there is no guarantee that such actions will be successful or that anticipated operating results will be achieved. We currently have limited borrowing availability under our existing revolving credit facilities. If the Company is unable to improve operating results, expand existing borrowing agreements, refinance current debt, or raise capital through the issuance of securities, or the convertible promissory notes due October 2013 are not converted into common stock and are required to be repaid by us in cash, then the Company
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2. LIQUIDITY AND PROFITABILITY (Continued)
may be required to restructure its outstanding indebtedness, implement further cost reduction initiatives, sell assets, or delay, modify, or abandon its expansion plans.
NOTE 3. DISCONTINUED OPERATIONS
As part of the Company's strategy to focus on the growth of its skilled nursing segment, the Company decided in the fourth quarter of 2011 to exit the home health segment of the business. In the fourth quarter of 2012, the Company continued this strategy and entered into an agreement to sell six assisted living facilities located in Ohio. The Company also entered into a sublease arrangement in the fourth quarter of 2012 to exit the operations of a skilled nursing facility in Jeffersonville, Georgia. The results of operations and cash flows for the home health business, the six Ohio assisted living facilities and the Jeffersonville, Georgia skilled nursing facility are reported as discontinued operations in 2012 and 2011.
Total revenues from discontinued operations were $14.3 million and $14.9 million, respectively, in 2012 and 2011. Net income (loss) from discontinued operations was $7.2 million and $(1.2) million, respectively, in 2012 and 2011. Interest expense included in discontinued operations was $0.6 million and $0.8 million in 2012 and 2011, respectively. Income tax expense (benefit) included in discontinued operations was $0.02 and $(0.2) million in 2012 and 2011, respectively. The 2012 net income from discontinued operations includes a gain on sale of $6.7 million, including a $6.9 million gain on the sale of four of the six Ohio assisted living facilities sold for $16.1 million in December 2012 and a $0.2 million loss on the exit of the Jeffersonville, Georgia leased business operation. The 2011 net loss from discontinued operations includes a $1.8 million goodwill impairment charge pertaining to the home health business.
The assets and related debt of the home health business are reflected as assets and liabilities of a disposal group held for sale at December 31, 2011. The assets of the home health business were sold during 2012 for less than $0.1 million resulting in an immaterial gain on the sale. The two remaining Ohio assisted living facilities held for sale at December 31, 2012 are Lincoln Lodge Retirement Residence (known as Lincoln Lodge) and Hearth & Home of Vandalia (known as Vandalia). The assets of Lincoln Lodge and Vandalia to be sold and the Vandalia HUD mortgage note of $3.7 million to be assumed by the buyer are reflected as assets and liabilities of a disposal group held for sale at December 31, 2012. The Lincoln Lodge HUD mortgage note of $1.9 million at December 31, 2012 is reflected in the current portion of notes payable and other debt and was paid off from the proceeds of the Lincoln Lodge sale that occurred on February 28, 2013. The sale of Vandalia closed on May 6, 2013. Pursuant to the purchase and sale agreement, the combined purchase price for the sale of Vandalia and Lincoln Lodge is $6.0 million ($2.3 million net of assumed debt). Subsequent to December 31, 2012, the Company recognized a combined gain on sale in 2013 of less than $0.1 million and cash proceeds, net of costs and debt payoff, of $0.3 million.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3. DISCONTINUED OPERATIONS (Continued)
Assets and liabilities of the disposal groups held for sale at December 31, 2012 and 2011 are as follows:
Amounts in (000's)
|
December 31,
2012 |
December 31,
2011 |
|||||
---|---|---|---|---|---|---|---|
Property and equipment, net |
$ | 5,840 | $ | 45 | |||
Other assets |
319 | 2 | |||||
Assets of disposal group held for sale |
$ | 6,159 | $ | 47 | |||
Notes payable |
3,662 | 240 | |||||
Liabilities of disposal group held for sale |
$ | 3,662 | $ | 240 | |||
NOTE 4. SEGMENTS
Consistent with the Company's strategy to focus on the growth of its skilled nursing segment and the sale of the majority of its assisted living facilities (see Note 3) beginning in the fourth quarter of 2012, the Company evaluates operating performance of its 35 skilled nursing facilities, the three remaining assisted living facilities and the one independent living facility on a combined basis. Through the fourth quarter of 2012, the Company reported its operations under three segments: SNF, Assisted Living Facilities ("ALF"), and Corporate & Other.
With the execution of an agreement to sell six of its assisted living facilities located in Ohio occurring during the fourth quarter of 2012, the Company has provided segment reporting herein for 2012 and 2011 based on its prior three operating segments. The SNF and ALF segments provide services to individuals needing long-term care in a nursing home or assisted living setting and management of those facilities. The Corporate & Other segment engages in the management of facilities and accounting and IT services. The Company previously evaluated operating performance and allocated resources primarily based upon segment operating income (loss). Segment operating results exclude interest expense and other non-operating income and expenses. The table below contains continuing operations segment information for the years ended December 31, 2012 and 2011 based on the Company's former operating segments. The revenue, expenses, and income/(loss) of all
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4. SEGMENTS (Continued)
facilities reflected in discontinued operations (see Note 3) are excluded. Assets of disposal group are included in Corporate and other below.
Amounts in (000's)
|
SNF | ALF |
Corporate &
Other |
Eliminations | Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year ended December 31, 2012 |
||||||||||||||||
Total revenues |
$ | 195,182 | $ | 4,319 | $ | 12,195 | $ | (10,038 | ) | $ | 201,658 | |||||
Cost of services |
174,140 | 3,725 | 380 | (10,038 | ) | 168,207 | ||||||||||
General and administrative |
| | 17,005 | | 17,005 | |||||||||||
Facility rent expense |
7,499 | | 190 | | 7,689 | |||||||||||
Depreciation and amortization |
5,278 | 403 | 1,124 | | 6,805 | |||||||||||
Salary retirement and continuation costs |
| | 43 | | 43 | |||||||||||
Operating income/(loss) |
$ | 8,265 | $ | 191 | $ | (6,547 | ) | $ | | $ | 1,909 | |||||
Total assets |
$ | 146,159 | $ | 12,905 | $ | 85,676 | $ | (10,291 | ) | $ | 234,449 | |||||
Capital spending |
$ | 4,278 | $ | 205 | $ | 1,294 | $ | | $ | 5,777 | ||||||
Year ended December 31, 2011 |
||||||||||||||||
Total revenue |
$ | 135,137 | $ | 1,455 | $ | 9,493 | $ | (7,873 | ) | $ | 138,212 | |||||
Cost of services |
118,220 | 1,466 | 6 | (7,873 | ) | 111,819 | ||||||||||
General and administrative |
| | 13,281 | | 13,281 | |||||||||||
Facility rent expense |
7, 086 | | 107 | | 7,193 | |||||||||||
Depreciation and amortization |
2,945 | 171 | 243 | | 3,359 | |||||||||||
Salary retirement and continuation costs |
| | 1,451 | | 1,451 | |||||||||||
Operating income/(loss) |
$ | 6,886 | $ | (182 | ) | $ | (5,595 | ) | $ | | $ | 1,109 | ||||
Total assets |
$ | 109,681 | $ | 6,978 | $ | 51,993 | $ | (9,548 | ) | $ | 159,104 | |||||
Capital spending |
$ | 2,046 | $ | 78 | $ | 2,121 | $ | | $ | 4,245 | ||||||
NOTE 5. PROPERTY AND EQUIPMENT
Property and Equipment consist of the following:
(Amounts in 000's)
|
Estimated Useful
Lives (Years) |
December 31,
2012 |
December 31,
2011 |
||||||
---|---|---|---|---|---|---|---|---|---|
Buildings and improvements |
5 - 40 | $ | 137,842 | $ | 93,371 | ||||
Equipment |
2 - 10 | 10,448 | 7,108 | ||||||
Land |
| 8,469 | 7,636 | ||||||
Computer related |
2 - 10 | 2,670 | 2,414 | ||||||
Construction in process |
| 510 | 77 | ||||||
|
159,939 | 110,606 | |||||||
Less: accumulated depreciation and amortization expense |
8,875 | 8,157 | |||||||
Property and equipment, net |
$ | 151,064 | $ | 102,449 | |||||
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 5. PROPERTY AND EQUIPMENT (Continued)
For the twelve months ended December 31, 2012 and 2011, total depreciation and amortization expense was $6.8 million and $2.6 million, respectively. Total depreciation expense and amortization expense excludes $1.1 million and $0.6 million in 2012 and 2011, respectively, that is recognized in net income (loss) from discontinued operations.
NOTE 6. INTANGIBLE ASSETS AND GOODWILL
Intangible assets consist of the following:
(Amounts in 000's)
|
Lease
Rights |
Bed Licenses
(included in property and equipment) |
Bed Licenses
Separable |
Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balances, December 31, 2011 |
|||||||||||||
Gross |
$ | 9,545 | $ | 26,149 | $ | 1,189 | $ | 36,883 | |||||
Accumulated amortization |
(1,085 | ) | (533 | ) | | (1,618 | ) | ||||||
Net carrying amount |
$ | 8,460 | $ | 25,616 | $ | 1,189 | $ | 35,265 | |||||
Reclass adjustment from bed licenses to goodwill |
| (2,694 | ) | | (2,694 | ) | |||||||
Deconsolidation of Oklahoma Owners |
| (3,458 | ) | | (3,458 | ) | |||||||
Acquisitions |
| 18,481 | 1,282 | 19,763 | |||||||||
Amortization expense |
(1,616 | ) | (905 | ) | | (2,521 | ) | ||||||
Balances, December 31, 2012 |
|||||||||||||
Gross |
$ | 9,545 | $ | 38,478 | $ | 2,471 | $ | 50,494 | |||||
Accumulated amortization |
(2,701 | ) | (1,438 | ) | | (4,139 | ) | ||||||
Net carrying amount |
$ | 6,844 | $ | 37,040 | $ | 2,471 | $ | 46,355 | |||||
(Amounts in 000's)
|
Lease
Rights |
Bed Licenses
(included in property and equipment) |
Bed Licenses
Separable |
Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balances, December 31, 2010 |
|||||||||||||
Gross |
$ | 9,020 | $ | 6,120 | $ | 1,189 | $ | 16,329 | |||||
Accumulated amortization |
(169 | ) | | | (169 | ) | |||||||
Net carrying amount |
$ | 8,851 | $ | 6,120 | $ | 1,189 | $ | 16,160 | |||||
Acquisitions |
525 | 20,029 | | 20,554 | |||||||||
Amortization expense |
(916 | ) | (533 | ) | | (1,449 | ) | ||||||
Balances, December 31, 2011 |
|||||||||||||
Gross |
$ | 9,545 | $ | 26,149 | $ | 1,189 | $ | 36,883 | |||||
Accumulated amortization |
(1,085 | ) | (533 | ) | | (1,618 | ) | ||||||
Net carrying amount |
$ | 8,460 | $ | 25,616 | $ | 1,189 | $ | 35,265 | |||||
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6. INTANGIBLE ASSETS AND GOODWILL (Continued)
Amortization expense for bed licenses included in property and equipment is included in property and equipment depreciation and amortization expense (See Note 5). Amortization expense for lease rights was $1.6 million and $0.9 million for the years ended December 31, 2012 and 2011, respectively. Estimated amortization expense for all definite lived intangibles for each of the future years ending December 31 is as follows:
Amounts in (000's)
|
Bed
Licenses |
Lease
Rights |
|||||
---|---|---|---|---|---|---|---|
2013 |
$ | 1,283 | $ | 997 | |||
2014 |
1,283 | 938 | |||||
2015 |
1,283 | 813 | |||||
2016 |
1,283 | 813 | |||||
2017 |
1,283 | 813 | |||||
Thereafter |
30,625 | 2,470 | |||||
Total |
$ | 37,040 | $ | 6,844 | |||
The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Balances, December 31, 2011 |
||||
Goodwill |
$ | 5,374 | ||
Accumulated impairment losses |
(1,774 | ) | ||
Total |
$ | 3,600 | ||
Deconsolidation of variable interest entities |
(1,122 |
) |
||
Goodwill acquired in acquisitions |
3,451 | |||
Disposed in sale of business (net of accumulated impairment losses of $1,774) |
(906 | ) | ||
Impairment losses |
| |||
Net change during year |
$ | 1,423 | ||
Balances, December 31, 2012 |
||||
Gross |
$ | 5,023 | ||
Accumulated impairment losses |
| |||
Total |
$ | 5,023 | ||
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6. INTANGIBLE ASSETS AND GOODWILL (Continued)
|
(Amounts in 000's) | |||
---|---|---|---|---|
Balances, December 31, 2010 |
||||
Goodwill |
$ | 2,680 | ||
Accumulated impairment losses |
| |||
Total |
$ | 2,680 | ||
Goodwill acquired in acquisitions |
2,694 | |||
Impairment losses |
(1,774 | ) | ||
Balances, December 31, 2011 |
||||
Gross |
$ | 2,680 | ||
Accumulated impairment losses |
(1,774 | ) | ||
Goodwill as previously reported |
906 | |||
Goodwill acquired in acquisitions (see note below) |
2,694 | |||
Total |
$ | 3,600 | ||
Goodwill as previously reported in the 2011 consolidated financial statements was $0.9 million. In 2012, a reclassification adjustment was made to the December 31, 2011 balance sheet to recognize $2.7 million of goodwill from 2011 acquisitions that was previously reported as bed licenses included in property and equipment. The Company does not amortize goodwill or indefinite lived intangibles, which consist of separable bed licenses.
NOTE 7. RESTRICTED CASH AND INVESTMENTS
The following presents the Company's various restricted cash, escrow deposits and investments:
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
|
2012 | 2011 | |||||
HUD escrow deposits |
$ | 279 | $ | 326 | |||
Funds held in trust for residents |
| 45 | |||||
Refundable escrow deposits |
| 500 | |||||
Principal and interest escrow |
106 | | |||||
Collateral certificates of deposit |
1,357 | 1,012 | |||||
Total current portion |
1,742 | 1,883 | |||||
HUD replacement reserve |
372 | 1,130 | |||||
Reserves for capital improvements |
1,602 | 1,767 | |||||
Restricted investments for other debt obligations |
5,241 | 1,973 | |||||
Total noncurrent portion |
7,215 | 4,870 | |||||
Total restricted cash and investments |
$ | 8,957 | $ | 6,753 | |||
HUD escrow deposits The Regulatory Agreements we have entered into in connection with the financing secured through HUD for facilities requiring monthly escrow deposits for taxes and insurance.
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NOTE 7. RESTRICTED CASH AND INVESTMENTS (Continued)
Funds held in trust for residents Nursing homes are required to maintain a savings account for the use of the residents to deposit their personal funds. The Company maintains such accounts for their nursing home residents with an offsetting liability as these funds are payable to the residents on demand. In some locations, the residents' funds are managed by a third party and are not reflected on the balance sheet. In 2012, all facilities transitioned to the third party manager for the resident funds.
Refundable escrow deposits In March 2012, the Company terminated an agreement to acquire or lease 15 skilled nursing facilities in South Carolina, North Carolina, Virginia, and Tennessee and, as a result of such termination, the deposit was refunded.
Collateral certificates of deposit In 2012, a short term mortgage obtained by the Company required a certificate of deposit to be held as collateral. The certificate of deposit matured in March 2013.
HUD replacement reserve The Regulatory Agreements entered into in connection with the financing secured through HUD also requires monthly escrow deposits for replacement and improvement of the HUD project assets.
Reserves for capital improvements Several of the acquired facilities also have requirements to have funds set aside for capital improvements.
Restricted investments for other debt obligations One of the Company's consolidated variable interest entities entered into a bond agreement that requires a project fund and a debt service reserve fund. In addition, two mortgages obtained in 2010 required two five year certificates of deposit to be held as collateral. The certificates of deposit are required to be held to maturity through October 2015 and will automatically renew if the lender continues to require them as collateral.
NOTE 8. ACCRUED EXPENSES
Accrued expenses consist of the following:
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
|
2012 | 2011 | |||||
Accrued payroll related |
$ | 5,626 | $ | 5,040 | |||
Accrued employee benefits |
3,790 | 2,023 | |||||
Real estate and other taxes |
1,245 | 982 | |||||
Other accrued expenses |
3,069 | 1,836 | |||||
Total |
$ | 13,730 | $ | 9,881 | |||
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NOTE 9. NOTES PAYABLE AND OTHER DEBT
Notes payable and other debt consists of the following:
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
Amounts in (000's)
|
2012 | 2011 | |||||
Revolving credit facilities and lines of credit |
$ | 9,204 | $ | 8,651 | |||
Senior debtguaranteed by HUD |
9,699 | 15,738 | |||||
Senior debtguaranteed by USDA |
28,370 | 38,717 | |||||
Senior debtguaranteed by SBA |
6,189 | 5,087 | |||||
Senior debtbonds, net of discount |
16,265 | 6,176 | |||||
Senior debtother mortgage indebtedness |
75,188 | 24,063 | |||||
Other debt |
4,004 | 4,196 | |||||
Convertible debt issued in 2010, net of discount |
10,948 | 10,105 | |||||
Convertible debt issued in 2011 |
4,509 | 4,509 | |||||
Convertible debt issued in 2012 |
7,500 | | |||||
Total |
171,876 | 117,242 | |||||
Less current portion |
19,387 | 11,909 | |||||
Less portion included in liabilities of disposal group held for sale |
3,662 | 240 | |||||
Notes payable and other debt, net of current portion |
$ | 148,827 | $ | 105,093 | |||
Scheduled Maturities
The schedule below summarizes the scheduled maturities as of December 31, 2012 for each of the next five years and thereafter. The 2013 maturities include $3.7 million related to the Vandalia HUD mortgage note classified as liabilities of disposal group held for sale at December 31, 2012 that was assumed by the buyer of the Hearth & Home of Vandalia assisted living facility that the Company sold in a transaction that closed in May 2013 (see Note 3 and Note 23).
|
Amounts in (000's) | |||
---|---|---|---|---|
2013 |
$ | 23,661 | ||
2014 |
20,561 | |||
2015 |
30,888 | |||
2016 |
41,000 | |||
2017 |
3,750 | |||
Thereafter |
52,789 | |||
Subtotal |
172,649 | |||
Less: unamortized discounts ($702 classified as current) |
(1,131 | ) | ||
Plus: unamortized premiums ($90 classified as current) |
358 | |||
Total notes and other debt |
$ | 171,876 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
Debt Covenant Compliance
As of December 31, 2012, the Company (including its consolidated variable interest entity) has over twenty different credit facilities (credit facilities, mortgage notes, bonds and other credit obligations) outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum EBITDA or EBITDAR, current ratios and tangible net worth requirements. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on subsidiary level (i.e.; facility, multiple facilities or a combination of subsidiaries comprising less than the Company's consolidated financial measurements). Some covenants are based on annual financial metric measurements whereas others are based on monthly or quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements. In recent periods, including as of December 31, 2012, the Company has not been in compliance with certain financial and administrative covenants. For each instance of such non-compliance, the Company has obtained waivers or amendments to such requirements including as necessary modifications to future covenant requirements or the elimination of certain requirements in future periods.
Revolving Credit Facilities and Lines of Credit
Gemino Credit Facility
On September 20, 2012, AdCare terminated and paid off all amounts outstanding under that certain Credit Agreement, dated October 29, 2010, between Gemino Healthcare Finance, LLC ("Gemino") and AdCare (the "Gemino Credit Facility"). The Gemino Credit Facility was a secured credit facility for borrowings up to $7.5 million, which was to mature on October 29, 2013. As of September 20, 2012, the amount outstanding in principal balance was approximately $4.2 million which was paid from funds made available to AdCare from a new credit facility entered into with The PrivateBank and Trust Company ("PrivateBank"). Interest accrued on the principal balance outstanding of the Gemino Credit Facility at an annual rate equal to LIBOR rate plus the applicable margin of 4.75% to 5.00%, depending on the principal amount outstanding. The Gemino Credit Facility contained various financial covenants and other restrictions, including a fixed charge cover ratio and maximum loan turn days, as well as borrowing base restrictions. No material early termination penalties were incurred by AdCare as a result of the termination.
At December 31, 2011, the outstanding balance of approximately $7.3 million for the Gemino Credit Facility was classified as current as a result of the required lockbox arrangement and subjective acceleration clauses.
Gemino-Bonterra Amendment
On September 20, 2012, ADK Bonterra/Parkview, LLC, a wholly owned subsidiary of AdCare ("Bonterra") entered into a Second Amendment to the Credit Agreement with Gemino ("Gemino-Bonterra Credit Facility"), which amended the original Credit Agreement dated April 27, 2011 between Bonterra and Gemino. The Gemino-Bonterra Credit Facility is a secured credit facility for borrowings up to $2.0 million. The amendment extends the term of the Gemino-Bonterra Credit Facility from October 29, 2013 to January 31, 2014 and amends certain financial covenants regarding Bonterra's fixed charge coverage ratio, maximum loan turn days and applicable margin. Interest accrues on the principal
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
balance outstanding at an annual rate equal to the LIBOR rate plus the applicable margin of 4.75% to 5.00%, which fluctuates depending upon the principal amount outstanding. As of December 31, 2012, $1.3 million was outstanding under the Gemino-Bonterra Credit Facility.
On December 20, 2012, Bonterra entered into a Third Amendment to the Credit Agreement with Gemino, which amended the original Credit Agreement, dated April 27, 2011, between Bonterra and Gemino. The Third Amendment altered the financial covenant in the original credit agreement to exclude the Oklahoma Owners under another credit agreement with Gemino from the covenant calculation of maximum loan turn days and acknowledges that Bonterra shall not be obligated, directly or indirectly, for any indebtedness or obligations of the Oklahoma Owners to Gemino.
PrivateBank Credit Facility
On September 20, 2012, in connection with the payoff of the Gemino Credit Agreement noted above, AdCare entered into a Loan and Security Agreement with PrivateBank ("PrivateBank Credit Facility"). Under the terms of the PrivateBank Credit Facility, PrivateBank provides $10.6 million principal amount for a three-year period on senior secured revolving credit facility limited to borrowing base restrictions and offset by a $0.7 million standby letter of credit at December 31, 2012, increasing to $2.5 million at July 31, 2013.
The PrivateBank Credit Facility matures on December 31, 2016. Interest is accrued on the principal balance at an annual rate of the greater of (i) 1% plus the prime interest rate per annum, or (ii) 5% per annum. Payments for the interest are due monthly and commenced on October 1, 2012. In addition, there is a non-utilization fee of 0.5% on the unused portion of the available credit. The PrivateBank Credit Facility may be prepaid at any time without premium or penalty, provided that such prepayment is accompanied by a simultaneous payment of all accrued and unpaid interest, through the date of prepayment. The PrivateBank Credit Facility is secured by a first priority security interest in the real property and improvements constituting nursing facilities owned and operated by AdCare. AdCare has unconditionally guaranteed all amounts owed to PrivateBank under the PrivateBank Credit Facility.
Proceeds from the PrivateBank Credit Facility were used to pay off all amounts outstanding under a separate $2.0 million credit facility with PrivateBank under which certain subsidiaries of AdCare were borrowers, and the Gemino Credit Facility.
On October 26, 2012, the Company and certain of its wholly owned subsidiaries, on the one hand, and PrivateBank entered into a Modification Agreement which amends the PrivateBank Credit Facility, dated as of September 20, 2012, between certain of the Company's wholly owned subsidiaries and PrivateBank. The Modification Agreement amends the loan agreement to: (i) allow PrivateBank to issue additional letters of credit for the account of the borrowers under the loan agreement; and (ii) change the total amount that may be issued under any letters of credit to $2.5 million. The modification agreement did not change the maximum amount that may be borrowed under the loan agreement by the borrowers, which remains at $10.6 million. As of December 31, 2012, $7.7 million was outstanding under the PrivateBank Credit Facility.
Contemporary Healthcare Senior
On August 17, 2012 in conjunction with the acquisition of Companions Specialized Care Center in Tulsa, OK, two wholly owned subsidiaries of the Company entered into a Loan Agreement with
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NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
Contemporary Healthcare Senior ("Contemporary") and issued a promissory note in favor of Contemporary for a principal amount of $600,000 ("Contemporary $600,000 Loan"). The Contemporary $600,000 Loan matures on August 20, 2015 and interest accrues on the principal balance at an annual rate of 9.0%. Payments for the interest and a portion of the principal in excess of the borrowing base are payable monthly, commencing on September 20, 2012. As of December 31, 2012, $0.2 million was outstanding under the Contemporary $600,000 Loan.
Senior DebtGuaranteed by HUD
Hearth and Home of Vandalia
In connection with the Company's January 2012 refinancing of the assisted living facility known as Hearth and Home of Vandalia, owned by a wholly owned subsidiary of AdCare, the Company obtained a term loan, insured by U.S. Department of Housing and Urban Development ("HUD"), with a financial institution for a total amount of $3.7 million that matures in 2041. The HUD term loan requires monthly principal and interest payments with a fixed interest rate of 3.74%. Deferred financing costs incurred on the term loan amounted to $0.2 million and are being amortized to interest expense over the life of the loan. The HUD term loan has a prepayment penalty of 8% starting in 2014 declining by 1% each year through 2022. This mortgage note was assumed by the buyer in the closing of the sale of this facility that occurred in May 2013 pursuant to the terms of the sale agreement related to the sale of six of the Company's assisted living facilities located in Ohio (see Note 3 to our Consolidated Financial Statements included in this Annual Report).
Other Senior DebtGuaranteed by HUD
For three facilities, the Company has term loans insured by HUD a financial institution that totaled approximately $6.0 million at December 31, 2012. The combined HUD mortgage notes require monthly principal and interest payments of approximately $45,000 with fixed interest rates ranging from 5.95% to 7.25%. The notes mature at various dates starting in 2027 through 2038. Deferred financing costs incurred on these loans amounted to approximately $0.3 million and are being amortized to interest expense over the life of the notes. The loans have prepayment penalties of 3.5% to 6% through 2013 declining by 1% each year through 2022. The loans have certain restrictive covenants and HUD regulatory compliance requirements including maintenance of certain restricted escrow deposits and reserves for replacement.
Sale of Ohio ALFs
On December 28, 2012, AdCare sold four of its assisted living facilities located in Ohio and used a portion of the funds to pay off the principal balance of their HUD loans in the amount of $6.4 million. On February 28, 2013, AdCare completed the sale of one additional assisted living facility and used the proceeds to repay the principal balance of the HUD loan with respect to the facility in the amount of $1.9 million (see Note 23 to our Consolidated Financial Statements included in this Annual Report).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
Senior DebtGuaranteed by USDA
For five facilities, the Company has term loans insured 70% to 80% by the USDA with financial institutions that totaled approximately $28.4 million at December 31, 2012. The combined USDA mortgage notes require monthly principal and interest payments of approximately $0.2 million adjusted quarterly with a variable interest rate of prime plus 1.0% to 1.75% with a floor of 5.50% to 6.00%. The notes mature at various dates starting in 2035 through 2036. Deferred financing costs incurred on these loans amounted to approximately $0.8 million and are being amortized to interest expense over the life of the notes. In addition, the loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 8% to 9% through 2013 declining by 1% each year capped at 1% for the remainder of the term.
Senior DebtGuaranteed by SBA
Stone County
In June 2012, Mt. V Property Holdings, LLC. ("Stone County"), a wholly owned subsidiary of AdCare, entered into a loan agreement with the Economic Development Corporation of Fulton County (the "CDC"), an economic development corporation working with the SBA, in the amount of $1.3 million. The funding from the CDC loan of $1.3 million was used to satisfy a $1.3 million Metro City Bank loan that was used to acquire the assets of a skilled nursing facility located in Arkansas known as the Stone County Nursing and Rehabilitation facility.
The CDC loan matures in July 2032 and accrues interest at a rate of 2.42% per annum. The CDC loan is payable in equal monthly installments of principal and interest based on a twenty (20) year amortization schedule. The CDC loan may be prepaid, subject to prepayment premiums, during the first 10 years. There are also annual fees associated with the CDC loan, including an SBA guarantee fee. The CDC loan is secured by a second in priority security deed on the Stone County Nursing and Rehabilitation facility and guarantees from AdCare, the SBA and a wholly owned subsidiary of AdCare. As of December 31, 2012, $1.3 million was outstanding under the CDC loan.
Other Senior DebtGuaranteed by SBA
For three facilities, the Company has term loans insured 75% by the SBA with a financial institution that totaled approximately $4.9 million at December 31, 2012. The combined SBA mortgage notes require monthly principal and interest payments of approximately $28,000 with an interest rate of 2.42% to 5.5%. The notes mature at various dates starting in 2031 through 2036. Deferred financing costs incurred on these loans amounted to approximately $0.2 million and are being amortized to interest expense over the life of the note. In addition, the loans have an annual renewal fee for the SBA guarantee of 0.13% to 0.25% of the guaranteed portion. The loans have prepayment penalties ranging from 2.48% to 3.0% declining each year until year 10.
Senior DebtBonds, net of Discount
Eaglewood Village Bonds
In April 2012, a wholly owned subsidiary of AdCare entered into a loan agreement with the City of Springfield in the State of Ohio pursuant to which City of Springfield lent to such subsidiary the proceeds from the sale of City of Springfield's Series 2012 Bonds. The Series 2012 Bonds consist of
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
$6.6 million in Series 2012A First Mortgage Revenue Bonds and $0.6 million in Taxable Series 2012B First Mortgage Revenue Bonds. The Series 2012 Bonds were issued pursuant to an April 2012 Indenture of Trust between the City of Springfield and the Bank of Oklahoma. The Series 2012A Bonds mature in May 2042 and accrue interest at a fixed rate of 7.65% per annum. The Series 2012B Bonds mature in May 2021 and accrue interest at a fixed rate of 8.5% per annum. Deferred financing costs incurred on the loan amounted to $0.6 million and are being amortized to interest expense over the life of the loan. The loan is secured by the Company's assisted living facility located in Springfield, Ohio known as Eaglewood Village and guaranteed by AdCare. There is an original issue discount of $0.3 million and restricted assets of $0.3 million related to this loan. As of December 31, 2012, $6.6 million was outstanding under the Series 2012A First Mortgage Revenue Bonds and $0.6 million was outstanding under the Taxable Series 2012B First Mortgage Revenue Bonds. The unamortized discount on the bonds was $0.2 million at December 31 2012.
Quail Creek
In July 2012, a wholly owned subsidiary of AdCare financed the purchase of a skilled nursing facility located in Oklahoma City, Oklahoma known as Quail Creek Nursing by the assumption of existing indebtedness under that certain Loan Agreement and Indenture of First Mortgage with The Bank of New York Mellon Global Corporate Trust, as assignee of The Liberty National Bank and Trust of that certain Bond Indenture, dated September 1, 1986, as amended as of September 1, 2001. The indebtedness under the Loan Agreement and Indenture consists of a principal amount of $2.8 million. In July of 2012, the purchase price allocation of fair value totaling $3.2 million was assigned to this indebtedness resulting in a $0.4 million premium that is being amortized to maturity. The loan matures in August 2016 and accrues interest at a fixed rate of 10.25% per annum. The loan is secured by the Quail Creek facility.
As of December 31, 2012, $2.8 million was outstanding under the Loan Agreement. The unamortized premium on the bonds was $0.4 million at December 31 2012.
Riverchase
The Company's consolidated variable interest entity, Riverchase Village ADK, LLC ("Riverchase"), has revenue bonds, in two series, issued by the Medical Clinical Board of the City of Hoover in the state of Alabama which the Company has guaranteed the obligation under the bonds.
The Series 2010A portion of $5.8 million matures on June 1, 2039. The Series 2010B portion of $0.5 million matures serially beginning on June 1, 2012 through June 1, 2017, with annual redemption amounts ranging from $75,000 to $100,000. The Series 2010A and 2010B bonds may be redeemed early beginning on June 1, 2012 through May 31, 2015 at a redemption price ranging from 101% to 103% of the principal amount plus accrued interest. Any early redemption after May 31, 2015 is at a redemption price of 100% of the principal amount plus accrued interest. The bonds require monthly payments of fixed interest of $38,000 at a weighted average effective interest rate of 7.9%.
As of December 31, 2012, $5.8 million was outstanding under the Series 2010A portion and $0.5 million was outstanding under the Series 2010 B portion of the bonds. The bonds contain an original issue discount that is being amortized over the term of the notes. The unamortized discount on the bonds was $0.2 million at December 31 2012.
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NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
Senior DebtOther Mortgage Indebtedness
Woodland Manor
In connection with the Company's January 2012 acquisition of the skilled nursing facility known as Woodland Manor, the Company entered into a loan agreement for $4.8 million with PrivateBank. The loan matures in December 2016 with a required final payment of $4.3 million and accrues interest at the LIBOR rate plus 4% with a minimum rate of 6% per annum. The loan requires monthly payments of principal and interest. Deferred financing costs incurred on the loan amounted to $0.1 million and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 5% through 2012 declining by 1% each year through 2015. The loan is secured by the Woodland Manor facility and guaranteed by AdCare. As of December 31, 2012, $4.7 million was outstanding under loan agreement.
Little Rock, Northridge and Woodland Hills
In connection with the Company's April 2012 acquisition of three skilled nursing facilities located in Arkansas known as Little Rock, Northridge and Woodland Hills, the Company entered into a loan agreement for $21.8 million with PrivateBank. The loan originally matured in March 2017 with a required final payment of $19.7 million and has since been amended. The loan accrues interest at the LIBOR rate plus 4% with a minimum rate of 6% per annum and requires monthly principal payments plus interest for total current monthly payments of $0.2 million. Deferred financing costs incurred on the loan amounted to $0.4 million and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 5% through 2012 declining by 1% each year through 2015. The loan is secured by the three facilities and guaranteed by AdCare. The Company has $1.8 million of restricted assets related to this loan.
On June 15, 2012, the Company entered into a modification agreement with PrivateBank to modify the terms of the loan agreement. The loan modification agreement, among other things, amended the loan agreement to reflect a maturity date of March 30, 2013.
A portion of the PrivateBank loan with respect to the Northridge facility and Woodland Hills facility was paid off and refinanced with a portion of the proceeds from a new credit facility with KeyBank National Association ("KeyBank") on December 28, 2012, as discussed below. On December 28, 2012, certain subsidiaries of the Company entered into a Second Modification Agreement with PrivateBank which modified the loan agreement. The modification, among other things, extends the term of the PrivateBank loan from March 30, 2013 to December 31, 2016; releases certain subsidiaries of the Company related to the Northridge facility and Woodland Hills facility from liability under two of the promissory notes and other related documents under the credit facility; and reduces the total outstanding amount owed under the credit facility from $21.8 million to $13.7 million. As of December 31, 2012, $13.7 million was outstanding under loan agreement.
Abington Place Metro City Bank
In connection with the Company's June 2012 acquisition of the skilled nursing facility located in Little Rock, Arkansas known as Abington Place, a wholly owned subsidiary of AdCare, entered into a short-term loan agreement for $3.4 million with Metro City Bank. In August 2012, the maturity date was extended from September 2012 to January 2014. The note accrues interest at the prime rate plus
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
2.25% with a minimum rate of 6.25% per annum. Deferred financing costs incurred on the loan amounted to $0.1 million and are amortized to interest expense over the life of the loan. The loan was secured by the Abington Place facility and guaranteed by AdCare.
The Abington Metro City Bank loan was paid off and refinanced with Key Bank on December 28, 2012 as discussed below.
Stone County
In June 2012, Mt. V Property Holdings, LLC ("Stone County"), a wholly owned subsidiary of AdCare, entered into two loan agreements with Metro City Bank in the amounts of $1.3 million and $1.8 million. The purpose of these agreements was to refinance existing debt in the original principal amount of $3.1 million used to acquire the assets of a skilled nursing facility located in Arkansas known as the Stone County Nursing and Rehabilitation facility.
The $1.3 million loan from Metro City Bank was repaid with the funding from the CDC loan of $1.3 million. The $1.8 million Metro City Bank loan matures in June 2022 and accrues interest at the prime rate plus 2.25% with a minimum rate of 6.25% per annum. Deferred financing costs incurred on this loan amounted to $0.1 million and are being amortized to interest expense over the life of the loan. The Metro City Bank loan has a prepayment penalty of 10% for any prepayment through June 2013. The penalty is reduced by 1% each year until the loan maturity date. The Metro City Bank loan is secured by the Stone County Nursing and Rehabilitation facility and is guaranteed by AdCare. As of December 31, 2012, $1.8 million was outstanding under the Metro City Bank loan.
Glenvue
In July 2012, Glenvue Health & Rehabilitation, a wholly owned subsidiary of AdCare, financed the acquisition of a skilled nursing facility located in Glennville, Georgia, by entering into a loan agreement for $6.6 million with PrivateBank. The loan matures in July 2014 with a required final payment of $6.4 million and accrues interest at an annual rate of the greater of (i) 6.0% per annum; or (ii) the LIBOR rate plus 4.0% per annum. The loan requires monthly payments of principal and interest. Deferred financing costs incurred on the loan amounted to $0.1 million and are being amortized to interest expense over the life of the loan. The loan is secured by the Glenvue facility and guaranteed by AdCare. As of December 31, 2012, $6.5 million was outstanding under the loan.
Companions Specialized Care
In August 2012, a wholly owned subsidiary of AdCare, financed the acquisition of a skilled nursing facility located in Tulsa, Oklahoma, known as Companions Specialized Care Center, by entering into a loan agreement for $5.0 million with Contemporary Healthcare Capital. The loan matures in August 2015 with a required final payment of $5.0 million and accrues interest at a fixed rate of 8.5% per annum. Deferred financing costs incurred on the loan amounted to $0.2 million and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 5% during the first year of the term and 1% during the second year of the term. The loan is secured by the Companions Specialized Care facility and guaranteed by AdCare. As of December 31, 2012, $5.0 million was outstanding under the loan.
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NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
Northridge, Woodland Hills and Abington
On December 28, 2012, the Company's wholly owned subsidiaries which own the Northridge, Woodland Hills and Abington facilities entered into a Secured Loan Agreement with the KeyBank National Association (the "KeyBank Credit Facility"). The KeyBank Credit Facility provides for a $16.5 million principal amount senior secured credit facility and matures on February 27, 2015; provided, however, that the KeyBank Borrowers may extend the maturity date by an additional six months if certain conditions are met. Interest on the KeyBank Credit Facility accrues on the principal balance thereof at an annual rate of 4.25% plus the current LIBOR rate. The KeyBank Credit Facility may be prepaid at any time without premium or penalty, provided that the KeyBank Borrowers pay any costs of KeyBank in re-employing such prepaid funds. AdCare Health Systems, Inc., AdCare Property Holdings, LLC, and AdCare Operations, LLC. have unconditionally guaranteed all amounts owing under the KeyBank Credit Facility.
Proceeds from the KeyBank Credit Facility were used to pay off all amounts outstanding under an unsecured promissory note, dated April 1, 2012, issued by the Company in favor of Strome Alpha Offshore Ltd. in the amount of $5.0 million; payoff of an existing credit facility with Metro City Bank with respect to the Abington facility in the amount of $3.4 million; and payoff of the portion of the PrivateBank Credit Facility which relates to the Northridge and Woodland Hills in the amount of $8.1 million. As of December 31, 2012, $16.5 million was outstanding under the KeyBank Credit Facility.
Sumter Valley and Georgetown
In connection with the closing of the Sumter and Georgetown facilities acquisition, two wholly owned subsidiaries of AdCare Sumter Valley Property Holdings, LLC and Georgetown HC&R Property Holdings, LLC entered into a Loan Agreement with Metro City Bank, dated December 31, 2012 in which Metro City Bank issued a promissory note for an aggregate principal amount of $7.0 million (the "Metro City Bank Loan"). The Metro City Bank Loan matures on February 1, 2014. Interest on the loan accrues on the principal balance thereof at an annual rate of 1.5% per annum plus the prime interest rate, to be adjusted quarterly (but in no event shall the total interest be less than 5.50% per annum), and payments for the interest are payable monthly, commencing on February 1, 2013. The entire outstanding principal balance of the loan, together with all accrued but unpaid interest thereon, is payable on February 1, 2014. AdCare and certain of its subsidiaries have unconditionally guaranteed all amounts owing under the Metro City Bank Loan. As of December 31, 2012, $7.0 million was outstanding under the Metro City Bank Loan.
Northwest
In connection with the acquisition of the Northwest Nursing Center facility, a wholly owned subsidiary of AdCare, issued a note pursuant to a Loan Agreement with First Commercial Bank, dated December 31, 2012, for a principal amount of $1.5 million. The note matures on December 31, 2017. Interest on the note accrues on the principal balance thereof at an annual rate equal to the prime interest rate (but in no event shall the interest rate be less than 5.00% per annum), and payments for the interest are payable monthly, commencing on January 31, 2013. The entire outstanding principal balance of the note, together with all accrued but unpaid interest thereon, is payable on December 31,
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2017. AdCare and certain subsidiaries of the Company have unconditionally guaranteed all amounts owing under the note. As of December 31, 2012, $1.5 million was outstanding under the loan.
Hembree Road Building
In November 2012, in connection with the acquisition of AdCare's corporate offices at Hembree Road, Roswell, Georgia, a wholly owned subsidiary of AdCare issued a promissory note in favor of Fidelity Bank for a principal amount of $1.1 million. The note matures in December 2017. Interest on the note accrues on the principal balance thereof at a fixed rate of 5.5% per annum and payments for the interest and principal are due monthly, commencing in December 2012. The entire outstanding principal balance of the note, together with all accrued but unpaid interest thereon, is payable on December 31, 2017. As of December 31, 2012, $1.0 million was outstanding under the loan.
Senior DebtOther Mortgage Indebtedness
For five facilities the Company has obtained various term loans that totaled approximately $17.3 million at December 31, 2012. The combined mortgage notes require monthly principal and interest payments of approximately $0.1 million with interest rates of 6.00% to 6.25%. The notes mature at various dates starting in 2016 through 2031. Deferred financing costs incurred on these loans amounted to approximately $0.5 million and are being amortized to interest expense over the life of the notes.
The remaining mortgage note balance is related to the financing on the Company's former corporate headquarters in Springfield, Ohio with a balance of approximately $0.2 million at December 31, 2012. The mortgage requires fixed monthly payments of approximately $3,000 plus interest at LIBOR plus 3.00% maturing in 2017. The building was sold in June 2013 and the mortgage was paid.
Other Debt
Eaglewood Village Promissory Note
In January 2012, two wholly owned subsidiaries of AdCare issued a promissory note to the seller in the amount of $0.5 million in connection with the January 2012 acquisition of the assisted living facility located in Springfield, Ohio. The note matures in January 2014 and requires a final payment of $0.5 million. The note bears interest at 6.5% per annum payable monthly beginning in February 2012. The note requires monthly principal and interest payment. The note may be prepaid without penalty at any time.
Cantone Promissory Notes
In March 2012, AdCare issued an unsecured promissory note to Cantone Asset Management LLC in the amount of $3.5 million. In April 2012, AdCare issued another promissory note to Cantone Asset Management LLC in the amount of $1.5 million. In July 2012, these two promissory notes were refinanced through the issuance to Cantone Asset Management LLC of an 8% subordinated convertible note in the principal amount of $5.0 million.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
The $5.0 million of promissory notes issued to Cantone Asset Management LLC was refinanced as part of the $7.5 million in subordinated convertible promissory notes issued in July 2012 that is discussed below.
Strome Note
In April 2012, AdCare issued an unsecured promissory note in the amount of $5.0 million to Strome Alpha Offshore Ltd. The promissory note matured in November 2012, and the Company paid off the promissory note on December 28, 2012, using the proceeds from the KeyBank Credit Facility discussed in Note 9 to our Consolidated Financial Statements included in this Annual Report. Interest accrued on the promissory note at a fixed rate of 10% per annum.
Sumter Valley Promissory Note
In connection with the acquisition of the facility known as Sumter Valley Nursing and Rehab in December 2012, a subsidiary of AdCare issued a promissory note to the seller of the facility in the amount of $0.3 million. Interest on the note accrues at a rate of 6% per annum. Principal and interest payments on the note shall be due and payable monthly, beginning on February 1, 2013, with a final payment due on the earlier of December 31, 2014, or the date upon which the Company refinances its loan relating to the Sumter facility. AdCare has unconditionally guaranteed all amounts owed under the note. At December 31, 2012, $0.2 million remained outstanding on this promissory note.
Georgetown Promissory Note
In connection with the acquisition of the facility known as Georgetown Healthcare and Rehab in December 2012, a subsidiary of AdCare issued a secured subordinated promissory note to the seller of the Georgetown facility in the amount of $1.9 million. Interest on the note accrues at a rate of 7% per annum. Interest payments on the note shall be due and payable monthly, beginning on February 1, 2013, with a final payment due on the earlier of December 31, 2013; or the date upon which the Company refinances its loan with Metro City Bank relating to the Georgetown Healthcare and Rehab Facility. AdCare has unconditionally guaranteed all amounts owing under the note.
Pinnacle Healthcare Promissory Notes
The Company previously issued promissory notes in the aggregate principal amount of $2.4 million. The notes mature March 1, 2014, and bear interest at 7% payable quarterly in arrears the first day of each December, March, June and September beginning December 1, 2011. The notes are subject to mandatory prepayment in the aggregate principal amount of $250,000 on each of March 1, 2013, June 1, 2013, September 1, 2013 and December 1, 2013 and a final payment of $150,000 on March 1, 2014. The notes may also be prepaid without penalty at any time. At December 31, 2012, $1.2 million remained outstanding.
Mountain Trace Promissory Notes
Mountain Trace ADK, LLC, a wholly owned subsidiary of AdCare, previously issued promissory notes in the aggregate principal amount of $1,000,000. The notes mature April 1, 2013, and bear interest at 11% payable quarterly in arrears the first day of each January, April, July and October beginning July 1, 2011. The notes may also be prepaid without penalty by providing fifteen days prior
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
notice. The Company received proceeds of $0.9 million net of legal and other financing costs. At December 31, 2012, $0.2 million remained outstanding.
Convertible Debt
Subordinated Convertible Notes Issued in 2010
On October 26, 2010, the Company entered into a Securities Purchase Agreement with certain accredited investors to sell and issue to the Purchasers an aggregate of $11.1 million in principal amount of the Company's Subordinated Convertible Notes, bearing 10% interest per annum payable quarterly in cash in arrears beginning December 31, 2010.
On October 29, 2010, the Company entered into an amendment and joinder agreement to effectuate the sale of an additional $0.8 million in principal amount of Notes. The initial sale of $11.1 million in principal amount of Notes occurred on October 26, 2010, and the subsequent sale of $0.8 million in principal amount of Notes occurred on October 29, 2010. The notes mature in October 2013.
The Notes are convertible at the option of the holder into shares of common stock of the Company at a current conversion price of $3.73 (adjusted for a 5% stock dividends paid on October 14, 2011 and October 22, 2012, as further discussed in Note 10 to our Consolidated Financial Statements included in this Annual Report, and subject to adjustment for stock dividends, stock splits, combination of shares, recapitalization and other similar events) that is subject to future reductions if the Company issues equity instruments at a lower price. Since there is no minimum conversion price resulting in an indeterminate number of shares to be issued in the future, the Company determined an embedded derivative existed that was required to be bifurcated from the Notes and accounted for separately as a derivative liability recorded at fair value (see Note 15). At the time of initial measurement, the derivative had an estimated fair value of $2.6 million resulting in a discount on the Notes. The discount is being amortized over the term of the Notes. At December 31, 2012, the unamortized discount on the Notes was $0.7 million.
There was a conversion of a $0.2 million note that was part of the October 26, 2010 offering. It was recorded in two $0.1 million allotments. The first one converted in July 2011 at a price of $4.13 per share and resulted in the issuance of 18,160 shares. The second converted in November 2011 at a price of $3.92 and resulted in the issuance of 19,132 shares. As of December 31, 2012, $11.7 million was outstanding under the Notes.
Subordinated Convertible Notes Issued in 2011
On March 31, 2011, the Company entered into a Securities Purchase Agreement with certain accredited investors to sell and issue to the Purchasers an aggregate of $2.1 million in principal amount of the Company's Subordinated Convertible Notes. On April 29, 2011, the Company issued an additional $1.8 million in principal amount of the convertible debt issuance. On May 6, 2011, the Company issued an additional $0.6 in principal amount of the Notes. As of December 31, 2012, the total outstanding principal amount of the Notes is $4.5 million. Approximately $1.4 million of the proceeds obtained were used to repay the short-term promissory note that was issued March 31, 2011 and related accrued interest.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
The Notes bear a 10% interest per annum and are payable quarterly in cash in arrears beginning June 30, 2011. The Notes mature on March 31, 2014. Debt issuance costs of $0.6 million are being amortized over the life of the Notes.
The Notes are convertible at the option of the holder into shares of common stock of the Company at a conversion price of $4.80 (adjusted for a 5% stock dividends paid on October 14, 2011 and October 22, 2012, as further discussed in Note 10 to our Consolidated Financial Statements included in this Annual Report, and subject to adjustment for stock dividends, stock splits, combination of shares, recapitalization and other similar events). The initial conversion price is subject to adjustment for any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or other similar events. The Notes are unsecured and subordinated in right of payment to existing and future senior indebtedness.
Subordinated Convertible Notes Issued in 2012
AdCare entered into a Securities Purchase Agreement, dated as of June 28, 2012, with certain accredited investors pursuant to which the Company issued and sold such investors on July 2, 2012 an aggregate of $7.5 million in principal amount of the Company's 8.0% subordinated convertible promissory notes. The notes bear interest at 8% per annum and such interest is payable quarterly in cash in arrears beginning on September 30, 2012. The notes mature on July 31, 2015. The notes are unsecured and subordinated in right of payment to existing and future senior indebtedness of the Company. The $7.5 million principal amount of the notes includes a refinancing of existing indebtedness of $5.0 million of promissory notes issued to Cantone Asset Management LLC.
At any time on or after the six-month anniversary of the date of issuance of the notes, the notes are convertible at the option of the holder into shares of the Company's common stock at a conversion price equal to $3.97 per share (adjusted for a 5% stock dividend paid on October 22, 2012, as further discussed in Note 10 to our Consolidated Financial Statements included in this Annual Report, and subject to adjustment for stock dividends, stock splits, combination of shares, recapitalization and other similar events).
If at any time on or after the six-month anniversary date, the weighted average price of the common stock for any 20 trading days within a period of 30 consecutive trading days equals or exceeds 200% of the conversion price and the average daily trading volume of the common stock during such 20 days exceeds 50,000 shares, then the Company may, subject to the satisfaction of certain other conditions, redeem the notes in cash at a redemption price equal to the sum of 100% of the principal amount being redeemed plus any accrued and unpaid interest on such principal.
In addition, the holders of a majority of the aggregate principal amount of notes then outstanding may require the Company to redeem all or any portion of the notes upon a change of control transaction, at a redemption price in cash equal to 110% of the redemption amount.
Approximately $23.7 million of the scheduled maturities in 2013, 2014 and 2015, relate to the subordinated convertible notes issued in 2010, 2011 and 2012. While management cannot predict with certainty, we anticipate that some holders of the subordinated convertible notes will elect to convert their subordinated convertible notes into shares of common stock provided the common stock continues to trade above the applicable conversion price for such notes. The conversion prices are $3.73, $4.80 and $3.97 for the subordinated convertible notes issued in 2010, 2011 and 2012,
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9. NOTES PAYABLE AND OTHER DEBT (Continued)
respectively. If all of the subordinated convertible notes had been converted to common stock at December 31, 2012, then the Company would have been required to issue approximately 6.4 million shares of common stock.
NOTE 10. PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Shares Authorized and Reserved
At December 31, 2012, the Company had reserved approximately 13.9 million shares of its authorized but unissued common stock for possible future issuance in connection with the following potential future events:
|
Shares
(000's) |
|||
---|---|---|---|---|
Exercise of outstanding and future grants of stock options under approved plans |
3,026 | |||
Exercise of outstanding stock warrantsemployees |
1,806 | |||
Exercise of outstanding stock warrantsnon-employees |
1,961 | |||
Convertible debt shares issuable (including additional 20% required under agreements) |
7,140 | |||
Total authorized shares reserved |
13,933 | |||
Stock Dividends
On September 6, 2012, the Company's Board of Directors declared a 5% stock dividend issued on October 22, 2012 to holders of the common stock as of October 8, 2012. As a result of the stock dividend, the number of outstanding shares of common stock increased by 0.7 million shares in 2012.
On August 31, 2011, the Company's Board of Directors declared a 5% stock dividend issued on October 14, 2011 to stockholders of record at the close of business on September 30, 2011. As a result of the stock dividend, the number of outstanding shares of common stock increased by 0.6 million shares in 2011.
As the Company was in a deficit position for both 2012 and 2011, there was no recorded impact to the reported amounts of stockholders' equity in the accompanying consolidated balance sheet. All references to the number of common shares and per-share amounts included in these consolidated financial statements are restated based on the increased number of shares giving retroactive effect to the stock dividend to prior year amounts.
2012 Public Common Stock Offering
In March 2012, the Company closed a firm commitment underwritten public offering of 1.1 million shares of common stock at an offering price to the public of $3.75 per share. The Company also granted the underwriter in the offering an option for 45 days to purchase up to an additional 165,000 shares of common stock to cover over-allotments, if any. In connection with the underwriter's partial exercise of this option, the Company issued an additional 65,000 shares of common stock at an offering
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10. PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Continued)
price to the public of $3.75 per share on May 22, 2012. The Company received net proceeds of $3.8 million after deducting underwriting discounts and other offering-related expenses of $0.6 million.
2011 Warrant Call
In August 2011, the Company called for redemption the outstanding warrants to purchase shares of common stock sold in the Company's initial public offering and private placement offering. Each warrant exercised in response to the call was exercised for 1.05 shares of common stock at a price of $2.38 per share as adjusted for the 2010 stock dividend. Any warrants not exercised expired on the last day of the exercise period and were redeemed at $.10 per underlying share of common stock. In connection with the warrant call, the Company issued 2,897,149 shares of common stock. The Company received aggregate net proceeds of $6.3 million upon such exercises including issuance costs of $0.6 million. The remaining unexercised warrants expired requiring the Company to pay the aggregate call amount of $3,000.
Preferred Stock
On November 7, 2012, the Company announced a "best efforts" public offering of 450,000 shares of its newly designated Series A Preferred Stock. The Series A Preferred Stock was offered at $23 per share. In November 2012, the Company issued 450,000 shares of Series A Preferred Stock at $23 per share, receiving proceeds of $9.2 million after deducting underwriting discounts and other offering-related expenses of $1.2 million. The liquidation preference per share is $25. Cumulative dividends accrue and are paid in the amount of $2.72 per share each year, which is equivalent to 10.875% of the $25.00 liquidation preference per share. The dividend rate may increase under certain circumstances.
Holders of the Series A Preferred Stock generally have no voting rights but have limited voting rights under certain circumstances. The Company may not redeem the Series A Preferred Stock before December 1, 2017, except the Company is required to redeem the Series A Preferred Stock following a "Change of Control," as defined. On and after December 1, 2017, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to the redemption date.
The change-in-control provision requires the preferred stock to be classified as temporary equity because, although deemed a remote possibility, a purchaser could acquire a majority of the voting power of the outstanding common stock without company approval, thereby triggering redemption. FASB ASC Topic 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities , requires classification outside of permanent equity for redeemable instruments for which the redemption triggers are outside of the issuer's control. The assessment of whether the redemption of an equity security could occur outside of the issuer's control is required to be made without regard to the probability of the event or events that may result in the instrument becoming redeemable.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11. STOCK BASED COMPENSATION
The following table summarizes employee and nonemployee stock based compensation for the years ended December 31, 2012 and 2011:
Amounts in (000's)
|
December 31,
2012 |
December 31,
2011 |
|||||
---|---|---|---|---|---|---|---|
Employee compensation: |
|||||||
Stock options |
$ | 486 | $ | 212 | |||
Employee warrants |
229 | 594 | |||||
Total option and warrants compensation |
715 | 806 | |||||
Board restricted stock |
176 | | |||||
Total Employee Compensation Expense |
$ | 891 | $ | 806 | |||
Non-employee compensation: |
|||||||
Warrants |
$ | 859 | $ | 434 | |||
Less: Deferred financing and prepaid services |
(783 | ) | (330 | ) | |||
Amortization of prepaid services |
696 | 108 | |||||
Total Nonemployee Compensation Expense |
$ | 772 | $ | 212 | |||
The Company uses the Black-Scholes-Merton option-pricing model for estimating the fair values of employee share options, employee and nonemployee warrants and similar instruments with the following key assumptions:
Expected Dividend Yield: The Company has not historically paid cash dividends on its common stock, and does not expect to pay cash dividends on its common stock in the near future. Accordingly, our expected dividend yield is zero.
Expected Volatility: The Company estimates the expected volatility factor using the Company's historical stock price volatility. For the calculations in the first quarter of 2011, the estimated expected volatility also included the weighted-average historical volatility of similar companies within the same industry whose stock prices are publicly available.
Risk-Free Interest Rate: The Company bases the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the options and warrants being valued.
Expected Term: The Company currently uses a simplified method for calculating the expected term based on the vesting and contractual expiration dates. For non-employee warrants awarded to certain service providers or financing partners, the Company uses the contractual life of the warrants as the expected term, as the Company does not have sufficient experience with the service providers or financing partners to determine when they could be expected to exercise their warrants.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11. STOCK BASED COMPENSATION (Continued)
The assumptions used in calculating the fair value of employee stock options and warrants using the Black-Scholes-Merton option-pricing model are set forth in the following table:
|
2012 | 2011 | ||
---|---|---|---|---|
Dividend Yield |
0.0% | 0.0% | ||
Expected Volatility |
40.0% - 46.1% | 65.6% | ||
Risk-Free Interest Rate |
.25% - 1.05% | 1.23% | ||
Expected Term |
4.0 - 6.5 years | 4.7 years |
The assumptions used in calculating the fair value of non-employee stock options and warrants using the Black-Scholes-Merton option-pricing model are set forth in the following table:
|
2012 | 2011 | ||
---|---|---|---|---|
Dividend Yield |
0.0% | 0.0% | ||
Expected Volatility |
38.5% - 47.8% | 62.0% | ||
Risk-Free Interest Rate |
0.25% - 0.72% | 0.86% | ||
Expected Term |
3 - 10 years | 1.7 years |
Employee Stock Options
The Company has three active employee stock option plans.
All three plans permit the granting of incentive or nonqualified stock options. The 2011 plan also permits the granting of restricted stock. The plans are administered by the Board of Directors which has the authority to determine the employees to whom awards will be made, the amounts of the awards, and the other terms and conditions of the awards.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11. STOCK BASED COMPENSATION (Continued)
The following summarizes the Company's stock option activity for the years ended December 31, 2012 and 2011:
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
Aggregate
Intrinsic Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2012 |
575,277 | $ | 3.90 | ||||||||||
Stock Dividend |
73,393 | $ | 4.25 | ||||||||||
Granted |
996,200 | $ | 4.46 | ||||||||||
Exercised |
(66,867 | ) | $ | 1.39 | |||||||||
Forfeited |
(186,483 | ) | $ | 4.31 | |||||||||
Expired |
(40,659 | ) | $ | 2.78 | |||||||||
Outstanding at December 31, 2012 |
1,350,861 | $ | 4.57 | 6.6 years | 900,426 | ||||||||
Exercisable at December 31, 2012 |
268,457 | $ | 4.22 | 5.2 years | 260,123 | ||||||||
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
Aggregate
Intrinsic Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2011 |
212,404 | $ | 1.79 | ||||||||||
Stock Dividend |
16,298 | $ | 3.79 | ||||||||||
Granted |
487,000 | $ | 4.77 | ||||||||||
Exercised |
(37,338 | ) | $ | 1.74 | |||||||||
Forfeited |
(98,807 | ) | $ | 4.53 | |||||||||
Expired |
(4,280 | ) | $ | 2.26 | |||||||||
Outstanding at December 31, 2011 |
575,277 | $ | 3.90 | 8.3 years | 370,606 | ||||||||
Exercisable at December 31, 2011 |
213,178 | $ | 2.66 | 5.7 years | 370,606 | ||||||||
The weighted average grant date fair value of options granted during 2012 and 2011 was $1.36 and $2.21, respectively. At December 31, 2012, the Company has approximately $1.2 million of unrecognized compensation expense related to unvested options. Assuming no pre-vesting forfeitures, this expense will be recognized as a charge to earnings over a weighted-average remaining service period of 2.3 years. The total intrinsic value of options exercised during 2012 and 2011, was $0.2 million and $0.1 million, respectively.
Employee Common Stock Warrants
In addition to the Company's stock option plans, the Company grants, in accordance with the rules and regulations of the NYSE MKT LLC, stock warrants to officers, directors, employees and certain consultants to the Company from time to time as determined by the Board of Directors. The Board of Directors administers the granting of warrants, determines the persons to whom awards will be made, the amount of the awards, and the other terms and conditions of the awards.
107
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11. STOCK BASED COMPENSATION (Continued)
The following summarizes the Company's employee common stock warrant activity for the years ended December 31, 2012 and 2011:
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
Aggregate
Intrinsic Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2012 |
1,720,020 | $ | 3.10 | ||||||||||
Stock Dividend |
86,004 | $ | 2.99 | ||||||||||
Granted |
| ||||||||||||
Exercised |
| ||||||||||||
Forfeited |
| ||||||||||||
Outstanding at December 31, 2012 |
1,806,024 | $ | 2.99 | 5.6 years | 3,181,251 | ||||||||
Exercisable at December 31, 2012 |
1,539,126 | $ | 2.79 | 5.1 years | 3,014,103 | ||||||||
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
Aggregate
Intrinsic Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2011 |
1,289,412 | $ | 2.64 | ||||||||||
Stock Dividend |
71,162 | $ | 2.93 | ||||||||||
Granted |
450,000 | $ | 4.18 | ||||||||||
Exercised |
(70,433 | ) | $ | 2.08 | |||||||||
Forfeited |
(20,121 | ) | $ | 2.38 | |||||||||
Outstanding at December 31, 2011 |
1,720,020 | $ | 3.10 | 6.6 years | 1,676,791 | ||||||||
Exercisable at December 31, 2011 |
1,345,020 | $ | 2.78 | 5.8 years | 1,666,991 | ||||||||
There were no employee warrants granted in 2012; the weighted average grant date fair value of employee warrants granted during 2011 was $2.29. The Company has approximately $0.2 million of unrecognized compensation expense related to unvested employee warrants as of December 31, 2012. Assuming no pre-vesting forfeitures, this expense will be recognized as a charge to earnings over a weighted-average remaining service period of 2.4 years. There were no employee warrants exercised during 2012; the total intrinsic value of employee warrants exercised during 2011 was $0.4 million.
Restricted Stock
In June 2012, the Company approved issuing, pursuant to the 2011 Plan, 270,000 shares of common stock with a three-year restriction on transfer to its nine directors. The restricted stock has all the rights of a shareholder from the date of grant, including, without limitation the right to receive dividends and the right to vote. The Company determined the fair value of the restricted stock at date of grant to be equal to the grant date closing stock price of $3.20. The related compensation expense is being recognized over the three-year restricted period. The compensation expense for year ended December 31, 2012 was $0.2 million with unrecognized compensation expense of $0.7 million remaining at December 31, 2012.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11. STOCK BASED COMPENSATION (Continued)
On July 2, 2012, in connection with the issuance of the $7.5 million principal amount of 8% subordinated convertible notes, the Company granted 50,000 shares of restricted common stock with a one-year restriction on transferability to the placement agent as partial consideration for its service on the offering. The Company determined the fair value of the restricted stock to be equal to the grant date closing stock price of $3.50. The related compensation expense is included in deferred loan costs and is being amortized as interest expense over the term of the 8% subordinated convertible notes. The expense for the year ended December 31, 2012 was $0.1 million with unrecognized expense of $0.1 million remaining at December 31, 2012.
The following summarizes the Company's restricted stock activity for the year ended December 31, 2012:
|
Number
of Shares |
Weighted Avg.
Grant Date Fair Value |
|||||
---|---|---|---|---|---|---|---|
Unvested at January 1, 2012 |
| | |||||
Granted |
320,000 | $ | 3.25 | ||||
Stock Dividend |
16,000 | $ | 3.25 | ||||
Vested |
(52,500 | ) | $ | 3.50 | |||
Forfeited |
| | |||||
Unvested at December 31, 2012 |
283,500 | $ | 3.20 | ||||
Nonemployee Common Stock Warrants
The following summarizes the Company's non-employee common stock warrant activity for the period ended December 31, 2012 and 2011:
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
Aggregate
Intrinsic Value |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2012 |
1,153,574 | $ | 3.85 | |||||||||
Stock Dividend |
94,054 | $ | 3.85 | |||||||||
Granted |
777,500 | $ | 3.82 | |||||||||
Exercised |
(28,941 | ) | $ | 1.26 | ||||||||
Expired |
(34,730 | ) | $ | 3.82 | ||||||||
Outstanding at December 31, 2012 |
1,961,457 | $ | 3.78 | 1.7 years | 1,934,826 | |||||||
Exercisable at December 31, 2012 |
1,950,957 | $ | 3.77 | 1.7 years | 1,930,836 | |||||||
109
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11. STOCK BASED COMPENSATION (Continued)
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
Aggregate
Intrinsic Value |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2011 |
953,074 | $ | 3.13 | |||||||||
Stock Dividend |
86,236 | $ | 3.84 | |||||||||
Granted |
300,000 | $ | 4.91 | |||||||||
Exercised |
(179,452 | ) | $ | 1.78 | ||||||||
Expired |
(6,284 | ) | $ | 3.11 | ||||||||
Outstanding at December 31, 2011 |
1,153,574 | $ | 3.85 | 2.0 years | 437,432 | |||||||
Exercisable at December 31, 2011 |
1,153,574 | $ | 3.85 | 2.0 years | 437,432 | |||||||
During 2012 and 2011, the Company granted warrants to nonemployees with a weighted-average per share fair value estimated at $0.99 and $1.45, respectively. The warrants have contractual terms between two and ten years. The majority vested immediately on the date of grant.
NOTE 12. OFFERING WARRANTS
A summary of the status of the Company's warrants issued in connection with the initial public offering is presented below:
|
December 31,
2011 |
|||
---|---|---|---|---|
Beginning balance |
2,927,925 | |||
Stock Dividend |
| |||
Exercised |
(2,897,149 | ) | ||
Redeemed |
(30,776 | ) | ||
Ending balance |
| |||
In August 2011, the Company called for redemption all of the outstanding offering warrants issued in the initial public offering.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13. INCOME TAXES
The provision for income taxes attributable to continuing operations for the years ended December 31, 2012 and December 31, 2011 is presented below.
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
(Amounts in 000's)
|
2012 | 2011 | |||||
Current Tax Expense (Benefit): |
|||||||
Federal |
$ | (97 | ) | $ | | ||
State |
90 | 215 | |||||
|
$ | (7 | ) | $ | 215 | ||
Deferred Tax Expense: |
|||||||
Federal |
$ | | $ | | |||
State |
104 | 0 | |||||
|
$ | 104 | $ | 0 | |||
Total income tax expense |
$ | 97 | $ | 215 | |||
The income tax expense applicable to continuing and discontinued operations is presented below.
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
(Amounts in 000's)
|
2012 | 2011 | |||||
Income tax expense on continuing operations |
$ | 97 | $ | 215 | |||
Income tax expense (benefit) on discontinued operations |
(20 | ) | (191 | ) | |||
Total income tax expense |
$ | 77 | $ | 24 | |||
At December 31, 2012 and 2011, the tax effect of significant temporary differences representing deferred tax assets and liabilities are as follows:
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
(Amounts in 000's)
|
2012 | 2011 | |||||
Net current deferred tax asset: |
|||||||
Allowance for doubtful accounts |
$ | 1,265 | $ | 494 | |||
Accrued expenses |
464 | 429 | |||||
|
1,729 | 923 | |||||
Net long-term deferred tax asset (liability): |
|||||||
Net operating loss carry forwards |
4,825 | 3,896 | |||||
Noncontrolling interests |
| 38 | |||||
Property, equipment & intangibles |
(1,091 | ) | (1,434 | ) | |||
Stock based compensation |
848 | 832 | |||||
Convertible debt adjustments |
1,876 | 1,074 | |||||
Other |
(277 | ) | 648 | ||||
|
6,181 | 5,054 | |||||
Total deferred tax assets |
7,910 | 5,977 | |||||
Valuation allowance |
(8,014 | ) | (6,063 | ) | |||
Net deferred tax liability |
$ | (104 | ) | $ | (86 | ) | |
111
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13. INCOME TAXES (Continued)
The items accounting for the differences between income taxes computed at the federal statutory rate and the provision for income taxes are as follows:
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
|
2012 | 2011 | |||||
Federal income tax at statutory rate |
34.0 | % | 34.0 | % | |||
State and local taxes |
(0.6 | )% | (3.1 | )% | |||
Consolidated VIE LLCs |
(1.5 | )% | (7.6 | )% | |||
Nondeductible expenses |
(0.8 | )% | (0.9 | )% | |||
Other |
1.7 | % | 0.4 | % | |||
Change in valuation allowance |
(33.5 | )% | (26.3 | )% | |||
Effective tax rate |
(0.7 | )% | (3.5 | )% | |||
As of December 31, 2012 AdCare had consolidated federal net operating loss ("NOL") carry forwards of $14.2 million. These NOLs begin to expire in 2018 through 2032 and currently are offset by a full valuation allowance.
Given the Company's historical net operating losses, a full valuation allowance has been established on the Company's net deferred tax assets. The Company has generated additional deferred tax liabilities related to its tax amortization of certain acquired indefinite lived intangible assets because these assets are not amortized for book purposes. The tax amortization in current and future years gives rise to a deferred tax liability which will only reverse at the time of ultimate sale or book impairment. Due to the uncertain timing of this reversal, the temporary differences associated with indefinite lived intangibles cannot be considered a source of future taxable income for purposes of determining a valuation allowance. As such, the deferred tax liability cannot be used to support an equal amount of the deferred tax asset related to the NOL carry forward ("naked credit"). This resulted in recognizing deferred Federal tax expense of $0.1 million for each of the years ended December 31, 2012 and 2011, and a deferred tax liability of $0.1 million as of both December 31, 2012 and 2011.
NOTE 14. COMMITMENTS AND CONTINGENCIES
Regulatory Matters
Laws and regulations governing Federal Medicare and State Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from certain governmental programs. The Company believes that it is in compliance in all material respects with all applicable laws and regulations.
A significant portion of the Company's revenue is derived from Medicaid and Medicare, for which reimbursement rates are subject to regulatory changes and government funding restrictions. Any significant future change to reimbursement rates could have a material effect on the Company's operations.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)
Operating Leases
The Company leases certain office space and 11 skilled nursing facilities under non-cancelable operating leases, most of which have initial lease terms of ten to twelve years with rent escalation clauses and provisions for payments by the Company of real estate taxes, insurance and maintenance costs. Eight of the facilities were initiated in the third quarter of 2010, and two additional in the fourth quarter of 2010. One lease agreement was initiated in the fourth quarter of 2011. For the years ended December 31, 2012 and 2011, facility rent expense totaled $7.7 million and $7.2 million, respectively.
Eight of the Company's facilities are operated under a single master lease arrangement. The lease has a term of ten years into 2020. Under the master lease, a breach at a single facility could subject one or more of the other facilities covered by the same master lease to the same default risk. Failure to comply with regulations or governmental authorities, such as Medicare and Medicaid provider requirements, is a default under the Company's master lease agreement. In addition, other potential defaults related to an individual facility may cause a default of the entire master lease agreement. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord. The Company is not aware of any defaults as of December 31, 2012.
Two of the Company's facilities are operated under a separate lease agreement. The lease is a single indivisible lease; therefore, a breach at a single facility could subject the second facility to the same default risk. The lease has a term of 12 years into 2022 and includes covenants and restrictions. A commitment is included that requires minimum capital expenditures of $375 per licensed bed per lease year at each facility which amounts to $0.1 million per year for both facilities. In recent periods, including as of December 31, 2012, the Company has not been in compliance with certain financial and administrative covenants of this lease agreement. The Company has obtained a waiver for each instance of such non-compliance.
Future minimum lease payments for each of the next five years ending December 31 are as follows:
|
(Amounts in
000's) |
|||
---|---|---|---|---|
2013 |
$ | 8,049 | ||
2014 |
7,569 | |||
2015 |
7,407 | |||
2016 |
7,274 | |||
2017 |
7,180 | |||
Thereafter |
21,639 | |||
Total |
$ | 59,118 | ||
The Company has also entered into lease agreements for various equipment used in the facilities. These leases are included in future minimum lease payments above.
113
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)
Legal Matters
The skilled nursing business involves a significant risk of liability due to the age and health of the Company's patients and residents and the services the Company provides. The Company and others in the industry are subject to an increasing number of claims and lawsuits, including professional liability claims, which may allege that services have resulted in personal injury, elder abuse, wrongful death or other related claims. The defense of these lawsuits may result in significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards.
In addition to the potential lawsuits and claims described above, the Company is also subject to potential lawsuits under the Federal False Claims Act and comparable state laws alleging submission of fraudulent claims for services to any healthcare program (such as Medicare) or payer. A violation may provide the basis for exclusion from federally funded healthcare programs. As of December 31, 2012, the Company does not have any material loss contingencies recorded or requiring disclosure based upon the evaluation of the probability of loss from known claims, except as disclosed below.
In 2012, the Company was named as a defendant in two related lawsuits asserting breach of contract claims arising out of consulting agreements executed in 2010 in connection with the Company's becoming the operator of certain leased facilities that were previously operated by a third-party. The same transaction was already the subject of litigation commenced by the Company in 2011 against several entities which had previously operated the leased facilities. After becoming the operator of the leased facilities, the Company incurred certain losses for pre-closing activities for which the Company was entitled to indemnification. The Company sought to enforce its rights to indemnity by filing a lawsuit against the former operators of the leased facilities for breach of contract and related tort claims, and the Company proceeded to set off its losses against payment due under the consulting agreements referenced above. The defendants filed counterclaims against the Company. In the third quarter of 2012, a settlement was reached with respect to the three lawsuits that permitted the Company to eliminate a previously accrued liability in light of the lower than expected settlement amount of $1.0 million resulting in a non-cash settlement gain of $0.4 million recognized in the third quarter of 2012. During the third quarter of 2012, $0.3 million of the settlement was paid and the majority of the remaining balance will be paid within one year.
Commitments
Special Termination Benefits
The Company incurred certain salary retirement and continuation costs of $1.5 million related to separation agreements with certain of the Company's former officers. The benefits include wage continuation and fringe benefits which are to be paid out to these former employees over various future periods ranging from a 6-month period to a 24-month period. The remaining unpaid balance accrued as of December 31, 2012 is $0.3 million.
Commitment to Future Lease Payments
A leased skilled nursing facility has signed a security agreement associated with the lessor, Covington Realty, LLC, in conjunction with the lessor's refinancing of the project through HUD. The commitment gives the lender the right to pursue the facility for unpaid lease payments to the lessor.
114
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15. THIRD-PARTY REIMBURSEMENT
Medicare
Payments for Medicare resident services are made under a prospective payment system. There is no retroactive adjustment to allowable cost. The Company is paid one of several prospectively set rates that vary depending on the resident's service needs. Payment rates are established on a federal basis by the Centers for Medicare & Medicaid Services ("CMS"). The final settlement process is primarily a reconciliation of services provided and rates paid. As a result, no material settlement estimates are expected.
Medicaid
Payments for Medicaid resident services are calculated and made under a prospective reimbursement system. Payment rates are based on actual cost, limited by certain ceilings, adjusted by a resident service needs factor and updated for inflation. The direct care portion of the rate can be adjusted prospectively for changes in residents' service needs. While interim rates are subject to reconsideration and appeal, once this process is completed, they are not subject to subsequent retroactive adjustment. However, the states in which the Company operates have the opportunity to audit the cost report used to establish the prospective rate. If the state departments discover non-allowable or misclassified costs that resulted in overpayments to the Company, the funds may be recovered by the state departments through the final rate recalculation process. For the years ended December 31, 2012 and 2011, management believes that adequate provisions have been made for potential adjustments.
Laws and Regulations
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. The Company believes that it is materially in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigation involving allegations of potential wrongdoing. While no such regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as significant regulatory action including fines, penalties and exclusion from the Medicare and Medicaid programs.
NOTE 16. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The following are the major categories of assets and liabilities measured at fair value on a recurring basis during the years ended December 31, 2012 and 2011, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).
Amounts in (000's)
|
Level 1: | Level 2: | Level 3: | Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Derivative Liability2012 |
$ | | $ | | $ | 3,630 | $ | 3,630 | |||||
Derivative Liability2011 |
$ | | $ | | $ | 1,889 | $ | 1,889 |
115
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 16. FAIR VALUE MEASUREMENTS (Continued)
Following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period ended December 31, 2012:
Amounts in (000's)
|
Derivative
Liability |
|||
---|---|---|---|---|
Beginning Balance |
$ | 1,889 | ||
Debt extinguishment |
| |||
Derivative loss |
1,741 | |||
Ending Balance |
$ | 3,630 | ||
The derivative liability is the result of the Company issuing subordinated convertible notes in 2010. The notes are convertible into shares of common stock of the Company at a current conversion price of $3.73 (adjusted for various stock dividends) that is subject to future reductions if the Company issues equity instruments at a lower price. Because there is no minimum conversion price, an indeterminate number of shares may be issued in the future. Accordingly, the Company determined an embedded derivative existed that was required to be bifurcated from the subordinated convertible notes and accounted for separately as a derivative liability recorded at fair value. The Company estimates the fair value of the derivative liability using the Black-Scholes-Merton option-pricing model with changes in fair value being reported in the consolidated statement of operations. This model requires certain key inputs that are significant unobservable inputs (Level 3).
The Company currently has no plans to issue equity instruments at a price lower than the conversion price of $3.73, the current conversion price of the subordinated convertible promissory notes issued in 2010. The derivative liability is a non-cash item. Upon conversion to common stock, the debt and derivative liability will be extinguished, the current fair market value of the common stock will be reflected as common stock and additional paid-in capital, and there may be a resulting gain or loss on the debt extinguishment. If not converted to common stock, upon settlement at the date of maturity, the debt and derivative liability will result in a gain on debt extinguishment for the remaining fair value of the derivative.
Nonrecurring Fair Value Measurements
During 2011, the Company recorded a goodwill impairment charge of $1.8 million which is reflected in the loss from discontinued operations. The impairment charge was a result of the required goodwill impairment test that requires the goodwill to be written down to the estimate of the implied fair value. The goodwill was measured using primarily an income approach with significant unobservable inputs (Level 3).
NOTE 17. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
The Company's operations are concentrated in the long-term care market, which is a heavily regulated environment. The operations of the Company are subject to the administrative directives, rules and regulations of federal and state regulatory agencies, including, but not limited to, CMS, and the Department of Health and Aging in all states in which the Company operates. Such administrative directives, rules and regulations, including budgetary reimbursement funding, are subject to change by
116
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 17. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS (Continued)
an act of Congress, the passage of laws by the General Assembly or an administrative change mandated by one of the executive branch agencies. Such changes may occur with little notice or inadequate funding to pay for the related costs, including the additional administrative burden, to comply with a change.
Given the significant concentration of revenue from third-party payors, including Medicare and Medicaid programs, along with recent healthcare reform and budgetary constraints of governmental agencies, there is potential for reimbursement rate reductions in the near term that could materially and adversely impact the Company's revenue and profitability.
The Company has 100% of its 3,804 skilled nursing facility beds that it owns or leases certified under the Medicaid and Medicare programs. A summary of occupancy utilization and net revenues for these nursing facility beds is as follows:
For the Years Ended
|
Percent of
Total Occupancy |
Percent of
Long-Term Care Receivables |
Percent of
Patient Care Revenue |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Medicaid |
||||||||||
December 31, 2012 |
73 | % | 39 | % | 54 | % | ||||
December 31, 2011 |
76 | % | 35 | % | 56 | % | ||||
Medicare |
||||||||||
December 31, 2012 |
14 | % | 30 | % | 29 | % | ||||
December 31, 2011 |
14 | % | 30 | % | 31 | % | ||||
Other Payers |
||||||||||
December 31, 2012 |
13 | % | 31 | % | 17 | % | ||||
December 31, 2011 |
10 | % | 35 | % | 13 | % |
NOTE 18. DEFERRED COMPENSATION PLAN
The Company maintains a non-qualified deferred compensation plan available to a select group of management or highly compensated employees. Contributions to the plan are made by the participants. The Company does not provide any matching contributions. The benefits of the plan are payable upon the employee's separation of employment with the Company.
As of December 31, 2012 and 2011, the Company had a gross asset of $.01 million and $0.3 million, respectively, to reflect the amount of investments held in the plan and a corresponding liability acknowledging the Company's obligation to employees participating in the plan (included in other assets and other liabilities in the accompanying consolidated balance sheet). At December 31, 2011, the Company had one outstanding loan for $0.2 million. This loan was subsequently repaid in 2012. The underlying assets are recorded at fair value and primarily represent short term fixed income assets invested at the participants' direction. Contributions to and payments from the plan in 2012 and 2011 were not material.
117
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS
Summary of 2012 Acquisitions
During the year ended December 31, 2012, the Company acquired a total of eleven skilled nursing facilities and one assisted living facility described further below. The total purchase price for each acquisition is after final closing adjustments. The Company has incurred a total of $2.0 million of acquisition costs related to these acquisitions and has recorded the cost in the "Other Income (Expense)" section of the Consolidated Statements of Operations.
Eaglewood Care Center and Eaglewood Village
On January 1, 2012, the Company acquired the Eaglewood Care Center, a skilled nursing facility and the Eaglewood Village facility, an assisted living facility each located in Springfield, Ohio. The total purchase price was $12.4 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration Transferred: |
||||
Net proceeds from loans |
$ | 4,693 | ||
Seller notes |
5,000 | |||
Cash from earnest money deposits |
250 | |||
Cash (prepaid on December 30, 2011) |
2,469 | |||
Total consideration transferred |
$ | 12,412 | ||
Assets Acquired: |
||||
Land |
$ | 370 | ||
Building |
9,656 | |||
Equipment and Furnishings |
1,199 | |||
Intangible Assetsbed licenses |
1,188 | |||
Goodwill |
87 | |||
Total assets acquired |
12,500 | |||
Liabilities Assumed: |
||||
Real estate taxes and other |
(88 | ) | ||
Total identifiable net assets |
$ | 12,412 | ||
118
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Little Rock, Northridge and Woodland Hills
On April 1, 2012, the Company acquired the Little Rock, Northridge and Woodland Hills facilities, three skilled nursing facilities located in Little Rock, Arkansas. The total purchase price was $27.2 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 19,732 | ||
Cash |
5,899 | |||
Cash from earnest money deposits |
1,600 | |||
Total consideration transferred |
$ | 27,231 | ||
Assets acquired: |
||||
Land |
$ | 1,582 | ||
Building |
17,256 | |||
Equipment and furnishings |
1,620 | |||
Intangible Assetsbed licenses |
6,510 | |||
Goodwill |
312 | |||
Total assets acquired |
27,280 | |||
Liabilities assumed: |
||||
Real estate taxes and other |
(49 | ) | ||
Total identifiable net assets |
$ | 27,231 | ||
Abington Place
On April 30, 2012, the Company acquired Abington Place, a skilled nursing facility located in Little Rock, Arkansas. The total purchase price was $3.6 million.
|
(Amounts in 000s') | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 3,296 | ||
Cash from earnest money deposits |
250 | |||
Security deposit for lease/May rent |
35 | |||
Total consideration transferred |
$ | 3,581 | ||
Assets acquired: |
||||
Land |
$ | 210 | ||
Building |
225 | |||
Equipment and furnishings |
2,090 | |||
Intangible assetsbed licenses |
840 | |||
Goodwill |
235 | |||
Total assets acquired |
3,600 | |||
Liabilities assumed: |
||||
Real estate taxes and other |
(19 | ) | ||
Total identifiable net assets |
$ | 3,581 | ||
119
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Glenvue Nursing Home
On July 2, 2012, the Company acquired Glenvue Nursing, a skilled nursing facility located in Glennville, Georgia. The total purchase price was $8.2 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 6,573 | ||
Cash from earnest money deposits |
1,667 | |||
Total consideration transferred |
$ | 8,240 | ||
Assets acquired: |
||||
Land |
$ | 406 | ||
Building |
3,815 | |||
Equipment and furnishings |
285 | |||
Intangible Assetsbed licenses |
3,020 | |||
Goodwill |
720 | |||
Total assets acquired |
8,240 | |||
Total identifiable net assets |
$ | 8,240 | ||
Quail Creek Health and Rehab
On July 3, 2012, the Company acquired Quail Creek Health and Rehab a skilled nursing facility located in Oklahoma City, Oklahoma. The total purchase price was $6.2 million with assumed fair valued indebtedness of $3.2 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Assumed debt |
$ | 3,200 | ||
Cash from earnest money deposits |
3,000 | |||
Total consideration transferred |
$ | 6,200 | ||
Assets acquired: |
||||
Land |
$ | 237 | ||
Building |
3,743 | |||
Equipment and furnishings |
220 | |||
Intangible Assetsbed licenses |
1,770 | |||
Goodwill |
230 | |||
Total assets acquired |
6,200 | |||
Total identifiable net assets |
$ | 6,200 | ||
120
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Companions Specialized Care Center
On August 17, 2012, the Company acquired Companions Specialized Care Center, a skilled nursing facility located in Tulsa, Oklahoma. The total purchase price was $5.9 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 4,454 | ||
Cash from earnest money deposits |
662 | |||
Common stock issued |
750 | |||
Total consideration transferred |
$ | 5,866 | ||
Assets acquired: |
||||
Land |
$ | 780 | ||
Building |
2,588 | |||
Equipment and furnishings |
191 | |||
Intangible assetsbed licenses |
1,530 | |||
Goodwill |
799 | |||
Total assets acquired |
5,888 | |||
Liabilities assumed: |
||||
Real estate taxes and other |
(22 | ) | ||
Total identifiable net assets |
$ | 5,866 | ||
Sumter Valley Nursing and Rehab
On December 31, 2012, the Company acquired Sumter Valley Nursing and Rehab, a skilled nursing facility located in Sumter, South Carolina. The total purchase price was $5.6 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 4,215 | ||
Seller notes |
250 | |||
Cash from earnest money deposits |
1,085 | |||
Total consideration transferred |
$ | 5,550 | ||
Assets acquired: |
||||
Land |
$ | 190 | ||
Building |
2,797 | |||
Equipment and furnishings |
140 | |||
Intangible Assetsbed licenses |
2,016 | |||
Goodwill |
407 | |||
Total assets acquired |
5,550 | |||
Total identifiable net assets |
$ | 5,550 | ||
121
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Georgetown Healthcare and Rehab
On December 31, 2012, the Company acquired Georgetown Healthcare and Rehab, a skilled nursing facility located in Georgetown, South Carolina. The total purchase price was $4.2 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 1,968 | ||
Seller notes |
1,850 | |||
Cash from earnest money deposits |
382 | |||
Total consideration transferred |
$ | 4,200 | ||
Assets acquired: |
||||
Land |
$ | 20 | ||
Building |
2,179 | |||
Equipment and furnishings |
160 | |||
Intangible Assetsbed licenses |
1,470 | |||
Goodwill |
371 | |||
Total assets acquired |
4,200 | |||
Total identifiable net assets |
$ | 4,200 | ||
Northwest Nursing Center
On December 31, 2012, the Company acquired Northwest Nursing Center, a skilled nursing facility located in Oklahoma City, Oklahoma. The total purchase price was $3.0 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 2,850 | ||
Cash from earnest money deposits |
150 | |||
Total consideration transferred |
$ | 3,000 | ||
Assets acquired: |
||||
Land |
$ | 155 | ||
Building |
1,045 | |||
Equipment and furnishings |
185 | |||
Intangible Assetsbed licenses |
1,325 | |||
Goodwill |
290 | |||
Total assets acquired |
3,000 | |||
Total identifiable net assets |
$ | 3,000 | ||
122
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Summary of 2011 Acquisitions
During the year ended December 31, 2011, the Company has acquired a total of fifteen skilled nursing facilities and two assisted living facilities described further below. For the year ended December 31, 2011, the Company has incurred a total of approximately $2.3 million of acquisition costs net of approximately $1.1 million, net of bargain purchase gains for a net amount of $1.2 million in the "Other Income" section of the consolidated statements of operations. Acquisition costs include non-cash charges of $0.2 million from the issuance of 36,337 shares of common stock with a per share market value of $5.68. As discussed in Note 1, Acquisition Policy, in acquisitions of facilities in states where the acquired CON/bed licenses are not transferable from the facility acquired the fair value of the CON/bed licenses are classified together as building.
All of our 2011 acquisitions were in conjunction with our growth strategy for acquiring nursing facilities and optimizing performance. The Company issued various notes to complete these transactions.
Mountain Trace
On January 1, 2011, Mountain Trace Nursing ADK, LLC, a wholly owned subsidiary of AdCare, commenced operations of the Mountain Trace facility, a skilled nursing facility located in Sylva, North Carolina, which was acquired on December 31, 2010, for a purchase price of $6.2 million after final closing adjustments. In connection with the acquisition, the Company recognized a total gain of approximately $1.1 million, as the transaction resulted in a bargain purchase because the seller was motivated to sell the facility in order to retire and restructure the composition of their facilities in certain of the states in which they operate.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 4,945 | ||
Cash from earnest money deposits |
250 | |||
Cash |
975 | |||
Total consideration transferred |
$ | 6,170 | ||
Assets acquired: |
||||
Land |
$ | 320 | ||
Building |
6,806 | |||
Equipment and furnishings |
149 | |||
Total identifiable net assets |
$ | 7,275 | ||
Less: gain on bargain purchase |
(1,105 | ) | ||
Total consideration |
$ | 6,170 | ||
Autumn Breeze Healthcare Center, Southland Care Center and College Park Healthcare Center
On April 29, 2011, Erin Property Holdings, LLC, a wholly owned subsidiary of AdCare, acquired the Southland Care Center, a skilled nursing facility located in Dublin, Georgia. In addition, on April 29, 2011, Mt. Kenn Property Holdings, LLC, a wholly owned subsidiary of AdCare, acquired the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Autumn Breeze Healthcare Center, a skilled nursing facility located in Marietta, Georgia. On May 31, 2011, CP Property Holdings, LLC, a wholly owned subsidiary of AdCare, acquired the College Park Healthcare Center, a skilled nursing facility located in College Park, Georgia. The total purchase price for all three facilities was $17.9 million after final closing adjustments.
Through separate Operations Transfer Agreements, the Company obtained control of Autumn Breeze Healthcare and Southland Care Center effective May 1, 2011. The Company had paid $0.5 million in earnest money upon entering the purchase agreement and an additional $0.4 million to extend the closing date to April 29, 2011. A final Operations Transfer Agreement allowed the Company to obtain control of the College Park Care Center effective June 1, 2011.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 12,439 | ||
Cash from earnest money deposits |
900 | |||
Cash |
4,603 | |||
Total consideration transferred |
$ | 17,942 | ||
Assets acquired: |
||||
Land |
$ | 675 | ||
Building |
17,041 | |||
Equipment and furnishings |
226 | |||
Total identifiable net assets |
$ | 17,942 | ||
The Living Center, Kenwood Manor, Enid Senior Care, Betty Ann Nursing Center, and Grand Lake Villa ("Oklahoma VIE's")
On August 1, 2011, five skilled nursing facilities located in Oklahoma, were purchased for an aggregate purchase price of $11.2 million, after closing adjustments by companies owned and operated by Christopher Brogdon, the Company's Vice Chairman and Chief Acquisition Officer, and others. These facilities are known as the Living Center, Kenwood Manor, Enid Senior Care, Betty Ann Nursing Center and Grand Lake Villa.
Even though the Company does not have any equity interest in these facilities, the Company determined that it is a variable interest entity as the ownership entity does not have sufficient equity at risk. Given the related party relationship with Christopher Brogdon, the common shareholder and other variable interests, the Company determined that it is the primary beneficiary and consolidation of
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
the facilities is required. The Company initially consolidated the Oklahoma VIE's on August 1, 2011, the date of acquisition and initial operations.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 9,459 | ||
Cash from earnest money deposits |
200 | |||
Cash |
1,559 | |||
Total consideration transferred |
$ | 11,218 | ||
Assets acquired: |
||||
Land |
$ | 661 | ||
Building |
9,745 | |||
Equipment and furnishings |
844 | |||
Total assets acquired |
$ | 11,250 | ||
Liabilities assumed |
||||
Real estate taxes |
$ | (32 | ) | |
Total identifiable net assets |
$ | 11,218 | ||
Homestead Manor, River Valley Center, Benton Manor, Heritage Park Center and Rose Nursing
On September 1, 2011, the Company acquired and obtained effective control of four skilled nursing facilities and a corporate office building located in Arkansas. In addition, effective November 1, 2011, the Company acquired the rights to a leased skilled nursing facility located in Missouri. The total purchase price for all five facilities was $19.9 million after final closing adjustments.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 14,582 | ||
Seller note |
2,400 | |||
Cash from earnest money deposits |
350 | |||
Cash |
2,607 | |||
Total consideration transferred |
$ | 19,939 | ||
Assets acquired: |
||||
Land |
$ | 1,095 | ||
Building |
17,632 | |||
Equipment and furnishings |
773 | |||
Intangible assetslease rights |
500 | |||
Total assets acquired |
$ | 20,000 | ||
Liabilities assumed |
||||
Real estate taxes |
$ | (61 | ) | |
Total identifiable net assets |
$ | 19,939 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19. ACQUISITIONS (Continued)
Stone County Nursing and Rehabilitation and Stone County Residential Care Facility
On November 30, 2011, the Company acquired and obtained effective control of one skilled nursing facility and one assisted living facility both located in Mountain View, Arkansas. The total purchase price was $4.3 million.
|
(Amounts in 000's) | |||
---|---|---|---|---|
Consideration transferred: |
||||
Net proceeds from loans |
$ | 2,909 | ||
Seller note |
750 | |||
Cash from earnest money deposits |
300 | |||
Cash |
291 | |||
Total consideration transferred |
$ | 4,250 | ||
Assets acquired: |
||||
Land |
$ | 194 | ||
Building |
3,789 | |||
Equipment and furnishings |
267 | |||
Total assets acquired |
$ | 4,250 | ||
Unaudited Pro forma Financial Information
The above acquisitions have been included in the consolidated financial statements since the dates of the acquisition. Combined revenue for all 2012 acquisitions since date of acquisition is $35.1 million and resulted in loss from operations of $0.3 million for the year ended December 31, 2012.
The following table represents pro forma results of consolidated operations as if all of the 2012 acquisitions had occurred at the beginning of the earliest fiscal year being presented, after giving effect to certain adjustments.
|
December 31, | ||||||
---|---|---|---|---|---|---|---|
(Amounts in 000's)
|
2012 | 2011 | |||||
Pro forma revenue |
$ | 228,326 | $ | 226,429 | |||
Pro forma operating expenses |
$ | 225,447 | $ | 219,516 | |||
Pro forma income from operations |
$ | 2,879 | $ | 6,913 |
The forgoing pro forma information is not indicative of what the results of operations would have been if the acquisitions had actually occurred at the beginning of the periods presented and is not intended as a projection of future results or trends.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 20. VARIABLE INTEREST ENTITIES
The Company has certain variable interest entities that are required to be consolidated because AdCare is their primary beneficiary. A "primary beneficiary" is the party in a VIE that has both of the following characteristics: (a.) The power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (b.) The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
For a further description of the VIEs, see the sections of Note 22 to the Consolidated Financial Statements included in this Annual Report titled "Riverchase" and "Oklahoma Owners".
In 2011, the Company concluded it was the primary beneficiary of the Oklahoma Owners and pursuant to FASB ASC Topic 810-10, Consolidation-Overall , consolidated the Oklahoma Owners in its 2011 consolidated financial statements. During the process of finalizing the 2012 financial statements, the Company re-assessed its prior conclusion that it should consolidate the Oklahoma Owners. In the reassessment process, the Company concluded that it should not have consolidated the Oklahoma Owners. In the accompanying consolidated financial statements the Company has deconsolidated the Oklahoma Owners effective January 1, 2012 and the balance sheet, operations and cash flows of the Oklahoma Owners are not included in the Company's 2012 consolidated financial statements. The Company further concluded that including the Oklahoma Owners in its 2011 financial statements was not material to such consolidated financial statements and therefore no adjustments have been made to the previously issued 2011 financial statements.
In July 2012, the Company amended the Option Agreement to purchase Riverchase Village facility to extend the Company's option exercise period to June 22, 2013. (See Note 23Subsequent Events for discussion of recent events.) The following summarizes the assets and liabilities of the variable interest entities included in the consolidated balance sheets:
Riverchase Village FacilityAssets and Liabilities:
(Amounts in 000's)
|
December 31,
2012 |
December 31,
2011 |
|||||
---|---|---|---|---|---|---|---|
Cash |
$ | (38 | ) | $ | 16 | ||
Accounts receivable |
| 10 | |||||
Restricted investments |
343 | 451 | |||||
Property and equipment, net |
5,974 | 5,999 | |||||
Other assets |
391 | 432 | |||||
Total assets |
$ | 6,670 | $ | 6,908 | |||
Accounts payable |
$ | 1,316 | $ | 740 | |||
Accrued expenses |
67 | 174 | |||||
Current portion of notes payable |
92 | 99 | |||||
Notes payable, net of current portion |
6,033 | 6,077 | |||||
Noncontrolling interest |
(838 | ) | (182 | ) | |||
Total liabilities |
$ | 6,670 | $ | 6,908 | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 20. VARIABLE INTEREST ENTITIES (Continued)
The balances related to the Oklahoma Owners variable interest entities that were consolidated as of December 31, 2011 but that the Company subsequently determined should not be consolidated were as follows:
(Amounts in 000's)
|
December 31, 2011 | |||
---|---|---|---|---|
Cash |
180 | |||
Accounts receivable |
800 | |||
Property and equipment, net |
9,988 | |||
Goodwill |
1,123 | |||
Other assets |
641 | |||
Total assets |
12,732 | |||
Accounts payable |
458 | |||
Accrued expenses |
356 | |||
Current portion of notes payable |
189 | |||
Notes payable, net of current portion |
12,389 | |||
Noncontrolling interest |
(660 | ) | ||
Total liabilities |
12,732 | |||
NOTE 21. BENEFIT PLANS
The Company sponsors a 401(k) plan, which provides retirement benefits to eligible employees. All employees are eligible once they reach age 21 and complete 1 year of eligible service. The Company matches employee contributions at 50% up to 2% of the employee's salary. Total matching contributions during 2012 and 2011 were approximately $0.1 million for both years. Given the significant acquisitions and resulting increase in the number of employees, as new employees become eligible and are added as participants in the 401(k) plan in the future, the Company expects the employer match obligation to increase.
The Company is pursuing remedial actions under the Voluntary Correction Programs ("VCP") of the Employee Compliance Resolution System contained in Internal Revenue Service ("IRS") Revenue Procedure 2008-50 to conform the 401(k) plan's terms to the plan's administration. The acceptance by the IRS of the Company's proposed correction is unknown at this time. A denial by the IRS of the proposed correction could result in financial liability on the part of the Company. Management believes the ultimate financial impact of the resolution is less than $0.1 million and that the matter will be resolved before the end of 2014.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 22. RELATED PARTY TRANSACTIONS
Riverchase
On April 9, 2010, Riverchase Village ADK, LLC ("Riverchase"), then a wholly owned subsidiary of the Company, entered into a Purchase Agreement with an Oklahoma limited liability company controlled by a bank ("Riverchase Seller") to acquire the assets of Riverchase Village, a 105-bed assisted living facility located in Hoover, Alabama, for a purchase price of approximately $5.0 million. On June 22, 2010, the Company assigned to Christopher Brogdon 100% of the membership interests in Riverchase. On June 25, 2010, Riverchase, then owned by Mr. Brogdon, purchased Riverchase Village pursuant to the terms of the Purchase Agreement.
In connection with financing of the acquisition of Riverchase Village, Riverchase borrowed from the Medical Clinic Board of the City of Hoover the proceeds from the issuance of $5.9 million First Mortgage Healthcare Facility Revenue Bonds (Series 2010 A) and $0.5 million First Mortgage Revenue Bonds (Series B), which proceeds were used to acquire Riverchase Village, pay the cost of certain repairs and improvements to Riverchase Village, fund certain services and pay the cost of the issuance of the bonds. As part of the financing, AdCare guaranteed Riverchase's obligations under the bonds. In June 2010, Riverchase Seller refunded to AdCare the $250,000 of earnest money it had deposited in connection with the Riverchase Village transaction.
As consideration for the assignment of 100% of the membership interests in Riverchase to Mr. Brogdon and AdCare's guaranteeing the bonds, Mr. Brogdon granted to Hearth & Home of Ohio, Inc. ("Hearth & Home"), a wholly owned subsidiary of AdCare, an exclusive and irrevocable option pursuant to an Option Agreement to acquire Riverchase through June 22, 2012 for an exercise price of $100,000 and otherwise under the same terms and conditions set forth in the Purchase Agreement. In addition, a wholly owned subsidiary of AdCare entered into a five-year year Management Agreement with Riverchase pursuant to which such subsidiary supervises the management of the Riverchase Village facility for a monthly fee equal to 5% of the monthly gross revenues of the Riverchase Village facility. On June 22, 2013, the Management Agreement was mutually terminated by Riverchase and the Company.
On July 26, 2012, Hearth & Home and Mr. Brogdon amended the Option Agreement to extend the last date on which the option provided for thereby may be exercised from June 22, 2012 to June 22, 2013. On June 22, 2013, Hearth & Home and Mr. Brogdon amended the Option Agreement to extend the last date on which the Company may exercise the option provided for thereby may be exercised from June 22, 2013 to June 22, 2014.
Office Subleases and Purchase
Roswell Office Space. From April 2011 through November 2012, the Company subletted from JRT Group Properties, LLC ("JRT") on a month-to-month basis Building 1145 of the Offices at Hembree, a condominium used by the Company as its service center and administrative offices, located in Roswell, Georgia (the "Hembree Facility"). Mr. Brogdon's son is a one-third owner of JRT. Pursuant to this sublease, the Company paid to JRT on a monthly basis base rent of approximately $10,458. The Company paid an aggregate of $115,035 and $94,120 in rent under this sublease in 2012 and 2011, respectively. The Company also paid to unrelated third parties amounts for utilities, property taxes and building association dues with respect to the Hembree Facility.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 22. RELATED PARTY TRANSACTIONS (Continued)
On June 4, 2012, ADK Hembree Road Property, LLC ("ADK Hembree"), wholly owned subsidiary of AdCare, entered into a Purchase Agreement with JRT to acquire the Hembree Facility. On November 30, 2012, ADK Hembree acquired the Hembree Facility from JRT pursuant to the Purchase Agreement for an aggregate purchase price of $1,083,781 and, in connection therewith, ADK Hembree issued a promissory note in favor of Fidelity Bank for a principal amount of $1,050,000.
Edwards Redeemer and Whispering Pines
In May 2011, First Commercial Bank and Brogdon Family, LLC, an entity owned and controlled by Mr. Brogdon, entered into a Purchase and Sale Agreement pursuant to which Brogdon Family, LLC had the right to acquire six skilled nursing facilities located in Oklahoma for an aggregate purchase price of $16.0 million. These facilities were Edwards Redeemer Nursing Center, Harrah Nursing Center, Northwest Nursing Center, Whispering Pines Nursing Center, McLoud Nursing Center and Meeker Nursing Center. In October 2011, Brogdon Family, LLC, assigned all of its rights under the Purchase and Sale Agreement to AdCare Property Holdings, LLC.
In October 2012, AdCare Holdings assigned to Edwards Redeemer and ER Nursing (then both wholly owned subsidiaries of AdCare) all of its right under that certain Purchase and Sale Agreement to purchase the Edwards Redeemer Nursing Center. The Edwards Assignees agreed to assume all obligations of AdCare Holdings under the Purchase and Sale Agreement with respect to the Edwards Redeemer Nursing Center, including reimbursement for out-of-pocket costs. In connection therewith: (i) AdCare Holdings (as the owner of all of the issued and outstanding membership interests of Edward Redeemer) assigned all of its interest in Edwards Redeemer to Mr. Brogdon; and (ii) AdCare Holdings assigned to WP Nursing, LLC, an entity owned and controlled by Mr. Brogdon, all of AdCare Holding's right under the Purchase and Sale Agreement to purchase the Whispering Pines Nursing Center. WP Oklahoma Nursing, LLC has agreed to assume all obligations of the Company under the Purchase and Sale Agreement with respect to the Whispering Pines Nursing Center. In connection with the assignment with respect to the Whispering Pines Nursing Center, the Company has recorded a receivable of less than $0.1 million.
In December 2012, ER Nursing (still a wholly owned subsidiary of AdCare and the licensed operator of the Edwards Redeemer Nursing Center) entered into a Facility Lease with Edwards Redeemer (now owned and controlled by Mr. Brogdon) pursuant to which ER Nursing leases to Edwards Redeemer the operations of the Edwards Redeemer Nursing Center. In connection with entering into the Facility Lease, ER Nursing also entered into a Management Agreement with New Beginnings pursuant to which New Beginnings agreed to manage the Edwards Redeemer Nursing Center for a monthly fee equal to five percent (5%) of the aggregate gross revenues of the Edwards Redeemer Nursing Center. The Management Agreement terminates upon the Approval Date, and ER Nursing may terminate the Management Agreement at any time. ER Nursing also entered into an Operations and Indemnification Agreement with the Edwards Indemnitors, pursuant to which the Edwards Indemnitors have agreed to indemnify the Company for any of its losses: (x) arising out of the Management Agreement; or (y) resulting from any services provided by New Beginnings at or for the benefit of the Edwards Redeemer Nursing Center.
Pursuant to the Lease, ER Nursing will pay ER Property monthly rent in an amount equal to one hundred-twenty percent (120%) of the monthly payment of principal and interest due to the lender holding a first priority mortgage on the Edwards Redeemer Nursing Center; provided, however, that
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 22. RELATED PARTY TRANSACTIONS (Continued)
pursuant to the Operations and Indemnification Agreement, the Edwards Indemnitors will indemnify the Company for any rent expenses arising out of the Lease. The Lease terminates upon the Approval Date.
Oklahoma Owners
Effective August 1, 2011, the Oklahoma Owners, who are controlled by Mr. Brogdon and his spouse, Connie Brogdon, acquired five skilled nursing facilities located in Oklahoma. In connection with the closing of this acquisition: (i) the Company paid closing costs on behalf of the Oklahoma Owners in the amount of $56,894 (which amount was refunded to the Company in February 2012); and (ii) AdCare Oklahoma Management, LLC, a wholly-owned subsidiary of the Company ("AdCare Oklahoma"), entered into a five-year year Management Agreement with the Oklahoma Owners pursuant to which AdCare Oklahoma supervises the management of the Oklahoma facilities for a monthly fee equal to 5% of the monthly gross revenues of the Oklahoma facilities.
Gemino Oklahoma Management Agreement
On December 20, 2012, the Oklahoma Owners entered into a Credit Agreement with Gemino. Under the terms of the agreement, Gemino provided a $1.0 million senior secured revolving line of credit. Pursuant to a subordination agreement, the Company has agreed to subordinate its right to payment of all obligations owing by the Oklahoma Owners to Gemino. The Company may accept the fees payable by the Oklahoma Owners under the management agreement so long as no event of default or unmatured event of default has occurred or is continuing under the credit agreement.
Red Rose Facility
In October 2011, pursuant to the terms of an Assignment of Lease and Landlord's Consent, Rose Missouri Nursing, LLC, a wholly owned subsidiary of the Company, became the tenant and operator of the Red Rose facility, a 90-bed skilled nursing facility located in Cassville, Missouri. In connection with this transaction, Mr. Brogdon and his spouse, Connie Brogdon, each guaranteed the performance of the Company's obligations, including payment obligations, under the Lease. In consideration of these guaranties, the Company paid to Mr. Brogdon the amount of $25,000 as a guaranty fee.
Golden Years Manor
In January 2012, a wholly owned subsidiary of the AdCare entered into a Purchase and Sale Agreement with Gyman Properties, LLC to acquire a 141-bed skilled nursing facility located in Lonoke, Arkansas, known as Golden Years Manor, for an aggregate purchase price of $6.5 million. Pursuant to the Purchase and Sale Agreement, the Company deposited approximately $0.3 million into escrow to be held as earnest money. In May 2012, the Company decided not to pursue the acquisition of Golden Years Manor because it determined that the facility no longer met its investment criteria. At the time of such determination, the Company was not entitled to reimbursement of its deposit under the Purchase and Sale Agreement. Subsequently, the Company assigned all of its rights under the Purchase and Sale Agreement to GL Nursing, LLC, an entity affiliated with Mr. Brogdon. In connection with such assignment, GL Nursing, LLC agreed to reimburse to the Company the deposit and all of its out-of-pocket costs relating to Golden Years Manor upon the closing of the acquisition, which occurred on May 31, 2012. The assignment provided the Company with an opportunity to recoup the deposit and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 22. RELATED PARTY TRANSACTIONS (Continued)
out-of-pocket costs which would otherwise have been forfeited if the assignment had not occurred. As of December 31, 2012, the Company has recorded a receivable of $0.2 million ("Remaining Balance") in connection with the assignment. The payment of the Remaining Balance shall be due and payable in (i) six equal monthly payments commencing on April 30, 2013 totaling approximately $0.1 million and continuing on the last business day of each month thereafter through September 30, 2012 and (ii) one $0.1 million payment on October 31, 2013. The then Remaining Balance may be prepaid in part or in full at any time prior to September 30, 2013.
Airplane
Since May 2012, the Company has access to an airplane on a month-to-month basis from JRT. Mr. Brogdon's son is a one-third owner of JRT. Pursuant to this arrangement, the Company pays to JRT on a monthly basis base rent of $7,000. The Company paid an aggregate of $56,000 in rent in 2012. The Company has the right to use the airplane with no limit on hours of usage and is responsible for all cost associated with maintenance such as inspections, fuel, pilot costs, and hanger rental.
Consulting Agreement
In December 2012, the Company entered into a Consulting Agreement with Mr. Brogdon pursuant to which Mr. Brogdon will be compensated by the Company for providing consulting services related to the acquisition and financing of skilled nursing facilities. The Consulting Agreement terminates on December 31, 2015 and, if it is not terminated prior to December 31, 2015, will renew automatically for successive one-year terms until terminated. As compensation for his services under the Consulting Agreement, Mr. Brogdon shall receive: (i) $10,000 per month in year one; (ii) $15,000 per month in year two; and (iii) $20,000 per month in year three of the Consulting Agreement. In addition, Mr. Brogdon shall receive a success fee of $20,000 for each completed transaction; provided, however, that barring a majority vote of the Board of Directors of the Company, such success fees on a one-year basis shall not exceed $80,000 in year one, $120,000 in year two and $160,000 in year three of the Consulting Agreement. In addition, no success fee shall be paid for transactions involving leased facilities or transactions in which the overall consideration is less than $2,500,000. In the event the Consulting Agreement is terminated by the Company without cause, the Company shall provide severance pay to Mr. Brogdon in an amount equal to eighteen (18) months of Mr. Brogdon's maximum total compensation (including success fees).
In December 2012, the Company entered into agreements to indemnify Mr. Brogdon with respect to certain personal guarantees Mr. Brogdon previously made with respect to loans on the Hembree Facility and the Red Rose facility. The Company has agreed to reimburse Mr. Brogdon for any costs, losses, damages, claims and expenses under the guarantees so long they are not due to Mr. Brogdon's gross negligence, fraud, intentional misrepresentation, willful misconduct, bad faith or criminal act.
Other than the items discussed above, there are no other material undisclosed related party transactions. For purposes of the disclosure in this Note 22, note that Mr. Brogdon is Vice Chairman of the Board of Directors, holds in excess of 10% of the outstanding common stock and, during 2011 and 2012, served as the Company's Chief Acquisitions Officer.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 23. SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and filed with the United States Securities and Exchange Commission ("SEC"). The following is a summary of the material subsequent events.
Debt Modification
On January 25, 2013, the Company entered into a Memorandum of Agreement with PrivateBank. Pursuant to the memorandum, three of the Company's subsidiaries and their collateral, which comprise the three skilled nursing facilities located in Arkansas known as the Aviv facilities, were released from liability under that certain Loan and Security Agreement, dated October 26, 2012 and as so amended, between PrivateBank and the Company. In exchange for the release from liability under the loan agreement, the Company made a payment in the amount of $0.7 million on December 28, 2012. The memorandum did not change the maximum amount that may be borrowed under the loan agreement by the Company, which remains $10.6 million.
Termination of Avalon Purchase and Sale Agreement
On February 15, 2013, the Company entered into a Purchase and Sale Agreement (the Avalon Purchase Agreement) with Avalon Health Care, LLC ("Avalon") to acquire certain land, buildings, improvements, furniture, vehicles, contracts, fixtures and equipment comprising: (i) a 180-bed skilled nursing facility known as Bethany Health and Rehab; and (ii) a 240-bed skilled nursing facility known as Trevecca Health and Rehab, both located in Nashville, Tennessee. On June 1, 2013, the Avalon Purchase Agreement was terminated due to the failure of the transaction to close by May 31, 2013. In connection with the termination of the Avalon Purchase Agreement, the Company is seeking the return of $0.4 million previously deposited earnest money escrow deposits. The Company incurred approximately $0.5 million in acquisition costs expensed in 2013.
Sale of Lincoln Lodge ALF
On February 28, 2013, the Company sold to CHP Acquisition Company, LLC ("CHP") certain land, buildings, improvements, furniture, fixtures and equipment comprising the Lincoln Lodge Retirement Residence located in Columbus, Ohio for an aggregate purchase price of $2.4 million. The purchase price consisted of, among other items, $0.4 million in cash proceeds to the Company and the repayment of the principal balance of a HUD loan with respect to the facility in an aggregate amount of $1.9 million. In connection with the sale of the facility, the Company and an affiliate of CHP also entered into an assignment and assumption agreement of leases, rents and security deposits, containing customary terms and conditions.
Preferred Stock Dividends
On March 8, 2013, the Company declared a quarterly dividend out of capital surplus of $0.68 per share on the Series A Preferred Stock. The dividend payment is equivalent to an annualized 10.875% per share, based on the $25.00 per share stated liquidation preference, accruing from January 1, 2013. The dividend was paid on April 1, 2013 to holders of the Series A Preferred Stock of record on March 21, 2013.
On June 7, 2013, the Company declared a quarterly dividend out of capital surplus of $0.68 per share on the Series A Preferred Stock. The dividend payment is equivalent to an annualized 10.875%
133
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 23. SUBSEQUENT EVENTS (Continued)
per share, based on the $25.00 per share stated liquidation preference, accruing from April 1, 2013. The dividend will be payable on July 1, 2013 to holders of the Series A Preferred Stock of record on June 20, 2013.
Conversion of Convertible Notes to Common Stock
Between March 4, 2013 and April 25, 2013, the Company issued to holders of the Company's subordinated convertible promissory notes dated October 31, 2010, shares of common stock upon conversion of $0.3 million of the principal amount of the notes. The conversion price was $3.73 per share for 73,669 shares and $4.79 for 10,438 shares.
Sale of Hearth & Home of Vandalia, Inc.
On May 6, 2013, Hearth & Home of Vandalia, Inc. (the "Vandalia Seller"), a wholly owned subsidiary of the Company, sold to H & H of Vandalia LLC (the "Vandalia Purchaser"), pursuant to that certain Agreement of Sale, dated October 11, 2012 and amended December 28, 2012 (as amended, the "Ohio Sale Agreement"), between the Company and certain of its subsidiaries, including the Vandalia Seller (together, the "Ohio ALF Sellers"), on the one hand, and CHP on the other hand, certain land, buildings, improvements, furniture, fixtures and equipment comprising the Hearth and Home of Vandalia facility (the "Vandalia Facility") located in Vandalia, Ohio. CHP had previously assigned its rights in the Ohio Sale Agreement with respect to the Vandalia Facility to the Vandalia Purchaser.
The sale price for the Vandalia Facility consisted of, among other items: (i) an assumption, by the Vandalia Purchaser, of a mortgage in an aggregate amount of $3.6 million (the "Vandalia Mortgage") that secures the Vandalia Facility; and (ii) a release of the Vandalia Seller from its obligations to Red Mortgage Capital, LLC (the "Vandalia Mortgagee") and HUD with respect to the Vandalia Mortgage, pursuant to a release and assumption agreement entered into among the Vandalia Purchaser, the Vandalia Seller, HUD and the Vandalia Mortgagee. In connection with the sale of the Vandalia Facility, the Vandalia Seller and Vandalia Purchaser also entered into an assignment and assumption agreement of trust funds and service contracts, containing customary terms and conditions.
Assignment of Purchase and Sale Agreement
On May 7, 2013, AdCare Property Holdings, LLC, a wholly owned subsidiary of the Company ("AdCare Holdings"), executed and delivered that certain Reinstatement, Sixth Amendment and Assignment of Purchase and Sale Agreement by and among AdCare Holdings, First Commercial Bank ("First Commercial") and Brogdon Family, LLC ("Brogdon Family"), which amends the Purchase and Sale Agreement, dated May 5, 2011 pursuant to which AdCare Holdings or its assignee had the right to acquire certain land, buildings, improvements, furniture, fixtures, operating agreements and equipment comprising the following six skilled nursing facilities located in Oklahoma: (i) Harrah Nursing Center; (ii) McLoud Nursing Center; (iii) Meeker Nursing Center ((i) through (iii) collectively, the "Unsold Oklahoma Facilities"); (iv) Whispering Pines Nursing Center (the "WP Facility"); (v) Northwest Nursing Center (the "Northwest Facility"); and (vi) Edwards Redeemer Nursing Center (the "Edwards Facility"). The Company acquired the Northwest Facility from First Commercial for an aggregate purchase price of $3.0 million on December 28, 2012.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 23. SUBSEQUENT EVENTS (Continued)
Pursuant to the amendment, Brogdon Family assumed all of AdCare Holdings's obligations under the purchase agreement and AdCare Holdings assigned to Brogdon Family all of its right, title and interest in and to the purchase agreement, which includes the right to acquire the Unsold Oklahoma Facilities.
Northwest Credit Facility
On May 30, 2013, NW 61st Nursing, LLC ("Northwest"), a wholly owned subsidiary of the Company, entered into a Credit Agreement (the "Northwest Credit Facility") between Northwest and Gemino. The Northwest Credit Facility provides for a $1.0 million principal amount senior-secured revolving credit facility.
The Northwest Credit Facility matures on January 31, 2015. Interest on the Northwest Credit Facility accrues on the principal balance thereof at an annual rate of 4.75% plus the current LIBOR rate. Northwest shall also pay to Gemino: (i) a collateral monitoring fee equal to 1.0% per annum of the daily outstanding balance of the Northwest Credit Facility; and (ii) a fee equal to 0.5% per annum of the unused portion of the Northwest Credit Facility. In the event the Northwest Credit Facility is terminated prior to January 31, 2015, Northwest shall also be required to pay a fee to Gemino in an amount equal to 1.0% of the Northwest Credit Facility. The Northwest Credit Facility is secured by a security interest in, without limitation, the accounts receivable and the collections and proceeds thereof relating to the Company's skilled nursing facility located in Oklahoma City, Oklahoma known as the Northwest Nursing Center. The Company has unconditionally guaranteed all amounts owing under the Northwest Credit Facility.
The Northwest Credit Facility contains customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants and certain events of bankruptcy and insolvency. Upon the occurrence of an event of default, Gemino may terminate the Northwest Credit Facility.
In connection with entering into the Northwest Credit Facility, certain affiliates of the Company and Northwest, as applicable, also entered into an intercreditor and subordination agreement, governmental depository agreement and subordination of management fee agreement, each containing customary terms and conditions.
On June 25, 2013, Northwest entered into a First Amendment to Credit Agreement between Northwest and Gemino which amended the Northwest Credit Facility. The amendment, among other things: (i) amends certain financial covenants regarding Northwest's fixed charge coverage ratio and minimum EBITDA; and (ii) amends the Northwest Credit Facility to include the Gemino-Bonterra credit facility as an affiliated credit agreement in determining whether certain financial covenants are being met.
Gemino-Bonterra AmendmentMay 2013
On May 30, 2013, ADK Bonterra/Parkview, LLC ("Bonterra"), a wholly owned subsidiary of the Company, entered into a Fourth Amendment to Credit Agreement with Gemino, which amended that certain Credit Agreement, dated April 27, 2011, between Bonterra and Gemino (as amended, the "Gemino-Bonterra credit facility"). The amendment, among other things: (i) extends the term of the Gemino-Bonterra credit facility from January 31, 2014 to January 31, 2015; (ii) amends certain financial
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 23. SUBSEQUENT EVENTS (Continued)
covenants regarding Bonterra's fixed charge coverage ratio and maximum loan turn days; and (iii) amends the Gemino-Bonterra credit facility to include the Northwest Credit Facility as an affiliated credit agreement in determining whether certain financial covenants are being met.
KeyBank AmendmentMay 2013
On May 31, 2013, certain subsidiaries of the Company entered into a First Amendment to Secured Loan Agreement and Payment Guaranty (the "KeyBank Amendment") with KeyBank, which amended the KeyBank Credit Facility. Pursuant to the KeyBank Amendment, KeyBank waives any default or events of default that may exist relating to the Company's: (i) failure to timely file with the SEC its Annual Report on Form 10-K for the year ended December 31, 2012 (the "Annual Report"); (ii) process of restating its previously issued financial statements for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012; and (iii) non-compliance with the continued listing standards of the NYSE MKT LLC, as well as certain other events. The KeyBank Amendment, among other things: (1) establishes a special account under the sole dominion and control of KeyBank pursuant to which certain subsidiaries of the Company shall deposit certain funds, on a monthly basis, to be held as collateral; (2) amends certain financial covenants regarding such subsidiaries implied debt service coverage and furnishing of certain financial information; and (3) amends certain financial covenants provided for in a guaranty made by the Company for the benefit of KeyBank relating to the KeyBank Credit Facility. In addition, as a condition precedent for KeyBank to enter into the KeyBank Amendment, the Company granted a first-priority security interest in the real property and improvements, leases and rents, revenues and accounts receivables relating to the 32 unit assisted-living facility located in Mountain View, Arkansas known as the Stone County Residential Care Center. The KeyBank Amendment also requires the Company to pledge to KeyBank, as additional collateral, that certain secured promissory note dated December 28, 2012, issued by CHP to the Company in the amount of $3,600,000 (as amended, the "CHP Note"); provided, however, that the Company shall be entitled to any excess payments of principal or prepayments over $2,000,000 made by CHP on the CHP Note.
In connection with entering into the KeyBank Amendment, certain affiliates and subsidiaries of the Company, as applicable, entered into environmental indemnities, pledge and security agreements, subordination of lease liens and subordination of management fee agreements, each containing customary terms and conditions.
CHP Note Release
On June 20, 2013, the Company released CHP in connection with CHP's purchase of certain assets of the Company under the Ohio Sale Agreement pursuant to which CHP executed and delivered to the Company the CHP Note. CHP is prepaying the CHP Note for a discounted amount, which amount is equal to $3,240,000 (the "Discounted Payment"). The Company acknowledges that the Discounted Payment shall be treated as a payment in full of the CHP Note and all obligations thereunder shall expire immediately upon the Company's receipt of the Discounted Payment. The Company further acknowledges that such discount shall be treated as a reduction in the purchase price payable by CHP to the Company under the Ohio Sale Agreement and shall not be treated as forgiveness of debt.
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 23. SUBSEQUENT EVENTS (Continued)
RiverchaseManagement Agreement Termination
On June 22, 2013, a wholly owned subsidiary of the Company and an entity owned and controlled by Mr. Christopher Brogdon, agreed to mutually terminate the five-year year management agreement, dated June 22, 2010. Pursuant to the management agreement, such subsidiary supervised the management of the Riverchase Village facility for a monthly fee equal to 5% of the monthly gross revenues of the Riverchase Village facility.
RiverchaseOption Agreement Extension
On June 22, 2013, Hearth & Home and Mr. Brogdon amended that certain Option Agreement, dated June 22, 2010, pursuant to which the Company has the exclusive and irrevocable right to acquire from Mr. Brogdon all of the issued and outstanding membership interests in Riverchase. The amendment extended the option provided for thereby from June 22, 2013 to June 22, 2014.
PrivateBank AmendmentJune 2013
On June 27, 2013, certain wholly owned subsidiaries of the Company entered into a Third Modification Agreement with PrivateBank, dated as of June 26, 2013, which modified that certain Loan Agreement, dated March 30, 2012, between such subsidiaries and. Pursuant to the modification, PrivateBank waives certain financial covenants under the credit facility regarding the minimum fixed charge coverage ratio and minimum EBITDAR of one of the subsidiaries that is the operator of the Company's skilled nursing facility located in Little Rock, Arkansas.
Keybank AmendmentJune 2013
On June 27, 2013, certain wholly owned subsidiaries of the Company entered into a Second Amendment to Secured Loan Agreement and Payment Guaranty with KeyBank, which amended the KeyBank Credit Facility. Pursuant to the amendment: (i) KeyBank waives the failure of certain financial covenants of such subsidiaries regarding fixed charge coverage ratio and implied debt service coverage such that no default or events of default under the KeyBank Credit Facility occurred due to such failure; and (ii) KeyBank and the Company agreed to amend certain financial covenants regarding the Company's fixed charge ratio.
Gemino AmendmentJune 2013
On June 28, 2013, certain wholly owned subsidiaries of the Company entered into a Joinder Agreement, Second Amendment and Supplement to Credit Agreement with Northwest and Geminopursuant to which such subsidiaries became additional borrowers under the Northwest Credit Facility. Pursuant to the joinder, the borrowers granted a continuing security interest in, among other things, their accounts receivables, payment intangibles, chattel paper, general intangibles, collateral relating to any accounts or payment intangibles, commercial lockboxes and cash, as additional collateral under the Northwest Credit Facility; however, the Joinder did not change the maximum amount that the borrowers may borrow under the credit facility, which remains at $1,000,000. In connection with the execution of the joinder, the borrowers issued an amended and restated revolving promissory note in favor of Gemino in the amount of $1,500,000.
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Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Audit Committee Review and Inquiry
As previously disclosed, the Audit Committee, in consultation with management, concluded in March 2013 that: (i) the Company's previously issued financial statements for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012 (the "Relevant Financial Statements") should no longer be relied upon due to errors in the Relevant Financial Statements identified in connection with the audit of the Company's consolidated financial statements for the year ended December 31, 2012; and (ii) the Company would restate the Relevant Financial Statements.
The Audit Committee initiated a further review of, and inquiry with respect to, the accounting and financial issues related to these and other potential errors and engaged counsel to assist the Audit Committee with such matters. The Audit Committee completed its inquiry and, in connection therewith, assisted in the correction of certain errors relating to accounting and financial matters and identified certain material weaknesses in the Company's internal control over financial reporting, including weakness in the Company's ability to appropriately account for complex or non-routine transactions and in the quality and sufficiency of the Company's finance and accounting resources.
On July 8, 2013, the Company restated the Relevant Financial Statements by filing with the SEC amendments to its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report (the "Evaluation Date"). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
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generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that are intended to:
(1) maintain records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.
Management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this evaluation, management used the framework and criteria set forth in the report entitled Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The COSO framework summarizes each of the components of a company's internal control system, including: (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring.
Consistent with the results of the Audit Committee's review and inquiry, management identified material weaknesses in the Company's ability to appropriately account for complex or non-routine transactions and the quality and sufficiency of the Company's finance and accounting resources in relation to the increasing complexity and growth of the Company's operations.
As a result of the material weaknesses described above, management has concluded that our internal control over financial reporting was not effective at December 31, 2012 based on the guidelines established in Internal ControlIntegrated Framework issued by COSO.
Changes in Internal Control over Financial Reporting and Remediation
In response to the material weaknesses in the Company's internal control over financial reporting, and based in part on recommendations made by the Audit Committee to the Board of Directors following the completion of the Audit Committee's review and inquiry, we have implemented, or plan to implement, the changes to our internal control over financial reporting discussed below.
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In April 2013, we engaged an Interim Chief Accounting Officer on a contract basis. We are currently discussing with our Interim Chief Accounting regarding the terms of her employment as the Company's Chief Accounting Officer and believe that we will reach agreement on such terms in the near term.
Since January 2013, the Company has hired eight new finance and accounting personnel, including a Vice President of Facility Accounting Operations. Our new finance and accounting leadership continue to evaluate the qualifications and sufficiency of our accounting and finance department. The expanded internal audit scope has commenced and will be completed prior to the Company filing its Quarterly Reports on Form 10-Q for each of the 2013 quarterly periods.
Due to the short time period since we commenced our efforts to remediate our material weaknesses, and because we have not fully completed our financial reporting process for the quarter ended March 31, 2013, we have not yet been able to fully evaluate the effectiveness of such efforts. We have incurred, and will continue to incur, additional incremental costs associated with our remediation efforts, primarily due to hiring new finance and accounting personnel and external consultants and the implementation and validation of improved accounting and financial reporting procedures. If we are not successful in remediating our material weaknesses, or if we determine in future fiscal periods that we have additional material weaknesses in our internal control over financial reporting, then the reliability of our financial reports may be adversely impacted, we may be unable to file our reports with the SEC in a timely fashion and we could be required to restate our financial results. This could cause our investors to lose confidence in our financial reporting, which could adversely affect the trading price of our stock.
Other than the remediation efforts discussed above, which occurred in 2013 and have included the involvement of our new finance and accounting leadership in the preparation, review, and approval of the consolidated financial statements included in this Annual Report, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) since January 1, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In addition, there were not any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management's report in this Annual Report.
On October 1, 2012, the Company agreed to issue warrants to purchase an aggregate of 120,000 shares of our common stock to an investor relations firm as a professional services fee for investor relations services. The warrants are to be issued on a monthly basis as 12 individual warrants each to purchase 10,000 shares of our common stock. The exercise price of the warrants ranges from $5.75 to $7.00 per share of common stock and are exercisable at any time prior to 5:00 p.m. on the date that is the third anniversary of each warrant issuance. The exercise prices of the warrants are subject to adjustment for stock splits, dividends and other similar corporate events. The shares of our common stock to be issued upon exercise of the warrants will be issued upon reliance on the exemption from registration set forth in Rule 506 of Regulation D promulgated pursuant to Section 4(2) of the Securities Act. The Company relied on such exemption based upon representations made by the
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warrant holder regarding, among other things, its status as an "accredited investor," as such term is defined under the Securities Act.
On June 22, 2013, a wholly owned subsidiary of the Company and Riverchase Village ADK, LLC, an entity owned and controlled by Mr. Christopher Brogdon, agreed to mutually terminate the five-year year management agreement, dated June 22, 2010. Pursuant to the management agreement, such subsidiary supervised the management of the Riverchase Village facility, which is owned by Riverchase Village ADK, LLC, for a monthly fee equal to 5% of the monthly gross revenues of the Riverchase Village facility.
On June 22, 2013, Hearth & Home of Ohio, Inc., a wholly owned subsidiary of the Company, and Mr. Brogdon amended that certain Option Agreement, dated June 22, 2010, pursuant to which the Company has the exclusive and irrevocable right to acquire from Mr. Brogdon all of the issued and outstanding membership interests in Riverchase Village ADK, LLC. The amendment extended the option provided for thereby from June 22, 2013 to June 22, 2014.
On July 3, 2013, the Company entered into an employment agreement with Ronald W. Fleming. For a description of the material terms of the employment agreement, see Part II, Item 11., "Executive CompensationEmployment and Consulting AgreementsRonald W. Fleming."
Our website address is www.adcarehealth.com. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports from the investors section of our website. These reports are available on our website as soon as reasonably practicable after we electronically file them with the SEC. These reports should also be available through the SEC's website at www.sec.gov .
The charters for the Compensation Committee of the Board of Directors (the "Compensation Committee") and the Audit Committee are available in the corporate governance subsection of the investors section of our website, www.adcarehealth.com, and are also available in print upon written request to the Corporate Secretary, AdCare Health Systems, Inc., 1145 Hembree Road, Roswell, Georgia 30076.
Item 10. Directors, Executive Officers and Corporate Governance.
Executive Officers and Directors
The following table sets forth certain information with respect to our executive officers and directors. We have historically separated the function of Chairman of the Board and Chief Executive
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Officer as we believe that the Company is better served by these functions being performed by separate individuals.
Name
|
Age | Position | Expiration of Term as a Director | ||||||
---|---|---|---|---|---|---|---|---|---|
David A. Tenwick(1) |
75 | Director, Chairman of the Board | 2015 | ||||||
Christopher Brogdon(1) |
64 | Director, Vice-Chairman | 2013 | ||||||
Boyd P. Gentry(1) |
54 | Director, President and Chief Executive Officer | 2014 | ||||||
Peter J. Hackett(1) |
75 | Director | 2013 | ||||||
Jeffrey Levine |
62 | Director | 2015 | ||||||
Joshua J. McClellan |
41 | Director | 2014 | ||||||
Philip S. Radcliffe |
76 | Director | 2014 | ||||||
Laurence E. Sturtz |
70 | Director | 2013 | ||||||
Gary L. Wade |
76 | Director | 2015 | ||||||
Ronald W. Fleming |
55 | Senior Vice President and Chief Financial Officer | N/A | ||||||
David Rubenstein |
46 | Chief Operating Officer | N/A |
Directors are elected at the annual meeting of shareholders and hold office for a term of three (3) years or until their successors have been duly elected and qualified. All executive officers serve at the discretion of the Board of Directors, subject to applicable employment agreements. See Part III, "Item 11. Executive CompensationEmployment and Consulting Agreements."
Biographical information with respect to each of our directors and executive officers is set forth below.
David A. Tenwick. Mr. Tenwick is our founder and has served as our Chairman and as a director since our organization was founded in August 1991. Prior to founding our Company, Mr. Tenwick was an independent business consultant from 1982 to 1990. In this capacity, he has served as a director and an officer of several businesses, including Douglass Financial Corporation, a surety company, and AmeriCare Health & Retirement, Inc., a long-term care management company. From 1967 until 1982, Mr. Tenwick was a director and an officer of Nucorp Energy, Inc., a company which he co-founded. Nucorp Energy was a public company that invested in oil and gas properties and commercial and residential real estate. Prior to founding Nucorp Energy, Mr. Tenwick was an enforcement attorney for the SEC. Mr. Tenwick is a member of the Ohio State Bar Association and was a founding member of the Ohio Assisted Living Association, an association that promotes high quality assisted living throughout the State of Ohio. Mr. Tenwick earned his Bachelor of Business Administration and Juris Doctor (J.D.) degrees from the University of Cincinnati in 1960 and 1962, respectively. Mr. Tenwick's tenure with the Company and legal and business background provide experience the Board of Directors considers valuable.
Christopher Brogdon. Mr. Brogdon has served as a director since September 2009. Mr. Brogdon currently serves as the Company's Vice-Chairman. Previously, Mr. Brogdon served as the Company's Chief Acquisitions Officer from September 2009 through December 2012. Mr. Brogdon has been primarily responsible for directing the Company's acquisition strategy. Mr. Brogdon brings to AdCare more than 20 years of experience in the nursing home, assisted living and retirement community. Since 1998, Mr. Brogdon has owned and operated Brogdon Family LLC which owns and operates nursing homes, assisted living facilities and restaurants. Mr. Brogdon previously served as Chairman of the
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Board of NYSE-listed Retirement Care Associates and Chairman of the Board of NASDQ-listed Contour Medical. Mr. Brogdon's extensive background with public companies and his experience in nursing home development, acquisitions and mergers as well as his experience in financing those activities provides experience the Board of Directors considers valuable.
Boyd P. Gentry. Mr. Gentry was appointed as a director by existing members of the Board of Directors in December 2009 and became Co-Chief Executive Officer of the Company in January 2011 and President and Chief Executive Officer in June 2011. Mr. Gentry was employed by Mariner Health Care, Inc., a former NYSE publicly held long-term health care provider, from 1995 to 2007, and promoted to Chief Financial Officer subsequent to its 2004 going private transaction sponsored by National Senior Care. He transitioned to an ongoing consulting role for Mariner in September 2007 when he was recruited to Millennium Pharmacy Systems, Inc. to serve as Chief Financial Officer. He remained with Millennium until 2009 and rejoined Mariner Health Care, Inc. as its President in April of 2010. From 1982 until 1995, Mr. Gentry was employed with Bank of America and its predecessors with various financial responsibilities as Senior Vice President. Mr. Gentry received his Bachelor of Arts (BA) in Economics from Knox College in Galesburg, Illinois and his Master of Business Administration (MBA) in Finance and Accounting from Southern Methodist University in Dallas, Texas. Mr. Gentry's expertise and background in the healthcare industry provides experience the Board of Directors considers valuable, especially as the Company expands its operations and adds to the number of nursing home beds that it owns or leases.
Peter J. Hackett. Mr. Hackett has served as a director since May 2005. Mr. Hackett is a certified public accountant who received his B.A. degree from the University of Notre Dame and his M.A. degree from The Ohio State University in 1959 and 1965, respectively. Mr. Hackett worked as an auditor and was a stockholder in the accounting firm of Clark, Schaefer, & Hackett & Co. from 1962 to 2003. Mr. Hackett served as the Chief Executive Officer of Clark, Schaefer, & Hackett & Co. from 1991 to 1999 and was Chairman from 1999 to 2003. Since 2003 until present, Mr. Hackett has acted as a consultant for Clark, Schaefer, & Hackett & Co. Mr. Hackett is a member of the American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants. Mr. Hackett was a member of the board of directors of Mercy Medical Center from 1972 to 1995. Mr. Hackett is also involved in numerous civic and charitable affiliations in the Springfield, Ohio area. Mr. Hackett's extensive financial and auditing background provides experience the Board of Directors considers valuable.
Jeffrey L. Levine. Mr. Levine has served as a director since December 2005. He also served as a director of the Company from its organization in 1991 until 2003. Mr. Levine received his B.S. degree in Business from Miami University in 1973 and his J.D. degree from Capital University Law School in 1976. He has worked as an industrial and commercial real estate broker from 1975 to present. He is the President of the Levine Real Estate Company and the Senior Vice President of Cassidy Turley. He is the past President of Larry Stein Realty. Mr. Levine has extensive experience in negotiating and appraising commercial and investment real estate. Mr. Levine has served as an officer and director on several private and public real estate companies and financial institutions. He is a member of the National Association of Realtors, the Ohio State Bar Association and the Florida State Bar Association. Mr. Levine's extensive real estate background provides experience the Board of Directors considers valuable.
Joshua J. McClellan. Mr. McClellan has served as a director since December 2009. From 1996 to 2006, Mr. McClellan served as the Founder and President of McClellan Health Systems, Inc., a long-term health care provider located in northwest Ohio. Through acquisitions and development, he grew his company from a single, skilled nursing facility to a large regional healthcare provider which he sold in June 2006. In 2011, he co-founded Azura Living, Inc., a rehabilitation facility located in Denver, Colorado which has the capacity to provide rehabilitation and other medical services to approximately
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100 residents. Mr. McClellan received his B.S. from Ohio State University and his M.B.A. from the University of Findlay in Findlay, Ohio. Mr. McClellan is also a member of the Young Presidents Organization. Mr. McClellan's expertise and background in the healthcare and nursing home industries provides experience the Board of Directors considers valuable.
Philip S. Radcliffe. Mr. Radcliffe has served as a director since our organization was founded in August 1991. Mr. Radcliffe has spent his career in the industrial computer industry. Through the 1960s, Mr. Radcliffe was employed by IBM and then The Westinghouse Electric Company in their Computer and Instruments Division. Mr. Radcliffe next became an entrepreneur and participated in the startup of an industrial systems integration supplier. Mr. Radcliffe served as the Chief Financial Officer of this company and led the effort in the company becoming public and directed all SEC reporting requirements. In 1980, Mr. Radcliffe started his own virtual company in the Washington, DC area providing turnkey data acquisition and control systems to industry and the government. Since 1992, Mr. Radcliffe has assisted several early-stage high-tech companies in developing their business plan, locating funds and providing oversight and mentoring. Since 1970, Mr. Radcliffe has served on the boards of directors of several private and public companies. Mr. Radcliffe has served as a mentor for the Dingman School of Entrepreneurship, affiliated with the University of Maryland School of Business. Mr. Radcliffe received his Bachelor's Degree from Baldwin Wallace College in 1959. Mr. Radcliffe's expertise and background in founding and advising start-up companies and helping them transition to public SEC reporting companies provides experience the Board of Directors considers valuable. In addition, his expertise in information technology is valuable as the Company continues to acquire long-term care facilities.
Laurence E. Sturtz. Mr. Sturtz has served as a director since June 2005. Mr. Sturtz is a retired attorney at law. He received his B.A. degree in Economics and his J.D. degree from The Ohio State University in 1964 and 1967, respectively. Mr. Sturtz was a prominent trial lawyer in Columbus, Ohio and also specialized in representing companies of all sizes until his retirement in 2002. Mr. Sturtz left the private practice of law for six years, from 1982 to 1988, during which time he served as Vice President and General Counsel, and then President and Chief Executive Officer, of Strata Corporation, a public company based in Columbus, Ohio. In 1988, Mr. Sturtz returned to the private practice of law and became the senior litigator with the firm of Carlile Patchen & Murphy LLP. Mr. Sturtz was admitted to practice before the United States Supreme Court and had five cases before the Court during the course of his career. Mr. Sturtz has served as a director of Advanced Biological Marketing, Inc. since 2005, and was Chairman of the Board of The Language Access Network from March 2006 until December 2007. Mr. Sturtz currently works as a mediator and arbitrator in Florida and Ohio. Mr. Sturtz's extensive legal experience, management background and experience with public companies provides experience the Board of Directors considers valuable.
Gary L. Wade. Mr. Wade has served as our President and as a director since 1995 and became Chief Executive Officer in 1998. Mr. Wade became Co-Chief Executive Officer (with Boyd Gentry) in January 2011 and retired as Chief Executive Officer and President in June 2011. In 1988, Mr. Wade was a co-founder of AdCare Health Systems, Inc., whose assets we acquired in 1995. From 2011 until 2012, Mr. Wade also served as a Vice President for Dayfield Senior Solutions, LLC, a manager of operations and financials for assisted living and skilled nursing facilities. Prior to that, he served as the Chief Executive Officer and President of St. John's Mercy from 1980 to 1989 and was responsible for the development and operation of Oakwood Village Retirement Community in 1987, a continuing care retirement community, and the operation of St. John's Center, a sub-acute long-term care facility. His extensive experience in health care also includes work with chemical abuse treatment programming and care for Alzheimer's patients. Mr. Wade earned his undergraduate degree at Ohio University and his M.B.A. from Xavier University, where he specialized in hospital and health care administration. He is a past Chairman of the Ohio Assisted Living Association and served on the Government Relations and Health Care committees of the Association of Ohio Philanthropic Homes. Mr. Wade's tenure with the
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Company and healthcare business background provides experience the Board of Directors considers valuable.
Ronald W. Fleming. Mr. Fleming has more than 25 years of experience in finance and was appointed to serve as the Company's Senior Vice President and Chief Financial Officer in May 2013. From 2001 until May 2013, Mr. Fleming served as Chief Financial Officer of Georgia Cancer Specialists I, P.C., where he was responsible for the financial reporting and oversight of the privately-held healthcare services company. Mr. Fleming was employed by Mariner Post-Acute Network, Inc., a publicly held long-term health care services provider from 1989 to 2000 and served as its Vice President, Controller and Chief Accounting Officer from 1996-2000. Mr. Fleming holds a B.S. in Accounting from Ball State University and is a Certified Public Accountant.
David Rubenstein. Mr. Rubenstein has more than 23 years of experience in long-term care facility management and was appointed to serve as the Company's Executive Vice President and Chief Operating Officer in December 2011. From March 2010 until December 2011, Mr. Rubenstein served as Chief Executive Officer of LaVie Management Services, where he was responsible for the management of operations of the skilled nursing facility company. From January 2009 to March 2010, Mr. Rubenstein was the Chief Executive Officer of Coastal Administrative Services as well as the Executive Vice President of Strategy and Support for Genoa Healthcare, where he was responsible for oversight of information technology, accounting and reimbursement issues for the skilled nursing facility companies. From January 2006 to December 2008, Mr. Rubenstein served as the Chief Development Officer for Genoa Healthcare Consulting, where he oversaw the acquisition and divestiture of skilled nursing facilities. Mr. Rubenstein holds a B.S. in Accounting from the University of Rhode Island.
Committees of the Board of Directors
We have an Audit Committee, a Compensation Committee and an Executive Committee.
The Audit Committee was established in accordance with Section 3(e)(58)(A) of the Exchange Act. The Audit Committee has the responsibility of reviewing our financial statements, evaluating internal accounting controls, reviewing reports of regulatory authorities and determining that all audits and examinations required by law are performed. The Audit Committee also approves the appointment of the independent registered public accounting firm for the next fiscal year, approves the services to be provided by such firm and the fees for such services, reviews and approves the audit plans, reviews and reports upon various matters affecting the independence of the independent registered public accounting firm and reviews with it the results of the audit and management's responses.
The Audit Committee was established in 1995, and its charter was adopted in December 2005. Since January 1, 2012, the Audit Committee has been comprised of Messrs. Hackett, Levine, Radcliffe and Sturtz, each of whom is considered "independent," as independence for Audit Committee members is defined in the applicable rules of the NYSE MKT listing standards and the rules of the SEC. The Board of Directors has designated Peter J. Hackett as Chairman of the Audit Committee and as the "audit committee financial expert" as defined by Item 407 of Regulation S-K of the Exchange Act.
The Compensation Committee was established in 1995, and its charter was adopted in December 2005. Since January 1, 2012, the Compensation Committee has been comprised of Messrs. Radcliffe, Levine and McClellan. Our Compensation Committee is responsible for establishing our compensation plans. Its duties include the development with management of benefit plans for our employees and the formulation of bonus plans and incentive compensation packages. The Board of Directors has designated Philip S. Radcliffe as Chairman of the Compensation Committee.
The Executive Committee was established in 1991 in order to take actions necessary between the meetings of the Board of Directors. The Executive Committee is authorized to exercise all of the power and authority of the Board of Directors, other than the authority of filling vacancies among the
145
members of the Board of Directors or the members of any committee of the Board of Directors and the authority to adopt, amend or repeal any regulations of the Company. The members of the Executive Committee are elected by the entire Board of Directors. Since January 1, 2012, the Executive Committee has been comprised of Messrs. Tenwick, Gentry, Hackett and Brogdon.
The Board of Directors has no standing nominating committee. We believe that, as a result of the role of the independent directors, as described below, it is not necessary to have a separate nominating committee at this time. Five of our nine current directors, Messrs. Hackett, Levine, Radcliffe, Sturtz and McClellan, were independent in 2012 as determined utilizing the standards for director "independence" set forth in the applicable rules of the NYSE MKT listing standards. The independent members of the Board of Directors select nominees for election as directors by majority vote. In selecting nominees for director, the Board of Directors does not operate pursuant to a charter.
In selecting director nominees, the Board of Directors considers, among other factors, the existing composition of the Board of Directors and the mix of its members appropriate for the perceived needs of AdCare. The Board of Directors believes that continuity in leadership and tenure maximizes the Board of Directors ability to exercise meaningful oversight. Because qualified incumbent directors are generally uniquely positioned to provide shareholders the benefit of continuity of leadership and seasoned judgment gained through experience as a director, the Board of Directors will generally consider as potential candidates those incumbent directors interested in standing for re-election who they believe have satisfied director performance expectations, including regular attendance at, preparation for and meaningful participation in meetings of the Board of Directors and committees thereof. While the Board of Directors does not have a formal policy on diversity, it seeks nominees with a broad diversity of experiences, professions, skills and backgrounds. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires executive officers and directors and persons who beneficially own more than 10% of our common stock (the "Reporting Persons") to file initial reports of ownership and reports of changes in ownership with the SEC. Reporting Persons are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company and written representations from the executive officers and directors, the Company believes that the Reporting Persons complied with all Section 16(a) filing requirements during fiscal 2012 except that: (i) Mr. Wade filed late two reports with four late transactions; (ii) Mr. Tenwick filed one late report with one late transaction; (iii) Mr. Sturtz filed one late report with three late transactions; (iv) Mr. Radcliffe filed two late reports with five late transactions; (v) Mr. McClellan filed two late reports with two late transactions; (vi) Mr. Levine filed one late report with three late transactions; (vii) Mr. Hackett filed one late report with three late transactions; and (viii) Mr. Gentry filed two late reports with three late transactions.
Code of Ethics
We have adopted a written code of conduct, our Code of Business Conduct and Ethics, which is applicable to all directors, officers and employees of AdCare (including our principal executive officer, principal financial officer, principal accounting officer or controller, and any person performing similar functions). Our Code of Business Conduct and Ethics is available in the corporate governance subsection of the investors section of our website, www.adcarehealth.com, and is also available in print upon written request to our Corporate Secretary, AdCare Health Systems, Inc., 1145 Hembree Road, Roswell, Georgia 30076.
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Item 11. Executive Compensation.
The following table sets forth the compensation paid to, earned by, or accrued for our principal executive officer and our other most highly compensated executive officers whose total compensation exceeded $100,000 for the year ended December 31, 2012 (collectively, our "named executive officers"):
Name and Principal Position
|
Year |
Salary
($) |
Bonus
($) |
Stock
Awards ($)(1) |
Option
Awards ($)(1) |
Non-Equity
Incentive Plan Compensation ($) |
Nonqualified
Deferred Compensation Earnings ($) |
All Other
Compensation ($) |
Total
($) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(A)
|
(B)
|
(C)
|
(D)
|
(E)
|
(F)
|
(G)
|
(H)
|
(I)
|
(J)
|
|||||||||||||||||||
Boyd Gentry, |
2012 | $ | 408, 043 | $ | 50,000 | $ | 100,800 | (2) | $ | 227,080 | (3) | $ | | $ | | $ | 3,595 | (4) | $ | 789,518 | ||||||||
President and Chief Executive Officer (principal executive officer) |
2011 | $ | 279,629 | $ | | $ | | $ | 680,794 | $ | | $ | | $ | 35,918 | $ | 996,341 | |||||||||||
Martin D. Brew, |
2012 |
$ |
215,665 |
$ |
|
$ |
|
$ |
67,200 |
(5) |
$ |
|
$ |
|
$ |
|
$ |
282,865 |
||||||||||
Former Chief Financial Officer |
2011 | $ | 103,333 | $ | | $ | | $ | 158,760 | $ | | $ | | $ | 3,089 | $ | 265,182 | |||||||||||
Christopher Brogdon, |
2012 |
$ |
|
$ |
200,000 |
$ |
100,800 |
(2) |
$ |
162,225 |
(6) |
$ |
|
$ |
|
$ |
|
$ |
463,025 |
|||||||||
Vice-Chairman and Former Chief Acquisitions Officer |
2011 | $ | | $ | 200,000 | $ | | $ | 176,925 | $ | | $ | | $ | 25,000 | $ | 401,925 | |||||||||||
David Rubenstein, |
2012 |
$ |
297,678 |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
297,678 |
|||||||||||
Chief Operating Officer |
2011 | $ | | $ | 150,000 | $ | | $ | 349,650 | $ | | $ | | $ | | $ | 499,650 | |||||||||||
David. A. Tenwick, |
2012 |
$ |
|
$ |
|
$ |
100,800 |
(2) |
$ |
|
$ |
|
$ |
|
$ |
778,000 |
(7) |
$ |
878,800 |
|||||||||
Chairman |
2011 | $ | 221,333 | $ | | $ | | $ | | $ | | $ | | $ | 47,072 | $ | 268,405 |
Employment and Consulting Agreements
Boyd P. Gentry. We entered into an Employment Agreement with Mr. Gentry, effective January 10, 2011 (the "Gentry Agreement"). The terms of the Gentry Agreement Provide for an initial annual salary of $300,000 per year, subject to annual review by the Compensation Committee thereafter. Pursuant to such review: (i) from January 1, 2012 through July 1, 2012, Mr. Gentry received an annual salary of $330,000; (ii) from July 1, 2012 through December 31, 2012, Mr. Gentry received an annual salary of $400,000; and (iii) effective January 1, 2013, Mr. Gentry receives an annual salary of $450,000. The Gentry Agreement also includes an annual performance bonus of up to 100% of the annual salary based on standards to be established by the Compensation Committee.
147
Pursuant to the Gentry Agreement, Mr. Gentry also received equity compensation in the form of a warrant to purchase 250,000 shares of common stock, with an exercise price equal to $4.13 per share. As a result of certain anti-dilution adjustments, the warrant currently represents the right to purchase 275,626 shares of common stock at an exercise price of $3.75. The warrant vested as to one-third of the underlying shares on each of January 10, 2011, January 9, 2012 and January 9, 2013. If Mr. Gentry resigns his employment for "good reason" or the Company terminates Mr. Gentry's employment without "cause", then Mr. Gentry shall be entitled to severance pay in an amount equal to two (2) times the sum of his annual salary plus target bonus, payable in substantially equal installments at least monthly for a period of twenty-four (24) months after his termination date (the "Gentry Initial Severance Period"), plus if such termination occurs within three (3) months before or twenty-four (24) months after the occurrence of a change in control, then Mr. Gentry is entitled to an additional payment equal to the sum of his annual salary plus target bonus, payable at least monthly in substantially equal installments over a period not to exceed twelve (12) months, which period shall begin immediately after the expiration of the Gentry Initial Severance Period. For the period for which severance pay is paid, i.e., twenty-four (24), or thirty-six (36) months in the case of a termination of Mr. Gentry within three (3) months before or twenty-four (24) months after the occurrence of a change in control of the Company (the "Gentry Severance Period"), Mr. Gentry and his family are entitled to continue to be covered under all employee benefit plans of the Company under which executive officers of the Company are covered and at the same cost and under the same terms and conditions as apply to executive officers; provided, however, if the Company is prohibited by applicable law or its insurer from covering Mr. Gentry under any such plan, then the Company is required to pay Mr. Gentry an amount each month during the Gentry Severance Period equal to the Company's cost of coverage for similarly situated executive officers.
Ronald W. Fleming. We entered into an Employment Agreement with Mr. Fleming, effective May 15, 2013 (the "Fleming Agreement"). The terms of the Fleming Agreement include an annual base salary of $270,000 per year, to be subject to review on an annual basis thereafter, and an annual bonus with a target amount equal to at least 75% of the annual salary (provided, however, that the bonus paid for 2013 will be based on the salary actually paid during 2013 and shall not be less than $80,000), based on reasonably expected performance. On May 15, 2013, Mr. Fleming also received equity compensation in the form of a warrant to purchase 70,000 shares of common stock, with an exercise price equal to $5.90 per share, which vests as to one-third of the underlying shares on each of the three subsequent anniversaries of the grant date. Furthermore, the Company will grant to Mr. Fleming, at a date after we file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 but prior to March 15, 2014, 30,000 shares of restricted common stock, which shall vest as to one-third of the shares on each of May 15, 2014, May 15, 2015 and May 15, 2016.
In the event Mr. Fleming resigns for a "good reason" or a "change in control" occurs while Mr. Fleming is employed by the Company, the warrants and the restricted stock immediately become 100% vested. In the event that: (i) a change in control occurs prior to March 15, 2014; or (ii) Mr. Fleming resigns his employment for "good reason" prior to March 15, 2014, and the Company has not granted Mr. Fleming the restricted common stock, he shall receive a cash payment equal to the fair market value of the restricted stock as of the date of such change in control or date of resignation. If, during the first three (3) months of continuous employment with the Company, Mr. Fleming resigns his employment for good reason, or the Company terminates his employment without "cause" (other than due to his disability), then Mr. Fleming is entitled to severance pay in the form of salary continuation for a period of three (3) months. If after a minimum of three (3) months of continuous employment with the Company, but less than six (6) months of continuous employment with the Company, Mr. Fleming resigns his employment for good reason or the Company terminates his employment without cause (other than due to his disability), then Mr. Fleming is entitled to receive severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for a period of six (6) months after his termination date. If, after a minimum of six (6) months
148
of continuous employment with the Company Mr. Fleming resigns his employment for good reason or the Company terminates Mr. Fleming's employment without cause (other than due to his disability), then Mr. Fleming shall receive the severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for a period of twelve (12) months after his termination, plus if such termination occurs within three (3) months before or twenty-four (24) months after the occurrence of a change in control of the Company, then Mr. Fleming is entitled to severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for a period of eighteen (18) months after his termination date, plus an additional sum equal to one-half ( 1 / 2 ) his target bonus, payable in substantially equal installments at least monthly for a period six (6) months, which period shall begin twelve (12) months following his termination date. For the period for which severance pay is paid, i.e., three (3), six (6), twelve (12) or eighteen (18) months following termination of employment (the "Fleming Severance Period"), Mr. Fleming and his family are entitled to continue to be covered under all employee benefit plans of the Company under which executive officers of the Company are covered and at the same cost and under the same terms and conditions as apply to executive officers; provided, however, if the Company is prohibited by applicable law or its insurer from covering Mr. Fleming under any such plan, then the Company shall pay to Mr. Fleming an amount each month during the Fleming Severance Period equal to the Company's cost of coverage for similarly situated executive officers.
David Rubenstein. We entered into an Employment Agreement with Mr. Rubenstein, effective December 19, 2011 (the "Rubenstein Agreement"). The terms of the Rubenstein Agreement include an annual salary of $300,000 per year which increased to $325,000 effective June 30, 2012, an annual performance bonus of up to 75% of the annual salary based on standards to be established by the Compensation Committee and a one-time signing bonus of $150,000. On December 19, 2011, Mr. Rubenstein also received equity compensation in the form of: (i) a warrant to purchase 100,000 shares of common stock, with an exercise price equal to $4.13 per share, which warrant vests as to one-third of the underlying shares on each of the three subsequent anniversaries of the grant date; and (ii) a warrant to purchase 100,000 shares of common stock, with an exercise price equal to $4.97 per share, which warrant vests as to one-third of the underlying shares on each of the second, third and fourth anniversaries of the grant date. As a result of such anti-dilution adjustments, the warrants now represent the right to purchase: (i) 105,000 shares at an exercise price of $3.93 per share; and (ii) 105,000 shares at an exercise price of $4.58 per share. In the event Mr. Rubenstein resigns for a "good reason" or a "change in control" occurs while Mr. Rubenstein is employed by the Company, the warrants immediately become 100% vested.
If, after a minimum of six (6) months of continuous employment with the Company Mr. Rubenstein resigns his employment for good reason or the Company terminates Mr. Rubenstein's employment without cause (other than due to his disability), then Mr. Rubenstein shall receive the severance pay and benefits hereafter provided. The severance pay shall be an amount equal to one (1) times the sum of his annual salary payable in substantially equal installments at least monthly for a period of twelve (12) months after his termination date (the "Rubenstein Initial Severance Period"), plus if such termination occurs within three (3) months before or twenty-four (24) months after the occurrence of a change in control of the Company, then Mr. Rubenstein is entitled to an additional one-half ( 1 / 2 ) times the sum of his annual salary and target bonus, payable in substantially equal installments at least monthly for a period six (6) months, which period shall begin immediately after the expiration of the Rubenstein Initial Severance Period. For the period for which severance pay is paid, i.e., twelve (12) or eighteen (18) months following termination of employment (the "Rubenstein Severance Period"), Mr. Rubenstein and his family are entitled to continue to be covered under all employee benefit plans of the Company under which executive officers of the Company are covered and at the same cost and under the same terms and conditions as apply to executive officers; provided, however, if the Company is prohibited by applicable law or its insurer from covering Mr. Rubenstein under any such plan, then the Company shall pay to Mr. Rubenstein an amount each month during the
149
Rubenstein Severance Period equal to the Company's cost of coverage for similarly situated executive officers.
Christopher Brogdon. Mr. Brogdon served as our Chief Acquisition Officer from September 2009 through December 2012, although we did not enter into an employment agreement with him. We entered into a Consulting Agreement with Mr. Brogdon, dated December 31, 2012 (the "Brogdon Agreement"). The Brogdon Agreement is effective December 31, 2012 and terminates on December 31, 2015. In the event the Brogdon Agreement is not terminated prior to December 31, 2015, the Brogdon Agreement will renew automatically for successive one-year terms until it is terminated. As compensation for his services under the Brogdon Agreement, Mr. Brogdon shall receive: (i) $10,000 per month in year one; (ii) $15,000 per month in year two; and (iii) $20,000 per month in year three of the Brogdon Agreement. In addition, Mr. Brogdon shall receive a success fee of $20,000 for each completed transaction; provided, however, that barring a majority vote of the Board of Directors, such success fees on a one year basis shall not exceed $80,000 in year one, $120,000 in year two and $160,000 in year three of the Brogdon Agreement. In addition, no success fee shall be paid for transactions involving leased facilities or transactions in which the overall consideration is less than $2,500,000. The Brogdon Agreement may be terminated by us at any time without "cause" upon: (1) a vote of the majority of the Board of Directors; and (2) thirty (30) days written notice to Mr. Brogdon; provided, however, that we shall provide severance pay to Mr. Brogdon in an amount equal to eighteen (18) months of Mr. Brogdon's maximum total compensation (including success fees). If after a "change in control" of the Company occurs, and Mr. Brogdon: (x) resigns for any reason; (y) is terminated by the Company without cause within six (6) months of the occurrence of a change in control; or (z) is terminated by the entity acquiring a controlling interest in the Company without cause, the Company shall provide severance pay to Mr. Brogdon in an amount equal to three (3) years of his maximum total compensation (including success fees).
For purposes of each of the Gentry Agreement, Fleming Agreement and Rubenstein Agreement the term resignation for "good reason" means the officer's resignation within ninety (90) days following the Company's failure to cure a material breach of the agreement within thirty (30) days after the officer gives the Company written notice of such breach within ninety (90) days of the occurrence of such breach. For the purposes of each of the Gentry Agreement, Fleming Agreement, Rubenstein Agreement and Brogdon Agreement, the term "cause" means the officer's fraud, dishonesty, willful misconduct, or gross negligence in his performance of his duties, or the individual's conviction for a crime of moral turpitude, or material breach by the individual of the agreement which the individual fails to cure within thirty (30) days after the Company gives the officer written notice of such breach. For purposes of each of the Gentry Agreement, Rubenstein Agreement and Brogdon Agreement, the term "change in control" means one or more sales or dispositions, within a twelve (12) month period, of assets representing a majority of the value of the assets of the Company or the acquisition (whether by purchase or through a merger or otherwise) of common stock of the Company immediately following which the holders of common stock of the Company immediately prior to such acquisition cease to own directly or indirectly common stock of the Company or its legal successor representing more than fifth percent (50%) of the voting power of the common stock of the Company or its legal successor. For purposes of the above referenced Fleming Agreement, the term "change of control" shall have the same meaning as set forth in the AdCare Health Systems, Inc. 2011 Stock Incentive Plan.
Separation Agreement. On May 31, 2013, we entered into a Separation and Release Agreement (the "Brew Agreement") with Mr. Brew. Pursuant to the Brew Agreement: (i) Mr. Brew will remain employed by the Company for a limited period of time as Vice President (the "Transition Period"); (ii) Mr. Brew's employment with the Company will terminate on such date as determined solely by the Company, which date will be no earlier than June 4, 2013 and no later than November 30, 2013; (iii) the Company will pay Mr. Brew a salary of $20,833.33 per month from June 1, 2013 through the
150
date of his termination; and (iv) Mr. Brew will receive additional compensation of $120 per hour over and above his salary for the performance of any services and duties as requested by the Company during the Transition Period. Furthermore, subject to the terms of the 2011 Stock Incentive Plan and applicable option agreements, Mr. Brew may exercise any options granted to him under the 2011 Stock Incentive Plan which have vested as of his termination date at any time within 30 days of his termination date. Upon the termination date, in exchange for Mr. Brew's execution of a waiver and release of certain claims against the Company, we have agreed to pay to Mr. Brew $20,833.33 per month through the month of November 2013 and $2,688.17 for the period from December 1, 2013 through and including December 4, 2013.
Stock Incentive Plans
At our 2011 Annual Meeting of Shareholders held on June 3, 2011, the shareholders of the Company adopted the 2011 Stock Incentive Plan. The 2011 Stock Incentive Plan is intended to further the growth and profitability of our Company by providing increased incentives to encourage share ownership on the part of key employees, officers, directors, consultants and advisors who render services to the Company and any future parent or subsidiary of the Company, including our named executive officers. The 2011 Stock Incentive Plan permits the granting of stock options and restricted stock awards (collectively, "Awards") to eligible participants. At our 2012 Annual Meeting of Shareholders held on June 1, 2012, the shareholders of the Company adopted an amendment to the 2011 Stock Incentive Plan that increased the maximum number of shares of Company stock that may be granted under the 2011 Stock Incentive Plan from 1,000,000 to an aggregate of 2,000,000 shares. Subject to the terms of the 2011 Stock Incentive Plan, the Compensation Committee has the sole discretion to determine the persons who will be granted Awards under the 2011 Stock Incentive Plan and the terms and conditions of such Awards, and to construe and interpret the 2011 Stock Incentive Plan. The Compensation Committee is also responsible for making adjustments in outstanding Awards, the shares available for Awards, and the numerical limitations for Awards to reflect transactions such as stock splits and dividends. The Compensation Committee may delegate its authority to one or more directors or officers; provided, however, that the Committee may not delegate its authority and powers: (i) with respect to Section 16 reporting persons, or (ii) in any way which would jeopardize the 2011 Stock Incentive Plan's qualifying under Section 162(m) of the Internal Revenue Code of 1986 or Rule 16b-3 promulgated under the Exchange Act. The 2011 Stock Incentive Plan allows for the exercise of options through cash, or with the consent of the Compensation Committee: (i) by tendering previously acquired shares; (ii) by tendering a full recourse promissory note of the optionee; (iii) through a cashless exercise without the payment of cash by reducing the number of shares of common stock that would be obtainable upon the exercise of the option; (iv) through a brokerage transaction; or (v) through any combination of the foregoing. The 2011 Stock Incentive Plan provides the issuance of both incentive stock options and nonqualified stock options.
Retirement Programs
The Company's retirement programs are designed to facilitate the retirement of employees, including our named executive officers, who have performed for AdCare over the long term. We currently maintain a 401(k) plan with a match of 50% of the first 2% of an employee's contribution as well as non-qualified employee stock purchase program. The terms of these plans are essentially the same for all employees. Our named executive officers participate in the plans on the same basis as all other employees. AdCare does not provide our named executive officers any special benefits such as executive life insurance.
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Outstanding Equity Awards at Fiscal Year-End Table
The Outstanding Equity Awards at Fiscal Year-End table below sets forth information regarding the outstanding equity awards held by our named executive officers as of December 31, 2012:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
OPTIONS/WARRANTS AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Principal
Position |
Number of
Securities Underlying Unexercised Options (#) Exercisable |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Earned Options (#) |
Option
Exercise Price |
Option
Expiration Date |
Number of
Shares or Units of Stock that have Not Vested |
Market
Value of Stock that is Not Vested |
Equity
Incentive Plan Award: Total Number of Unearned Shares, Units or Other Rights that have Not Vested |
Equity
Incentive Plan Award: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested |
|||||||||||||||||||
Boyd Gentry(1) |
183,731 | 91,894 | 3.75 | 1/10/2021 | ||||||||||||||||||||||||
|
125,000 | 3.93 | 11/16/2022 | |||||||||||||||||||||||||
|
31,500 | $ | 149,625 | |||||||||||||||||||||||||
Martin D. Brew(2) |
18,373 |
36,752 |
5.22 |
6/3/2016 |
||||||||||||||||||||||||
|
52,500 | 3.93 | 3/16/2017 | |||||||||||||||||||||||||
Christopher Brogdon(3) |
105,000 |
5.71 |
11/18/2021 |
|||||||||||||||||||||||||
|
52,500 | 6.67 | 11/18/2021 | |||||||||||||||||||||||||
|
52,500 | 6.67 | 2/15/2022 | |||||||||||||||||||||||||
|
105,000 | 7.62 | 2/15/2022 | |||||||||||||||||||||||||
|
115,763 | 2.59 | 11/1/2017 | |||||||||||||||||||||||||
|
115,763 | 3.46 | 11/1/2017 | |||||||||||||||||||||||||
|
115,762 | 4.32 | 11/1/2017 | |||||||||||||||||||||||||
|
31,500 | $ | 149,625 | |||||||||||||||||||||||||
David Rubenstein(4) |
34,996 |
70,004 |
3.93 |
12/19/2021 |
||||||||||||||||||||||||
|
105,000 | 4.58 | 12/19/2021 | |||||||||||||||||||||||||
David A. Tenwick(5) |
34,472 |
1.05 |
11/16/2017 |
|||||||||||||||||||||||||
|
109,472 | 1.94 | 11/16/2017 | |||||||||||||||||||||||||
|
109,473 | 2.59 | 11/16/2017 | |||||||||||||||||||||||||
|
109,473 | 3.46 | 11/16/2017 | |||||||||||||||||||||||||
|
31,500 | $ | 149,625 |
Director Compensation
Non-Employee Director Compensation and Reimbursement Arrangements
Non-employee directors are reimbursed for travel and other out-of-pocket expenses for travel in connection with their duties as directors.
Prior to July 1, 2012, directors who are not employed by us were paid $4,500 per month plus an additional $1,100 per month if serving as a chairperson of one of the committees of the Board of Directors, as well as $1,000 for each meeting attended in person and $500 for each meeting attended via conference call. After July 1, 2012, directors who are not employed by us were paid $6,000 per month plus an additional $1,500 per month if serving as a chairperson of one of the committees of the Board of Directors and an additional $500 per month if serving on more than one committee.
152
Director Compensation Table
The following table sets forth information regarding compensation paid to our non-employee directors. Directors who are employed by us do not receive any compensation for their activities related to serving on the Board of Directors.
Name
(a)(1) |
Fees
earned or paid in cash (b) |
Stock awards
(c)(2) |
Option
awards (d)(3) |
Non-equity
incentive plan compensation (e) |
Change in
pension value and non- qualified deferred compensation earnings (f) |
All other
compensation (g) |
Total | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter J. Hackett |
$ | 89,600 | $ | 100,800 | | | | | $ | 190,400 | ||||||||||||
Jeffrey Levine |
$ | 74,000 | $ | 100,800 | | | | | $ | 174,800 | ||||||||||||
Joshua J. McClellan |
$ | 67,000 | $ | 100,800 | | | | | $ | 167,800 | ||||||||||||
Philip S. Radcliffe |
$ | 90,100 | $ | 100,800 | | | | | $ | 190,900 | ||||||||||||
Laurence E. Sturtz |
$ | 68,500 | $ | 100,800 | | | | | $ | 169,300 | ||||||||||||
Gary L. Wade(4) |
$ | 66,000 | $ | 100,800 | | | | $ | 225,000 | $ | 391,800 |
|
Number of Shares Subject
to Outstanding Options or Warrants as of December 31, 2012 |
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Number of Shares
of Unvested Restricted Stock as of December 31, 2012 |
|||||||||
Director
|
Exercisable | Unexercisable | ||||||||
Peter J. Hackett |
14,204 | | 31,500 | |||||||
Jeffrey Levine |
29,947 | | 31,500 | |||||||
Joshua J. McClellan |
10,500 | | 31,500 | |||||||
Philip S. Radcliffe |
37,588 | | 31,500 | |||||||
Laurence E. Sturtz |
57,582 | | 31,500 | |||||||
Gary L. Wade |
246,035 | | 31,500 |
Separation Agreements and Continuation Arrangements
In July 2011, we entered into a Separation Agreement with Mr. Wade pursuant to which we agreed to pay certain compensation to him in connection with his ceasing to serve as Co-Chief Executive Officer of the Company on July 1, 2011. Pursuant to such agreement, Mr. Wade became
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entitled to receive salary continuation, expense allowance and employee benefits (including health, life, accident and other benefits as the Company was historically provided) for twenty-four months after such date. The salary continuation and expense allowance amounts total $190,000 and $35,000, respectively, per year.
In August 2011, we determined to pay certain compensation to Mr. Tenwick for his continuing to serve as the Chairman of the Board of Directors. Pursuant to this arrangement, Mr. Tenwick was entitled to receive (i) two years of salary and expense allowance and (ii) $11,000 per month for director fees.
Deferred Compensation Plan
The Company maintains a non-qualified deferred compensation plan previously available to a select group of management or highly compensated employees. Contributions to the plan were made by the participants. The Company does not provide any matching contributions. The benefits of the plan are payable upon the employee's separation of employment with the Company. Mr. Tenwick and Mr. Wade participated in the plan in 2012 and, pursuant to the plan: received in 2012 $179,970 and $43,856, respectively. These amounts were earned by Messrs. Tenwick and Wade prior to 2012 and reported as earned by them in the Company's proxy statements filed with the SEC in prior years. Accordingly, these amounts are not included in the Summary Compensation Table (with respect to Mr. Tenwick) or the Director Compensation Table (with respect to Mr. Wade).
Compensation Committee Interlocks and Insider Participation
During 2012, the Compensation Committee was comprised of Messrs. Levine, Radcliffe and Sturtz. None of the members of the Compensation Committee is a former or current officer or employee of the Company or any of its subsidiaries.
None of our executive officers has served:
Purpose of the Compensation Committee of the Board of Directors
The Compensation Committee advises the Board of Directors with respect to the compensation of each senior executive and each member of the Board of Directors. The Compensation Committee is also charged with the oversight of compensation plans and practices for all employees of the Company. The Compensation Committee relies upon data made available for the purpose of providing information on organizations of similar or larger scale engaged in similar activities. The purpose of the Compensation Committee's activity is to assure that the Company's resources are used appropriately to recruit and maintain competent and talented executives and employees able to operate and grow the Company successfully.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
For information regarding securities authorized for issuance under equity compensation plans, see "Part II, Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
Beneficial Ownership of Common Stock
The following table furnishes information, as of May 31, 2013, as to shares of the common stock beneficially owned by: (i) each person or entity known to us to be the beneficial owner of more than 5% of the common stock, (ii) each of our directors and our named executive officers identified in Part II, Item 11., "Executive CompensationSummary Compensation Table"; and (iii) our directors and executive officers as a group. As of May 31, 2013, there were 14,504,788 shares of the common stock outstanding.
Name of Beneficial Owner(1)
|
Number of
Shares of Common Stock Beneficially Owned(2) |
Percent of
Outstanding Common Stock(3) |
|||||
---|---|---|---|---|---|---|---|
5% Beneficial Owners: |
|||||||
Connie B. Brogdon(4) |
1,616,620 | (5) | 10.7 | % | |||
AQR Capital Management, LLC(6) |
1,206,434 | (7) | 7.7 | % | |||
Park City Capital, LLC(8) |
750,000 | (9) | 5.2 | % | |||
Anthony J. Cantone(10) |
2,058,206 | (11) | 12.5 | % | |||
Directors and Executive Officers: |
|||||||
Martin D. Brew |
35,874 | (12) | * | ||||
Christopher Brogdon |
1,616,620 | (13) | 10.7 | % | |||
Ronald W. Fleming |
| (14) | * | ||||
Boyd P. Gentry |
322,967 | (15) | 2.2 | % | |||
Peter J. Hackett |
40,506 | (16) | * | ||||
Jeffrey Levine |
31,568 | (17) | * | ||||
Joshua J. McClellan |
126,626 | (18) | * | ||||
Philip S. Radcliffe |
65,332 | (19) | * | ||||
David Rubenstein |
34,996 | (20) | * | ||||
Laurence E. Sturtz |
118,649 | (21) | * | ||||
David A. Tenwick |
765,809 | (22) | 5.2 | % | |||
Gary L. Wade |
462,049 | (23) | 3.1 | % | |||
All directors and executive officers as a group |
3,610,996 | 22.8 | % |
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115,763 shares of common stock held by Christopher Brogdon at an exercise price of $2.59 per share; (iv) warrants to purchase 115,763 shares of common stock held by Christopher Brogdon at an exercise price of $3.46 per share; (v) warrants to purchase 115,762 shares of common stock held by Christopher Brogdon at an exercise price of $4.32 per share; and (vi) an option to purchase 105,000 shares of common stock held by Christopher Brogdon at an exercise price of $5.71 per share.
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Arrangements Known to the Registrant Regarding Changes of Control
On April 17, 2013, Brogdon Family, LLC, an affiliate of Christopher Brogdon, our Vice Chairman and beneficial owner of greater than 10% of the common stock, informed the Board of Directors of Brogdon Family's interest in commencing an unsolicited tender offer to acquire, at a price of $8.00 per share, such number of shares of common stock that would result in Mr. Brogdon beneficially owning at least 55%, but no more than 75%, of the outstanding shares of common stock. Brogdon Family also informed the Board of Directors, or otherwise disclosed, that the Tender Offer will be subject to certain conditions, including, but not limited to: (i) the valid tender of shares of common stock totaling at least 55% of the issued and outstanding common stock when added to the shares of common stock held by Brogdon Family and its affiliates; (ii) the absence of litigation regarding the Tender Offer; (iii) the absence of any governmental order being entered enjoining the Tender Offer (and that such order is not anticipated being entered); (iv) the receipt of any required governmental approvals; and (v) Brogdon Family obtaining appropriate financing.
We do not control if or when Brogdon Family commences the Tender Offer or, if commenced, the ultimate terms of the Tender Offer, including the price offered for the common stock. No assurance is made that Brogdon Family will commence the Tender Offer or that, if commenced, it will be completed on terms acceptable to our shareholders or at all.
If and when the Tender Offer is commenced, then, consistent with its fiduciary duties and as required by applicable law, the Board of Directors, in consultation with our independent financial and legal advisors (a) will review the Tender Offer to determine the course of action that it believes is in the best interests of us and our shareholders and (b) will advise shareholders of its formal position regarding the Tender Offer within ten business days after its commencement by making available to our shareholders and filing with the SEC a solicitation/recommendation statement on Schedule 14D-9.
If the Tender Offer is commenced, then we will file a solicitation/recommendation statement with the SEC. INVESTORS AND ALL OF OUR SECURITY HOLDERS ARE URGED TO READ SUCH STATEMENT AND ANY OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. INVESTORS AND SECURITY HOLDERS WILL BE ABLE TO OBTAIN FREE COPIES OF THESE DOCUMENTS (WHEN AVAILABLE) AND OTHER DOCUMENTS FILED WITH THE SEC BY US THROUGH THE WEBSITE MAINTAINED BY THE SEC AT http://www.sec.gov.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Related Party Transactions
Riverchase
On April 9, 2010, Riverchase Village ADK, LLC ("Riverchase"), then a wholly owned subsidiary of the Company, entered into a Purchase Agreement with an Oklahoma limited liability company controlled by a bank ("Riverchase Seller") to acquire the assets of Riverchase Village, a 105-bed assisted living facility located in Hoover, Alabama, for a purchase price of approximately $5,000,000. On June 22, 2010, the Company assigned to Mr. Brogdon 100% of the membership interests in Riverchase. On June 25, 2010, Riverchase, then owned by Mr. Brogdon, purchased Riverchase Village pursuant to the terms of the Purchase Agreement.
In connection with financing of the acquisition of Riverchase Village, Riverchase borrowed from the Medical Clinic Board of the City of Hoover the proceeds from the issuance of $5,845,000 First Mortgage Healthcare Facility Revenue Bonds (Series 2010 A) and $520,000 First Mortgage Revenue Bonds (Series B), which proceeds were used to acquire Riverchase Village, pay the cost of certain repairs and improvements to Riverchase Village, fund certain services and pay the cost of the issuance
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of the bonds. As part of the financing, each of AdCare and Mr. Brogdon guaranteed Riverchase's obligations under the bonds. For a further description regarding the bonds, see Note 20 to the Company's Consolidated Financial Statements included elsewhere in this Annual Report. In June 2010, Riverchase Seller refunded to AdCare the $250,000 of earnest money it had deposited in connection with the Riverchase Village transaction.
As consideration for the assignment of 100% of the membership interests in Riverchase to Mr. Brogdon and AdCare's guaranteeing the bonds, Mr. Brogdon granted to Hearth & Home of Ohio, Inc. ("Hearth & Home"), a wholly owned subsidiary of AdCare, an exclusive and irrevocable option pursuant to an Option Agreement to acquire Riverchase through June 22, 2012 for an exercise price of $100,000 and otherwise under the same terms and conditions set forth in the Purchase Agreement. In addition, a wholly owned subsidiary of AdCare entered into a five-year year Management Agreement with Riverchase pursuant to which such subsidiary supervises the management of the Riverchase Facility for a monthly fee equal to 5% of the monthly gross revenues of the Riverchase Facility. On June 22, 2013, the Management Agreement was terminated.
On July 26, 2012, Hearth & Home and Mr. Brogdon amended the Option Agreement to extend the last date on which the option provided for thereby may be exercised from June 22, 2012 to June 22, 2013.
Mountain Trace
Effective January 1, 2011, pursuant to a purchase and sale agreement and operations transfer agreement, the Company acquired the options and selected assets of Mountain Trace, a 106-bed skilled nursing facility located in Sylva, North Carolina. To complete the acquisition, the Company issued a secured promissory note in the amount of $5,000,000. The promissory note was secured by the Mountain Trace facility and was guaranteed by each of Mr. Brogdon and his spouse, Connie Brogdon.
Office Subleases and Purchase
From April 2011 through November 2012, the Company subletted from JRT Group Properties, LLC ("JRT") on a month-to-month basis Building 1145 of the Offices at Hembree, a condominium used by the Company as its service center and administrative offices, located in Roswell, Georgia (the "Hembree Facility"). Mr. Brogdon's son is a one-third owner of JRT. Pursuant to this sublease, the Company paid to JRT on a monthly basis base rent of approximately $10,458. The Company paid an aggregate of $115,035 and $94,120 in rent under this sublease in 2012 and 2011, respectively. The Company also paid to unrelated third parties amounts for utilities, property taxes and building association dues with respect to the Hembree Facility.
On June 4, 2012, ADK Hembree Road Property, LLC ("ADK Hembree"), a wholly owned subsidiary of AdCare, entered into a Purchase Agreement with JRT to acquire the Hembree Facility. On November 30, 2012, ADK Hembree acquired the Hembree Facility from JRT pursuant to the Purchase Agreement for an aggregate purchase price of $1,083,781 and, in connection therewith, ADK Hembree issued a promissory note in favor of Fidelity Bank for a principal amount of $1,050,000.
Edwards Redeemer and Whispering Pines
In May 2011, First Commercial Bank and Brogdon Family, LLC, an entity owned and controlled by Mr. Brogdon, entered into a Purchase and Sale Agreement pursuant to which Brogdon Family, LLC had the right to acquire six skilled nursing facilities located in Oklahoma for an aggregate purchase price of $16.0 million. These facilities were Edwards Redeemer Nursing Center, Harrah Nursing Center, Northwest Nursing Center, Whispering Pines Nursing Center, McLoud Nursing Center and Meeker Nursing Center. In October 2011, Brogdon Family, LLC, assigned all of its rights under the Purchase and Sale Agreement to AdCare Property Holdings, LLC, a wholly owned subsidiary of
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AdCare ("AdCare Holdings"). In May 2013, AdCare Holdings assigned all of its rights under the Purchase and Sale Agreement with respect to the Harrah Nursing Center, McLoud Nursing Center and Meeker Nursing Center to Brogdon Family, LLC.
In October 2012, AdCare Holdings assigned to Edwards Redeemer Property Holdings, LLC ("Edwards Redeemer") and ER Nursing, LLC ("ER Nursing") (then both wholly owned subsidiaries of AdCare and, collectively, the "Edwards Assignees") all of its right under that certain Purchase and Sale Agreement to purchase the Edwards Redeemer Nursing Center. The Edwards Assignees agreed to assume all obligations of AdCare Holdings under the Purchase and Sale Agreement with respect to the Edwards Redeemer Nursing Center, including reimbursement for out-of-pocket costs. In connection therewith: (i) AdCare Holdings (as the owner of all of the issued and outstanding membership interests of Edward Redeemer) assigned all of its interest in Edwards Redeemer to Mr. Brogdon; and (ii) AdCare Holdings assigned to WP Nursing, LLC, an entity owned and controlled by Mr. Brogdon, all of AdCare Holding's right under the Purchase and Sale Agreement to purchase the Whispering Pines Nursing Center. WP Oklahoma Nursing, LLC has agreed to assume all obligations of the Company under the Purchase and Sale Agreement with respect to the Whispering Pines Nursing Center. In connection with the assignment with respect to the Whispering Pines Nursing Center, the Company has recorded a receivable of less than $0.1 million.
In December 2012, ER Nursing (still a wholly owned subsidiary of AdCare and the licensed operator of the Edwards Redeemer Nursing Center) entered into a Facility Lease with Edwards Redeemer (now owned and controlled by Mr. Brogdon) pursuant to which ER Nursing leases to Edwards Redeemer the operations of the Edwards Redeemer Nursing Center. In connection with entering into the Facility Lease, ER Nursing also entered into a Management Agreement with New Beginnings Care, LLC ("New Beginnings") pursuant to which New Beginnings agreed to manage the Edwards Redeemer Nursing Center for a monthly fee equal to five percent (5%) of the aggregate gross revenues of the Edwards Redeemer Nursing Center. The Management Agreement terminates upon the date the Oklahoma State Department of Health approves the application for the appropriate permits and licenses to allow New Beginnings to become the licensed operator of the Edwards Redeemer Nursing Center (the "Approval Date"), and ER Nursing may terminate the Management Agreement at any time. ER Nursing also entered into an Operations and Indemnification Agreement with New Beginnings, ER Property, Edwards Redeemer Healthcare & Rehab, LLC and Mr. Brogdon (collectively, the "Indemnitors"), pursuant to which the Indemnitors have agreed to indemnify the Company for any of its losses: (x) arising out of the Management Agreement; or (y) resulting from any services provided by New Beginnings at or for the benefit of the Edwards Redeemer Nursing Center.
Pursuant to the Lease, ER Nursing will pay ER Property monthly rent in an amount equal to one hundred-twenty percent (120%) of the monthly payment of principal and interest due to the lender holding a first priority mortgage on the Edwards Redeemer Nursing Center; provided, however, that pursuant to the Operations and Indemnification Agreement, the Indemnitors will indemnify the Company for any rent expenses arising out of the Lease. The Lease terminates upon the Approval Date.
Oklahoma Operations
Effective August 1, 2011, the Oklahoma Owners acquired five skilled nursing facilities located in Oklahoma. In connection with the closing of this acquisition: (i) the Company paid closing costs on behalf of the Oklahoma Owners in the amount of $56,894 (which amount was refunded to the Company in February 2012); and (ii) AdCare Oklahoma Management, LLC, a wholly-owned subsidiary of the Company ("AdCare Oklahoma"), entered into a five-year year Management Agreement with the Oklahoma Owners pursuant to which AdCare Oklahoma supervises the management of the Oklahoma facilities for a monthly fee equal to 5% of the monthly gross revenues of the Oklahoma facilities.
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In December 2012, AdCare Oklahoma entered into a Management Fee Subordination Agreement pursuant to which AdCare Oklahoma agreed to subordinate its right to payment of all management fees owed to AdCare Oklahoma by the Oklahoma Owners to a third-party lender. However, AdCare Oklahoma may continue to accept such management fees owed to it under the Management Agreement, so long as no event of default has occurred under the credit agreement entered into among the third-party lender and the Oklahoma Owners.
Red Rose Facility
In October 2011, pursuant to the terms of an Assignment of Lease and Landlord's Consent, Rose Missouri Nursing, LLC, a wholly owned subsidiary of the Company, became the tenant and operator of the Red Rose facility, a 90-bed skilled nursing facility located in Cassville, Missouri. In connection with this transaction, Mr. Brogdon and his spouse, Connie Brogdon, each guaranteed the performance of the Company's obligations, including payment obligations, under the Lease. In consideration of these guaranties, the Company paid to Mr. Brogdon in 2011 the amount of $25,000 as a guaranty fee.
Golden Years Manor
In January 2012, a wholly owned subsidiary of AdCare entered into a Purchase and Sale Agreement with Gyman Properties, LLC, to acquire a 141-bed skilled nursing facility located in Lonoke, Arkansas, known as Golden Years Manor, for an aggregate purchase price of $6.5 million. Pursuant to the Purchase and Sale Agreement, the Company deposited approximately $0.3 million into escrow to be held as earnest money. In May 2013, the Company decided not to pursue the acquisition of Golden Years Manor because it determined that the facility no longer met its investment criteria. At the time of such determination, the Company was not entitled to reimbursement of its deposit under the Purchase and Sale Agreement. Subsequently, on May 9, 2012, the Company assigned all of its rights under the Purchase and Sale Agreement to GL Nursing, LLC, an entity affiliated with Mr. Brogdon. In connection with such assignment, GL Nursing, LLC agreed to reimburse to the Company the deposit and all of its out-of-pocket costs relating to Golden Years Manor upon the closing of the acquisition, which occurred on May 31, 2012. The assignment provided the Company with an opportunity to recoup the deposit and out-of-pocket costs which would otherwise have been forfeited if the assignment had not occurred. As of December 31, 2012, the Company has recorded a receivable of $0.2 million ("Remaining Balance") in connection with the assignment. The payment of the Remaining Balance shall be due and payable in (i) six equal monthly payments commencing on April 30, 2013 totaling approximately $0.1 million and continuing on the last business day of each month thereafter through September 30, 2012 and (ii) one $0.1 million payment on October 31, 2013. The then Remaining Balance may be prepaid in part or in full at any time prior to September 30, 2013.
Airplane
Since May 2012, the Company has access to an airplane on a month-to-month basis from JRT. Mr. Brogdon's son is a one-third owner of JRT. Pursuant to this arrangement, the Company pays to JRT on a monthly basis base rent of $7,000. The Company paid an aggregate of $56,000 in rent in 2012. The Company has the right to use the airplane with no limitation on hours of usage and is responsible for all costs associated with maintenance such as inspections, fuel, pilot costs and hangar rental.
Consulting Agreement
In December 2012, the Company entered into a Consulting Agreement with Mr. Brogdon pursuant to which Mr. Brogdon will be compensated by the Company for providing consulting services related to the acquisition and financing of skilled nursing facilities. The Consulting Agreement terminates on December 31, 2015 and, if it is not terminated prior to December 31, 2015, will renew automatically for
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successive one-year terms until terminated. As compensation for his services under the Consulting Agreement, Mr. Brogdon shall receive: (i) $10,000 per month in year one; (ii) $15,000 per month in year two; and (iii) $20,000 per month in year three of the Consulting Agreement. In addition, Mr. Brogdon shall receive a success fee of $20,000 for each completed transaction; provided, however, that barring a majority vote of the Board of Directors of the Company, such success fees on a one-year basis shall not exceed $80,000 in year one, $120,000 in year two and $160,000 in year three of the Consulting Agreement. In addition, no success fee shall be paid for transactions involving leased facilities or transactions in which the overall consideration is less than $2,500,000. In the event the Consulting Agreement is terminated by the Company without cause, the Company shall provide severance pay to Mr. Brogdon in an amount equal to eighteen (18) months of Mr. Brogdon's maximum total compensation (including success fees).
In December 2012, the Company entered into agreements to indemnify Mr. Brogdon with respect to certain personal guarantees Mr. Brogdon previously made with respect to loans on the Hembree Facility and the Red Rose facility. The Company has agreed to reimburse Mr. Brogdon for any costs, losses, damages, claims and expenses under the guarantees so long they are not due to Mr. Brogdon's gross negligence, fraud, intentional misrepresentation, willful misconduct, bad faith or criminal act.
Cantone
In March 2012, the Company issued an unsecured promissory note to Cantone Asset Management LLC ("CAM") in the principle amount of $3,500,000. In connection with the issuance of the promissory note to CAM, the Company also issued to CAM a warrant to purchase 300,000 shares of common stock. In April 2012, the Company issued an unsecured promissory note to CAM in the principle amount of $1,500,000. In July 2012, the Company and CAM refinanced these two promissory notes. The promissory notes were canceled and terminated in exchange for the issuance by the Company to CAM of an 8% convertible subordinated note in a principle amount of $5,000,000.
In connection with the issuance of the promissory notes to CAM in March and April of 2012, Cantone Research, Inc. ("CRI") agreed to provide the Company with certain consulting services for a monthly fee if the Company and CAM (or an affiliated entity) did not agree to the terms of an additional financing arrangement pursuant to which it (or affiliated entity) would loan to the Company at least $4,000,000 for a four-year term. In July 2012, the consulting agreement was revised so as to provide for a certain monthly fee payable to CRI regardless of whether the Company and CAM agreed to an additional financing arrangement. Furthermore, under the terms of the revised consulting agreement, the Company issued to CRI 50,000 shares of common stock and a warrant to purchase 100,000 shares of common stock. The Company paid to CRI in 2012 $25,000 in fees pursuant to the consulting agreement.
In July 2012 and March 2011, the Company issued and sold to certain accredited investors an aggregate of $7,500,000 and $$4,508,700 in principle amount of subordinated convertible notes, respectively. In connection with the offerings, CRI acted as the exclusive agent with respect to the private placement of the notes. The Company paid to CRI $42,500 and $60,000 to act as the placement agent pursuant to the July 2012 and March 2011 offerings, respectively.
Other Transactions
In 2007, Mr. Tenwick advanced $155,000 to the Company as a loan from his retirement plan. This loan currently accrues interest at the rate of 8% per annum, with total payments made to Mr. Tenwick in 2011 of interest in the amount of $7,270. The principal amount of this loan was repaid by the Company in full in January of 2012.
Other than the items above, the Company does not believe there are any other material undisclosed related party transactions. For purposes of the disclosure in this Item 13, note that
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Mr. Brogdon is Vice Chairman of the Board of Directors, holds in excess of 10% of the outstanding common stock and, during 2012, served as the Company's Chief Acquisitions Officer.
Approval of Related Party Transactions
Each of the foregoing transactions was approved by the independent members of the Board of Directors of the Company without the related party having input with respect to the discussion of such approval. In addition, the Board of Directors believes that each of the foregoing transactions were necessary for the Company's business and are on terms no less favorable to the Company than could be obtained from independent third parties.
Director Independence
Five of nine of our current directors, Messrs. Hackett, Levine, Radcliffe, Sturtz and McClellan, were independent in 2012 as determined utilizing the standards for director "independence" set forth in the applicable rules of the NYSE MKT listing standards. Since January 1, 2012, all of the members of the Audit Committee were considered "independent," as independence for Audit Committee members is defined in the applicable rules of the NYSE MKT listing standards and the rules of the SEC.
Item 14. Principal Accountant Fees and Services
Pursuant to appointment by the Audit Committee: (i) Battelle & Battelle LLP ("Battelle") has audited the financial statements of the Company and its subsidiaries for the year ended December 31, 2011; and (ii) KPMG LLP ("KPMG") has audited the financial statements of the Company and its subsidiaries for the year ended December 31, 2012.
The following table sets forth the aggregate fees that Battelle and KPMG each billed to the Company for the years ended December 31, 2011 and December 31, 2012, respectively. All of the fees were approved by the Audit Committee in accordance with its policies and procedures.
|
Year Ended
December 31, 2011 |
Year Ended
December 31, 2012 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Battelle | Battelle | KPMG | |||||||
|
(in thousands)
|
(in thousands)
|
||||||||
Audit fees (total)(1) |
$ | 372,000 | $ | 80,000 | $ | 690,000 | ||||
Audit-related fees (total)(2) |
$ | 144,400 | $ | 153,000 | $ | | ||||
Tax fees |
$ | | $ | | $ | | ||||
All other fees |
$ | | $ | | $ | | ||||
Total fees |
$ | 516,400 | $ | 233,000 | $ | 690,000 |
Pre-Approval Policy
The Audit Committee is required to pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed by our independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in
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Section 10A(i)(1)(B) of the Exchange Act that are approved by the Audit Committee prior to completion of the audit.
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements. The following financial statements of AdCare Health Systems, Inc. and its Subsidiaries are included in Part II, Item 8 of this Annual Report.
(a)(2) Financial Statement Schedules. Financial statement schedules are omitted because they are not required, are not material, are not applicable, or the required information is shown in the financial statements or notes thereto.
(a)(3) Exhibits. A list of the Exhibits required by Item 601 of Regulation S-K to be filed as a part of this Annual Report is shown on the "Exhibit Index" filed herewith and incorporated herein by this reference.
In reviewing the agreements included as exhibits to this Annual Report, investors are reminded that they are included to provide information regarding their terms and are not intended to provide any other factual or disclosure information about AdCare or the other parties to the agreements. Some of the agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
Accordingly, the representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about us may be found elsewhere in this Annual Report and our other public filings with the SEC, which are available without charge on our website at www.adcarehealth.com.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AdCare Health Systems, Inc. | ||||
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|
by |
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/s/ BOYD P. GENTRY |
Boyd P. Gentry, President and Chief Executive Officer July 8, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE
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TITLE
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DATE
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/s/ DAVID A. TENWICK
David A. Tenwick |
Director, Chairman | July 8, 2013 | ||
/s/ CHRISTOPHER F. BROGDON Christopher F. Brogdon |
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Director, Vice Chairman |
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July 8, 2013 |
/s/ BOYD P. GENTRY Boyd P. Gentry |
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Director, Chief Executive Officer (Principal Executive Officer) |
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July 8, 2013 |
/s/ RONALD W. FLEMING Ronald W. Fleming |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
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July 8, 2013 |
/s/ PETER J. HACKETT Peter J. Hackett |
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Director |
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July 8, 2013 |
/s/ JEFFREY L. LEVINE Jeffrey L. Levine |
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Director |
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July 8, 2013 |
/s/ JOSHUA J. MCCLELLAN Joshua J. McClellan |
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Director |
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July 8, 2013 |
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SIGNATURE
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TITLE
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DATE
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/s/ PHILIP S. RADCLIFFE
Philip S. Radcliffe |
Director | July 8, 2013 | ||
/s/ LAURENCE E. STURTZ Laurence E. Sturtz |
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Director |
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July 8, 2013 |
/s/ GARY L. WADE Gary L. Wade |
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Director |
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July 8, 2013 |
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Exhibit No. | Description | Method of Filing | |||
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2.1 | Purchase and Sale Agreement, dated as of January 3, 2012, between SCLR, LLC and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.9 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
2.2 | Purchase and Sale Agreement, dated as of January 17, 2012, between Gyman Properties, LLC and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
2.3 | Purchase and Sale Agreement, dated March 12, 2012, by and between Westlake Nursing Home Limited and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed March 15, 2012 | |||
2.4 | Purchase and Sale Agreement, dated March 14, 2012, by and between F & F Ventures, LLC, Tulsa Christian Care, Inc., d/b/a/ Companions Specialized Care Center and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K filed March 15, 2012 | |||
2.5 | Purchase and Sale Agreement, dated as of April 3, 2012, between Evans Memorial Hospital, Inc. and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed April 9, 2012 | |||
2.6 | Third Amendment to Purchase and Sale Agreement, dated as of April 17, 2012, by and between First Commercial Bank and AdCare Property Holdings, LLC. | Incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K filed April 23, 2012 | |||
2.7 | Purchase Agreement, dated as of April 27, 2012, between AdCare Property Holdings, LLC and 1761 Pinewood Holdings, LLC | Incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
2.8 | Second Amendment to Purchase and Sale Agreement, dated April 30, 2012, by and between Gyman Properties, LLC and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
2.9 | First Amendment to Purchase and Sale Agreement, dated May 15, 2012, by and between AdCare Property Holdings, LLC and Westlake Nursing Home Limited | Incorporated by reference to Exhibit 2.6 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
2.10 | Purchase Agreement, dated June 4, 2012, by and between AdCare Hembree Road Property, LLC and JRT Group Properties, LLC | Incorporated by reference to Exhibit 2.7 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
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167
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
2.11 | Second Amendment to Purchase and Sale Agreement, dated June 19, 2012, by and among F & F Ventures, LLC, Tulsa Christian Care, Inc., d/b/a Companions Specialized Care Center, George Perry Farmer, Jr., Jessica L. Farmer and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.5 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
2.12 | Amendment to Purchase Agreement, dated July 19, 2012, between 1761 Pinewood Holdings, LLC and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.13 | Purchase and Sale Agreement, dated as of August 9, 2012, between Winyah Nursing Home, Inc. and AdCare Property Holdings, LLC | Incorporated by reference from Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed August 15, 2012 | |||
2.14 | Second Amendment to Purchase Agreement, dated as of August 31, 2012, between Winyah Nursing Home, Inc. and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.15 | Third Amendment to Purchase Agreement, dated as of September 27, 2012, between 1761 Pinewood Holdings, LLC and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.4 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.16 | Agreement of Sale, dated October 11, 2012, between AdCare Health Systems, Inc., certain of its subsidiaries named therein and CHP Acquisition Company, LLC | Incorporated by reference to Exhibit 2.5 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.17 | Assignment of Purchase and Sale Agreement, dated October 12, 2012, executed by AdCare Property Holdings, LLC in favor of Edwards Redeemer Property Holdings, LLC and ER Nursing, LLC | Incorporated by reference to Exhibit 2.6 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.18 | Assignment of Purchase and Sale Agreement, dated October 12, 2012, executed by AdCare Property Holdings, LLC in favor of WP Oklahoma Nursing, LLC | Incorporated by reference to Exhibit 2.7 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.19 | Membership Interest Power (transferring membership interests of Edwards Redeemer Property Holdings, LLC from AdCare Property Holdings, LLC to Christopher Brogdon), dated October 12, 2012 | Incorporated by reference to Exhibit 2.8 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
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168
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
2.20 | Fourth Amendment to Purchase and Sale Agreement, dated October 8, 2012, between AdCare Property Holdings, LLC and First Commercial Bank | Incorporated by reference from Exhibit 2.5 to the Registrant's Current Report on Form 8-K filed October 10, 2012 | |||
2.21 | Membership Interest Purchase Agreement, dated as of September 25, 2012, by and between John B. Montgomery and Michael Morton and AdCare Property Holdings, LLC | Incorporated by reference from Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed October 1, 2012 | |||
2.22 | Addendum to Membership Interest Purchase Agreement, dated as of September 26, 2012, by and between John B. Montgomery and Michael Morton and AdCare Property Holdings, LLC | Incorporated by reference from Exhibit 2.2 to the Registrant's Current Report on Form 8-K filed October 1, 2012 | |||
2.23 | First Amendment to Purchase and Sale Agreement, effective as of October 31, 2012, between AdCare Property Holdings, LLC and Winyah Nursing Home, LLC | Incorporated by reference to Exhibit 2.12 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
2.24 | Fifth Amendment to Purchase and Sale Agreement, dated as of November 30, 2012, by and between First Commercial Bank and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 2.6 of the Registrant's Current Report on Form 8-K filed December 19, 2012 | |||
2.25 | First Amendment to Asset Purchase Agreement, dated December 28, 2012, among CHP Acquisition Company, LLC, AdCare Health Systems Inc. and certain of its subsidiaries named therein | Filed herewith | |||
2.26 | Assignment of Purchase and Sale Agreement, dated December 31, 2012, by and between AdCare Property Holdings, LLC, Northwest Property Holdings, LLC and NW 61 st Nursing, LLC | Filed herewith | |||
2.27 | Purchase and Sale Agreement, dated February 15, 2013, between AdCare Property Holdings, LLC and Avalon Health Care, LLC | Filed herewith | |||
2.28 | First Amendment to Purchase and Sale Agreement, dated March 14, 2013, between AdCare Property Holdings, LLC and Avalon Health Care, LLC | Filed herewith | |||
2.29 | Second Amendment to Purchase and Sale Agreement, dated August 31, 2012, by and between AdCare Property Holdings, LLC and 1761 Pinewood Holdings, LLC | Incorporated by reference to Exhibit 2.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
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169
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
2.30 | First Amendment to Purchase and Sale Agreement, dated March 20, 2012, by and between Gyman Properties, LLC and AdCare Property Holdings, LLC | Filed herewith | |||
2.31 | First Amendment to Purchase and Sale Agreement, dated April 19, 2012, by and among AdCare Property Holdings, LLC, F & F Ventures, LLC and Tulsa Christian Care, Inc., d/b/a Companions Specialized Care Center | Filed herewith | |||
2.32 | Third Amendment to Purchase and Sale Agreement, dated July 31, 2012, by and among AdCare Property Holdings, LLC, F & F Ventures, LLC and Tulsa Christian Care, Inc., d/b/a Companions Specialized Care Center | Filed herewith | |||
3.1 | Amended and Restated Articles of Incorporation | Incorporated by reference from Exhibit 3.1 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
3.2 | Code of Regulations | Incorporated by reference from Exhibit 3.2 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
3.3 | Amendment to Amended and Restated Articles of Incorporation | Incorporated by reference to Exhibit 3.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
3.4 | Affidavit, dated June 28, 2012 | Incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K filed on July 5, 2012 | |||
3.5 | Certificate of Amendment to Amended and Restated Articles of Incorporation of AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 3.5 of the Registrant's Registration Statement on Form 8-A filed on November 7, 2012 | |||
4.1 | Specimen Common Share Certificate | Incorporated by reference to Exhibit 4.1 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
4.2 | Specimen Warrant Certificate | Incorporated by reference to Exhibit 4.3 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
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170
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
4.3 | Form of 10.875% Series A Cumulative Redeemable Preferred Stock Certificate | Incorporated by reference to Exhibit 4.1 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
4.4 | * | 2004 Stock Option Plan of AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 4.1 of the Registrant's Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011 | ||
4.5 | * | 2005 Stock Option Plan of AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 4.2 of the Registrant's Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011 | ||
4.6 | * | AdCare Health Systems, Inc. 2011 Stock Incentive Plan | Incorporated by reference to Exhibit 4.3 of the Registrant's Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011 | ||
4.7 | * | Form of Non-Statutory Stock Option Agreement | Incorporated by reference to Exhibit 4.4 of the Registrant's Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011 | ||
4.8 | * | Form of Incentive Stock Option Agreement | Incorporated by reference to Exhibit 4.5 of the Registrant's Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011 | ||
4.9 | Amended and Restated Warrant Agreement between AdCare Health Systems, Inc. and Continental Stock Transfer & Trust Company, dated as of February 15, 2010, but first fully executed and delivered on June 27, 2011 | Incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed June 29, 2011 | |||
4.10 | Form of Subordinated Convertible Note, issued April 29, 2011, by AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 4.2 to the Registrant's Form S-3 (File No. 333-175541) | |||
4.11 | Warrant to Purchase Shares of Common Stock, dated March 31, 2011, issued by AdCare Health Systems, Inc. to Cantone Research, Inc. | Incorporated by reference to Exhibit 4.3 to the Registrant's Form S-3 (File No. 333-175541) | |||
4.12 | Registration Rights Agreement, dated April 29, 2011, by and among AdCare Health Systems, Inc. and the investors named therein | Incorporated by reference to Exhibit 4.5 to the Registrant's Form S-3 (File No. 333-175541) | |||
4.13 | Registration Rights Agreement, dated March 31, 2011, by and among AdCare Health Systems, Inc. and the investors named therein | Incorporated by reference to Exhibit 10.2 to the Registrant's Form S-3 (File No. 333-175541) |
171
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
4.14 | Form of Registration Rights Agreement, dated as of June 28, 2012, between AdCare Health Systems, Inc. and the Buyers signatory thereto | Incorporated by reference from Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed July 5, 2012 | |||
4.15 | Form of 8% Subordinated Convertible Note Due 2015 issued by AdCare Health Systems, Inc. | Incorporated by reference from Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed July 5, 2012 | |||
4.16 | Form of Warrant to Purchase Common Stock of the Company | Incorporated by reference to Exhibit 4.3 to the Registrant's Form S-3 (File No. 333-175541) | |||
4.17 | Form of Subordinated Convertible Note, issued March 31, 2011, by AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed April 6, 2011 | |||
4.18 | Warrant to Purchase 312,500 Shares of Common Stock, dated April 1, 2012, issued by AdCare Health Systems, Inc. to Strome Alpha Offshore Ltd. | Incorporated by reference to Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
4.19 | Warrant to Purchase 300,000 Shares of Common Stock, dated March 30, 2012, issued by AdCare Health Systems, Inc. to Cantone Asset Management LLC | Incorporated by reference to Exhibit 4.2 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
4.20 | Warrant to Purchase 100,000 Shares of Common Stock, dated July 2, 2012, issued by AdCare Health Systems, Inc. to Cantone Research, Inc. | Incorporated by reference to Exhibit 4.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
4.21 | Warrant to Purchase 50,000 Shares of Common Stock, dated December 28, 2012, issued by AdCare Health Systems, Inc. to Strome Alpha Offshore Ltd. | Filed herewith | |||
4.22 | Warrant to Purchase 15,000 Shares of Common Stock, dated August 31, 2012, issued by AdCare Health Systems, Inc. to Hayden IR, LLC | Filed herewith | |||
4.23 | * | Warrant to Purchase 70,000 Shares of Common Stock, dated May 15, 2013, issued by AdCare Health Systems, Inc. to Ronald W. Fleming | Filed herewith | ||
10.1 | * | Employment Agreement between AdCare Health Systems, Inc. and David A. Tenwick, dated September 1, 2008 | Incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed September 8, 2008 | ||
10.2 | Reimbursement Agreement between Community's Hearth & Home, Ltd. and Cornerstone Bank dated December 1, 2002 | Incorporated by reference to Exhibit 10.14 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
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172
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.3 | Reimbursement Agreement between Community's Hearth & Home, Ltd. and The Huntington National Bank dated September 13, 2007 | Incorporated by reference to Exhibit 10.19 of the Registrant's annual report on form 10-KSB as amended March 31, 2008 | |||
10.4 | Form of Warrant granted to management to Purchase Shares of AdCare Health Systems, Inc. dated November 20, 2007 | Incorporated by reference to Exhibit 10.19 of the Registrant's annual report on form 10-KSB as amended March 31, 2008 | |||
10.5 | Regulatory Agreement and Mortgage Note between The Pavilion Care Center, LLC and Red Mortgage Capital, Inc, in the original amount of $2,108,800 dated November 27, 2007 | Incorporated by reference to Exhibit 10.19 of the Registrant's annual report on form 10-KSB as amended March 31, 2008 | |||
10.6 | Regulatory Agreement and Mortgage Note between Hearth & Home of Urbana and Red Mortgage Capital, Inc, in the original amount of $2,142,700 dated June 26, 2008 | Incorporated by reference to Exhibit 10.26 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.7 | Regulatory Agreement and Mortgage Note between Community's Hearth & Home and Red Mortgage Capital, Inc, in the original amount of $1,863,800 dated June 26, 2008 | Incorporated by reference to Exhibit 10.27 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.8 | Promissory Note between Assured Health Care and Huntington National Bank in the original amount of $760,000 dated July 24, 2008 | Incorporated by reference to Exhibit 10.28 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.9 | Promissory Note between AdCare Health Systems, Inc. and Huntington National Bank in the original amount of $300,000 dated October 17, 2008 | Incorporated by reference to Exhibit 10.29 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.10 | Promissory Note between AdCare Health Systems, Inc. and Huntington National Bank in the original amount of $100,000 dated November 14, 2008 | Incorporated by reference to Exhibit 10.30 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.11 | Regulatory Agreement and Mortgage Note between Hearth & Care of Greenfield and Red Mortgage Capital, Inc, in the original amount of $2,524,800 dated July 29, 2008 | Incorporated by reference to Exhibit 10.31 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.12 | Promissory Note between AdCare Health Systems and the AdCare Deferred Compensation plan for a $150,000 line of credit dated January 2008 | Incorporated by reference to Exhibit 10.32 of the Registrant's annual report on form 10-K filed March 31, 2009 | |||
10.13 | Loan Agreement and Secured Promissory Note between Coosa Nursing ADK, LLC, and Metro City Bank in the original amount of $7,500,000 dated September 30, 2010 | Incorporated by reference to Exhibits 10.1 and 10.2 of the Registrant's Form 8-K filed October 6, 2010 |
173
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.14 | Promissory Note between Coosa Nursing ADK, LLC, and Coosa Valley Health Care Inc. in the original amount of $600,000 dated September 30, 2010 | Incorporated by reference to Exhibits 10.1 and 10.2 of the Registrant's Form 8-K filed October 6, 2010 | |||
10.15 | Loan Agreement and Secured Promissory Note between Attalla Nursing ADK, LLC, and Metro City Bank in the original amount of $8,320,000 dated September 30, 2010 | Incorporated by reference to Exhibits 10.1 and 10.6 of the Registrant's Form 8-K filed October 6, 2010 | |||
10.16 | Form of Subordinated Convertible Note dated October 26, 2010 | Incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed November 1, 2010 | |||
10.17 | Credit Agreement between Gemino Healthcare Finance, LLC and certain subsidiaries of the Registrant named therein dated October 29, 2010 | Incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed November 4, 2010 | |||
10.18 | * | Employment Agreement between AdCare Health Systems, Inc. and Boyd Gentry, effective as of January 10, 2011 | Incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed January 14, 2011 | ||
10.19 | Securities Purchase Agreement dated March 31, 2011, by and among AdCare Health Systems, Inc. and the investors named therein | Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed April 6, 2011 | |||
10.20 | Registration Rights Agreement dated October 26, 2010, by and among AdCare Health Systems, Inc. and the investors named therein | Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed April 6, 2011 | |||
10.21 | Form of Lock-Up Agreement, dated March 31, 2011 | Incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed April 6, 2011 | |||
10.22 | Promissory Note dated March 31, 2011, by and among AdCare Health Systems, Inc. and Anthony Cantone | Incorporated by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed April 6, 2011 | |||
10.23 | Promissory Note dated April 29, 2011, between Erin Property Holdings, LLC, Erin Nursing, LLC and Regions Bank | Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed May 5, 2011 | |||
10.24 | Erin Property Holdings, LLC Deed to Secure Debt, Assignment of Rents and Security Agreement dated April 29, 2011 | Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed May 5, 2011 | |||
10.25 | Promissory Note, dated April 29, 2011, between Mt. Kenn Property Holdings, LLC, Mt. Kenn Nursing, LLC, and Regions Bank | Incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed May 5, 2011 | |||
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174
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.26 | Mt. Kenn Property Holdings, LLC Deed to Secure Debt, Assignment of Rents and Security Agreement dated April 29, 2011 | Incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed May 5, 2011 | |||
10.27 | CP Property Holdings, LLC Business Loan Agreement dated May 25, 2011 | Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed June 6, 2011 | |||
10.28 | CP Property Holdings, LLC Loan Agreement dated May 27, 2011 | Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed June 6, 2011 | |||
10.29 | Form of Promissory Note, issued by Mount Trace Nursing ADK, LLC | Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed June 16, 2011 | |||
10.30 | Amendment, dated June 22, 2011, between Hearth & Home of Ohio, Inc. and Christopher F. Brogdon | Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed June 22, 2011 | |||
10.31 | Guaranty, dated May 26, 2011, made by Christopher F. Brogdon | Incorporated by reference to Exhibit 10.34 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.32 | Guaranty, dated May 26, 2011, made by Connie B. Brogdon | Incorporated by reference to Exhibit 10.35 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.33 | Operations Transfer Agreement, dated May 1, 2011, between Five Star Quality Care-GA, LLC and Erin Nursing, LLC | Incorporated by reference to Exhibit 10.36 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.34 | Operations Transfer Agreement, dated May 1, 2011, between Five Star Quality Care-GA, LLC and Mt. Kenn Nursing, LLC | Incorporated by reference to Exhibit 10.37 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.35 | Operations Transfer Agreement, dated May 1, 2011, between Five Star Quality Care-GA, LLC and Mt. Kenn Nursing, LLC | Incorporated by reference to Exhibit 10.38 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.36 | Commercial Guaranty, dated May 25, 2011,made by Christopher F. Brogdon | Incorporated by reference to Exhibit 10.39 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.37 | Commercial Guaranty, dated May 25, 2011, made by Connie B. Brogdon | Incorporated by reference to Exhibit 10.40 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
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175
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.38 | Joinder Agreement, Third Amendment and Supplement to Credit Agreement, dated June 2, 2011, among Gemino Healthcare Finance, LLC and the subsidiaries of the Company named therein | Incorporated by reference to Exhibit 10.41 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.39 | Loan Agreement, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the SBA Loan #47671350-10 | Incorporated by reference to Exhibit 10.42 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.40 | Term Note, dated July 27, 2011, made by Erin Property Holdings, LLC in favor of Bank of America, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 | |||
10.41 | Note, dated July 27, 2011, made by Erin Property Holdings, LLC, in favor of Bank of America, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.42 | Term Loan Agreement, dated July 27, 2011, among Erin Property Holdings, LLC, Erin Nursing, LLC, AdCare Health Systems, Inc. and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.43 | Loan Agreement, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.44 | Deed to Secure Debt and Security Agreement, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.45 | Deed to Secure Debt and Security Agreement, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.46 | Deed to Secure Debt and Security Agreement, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.47 | Assignment of Leases and Rents, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
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176
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.48 | Assignment of Leases and Rents, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.49 | Indemnity Agreement, Regarding Hazardous Materials, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.50 | Indemnity Agreement, Regarding Hazardous Materials, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.10 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.51 | Security Agreement, dated July 27, 2011, between Erin Property Holdings, LLC, Erin Nursing, LLC and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.52 | Security Agreement, dated July 27, 2011, between Erin Property Holdings, LLC, Erin Nursing, LLC and Bank of Atlanta, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.12 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.53 | Guaranty, dated July 27, 2011, made by Erin Nursing, LLC, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.13 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.54 | Guaranty, dated July 27, 2011, made by AdCare Health Systems, Inc., with respect to the USDA Loan | Incorporated by reference to Exhibit 10.14 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.55 | Unconditional Guarantee Business and Industry Guarantee Loan Program, dated July 27, 2011, made by Erin Nursing, LLC, with respect to the USDA Loan | Incorporated by reference to Exhibit 10.15 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.56 | Unconditional Guarantee Business and Industry Guarantee Loan Program, dated July 27, 2011, made by AdCare Health Systems, Inc., with respect to the USDA Loan | Incorporated by reference to Exhibit 10.16 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.57 | Unconditional Guarantee, dated July 27, 2011, made by Erin Nursing, LLC, with respect to the SBA Loan | Incorporated by reference to Exhibit 10.17 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 |
177
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.58 | Unconditional Guarantee, dated July 27, 2011, made by AdCare Health Systems, Inc., with respect to the SBA Loan | Incorporated by reference to Exhibit 10.18 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.59 | Escrow Agreement, dated July 27, 2011, between Erin Property Holdings, LLC, Bank of Atlanta, and Bank of Atlanta as Escrow Agent, with respect to the USDA Loan and the SBA Loan | Incorporated by reference to Exhibit 10.19 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.60 | Loan Agreement, dated July 27, 2011, between Erin Property Holdings, LLC and Bank of Atlanta, with respect to the SBA Loan #47671350-10 | Incorporated by reference to Exhibit 10.20 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011 | |||
10.61 | Securities Purchase Agreement dated April 29, 2011, by and among AdCare Health Systems, Inc. and the investors named therein | Incorporated by reference to Exhibit 10.2 of the Registrant's Form S-3 (File No. 333-175541) | |||
10.62 | Loan Agreement, made and entered into September 1, 2011, by and between Homestead Property Holdings, LLC and Metro City Bank | Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.63 | Promissory Note, dated September 1, 2011, issued by Homestead Property Holdings, LLC, in favor of Metro City Bank, in the amount of $3,600,000 | Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.64 | Mortgage and Security Agreement, dated September 1, 2011, between Homestead Property Holdings, LLC and Metro City Bank | Incorporated by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.65 | Security Agreement, dated September 1, 2011, between Homestead Property Holdings, LLC and Homestead Nursing, LLC, as the debtor, and Metro City Bank, as the secured party | Incorporated by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.66 | Guaranty, dated as of September 1, 2011, issued by Homestead Nursing, LLC in favor of Metro City Bank | Incorporated by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.67 | Guaranty, dated as of September 1, 2011, issued by AdCare Health Systems, Inc., in favor of Metro City Bank | Incorporated by reference to Exhibit 99.6 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.68 | Guaranty, dated as of September 1, 2011, issued by AdCare Health Systems, Inc., in favor of Metro City Bank | Incorporated by reference to Exhibit 99.6 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
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178
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.69 | Guaranty, dated as of September 1, 2011, issued by Christopher F. Brogdon in favor of Metro City Bank | Incorporated by reference to Exhibit 99.7 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.70 | Loan Agreement, dated as of September 1, 2011, by and among Benton Property Holdings, LLC; Park Heritage Property Holdings, LLC and Valley River Property Holdings, LLC, as borrowers, and The PrivateBank and Trust Company, as lender | Incorporated by reference to Exhibit 99.8 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.71 | Promissory Note, dated September 1, 2011, issued by Benton Property Holdings, LLC; Park Heritage Property Holdings, LLC and Valley River Property Holdings, LLC, in favor of The PrivateBank and Trust Company, in the amount of $11,800,000 | Incorporated by reference to Exhibit 99.9 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.72 | Term Loan Agreement, dated July 27, 2011, among Erin Property Holdings, LLC, Erin Nursing, LLC, AdCare Health Systems, Inc. and Bank of Atlanta, with respect to the USDA Loan | Incorporated by reference to Exhibit 99.10 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.73 | Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated as of September 1, 2011, executed by Benton Property Holdings, LLC, to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.11 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.74 | Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated as of September 1, 2011, executed by Valley River Property Holdings, LLC, to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.12 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.75 | Guaranty of Payment and Performance, dated as of September 1, 2011, issued by AdCare Health Systems, Inc.; Benton Nursing, LLC; Park Heritage Nursing, LLC; and Valley River Nursing, LLC in favor of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.13 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.76 | Guaranty of Payment and Performance, dated as of September 1, 2011, issued by AdCare Health Systems, Inc.; Benton Nursing, LLC; Park Heritage Nursing, LLC; and Valley River Nursing, LLC in favor of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.13 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
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179
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.77 | Secured Promissory Note, dated August 31, 2011, issued by Benton Property Holdings, LLC; Valley River Property Holdings, LLC; Homestead Property Holdings, LLC; Park Heritage Property Holdings, LLC and Home Office Property Holdings, LLC, in favor of KMJ Management, LLC (d/b/a Pinnacle Healthcare, LLC), in the amount of $2,400,000 | Incorporated by reference to Exhibit 99.14 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.78 | Mortgage, made and entered into as of August 31, 2011, by and between Benton Property Holdings, LLC and KMJ Management, LLC | Incorporated by reference to Exhibit 99.15 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.79 | Mortgage, made and entered into as of August 31, 2011, by and between Park Heritage Property Holdings, LLC and KMJ Management, LLC | Incorporated by reference to Exhibit 99.16 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.80 | Mortgage, made and entered into as of August 31, 2011, by and between Valley River Property Holdings, LLC and KMJ Management, LLC | Incorporated by reference to Exhibit 99.17 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.81 | Pledge and Security Agreement with Power of Sale, entered into and executed as of August 31, 2011, by and between AdCare Property Holdings, LLC and KMJ Management, LLC, with respect to one hundred percent (100%) of the ownership interest in Benton Property Holdings, LLC | Incorporated by reference to Exhibit 99.18 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.82 | Pledge and Security Agreement with Power of Sale, entered into and executed as of August 31, 2011, by and between AdCare Property Holdings, LLC and KMJ Management, LLC, with respect to one hundred percent (100%) of the ownership interest in Valley River Property Holdings, LLC | Incorporated by reference to Exhibit 99.19 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.83 | Pledge and Security Agreement with Power of Sale, entered into and executed as of August 31, 2011, by and between AdCare Property Holdings, LLC and KMJ Management, LLC, with respect to one hundred percent (100%) of the ownership interest in Homestead Property Holdings, LLC | Incorporated by reference to Exhibit 99.20 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
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180
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.84 | Pledge and Security Agreement with Power of Sale, entered into and executed as of August 31, 2011, by and between AdCare Property Holdings, LLC and KMJ Management, LLC, with respect to one hundred percent (100%) of the ownership interest in Park Heritage Property Holdings, LLC | Incorporated by reference to Exhibit 99.21 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.85 | Pledge and Security Agreement with Power of Sale, entered into and executed as of August 31, 2011, by and between AdCare Property Holdings, LLC and KMJ Management, LLC, with respect to one hundred percent (100%) of the ownership interest in Home Office Property Holdings, LLC | Incorporated by reference to Exhibit 99.22 to the Registrant's Current Report on Form 8-K filed September 7, 2011 | |||
10.86 | Loan Agreement, dated September 6, 2011, by and between CP Property Holdings, LLC; CP Nursing, LLC; and Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.43 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.87 | Promissory Note, dated September 6, 2011, issued by CP Property Holdings, LLC, in favor of Economic Development Corporation of Fulton County, in the amount of $2,034,000 | Incorporated by reference to Exhibit 10.44 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.88 | Deed to Secure Debt and Security Agreement, made an entered into September 6, 2011, by and between CP Property Holdings, LLC and Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.45 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.89 | Security Agreement, made and entered into as of September 6, 2011, between CP Property Holdings, LLC and CP Nursing, LLC, as grantors, and Economic Development Corporation of Fulton County, as the secured party | Incorporated by reference to Exhibit 10.46 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.90 | Unconditional Guarantee, dated September 6, 2011, issued by AdCare Health Systems, Inc. in favor of Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.47 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
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181
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.91 | Unconditional Guarantee, dated September 6, 2011, issued by CP Nursing, LLC in favor of Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.48 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.92 | Unconditional Guarantee, dated September 6, 2011, issued by Hearth and Home of Ohio, Inc. in favor of Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.49 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.93 | Loan Agreement, dated as of September 30, 2011, by and among Benton Nursing, LLC, Park Heritage Nursing, LLC and Valley River Nursing, LLC, as borrowers, and The PrivateBank and Trust Company, as lender | Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed October 6, 2011 | |||
10.94 | Promissory Note, dated September 30, 2011, issued by Benton Nursing, LLC, Park Heritage Nursing, LLC and Valley River Nursing, LLC, in favor of The PrivateBank and Trust Company, in the amount of $2,000,000 | Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed October 6, 2011 | |||
10.95 | Guaranty of Payment and Performance, dated September 30, 2011, executed by AdCare Health Systems, Inc., Benton Property Holdings, LLC, Park Heritage Property Holdings, LLC and Valley River Property Holdings, LLC, in favor of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed October 6, 2011 | |||
10.96 | Term Loan Agreement, dated as of October 14, 2011, by and among Homestead Property Holdings, LLC and Homestead Nursing, LLC, as borrowers; AdCare Health Systems, Inc., as guarantor; and Square 1 Bank, as lender | Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.97 | Term Note, dated October 14, 2011, issued by Homestead Property Holdings, LLC and Homestead Nursing, LLC, in favor of Square 1 Bank, in the amount of $3,600,000 | Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.98 | Mortgage and Security Agreement, dated October 14, 2011, by and between Homestead Property Holdings, LLC and Square 1 Bank | Incorporated by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
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182
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.99 | Security Agreement, dated October 14, 2011, by and between Homestead Property Holdings, LLC and Homestead Nursing, LLC, as debtors, and Square 1 Bank, as the secured party | Incorporated by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.100 | Guaranty, dated October 14, 2011, issued by AdCare Health Systems, Inc. in favor of Square 1 Bank | Incorporated by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.101 | United States Department of Agriculture Rural Development, Unconditional Guarantee, Business and Industry Guaranteed Loan Program, on Form RD 4279-14, dated October 13, 2011, issued by AdCare Health Systems, Inc. in favor of Square 1 Bank | Incorporated by reference to Exhibit 99.6 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.102 | Escrow Agreement, dated October 14, 2011, by and among Homestead Property Holdings, LLC and Homestead Nursing, LLC, as borrowers, and Square 1 Bank, as both lender and escrow agent | Incorporated by reference to Exhibit 99.7 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.103 | Purchase and Sale Agreement, made and entered into as of May 5, 2011, by and between First Commercial Bank and Brogdon Family, LLC | Incorporated by reference to Exhibit 99.8 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.104 | First Amendment to Purchase and Sale Agreement, made and entered into as of June 13, 2011, by and between First Commercial Bank and Brogdon Family, LLC | Incorporated by reference to Exhibit 99.9 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.105 | Amendment and Assignment of Purchase and Sale Agreement, made and entered into as of September 30, 2011, by and among First Commercial Bank, Brogdon Family, LLC and AdCare Property Holdings, LLC | Incorporated by reference to Exhibit 99.10 to the Registrant's Current Report on Form 8-K filed October 20, 2011 | |||
10.106 | Guaranty of AdCare Health Systems, Inc., dated August 31, 2011, issued in favor of KMJ Management, LLC | Incorporated by reference to Exhibit 10.63 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 | |||
10.107 | Assignment of Lease and Landlord's Consent, made and entered into as of October 31, 2011, by and among Cassville Real Estate, Inc. (f/k/a Cassville Manor, Inc.), KMJ Enterprises Cassville, LLC and Rose Missouri Nursing, LLC | Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed November 4, 2011 |
183
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.108 | Operations Transfer Agreement, dated as of November 1, 2011, by and between KMJ Management, LLC (d/b/a Pinnacle Healthcare, LLC) and Rose Missouri Nursing, LLC | Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed November 4, 2011 | |||
10.109 | Guaranty of Lease, made as of November 1, 2011, issued by each of AdCare Health Systems, Inc., Christopher F. Brogdon and Connie B. Brogdon in favor of Cassville Real Estate, Inc | Incorporated by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed November 4, 2011 | |||
10.110 | Loan Agreement, made and entered into November 30, 2011, issued by Mt. V Property Holdings, LLC, Mountain View Nursing, LLC and Metro City Bank | Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
10.111 | Promissory Note, dated November 30, 2011, issued by Mt. V Property Holdings, LLC and Mountain View Nursing, LLC in favor of Metro City Bank in the amount of $3,114,000 | Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
10.112 | Mortgage and Security Agreement, dated as of November 30, 2011, between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
10.113 | Security Agreement, dated November 30, 2011, between Mt. V Property Holdings, LLC, Mountain View Nursing, LLC and Metro City Bank | Incorporated by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
10.114 | Guaranty, dated as of November 30, 2011, issued by Mt. V Property Holdings, LLC and Mountain View Nursing, LLC in favor of Metro City Bank | Incorporated by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
10.115 | Term Note, dated as of November 29, 2011, issued by Mountain Top AFL, LLC and Mountain Top Property Holdings, LLC, in favor of White River Health System, Inc., in the amount of $750,000 | Incorporated by reference to Exhibit 99.6 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
10.116 | Mortgage (with Security Agreement and Absolute Assignment of Rents and Leases) and Fixture Filing, dated as of November 30, 2011, executed by Mountain Top Property Holdings, LLC in favor of White River Health System, Inc. | Incorporated by reference to Exhibit 99.7 to the Registrant's Current Report on Form 8-K filed December 6, 2011 | |||
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184
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.117 | * | Employment Agreement, dated December 1, 2011, between AdCare Health Systems, Inc. and David Rubenstein | Incorporated by reference to Exhibit 10.118 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | ||
10.118 | * | Employment Agreement, dated December 16, 2011, between AdCare Health Systems, Inc. and David Rubenstein | Incorporated by reference to Exhibit 10.119 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | ||
10.119 | Promissory Note, dated November 4, 2011, issued by Mt. Kenn Property Holdings, LLC in favor of The Bank of Las Vegas, in the amount of $3,175,200 | Incorporated by reference to Exhibit 10.120 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.120 | Loan Agreement, dated November 4, 2011, by and between Mt. Kenn Property Holdings, LLC and The Bank of Las Vegas | Incorporated by reference to Exhibit 10.121 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.121 | Guaranty, dated November 4, 2011, issued by Mt. Kenn Nursing, LLC in favor of The Bank of Las Vegas | Incorporated by reference to Exhibit 10.122 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.122 | Guaranty, dated November 4, 2011, issued by Hearth & Home of Ohio, Inc. in favor of The Bank of Las Vegas | Incorporated by reference to Exhibit 10.123 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.123 | Guaranty, dated November 4, 2011, issued by AdCare Health Systems, Inc. in favor of The Bank of Las Vegas | Incorporated by reference to Exhibit 10.124 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.124 | Promissory Note, dated November 4, 2011, issued by Mt. Kenn Property Holdings, LLC in favor of Apax Capital, LLC, in the amount of $2,222,640 | Incorporated by reference to Exhibit 10.125 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.125 | Loan Agreement, dated November 4, 2011, by and between Mt. Kenn Property Holdings, LLC and Apax Capital, LLC | Incorporated by reference to Exhibit 10.126 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.126 | Guaranty, dated November 4, 2011, issued by Mt. Kenn Nursing, LLC in favor of Apax Capital, LLC | Incorporated by reference to Exhibit 10.127 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.127 | Guaranty, dated November 4, 2011, issued by Hearth & Home of Ohio, Inc. in favor of Apax Capital, LLC | Incorporated by reference to Exhibit 10.128 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
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185
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.128 | Guaranty, dated November 4, 2011, issued by AdCare Health Systems, Inc. in favor of Apax Capital, LLC | Incorporated by reference to Exhibit 10.129 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.129 | Promissory Note, dated November 4, 2011, issued by Mt. Kenn Property Holdings, LLC in favor of Economic Development Corporation of Fulton County, in the amount of $2,274,000 | Incorporated by reference to Exhibit 10.130 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.130 | Loan Agreement, dated November 4, 2011, by and between Mt. Kenn Property Holdings, LLC and Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.131 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.131 | Unconditional Guarantee, dated November 4, 2011, issued by Mt. Kenn Nursing, LLC in favor of Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.132 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.132 | Unconditional Guarantee, dated November 4, 2011, issued by Hearth & Home of Ohio, Inc. in favor of Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.133 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.133 | Unconditional Guarantee, dated November 4, 2011, issued by AdCare Health Systems, Inc. in favor of Economic Development Corporation of Fulton County | Incorporated by reference to Exhibit 10.134 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.134 | Joinder Agreement, Fifth Amendment and Supplement to Credit Agreement, dated November 29, 2011, by and among Gemino Healthcare Finance, LLC and the subsidiaries of the Company named therein | Incorporated by reference to Exhibit 10.135 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.135 | Third Amended and Restated Revolving Note, dated November 29, 2011, dated November 29, 2011, by and among Gemino Healthcare Finance, LLC and the subsidiaries of the Company named therein | Incorporated by reference to Exhibit 10.136 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.136 | Guaranty, dated as of November 29, 2011, issued by AdCare Operations, LLC in favor of Gemino Healthcare Finance, LLC | Incorporated by reference to Exhibit 10.137 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
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186
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.137 | Loan Agreement, dated as of December 30, 2011, by and between Woodland Manor Property Holdings, LLC and The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.138 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.138 | Promissory Note, dated as of December 30, 2011, issued by Woodland Manor Property Holdings, LLC in favor of The PrivateBank and Trust Company in the amount of $4,800,000 | Incorporated by reference to Exhibit 10.139 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.139 | Guaranty of Payment and Performance, dated as of December 30, 2011, executed by Woodland Manor Property Holdings, LLC and Adcare Health Systems, Inc. in favor of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.140 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.140 | Cognovit Promissory Note, dated as of January 1, 2012, issued by Eaglewood Property Holdings, LLC and Eaglewood Village, LLC in favor of Eaglewood Villa, Ltd. in the amount of $500,000 | Incorporated by reference to Exhibit 10.141 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.141 | Cognovit Promissory Note, dated as of January 1, 2012, issued by Eaglewood Property Holdings, LLC and Eaglewood Village, LLC in favor of Eaglewood Villa, Ltd. in the amount of $4,500,000 | Incorporated by reference to Exhibit 10.142 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.142 | Guaranty Agreement, dated as of December 30, 2011, executed by AdCare Health Systems, Inc. and AdCare Property Holdings, LLC in favor of Eaglewood Villa, Ltd | Incorporated by reference to Exhibit 10.143 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.143 | Third Amended And Restated Multiple Facilities Lease, dated October 29, 2010, between Georgia LessorBonterra/Parkview, Inc. and ADK Bonterra/Parkview, LLC | Incorporated by reference to Exhibit 10.144 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.144 | Guaranty, dated October 29, 2010, executed by AdCare Health Systems, Inc. in favor of Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.145 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.145 | Guaranty, dated October 29, 2010, executed by Hearth & Home of Ohio, Inc. in favor of Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.146 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
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187
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.146 | Security Agreement, dated October 29, 2010, by and between AdCare Health Systems, Inc. and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.147 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.147 | Security Agreement, dated October 29, 2010, by and between ADK Bonterra/Parkview, LLC and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.148 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.148 | Security Agreement, dated October 29, 2010, by and between Hearth & Home of Ohio, Inc. and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.149 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.149 | Pledge Agreement, dated October 29, 2010, between Hearth & Home of Ohio, Inc. and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.150 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.150 | Subordination Agreement, dated October 29, 2010, between AdCare Health Systems, Inc., ADK Bonterra/Parkview, LLC and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.151 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.151 | Letter of Credit Agreement, dated October 29, 2010, by and between ADK Bonterra/Parkview, LLC and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.152 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.152 | Subordination, Non-Disturbance and Attornment Agreement, dated October 29, 2010, by and among Omega Healthcare Investors, Inc., ADK Bonterra/Parkview, LLC and Georgia LessorBonterra/Parkview, Inc. | Incorporated by reference to Exhibit 10.153 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.153 | Assignment and Assumption of Second Amended and Restated Multiple Facilities Lease And Consent of Lessor, dated October 29, 2010, by and among Georgia LessorBonterra/Parkview, Inc., Triad Health Management of Georgia II, LLC, AdCare Health Systems, Inc., Hearth & Home of Ohio, Inc., ADK Bonterra/Parkview, LLC and the other entities signatory thereto | Incorporated by reference to Exhibit 10.154 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.154 | Lease Agreement, dated August 1, 2010, between William M. Foster and ADK Georgia, LLC | Incorporated by reference to Exhibit 10.155 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
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188
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.155 | First Amendment to Lease, dated August 31, 2010, between William M. Foster and ADK Georgia, LLC | Incorporated by reference to Exhibit 10.156 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.156 | * | Employment Offer Letter, dated May 15, 2011, from AdCare Health Systems, Inc. to Martin Brew | Incorporated by reference to Exhibit 10.157 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | ||
10.157 | Warrant to Purchase Shares of Common Stock, dated January 10, 2011, issued by AdCare Health Systems, Inc. to Boyd P. Gentry | Incorporated by reference to Exhibit 10.158 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.158 | Guaranty Agreement, dated as of June 1, 2010, entered into by AdCare Health Systems, Inc. to and for the benefit of Bank of Oklahoma, N.A. | Incorporated by reference to Exhibit 10.159 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.159 | Purchase Agreement, dated as of September 15, 2011, by and between JRT Group Properties, LLC and AdCare Hembree Road Property, LLC | Incorporated by reference to Exhibit 10.160 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.160 | First Amendment to Purchase Agreement, dated as of October 31, 2011, by and between JRT Group Properties, LLC and AdCare Hembree Road Property, LLC | Incorporated by reference to Exhibit 10.161 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 | |||
10.161 | Mortgage Note, dated January 1, 2012, entered into by Hearth & Home of Vandalia, Inc. in favor of Red Mortgage Capital, LLC | Incorporated by reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.162 | Security Agreement, dated January 1, 2012, by and between Hearth and Home of Vandalia, Inc. and Red Mortgage Capital, LLC | Incorporated by reference to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.163 | Lessee Security Agreement, dated January 1, 2012, by and among AdCare Health Systems, Inc., Hearth & Home of Vandalia, Inc. and Red Mortgage Capital, LLC | Incorporated by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.164 | Mortgage Deed, recorded January 31, 2012, executed by Hearth and Home of Vandalia, Inc. in favor of Red Mortgage Capital, LLC | Incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
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189
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.165 | Modification Agreement, dated as of March 9, 2012, by and among Benton Nursing, LLC, Park Heritage Nursing, LLC, Valley River Nursing, LLC, Homestead Nursing, LLC, Woodland Manor Nursing, LLC, Mountain View Nursing, LLC, AdCare Health Systems, Inc. and the PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed March 15, 2012 | |||
10.166 | Loan Agreement, dated as of March 30, 2012, by and among Little Rock HC&R Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, Woodland Hills HC Property Holdings, LLC and The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.6 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.167 | Promissory Note, dated as of March 30, 2012, issued by Little Rock HC&R Property Holdings, LLC, Northridge HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC in favor of The PrivateBank and Trust Company in the amount of $21,800,000 | Incorporated by reference to Exhibit 10.7 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.168 | Note Purchase Agreement, dated March 29, 2012, by and between AdCare Health Systems, Inc. and Cantone Asset Management LLC | Incorporated by reference to Exhibit 10.10 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.169 | Promissory Note, dated March 30, 2012, issued by AdCare Health Systems, Inc. in favor of Cantone Asset Management LLC, in the amount of $3,500,000 | Incorporated by reference to Exhibit 10.9 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.170 | Guaranty of Payment and Performance, dated as of March 30, 2012, made by AdCare Health Systems, Inc., Little Rock HC&R Property Holdings, LLC, Northridge HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.11 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.171 | Promissory Note, dated April 1, 2012, issued by AdCare Health Systems, Inc. in favor of Strome Alpha Offshore Ltd., in the amount of $5,000,000 | Incorporated by reference to Exhibit 10.8 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
|
190
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.172 | Mortgage, Security Agreement, Assignment of Rents and Leases & Fixture Filing, dated as of April 1, 2012, executed by Little Rock HC&R Property Holdings, LLC to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.12 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.173 | Mortgage, Security Agreement, Assignment of Rents and Leases & Fixture Filing, dated as of April 1, 2012, executed by Northridge HC&R Property Holdings, LLC to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.13 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.174 | Mortgage, Security Agreement, Assignment of Rents and Leases & Fixture Filing, dated as of April 1, 2012, executed by Woodland Hills HC Property Holdings, LLC to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.14 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.175 | Absolute Assignment of Rents and Leases, dated as of April 1, 2012, executed by Little Rock HC&R Property Holdings, LLC to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.15 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.176 | Absolute Assignment of Rents and Leases, dated as of April 1, 2012, executed by Northridge HC&R Property Holdings, LLC to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.16 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.177 | Absolute Assignment of Rents and Leases, dated as of April 1, 2012, executed by Woodland Hills HC Property Holdings, LLC to and for the benefit of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.17 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.178 | Loan Agreement, dated as of April 12, 2012, between the City of Springfield, Ohio and Eaglewood Property Holdings, LLC | Incorporated by reference to Exhibit 10.18 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.179 | Guaranty Agreement, dated as of April 12, 2012, made and entered into by AdCare Health Systems, Inc., to and for the benefit of BOKF, NA dba Bank of Oklahoma | Incorporated by reference to Exhibit 10.19 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.180 | Land Use Restriction Agreement, dated as of April 12, 2012, by and between BOKF, NA dba Bank of Oklahoma and Eaglewood Property Holdings, LLC | Incorporated by reference to Exhibit 10.20 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
|
191
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.181 | Open-End Mortgage, Assignment of Leases and Security Agreement, dated April 12, 2012, from Eaglewood Property Holdings, LLC to BOKF, NA dba Bank of Oklahoma | Incorporated by reference to Exhibit 10.21 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.182 | Assignment of Purchase and Sale Agreement, dated May 9, 2012, between AdCare Property Holdings, LLC and GL Nursing, LLC | Incorporated by reference to Exhibit 10.30 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 | |||
10.183 | Form of Securities Purchase Agreement, dated as of June 28, 2012, between AdCare Health Systems, Inc. and the Buyers signatory thereto | Incorporated by reference from Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed July 5, 2012 | |||
10.184 | Assignment and Assumption Agreement, dated as of July 1, 2012, by and between Westlake Nursing Home Limited Partnership and QC Property Holdings, LLC | Incorporated by reference to Exhibit 10.37 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.185 | Loan Agreement, dated as of July 2, 2012, by and between Glenvue H&R Property Holdings, LLC and the PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.32 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.186 | Promissory Note, dated July 2, 2012, issued by Glenvue H&R Property Holdings, LLC in favor of the PrivateBank and Trust Company in the amount of $6,600,000 | Incorporated by reference to Exhibit 10.33 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.187 | Deed to Secure Debt, Security Agreement and Assignment of Leases and Rents, dated as of July 2, 2012, from Glenvue H&R Property Holdings, LLC to the PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.34 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.188 | Assignment of Leases and Rents, dated as of July 2, 2012, from Glenvue H&R Property Holdings, LLC to the PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.35 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.189 | Assignment and Assumption Agreement, dated as of July 1, 2012, by and between Westlake Nursing Home Limited Partnership and QC Property Holdings, LLC | Incorporated by reference to Exhibit 10.37 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
|
192
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.190 | Loan Agreement and Indenture of First Mortgage, dated as of September 1, 1986, by and among Oklahoma County Industrial Authority, Westlake Nursing Home Limited Partnership and The Liberty National Bank and Trust Company of Oklahoma City, as Trustee | Incorporated by reference to Exhibit 10.38 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.191 | First Amendment to Loan Agreement and Indenture of First Mortgage, dated September 1, 2001, by and among Oklahoma County Industrial Authority, Westlake Nursing Home, L.P. and Bank One Trust Company, N.A., as Trustee | Incorporated by reference to Exhibit 10.39 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.192 | Loan Agreement, made as of August 17, 2012, by and among CSCC Property Holdings, LLC, CSCC Nursing, LLC and Contemporary Healthcare Senior Lien Fund I, L.P. | Incorporated by reference to Exhibit 10.12 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.193 | Loan Agreement, made as of August 17, 2012, by and among CSCC Property Holdings, LLC, CSCC Nursing, LLC and Contemporary Healthcare Fund I, L.P. | Incorporated by reference to Exhibit 10.13 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.194 | Promissory Note, dated August 17, 2012, issued by CSCC Nursing, LLC and CSCC Property Holdings, LLC in favor of Contemporary Healthcare Senior Lien Fund I, L.P. in the amount of $5,000,000 | Incorporated by reference to Exhibit 10.14 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.195 | Revolving Loan Promissory Note, made as of August 17, 2012, by and among CSCC Nursing, LLC and CSCC Property Holdings, LLC in favor of Contemporary Healthcare Fund I, L.P. in the amount of $600,000 | Incorporated by reference to Exhibit 10.15 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.196 | Assignment of Leases and Rents, dated as of August 17, 2012, by and among CSCC Property Holdings, LLC, CSCC Nursing, LLC and Contemporary Healthcare Senior Lien Fund I, L.P. | Incorporated by reference to Exhibit 10.16 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.197 | Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated August 17, 2012, made and entered into by CSCC Property Holdings, LLC in favor of Contemporary Healthcare Senior Lien Fund I, L.P. | Incorporated by reference to Exhibit 10.17 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
|
193
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.198 | Guaranty of Payment and Performance, made as of August 17, 2012, by AdCare Health Systems, Inc. in favor of Contemporary Healthcare Fund I, L.P. | Incorporated by reference to Exhibit 10.18 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.199 | Guaranty of Payment and Performance, made as of August 17, 2012, by AdCare Oklahoma Management, LLC in favor of Contemporary Healthcare Fund I, L.P. | Incorporated by reference to Exhibit 10.19 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.200 | Guaranty of Payment and Performance, made as of August 17, 2012, by AdCare Health Systems, Inc. in favor of Contemporary Healthcare Senior Lien Fund I, L.P. | Incorporated by reference to Exhibit 10.20 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.201 | Guaranty of Payment and Performance, made as of August 17, 2012, by AdCare Oklahoma Management, LLC in favor of Contemporary Healthcare Senior Lien Fund I, L.P. | Incorporated by reference to Exhibit 10.21 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.202 | Security Agreement, made as of August 17, 2012, by and among CSCC Property Holdings, LLC, CSCC Nursing, LLC and Contemporary Healthcare Fund I, L.P. | Incorporated by reference to Exhibit 10.22 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.203 | Security Agreement, made as of August 17, 2012, by and among CSCC Property Holdings, LLC, CSCC Nursing, LLC and Contemporary Healthcare Senior Lien Fund I, L.P. | Incorporated by reference to Exhibit 10.23 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.204 | Loan and Security Agreement, dated as of September 20, 2012, by and among The PrivateBank and Trust Company and the Borrowers named therein | Incorporated by reference to Exhibit 10.24 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.205 | Modification Agreement, dated as of October 26, 2012, by and among The PrivateBank and Trust Company and the Borrowers named therein | Incorporated by reference to Exhibit 10.25 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.206 | Promissory Note, dated September 20, 2012, issued by the subsidiaries of AdCare Health Systems, Inc. named therein in favor of The PrivateBank and Trust Company in the amount of $10,600,000 | Incorporated by reference to Exhibit 10.26 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.207 | Guaranty of Payment and Performance, made as of September 20, 2012, by AdCare Health Systems, Inc. in favor of The PrivateBank and Trust Company | Incorporated by reference to Exhibit 10.27 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
|
194
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.208 | Release of Guarantees, dated September 20, 2012, from Gemino Healthcare Finance, LLC to certain subsidiaries of AdCare Health Systems, Inc. named therein | Incorporated by reference to Exhibit 10.29 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.209 | Second Amendment to Credit Agreement, dated September 20, 2012, by and between ADK Bonterra/Parkview, LLC and Gemino Healthcare Finance, LLC | Incorporated by reference to Exhibit 10.30 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.210 | Temporary Extension Agreement, dated August 29, 2012, by and between APH & R Property Holdings, LLC and Metro City Bank | Incorporated by reference to Exhibit 10.31 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 | |||
10.211 | Loan Agreement, dated April 30, 2012, by and between APH&R Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.212 | Promissory Note, dated April 30, 2012, issued by APH&R Property Holdings, LLC in favor of Metro City Bank in the amount of $3,425,500 | Incorporated by reference from Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.213 | Mortgage and Security Agreement, dated April 30, 2012, between APH&R Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.214 | Security Agreement, dated April 30, 2012, between APH&R Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.215 | Guaranty, dated as of April 30, 2012, between APH&R Property Holdings, LLC in favor of Metro City Bank | Incorporated by reference from Exhibit 99.5 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.216 | Guaranty, dated as of April 30, 2012, between AdCare Health Systems, Inc. in favor of Metro City Bank | Incorporated by reference from Exhibit 99.6 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.217 | Collateral Assignment of Certificate of Deposit, dated April 30, 2012, by and between APH&R Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 99.7 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.218 | Promissory Note, dated April 27, 2012, issued by Cantone Asset Management LLC in favor of AdCare Health Systems, Inc. in the amount of $1,500,000 | Incorporated by reference from Exhibit 99.8 to the Registrant's Current Report on Form 8-K filed May 3, 2012 | |||
10.219 | Promissory Note, dated June 8, 2012, issued by Mt. V Property Holdings, LLC in favor of Metro City Bank in the amount of $1,800,000 | Incorporated by reference from Exhibit 10.13 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
|
195
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.220 | Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.14 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.221 | Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.15 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.222 | Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.16 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.223 | Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.17 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.224 | Guaranty, dated June 8, 2012, made by AdCare Health Systems, Inc. in favor of Metro City Bank | Incorporated by reference from Exhibit 10.18 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.225 | Promissory Note, dated June 8, 2012, issued by Mt. V Property Holdings, LLC in favor of Metro City Bank in the amount of $1,267,000 | Incorporated by reference from Exhibit 10.19 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.226 | Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.20 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.227 | Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.21 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.228 | Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.22 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.229 | Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank | Incorporated by reference from Exhibit 10.23 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.230 | Guaranty, dated June 8, 2012, made by AdCare Health Systems, Inc. in favor of Metro City Bank | Incorporated by reference from Exhibit 10.24 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
|
196
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.231 | Promissory Note, dated June 8, 2012, issued by Mt. V Property Holdings, LLC in favor of Economic Development Corporation of Fulton County in the amount of $1,304,000 | Incorporated by reference from Exhibit 10.25 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.232 | Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC, Mountain View Nursing, LLC and Economic Development Corporation of Fulton County | Incorporated by reference from Exhibit 10.26 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.233 | Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County | Incorporated by reference from Exhibit 10.27 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.234 | Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County | Incorporated by reference from Exhibit 10.28 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.235 | Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County | Incorporated by reference from Exhibit 10.29 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.236 | Unconditional Guarantee, dated June 8, 2012, issued by Mountain View Nursing, LLC in favor of Economic Development Corporation of Fulton County | Incorporated by reference from Exhibit 10.30 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.237 | Unconditional Guarantee, dated June 8, 2012, issued by AdCare Health Systems, Inc. in favor of Economic Development Corporation of Fulton County | Incorporated by reference from Exhibit 10.31 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.238 | Bond Purchase Agreement, dated April 10, 2012, among Lawson Financial Corporation, The City of Springfield, Ohio and Eaglewood Property Holdings, LLC | Incorporated by reference from Exhibit 10.40 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.239 | Note Purchase Agreement, dated April 12, 2012, by and between Cantone Asset Management LLC and AdCare Health Systems, Inc. | Incorporated by reference from Exhibit 10.41 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
|
197
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.240 | * | Employment Agreement, dated August 7, 2012, between AdCare Health Systems, Inc. and Martin D. Brew | Incorporated by reference from Exhibit 10.42 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | ||
10.241 | Modification Agreement, dated June 15, 2012, among Little Rock HC&R Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, Woodland Hills HC Property Holdings, LLC and The PrivateBank and Trust Company | Incorporated by reference from Exhibit 10.43 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.242 | Amendment, entered into as of July 26, 2012, by and between Christopher F. Brogdon and Hearth & Home of Ohio, Inc. | Incorporated by reference from Exhibit 10.47 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | |||
10.243 | * | Employment Agreement, dated August 6, 2012, between AdCare Health Systems, Inc. and Melissa L. Green | Incorporated by reference from Exhibit 10.48 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 | ||
10.244 | First Modification of Note and First Modification of Mortgage and Security Agreement, dated November 30, 2012, between Metro City Bank and APH&R Property Holdings, LLC | Filed herewith | |||
10.245 | Sublease Agreement, dated December 1, 2012, between ADK Georgia, LLC and Jeff Co. Nursing, LLC | Filed herewith | |||
10.246 | Sublease Termination Agreement, dated November 30, 2012, by and between ADK Georgia, LLC and ADK Jeffersonville Operator, LLC | Filed herewith | |||
10.247 | Management Fee Subordination Agreement, dated December 20, 2013, between AdCare Oklahoma Management, LLC, Gemino Healthcare Finance, LLC, Living Center, LLC, Kenmetal, LLC, Senior NH, LLC, Ban NH, LLC and Oak Lake, LLC | Filed herewith | |||
10.248 | Third Amendment to Credit Agreement, dated December 21, 2012, by and between ADK Bonterra/Parkview, LLC and Gemino Healthcare Finance, LLC | Filed herewith | |||
10.249 | Management Agreement, dated December 28, 2012, between New Lincoln Ltd. And Chancellor Senior Management, Ltd. | Filed herewith | |||
|
198
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.250 | Management Agreement, dated December 28, 2012, between Community's Hearth at Vandalia and Chancellor Senior Management, Ltd. | Filed herewith | |||
10.251 | Mortgage of Real Estate, Security Agreement and Financing Statement, dated as of December 31, 2012, by Sumter Valley Property Holdings, LLC in favor of Metro City Bank | Filed herewith | |||
10.252 | Assignment of Leases and Rents, dated December 31, 2012, by and between Sumter Valley Property Holdings, LLC and Metro City Bank | Filed herewith | |||
10.253 | Promissory Note, dated December 31, 2012, issued by Sumter Valley Property Holdings, LLC in favor of 1761 Pinewood Holdings, LLC in the amount of $250,000 | Filed herewith | |||
10.254 | Guaranty Agreement, dated December 31, 2012 made by AdCare Health Systems, Inc. for the benefit of 1761 Pinewood Holdings, LLC | Filed herewith | |||
10.255 | Mortgage and Security Agreement, dated December 31, 2012, between Georgetown HC&R Property Holdings and Winyah Nursing Home, LLC | Filed herewith | |||
10.256 | Secured Subordinated Promissory Note, dated December 31, 2012, issued by Georgetown HC&R Property Holdings, LLC in favor of Winyah Nursing Home, LLC in the amount of $1,850,000 | Filed herewith | |||
10.257 | Guaranty Agreement, dated December 31, 2012, by AdCare Health Systems, Inc. to and for the benefit of Winyah Nusing Home, LLC | Filed herewith | |||
10.258 | Guaranty, dated December 31, 2012, by Sumter N&R, LLC for the benefit of Metro City Bank | Filed herewith | |||
10.259 | Guaranty, dated December 31, 2012, by Georgetown HC&R Nursing, LLC for the benefit of Metro City Bank | Filed herewith | |||
10.260 | Guaranty, dated December 31, 2012, by AdCare Health Systems, Inc. to and for the benefit of Metro City Bank | Filed herewith | |||
|
199
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.261 | Security Agreement, dated December 31, 2012, by and between Sumter Valley Property Holdings, LLC, Georgetown HC&R Property Holdings, LLC and Metro City Bank | Filed herewith | |||
10.262 | Loan Agreement, dated December 31, 2012, by and between Sumter Valley Property Holdings, LLC, Georgetown HC&R Property Holdings, LLC, Sumter N&R, LLC, Georgetown HC&R Nursing, LLC and Metro City Bank | Filed herewith | |||
10.263 | Secured Loan Agreement, dated December 28, 2012, by and among Keybank National Association and the subsidiaries of AdCare Health Systems, Inc. named therein | Filed herewith | |||
10.264 | Promissory Note, dated December 28, 2012, issued by subsidiaries of AdCare Health Systems, Inc. in favor of Keybank National Association in the amount of $16,500,000 | Filed herewith | |||
10.265 | Absolute Assignment of Leases and Rents, dated December 28, 2012, by Northridge HC&R Property Holdings, LLC to Keybank National Association | Filed herewith | |||
10.266 | Absolute Assignment of Leases and Rents, dated December 28, 2012, by Woodland Hills HC Property Holdings, LLC to Keybank National Association | Filed herewith | |||
10.267 | Absolute Assignment of Leases and Rents, dated December 28, 2012, by APH&R Property Holdings, LLC to Keybank National Association | Filed herewith | |||
10.268 | Mortgage, Assignment of Rents, Security Agreement and Fixture Filing, dated December 28, 2012, made by APH&R Property Holdings, LLC to and for the benefit of Keybank National Association | Filed herewith | |||
10.269 | Mortgage, Assignment of Rents, Security Agreement and Fixture Filing, dated December 28, 2012, made by Northridge HC&R Property Holdings, LLC to and for the benefit of Keybank National Association | Filed herewith | |||
|
200
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.270 | Mortgage, Assignment of Rents, Security Agreement and Fixture Filing, dated December 28, 2012, made by Woodland Hills HC Property Holdings, LLC to and for the benefit of Keybank National Association | Filed herewith | |||
10.271 | Payment Guaranty, made as of December 28, 2012, by AdCare Operations, LLC to and for the benefit of Keybank National Association | Filed herewith | |||
10.272 | Payment Guaranty, made as of December 28, 2012, by AdCare Property Holdings, LLC to and for the benefit of Keybank National Association | Filed herewith | |||
10.273 | * | Payment Guaranty, made as of December 28, 2012, by AdCare Health Systems, Inc. to and for the benefit of Keybank National Association | Filed herewith | ||
10.274 | Pledge and Security Agreement, dated December 28, 2012, between AdCare Property Holdings, LLC and Keybank National Association | Filed herewith | |||
10.275 | Pledge and Security Agreement, dated December 28, 2012, between AdCare Operations, LLC and Keybank National Association | Filed herewith | |||
10.276 | Security Agreement, dated December 28, 2012, made by Woodland Hills HC Nursing, LLC, APH&R Nursing, LLC and Northridge HC&R Nursing, LLC in favor of Keybank National Association | Filed herewith | |||
10.277 | Security Agreement, dated December 28, 2012, by and among Woodland Hills HC Property Holdings, LLC, Northridge HC&R Property Holdings, LLC and APH&R Property Holdings, LLC in favor of Keybank National Association | Filed herewith | |||
10.278 | Second Modification Agreement, dated December 28, 2012, between The PrivateBank and Trust Company and the subsidiaries of AdCare Health Systems, Inc. named therein | Filed herewith | |||
10.279 | Consulting Agreement, dated December 31, 2012, between Christopher Brogdon and AdCare Health Systems, Inc. | Filed herewith | |||
|
201
Exhibit No. | Description | Method of Filing | |||
---|---|---|---|---|---|
10.280 | Guaranty Indemnification Agreement, dated December 31, 2012, between AdCare Health Systems, Inc. and Christopher Brogdon | Filed herewith | |||
10.281 | Guaranty Indemnification Agreement, dated December 31, 2012, between AdCare Health Systems, Inc. and Christopher Brogdon | Filed herewith | |||
10.282 | Assignment of Rents, dated December 31, 2012, made and executed between Northwest Property Holdings, LLC and First Commercial Bank | Filed herewith | |||
10.283 | Mortgage, dated December 31, 2012, made and executed between Northwest Property Holdings, LLC and First Commerical Bank | Filed herewith | |||
10.284 | Promissory Note, dated December 31, 2012, issued by Northwest Property Holdings, LLC in favor of First Commercial Bank in the amount of $1,501,500 | Filed herewith | |||
10.285 | Commercial Security Agreement, dated December 31, 2012, made and executed between Northwest Property Holdings, LLC and First Commercial Bank | Filed herewith | |||
10.286 | Commercial Security Agreement, dated December 31, 2012, made and executed between NW 61 st Nursing, LLC and First Commercial Bank | Filed herewith | |||
10.287 | Commercial Guaranty, dated December 31, 2012, between AdCare Health Systems, Inc. and First Commercial Bank | Filed herewith | |||
10.288 | Commercial Guaranty, dated December 31, 2012, between Northwest Property Holdings, LLC and First Commercial Bank | Filed herewith | |||
10.289 | Memorandum of Agreement, dated January 25, 2013, between The PrivateBank and Trust Company, AdCare Health Systems, Inc. and its subsidiaries named therein | Filed herewith | |||
10.290 | Secured Promissory Note, dated December 28, 2012, issued by CHP Acquisition Company, LLC, in favor of AdCare Health Systems, Inc., in the amount of $3,600,000 | Filed herewith | |||
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202
Exhibit No. | Description | Method of Filing | |||
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10.291 | Pledge and Security Agreement, dated December 28, 2012, by and between CHP Acquisition Company, LLC and AdCare Health Systems, Inc. | Filed herewith | |||
10.292 | Promissory Note, dated December 31, 2012, issued by Sumter Valley Property Holdings, LLC and Georgetown HC&R Property Holdings, LLC in favor of Metro City Bank, in the amount of $6,950,000 | Filed herewith | |||
10.293 | Assignment of Leases and Rents, dated December 31, 2012, by and between Sumter Valley Property Holdings, LLC and Metro City Bank | Filed herewith | |||
10.294 | Management Agreement, dated June 22, 2010, by and between Riverchase Village ADK, LLC and AdCare Management Company, Inc. | Filed herewith | |||
10.295 | Management Agreement, dated September 19, 2011, by and among AdCare Oklahoma Management, LLC and the entities listed therein | Filed herewith | |||
10.296 | * | Employment Agreement, dated July 3, 2013, by and between AdCare Health Systems, Inc. and Ronald W. Fleming | Filed herewith | ||
10.297 | * | Confidential Separation Agreement and Release, dated July 1, 2011, by and between AdCare Health Systems, Inc. and Gary L. Wade | Filed herewith | ||
14.1 | Code of Business Conduct and Ethics | Incorporated by reference to Exhibit 10.19 of the Registrant's annual report on form 10-KSB as amended April 30, 2007 | |||
16.1 | Letter from Battelle and Battelle LLP, dated November 21, 2012 | Incorporated by reference to Exhibit 16.1 to the Registrant's Current Report on Form 8-K filed November 21, 2012 | |||
21.1 | Subsidiaries of the Registrant | Filed herewith | |||
23.1 | Consent of Battelle & Battelle LLP | Filed herewith | |||
23.2 | Consent of KPMG LLP | Filed herewith | |||
31.1 | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act | Filed herewith | |||
31.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act | Filed herewith | |||
32.1 | Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith |
203
Exhibit No. | Description | Method of Filing | |||
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32.2 | Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith | |||
99.1 | Audit Committee Charter | Incorporated by reference to Exhibit 99.1 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
99.2 | Compensation Committee Charter | Incorporated by reference to Exhibit 99.2 of the Registrant's Registration Statement Form SB (Registration No. 333-131542) filed February 3, 2006 | |||
101.SCH | XBRL Taxonomy Extension Schema | Filed herewith | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | Filed herewith | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | Filed herewith | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase | Filed herewith | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | Filed herewith |
204
Exhibit 2.25
FIRST AMENDMENT TO ASSET PURCHASE AGREEEMENT
This First Amendment to the Asset Purchase Agreement (this Amendment) is entered into this 28th day of December, 2012, by and among Adcare Health Systems, Inc., an Ohio Corporation and its subsidiaries identified on the signature page hereto (hereinafter collectively referred to as Seller) and CHP Acquisition Company LLC, an Ohio limited liability company (hereinafter Buyer). Any of the capitalized terms otherwise not defined herein shall have the meaning ascribed to them Asset Purchase Agreement between Seller and Buyer dated October 11, 2012 (the Purchase Agreement).
Recitals
WHEREAS, Seller and Buyer wish to amend the Purchase Agreement so as to correctly reflect their understanding thereof.
NOW, THEREFORE, for and in consideration of the terms and conditions hereof, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Seller and Buyer amend the Purchase Agreement as follows:
1. Hearth and Home of Vandalia
(a) Delayed Closing . Buyer and Seller agree that the Closing (the Vandalia Closing) for the purchase of the Assets related to the Facility commonly known as Hearth and Home of Vandalia (the Vandalia Facility) shall be delayed until the sooner of (i) September 1, 2014, (ii) such time that the Secretary of the United States Department of Housing and Urban Development (the Secretary) approves the assignment of the Vandalia HUD Loan to Buyer or (iii) such time as the Secretary provides notice to Seller of its desire to cause the parties to terminate the Management Agreement, attached hereto as Exhibit A (the Management Agreement); provided that the Vandalia Closing shall not occur until such time that the (i) Lincoln Closing (as defined below) has occurred (or simultaneous therewith) or (ii) Buyer has received written notice from Seller that Seller has elected to forego remediation of Lincoln and terminate the Purchase Agreement with respect thereto.
(b) HUD TPA Application . The purchase price due at the Vandalia Closing shall be the assumption of the HUD Vandalia Loan and subject to adjustment as provided for in the Purchase Agreement. Buyer acknowledges and agrees that within 30 days of the date hereof, Buyer shall submit a third party transfer application to the Secretary requesting that Buyer be permitted to assume the HUD Vandalia Loan (the TPA). Buyer further acknowledges that Buyer shall diligently and in good faith pursue the TPA.
(c) Representations and Warranties/Conditions Precedent/Closing Deliveries . Buyer and Seller acknowledge and agree that all of the representation and warranties, covenants, closing conditions and closing deliveries shall continue to apply and shall be true, correct and completed as of the date of the Vandalia Closing; provided that any such representation and warranties or covenants with respect to the management and condition of the Assets of the Vandalia Facility shall be true as of the date of this Agreement.
(d) Vandalia Closing Deliverables . Concurrent with the execution of this Agreement, Buyer and Seller shall execute and deliver the Management Agreement and the At-Risk-Agreement attached hereto as Exhibit B .
(e) Resident Trust Funds/Employees/Accounts Receivable . Buyer and Seller agree that Articles X, XI and XII shall be treated as if the Vandalia Closing occurred as of the date of this Agreement.
(f) HUD Manager Approval . Notwithstanding the foregoing, until such time that the Secretary has approved the change in manager, no management fees shall be paid under the Management Agreement and Seller shall remain responsible for the operations of Vandalia..
2. Lincoln Lodge Retirement Residence
(a) Delayed Closing . Buyer and Seller agree that the Closing (the Lincoln Closing) for the purchase of the Assets for the Facility commonly known as Lincoln Lodge Retirement Residence, located in Columbus, Ohio (Lincoln) shall be delayed until the completion and outcome of the Asbestos Study (as outlined below). The purchase price due from Buyer to Seller at the Lincoln Closing shall be $2,400,000 and shall be subject to adjustment as provided for in the Purchase Agreement.
(b) Asbestos Study . As of the date hereof Buyer has engaged Chryatech, Inc. to conduct as asbestos study at Lincoln (the Asbestos Study). If the remediation costs provided for in the Asbestos Study are equal to or less than $100,000, Buyer and Seller shall proceed with the Lincoln Closing within 30 days thereof and Buyer shall receive credit at the Closing for the costs of remediation (not to exceed $100,000). If the remediation costs provided therein exceed $100,000, Seller shall, within 15 days of the receipt of the Asbestos Study, notify Buyer of (i) its intent to pay for such remediation costs and proceed to closing within 30 days thereof or (ii) its intent to terminate the Purchase Agreement with respect to Lincoln.
(c) Representations and Warranties/Conditions Precedent/Closing Deliveries . Buyer and Seller acknowledge and agree that all of the representation and warranties, covenants, closing conditions and closing deliveries shall continue to apply and shall be true, correct and completed as of the date of the Lincoln Closing; provided that any such representation and warranties or covenants with respect to the management and condition of the Assets of Lincoln shall be true as of the date of this Agreement.
(d) Management Agreement . Simultaneous with the execution of this Agreement, Buyer and Seller shall execute and deliver the Management Agreement attached hereto as Exhibit C .
3. Section 6.1 of the purchase price is hereby amended by replacing $22,307,409.00 with $16,097,652.80.
4. Within 10 days of the date of the Closing, Buyer and Seller shall reconcile the proration for Residency Occupancy Fees as provided for in Section 6.3(e) and Seller shall pay to Buyer such amount, if any, owed to Buyer in cash or other immediately available funds.
5. The parties agree to execute such other documents as may be reasonable necessary to carry out the intent of the parties as outlined herein.
6. In all other respects the Purchase Agreement shall remain unchanged and as written and is hereby ratified and confirmed.
7. This Amendment may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and their respective corporate seals to be affixed hereto, all as of the day and year first above written.
[Signature Page on Following Page]
IN WITNESS WHEREOF, each party has executed this Agreement by its duly authorized representatives, the day and year first above written.
BUYER : |
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SELLER : |
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CHP ACQUISITION COMPANY LLC,
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ADCARE HEALTH SYSTEMS, INC.,
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By: |
/s/ Roger C. Vincent |
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By: |
/s/ Boyd P. Gentry |
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Roger C. Vincent, |
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Boyd P. Gentry |
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Manager |
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Chief Executive Officer |
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HEARTH & HOME OF VANDALIA, INC.,
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry |
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Authorized Representative |
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NEW LINCOLN LTD., |
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an Ohio limited partnership |
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By: |
/s/ Boyd P. Gentry |
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Its General Partner |
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By: |
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Name: |
Boyd P. Gentry |
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Title: |
Authorized Representative |
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COMMUNITYS HEARTH & HOME, LTD., |
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an Ohio limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry |
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Title: |
Authorized Representative |
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HEARTH & HOME OF VAN WERT, LLC, |
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an Ohio limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Authorized Representative |
SIGNATURE PAGE
First Amendment to APA
Exhibit 2.26
ASSIGNMENT OF PURCHASE AND SALE AGREEMENT
FOR VALUE RECEIVED, ADCARE PROPERTY HOLDINGS, LLC, a Georgia limited liability company ( Assignor ) hereby transfers and assigns unto NORTHWEST PROPERTY HOLDINGS, LLC and NW 61ST NURSING, LLC, each a Georgia limited liability company (collectively Assignee ), all of Assignors right, title and interest in and to that certain Purchase and Sale Agreement effective as of May 5, 2011, as the same has been amended and assigned through the date hereof (the Agreement ), relating to the Facility (as defined in the Agreement) commonly known as Northwest Nursing Center and located at 2801 Northwest 61 st Street, Oklahoma City, Oklahoma. Assignee hereby assumes all obligations of Assignor under the Agreement with respect to such Facility. Assignor and Assignee acknowledge that the Purchase Price for the Facility shall be $3,000,000.00.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment of Purchase and Sale Agreement to be duly executed and delivered as of the 31 st day of December, 2012.
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ADCARE PROPERTY HOLDINGS, LLC |
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NORTHWEST PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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Christopher F. Brogdon, Manager |
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NW61ST NURSING, LLC |
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Christopher F. Brogdon, Manager |
Exhibit 2.27
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered into as of February 15, 2013 (the Effective Date ) by and among AVALON HEALTH CARE, LLC, a Tennessee limited liability company ( Seller ) and ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company or its permitted assigns ( Purchaser ).
WITNESSETH :
WHEREAS, Seller owns certain land, buildings, improvements, furniture, fixtures and equipment comprising the two (2) facilities described on Exhibit A attached hereto and incorporated herein by reference (collectively, the Facilities ); and
WHEREAS, Seller operates the Facilities and owns various equipment, inventories and other assets related to the operation of the Facilities; and
WHEREAS , Seller desires to sell its entire right, title and interest in and to the Facilities to Purchaser, and Purchaser desires to purchase Sellers entire right, title and interest in and to the Facilities from Seller, subject to and upon the terms and conditions hereinafter set forth; and
WHEREAS , at or prior to the Closing, Seller and Purchaser (or its designee) shall enter into Operations Transfer Agreements (collectively, the OTAs ), to further provide for a smooth and orderly transition of the operations of the Facilities from Seller to Purchaser (or its designee) on the Closing Date (as hereinafter defined), a copy of the form of which OTA is attached hereto as Exhibit D .
NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Seller and Purchaser, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Capitalized Terms . Capitalized terms used in this Agreement shall have the meanings set forth below or in the section of this Agreement referred to below. Such terms, as so defined, shall include in the singular, the plural, and in the plural, the singular.
Agreement shall mean this Purchase and Sale Agreement, together with all Schedules and Exhibits attached hereto, as it and they may be amended from time to time as herein provided.
Assumed Liabilities shall mean (i) all obligations first accruing, first arising or first to be performed after the Closing Date with respect to the Assumed Contracts, and (ii) liabilities arising from or in connection with the possession or control of the Resident Trust Funds transferred to Purchaser.
Business Day shall mean any day other than a Saturday, Sunday or any other day on which banking institutions in the State of Tennessee are authorized by law or executive action to close.
Closing shall mean the closing of the transaction contemplated by this Agreement.
Closing Date shall mean March 31, 2013 or, if extended by Purchaser pursuant to Section 2.2 hereof, April 30, 2013, as the case may be.
Contracts shall mean, with respect to any Facility, collectively, all service contracts, equipment leases, booking agreements, Resident Agreements, warranties and guaranties, and other arrangements or agreements which relate exclusively to the ownership, repair, maintenance, management, leasing or operation of such Facility.
Deposit shall mean the amount of Three Hundred Fifty Thousand and 00/100 Dollars ($350,000.00), plus any additional amount deposited by Purchaser pursuant to Section 2.2 hereof.
Effective Date shall have the meaning given such term in the opening paragraph to this Agreement.
Escrow Agent shall mean Hughes and White.
Environmental Law shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, including the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Sections 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Sections 5101 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.) and any other federal, state, or local law, regulation, or ordinance pertaining to the protection of the environment that applies to the Facilities.
Excluded Assets shall mean (i) restricted and unrestricted cash and cash equivalents, including, without limitation, temporary investments, investments in marketable securities, certificates of deposit and bank accounts, (ii) accounts receivable for goods or services provided by Seller to residents at the Facility prior to the Closing Date, including those from non-governmental third-party payors ( Resident Receivables ) and those from governmental third-party payors, including Medicare and Medicaid (the Governmental Receivables ), (iii) any accounts related to any Facility or its operation or other right(s) to receive payments for goods or services provided by Seller prior to Closing (together with the Resident Receivables and Government Receivables, the Accounts Receivable), (iv) any reimbursement from Medicare or Medicaid as a result of any loss by Seller on the disposal of the Properties for purposes of Medicare and Medicaid reimbursement, (v) all Contracts which are not Assumed Contracts, and (vi) such other assets described on Schedule 1.1 .
FF&E shall mean, collectively, all appliances, machinery, devices, fixtures, equipment, furniture, furnishings, partitions, signs or trade fixtures or other tangible personal property, including, without limitation, computer hardware, software and data, owned by Seller and located at the Facilities.
Facility Records shall mean, with respect to each Facility, collectively, all files and records pertaining to the residents and employees of such Facility which are located at such Facility on the Closing Date.
HIPAA shall mean the Health Insurance Portability and Accountability Act of 1996, as it may be amended from time to time.
Hazardous Substance shall mean any chemical, substance, material, object, condition, or waste harmful to human health or safety or to the environment due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity, infectiousness, or other harmful or potentially harmful properties or effects, including, without limitation, petroleum or petroleum products, and all of those chemicals, substances, materials, objects, conditions, wastes, or combinations of them which are listed, defined or regulated by Environmental Law.
Improvements shall mean, collectively, all buildings and other structures and improvements situated on, affixed or appurtenant to the Land on which a Facility is located.
Inspection Period shall mean the period beginning on the Effective Date and expiring at 5:00 p.m. Central Standard Time on the thirtieth (30 th ) day after the Effective Time.
Intangible Property shall mean, with respect to any Facility, all transferable intangible property owned by Seller and arising from or used in connection with the ownership, use, operation or maintenance of the Real Property or FF&E related to such Facility, including, without limitation, websites and other intellectual property owned by Seller and used solely in connection with the operation of the Facilities, any names or other marks used exclusively in connection therewith and only to the extent Sellers interest therein is freely assignable or transferable; provided , however , in no event shall the Intangible Property include Excluded Assets.
Inventory shall mean, with respect to any Facility, collectively, any consummables, inventories, stocks, supplies and other related items which are used in connection with the use, operation or maintenance of such Facility or the provision of services to the residents of such Facility other than Medical Inventory and supplies or other items used or consumed in the ordinary course of business.
Land shall mean, collectively, the parcel or parcels of land described on Exhibit B attached hereto on which a Facility is located, together with all appurtenances thereto.
Medical Inventory shall mean the medical inventory of Quality Medical Supply Nashville, Inc.
Properties shall mean, with respect to any Facility, collectively, Sellers entire right, title and interest in and to the Real Property and with respect to all Facilities, Sellers entire right, title and interest if any in and to the FF&E, the Inventory, the Intangible Property, the Assumed Contracts and the Resident Trust Funds related to such Facility. The term Properties shall specifically exclude the Excluded Assets and Medical Inventory.
Purchase Price shall mean Twenty-eight Million and 00/100 Dollars ($28,000,000.00).
Purchaser shall have the meaning given such term in the opening paragraph to this Agreement, together with any of its permitted successors and assigns.
Real Property shall mean, collectively, the Land and the Improvements related to a Facility.
Resident Agreements shall mean, with respect to any Facility, collectively, all resident agreements or other contracts or arrangements for the use or occupancy of any units, beds or other facilities provided, meals served, goods sold or services rendered, in each case, on or at such Facility.
Resident Trust Funds shall mean the funds held in trust by Seller for the residents of each Facility excluding non-refundable deposits.
Surviving Obligations shall mean all of the obligations and liabilities of Purchaser or Seller which expressly survive the Closing or any termination of this Agreement.
Tax Code shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as from time to time amended.
Title Company shall mean First American Title Insurance Company or such other reputable national title insurance company as may be selected by Purchaser.
Vehicles shall mean the vehicles owned by Seller and located at and/or used in connection with the Facilities as more specifically identified on Exhibit E attached hereto and incorporated herein by reference.
ARTICLE 2
PURCHASE AND SALE; CLOSING
2.1 Purchase and Sale . In consideration of the payment of the Purchase Price by Purchaser to Seller and for other good and valuable consideration, Seller hereby agrees to sell to Purchaser, and Purchaser hereby agrees to purchase from Seller, all of Sellers right, title and interest in and to the Properties for the Purchase Price, subject to and in accordance with the terms and conditions of this Agreement. As of the Closing Date, Purchaser agrees to assume and become responsible for the payment and performance of the Assumed Liabilities in accordance with their respective terms.
2.2 Closing . If the closing conditions in Section 4 and Section 5 are satisfied, the purchase and sale of the Properties shall be consummated on the Closing Date by the release of the documents and funds held in escrow by the Escrow Agent. The Closing shall be effective as of 12:01 a.m. Central Standard Time on the date immediately following the Closing Date. Purchaser shall have the right to extend the Closing Date to April 30, 2013 upon (i) written notice to Seller and (ii) delivery of an additional $50,000 to the Escrow Agent, which amount shall be held and disbursed as part of the Deposit.
2.3 Purchase Price . The aggregate purchase price to be paid for the Properties shall be the Purchase Price plus the assumption of the Assumed Liabilities. The Purchase Price shall be paid as follows:
(a) Deposit . Within three (3) Business Days following the Effective Date, Purchaser shall deposit the Deposit with the Escrow Agent by wire transfer of immediately available funds.
(b) Cash Consideration . The sum of Twenty-five Million and 00/100 Dollars ($25,000,000.00) (including the Deposit) plus the Additional Monies (the Cash Consideration), subject to adjustment as provided in Article 9 , shall be deposited into escrow with the Escrow Agent by wire transfer of immediately available funds and released to Seller at the Closing.
(c) Seller Note. The sum of Three Million and 00/100 Dollars ($3,000,000.00) shall be evidenced by a promissory note from Purchaser in favor of Seller executed and delivered at Closing (the Seller Note). The Seller Note shall be substantially in the form attached hereto as Exhibit F . The Seller Note shall have a three (3) year term and bear interest at the simple annual fixed rate of five percent (5%). For the first eighteen (18) months, payments shall be interest only and paid monthly in arrears. Thereafter, Purchaser shall also make (in addition to monthly interest payments) quarterly principal payments in the amount of $350,000.00 each.
(d) Assignment and Assumption Agreement . The Purchaser and Seller shall enter into an Assignment and Assumption Agreement pursuant to Section 4.1(c) and Section 5.2(b) whereby the Purchaser agrees to assume the Assumed Liabilities.
(e) Independent Consideration . Seller and Purchaser acknowledge and agree that if the Deposit is to be returned to Purchaser pursuant to any of the provisions of this Agreement, the Escrow Agent shall retain One Hundred and 00/100 Dollars ($100.00) from the Deposit and shall pay such
amount to Seller as independent consideration paid by Purchaser to Seller for Sellers execution and delivery of this Agreement.
2.4 Duties of Escrow Agent .
(a) Holding of Deposit . The Escrow Agent shall hold the Deposit in a non-interest bearing account and shall pay the Deposit to the party entitled thereto in accordance with the terms of this Agreement.
(b) IRS Real Estate Sales Reporting . The Escrow Agent shall act as the person responsible for closing the transactions contemplated hereby pursuant to Section 6045(e) of the Tax Code, and the Escrow Agent shall prepare and file all informational returns, including IRS Form 1099-S, and shall otherwise comply with the provisions of said Section 6045(e).
(c) Escrow Agreement . Simultaneously with the execution and delivery of this Agreement, Seller, Purchaser and Escrow Agent shall execute and deliver an escrow agreement in the form attached hereto as Exhibit C .
ARTICLE 3
DILIGENCE
3.1 Inspections and Other Diligence Activities .
(a) Property Inspections . During the Inspection Period and thereafter until the Closing or the earlier termination of this Agreement, Seller shall permit Purchaser and its representatives to conduct non-invasive physical inspections of the Properties; provided , however , Purchaser shall not be permitted to perform any environmental investigations or invasive testing which is outside the scope of a Phase I Environmental Site Assessment conducted in accordance with ASTM Standard E1527-05 without Sellers prior written consent which shall not be unreasonably withheld or delayed. Except for the administrators of each of the Facilities (whom Purchaser may contact), Purchaser shall not contact any employees or any residents of any Facility without Sellers prior written consent. All such property inspections shall be performed in a manner consistent with this Agreement, and in coordination with Seller and so as to avoid any interference or disruptions to the residents or the operations of the Facilities. Purchaser shall notify Seller at least one (1) Business Day prior to entering any Facility for the purpose of making any such inspections. For purposes of the preceding sentence only, notice may be given by e-mail or by telephone to Emily Whitcomb at 615-390-3127.
(b) Diligence Materials . From and after the Effective Date until the Closing or the earlier termination of this Agreement, Seller shall deliver to Purchaser for Purchasers review correct and complete copies of any materials pertaining to the Facilities that are reasonably requested by Purchaser to the extent such materials are within Sellers possession or control. Except as otherwise expressly set forth herein, Seller makes no representation or warranty, express or implied, with respect to the accuracy or completeness of any materials, reports, data or other information provided by Seller pursuant to or in connection with this Agreement. Within ten (10) days of the Effective Date, Seller shall make available to Purchaser correct and complete copies of all Contracts.
(c) Indemnification . Purchaser shall indemnify, defend and hold harmless Seller from and against any and all expenses, losses, claims or damages which Seller suffers as a result of any act or omission of Purchaser or its representatives, agents or contractors in connection with any inspection conducted by Purchaser or its representatives, agents or contractors pursuant to this Agreement.
Purchasers obligations under this Section 3.1(c) shall survive the Closing or any earlier termination of this Agreement.
3.2 Termination of Agreement . If the results of the inspections performed by or on behalf of Purchaser pursuant to Section 3.1 shall be unsatisfactory to Purchaser in any respect, Purchaser shall have the right to terminate this Agreement at any time prior to the expiration of the Inspection Period by giving written notice thereof to Seller, in which event the Escrow Agent shall return the Deposit to Purchaser and neither party shall have any further rights or obligations hereunder, except the Surviving Obligations. In addition, this Agreement may be terminated and the transactions abandoned at any time prior to the Closing Date, by written notice to the other party, as follows:
(a) by the mutual written consent of Purchaser and the Seller;
(b) by Purchaser or Seller, if the Closing has not occurred by March 31, 2013 or, if extended by Purchaser pursuant to Section 2.2, April 30, 2013;
(c) by Purchaser if there has been a material violation or breach of any of the Sellers agreements, representations or warranties contained in this Agreement which has not been waived by Purchaser in writing; or
(d) by Seller if there has been a material violation or breach of any of the Purchasers agreements, representations or warranties contained in this Agreement which has not been waived by Seller in writing.
3.3 Title and Survey . Within five (5) Business Days following the Effective Date, Seller shall deliver to Purchaser copies of the most recent title policies and surveys of the Real Properties that are in Sellers possession or control (if any). Purchaser shall have the right to obtain new or updated title commitments and/or surveys for the Real Properties and Purchaser shall provide copies of any such updates to Seller within two (2) Business Days after its receipt thereof. At least five (5) Business Days prior to the expiration of the Inspection Period, Purchaser shall give Seller notice of any title exceptions or other matters set forth on Sellers title policies or surveys or any updates thereof as to which Purchaser objects in its sole and absolute discretion. Seller shall have the right, but not the obligation, to remove, satisfy or otherwise cure any such exception or other matter as to which Purchaser so objects. If Seller is unable or unwilling to take such actions as may be required to cure such objections, Seller shall give Purchaser notice thereof; it being understood and agreed that the failure of Seller to give such notice within three (3) Business Days after its receipt of Purchasers notice of objection shall be deemed an election by Seller not to remedy such matters. If Seller shall be unable or unwilling to remove any title defects to which Purchaser has so objected, Purchaser shall elect either (a) to terminate this Agreement (in whole but not in part) or (b) to proceed to Closing notwithstanding such title defect without any abatement or reduction in the Purchase Price on account thereof. Purchaser shall make any such election by written notice to Seller given on or prior to the expiration of the Inspection Period; provided , however , if Seller commences to cure a title defect and then elects not to complete such cure, Purchaser shall have the right to terminate this Agreement by written notice to Seller within three (3) Business Days after Seller notifies Purchaser thereof. The failure of Purchaser to give such notice shall be deemed an election by Purchaser to proceed to Closing in accordance with clause (b) above. If Purchaser terminates this Agreement in accordance with this Section 3.3 , Escrow Agent shall return the Deposit to Purchaser and neither party shall have any further rights or obligations hereunder, except with respect to the Surviving Obligations.
3.4 Confidentiality, Etc. Purchaser shall not disclose or otherwise use any data or other information concerning the Facilities for any purpose other than for evaluating the Facilities in the course
of its due diligence as provided herein, and Purchaser shall keep all such data and information strictly confidential. Following the expiration of the Inspection Period, nothing herein shall prohibit Purchaser, from issuing a press release generally describing the transactions contemplated hereunder, provided that such press release shall not disclose the identity or location of the Facilities or the identity of Seller and is in a form approved by Seller; provided that such approval shall not be unreasonably withheld. Notwithstanding the foregoing, Seller acknowledges that Purchaser may disclose (i) such data and information by furnishing copies thereof to third party consultants in the normal course of Purchasers due diligence provided that such consultants agree to be abide bound the terms and conditions of this Section 3.4 and/or (ii) the terms of this Agreement as may be required for any regulatory filings. Purchaser shall indemnify, defend and hold harmless Seller from and against any loss, claim, damage or expense which Seller may incur as a result of any breach by Purchaser or any third party of the terms and conditions of this Section 3.4 . This Section 3.4 shall survive any termination of this Agreement.
3.5 Return of Materials . If the Closing does not take place as herein contemplated for any reason, Purchaser shall promptly return all materials delivered or made available to it by Seller pursuant to this Agreement, and Purchaser shall also deliver to Seller copies of any reports, surveys, data or other information obtained by Purchaser in connection with its diligence hereunder without any representation or warranty whatsoever.
ARTICLE 4
CONDITIONS TO PURCHASERS OBLIGATION TO CLOSE
The obligation of Purchaser to acquire the Properties shall be subject to the satisfaction of the following conditions precedent on and as of the Closing Date:
4.1 Closing Documents . The Seller shall have delivered to Escrow Agent and shall have authorized and directed Escrow Agent to record or release to Purchaser (as applicable) the following:
(a) Deeds . A limited warranty deed with respect to the Real Property at each Facility, in proper statutory form for recording, duly executed and acknowledged by Seller and substantially in the form of Exhibit G attached hereto and made a part hereof;
(b) Bills of Sale . One or more bill(s) of sale, duly executed by Seller with respect to Sellers right, title and interest in and to the FF&E and Inventory related to each Facility and substantially in the form of Exhibit H attached hereto;
(c) Title to Vehicles . Original title to each of the Vehicles shall be duly executed by Seller to transfer title to Purchaser;
(d) Assignments . One or more assignment and assumption agreement(s), duly executed by Seller, with respect to Sellers right, title and interest in and to all Intangible Property, Assumed Contracts and Resident Trust Funds at each Facility and substantially in the form of Exhibit I attached hereto;
(e) FIRPTA . A so-called FIRPTA affidavit pursuant to Section 1445 of the Tax Code, duly executed by Seller, in the form of Exhibit J attached hereto;
(f) Settlement Statement . A settlement statement showing the Purchase Price and all adjustments thereto in accordance with the terms and conditions of this Agreement, which settlement statement shall be in a form and substance reasonably satisfactory to Seller and Purchaser, duly executed by Seller (the Settlement Statement);
(g) Original Documents . To the extent the same are in Sellers possession or control, original, fully executed copies of the Resident Agreements;
(h) Title Affidavits . Such usual and customary affidavits and indemnities as the Title Company may reasonably require, including, without limitation, a so-called owners affidavit in such form as will permit the Title Company to issue its title policy without exceptions for parties-in-possession (other than the residents under Resident Agreements) or mechanics liens;
(i) Secretarys Certificate & Incumbency . Copies of the following, in each case certified as of the Closing Date by a Secretary or an Assistant Secretary of Seller:
(i) resolutions of the members of Seller authorizing the execution, delivery and performance of this Agreement and the other agreements that Seller is required to execute and deliver pursuant to the terms of this Agreement; and
(ii) the signature and incumbency of the officers of Seller authorized to execute and deliver this Agreement and the other agreements and certificates that Seller is required to deliver on or before the Closing Date pursuant to this Agreement;
(j) Good Standing . A good standing certificate issued with respect to Seller by the Secretary of the State of Tennessee. Such good standing certificate shall be dated as of a date that is not more than 15 days prior to the Closing Date;
(k) Seller Note Documents . A Security Agreement, a Deed of Trust, an Intercreditor Agreement, a Subordination Agreement, Guaranty and any other necessary documents to be executed in connection with the Seller Note, all in form and substance satisfactory to Seller, duly executed by Seller, as applicable. Notwithstanding any provision hereof, if Seller and Purchasers lender are not able to agree upon the terms of an Intercreditor Agreement on or prior to the Closing Date, the Deposit shall be refunded to Purchaser; and
(l) Other Conveyance Documents . Such other conveyance documents and instruments as Purchaser, Seller or the Title Company may reasonably require and as are consistent with this Agreement and are customary in like transactions in the State of Tennessee, including, without limitation, a GAP indemnity.
4.2 Licenses and Permits, Etc. Purchaser shall have obtained all necessary licenses, certificates, permits and approvals (or customary assurances reasonably satisfactory to Purchaser that all such necessary licenses, certificates, permits and approvals shall be issued retroactively as of the Closing Date) from all Federal, state and local regulatory agencies required to acquire, own, lease, manage and operate each Facility in the manner currently operated.
4.3 Representations and Warranties . All representations and warranties of Seller herein shall be correct and complete in all material respects on and as of the Closing Date (unless such representation speaks as of an earlier date, in which case as of such date), and Seller shall certify in writing at the Closing that each of the representations and warranties made by Seller herein are correct and complete in all material respects on and as of the Closing Date (unless such representation speaks as of an earlier date, in which case as of such date).
4.4 Sellers Covenants . Seller shall have performed in all material respects all covenants and obligations required to be performed by Seller on or before the Closing Date.
4.5 Condition of Property . The Facilities shall, on the Closing Date, be in substantially the same condition as they were on the Effective Date, normal wear and tear excepted; provided , however , if a casualty or condemnation occurs with respect to any Facility, Article 10 shall govern the rights and obligations of the parties hereunder.
4.6 Title Policy . The Title Company shall be committed, subject only to payment of its usual and customary premium at the Closing, to issue a title policy to Purchaser insuring that fee simple title to the Real Properties on which the owned Facilities are located is vested in Purchaser.
4.7 OTAs . Seller and Purchaser (or its designee) shall have entered into the OTAs; the OTAs shall be in full force and effect; and the consummation of the transactions contemplated by the OTAs shall occur simultaneously with the Closing. If Seller and Purchaser are unable to agree upon the Severance Pay Program (as contemplated and defined in the OTAs), Purchaser may terminate this Agreement and the Deposit shall be returned to Purchaser.
ARTICLE 5
CONDITIONS TO SELLERS OBLIGATION TO CLOSE
The obligation of Seller to convey the Properties to Purchaser is subject to the satisfaction of the following conditions precedent on and as of the Closing Date:
5.1 Purchase Price . Purchaser shall have delivered the Seller Note and the Cash Consideration to Escrow Agent and shall have authorized and directed Escrow Agent to pay and deliver the same to Seller.
5.2 Closing Documents . Purchaser shall have delivered to Escrow Agent and shall have authorized and directed Escrow Agent to release to Seller the following:
(a) Bills of Sale . One or more bill(s) of sale, duly executed by Purchaser substantially in the form of Exhibit H attached hereto;
(b) Assignments . One or more assignment and assumption agreement(s), duly executed by Purchaser substantially in the form of Exhibit I attached hereto;
(c) Settlement Statement . The Settlement Statement duly executed by Purchaser;
(d) Secretarys Certificate & Incumbency . Copies of the following, in each case certified as of the Closing Date by a Secretary or an Assistant Secretary of Purchaser:
(i) resolutions of the members of Purchaser authorizing the execution, delivery and performance of this Agreement and the other agreements that Purchaser is required to execute and deliver pursuant to the terms of this Agreement; and
(ii) the signature and incumbency of the officers of Purchaser authorized to execute and deliver this Agreement and the other agreements and certificates that Purchaser is required to deliver on or before the Closing Date pursuant to this Agreement;
(e) Good Standing . A good standing certificate issued with respect to Purchaser by the Secretary of State of Ohio. Such good standing certificate shall be dated as of a date that is not more than 15 days prior to the Closing Date;
(f) Qualification . Evidence of Purchasers qualification to do business in the State of Tennessee issued by the Secretary of State of Tennessee. Such evidence shall be dated as of a date that is not more than 30 days prior to Closing;
(g) Seller Note Documents . A Security Agreement, a Deed of Trust, an Intercreditor Agreement, a Subordination Agreement, Guaranty and any other necessary documents to be executed in connection with the Seller Note, duly executed by Purchaser or its ultimate parent, as applicable;
(h) Side Letter . A side letter regarding health coverage for Emily Whitcomb executed by Purchaser; and
(i) Other Conveyance Documents . Such other conveyance documents and instruments as Seller or the Title Company may reasonably require and as are consistent with this Agreement and are customary in like transactions in the State of Tennessee.
5.3 Representations and Warranties . All representations and warranties of Purchaser herein shall be correct and complete in all material respects on and as of the Closing Date (unless such representation speaks as of an earlier date, in which case as of such date), and Purchaser shall certify in writing at the Closing that each of the representations and warranties made by Purchaser herein are correct and complete in all material respects on and as of the Closing Date (unless such representation speaks as of an earlier date, in which case as of such date).
5.4 Purchasers Covenants . Purchaser shall have performed in all material respects all covenants and obligations required to be performed by Purchaser on or before the Closing Date.
5.5 OTAs . Seller and Purchaser (or its designee) shall have entered into the OTAs; the OTAs shall be in full force and effect; and the consummation of the transactions contemplated by the OTAs shall occur simultaneously with the Closing.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
6.1 Sellers Representations . To induce Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as follows:
(a) Status and Authority . Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Tennessee, and has all requisite power and authority under the laws of such state and its charter documents to enter into and perform its obligations under this Agreement and the OTAs and to consummate the transactions contemplated hereby and thereby.
(b) Action . Seller has taken (or will have taken prior to Closing) all necessary action to authorize the execution, delivery and performance of this Agreement and the OTAs, and upon the execution and delivery of this Agreement, the OTAs and/or any document to be delivered by Seller hereunder or thereunder, this Agreement, the OTAs and such document shall constitute the valid and binding obligations and agreements of Seller, enforceable against Seller in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.
(c) No Violations of Agreements . Neither the execution, delivery or performance of this Agreement or the OTAs by Seller, nor compliance with the terms and provisions hereof by Seller,
will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the Properties pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Seller is bound.
(d) Litigation . There are no pending investigations, actions or proceedings which question the validity of this Agreement or the OTAs. Except as set forth on Schedule 6.1(d) , Seller has not received any written notice regarding any pending or threatened litigation or administrative proceedings with respect to any Property which could reasonably be expected to materially adversely affect the Properties or the Facilities or Sellers right to enter into this Agreement or the OTAs or to consummate the transactions contemplated by this Agreement or the OTAs. Seller is not subject to any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental department, agency, board, bureau or instrumentality issued or entered in a proceeding to which Seller or any Facility is or was a party which is binding upon any Facility, including, without limitation, any uncorrected license deficiencies, restrictions or limitations related to the operation of any Facility.
(e) Notices of Violation . Except as otherwise disclosed to Purchaser in writing, as of the Effective Date, since January 1, 2010, Seller has not received any written notice from any governmental authority claiming that any of the Properties is in material violation of any applicable law, code, rule, regulation, ordinance, license or permit (including, without limitation, any Environmental Law).
(f) Residents . That certain letter from Seller to Purchaser dated as of the Effective Date sets forth an accurate and complete list of the names of all residents at the Facilities on the date immediately preceding the Effective Date.
(g) Covered Entity . Seller is a covered entity for HIPAA purposes.
(h) Hazardous Substances . To Sellers knowledge, Seller has not unlawfully used, generated, transported, treated, constructed, deposited, stored, disposed, placed or located at, on, under or from the Property any Hazardous Substances in material violation of Environmental Laws where such violation could reasonably be expected to have a material adverse effect on the Facilities.
6.2 Knowledge Defined . All references in this Agreement to Sellers knowledge or words of similar import shall refer to the actual, conscious knowledge of Emily Whitcomb, without any duty of investigation or inquiry.
6.3 Survival . The representations and warranties made in this Agreement by Seller shall be continuing and shall be deemed remade as of the Closing Date, with the same force and effect as if made on, and as of, such date, subject to Sellers right to update such representations and warranties by written notice to Purchaser prior to the Closing Date. All representations and warranties made in this Agreement by Seller shall survive the Closing for a period of one (1) year. Purchaser must notify Seller of any alleged breach of any representation on or before the day preceding the first anniversary of the Closing Date, and no action or proceeding may be commenced against Seller for any breach of any representation or warranty after the day preceding the first anniversary of the Closing Date.
6.4 AS-IS . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, AND PURCHASER HAS NOT RELIED UPON, ANY INFORMATION, PROMISE, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING THE PROPERTIES OR THE FACILITIES, WHETHER MADE BY SELLER, INCLUDING, WITHOUT LIMITATION, ANY INFORMATION, PROMISE, REPRESENTATION OR
WARRANTY REGARDING THE PHYSICAL CONDITION OR VALUE OF THE PROPERTIES OR THE FACILITIES, THE FINANCIAL CONDITION OF THE RESIDENTS UNDER THE RESIDENT AGREEMENTS, TITLE TO OR THE BOUNDARIES OF ANY OF THE PROPERTIES OR THE FACILITIES, PEST CONTROL MATTERS, SOIL CONDITIONS, THE PRESENCE, EXISTENCE OR ABSENCE OF HAZARDOUS SUBSTANCES, TOXIC SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS, COMPLIANCE WITH BUILDING, HEALTH, ENVIRONMENTAL, SAFETY, LAND USE AND ZONING LAWS, REGULATIONS AND ORDERS, STRUCTURAL AND OTHER ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS, MARKET DATA, ECONOMIC CONDITIONS OR PROJECTIONS, AND ANY OTHER INFORMATION PERTAINING TO ANY OF THE PROPERTIES, THE FACILITIES OR THE MARKET AND PHYSICAL ENVIRONMENTS IN WHICH THEY MAY BE LOCATED AND SELLER EXPRESSLY DISCLAIMS ALL WARRANTIES RELEVANT TO THE PROPERTIES OR THE FACILITIES, EITHER EXPRESS OR IMPLIED, INCLUDING MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND SUITABILITY FOR ITS INTENDED USE. PURCHASER ACKNOWLEDGES THAT (A) PURCHASER IS A SOPHISTICATED OWNER AND OPERATOR OF PROPERTIES AND FACILITIES SIMILAR TO THE PROPERTIES AND FACILITIES, (B) PURCHASER HAS ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN INVESTIGATION OR THAT OF THIRD PARTIES WITH RESPECT TO THE PHYSICAL, ENVIRONMENTAL, ECONOMIC AND LEGAL CONDITION OF THE PROPERTIES AND THE FACILITIES AND (C) PURCHASER IS NOT RELYING UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES OF ANY KIND, AND IS ACQUIRING THE PROPERTIES AND FACILITIES IN AS IS, WHERE IS CONDITION, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER
7.1 Representations of Purchaser . To induce Seller to enter into this Agreement, Purchaser represents and warrants to Seller as follows:
(a) Status and Authority of Purchaser . Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of its state of formation, and has all requisite power and authority under the laws of such state and its charter documents to enter into and perform its obligations under this Agreement and the OTAs and to consummate the transactions contemplated hereby and thereby.
(b) Action of Purchaser, Etc. Purchaser has taken (or will have taken prior to Closing) all necessary action to authorize the execution, delivery and performance of this Agreement and the OTAs, and upon the execution and delivery of this Agreement, the OTAs and/or any document to be delivered by Purchaser hereunder or thereunder, this Agreement, the OTAs and such documents shall constitute the valid and binding obligations and agreements of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.
(c) No Violations of Agreements . Neither the execution, delivery or performance of this Agreement or the OTAs by Purchaser, nor compliance with the terms and provisions hereof by Purchaser, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon the property or assets of Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Purchaser is bound.
(d) Litigation . No investigation, action or proceeding is pending and, to Purchasers knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or the OTAs or any action taken or to be taken pursuant hereto or thereto.
(e) Covered Entity . Purchaser is a covered entity for HIPAA purposes.
7.2 Survival . The representations and warranties made in this Agreement by Purchaser shall be continuing and shall be deemed remade as of the Closing Date, with the same force and effect as if made on, and as of, such date. All representations and warranties made in this Agreement by Purchaser shall survive the Closing for a period of one (1) year. Seller must notify Purchaser of any alleged breach of any representation on or before the day preceding the first anniversary of the Closing Date, and no action or proceeding may be commenced against Purchaser for any breach of any representation or warranty after the day preceding the first anniversary of the Closing Date.
ARTICLE 8
COVENANTS
8.1 Sellers Covenants . Seller hereby covenants with Purchaser between the Effective Date and the Closing Date as follows:
(a) Material Agreements . Not to enter into, modify, amend or terminate any material agreement with respect to any Facility, which would encumber or be binding upon such Facility from and after the Closing Date, without in each instance obtaining the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed prior to the expiration of the Inspection Period but which may be withheld in Purchasers sole and absolute discretion thereafter.
(b) Operation of Property . To continue to own and operate each Facility which it owns or operates in a good and businesslike fashion consistent with past practices; provided , however , notwithstanding anything to the contrary contained in this Article 8 or elsewhere in this Agreement, it is expressly understood and agreed that no Seller shall have any obligation to make any capital expenditure with respect to any Facility.
8.2 Licensing . Purchaser hereby covenants with Seller between the Effective Date and the Closing Date to use commercially reasonable efforts to obtain all material licenses, certificates, permits and approvals from all Federal, state and local regulatory agencies required to acquire, own, lease, manage and operate each Property in the manner currently operated. Seller hereby covenants to reasonably cooperate with Purchaser, at no out-of-pocket cost or expense to Seller, in Purchasers obtaining all such licenses, certificates, permits and approvals.
8.3 Misdirected Payments, etc. Seller and Purchaser covenant and agree to remit, with reasonable promptness, to the other any payments received, which payments are on or in respect of accounts or notes receivable owned by (or are otherwise payable to) the other.
8.4 Medical Inventory . At Closing, Seller shall cause its affiliate, Quality Medical Supply Nashville, Inc., to sell to Purchaser and Purchaser shall purchase all of the Medical Inventory at the Closing. The purchase price for such Medical Inventory (the Additional Monies ) shall equal the price Purchaser could acquire the same items (in the same quantity) from McKesson. No later than ten (10) Business Days prior to Closing, Seller shall deliver to Purchaser an inventory of the Medical Inventory and Purchaser shall provide Seller no later than five (5) days prior to the Closing a schedule setting forth
the amount to be paid as Additional Monies. At Closing, Seller shall deliver to Purchaser a Bill of Sale in the form of Exhibit K transferring all of the Medical Inventory to Purchaser.
8.5 Assumed Contracts . At the Closing, Seller shall assign and Purchaser shall assume all of the Contracts other than those contracts listed on Schedule 8.5 hereto (all of which are not terminable by Seller without cause or penalty on ninety (90) days or less notice to the counter party) (collectively, the Assumed Contracts ). Notwithstanding the preceding sentence, Assumed Contracts shall not include any Contracts between Seller and its affiliated entities.
8.6 Access to Records .
(a) At the Closing, Seller shall, to the extent permitted by applicable law, including, without limitation, HIPAA, allow all of the Facility Records that are in Sellers possession or control to remain at the Facilities or if requested by Purchaser, to the extent such records are in an electronic format, provide such information directly to Purchaser for downloading by Purchaser on its computer system.
(b) Subsequent to the Closing, Purchaser shall allow Seller and its agents and representatives to have reasonable access to (upon reasonable prior notice and during normal business hours), and to make copies of, at Sellers expense, the books and records and supporting material of the Facilities relating to any period prior to the Closing, to the extent reasonably requested by Seller, which access shall not unreasonably disrupt Purchasers operations.
(c) Seller shall be entitled to remove the originals of any records delivered to Purchaser, for purposes of litigation involving a resident or employee to whom such record relates, if an officer of a court of competent jurisdiction or agency official certifies that such original must be produced in order to comply with applicable law or the order of a court of competent jurisdiction in connection with such litigation and Seller shall provide Purchaser with a complete copy of such records prior to its removal at Sellers reasonable cost and expense and as a condition precedent to receiving such original record. Any record so removed shall promptly be returned to Purchaser following its use.
(d) Purchaser agrees to maintain the Facility Records that have been received by Purchaser from Seller or otherwise, including, but not limited to, resident records and records of resident funds, for a period of seven (7) years from the date of the record or such shorter period as may be required by law.
ARTICLE 9
APPORTIONMENTS
9.1 Real Property Apportionments .
(a) Prorations . The following items for the Facilities shall be apportioned at the Closing as of 12:01 a.m. on the day immediately following the Closing Date:
(i) fixed charges or other amounts paid or payable by or on behalf of residents under the Resident Agreements;
(ii) real estate taxes and assessments other than special assessments, based on the rates and assessed valuation applicable in the fiscal year for which assessed;
(iii) municipal assessments and governmental license and permit fees;
(iv) amounts payable under financing or equipment leases affecting personal property; and
(v) all other items of income and expense normally apportioned in sales of properties of the nature and type of each Facility.
If any of the foregoing cannot be apportioned at the Closing because of the unavailability of the amounts which are to be apportioned, such items shall be apportioned on the basis of a good faith estimate by the parties and reconciled as soon as practicable after the Closing Date but, in any event, no later than forty-five (45) days after the Closing Date.
(b) Utilities . Seller shall endeavor to obtain readings of any water, gas, electric or other utility meters located at the Facilities as of the Closing Date, so that all such utilities are transferred over to Purchasers own accounts as of the Closing Date, and either Seller or Purchaser, as applicable, shall pay all such invoices related to such partys period of ownership directly to the applicable utility provider. If all such readings cannot be obtained as of the Closing Date, then, at the Closing, the charges for any unread utilities shall be prorated based upon the per diem charges using the most recent period for which such readings are available. Seller and Purchaser agree to make such final recalculations within ninety (90) days after the Closing Date.
(c) Tax Refunds . If any refunds of real property taxes or assessments, water rates and charges or sewer taxes and rents shall be made after the Closing Date, the same shall be held in trust by the Seller or Purchaser, as the case may be, and shall first be applied to the unreimbursed costs incurred in obtaining the same and the balance, if any, shall be paid to the Seller (for the period prior to the Closing Date) and to Purchaser (for the period commencing with the Closing Date).
(d) Insurance Policies . No insurance policies of Seller are to be transferred to Purchaser, and no apportionment of the premiums therefor shall be made.
(e) Net Adjustments . If a net amount is owed by Seller to Purchaser pursuant to this Section 9.1 , such amount shall be credited against the Purchase Price. If a net amount is owed by Purchaser to Seller pursuant to this Section 9.1 , such amount shall be added to the Purchase Price.
9.2 Closing Costs .
(a) Purchasers Closing Costs . Purchaser shall pay the following costs in connection with the consummation of the Closing: (i) the premium charges and search fees for Purchasers title policies and all of the charges for any endorsements thereto, (ii) the cost of any survey or Phase I Environmental Report for the Real Property obtained by Purchaser in connection with the Closing and (iii) all other charges incurred by Purchaser in connection with this Agreement (including, without limitation, the fees and expenses of Purchasers attorneys and other consultants).
(b) Sellers Closing Costs . Seller shall pay the following costs in connection with the consummation of the Closing: (i) all of the charges and transfer taxes for recording the deeds; (ii) all commissions owed to any broker in accordance with the terms of a separate agreement among the Seller and such broker; and (iii) all other charges incurred by the Seller in connection with this Agreement (including, without limitation, the fees and expenses for the Sellers attorneys and other consultants).
9.3 Survival . Notwithstanding any term herein to the contrary, the covenants contained in this Article 9 shall survive closing for a period of one year following the Closing Date or such shorter
period as may be specified herein and each partys obligation to pay any applicable Closing costs in accordance with Section 9.2 shall survive any earlier termination of this Agreement.
ARTICLE 10
DAMAGE TO OR CONDEMNATION OF PROPERTY
10.1 Casualty . If, prior to the Closing, all or any material part of the Facilities (taken as a whole) is destroyed or materially damaged by fire or other casualty, Seller shall promptly notify Purchaser of such fact. In such event, Purchaser shall have the right to terminate this Agreement (in whole but not in part) by giving notice thereof to Seller not later than ten (10) days after receiving Sellers notice (and, if necessary, the Closing Date shall be extended until the second Business Day after the expiration of such ten-day period). If Purchaser elects to terminate this Agreement as aforesaid, the Deposit shall be paid to Purchaser, whereupon, this Agreement shall terminate and be of no further force and effect and no party shall have any rights or obligations hereunder except for the Surviving Obligations. If less than a material part of the Facilities (taken as a whole) shall be affected or if Purchaser shall not elect to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and the Seller shall assign to Purchaser at the Closing all of Sellers right, title and interest in and to the proceeds, if any, under Sellers insurance policies covering such Property with respect to such damage or destruction and there shall be credited against the Purchase Price the amount of any applicable deductible.
10.2 Condemnation . If, prior to the Closing, all or any material part of the Facilities (taken as a whole) is taken by eminent domain (or becomes the subject of a pending taking which has not yet been consummated), Seller shall notify Purchaser of such fact promptly after obtaining knowledge thereof and Purchaser shall have the right to terminate this Agreement (in whole but not in part) by giving notice thereof to Seller not later than ten (10) days after the giving of Sellers notice (and, if necessary, the Closing Date shall be extended until the second day after the expiration of such ten-day period). If Purchaser elects to terminate this Agreement as aforesaid, the Deposit shall be paid to Purchaser, whereupon, this Agreement shall terminate and be of no further force and effect and no party shall have any rights or obligations hereunder except for the Surviving Obligations. If less than a material part of the Facilities (taken as a whole) shall be affected or if Purchaser shall not elect to terminate this Agreement as aforesaid, the sale of the Facilities shall be consummated as herein provided without any adjustment to the Purchase Price (except to the extent of any condemnation award received by Seller prior to the Closing) and the Seller shall assign to Purchaser at the Closing all of Sellers right, title and interest in and to all awards, if any, for the taking, and Purchaser shall be entitled to receive and keep all awards for the taking of such Facilities or portion thereof.
ARTICLE 11
INDEMNIFICATION AND
DEFAULT
11.1 Sellers Indemnification . Seller will defend, indemnify and hold Purchaser harmless against and in respect of any and all liability, damage, loss, cost, and expenses (collectively, Damages ) arising out of or otherwise in respect of: (a) any misrepresentation, breach of warranty, or non-fulfillment of any agreement or covenant made by Seller in this Agreement, the OTAs or any other documents or agreements executed and delivered by Seller to Purchaser at Closing; (b) the ownership and/or operation of the Facilities prior to the Closing Date (other than the Assumed Liabilities); and (c) any and all actions, suits, proceedings, audits, judgments, costs, and legal and other expenses incident to any of the foregoing or to the enforcement of this Section 11.1 . Notwithstanding the provisions of this Agreement, the OTAs or any other documents or agreements executed and delivered by Seller to Purchaser at Closing, in no event shall (i) Sellers indemnity obligations pursuant to this Agreement exceed Twenty Five Million and No/100 Dollars ($25,000,000) (the Cap ) in the aggregate; provided that the Cap shall not apply to fraud
and (ii) Seller be liable for any indemnification obligations pursuant to this Section 11.1 unless and until the aggregate of all indemnity losses exceeds Fifty Thousand and No/100 Dollars ($50,000.00) (the Threshold Amount), at which time the Purchaser shall be entitled to be indemnified for losses only to the extent such loss exceeds the Threshold Amount.
11.2 Purchasers Indemnification . Purchaser will defend, indemnify and hold Seller harmless against and in respect of any and all Damages arising out of or otherwise in respect of: (a) any misrepresentation, breach of warranty or non-fulfillment of any agreement or covenant made by Purchaser or its affiliates contained in this Agreement, the OTAs or any other documents or agreements executed and delivered by Purchaser or its affiliates to Seller at Closing; (b) the ownership and/or operation of the Facilities on and after the Closing Date; (c) the Assumed Liabilities; and (d) any and all actions, suits, proceedings, audits, judgments, costs, and legal and other expenses incident to any of the foregoing or to the enforcement of this Section 11.2 . Notwithstanding the provisions of this Agreement, the OTAs or any other documents or agreements executed and delivered by Purchaser to Seller at Closing, in no event shall (i) Purchasers indemnity obligations pursuant to this Agreement exceed the Cap in the aggregate; provided that the Cap shall not apply to fraud and (ii) Purchaser be liable for any indemnification obligations pursuant to this Section 11.2 unless and until the aggregate of all indemnity losses exceeds the Threshold Amount, at which time the Seller shall be entitled to be indemnified for losses only to the extent such loss exceeds the Threshold Amount.
11.3 Non-Third Party Claims . Whenever any claim shall arise for indemnification hereunder not involving any demand, claim, action or proceeding made or brought by a third party, the indemnified party shall notify the indemnifying party promptly after such indemnified party has actual knowledge of the facts constituting the basis for such claim. The notice to the indemnifying party shall specify, if known, the amount or an estimate of the nature and amount of the Damages arising therefrom.
11.4 Third Party Claims . Whenever any claim shall arise for indemnification hereunder involving any demand, claim, action or proceeding made or brought by a third party, including without limitation a government agency, the indemnified party shall notify the indemnifying party promptly after such indemnified party has actual knowledge of the facts constituting the basis for such claim. The notice to the indemnifying party shall specify, if known, the nature and amount or an estimate of the amount of the Damages arising therefrom. The indemnified party shall afford indemnifying party the opportunity, at indemnifying partys expense, to assume the defense or settlement of any such claim, with its own counsel. In connection therewith, the indemnified party shall cooperate fully to make available all pertinent information under its control and shall have the right to join in the defense, at its own expense, with its own counsel. If indemnifying party does not elect to undertake the defense of a claim on the terms provided below, indemnified party shall be entitled to undertake the defense or settlement of the claim at the expense of and for the account of indemnifying party. The indemnifying party shall have the right to assume the entire defense of a claim hereunder provided that (a) indemnifying party gives written notice of such desire to indemnified party within fifteen (15) days after indemnifying partys receipt of the notice of claim; (b) indemnifying partys defense of such claim shall be without cost to indemnified party or prejudice to indemnified partys rights under this Article 11 ; (c) indemnifying party shall bear all costs and expenses in connection with the defense and settlement of such claim; and (d) indemnifying party will not, without indemnified partys written consent, settle or compromise any claim or consent to any entry of judgment which does not include the unconditional release by claimant or plaintiff of all liability with respect to the claim.
11.5 Default by Seller . If, on or prior to the Closing, Seller shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if Seller shall fail to perform any of the material covenants and agreements contained herein to be performed by Seller, Purchaser may, as its sole and exclusive remedy at law or in equity, elect to either (a) terminate
this Agreement and receive a refund of the Deposit (following which no party shall have any rights or obligations hereunder except for the Surviving Obligations) or (b) pursue a suit for specific performance. Following any such termination, no party shall have any rights or obligations hereunder except for the Surviving Obligations.
11.6 Default by Purchaser . If, on or prior to Closing, Purchaser shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if Purchaser shall fail to perform any of the covenants and agreements contained herein to be performed by it, Seller, as its sole and exclusive remedy at law or in equity, may terminate this Agreement and retain the Deposit, as liquidated damages and not as a penalty (the parties agree that in the event of such a default, it would be extremely difficult or impossible to determine Sellers actual damages and that the liquidated damages amount is a reasonable estimate thereof). Following any such termination, no party shall have any rights or obligations hereunder except for the Surviving Obligations.
ARTICLE 12
MISCELLANEOUS
12.1 Single Transaction . The transaction contemplated by this Agreement is a single purchase and sale transaction with respect to all of the Properties. Under no circumstances shall Seller have any obligation to sell less than all of the Properties to Purchaser, and under no circumstances shall Purchaser have an obligation to purchase less than all of the Properties from Seller. Any termination of this Agreement shall operate to terminate this Agreement as to all of the Properties simultaneously.
12.2 Brokers . Except as disclosed on Schedule 12.2 hereto neither party has dealt with any broker, finder or like agent in connection with this Agreement or the transactions contemplated hereby. Each party shall indemnify, defend and hold harmless the other parties from and against any loss, liability or expense, including, without limitation, reasonable attorneys fees, arising out of any claim or claims for commissions or other compensation for bringing about this Agreement or the transactions contemplated hereby made by any other broker, finder or like agent, if such claim or claims are based in whole or in part on dealings with the indemnifying party.
12.3 Notices .
(a) Form of Notices . Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement may be given by the attorneys of the parties and shall be deemed adequately given if in writing. All such notices shall be delivered by hand, by mail or Fed Ex or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Fed Ex or similar carrier).
(b) Timing of Notices . All notices shall be deemed to have been given for all purposes of this Agreement upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.
(c) Notice Addresses . All such notices shall be addressed, |
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If to Seller, to: |
Avalon Health Care, LLC |
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413 Brock Rd. |
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Charlotte, Tennessee 37036 |
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Attn: Emily Whitcomb |
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with a copy to: |
Waller Lansden Dortch and Davis, LLP |
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511 Union Street, Suite 2700 |
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Nashville, TN 37219 |
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Attn: Brian R. Browder, Esq. |
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If to Purchaser, to: |
AdCare Property Holdings, LLC |
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Two Buckhead Plaza |
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3050 Peachtree Road NW, Suite 355 |
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Atlanta, Georgia 30305 |
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Attn: Christopher F. Brogdon |
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with a copy to: |
Holt Ney Zatcoff & Wasserman, LLP |
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100 Galleria Pkwy, Suite 1800 |
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Atlanta, Georgia 30339 |
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Attn: Gregory P. Youra, Esq. |
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If to Escrow Agent, to: |
Hughes and White |
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Shadowood Office Park |
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2110 Powers Ferry Road, Suite 410 |
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Atlanta, Georgia 30339 |
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Attn: Gregory D. Hughes, Esq. |
(d) Change of Notice Addresses . By notice given as herein provided, the parties hereto shall have the right from time to time and at any time to change their respective addresses to any other address within the United States of America effective upon receipt by the other parties of such notice.
12.4 Waivers . Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such partys right at a later time to enforce or require performance of such provision or any other provision hereof.
12.5 Amendments . This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.
12.6 Assignment; Successors and Assigns . This Agreement and all rights and obligations hereunder shall not be assignable by Purchaser without the prior written consent of Seller, except that Purchaser may assign this Agreement to one or more entities owned and/or controlled, directly or
indirectly, by Purchaser upon not less than three (3) Business Days prior notice to Seller. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons or entities.
12.7 Severability . If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.
12.8 Counterparts, Etc . This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any such counterparts or signatures may be delivered by facsimile or e-mail (in .pdf format), and any counterparts or signatures so delivered shall be deemed an original counterpart or signature for all purposes related to this Agreement.
12.9 Integration . This Agreement, the OTAs and the documents referenced herein constitute the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.
12.10 Attorneys Fees . Notwithstanding anything contained herein to the contrary, if any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing partys costs and expenses, including reasonable attorneys fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein.
12.11 Section and Other Headings . The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
12.12 No Presumption Against Drafter . This Agreement has been extensively negotiated between Seller and Purchaser and none of the provisions set forth herein shall be construed narrowly against either party on the account of the fact that such party (or its attorney) drafted such provision.
12.13 Time of Essence . Time shall be of the essence with respect to the performance of each and every covenant and obligation, and the giving of all notices, under this Agreement.
12.14 Performance on Business Days . In the event the date on which performance or payment of any obligation of a party required hereunder is other than a Business Day, the time for payment or performance shall automatically be extended to the first Business Day following such date.
12.15 Governing Law . This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the State of Tennessee.
12.16 Post-Closing Audit .
(a) Promptly following the Closing Date, and in no event later than fifteen (15) days following the Closing Date, and at any time thereafter as AdCare Health Systems, Inc., ( ADK ) may reasonably request, Seller shall provide to ADK and its accounting advisors such financial information (the Financial Information ) related to the Properties purchased by Purchaser pursuant to this Agreement (the Purchased Business ) as ADK may reasonably request in order to enable ADK to determine whether it is or would be required to include separate financial statements of the Purchased Business for any periods prior to Closing in the reports filed by ADK with the SEC under the Securities Exchange Act of 1934, as amended (the 1934 Act ), or in a registration statement filed by ADK with the SEC under the 1933 Act, as amended (the 1933 Act ), in accordance with Regulation S-X ( Regulation S-X ) promulgated by the SEC (the Required Financial Statements ). Seller will provide ADK reasonable access during normal business hours and upon reasonable advance notice to the records of Seller regarding the Purchased Business, provided that Seller shall not be required to provide ADK with access to or to disclose information that is subject to any attorney-client, attorney work product or other legal privilege (provided, however, that Seller will allow for such access or disclosure to the maximum extent that does not result in a loss of any such privilege). Sellers accounting staff and firm(s) will be available during normal business hours and upon reasonable advance notice to address any questions of ADK and ADKs accounting advisors pertaining to the Financial Information or the Required Financial Statements at Purchasers or ADKs sole cost and expense.
(b) If ADK determines that it is required to file with the SEC the Required Financial Statements, then, Seller shall cooperate fully with ADK and its accounting advisors, and shall use its commercially reasonable efforts, to cause the Required Financial Statements to be prepared, at the sole cost and expense of Purchaser or ADK, so as to enable ADK to file the Required Financial Statements with the SEC no later than the deadline therefor under the 1934 Act and Form 8-K promulgated by the SEC thereunder, including, without limitation: (i) preparing the Required Financial Statements in accordance with Regulation S-X; (ii) causing the auditors selected to audit the Required Financial Statements to consent to the inclusion of such financial statements in ADKs filings with the SEC under the 1934 Act and the 1933 Act, including providing such auditors with reasonable and customary representation letters in connection therewith; (iii) causing Sellers counsel to respond to reasonable requests for information made by ADK or its accounting advisors; and (iv) providing such Financial Information related to the Purchased Business and other assistance to ADK and its accounting advisors as ADK reasonably deems necessary to enable ADK to prepare and file the Required Financial Statements in accordance with the 1934 Act and Regulation S-X.
(c) In the event that the SEC reviews and comments on the Financial Information regarding the Purchased Business, including any comments regarding the Required Financial Statements that relate to the Financial Information, as promptly as practicable after being notified by ADK of such review and comment, Seller shall provide such reasonable cooperation and assistance as may be reasonably requested by ADK, at the sole cost and expense of Purchaser or ADK, in responding to such comments.
12.7 Survival . The provisions of this Article 12 shall survive the Closing hereunder.
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IN WITNESS WHEREOF , the parties have caused this Agreement to be executed as of the date first above written.
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SELLER: |
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AVALON HEALTH CARE, LLC, |
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a Tennessee limited liability company |
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By: |
/s/ Emily Whitcomb |
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Name: |
Emily Whitcomb |
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Title: |
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PURCHASER: |
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ADCARE PROPERTY HOLDINGS, LLC, |
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an Ohio limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
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Exhibit 2.28
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This First Amendment to Purchase and Sale Agreement (this Amendment ) is made and entered into as of March 14, 2013 (the Effective Date ) by and between AVALON HEALTH CARE, LLC ( Seller ) and ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company or its permitted assigns ( Purchaser ).
WITNESSETH :
WHEREAS, Seller and Purchaser are parties to that certain Purchase and Sale Agreement dated as of February 15, 2013 (the Agreement ); and
WHEREAS, Purchaser and Seller desire to amend the Agreement to extend the Closing Date on the terms hereinafter set forth.
In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration paid by Purchaser to Seller, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:
1. Capitalized Terms . Capitalized but undefined terms used in this Amendment shall have the meanings set forth in the Agreement.
2. Closing Date . The Agreement is hereby amended to provide that Closing Date shall mean April 30, 2013, or if extended by Purchaser pursuant to Section 2.2 of the Agreement, May 31, 2013, as the case may be.
3. Partial Disbursement of Deposit; Increase in Deposit . By the execution of this Amendment, Purchaser hereby authorizes and directs Escrow Agent to promptly wire the sum of One Hundred Thousand and 00/100 Dollars ($100,000.00) (the Disbursed Deposit ) to Seller pursuant to the wire instructions set forth on Exhibit A attached hereto. The Disbursed Deposit shall be non-refundable to Purchaser regardless of whether the Closing occurs. If the Closing occurs, the Disbursed Deposit will be credited against the Cash Consideration portion of the Purchase Price at Closing. Also, as additional consideration for the extension of the Closing Date as set forth herein, Purchaser shall deposit an additional amount of One Hundred Thousand and 00/100 Dollars ($100,000.00) (the Additional Deposit ) with the Escrow Agent on or before March 31, 2013. The Additional Deposit shall be deemed to be part of the Deposit as defined under the Agreement and shall be credited against the Cash Consideration portion of the Purchase Price at Closing (or in the event of a Seller default resulting in the failure of the transaction contemplated by the Agreement to close, returned to Purchaser upon demand in accordance with Section 11.5 of the Agreement). For clarification, the total Deposit, following the disbursement to Seller of the Disbursed Deposit and provided that the Purchaser makes the Additional Deposit, shall be Three Hundred Fifty Thousand and 00/100 Dollars ($350,000.00).
4. Financing Contingency . The parties acknowledge and agree that the Closing and Purchasers payment of the Purchase Price to Seller are contingent upon Purchaser receiving financing from KeyBank National Association in an amount not less than $22,000,000.00 as evidenced by a signed loan commitment between Purchaser and Lender dated no more than fifteen (15) business days after the date that AdCare Health Systems, Inc., Purchasers parent company, files its Form 10-K (Annual Report) for the fiscal year
ended December 31, 2012, with the United States Securities and Exchange Commission. If, however, for any reason, Purchaser is unable to obtain such financing, Purchaser shall have the full right and option to terminate this Agreement and promptly receive a full refund of the Deposit from the Escrow Agent and Seller. As consideration for this Financing Contingency, Purchaser hereby waives its right to terminate the Agreement as set forth the first full sentence of Section 3.2 of the Agreement.
5. Seller Note Documents . The parties acknowledge and agree that the Seller Note shall be guaranteed by AdCare Health Systems, Inc., and that no other security for the note shall be warranted. Accordingly, any references in the Agreement (including, without limitation Sections 4.1(k), 5.2(g) and Exhibit F) to a Deed of Trust or Security Agreement relating to the Seller Note shall be deleted.
6. Ratification . Except to the extent amended hereby, Purchaser and Seller ratify and confirm that all other terms and conditions of the Agreement remain in full force and effect.
7. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall be taken to be one and the same Amendment, for the same effect as if all parties hereto had signed the same signature page, and an electronic PDF or facsimile copy of an executed counterpart shall constitute the same as delivery of the original of such executed counterpart. Any signature page of this Amendment (whether original or facsimile) may be detached from any counterpart of this Amendment (whether original or facsimile) without impairing the legal effect of any signatures thereof and may be attached to another counterpart of this Amendment (whether original, PDF or facsimile) identical in form hereto but having attached to it one or more additional signature pages (whether original, PDF or facsimile).
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IN WITNESS WHEREOF, each party has caused this Amendment to be executed and delivered under seal as of the date set forth hereinabove.
SELLER: |
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PURCHASER: |
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AVALON HEALTH CARE, LLC
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ADCARE PROPERTY HOLDINGS, LLC,
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By: |
/s/ Emily Whitcomb |
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By: |
/s/ Boyd P. Gentry |
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Emily Whitcomb, Owner/CEO |
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Boyd P. Gentry, Manager |
Exhibit 2.30
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT ( First Amendment ) is made and entered into as of March 20, 2012, by and between GYMAN PROPERTIES, LLC, an Arkansas limited liability company ( Seller ), and ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company or its permitted assigns ( Purchaser ).
WITNESSETH :
WHEREAS, Seller and Purchaser are parties to that certain Purchase and Sale Agreement dated as of January 17, 2012 (the Agreement ); and
WHEREAS, Seller and Purchaser desire to amend the Agreement to extend the Closing Date on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Seller and Purchaser, intending to be legally bound, hereby agree as follows:
1. Recitals; Terms . The foregoing recitals are true and correct and incorporated into this First Amendment as if fully set forth herein. Capitalized but undefined terms used in this First Amendment shall have the meanings set forth in the Agreement.
2. Closing Date . The Closing Date is hereby extended to April 30, 2012.
3. Deposit . As of the date of this Amendment, the total amount of the Deposit is $100,000.00. In exchange for Sellers agreement to extend the Closing Date as set forth herein, (i) Purchaser shall deliver an additional $50,000.00 to the Escrow Agent, which amount shall be held and disbursed as part of the Deposit, and (ii) the Escrow Agent shall immediately deliver to Seller $100,000.00 of the Deposit. Notwithstanding the delivery of a portion of the total $150,000.00 Deposit to Seller in accordance with this First Amendment, the total Deposit shall be a credit against the Purchase Price at Closing.
4. Assurances . Purchaser confirms to Seller that it is committed to close on its acquisition of the Facility, subject to its obtaining financing and subject to the fulfillment of the conditions set forth in the Agreement. Purchaser represents that it has, in material respects, concluded the due diligence contemplated in the Agreement and that subject to the satisfaction of the conditions precedent as specified in Section 4.1 of the Agreement, Purchaser is prepared to fulfill its obligations under the Agreement on or before the Closing Date, as the same is extended by this Amendment.
5. Ratification . Except to the extent amended hereby, Purchaser and Seller ratify and confirm that all other terms and conditions of the Agreement remain in full force and effect.
6. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall be taken to be one and the same Amendment, for the same effect as if all parties hereto had signed the same signature page, and an electronic PDF or facsimile copy of an executed counterpart shall constitute the same as delivery of the original of such executed counterpart. Any signature page of this Amendment (whether original or facsimile) may be detached from any counterpart of this Amendment (whether original or facsimile) without impairing the legal effect of any signatures thereof and may be attached to another counterpart of this Amendment (whether original, PDF or facsimile) identical in form hereto but having attached to it one or more additional signature pages (whether original, PDF or facsimile).
IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed as a sealed instrument and delivered as of the date first above written.
SELLER: |
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PURCHASER: |
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GYMAN PROPERTIES, LLC, |
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ADCARE PROPERTY HOLDINGS, LLC, |
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an Arkansas limited liability company |
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an Ohio limited liability company |
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By: |
/s/ Joey Wiggins |
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By: |
/s/ Christopher F. Brogdon |
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Joey Wiggins, Authorized Member |
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Christopher F. Brogdon, Vice Chairman |
Exhibit 2.31
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This First Amendment to Purchase and Sale Agreement (this Amendment ) is made and entered into as of April 19, 2012 (the Effective Date ) by and between F & F VENTURES, LLC, an Oklahoma limited liability company and TULSA CHRISTIAN CARE, INC., d.b.a. COMPANIONS SPECIALIZED CARE CENTER (collectively, Seller ) and ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company or its permitted assigns ( Purchaser ).
WITNESSETH :
WHEREAS, Purchaser and Seller are parties to that certain Purchase and Sale Agreement dated as of March 14, 2012 (the Agreement ); and
WHEREAS, Purchaser and Seller desire to amend the Agreement to extend the time period within which Purchaser may conduct its title and survey due dilligenceon the terms hereinafter set forth.
In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration paid by Purchaser to Seller, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:
1. Capitalized Terms . Capitalized but undefined terms used in this Amendment shall have the meanings set forth in the Agreement.
2. Title and Survey . Section 3.3 of the Agreement is hereby amended to allow Purchaser through May 11, 2012 to give Seller notice of any title exceptions or other matters set forth on Sellers title policies or surveys or any updates thereof as to which Purchaser objects in its sole and absolute discretion.
3. Ratification . Except to the extent amended hereby, Purchaser and Seller ratify and confirm that all other terms and conditions of the Agreement remain in full force and effect.
4. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall be taken to be one and the same Amendment, for the same effect as if all parties hereto had signed the same signature page, and an electronic PDF or facsimile copy of an executed counterpart shall constitute the same as delivery of the original of such executed counterpart. Any signature page of this Amendment (whether original or facsimile) may be detached from any counterpart of this Amendment (whether original or facsimile) without impairing the legal effect of any signatures thereof and may be attached to another counterpart of this Amendment (whether original, PDF or facsimile) identical in form hereto but having attached to it one or more additional signature pages (whether original, PDF or facsimile).
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IN WITNESS WHEREOF, each party has caused this instrument to be executed as of the date set forth hereinabove.
SELLER: |
PURCHASER: |
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ADCARE PROPERTY HOLDINGS, LLC, |
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an Ohio limited liability company |
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By: |
/s/ G. Perry Farmer, Jr. |
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G. Perry Farmer, Jr., Owner, F&F |
By: |
/s/ Christopher F. Brogdon |
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Ventures, L.L.C., Owner, Tulsa Christian |
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Christopher F. Brogdon, Manager |
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Care, Inc., d/b/a Companions Specialized |
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Care Center |
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Exhibit 2.32
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Third Amendment to Purchase and Sale Agreement (this Amendment ) is made and entered into as of July 31, 2012 (the Effective Date ) by and among: F & F VENTURES, LLC, an Oklahoma limited liability company, TULSA CHRISTIAN CARE, INC., d.b.a. COMPANIONS SPECIALIZED CARE CENTER, an Oklahoma corporation, GEORGE PERRY FARMER, JR., and JESSICA L. FARMER (collectively, Seller ) and ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company or its permitted assigns ( Purchaser ).
WITNESSETH :
WHEREAS, Purchaser and Seller are parties to that certain Purchase and Sale Agreement dated as of March 14, 2012, as amended by that First Amendment to Purchase and Sale Agreement dated as of April 19, 2012 and as further amended by that Second Amendment to Purchase and Sale Agreement dated as of June 19, 2012 (as amended, the Agreement ); and
WHEREAS, Purchaser and Seller desire to amend the Agreement to extend the Closing Date and to make such other modifications on the terms hereinafter set forth.
In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration paid by Purchaser to Seller, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:
1. Capitalized Terms . Capitalized but undefined terms used in this Amendment shall have the meanings set forth in the Agreement.
2. Closing Date . The Agreement is hereby amended to provide that the Closing Date is extended to and shall be August 17, 2012.
3. Ratification . Except to the extent amended hereby, Purchaser and Seller ratify and confirm that all other terms and conditions of the Agreement remain in full force and effect.
4. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall be taken to be one and the same Amendment, for the same effect as if all parties hereto had signed the same signature page, and an electronic PDF or facsimile copy of an executed counterpart shall constitute the same as delivery of the original of such executed counterpart. Any signature page of this Amendment (whether original or facsimile) may be detached from any counterpart of this Amendment (whether original or facsimile) without impairing the legal effect of any signatures thereof and may be attached to another counterpart of this Amendment (whether original, PDF or facsimile) identical in form hereto but having attached to it one or more additional signature pages (whether original, PDF or facsimile).
IN WITNESS WHEREOF, each party has caused this Amendment to be executed as of the date set forth hereinabove.
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ADCARE PROPERTY HOLDINGS, LLC, |
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an Ohio limited liability company |
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G. Perry Farmer, Jr., Owner, F&F |
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/s/ Boyd P. Gentry |
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Ventures, L.L.C., Owner, Tulsa Christian |
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Boyd P. Gentry, Manager |
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Care, Inc., d/b/a Companions Specialized |
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Care Center |
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/s/ Jessica L. Farmer |
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Jessica L. Farmer |
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Exhibit 4.21
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
TO PURCHASE 50,000 SHARES OF COMMON STOCK OF
ADCARE HEALTH SYSTEMS, INC.
December , 2012
THIS CERTIFIES THAT , for value received, STROME ALPHA OFFSHORE LTD. or its registered assigns (the Holder ) is entitled to purchase from ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation (the Company ), at any time or from time to time after the date hereof and prior to 5:00 p.m., Atlanta, Georgia time, on November 1, 2022 (the Expiration Date ), at the place where the Warrant Agency (as hereinafter defined) is located, at the Exercise Price (as hereinafter defined), the number of shares of common stock, no par value (the Common Stock ), of the Company specified above, subject to the terms and conditions as hereinafter provided.
Capitalized terms used and not otherwise defined in this Warrant shall have the meanings set forth in Article IV hereof.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise .
(a) To exercise this Warrant in whole or in part, the Holder shall deliver to the Company at the Warrant Agency: (i) this Warrant; (ii) a written notice, substantially in the form of the subscription notice attached hereto as Annex 1 , of such Holders election to exercise this Warrant, which notice shall specify the number of whole shares of Common Stock to be purchased, the denominations of the share certificate or certificates desired and the name or names of the Eligible Holder(s) in which such certificates are to be registered (the Exercise Notice ); and (iii) payment of the Exercise Price with respect to such shares of Common Stock. Such payment may be made, at the option of the Holder, by cash, money order, certified or bank cashiers check or wire transfer.
(b) The Company shall, as promptly as practicable and in any event within five (5) Business Days thereafter, execute and deliver or cause to be executed and delivered, in accordance with an Exercise Notice delivered pursuant to Section 1.1(a), a certificate or certificates representing the aggregate number of shares of Common Stock specified in said notice. The share certificate or certificates so delivered shall be in such denominations as may be specified in such notice (or, if such notice shall not specify denominations, one certificate shall be issued) and shall be issued in the name of the Holder or such other name or names of Eligible Holder(s) as shall be designated in such notice. Such certificate or certificates shall be deemed to have been issued, and such Holder or any other Person so designated to be named therein shall be deemed to have exercised this Warrant and for all purposes to have become holders of record of such shares, as of the date the aforementioned notice is received by the Company. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the certificate or certificates, deliver to the Holder a new Warrant evidencing the right to purchase the remaining shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. The Company shall pay all expenses payable in connection with the preparation, issuance and delivery of share certificates and new Warrants as contemplated by Section 2.6 below (other than transfer or similar taxes in connection with the transfer of securities), except that, if share certificates or new Warrants shall be registered in a name or names other than the name of the Holder, funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the Holder at the time of delivering the aforementioned notice or promptly upon receipt of a written request of the Company for payment.
(c) If this Warrant shall be surrendered for exercise within any period during which the transfer books for shares of the Common Stock purchasable upon the exercise of this Warrant are closed for any purpose, then the Company shall not be required to make delivery of certificates for the Common Stock purchasable upon such exercise until the date of the reopening of said transfer books.
1.2 Shares To Be Fully Paid and Nonassessable . All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable.
1.3 No Fractional Shares To Be Issued . The Company shall not be required to issue fractions of shares of Common Stock upon exercise of this Warrant. The Holder may only elect to exercise this Warrant with respect to a whole number of shares of the Common Stock.
1.4 Securities Laws; Share Legend . The Holder, by acceptance of this Warrant, agrees that this Warrant and all shares of Common Stock issuable upon exercise of this Warrant will be disposed of only in accordance with the Securities Act of 1933, as amended, and any successor Federal statue, and the rules and regulations of the Commission promulgated thereunder (the Securities Act ). In addition to any other legend which the Company may deem advisable under the Securities Act and applicable state securities laws, all certificates representing shares of Common Stock (as well as any other securities issued hereunder in respect of any such shares) issued upon exercise of this Warrant shall be endorsed as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to a registration statement under the Securities Act) shall also bear such legend unless, in the opinion of counsel (in form and substance reasonably satisfactory to the Company) selected by the Holder of such certificate and reasonably acceptable to the Company, the securities represented thereby need no longer be subject to restrictions on resale under the Securities Act.
1.5 Exercise Limitations . Notwithstanding anything herein to the contrary, the Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1.1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together with such Holders Affiliates, and any other Person or entity acting as a group together with the Holder or any of the Holders Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of this Section 1.5, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 1.5 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be made in good faith by the Company in consultation with the Holder. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The Beneficial Ownership Limitation shall be 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The provisions of this Section 1.5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1.5 to correct this Section 1.5 (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this Section 1.5 shall apply to all Eligible Holders of this Warrant.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANT
2.1 Warrant Agency . Until such time, if any, as an independent agency shall be appointed by the Company to perform services described herein with respect to this Warrant (the Warrant Agency ), the Company shall perform the obligations of the Warrant Agency provided
herein at its principal office address or such other address as the Company shall specify by prior written notice to the Holder.
2.2 Ownership of Warrant . The Company may deem and treat the Person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by any Person other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in this Article II.
2.3 Transfer of Warrant . This Warrant may only be transferred to a purchaser subject to and in accordance with this Section 2.3 and Section 1.4 hereof, and any attempted transfer which is not in accordance with this Section 2.3 and Section 1.4 hereof shall be null and void and the transferee shall not be entitled to exercise any of the rights of the holder of this Warrant. The Company agrees to maintain at the Warrant Agency books for the registration of such transfers of Warrants, and transfer of this Warrant and all rights hereunder shall be registered, in whole or in part, on such books, upon surrender of this Warrant at the Warrant Agency in accordance with this Section 2.3, together with a written assignment of this Warrant, substantially in the form of the assignment attached hereto as Annex 2 , duly executed by the Holder or its duly authorized agent or attorney-in-fact, with signatures guaranteed by a bank or trust company or a broker or dealer registered with the Financial Industry Regulatory Authority, and funds sufficient to pay any transfer taxes payable upon such transfer. Upon surrender of this Warrant in accordance with this Section 2.3, the Company (subject to being satisfied that such transfer is in compliance with Section 1.4 hereof) shall execute and deliver a new Warrant or Warrants of like tenor and representing in the aggregate the right to purchase the same number of shares of Common Stock in the name of the assignee or assignees and in the denominations specified in the instrument of assignment, and this Warrant shall promptly be canceled. Notwithstanding the foregoing, a Warrant may be exercised by a new holder without having a new Warrant issued. The Company shall not be required to pay any Federal or state transfer tax or charge that may be payable in respect of any transfer of this Warrant or the issuance or delivery of certificates for Common Stock in a name other than that of the registered holder of this Warrant.
2.4 Division or Combination of Warrants . This Warrant may be divided or combined with other Warrants, in connection with the partial exercise of this Warrant, upon surrender hereof and of any Warrant or Warrants with which this Warrant is to be combined at the Warrant Agency, together with a written notice specifying the names and denominations in which the new Warrant or Warrants are to be issued, signed by the holders hereof and thereof or their respective duly authorized agents or attorneys-in-fact. Subject to compliance with Sections 1.4 and 2.3 hereof as to any transfer which may be involved in the division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrant Certificates . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security (in customary form) reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant and upon reimbursement of the Companys reasonable incidental expenses, the Company will make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.
2.6 Expenses of Delivery of Warrants . Except as otherwise expressly provided herein, the Company shall pay all expenses (other than transfer taxes as described in Section 2.3) and other charges payable in connection with the preparation, issuance and delivery of Warrants hereunder and shares of Common Stock upon the exercise hereof.
ARTICLE III
ADJUSTMENT PROVISIONS
3.1 Adjustments Generally . The Exercise Price and the number of shares of Common Stock (or other securities or property) issuable upon exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events, as provided in this Article III.
3.2 Common Share Reorganization and Stock Dividend Payments . If the Company, at any time this Warrant is outstanding, (a) shall subdivide its outstanding shares of Common Stock into a greater number of shares or consolidate its outstanding shares of Common Stock into a smaller number of shares (any such event being called a Common Share Reorganization ), or (b) pay a stock dividend (except scheduled dividends paid on preferred stock which contain a stated dividend rate) or otherwise make a distribution or distributions on shares of its Common Stock or on any other class of capital stock payable in shares of Common Stock (any such event being called a Stock Dividend Payment ), then (i) the Exercise Price shall be adjusted, effective immediately after the record date at which the holders of shares of Common Stock are determined for purposes of a Common Share Reorganization or at which the holders of shares of Common Stock or any other class of capital stock are determined for purposes of a Stock Dividend Payment, as the case may be, to a price determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date before giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and (ii) the number of shares of Common Stock subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Common Share Reorganization or Stock Dividend Payment, as the case may be, by a fraction, the numerator of which shall be the number of shares outstanding after giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such Common Share Reorganization or Stock Dividend Payment, as the case may be.
3.3 Capital Reorganization . If, at any time this Warrant is outstanding, there shall be any consolidation or merger to which the Company is a party, other than a consolidation or a merger in which the Company is a continuing corporation and which does not result in any reclassification of, or change (other than a Common Share Reorganization, Stock Dividend
Payment or a change in par value) in, outstanding shares of Common Stock, or any sale or conveyance of the property of the Company as an entirety or substantially as an entirety (any such event being called a Capital Reorganization ), then, effective upon the effective date of such Capital Reorganization, the Holder shall have the right to purchase, upon exercise of this Warrant, the kind and amount of shares of stock and other securities and property (including cash) which the Holder would have owned or have been entitled to receive after such Capital Reorganization if this Warrant had been exercised immediately prior to such Capital Reorganization. As a condition to effecting any Capital Reorganization, the Company or the successor or surviving corporation, as the case may be, shall execute and deliver to the Holder and to the Warrant Agency an agreement as to the Holders rights in accordance with this Section 3.3, providing for subsequent adjustments as nearly equivalent as may be practicable to the adjustments provided for in this Article III. The provisions of this Section 3.3 shall similarly apply to successive Capital Reorganizations.
3.4 Adjustment Rules .
(a) Any adjustments pursuant to this Article III shall be made successively whenever an event referred to herein shall occur.
(b) If the Company shall set a record date to determine the holders of shares of Common Stock or any other class of capital stock, as the case may be, for purposes of a Common Share Reorganization, Stock Dividend Payment or Capital Reorganization and shall legally abandon such action prior to effecting such action, then no adjustment shall be made pursuant to this Article III in respect of such action.
3.5 Notice of Adjustments . The Company shall give notice to the Holder prior to any record date or effective date, as the case may be, in respect of any Common Share Reorganization, Stock Dividend Payment or Capital Reorganization describing, in each case, such event in reasonable detail and specifying such record date or effective date, as the case may be. In addition, after the record date or effective date, as the case may be, of any Common Share Reorganization, Stock Dividend Payment or Capital Reorganization, the Company shall promptly give notice to the Holder of such event, describing such event in reasonable detail and specifying the record date or effective date, as the case may be, and, if determinable, the required adjustment and the computation thereof. If the required adjustment is not determinable at the time of such notice, the Company shall give notice to the Holder of such adjustment and computation promptly after such adjustment becomes determinable.
3.6 Adjustment by Board of Directors . If any event occurs as to which, in the opinion of the Board of Directors of the Company, the provisions of this Article III are not strictly applicable or if strictly applicable would not fairly protect the rights of the holder of this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors may make, in its discretion, an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have the effect of increasing the Exercise Price or decreasing the number of shares of Common Stock into which the Warrant is exercisable as otherwise determined pursuant to any of the provisions of this Article III, except in the case of a
combination of shares of a type contemplated in Section 3.2 and then in no event to an amount larger than the Exercise Price as adjusted pursuant to Section 3.2.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following respective meanings:
Affiliate means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144 under the Securities Act.
Beneficial Ownership Limitation has the meaning set forth in Section 1.5.
Business Days means each day in which banking institutions in Atlanta, Georgia are not required or authorized by law or executive order to close.
Capital Reorganization has the meaning set forth in Section 3.3.
Commission means the Securities and Exchange Commission.
Common Share Reorganization has the meaning set forth in Section 3.2.
Common Stock has the meaning set forth in the first paragraph of this Warrant.
Company has the meaning set forth in the first paragraph of this Warrant.
Eligible Holder means the Holder and any permitted transferee of the Holder pursuant to and in accordance with this Warrant.
Exchange Act has the meaning set forth in Section 1.5.
Exercise Date has the meaning set forth in the first paragraph of this Warrant.
Exercise Price means US $4.00 per share of Common Stock, as may be adjusted pursuant to Article III.
Expiration Date has the meaning set forth in the first paragraph of this Warrant.
Exercise Notice has the meaning set forth in Section 1.1(a).
Holder has the meaning set forth in the first paragraph of this Warrant.
NYSE MKT has the meaning set forth in Section 5.2.
NYSE MKT Rules has the meaning set forth in Section 5.2.
Person means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
Securities has the meaning set forth in Section 5.1(a).
Securities Act has the meaning set forth in Section 1.4.
Stock Dividend Payment has the meaning set forth in Section 3.2.
Warrant Agency has the meaning set forth in Section 2.1.
Warrants mean this Warrant and other warrants of like tenor issued pursuant to Section 2.3.
ARTICLE V
REPRESENTATIONS
5.1 Representations of Holder . The Holder hereby represents to the Company as follows:
(a) Own Account . The Holder understands that this Warrant and all shares of Common stock issuable upon exercise of this Warrant (together, the Securities ) are restricted securities and have not been and will not be registered under the Securities Act or any applicable state securities law. The Holder is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law. The Holder is acquiring the Securities hereunder in the ordinary course of its business.
(b) Holder Status . At the time the Holder was offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises this Warrant it will be, an accredited investor as defined under Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or a(8) under the Securities Act.
(c) Experience of the Holder . The Holder has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.
(d) General Solicitation . The Holder is not acquiring the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
5.2 Other Agreements . The Holder acknowledges that the Company is subject to the rules and regulations of the NYSE MKT LLC (the NYSE MKT ), including, without limitation, the provisions of the NYSE MKT Company Guide (collectively, the NYSE MKT Rules ). The Holder agrees that, notwithstanding anything herein to the contrary, this Warrant shall not be exercisable in whole or in part until the NYSE MKT has approved the listing of the shares of Common Stock issuable upon exercise of this Warrant for quotation on the NYSE MKT, and the Company agrees to seek, and diligently pursue, such approval as soon as practicable. The Holder also agrees that, notwithstanding anything herein to the contrary, if the issuance of the shares of Common Stock upon exercise of this Warrant would require the approval of the Companys shareholders under the NYSE MKT Rules, then the Holder and the Company agree to negotiate in good faith to amend this Warrant in such a manner so that such approval is not required thereunder.
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law . This Warrant shall be governed in all respects by the laws of the State of Ohio, without reference to its conflicts of law principles.
6.2 Covenants To Bind Successor and Assigns . All covenants, stipulations, promises and agreements contained in this Warrant by or on behalf of the Company shall bind its successors and assigns, whether or not so expressed.
6.3 Entire Agreement . This Warrant constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenant except as specifically set forth herein or therein.
6.4 Waivers and Amendments . No failure or delay of the Holder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Holder are cumulative and not exclusive of any rights or remedies which it would otherwise have. The provisions of this Warrant may be amended, modified or waived with (and only with) the written consent of the Company and the Holder of this Warrant.
6.5 Notices . All notices or other communications required or permitted hereunder shall be in writing and shall be mailed by express, registered or certified mail, postage prepaid, return receipt requested, sent by facsimile (with confirmation of transmission received and followed by the posting of a hard copy of the notice or communication by first-class U.S. mail), or by courier service guaranteeing overnight delivery with charges prepaid, or otherwise delivered by hand or by messenger, and shall be conclusively deemed to have been received by a party hereto and to be effective on the day on which delivered or facsimile is sent to such party at its address set forth below (or at such other address as such party shall specify to the other parties hereto in writing), or, if sent by registered or certified mail, on the third business day after the day on which mailed, addressed to such party at such address.
In the case of the Holder, such notices and communications shall be addressed to its address as shown on the books maintained by the Warrant Agency, unless the Holder shall notify the Company and the Warrant Agency in writing that notices and communications should be sent to a different address, in which case such notices and communications shall be sent to the address specified by the Holder. In the case of the Company, such notices and communications shall be addressed as follows: Attention: Chief Financial Officer, AdCare Health Systems, Inc., 3050 Peachtree Rd N.W., Suite 355, Atlanta, GA 30305.
6.6 Survival of Agreements; Representations and Warranties, etc. All warranties, representations and covenants made by the Company herein shall be considered to have been relied upon by the Holder and shall survive the issuance and delivery of the Warrant, regardless of any investigation made by the Holder, and shall continue in full force and effect so long as this Warrant is outstanding.
6.7 Severability . In case any one or more of the provisions contained in this Warrant shall be held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
6.8 Section Headings . The section headings used herein are for convenience of reference only, do not constitute a part of this Warrant and shall not affect the construction of or be taken into consideration in interpreting this Warrant.
6.9 No Rights as Shareholder; No Limitations on Company Action . This Warrant shall not entitle the Holder to any rights as a shareholder of the Company. No provision of this Warrant and no right or option granted or conferred hereunder shall in any way limit, affect or abridge the exercise by the Company of any of its corporate rights or powers to recapitalize, amend its certificate of incorporation, reorganize, consolidate or merge with or into another corporation or to transfer all or any part of its property or assets, or the exercise of any other of its corporate rights or powers.
IN WITNESS WHEREOF , the Company has caused this Warrant to be executed by its duly authorized representative.
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Annex 1
EXERCISE NOTICE
TO: AdCare Health Systems, Inc.
3050 Peachtree Rd N.W.
Suite 355
Atlanta, GA 30305
Attention: Chief Financial Officer
The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby irrevocably elects to purchase shares of the Common Stock covered by such Warrant.
The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $ . Such payment takes the form of $ in cash or by money order, certified or bank cashiers check, or by wire transfer for such amount.
The undersigned requests that the certificates for such shares be issued in the name of, and delivered to whose address is . The undersigned also requests that the certificates for the shares be issued in the following denominations: .
The undersigned represents and warrants that (i) all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the Securities Act), or pursuant to an exemption from registration under the Securities Act; and (ii) the undersigned is an accredited investor within the meaning of Regulation D under the Securities Act.
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(Signature must conform to name of holder as specified on the face of the Warrant) |
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Annex 2
Assignment
For value received, the undersigned hereby sells, assigns and transfers unto:
Name:
(Please type or print in block letters)
Address:
the right to purchase Common Stock (as defined in the attached Warrant) represented by the attached Warrant to the extent of shares as to which such right is exercisable and does hereby irrevocably constitute and appoint , attorney-in-fact, to transfer said Warrant on the books of AdCare Health Systems, Inc., with full power of substitution in the premises.
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Exhibit 4.22
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
TO PURCHASE 15,000 SHARES OF COMMON STOCK OF
ADCARE HEALTH SYSTEMS, INC.
August 31, 2012
THIS CERTIFIES THAT , for value received, HAYDEN IR, LLC or its registered assigns (the Holder ) is entitled to purchase from ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation (the Company ), at any time or from time to time after the date hereof and prior to 5:00 p.m., Atlanta, Georgia time, on August 31, 2015 (the Expiration Date ), at the place where the Warrant Agency (as hereinafter defined) is located, at the Exercise Price (as hereinafter defined), the number of shares of common stock, no par value (the Common Stock ), of the Company specified above, subject to the terms and conditions as hereinafter provided.
Capitalized terms used and not otherwise defined in this Warrant shall have the meanings set forth in Article IV hereof.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise .
(a) To exercise this Warrant in whole or in part, the Holder shall deliver to the Company at the Warrant Agency: (i) this Warrant; (ii) a written notice, substantially in the form of the subscription notice attached hereto as Annex 1 , of such Holders election to exercise this Warrant, which notice shall specify the number of whole shares of Common Stock to be purchased, the denominations of the share certificate or certificates desired and the name or names of the Eligible Holder(s) in which such certificates are to be registered (the Exercise Notice ); and (iii) payment of the Exercise Price with respect to such shares of Common Stock. Such payment may be made, at the option of the Holder, by cash, money order, certified or bank cashiers check, wire transfer or as a cashless exercise, as described in Section 1.1(b).
(b) In lieu of exercising this Warrant for cash, the Holder may elect, at any time prior to the Expiration Date, to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant to the Company at the Warrant Agency, together with the properly endorsed Exercise Notice, in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:
(X) = Y(A-B)
A
where
(X) = the number of shares of Common Stock to be issued to the holder;
(Y) = the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date of exercise);
(A) = the Fair Market Value of one share of Common Stock (at the date of exercise); and
(B) = the Exercise Price per share (as adjusted to the date of exercise).
(c) The Company shall, as promptly as practicable and in any event within five (5) Business Days thereafter, execute and deliver or cause to be executed and delivered, in accordance with an Exercise Notice delivered pursuant to Section 1.1(a), a certificate or certificates representing the aggregate number of shares of Common Stock specified in said notice. The share certificate or certificates so delivered shall be in such denominations as may be specified in such notice (or, if such notice shall not specify denominations, one certificate shall be issued) and shall be issued in the name of the Holder or such other name or names of Eligible Holder(s) as shall be designated in such notice. Such certificate or certificates shall be deemed to have been issued, and such Holder or any other Person so designated to be named therein shall be deemed to have exercised this Warrant and for all purposes to have become holders of record of such shares, as of the date the aforementioned notice is received by the Company. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the certificate or certificates, deliver to the Holder a new Warrant evidencing the right to purchase the remaining shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. The Company shall pay all expenses payable in connection with the preparation, issuance and delivery of share certificates and new Warrants as contemplated by Section 2.6 below (other than transfer or similar taxes in connection with the transfer of securities), except that, if share certificates or new Warrants shall be registered in a name or names other than the name of the Holder, funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the Holder at the time of delivering the aforementioned notice or promptly upon receipt of a written request of the Company for payment.
(d) If this Warrant shall be surrendered for exercise within any period during which the transfer books for shares of the Common Stock purchasable upon the exercise of this Warrant are closed for any purpose, then the Company shall not be required to make delivery of certificates for the Common Stock purchasable upon such exercise until the date of the reopening of said transfer books.
1.2 Shares To Be Fully Paid and Nonassessable . All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable.
1.3 No Fractional Shares To Be Issued . The Company shall not be required to issue fractions of shares of Common Stock upon exercise of this Warrant. The Holder may only elect to exercise this Warrant with respect to a whole number of shares of the Common Stock.
1.4 Securities Laws; Share Legend . The Holder, by acceptance of this Warrant, agrees that this Warrant and all shares of Common Stock issuable upon exercise of this Warrant will be disposed of only in accordance with the Securities Act of 1933, as amended, and any successor Federal statue, and the rules and regulations of the Commission promulgated thereunder (the Securities Act ). In addition to any other legend which the Company may deem advisable under the Securities Act and applicable state securities laws, all certificates representing shares of Common Stock (as well as any other securities issued hereunder in respect of any such shares) issued upon exercise of this Warrant shall be endorsed as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to a registration statement under the Securities Act) shall also bear such legend unless, in the opinion of counsel (in form and substance reasonably satisfactory to the Company) selected by the Holder of such certificate and reasonably acceptable to the Company, the securities represented thereby need no longer be subject to restrictions on resale under the Securities Act.
1.5 Exercise Limitations . Notwithstanding anything herein to the contrary, the Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1.1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together with such Holders Affiliates, and any other Person or entity acting as a group together with the Holder or any of the Holders Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of this Section 1.5, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and the rules and regulations promulgated thereunder. To the
extent that the limitation contained in this Section 1.5 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be made in good faith by the Company in consultation with the Holder. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The Beneficial Ownership Limitation shall be 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The provisions of this Section 1.5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1.5 to correct this Section 1.5 (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this Section 1.5 shall apply to all Eligible Holders of this Warrant.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANT
2.1 Warrant Agency . Until such time, if any, as an independent agency shall be appointed by the Company to perform services described herein with respect to this Warrant (the Warrant Agency ), the Company shall perform the obligations of the Warrant Agency provided herein at its principal office address or such other address as the Company shall specify by prior written notice to the Holder.
2.2 Ownership of Warrant . The Company may deem and treat the Person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by any Person other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in this Article II.
2.3 Transfer of Warrant . This Warrant may only be transferred to a purchaser subject to and in accordance with this Section 2.3 and Section 1.4 hereof, and any attempted transfer which is not in accordance with this Section 2.3 and Section 1.4 hereof shall be null and void and the transferee shall not be entitled to exercise any of the rights of the holder of this Warrant. The Company agrees to maintain at the Warrant Agency books for the registration of such transfers of Warrants, and transfer of this Warrant and all rights hereunder shall be registered, in whole or in part, on such books, upon surrender of this Warrant at the Warrant Agency in accordance with this Section 2.3, together with a written assignment of this Warrant, substantially in the form of the assignment attached hereto as Annex 2 , duly executed by the Holder or its duly authorized agent or attorney-in-fact, with signatures guaranteed by a bank or trust company or a broker or dealer registered with the Financial Industry Regulatory Authority, and funds sufficient to pay any transfer taxes payable upon such transfer. Upon surrender of this Warrant in accordance with this Section 2.3, the Company (subject to being satisfied that such transfer is in compliance with Section 1.4 hereof) shall execute and deliver a new Warrant or Warrants of like tenor and representing in the aggregate the right to purchase the same number of shares of Common Stock
in the name of the assignee or assignees and in the denominations specified in the instrument of assignment, and this Warrant shall promptly be canceled. Notwithstanding the foregoing, a Warrant may be exercised by a new holder without having a new Warrant issued. The Company shall not be required to pay any Federal or state transfer tax or charge that may be payable in respect of any transfer of this Warrant or the issuance or delivery of certificates for Common Stock in a name other than that of the registered holder of this Warrant.
2.4 Division or Combination of Warrants . This Warrant may be divided or combined with other Warrants, in connection with the partial exercise of this Warrant, upon surrender hereof and of any Warrant or Warrants with which this Warrant is to be combined at the Warrant Agency, together with a written notice specifying the names and denominations in which the new Warrant or Warrants are to be issued, signed by the holders hereof and thereof or their respective duly authorized agents or attorneys-in-fact. Subject to compliance with Sections 1.4 and 2.3 hereof as to any transfer which may be involved in the division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrant Certificates . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security (in customary form) reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant and upon reimbursement of the Companys reasonable incidental expenses, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.
2.6 Expenses of Delivery of Warrants . Except as otherwise expressly provided herein, the Company shall pay all expenses (other than transfer taxes as described in Section 2.3) and other charges payable in connection with the preparation, issuance and delivery of Warrants hereunder and shares of Common Stock upon the exercise hereof.
ARTICLE III
ADJUSTMENT PROVISIONS
3.1 Adjustments Generally . The Exercise Price and the number of shares of Common Stock (or other securities or property) issuable upon exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events, as provided in this Article III.
3.2 Common Share Reorganization and Stock Dividend Payments . If the Company, at any time this Warrant is outstanding, (a) shall subdivide its outstanding shares of Common Stock into a greater number of shares or consolidate its outstanding shares of Common Stock into a smaller number of shares (any such event being called a Common Share Reorganization ), or (b) pay a stock dividend (except scheduled dividends paid on preferred stock which contain a stated dividend rate) or otherwise make a distribution or distributions on shares of its Common Stock or on any other class of capital stock payable in shares of Common
Stock (any such event being called a Stock Dividend Payment ), then (i) the Exercise Price shall be adjusted, effective immediately after the record date at which the holders of shares of Common Stock are determined for purposes of a Common Share Reorganization or at which the holders of shares of Common Stock or any other class of capital stock are determined for purposes of a Stock Dividend Payment, as the case may be, to a price determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date before giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and (ii) the number of shares of Common Stock subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Common Share Reorganization or Stock Dividend Payment, as the case may be, by a fraction, the numerator of which shall be the number of shares outstanding after giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such Common Share Reorganization or Stock Dividend Payment, as the case may be.
3.3 Capital Reorganization . If, at any time this Warrant is outstanding, there shall be any consolidation or merger to which the Company is a party, other than a consolidation or a merger in which the Company is a continuing corporation and which does not result in any reclassification of, or change (other than a Common Share Reorganization, Stock Dividend Payment or a change in par value) in, outstanding shares of Common Stock, or any sale or conveyance of the property of the Company as an entirety or substantially as an entirety (any such event being called a Capital Reorganization ), then, effective upon the effective date of such Capital Reorganization, the Holder shall have the right to purchase, upon exercise of this Warrant, the kind and amount of shares of stock and other securities and property (including cash) which the Holder would have owned or have been entitled to receive after such Capital Reorganization if this Warrant had been exercised immediately prior to such Capital Reorganization. As a condition to effecting any Capital Reorganization, the Company or the successor or surviving corporation, as the case may be, shall execute and deliver to the Holder and to the Warrant Agency an agreement as to the Holders rights in accordance with this Section 3.3, providing for subsequent adjustments as nearly equivalent as may be practicable to the adjustments provided for in this Article III. The provisions of this Section 3.3 shall similarly apply to successive Capital Reorganizations.
3.4 Adjustment Rules .
(a) Any adjustments pursuant to this Article III shall be made successively whenever an event referred to herein shall occur.
(b) If the Company shall set a record date to determine the holders of shares of Common Stock or any other class of capital stock, as the case may be, for purposes of a Common Share Reorganization, Stock Dividend Payment or Capital Reorganization and shall legally abandon such action prior to effecting such action, then no adjustment shall be made pursuant to this Article III in respect of such action.
3.5 Notice of Adjustments . The Company shall give notice to the Holder prior to any record date or effective date, as the case may be, in respect of any Common Share Reorganization, Stock Dividend Payment or Capital Reorganization describing, in each case, such event in reasonable detail and specifying such record date or effective date, as the case may be. In addition, after the record date or effective date, as the case may be, of any Common Share Reorganization, Stock Dividend Payment or Capital Reorganization, the Company shall promptly give notice to the Holder of such event, describing such event in reasonable detail and specifying the record date or effective date, as the case may be, and, if determinable, the required adjustment and the computation thereof. If the required adjustment is not determinable at the time of such notice, the Company shall give notice to the Holder of such adjustment and computation promptly after such adjustment becomes determinable.
3.6 Adjustment by Board of Directors . If any event occurs as to which, in the opinion of the Board of Directors of the Company, the provisions of this Article III are not strictly applicable or if strictly applicable would not fairly protect the rights of the holder of this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors may make, in its discretion, an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have the effect of increasing the Exercise Price or decreasing the number of shares of Common Stock into which the Warrant is exercisable as otherwise determined pursuant to any of the provisions of this Article III, except in the case of a combination of shares of a type contemplated in Section 3.2 and then in no event to an amount larger than the Exercise Price as adjusted pursuant to Section 3.2.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following respective meanings:
Affiliate means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144 under the Securities Act.
Beneficial Ownership Limitation has the meaning set forth in Section 1.5.
Business Days means each day in which banking institutions in Atlanta, Georgia are not required or authorized by law or executive order to close.
Capital Reorganization has the meaning set forth in Section 3.3.
Commission means the Securities and Exchange Commission.
Common Share Reorganization has the meaning set forth in Section 3.2.
Common Stock has the meaning set forth in the first paragraph of this Warrant.
Company has the meaning set forth in the first paragraph of this Warrant.
Eligible Holder means the Holder and any permitted transferee of the Holder pursuant to and in accordance with this Warrant.
Exchange Act has the meaning set forth in Section 1.5.
Exercise Price means US $4.59 per share of Common Stock, as may be adjusted pursuant to Article III.
Expiration Date has the meaning set forth in the first paragraph of this Warrant.
Exercise Notice has the meaning set forth in Section 1.1(a).
Fair Market Value means, with respect to a share of Common Stock as of a particular date: (i) if the Common Stock is quoted on the NYSE MKT or another national exchange, the closing or last sale price, respectively, reported for the last business day immediately preceding such date; (ii) if the Common Stock is not quoted on the NYSE MKT or another national exchange but is quoted on the OTC Bulletin Board, the mean of the average of the closing bid and asked prices reported for the last business day immediately preceding such date; or (iii) if the Common Stock is not quoted on either a national securities exchange or the OTC Bulletin Board, then as the Companys Board of Directors shall determine in good faith.
Holder has the meaning set forth in the first paragraph of this Warrant.
Person means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
Securities has the meaning set forth in Section 5.1(a).
Securities Act has the meaning set forth in Section 1.4.
Stock Dividend Payment has the meaning set forth in Section 3.2.
Warrant Agency has the meaning set forth in Section 2.1.
Warrants mean this Warrant and other warrants of like tenor issued pursuant to Section 2.3.
ARTICLE V
REPRESENTATIONS AND OTHER AGREEMENTS
5.1 Representations of Holder . The Holder hereby represents to the Company as follows:
(a) Own Account . The Holder understands that this Warrant and all shares of Common stock issuable upon exercise of this Warrant (together, the Securities ) are restricted securities and have not been and will not be registered under the Securities Act or any applicable state securities law, except as expressly required hereunder. The Holder is
acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law. The Holder is acquiring the Securities hereunder in the ordinary course of its business.
(b) Holder Status . At the time the Holder was offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises this Warrant it will be, an accredited investor as defined under Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.
(c) Experience of the Holder . The Holder has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.
(d) General Solicitation . The Holder is not acquiring the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
5.2 Other Agreements . The Holder acknowledges that the Company is subject to the rules and regulations of the NYSE MKT, including, without limitation, the provisions of the NYSE MKT Company Guide. The Holder agrees that, notwithstanding anything herein to the contrary, this Warrant shall not be exercisable in whole or in part unless and until the NYSE MKT has approved the listing of the shares of Common Stock issuable upon exercise of this Warrant for quotation on the NYSE MKT, and the Company agrees to seek, and diligently pursue, such approval as soon as practicable.
5.3 Piggyback Registration Rights . If at any time prior to the three (3) year anniversary of the date hereof, the Company proposes to register for its own account (other than a registration relating solely to employee benefit plans or a registration relating solely to a transaction pursuant to Rule 145 of the Securities Act) any of its Common Stock under the Securities Act in connection with the public offering by the Company of such securities, then the Company shall, prior to the filing of any such registration, promptly give the Holder written notice of such registration. Upon the written request of the Holder given within ten (10) days after receipt of such notice by the Company and subject to the limitations described below, the Company shall cause to be included in such registration the shares of Common Stock issuable upon exercise of this Warrant that Holder has requested to be registered.
In connection with any offering involving an underwriting of shares of Common Stock in which Holder makes a written request pursuant to the provisions of the preceding paragraph, the Company shall not be required to include any of the shares of Common Stock issuable upon exercise of this Warrant in such underwriting unless the Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by it, and then only in such quantity as the underwriters determine in their sole reasonable discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including the shares of Common Stock issuable upon exercise of this Warrant, requested to be included in such registration exceeds the amount of securities that the underwriters determine in their sole reasonable discretion is compatible with the success of the offering, then the Company will include in such registration, to the extent of the number which the Company is so advised can be sold in such offering, (a) first securities proposed by the Company to be sold for its own account, and (b) second the shares of Common Stock issuable upon exercise of this Warrant and securities of other selling security holders requested to be included in such registration pro-rata on the basis of the number of share of such securities so proposed to be sold and so requested to be included.
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law . This Warrant shall be governed in all respects by the laws of the State of Ohio, without reference to its conflicts of law principles.
6.2 Covenants To Bind Successor and Assigns . All covenants, stipulations, promises and agreements contained in this Warrant by or on behalf of the Company shall bind its successors and assigns, whether or not so expressed.
6.3 Entire Agreement . This Warrant constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenant except as specifically set forth herein or therein.
6.4 Waivers and Amendments . No failure or delay of the Holder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Holder are cumulative and not exclusive of any rights or remedies which it would otherwise have. The provisions of this Warrant may be amended, modified or waived with (and only with) the written consent of the Company and the Holder of this Warrant.
6.5 Notices . All notices or other communications required or permitted hereunder shall be in writing and shall be mailed by express, registered or certified mail, postage prepaid, return receipt requested, sent by facsimile (with confirmation of transmission received and followed by the posting of a hard copy of the notice or communication by first-class U.S. mail), or by courier service guaranteeing overnight delivery with charges prepaid, or otherwise delivered by hand or by messenger, and shall be conclusively deemed to have been received by a party hereto and to be effective on the day on which delivered or facsimile is sent to such party at its address set forth below (or at such other address as such party shall specify to the other parties hereto in writing), or, if sent by registered or certified mail, on the third business day after the day on which mailed, addressed to such party at such address.
In the case of the Holder, such notices and communications shall be addressed to its address as shown on the books maintained by the Warrant Agency, unless the Holder shall notify the Company and the Warrant Agency in writing that notices and communications should be sent to a different address, in which case such notices and communications shall be sent to the address specified by the Holder. In the case of the Company, such notices and communications shall be addressed as follows: Attention: Chief Financial Officer, AdCare Health Systems, Inc., 1145 Hembree Road, Roswell, Georgia 30076.
6.6 Survival of Agreements; Representations and Warranties, etc. All warranties, representations and covenants made by the Company herein shall be considered to have been relied upon by the Holder and shall survive the issuance and delivery of the Warrant, regardless of any investigation made by the Holder, and shall continue in full force and effect so long as this Warrant is outstanding.
6.7 Severability . In case any one or more of the provisions contained in this Warrant shall be held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
6.8 Section Headings . The section headings used herein are for convenience of reference only, do not constitute a part of this Warrant and shall not affect the construction of or be taken into consideration in interpreting this Warrant.
6.9 No Rights as Shareholder; No Limitations on Company Action . This Warrant shall not entitle the Holder to any rights as a shareholder of the Company. No provision of this Warrant and no right or option granted or conferred hereunder shall in any way limit, affect or abridge the exercise by the Company of any of its corporate rights or powers to recapitalize, amend its certificate of incorporation, reorganize, consolidate or merge with or into another corporation or to transfer all or any part of its property or assets, or the exercise of any other of its corporate rights or powers.
[Signature page follows.]
IN WITNESS WHEREOF , the Company has caused this Warrant to be executed by its duly authorized representative.
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ADCARE HEALTH SYSTEMS, INC. |
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/s/ Boyd P. Gentry |
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Boyd P. Gentry |
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Chief Executive Officer |
ACKNOWLEDGED AND AGREED TO BY: |
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HAYDEN IR, LLC |
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Annex 1
EXERCISE NOTICE
TO: AdCare Health Systems, Inc.
3050 Peachtree Rd N.W.
Suite 355
Atlanta, GA 30305
Attention: Chief Financial Officer
The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby irrevocably elects to purchase:
shares of the Common Stock covered by such Warrant; or
shares of the Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 1.1(b) of such Warrant.
The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $ . Such payment takes the form of (check applicable box):
o $ in cash or by money order, certified or bank cashiers check, or by wire transfer for such amount; or
o the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 1.1(b), to exercise this Warrant with respect to number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 1.1(b).
The undersigned requests that the certificates for such shares be issued in the name of, and delivered to whose address is . The undersigned also requests that the certificates for the shares be issued in the following denominations: .
The undersigned represents and warrants that (i) all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the Securities Act), or pursuant to an exemption from registration under the Securities Act; and (ii) the undersigned is an accredited investor within the meaning of Regulation D under the Securities Act.
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(Signature must conform to name of holder as specified on the face of the Warrant) |
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Annex 2
Assignment
For value received, the undersigned hereby sells, assigns and transfers unto:
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the right to purchase Common Stock (as defined in the attached Warrant) represented by the attached Warrant to the extent of shares as to which such right is exercisable and does hereby irrevocably constitute and appoint , attorney-in-fact, to transfer said Warrant on the books of AdCare Health Systems, Inc., with full power of substitution in the premises.
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Exhibit 4.23
ADCARE HEALTH SYSTEMS, INC.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF ADCARE HEALTH SYSTEMS, INC.
Dated as of May 15, 2013
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH WARRANT AND SHARES ARE REGISTERED UNDER SUCH ACT OR THE HOLDER OF SUCH WARRANT AND SHARES ESTABLISHES TO THE SATISFACTION OF THE COMPANY THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, THIS WARRANT MAY NOT BE TRANSFERRED, PLEDGED OR HYPOTHECATED OTHER THAN BY ITS TERMS.
ADCARE HEALTH SYSTEMS, INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF ADCARE HEALTH SYSTEMS, INC.
This Warrant, granted by the Board of Directors (the Board) of AdCare Health Systems, Inc. (the Company) as of May 15, 2013 (the Grant Date), certifies that, FOR VALUE RECEIVED, Ronald W. Fleming (the Holder), is entitled to purchase up to 70,000 shares of common stock, no par value (the Common Stock), of the Company, at a per share purchase price (the Exercise Price) of $5.90. This Warrant is exercisable upon the vesting schedule set forth in Section (a) and shall terminate and expire unless exercised on or before the tenth anniversary of the Grant Date. The shares of the Common Stock issuable upon the exercise of this Warrant are referred to herein as the Underlying Common Stock. The Holder may exercise this Warrant as to all or any portion of the shares of the Underlying Common Stock which it shall have the right to acquire hereunder.
(a) Vesting Schedule . Subject to the terms and conditions set forth herein, this Warrant shall vest with respect to one-third of the Underlying Common Stock on each of May 15, 2014 , May 15, 2015 and May 15, 2016, provided that the Holder has not ceased employment with the Company as of the date of vesting as set forth herein. Except as otherwise provided herein, if the Holder ceases to be an employee of the Company, for any reason, then no additional shares of Underlying Common Stock shall vest and the right to purchase such additional shares under this Warrant shall terminate. Notwithstanding the foregoing, this Warrant shall vest and become immediately exercisable with respect to one hundred percent (100%) of the Underlying Common Stock if (i) there is a Change in Control as defined in the AdCare Health Systems, Inc. 2011 Stock Incentive Plan or (ii) the Holder resigns his employment with the Company for Good Reason.
Resignation for Good Reason means the Holders resignation of employment within ninety (90) days following the Companys failure to cure a material breach of the Employment Agreement entered into July 3, 2013 between the Holder and the Company, as may be amended from time to time, within thirty (30) days after the Holder gives the Company written notice of such breach within ninety (90) days of the occurrence of such breach.
(b) Exercise of Warrant . In order to exercise all or any portion of this Warrant, the Holder must surrender for exercise this Warrant with the Purchase Form annexed hereto duly executed, together with payment in full of the Exercise Price then in effect for each share of Underlying Common Stock purchasable upon exercise of this Warrant. Payment may be made: (i) in cash or by certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated by the Company for such purpose; (ii) without the payment of cash (a Cashless Exercise), by reducing the number of shares of Common Stock that would be obtainable upon the exercise of this Warrant and payment of the Exercise Price in cash so as to yield a number of shares of Common Stock upon the exercise of this Warrant equal to the product of (A) the number of shares of Common Stock for which this Warrant is exercisable as of the date of exercise (if the Exercise Price were being paid in cash) and (B) the Cashless Exercise Ratio (as hereinafter defined); or (iii) a combination of (i) and (ii). The date upon which the Holder exercises this Warrant is hereinafter referred to as the Exercise Date.
The Cashless Exercise Ratio shall equal a fraction, (1) the numerator of which is the excess of the Current Market Value (as defined in Section (f)(v)) per share of Common Stock on the Exercise Date over the Exercise Price per share as of the Exercise Date and (2) the denominator of which is the Current Market Price per share of the Common Stock on the Exercise Date. Upon surrender of this Warrant in connection with the Holders option to elect a Cashless Exercise, the number of shares of Common Stock deliverable upon a Cashless Exercise shall be equal to the number of shares of Common Stock issuable upon the exercise of Warrants that the Holder specifies are to be exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise Ratio.
If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the right of the Holder to purchase the balance of the Underlying Common Stock purchasable hereunder. Upon receipt by the Company of this Warrant at the office of the Company, in proper form for exercise, accompanied by payment of the Exercise Price, the Holder shall be deemed to be the Holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. If the stock transfer books of the Company shall be closed on the date of receipt of this Warrant and the Exercise Price as aforesaid, the Holder shall be deemed to be the Holder of such shares of Common Stock on the next succeeding day on which the stock transfer books of the Company shall be opened.
(c) Reservation of Shares; Stock Fully Paid . The Company agrees that at all times there shall be authorized and reserved for issuance upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance or delivery upon exercise of this Warrant. All shares which may be issued upon exercise hereof will, upon issuance, be fully paid and nonassessable. The Company shall pay all United States and state documentary stamp taxes, if any, in respect of the issue of the Common Stock.
(d) Fractional Shares . This Warrant shall be exercisable in such manner so as not to require the issuance of fractional shares of scrip representing fractional shares. If, as a result of adjustment in the Underlying Common Stock or for any other reason, fractional
shares would be issuable, no such fractional shares shall be issued. In lieu thereof the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Current Market Price of such fractional share.
(e) Rights of the Holder . The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant.
(f) Adjustment of Exercise Rights . The Exercise Price or the number of shares of Underlying Common Stock to be received upon the exercise of this Warrant, or both, shall be subject to adjustment from time to time as hereinafter in this Section (f) provides.
The Exercise Price shall be adjusted from time to time as follows:
(i) In case the Company shall, at any time or from time to time while this Warrant is outstanding, (A) pay a dividend or make a distribution on its Common Stock in shares of Common Stock (any such event being called a Stock Dividend Payment ), (B) subdivide or split its outstanding shares of Common Stock or combine its outstanding Common Stock into a smaller number of shares (any such event being called a Common Share Reorganization ), then (i) the Exercise Price shall be adjusted, effective immediately after the record date at which the holders of shares of Common Stock are determined for purposes of a Common Share Reorganization or at which the holders of shares of Common Stock or any other class of capital stock are determined for purposes of a Stock Dividend Payment, as the case may be, to a price determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date before giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and (ii) the number of shares of Common Stock subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Common Share Reorganization or Stock Dividend Payment, as the case may be, by a fraction, the numerator of which shall be the number of shares outstanding after giving effect to such Common Share Reorganization or Stock Dividend Payment, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such Common Share Reorganization or Stock Dividend Payment, as the case may be.
(ii) In case the Company shall, at any time or from time to time while this Warrant is outstanding, distribute to all holders of shares of its Common Stock evidences of its indebtedness or securities or assets (excluding cash dividends), the Exercise Price in effect immediately prior to such distribution shall be adjusted by multiplying the Exercise Price by a fraction, of which (A) the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned
below less than the then fair market value (as determined by the Board, whose determination shall be conclusive) of the portion of the assets or evidences of indebtedness distributed applicable to one share of Common Stock, and (B) the denominator shall be such Current Market Price per share of Common Stock. Such adjustment shall become effective on the date of such distribution retroactively to immediately after the opening of business on the day following the record date for the determination of shareholders entitled to receive such distribution.
(iii) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% of such price.
(iv) The Current Market Price at any date shall mean the price per share of Common Stock on such date determined by the Board as provided below. The Current Market Price shall be the average of the daily closing prices per share of Common Stock for thirty (30) consecutive business days ending no more than fifteen (15) business days before the day in question (as adjusted for any stock dividend, split, combination or reclassification that took effect during such thirty (30) business day period). The closing price for each day shall be the last reported sales price regular way or, in case no such reported sales take place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading. In the event that the Common Stock is not listed on a national securities exchange, but the shares are traded on the over-the-counter market, then the Current Market Price will mean the average of the last bid and asked prices for the Common Stock on the over-the-counter market. If the Common Stock is not traded in such manner that the quotations referred to above are available for the period required hereunder, the Current Market Price per share of Common Stock shall be deemed to be fair value as determined by the Board (whose determination shall be conclusive), irrespective of any accounting treatment.
(g) Statement of Adjusted Exercise Price . Whenever the Exercise Price of Underlying Common Stock is adjusted pursuant to Section (f), the Company shall forthwith prepare a written statement signed by the President or the Treasurer of the Company setting forth such adjustment. Such statement shall be filed among the permanent records of the Company and shall be delivered to the Holder.
(h) Dissolution or Liquidation . In case the Company shall liquidate or wind up its affairs, the Holder of this Warrant shall be entitled, upon the exercise thereof, to receive, in lieu of the Underlying Common Stock of the Company which he would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to him upon any such dissolution, liquidations or winding up with respect to such shares of Common Stock of the Company, had he been the holder of record of such Underlying Common Stock on the record date for the determination of those entitled to receive any such liquidating distribution; provided, however, that all rights under this Warrant shall terminate on a date fixed by the Company, such date to be not earlier than the date of commencement of proceedings for dissolution, liquidation, or winding up and not later than thirty (30) days after such commencement date, unless the Holder shall
have, prior to such termination date, exercised this Warrant. Notice of such termination of rights under this Warrant shall be given to the Holder hereof, as the same shall appear on the books of the Company, by mail at least thirty (30) days prior to such termination date.
(i) Piggyback Registration Rights . The Company hereby grants to the Holder piggyback registration rights with respect to all or any portion of the shares of Underlying Common Stock which Holder shall have the right to acquire hereunder. In the event Company proposes to file a new registration statement after the Grant Date seeking to register any of its Common Stock under the Securities Act of 1933, as amended (the Act), in connection with the public offering of such securities, the Company shall, prior to the filing of such registration statement, promptly give the Holder written notice thereof. Upon the written request of the Holder given within ten (10) days after receipt of such notice by the Company, the Company shall include on such registration statement any of the Underlying Common Stock that have then vested under this Warrant that the Holder has requested to be registered. If the Holder decides not to include all of its Underlying Common Stock in any registration statement filed by Company, the Holder shall nevertheless continue to have the right to include any Underlying Common Stock that have then vested under this Warrant in any subsequent registration statements as may be filed by the Company with respect to the offering of its Common Stock under the Act, all upon the terms and conditions set forth herein.
In connection with any offering involving an underwriting of shares of the Common Stock in which the Holder makes a written request pursuant to the provisions of the preceding paragraph, the Company shall not be required to include any of the Holders Underlying Common Stock in such underwriting unless the Holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it, and then only in such quantity as the underwriters determine in their sole reasonable discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including the Holders Underlying Common Stock, requested to be included in such registration exceeds the amount of securities that the underwriters determine in their sole reasonable discretion is compatible with the success of the offering, then the Company will include in such registration, to the extent of the number which the Company is so advised can be sold in such offering, (i) first securities proposed by the Company to be sold for its own account, and (ii) second Underlying Common Stock of the the Holder and securities of other selling security holders requested to be included in such registration pro-rata on the basis of the number of share of such securities so proposed to be sold and so requested to be included; provided, however, that the Holder shall have pro-rata rights of registration with all shares sought to be included by officers and directors of the Company as well as holders of ten percent (10%) or more of the Common Stock.
(j) Notices . All notices, payments, requests and demands and other communications required or permitted under this Warrant shall be deemed to have been duly given, delivered and made if in writing and if served either by personal delivery to the party for whom it is intended or by being deposited postage prepaid, certified or registered mail, return receipt requested, to the address shown below or such other address as may be designated in writing hereafter by such party:
If to the Company: |
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AdCare Health Systems, Inc.
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If to the Holder: |
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The most recent address that the Company has on file. |
(k) Governing Law . This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of Ohio.
(l) Further Assurances . The parties agree to execute, acknowledge and deliver any and all such other documents and to take any and all such other actions as may, in the reasonable opinion of either of the parties hereto, be necessary or convenient to carry out more efficiently any or all of the purposes of this Warrant.
(m) Severability . Any provisions of this Warrant which shall be prohibited by law or otherwise held invalid shall be ineffective only to the extent of such prohibition or invalidity and shall not invalidate or otherwise render ineffective any or all of the remaining provisions of this Warrant.
(n) Non-Transferable . This Warrant and the rights granted to the Holder hereof are not transferable by the Holder otherwise than by will or the laws of descent and distribution and may be exercised, during the lifetime of the Holder, only by the Holder or by the Holders guardian or legal representative.
[Signature page follows.]
IN WITNESS WHEREOF , the Company has caused this Warrant dated May 15, 2013 to be executed by its duly authorized representative.
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ADCARE HEALTH SYSTEMS, INC. |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Chief Executive Officer |
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ACKNOWLEDGED AND AGREED TO BY: |
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/s/ Ronald W. Fleming |
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RONALD W. FLEMING |
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PURCHASE FORM
The undersigned, pursuant to the provisions of this Warrant hereby elects to purchase shares of Common Stock of AdCare Health Systems, Inc.
The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $ . Such payment takes the form of (check applicable box or boxes):
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$ in cash or by money order, certified or bank cashiers check, or by wire transfer for such amount; and/or |
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the cancellation of such number of shares of Common Stock underlying this Warrant as is necessary, in accordance with the formula set forth in Section (b), to exercise this Warrant with respect to number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section (b). |
Dated |
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(Signature must conform to name of holder as specified on the face of the Warrant) |
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Exhibit 10.244
THIS INSTRUMENT PREPARED BY
Reid H. Harbin, Esq. HARBIN & MILLER, LLC 3085 E. Shadowlawn Ave. Atlanta, Georgia 30305 |
Cross Reference to Mortgage and Security Agreement recorded as Instrument No. 2012025981 and Assignment of Leases and Rents recorded as Instrument No. 2012025982, recorded in Pulaski County, Arkansas records. |
FIRST MODIFICATION OF NOTE AND FIRST MODIFICATION OF MORTGAGE AND SECURITY AGREEMENT
THIS FIRST MODIFICATION OF NOTE AND FIRST MODIFICATION OF MORTGAGE AND SECURITY AGREEMENT (Modification) made and entered into as of the 30 th day of November, 2012, by and between APH&R PROPERTY HOLDINGS, LLC (Borrower) and Metro City Bank (Lender).
W I T N E S S E T H:
WHEREAS, Borrower executed and delivered to Lender that certain Promissory Note and Mortgage and Security Agreement dated April 30, 2012, in the principal amount of Three Million Four Hundred Twenty-Five Thousand Five Hundred and No/100 Dollars ($3,425,500.00), being payable on the terms and conditions specified therein (hereinafter referred to as the Note and Mortgage);
WHEREAS, Borrower and Lender internally extended the Maturity Date of the Note from September 1, 2012 to December 1, 2012;
WHEREAS, Borrower and Lender have agreed to further amend the Note and to amend the Mortgage as set forth herein and effectuate hereby their agreement in this regard.
NOW, THEREFORE, for and in consideration of the foregoing premises and the sum of Ten and No/100 Dollars ($10.00) cash in hand paid by each party hereto to the other, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree as follows:
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The Maturity Date of the Note and Mortgage is extended from December 1, 2012 to December 31, 2012.
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Except as modified and amended hereby, the Note and Mortgage shall be and remain in full force and effect and unchanged. This Modification is not intended to be nor shall it constitute a novation of the Note or the indebtedness evidenced thereby. Borrower hereby ratifies, confirms and approves the Note and Mortgage as modified herein, and agrees that the same constitutes the valid and binding obligations of Borrower, enforceable by Lender in accordance with their terms. Any references to the Note and Mortgage in any other document evidencing, securing or otherwise relating to the indebtedness evidenced by the Note and Mortgage shall mean and refer to the Note and Mortgage as modified and amended hereby.
3.
This Modification and the rights and obligations of the parties thereunder shall in all respects be governed by, construed and enforced in accordance with federal law and the laws of the State of Georgia, except and only to the extent of procedural matters related to the perfection and enforcement of Lenders rights and remedies against the Property, which matters shall be governed by the laws of the state of Arkansas. However, in the event that the enforceability or validity of any provision of this Modification is challenged or questioned, such provision shall be governed by which whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which is evidenced by this Modification and the Note has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
4.
This Modification shall bind and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.
IN WITNESS WHEREOF, Borrower has caused its duly authorized agent to execute this Modification and affix its official seal hereto and Lender has caused its duly authorized officer to execute this Modification and affix its ofiicial seal hereto, all effective as of the day, month and year first above written.
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BORROWER: |
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APH&R PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
COUNTY OF FULTON |
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On this 30 th day of November, in the year 2012, before me, the undersigned, a Notary Public in and for said County and State, personally appeared Christopher F. Brogdon, Manager of APH&R PROPERTY HOLDINGS, LLC, a Georgia limited liability company authorized to transact business in Arkansas, and thereupon he acknowledged under oath to my satisfaction that he is the person who executed the within instrument, and that he executed said instrument on behalf of the company as its voluntary act and was authorized to do so.
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/s/ Ellen W. Smith |
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Notary Public in and for said County and State |
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My Commission Expires: |
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(NOTARIAL SEAL) |
[SEAL] |
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LENDER: |
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Signed, sealed and delivered in the presence of: |
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METRO CITY BANK |
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/s/ [ILLEGIBLE] |
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Witness |
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By: |
/s/ Alison Kim |
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Name: |
Alison Kim |
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Title: |
Lending Officer |
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[SEAL] |
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/s/ Eumean Eom |
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Notary Public |
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[BANK SEAL] |
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(affix seal and commission expiration date) |
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[SEAL] |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
COUNTY OF GWINNETT |
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On this 29 th day of November, in the year 2012, before me, the undersigned, a Notary Public in and for said County and State, personally appeared Alison Kim, Lending Officer of Metro City Bank, a Georgia banking corporation and thereupon he/she acknowledged under oath to my satisfaction that he/she is the person who executed the within instrument, and that he/she executed said instrument on behalf of the corporation as its voluntary act and was authorized to do so.
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/s/ Eumean Eom |
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Notary Public in and for said County and State |
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My Commission Expires: |
6-10-2013 |
[SEAL] |
(NOTARIAL SEAL) |
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CONFIRMATION OF GUARANTY
THIS CONFIRMATION, made and entered into this 30 th day of November, 2012, between METRO CITY BANK (hereinafter referred to as Lender) and AdCare Health Systems, Inc., (hereinafter referred to as the Guarantor).
W I T N E S S E T H :
WHEREAS, Guarantor, on or about April 30, 2012, did in fact execute that certain Guaranty (hereinafter referred to as Guaranty) in order to induce METRO CITY BANK to make a loan in the amount of Three Million Four Hundred Twenty-Five Thousand Five Hundred and No/100 Dollars ($3,425,500.00) (Loan) to APH&R PROPERTY HOLDINGS, LLC (hereinafter referred to as Borrower); and
WHEREAS, Lender and Borrower have agreed to renew and extend the term of the Note; and
WHEREAS, the Guarantor and Lender are desirous of confirming the unconditional, continual and unlimited Guaranty of the Guarantor; and
NOW, THEREFORE, for the purpose of conforming the same to the intentions of the parties herein and for and in consideration of the covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor and Lender hereby covenant and agree as follows:
ONE
The Note has been renewed in the original principal amount Three Million Four Hundred Twenty-Five Thousand Five Hundred and No/100 Dollars ($3,425,500.00) and the maturity date of said Note has been extended to December 31, 2012;
TWO
The Guaranty is unconditional, continual and unlimited;
THREE
The Guaranty shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and affixed their seals this 30 th day of November, 2012.
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GUARANTOR : |
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AdCare Health Systems, Inc. |
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/s/ [ILLEGIBLE] |
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By: |
/s/ Christopher F. Brogdon |
Witness |
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Christopher F. Brogdon, Vice Chairman and |
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Chief Acquisition Officer |
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[CORPORATE SEAL] |
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LENDER: |
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METRO CITY BANK |
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BY: |
/s/ Alison Kim |
/s/ [ILLEGIBLE] |
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NAME: |
Alison Kim |
Witness |
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TITLE: |
Lending Officer |
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[BANK SEAL] |
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[SEAL] |
CONFIRMATION OF GUARANTY
THIS CONFIRMATION, made and entered into this 30 th day of November, 2012, between METRO CITY BANK (hereinafter referred to as Lender) and APH&R NURSING, LLC, (hereinafter referred to as the Guarantor).
W I T N E S S E T H :
WHEREAS, Guarantor, on or about April 30, 2012, did in fact execute that certain Guaranty (hereinafter referred to as Guaranty) in order to induce METRO CITY BANK to make a loan in the amount of Three Million Four Hundred Twenty-Five Thousand Five Hundred and No/100 Dollars ($3,425,500.00) (Loan) to APH&R PROPERTY HOLDINGS, LLC (hereinafter referred to as Borrower); and
WHEREAS, Lender and Borrower have agreed to renew and extend the term of the Note; and
WHEREAS, the Guarantor and Lender are desirous of confirming the unconditional, continual and unlimited Guaranty of the Guarantor; and
NOW, THEREFORE, for the purpose of conforming the same to the intentions of the parties herein and for and in consideration of the covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor and Lender hereby covenant and agree as follows:
ONE
The Note has been renewed in the original principal amount Three Million Four Hundred Twenty-Five Thousand Five Hundred and No/100 Dollars ($3,425,500.00) and the maturity date of said Note has been extended to December 31, 2012;
TWO
The Guaranty is unconditional, continual and unlimited;
THREE
The Guaranty shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and affixed their seals this 30 th day of November 2012.
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GUARANTOR : |
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APH&R NURSING, LLC |
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/s/ [ILLEGIBLE] |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
Witness |
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Christopher F. Brogdon, Manager |
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LENDER : |
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METRO CITY BANK |
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BY: |
/s/ Alison Kim |
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/s/ [ILLEGIBLE] |
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NAME: |
Alison Kim |
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Witness |
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TITLE: |
Lending Officer |
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[BANK SEAL] |
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[SEAL] |
Exhibit 10.245
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this Sublease) is made and entered into as of December l, 2012 by and between ADK GEORGIA, LLC, a Georgia limited liability company (Lessee) and JEFF CO. NURSING, LLC, a Georgia limited liability company (Jeff Co. Nursing).
WITNESSETH:
WHEREAS, pursuant to that certain Lease (Master Lease) dated August 1, 2010, Lessee leased from William M. Foster (Lessor) the premises described and defined in the Master Lease as the Property (the Property);
WHEREAS, Jeff Co. Nursing is a Georgia limited liability company whose issued and outstanding membership interests are owned solely by Robert Lancaster; and
WHEREAS, Jeff Co. Nursing desires to sublease that portion of the Property located in Jeffersonville, Georgia consisting of 131 licensed beds (the Premises) on the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of Ten Dollars and no/100 ($10.00), and the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration paid by each party to the other, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Premises. Lessee does hereby lease to Jeff Co. Nursing, and Jeff Co., Nursing does hereby lease from Lessee, for the term and upon the conditions hereinafter provided, the Premises.
2. Terms and Conditions . The term of this Sub-sublease shall be for the same term as the Master Lease. This Sub-sublease is subject to the Master Lease and all of the terms, covenants, and conditions in the Master Lease are applicable to this Sub-sublease with the same force and effect as if Lessee were the lessor under the Master Lease and Jeff Co. Nursing were the lessee thereunder.
3. Rent. During the term of this Sub-sublease, Jeff Co. Nursing shall pay to Lessee, the rent and other charges relating to the Premises payable by Lessee under the Sublease and the Master Lease.
4. Remedies. In the event (i) Jeff Co. Nursing defaults under this Sublease and/or the Master Lease or (ii) the entering into of this Sublease results in Lessor giving notice of default under the Master Lease, Lessee shall have the right to terminate this Sublease immediately. The remedy described in the preceding sentence shall be in addition to all other remedies available at law or in equity.
5. Representations and Warranties . Lessee hereby makes the following representations and warranties, each of which is material: (a) the Master Lease and Sublease are in full force and effect; (b) Lessee has no knowledge of any event having occurred that authorizes the termination of the Master Lease and/or the Sublease; and (c) Lessee has no knowledge of any default under the Master Lease and/or the Sublease, nor has Lessee received any notice of default from Lessor or Lessee.
6. Governing Law and Venue . This Sub-sublease is made pursuant to, and shall be construed and enforced in accordance with, the laws in force in the State of Georgia, and any dispute arising hereunder shall be brought in the courts of Twiggs County, Georgia.
7. Entire Agreement . The parties hereby understand and agree that this Sub-sublease contains the entire agreement between the parties and cannot be changed or modified except by a written instrument subsequently executed by the parties hereto.
{Signatures on Following Page}
IN WITNESS WHEREOF, the parties hereto have caused this Sub-sublease to be duly executed and delivered as of the day and year first written above.
SUBLESSEE : |
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LESSEE: |
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JEFF CO. NURSING, LLC, |
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ADK GEORGIA, LLC, |
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a Georgia limited liability company |
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a Georgia limited liability company |
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By: |
/s/ Robert Lancaster |
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By: |
/s/ Boyd P. Gentry |
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Robert Lancaster, Manager |
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Name: |
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Title: |
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Exhibit 10.246
SUBLEASE TERMINATION AGREEMENT
THIS SUBLEASE TERMINATION AGREEMENT (the Agreement ) is made and entered into effective as of November 30, 2012 (the Effective Date ) , by and between ADK GEORGIA, LLC, a Georgia limited liability Company ( Sublessor ) and ADK JEFFERSONVILLE OPERATOR, LLC, a Georgia limited liability company ( Sublessee ) .
WITNESSETH:
WHEREAS, pursuant to that certain Lease (Master Lease) dated August 1, 2010, Sublessor leased from William M. Foster (Lessor) the premises described and defined in the Master Lease as the Property (the Property);
WHEREAS, Sublessee subleased that portion of the Property located in Jeffersonville, Georgia consisting of 131 licensed beds (the Premises) pursuant to that certain Sublease Agreement and Lessors Consent dated as of April 10, 2010 (the Sublease); and
WHEREAS, Sublessor and Sublessee desire to terminate the Sublease in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the covenants, promises, undertakings, and releases herein, the receipt, adequacy, and sufficiency of such consideration being expressly acknowledged, Lessor and Lessee hereby agree as follows:
1. The foregoing recital of facts is hereby made a part of this Agreement to the same extent as if fully set forth herein. All capitalized terms not otherwise defined shall have the meanings ascribed to them above.
2. The Sublease shall terminate, without further action or notice, on the Effective Date at 11:59 p.m. Each partys duties and obligations to the other under the Sublease shall terminate as of 11:59 p.m. on the Effective Date.
3. This Agreement shall be governed by and interpreted under the laws of the State of Georgia.
{Signatures on Following Page}
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and sealed as of the date stated on the first page of this Agreement.
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SUBLESSOR: |
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ADK GEORGIA, LLC, |
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a Georgia limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
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Title: |
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SUBLESSEE: |
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ADK JEFFERSONVILLE OPERATOR, LLC, |
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a Georgia limited, liability company |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
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Title: |
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Exhibit 10.247
MANAGEMENT FEE SUBORDINATION AGREEMENT
Dated: December 20, 2012
To: Gemino Healthcare Finance, LLC
One International Plaza
Suite 220
Philadelphia, PA 19113
To induce GEMINO HEALTHCARE FINANCE, LLC , a Delaware limited liability company (together with its successors and assigns, Lender ), to establish credit facilities for making loans and extending credit from time to time for the benefit of LIVING CENTER, LLC , a Georgia limited liability company ( Living Center ), KENMETAL, LLC , a Georgia limited liability company ( Kenmetal ), SENIOR NH, LLC , a Georgia limited liability company ( Senior NH ), BAN NH, LLC , a Georgia limited liability company ( Ban NH ), and OAK LAKE, LLC , a Georgia limited liability company ( Oak Lake ; Living Center, Kenmetal, Senior NH, Ban NH and Oak Lake, together with each of their successors and permitted assigns, are individually and collectively referred to herein as Borrower ), pursuant to the terms of that certain Credit Agreement dated of even date herewith among Borrower, such other Persons joined thereto as a Borrower from time and Lender (as hereafter amended, restated, supplemented or replaced from time to time, the Credit Agreement ), ADCARE OKLAHOMA MANAGEMENT, LLC , a Georgia limited liability company (together with its successors and assigns, the Undersigned ), hereby agrees as follows:
1. The payment of any and all Subordinated Debt is expressly subordinated to the Senior Debt to the extent and in the manner set forth in this Management Fee Subordination Agreement (this Subordination Agreement ). The term Subordinated Debt means the obligations owing by Borrower to the Undersigned pursuant to the terms and conditions of that certain Management Agreement dated September 19, 2011 by and among Borrower and the Undersigned (the Management Agreement ). Neither the Undersigned nor Borrower shall amend or modify the Management Agreement in any manner adverse to Lender without the prior written consent of Lender. The term Senior Debt means any and all Obligations of Borrower to Lender under, in connection with, or in any way related to (including debtor-in-possession financing), the Credit Agreement (including, without limitation, any interest accruing thereon after maturity or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding). Capitalized terms not defined herein shall have the meaning set forth in the Credit Agreement.
2. As long as no Event of Default or Unmatured Event of Default has occurred and is continuing, and if no Event of Default or Unmatured Event of Default would result from the making of any such payments, Borrower may pay and the Undersigned may accept the fees payable by Borrower to the Undersigned pursuant to the Management Agreement (the Management Fees ). Notwithstanding the foregoing, upon the occurrence of an Event of Default or an Unmatured Event of Default, Borrower shall not make and the Undersigned shall not receive any of the Management Fees without Lenders prior written consent.
3. Any payments on the Subordinated Debt received by the Undersigned, other than as expressly permitted in Section 2 above, shall be held in trust for Lender and the Undersigned will forthwith turn over any such payments in the form received, properly endorsed, to Lender to be applied to the Senior Debt as determined by Lender.
4. The Undersigned agrees that it will not make any assertion or claim in any action, suit or proceeding of any nature whatsoever in any way challenging the priority, validity or effectiveness of the liens and security interests granted to Lender under and in connection with the Credit Agreement, or any amendment, extension, replacement thereof or related agreement, instrument or document between Lender and Borrower.
5. At no time will the Undersigned commence any action or proceeding against any Borrower to recover all or any part of the Subordinated Debt not paid when due and the Undersigned shall not join with any creditor, in bringing any proceeding against any Borrower under any liquidation, conservatorship, bankruptcy, reorganization, rearrangement, or other insolvency law now or hereafter existing, unless and until the Senior Debt shall be Paid in Full. The term Paid in Full means the indefeasible payment in full in cash of all Senior Debt and the irrevocable termination of all commitments to lend or otherwise extend credit under the Credit Agreement. Subject to the foregoing, the Undersigned may accelerate the amount of the Subordinated Debt upon the occurrence of (i) the acceleration of the Senior Debt; and (ii) the filing of a petition under the United States Bankruptcy Code by any Borrower.
6. In the event of any liquidation, conservatorship, bankruptcy, reorganization, rearrangement, or other insolvency proceeding of any Borrower, the Undersigned will, at Lenders request, file any claims, proofs of claim, or other instruments of similar character necessary to enforce the obligations of Borrower in respect of the Subordinated Debt and will hold in trust for Lender and pay over to Lender in the same form received, to be applied on the Senior Debt as determined by Lender, any and all money, dividends or other assets received in any such proceedings on account of the Subordinated Debt, unless and until the Senior Debt shall be Paid in Full, including, without limitation, interest owing to Lender after the commencement of a bankruptcy proceeding at the rate specified in the Credit Agreement, whether or not such interest is an allowable claim in any such proceeding. Lender may, as attorney-in-fact for the Undersigned, take such action on behalf of the Undersigned, and the Undersigned hereby appoints Lender as attorney-in-fact for the Undersigned to demand, sue for, collect, and receive any and all such money, dividends or other assets and give acquittance therefore and to file any claim, proof of claim or other instrument of similar character and to take such other proceedings in Lenders name or in the name
of the Undersigned, as Lender may deem necessary or advisable for the enforcement of this Subordination Agreement. The Undersigned will execute and deliver to Lender such other and further powers of attorney or other instruments as Lender reasonably may request in order to accomplish the foregoing.
7. Lender may at any time and from time to time, without the consent of or notice to the Undersigned, without incurring responsibility to the Undersigned and without impairing or releasing any of Lenders rights, or any of the obligations of the Undersigned hereunder:
(a) Change the amount, manner, place or terms of payment or change or extend the time of payment of or renew or alter the Senior Debt, or any part thereof, or amend, supplement or replace the Credit Agreement and/or any notes executed in connection therewith in any manner or enter into or amend, supplement or replace in any manner any other agreement relating to the Senior Debt;
(b) Sell, exchange, release or otherwise deal with all or any part of any property at any time pledged or mortgaged by any party to secure or securing the Senior Debt or any part thereof;
(c) Release anyone liable in any manner for the payment or collection of the Senior Debt;
(d) Exercise or refrain from exercising any rights against any Borrower or others (including the Undersigned); and
(e) Apply sums paid by any party to the Senior Debt in any order or manner as determined by Lender.
8. The Undersigned shall advise each future assignee of all or any part of the Subordinated Debt that the Subordinated Debt is subordinated to the Senior Debt in the manner and to the extent provided herein. The Undersigned represents that no part of the Subordinated Debt or any instrument evidencing the same has been transferred or assigned, and the Undersigned will not transfer or assign, except to Lender, any part of the Subordinated Debt while any Senior Debt remains outstanding, unless such transfer or assignment is made expressly subject to this Subordination Agreement. Upon Lenders request, the Undersigned will place on the Management Agreement a legend in such form as Lender may determine to the effect that the indebtedness evidenced thereby is subordinated and subject to the prior payment in full of all Senior Debt pursuant to this Subordination Agreement, as well as deliver all such instruments to Lender.
9. This Subordination Agreement contains the entire agreement between the parties regarding the subject matter hereof and may be amended, supplemented or modified only by written instrument executed by Lender and the Undersigned.
10. The Undersigned represents and warrants that neither the execution or delivery of this Subordination Agreement nor fulfillment of nor compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms, conditions, or provisions of or constitute a
default under any agreement or instrument to which the Undersigned or any of the Undersigneds assets is now subject.
11. Any notice of acceptance of this Subordination Agreement is hereby waived.
12. This Subordination Agreement may be assigned by Lender in whole or in part in connection with any assignment or transfer of any portion of the Senior Debt.
13. This Subordination Agreement shall be binding upon the Undersigned, and the Undersigneds successors, representatives and assigns.
14. Except as provided in Section 2 above, each Borrower agrees that it will not make any payment on any of the Management Fees or take any other action in contravention of the provisions of this Subordination Agreement.
15. GOVERNING LAW . THIS SUBORDINATION AGREEMENT, AND ALL MATTERS ARISING OUT OF OR RELATING TO THIS SUBORDINATION AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND SHALL BE CONSTRUED WITHOUT THE AID OF ANY CANON, CUSTOM OR RULE OF LAW REQUIRING CONSTRUCTION AGAINST THE DRAFTSMAN.
16. CONSENT TO JURISDICTION . THE UNDERSIGNED, EACH BORROWER AND LENDER HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION OF, AND VENUE IN, ANY STATE OR FEDERAL COURT LOCATED IN THE COMMONWEALTH OF PENNSYLVANIA IN ANY AND ALL ACTIONS AND PROCEEDINGS WHETHER ARISING HEREUNDER OR UNDER ANY OTHER AGREEMENT OR UNDERTAKING. EACH BORROWER AND THE UNDERSIGNED WAIVE ANY OBJECTION TO IMPROPER VENUE AND FORUM NON-CONVENIENS TO PROCEEDINGS IN ANY SUCH COURT OR COURTS AND ALL RIGHTS TO TRANSFER FOR ANY REASON. THE UNDERSIGNED AND EACH BORROWER IRREVOCABLY AGREE TO SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO THE ADDRESS OF THE APPROPRIATE PARTY SET FORTH HEREIN.
17. WAIVER OF JURY TRIAL . THE UNDERSIGNED, EACH BORROWER AND LENDER HEREBY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION COMMENCED BY OR AGAINST LENDER WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.
[Remainder of Page Intentionally Left Blank]
Signature Page to Management Fee Subordination Agreement
Dated as of the date first written above. |
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UNDERSIGNED: |
ADCARE OKLAHOMA MANAGEMENT, LLC |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry , Manager |
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Address for Notices : |
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1145 Hembree Road |
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Roswell, Georgia 30076 |
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Attn: Manager |
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Signature Page to Management Fee Subordination Agreement
Intending to be legally bound, each of the following consents and agrees to the terms of this Subordination Agreement as of the date first above written:
BORROWER: |
LIVING CENTER, LLC |
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KENMETAL, LLC |
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SENIOR NH, LLC |
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BAN NH, LLC |
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OAK LAKE, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon , Manager |
Address for notices to Borrower:
Two Buckhead Plaza
3050 Peachtree Road NW
Suite 355
Atlanta, GA 30305
Fax No.: (937) 964-8222
With a copy to:
AdCare Oklahoma Management, LLC
1145 Hembree Road
Roswell, Georgia 30076
Attn: Manager
Fax No.: ( ) -
Signature Page to Management Fee Subordination Agreement
Agreed to and Acknowledged: |
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LENDER: |
GEMINO HEALTHCARE FINANCE, LLC |
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By: |
/s/ Jeffrey M. Joslin |
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Jeffrey M. Joslin , Senior Portfolio Manager |
Address for notices to Lender:
Gemino Healthcare Finance, LLC
1 International Plaza, Suite 220
Philadelphia, Pennsylvania 19113
Attn: Thomas Schneider
Fax: (610) 870-5401
Exhibit 10.248
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this Amendment ) is made and entered into this 21st day of December, 2012, by and between ADK BONTERRA/PARKVIEW, LLC , a Georgia limited liability company (hereinafter referred to as Borrower ), with its chief executive office at Two Buckhead Plaza, 3050 Peachtree Road NW, Suite 355, Atlanta, Georgia 30305, and GEMINO HEALTHCARE FINANCE, LLC , a Delaware limited liability company (hereinafter referred to as Lender ) with an office at One International Plaza, Suite 220, Philadelphia, Pennsylvania 19113.
Recitals :
Lender and Borrower are parties to a certain Credit Agreement dated April 27, 2011 (as at any time amended, restated, modified or supplemented, the Credit Agreement ) pursuant to which Lender has made certain revolving credit loans to Borrower.
The parties desire to amend the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Definitions . All capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . The Credit Agreement is hereby amended as follows:
(a) By deleting Section 2.01(d) of the Credit Agreement and by substituting in lieu thereof the following:
(a) The initial term of the Credit Facility ( Initial Term ) shall expire on January 31, 2014. All Loans shall be repaid on or before the earlier of the last day of the Initial Term, termination of the Credit Facility or termination of this Agreement ( Maturity Date ). After the Maturity Date no further Revolving Loans shall be available from Lender.
(b) By deleting Section 6.06(b) of the Credit Agreement and by substituting in lieu thereof the following:
(b) Maximum Loan Turn Days . Borrowers and Non-Bonterra/Parkview Borrowers Borrowers shall maintain at all times a Maximum Loan Turn Days, measured quarterly at the end of the fiscal quarter ending December 31, 2012 and each fiscal quarter thereafter, of not greater than 40 days.
(c) By adding the following Section 9.27 to the Credit Agreement immediately following Section 9.26 thereof:
9.27 Liability for Obligations Under Affiliated Credit Agreement . Notwithstanding anything to the contrary in this Agreement or the other Loan Documents, without the prior written consent of Bonterra/Parkview Lessor, no Borrower shall be obligated, directly or indirectly, for any indebtedness, liabilities and obligations of the Non-Bonterra/Parkview Borrowers to Lender, including the Obligations (as defined in the Affiliated Credit Agreement).
(d) By deleting the definition of Maximum Loan Turn Days set forth in Annex I to the Credit Agreement and by substituting in lieu thereof the following:
Maximum Loan Turn Days means, as of any date of determination, (i) the result of (a) (1) the average daily outstanding balance of the Revolving Loans during the immediately preceding three (3) months, plus (2) the average daily outstanding balance of the Revolving Loans (as defined in the Affiliated Credit Agreement) during the immediately preceding three (3) months, divided by (b)(1) the average monthly Collections in the Commercial Lockbox and Government Lockbox for the immediately preceding three (3) months, plus (2) the average monthly Collections in the Commercial Lockbox and Government Lockbox (in each case with respect to the terms Collections, Commercial Lockbox and Government Lockbox used in this clause (2), as such term is defined in the Affiliated Credit Agreement) for the immediately preceding three (3) months multiplied by (ii) 30.
(e) By adding the following definitions of Affiliated Credit Agreement and Non-Bonterra/Parkview Borrowers to Annex I to the Credit Agreement in appropriate alphabetical order:
Affiliated Credit Agreement means the Credit Agreement dated December 21, 2012, among Living Center, LLC, a Georgia limited liability company, Kenmetal, LLC, a Georgia limited liability company, Senior NH, LLC, a Georgia limited liability company, BAN NH, LLC, a Georgia limited liability company, and Oak Lake, LLC, a Georgia limited liability company, such other Persons from time to time party thereto as borrowers, and Lender.
Non-Bonterra/Parkview Borrowers means the Borrowers under (and as defined in) the Affiliated Credit Agreement.
3. Ratification and Reaffirmation . Borrower hereby ratifies and reaffirms the Obligations, each of the Loan Documents and all of Borrowers covenants, duties, indebtedness and liabilities under the Loan Documents.
4. Acknowledgments and Stipulations. Borrower acknowledges and stipulates that the Credit Agreement and the other Loan Documents executed by Borrower are legal, valid and binding obligations of Borrower that are enforceable against Borrower in accordance with the terms thereof; all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby waived by Borrower); the security interests and liens granted by Borrower in favor of Lender are duly perfected, first priority security interests and liens; and the unpaid principal amount of the Loans on and as of December 20, 2012, totaled $1,376,517.26.
5. Representations and Warranties . Borrower represents and warrants to Lender, to induce Lender to enter into this Amendment, that no Event of Default or Unmatured Event of Default exists on the date hereof; the execution, delivery and performance of this Amendment have been duly authorized by all requisite company action on the part of Borrower and this Amendment has been duly executed and delivered by Borrower; and all of the representations and warranties made by Borrower in the Credit Agreement are true and correct on and as of the date hereof.
6. Reference to Credit Agreement . Upon the effectiveness of this Amendment, each reference in the Credit Agreement to this Agreement, hereunder, or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment.
7. Breach of Amendment . This Amendment shall be part of the Credit Agreement and a breach of any representation, warranty or covenant herein shall constitute an Event of Default.
8. Conditions Precedent. The effectiveness of the amendments contained in Section 2 hereof are subject to the satisfaction of each of the following conditions precedent, in form and substance satisfactory to Lender, unless satisfaction thereof is specifically waived in writing by Lender:
(a) Lender shall have received a counterpart of this Amendment duly executed by Borrower;
(b) Lender shall have received a Consent and Reaffirmation to this Amendment duly executed by ADK; and
(c) The Affiliated Credit Agreement and the Loan Documents (as defined in the Affiliated Credit Agreement) shall be in full force and effect, and Lender shall have received fully executed counterparts of each.
9. Expenses of Lender . Borrower agrees to pay, on demand , all costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including, without limitation, the costs and fees of Lenders legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or agreement referred to herein or contemplated hereby.
10. Governing Law . This Amendment shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania.
11. Successors and Assigns . This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
12. No Novation, etc. Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision of the Credit Agreement or any of the other Loan Documents, each of which shall remain in full force and effect. This Amendment is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect.
13. Counterparts; Electronic Signatures . This Amendment may be executed in any number of counterparts and by different parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any manually executed signature page to this Amendment delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto.
14. Further Assurances . Borrower agrees to take such further actions as Lender shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.
15. Section Titles . Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto.
16. Release of Claims . To induce Lender to enter into this Amendment, Borrower hereby releases, acquits and forever discharges Lender, and all officers, directors, agents, employees, successors and assigns of Lender, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that Borrower now has or ever had against Lender arising under or in
connection with any of the Loan Documents or otherwise. Borrower represents and warrants to Lender that Borrower has not transferred or assigned to any Person any claim that Borrower ever had or claimed to have against Lender.
17. Waiver of Jury Trial . To the fullest extent permitted by applicable law, the parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Amendment .
[Remainder of page intentionally left blank; signatures begin on following page.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers on the date first written above.
BORROWER: |
ADK BONTERRA/PARKVIEW, LLC |
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By: |
/s/ Martin Brew |
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Martin Brew , Chief Financial Officer |
[Signatures continued on following page.]
Third Amendment to Credit Agreement (ADK Bonterra)
LENDER: |
GEMINO HEALTHCARE FINANCE, LLC |
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By: |
/s/ Jeffrey M. Joslin |
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Jeffrey M. Joslin , Senior Portfolio |
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Manager |
Third Amendment to Credit Agreement (ADK Bonterra)
CONSENT AND REAFFIRMATION
The undersigned guarantor of the Obligations of Borrower at any time owing to Lender hereby (i) acknowledges receipt of a copy of the foregoing Third Amendment to Credit Agreement; (ii) consents to Borrowers execution and delivery thereof and of the other documents, instruments or agreements Borrower agrees to execute and deliver pursuant thereto; (iii) agrees to be bound thereby; and (iv) affirms that nothing contained therein shall modify in any respect whatsoever its guaranty of the Obligations and reaffirms that such guaranty is and shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Consent and Reaffirmation as of the date of such Third Amendment to Credit Agreement.
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ADCARE HEALTH SYSTEMS, INC. |
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By: |
/ s/ Martin Brew |
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Martin Brew , Chief Financial Officer |
Third Amendment to Credit Agreement (ADK Bonterra)
Exhibit 10.249
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the Agreement) is made and entered into effective as of December 28, 2012, by and between NEW LINCOLN LTD., an Ohio limited partnership (Operator), and CHANCELLOR SENIOR MANAGEMENT, LTD. , an Ohio limited liability company (hereinafter called Manager).
Operator and Manager agree that Manager shall manage that certain assisted living facility commonly known as Lincoln Lodge Retirement Residence and located at 4950 West Broad Street, Columbus Ohio, 43228 (the Facility), on the following terms and conditions:
SECTION ONE: MANAGEMENT DUTIES AND OBLIGATIONS
1.01 Management of Facility . During the term of this Agreement, Manager shall supervise the management of the Facility including, but not limited to, staffing, billing, collections, setting of rates and charges and general administration. In connection therewith, Manager (either directly or through supervision of employees of the Facility) shall:
(a) Hire on behalf of Operator and maintain (to the extent such personnel are reasonably available in the community in which the Facility is located) an adequate staff of nurses, technicians, office and other employees, including an administrator, at wage and salary rates for various job classifications approved from time to time by Operator; and release employees at Managers discretion. Operator and Manager agree that the Facility Administrator will be an employee of Manager (or Managers affiliate), and will be paid by Manager and not by Operator.
(b) Recommend and institute, subject to approval of Operator, appropriate employee benefits. Employee benefits may include pension and profit sharing plans, insurance benefits, incentive plans for key employees, and vacation policies.
(c) Order, supervise and conduct a program of regular maintenance and repair of the Facility, except that physical improvements costing more than $5,000.00 shall be subject to prior approval of Operator, which shall not be unreasonably withheld.
(d) Purchase supplies, drugs, solutions, equipment, furniture and furnishings on behalf of Operator, except that purchases of items of equipment which cost more than $5,000.00 shall be subject to prior approval of Operator, which shall not be unreasonably withheld.
(e) Administer and schedule all services of the Facility.
(f) Supervise and provide the operation of food service facilities.
(g) Institute standards and procedures for admitting patients, for charging patients for services, and for collection of the charges from the patients or third parties.
(h) Negotiate on behalf of Operator (and in conjunction with Operators counsel) with any labor union lawfully entitled to represent employees of the Operator who work
at the Facility, but any collective bargaining agreement or labor contract must be submitted to Operator for approval and execution.
(i) Make periodic evaluation of the performance of all departments of the facility, paying particular attention to those departments where there is an inconsistency between expenditures and budget.
(j) Advise and assist Operator in designing an adequate and appropriate public and personnel relations program.
(k) Provide a monthly narrative report addressing the operations of the community, including progress towards goals, challenges and updated plans.
(l) Develop a customized and aggressive marketing program to be implemented by the Facility that includes detailed lead tracking, sales person training, ongoing referral management and regular oversight by our team.
(m) Prepare a detailed annual budget based on current operations and proposed changes and improvements.
1.02 Bank Accounts and Working Capital . Manager shall deposit all funds received from the operation of the Facility in an Operating Account in a bank or banks presently being used by the Facility or such other banks as are designated from time to time by Manager. Operator shall provide sufficient working capital for the operation of the Facility and shall make deposits in the Operating Account of such working capital from time to time.
1.03 Access to Records and Facility . The books and records kept by Manager for the Facility shall be maintained at the Facility, although Manager shall have the right to maintain copies of such records at its home office for the purpose of providing services under this Agreement. Manager shall make available to Operator, its agents, accountants and attorneys, during normal business hours, all books and records pertaining to the Facility and Manager shall promptly respond to any questions of Operator with respect to such books and records and shall confer with Operator at all reasonable times, upon request, concerning operation of the Facility. In addition, Operator shall have access to the Facility at all reasonable hours for the purpose of examining or inspecting the Facility.
1.04 Licenses .
(a) Manager shall use its best efforts to manage the Facility in a manner necessary to maintain all necessary licenses, permits, consents, and approvals from all governmental agencies, which have jurisdiction over the operation of the Facility. Manager shall not assume the liability for any employee action, failure to act or negligence prohibiting the intent of this provision to be met.
(b) Neither Operator nor Manager shall knowingly take any action which may (1) cause any governmental authority having jurisdiction over the operation of the Facility to institute any proceeding for the rescission or revocation of any necessary license, permit, consent or approval, or (2) adversely affect Operators right to accept and obtain payments under
Medicare, Medicaid, or any other public or private medical payment program; however, this Agreement in no way guarantees or warrants that any or all of the above will not or could not occur.
(c) Manager shall, with the written approval of Operator, have the right to contest by appropriate legal proceedings, diligently conducted in good faith, in the name of the Operator, the validity or application of any law, ordinance, rule, ruling, regulation, order or requirement of any governmental agency having jurisdiction over the operation of similar facilities. Operator shall cooperate with Manager with regard to the contest, and Operator shall pay the reasonable attorneys fees incurred with regard to the contest. Counsel for any such contest shall be mutually selected by Manager and Operator. Manager shall have the right, without the written consent of the Operator, to process all third-party payment claims for the services of the Facility, including the full right to contest adjustments and denials by governmental agencies (or their fiscal intermediaries) as third-party payor.
1.05 Taxes . Any taxes or other governmental obligations properly imposed on the Facility are the obligations of the Operator, not of Manager, and shall be paid out of the operating Accounts of the Facility. With the Operators written consent, Manager may contest the validity or amount of any such tax or imposition on the Facility in the same manner as described in Section 1.04(c).
SECTION TWO: TERM AND TERMINATION
2.01 Term . The term of this Agreement shall commence on December 29, 2012 and shall terminate on the earlier of the closing of the acquisition of the Facility pursuant to that certain Purchase Agreement by and between AdCare Health Systems, Inc. and CHP Acquisition Company LLC, dated October 11, 2012, as amended, or notice by Operator of its intent to terminate the said Purchase Agreement.
SECTION THREE: MANAGEMENT FEE; RENT
3.01 Monthly Management Fee . During each month of this Agreement, Operator shall pay Manager a fee in an amount equal to five percent (5%) of the gross revenue of the Facility computed in accordance with GAAP (the Management Fee). The Management Fee for each month shall be payable within five (5) days following the delivery to Manager of the monthly financial report required pursuant to Section 1.01 for such month. Any Management Fee or portion thereof not paid within ten (10) days following the date it was due shall be considered late and accrue interest at the simple rate of eight percent (8%) per annum.
3.02 During each month of this Agreement Operator (i) shall provide back office accounting services for the Facility, (ii) shall pay all expenses related to Facility, including without limitation any outstanding debts on the Facility and (iii) shall receive from Manager a fee of $1,500.00 per month for such services.
SECTION FOUR: COVENANTS OF OPERATOR
4.01 Insurance . Operator shall provide and maintain throughout the Term the following insurance with responsible companies, naming Operator and Manager (as its interest
may appear) as insured thereunder in amounts approved by Manager and Operator.
(a) public liability insurance and insurance against theft of or damage to patients property in the Facility or its Premises;
(b) workers compensation, employers liability or similar insurance as may be required by law;
(c) insurance against loss or damage to the Facility from fire and such other risks and casualties now or hereafter embraced by Extended Coverage, as well as such other risks and casualties with respect to which insurance is customarily carried for similar facilities;
(d) business interruption insurance against loss of income due to the risks insured against under this Section 4.01;
(e) such other insurance or additional insurance as Manager and Operator together shall reasonably deem necessary for protection against claims, liabilities and losses arising from the operation or Operatorship of the Facility.
If Operator fails to affect or maintain any such insurance, Operator will indemnify Manager against damage, loss or liability resulting from all risks for which such insurance should have been maintained, and Manager may affect such insurance as agent of Operator, but shall not be liable for its failure to do so, by taking out policies in such insurance companies as may be selected by Manager, running for a period not to exceed one year.
4.02 Convalescent Services . Operator covenants and agrees that Facility is and will continue to be a fully licensed skilled nursing facility containing 84 licensed beds. Manager and Operator agree that the services rendered by the Facility will not, during the term hereof, be changed in any material respect, unless there shall first have been mutual agreement between Manager and Operator to such change.
SECTION FIVE: MISCELLANEOUS
5.01 Assignment by Manager . Manager shall not assign its rights or obligations under this Agreement without the consent of Operator.
5.02 Assignment by Operator . Operator shall not assign its rights or obligations under this Agreement without notice to Manager.
5.03 Binding on Successors and Assigns . The terms, covenants, conditions, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto, their heirs, administrators, executors, successors and assigns, subject to provisions of Section 5.01 and 5.02 above.
5.04 Negation of Partnership, Joint Venture and Agency . Nothing in this Agreement contained shall constitute or be construed to be or to create a partnership, joint venture or lease between Operator and Manager with respect to the Facility. The parties intend for the relationship of Manager to Operator under this Agreement to be that of an independent
contractor, not that of an agent. Operator shall not have the power to control the time, method or manner of Managers performance hereunder. Operator shall look solely to the results to be achieved by Manager, and nothing contained herein shall be construed to create a relationship of agency between Manager and Operator.
5.05 Notices . All notices hereunder by either party to the other shall be in writing. All notices, demands and requests shall be deemed given when mailed, postage prepaid, registered, or certified mail, return receipt requested:
(a) to Operator: New Lincoln Ltd.
1145 Hembree Road
Roswell, Georgia 30076
(b) to Manager: Chancellor Senior Management, Ltd.
4100 Regent Street, Suite F
Columbus, Ohio 43219
or to such other address or to such other person as may be designated by notice given from time to time during the term by one party to the other.
5.06 Entire Agreement . This Agreement contains the entire agreement between the parties hereto, and no representations or agreements, oral or otherwise, between the parties not embodied herein or attached hereto shall be of any force and effect. Any additions or amendments to this Agreement subsequent hereto shall be of no force and effect unless in writing and signed by the party to be bound.
5.07 Governing Law . This Agreement has been executed and delivered in the State of Ohio, and all the terms and provisions hereof and the rights and obligations of the parties hereto shall be construed and enforced in accordance with the laws thereof.
5.08 Captions and Headings . The captions and headings throughout this Agreement are for convenience and reference only, and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Agreement nor in any way affect this Agreement.
5.09 Disclaimer of Employment of Facility Employees . No person employed by Operator in operation of the Facility will be an employee of Manager with the exception of the Facility Administrator, and Manager will have no liability for payment of wages, payroll taxes and other expenses of employment except (i) with respect to the Facility Administrator, and (ii) Managers obligation to exercise reasonable care in its management of the Facility and to properly apply available Facility funds to the payment of such wages and payroll taxes.
5.10 Impossibility of Performance . Neither party to this Agreement shall be deemed to be in violation of this Agreement if it is prevented from performing any of its obligations hereunder for any reason beyond its control, including without limitation, acts of God or of the public enemy, flood or storm, strikes or statutory regulation or rule of any federal, state, or local
government, or any agency thereof.
5.11 Non-assumption of Liabilities . Manager shall not, by entering into and performing this Agreement, become liable for any of the existing or future obligations, liabilities or debts of Operator, and Manager shall not, by managing the Facility, assume or become liable for any of the obligations, debts and liabilities of Operator; and Manager will, in its role as manager of the Facility, have only the obligation to exercise reasonable care in its management and handling of the funds generated from the operation of the Facility.
5.12 Responsibility for Misconduct of Employees and Other Personnel . Manager will have no liability whatever for damages suffered on account of the dishonesty, willful misconduct or negligence of any employee of the Operator regarding the Facility in connection with damage or loss directly sustained by it by reason of the dishonesty, willful misconduct and gross negligence of Operators employees in the operation of the Facility during the term of this Agreement.
5.13 Rights Cumulative, No Waiver . No right or remedy herein conferred upon or reserved to either of the parties hereto is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, or now or hereafter legally existing upon the occurrence of any event of default hereunder. The failure of either party hereto to insist at any time upon the strict observance or performance of any of the provisions of this Agreement or to exercise any right or remedy as provided in this Agreement shall not impair any such right or remedy to be construed as a waiver or relinquishment thereof. Every right and remedy given by this Agreement to the parties hereto may be exercised from time to time and as often as may be deemed expedient by the parties hereto, as the case may be.
5.14 Invalid or Unenforceable Provisions . If any terms, covenants or conditions of this Agreement or the application thereof to any person or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law.
5.15 Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.
5.16 Authorization of Agreement . Manager and Operator represent and warrant, each to the other, that this Agreement has been duly authorized by its respective Board of Directors and, if required by law, shareholders; and that this Agreement constitutes a valid and enforceable obligation of Manager and Operator in accordance with its terms.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the day and year first above written.
OPERATOR : |
MANAGER : |
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NEW LINCOLN LTD., |
CHANCELLOR SENIOR MANAGEMENT, LTD., |
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an Ohio limited partnership |
an Ohio limited liability company |
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By: |
/s/ Boyd P. Gentry |
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By: CHANCELLOR HEALTH PARTNERS, INC., |
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Name: |
Boyd P. Gentry |
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an Ohio corporation, its Manager |
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Title: |
Authorized Representative |
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By: |
/s/ Roger C. Vincent |
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Roger C. Vincent |
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President |
SIGNATURE PAGE
Management Agreement Lincoln Lodge
Exhibit 10.250
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the Agreement) is made and entered into effective as of December 28, 2012, by and between COMMUNITYS HEARTH AT VANDALIA, an Ohio corporation (Operator), and CHANCELLOR SENIOR MANAGEMENT, LTD. , an Ohio limited liability company (hereinafter called Manager).
Operator and Manager agree that Manager shall manage that certain assisted living facility commonly known as Hearth & Home of Vandalia and located at SS Grant Hill Road, Vandalia, Ohio (the Facility), on the following terms and conditions:
SECTION ONE: MANAGEMENT DUTIES AND OBLIGATIONS
1.01 Management of Facility . During the term of this Agreement, Manager shall supervise the management of the Facility including, but not limited to, staffing, billing, collections, setting of rates and charges and general administration. In connection therewith, Manager (either directly or through supervision of employees of the Facility) shall:
(a) Hire on behalf of Operator and maintain (to the extent such personnel are reasonably available in the community in which the Facility is located) an adequate staff of nurses, technicians, office and other employees, including an administrator, at wage and salary rates for various job classifications approved from time to time by Operator; and release employees at Managers discretion. Operator and Manager agree that the Facility Administrator will be an employee of Manager (or Managers affiliate), and will be paid by Manager and not by Operator.
(b) Recommend and institute, subject to approval of Operator, appropriate employee benefits. Employee benefits may include pension and profit sharing plans, insurance benefits, incentive plans for key employees, and vacation policies.
(c) Order, supervise and conduct a program of regular maintenance and repair of the Facility, except that physical improvements costing more than $5,000.00 shall be subject to prior approval of Operator, which shall not be unreasonably withheld.
(d) Purchase supplies, drugs, solutions, equipment, furniture and furnishings on behalf of Operator, except that purchases of items of equipment which cost more than $5,000.00 shall be subject to prior approval of Operator, which shall not be unreasonably withheld.
(e) Administer and schedule all services of the Facility.
(f) Supervise and provide the operation of food service facilities.
(g) Institute standards and procedures for admitting patients, for charging patients for services, and for collection of the charges from the patients or third parties.
(h) Negotiate on behalf of Operator (and in conjunction with Operators counsel) with any labor union lawfully entitled to represent employees of the Operator who work
at the Facility, but any collective bargaining agreement or labor contract must be submitted to Operator for approval and execution.
(i) Make periodic evaluation of the performance of all departments of the facility, paying particular attention to those departments where there is an inconsistency between expenditures and budget.
(j) Advise and assist Operator in designing an adequate and appropriate public and personnel relations program.
(k) Provide a monthly narrative report addressing the operations of the community, including progress towards goals, challenges and updated plans.
(l) Develop a customized and aggressive marketing program to be implemented by the Facility that includes detailed lead tracking, sales person training, ongoing referral management and regular oversight by our team.
(m) Prepare a detailed annual budget based on current operations and proposed changes and improvements.
1.02 Bank Accounts and Working Capital . Manager shall deposit all funds received from the operation of the Facility in an Operating Account in a bank or banks presently being used by the Facility or such other banks as are designated from time to time by Manager. Operator shall provide sufficient working capital for the operation of the Facility and shall make deposits in the Operating Account of such working capital from time to time.
1.03 Access to Records and Facility . The books and records kept by Manager for the Facility shall be maintained at the Facility, although Manager shall have the right to maintain copies of such records at its home office for the purpose of providing services under this Agreement. Manager shall make available to Operator, its agents, accountants and attorneys, during normal business hours, all books and records pertaining to the Facility and Manager shall promptly respond to any questions of Operator with respect to such books and records and shall confer with Operator at all reasonable times, upon request, concerning operation of the Facility. In addition, Operator shall have access to the Facility at all reasonable hours for the purpose of examining or inspecting the Facility.
1.04 Licenses .
(a) Manager shall use its best efforts to manage the Facility in a manner necessary to maintain all necessary licenses, permits, consents, and approvals from all governmental agencies, which have jurisdiction over the operation of the Facility. Manager shall not assume the liability for any employee action, failure to act or negligence prohibiting the intent of this provision to be met.
(b) Neither Operator nor Manager shall knowingly take any action which may (1) cause any governmental authority having jurisdiction over the operation of the Facility to institute any proceeding for the rescission or revocation of any necessary license, permit, consent or approval, or (2) adversely affect Operators right to accept and obtain payments under
Medicare, Medicaid, or any other public or private medical payment program; however, this Agreement in no way guarantees or warrants that any or all of the above will not or could not occur.
(c) Manager shall, with the written approval of Operator, have the right to contest by appropriate legal proceedings, diligently conducted in good faith, in the name of the Operator, the validity or application of any law, ordinance, rule, ruling, regulation, order or requirement of any governmental agency having jurisdiction over the operation of similar facilities. Operator shall cooperate with Manager with regard to the contest, and Operator shall pay the reasonable attorneys fees incurred with regard to the contest. Counsel for any such contest shall be mutually selected by Manager and Operator. Manager shall have the right, without the written consent of the Operator, to process all third-party payment claims for the services of the Facility, including the full right to contest adjustments and denials by governmental agencies (or their fiscal intermediaries) as third-party payor.
1.05 Taxes . Any taxes or other governmental obligations properly imposed on the Facility are the obligations of the Operator, not of Manager, and shall be paid out of the operating Accounts of the Facility. With the Operators written consent, Manager may contest the validity or amount of any such tax or imposition on the Facility in the same manner as described in Section 1.04(c).
1.06 HUD Requirements . The Facility is subject to a loan from the U.S Department of Housing and Development (the HUD Loan) and as such is subject to a regulatory agreement (the Regulatory Agreement) with the Secretary of the United States Department of Housing and Urban Development (the Secretary). In performing its duties under this Agreement, the Manager will comply with all pertinent requirements of the Regulatory Agreement and the directives of the Secretary. To the extent that this Agreement conflicts with any of the provisions in the Regulatory Agreement, the Regulatory Agreement shall prevail and control. Further, any instruction from Operator to Manager which is in contravention of the Regulatory Agreement shall be null and void and without any affect. Further, written approval of the Secretary shall be required prior to the expenditure of any funds for repairs, replacement or improvements to the Facility in excess of $50,000.
SECTION TWO: TERM AND TERMINATION
2.01 Term . The term of this Agreement shall commence on December 28, 2012 and shall terminate upon the sooner of (1) the date of the closing of the sale of the Facility to H&H of Vandalia pursuant to that certain Purchase Agreement dated October 11, 2012(the Purchase Agreement) and (ii) September 1, 2014 unless sooner terminated by the Secretary upon the occurrence of any of the following: immediately, in the event of a default under the mortgage or note related to the HUD Loan, Regulatory Agreement or any subsidy agreement attributable to Manager, (b) upon 30 days written notice provided to Operator, for Managers failure to comply with the requirements of Form HUD-9839B or other good cause or (c) at such time as the Secretary shall take over the Facility as a mortgagee-in-possession. The Manager shall turn over all of the Facilitys cash, resident trust accounts, investments and other records directly related to the Facility to the Operator within 30 days of the date of termination of this Agreement.
SECTION THREE: MANAGEMENT FEE; RENT
3.01 Monthly Management Fee . During each month of this Agreement, Operator shall pay Manager a fee in an amount equal to five percent (5%) of the gross revenue of the Facility computed in accordance with GAAP (the Management Fee). The Management Fee for each month shall be payable within five (5) days following the delivery to Manager of the monthly financial report required pursuant to Section 1.01 for such month. Any Management Fee or portion thereof not paid within ten (10) days following the date it was due shall be considered late and accrue interest at the simple rate of eight percent (8%) per annum.
SECTION FOUR: COVENANTS OF OPERATOR
4.01 Insurance . Operator shall provide and maintain throughout the Term the following insurance with responsible companies, naming Operator and Manager (as its interest may appear) as insured thereunder in amounts approved by Manager and Operator.
(a) public liability insurance and insurance against theft of or damage to patients property in the Facility or its Premises;
(b) workers compensation, employers liability or similar insurance as may be required by law;
(c) insurance against loss or damage to the Facility from fire and such other risks and casualties now or hereafter embraced by Extended Coverage, as well as such other risks and casualties with respect to which insurance is customarily carried for similar facilities;
(d) business interruption insurance against loss of income due to the risks insured against under this Section 4.01;
(e) such other insurance or additional insurance as Manager and Operator together shall reasonably deem necessary for protection against claims, liabilities and losses arising from the operation or Operatorship of the Facility.
If Operator fails to affect or maintain any such insurance, Operator will indemnify Manager against damage, loss or liability resulting from all risks for which such insurance should have been maintained, and Manager may affect such insurance as agent of Operator, but shall not be liable for its failure to do so, by taking out policies in such insurance companies as may be selected by Manager, running for a period not to exceed one year.
4.02 Convalescent Services . Operator covenants and agrees that Facility is and will continue to be a fully licensed skilled nursing facility containing 84 licensed beds. Manager and Operator agree that the services rendered by the Facility will not, during the term hereof, be changed in any material respect, unless there shall first have been mutual agreement between Manager and Operator to such change.
SECTION FIVE: MISCELLANEOUS
5.01 Assignment by Manager . Manager shall not assign its rights or obligations under
this Agreement without the consent of Operator.
5.02 Assignment by Operator . Operator shall not assign its rights or obligations under this Agreement without notice to Manager. This Agreement shall automatically be assigned (without further consent of the parties) to H&H of Vandalia LLC upon closing of the sale of the Facility in accordance with the Purchase Agreement.
5.03 Binding on Successors and Assigns . The terms, covenants, conditions, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto, their heirs, administrators, executors, successors and assigns, subject to provisions of Section 5.01 and 5.02 above.
5.04 Negation of Partnership, Joint Venture and Agency . Nothing in this Agreement contained shall constitute or be construed to be or to create a partnership, joint venture or lease between Operator and Manager with respect to the Facility. The parties intend for the relationship of Manager to Operator under this Agreement to be that of an independent contractor, not that of an agent. Operator shall not have the power to control the time, method or manner of Managers performance hereunder. Operator shall look solely to the results to be achieved by Manager, and nothing contained herein shall be construed to create a relationship of agency between Manager and Operator.
5.05 Notices . All notices hereunder by either party to the other shall be in writing. All notices, demands and requests shall be deemed given when mailed, postage prepaid, registered, or certified mail, return receipt requested:
(a) to Operator: Communitys Hearth at Vandalia
1145 Hembree Road
Roswell, Georgia 30076
(b) to Manager: Chancellor Senior Management, Ltd.
4100 Regent Street, Suite F
Columbus, Ohio 43219
or to such other address or to such other person as may be designated by notice given from time to time during the term by one party to the other.
5.06 Entire Agreement . This Agreement contains the entire agreement between the parties hereto, and no representations or agreements, oral or otherwise, between the parties not embodied herein or attached hereto shall be of any force and effect. Any additions or amendments to this Agreement subsequent hereto shall be of no force and effect unless in writing and signed by the party to be bound.
5.07 Governing Law . This Agreement has been executed and delivered in the State of Ohio, and all the terms and provisions hereof and the rights and obligations of the parties hereto shall be construed and enforced in accordance with the laws thereof.
5.08 Captions and Headings . The captions and headings throughout this Agreement
are for convenience and reference only, and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Agreement nor in any way affect this Agreement.
5.09 Disclaimer of Employment of Facility Employees . No person employed by Operator in operation of the Facility will be an employee of Manager with the exception of the Facility Administrator, and Manager will have no liability for payment of wages, payroll taxes and other expenses of employment except (i) with respect to the Facility Administrator, and (ii) Managers obligation to exercise reasonable care in its management of the Facility and to properly apply available Facility funds to the payment of such wages and payroll taxes.
5.10 Impossibility of Performance . Neither party to this Agreement shall be deemed to be in violation of this Agreement if it is prevented from performing any of its obligations hereunder for any reason beyond its control, including without limitation, acts of God or of the public enemy, flood or storm, strikes or statutory regulation or rule of any federal, state, or local government, or any agency thereof.
5.11 Non-assumption of Liabilities . Manager shall not, by entering into and performing this Agreement, become liable for any of the existing or future obligations, liabilities or debts of Operator, and Manager shall not, by managing the Facility, assume or become liable for any of the obligations, debts and liabilities of Operator; and Manager will, in its role as manager of the Facility, have only the obligation to exercise reasonable care in its management and handling of the funds generated from the operation of the Facility.
5.12 Responsibility for Misconduct of Employees and Other Personnel . Manager will have no liability whatever for damages suffered on account of the dishonesty, willful misconduct or negligence of any employee of the Operator regarding the Facility in connection with damage or loss directly sustained by it by reason of the dishonesty, willful misconduct and gross negligence of Operators employees in the operation of the Facility during the term of this Agreement.
5.13 Rights Cumulative, No Waiver . No right or remedy herein conferred upon or reserved to either of the parties hereto is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, or now or hereafter legally existing upon the occurrence of any event of default hereunder. The failure of either party hereto to insist at any time upon the strict observance or performance of any of the provisions of this Agreement or to exercise any right or remedy as provided in this Agreement shall not impair any such right or remedy to be construed as a waiver or relinquishment thereof. Every right and remedy given by this Agreement to the parties hereto may be exercised from time to time and as often as may be deemed expedient by the parties hereto, as the case may be.
5.14 Invalid or Unenforceable Provisions . If any terms, covenants or conditions of this Agreement or the application thereof to any person or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and shall be enforced to the fullest extent permitted by
law.
5.15 Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.
5.16 Authorization of Agreement . Manager and Operator represent and warrant, each to the other, that this Agreement has been duly authorized by its respective Board of Directors and, if required by law, shareholders; and that this Agreement constitutes a valid and enforceable obligation of Manager and Operator in accordance with its terms.
5.17 Managers Gross Negligence or Willful Conduct . Notwithstanding anything to the foregoing, Manager shall not be exempt from liability for any damages or injuries from liability occurring as a result of Managers gross negligence or willful wrongdoing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, the day and year first above written.
OPERATOR: |
MANAGER: |
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COMMUNITYS HEARTH AT VANDALIA , |
CHANCELLOR SENIOR MANAGEMENT, LTD. , |
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an Ohio corporation |
an Ohio limited liability company |
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By: |
/s/ Boyd P. Gentry |
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By: |
/s/ Roger C. Vincent |
Name: |
Boyd P. Gentry |
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Roger C. Vincent |
Title: |
Authorized Representative |
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President |
Exhibit 10.251
After recording return to:
Richard G. Gaalema, Esq.
Kitchens Kelley Gaynes, P.C.
11 Piedmont Center, Ste. 900
3495 Piedmont Road
Atlanta, GA 30305
8943.386
STATE OF GEORGIA |
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MORTGAGE OF REAL ESTATE |
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COUNTY OF FULTON |
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SECURITY AGREEMENT |
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AND FINANCING STATEMENT |
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THIS MORTGAGE OF REAL ESTATE, SECURITY AGREEMENT AND FINANCING STATEMENT (the Mortgage) is made and entered into as of the 31 st day of December, 2012, by Sumter Valley Property Holdings, LLC , a Georgia limited liability company, whose address is 1145 Hembree Road, Roswell, Georgia 30076 (the Mortgagor), in favor of Metro City Bank, having as an address 5441 Buford Highway, Suite 109, Doraville, Georgia 30340, its successors and assigns (the Mortgagee).
WITNESSETH:
WHEREAS, pursuant to the terms and conditions of a Loan Agreement of even date herewith (the Loan Agreement) by and among Mortgagor, Sumter N&R, LLC, Georgetown HC&R Property Holdings, LLC, and Georgetown HC&R Nursing, LLC, each a Georgia limited liability company (Mortgagor, together with the others collectively Borrowers), and Mortgagee, Mortgagee has agreed to make a loan to the Borrowers in the original principal amount of SIX MLLION NINE HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($6,950,000.00) (the Loan), as evidenced by that certain Promissory Note of even date herewith (together with any and all extensions, renewals, or modifications thereof, the Note); and
WHEREAS, a condition precedent to Mortgagees extension of the Loan to Mortgagor is the granting by Mortgagor to the Mortgagee of this Mortgage;
SEE ATTACHED EXHIBIT A FOR LEGAL DESCRIPTION
NOW, THEREFORE, the Mortgagor in consideration of the aforesaid debt, and also in consideration of the further sum of Ten and No/100 ($10.00) Dollars, to it in hand paid by the Mortgagee, receipt whereof is hereby acknowledged, and for the purpose of securing the Obligations (as hereinafter defined), has granted, bargained, sold, and released, and by these
presents, does grant, bargain, sell and release unto, the Mortgagee, its successors and assigns, the land described on Exhibit A attached hereto and incorporated by reference (the Land) including all improvements (the Improvements) now existing or hereafter placed on the Land; (a) the obligations of Borrowers to Mortgagee under the Note; (b) any and all advances or expenditures made by Mortgagee pursuant to the terms of this Mortgage; (c) attorneys fees, court costs, and other amounts which may be due under the Note or this Mortgage; (d) any and all other indebtedness of the Mortgagor to Mortgagee, now existing or hereafter arising, of whatever class or nature, whether or not now contemplated by the parties, including future advances pursuant to S.C. Code Ann. § 29-3-50 (1976); and (e) any and all extensions and renewals of any of the foregoing (all of (a) through (e) being hereinafter referred to as the Obligations),
TOGETHER , with all rights, privileges, interests, easements, tenements, hereditaments and appurtenances thereto belonging, including without limitation all right, title and interest of Mortgagor in and to water, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located therein, and the rents, issues and profits thereof, and any and all improvements and fixtures now or subsequently attached to or used in connection therewith (collectively, together with the Land, the Improvements, and the Additional Property (as hereafter defined), the Mortgaged Property).
TO HAVE AND TO HOLD , all and singular the Mortgaged Property, unto the Mortgagee, its successors and assigns forever.
AND the Mortgagor covenants with the Mortgagee that the Mortgagor is indefeasibly seized of fee simple title to said Land and has good and lawful authority to mortgage said Land; that the Mortgagor hereby fully warrants the title to said Land and will defend the same against the lawful claims of all persons whomsoever; and that said Land is free and clear of all encumbrances except those exceptions set forth on Exhibit B attached hereto and incorporated by reference.
PROVIDED, ALWAYS , that if the Mortgagor shall pay unto the Mortgagee the said Obligations (including any future advances); AND if the Mortgagor shall duly, promptly and fully perform, discharge, execute, effect, complete and comply with and abide by each and every of the stipulations, agreements, conditions and covenants therein and in this Mortgage, then this Mortgage and all assignments contained herein shall cease and be null and void; otherwise to remain in full force and effect.
THIS MORTGAGE secures (a) the obligations of Borrowers to Mortgagee under the Note; (b) any and all advances or expenditures made by Mortgagee pursuant to the terms of this Mortgage; (c) attorneys fees, court costs, and other amounts which may be due under the Note or this Mortgage; (d) any and all other indebtedness of Mortgagor to Mortgagee, now existing or hereafter arising, of whatever class or nature, whether or not now contemplated by the parties, including future advances pursuant to S.C. Code Ann. § 29-3-50 (as set forth more fully below); and (e) any and all extensions, renewals, and modifications of any of the foregoing (all of (a) through (e) being hereinafter referred to the as Obligations). Extensions, renewals, and modifications of the debt secured hereby, and future advances, may bear interest at a rate or rates higher than the rate borne by the Note.
THIS MORTGAGE shall secure not only existing indebtedness but all future advances (in accordance with S.C. Code Ann. § 29-3-50, as amended), readvances, and additional indebtedness hereafter arising or incurred of Mortgagor to Mortgagee, and any notes evidencing the same, whether such advances or indebtedness is obligatory or to be made at the option of the Mortgagee, or otherwise, to the same extent as if such future advance or indebtedness was made on the date of the execution of this Mortgage, but the indebtedness secured by this Mortgage shall not exceed at any one time the maximum principal amount of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($6,950,000.00) , plus interest thereon, reasonable attorneys fees and court costs, and plus advancements for taxes, insurance premiums, and repairs made by Mortgagee.
ALL indebtedness incurred after the date hereof by Mortgagor in favor of Mortgagee shall be deemed to be a future advance and entitled to the protection of this provision. Such future indebtedness may bear interest at a rate or rates greater than the rate set forth in the Note. Interest on the Note will be deferred, accrued, or capitalized, but Mortgagee shall not be required to defer, accrue, or capitalize any interest except as provided in the Note.
AS FURTHER SECURITY for the Obligations, Mortgagor hereby grants to Mortgagee, its successors and assigns, a continuing security interest in the following (the Additional Property):
(a) All machinery, apparatus, equipment, fittings, fixtures, and other personal property (all as defined in the Uniform Commercial Code) actually or constructively attached to the Land or the Improvements and now owned or hereafter acquired by the Mortgagor, including, but without limiting the generality of the foregoing, all heating, air conditioning, freezing, lighting, pipes; pumps; tanks; motors; conduits; plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating, ventilating and communications apparatus, boilers, furnaces, oil burners or units thereof, ducts and compressors, together with all building materials and equipment now or hereafter delivered to the Land or the Improvements and intended to be installed therein;
(b) All of the water, sanitary and storm sewer systems now or hereafter owned by the Mortgagor which are now or hereafter located by, over, and/or upon the Land or the Improvements or any part and parcel thereof, and which water system includes all water mains, service laterals, hydrants, valves and appurtenances, and which sewer system includes all sanitary sewer lines, including mains, laterals, manholes and appurtenances;
(c) All exterior lights, light poles, and related fixtures and equipment, including without limitation all parking lot lighting;
(d) All paving for streets, roads, walkways or entrance ways now or hereafter owned by the Mortgagor and which are now or hereafter located on the Land or the Improvements or any part or parcel thereof;
(e) Any and all awards or payments, including interest thereon, and the right to receive the
same, as a result of (a) the exercise of the right of eminent domain, (b) the alteration of the grade of any street, or (c) any other injury to, taking of, or decrease in the value of the Land or the Improvements or personal property;
(f) All of the Mortgagors interest in all utility security deposits or bonds on the Land or the Improvements or any part or parcel thereof;
(g) All utility service bonds and/or cash deposits, site improvement bonds and/or cash deposits, building permits, sewer connection and/or tap-in permits, water connection and/or tap-in permits, curb-cut permits, utility service agreements, site work agreements with any governmental authority or public utility, and all other permits, approvals and contracts of any kind relating to the Land or Improvements;
(h) All substitutions and replacements of, and accessions and additions to, any of the foregoing; and
(i) All proceeds of any of the foregoing, including, without limitation, proceeds of any voluntary or involuntary disposition or claim respecting any part thereof (pursuant to judgment, condemnation award or otherwise) and all goods, documents, general intangibles, chattel paper and accounts, wherever located, acquired with cash proceeds of any of the foregoing or proceeds thereof.
AND the Mortgagor does hereby expressly covenant and agree as follows:
1. Assignment of Rents and Profits. As further security for the payment of the Obligations and for the faithful performance of all the covenants, agreements, terms and provisions of this Mortgage, Mortgagor hereby sells, mortgages, transfers and assigns unto Mortgagee and grants Mortgagee a security interest in all the right, title and interest of the Mortgagor in and to the rents, issues, profits, revenues, royalties, rights and benefits from the above described property, and to that end Mortgagor hereby assigns and sets over unto the said Mortgagee all leases and licenses of said premises now made, executed or delivered, whether written or verbal, or to be hereafter made, be the same written or verbal, and Mortgagor does hereby authorize and empower the Mortgagee to collect said rents, issues, profits, revenues, royalties, rights and benefits, as they shall become due, and does hereby direct each and all of the tenants of the aforesaid premises to pay such rents, as they may now be due or shall hereafter become due to the said Mortgagee, upon demand for payment thereof by said Mortgagee; it being understood and agreed, however, that no such demand shall be made unless and until there has occurred an Event of Default hereunder; and until such demand is made, Mortgagor is authorized to collect or continue collecting said rents, issues, profits, revenues, royalties, rights and benefits; but that such privilege to collect or continue collecting, as aforesaid, by the Mortgagor shall not operate to permit the collection of any rents more than thirty (30) days in advance of the date same are due under the terms and provisions of said lease or leases.
2. After Acquired Property. The Lien of this Mortgage shall automatically attach, without further act, to all after acquired property located in or on, or attached to, or used or
intended to be used in connection with or with the operation of the Mortgaged Property or any part thereof, and shall likewise automatically attach to any and all subsequent or additional interests Mortgagor may hereafter acquire in the Mortgaged Property.
3. Payment of Obligations. Mortgagor covenants and agrees to pay the Obligations in accordance with their terms promptly as the principal and interest thereon shall become due.
4. Maintenance of Property. Mortgagor shall maintain the Mortgaged Property in good condition and repair and shall neither permit nor allow waste thereof. Mortgagor shall promptly repair or restore any portion of the Mortgaged Property which is damaged or destroyed by any cause whatsoever and shall promptly pay when due all costs and expenses of such repair or restoration. Mortgagor shall not remove, demolish, or materially alter any improvement or fixture which is now or hereafter part of the Mortgaged Property and shall cut no timber on the on the Mortgaged Property, except in the ordinary course of business, without the express written consent of Mortgagee. Mortgagee shall be entitled to specific performance of the provisions of this paragraph.
5. Insurance. Mortgagor shall keep all buildings, improvements, fixtures, and tangible personal property which are now or hereafter part of the Mortgaged Property insured by such company or companies as Mortgagee may reasonably approve for the full insurable replacement value thereof against all risks including vandalism, malicious mischief, and, if coverage is available, earthquake. Mortgagor shall pay not less than one years premium in advance. If any portion of the Mortgaged Property is located in a federally designated flood plain, Mortgagor shall also obtain a flood insurance policy in-the maximum amount available under the National Flood Insurance Act of 1968, but not to exceed the replacement value of all buildings and improvements located on the Mortgaged Property that are located in a federally designated flood plain. Such insurance shall be payable to Mortgagee as the interest of Mortgagee may appear pursuant to the New York standard form of mortgagee clause or such other form of mortgagee clause as may be required by the Mortgagee and shall not be cancelable by either the insurer or the insured without at least thirty (30) days prior written notice to the Mortgagee. Mortgagor hereby assigns to Mortgagee the right to collect and receive any indemnity payment otherwise owed Mortgagor upon any policy of insurance insuring any portion of the Mortgaged Property, regardless of whether Mortgagee is named in such policy as a person entitled to collect upon the same. Any indemnity payment received by Mortgagee from any such policy of insurance may, at the option of Mortgagee, (i) be applied by Mortgagee to payment of any sum secured by this Mortgage in such order as Mortgagee may determine or (ii) be applied in a manner determined by Mortgagee to the replacement, repair or restoration of the portion of the Mortgaged Property damaged or destroyed or (iii) be released to Mortgagor upon such conditions as Mortgagee may reasonably determine or (iv) be used for any combination of the foregoing purposes. No portion of any indemnity payment which is applied to replacement, repair or restoration of any portion of the Mortgaged Property which is released to Mortgagor shall be deemed a payment against any sums secured by this Mortgage. Mortgagor shall keep the Mortgaged Property continuously insured as herein required and shall deliver to Mortgagee a copy of each policy of insurance required hereby together with a current certificate of insurance. Mortgagor shall pay each premium coming due on any such policy of insurance and will deliver to Mortgagee proof of such
payment at least ten (10) days prior to the date such premium would become overdue or delinquent. Upon the expiration or termination of any such policy of insurance, Mortgagor shall furnish to Mortgagee at least ten (10) days prior to such expiration or termination a copy of a renewal or replacement policy of insurance meeting the requirements hereof together with a current certificate of insurance. If Mortgagor fails to insure the Mortgaged Property as herein required, Mortgagee may so insure the Mortgaged Property in the name of Mortgagor or in the name of Mortgagee or both, and the premiums for any such insurance obtained by Mortgagee shall be the obligation of Mortgagor as provided in Section 7 below. Upon foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any policy of insurance upon the Mortgaged Property which is in the custody of Mortgagee, including the right to unearned premiums, shall vest in the purchaser of the Mortgaged Property at foreclosure, and Mortgagor hereby appoints Mortgagee as the attorney in fact of Mortgagor to assign all right, title and interest of Mortgagor in and to any such policy of insurance to such purchaser as provided in herein. This appointment is coupled with an interest and shall be irrevocable.
6. Taxes . Mortgagor shall pay all taxes, assessments and other charges which constitute or are secured by a lien upon the Mortgaged Property which is superior to the lien of this Mortgage and shall deliver to Mortgagee proof of payment of the same not less than ten (10) days prior to the date the same becomes delinquent; provided, however, that Mortgagor shall be entitled by appropriate proceedings to contest the amount of validity of such tax, assessment or charge so long as the collection of the same by foreclosure of the lien upon the Mortgaged Property is stayed during the pendency of such proceedings and Mortgagor deposits with the authority to which such tax, assessment or charge is payable or with the Mortgagee appropriate security for payment of the same, together with any applicable interest and penalties, should the same be determined due and owing. Mortgagor shall not claim, demand or be entitled to receive any credit or credits on the principal or interest payable under the terms of the Note or on any other Obligations secured hereby, for so much of the taxes, assessments or similar impositions assessed against the Mortgaged Property or any part thereof as are applicable to the indebtedness secured hereby or to Mortgagees interest in the Mortgaged Property. No deduction shall be claimed from the taxable value of the Mortgaged Property or any part thereof by reason of the Note, this Mortgage or any other instrument securing the Note.
7. Advances by Mortgagee: Reimbursement. If Mortgagor fails to make payment for restoration or repair of the Mortgaged Property, for insurance premiums or for taxes, assessments or other charges as required in this Mortgage, Mortgagee may, but shall not be obligated to, pay for the same, and any such payment by Mortgagee will be secured by this Mortgage and have the same rank and priority as the principal debt secured hereby and bear interest from the date of payment at the rate provided in the Note. Payments made for taxes by Mortgagee shall be a first lien on the Mortgaged Property to the extent of the taxes so paid with interest from the date of payment, regardless of rank or priority of this Mortgage. Mortgagor shall pay to Mortgagee in cash on demand an amount equal to any payment made by Mortgagee pursuant to this paragraph plus interest thereon as herein provided.
8. Extending Time for Payment. Mortgagee, without notice, and as often as it wishes to, may agree with any party obligated on the Obligations (or any of them), or having an
interest in the Mortgaged Property, to renew or extend the time for payment of any part or all of the indebtedness secured hereby, without in any way affecting either the lien hereof or the liability of any other party.
9. Events of Default. The term Event of Default, wherever used in this Mortgage, shall mean any one or more of the following events:
(a) The occurrence of a default under and as defined in the Note.
(b) The occurrence of an Event of Default under and as defined in the Loan Agreement, the giving of any required notice, and the continuation of such default unremedied beyond any applicable grace period set forth in such construction loan agreement.
(c) Failure by the Mortgagor to pay within the scheduled payment date any installment of principal and/or interest on the Obligations or any of them, including but not limited to the Note, or failure to pay taxes or insurance when due.
(d) The sale, conveyance, transfer, mortgage, lease or encumbrance of all or any portion of the Mortgaged Property in violation of the terms of this Mortgage.
(e) Failure by the Mortgagor to duly observe any other covenant, condition or agreement of the Obligations, or of this Mortgage, and the continuation of such failure for a period of thirty (30) days after written notice thereof is provided by Mortgagee to Mortgagor.
(f) Default in the terms or conditions of any other mortgage which is a lien upon the Mortgaged Property, and the continuation of such default beyond any applicable grace period.
(g) The release of any Hazardous Substance (as hereinafter defined) on the Mortgaged Property in violation of an Environmental Law (as hereinafter defined).
(h) The damage or destruction of a material portion of the Improvements, which damage or destruction is not promptly repaired or is not fully covered by insurance.
(i) Mortgagor suffers or permits any lien, encumbrance, or security interest to arise or attach to the Mortgaged Property that is not promptly removed or satisfied, or any judgment is entered against Borrower that is not satisfied or appealed and stayed within thirty (30) days.
(j) Any lien for labor, material, taxes or otherwise shall be filed against the Mortgaged Property or any part thereof, which lien or liens shall not be discharged or released within thirty (30) days after the filing of such lien, whether by payment in satisfaction of such lien or securing such lien by surety bond.
10. Consequences of Default. If an Event of Default shall occur:
(a) All of the indebtedness secured hereby shall become and be immediately due and payable at the option of the Mortgagee, without notice or demand, which are hereby expressly waived, and the Mortgagee may proceed to foreclose this Mortgage and sell the Mortgaged Property or otherwise pursue any right or remedy herein or by law provided. At the foreclosure, Mortgagee shall be entitled to bid and purchase the Mortgaged Property and shall be entitled to apply the debt secured hereby, or any portion thereof, in payment for the Mortgaged Property.
(b) Irrespective of whether Mortgagee accelerates the maturity of all indebtedness secured hereby, or institutes foreclosure proceedings, Mortgagee shall be entitled to the appointment of a receiver to enter upon and take and maintain full control of the Mortgaged Property in order to perform all acts necessary and appropriate for the operation and maintenance thereof including, but not limited to, the execution, cancellation or modification of leases, the making of repairs to the Mortgaged Property and the execution or termination of contracts providing for the management or maintenance of the Mortgaged Property, all on such terms as are deemed appropriate to protect the security of this Mortgage. The receiver shall be entitled to a reasonable fee for so managing the Mortgaged Property. All rents collected pursuant to this paragraph shall be applied first to the costs of taking control and managing the Mortgaged Property and collecting the rents, including but not limited to reasonable attorneys fees, receivers fees, premiums on receivers bonds, costs of repair to the Mortgaged Property, premiums on insurance policies, taxes, assessments and other charges on the Mortgaged Property, and the costs of discharging any liability or obligation of Mortgagor as lessor or Landlord of the Mortgaged Property and then to the sums secured by this Mortgage. Mortgagee and the receiver shall have access to the books and records used in the operation and maintenance of the Mortgaged Property and shall be liable to account only for those rents actually received. Mortgagee shall not be liable to Mortgagor, anyone claiming under or through Mortgagor, or anyone having an interest in the Mortgaged Property by reason of anything done or left undone by Mortgagee under this paragraph. If the rents of the Mortgaged Property are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the rents, Mortgagee may at its sole option advance funds to meet the costs. Any funds expended by Mortgagee for such purposes shall become indebtedness of Mortgagor to Mortgagee secured by this Mortgage. Such funds shall be payable on demand by Mortgagee and shall bear interest at the rate provided in the Note. The entering upon and taking and maintaining of control of the Mortgaged Property by the Mortgagee or the receiver and the application of the rents as provided herein shall not cure or waive any default hereunder or invalidate any other right or remedy of Mortgagee hereunder.
(c) The Mortgagee shall, in addition to all other rights and remedies, have the rights
and remedies of a secured party under the Uniform Commercial Code, including without limitation, the right to take possession of the Additional Property, and for that purpose the Mortgagee may: (i) so far as the Mortgagor can give authority therefor, enter upon any premises on which the Additional Property may be situated and remove the same therefrom; (ii) take possession or control of the Additional Property and the premises on which it is located; (iii) require the Mortgagor to assemble all or any part of the Additional Property or records concerning the Additional Property and make such available to the Mortgagee at a place to be designated by the Mortgagee which is reasonably convenient to both parties; (iv) sell or otherwise dispose of all or any part of the inventory on any premises where then located without being liable to the Mortgagor on account of any loss, damage or depreciation that may occur as a result thereof so long as the Mortgagee shall act in a commercially reasonable manner; (v) use all trademarks, service marks, trade names, trade styles, logos, goodwill, trade secrets, franchises, licenses and patents which the Mortgagor now has or may hereafter acquire, including the right to use or license the use of said marks, names, styles, logos and goodwill in connection with the sale of goods or the rendering of services, in the conduct of service, advertising, promotion and the like; and (vi) lease or license third persons or entities for such purpose. Unless the Additional Property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Mortgagee shall give to the Mortgagor at least thirty (30) days prior written notice (which Mortgagor agree is reasonable notification within the meaning of Section 9-504 of the Uniform Commercial Code of the State of South Carolina) of the time and place of any public sale or any other intended disposition of the Additional Property is to be made.
11. Marshaling of Assets . The Mortgagee shall not be required to marshal any present or future security for (including but not limited to this Mortgage and the Mortgaged Property), or guaranties of, the Obligations or any of them, or to resort to such security or guaranties in any particular order; and all of the rights hereunder and in respect of such security and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the extent that it lawfully may, the Mortgagor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Mortgagees rights under this Mortgage or under any other instrument evidencing any of the Obligations or under which any of the Obligations is secured or guaranteed, and to the extent that it lawfully may the Mortgagor hereby irrevocably waives the benefits of all such laws.
12. Costs and Expenses. All reasonable costs and expenses (including attorneys fees) incurred or paid by the Mortgagee in connection with enforcement of the Obligations or the exercise by the Mortgagee of any of its rights or remedies hereunder, or in retaking, holding, preparing for sale and selling or otherwise realizing upon any of the Mortgaged Property, including, without limitation, the reasonable attorneys fees and expenses of any attorney to whom this matter is referred (whether or not litigation is commenced), or for representation in proceedings under any bankruptcy or insolvency law, or in case the Mortgagee has become a party either as plaintiff or as defendant in any suit or legal proceeding in relation to the Mortgaged
Property or the lien created herein, shall be repaid by the Mortgagor to the Mortgagee upon demand, with interest at the rate provided in the Note. In the event said expenses are not paid by the Mortgagor to the Mortgagee, they shall become part of the Obligations and shall be secured hereby.
13. Interest . It is agreed that nothing herein contained nor any transaction related thereto shall be construed or so operate as to require the Mortgagor to pay interest at a rate greater than is now lawful in such case to contract for, or to make any payment or to do any act contrary to laws, that if any clauses or provisions herein contained operate or would prospectively operate to invalidate this Mortgage or the Note in whole or in part, then such clauses and provisions only shall be held for naught, as though not herein contained, and the remainder of this Mortgage shall remain operative and in full force and effect.
14. Eminent Domain . The Mortgagee shall be entitled to receive and recover the entire award made in any eminent domain proceedings to the extent that the same does not exceed the amount necessary to pay in full all sums secured by the lien of this Mortgage and provided that Mortgagee uses such award to reduce and pay down the outstanding balance of the Loan.
15. Transfer of Property. Mortgagor shall not sell, convey, transfer, mortgage, lease or further encumber, nor suffer or permit the sale, conveyance, transfer, mortgage, lease or encumbrance, whether voluntarily or by operation of law, of any interest in or any part of the Mortgaged Property, the rents and profits therefrom, or the Additional Property, without the prior written consent of Mortgagee. If any person or entity should obtain any interest in all or any part of the Mortgaged Property pursuant to the execution or enforcement of any lien, security interest or other right, whether superior, equal or subordinate to this Mortgage or the lien hereof, such event shall unless otherwise provided herein be deemed to be a transfer by Mortgagor. Mortgagor shall not, without the prior written consent of the Mortgagee, further assign the rents from the Mortgaged Property nor enter into any agreement or do any act to amend, modify, extend, terminate or cancel, accept the surrender, subordinate, accelerate the payment of rent, or change the terms of any renewal option of any lease now or hereafter covering such property or any part thereof which would in each instance or in the aggregate materially affect the collateral or the operation of the Mortgagor or the Mortgaged Property or the ability of the Mortgagor to repay the Note.
16. Further Assurances. The Mortgagor shall, at its sole expense, do, make, execute and deliver all such additional and further acts, things, deeds, assurances and instruments, in each case in form and substance, satisfactory to the Mortgagee, relating to the creation, validity, or perfection of the mortgage lien and security interests provided for in this Agreement under the Uniform Commercial Code or other laws of the State of South Carolina or of any other state or states in which Mortgagor is doing business or in which any of the Mortgaged Property is located as the Mortgagee may from time to time reasonably request, and shall take all such other action as the Mortgagee may reasonably require more completely to vest in any and assure to the Mortgagee its rights hereunder or in any of the Mortgaged Property, including without limitation execution and delivery of financing statements which the Mortgagee deems appropriate to perfect and
continue the security interest hereby granted; and the Mortgagor hereby irrevocably authorizes the Mortgagee, or its designee, at the Mortgagors sole expense, to execute and file such financing statements, with or without the Mortgagors signature, as the Mortgagee may deem appropriate. In the event that any recording or refiling (or the filing of any statement of continuation of any mortgage lien or financing statement) or any repledge, or any other action, is required at any time to protect and preserve such security interests, the Mortgagor shall, at its sole expense, cause the same to be done or taken at such time and in such manner as may be necessary and as may be reasonably requested by the Mortgagee.
17. Deficiency Judgment. Mortgagor understands that upon default hereunder, among other remedies available to Mortgagee, the Mortgagee may foreclose upon the Mortgaged Property and ask for a deficiency judgment pursuant to Section 293-660, Code of Laws of South Carolina 1976.
18. Inspections: Easement. Mortgagor hereby agrees that Mortgagee shall have the right, at any time during the term of this Mortgage, to conduct an environmental investigation of the Mortgaged Property, either itself or by or through designated agents and may exercise such rights from time to time, and in furtherance of such rights, Mortgagor hereby grants to Mortgagee, its successors and assigns, a non-exclusive limited easement over and across the Mortgaged Property, and its subsurface, for access to the Mortgaged Property and for the purpose of conducting an environmental investigation of such Mortgaged Property, provided that any such investigation shall be conducted in such a manner as to not disrupt the Mortgagors operations on the Mortgaged Property. The satisfaction of, or the release of a portion of the Mortgaged Property, shall evidence a termination of the easement granted herein in full, or as to the Mortgaged Property released, as the case may be. This easement is irrevocable so long as this Mortgage is outstanding.
19. Environmental Covenants. The Mortgagor hereby covenants and agrees with Mortgagee as follows:
(a) Mortgagor will not use, generate, manufacture, produce, store, release, discharge, or dispose of on, under or about the Mortgaged Property or transport to or from the Mortgaged Property any Hazardous Substance (as defined herein) or allow any other person or entity to do so, and shall keep and maintain the Mortgaged Property in compliance with, and shall not cause or permit the Mortgaged Property to be in violation of any Environmental Law (as defined herein).
(b) Mortgagor shall give prompt written notice to Mortgagee of: i) any proceeding or inquiry by any governmental authority with respect to the presence of any Hazardous Substance on the Mortgaged Property; ii) all claims made or threatened by any third party against Mortgagor or the Mortgaged Property relating to any loss or injury resulting from any Hazardous Substance; and iii) Mortgagors discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Mortgaged Property that could cause the Mortgaged Property or any part thereof to be subject to any restriction on the ownership, occupancy, transferability, or use of the Mortgaged Property under any Environmental Law.
(c) Mortgagor shall protect, indemnify, and hold harmless Mortgagee, its directors, officers employees, agents, successors, and assigns from and against any and all loss, damage, cost, expense, or liability (including attorneys fees and costs) directly or indirectly arising out of or attributable to the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal, or presence of a Hazardous Substance on, under, or about the Mortgaged Property including without limitation (i) all foreseeable consequential damages; and (ii) the costs of any required or necessary repair, cleanup or detoxification of the Mortgaged Property and the preparation and implementation of any closure, remedial, or other required plans. This indemnity shall survive the extinguishment of the lien by foreclosure or deed in lieu thereof, and this covenant shall survive such reconveyance or extinguishment.
(d) In the event that any investigation, site monitoring, containment, cleanup, removal, restoration, or other remedial work of any kind or nature (the Remedial Work) is reasonably necessary or desirable under any applicable local, state, or federal law or regulation, any judicial order, or by any governmental or nongovernmental entity or person because of, or in connection with, the current or future presence, suspected presence, release or suspected release of a Hazardous Substance in or into the air, soil, groundwater, surface water or soil vapor at, on, about, under or within the Mortgaged Property (or any portion thereof, Mortgagor shall within thirty (30) days after written demand for performance thereof by Mortgagee (or such shorter period of time as may be required under any applicable law, regulation, order, or agreement), commence to perform, or cause to be commenced, and thereafter diligently prosecuted to completion, all such Remedial Work. All Remedial Work shall be performed by one or more contractors, approved in advance in writing by Mortgagee, and under the supervision of a consulting engineer approved in advance in writing by Mortgagee. All costs and expenses of such Remedial Work shall be paid by Mortgagor including, without limitation, the charges of such contractor(s) and/or the consulting engineer, and Mortgagees reasonable attorneys fees and costs incurred in connection with monitoring or review of such Remedial Work. In the event Mortgagor shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, Mortgagee may, but shall not be required to, cause such Remedial Work to be performed and all costs and expenses thereof, or incurred in connection therewith, shall become part of the indebtedness secured hereby.
(e) Mortgagee is authorized by itself, its agents, employees or workmen to enter at any reasonable time, after three (3) days prior notice, upon any part of the Mortgaged Property for the purposes of inspecting the same for Hazardous Substances and Mortgagors compliance with this Section and such inspections may include, without limitation, soil borings. Mortgagor agrees to pay to Mortgagee, upon Mortgagees demand, all expenses, costs or other amounts incurred by Mortgagee in performing any reasonably necessary inspection for the purposes set forth in this clause.
(f) Environmental Laws shall mean any federal, state or local law, statute, ordinance, or regulation pertaining to health, industrial hygiene, or the environmental conditions on, under or about the Mortgaged Property, including without limitation the Comprehensive Environmental Response, Compensation, and Liability act of 1980 (CERCLA) as amended, 42 U.S.C. Sections 9601 et the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. Sections 6901 et seq . The term Hazardous Substances shall include without limitation: i)
those substances included within the definitions of hazardous substances, hazardous materials, toxic substances, or solid waste in CERCLA, RCRA, and the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et seq. , and in the regulations promulgated pursuant to said laws; ii) those substances listed in the United States Department of Transportation Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substance (40 CFR Part 302.4 and amendments thereto); iii) such other substances, materials and wastes which are or become regulated under applicable local, state or federal law, or the United States government, or which are classified as hazardous or toxic under federal, state, or local laws or regulations; and iv) any material, waste or substance which is (A) petroleum,, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as a hazardous substance pursuant to Section 31 1 of the Clean Water Act, 33 U.S.C. 1251 et seq . (33 U.S.C. 132 1) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. 1317); (E) flammable explosives; or (F) radioactive materials.
(g) Mortgagee and its successors and assigns are hereby granted an easement to enter, after three (3) days prior notice, and to authorize others to enter upon the Land for the purposes of conducting environmental investigations and audits (including taking physical samples) and such other action deemed necessary by Mortgagee to insure compliance by Mortgagor with all local, state or federal laws, rules or regulations. Mortgagor acknowledges that no adequate remedy at law exists for a violation of the easement granted herein and agrees that Mortgagee is entitled to specific performance of its rights under this easement. The easement granted herein shall continue until this Mortgage is cancelled or released of record.
20. Environmental Representations and Warranties. To induce the Mortgagee to make the Loan evidenced by the Note, the Mortgagor makes the following representations and warranties:
(a) The Mortgagors business operations on the Mortgaged Property and the Mortgaged Property are in compliance with all Environmental Laws;
(b) There has been no clean up, remedial, removal, or other governmental or regulatory action, proceeding, or inquiry instituted with respect to the Mortgagors business operations or the Mortgaged Property,
(c) There have been no claims made or threatened by any third party against the Mortgagor relating to any damage, contribution, cost recovery compensation, loss, or injury resulting from any Hazardous Material used in the Mortgagors business operation or located on the Mortgaged Property; and
(d) The Mortgaged Property does not contain any Hazardous Substances which have been released or spilled in violation of Environmental Law.
21. Additional Assessments. The Mortgagor shall pay when due the cost of providing to Mortgagee, at Mortgagees request from time to time, a then-current environmental site assessment, audit, or survey (Assessment) of the Mortgaged Property which Assessment shall be
prepared by an environmental auditor acceptable to Mortgagee, in Mortgagees sole discretion; provided, however, that Mortgagee shall make such request no more frequently than once every third year unless the loan evidenced by the Note is being renewed, extended, modified, or accelerated, or unless Mortgagee is required by any law, regulation, order, or other directive from any regulatory agency having jurisdiction over Mortgagee to obtain any such Assessment more frequently than once a year.
22. Governing Law. This instrument is to be governed by and construed in accordance with the laws of the State of South Carolina and each of the remedies provided for herein shall be cumulative so that the right of the Mortgagee to exercise one or more of such remedies shall not be construed to limit or preclude the right of the Mortgagee to exercise any other remedy or remedies set forth herein.
23. No Waiver . No delay by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by law, shall operate as a waiver thereof or preclude the exercise thereof during the continuance of any default hereunder.
24. Miscellaneous. The covenants herein contained shall bind, and the benefits and advantages shall inure to the respective heirs, executors, administrators, successors and assigns of the parties hereto. Wherever used, the singular number shall include the plural, the plural the singular, and the use of any gender shall include all genders.
25. Benefits to Mortgagor. The undersigned Mortgagor represents to Mortgagee that the Mortgagor is benefited by the loans evidenced by the Note, whether or not the Mortgagor is the obligor thereon, and that adequate and sufficient consideration has been given to Mortgagor for its execution and delivery of this Mortgage.
26. Security Agreement. This Mortgage creates a lien on the Mortgaged Property, and to the extent the Mortgaged Property is not real property under applicable law this Mortgage constitutes a security agreement under the South Carolina Uniform Commercial Code and any other applicable law.
27. No Derogation . The grant of a security interest to Mortgagee in the granting clauses of this Mortgage shall not be construed to derogate from or impair the lien or provisions of or the rights of Mortgagee under this Mortgage with respect to any property described therein which is real property or which the parties have agreed to treat as real property. The hereby stated intention of the Mortgagor and Mortgagee is that everything used in connection with the production of income from such real property or adapted for use thereon is, and at all times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as real property, irrespective of whether or not the same is physically attached to the land or the improvements thereon. If required by Mortgagee, at any time during the term of this Mortgage, Mortgagor will execute and deliver to Mortgagee, in form satisfactory to Mortgagee, additional security agreements, financing statements and/or other instruments covering all personal property or fixtures of Mortgagor which may at any time be furnished, placed on, or annexed or made appurtenant to the real property or used, useful or held for use, in the operation of the
Improvements.
28. Personal Property . As to any part of the Mortgaged Property constituting personal property, Mortgagee may proceed as to such personal property in accordance with Mortgagees rights and remedies in respect to such property or sell the personal property separately and without regard to the remainder of the Mortgaged Property in accordance with Mortgagees rights and remedies provided by the South Carolina Uniform Commercial Code as well as other rights and remedies available at law or in equity.
29. Financing Statements. With respect to those items of the Additional Property which are or are to become fixtures related to the herein described real estate, this Mortgage shall constitute a financing statement filed as a fixture filing. The lien upon fixtures granted herein and perfected hereby shall be in addition to and not in lieu of any lien upon fixtures acquired under real property law.
30. Borrower Information. The Mortgagor shall maintain full and correct books and records showing in detail the earnings and expenses of the Mortgaged Property and shall permit or cause the Borrower to permit the Mortgagee and its representatives of examine said books and records and all supporting vouchers and data at any time and from time to time upon reasonable request by the Mortgagee.
31. Satisfaction and Release of Assignment of Rents . The release of all or any part of the Mortgaged Property from the lien of this Mortgage shall be deemed a release of such property from the lien of the Assignment of Leases, Rents, and Profits and Security Agreement of even date herewith executed by the Mortgagor in favor of the Mortgagee.
32. Severability. If any provision hereof should be held unenforceable or void, then such provision shall be deemed separable from the remaining provisions and shall in no way affect the validity of this Mortgage except that if such provision relates to the payment of any monetary sum, then, Mortgagee may, at its option, declare the indebtedness and all other sums secured hereby immediately due and payable.
33. WAIVER OF STAY . IN THE EVENT OF THE COMMENCEMENT OF BANKRUPTCY PROCEEDINGS BY OR AGAINST THE BORROWER, TO THE EXTENT PERMITTED BY LAW, MORTGAGOR HEREBY WAIVES THE BENEFIT OF THE AUTOMATIC STAY PROVIDED FOR BY 11 U.S.C. § 362 AND/OR ANY STAY, INJUNCTION, OR RESTRAINING ORDER ISSUED PURSUANT TO 11 U.S.C. § 105 OR OTHERWISE. TO THAT END, MORTGAGOR AGREES THAT IT WILL NOT SEEK OR ASSERT ANY SUCH STAY, INJUNCTION, OR RESTRAINING ORDER AND MORTGAGOR HEREBY IRREVOCABLY CONSENTS TO AND AGREES NOT TO OPPOSE THE MODIFICATION OF ANY SUCH STAY TO ALLOW FOR THE ENFORCEMENT BY MORTGAGEE OF THIS MORTGAGE AND THE FORECLOSURE OR OTHER REALIZATION UPON THE COLLATERAL PROVIDED FOR HEREIN.
34. WAIVER OF JURY TRIAL. MORTGAGOR, ANY OTHER OBLIGORS, AND
THE MORTGAGEE EACH WAIVE TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING OUT OF THIS NOTE, THE OBLIGATIONS, THE CONDUCT OF THE RELATIONSHIP BETWEEN MORTGAGEE AND MORTGAGOR AND/OR THE CONDUCT OF THE RELATIONSHIP BETWEEN MORTGAGEE AND ANY OBLIGORS. ANY LITIGATION ARISING HEREUNDER OR RELATED HERETO MAY BE TRIED BY THE SOUTH CAROLINA COURTS FOR CHARLESTON COUNTY OR THE FEDERAL COURTS OF SOUTH CAROLINA. MORTGAGOR HEREBY CONSENTS TO THE JURISDICTION OF SUCH COURTS.
35. WAIVER OF APPRAISAL RIGHTS . The laws of South Carolina provide that in any real estate foreclosure proceeding a defendant against whom a personal judgment is taken or asked may within thirty days after the sale of the mortgaged property apply to the court for an order of appraisal. The statutory appraisal value as approved by the court would be substituted for the high bid and may decrease the amount of any deficiency owing in connection with the transaction. THE UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED PROPERTY.
IN WITNESS WHEREOF, the Mortgagor has hereunto set his Hand and Seal as of the date first written above.
WITNESSES: |
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GEORGETOWN HC&R PROPERTY HOLDINGS, LLC, a Georgia limited liability company |
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/s/ Gregory Youra |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry, Manager |
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/s/ [Illegible] |
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STATE OF GEORGIA)
COUNTY OF FULTON)
I, Ellen W. Smith, Notary Public for Georgia do hereby certify that Boyd P. Gentry as Manager of Georgetown HC&R Property Holdings, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the 26th day of December, 2012.
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/s/ Ellen W. Smith |
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NOTARY PUBLIC FOR Georgia |
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MY COMMISSION EXPIRES: Jan. 30, 2016 |
Exhibit 10.252
After recording return to:
Richard Gaalema
Kitchens Kelley Gaynes, P.C.
3495 Piedmont Road
Building 11, Suite 900
Atlanta, Georgia 30305
8943.386
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to as this Assignment) made and entered into this 31 st day of December, 2012, by and between SUMTER VALLEY PROPERTY HOLDINGS, LLC, a South Carolina limited liability company , having a mailing address of 1761 Pinewood Road, Sumter, South Carolina 29154 (hereinafter called Borrower), and METRO CITY BANK , having a mailing address of 5441 Buford Highway, Suite 109, Doraville, Georgia 30340 (hereinafter called Lender).
W I T N E S S E T H :
That for and in consideration of the sum of Ten and no/100 Dollars ($10.00) and other valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, and in order to secure the indebtedness and other obligations of Borrower, hereinafter set forth, Borrower does hereby grant, transfer and assign to Lender and the successors and assigns of Lender all of the right, title and interest of Borrower in, to and under any lease agreements respecting property described on Exhibit A attached hereto and made a part hereof (the Property), including any and all extensions, renewals and modifications thereof and guarantees of the performance or obligations of any Tenant thereunder now or hereafter entered into, together with any other leases on the Property now or hereafter entered into (hereinafter referred to as the Leases), TOGETHER WITH all of the interest of Borrower in and to all rents, issues and profits from the Leases and from the Property.
This Assignment is made for the purpose of securing the following described indebtedness (hereinafter sometimes referred to collectively as the Indebtedness):
(a) the debt evidenced by that certain Note (hereinafter referred to as the Note and to which Note reference is hereby made for all purposes) dated of even date herewith, made by Borrower to the order of Lender in the principal amount of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100ths DOLLARS ($4,800,000.00) with the final payment being due on February 1, 2014, together with any and all renewals and/or extensions of the indebtedness evidenced by the Note;
(b) any and all indebtedness secured by that certain Mortgage (hereinafter referred to as the Security Instrument and to which Security Instrument reference is hereby made for all purposes) dated of even date herewith, made by Borrower in favor of Lender, conveying the Property to secure the indebtedness evidenced by the Note (the Note, Security Instrument and any other document executed in connection therewith being hereinafter sometimes collectively referred to as the Loan Documents);
(c) any and all advances made by Lender to protect or preserve the security created by this Assignment, or to protect or preserve the Property or the Premises (as that term is defined in the Security Instrument) or the lien of the security instrument on said Premises, or for taxes or insurance premiums as provided in the Security Instrument; and
(d) the performance and discharge of each obligation, covenant and agreement of Borrower contained herein, in the Note or in the Security Instrument.
Borrower and Lender agree that (i) an extension or extensions may be made of the time of payment of all or any part of the indebtedness evidenced by the Note or of any other indebtedness secured by this Assignment or by the Security Instrument; (ii) the terms of the Note, the Security Instrument and this Assignment may be modified; and (iii) additional security may be given by Borrower; all without altering or affecting the security created by this Assignment in favor of any junior encumbrancer, grantee, purchaser or other person, or any person acquiring or holding an interest in the Leases of the Property or any portion thereof and without altering or releasing the obligation of Borrower or any guarantors under the Note, the Security Instrument or this Assignment.
Should the indebtedness secured by this Assignment be paid in full, then this Assignment shall be cancelled and surrendered as hereinafter provided.
Borrower and Lender hereby further covenant and agree as follows, in addition to and not in substitution for or derogation of any other covenants contained in the Security Instrument or other instruments concerning the indebtedness secured hereby or by the Security Instrument:
ARTICLE I
1.01 Warranties of Borrower . Borrower hereby warrants unto Lender that:
(a) Borrower has made no assignment other than this Assignment of any of the rights of Borrower under the Leases;
(b) Borrower has neither done any act nor omitted to do any act which might prevent Lender from, or limit Lender in, acting under any of the provisions of this Assignment;
(c) Borrower has not accepted payment of rental under the Leases for more than one (1) month in advance of the due date thereof;
(d) So far as is known to Borrower, there is no default by any Tenant under the terms of the Leases;
(e) Borrower is not prohibited under any agreement with any other person or any judgment or decree from (i) the execution and delivery of either this Assignment or the Leases; (ii) the performance of each and every covenant of Borrower under either this Assignment or the Leases; or (iii) the meeting of each and every condition contained in this Assignment;
(f) no action has been brought or, so far as is known to Borrower, is threatened, which in anywise would interfere with the right of Borrower to execute this Assignment and perform all of Borrowers obligations contained in this Assignment and in the Leases; and
(g) the Leases are in full force and effect and has not been modified or amended unless as expressly set forth herein.
1.02 Covenants of Borrower . Borrower hereby covenants with Lender that:
(a) Borrower will (i) fulfill, perform and observe each and every condition and covenant of Borrower contained in the Leases; (ii) give prompt notice to Lender of any claim of default under the Leases either given by the Tenant under the Leases to Borrower or given by Borrower to the Tenant under the Leases, together with a complete copy of any such claim; (iii) at no cost or expense to Lender, enforce, short of termination, the performance and observance of each and every covenant and condition of the Leases to be performed or observed by the Tenant thereunder; and (iv) appear in and defend any action growing out of, or in any matter connected with, the Leases or the obligations or liabilities of Borrower as the Landlord thereunder or of the Tenant or any guarantor thereunder;
(b) Borrower will not, without the prior written consent of Lender, either (i) modify any material term of the Leases; (ii) terminate the term or accept the surrender of the Leases; (iii) waive, or release the Tenant from, the performance or observance by the Tenant of any material obligation or condition of the Leases; (iv) permit the prepayment of any rents under the Leases for more than one (1) month prior to the accrual thereof; or (v) give any consent to any assignment or sublease by the Tenant under the Leases except for Concessionaire Leases by tenant or Borrower as landlord;
(c) Borrower shall take no action which shall cause or permit the estate of the Tenant under the Leases to merge with the reversionary interest of Borrower in the Property or any portion thereof; and
(d) Lender shall not be obligated to perform or discharge any obligation of Borrower under the Leases, and Borrower agrees to, and does hereby indemnify and hold Lender harmless against any and all liability, loss or damage which Lender may incur under any of the Leases or under or by reason of this Assignment, and from all
claims and demands whatsoever which may be asserted against Lender by reason of an act of Lender under this Assignment.
1.03 Covenants of Lender . By acceptance of delivery of this Assignment, Lender covenants with Borrower that so long as there shall exist no Event of Default, as defined, in Paragraph 2.01 hereinbelow, on the part of Borrower, Borrower shall have the right to collect, but not more than one (1) month prior to accrual, all rents, issues and profits from the Property (including, but not by way of limitation, all rent payments under any of the Leases) and to retain, use and enjoy the same.
ARTICLE II
2.01 Event of Default . The term Event of Default, wherever used in this Assignment, shall mean any one or more of the following events:
(a) the occurrence of any default or event of default as defined in the Note or the Security Instrument.
(b) the failure by Borrower to duly observe any covenant, condition or agreement of this Assignment, or the breach of any warranty by Borrower contained in this Assignment.
2.02 Remedies . Upon the occurrence of any Event of Default, in addition to any and all other rights and remedies available to Lender under the Note and the Security Instrument, and not in substitution therefor or in derogation thereof, and without any notice to Borrower, Lender may (i) proceed to enter upon, take possession of and operate the Property, including the collection of rent without becoming a mortgagee in possession; (ii) proceed to perform any and all obligations of Borrower under the Leases and exercise any and all rights of Borrower therein contained as fully as Borrower itself could, all without regard to the adequacy of security for the indebtedness hereby secured and with or without the bringing of any legal action or the causing of any receiver to be appointed by any court or other judicial authority; (iii) notify Tenant to make payments of rent to Lender; (iv) make, enforce, modify and accept the surrender of the Leases or evict the Tenant under the Leases; (v) fix or modify rent; (vi) apply for appointment of a receiver of the rents and profits of the premises without notice, and shall be entitled to the appointment of such a receiver as a matter of right, without consideration of the value of the property or the solvency of any party liable for the indebtedness; and (vii) do all of the acts which Lender may deem necessary or proper to protect the security created by this Assignment. If an Event of Default shall have occurred and be continuing, Borrower does hereby specifically authorize Lender, in the name of Borrower or in the name of Lender, to sue for or otherwise collect and receive all rents, issues and profits from the Property, including those past due and unpaid, and apply such as required or permitted by the Security Instrument. Entry upon and taking possession of the Property and the collection of the rents, issues and profits of the Property and the application thereof, as aforesaid, shall not operate to waive any default or prohibit the taking of any action by Lender under the Note, the Security Instrument, this Assignment or other related loan documents or at law or in equity to enforce payment of the indebtedness secured hereby or by the Security Instrument or to realize on any other security.
ARTICLE III
3.01 Successors and Assigns . This Assignment shall inure to the benefit of and be binding upon Borrower and Lender and their respective heirs, executors, legal representatives, successors and assigns. Whenever a reference is made in this Assignment to Borrower or Lender such reference shall be deemed to include a reference to the heirs, executors, legal representatives, successors and assigns of Borrower or Lender.
3.02 Terminology . All personal pronouns used in this Assignment whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Titles and Articles are for convenience only and neither limit nor amplify the provisions of this Assignment itself.
3.03 Severability . If any provision of this Assignment or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Assignment and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.
3.04 Applicable Law . This Assignment shall be interpreted, construed and enforced according to the laws of the state in which the Property is situated.
3.05 Reassignment . Lender shall have the right to reassign its interests hereunder without the consent of Borrower.
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal, as of the day and year first above written.
WITNESSES: |
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SUMTER VALLEY PROPERTY HOLDINGS, LLC, a Georgia limited liability company |
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/s/ Gregory Youra |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry, Manager |
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/s/ [Illegible] |
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STATE OF GEORGIA
COUNTY OF FULTON
I, Ellen W. Smith, Notary Public for Georgia do hereby certify that Boyd P. Gentry as Manager of Sumter Valley Property Holdings, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the 26th day of December, 2012.
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/s/ Ellen W. Smith |
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NOTARY PUBLIC FOR GEORGIA |
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(Official/Notarial Seal) |
My Commission Expires: |
Jan. 30, 2016 |
Exhibit 10.253
PROMISSORY NOTE
U.S. $250,000.00 |
December 31, 2012 |
FOR VALUE RECEIVED , the undersigned SUMTER VALLEY PROPERTY HOLDINGS, LLC , a Georgia limited liability company (the Borrower), promises to pay to the order of 1761 PINEWOOD HOLDINGS LLC, a Delaware limited liability company (Lender), the principal sum of TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($250,000.00) (the Principal).
The unpaid Principal of this Note shall bear interest from the date hereof until paid in full at the annual percentage rate of six percent (6%).
The Principal balance plus accrued interest shall be due and payable as follows:
Commencing on February 1, 2013 and continuing on the first day of each month thereafter, payments of principal and interest shall be due and payable in accordance with the fifteen (15) year amortization schedule attached hereto as Exhibit A . The unpaid Principal of this Note together with all accrued and unpaid interest shall be due and payable on the earlier of (i) December 31, 2014 or (ii) the date on which Borrower refinances the indebtedness of even date herewith which is secured by a first priority mortgage on the Real Property (as defined in that certain Purchase and Sale Agreement dated as of April 27, 2012).
Borrower acknowledges and agrees that all amounts due under this Promissory Note (the Note) are due and payable as stated herein, and Lender has no obligation to renew or extend this Note. The books and records of Lender shall constitute prima facie evidence of all matters with respect to the amounts due hereunder. Payments shall be applied first to interest and then to Principal.
ADDITIONAL COVENANTS:
1. Secured Note . Payment of this Note is secured by the guaranty of AdCare Health Systems, Inc., Borrowers affiliate.
2. Default .
a. Each of the following shall be a default (Default) under this Note:
(a) failure of Borrower to pay any amount due hereunder, or any part hereof, or any extension or renewal hereof, within five (5) business days of the due date; or
(b) Borrowers failure to perform or comply with any of the covenants or agreements contained herein.
b. If this Note is placed in the hands of one or more attorneys for collection or in the hands of one or more attorneys for representation of Lender in connection with any bankruptcy, probate or other court or by any other legal proceedings, Borrower shall pay the fees and expenses of such attorneys in addition to the full amount due hereon, whether or not litigation is commenced.
c. In the event ( i ) that there occurs any Default hereunder; or ( ii ) that the Borrower shall become insolvent or make an assignment for the benefit of its creditors; or ( iii ) that a petition is filed or any other proceeding is commenced under the Federal Bankruptcy Act or any state insolvency statute by or against the Borrower; or ( iv ) that a receiver or similar person is appointed for the Borrower; then, in any such event, the entire unpaid Principal balance due hereon and all accrued interest at the option of the holder hereof shall become immediately due and payable without any notice or demand. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Default.
3. Prepayment . Borrower may prepay the balance of the Note in full or in part at any time without penalty, premium or additional interest.
4. Waivers by Borrower and Others . Borrower and all endorsers, sureties and guarantors hereof hereby severally waive presentment for payment, notice of non-payment, protest, and notice of protest, and diligence in enforcing payment hereof, and consent that the time of payment may be extended without notice. The makers, endorsers, guarantors, and sureties executing this Note also waive any and all defenses which they may have upon the ground of any extension of time of payment which may be given by the holder of this indebtedness to any of the undersigned, or to any other person assuming payment hereof.
5. Amendments, Modifications and Waiver . No amendment, modification or waiver of any provision of this Note, nor consent to any departure by Borrower therefrom, shall be effective unless the same shall be in a writing signed by Lender, and then only in the specific instance and for the purpose for which given. No failure or delay on the part of Lender to exercise any right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right under this Note preclude any other or further exercise thereof, or the exercise of any other right. Each and every right granted to Lender under this Note or allowed to it at law or in equity shall be deemed cumulative and such remedies may be exercised from time to time concurrently or consecutively at Lenders option.
6. Payment . All payments due under this Note shall be paid to Lender c/o Millennium Management, L.L.C., 10800 Biscayne Boulevard, Suite 600, Miami, Florida 33161 or at such other place as Lender may direct. Whenever a payment is due on a day other than a business day (all days except Saturday, Sunday and legal holidays under federal or South Carolina law), the maturity thereof shall be extended to the next succeeding business day and interest shall accrue thereon at the rate described herein. In the event any amount due hereunder is not paid within ten (10) days of the date when due, the undersigned agrees to pay an administrative and late charge equal to the lesser of (a) five percent (5%) on and in addition to the amount of such overdue amount, or (b) the maximum charges allowable under applicable law.
7. Notices .
(a) Form of Notices . Any and all notices and other communications required or permitted under this Note may be given by the attorneys of the parties and shall be deemed adequately given if in writing. All such notices shall be delivered either in hand, by facsimile with written confirmation of transmission, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) Timing of Notices . All notices shall be deemed to have been given for all purposes of this Note upon the date of receipt or refusal, except that whenever under this Note a notice is either received on a day which is not a business day or is required to be delivered on or before a specific day which is not a business day, the day of receipt or required delivery shall automatically be extended to the next business day. For purposes of any notice given by facsimile, the date of receipt shall be the date of transmission (as confirmed by electronic confirmation of transmission generated by the senders machine).
(c) Notice Addresses . All such notices shall be addressed,
if to Lender, to: 1761 Pinewood Holdings LLC
10800 Biscayne Blvd., Suite 600
Miami, Florida 33161
Attn: Mr. Abraham Shaulson
Facsimile No.: (305) 864-6667
with a copy to: Wilk Auslander LLP
1515 Broadway
New York, New York 10036
Attn: Aaron C. Kinderlehrer, Esq.
Facsimile No. (212) 752-6380
If to Borrower, to: Sumter Valley Property Holdings, LLC
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305
Attn: Christopher F. Brogdon
Facsimile No. (404) 842-1899
with a copy to: Gregory P. Youra, Esq.
Holt Ney Zatcoff & Wasserman, LLP
100 Galleria Pkwy, Suite 1800
Atlanta, Georgia 30339
Facsimile: (770) 956-1490
(d) Change of Notice Addresses . By notice given as herein provided, the parties hereto shall have the right from time to time and at any time to change their respective addresses to any other address within the United States of America effective upon receipt by the other parties of such notice.
8. Paragraph Headings . Paragraph headings are inserted for convenience of reference only, do not form part of this Note and shall be disregarded for purposes of the interpretation of the terms of this Note.
9. Time of Essence . Time is of the essence with respect to each and every covenant and obligation of Borrower under this Note.
10. Governing Law . This note shall be governed and construed according to the statutes and laws of the State of South Carolina from time to time in effect, except to the extent that any federal statute or law that preempts or provides an alternative or alternatives to otherwise applicable state statutes or laws, or other applicable federal statute or law, may permit the charging of a higher rate of interest than applicable state statute or law, in which event such applicable federal statute or law, as amended and supplemented from time to time shall govern and control maximum rate of interest permitted to be charged hereunder; it being intended that, as to the maximum rate of interest which may be charged, received, and collected hereunder, those applicable statutes and laws, whether state or federal, from time to time in effect, which permit the charging of a higher rate of interest, shall govern and control; provided, always, however that in no event and under no circumstances shall Borrower be liable for the payment of interest in excess of the maximum rate permitted by such applicable law, from time to time in effect.
[INTENTIONAL SHORT PAGE; SIGNATURE PAGE FOLLOWS]
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BORROWER: |
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SUMTER VALLEY PROPERTY HOLDINGS , LLC, a |
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Georgia limited liability company |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
Exhibit 10.254
GUARANTY AGREEMENT
This GUARANTY AGREEMENT ( Guaranty ) is made as of December 31, 2012 by ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation ( Guarantor ), to and for the benefit of 1761 PINEWOOD HOLDINGS LLC , a Delaware limited liability company ( Lender ).
W I T N E S S E T H :
WHEREAS, AdCare Property Holdings, LLC, an Ohio limited liability company, and Lender have entered a Purchase and Sale Agreement dated April 27, 2012 (the PSA ), pursuant to which AdCare Property Holdings, LLC has agreed to purchase and Lender has agreed to sell certain assets and real property, expressly including that certain skilled nursing facility commonly known as Sumter Valley Nursing and Rehab Center located at 1762 Pinewood Road, Sumter, South Carolina 29154 (the Facility ); and
WHEREAS, AdCare Property Holdings, LLC has assigned its rights under the PSA to acquire the Facility to Sumter Valley Property Holdings, LLC (the Borrower );
WHEREAS, Borrower a wholly owned subsidiary of AdCare Property Holdings, LLC, which in turn is a wholly owned subsidiary of Guarantor, and Guarantor has received adequate consideration for the execution and delivery of this Guaranty; and
WHEREAS, in connection with the sale of the Facility and payment therefor Borrower has executed and delivered to Lender a Promissory Note of even date herewith (the Note ) pursuant to which Borrower has agreed to borrow from Lender, and Lender has agreed to lend to Borrower $250,000.00 (the Principal Amount ); and
WHEREAS, Lender is willing to make the Principal Amount available to Borrower by way of a loan only upon the condition that Guarantor executes and delivers to Lender this Guaranty and agree to perform and to comply with its obligations under this Guaranty; and
NOW, THEREFORE, in consideration of the foregoing and of the covenants and agreements hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, and as an inducement for Lender to loan the Principal Amount to Borrower, Guarantor, intending to be legally bound hereby, agree as follows:
NOW THEREFORE , for and in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Guaranty of Payment . Guarantor hereby guarantees the full and prompt payment and performance when due, whether by acceleration or otherwise, and at all times thereafter, of all obligations of Borrower to Lender under the Note (all such obligations, together with any extensions or renewals thereof, are collectively the Liabilities ), and Guarantor further agrees to pay all expenses (including reasonable attorneys fees) actually paid or incurred by
Lender in endeavoring to collect the Liabilities, or any part thereof, and in enforcing this Guaranty.
2. Primary Liability of Guarantor . Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral. This is a guaranty of payment and not merely of collection.
3. Continuing Guaranty . This Guaranty shall in all respects be a continuing, absolute and unconditional guaranty, and shall remain in full force and effect, subject to discontinuance as to Guarantor only upon actual receipt by Lender of the indefeasible payment in full of the Liabilities.
4. Rescission or Return of Payment on Liabilities . Guarantor further agrees that, if at any time all or any part of any payment theretofore applied by Lender to any of the Liabilities is or must be rescinded or returned by Lender for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Guarantor or any Borrower), such Liabilities shall, for the purposes of this Guaranty, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by Lender, and this Guaranty shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as though such application by Lender had not been made.
5. Waiver of Notice and Other Matters . Guarantor waives: (a) notice of the acceptance by Lender of this Guaranty; (b) notice of the existence or creation or non-payment of all or any of the Liabilities; (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever; and (d) all diligence in collection or protection of or realization upon the Liabilities or any thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing.
6. Waiver and Modifications . No delay on the part of Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any of the provisions of this Guaranty be binding upon Lender except as expressly set forth in a writing duly signed and delivered on behalf of Lender.
7. Obligations Under Guaranty . No action of Lender permitted hereunder shall in any way affect or impair the rights of Lender and the obligations of Guarantor under this Guaranty. For the purposes of this Guaranty, Liabilities shall include all Obligations of Borrower to Lender, notwithstanding any right or power of Borrower or anyone else to assert any claim or defense as to the invalidity or unenforceability of any such Obligation, and no such claim or defense shall affect or impair the obligations of Guarantor hereunder. The obligations of Guarantor under this Guaranty shall be absolute and unconditional irrespective of any circumstance whatsoever which might constitute a legal or equitable discharge or defense of Guarantor. Guarantor acknowledges that there are no conditions to the effectiveness of this Guaranty.
8. Successors . This Guaranty shall be binding upon Guarantor, and upon the successors and assigns of Guarantor.
9. Representations and Warranties . Guarantor warrants that:
(a) Guarantor has the full and absolute power to execute and deliver this Guaranty and to perform its obligations hereunder.
(b) The execution and delivery of this Guaranty and the performance by Guarantor of Guarantors obligations hereunder do not and will not conflict with any provision of law or of any agreement binding upon Guarantor.
(c) The Guaranty is the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors rights or by general principles of equity limiting the availability of equitable remedies.
10. Law . THIS GUARANTY, AND ALL MATTERS ARISING OUT OF OR RELATING TO THIS GUARANTY, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE SOUTH CAROLINA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND SHALL BE CONSTRUED WITHOUT THE AID OF ANY CANON, CUSTOM OR RULE OF LAW REQUIRING CONSTRUCTION AGAINST THE DRAFTSMAN.
11. Severability . Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty.
12. Captions . Section captions used in this Guaranty are for convenience only, and shall not affect the construction of this Guaranty.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF , this Guaranty Agreement has been duly executed as of the day and year first above written.
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GUARANTOR: |
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ADCARE HEALTH SYSTEMS, INC. |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Vice Chairman |
Exhibit 10.255
STATE OF SOUTH CAROLINA |
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MORTGAGE AND SECURITY |
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AGREEMENT |
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COUNTY OF GEORGETOWN |
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THIS MORTGAGE AND SECURITY AGREEMENT made this 31st day of December, 2012, between GEORGETOWN HC&R PROPERTY HOLDINGS, LLC (hereinafter referred to as Mortgagor), whose address is Two Buckhead Plaza, 3050 Peachtree Road NW, Suite 355, Atlanta, GA 30305 and WINYAH NURSING HOME, LLC (collectively Mortgagee), whose address is P O Drawer 68, Pawleys Island, SC 29585.
WITNESSETH:
WHEREAS, Mortgagor is indebted to Mortgagee in the principal sum of One Million Eight Hundred Fifty Thousand and 00/100 (1,850,000.00) Dollars, together with interest thereon, as evidenced by that certain Promissory Note of even date herewith, executed by Mortgagor and delivered to Mortgagee, the final payment of which is due on or before the 31st day of December, 2013, which by reference is made a part hereof to the same extent as though set out in full herein (the Note).
NOW, THEREFORE, (a) to secure the performance and observance by Borrower and/or Mortgagor, of all covenants and conditions contained in the Note, in any renewal, extension or modification thereof, in this Mortgage and Security Agreement and in all other instruments securing the Note; and (b) also to secure in accordance with Section 29-3-50, as amended, Code of Laws of South Carolina 1976: (i) all future advances and re-advances that may subsequently be made to Mortgagor by Mortgagee, evidenced by the aforesaid Note, or any other promissory Note, and all renewals and extensions thereof; provided, however, that nothing contained herein shall create an obligation on the part of Mortgagee to make future advances or re-advances to Borrower and (ii) all other indebtedness of Mortgagor to Mortgagee, now or hereafter existing, whether direct or indirect, the maximum amount of all indebtedness outstanding at any one time secured hereby not to exceed twice the face amount of the Note, plus interest thereon, all charges and expenses of collection incurred by Mortgagee, including court costs, and reasonable attorneys fees; and (c) also in order to charge the properties, interests and rights hereinafter described with such payment, performance and observance; and (d) for and in consideration of the sum of One and No/100 ($1.00) Dollar paid by Mortgagee to Mortgagor this date, and for other valuable consideration, the receipt of which is acknowledged, Mortgagor does hereby grant, bargain, sell, alien, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, deliver, set over, warrant and confirm unto Mortgagee, its successors and assigns forever all right, title and interest of Mortgagor in and to:
THE MORTGAGED PROPERTY
(A) THE LAND : All the land located in the County of Georgetown, State of South Carolina (the Land), described in Exhibit A attached hereto and made a part hereof;
(B) THE IMPROVEMENTS : TOGETHER WITH all buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land, and all fixtures, machinery, appliances, equipment, furniture and personal property of every nature whatsoever now or hereafter owned by Mortgagor and located in or on, or attached to, or used or intended to be used in connection with or with the operation of, the Land, buildings, structures or other improvements, including all extensions, additions, improvements, betterments, renewals and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures subject to any lien, security interest or claim together with the benefit of any deposits or payments now or hereafter made by Mortgagor or on its behalf (the Improvements).
(C) EASEMENTS OR OTHER INTERESTS : TOGETHER WITH all easements, rights of way, gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way belonging, relating or appertaining to any of the property hereinabove described, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Mortgagor, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same, including but not limited to all judgments, awards of damages and settlements, hereafter made resulting from condemnation proceedings or the taking of the property described in paragraphs (A), (B) and (C) hereof or any part thereof under the power of eminent domain, or for any damage (whether caused by such taking or otherwise) to the property described in paragraphs (A), (B) and (C) hereof or any part thereof, or to any rights appurtenant thereto, and all proceeds of any sales or other dispositions of the property described in paragraphs (A), (B) and (C) hereof or any part thereof.
(D) ASSIGNMENT OF RENTS : TOGETHER WITH all rents, royalties, issues, profits, revenue, income and other benefits from the property described in paragraphs (A), (B) and (C) hereof to be applied against the indebtedness and other sums secured hereby, provided, however, that permission is hereby given to Mortgagor so long as no default has occurred hereunder, to collect, receive, take, use and enjoy such rents, royalties, issues, profits, revenue, income and other benefits as they become due and payable, but not in advance thereof. The foregoing assignment shall be fully operative without any further action on the part of either party and specifically Mortgagee shall be entitled, at its option upon the occurrence of a default hereunder, to all rents, royalties, issues, profits, revenue, income and other benefits from the property described in paragraphs (A), (B) and (C) hereof whether or not Mortgagee takes possession of the property described in paragraphs (A), (B) and (C) hereof. Upon any such default hereunder, the permission hereby given to Mortgagor to collect such rents, royalties, issues, profits, revenue, income and other benefits from the property described in paragraphs (A), (B) and (C) hereof shall terminate and such permission shall not be reinstated upon a cure of the default without Mortgagees specific consent. Neither the exercise of any rights under this paragraph by Mortgagee nor the application of any such rents, royalties, issues, profits, revenue, income or other benefits to the indebtedness and other sums secured hereby, shall cure or waive
any default or notice of default hereunder or invalidate any act done pursuant hereto or to any such notice, but shall be cumulative of all other rights and remedies.
(E) ASSIGNMENT OF LEASES : TOGETHER WITH all right, title and interest of Mortgagor in and to any and all leases now or hereafter on or affecting the property described in paragraphs (A), (B) and (C) hereof, together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such lease. The foregoing assignment of any lease shall not be deemed to impose upon Mortgagee any of the obligations or duties of Mortgagor provided in any such lease, and Mortgagor agrees to duly perform all obligations of the lessor under all such leases. Upon Mortgagees request, Mortgagor agrees to send to Mortgagee a list of all leases covered by the foregoing assignment and as any such lease shall expire or terminate or as any new lease shall be made, Mortgagor shall so notify Mortgagee in order that at all times Mortgagee shall have a current list of all leases affecting the property described in paragraphs (A), (B) and (C) hereof. Mortgagee shall have the right, at any time and from time to time, to notify any lessee of the rights of Mortgagee as provided by this paragraph. From time to time, upon request of Mortgagee, Mortgagor shall specifically assign to Mortgagee as additional security hereunder, by an instrument in writing in such form as may be approved by Mortgagee, all right, title and interest of Mortgagor in and to any and all leases now or hereafter on or affecting the Mortgaged Property, together with all security therefor and all monies payable thereunder, subject to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such lease. Mortgagor shall also execute and deliver to Mortgagee any notification, financing statement or other document reasonably required by Mortgagee to perfect the foregoing assignment as to any such lease.
This instrument constitutes an absolute and present assignment of the rents, royalties, issues, profits, revenue, income, and other benefits from the Mortgaged Property, subject, however to the conditional permission given to Mortgagor to collect, receive, take use and enjoy the same as provided hereinabove; provided, further, that the existence or exercise of such right of Mortgagor shall not operate to subordinate this assignment to any subsequent assignment, in whole or in part, by Mortgagor, and any such subsequent assignment by Mortgagor shall be subject to the rights of Mortgagee hereunder.
(F) FIXTURES AND PERSONAL PROPERTY : TOGETHER WITH a security interest in (i) all property and fixtures now or hereafter acquired and affixed to or located on the property described in paragraphs (A), (B) and (C) hereof which, to the fullest extent permitted by law shall be deemed fixtures and a part of the real property, (ii) all articles of personal property now or hereafter acquired and all materials delivered to the property described in paragraphs (A), (B) and (C) hereof for use in any construction being conducted thereon, and owned by Mortgagor; (iii) and all contract rights, general intangibles, actions and rights in action now or hereafter acquired pertaining to the Mortgaged Property, including, all rights to insurance proceeds, and (iv) all proceeds, products, replacements, additions, substitutions, renewals and accessions of any of the foregoing. Mortgagor (Debtor) hereby grants to Mortgagee (Secured Party) a security interest in all fixtures, rights in action and personal property described herein. This Mortgage is a self-operative security agreement with respect to such property, but Mortgagor agrees to execute
and deliver on demand such other security agreements, financing statements and other instruments as Mortgagee may reasonably request in order to perfect its security interest or to impose the lien hereof more specifically upon any of such property. Mortgagor agrees to pay Mortgagees charge, to the maximum amount permitted by law, for any statement by Mortgagee regarding the obligations secured by this Mortgage and Security Agreement requested by Mortgagor or on behalf of Mortgagor. On demand, Mortgagor will promptly pay all costs and expenses of filing statements, continuation statements, partial releases, and termination statements deemed necessary or appropriate by Mortgagee to establish and maintain the validity and priority of the security interest of Mortgagee, or any modification thereof, and all costs and expenses of any searches reasonably required by Mortgagee. Mortgagee may exercise any or all of the remedies of a secured party available to it under the Uniform Commercial Code (South Carolina) with respect to such property, and it is expressly agreed in accordance with the provisions of the Uniform Commercial Code (South Carolina), 10 days notice by Mortgagee to Mortgagor shall be deemed to be reasonable notice under any provision of the Uniform Commercial Code (South Carolina) requiring such notice; provided, however, that Mortgagee may at its option dispose of the collateral in accordance with Mortgagees rights and remedies in respect to the real property pursuant to the provisions of this Mortgage and Security Agreement, in lieu of proceeding under the Uniform Commercial Code (South Carolina).
Some of the items of property described herein are goods that are or are to become fixtures related to the real estate described herein, and it is intended that, as to those goods, this Mortgage and Security Agreement shall be effective as a financing statement filed as a fixture filing from the date of its filing for record in the real estate records of the county in which the Land is located. Information concerning the security interest created by this instrument may be obtained from the Mortgagee, as Secured Party, or the Mortgagor, as Debtor, at the address first shown above.
Everything referred to in paragraphs (A), (B), (C), (D), (E) and (F) hereof and any additional property hereafter acquired by Mortgagor and subject to the lien of this Mortgage or intended to be so is herein referred to as the Mortgaged Property.
TO HAVE AND TO HOLD the Mortgaged Property and all parts thereof unto Mortgagee, its successors and assigns, to its own proper use and benefit forever, subject, however, to the terms and conditions herein.
PROVIDED, HOWEVER, that if Mortgagor shall promptly pay or cause to be paid to Mortgagee the principal and interest payable under the Note, at the times and in the manner stipulated therein, herein, and in all other instruments securing the Note, all without any deduction or credit for taxes or other similar charges paid by Mortgagor, and shall keep, perform and observe all the covenants and promises in the Note, and any renewal, extension or modification thereof, and in this Mortgage and in all other instruments securing the Note, to be kept, performed or observed by Mortgagor, then this Mortgage, and all the properties, interest and rights hereby granted, conveyed and assigned shall cease and be void and the lien created by this Mortgage released from public record, but shall otherwise remain in full force and effect.
Mortgagor covenants and agrees with Mortgagee as follows:
ARTICLE ONE
COVENANTS OF MORTGAGOR
1.01 Performance of Note, Mortgage, etc . Mortgagor shall perform, observe and comply with all provisions hereof, of the Note, this Mortgage and of every other instrument securing the Note, and will promptly pay to Mortgagee the principal with interest thereon and all other sums required to be paid by Mortgagor under the Note and pursuant to the provisions of this Mortgage and of every other instrument securing the Note when payment shall become due, all without deduction or credit for taxes or other similar charges paid by Mortgagor.
1.02 Intentional Omitted.
1.03 Warranty of Title . Mortgagor covenants and warrants that it is seized of an indefeasible estate in fee simple in the Land and real property hereby mortgaged, has good and absolute title to all existing personal property hereby mortgaged or made subject to the security interest hereby created and has good right, full power and lawful authority to convey, mortgage and encumber the same as provided herein; that Mortgagor may at all times peaceably and quietly enter upon, hold, occupy and enjoy the Land and real property hereby mortgaged and every part thereof; that the Land, real property and all existing personal property hereby mortgaged or made subject to the security interest hereby created is free and clear of all liens, security interests, charges and encumbrances whatsoever, except for the lien for property taxes not yet due and payable and those permitted encumbrances, if any, described in the title insurance policy. Mortgagor shall and will make such further assurances to perfect Mortgagees fee simple title to the Land and the real property hereby mortgaged, and the title to the personal property hereby mortgaged or made subject to the security interest created as may reasonably be required. Mortgagor fully warrants the title to the Land, real property and all existing personal property hereby mortgaged or made subject to the security interest hereby created and every part thereof, and will forever defend the same against the claims of all persons whomsoever.
1.04 Environmental Laws . Mortgagor warrants to comply with all environmental and ecological laws, ordinances and regulations affecting the Mortgaged Property.
1.05 Taxes and Liens .
(a) Mortgagor shall pay or bond promptly, when and as due, and shall promptly exhibit to Mortgagee receipts for the payment of all taxes, assessments, rates, dues, charges, fees, levies, fines, impositions, liabilities, obligations and encumbrances of every kind whatsoever now or hereafter imposed, levied or assessed upon or against the Mortgaged Property or any part thereof, or upon or against this Mortgage or the indebtedness or other sums secured hereby, or upon or against the interest of Mortgagee in the Mortgaged Property, as well as all income taxes, assessments and other governmental charges levied and imposed by the United States of America or any state, county, municipality, borough or other taxing authority upon or against
Mortgagor or in respect of the Mortgaged Property or any part thereof, and any charge which, if unpaid, would become a lien or charge upon the Mortgaged Property prior to or equal to the lien of this Mortgage before they become delinquent and before any interest attaches or any penalty is incurred.
(b) Mortgagor shall not permit or suffer more than fifteen (15) days any mechanics, laborers, materialmens, statutory or other lien upon any of the Mortgaged Property.
(c) Mortgagor shall not claim, demand or be entitled to receive any credit or credits on the principal or interest payable under the terms of the Note or on any other sums secured hereby, for so much of the rent, taxes, assessments or similar impositions assessed against the Mortgaged Property or any part thereof as are applicable to the indebtedness secured hereby or to Mortgagees interest in the Mortgaged Property. No deduction shall be claimed from the taxable value of the Mortgaged Property or any part thereof by reason of the Note, this Mortgage or any other instrument securing the Note.
1.06 Insurance . That the Mortgagor will keep the improvements now existing or hereafter erected on the mortgaged premises insured against fire, flood and such other hazards as the Mortgagee may from time to time require including flood hazard insurance if the premises are designated as lying within a flood hazard area, and will also provide such other insurance, as the Mortgagee may from time to time require and deliver to it policies for such insurance in form and amounts, and written by companies, satisfactory to the Mortgagee and first payable in case of loss to the Mortgagee, full power being hereby given to Mortgagee to settle and compromise claims or bring suit to recover thereunder, including attorneys fees, in reduction of the indebtedness hereby secured or, at its option, toward the repair, reconstruction or restoration of the premises, and in the event of foreclosure to assign each such policy to the transferee of the premises.
1.07 Condemnation . If all or any part of the Mortgaged Property shall be damaged or taken through condemnation (which terms when used herein shall include any damage or taking by any governmental authority or any other authority authorized by the laws of the state where the Land is located or the United States of America to so damage or take, and any transfer by private sale in lieu thereof), either temporarily or permanently, the entire indebtedness and other sums secured hereby shall, at the option of Mortgagee, become immediately due and payable. Mortgagee shall be entitled to all compensation awards, damages, claims, rights of action and proceeds of, or on account of any damage or taking through condemnation and is hereby authorized, at its option, to commence, appear in and prosecute, in its own or Mortgagors name, any action or proceeding relating to any condemnation, and to settle or compromise any claim in connection therewith. All such compensation awards, damages, claims, rights of action and proceeds, and any other payments or relief, and the right thereto, are hereby assigned by Mortgagor to Mortgagee, who, after deducting therefrom all its expenses including attorneys fees, may release any monies so received by it without affecting the lien of this Mortgage or may apply the same, in such manner as Mortgagee shall determine, to the reduction of the sums secured hereby and to any prepayment charge provided in the Note, this Mortgage or other
instrument securing the Note. Any balance of such monies then remaining shall be paid to Mortgagor. Mortgagor agrees to execute such further assignments of any compensations, awards, damages, claims, rights of action and proceeds as Mortgagee may require.
1.08 Care of Property .
(a) Mortgagee may enter upon and inspect the Mortgaged Property at any reasonable time during the life of this Mortgage.
(b) Mortgagor will promptly comply with all present and future laws, ordinances, rules and regulations of any governmental authority affecting the Mortgaged Property or any part thereof.
1.09 Transfer of Property . Mortgagor shall not sell, convey, transfer, lease or further encumber any interest in or any part of the Mortgaged Property, without the prior written consent of Mortgagee. If all or any part of the property or an interest therein is sold or transferred (or if a beneficial interest in Mortgagor is sold or transferred) without Mortgagees prior written consent, Mortgagee may at Mortgagees option declare all the sums secured by this Mortgage to be immediately due and payable. If any person should obtain any interest in all or any part of the Mortgaged Property pursuant to the execution or enforcement of any lien, security interest or other right, whether superior, equal or subordinate to this Mortgage or the lien hereof, such event shall be deemed to be a transfer by Mortgagor. Mortgagor shall not, without the prior written consent of Mortgagee, further assign the rents from the Mortgaged Property, nor enter into any agreement or do any act to amend, modify, extend, terminate or cancel, accept the surrender, subordinate, accelerate the payment of rent, or change the terms of any renewal option of any lease now or hereafter covering such property or any part thereof.
1.10 Further Assurances . At any time and from time to time, upon Mortgagees request Mortgagor shall make, execute and deliver or cause to be made, executed and delivered to Mortgagee and, where appropriate, shall cause to be recorded or filed and from time to time thereafter to be re-recorded or refiled at such time and in such offices and places as shall be deemed desirable by Mortgagee any and all such further mortgages, instruments of further assurance, certificates and other documents as Mortgagee may consider necessary or desirable in order to effectuate, complete, enlarge in accordance with any loan agreement or perfect, or to continue and preserve the obligations of Mortgagor under the Note and this Mortgage, and the lien of this Mortgage as a first and prior lien upon all of the Mortgaged Property, whether now owned or hereafter acquired by Mortgagor. Upon any failure by Mortgagor to do so, Mortgagee may make, execute, record, file, rerecord or refile any and all such mortgages, instruments, financing statements, certificates and documents for and in the name of Mortgagor, and Mortgagor hereby irrevocably appoints Mortgagee the agent and attorney-in-fact of Mortgagor to do so.
1.11 Leases Affecting Mortgaged Property . Mortgagor shall comply with and observe its obligations as landlord under all leases affecting the Mortgaged Property or any part thereof. Mortgagor, if required by Mortgagee, shall furnish promptly to Mortgagee executed copies of all
such leases now existing or hereafter created, all of which shall be in form and substance subject to the approval of Mortgagee. Mortgagor shall not, without the express written consent of Mortgagee, modify, surrender, terminate or extend any such lease now existing or hereafter created, or permit or suffer an assignment or sublease.
1.12 Expenses . Mortgagor shall pay or reimburse Mortgagee for all costs, charges and expenses, including reasonable attorneys fees and disbursements, and costs incurred or paid by Mortgagee in any action which is threatened, pending or completed or proceeding or dispute in which Mortgagee is or might be made a part or appears as a party plaintiff or party defendant and which affects or might affect the Note, or the Mortgaged Property or any part thereof, or the interests of Mortgagor or Mortgagee therein, including but not limited to the foreclosure of this Mortgage, condemnation involving all or part of the Mortgaged Property or any action to protect the security hereof. All costs, charges and expenses except where Mortgagor and Mortgagee are adverse parties unless awarded by the Court so incurred or paid by Mortgagee shall become due and payable immediately, whether or not there be notice, demand, attempt to collect or suit pending. The amounts so incurred or paid by Mortgagee, together with interest thereof at the Default Rate as hereinafter defined from the date incurred until paid by Mortgagor, shall be added to the indebtedness and secured by the lien of this Mortgage.
1.13 Mortgagees Performance of Defaults . If Mortgagor defaults in the payment of any tax, assessment, encumbrance or other imposition, in its obligation to furnish insurance hereunder or in the performance or observance of any other covenant, condition or term in this Mortgage or in any other instrument securing the Note, Mortgagee may at its option perform or observe the same, and all payments made (whether such payments are regular or accelerated payments) and costs and expenses incurred or paid by Mortgagee in connection therewith shall become due and payable immediately by Mortgagor. The amounts so incurred or paid by Mortgagee, together with interest thereof at the Default Rate as hereinafter defined from the date incurred until paid by Mortgagor, shall be added to the indebtedness and secured by the lien of this Mortgage. Nothing contained herein shall be construed as requiring Mortgagee to advance or expend monies for any purposes mentioned in this paragraph, or for any other purpose. Mortgagee is hereby empowered to enter and to authorize others to enter upon the Mortgaged Property or any part thereof for the purpose of performing or observing any such defaulted covenant, condition or terms, without thereby becoming liable to Mortgagor or any person in possession holding under Mortgagor.
ARTICLE TWO
DEFAULTS
2.01 Event of Default . The term Event of Default, wherever used in this Mortgage, shall mean any one or more of the following events which is not cured or corrected by Mortgagor within five (5) days after written notice is given by Mortgagee to Mortgagor, specifying the nature of the event:
(a) A breach by Mortgagor of any of the covenants, agreements and conditions of Article One hereof.
(b) Failure by Mortgagor to duly keep, perform and observe any other covenant, condition or agreement in the Note, this Mortgage, or any other instrument securing the Note or any other instrument of collateral to the Note or executed in connection with the sums secured hereby.
(c) If either (A) Mortgagor, or any guarantor or endorser of the Note: (i) files a voluntary petition in bankruptcy, or (ii) is adjudicated as a bankrupt or insolvent, or (iii) files any petition or answer seeking or acquiescing in any reorganization, management, composition, readjustment, liquidation, dissolution or similar relief for itself under any law relating to bankruptcy, insolvency or other relief for debtors, or (iv) seeks or consents to or acquiesces in the appointment of any trustee, receiver, master or liquidator of itself Mortgaged Property or of any or all of the rents, or of all of any substantial part of the revenues, issues, earnings, profits or income thereof, or (v) makes any general assignment for the benefit of creditors, or (vi) makes an admission in writing of its inability to pay its debts generally as they become due; or (B) a court of competent jurisdiction enters an order, judgment or decree approving a petition filed against Mortgagor or any guarantor or endorser of the Note, seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal, state, or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, which order, judgment or decree remains unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive) from the date of entry thereof; or (C) any trustee, receiver or liquidator of Mortgagor or of all or any substantial part of the Mortgaged Property or of any or all of the rents, revenues, issues, earnings, profits or income thereof, is appointed without the prior written consent of Mortgagee, which appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive).
(d) Default by Mortgagor under any agreement or obligation of Mortgagor affecting any portion of the Mortgaged Property, or any other documents or instruments securing any other indebtedness of Mortgagor to Mortgagee, if such default is not cured within any grace period permitted therein and if such default permits the holder to cause such obligation to become due prior to its stated maturity. Mortgagor shall notify Mortgagee in writing of the occurrence of such default, specifying the nature of such default.
(e) Material breach of any warranty or material untruth of any representation of Mortgagor contained in the Note, this Mortgage or any other instrument securing the Note.
2.02 Acceleration of Maturity . If an Event of Default shall have occurred, Mortgagee may declare the outstanding principal amount of the Note and the interest accrued thereon, and all other sums secured hereby, to be due and payable immediately, and upon such declaration such principal and interest and other sums shall immediately become and be due and payable without demand or notice.
2.03 Mortgagees Power of Enforcement . If an Event of Default shall have occurred, Mortgagee may, either with or without entry or taking possession as hereinabove provided or otherwise, proceed by suit or suits at law or in equity or by any other appropriate proceeding or remedy: (a) to enforce payment of the Note or the performance of any term hereof or any other right; (b) to foreclose this Mortgage and to sell, as an entirety or in separate lots or parcels, the Mortgaged Property, under the judgment or decree of a court or courts of competent jurisdiction; and (c) to pursue any other remedy available to it. Mortgagee shall take action either by such proceedings or by the exercise of its powers with respect to entry or taking possession, or both, as the Mortgagee may determine.
2.04 Mortgagees Right to Enter and Take Possession, Operate and Apply Income .
(a) If an Event of Default shall have occurred, Mortgagor, upon demand of Mortgagee, shall forthwith surrender to Mortgagee the actual possession, and if and to the extent permitted by law, Mortgagee itself, or by such officers or agents as it may appoint, may enter and take possession of all the Mortgaged Property, and may exclude Mortgagor and its agents and employees wholly therefrom, and may have joint access with Mortgagor to the books, papers and accounts of Mortgagor.
(b) If Mortgagor shall for any reason fail to surrender or deliver the Mortgaged Property or any part thereof after Mortgagees demand, Mortgagee may obtain a judgment or decree conferring on Mortgagee the right to immediate possession or requiring Mortgagor to deliver immediate possession of all or part of the Mortgaged Property to Mortgagee along with all books, papers and accounts of Mortgagor, to the entry of which judgment or decree Mortgagor hereby specifically consents.
(c) Mortgagor shall pay to Mortgagee, upon demand, all reasonable costs and expenses of obtaining such judgment or decree and reasonable compensation to Mortgagee, its attorneys and agents, and all such costs, expenses and compensation shall, until paid, be secured by the lien of this Mortgage.
(d) Upon every such entering upon or taking of possession, Mortgagee may hold, store, use, operate, manage and control the Mortgaged Property and conduct the business thereof, and, from time to time:
(i) make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements thereto and thereon and purchase or otherwise acquire additional fixtures, personalty and other property;
(ii) insure or keep the Mortgaged Property insured;
(iii) manage and operate the Mortgaged Property and exercise all the rights and powers of Mortgagor in its name;
(iv) enter into agreements with others to exercise the powers herein granted Mortgagee;
all as Mortgagee in its reasonable judgment from time to time may determine; and Mortgagee may collect and receive all the income, revenues, rents, issues and profits of the same, including those past due as well as those accruing thereafter; and shall apply the monies so received by Mortgagee in such priority as Mortgagee may determine to (1) the reasonable compensation, expenses and disbursements of the agents and attorneys; (2) the cost of insurance, taxes, assessments and other proper charges upon the Mortgaged Property or any part thereof; (3) the deposits for taxes and assessments and insurance premiums due; and (4) the payment of accrued interest on the Note.
Mortgagee shall surrender possession of the Mortgaged Property to Mortgagor only when all that is due upon such interest, tax and insurance deposits and principal installments, and under any of the terms of this Mortgage, shall have been paid and all defaults made good. The same right of taking possession, however, shall exist if any subsequent Event of Default shall occur and be continuing.
2.05 Purchase by Mortgagee . Upon any such foreclosure sale, Mortgagee may bid for and purchase the Mortgaged Property and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in its own absolute right without further accountability.
2.06 Application of Indebtedness Toward Purchase Price . Upon any such foreclosure sale, Mortgagee may, if permitted by law, after allowing for the proportion of the total purchase price required to be paid in cash and for the costs and expenses of the sale, compensation and other charges, in paying the purchase price apply any portion of or all sums due to Mortgagee under the Note, this Mortgage or any other instrument securing the Note, in lieu of cash, to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon.
2.07 Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws . Mortgagor agrees to the full extent permitted by law that in case of a default on its part hereunder, neither Mortgagor nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, or the absolute sale of the Mortgaged Property or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereat, and Mortgagor, for itself and all who may at any time claim through or under it hereby waives, to the full extent that it may lawfully so do, the benefit of all such laws, and any and all right to have the assets comprising the Mortgaged Property marshaled upon any foreclosure of the lien hereof deficiency judgment obtained by Mortgagee against Mortgagor and or appraised for the purpose of reducing any agrees that Mortgagee or any court having jurisdiction to foreclose such lien may sell the Mortgaged Property in part or as an entirety.
2.08 Receiver . If an Event of Default shall have occurred, Mortgagee, to the extent permitted by law and without regard to the value or occupancy of the security, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Mortgaged Property and to collect all rents, revenues, issues, income, products and profits thereof and apply the same as the court may direct. The receiver shall have all rights and powers permitted under the laws of the state where the Land is located and such other powers as the court making such appointment shall confer. The expenses, including receivers fees, attorneys fees, costs and agents compensation, incurred pursuant to the powers herein contained shall be secured by this Mortgage. The right to enter and take possession of and to manage and operate the Mortgaged Property, and to collect the rents, issues and profits thereof, whether by a receiver or otherwise, shall be cumulative to any other right or remedy hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. Mortgagee shall be liable to account only for such rents, issues and profits actually received by Mortgagee, whether received pursuant to this Paragraph or Paragraph 2.04. Notwithstanding the appointment of any receiver or other custodian, Mortgagee shall be entitled as secured party hereunder to the possession and control of any cash, deposits, or instruments at the time held by, or payable or deliverable under the terms of this Mortgage to, Mortgagee.
2.9 Suits to Protect the Mortgaged Property . Mortgagee shall have the power and authority to institute and maintain any suits and proceedings as Mortgagee may deem advisable (a) to prevent any impairment of the Mortgaged Property by any acts which may be unlawful or any violation of this Mortgage, (b) to preserve or protect its interest in the Mortgaged Property, and (c) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order may impair the security hereunder or be prejudicial to Mortgagees interest.
2.10 Proofs of Claim . In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings affecting Mortgagor, any person, partnership or corporation guaranteeing or endorsing any of Mortgagors obligations, its creditors or its property, Mortgagee, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have its claims allowed in such proceedings for the entire amount due and payable by Mortgagor under the Note, this Mortgage and any other instrument securing the Note, at the date of the institution of such proceedings, and for any additional amounts which may become due and payable by Mortgagor after such date.
2.11 Mortgagor to Pay the Note on Any Default in Payment:
Application of Monies by Mortgagee.
(a) If default shall be made in the payment of any amount due under the Note, this Mortgage or any other instrument securing the Note, then, upon Mortgagees demand, Mortgagor will pay to Mortgagee the whole amount due and payable under the Note and all other sums secured hereby; and if Mortgagor shall fail to pay the same forthwith upon such demand, Mortgagee shall be entitled to sue for and to recover judgment for the whole amount so due and unpaid together with costs and expenses including the reasonable compensation, expenses and disbursements of Mortgagees agents and attorneys incurred in connection with such suit and any appeal in connection therewith, Mortgagee shall be entitled to sue and recover judgment as aforesaid either before, after or during the pendency of any proceedings for the enforcement of this Mortgage, and the right of Mortgagee to recover such judgment shall not be affected by any taking, possession or foreclosure sale hereunder, or by the exercise of any other right, power or remedy for the enforcement of the terms of this Mortgage, or the foreclosure of the lien hereof.
(b) In case of a foreclosure sale of all or any part of the Mortgaged Property and of the application of the proceeds of sale to the payment of the sums secured hereby, Mortgagee shall be entitled to enforce payment of and to receive all amounts then remaining due and unpaid and to recover judgment for any portion thereof remaining unpaid, with interest.
(c) Mortgagor hereby agrees, to the extent permitted by law, that no recovery of any such judgment by Mortgagee and no attachment or levy or any execution upon any of the Mortgaged Property or any other property shall in any way affect the lien of this Mortgage upon the Mortgaged Property or any part thereof or any lien, rights, powers or remedies of Mortgagee hereunder, but such lien, rights, powers and remedies shall continue unimpaired as before.
(d) Any monies collected or received by Mortgagee under this Paragraph 2.11 shall be applied as follows:
(i) First to the payment of reasonable compensation, expenses and disbursements of the agents and attorneys; and
(ii) Second, to payment of amounts due and unpaid under the Note, this Mortgage and all other instruments securing the Note.
2.12 Delay or Omission No Waiver . No delay or omission of Mortgagee or of any holder of the Note to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy or shall be construed to waive any such Event of Default or to constitute acquiescence therein. Every right, power and remedy given to Mortgagee may be exercised from time to time and as often as may be deemed expedient by Mortgagee.
2.13 No Waiver of One Default to Affect Another . No waiver of any Event of Default hereunder shall extend to or affect any subsequent or any other Event of Default then existing, or
impair any rights, powers or remedies consequent thereon. If Mortgagee (a) grants forbearance or an extension of time for the payment of any sums secured hereby; (b) takes other or additional security for the payment thereof; (c) waivers or does not exercise any right granted in the Note, this Mortgage or any other instrument securing the Note; (d) releases any part of the Mortgaged Property from the lien of this Mortgage or any other instrument securing the Note; (e) consents to the filing of any map, plat or replat of the Land; (f) consents to the granting of any easement on the Land; or (g) makes or consents to any agreement changing the terms of this Mortgage or subordinating the lien or any charge hereof, no such act or omission shall release, discharge, modify, change or affect the original liability under the Note, this Mortgage or otherwise of Mortgagor, or any subsequent purchaser of the Mortgaged Property or any part thereof or any maker, co-signer, endorser, surety or guarantor.
No such act or omission shall preclude Mortgagee from exercising any right, power or privilege herein granted or intended to be granted in case of any Event of Default then existing or of any subsequent Event of Default nor, except as otherwise expressly provided in an instrument or instruments executed by Mortgagee, shall the lien of this Mortgage be altered thereby. In the event of then sale or transfer by operation of law or otherwise of all or any part of the Mortgaged Property, Mortgagee, without notice to any person, firm or deal with any such vendee concerning the indebtedness secured corporation, is hereby authorized and empowered to hereby, or with reference to any of the terms or conditions hereof, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any of the liabilities or undertakings hereunder.
2.14 Discontinuance of Proceedings; Position of Parties Restored . If Mortgagee shall have proceeded to enforce any right or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to Mortgagee, then and in every such case Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Mortgagee shall continue as if no such proceeding had occurred or had been taken.
2.15 Remedies Cumulative . No right, power or remedy conferred upon or reserved to Mortgagee by the Note, this Mortgage or any other instrument securing the Note is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or under then Note or any other instrument securing the Note, or now or hereafter existing at law, in equity or by statute.
ARTICLE THREE
MISCELLANEOUS PROVISIONS
3.01 Heirs, Successors, and Assigns Included in Parties . Whenever one of the parties hereto is named or referred to herein, the heirs, successors and assigns of such party shall be
included and all covenants and agreements contained in this Mortgage, by or on benefit of their respective behalf of Mortgagor or Mortgagee, heirs, successors and assigns, whether shall bind and inure to the so expressed or not.
3.02 Addresses for Notices, etc . All notices hereunder shall be in writing and shall be deemed to have been sufficiently given or served when presented personally or three (3) days following the date when deposited in the mail by registered or certified U.S. Mail, return receipt requested, with sufficient postage prepaid, addressed to MORTGAGOR at Two Buckhead Plaza, 3050 Peachtree Road NW, Suite 355, Atlanta, GA 30305, and to MORTGAGEE at P O Drawer 68, Pawleys Island, SC 29585.
3.03 Heading . The headings of the articles, sections, paragraphs and subdivisions of this Mortgage are for convenience of reference only, are not to be considered a part hereof, and shall not limit or expand or otherwise affect any of the terms hereof.
3.04 Invalid Provisions to Affect No Others . In the event that any of the covenants, agreements, terms or provisions contained in the Note, this Mortgage or any other instrument securing the Note shall be invalid, illegal or unenforceable in any respect, the validity of the remaining covenants, agreements, terms or provisions contained herein and in the Note and any other instrument securing the Note shall be in no way affected, prejudiced or disturbed thereby.
3.05 Changes, etc . Neither this Mortgage nor any term hereof may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement hereafter made by Mortgagor and Mortgagee relating to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance.
3.06 Governing Law . This Mortgage is made by Mortgagor and accepted by Mortgagee in the State of South Carolina, with reference to the laws of such State, and shall be construed, interpreted, enforced and governed by and in accordance with such laws (excluding the principles thereof governing conflicts of law).
3.07 Default Rate . The Default Rate of interest shall be as set forth in the Note.
3.08 Execution by Parties Other Than Borrower of Obligations. Any Mortgagor who executes this Mortgage but does not execute the Note (or other Obligations) has executed this Mortgage only to subject whatever interest, if any, such Mortgagor has or may hereafter have in the Premises to the lien of this Mortgage (nothing herein limits or affects such Mortgagors liability to Mortgagee under any separate guaranty or any other instrument), and agrees that Mortgagee and any other Mortgagor hereunder and Borrower may extend, modify, forbear, or make any other accommodations with regard to the terms of this Mortgage or the Obligations without such Mortgagors consent and without releasing such Mortgagor hereunder or modifying or affecting this Mortgage as to such Mortgagors interest in the Premises.
3.09 Subordinate Debt. This Mortgage is being given subject to that certain Mortgage of Real Estate, Security Agreement and Financing Statement from Mortgagor to Metro City Bank, dated December 31, 2012, and recorded December 31, 2012 in the office of the Register of Deeds for Georgetown County in Record Book at Page , and subject to that certain Assignment of Leases and Rents dated December , 2012, and recorded December , 2012, in Record Book at Page , aforesaid records. All rights given to Mortgagee herein remain subject to the rights first given to Metro City Bank.
WAIVER OF APPRAISAL RIGHTS: The Laws of the South Carolina provide that in any real estate foreclosure proceeding a defendant against whom a personal judgment is taken or asked may, within thirty (30) days after the sale of the mortgaged property, apply to the court for an order of appraisal. The statutory appraisal value as approved by the court could be substituted for the high bid and may decrease the amount of any deficiency owning in connection with the transaction. THE UNDERSIGNED BORROWER HEREBY WAIVES AND RELINQUISHES THE STATUTORY APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED PROPERTY.
IN WITNESS WHEREOF, the undersigned have executed this instrument the day and year above first written.
Signed, Sealed and Delivered |
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MORTGAGOR: |
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In the presence of: |
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GEORGETOWN HC&R |
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PROPERTY HOLDINGS, LLC |
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/s/ Gregory Youra |
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/s/ Boyd P. Gentry |
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By: Boyd P. Gentry, Manager |
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/s/ [Illegible] |
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STATE OF GEORGIA |
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COUNTY OF FULTON |
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PERSONALLY appeared before me the undersigned witness and made oath that s/he saw the within named Georgetown HC&R Property Holdings, LLC by Boyd P. Gentry, its Manager, Sign, Seal and as its Act and Deed deliver the within written Mortgage and Security Agreement; and that s/he with the other witness subscribed above witnessed the execution thereof.
SWORN to before me this 26th day of December, 2012. |
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/s/ Ellen W. Smith |
(L.S.) |
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#2 same notary signs here again and places SEAL |
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Notary Public for Georgia |
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My Commission Expires: Jan. 30, 2016 |
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Exhibit 10.256
SECURED SUBORDINATED PROMISSORY NOTE
U.S. $1,850,000.00 |
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December 31, 2012 |
FOR VALUE RECEIVED , the undersigned GEORGETOWN HC&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company (the Borrower), promises to pay to the order of WINYAH NURSING HOME, LLC, a South Carolina limited liability company (Lender), the principal sum of ONE MILLION EIGHT HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($1,850,000.00) (the Principal).
The unpaid Principal of this Note shall bear interest from the date hereof until paid in full at the annual percentage rate of seven percent (7%).
The Principal balance plus accrued interest shall be due and payable as follows:
Commencing on February 1, 2013 and continuing on the first day of each month thereafter, interest only payments shall be due and payable in the amount of Ten Thousand Seven Hundred Ninety-Two and 00/100 Dollars ($10,792.00) each. The unpaid Principal of this Note together with all accrued and unpaid interest shall be due and payable on the earlier of (i) December 31, 2013 or (ii) the date on which Borrower refinances the indebtedness of even date herewith in favor of Metro City Bank (MCB) which is secured by a first priority mortgage on the Real Property (as defined in that certain Purchase and Sale Agreement dated as of April 27, 2012, as amended) (the MCB Mortgage).
This Promissory Note (this Note) is secured by a second priority mortgage on the Real Property in favor of Lender. All payments due hereunder are subordinate to the indebtedness of Borrower to MCB, which indebtedness is secured by the MCB Mortgage.
Borrower acknowledges and agrees that all amounts due under this Note are due and payable as stated herein, and Lender has no obligation to renew or extend this Note. The books and records of Lender shall constitute prima facie evidence of all matters with respect to the amounts due hereunder. Payments shall be applied first to interest and then to Principal.
ADDITIONAL COVENANTS:
1. Secured Note . Payment of this Note is secured by the guaranty of AdCare Health Systems, Inc., Borrowers affiliate.
2. Default .
a. Each of the following shall be a default (Default) under this Note:
(a) failure of Borrower to pay any amount due hereunder, or any part hereof, or any extension or renewal hereof, within five (5) business days of the due date; or
(b) Borrowers failure to perform or comply with any of the covenants or agreements contained herein.
b. If this Note is placed in the hands of one or more attorneys for collection or in the hands of one or more attorneys for representation of Lender in connection with any bankruptcy, probate or other court or by any other legal proceedings, Borrower shall pay the fees and expenses of such attorneys in addition to the full amount due hereon, whether or not litigation is commenced.
c. In the event ( i ) that there occurs any Default hereunder; or ( ii ) that the Borrower shall become insolvent or make an assignment for the benefit of its creditors; or ( iii ) that a petition is filed or any other proceeding is commenced under the Federal Bankruptcy Act or any state insolvency statute by or against the Borrower; or ( iv ) that a receiver or similar person is appointed for the Borrower; then, in any such event, the entire unpaid Principal balance due hereon and all accrued interest at the option of the holder hereof shall become immediately due and payable without any notice or demand. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Default.
3. Prepayment . Borrower may prepay the balance of the Note in full or in part at any time without penalty, premium or additional interest.
4. Waivers by Borrower and Others . Borrower and all endorsers, sureties and guarantors hereof hereby severally waive presentment for payment, notice of non-payment, protest, and notice of protest, and diligence in enforcing payment hereof, and consent that the time of payment may be extended without notice. The makers, endorsers, guarantors, and sureties executing this Note also waive any and all defenses which they may have upon the ground of any extension of time of payment which may be given by the holder of this indebtedness to any of the undersigned, or to any other person assuming payment hereof.
5. Amendments, Modifications and Waiver . No amendment, modification or waiver of any provision of this Note, nor consent to any departure by Borrower therefrom, shall be effective unless the same shall be in a writing signed by Lender, and then only in the specific instance and for the purpose for which given. No failure or delay on the part of Lender to exercise any right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right under this Note preclude any other or further exercise thereof, or the exercise of any other right. Each and every right granted to Lender under this Note or allowed to it at law or in equity shall be deemed cumulative and such remedies may be exercised from time to time concurrently or consecutively at Lenders option.
6. Payment . All payments due under this Note shall be paid to Lender at Post Office Drawer 68, Pawleys Island, South Carolina 29585 or at such other place as Lender may direct. Whenever a payment is due on a day other than a business day (all days except Saturday, Sunday and legal holidays under federal or South Carolina law), the maturity thereof shall be extended to the next succeeding business day and interest shall accrue thereon at the rate described herein. In the event any amount due hereunder is not paid within ten (10) days of the date when due, the undersigned agrees to pay an administrative and late charge equal to the lesser of (a) five percent (5%) on and in addition to the amount of such overdue amount, or (b) the maximum charges allowable under applicable law.
7. Notices .
(a) Form of Notices . Any and all notices and other communications required or permitted under this Note may be given by the attorneys of the parties and shall be deemed adequately given if in writing. All such notices shall be delivered either in hand, by facsimile with written confirmation of transmission, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) Timing of Notices . All notices shall be deemed to have been given for all purposes of this Note upon the date of receipt or refusal, except that whenever under this Note a notice is either received on a day which is not a business day or is required to be delivered on or before a specific day which is not a business day, the day of receipt or required delivery shall automatically be extended to the next business day. For purposes of any notice given by facsimile, the date of receipt shall be the date of transmission (as confirmed by electronic confirmation of transmission generated by the senders machine).
(c) Notice Addresses . All such notices shall be addressed,
if to Lender, to: Winyah Nursing Home, LLC
Post Office Drawer 68
Pawleys Island, South Carolina 29585
Attn: E. Stone Miller
Facsimile No.: (843) 235-8481
with a copy to: McNair Law Firm, P.A.
11019 Ocean Highway
Pawleys Island, South Carolina 29585
Attn: James B. Moore, Jr.
Facsimile No. (843) 235-4101
If to Borrower, to: Georgetown HC&R Property Holdings, LLC
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305
Attn: Boyd P. Gentry
Facsimile No. (404) 842-1899
with a copy to:
Gregory P. Youra, Esq.
Holt Ney Zatcoff & Wasserman, LLP
100 Galleria Pkwy, Suite 1800
Atlanta, Georgia 30339
Facsimile: (770) 956-1490
(d) Change of Notice Addresses . By notice given as herein provided, the parties hereto shall have the right from time to time and at any time to change their respective addresses to any other address within the United States of America effective upon receipt by the other parties of such notice.
8. Paragraph Headings . Paragraph headings are inserted for convenience of reference only, do not form part of this Note and shall be disregarded for purposes of the interpretation of the terms of this Note.
9. Time of Essence . Time is of the essence with respect to each and every covenant and obligation of Borrower under this Note.
10. Governing Law . This note shall be governed and construed according to the statutes and laws of the State of South Carolina from time to time in effect, except to the extent that any federal statute or law that preempts or provides an alternative or alternatives to otherwise applicable state statutes or laws, or other applicable federal statute or law, may permit the charging of a higher rate of interest than applicable state statute or law, in which event such applicable federal statute or law, as amended and supplemented from time to time shall govern and control maximum rate of interest permitted to be charged hereunder; it being intended that, as to the maximum rate of interest which may be charged, received, and collected hereunder, those applicable statutes and laws, whether state or federal, from time to time in effect, which permit the charging of a higher rate of interest, shall govern and control; provided, always, however that in no event and under no circumstances shall Borrower be liable for the payment of interest in excess of the maximum rate permitted by such applicable law, from time to time in effect.
[INTENTIONAL SHORT PAGE; SIGNATURE PAGE FOLLOWS]
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BORROWER: |
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GEORGETOWN PROPERTY HOLDINGS , LLC, |
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a Georgia limited liability company |
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/s/ Boyd P. Gentry |
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Boyd P. Gentry, Manager |
Exhibit 10.257
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this Guaranty ) is dated December 31, 2012, by ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation ( Guarantor ), to and for the benefit of WINYAH NURSING HOME, LLC , a South Carolina limited liability company (the Lender).
WHEREAS, AdCare Property Holdings, LLC, an Ohio limited liability company, and Lender entered into that certain Purchase and Sale Agreement dated August 9, 2012, as amended (the PSA ), pursuant to which AdCare Property Holdings, LLC has agreed to purchase and the Lender has agreed to sell certain assets and real property, expressly including that certain skilled nursing facility commonly known as Georgetown Healthcare & Rehabilitation Center, located at 2715 South Island Road, Georgetown, South Carolina 29449 (the Facility ); and
WHEREAS, AdCare Property Holdings, LLC has assigned its rights under the PSA to acquire the Facility to Georgetown HC&R Property Holdings, LLC, a Georgia limited liability company ( Borrower ); and
WHEREAS, in connection with the sale of the Facility and payment therefor, Borrower has executed and delivered to Lender a Secured Subordinated Promissory Note of even date herewith (the Note ) pursuant to which Borrower has agreed to borrow from Lender, and Lender has agreed to lend to Borrower $1,850,000.00 (the Principal Amount ); and
WHEREAS, Lender is willing to make the Principal Amount available to Borrower by way of a loan only upon the condition that Guarantor executes and delivers to Lender this Guaranty and agrees to perform and to comply with its obligations under this Guaranty; and
NOW, THEREFORE, in consideration of the foregoing and of the covenants and agreements hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, and as an inducement for Lender to loan the Principal Amount to Borrower, Guarantor, intending to be legally bound hereby, agrees as follows:
1. All capitalized terms in this Guaranty and not defined herein shall have the defined meanings provided in the Note.
2. Guarantor, jointly and severally, unconditionally, irrevocably and absolutely guarantees the due and punctual payment and performance when due of the Note (the Guaranteed Obligations ). Guarantor acknowledges that this Guaranty shall be deemed a continuing guaranty of the Guaranteed Obligations.
3. This Guaranty is a guaranty of payment, not of collection. Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral, and Guarantor hereby waives any rights to require Lender to proceed against Borrower or to require Lender to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein shall prevent Lender from suing on the Note if neither Borrower nor Guarantor timely performs the obligations of Borrower thereunder, and the exercise of any of the aforesaid rights and the completion of any foreclosure or other proceedings shall not constitute a discharge of Guarantors obligations hereunder, it being the purpose and intent of Guarantor that the Guarantors obligations hereunder shall be absolute, independent and unconditional under any and all circumstances. Neither Guarantors obligations under this Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by an impairment,
modification, change, release, or limitation of the liability of Borrower or by reason of Borrowers bankruptcy or insolvency.
If any Guaranteed Obligation is not satisfied when due, whether by acceleration or otherwise, the Guarantor shall forthwith satisfy such Guaranteed Obligation, upon demand, and no such satisfaction shall discharge the obligations of the Guarantor hereunder until all Guaranteed Obligations have been indefeasibly paid in cash and performed and satisfied in full and the Note fully satisfied. The liability of Guarantor under this Guaranty shall be primary and direct and not conditional or contingent upon the enforceability of any obligation, the solvency of Borrower or any other Person, any obligation or circumstance which might otherwise constitute a legal or equitable discharge or defense of a surety or guaranty or the pursuit by Lender of any remedies it may have against Borrower. Lender shall not be required to make any demand on Borrower or to sell at foreclosure or otherwise pursue or exhaust its remedies against any collateral of Borrower, simultaneously with or after enforcing its rights and remedies hereunder against Guarantor, and any one or more successive and/or concurrent actions may be brought against Guarantor in the same action brought against Borrower, as often as Lender may deem advisable, in its sole discretion.
4. Guarantor hereby represents and warrants to Lender the following: (A) AdCare Healthcare Systems, Inc., is a corporation, duly organized, validly existing and in good standing under the laws of the State of Ohio; (B) Guarantor has all requisite power and authority to own its properties and assets and to carry on its business as now being conducted; (C) Guarantor has all requisite power and authority (i) to execute, deliver and perform this Guaranty, and (ii) to consummate the transactions contemplated hereunder, and Guarantor is under no legal restriction, limitation or disability that would prevent it from doing any of the foregoing; (D) the execution, delivery and performance by Guarantor of this Guaranty and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary actions on the part of Guarantor (including any required approval of shareholders or members or other equity holders, if applicable) (none of which actions have been modified or rescinded, and all of which actions are in full force and effect), and this Guaranty has been duly executed and delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms; and (E) the execution, delivery and performance by Guarantor of this Guaranty do not and will not (1) violate any provision of any applicable law, statute, rule, regulation, ordinance, license or tariff or any judgment, decree or order of any court or other governmental authority binding on or applicable to Guarantor or any of its properties or assets; (2) result in a breach of any indenture, agreement or other instrument to which Guarantor is a party; or (3) conflict with or violate any provision of the certificate of incorporation or formation, by-laws, or operating agreement of Guarantor.
5. Guarantor hereby waives demand, setoff, counterclaim, presentment, protest, notice of dishonor or non-payment, as well as all defenses with respect to any and all instruments, notice of acceptance hereof, credit extended, collateral received or delivered, or any other action taken by Lender in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein, it being the intention hereof that Guarantor shall remain liable as a principal until the full amount of all Guaranteed Obligations shall have been indefeasibly paid in full in cash and performed and satisfied in full. The pleading of any statute of limitations as a defense to any demand against Guarantor is expressly waived by Guarantor.
6. Any notice or request under this Guaranty shall be given to the parties at the addresses set forth below, or at such other address as such party may hereafter specify in a notice given in the manner required under this Section 6. Any notice or request hereunder shall be given only by, and shall be deemed to have been received upon (each a Receipt ): (i) registered or certified mail, return receipt
requested, on the date on which such is received as indicated in such return receipt, or (ii) delivery by a nationally recognized overnight courier, one (1) Business Day after deposit with such courier.
if to Lender, to: Winyah Nursing Home, LLC
Post Office Drawer 68
Pawleys Island, South Carolina 29585
Attn: E. Stone Miller
Facsimile No.: (843) 235-8481
with a copy to: McNair Law Firm, P.A.
11019 Ocean Highway
Pawleys Island, South Carolina 29585
Attn: James B. Moore, Jr.
Facsimile No. (843) 235-4101
If to Borrower, to: Georgetown HC&R Property Holdings, LLC
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305
Attn: Boyd P. Gentry
Facsimile No. (404) 842-1899
with a copy to:
Gregory P. Youra, Esq.
Holt Ney Zatcoff & Wasserman, LLP
100 Galleria Pkwy, Suite 1800
Atlanta, Georgia 30339
7. If any term or provision of this Guaranty is adjudicated to be invalid under applicable laws or regulations, such provision shall be inapplicable to the extent of such invalidity or unenforceability without affecting the validity or enforceability of, the remainder of this Guaranty which shall be given effect so far as possible.
8. This Guaranty shall be governed by and construed in accordance with the internal laws of the State of South Carolina without giving effect to its choice of law provisions. Any judicial proceeding brought by or against Guarantor with respect to any of the Guaranteed Obligations or any of the rights or obligations hereunder, this Guaranty or any related agreement may be brought in any federal or state court of competent jurisdiction located in the State of South Carolina, and, by execution and delivery of this Guaranty, each Guarantor accepts for itself and in connection with its properties generally and unconditionally the non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Guaranty and/or the Note. Guarantor waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Guarantor acknowledges that Guarantor participated in the negotiation and drafting of this Guaranty and that, accordingly, Guarantor shall not move or petition a court construing this Guaranty to construe it more stringently against Lender than against Guarantor.
9. GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION (A) ARISING UNDER THIS GUARANTY OR (B) IN ANY WAY RELATING TO THIS GUARANTY OR THE TRANSACTIONS EVIDENCED HEREBY
OR THEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND GUARANTOR HEREBY AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT EITHER GUARANTOR OR LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
10. This Guaranty constitutes the entire agreement between Guarantor and Lender with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof or thereof. Neither this Guaranty nor any provision hereof may be changed, modified, amended, waived, restated, supplemented, canceled or terminated other than by an agreement in writing signed by both Lender and Guarantor. Guarantor acknowledges that Guarantor has been advised by counsel in connection with the negotiation and execution of this Guaranty and Guarantor is not relying upon oral representations or statements inconsistent with the terms and/or provisions of this Guaranty. Any waiver of this Guaranty by Lender shall be limited solely to the express terms and provisions of such waiver.
[Signature page follows]
GUARANTY AGREEMENT
IN WITNESS WHEREOF, Guarantor has executed this Guaranty Agreement as of the day and year first above written.
GUARANTOR : |
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ADCARE HEALTH SYSTEMS, INC. , |
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an Ohio corporation |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry, Chief Executive Officer |
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Exhibit 10.258
STATE OF GEORGIA
COUNTY OF FULTON
G U A R A N T Y
WHEREAS, Sumter N&R, LLC, hereinafter called Guarantor, has an interest in the financial affairs of SUMTER VALLEY PROPERTY HOLDINGS, LLC, hereinafter collectively called Borrower;
WHEREAS, METRO CITY BANK, hereinafter called Lender, proposes to make certain financial accommodations to the Borrower; and
WHEREAS, such financial accommodations will benefit Guarantor and Guarantor desires to induce Lender to make its financial accommodations to the Borrower.
NOW, THEREFORE, to induce Lender to make certain financial accommodations to the Borrower, including, without limitation, the lending of funds to the Borrower pursuant to that certain Promissory Note dated of even date herewith, made by the Borrower payable to the order of Lender, in the original principal amount of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($6,950,000.00), hereinafter called the Note, and in consideration of such financial accommodations and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Guarantor, Guarantor unconditionally guarantees the full, prompt and complete payment when due, whether by declaration or otherwise, and at all times hereafter, of all obligations and indebtedness now or hereafter owing by the Borrower to Lender as evidenced by the Note and by any document executed or delivered in connection with the transaction resulting in the indebtedness evidenced by the Note, together with any and all renewal or renewals, extension or extensions, modification or modifications thereof, and substitution or substitutions therefor, either in whole or in part (all such obligations and indebtedness being hereinafter collectively called the Liabilities). Guarantor agrees that, if the Liabilities are not paid by the Borrower when due, Guarantor will immediately do so. Guarantor further agrees to pay all expenses (including attorneys fees) paid or incurred in endeavoring to enforce this Guaranty and the payment of the Liabilities.
Guarantor waives presentment, demand, dishonor, notice of dishonor, protest, and all other notices whatsoever, including, without limitation, notices of acceptance hereof, of all contracts and commitments, of the existence or creation of any of the Liabilities, or the amounts and terms thereof, and all defaults, disputes or controversies with the Borrower, and of the settlement, compromise or adjustment thereof. Guarantor agrees that Lender shall have full authority, without obtaining the consent of, giving notice to, or affecting the liability of Guarantor, to make changes of terms, to withdraw or extend credit or time to pay, to release the whole or any part of any indebtedness, to settle or compound differences for less than the full amount owing, to accept or release security, to accept, compromise or release the primary or secondary liability of any person or persons with respect to any of the Liabilities, to accept Note, trade acceptances or any other form of obligation for the Liabilities, to make arrangements or settlements in or out of court in the case of receivership, liquidation, readjustment, bankruptcy, reorganization, arrangement or an assignment for the benefit of creditors and to do anything, whether or not herein specified, which may be done or waived by or between Lender and the Borrower. The making of such arrangements, settlements, compromises, adjustments, releases, and extensions of time shall not diminish,
discharge, modify, reduce, extinguish or otherwise affect the liability of Guarantor hereunder for the full amount of the Liabilities. Guarantor further agrees that no act or omission on the part of Lender shall in any way affect, impede or impair this Guaranty.
This Guaranty shall be enforceable without Lender having to proceed first against the Borrower (the right to require Lender to take action against the Borrower as required by O.C.G.A. §10-7-24 being hereby expressly waived) or against any security for the payment of the Liabilities, and shall be effective regardless of the solvency or insolvency of the Borrower, any reorganization, merger or consolidation of the Borrower, or any change in the composition, nature, personnel or location of the Borrower.
This Guaranty shall be binding upon and enforceable against the Guarantor and upon the legal representatives, successors and assigns of the Guarantor. The liability of the Guarantor and the legal representatives, successors and assigns of the Guarantor hereunder is joint and several, primary and unconditional, and shall not be subject to any claim of offset, counterclaim or defense of the Borrower.
This Guaranty shall be irrevocable, absolute and unconditional and shall remain in full force and effect as to Guarantor until such time as all of the Liabilities shall have been paid and satisfied in full. No delay or failure on the part of the Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.
This Guaranty shall remain in full force and effect, and Guarantor shall continue to be liable for the payment of the Liabilities in accordance with the original terms of the documents and instruments evidencing and securing the same, notwithstanding the commencement of any bankruptcy, reorganization or other debtor relief proceeding by or against the Borrower, and notwithstanding any modification or amendment of any document or instrument evidencing or securing any of the Liabilities, any stay of the exercise by Lender of any of its rights and remedies against the Borrower with respect to any of the Liabilities, or any cure of any default by the Borrower under any document or instrument evidencing or securing any of the Liabilities, which may be effected in connection with any such proceeding, whether permanent or temporary, and notwithstanding any assent thereto by Lender.
Lender may, without notice of any kind, sell, assign or transfer all or any of the Liabilities, and in such event each and every immediate and successive assignee, transferee or holder of all or any of the Liabilities shall have the right to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee, transferee or holder, as fully as if such person were herein by name specifically given such rights, powers and benefits, but Lender shall have an unimpaired right to enforce this Guaranty for its benefit as to so much of the Liabilities as Lender has not sold, assigned, or transferred.
The records of Lender showing the account between Lender and the Borrower shall be admissible in evidence in any action or proceeding hereon as prima facie proof of the items therein set forth.
This Guaranty shall be governed by, construed under and interpreted and enforced in accordance with the laws of the State of Georgia.
Guarantor hereby submits to personal jurisdiction in the State of Georgia for the enforcement of this Guaranty and waives any and all personal rights under the laws of any other state or the United States to object to jurisdiction within the State of Georgia for the purposes of litigation to enforce this Guaranty. In the event that such litigation is commenced, Guarantor agrees that service of process may be made, and personal jurisdiction over Guarantor obtained, by the serving of a copy of the summons and complaint upon Guarantor at the following address:
1145 Hembree Road
Roswell, Georgia 30076
Nothing contained herein shall prevent Lender from bringing any action or exercising any rights against any security given to Lender by the Borrower or Guarantor, or against Guarantor personally, or against any property of Guarantor, within any other state. Commencement of any such action or proceeding in any other state shall not constitute a waiver of the agreement that the laws of the State of Georgia shall govern the rights and obligations of Guarantor and Lender hereunder or of the submission made by Guarantor to personal jurisdiction within the State of Georgia. The aforesaid means of obtaining personal jurisdiction and perfecting service of process are not intended to be exclusive but are cumulative and in addition to all other means of obtaining personal jurisdiction and perfecting service of process now or hereafter provided by the laws of the State of Georgia.
Guarantor warrants and represents to Lender that any financial statements heretofore delivered by Guarantor to Lender were true and correct in all respects as of the date delivered to Lender, and that there has been no material adverse change in the financial condition of Guarantor since the date of such statement.
Guarantor hereby represents and covenants that (a) this Guaranty constitutes a valid and legally binding obligation of Guarantor and does not violate, conflict with, or constitute any default under any law, government regulation, decree, judgment or any other agreement or instrument binding upon such Guarantor, and (b) Guarantor has full power and authority to incur the obligations provided for herein.
Guarantor agrees that Guarantor shall have no right to recover against the Borrower by way of subrogation to the rights of Lender on account of any payment by Guarantor to Lender hereunder until all of the Liabilities have been paid and satisfied in full, and Guarantor hereby waives, releases and relinquishes any such rights of subrogation to such extent.
In the event that any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by any court, this Guaranty shall be construed as not containing such provision, and the invalidity of such provision shall not affect other provisions hereof which are otherwise lawful and valid and shall remain in full force and effect.
This Guaranty has been negotiated, and is being executed and delivered in the State of Georgia, or if executed elsewhere, shall become effective upon Lenders receipt and acceptance of the executed original of this Guaranty in the State of Georgia; provided, however, that Lender shall have no obligation to give, nor shall Guarantor be entitled to receive, any notice of such acceptance
for this Guaranty to become a binding obligation of Guarantor.
(Signature page for Sumter guaranty)
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed under seal and Guarantor has delivered this Guaranty to Lender, all as of the 31st day of December, 2012.
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GUARANTOR: |
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SUMTER N&R, LLC |
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/s/ [Illegible] |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
WITNESS |
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Boyd P. Gentry, Manager |
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Exhibit 10.259
STATE OF GEORGIA
COUNTY OF FULTON
G U A R A N T Y
WHEREAS, Georgetown HC&R Nursing, LLC, hereinafter called Guarantor, has an interest in the financial affairs of GEORGETOWN HC&R PROPERTY HOLDINGS, LLC, hereinafter collectively called Borrower;
WHEREAS, METRO CITY BANK, hereinafter called Lender, proposes to make certain financial accommodations to the Borrower; and
WHEREAS, such financial accommodations will benefit Guarantor and Guarantor desires to induce Lender to make its financial accommodations to the Borrower.
NOW, THEREFORE, to induce Lender to make certain financial accommodations to the Borrower, including, without limitation, the lending of funds to the Borrower pursuant to that certain Promissory Note dated of even date herewith, made by the Borrower payable to the order of Lender, in the original principal amount of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($6,950,000.00), hereinafter called the Note, and in consideration of such financial accommodations and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Guarantor, Guarantor unconditionally guarantees the full, prompt and complete payment when due, whether by declaration or otherwise, and at all times hereafter, of all obligations and indebtedness now or hereafter owing by the Borrower to Lender as evidenced by the Note and by any document executed or delivered in connection with the transaction resulting in the indebtedness evidenced by the Note, together with any and all renewal or renewals, extension or extensions, modification or modifications thereof, and substitution or substitutions therefor, either in whole or in part (all such obligations and indebtedness being hereinafter collectively called the Liabilities). Guarantor agrees that, if the Liabilities are not paid by the Borrower when due, Guarantor will immediately do so. Guarantor further agrees to pay all expenses (including attorneys fees) paid or incurred in endeavoring to enforce this Guaranty and the payment of the Liabilities.
Guarantor waives presentment, demand, dishonor, notice of dishonor, protest, and all other notices whatsoever, including, without limitation, notices of acceptance hereof, of all contracts and commitments, of the existence or creation of any of the Liabilities, or the amounts and terms thereof, and all defaults, disputes or controversies with the Borrower, and of the settlement, compromise or adjustment thereof. Guarantor agrees that Lender shall have full authority, without obtaining the consent of, giving notice to, or affecting the liability of Guarantor, to make changes of terms, to withdraw or extend credit or time to pay, to release the whole or any part of any indebtedness, to settle or compound differences for less than the full amount owing, to accept or release security, to accept, compromise or release the primary or secondary liability of any person or persons with respect to any of the Liabilities, to accept Note, trade acceptances or any other form of obligation for the Liabilities, to make arrangements or settlements in or out of court in the case of receivership, liquidation, readjustment, bankruptcy, reorganization, arrangement or an assignment for the benefit of creditors and to do anything, whether or not herein specified, which may be done or waived by or between Lender and the Borrower. The making of such arrangements, settlements, compromises, adjustments, releases, and extensions of time shall not diminish,
discharge, modify, reduce, extinguish or otherwise affect the liability of Guarantor hereunder for the full amount of the Liabilities. Guarantor further agrees that no act or omission on the part of Lender shall in any way affect, impede or impair this Guaranty.
This Guaranty shall be enforceable without Lender having to proceed first against the Borrower (the right to require Lender to take action against the Borrower as required by O.C.G.A. §10-7-24 being hereby expressly waived) or against any security for the payment of the Liabilities, and shall be effective regardless of the solvency or insolvency of the Borrower, any reorganization, merger or consolidation of the Borrower, or any change in the composition, nature, personnel or location of the Borrower.
This Guaranty shall be binding upon and enforceable against the Guarantor and upon the legal representatives, successors and assigns of the Guarantor. The liability of the Guarantor and the legal representatives, successors and assigns of the Guarantor hereunder is joint and several, primary and unconditional, and shall not be subject to any claim of offset, counterclaim or defense of the Borrower.
This Guaranty shall be irrevocable, absolute and unconditional and shall remain in full force and effect as to Guarantor until such time as all of the Liabilities shall have been paid and satisfied in full. No delay or failure on the part of the Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.
This Guaranty shall remain in full force and effect, and Guarantor shall continue to be liable for the payment of the Liabilities in accordance with the original terms of the documents and instruments evidencing and securing the same, notwithstanding the commencement of any bankruptcy, reorganization or other debtor relief proceeding by or against the Borrower, and notwithstanding any modification or amendment of any document or instrument evidencing or securing any of the Liabilities, any stay of the exercise by Lender of any of its rights and remedies against the Borrower with respect to any of the Liabilities, or any cure of any default by the Borrower under any document or instrument evidencing or securing any of the Liabilities, which may be effected in connection with any such proceeding, whether permanent or temporary, and notwithstanding any assent thereto by Lender.
Lender may, without notice of any kind, sell, assign or transfer all or any of the Liabilities, and in such event each and every immediate and successive assignee, transferee or holder of all or any of the Liabilities shall have the right to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee, transferee or holder, as fully as if such person were herein by name specifically given such rights, powers and benefits, but Lender shall have an unimpaired right to enforce this Guaranty for its benefit as to so much of the Liabilities as Lender has not sold, assigned, or transferred.
The records of Lender showing the account between Lender and the Borrower shall be admissible in evidence in any action or proceeding hereon as prima facie proof of the items therein set forth.
This Guaranty shall be governed by, construed under and interpreted and enforced in accordance with the laws of the State of Georgia.
Guarantor hereby submits to personal jurisdiction in the State of Georgia for the enforcement of this Guaranty and waives any and all personal rights under the laws of any other state or the United States to object to jurisdiction within the State of Georgia for the purposes of litigation to enforce this Guaranty. In the event that such litigation is commenced, Guarantor agrees that service of process may be made, and personal jurisdiction over Guarantor obtained, by the serving of a copy of the summons and complaint upon Guarantor at the following address:
1145 Hembree Road
Roswell, Georgia 30076
Nothing contained herein shall prevent Lender from bringing any action or exercising any rights against any security given to Lender by the Borrower or Guarantor, or against Guarantor personally, or against any property of Guarantor, within any other state. Commencement of any such action or proceeding in any other state shall not constitute a waiver of the agreement that the laws of the State of Georgia shall govern the rights and obligations of Guarantor and Lender hereunder or of the submission made by Guarantor to personal jurisdiction within the State of Georgia. The aforesaid means of obtaining personal jurisdiction and perfecting service of process are not intended to be exclusive but are cumulative and in addition to all other means of obtaining personal jurisdiction and perfecting service of process now or hereafter provided by the laws of the State of Georgia.
Guarantor warrants and represents to Lender that any financial statements heretofore delivered by Guarantor to Lender were true and correct in all respects as of the date delivered to Lender, and that there has been no material adverse change in the financial condition of Guarantor since the date of such statement.
Guarantor hereby represents and covenants that (a) this Guaranty constitutes a valid and legally binding obligation of Guarantor and does not violate, conflict with, or constitute any default under any law, government regulation, decree, judgment or any other agreement or instrument binding upon such Guarantor, and (b) Guarantor has full power and authority to incur the obligations provided for herein.
Guarantor agrees that Guarantor shall have no right to recover against the Borrower by way of subrogation to the rights of Lender on account of any payment by Guarantor to Lender hereunder until all of the Liabilities have been paid and satisfied in full, and Guarantor hereby waives, releases and relinquishes any such rights of subrogation to such extent.
In the event that any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by any court, this Guaranty shall be construed as not containing such provision, and the invalidity of such provision shall not affect other provisions hereof which are otherwise lawful and valid and shall remain in full force and effect.
This Guaranty has been negotiated, and is being executed and delivered in the State of Georgia, or if executed elsewhere, shall become effective upon Lenders receipt and acceptance of the executed original of this Guaranty in the State of Georgia; provided, however, that Lender shall have no obligation to
give, nor shall Guarantor be entitled to receive, any notice of such acceptance for this Guaranty to become a binding obligation of Guarantor.
(Signature page for Georgetown guaranty)
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed under seal and Guarantor has delivered this Guaranty to Lender, all as of the 31st day of December, 2012.
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GUARANTOR: |
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GEORGETOWN HC&R NURSING, LLC |
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/s/ [Illegible] |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
WITNESS |
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Boyd P. Gentry, Manager |
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Exhibit 10.260
STATE OF GEORGIA
COUNTY OF FULTON
G U A R A N T Y
WHEREAS, Adcare Health Systems, Inc., hereinafter called Guarantor, has an interest in the financial affairs of SUMTER VALLEY PROPERTY HOLDINGS, LLC AND GEORGETOWN HC&R PROPERTY HOLDINGS, LLC, hereinafter collectively called Borrower;
WHEREAS, METRO CITY BANK, hereinafter called Lender, proposes to make certain financial accommodations to the Borrower; and
WHEREAS, such financial accommodations will benefit Guarantor and Guarantor desires to induce Lender to make its financial accommodations to the Borrower.
NOW, THEREFORE, to induce Lender to make certain financial accommodations to the Borrower, including, without limitation, the lending of funds to the Borrower pursuant to that certain Promissory Note dated of even date herewith, made by the Borrower payable to the order of Lender, in the original principal amount of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($6,950,000.00), hereinafter called the Note, and in consideration of such financial accommodations and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Guarantor, Guarantor unconditionally guarantees the full, prompt and complete payment when due, whether by declaration or otherwise, and at all times hereafter, of all obligations and indebtedness now or hereafter owing by the Borrower to Lender as evidenced by the Note and by any document executed or delivered in connection with the transaction resulting in the indebtedness evidenced by the Note, together with any and all renewal or renewals, extension or extensions, modification or modifications thereof, and substitution or substitutions therefor, either in whole or in part (all such obligations and indebtedness being hereinafter collectively called the Liabilities). Guarantor agrees that, if the Liabilities are not paid by the Borrower when due, Guarantor will immediately do so. Guarantor further agrees to pay all expenses (including attorneys fees) paid or incurred in endeavoring to enforce this Guaranty and the payment of the Liabilities.
Guarantor waives presentment, demand, dishonor, notice of dishonor, protest, and all other notices whatsoever, including, without limitation, notices of acceptance hereof, of all contracts and commitments, of the existence or creation of any of the Liabilities, or the amounts and terms thereof, and all defaults, disputes or controversies with the Borrower, and of the settlement, compromise or adjustment thereof. Guarantor agrees that Lender shall have full authority, without obtaining the consent of, giving notice to, or affecting the liability of Guarantor, to make changes of terms, to withdraw or extend credit or time to pay, to release the whole or any part of any indebtedness, to settle or compound differences for less than the full amount owing, to accept or release security, to accept, compromise or release the primary or secondary liability of any person or persons with respect to any of the Liabilities, to accept Note, trade acceptances or any other form of obligation for the Liabilities, to make arrangements or settlements in or out of court in the case of receivership, liquidation, readjustment, bankruptcy, reorganization, arrangement or an assignment for the benefit of creditors and to do anything, whether or not herein specified, which may be done or waived by or between Lender and the Borrower. The making of such arrangements, settlements,
compromises, adjustments, releases, and extensions of time shall not diminish, discharge, modify, reduce, extinguish or otherwise affect the liability of Guarantor hereunder for the full amount of the Liabilities. Guarantor further agrees that no act or omission on the part of Lender shall in any way affect, impede or impair this Guaranty.
This Guaranty shall be enforceable without Lender having to proceed first against the Borrower (the right to require Lender to take action against the Borrower as required by O.C.G.A. §10-7-24 being hereby expressly waived) or against any security for the payment of the Liabilities, and shall be effective regardless of the solvency or insolvency of the Borrower, any reorganization, merger or consolidation of the Borrower, or any change in the composition, nature, personnel or location of the Borrower.
This Guaranty shall be binding upon and enforceable against the Guarantor and upon the legal representatives, successors and assigns of the Guarantor. The liability of the Guarantor and the legal representatives, successors and assigns of the Guarantor hereunder is joint and several, primary and unconditional, and shall not be subject to any claim of offset, counterclaim or defense of the Borrower.
This Guaranty shall be irrevocable, absolute and unconditional and shall remain in full force and effect as to Guarantor until such time as all of the Liabilities shall have been paid and satisfied in full. No delay or failure on the part of the Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.
This Guaranty shall remain in full force and effect, and Guarantor shall continue to be liable for the payment of the Liabilities in accordance with the original terms of the documents and instruments evidencing and securing the same, notwithstanding the commencement of any bankruptcy, reorganization or other debtor relief proceeding by or against the Borrower, and notwithstanding any modification or amendment of any document or instrument evidencing or securing any of the Liabilities, any stay of the exercise by Lender of any of its rights and remedies against the Borrower with respect to any of the Liabilities, or any cure of any default by the Borrower under any document or instrument evidencing or securing any of the Liabilities, which may be effected in connection with any such proceeding, whether permanent or temporary, and notwithstanding any assent thereto by Lender.
Lender may, without notice of any kind, sell, assign or transfer all or any of the Liabilities, and in such event each and every immediate and successive assignee, transferee or holder of all or any of the Liabilities shall have the right to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee, transferee or holder, as fully as if such person were herein by name specifically given such rights, powers and benefits, but Lender shall have an unimpaired right to enforce this Guaranty for its benefit as to so much of the Liabilities as Lender has not sold, assigned, or transferred.
The records of Lender showing the account between Lender and the Borrower shall be admissible in evidence in any action or proceeding hereon as prima facie proof of the items therein set forth.
This Guaranty shall be governed by, construed under and interpreted and enforced in accordance with the laws of the State of Georgia.
Guarantor hereby submits to personal jurisdiction in the State of Georgia for the enforcement of this Guaranty and waives any and all personal rights under the laws of any other state or the United States to object to jurisdiction within the State of Georgia for the purposes of litigation to enforce this Guaranty. In the event that such litigation is commenced, Guarantor agrees that service of process may be made, and personal jurisdiction over Guarantor obtained, by the serving of a copy of the summons and complaint upon Guarantor at the following address:
1145 Hembree Road
Roswell, Georgia 30076
Nothing contained herein shall prevent Lender from bringing any action or exercising any rights against any security given to Lender by the Borrower or Guarantor, or against Guarantor personally, or against any property of Guarantor, within any other state. Commencement of any such action or proceeding in any other state shall not constitute a waiver of the agreement that the laws of the State of Georgia shall govern the rights and obligations of Guarantor and Lender hereunder or of the submission made by Guarantor to personal jurisdiction within the State of Georgia. The aforesaid means of obtaining personal jurisdiction and perfecting service of process are not intended to be exclusive but are cumulative and in addition to all other means of obtaining personal jurisdiction and perfecting service of process now or hereafter provided by the laws of the State of Georgia.
Guarantor warrants and represents to Lender that any financial statements heretofore delivered by Guarantor to Lender were true and correct in all respects as of the date delivered to Lender, and that there has been no material adverse change in the financial condition of Guarantor since the date of such statement.
Guarantor hereby represents and covenants that (a) this Guaranty constitutes a valid and legally binding obligation of Guarantor and does not violate, conflict with, or constitute any default under any law, government regulation, decree, judgment or any other agreement or instrument binding upon such Guarantor, and (b) Guarantor has full power and authority to incur the obligations provided for herein.
Guarantor agrees that Guarantor shall have no right to recover against the Borrower by way of subrogation to the rights of Lender on account of any payment by Guarantor to Lender hereunder until all of the Liabilities have been paid and satisfied in full, and Guarantor hereby waives, releases and relinquishes any such rights of subrogation to such extent.
In the event that any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by any court, this Guaranty shall be construed as not containing such provision, and the invalidity of such provision shall not affect other provisions hereof which are otherwise lawful and valid and shall remain in full force and effect.
This Guaranty has been negotiated, and is being executed and delivered in the State of Georgia, or if executed elsewhere, shall become effective upon Lenders receipt and acceptance of the executed original of this Guaranty in the State of Georgia; provided, however, that Lender shall have no obligation to
give, nor shall Guarantor be entitled to receive, any notice of such acceptance for this Guaranty to become a binding obligation of Guarantor.
(Signature page for Adcare guaranty)
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed under seal and Guarantor has delivered this Guaranty to Lender, all as of the 31st day of December, 2012.
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ADCARE HEALTH SYSTEMS, INC. |
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/s/ [Illegible] |
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/s/ Boyd P. Gentry |
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WITNESS |
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Boyd P. Gentry, Chief |
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Executive Officer |
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Exhibit 10.261
SECURITY AGREEMENT
WHEREAS, Georgetown HC&R Property Holdings, LLC and Georgetown HC&R Nursing, LLC (hereinafter collectively referred to as Debtor), have requested METRO CITY BANK (hereinafter referred to as Secured Party or Lender), to loan to Sumter Valley Property Holdings, LLC and Georgetown HC&R Property Holdings, LLC the sum of $6,950,000.00 (the Loan), evidenced by a Promissory Note (the Note) and guaranty agreements of even date herewith and in said principal amount; and
WHEREAS, to induce Lender to make the Loan, Debtor has agreed to execute this Security Agreement as security for its obligations under the Note.
NOW, THEREFORE, in consideration of Lender making the Loan, and as an inducement to do so, intending to be legally bound, Debtor hereby covenants and agrees with Lender as follows:
1. Definitions . All terms used herein which are defined in the Georgia Uniform Commercial Code (the Code) shall have the same meanings herein as in the Code unless the context in which such terms are used herein indicates otherwise.
2. Security Interest . Debtor hereby grants to Lender a security interest in the personal property and interests therein, of whatsoever kind or nature, tangible and intangible, now owned or hereafter acquired by Debtor, in the following:
(a) all goods, including without limitation, equipment, machinery, appliances, furniture, furnishings and fixtures, now owned or hereafter acquired by Debtor, wherever located, including without limitation those items listed on Exhibit A attached hereto;
(b) all substitutions for, renewals of, improvements, replacements and additions to, and the products and proceeds (cash and non-cash) of all of the foregoing including the cash collateral of $654,940.00 deposited with Lender at closing; and
(c) all insurance policies, books and records of Debtor pertaining to the property described in subsection (a) above including without limitation credit files, computer programs, printouts and other computer materials and records.
All such property subject to Lenders security interest described in this Section 2 is referred to herein collectively as the Collateral.
All security interests in Collateral shall be deemed to arise and be perfected under and governed by the Code, except to the extent that such law does not apply to certain types of transactions or Collateral, in which case applicable law shall govern.
3. Obligations Secured . The Collateral shall secure the following obligations (the Secured Obligations):
(a) all Obligations due under the Note (as such Note may be extended or modified);
(b) all costs and expenses incurred by Lender in the collection or enforcement of the Note or the protection of the Collateral;
(c) all future advances made by Lender for taxes, levies, insurance, and repairs to or maintenance of the Collateral or for any other reason; and
(d) all other indebtedness or obligations owed by Debtor to Lender.
4. Representations . Debtor hereby makes the following representations and warranties which shall be true and correct on the date of this Agreement and shall continue to be true and correct at
the time of the creation of any Secured Obligations and until the Secured Obligations shall have been paid in full:
(a) Debtor has (or will have upon its acquisition of after-acquired Collateral) good and marketable title to the Collateral, subject to no other lien, charge, security interest or other encumbrance (Lien); and
(b) All of the Collateral and all books and records of Debtor are located at 2715 South Island Road, Georgetown, South Carolina 29440 (the Premises).
(c) Georgetown HC&R Property Holdings, LLC is a limited liability company organized under the laws of the State of Georgia, and its mailing address is 1145 Hembree Road, Roswell, Georgia 30076 and its organizational identification number is 12070358.
(d) Georgetown HC&R Nursing, LLC is a limited liability company organized under the laws of the State of Georgia, and its mailing address is 1145 Hembree Road, Roswell, Georgia 30076 and its organizational identification number is 12070361.
(e) Georgetown HC&R Property Holdings, LLC and Georgetown HC&R Nursing, LLC are the correct legal names of the Debtor indicated on the public record of the Debtors jurisdiction of organization which shows the Debtor to be organized.
(f) Debtor has used the following names and tradenames within the last five (5) years: Georgetown Healthcare & Rehabilitation Center.
5. Covenants . Debtor covenants and agrees that until the Secured Obligations have been paid in full, Debtor shall:
(a) not permit use of the Collateral for any illegal purposes;
(b) not permit removal of any of the Collateral from the Premises unless Lender has given written consent in advance;
(c) maintain at all times good and marketable title to all Collateral, free and clear of all Liens, and defend such title against the claims and demands of all persons;
(d) not (i) affix the Collateral or permit the Collateral to be affixed to real estate or to any other goods, (ii) lease, mortgage, pledge or encumber the Collateral, (iii) permit the Collaterals identity to be lost, (iv) permit the Collateral to be levied upon or attached under any legal process, or (v) except inventory customarily sold by Debtor in the ordinary course of business and so sold in such manner for full value, sell, consign, part with possession of, or otherwise dispose of the Collateral or any rights therein, except as Lender may grant its prior specific written consent with respect to acts or events specified in subsections (i), (ii) or (v) hereof;
(e) maintain the Collateral in good condition and repair, excepting only reasonable wear and tear; pay and discharge all taxes and other levies on the Collateral, as well as the costs of repair and maintenance thereof; and furnish to Lender upon request documentary proof of payment of such taxes, levies and costs;
(f) provide financial or other information, documentation or certifications to Lender, including tax returns, balance sheets and income statements, all in form and content satisfactory to Lender within one hundred twenty (120) days after the fiscal year end;
(g) execute, upon demand by Lender, any financing statements or other documents which Lender may deem necessary to perfect or maintain perfection of the security interests created in this Agreement and pay all costs and fees pertaining to the filing of any financing, continuation or termination statements with regard to such security interests;
(h) pay, upon demand, all amounts incurred by Lender in connection with any action or proceeding taken or commenced by Lender to enforce this Agreement or protect, insure or realize upon the Collateral, including attorneys without limitation fees and all costs of legal proceedings;
(i) not change its name unless it has given the Lender thirty days prior written notice thereof and executed, at the request of Lender, such additional financing statements to be filed in such jurisdictions as the Lender may deem necessary or desirable in its sole discretion, or
(j) not merge or consolidate into, or transfer, sell or assign any of the Collateral to any other person or entity without the prior written consent of Lender.
6. Insurance . Debtor, at its sole expense, shall maintain insurance for hazard, fire, theft, vandalization and extended coverage in an amount equal to at least ninety percent (90%) of replacement value on all equipment and tangible assets in such form, with companies having at least an A rating, and otherwise comply with such requirements as Lender in its sole discretion may from time to time impose. With respect to such policies:
(a) Lender shall be named as a loss payee.
(b) Debtor empowers Lender to adjust or compromise any losses under such policies, collect and receive all proceeds thereof and execute and endorse in Debtors name all proofs of loss, drafts, checks and any other documents or instruments necessary to accomplish such collection.
(c) Debtor authorizes and directs each insurance company to pay all such proceeds directly and solely to Lender;
(d) All policies shall only be cancelable after thirty (30) days prior notice to Lender;
(e) Debtor shall provide evidence of replacement or renewal policies at least thirty (30) days prior to the expiration of any policy.
(f) The net proceeds collected by Lender relating to casualty losses of Collateral, after deducting all costs and expenses (including without limitation attorneys fees) of collection shall be applied as follows:
i. If no Event of Default (as hereinafter defined) exists, the net proceeds shall be applied, at Debtors option, either toward replacing or restoring the Collateral, in the manner and on terms reasonably satisfactory to Debtor, or to the payment of the Secured Obligations.
ii. Except as provided in clause (i), the net proceeds shall, at Lenders option, be applied to the payment of the Secured Obligations.
Any proceeds applied to the payment of the Secured Obligations shall be applied in such manner as Lender may elect. In no event shall such application relieve Debtor from payment in full of all Secured Obligations which thereafter become due in the order of maturity thereof.
(g) Debtor shall maintain collision/liability insurance on all vehicles used in the operation of Debtors business.
7. Protection of Collateral . In the event of the failure of the Debtor to (a) maintain in force and pay for any insurance required hereunder, (b) keep the Collateral in good repair and operating condition, (c) keep the Collateral free from any Liens, (d) pay when due all taxes, levies and assessments on or in respect of the Collateral, and (e) perform any other obligations of Debtor hereunder, Lender, at its option, may (but shall not be required to) procure and pay for such insurance, place the Collateral in good repair and operating condition, or otherwise correct any other aforesaid failure of the Debtor, and all sums advanced by Lender shall be part of the Secured Obligations and payable on demand.
8. Events of Default . The occurrence of one or more of the following events shall, at the option of the Lender, constitute an Event of Default hereunder:
(a) failure of Debtor to pay any installment of principal or interest as required under the Note as the same shall become due and payable;
(b) failure by Debtor to comply with any covenant or agreement contained herein;
(c) dissolution or termination of existence of the Debtor;
(d) the making of an assignment for the benefit or creditors of Debtor;
(e) the filing of any amendment to or termination of a financing statement naming the Debtor as Debtor and the Lender as Secured Party, or any correction statement with respect thereto, in any jurisdiction by any party other than Lender or its counsel without the prior written consent of the Lender;
(f) the consenting to the appointment of a receiver for all or a substantial part of the Debtors assets; or
(g) the voluntary or involuntary filing of a petition in bankruptcy, by or against Debtor, or for reorganization under the Bankruptcy Code as now or hereafter in effect; provided, however, that an involuntary filing shall not constitute an Event of Default if the same is dismissed within sixty (60) days from the date of filing thereof.
9. Remedies . Upon the occurrence of any Event of Default, Lender may immediately and without demand or notice exercise any of its rights and remedies granted herein or under applicable law, or which it may otherwise have, against the Debtor, the Collateral, or otherwise, and may do any or all of the following:
(a) Declare all of the indebtedness represented by the Note and any other indebtedness due Secured Party by Debtor to be immediately due and payable and this Agreement in default and subject to any rights, option, and remedies of the Secured Party as set forth herein or provided under applicable law;
(b) Inspect the Collateral at any reasonable time which shall be deemed to be during normal business hours (so long as Debtor is not in default, Lender shall only inspect the Collateral twice a year, at its option);
(c) At any reasonable time, through its authorized agents and employees, inspect, audit, and verify the accounts and the inventory, review Debtors books and records, and copy or make excerpts from any document; and
(d) Take immediate possession of the Collateral, sell or otherwise dispose of any or all of the Collateral, either at public or private sale, upon commercially reasonable terms, and either Debtor or Secured Party may become the purchaser thereof. Ten (10) days written notice of any proposed sale shall be given to Debtor and shall be deemed reasonable notice. From the proceeds of any sale of the Collateral, Secured Party shall be entitled to retain: (i) all of Secured Partys reasonable expenses of preparing for sale and selling the Collateral, including, but not limited to, reasonable attorneys fees incurred by Secured Party in connection therewith and (ii) all sums secured hereby allocated first to the payment of accrued interest and then to the payment of the principal amount of the Note.
In addition to all rights given to Lender by this Agreement, Lender shall have all the rights and remedies of a secured party under any applicable law, including without limitation, the Code.
10. Authorization to File Financing Statements.
The Debtor hereby authorizes the Lender, its counsel or its representative, at any time and from time to time, without the requirement of any further consent from or notice to Debtor, to file financing statements and amendments that describe the collateral covered by such financing statements as all assets of the Debtor, all personal property of the Debtor or words of similar effect, in such jurisdictions as the Lender may deem necessary or desirable in order to perfect the security interests granted by the Debtor under this Security Agreement, and any such financing statement filed prior to this date hereof by Lender evidencing a security interest in all Debtors personal property is hereby ratified.
11. Miscellaneous Provisions .
A. If any provision hereby shall for any reason be held invalid or unenforceable, no other provision shall be affected thereby, and this Agreement shall be construed as if the invalid or unenforceable provision had never been a part of it.
B. The descriptive headings of this Agreement are for convenience only and shall not in any way affect the meaning or construction of any provision hereof.
C. The rights and privileges of Lender contained in this Agreement shall inure to the benefit of its successors and assigns, and the duties of Debtor shall bind all heirs, personal representatives, successors and assigns.
D. This Agreement shall in all respects be governed by the laws of Georgia (except to the extent that federal law governs).
E. Debtor hereby irrevocably appoints Lender and each holder hereof as Debtors attorney-in-fact to: (1) endorse Debtors name to any draft or check which may be payable to Debtor in order to collect the proceeds of any insurance or any returned or unearned premiums in respect of any policies of insurance required to be maintained hereunder; (2) take any action Lender deems necessary to perfect or maintain perfection of any security interest granted to Lender herein, including executing any document on Debtors behalf; and (3) take such other action as Lender may deem appropriate for any such purpose including endorsement of checks made payable to Debtor for accounts receivable. This appointment shall be deemed to be a power coupled with an interest.
F. Copies or reproductions of this document or of any financing statement may be filed as a financing statement.
G. Unless otherwise provided by law, notices required or permitted to be given hereunder shall be satisfied if such notice is hand-delivered, mailed, postage prepaid, by registered or certified mail, return receipt requested, or sent by overnight courier service, to the addresses of the parties hereto as shown below, or to such other address as either party may, from time to time, designate in writing.
If to Lender: |
If to Debtor: |
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METRO CITY BANK
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SUMTER VALLEY PROPERTY HOLDINGS, LLC and SUMTER N&R, LLC
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Notice shall be deemed made when delivered.
H. No failure or delay by Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege.
(Remainder of page left intentionally blank)
(Signature page for Security Agreement Georgetown)
IN WITNESS WHEREOF, Debtor has caused this document to be executed by its duly authorized representatives this 31st day of December, 2012.
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DEBTOR |
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Sworn to before me: |
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GEORGETOWN HC&R PROPERTY HOLDINGS, LLC |
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/s/ Ellen W. Smith |
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Notary Public |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry, Manager |
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My Commission Expires: |
Jan. 30, 2016 |
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(Notarial Seal) |
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GEORGETOWN HC&R NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry , Manager |
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SECURED PARTY OR LENDER |
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METRO CITY BANK |
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By: |
/s/ [Illegible] |
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Title: |
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(Bank Seal) |
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Exhibit 10.262
LOAN AGREEMENT
This Loan Agreement is entered into this 31st day of December, 2012, by and between Sumter Valley Property Holdings, LLC (Sumter Holdings) and Georgetown HC&R Property Holdings, LLC (Georgetown Holdings; together with Sumter Holdings, collectively referred to as Borrower), Sumter N&R, LLC and Georgetown HC&R Nursing, LLC (hereinafter collectively referred to as Operating Company) and METRO CITY BANK (Lender).
WHEREAS, Lender has agreed to enter into a Loan with Borrower in the amount of $6,950,000.00 (the Loan) for the purchase of property and any improvements thereon located at 2715 South Island Road, Georgetown, South Carolina 29440 (the Georgetown Property) by Georgetown Holdings and 1761 Pinewood Road, Sumter, South Carolina 29154 (the Sumter Property; together with the Georgetown Property, collectively the Property), by Sumter Holdings, which Loan is evidenced by that Promissory Note (the Note), dated of even date herewith in said amount;
WHEREAS, in connection with the Loan, Lender and Borrower have agreed on a certain rate of interest which will be charged to Borrower for use of Loan proceeds, and on certain other charges to be paid by Borrower to compensate Lender for certain services to be rendered by Lender and for certain costs to be incurred by Lender; and
WHEREAS, Lender and Borrower desire to evidence in writing their agreement with respect to interest and charges and other conditions in connection with the Loan.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and pursuant to O.C.G.A. Section 7-4-2(a)(1), Lender and Borrower do hereby covenant and agree as follows:
1. The rate of interest under the Note, expressed in simple interest terms as of the date of the evidence of the indebtedness, is 5.5% per annum, which rates of interest may be subject to adjustment from time to time pursuant to the provisions of the Note. Notwithstanding any provision in the Note or any other document to the contrary, such rate of interest shall be computed on the daily outstanding principal balance on the Note, for the actual number of days outstanding, on the basis of a 360 day year.
2. Lender and Borrower hereby agree that (i) the only charge imposed by Lender upon Borrower for the use of money in connection with the Loan is and shall be the interest expressed in the Note, at the rate set forth in the Note, which rate of interest is expressed in simple interest terms as of the date of the evidence of indebtedness in paragraph 1 above, and (ii) all other charges imposed by Lender upon Borrower in connection with the Loan, including, without limitation, any commitment fees, brokerage fees, guaranty fee, origination fees, discount points, non-interest-bearing escrows, default and late charges, and prepayment fees, are and shall be deemed to be charges made to compensate Lender for underwriting and administrative services and costs, and other services and costs performed and incurred, and to be performed and incurred, by Lender in connection with the Loan, and shall under no circumstances be deemed to be charges for the use of money. All charges referred to in subparagraph 2(ii), above, shall be fully earned and non-refundable when paid.
3. Borrower certifies that neither Borrower is delinquent more than sixty (60) days under the terms of any (a) administrative order, or (b) court order.
4. Borrower shall obtain the following insurance coverage and maintain this coverage for the life of the Loan:
a. Flood Insurance . If FEMA Form 81-93 reveals that any portion of the collateral for the Loan is located in a flood hazard zone, Federal flood insurance or other appropriate special hazard insurance in amounts equal to the lesser of the insurable value of the property or the maximum limited of coverage available is required. Borrower
will be ineligible for any future SBA disaster assistance or business loan assistance if Borrower does not maintain such flood insurance for the entire term of the Loan.
b. Hazard Insurance coverage on all real estate and personal property that is collateral for the Loan in the amount of the maximum insurable value with a MORTGAGEE/LENDER LOSS PAYABLE CLAUSE in favor of Lender. This clause must provide that any act or neglect of the mortgagor or owner of the insured property will not invalidate the interest of Lender. The policy endorsements must provide at least ten (10) days prior written notice to Lender of policy cancellation.
5. Borrower covenants and certifies that Borrower and Operating Company are current on all federal, state, and local taxes, including but not limited to income taxes, payroll taxes, real estate taxes, or personal property taxes, and sales taxes.
6. Borrower further warrants that for the Property and any other property proposed as collateral for the Loan:
a. At the time Borrower submitted the Loan application, Borrower and Operating Company were in compliance with all local, state, and federal environmental laws and regulations pertaining to environmental contamination;
b. Borrower and Operating Company have and will continue to comply with these laws and regulations;
c. Borrower and Operating Company have no knowledge of any environmental contamination of the Property which violates any such laws and regulation (other than what was disclosed in connection with the environmental investigation of said Property);
d. Borrower and Operating Company assume full responsibility for all costs incurred in any clean-up of environmental contamination of the Property and agree to indemnify Lender against payment of any such costs (Lender may require Borrower and Operating Company to execute a separate indemnification agreement); and
e. Until full repayment of Loan, Borrower and Operating Company will promptly notify Lender if they know, suspect or believe there may be any environmental contamination in or around the Property, or if Borrower, its Operating Company or such Property are or become subject to any investigation or enforcement action by any governmental agency pertaining to any environmental contamination of such Property.
7. Borrower (and Operating Company) will:
a. Reimburse Lender for expenses incurred in the making and administration of the Loan in accordance with the terms and conditions of that certain Commitment letter dated December 24, 2012;
b. Keep proper books of account in a manner satisfactory to Lender;
c. Furnish year-end statements to Lender within 120 days of fiscal year end;
d. Furnish additional financial statements or reports whenever Lender requests them;
e. Promptly provide Lender with annual financial statements and income tax returns.
f. Allow Lender to:
(i) Inspect and audit books, records, and papers relating to Borrowers financial or business condition;
(ii) Inspect and appraise any of Borrowers assets; and
(iii) Allow all government authorities to furnish reports of examinations, or any records pertaining to Borrower, upon request by Lender.
8. Borrower (and its Operating Company) will not, without Lenders prior written consent:
a. Distributions - Make any distributions of company assets that will materially and adversely affect the financial condition of the Borrower or Operating Company.
b. Ownership Changes - Change the membership interests in the Borrower or Operating Company during the term of the Loan; provided, however, that Lender acknowledges that this subparagraph shall in no event apply to AdCare Health Systems, Inc., the parent company of Borrower and Operating Company.
c. Transfer of Assets - Sell, lease, pledge, encumber (except by purchase money liens on property acquired after the date of the Note), or otherwise dispose of any of the Collateral (as defined below) , except in the ordinary course of business; provided, however, that Lender acknowledges there shall be a second in priority mortgage encumbering the Georgetown Property for a loan by Winyah Nursing Home, LLC to Georgetown Holdings in the amount of $1,850,000.
9. Borrower shall allow Lender reasonable access to the Property and the machinery, furniture, fixtures and equipment located thereon (collectively, the Collateral) during the term of the Loan to verify at Lenders sole option, there being no obligation of Lender to do so, that said Property is being maintained in good working order.
10. Neither the Loan, nor Borrowers use of the proceeds thereof, will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, and Borrower is in compliance with the Requirements of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Person Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001) (the Order) and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (OFAC) and any enabling legislation or other executive orders or regulations in respect thereof (the Order and such other rules, regulations, legislation or orders are collectively referred to as the Orders). Without limiting the generality of the foregoing, neither Borrower, nor any subsidiary or affiliate of Borrower, nor any member, partner or shareholder or other beneficial owner of Borrower or of any such subsidiary, affiliate, member, partner, shareholder or other beneficial owner (A) is listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Order, (B) is or will become a blocked person described in Section 1 of the Orders or (C) knowingly engages or will engage in any dealings or transactions, or is or will be otherwise associated, with any such blocked person. No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the Foreign Corrupt Practices Act of 1977, as amended. Borrower agrees to promptly notify Lender should Borrower become aware of any change in the truth and accuracy of the representations and warranties set forth herein.
11. Covenants and conditions of warranties:
Taxes . Borrower certifies that its has filed or caused to be filed all federal, state and other tax returns which, to the best of its knowledge, are required to be filed, or have filed appropriate extensions, and have paid or caused to be paid all taxes as shown on said returns or in any manner due to be paid, (including, but not limited to, ad valorem and personal property taxes) or on any assessment received by them and not being contested in good faith, to the extent that such taxes have become due. Borrower further certifies that it has paid all other taxes, levies and charges of any nature, including any governmental charges.
Notice of Litigation . Borrower and Operating Company shall promptly give Lender written notice of (a) an uninsured judgment entered against Borrower or Operating Company in excess of $10,000.00 and (b) the commencement of any action, suit, claim, counterclaim or proceeding against or investigation of Borrower or Operating Company: (i) involving more than $50,000.00 for any single suit or dispute, or $100,000.00 in the aggregate for all suits and disputes involving Borrower, or (ii) which would materially adversely affect the ability of Borrower or any Guarantor to pay the indebtedness reflected by the Note, or (iii) which questions the validity of this Agreement, the Note or the mortgages given by Borrower in conjunction with this Agreement, or any other actions or agreements taken or to be made pursuant to any of the foregoing.
Maintenance of Corporate Existence . Throughout the term of the Loan, Borrower shall maintain its corporate or limited liability status in good standing.
Change in Ownership, Control or Management . Borrowers interest in the Property shall remain vested in Borrower, and the Property or any portion thereof will not be sold, transferred, leased, conveyed or further encumbered during the term of the Loan, except with Lenders consent which may be withheld for any reason.
Compliance with Laws . Borrower will comply promptly with all federal, state and local laws, ordinances and regulations relating to the construction, use, sale and leasing of the Property, including, but not limited to, all applicable federal and state securities laws, and will obtain and keep in good standing all necessary licenses and approvals required for operation of each Property as a skilled nursing facility.
Insurance and Condemnation Proceeds . The proceeds of any insurance policies collected or claims as a result of any loss or damage to any portion of the Property resulting from fire, vandalism, malicious mischief or any other casualty or physical harm and any awards, judgments or claims resulting from the exercise of the power of condemnation or eminent domain shall be applied to reduce the outstanding balance of the Loan or to rebuild and restore such Property, as provided in the applicable Mortgage.
Indemnification . Borrower shall indemnify and hold Lender harmless from and against any claims, including, without limitation, brokers claims, arising in connection with the Loan.
In the event any of the material warranties, covenants, or conditions contained in this Agreement are not met or prove to be false or misleading, Borrower shall be in default under the Loan, and Lender may pursue any rights or remedies it has for an event of default, including acceleration of the outstanding principal balance and accrued interest of the Note.
The provisions of the commitment letter from Lender to Borrower dated December 24, 2012, shall survive the closing of the Loan and are incorporated herein by reference. In the event of any conflict between said letter and the Loan Documents, the Loan Documents shall control.
12. Escrow Deposits :
(a) In the event of a default under this Loan Agreement or any Note to Lender from Borrower or under any of the Loan Documents (and regardless whether Borrower cures such default), Lender may, at its sole and absolute discretion, demand that Borrower thereafter deposit with Lender on the first day of each and every month a sum which, in the sole estimation of the Lender, shall be equal to one-twelfth
(1/12th) of the annual taxes, assessments (if any), and hazard insurance premiums for the Property (the Escrow Deposits ). The Escrow Deposits will be held by the Lender in a non-interest bearing account and free of any liens or claims on the part of the creditors of Borrower and shall be used by Lender to pay taxes, assessments, and insurance premiums on the Property as the same accrue and are due and payable. If the Escrow Deposits are insufficient to pay the taxes, assessments, and insurance premiums in full as the same become due and payable, then Borrower shall, upon demand by Lender, immediately deposit with Lender such additional sum or sums as may be required in order for the Lender to pay such taxes, assessments, and insurance premiums in full. Borrower shall deliver to Lender, promptly upon receipt, all bills for taxes, assessments, and insurance for which Lender has required Escrow Deposits. The obligations of Borrower under this Loan Agreement or any other Loan Documents shall not be diminished by Escrow Deposits made by Borrower, except to the extent that such obligations have actually been met by application of such Escrow Deposits.
(b) The Escrow Deposits may be co-mingled with the general funds of the Lender, and Lender shall not be or deemed to be a trustee, special depository or other fiduciary for Borrower with respect to such Escrow Deposits, and the existence of such account or accounts shall not limit Lenders rights under this Loan Agreement, any other agreement, or any provision of law. Upon any total assignment by Lender of the Note, Lender shall assign all Escrow Deposits in its possession to Lenders assignee, whereupon Lender shall be released from all liability with respect to such Escrow Deposits. Lender may, at its sole discretion and at any time, apply any or all of the Escrow Deposits to the payment of the obligations of Borrower to Lender to cure any existing default without any further notice, whereupon Borrower shall restore all Escrow Deposits so applied and cure all defaults not cured by such application. Within 60 days following full repayment by Borrower of the Note (other than as a consequence of foreclosure or conveyance in lieu of foreclosure) or at such earlier time as Lender may elect, Lender shall pay to Borrower all Escrow Deposits in Lenders possession, and no other party shall have any right or claim thereto.
13. Georgia Law : This Agreement shall be governed by the laws of the State of Georgia.
14. Release of Collateral . Borrower acknowledges and agrees that the payment of any principal shall be first applied to the Sumter Property and then applied towards the Georgetown Property. The allocation of Loan proceeds between the Sumter Property and Georgetown Property is set forth in that certain Loan Commitment letter dated December 24, 2012 which shall terms and conditions shall survive and shall not be merged into this Agreement. Specifically, the allocation of the Loan is: (i) $4,800,000.00 to the acquisition of the Sumter Property, and (ii) $2,150,000.00 to the acquisition of the Georgetown Property. Lender acknowledges that Borrower shall have the right to prepay the Loan from time to time and to obtain a release of the lien of the applicable mortgage (a Release ) at the time of such prepayment upon the following conditions:
(a) The Loan may be prepaid with respect to either Property at any time with USDA funding provided that the principal amount of the Loan allocated to that Property is paid. It is not a condition to the Release of one Mortgage that the full Loan be paid simultaneously.
(b) No Event of Default shall exist at the time Borrower requests a Release or as of the date on which the actual Release would occur;
(c) Borrower shall have executed and delivered to Lender (i) amendments and/or modifications of any of the Loan Documents as required by Lender and (ii) such other agreements as Lender may reasonably require to reflect, among other things, the release of Released Property;
15. Cash Collateral Deposits . Borrower and Lender acknowledge that Borrower has deposited with Lender the amounts of the Cash Collateral Deposits as shown on the Loan Closing Statement and in accordance with the provisions of that certain Loan Commitment Letter dated December 24, 2012. The parties acknowledge that the Cash Collateral Deposits are the sum total of amounts anticipated at the closing of the USDA refinances of the Loan, including the USDA Guarantee Fee, the Lenders Loan Fee, Thomas Financial Group Fee and an Interim Loan Fee (and, with respect to the Sumter facility, a capital expenditures reserve fee of $200,000). The parties intend that the funds held
by Lender in the Cash Collateral Deposit accounts shall be used in connection with the USDA refinances of the Loans and Lender agrees to release such amounts upon the earlier of (i) the USDA refinance of the Loan (which release may happen at different times with respect to each Property), or (ii) any other payoff of the Loan, whether in connection with a USDA refinance or not, provided that in such event, Lender shall have the right to withhold the amount of $21,500 with respect to the Georgetown Property for its interim loan fee, and $48,000 with respect to the Sumer Property for its interim loan fee.
THIS AGREEMENT shall be binding upon and inure to the benefit of the respective heirs, representatives, successors and assigns of the parties hereto.
(Signature page for Loan Agreement)
IN WITNESS WHEREOF, the parties hereto acknowledge and understand the terms hereof and agree to abide by the terms hereof.
BORROWER: |
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LENDER: |
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SUMTER VALLEY PROPERTY HOLDINGS, LLC |
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METRO CITY BANK |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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By: |
/s/ [Illegible] |
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Boyd P. Gentry , Manager |
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GEORGETOWN HC&R PROPERTY HOLDINGS, LLC |
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Title: |
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(BANK SEAL) |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry , Manager |
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The undersigned Guarantors hereby executes this Loan Agreement to acknowledge and agree to all terms and conditions hereof that are applicable to any Guarantor of the Note.
GUARANTOR: |
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SUMTER N&R, LLC |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry , Manager |
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GEORGETOWN HC&R NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry , Manager |
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ADCARE HEALTH SYSTEMS, INC. |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry , Chief Executive Officer |
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(Corporate Seal) |
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Exhibit 10.263
EXECUTION VERSION
SECURED LOAN AGREEMENT
for a loan in the amount of
$16,500,000.00
MADE BY AND AMONG
WOODLAND HILLS HC PROPERTY HOLDINGS, LLC ,
NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC ,
APH&R PROPERTY HOLDINGS, LLC ,
WOODLAND HILLS HC NURSING, LLC ,
NORTHRIDGE HC&R NURSING, LLC ,
APH&R NURSING, LLC
,
each a Georgia limited liability company
1145 Hembree Road
Roswell, Georgia 30076
AND
KEYBANK NATIONAL ASSOCIATION
,
a national banking association,
4910 Tiedeman Road, 3rd Floor
Brooklyn, Ohio 44144
Dated as of December 28, 2012
TABLE OF CONTENTS
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Page |
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ARTICLE 1 INCORPORATION OF RECITALS AND EXHIBITS |
2 |
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1.1 |
Incorporation of Recitals |
2 |
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1.2 |
Incorporation of Schedules and Exhibits |
2 |
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ARTICLE 2 DEFINITIONS |
2 |
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2.1 |
Defined Terms |
2 |
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2.2 |
Other Definitional Provisions; Computation of Time Periods |
18 |
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ARTICLE 3 BORROWERS REPRESENTATIONS AND WARRANTIES |
18 |
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3.1 |
Representations and Warranties |
18 |
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3.2 |
Survival of Representations and Warranties |
23 |
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ARTICLE 4 LOAN AND LOAN DOCUMENTS |
23 |
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4.1 |
Agreement to Borrow and Lend; Lenders Obligation to Disburse |
23 |
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4.2 |
Loan Documents |
24 |
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4.3 |
Term of the Loan |
25 |
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4.4 |
Prepayments |
26 |
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4.5 |
Required Principal Payments |
28 |
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4.6 |
Late Charge |
28 |
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4.7 |
Application of Certain Payments |
28 |
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ARTICLE 5 INTEREST |
28 |
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5.1 |
Interest Rate |
28 |
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5.2 |
Interest Rate Agreement |
29 |
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ARTICLE 6 COSTS OF MAINTAINING LOAN |
30 |
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6.1 |
Increased Costs and Capital Adequacy |
30 |
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6.2 |
Borrower Withholding |
31 |
TABLE OF CONTENTS
(continued)
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ARTICLE 7 LOAN EXPENSE, ADVANCES AND FEES |
31 |
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7.1 |
Loan and Administration Expenses |
31 |
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7.2 |
Origination Fee |
32 |
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7.3 |
Lenders Attorneys Fees and Disbursements |
32 |
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7.4 |
Time of Payment of Fees and Expenses |
32 |
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7.5 |
Expenses and Advances Secured by Loan Documents |
32 |
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7.6 |
Right of Lender to Make Advances to Cure Borrowers Defaults |
33 |
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7.7 |
Exit Fee |
33 |
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ARTICLE 8 REQUIREMENTS PRECEDENT TO THE OPENING OF THE LOAN |
33 |
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8.1 |
Conditions Precedent to Closing and Opening of the Loan |
33 |
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ARTICLE 9 SPECIAL PROVISIONS |
36 |
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9.1 |
Partial Releases of Projects |
36 |
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9.2 |
Special Post-Closing Deliveries to Lender |
37 |
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9.3 |
Semiannual Lien Searches and Title Updates |
37 |
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9.4 |
Required Repairs, Replacements, Renovations and Other Work |
37 |
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ARTICLE 10 BORROWERS AGREEMENTS |
38 |
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10.1 |
Additional Covenants of Borrowers |
38 |
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ARTICLE 11 CASUALTIES AND CONDEMNATION |
46 |
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11.1 |
Lenders Election to Apply Proceeds on Indebtedness |
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11.2 |
Borrowers Obligation to Rebuild and Use of Proceeds Therefor |
47 |
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ARTICLE 12 ASSIGNMENTS BY LENDER AND BORROWERS |
47 |
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12.1 |
Assignments and Participations |
47 |
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12.2 |
Prohibition of Assignments and Transfers by Borrowers |
47 |
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12.3 |
Prohibition of Transfers in Violation of ERISA |
48 |
TABLE OF CONTENTS
(continued)
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12.4. |
Successors and Assigns |
48 |
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ARTICLE 13 TIME OF THE ESSENCE |
48 |
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13.1 |
Time is of the Essence |
48 |
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ARTICLE 14 EVENTS OF DEFAULT |
48 |
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14.1 |
Events of Default |
48 |
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ARTICLE 15 LENDERS REMEDIES IN EVENT OF DEFAULT |
51 |
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15.1 |
Remedies Conferred Upon Lender |
51 |
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ARTICLE 16 GENERAL PROVISIONS |
51 |
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16.1 |
Captions |
51 |
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16.2 |
Modification; Waiver |
52 |
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16.3 |
GOVERNING LAW |
52 |
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16.4 |
Acquiescence Not to Constitute Waiver of Lenders Requirements |
52 |
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16.5 |
Disclaimer by Lender |
52 |
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16.6 |
Partial Invalidity; Severability |
52 |
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16.7 |
Definitions Include Amendments |
52 |
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16.8 |
Execution in Counterparts |
52 |
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16.9 |
Entire Agreement |
53 |
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16.10 |
Waiver of Damages |
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16.11 |
Claims Against Lender |
53 |
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16.12 |
Jurisdiction |
53 |
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16.13 |
Set-Offs |
54 |
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16.14 |
Limitation of Liability |
54 |
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16.15 |
Authorized Representative |
54 |
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ARTICLE 17 NOTICES |
54 |
TABLE OF CONTENTS
(continued)
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ARTICLE 18 WAIVER OF JURY TRIAL |
55 |
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ARTICLE 19 NATURE OF OBLIGATIONS |
56 |
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19.1 |
Joint and Several Obligations; Full Collateralization |
56 |
LIST OF EXHIBITS AND SCHEDULES TO LOAN AGREEMENT
Exhibits |
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Exhibit A-1 |
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Legal Description of Woodland Hills Land |
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Exhibit A-2 |
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Legal Description of Northridge Land |
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Exhibit A-3 |
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Legal Description of Abington Land |
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Exhibit B-1 |
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Permitted Exceptions (Woodland Hills) |
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Exhibit B-2 |
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Permitted Exceptions (Northridge) |
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Exhibit B-3 |
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Permitted Exceptions (Abington) |
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Exhibit C |
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Title Requirements |
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Exhibit D |
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Survey Requirements |
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Exhibit E |
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Insurance Requirements |
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Exhibit F |
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Form of Covenant Compliance Certificate |
Schedules |
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Schedule 2.1 |
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Certain Permitted Distributions |
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Schedule 3.1(s) |
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Principal Places of Business |
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Schedule 3.1(w)(i) |
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Certain Health Care Permit Disclosures |
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Schedule 3.1(w)(ii) |
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List of Health Care Permits by Project |
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Schedule 9.1(b) |
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Base Release Prices |
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Schedule 9.2 |
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Special Post-Closing Deliveries to Lender |
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Schedule 9.4 |
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Repairs, Replacements, Renovations and Other Work Critical and Other Items |
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Schedule 10.1(bb) |
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Permitted Affiliate Transactions |
SECURED LOAN AGREEMENT
THIS SECURED LOAN AGREEMENT ( Agreement ) is made as of December 28, 2012, by and among WOODLAND HILLS HC PROPERTY HOLDINGS, LLC, NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC, APH&R PROPERTY HOLDINGS, LLC, WOODLAND HILLS HC NURSING, LLC, NORTHRIDGE HC&R NURSING, LLC, APH&R NURSING, LLC , each a Georgia limited liability company (each a Borrower , and together, the Borrowers ), and KEYBANK NATIONAL ASSOCIATION , a national banking association, its successors and assigns ( Lender ).
W I T N E S S E T H :
RECITALS
A. Woodland Hills HC Property Holdings, LLC ( Woodland Hills PropCo ) holds fee simple estate in certain real property located in the City of Little Rock, Pulaski County, Arkansas, which is legally described in Exhibit A-1 attached hereto (the Woodland Hills Land ), together with all improvements located thereon, including the 140-bed skilled nursing facility known as Woodland Hills Healthcare and Rehabilitation (the Woodland Hills Improvements ). The Woodland Hills Land and the Woodland Hills Improvements (collectively referred to herein as the Woodland Hills Project ) are leased to, and operated by, Woodland Hills HC Nursing, LLC (the Woodland Hills Tenant ).
B. Northridge HC&R Property Holdings, LLC ( Northridge PropCo ) holds fee simple estate in certain real property located in the City of Little Rock, Pulaski County, Arkansas, which is legally described in Exhibit A-2 attached hereto (the Northridge Land ), together with all improvements located thereon, including the 140-bed skilled nursing facility known as Northridge Healthcare and Rehabilitation (the Northridge Improvements ). The Northridge Land and the Northridge Improvements (collectively referred to herein as the Northridge Project ) are leased to, and operated by, Northridge HC&R Nursing, LLC (the Northridge Tenant ).
C. APH&R HC Property Holdings, LLC ( Abington PropCo ) holds fee simple estate in certain real property located in the City of Little Rock, Pulaski County, Arkansas, which is legally described in Exhibit A-3 attached hereto (the Abington Land , together with the Woodland Hills Land and the Northridge Land sometimes collectively referred to herein as the Land ) all improvements located thereon, including the 120-bed skilled nursing facility currently known as Abington Place Health and Rehab Center and also to be known as Cumberland Health and Rehabilitation Center (the Abington Improvements ). The Abington Land and the Abington Improvements (collectively referred to herein as the Abington Project ) are leased to, and operated by, APH&R Nursing, LLC (the Abington Tenant )
D. The Woodland Hills Land, the Northridge Land and the Abington Land are sometimes collectively referred to herein as the Land . The Woodland Hills Improvements, the Northridge Improvements and the Abington Improvements are sometimes collectively referred to herein as the Improvements . Woodland Hills PropCo, Northridge PropCo and Abington PropCo are sometimes collectively referred to herein as the PropCos and individually as a
PropCo . Woodland Hills Tenant, Northridge Tenant and Abington Tenant are sometimes collectively referred to herein as the Tenants and individually as a Tenant .
E. Prior to the date hereof, Borrowers requested Lender make a loan in an amount of Sixteen Million Five Hundred Thousand and No/100 Dollars, ($16,500,000.00) (the Loan ) to refinance the Projects, and Lender is willing to make the Loan on the terms and conditions hereinafter set forth.
NOW, THEREFORE , in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
INCORPORATION OF RECITALS AND EXHIBITS
1.1 Incorporation of Recitals . The foregoing preambles and all other recitals set forth herein are made a part hereof by this reference.
1.2 Incorporation of Schedules and Exhibits . Exhibits A through F and Schedules 2.1 , 3.1(s) , 3.1(w)(i) , 3.1(w)(ii) , 9.1(b) , 9.2 , 9.4 and 10.1(bb) , inclusive, attached hereto are incorporated herein and expressly made a part hereof by this reference.
ARTICLE 2
DEFINITIONS
2.1 Defined Terms . The following terms as used herein shall have the following meanings:
Abington Adjusted EBITDA : For any period, Net Operating Income of Abington Borrowers on a combined basis and after the elimination of intercompany items, plus the sum of the following, without duplication and only to the extent such amounts are deducted from Gross Revenues of Abington Borrowers in the calculation of their Net Operating Income for such period: (i) Interest Expense, (ii) provisions for taxes based on income; (iii) depreciation expense; and (iv) amortization expense.
Abington Borrowers : Abington PropCo and Abington Tenant, jointly and severally.
Abington Improvements : As such term is defined in Recital C of this Agreement.
Abington Land : As such term is defined in Recital C of this Agreement.
Abington Lease : The Facility Lease dated June 1, 2012, by and between Abington PropCo, as lessor, and Abington Tenant, as lessee, relating to the Abington Project.
Abington Project : The collective reference to (i) the Abington Land, together with all buildings, structures and improvements located or to be located thereon, including the Abington Improvements, (ii) all rights, privileges, easements and hereditaments relating or
appertaining thereto, and (iii) all personal property, fixtures and equipment required or beneficial for the operation thereof.
Abington PropCo : As such term is defined in Recital C to this Agreement.
Abington Tenant : As such term is defined in Recital C of this Agreement.
AdCare OpCo : AdCare Operations, LLC, a Georgia limited liability company and the sole member of each Tenant.
AdCare OpCo Guaranty : As such term is defined in Section 4.2(e) .
Adjusted Base Rate : An interest rate per annum equal to the sum of (a) the Base Rate, plus (b) the Applicable Margin. Any change in the Adjusted Base Rate shall be effective immediately from and after a change in the Adjusted Base Rate (or the Federal Funds Effective Rate, as applicable).
Adjusted LIBOR Rate : For any LIBOR Rate Interest Period, an interest rate per annum equal to the sum of (i) the rate obtained by dividing (1) the LIBOR Rate for such LIBOR Rate Interest Period by (2) a percentage equal to one hundred percent (100%) minus the Reserve Percentage for such LIBOR Rate Interest Period, and (ii) the Applicable Margin.
Affiliate : With respect to a specified Person, any other Person which, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person. Without limiting the generality of the foregoing, Christopher F. Brogdon shall be deemed to be an Affiliate of the Loan Parties so long as he either owns or controls (directly or indirectly) more than five percent (5%) of Parents issued and outstanding common stock, is a member (whether ex-officio or otherwise) of Parents or any other Loan Partys Governing Body or is an officer or manager of the Parent or any other Loan Party.
Agreement : This Secured Loan Agreement.
APH : AdCare Property Holdings, LLC, an Ohio limited liability company, and a wholly owned Subsidiary of Parent.
APH Guaranty : As such term is defined in Section 4.2(d) .
Applicable Margin : Four and one-quarter percent (4.25%).
Applicable Rate : As such term is defined in Section 5.1(a) .
Applicable Release Price : As such term is defined in Section 9.1(b) .
Appraisal : An MAI certified appraisal of the Projects performed in accordance with FIRREA and Lenders appraisal requirements by an appraiser selected and retained by Lender.
Approved Residency Agreements : Shall mean all Residency Agreements executed by Borrower in accordance with Section 10.1(i) .
Assignments of Rents : As such term is defined in Section 4.2(h) .
Assumed Debt Service : For any period, the aggregate installments of principal and interest that would be required for the Loan, calculated based upon a thirty (30) year amortization schedule and an assumed per annum interest rate of six and one-half percent (6.50%).
Authorized Representative : As such term is defined in Section 16.15 .
Bankruptcy Code : As such term is defined in Section 14.1(h) .
Base Rate : For any day, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the greatest of:
(i) the rate of interest established by KeyBank National Association, from time to time, as its prime rate, whether or not publicly announced, which interest rate may or may not be the lowest rate charged by it for commercial loans or other extensions of credit;
(ii) the Federal Funds Effective Rate in effect from time to time, determined one Business Day in arrears, plus 1/2 of 1% per annum; and
(iii) the Daily LIBOR Rate plus one hundred basis points (100 bp).
Borrower or Borrowers : As such terms are defined in the introductory paragraph of this Agreement.
Borrower Total Adjusted EBITDA : For any period, Borrower Total EBITDA, adjusted to reflect assumed management fees of five percent (5%) of Gross Revenues of Borrowers and a $1,000 per bed, per year replacement reserve for each of the Projects.
Borrower Total EBITDA : For any period, Net Operating Income of Borrowers, on a combined basis and after the elimination of intercompany items, plus the sum of the following, without duplication and only to the extent such amounts are deducted from Gross Revenues in the calculation of their Net Operating Income for such period: (i) Interest Expense, (ii) provisions for taxes based on income; (iii) depreciation expense; and (iv) amortization expense.
Breakage Costs : Collectively, (a) the cost to Lender of re-employing funds bearing interest at an Adjusted LIBOR Rate, incurred (or expected to be incurred) in connection with (i) any payment of any portion of the Loan bearing interest at an Adjusted LIBOR Rate prior to the termination of any applicable LIBOR Rate Interest Period, or (ii) the conversion of an Adjusted LIBOR Rate to any other applicable interest rate on a date other than the last day of the relevant interest period, and (b) any amounts payable by a Borrower under any Interest Rate Agreement in connection with termination of such Agreement.
Business Day : A day of the year on which banks are not required or authorized to close in Brooklyn, Ohio or in Atlanta, Georgia.
Capital Lease Obligations : For any period and with respect to any Person, the obligations of such Person to pay rent or other amounts constituting payments of principal under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
Cash Collateral Account : As such term is defined in Section 8.1(d) .
Cash Collateral Amount : As such term is defined in Section 8.1(d) .
Cash Equivalents : (i) Securities issued or unconditionally guaranteed by the United States of America or any agency or instrumentality thereof, backed by the full faith and credit of the United States of America and maturing within ninety (90) days from the date of acquisition, or capable of being readily traded, (ii) commercial paper issued by any Person organized under the Laws of the United States of America, maturing within ninety (90) days from the date of acquisition and, at the time of acquisition, having a rating of at least A-1 or the equivalent thereof by Standard & Poors Ratings Services ( S&P ) or at least P-1 or the equivalent thereof by Moodys Investors Service, Inc. ( Moodys ), (iii) time deposits (which shall not include demand deposit accounts) and certificates of deposit maturing within ninety (90) days from the date of issuance and issued by Lender, PrivateBank, or a bank or trust company organized under the Laws of the United States of America or any state thereof that has combined capital and surplus of at least $500,000,000 and that has (or is a subsidiary of a bank holding company that has) a long-term unsecured debt rating of at least A or the equivalent thereof by S&P or at least A2 or the equivalent thereof by Moodys, (iv) repurchase obligations with a term not exceeding seven (7) days with respect to underlying securities of the types described in clause (i) above entered into with Lender, PrivateBank or any bank or trust company meeting the qualifications specified in clause (iii) above, (v) money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (iv) above, and (vi) annuity investments with a maturity date of no more than three (3) years, in an investment fund the substantial majority of whose assets consist of bonds issued by corporations having an unsecured debt rating of BBB or better from either S&P or Moodys, or other cash equivalents described in clauses (i) through (v) above.
CHAMPUS : Means, collectively, the Civilian Health and Medical Program of the Uniformed Service, a program of medical benefits covering former and active members of the uniformed services and certain of their dependents, financed and administered by the United State Departments of Defense, Health and Human Services and Transportation, and all laws, rules, regulations, manuals, order, guidelines or requirements pertaining to such program including (a) all federal statutes (whether set forth in 10 U.S.C. §§ 1071-1110a or elsewhere) affecting such program; and (b) all rules, regulations (include 32 C.F.R. Part 199), manuals, orders and administrative, reimbursement and other guidelines of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended.
CHAMPVA : Shall mean, collectively, the Civilian Health and Medical Program of the Department of Veteran Affairs, a program of medical benefits covering retirees and dependents of former members of the armed services administered by the United States Department of Veteran Affairs, and all laws, rules, regulations, manuals, orders, guidelines or requirements pertaining to such program including (a) all federal statutes (whether set forth in 38 U.S.C. § 1781 or elsewhere) affecting such program or, to the extent applicable to CHAMPVA; and (b) all rules, regulations (including 38 C.F.R. Part 17), manuals, orders and administrative, reimbursement and other guidelines of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended, supplemented or otherwise modified from time to time.
Change in Control : An event or series of events by which (i) Parent ceases to be the direct owner of 100% of all of the issued and outstanding equity interests in APH and AdCare OpCo, or either of them, (ii) APH ceases to be the direct owner of 100% of all of the issued and outstanding equity interests in the PropCos, or any of them, (iii) AdCare OpCo ceases to be the direct owner of 100% of all of the issued and outstanding equity interests in the Tenants, or any of them, or (iv) any Person or group of Persons acting in concert as a partnership or other group shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, have become, after the date hereof, the beneficial owner (within the meaning of such term under Rule 13d-3 under the Exchange Act) of equity interests of Parent representing voting power having the right to elect at least 49% of the members of Parents board of directors.
CMS : The Centers for Medicare and Medicaid Services, the entity within the United States Department of Health and Human Services responsible for administering the Medicare program and the federal aspects of the Medicaid programs, directly and through its fiscal intermediaries and agents, and any successor entities.
Collateral : The Premises (as defined in the Mortgages), the Collateral (as defined in the Security Agreements and in the Pledge Agreements), moneys on deposit in the Cash Collateral Account from time to time, and all of the other property, rights and interests of the Loan Parties which are or are intended to be subject to the security interests, security title, liens and mortgages created by the Loan Documents, including but not limited to the Projects.
Control : As such term is used with respect to any Person, including the correlative meanings of the terms controlled by and under common control with, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
Daily LIBOR Rate : The rate of interest calculated by Lender on a daily basis equal to the one month rate of interest (rounded upward to the next highest 1/16th of 1%) of the one month London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on the second preceding LIBOR Business Day; as determined and adjusted from time to time in Lenders sole discretion.
Default or Default : Any event, circumstance or condition which, if it were to continue uncured, would, with notice or lapse of time or both, constitute an Event of Default hereunder.
Default Rate : A rate per annum equal to four percent (400 basis points) over the Adjusted Base Rate.
Distributions : In connection with any Person with respect to which the term is used, any of the following: (i) any dividend or distribution of money or property to any owner of a direct or indirect equity interest in such entity (a Principal ), or to any Affiliate of any Principal, (ii) any loan or advance to any Principal, or to any Affiliate of any Principal, (iii) any payment of principal or interest on any Indebtedness due to any Principal, or to any Affiliate of any Principal, and (iv) any payment of any fees or other compensation to any Principal or any Affiliate of any Principal, except in the case of clause (iv), other than (A) any payment of fees under a Management Agreement permitted under this Agreement, (B) and any rent payable under the Facility Leases (in each instance subject to any restrictions contained in another Loan Document), and (C) any other fees and compensation described on Schedule 2.1 hereto.
Environmental Law : shall mean all applicable laws, statutes, enactments, orders, regulations, rules and ordinances of any Governmental Authority relating to pollution or protection of human health, safety, the environment, natural resources or laws relating to releases or threatened releases of Hazardous Materials into the indoor or outdoor environment (including, without limitation, ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport or handling of Hazardous Materials, including, without limitation (as applicable), the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.) and the Occupational Safety and Health Act, 29 U.S.C. §653 et seq.), and the regulations promulgated pursuant thereto, as amended from time to time.
Environmental Proceedings : As such term is defined in Section 3.1(b) .
Environmental Report : As such term is defined in Section 8.1(o) .
ERISA : The Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder from time to time.
Event of Default : As such term is defined in Article 14 .
Exit Fee : As such term is defined in Section 7.7 .
Extended Maturity Date : August 31, 2015.
Extension Option : As such term is defined in Section 4.3(b) .
Facility Leases : Collectively, the Woodland Hills Lease, the Northridge Lease and the Abington Lease, and each individually, a Facility Lease .
Federal Funds Effective Rate : Shall mean, for any day, the rate per annum (rounded upward to the nearest on one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of Cleveland on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the Federal Funds Effective Rate.
Final Maturity Date : The date on which the Note matures, whether by acceleration, lapse of time or otherwise; provided, that such date shall be the Initial Maturity Date, subject to the Extension Option pursuant to which Borrowers may extend the Initial Maturity Date to the Extended Maturity Date in accordance herewith, in each case unless earlier accelerated as permitted herein or in any Loan Document.
FIRREA : The Financial Institutions Reform, Recovery And Enforcement Act of 1989, as amended from time to time.
GAAP or Generally Accepted Accounting Principles : Accounting principles and practices generally accepted in the United States of America and recognized by the Financial Accounting Standards Board.
Governing Body : When used with respect to any Person, its Board of Directors, Board of Trustees, or other board, committee or group of individuals in which the powers of a Board of Directors or Board of Trustees is vested generally or for the specific matters under consideration.
Governmental Approvals : As such term is defined in Section 3.1(h) .
Governmental Authority : Any federal, state, county or municipal government, or political subdivision thereof; any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, or public body, or any court, administrative tribunal, or public utility.
Gross Revenues : For any period and for any Person, all revenues of such Person, determined on a cash basis, derived from the ownership, operation, use, leasing and occupancy of the Projects during such period; provided, however, that in no event shall Gross Revenues include (i) any loan proceeds, (ii) proceeds or payments under insurance policies (except proceeds of business interruption insurance); (iii) condemnation proceeds; (iv) any security deposits received from tenants in the Projects, unless and until the same are applied to rent or other obligations in accordance with the tenants lease; or (v) any other extraordinary items.
Guarantor : Either of the Parent, APH or AdCare OpCo, individually.
Guarantors : The collective reference to Parent, APH and AdCare OpCo.
Guaranties : Collectively, the Parent Guaranty, the APH Guaranty and the AdCare OpCo Guaranty, each of which, individually, is sometimes referred to herein as a Guaranty .
Hazardous Material : Gasoline, petroleum, asbestos containing materials, lead, explosives, radioactive materials or any materials or substances which are defined or regulated as dangerous, toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous or as a pollutant or contaminant under any Law of any Governmental Authority having jurisdiction over the Projects or any portion thereof or its use, including: (i) any hazardous substance, pollutant, or contaminant defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A. § 9601 as may be amended from time to time, or any state or local equivalents, or any superlien Law, including the judicial interpretations thereof; (ii) any material defined as hazardous pursuant to 40 C.F.R. Part 260; (iii) any petroleum, including crude oil or any fraction thereof; (iv) natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel; (v) any hazardous chemical as defined pursuant to 29 C.F.R. Part 1910; and (vi) any other toxic substance or contaminant that is subject to any other Law or other past or present requirement of any Governmental Authority, as any such acts and laws may be amended, modified or supplemented from time to time.
Health Care Permit : Any and all licenses, provisional licenses, Joint Commission and/or other accreditations, franchising rights to conduct business, approvals by a Governmental Authority, authorizations, certificates of need, consents, qualifications, operating authority, and/or any other permit that is related to the provision of health care services required by any applicable Governmental Authority or otherwise necessary for Borrower to operate its business or to own, lease, operate or manage the Projects.
Hedging Obligations : With respect to any Person, any and all obligations of such Person, whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such partys assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collateral protection agreements, forward rate currency or interest rate options, puts and warrants, commodity futures, forwards, swaps and options, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any of the foregoing.
HIPAA : The Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act, and Title 45, Parts 160 and 164 of the Code of Federal Regulations, as amended, and any other related laws.
Implied Debt Service Coverage : With respect to any applicable period, the ratio of (a) Borrower Total Adjusted EBITDA for such period, to (b) Assumed Debt Service.
Impound Account : As such term is defined in Section 4 of each of the Mortgages, and sometimes referred to collectively as the Impound Accounts .
Improvements : As such term is defined in Recital D of this Agreement.
Indebtedness : As to any Person, without duplication: (i) all indebtedness of such Person for borrowed money; (ii) any other indebtedness which is evidenced by a bond, debenture or similar instrument or upon which interest charges are traditionally paid; (iii) all Capital Lease Obligations of such Person; (iv) all obligations of such Person for the deferred purchase price of Property or services (except current trade accounts payable arising in the ordinary course of business and current accrued expenses, not the result of borrowing, arising in the ordinary course of business); (iv) all reimbursement obligations of such Person in respect of outstanding letters of credit, acceptances and similar obligations created for the account of such Person; (v) all indebtedness, liabilities, and obligations secured by any Lien on any Property owned by such Person even though such Person has not assumed or has not otherwise become liable for the payment of any such indebtedness, liabilities or obligations secured by such Lien, but only to the extent of the value of the Property subject to such Lien (or, if less, the amount of the underlying indebtedness, liability or obligation); (vi) net liabilities of such Person in respect of Hedging Obligations (calculated on a basis satisfactory to the Agent and in accordance with accepted practice); (vii) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person; (viii) all obligations of such Person to pay rent or other amounts under any Synthetic Lease; (ix) all Indebtedness of another entity to the extent such Person is liable therefor (including any partnership in which such Person is a general partner and including any unlimited liability corporation) to the extent such Person is liable therefor as a result of such Persons ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor; and (x) all Contingent Obligations of such Person with respect to Indebtedness of others; provided , that such term shall not mean or include (A) any Indebtedness in respect of which monies sufficient to pay and discharge the same in full (either on the expressed date of maturity thereof or on such earlier date as such Indebtedness may be duly called for redemption and payment) shall be deposited with a depository, agency or trustee acceptable to the Agent in trust for the payment thereof, or (B) any operating leases entered into in the ordinary course of business (to the extent such operating leases do not constitute Capital Lease Obligations or Synthetic Leases).
Indemnity : As such term is defined in Section 4.2(i) .
Initial Maturity Date : February 27, 2015.
Interest Rate Agreement : The document or instrument evidencing or creating any Interest Rate Protection Product which shall remain in effect from, or subsequent to, the Loan Opening Date.
Interest Rate Protection Product : A floating-to-fixed derivative, or other acceptable cap or limitation obtained by any Borrower, at its expense, to protect such Borrower from increases in the applicable LIBOR Rate, in an amount approved by Lender.
Investment : Any loan or advance to any Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or
other securities of such Person, any capital contribution to such Person or any other investment in such Person.
Joint Commission : The Joint Commission, formerly known as the Joint Commission on Accreditation of Healthcare Organizations, and any successor organization.
Land : As such term is defined in Recital D of this Agreement.
Late Charge : As such term is defined in Section 4.6 .
Laws : Collectively, all federal, state and local laws, statutes, codes, ordinances, orders, rules and regulations, including judicial opinions or precedential authority in the applicable jurisdiction.
Leases : The collective reference to all leases, subleases and occupancy agreements affecting a Project or any part thereof now existing or hereafter executed and all amendments, modifications or supplements thereto.
LIBOR Business Day : A Business Day on which dealings in U.S. dollars are carried on in the London Interbank Market.
LIBOR Rate : For any LIBOR Rate Interest Period, the average rate (rounded upwards to the nearest 1/16th) as shown by Reuters at which deposits in U.S. dollars are offered by first class banks in the London Interbank Market at approximately 11:00 a.m. (London time) on the day that is two (2) LIBOR Business Days prior to the first day of such LIBOR Rate Interest Period with a maturity approximately equal to such LIBOR Rate Interest Period and in an amount approximately equal to the amount to which such LIBOR Rate Interest Period relates, adjusted for reserves and taxes if required by future regulations. If Reuters no longer reports such rate or Lender determines in good faith that the rate so reported no longer accurately reflects the rate available to Lender in the London Interbank Market, Lender may select a replacement index.
LIBOR Rate Interest Period : With respect to each amount bearing interest at a LIBOR based rate, a period of one month, to the extent deposits with such maturities are available to Lender, commencing on a LIBOR Business Day, as selected by Borrower provided, however, that (i) any LIBOR Rate Interest Period which would otherwise end on a day which is not a LIBOR Business Day shall continue to and end on the next succeeding LIBOR Business Day, unless the result would be that such LIBOR Rate Interest Period would be extended to the next succeeding calendar month, in which case such LIBOR Rate Interest Period shall end on the next preceding LIBOR Business Day, (ii) any LIBOR Rate Interest Period which begins on a day for which there is no numerically corresponding date in the calendar month in which such LIBOR Rate Interest Period would otherwise end shall instead end on the last LIBOR Business Day of such calendar month, and (iii) Borrower may not select a LIBOR Rate Interest Period which would end after the Final Maturity Date.
Loan : As such term is defined in Recital E of this Agreement.
Loan Amount : The original principal amount of the Loan as set forth in Section 4.1(a) and as reduced by principal payments, if any, made from time to time.
Loan Documents : The collective reference to this Agreement, the documents and instruments listed in Section 4.2 , and all the other documents, instruments and agreements entered into from time to time, evidencing, guaranteeing or securing the Loan or any obligation of payment thereof or performance of Borrowers obligations in connection with the transaction contemplated hereunder and any Interest Rate Agreements, or otherwise executed and delivered by Loan Parties, or any of them, in connection with the transactions contemplated herein each as amended from time to time.
Loan Opening Date : The date of this Agreement.
Loan Parties : Collectively, Borrowers and Guarantors, and each individually sometimes referred to herein as a Loan Party .
Management Agreement : As such term is defined in Section 8.1(k) .
Material Adverse Change : The occurrence of an event or the existence of a fact or circumstance giving rise to a Material Adverse Effect.
Material Adverse Effect : A material adverse affect on (a) the business, condition (financial or otherwise), operations, performance or properties of any Borrower or any Project, (b) the ability of Loan Parties, taken as a whole to perform their obligations under the Loan Document to which it is a party from time to time or (c) the priority of any lien or security interest of Lender relating to a material part of the Collateral as provided under the terms of any Loan Document.
Medicaid : Collectively, the healthcare assistance program established by Title XIX of the Social Security Act (42 U.S.C. §§1396 et seq.) and any statutes succeeding thereto, and all laws, rules, regulations, manuals, orders, guidelines or requirements pertaining to such program including (a) all federal statutes (whether set forth in Title XIX of the Social Security Act or elsewhere) affecting such program; (b) all state statutes, regulations and plans for medical assistance enacted in connection with such program and federal rules and regulations promulgated in connection with such program; and (c) all applicable provisions of all rules, regulations, manuals, orders and administrative, reimbursement, guidelines and requirements of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended, supplemented or otherwise modified from time to time.
Medicaid Provider/Supplier Agreement : An agreement entered into between a provider or supplier, as defined under 42 U.S.C. 1395(x), pursuant to 42 U.S.C. 1395cc, or a similar agreement entered into between any federal or state agency or other entity administering Medicaid in such state, or any other grant of authority by CMS or any federal or state agency or other entity administering Medicaid in such state, under which the health care facility, supplier or physician is authorized to provide medical goods and services to Medicaid recipients and to be reimbursed by Medicaid for such goods and services.
Medicare : Collectively, the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act (42 U.S.C. §§1395 et seq.) and any statutes succeeding thereto, and all laws, rules, regulations, manuals, orders or guidelines pertaining to
such program including (a) all federal statutes (whether set forth in Title XVIII of the Social Security Act or elsewhere) affecting such program; and (b) all applicable provisions of all rules, regulations, manuals, orders and administrative, reimbursement, guidelines and requirements of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended, supplemented or otherwise modified from time to time.
Medicare Provider/Supplier Agreement : An agreement entered into between a provider or supplier, as defined under 42 U.S.C. 1395(x), pursuant to 42 U.S.C. 1395cc, or a similar agreement entered into between any federal or state agency or other entity administering Medicare in such state, or other grant of authority by CMS or any federal or state agency or other entity administering Medicare in such state, under which the health care facility, supplier or physician is authorized to provide medical goods and services to Medicare patients and to be reimbursed by Medicare for such goods and services.
Mortgages : Collectively, the Woodland Hills Mortgage, the Northridge Mortgage and the Abington Mortgage (each as defined in Section 4.2(b) ), and each individually, a Mortgage .
Net Operating Income or NOI : For any applicable period, with respect to any Person, all Gross Revenues based upon the most current operating statements then in Lenders possession less all Operating Expenses incurred by such Person for such period (as reasonably approved by Lender) in connection with its ownership and operation of their properties and assets, including, without limitation, real estate taxes and insurance premiums.
Northridge Borrowers : Collectively, Northridge PropCo and Northridge Tenant.
Northridge Land : As such term is defined in Recital B of this Agreement.
Northridge Lease : The Facility Lease dated April 1, 2012, by and between Northridge PropCo, as lessor, and Northridge Tenant, as lessee, relating to the Northridge Project.
Northridge Project : The collective reference to (i) the Northridge Land, together with all buildings, structures and improvements located or to be located thereon, including the Northridge Improvements, (ii) all rights, privileges, easements and hereditaments relating or appertaining thereto, and (iii) all personal property, fixtures and equipment required or beneficial for the operation thereof.
Northridge PropCo : As such term is defined in Recital B to this Agreement.
Note : The promissory note executed by Borrowers pursuant to Section 4.2(a) .
Obligations . All indebtedness, obligations and liabilities of Borrowers, individually or collectively, to Lender under this Agreement or any of the other Loan Documents or in respect of the Loan or the Note, or other instruments at any time evidencing any of the foregoing, whether existing on the date of this Agreement or arising or incurred hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or otherwise (including, without limitation, advances made by Lender to protect or preserve the Collateral or the security interests therein), and including interest and fees that accrue after the commencement by or against any Loan Party of any proceeding under the United States Bankruptcy Code or other similar federal or state law, naming such Person as the debtor in such proceeding, regardless of whether or not such interest and fees are allowed claims in such proceeding. To the extent this definition of Obligations is referenced in any Loan Document, the definition shall also include any Indebtedness, obligations and liabilities of Borrowers under any and all Interest Rate Agreements.
Opening of the Loan or Loan Opening : The disbursement of proceeds of the Loan.
Operating Accounts : Collectively, the PropCo Operating Accounts and the Tenant Operating Accounts, and each individually, an Operating Account .
Operating Expenses : For any period, with respect to any Person, the actual costs and expenses of owning, operating, managing and maintaining their properties and assets during such period incurred by such Person, determined on a cash basis (except for real and personal property taxes and insurance premiums, which shall be determined on an accrual basis), including, (i) an annual replacement reserve equal to $1,000 per bed, and (ii) a five percent (5.0%) management fee, excepting, however, (x) interest and principal due on Indebtedness, (y) depreciation and amortization, and (z) actual capital expenditures during the applicable period.
Operating Statement : As such term is defined in Section 10.1(m)(viii) .
Parent : AdCare Health Systems, Inc., an Ohio corporation.
Parent Guaranty : As such term is defined in Section 4.2(c) .
Permitted Exceptions : (i) As of the date hereof, with respect to each Project, those matters listed on Exhibits B-1, B-2 and B-3 hereto (as applicable) to which title to the respective Projects may be subject at the Loan Opening, and (ii) at all times thereafter, such exceptions covered by (i) along with the liens and security interests created by the Mortgages or other Loan Documents; statutory liens for ad valorem taxes, standby fees and other governmental charges which are not yet delinquent at the time in question or are being contested in accordance with the requirements of the Loan Documents; rights of tenants under Approved Leases; other liens and security interests (if any) in favor of Lender; and mechanics liens being contested in accordance with the requirements of the Loan Documents, and such other title exceptions as Lender may approve in writing.
Permitted Investments : Such term means the following:
(a) Cash Equivalents;
(b) Purchases and acquisitions of inventory, supplies, materials and equipment in the ordinary course of business;
(c) Investments consisting of loans and advances to employees for reasonable travel, relocation and business expenses in the ordinary course of business or prepaid expenses incurred in the ordinary course of business;
(d) Without duplication, Investments consisting of Indebtedness permitted by the terms of this Agreement;
(e) Investments existing on the Loan Opening Date;
(f) Other Investments made in accordance with Parents or the applicable Borrowers investment policy as in effect on the date of this Agreement, or as it may be amended with the Banks prior written consent, which will not be unreasonably withheld, delayed or conditioned;
(g) Investments arising under Interest Rate Agreements that otherwise qualify as Indebtedness permitted under the terms of this Agreement;
(h) Investments by any Borrower in or to another Borrower, and Investments by Parent in or to any of its Subsidiaries; and
(i) Any other Investments that may be approved in writing by Lender from time to time.
Permitted Substances : Substances used, generated, manufactured, stored, disposed of or otherwise handled in normal quantities by any Tenant in the ordinary course of its business, or by any Borrower or Tenant and its contractors and subcontractors in the course of construction on any Project, and in the case of all of the foregoing, in compliance with all Environmental Laws.
Pledge Agreements : Collectively, the pledge and security agreements required to be delivered by APH and AdCare OpCo to Lender pursuant to Sections 4.2(f) and (g) , and each individually, a Pledge Agreement .
PrivateBank : The PrivateBank and Trust Company, an Illinois banking corporation.
Projects : As such term is defined in Recital D of this Agreement.
PropCo Operating Accounts : As such term is defined in Section 10.1(dd)(i) .
PropCos : As such term is defined in Recital D of this Agreement.
Property Condition Report : As such term is defined in Section 8.1(g) .
Reimbursement Approvals : shall mean, with respect to all Third Party Payor Arrangements, any and all certifications, provider numbers, provider agreements (including, without limitation, Medicare Provider/Supplier Agreements and Medicaid Provider/Supplier Agreements), participation agreements, accreditations (including Joint Commission
accreditation) and/or any other agreements with or approvals by organizations and Governmental Authorities.
Remaining Project : As such term is defined in Section 9.1(b) .
Reserve Percentage : For any LIBOR Rate Interest Period, that percentage which is specified three (3) Business Days before the first day of such LIBOR Rate Interest Period by the Board of Governors of the Federal Reserve System (or any successor) or any other governmental or quasi-governmental authority with jurisdiction over Lender for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirement) for Lender with respect to liabilities constituting of or including (among other liabilities) Eurocurrency liabilities in an amount equal to that portion of the Loan affected by such LIBOR Rate Interest Period and with a maturity equal to such LIBOR Rate Interest Period.
Residency Agreements : With respect to any Project, the agreements entered into from time to time between the applicable Tenant and residents of that Project, which shall be in substantially in form of the standard residency agreement form submitted to Lender pursuant to Section 8.1(q) , or otherwise approved in writing by Lender.
Security Agreements : As such term is defined in Section 4.2(k) .
Sinking Fund Account : As such term is defined in Section 4.4(b) .
Sinking Fund Payment : For each calendar month during any Sinking Fund Period, an amount equal to one hundred percent (100%) of Borrower Total Adjusted EBITDA for the second preceding calendar month. For illustrative purposes, the Sinking Fund Payment due and payable on March 1 would be determined based upon Borrower Total Adjusted EBITDA for the preceding January, as required to be reported by Borrowers to Lender in mid-February.
Sinking Fund Period : Any period (i) commencing upon the occurrence of any Event of Default and ending on (ii) the date, if any, on which Lender waives such Event of Default in writing, or (ii) commencing on the date on which Lender receives a Compliance Certificate disclosing that Abington Adjusted EBITDA for any period required to be tested did not meet the applicable minimum amount specified in Section 4.4(b) , and ending on the date Lender receives a Compliance Certificate certifying that, for any subsequent period required to be tested under Section 4.4(b) , Abington Borrowers have achieved the minimum Abington Adjusted EBITDA amount specified in said Section.
State : The State of Arkansas.
Subsidiary : With respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than fifty percent (50%) of the total voting power of shares of stock or other ownership interest entitled to vote in the election of the Person or Persons (whether directors, manager, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the
management of policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.
Synthetic Lease : Any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which lease or other arrangement is required or is permitted to be classified and accounted for as an operating lease under GAAP, but which is intended by the parties thereto for tax, bankruptcy, regulatory, commercial law, real estate law and all other purposes as a financing arrangement.
Tenant Operating Accounts : As such term is defined in Section 10.1(dd)(ii) .
Tenants : As such term is defined in Recital D of this Agreement.
Third-Party Payor Arrangements : Any and all arrangements with Medicare, Medicaid, CHAMPUS, CHAMPVA, TRICARE and any other Governmental Authority, or quasi-public agency, any and all managed care plans and organizations, including but not limited to health maintenance organizations and preferred provider organizations, private commercial insurance companies, employee assistance programs and/or any other third-party arrangements, plans or programs for payment or reimbursement in connection with health services, products or supplies.
Title Insurer : First American Title Insurance Company or such other title insurance company licensed in the State as may be approved in writing by Lender.
Title Policies : As such term is defined in Section 8.1(a) .
Transfer : As such term is defined in Section 12.2 .
TRICARE : Shall mean, collectively, a program of medical benefits covering former and active members of the uniformed services and certain of their dependents, financed and administered by the United States Departments of Defense, Health and Human Services and Transportation, which program was formerly known as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), and all laws, rules, regulations, manuals, orders and administrative, reimbursement and other guidelines of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended, supplemented or otherwise modified from time to time.
Woodland Hills Improvements : As such term is defined in Recital A of this Agreement.
Woodland Hills Land : As such term is defined in Recital A of this Agreement.
Woodland Hills Lease : The Facility Lease dated April 1, 2012, by and between Woodland Hills PropCo, as lessor, and Woodland Hills Tenant, as lessee, relating to the Woodland Hills Project.
Woodland Hills Project : The collective reference to (i) the Woodland Hills Land, together with all buildings, structures and improvements located or to be located thereon,
including the Woodland Hills Improvements, (ii) all rights, privileges, easements and hereditaments relating or appertaining thereto, and (iii) all personal property, fixtures and equipment required or beneficial for the operation thereof.
Woodland Hills PropCo : As such term is defined in Recital A of this Agreement.
Working Capital Financing : The $10,600,000.00 revolving credit facility from PrivateBank in favor of Working Capital Line Borrowers, secured by all or substantially all of the personal property of each Working Capital Line Borrower, pursuant to the Working Capital Financing Agreement, as such credit facility may be modified, amended, renewed, extended, increased or restated from time to time.
Working Capital Financing Agreement : The Loan and Security Agreement dated as of September 20, 2102, by and among Working Capital Line Borrowers and PrivateBank, as amended, prior to the Loan Opening Date.
Working Capital Line Borrowers : Tenants and certain other operating company Subsidiaries of AdCare OpCo party to the Working Capital Financing immediately prior to the Loan Opening Date.
2.2 Other Definitional Provisions; Computation of Time Periods . All terms defined in this Agreement shall have the same meanings when used in the Note, Mortgages or any other Loan Documents, or any certificate or other document made or delivered pursuant hereto. The words hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to this Agreement. For purposes of computation of time periods hereunder, the word from means from and including, the words to and until each mean to but excluding, and the word through means through and including.
ARTICLE 3
BORROWERS REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties . To induce Lender to execute this Agreement and perform its obligations hereunder, Borrowers hereby represent and warrant to Lender as follows:
(a) Each PropCo has fee simple title to its Project, subject only to the Permitted Exceptions. Each Tenant has leasehold title to its Project under its respective Facility Lease. No event of default or any fact or circumstance which, notice or the passage of time (or both) would constitute an event of default exists with respect to any of the Facility Leases.
(b) No litigation or proceedings are pending, or to the best of Borrowers actual knowledge threatened, against any Borrower or Guarantor, which could, if adversely determined, have a Material Adverse Effect. Based on and subject to the Environmental Report, Borrowers have no actual knowledge of any pending environmental proceedings, whether civil (including actions by private parties), criminal, or administrative proceedings, relating to any of the Projects (collectively, Environmental Proceedings ), and Borrowers have no actual
knowledge of any Environmental Proceedings or any facts or circumstances which may give rise to any future Environmental Proceedings.
(c) Each Borrower is a duly organized and validly existing Georgia limited liability company, is duly qualified as a foreign limited liability company under the laws of the State, and has full power and authority to execute, deliver and perform all Loan Documents to which it is a party, and such execution, delivery and performance have been duly authorized by all requisite action on the part of such Borrower and its sole member.
(d) Except as has already been obtained or as otherwise permitted in this Agreement, no consent, approval or authorization of or declaration, registration or filing with any Governmental Authority or nongovernmental person or entity, including any creditor, partner or member of any Borrower, is required in connection with the execution, delivery and performance of this Agreement or any of the Loan Documents to which Borrowers are respectively a party other than the recordation of the Mortgages and the Assignments of Rents, and filing of UCC-1 Financing Statements.
(e) The execution, delivery and performance of this Agreement, the execution and payment of the Note and the granting of the Mortgages and other security interests and assignments under the other Loan Documents have not constituted and will not constitute, upon the giving of notice or lapse of time or both, a breach or default under any other agreement to which any Borrower is a party or may be bound or affected, or a violation of any law or court order which may affect any of the Projects, any part thereof, any interest therein, or the use thereof.
(f) There is no default under this Agreement or the other Loan Documents, nor any condition which, after notice or the passage of time or both, would constitute a default or an Event of Default under said documents. There is no default or event of default any documents evidencing, guaranteeing or securing Indebtedness being refinanced by the Loan, and such Indebtedness is not subject to any forbearance arrangement.
(g) (i) No condemnation of any Project or any portion thereof, (ii) no condemnation or relocation of any roadways abutting any Project, and (iii) no proceeding to deny access to any Project from any point or planned point of access to such Project, has commenced or, to the best of Borrowers knowledge, is contemplated by any Governmental Authority.
(h) The Projects and the use thereof for their current use do not violate (i) any applicable Laws (including subdivision, zoning, building, environmental protection and wetland protection Laws), or (ii) any building permits, restrictions of record, or agreements affecting the Projects or any part thereof , other than any violation which could not reasonably be expected to have a Material Adverse Effect. Neither the zoning authorizations, approvals or variances nor any other right to own or to use the Projects is to any extent dependent upon or related to any real estate other than the Land applicable to the respective Projects. All material and applicable consents, licenses and permits and all other authorizations or approvals (collectively, Governmental Approvals ) required for the ownership and use of each Project have been obtained and remain in full force and effect.
(i) Each Project has adequate water, gas and electrical supply, storm and sanitary sewerage facilities, other required public utilities, fire and police protection, and means of access between such Project and public highways; none of the foregoing will be foreseeably delayed or impeded by virtue of any requirements under any applicable Laws.
(j) No brokerage fees or commissions are payable by or to any Person in connection with this Agreement or the Loan to be disbursed hereunder.
(k) All financial statements and other information previously furnished by Loan Parties to Lender in connection with the Loan are true, complete and correct and fairly present the financial conditions of the subjects thereof as of the respective dates thereof and do not fail to state any material fact necessary to make such statements or information not misleading, and no Material Adverse Change has occurred the respective dates of such statements and information, which has not otherwise been disclosed to Lender in writing. Loan Parties have no material liability, contingent or otherwise, not disclosed in such financial statements.
(l) Subject to the Environmental Report, as of the date hereof, (i) each Project is in a clean, safe and healthful condition, and is free of all Hazardous Material, other than Permitted Substances, and is in compliance with all applicable Laws; (ii) neither Borrowers nor, to the best actual knowledge of Borrowers, any other Person, has ever caused or permitted any Hazardous Material (other than Permitted Substances) to be transported to or from, placed, held, stored, located or disposed of on, under, at or in a manner to affect the Projects, or any part thereof, and the Projects have not ever been used (whether by Borrowers or, to the best actual knowledge of Borrowers, by any other Person) for any activities involving, directly or indirectly, the use, generation, treatment, storage, transportation, or disposal of any Hazardous Material, except for Permitted Substances; (iii) none of the Projects or Borrowers are subject to any existing, pending or (to the best of Borrowers actual knowledge) threatened (A) investigation or inquiry by any Governmental Authority or (B) demand, settlement, litigation by any Governmental Authority or other third party, asserting any alleged violation of Environmental Law, and the Projects are not subject to any remedial obligations under any applicable Laws pertaining to health or the environment; and (iv) there are no underground tanks, vessels, or similar facilities for the storage, containment or accumulation of Hazardous Materials of any sort on, at, under or affecting the Projects, except with respect to Permitted Substances.
(m) Each Project is taxed separately without regard to any other property and for all purposes each Project may be mortgaged, conveyed and otherwise dealt with as an independent parcel.
(n) Neither Borrowers nor their respective agents have entered into any Leases, subleases or other arrangements for occupancy of space within the Projects other than the Facility Leases and the Residency Agreements set forth on the occupancy list delivered to Lender in connection herewith.
(o) No portion of the Improvements encroaches upon any property line, building line, setback line, side yard line or any recorded or visible easement (or other easement of which Borrower is aware or has reason to believe may exist) with respect to the Projects.
(p) The Loan is not being made for the purpose of purchasing or carrying margin stock within the meaning of Regulation T, U or X issued by the Board of Governors of the Federal Reserve System, and Borrower agrees to execute all instruments necessary to comply with all the requirements of Regulation U of the Federal Reserve System.
(q) No Borrower is a party in interest to any plan defined or regulated under ERISA, and none of the assets of any Borrower are plan assets of any employee benefit plan covered by ERISA or Section 4975 of the Internal Revenue Code.
(r) No Borrower is a foreign person within the meaning of Section 1445 or 7701 of the Internal Revenue Code.
(s) Borrowers do not use any trade name other than its actual name set forth herein and their respective facility names set forth in Recitals A, B or C, as applicable. The principal place of business of each Borrower is as stated in Schedule 3.1(s) attached hereto.
(t) Each Borrowers place of organization is the State of Georgia.
(u) All statements set forth in the Recitals are true and correct.
(v) No Borrower or Guarantor is (or will be) a person with whom Lender is restricted from doing business under OFAC (including, those Persons named on OFACs Specially Designated and Blocked Persons list) or under any statute, executive order (including, the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support. Terrorism), or other governmental action and is not and shall not engage in any dealings or transactions or otherwise be associated with such persons. In addition, each Borrower hereby agrees to provide, and agrees to cause each Guarantor to provide, to the Lender with any additional information that Lender deems necessary from time to time in order to ensure compliance with all applicable Laws concerning money laundering and similar activities.
(w) (i) Except as disclosed on Schedule 3.1(w)(i) :
(1) (A) Borrowers now have all Health Care Permits necessary for the lawful conduct of its business or operations at the Projects and as planned to be conducted, including, without limitation, the ownership and operation of their respective Projects pursuant to all requirements of applicable Law, (B) all such Health Care Permits are in full force and effect and have not been amended or otherwise modified, rescinded, revoked or assigned, (C) Borrowers are complying with the requirements of each such Health Care Permit, and no event has occurred, and no condition exists, which, with the giving of notice, the passage of time, or both, would constitute a violation thereof, (D) no Borrower has received any written notice of any violation of any requirement of applicable Law, (E) no condition exists or event has occurred which in itself or with the giving of notice or the lapse of time, or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such Health Care Permit, (F) there is no claim filed with any Governmental Authority of which any Borrower has been notified in
writing, challenging the validity and effectiveness of any such Health Care Permit or the execution and performance of any of the Loan Documents.
(2) Tenants, as licensed operators of the Projects, are entitled to participate in, and receive payment under, the appropriate Medicare, Medicaid, or any other federal or state health care program or any related reimbursement programs, and any similar state or local government-sponsored program, and to receive reimbursement from private and commercial payors and health maintenance organizations to the extent applicable thereto; and (ii) there are no proceedings pending or, to the knowledge of Borrowers, any proceedings threatened or investigations pending or threatened, by any Governmental Authority with respect to Tenants participation in the Medicare, Medicaid, or any other federal or state health care program or any related reimbursement programs.
(3) No Loan Party: (i) has had a civil monetary penalty assessed against it under the Social Security Act (the SSA ) Section 1128(a) , other than nominal amounts for violations which were not of a material nature, (ii) has been excluded from participation under the Medicare, Medicaid, or any other federal or state health care program or any related reimbursement programs or under a state health care program as defined in the SSA Section 1128(h) ( State Health Care Program ), or (iii) has been convicted (as that term is defined in 42 C.F.R. Section 1001.2 ) of any of the following categories of offenses as described in the SSA Section 1127(a) and (b)(1), (2), (3): (A) criminal offenses relating to the delivery of an item or service under Medicare or any State Health Care Program; (B) criminal offenses under federal or state law relating to patient neglect or abuse in connection with the delivery of a health care item or service; (C) criminal offenses under federal or state law relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service or with respect to any act or omission in a program operated by or financed in whole or in part by any federal, state or local government agency; (D) federal or state laws relating to the interference with or obstruction of any investigations into any criminal offense described in (A) through (C) above; or (E) criminal offenses under federal or state law relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance. Without limiting the generality of the foregoing, no Borrower is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Medicare, Medicaid, or any other federal or state health care program Provider/Supplier Agreement or other agreement or instrument to which any Borrower is a party, which default has resulted in, or if not remedied within any applicable grace period could result in, the revocation, termination, cancellation or suspension of the Medicare, Medicaid, or any other federal or state health care program enrollment of any Tenant.
(ii) Schedule 3.1(w)(ii) contains a true, correct and complete list of all of the Health Care Permits in effect on the Loan Opening Date with respect to the Projects.
(x) There are no strikes, lockouts or other labor disputes pending or threatened against any Borrower or Project, hours worked by and payment made to employees of any Borrower have not been in violation of the Fair Labor Standards Act or any other applicable law, and no unfair labor practice complaint is pending, or threatened, against any Borrower before any governmental authority.
(y) The outstanding principal amount of the Working Capital Financing as of the Loan Opening Date, immediately prior to the partial prepayment being made by or for the account of Tenants in order to secure the release of Tenants and their Collateral by PrivateBank, does not exceed $8,775,457.00.
Borrowers representations and warranties contained in this Section 3.1 shall be subject to any and all obligations to which Tenant is subject to under HIPAA.
3.2 Survival of Representations and Warranties . Borrowers agree that all of the representations and warranties set forth in Section 3.1 and elsewhere in this Agreement are true as of the date hereof, will be true at the Loan Opening and, except for matters which have been disclosed by Borrower and approved by Lender in writing, at all times thereafter. It shall be a condition precedent to the Loan Opening that each of said representations and warranties is true and correct as of the date thereof.
ARTICLE 4
LOAN AND LOAN DOCUMENTS
4.1 Agreement to Borrow and Lend; Lenders Obligation to Disburse . Subject to the terms, provisions and conditions of this Agreement and the other Loan Documents, Borrowers agree to borrow the Loan from Lender, and Lender agrees to make the Loan to Borrowers, all for the purposes and subject to all of the terms, provisions and conditions contained in this Agreement. If Lender consists of more than one party, the obligations of each such party with respect to the amount it has agreed to loan to Borrowers shall be several (and not joint and several) and shall be limited to its proportionate share of the Loan and of each advance.
(a) The original principal amount of the Loan shall be Sixteen Million Five Hundred Thousand and No/100 Dollars ($16,500,000.00). The Loan will be funded in a single lump sum advance on the Loan Opening Date. The Loan is non-revolving, and amounts repaid hereunder shall not be available for further borrowing hereunder.
(b) Lender agrees, upon Borrowers compliance with and satisfaction of all conditions precedent to the Loan Opening and provided no Material Adverse Change has occurred with respect to any Loan Party or any of the Projects, and no default or Event of Default has occurred and is continuing hereunder, to open the Loan.
(c) To the extent that Lender, may have acquiesced in noncompliance with any requirements precedent to the Opening of the Loan, such acquiescence shall not constitute a waiver by Lender, and Lender may at any time after such acquiescence require Borrowers to comply with all such requirements.
4.2 Loan Documents . Borrowers agrees that it will, on or before the Loan Opening Date, execute and deliver or cause to be executed and delivered to Lender the following documents in form and substance acceptable to Lender:
(a) (i) A promissory note (the Note ), executed by executed by Borrowers, jointly and severally, and payable to the order of Lender, evidencing the Loan.
(b) (i) A mortgage, assignment of rents, security agreement and fixture filing (the Woodland Hills Mortgage ), executed by Woodland Hills PropCo for the benefit of Lender securing the Obligations, granting a first priority lien on Woodland Hills PropCos fee simple interest in the Woodland Hills Project, subject only to the Permitted Exceptions applicable to the Woodland Hills Project; (ii) a mortgage, assignment of rents, security agreement and fixture filing (the Northridge Mortgage ), executed by Northridge PropCo for the benefit of Lender securing the Obligations, granting a first priority lien on Northridge PropCos fee simple interest in the Northridge Project, subject only to the Permitted Exceptions applicable to the Northridge Project; and (iii) a mortgage, assignment of rents, security agreement and fixture filing (the Abington Mortgage ), executed by Abington PropCo for the benefit of Lender securing the Obligations, granting a first priority lien on Abington PropCos fee simple interest in the Abington Project, subject only to the Permitted Exceptions applicable to the Abington Project.
(c) A guaranty of payment (the Parent Guaranty ) executed by the Parent and pursuant to which the Parent guarantees payment and performance of the Obligations.
(d) A guaranty of payment (the APH Guaranty ) executed by APH and pursuant to which APH guarantees payment and performance of the Obligations.
(e) A guaranty of payment (the AdCare OpCo Guaranty ) executed by AdCare OpCo and pursuant to which AdCare OpCo guarantees payment and performance of the Obligations (the Parent Guaranty, the APH Guaranty and the AdCare OpCo Guaranty being sometimes collectively referred to as the Guaranties ).
(f) A pledge and security agreement executed by APH in favor of Lender, pursuant to which APH pledges and grants a continuing first-priority security interest in and to all of the membership interests in each PropCo as security for the APH Guaranty and the other Obligations.
(g) A pledge and security agreement executed by AdCare Operations in favor of Lender, pursuant to which AdCare Operations pledges and grants a continuing first-priority security interest in and to all of the membership interests in each Tenant as security for the AdCare Operations Guaranty and the other Obligations.
(h) Separate assignments of rents and leases executed by Woodland Hills PropCo, Northridge PropCo and Abington PropCo with regard to their respective Projects, creating an absolute assignment of the rents and leases from those Projects to Lender as security for the Obligations (collectively, the Assignments of Rents and each individually and Assignment of Rents .
(i) An environmental indemnity ( Indemnity ) from Borrowers and Guarantor indemnifying Lender with regard to all matters related to Hazardous Materials and other environmental matters.
(j) An assignment and subordination agreement executed by Borrowers in favor of Lender and consented to by each manager under any Management Agreement.
(k) A blanket security agreement executed by all PropCos and a blanket security agreement executed by all Tenants (each, a Security Agreement , and collectively, the Security Agreements ), each in favor of Lender, granting to Lender a security interest in all or substantially all of the grantors respective personal property and fixtures.
(l) Such UCC financing statements as Lenders counsel determines are advisable or necessary to perfect or notify third parties of the security interests intended to be created by the Loan Documents.
(m) Such other documents, instruments or certificates as Lender and its counsel may reasonably require, including such documents as Lender in its sole discretion deems necessary or appropriate to effectuate the terms and conditions of this Agreement and the Loan Documents, and to comply with the laws of the State.
4.3 Term of the Loan.
(a) Unless the Loan is otherwise earlier prepaid or accelerated as permitted or required herein or under any other Loan Document, all principal, interest and other sums due under the Loan Documents shall be due and payable in full on the Initial Maturity Date, subject to the Extension Option. Lender shall not, however, be obligated to grant the Extension Option until the conditions precedent thereto are fully satisfied. The terms and provisions of this Section 4.3 (and any extension of the Initial Maturity Date pursuant hereto) shall not constitute a waiver of the requirement that any modification of the Note or any of the other Loan Documents shall require the express written approval of Lender, no such approval (either expressed or implied) having been given as of the date hereof (other than as expressly set forth herein). The Extension Option shall automatically expire and terminate, and shall thereafter be null and void, if Borrowers do not duly elect such extension option expressly in accordance therewith.
(b) Borrowers shall have the right to extend the Initial Maturity Date for six (6) months (the Extension Option ) provided that Borrowers satisfy the following conditions precedent:
(i) The delivery by Borrower to Lender not less than sixty (60) days prior to the Initial Maturity Date (but not more than ninety (90) days prior to such Initial Maturity Date) of (a) written notice of Borrowers election to exercise the extension of the Initial Maturity Date (which notice shall also represent and warrant that as of the date thereof there exists, no uncured Default or Event of Default and that the Loan Parties are in compliance with their respective financial covenants set forth in Sections 10.1(w) , (x) and (y) and in Paragraph 6 of the Parent Guaranty, tested as of the last day of the most recently ended calendar quarter or for the appropriate trailing period then ended, as the case may be) and (b) payment by Borrower to
Lender of an extension fee in an amount equal to the product of thirty-five basis points (0.35%) times the Loan Amount;
(ii) As of the Initial Maturity Date, there shall exist no uncured Event of Default or any event which, with the passage of time or the giving of notice, would constitute an Event of Default;
(iii) An endorsement of any existing Title Insurance issued in connection herewith shall be obtained and delivered by Borrower to Lender, stating that the coverage afforded thereby, or the agreements thereunder, shall not be affected because of such extension, and the obtainment of an abstractors certificate or other title evidence showing no liens, encumbrances or other exceptions to the title of the Projects other than those previously approved in writing by Lender;
(iv) As of the Initial Maturity Date, no Material Adverse Effect has occurred since the acquisition of the Projects by PropCos;
(v) In the event Lender chooses to obtain a current appraisal of the Projects after receiving Borrowers notice of extension pursuant to Section 4.3(b)(i) , then the outstanding principal amount of the Loan as of the Initial Maturity Date shall not exceed seventy percent (70%) of the as-stabilized value of the Projects as established pursuant to the Extension Appraisal and, to the extent the outstanding principal amount of the Loan exceeds seventy percent (70%) of such as-stabilized value of the Projects, Borrower shall repay an amount of principal of the Loan equal to such excess on or before the Initial Maturity Date, together with all accrued and unpaid interest on the amount of the Loan so repaid, plus any applicable Breakage Costs, and reasonable attorneys fees and disbursements incurred by Lender as a result of such repayment;
(vi) Execution of an extension agreement and such other documentation as Lender may reasonably require in connection therewith, all of which shall be in form and substance reasonably acceptable to Lender;
(vii) The delivery by each Borrower to Lender of written consent, in form and substance reasonably acceptable to Lender, to the Extension Option from each Borrower and each Guarantor; and
(viii) Borrower shall pay all reasonable expenses, including (without limitation) reasonable attorneys fees and legal expenses, incurred by Lender in connection with determining whether the conditions set forth in this Agreement are fully satisfied and the resulting granting of or refusal to grant the Extension Option by Lender (and in connection with the preparation and execution of any documentation therefor).
4.4 Prepayments .
(a) Subject to the limitations in Section 9.1 hereof and Section 23 of the Mortgages, and to payment of any Exit Fee that may be required in connection therewith pursuant to Section 7.7 , Borrower shall have the right to make voluntary prepayments of the Loan, in whole or in part, without prepayment penalty other than any Breakage Costs which may
be due, upon not less than five (5) Business Days prior written notice to Lender. No prepayment of all or part of the Loan shall be permitted unless same is made together with the payment of all interest accrued on the Loan through the date of prepayment and an amount equal to all Breakage Costs and reasonable attorneys fees and disbursements incurred by Lender as a result of the prepayment.
(b) Upon (i) the occurrence and during the continuation of an Event of Default (and assuming the Obligations shall not have been accelerated pursuant to Section 15.1 ), or (ii) in the event Abington Adjusted EBITDA is less than (1) $450,000.00 for the trailing three (3) months ending on December 31, 2013, or on the last day of any subsequent fiscal quarter through and including the quarter ending September 30, 2014 (in each case on an annualized basis), as reflected in the Compliance Certificate delivered to Lender pursuant to Section 10.1(m)(iv) accompanying the unaudited quarterly financial statements for the applicable fiscal quarter, or (2) $600,000.00 for the trailing three (3) months ending on December 31, 2014, or on the last day of any subsequent fiscal quarter through and including the last quarter ending prior to the Final Maturity Date (in each case on an annualized basis), as reflected in the Compliance Certificate delivered to Lender pursuant to Section 10.1(m)(iv) accompanying the unaudited quarterly financial statements for the applicable fiscal quarter, then and in each such event Borrowers shall make monthly Sinking Fund Payments to Lender on the first day of each calendar month during the Sinking Fund Period, commencing on the first day of the first full calendar month of the Sinking Fund Period. Failure of Abington Borrowers to meet the minimum Abington Adjusted EBITDA thresholds set forth in this paragraph shall not constitute a Default or Event of Default; however, failure of Borrowers to make any Sinking Fund Payment required by this paragraph shall constitute an Event of Default. All Sinking Fund Payments shall be held by Lender as additional Collateral for the Obligations in a separate cash collateral account (the Sinking Fund Account ) in the name of Lender and under Lenders sole dominion and control, and as to which Borrowers shall have no rights of withdrawal. Each Borrower hereby irrevocably authorizes Lender to apply amounts on deposit in the Sinking Fund Account to any outstanding Obligations, in such order of priority as Lender may in its sole discretion determine, upon the occurrence and during the continuation of any Event of Default. Any prepayment of the principal of the Loan from monies held in the Sinking Fund Account shall be subject to payment of the Exit Fee calculated on the principal amount so prepaid. Promptly following the release, cancellation and termination by Lender of the Abington Mortgage and the other Loan Documents constituting a lien on or security interest in the Abington Project or any part thereof or interest therein, Lender shall refund to Borrowers (or to Parent for the account of Borrowers) the amounts (if any) held in the Sinking Fund Account, to the extent not previously applied by Lender to the Obligations as permitted herein and in the other Loan Documents.
(c) Except for any prepayment in connection with the release of one or more Projects pursuant to Section 9.1 , each partial prepayment of the Loan under this Section 4.4 (except pursuant to subparagraph (d) hereof) shall be in the minimum amount of $100,000 or an integral multiple of $100,000 in excess thereof. Each partial prepayment of the Loan under this Section 4.4 (including pursuant to subparagraph (d) hereof) shall be accompanied by the payment of accrued interest on the principal prepaid to the date of payment and, after payment of such interest, shall be applied, in the absence of instruction by the applicable Borrower or Borrowers regarding such application, to the Loan on a pro rata basis, and in each case, first, to principal bearing interest based on the Adjusted Base Rate, and then to principal bearing interest
based on the Adjusted LIBOR Rate. Each voluntary or mandatory prepayment shall be subject to the payment of any applicable Breakage Costs to Lender.
(d) The Loan shall also be subject to mandatory prepayment, in part, on the Initial Maturity Date under the circumstances and in the amounts described in Section 4.3(b)(v) .
4.5 Required Principal Payments . The outstanding balance of the Loan plus all accrued but unpaid interest shall be due and payable on the Final Maturity Date.
4.6 Late Charge . Any and all amounts due hereunder or under the other Loan Documents which remain unpaid more than ten (10) days after the date said amount was due and payable shall incur a fee (the Late Charge ) of four percent (4%) of said amount, which payment shall be in addition to all of Lenders other rights and remedies under the Loan Documents, provided that no Late Charge shall apply to the final payment of principal on the Final Maturity Date.
4.7 Application of Certain Payments. In the event Lender receives any payment from or on behalf of Borrowers, or any of them, in less than the full amount due and payable, then in the absence of instruction by the applicable Borrower or Borrowers regarding such application and subject to any contrary provisions of this Agreement or the other Loan Documents, Lender shall apply such payment to the Obligations in such order of priority as Lender may determine in its sole discretion; provided, however, that to the extent such payment, or any portion thereof, is applied to accrued and unpaid interest on the Loan, such amounts shall be applied, first, to principal bearing interest based on the Adjusted Base Rate, and then to principal bearing interest based on the Adjusted LIBOR Rate.
ARTICLE 5
INTEREST
5.1 Interest Rate.
(a) The Loan will bear interest at the Applicable Rate, unless the Default Rate is applicable. Except as expressly provided herein, the Adjusted LIBOR Rate shall be the Applicable Rate . For the disbursement of the Loan, Borrowers acting through the Authorized Representative, shall deliver to Lender irrevocable notice (which may be (i) verbal notice provided that Borrowers deliver to Lender facsimile confirmation within twenty four (24) hours of such verbal notice or (ii) electronic mail notice within twenty four (24) hours of such verbal notice) by not later than 11:00 a.m. Brooklyn, Ohio, time on the third LIBOR Business Day prior to the desired date of disbursement. Borrowers shall pay interest in arrears on the first (1st) day of every calendar month in the amount of all interest accrued and unpaid. All payments (whether of principal or of interest) shall be deemed credited to Borrowers account only if received by 12:00 noon Brooklyn, Ohio, time on a Business Day; otherwise, such payment shall be deemed received on the next Business Day.
(b) If Lender determines in its reasonable discretion (i) that Dollar deposits in an amount approximately equal to the Loan for the designated LIBOR Rate Interest Period are not generally available at such time in the London interbank market for deposits in Dollars, (ii)
that the rate at which such deposits are being offered will not adequately and fairly reflect the cost to Lender of maintaining a LIBOR Rate on such portion of the Loan or of funding the same for such LIBOR Rate Interest Period due to circumstances affecting the London interbank market generally, (iii) that reasonable means do not exist for ascertaining a LIBOR Rate, or (iv) that an Adjusted LIBOR Rate would be in excess of the maximum interest rate which Borrower may by law pay, then, in any such event, Lender shall so notify Borrowers and all portions of the Loan bearing interest at an Adjusted LIBOR Rate that are so affected shall, as of the date of such notification with respect to an event described in clause (ii) or (iv) above, or as of the expiration of the applicable LIBOR Rate Interest Period with respect to an event described in clause (i) or (iii) above, bear interest at the Adjusted Base Rate (or such lower rate as required by applicable law) until such time as the situations described above are no longer in effect or can be avoided, at which time the Loan shall again accrue interest at the Adjusted LIBOR Rate.
(c) Interest at the Applicable Rate (or Default Rate) shall be calculated for the actual number of days elapsed on the basis of a 360-day year, including the first date of the applicable period to, but not including, the date of repayment.
(d) Borrowers shall pay all Breakage Costs incurred from time to time by Lender within ten (10) days after written demand.
(e) If the introduction of or any change in any Law, regulation or treaty, or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof, shall make it unlawful for Lender to maintain the Applicable Rate at an Adjusted LIBOR Rate with respect to the Loan or any portion thereof, or to fund the Loan or any portion thereof in Dollars in the London interbank market, or to give effect to its obligations regarding the accrual of interest on the Loan at the Adjusted LIBOR Rate as contemplated by the Loan Documents, then (1) Lender shall notify Borrowers that Lender is no longer able to maintain the Applicable Rate at an Adjusted LIBOR Rate, (2) the Applicable Rate for any portion of the Loan for which the Applicable Rate is then an Adjusted LIBOR Rate shall automatically be converted to the Adjusted Base Rate, and (3) Borrowers shall pay to Lender the amount of Breakage Costs (if any) incurred in connection with such conversion. Thereafter, the Loan shall accrue interest at the Adjusted Base Rate until such time as the situation described herein is no longer in effect or can be, avoided, at which time the Loan shall again accrue interest at the Adjusted LIBOR Rate.
(f) The Loan shall bear interest at the Default Rate upon Lenders election at any time at which an Event of Default shall exist.
5.2 Interest Rate Agreement.
(g) Any indebtedness incurred pursuant to an Interest Rate Agreement entered into by Borrowers and Lender shall constitute indebtedness evidenced by the applicable Note, guaranteed by the Guaranties, and secured by the Mortgages and the other Loan Documents to the same extent and effect as if the terms and provisions of such Interest Rate Agreement were set forth herein, whether or not the aggregate of such indebtedness, together with the disbursements made by Lender of the proceeds of the Loan, shall exceed the face amount of the Note.
(h) Each Borrower hereby collaterally assigns to Lender for the benefit of Lender any and all Interest Rate Protection Products purchased or to be purchased by such Borrower in connection with the Loan, as additional security for the Loan, and agrees to provide Lender with any additional documentation requested by Lender in order to confirm or perfect such security interest during the term of the Loan. If any Borrower obtains an Interest Rate Protection Product from a party other than Lender, such Borrower shall deliver to Lender such third partys consent to such collateral assignment. No Interest Rate Protection Product purchased from a third party may be secured by an interest in any such Borrower or any Project.
(i) In the event any Borrower desires to institute an interest rate hedging program through the purchase of an Interest Rate Protection Product with respect to the Loan, such Borrower shall afford Lender a right of first opportunity to provide all Interest Rate Protection Products but shall not be required to purchase such Interest Rate Protection Product from Lender.
ARTICLE 6
COSTS OF MAINTAINING LOAN
6.1 Increased Costs and Capital Adequacy.
(a) Borrowers recognize that the cost to Lender of maintaining the Loan or any portion thereof may fluctuate and, Borrowers agree to pay Lender additional amounts to compensate Lender for any increase in its actual costs incurred in maintaining the Loan or any portion thereof outstanding or for the reduction of any amounts received or receivable from Borrowers as a result of:
(i) any change after the date hereof in any applicable Law, regulation or treaty, or in the interpretation or administration thereof, or by any domestic or foreign court, (A) changing the basis of taxation of payments under this Agreement to Lender (other than taxes imposed on all or any portion of the overall net income or receipts of Lender), or (B) imposing, modifying or applying any reserve, special deposit or similar requirement against assets of, deposits with or for the account of; credit extended by, or any other acquisition of funds for loans by Lender (which includes the Loan or any applicable portion thereof), or (C) imposing on Lender, or the London interbank market generally, any other condition affecting the Loan, provided that the result of the foregoing is to increase the cost to Lender of maintaining the Loan or any portion thereof or to reduce the amount of any sum received or receivable from Borrower by Lender under the Loan Documents; or
(ii) the maintenance by Lender of reserves in accordance with reserve requirements promulgated by the Board of Governors of the Federal Reserve System of the United States with respect to Eurocurrency Liabilities of a similar term to that of the applicable portion of the Loan (without duplication for reserves already accounted for in the calculation of a LIBOR Rate pursuant to the terms hereof).
(b) If the application of any Law, rule, regulation or guideline adopted or arising out of the Basel Committee on Banking Regulations and Supervisory Practices entitled
International Convergence of Capital Measurement and Capital Standards, or the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives under or issued in connection therewith, regardless of when adopted, promulgated or issued, or the adoption after the date hereof of any other Law, rule, regulation or guideline regarding capital adequacy or liquidity, or any change after the date hereof in any of the foregoing, or in the interpretation or administration thereof by any domestic or foreign Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or by any other fiscal, monetary or other authority (whether or not having the force of law), or compliance by Lender, with any request or directive regarding capital adequacy or liquidity (whether or not having the force of law) of any such authority, central bank or comparable agency, has the effect of reducing the rate of return on Lenders capital to a level below that which Lender would have achieved but for such application, adoption, change or compliance (taking into consideration the policies of Lender with respect to capital adequacy and liquidity), then, from time to time Borrower shall pay to Lender such additional amounts as will compensate Lender for such reduction with respect to any portion of the Loan outstanding.
(c) Any amount payable by Borrowers under subsection (a) or subsection (b) of this Section 6.1 shall be paid within thirty (30) days of receipt by Borrowers of a certificate signed by an authorized officer of Lender setting forth the amount due and the basis for the determination of such amount, which statement shall be conclusive and binding upon Borrowers, absent manifest error. Failure on the part of Lender to demand payment from Borrowers for any such amount attributable to any particular period shall not constitute a waiver of Lenders right to demand payment of such amount for any subsequent or prior period. Lender shall use reasonable efforts to deliver to Borrowers prompt notice of any event described in subsection (a) or (b) above, of the amount of the reserve and capital adequacy payments resulting therefrom and the reasons therefor and of the basis of calculation of such amount; provided , however , that any failure by Lender to so notify Borrowers shall not affect Borrowers obligation to pay the reserve and capital adequacy payment resulting therefrom. Lender agrees not to seek compensation from Borrowers pursuant to subsection (a) or (b) of this Section 6.1 unless Lender is generally seeking similar compensation from other borrowers of Lender in connection with comparable types of financings.
6.2 Borrower Withholding . If by reason of a change in any applicable Laws occurring after the date hereof, Borrowers are required by Law to make any deduction or withholding in respect of any taxes (other than taxes imposed on or measured by the net income of Lender or any franchise tax imposed on Lender), duties or other charges from any payment due under the Note, the sum due from Borrowers in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, Lender receives and retains a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made.
ARTICLE 7
LOAN EXPENSE, ADVANCES AND FEES
7.1 Loan and Administration Expenses . Each Borrower unconditionally agrees to pay all reasonable and necessary expenses, of the Loan, including all amounts payable pursuant to Sections 7.2 and 7.3 and any and all other actual fees owing to Lender pursuant to the Loan
Documents, and also including, without limiting the generality of the foregoing, all recording, filing and registration fees and charges, mortgage or documentary taxes, all insurance premiums, title insurance premiums and other charges of each Title Insurer, printing and photocopying expenses, survey fees and charges, cost of certified copies of instruments, cost of premiums on surety company bonds and the Title Policies, charges of a Title Insurer or other escrowee for administering disbursements, all fees and costs of Lenders Environmental Report, all appraisal fees, insurance consultants fees, travel related expenses and all costs and expenses incurred by Lender in connection with the determination of whether or not Borrowers have performed the obligations undertaken by Borrowers hereunder or have satisfied any conditions precedent to the obligations of Lender hereunder and, if any default or Event of Default occurs hereunder or under any of the Loan Documents or if the Loan or the Note or any portion thereof are not paid in full when and as due, all costs and expenses of Lender (including, without limitation, court costs and reasonable counsels fees and disbursements) incurred in attempting to enforce payment of the Loan and expenses of Lender incurred (including court costs and reasonable counsels fees and disbursements) in attempting to realize, while a default or Event of Default exists, on any Collateral or incurred in connection with the sale or disposition (or preparation for sale or disposition) of any Collateral for the Loan or any portion thereof, each Borrower agrees to pay all brokerage, finder or similar fees or commissions payable in connection with the transactions contemplated hereby and shall indemnify and hold Lender harmless against all claims, liabilities, actual costs and expenses incurred by Lender (including reasonable attorneys fees and expenses) arising in relation to any claim by broker, finder or similar person.
7.2 Origination Fee . Borrowers shall pay to Lender on or before the Loan Opening Date an origination fee in the amount equal to one percent (1.0%) of the Loan Amount evidenced by the Note, for a total origination fee of One Hundred Sixty-Five Thousand and No/100 Dollars ($165,000.00). Such fee is fully earned when due and nonrefundable when paid.
7.3 Lenders Attorneys Fees and Disbursements . Each Borrower agrees to pay Lenders reasonable attorneys fees and disbursements incurred in connection with the Loan, including (i) the preparation of this Agreement, any intercreditor agreements and the other Loan Documents and the preparation of the closing binders, (ii) the disbursement, syndication and administration of the Loan, (iii) any amendment, consent, waiver, workout or restructuring relative to the Loan, and (iv) the enforcement of the terms of this Agreement and the other Loan Documents.
7.4 Time of Payment of Fees and Expenses. Borrower shall pay all expenses and fees incurred as of the Loan Opening on the Loan Opening Date (unless sooner required herein). At the time of the Opening of the Loan, Lender may pay from the proceeds of the disbursement of the Loan all Loan expenses.
7.5 Expenses and Advances Secured by Loan Documents. Any and all advances or payments made by Lender under this Article 7 from time to time, and any amounts expended by Lender pursuant to this Agreement and the other Loan Documents (whether for the protection or preservation of Collateral, or otherwise), shall, as and when advanced or incurred, constitute additional indebtedness evidenced by the Note and secured by the Mortgages and the other Loan Documents.
7.6 Right of Lender to Make Advances to Cure Borrowers Defaults . In the event that Borrowers fail to perform any of their covenants, agreements or obligations contained in this Agreement or any of the other Loan Documents (after the expiration of applicable grace periods, except in the event of an emergency or other exigent circumstances), Lender may (but shall not be required to) perform any of such covenants, agreements and obligations, and any amounts expended by Lender in so doing and shall constitute additional indebtedness evidenced by the Note and secured by the Mortgages and the other Loan Documents and shall bear interest at the Default Rate.
7.7 Exit Fee . Upon the repayment of the Loan, in whole or in part (whether by prepayment or on the Maturity Date), Borrowers will pay to Lender an exit fee equal to two percent (2.0%) of the Loan Amount so repaid (the Exit Fee ); unless (i) the Loan is repaid through a permanent loan from Lender or an Affiliate of Lender, or (ii) the Loan is repaid with the proceeds of a HUD-guaranteed permanent loan originated by Lender or an Affiliate of Lender. The Exit Fee shall be deemed to be earned upon the repayment or prepayment (in whole or in part, as the case may be) of the Loan except in the case of the events described in subsections (i) and (ii) of this Section 7.7 .
ARTICLE 8
REQUIREMENTS PRECEDENT
TO THE OPENING OF THE LOAN
8.1 Conditions Precedent to Closing and Opening of the Loan. Borrowers agree that Lenders obligation to open the Loan is conditioned upon Borrowers performance and satisfaction of the following conditions precedent in form and substance satisfactory to Lender in its reasonable discretion:
(a) Borrowers shall have furnished to Lender an ALTA Mortgagee Title Insurance Policy, issued by the Title Insurer in the original principal amount of the Loan, insuring the lien of the Mortgages as a valid first, prior and paramount lien upon the Projects and all appurtenant easements, and subject to no exceptions other than the Permitted Exceptions (the Title Policies ). The Title Policy shall satisfy the requirements of Exhibit C attached hereto and made a part hereof;
(b) Borrowers shall have furnished an ALTA plat of survey of each Project prepared and certified by a surveyor licensed in the State and otherwise satisfactory to Lender, in triplicate, showing, through the use of course bearings and distances, (i) all foundations of the related Improvements in place; (ii) the dimensions and locations of all easements and roads or rights of way and setback lines, if any, affecting the Projects, or required by subsection (i) of this Section and that the same are unobstructed; (iii) the dimensions, boundaries and square footage of the related Improvements, if any; (iv) that all foundations and other structures are within the lot lines and in compliance with any restrictions of record or ordinances relating to the location thereof; (v) the dimensions of all buildings and improvements, if any, and distance of such buildings and improvements from the lot lines; (vi) no encroachments by any improvements located on adjoining property, except as approved by Lender; (vii) whether or not the related Project is located within a flood plain or flood hazard area; (viii) the location of adjoining streets and utilities and the distance and name of the nearest intersecting streets; (ix) the dimensions and
locations of all exterior parking areas, if any; and (x) such additional information which may be required by Lender. Each such survey shall be dated no earlier than ninety (90) days prior to the Loan Opening, shall be made (and certified to have been made) as set forth in Exhibit D attached hereto and made a part hereof. Such survey shall include the legal description of the applicable Land;
(c) Borrowers shall have furnished to Lender not less than ten (10) days prior to the Loan Opening Date satisfactory evidence that insurance coverages are in effect with respect to the Projects and Borrowers, in accordance with the Insurance Requirements attached hereto as Exhibit E, for which the premiums have been fully prepaid with endorsements satisfactory to Lender.
(d) Parent shall have deposited the sum of $2,316,451.00 (the Minimum Cash Collateral Amount ) with Lender in a deposit account established by Parent with Lender, which account shall be under the sole dominion and control of Lender and with respect to which Parent shall have no withdrawal rights (the Cash Collateral Account );
(e) Borrowers shall have furnished to Lender opinions from counsel for Borrowers and Guarantors, including but not limited to local counsel in the states of Arkansas and Ohio, covering the entity existence and good standing of each of the Loan Parties; due authorization, execution and delivery and enforceability of the Loan Documents; no required approvals of Governmental Authorities or other third-parties; no violation of Organizational Documents, applicable Law or material agreements, and creation of valid, perfected lien on or security interest in the Collateral; and also containing such other legal opinions as Lender shall reasonably require;
(f) Lender shall have obtained Appraisals having an aggregate as stabilized market value in an amount at least equal to seventy percent (70%) of the Loan Amount for the Projects, which Appraisals must be satisfactory to Lender in all respects;
(g) Borrowers shall have furnished to Lender a property condition report for each Project ( Property Condition Report ) prepared at Borrowers expense by a qualified engineer/consultant approved by Lender;
(h) Borrowers shall have furnished to Lender current bankruptcy, federal tax lien and judgment searches and searches of all Uniform Commercial Code financing statements filed in each place UCC Financing Statements are to be filed hereunder, demonstrating the absence of adverse claims;
(i) Borrowers shall have furnished (or caused to be furnished) to Lender current quarterly and annual financial statement of Parent and its consolidated Subsidiaries, and such other Persons connected with the Loan as Lender may request, each in form and substance and certified by Parent, as acceptable to Lender;
(j) Borrowers shall have furnished to Lender legible copies of all title exception documents cited in the Title Policy and all other legal documents affecting the Projects or the use thereof;
(k) Borrowers shall have delivered to Lender executed copies of any leasing, management and development agreements entered into by any Borrower in connection with the operation of the Projects (the Management Agreement ), together with an assignment of each such Management Agreement to Lender as additional security for the Loan, together with the consent of the manager identified therein to such assignment;
(l) Lender has received evidence that no portion of any Project is located in an area designated by the Secretary of Housing and Urban Development as a special flood hazard area, or flood hazard insurance acceptable to Lender in its sole discretion;
(m) If any Title Policy does not include a zoning endorsement, Borrowers shall have furnished to Lender a zoning letter for each Project in form satisfactory to Lender;
(n) Borrowers shall have furnished to Lender proof satisfactory to Lender of authority, formation, organization and good standing in the state of its incorporation or formation and, if applicable, qualification as a foreign entity in good standing in the State, of all corporate, partnership, trust and limited liability company entities (including Borrowers and each of the other Loan Parties other than natural persons) executing any Loan Documents, whether in their own name or on behalf of another entity. Borrowers shall also provide, and cause each other Loan Party that is not a natural person to provide, certified resolutions in form and content satisfactory to Lender, authorizing execution, delivery and performance of the Loan Documents, and such other documentation as Lender may reasonably require to evidence the authority of the persons executing the Loan Documents;
(o) Borrowers shall have furnished an environmental report ( Environmental Report ) for each Project prepared at Borrowers expense by a qualified environmental consultant approved by Lender. The Environmental Report shall, at a minimum, (a) demonstrate the absence of any existing or potential Hazardous Material contamination or violations of environmental Laws at the Projects, except as acceptable to Lender in its sole and absolute discretion, (b) include the results of all sampling or monitoring to confirm the extent of existing or potential Hazardous Material contamination at the Projects, including the results of leak detection tests for each underground storage tank located at the Projects, if any, (c) describe response actions appropriate to remedy any existing or potential Hazardous Material contamination, and report the estimated cost of any such appropriate response, (d) confirm that any prior removal of Hazardous Material or underground storage tanks from the Projects was completed in accordance with applicable Laws, and (e) confirm whether or not the Land is located in a wetlands district;
(p) Borrowers shall have provided to Lender a current occupancy list for each Project certified by the applicable Borrowers;
(q) Borrowers shall have provided to Lender a copy of their standard form of residency agreement for space in each Project;
(r) There shall be no uncured Default or Event of Default by any Borrower hereunder;
(s) The Loan Parties shall be in compliance with all of their respective existing, material financial obligations;
(t) Lender shall have received evidence satisfactory to it that each Tenant has been released from its obligations under the Working Capital Financing and the liens and security interests of PrivateBank on each Tenants assets have been terminated;
(u) Borrowers shall have deposited with Lender an amount equal to the initial escrow for taxes, in an amount determined by Lender;
(v) Borrowers shall have furnished to Lender such other materials, documents, papers or requirements regarding the Projects, Borrowers and Guarantors as Lender shall reasonably request.
The conditions contained in this Section 8.1 are for the sole benefit of Lender, and Lender may, in its sole discretion, waive Borrowers compliance with any one (1) or more conditions; provided, that, in no event shall the waiver of one (1) condition by Lender constitute the waiver of any other condition listed above. Borrowers obligations under this Section 8.1 shall be subject to any and all obligations to which Borrowers are subject to under HIPAA or related patient or privacy laws.
ARTICLE 9
SPECIAL PROVISIONS
9.1 Partial Releases of Projects. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, except upon payment and satisfaction in full of all Obligations, in no event shall Lender be obligated to release any of the Projects from the Mortgages, or any of the other Collateral from the liens and security interests of the Loan Documents, except as follows:
(a) So long as no Default or Event of Default then exists, Lender shall release a Project and the Collateral granted by the PropCo Borrower and Tenant owning or operating that Project (in each case, the Requesting Borrowers ) upon satisfaction of all of the following conditions (except for any conditions waived in writing by Lender), and subject to receipt of an updated current appraisal as required in Section 9.1(b) :
(i) receipt by Lender of written request by Parent or the Requesting Borrowers for such release at least ten (10) days prior to the desired date of release; and
(ii) receipt by Lender of payment by or for the account of the Requesting Borrowers, in immediately available funds, of an amount equal to the sum of (A) the Applicable Release Price, as a prepayment of the Loan, plus (B) any accrued, unpaid interest required to be paid pursuant to Section 4.4(c) , (C) any Exit Fee due in connection with such prepayment, plus (D) any Breakage Costs due if such prepayment does not occur on the last day of a LIBOR Rate Interest Period, plus (E) all fees and expenses, including actual legal fees and expenses, incurred by Lender in connection with
such release transaction, and any other amounts then due and payable to Lender under the Loan Documents.
Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, in no event shall Borrowers, or any of them, be entitled to obtain the release of either the Northridge Project or the Woodland Hills Project, or both, unless Lender shall have released the Abington Project from the Abington Mortgage in accordance with the provisions of this subparagraph (a) prior to or contemporaneously with such release of the Northridge Project or the Woodland Hills Project.
(b) The Applicable Release Price for each Project shall be an amount equal to the sum of (i) the Base Release Price shown opposite the name of such Project on Schedule 9.1(b) , plus (ii) the additional amount (if any) required to reduce the outstanding principal amount of the Loan, immediately after giving effect to the prepayment of the Loan associated with such release, to an amount not exceeding seventy percent (70%) of the aggregate as stabilized value of the Project or Projects that will remain subject to Mortgages in favor of Lender after the requested release (each, a Remaining Project , and collectively, the Remaining Projects ), based upon a current appraisal of each Remaining Project (which appraisal(s) shall be obtained by Lender at Borrowers expense, upon at least twenty-one (21) days prior written request by the Requesting Borrowers).
9.2 Special Post-Closing Deliveries to Lender. Borrowers will cause each of the items described on Schedule 9.2 to be delivered to Lender within the time specified therefor in that Schedule.
9.3 Semiannual Lien Searches and Title Updates. Borrowers hereby authorize Lender, as part of its administration of the Loan, to obtain semiannual (i) tax and judgment lien searches with respect to Borrowers, and (ii) bringdown endorsements to each of the Title Policies relating to Projects then subject to a Mortgage. Borrowers agree to pay or reimburse Lender for the cost and expense of such searches and endorsements pursuant to Section 7.1 , subject to an annual maximum amount of $1,000.00 per Project (provided, however, that such maximum dollar limitation shall not apply with respect to any lien searches or title work performed during the existence of an Event of Default).
9.4 Required Repairs, Replacements, Renovations and Other Work. Borrowers agree to complete the repairs, replacements, renovations and other work described in the Property Condition Reports delivered to Lender with respect to their respective Projects (a) by no later than June 28, 2013, with respect to the critical work described in Schedule 9.4 hereto, and (b) by no later than March 28, 2014, with respect to the other work described in Schedule 9.4 hereto.
ARTICLE 10
BORROWERS AGREEMENTS
10.1 Additional Covenants of Borrowers . Each Borrower further covenants and agrees as follows:
(a) Opening of Loan on or Prior to Loan Opening Date . All conditions precedent to the Opening of the Loan shall be complied with on or prior to the Loan Opening Date. If such conditions are not complied with as of the Loan Opening Date, Lender may at its sole option terminate Lenders obligation to fund the Loan by written notice to Borrowers and Parent.
(b) Inspection by Lender . Provided the subject Borrower is given forty-eight (48) hours advance written notice (which notice shall not be required during the existence of any Event of Default) and subject to such inspection not unreasonably interfering with the business operations of Borrowers, Borrowers will cooperate with Lender in arranging for inspections by representatives of Lender at reasonable times from time to time including an examination of (i) the Projects, (ii) all books, contracts and records with respect to the Projects, and (iii) any other documents relating to the Projects. Lenders inspection rights shall not pertain to any records which are subject to the privacy protections of HIPAA or any related privacy or patient care laws.
(c) Mechanics Liens and Contest Thereof . Borrowers will not suffer or permit any mechanics lien claims to be filed or otherwise asserted against any of the Projects, and will promptly discharge the same in case of the filing of any claims for lien or proceedings for the enforcement thereof, provided, however, that Borrowers shall have the right to contest in good faith and with reasonable diligence the validity of any such lien or claim upon furnishing to the Title Insurer such security or indemnity as it may require to induce said Title Insurer to issue an endorsement to the Title Policy insuring against all such claims or liens; and provided further, that the aggregate amount of liens so insured against at any time shall not exceed $50,000 for any Project without Lenders prior written consent.
(d) Settlement of Mechanics Lien Claims . If any Borrower shall fail promptly either (i) to discharge any such lien, or (ii) to contest claims asserted and give security or indemnity in the manner provided in subsection (c) of this Section, or having commenced to contest the same, and having given such security or indemnity, shall fail to prosecute such contest with diligence, or to maintain such indemnity or security so required by the Title Insurer for its full amount, or upon adverse conclusion of any such contest, to cause any judgment or decree to be satisfied and lien to be released, then and in any such event Lender may, at its election (but shall not be required to), procure the release and discharge of any such claim and any judgment or decree thereon and, further, may in its sole discretion effect any settlement or compromise of the same, or may furnish such security or indemnity to the Title Insurer, and any amounts so expended by Lender, including premiums paid or security furnished in connection with the issuance of any surety company bonds, shall be deemed to constitute disbursement of the proceeds of the Loan hereunder. In settling, compromising or discharging any claims for lien, Lender shall not be required to inquire into the validity or amount of any such claim.
(e) Renewal of Insurance . Borrowers shall cause insurance policies to be maintained in compliance with Exhibit E at all times. Borrowers shall timely pay all premiums on all insurance policies required hereunder as and when any policies of insurance may expire, furnish to Lender, premiums prepaid, additional and renewal insurance policies with companies, coverage and in amounts satisfactory to Lender in accordance with Section 8.1(c) .
(f) Payment of Taxes . Borrowers shall pay, or cause to be paid, all real estate and personal property taxes and assessments and charges of every kind upon the Projects before the same become delinquent; provided, however, that Borrowers shall have the right to pay such tax under protest or to otherwise contest any such tax or assessment, but only if (i) such contest has the effect of preventing the collection of such taxes so contested and also of preventing the sale or forfeiture of any Project or any part thereof or any interest therein, (ii) Borrowers has notified Lender of its intent to contest such taxes, and (iii) Borrowers have deposited security in form and amount satisfactory to Lender, in its sole discretion, and has increased the amount of such security so deposited promptly after Lenders request therefor. If Borrowers fail to commence such contest or, having commenced to contest the same, and having deposited such security required by Lender for its full amount, shall thereafter fail to prosecute such contest in good faith or with due diligence, or, upon adverse conclusion of any such contest, shall fail to pay such tax, assessment or charge, Lender may, at its election (but shall not be required to), pay and discharge any such tax, assessment or charge, and any interest or penalty thereon, and any amounts so expended by Lender (other than from cash collateral posted by Borrowers as aforesaid, which each Borrower hereby irrevocably authorizes Lender to apply to the payment of such taxes, assessments and charges) shall be deemed to constitute disbursements of the Loan proceeds hereunder, even if the total amount of disbursements would exceed the face amount of the Note. Borrowers shall furnish to Lender evidence that taxes are paid within five (5) Business Days after the payment thereof (and other than with respect to any taxes being contested in the manner described in the foregoing provisions of this subsection (f) , in any event on or prior to the last date for payment of such taxes and before imposition of any penalty or accrual of interest).
(g) Escrow Accounts . Borrowers shall make tax escrow deposits (and, if an Event of Default then exists, upon the written request of Lender, insurance deposits), in amounts reasonably determined by Lender from time to time as being needed to pay taxes (and, if applicable, insurance premiums) for deposit in the applicable Borrowers Impound Account, as provided in Section 4 of the Mortgages. All payments deposited in the Impound Accounts are pledged as additional collateral for the Obligations. Notwithstanding Lenders holding of the Impound Accounts, nothing herein shall obligate Lender to pay any real property taxes or insurance premiums with respect to any Project or any portion thereof, provided that, so long as no Event of Default exists, Lender shall make available to Borrowers such funds as may be deposited in their respective Impound Accounts from time to time for Borrowers payment of real property taxes (or insurance premiums, if applicable) due with respect to the Projects.
(h) Personal Property . All personal property, fixtures, attachments and equipment of each Borrower delivered upon, attached to or used in connection with the operation of its Project shall always be located at such Project and shall be kept free and clear of all liens, encumbrances and security interests; however, Lender acknowledges that all property owned by residents of such Project is expressly excluded.
(i) Leasing Restrictions . Without the prior written consent of Lender, no Borrower or its agents shall lease or sublease space in the Improvements other than (1) in the case of PropCos, the Facility Leases, and (ii) in the case of Tenants, other than occupancy agreements pursuant to the standard form of residency agreements previously approved by Lender, with no material deviations from the standard form except as approved by Lender ( Residency Agreements ). Borrowers shall submit to Lender for its review the standard form of residency agreement proposed for the Improvements and any revisions to the form from time to time, which form as so revised must have the prior written approval of Lender and must contain mortgagee protection provisions acceptable to Lender. Any material change from the approved mortgagee protection provisions in the standard form residency agreement, or the inclusion of any provision permitting set-off by the resident, shall be considered a material deviation requiring the approval of Lender, except in the ordinary course of Borrowers business operations. If any Lease fails to meet all of the foregoing requirements, then the Lease is subject to Lenders approval, and Lender shall respond by approving or disapproving the Lease within ten (10) Business Days after receipt of the copy from Borrowers. Lenders failure to approve or disapprove the proposed Lease within that period shall constitute approval of the Lease. Absent Lenders express written agreement to the contrary, Lenders approval of any Lease shall be limited to the specific Lease in question, and such approval shall not operate or be construed as approval of any other Lease (whether similar or otherwise). Borrowers shall pay all reasonable costs incurred by Lender in connection with Lenders review and approval of tenant Leases, including reasonable attorneys fees and costs.
(j) Defaults Under Leases . Borrowers will not suffer or permit any breach or default to occur in any of Borrowers obligations under any of the Leases nor suffer or permit the same to terminate by reason of any failure of any of Borrowers to meet any requirement of any Lease, which default or failure could reasonably be expected to have a Material Adverse Effect.
(k) Lenders Attorneys Fees for Enforcement of Agreement and Other Loan Documents . In case of any default or Event of Default hereunder, Borrower (in addition to Lenders reasonable attorneys fees, if any, to be paid pursuant to Section 7.3) will pay Lenders reasonable attorneys and paralegal fees (including, without limitation, any attorney and paralegal fees and costs incurred in connection with any litigation or bankruptcy or administrative hearing and any appeals therefrom) in connection with the enforcement of this Agreement; without limiting the generality of the foregoing, if at any time or times hereafter Lender employs counsel (whether or not any suit has been or shall be filed and whether or not other legal proceedings have been or shall be instituted) for advice or other representation with respect to the Projects, this Agreement, or any of the other Loan Documents, or to protect, collect, lease, sell, take possession of, or liquidate any or all of the Projects, or to attempt to enforce any security interest or lien in any Project or any portion thereof, or to enforce any rights of Lender or any Borrowers obligations hereunder, then in any of such events all of the attorneys fees arising from such services, and any expenses, costs and charges relating thereto, shall constitute an additional liability owing by Borrowers to Lender, on a joint and several basis, payable on demand.
(l) Appraisals . Lender shall have the right, at Borrowers expense, to obtain new or updated Appraisals of the Projects from time to time. With respect to any new or updated Appraisals obtained by Lender (i) in connection with any proposed release or releases of one or
more Projects, (ii) in connection with exercise of the Extension Option, (iii) to comply with this Agreement or any applicable law or regulatory requirement, or bank policy promulgated to comply therewith, or (iv) if an Event of Default then exists, Borrowers shall pay for any such Appraisal upon Lenders request. Borrowers shall cooperate with Lender in connection with all such appraisals, whether or not Borrowers shall be obligated for the cost thereof.
(m) Furnishing Information . So long as any portion of the Loan remains outstanding, Borrowers shall deliver or cause to be delivered to Lender:
(i) on a quarterly basis within forty-five (45) days after the end of each fiscal quarter, company-prepared financial statements for the Borrowers, prepared on a combined and per Project basis, which statements shall include a balance sheet as of the end of such fiscal quarter and a statement of operations, a statement of cash flows for such fiscal quarter and for the fiscal year to date, in each case subject to normal year-end adjustments, all prepared in reasonable detail and in accordance with GAAP and certified by the chief financial officer or chief accounting officer of Parent and each Borrower as fairly and accurately presenting in all material respects the financial condition and results of operations of Borrowers on a combined and per Project basis, at the dates and for the periods indicated therein, subject to normal year-end adjustments;
(ii) on a quarterly basis within forty-five (45) days after the end of each fiscal quarter, unaudited financial statements of Parent and its consolidated Subsidiaries, prepared on a consolidated basis including all notes thereto, which statements shall include (A) a balance sheet as of the end of the such fiscal quarter, (B) a statement of operations for such fiscal quarter and for the fiscal year to date, subject to normal year-end adjustments, and (C) a statement of cash flows for such fiscal quarter and for the fiscal year to date, subject to normal year-end adjustments, all prepared in reasonable detail and in accordance with GAAP and certified by the chief financial officer or chief accounting officer of Parent as fairly and accurately presenting in all material respects the financial condition and results of operations of Parent and its consolidated Subsidiaries on a consolidated basis, at the dates and for the periods indicated therein, subject to normal year-end adjustments;
(iii) on an annual basis not later than the earlier of (A) the filing thereof with the Securities and Exchange Commission and (B) one hundred twenty (120) days after each December 31, the annual audited financial statements of Parent and its consolidated Subsidiaries, prepared on a consolidated basis and including all notes thereto, which statements shall include a balance sheet as of the end of such fiscal year and a statement of operations, a retained earnings statement and a statement of cash flows for such fiscal year, all setting forth in comparative form the corresponding figures from the previous fiscal year and accompanied by a report and opinion of independent certified public accountants with an accounting firm of national standing, which report shall not contain any qualification (and be without comment as to the accountants opinion whether such Person is a going concern or can continue to be a going concern), except that such report may contain qualification with respect to new accounting principles mandated by the Financial Accounting Standards Board (or its successor organization), and shall state that such financial statements, in the opinion of such
accountants, present fairly, in all material respects, the financial position of such Person as of the date thereof and the results of its operations and cash flows for the period covered thereby in conformity with GAAP;
(iv) contemporaneously with the provision of the financial statements required under clauses (i) , (ii) and (iii) of this Section 10.1(m) , a covenant compliance certificate in the form attached hereto as Exhibit F signed by the chief financial officer or chief accounting officer of Parent and by the Authorized Representative of each Borrower;
(v) contemporaneously with the provision of the financial statements required under clauses (i) , (ii) and (iii) of this Section 10.1(m) , occupancy reports and payor mix reports with respect to each Project certified as true, complete and correct by the applicable Borrowers;
(vi) [RESERVED] ;
(vii) [RESERVED] ;
(viii) no later than the fifteenth (15 th ) day of each calendar month during any Sinking Fund Period, monthly operating statements of the Projects, on both a combined and per Project basis (collectively, the Operating Statements ), showing the results of operations for the immediately preceding calendar month and calculating the amount of the Sinking Fund Payment due and payable at the beginning of the next succeeding calendar month pursuant to Section 4.4(b) ;
(ix) within thirty (30) days after the filing or receipt thereof (as the case may be), copies of (A) all property cost reports for the Projects filed with CMS and (B) all Department of Health surveys with respect to the Projects; and
(x) such additional financial information concerning Borrowers and the Projects as Lender reasonably requires.
(n) Lost Note . If the Note is mutilated, destroyed, lost or stolen, then upon Lenders furnishing to the applicable Borrower an affidavit to such effect, such Borrower shall execute and deliver to Lender, in substitution therefor, a new Note containing the same terms and conditions as the mutilated, destroyed or stolen Note.
(o) INDEMNIFICATION . EACH BORROWER HEREBY INDEMNIFIES LENDER AND EACH AFFILIATE OF LENDER AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS, AND EXPENSES TO WHICH ANY OF THEM MAY BECOME SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS, AND EXPENSES ARISE FROM OR RELATE TO THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY OR FROM ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING, EXCEPT TO THE EXTENT SAME IS CAUSED BY LENDERS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (IT BEING THE INTENT OF THE PARTIES THAT THE NEGLIGENCE OF THE INDEMNIFIED PARTIES SHALL BE COVERED HEREBY). WITHOUT INTENDING TO LIMIT THE REMEDIES AVAILABLE TO LENDER WITH RESPECT TO THE ENFORCEMENT OF ITS INDEMNIFICATION RIGHTS AS STATED HEREIN OR AS STATED IN ANY LOAN DOCUMENT, IN THE EVENT ANY CLAIM OR DEMAND IS MADE OR ANY OTHER FACT COMES TO THE ATTENTION OF LENDER IN CONNECTION WITH, RELATING OR PERTAINING TO, OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHICH LENDER REASONABLY BELIEVES MIGHT INVOLVE OR LEAD TO SOME LIABILITY OF LENDER, BORROWERS SHALL, IMMEDIATELY UPON RECEIPT OF WRITTEN NOTIFICATION OF ANY SUCH CLAIM OR DEMAND, ASSUME IN FULL THE PERSONAL RESPONSIBILITY FOR AND THE DEFENSE OF ANY SUCH CLAIM OR DEMAND AND PAY IN CONNECTION THEREWITH ANY LOSS, DAMAGE, DEFICIENCY, LIABILITY OR OBLIGATION, INCLUDING, WITHOUT LIMITATION, LEGAL FEES AND COURT COSTS INCURRED IN CONNECTION THEREWITH. IN THE EVENT OF COURT ACTION IN CONNECTION WITH ANY SUCH CLAIM OR DEMAND, BORROWERS SHALL ASSUME IN FULL THE RESPONSIBILITY FOR THE DEFENSE OF ANY SUCH ACTION AND SHALL IMMEDIATELY SATISFY AND DISCHARGE ANY FINAL DECREE OR JUDGMENT RENDERED THEREIN. LENDER MAY, IN ITS REASONABLE DISCRETION, MAKE ANY PAYMENTS SUSTAINED OR INCURRED BY REASON OF ANY OF THE FOREGOING; AND BORROWERS SHALL IMMEDIATELY REPAY TO LENDER, IN CASH AND NOT WITH PROCEEDS OF THE LOAN, THE AMOUNT OF SUCH PAYMENT, WITH INTEREST THEREON AT THE MAXIMUM RATE OF INTEREST PERMITTED BY APPLICABLE LAW FROM THE DATE OF SUCH PAYMENT. LENDER SHALL HAVE THE RIGHT TO JOIN BORROWERS (OR ANY OF THEM) AS A PARTY DEFENDANT IN ANY LEGAL ACTION BROUGHT AGAINST LENDER, AND EACH BORROWER HEREBY CONSENTS TO THE ENTRY OF AN ORDER MAKING SUCH BORROWER A PARTY DEFENDANT TO ANY SUCH ACTION. THE FOREGOING SHALL NOT APPLY TO THE EXTENT THE FOREGOING CLAIMS, LOSSES, EXPENSES, DAMAGES, OR ANY ACTION ARE DETERMINED IN A FINAL, NON-APPEALABLE ORDER OF A COURT OF COMPETENT JURISDICTION TO BE THE RESULT OF LENDERS OR ANY OTHER INDEMNIFIED PARTIES GROSS NEGLIGENCE OF WILLFUL MISCONDUCT.
(p) No Additional Indebtedness . Except for the Loan, no Borrower shall incur, assume or permit to exist any Indebtedness (whether personal or nonrecourse, secured or unsecured) other than (A) customary trade payables paid within sixty (60) days after they are incurred, and (B) Indebtedness representing Borrowers ratable shares of liability in connection with unsecured insurance premium financing obtained in the ordinary course of business of the Loan Parties, consistent with past practice and maturing in no more than thirteen (13) months from the date of incurrence.
(q) Compliance With Laws . Each Borrower shall comply with all applicable requirements (including applicable Laws) of any Governmental Authority having jurisdiction over such Borrower or its Project.
(r) Organizational Documents . No Borrower shall, without the prior written consent of Lender, permit or suffer (i) a material amendment or modification of its organizational documents, (ii) the admission of any new member, partner or shareholder, or (iii) any dissolution or termination of its existence.
(s) Management Contracts . Borrowers shall not enter into, materially modify, amend, terminate or cancel any management contracts for the Projects or agreements with agents or brokers, including the Management Agreement, without the prior written approval of Lender. Upon the continuance of an Event of Default caused by Manager, Borrowers shall cease making payments under Management Agreement until such time as Lender shall give its written consent that Borrowers may resume making such payments.
(t) Material Event Notices . Borrowers shall notify Lender, or cause Parent to notify Lender, within five (5) days after any Loan Party acquires knowledge of the occurrence of, or if any Loan Party or any of their Subsidiaries causes or intends to cause, as the case may be, any of the following: (i) the institution of any lawsuit, administrative proceeding or investigation affecting any Loan Party or any of their Subsidiaries, including without limitation any examination or audit by the IRS, the adverse determination under which could reasonably be expected to have a Material Adverse Effect; (ii) any development or change in the business or affairs of the Loan Party or any of their Subsidiaries which has had or which could reasonably be expected to have a Material Adverse Effect; (iii) any Event of Default or Default, together with a reasonably detailed statement by the Authorized Representative of the steps being taken to cure the effect of such Event of Default or Default; (iv) the occurrence of a default or event of default by any Loan Party or any of their Subsidiaries under any agreement or series of related agreements to which it is a party, which default or event of default could reasonably be expected to have a Material Adverse Effect; (v) any written notice from any Governmental Authority, insurance company or other third-party which could reasonably be expected to have a Material Adverse Effect; and (vi) any significant change in the accuracy of any material representations and warranties of the Loan Parties in this Agreement or any other Loan Document.
(u) Alterations . Without the prior written consent of Lender, no Borrower shall make any material alterations to its Project.
(v) Distributions .
(i) Borrowers shall not make any Distributions; provided, however, that so long as no Default or Event of Default shall be in existence immediately prior to or after giving effect thereto, Borrowers shall have the right to make cash Distributions to their respective members for the purpose of providing such member or Parent with funds to pay any taxes based solely on the income of the respective Borrowers (without duplication and after elimination of intercompany items).
(ii) It is a condition of this Agreement and the Loan that Parent comply with the limitations regarding Distributions contained in Paragraph 6(b) of the Parent Guaranty.
(w) Implied Debt Service Coverage . Borrowers shall not permit the Implied Debt Service Coverage for the Projects to be less than 1.40 to 1.00, tested as of the end of each fiscal quarter of the Loan Parties, (i) for the fiscal quarter ending March 31, 2013, (ii) for the period of two (2) consecutive fiscal quarters ending June 30, 2013, (iii) for the period of three (3) consecutive fiscal quarters ending September 30, 2013, and (iv) thereafter on a rolling four (4)-quarter basis.
(x) AdCare Fixed Charge Coverage Ratio . It is a condition of this Agreement and the Loan that Parent be in compliance with its minimum fixed charge coverage ratio set forth in Paragraph 6(c) of the Parent Guaranty as of the end of each fiscal quarter of Parent.
(y) Minimum Liquidity . It is a condition of this Agreement and the Loan that Parent be in compliance with its minimum liquidity requirement set forth in Paragraph 6(d) of the Parent Guaranty as at the end of each fiscal quarter of Parent.
(z) Health Care Permits and Reimbursement Approvals . No Tenant shall (i) fail to maintain in effect all Health Care Permits and Reimbursement Approvals necessary to the operation of its business, or (ii) receive payment under, the appropriate Medicare, Medicaid, or any other federal or state health care program, or any related reimbursement programs, engage in any activity that (1) constitutes or, with the giving of notice, the passage of time, or both, would result in a material violation of, any Health Care Permit necessary for the lawful conduct of its business or operations or (2) receive payment under, the appropriate Medicare, Medicaid, or any other federal or state health care program, or any related reimbursement programs, and any similar state or local government-sponsored program, to the extent that Tenants have decided to participate in any such program, and to receive reimbursement from private and commercial payers and health maintenance organizations to the extent applicable thereto, in each case under (i) and (ii) of this paragraph.
(aa) No Amendment or Termination of Facility Leases . No Borrower shall consent to the cancellation or material amendment of the Facility Lease to which it is party without the prior written consent of Lender in each instance, and Borrowers shall provide Lender a copy of each amendment to their respective Facility Leases within ten (10) Business Days after the execution and delivery thereof by the parties to such amendment.
(bb) Affiliate Transactions . Except for agreements reflected in Parents most recent financial statements or in Parents filings with the Securities and Exchange Commission, agreements currently in effect and listed on Schedule 10.1(bb) , and agreements which provide only for either Permitted Investments or Permitted Indebtedness, no Borrower will enter into any agreement, transaction or series of transactions with any Affiliate, except in the ordinary course of business and upon fair and reasonable terms that are no less favorable to it than would obtain in a comparable arms length transaction with a Person other than an Affiliate.
(cc) Investments . No Borrower will make any Investment other than Permitted Investments.
(dd) Deposit Accounts .
(i) Within thirty (30) days after the Loan Opening Date, each PropCo shall open a deposit account with Lender (each, a PropCo Operating Account and collectively, the PropCo Operating Accounts ) and thereafter promptly transition its operating accounts to Lender. Each PropCo shall maintain a deposit in such account of not less than $1,000.00 so long as the Loan remains outstanding in any amount. After the establishment of the PropCo Operating Account all rent payments under the applicable PropCos Facility Lease shall be paid into such PropCo Operating Account, and each PropCo agrees to direct its Tenant accordingly.
(ii) Within sixty (60) days after the Loan Opening Date, each Tenant shall open one or more deposit account with Lender (each, a Tenant Operating Account and collectively, the Tenant Operating Accounts ) and shall have transitioned its operating accounts to Lender. Each Tenant shall maintain a deposit in such account of not less than $1,000.00 in its Tenant Operating Account so long as the Loan remains outstanding in any amount. Each Tenant shall deposit, or cause to be deposited all cash flow from the operation of its Project into its Tenant Operating Account with Lender. It shall constitute an Event of Default hereunder if any Tenant directs that its Gross Revenues be paid in a manner contrary to the provisions of this subsection (ii) .
(iii) Each Borrower hereby irrevocably authorizes Lender, at Lenders option, to pay principal or interest due upon the Note when and as same shall become due by debiting funds on deposit in the Operating Accounts.
ARTICLE 11
CASUALTIES AND CONDEMNATION
11.1 Lenders Election to Apply Proceeds on Indebtedness.
(a) Subject to the provisions of Section 11.1(b) below, Lender may elect to collect, retain and apply to the Obligations all proceeds of insurance or condemnation (individually and collectively referred to as Proceeds ) after deduction of all reasonable expenses of collection and settlement, including attorneys and adjusters fees and charges. Any proceeds remaining after repayment of the Obligations under the Loan Documents shall be paid by Lender to the applicable Borrowers.
(b) Notwithstanding anything in Section 11.1(a) to the contrary, in the event of any casualty to the Improvements or any condemnation of part of any of the Projects, Lender agrees to make available the Proceeds to restoration of such Improvements if (i) no Event of Default exists, (ii) all Proceeds are deposited with Lender, (iii) in Lenders reasonable judgment, the amount of Proceeds available for restoration of the Improvements is sufficient to pay the full and complete costs of such restoration, (iv) if the cost of restoration exceeds ten percent (10%) of the Loan Amount under the Note for such Project, in Lenders sole determination after completion of restoration the Loan Amount will not exceed seventy percent (70%) of the as
stabilized value of such Project, (v) in Lenders reasonable determination, such Project can be restored to an architecturally and economically viable project in compliance with applicable Laws, (vi) each Guarantor reaffirms its Guaranty in writing, and (vii) in Lenders reasonable determination, such restoration is likely to be completed not later than three months prior to the Final Maturity Date.
11.2 Borrowers Obligation to Rebuild and Use of Proceeds Therefor . In case Lender does not elect to apply or does not have the right to apply the Proceeds to the indebtedness, as provided in Section 11.1 above, Borrowers shall:
(a) Proceed with diligence to make settlement with insurers or the appropriate governmental authorities and cause the Proceeds to be deposited with Lender;
(b) In the event of any material delay in making settlement with insurers or the appropriate governmental authorities or effecting collection of the Proceeds, deposit with Lender the full amount required to complete construction as aforesaid;
(c) In the event the Proceeds are insufficient to assure the Lender that the Loan will be in balance (i.e., the outstanding principal thereof does not exceed seventy percent (70%) of the as stabilized value of the Projects based on the most recent Appraisals received by Lender), promptly deposit with Lender any amount necessary to place the Loan in balance; and To the extent reasonably practicable, promptly proceed with the assumption of construction of such Improvements, including the repair of all damage resulting from such fire, condemnation or other cause and restoration to its former condition.
Any request by Borrowers for a disbursement by Lender of Proceeds and funds deposited by Borrowers shall be treated by Lender as if such request were for an advance of the Loan hereunder, and the disbursement thereof shall be conditioned upon Borrowers compliance with and satisfaction of the same conditions precedent as would be applicable under this Agreement for an advance of the Loan.
ARTICLE 12
ASSIGNMENTS BY LENDER AND BORROWERS
12.1 Assignments and Participations . Lender may from time to time sell the Loan and the Loan Documents (or any interest therein) and may grant participations in the Loan. Borrowers agrees to cooperate with Lenders efforts to do any of the foregoing and to execute all documents reasonably required by Lender in connection therewith which do not materially adversely affect Borrowers rights under the Loan Documents.
12.2 Prohibition of Assignments and Transfers by Borrowers . No Borrower shall assign or attempt to assign its rights under this Agreement and any purported assignment shall be void. Without the prior written consent of Lender, in Lenders sole discretion, Borrowers shall not suffer or permit (i) any change in the management (whether direct or indirect) of any Project, or (ii) the sale, transfer, lease (other than in the ordinary course of business pursuant to the standard form of residency agreement and without material deviation from the standard form previously provided by Borrowers to Lender), conveyance, alienation, pledge, assignment, encumbrance, hypothecation or other disposition (a Transfer ) of (1) all or any portion of any
Project or any portion of any other Collateral for the Loan, (2) all or any portion of Borrowers right, title and interest in and to any Project or any portion of any other Collateral for the Loan, (3) any interest of any Tenant under its Facility Lease, or (4) any interest in any Borrower or any interest in any entity which holds an interest in, or directly controls, any Borrower.
12.3 Prohibition of Transfers in Violation of ERISA . In addition to the prohibitions set forth in Section 12.2 above, Borrowers shall not assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of its interest or rights in this Agreement or in any Project, or attempt to do any of the foregoing or suffer any of the foregoing, nor shall any party owning a direct or indirect interest in any Borrower assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of any of its rights or interest (direct or indirect) in such Borrower, attempt to do any of the foregoing or suffer any of the foregoing, if such action would cause the Loan, or the exercise of any of Lenders rights in connection therewith, to constitute a prohibited transaction under ERISA or the Internal Revenue Code or otherwise result in Lender being deemed in violation of any applicable provision of ERISA. Borrowers agree to indemnify and hold Lender free and harmless from and against all losses, costs (including attorneys fees and expenses), taxes, damages (including consequential damages) and expenses Lender may suffer by reason of the investigation, defense and settlement of claims and in obtaining any prohibited transaction exemption under ERISA necessary or desirable in Lenders sole judgment or by reason of a breach of the foregoing prohibitions. The foregoing indemnification shall be a recourse obligation of each Borrower and shall survive repayment of the Note, notwithstanding any limitations on recourse contained herein or in any of the Loan Documents.
12.4. Successors and Assigns . Subject to the foregoing restrictions on transfer and assignment contained in this Article 12, this Agreement shall inure to the benefit of and shall be binding on the parties hereto and their respective successors and permitted assigns.
ARTICLE 13
TIME OF THE ESSENCE
13.1 Time is of the Essence . Borrowers agree that time is of the essence under this Agreement.
ARTICLE 14
EVENTS OF DEFAULT
14.1 Events of Default . The occurrence of any one or more of the following shall constitute an Event of Default as said term is used herein:
(a) Failure of Borrowers (i) to pay the aggregate outstanding balance under the Note on the Final Maturity Date, (ii) to make any scheduled payment of principal or interest payable pursuant to the Note or this Agreement on the date when due; (iii) to make any required Sinking Fund Payment on the date when due; or (iv) to pay any other amount payable to Lender under the Note, this Agreement or any of the other Loan Documents when such payment is due in accordance with the terms hereof or thereof.
(b) Failure of Borrowers to observe or perform their respective covenants contained in Section 9.2 , in Section 9.4 or in subsections (f), (m)(i) (m)(iv), (m)(viii) (m)(ix),
(o), (r), (s), (t), (u), (w), (x), (y), (aa), (bb) (provided such Default under clause (bb) could reasonably be expected to have a Material Adverse Effect), (cc) or (dd) of Section 10.1 hereof.
(c) Failure of Borrowers (1) to observe or perform their respective covenants contained in subsection (b) of Section 10.1 hereof, and such failure is not cured within one (1) Business Day after written notice of default from Lender, or (2) to observe or perform their respective covenants contained in subsections (g) , (m)(v) or (m)(x) of Section 10.1 hereof, and such failure is not cured within five (5) Business Days after written notice of default from Lender.
(d) Failure of any Tenant to observe or perform its covenants contained in subsection 10.1(z) ; provided, however, that if any such failure is curable by such Tenant it shall not constitute an Event of Default if such Tenant promptly commences to cure such Default and thereafter diligently pursues such cure to the completion thereof no later than the sooner of: (i) the expiration of the time period which the applicable Governmental Authority has given Tenant to complete corrective action, and (ii) thirty (30) days after the occurrence of such Default.
(e) Failure of Borrowers (i) for a period of thirty (30) days after written notice of default from Lender, to observe or perform any non-monetary covenant or condition contained in this Agreement or any other Loan Documents and not covered by any of the other provisions of this Section 14.1 ; provided that if any such failure is susceptible to cure and cannot reasonably be cured within said thirty (30)-day period, then such default shall not constitute an Event of Default so long as within such thirty (30)-day period Borrowers have commenced efforts to cure such default, diligently pursue efforts to cure the applicable default, and actually cure such default no later than thirty (30) days after the end of the initial thirty (30)-day period; provided that if a different notice or grace period is specified under any other paragraph of this Article 14 with respect to a particular breach, the specific provision shall control.
(f) Any Transfer or other disposition in violation of Sections 12.2 or 12.3 .
(g) If any warranty, representation, statement, report or certificate made now or hereafter by any Borrower or any Guarantor is untrue or materially incorrect at the time made or delivered.
(h) Any Borrower or Guarantor shall commence a voluntary case concerning any Borrower or Guarantor under Title 11 of the United States Code entitled Bankruptcy as now or hereafter in effect, or any successor thereto or any other present or future bankruptcy or insolvency statute (the Bankruptcy Code ); or an involuntary proceeding is commenced against any Borrower or Guarantor under the Bankruptcy Code and relief is ordered against any Borrower or Guarantor, or the petition is controverted but not dismissed or stayed within sixty (60) days after the commencement of the ease, or a custodian (as defined in the Bankruptcy Code) is appointed for or takes charge of all or substantially all of the property of any Borrower or Guarantor; or any Borrower or Guarantor commences any other proceedings under any reorganization, arrangement, readjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar Law of any jurisdiction whether now or hereafter in effect relating to any Borrower or Guarantor; or there is commenced against any Borrower or Guarantor any such proceeding which remains undismissed or unstayed for a period of sixty (60) days; or any
Borrower or Guarantor fails to controvert in a timely manner any such case under the Bankruptcy Code or any such proceeding, or any order of relief or other order approving any such case or proceeding is entered; or any Borrower or Guarantor by any act or failure to act indicates its consent to, approval of, or acquiescence in any such case or proceeding or the appointment of any custodian or the like of or for it for any substantial part of its property or suffers any such appointment to continue undischarged or unstayed for a period of sixty (60) days.
(i) Any Borrower or Guarantor shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall consent to the appointment of a receiver or trustee or liquidator of all of its property or the major part thereof or if all or a substantial part of the assets of any Borrower or Guarantor are attached, seized, subjected to a writ or distress warrant, or are levied upon, or come into the possession of any receiver, trustee, custodian or assignee for the benefit of creditors.
(j) If any Borrower is enjoined, restrained or in any way prevented by any court order from operating its Project.
(k) One or more final, unappealable judgments are entered against one or more Borrowers or Guarantors in amounts aggregating in excess of $100,000, and said judgments are not satisfied, vacated, stayed or bonded over within thirty (30) days after entry.
(l) If any Borrower or Guarantor shall fail to pay any debt owed by it or is otherwise in default (and such failure or default continues after any applicable grace period specified in the instrument or agreement relating thereto) (i) under any agreement with Lender, (ii) under any agreement with any Person other than Lender, where the maximum liability of any Borrower or Guarantor (other than Parent) would exceed $100,000.00, or (iii) under any agreement with any Person other than Lender, where the maximum liability of Parent would exceed $1,000,000.00; provided, however, that no Event of Default shall be deemed to exist under clause (iii) of this subsection (l) in connection with a default under any agreement under which Parents maximum liability would be $5,000,000.00 or less, unless the debt under such agreement has either been accelerated by the holder thereof or Parent has failed to pay the principal of or interest on such debt as and when due, including at maturity.
(m) The failure of Parent to perform or observe any of its covenants or agreements set forth in Paragraph 6 of the Parent Guaranty.
(n) There shall occur any revocation, suspension, termination, recession, non-renewal, forfeiture or any similar administrative or regulatory action with respect to one or more Health Care Permits or Reimbursement Approvals relating to any Project or Projects which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
(o) The occurrence of any other event or circumstance denominated as an Event of Default herein or under any of the other Loan Documents and the expiration of any applicable grace or cure periods, if any, specified for such Event of Default herein or therein, as the case may be.
(p) The occurrence of any Change in Control.
ARTICLE 15
LENDERS REMEDIES IN EVENT OF DEFAULT
15.1 Remedies Conferred Upon Lender. Upon the happening and during the continuance of any Event of Default, Lender may pursue any one or more of the following remedies concurrently or successively, it being the intent hereof that none of such remedies shall be to the exclusion of any other:
(a) Take possession of the Projects, or any of them, and do anything which is necessary or appropriate in its sole judgment to fulfill the obligations of Borrowers under this Agreement and the other Loan Documents, including either the right to avail itself of and procure performance of existing contracts or let any contracts with the same contractors or others. Without restricting the generality of the foregoing and for the purposes aforesaid, each Borrower hereby appoints and constitutes Lender its lawful attorney-in-fact with full power of substitution in its Project to pay, settle or compromise all existing bills and claims, which may, be liens or security interests, or to avoid such bills and claims becoming liens against such Project; to execute all applications and certificates in the name of each Borrower prosecute and defend all actions or proceedings in connection with the Improvements or the Projects; to take action and require such performance as it deems necessary under any of the bonds to be furnished hereunder and to make settlements and compromises with the surety or sureties thereunder, and in connection therewith, to execute instruments of release and satisfaction; and to do any and every act which any Borrower might do in its own behalf; it being understood and agreed that this power of attorney shall be a power coupled with an interest and cannot be revoked;
(b) Declare the Note to be immediately due and payable;
(c) Use and apply any monies or letters of credit deposited by any Borrower or Guarantor with Lender, regardless of the purposes for which the same was deposited, to cure any such default or to apply on account of any indebtedness under this Agreement which is due and owing to Lender;
(d) Exercise or pursue any other remedy or cause of action permitted under this Agreement or any other Loan Documents, or conferred upon Lender by operation of Law.
Notwithstanding the foregoing, upon the occurrence of any Event of Default under Section 14(h), all amounts evidenced by the Note shall automatically become due and payable, without any presentment, demand, protest or notice of any kind to Borrowers.
ARTICLE 16
GENERAL PROVISIONS
16.1 Captions. The captions and headings of various Articles, Sections and subsections of this Agreement and Exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
16.2 Modification; Waiver . No modification, waiver, amendment or discharge of this Agreement or any other Loan Document shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver, amendment or discharge is sought.
16.3 GOVERNING LAW . EXCEPT AS SET FORTH IN THE MORTGAGES AND ASSIGNMENTS OF RENTS, ALL OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAWS.
16.4 Acquiescence Not to Constitute Waiver of Lenders Requirements. Each and every covenant and condition for the benefit of Lender contained in this Agreement may be waived by Lender; provided, however, that to the extent that Lender may have acquiesced in any noncompliance with any construction or nonconstruction conditions precedent to the Opening of the Loan or to any subsequent disbursement of Loan proceeds, such acquiescence shall not be deemed to constitute a waiver by Lender of such requirements with respect to any future disbursements of Loan proceeds.
16.5 Disclaimer by Lender. This Agreement is made for the sole benefit of Borrower and Lender, and no other person or persons shall have any benefits, rights or remedies under or by reason of this Agreement, or by reason of any actions taken by Lender pursuant to this Agreement. Lender shall not be liable for any debts or claims accruing in favor of any such parties against Borrowers or others or against the Projects. Lender, by making the Loan or taking any action pursuant to any of the Loan Documents, shall not be deemed a partner or a joint venturer with Borrower or fiduciary of Borrower.
16.6 Partial Invalidity; Severability. If any of the provisions of this Agreement, or the application thereof to any person, party or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision or provisions to persons, parties or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
16.7 Definitions Include Amendments . Definitions contained in this Agreement which identify documents, including, but not limited to, the Loan Documents, shall be deemed to include all amendments, supplements and restatements to such documents from the date hereof, and all future amendments and supplements thereto entered into from time to time to satisfy the requirements of this Agreement or otherwise with the consent of Lender. Reference to this Agreement contained in any of the foregoing documents shall be deemed to include all amendments and supplements to, and restatements of, this Agreement.
16.8 Execution in Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
16.9 Entire Agreement . This Agreement, taken together with all of the other Loan Documents and all certificates and other documents delivered by Loan Parties to Lender, embody the entire agreement and supersede all prior agreements, written or oral, relating to the subject matter hereof.
16.10 Waiver of Damages . In no event shall Lender be liable to Loan Parties for punitive, exemplary or consequential damages, including, without limitation, lost profits, whatever the nature of a breach by Lender of its obligations under this Agreement or any of the Loan Documents, and each Borrower for itself and Guarantors waives all claims for punitive, exemplary or consequential damages.
16.11 Claims Against Lender . Lender shall not be in default under this Agreement, or under any other Loan Documents, unless a written notice specifically setting forth the claim of Borrowers shall have been given to Lender within three (3) months after any Borrower first had knowledge of the occurrence of the event which Borrowers allege gave rise to such claim and Lender does not remedy or cure the default, if any there be, promptly thereafter. Each Borrower waives any claim, set-off or defense against Lender arising by reason of any alleged default by Lender as to which Borrowers do not give such notice timely as aforesaid. Each Borrower acknowledges that such waiver is or may be essential to Lenders ability to enforce its remedies without delay and that such waiver therefore constitutes a substantial part of the bargain between Lender and Borrowers with regard to the Loan.
16.12 Jurisdiction . TO THE GREATEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A PROCEEDING ), EACH BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF CLEVELAND, COUNTY OF CUYAHOGA, STATE OF OHIO, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. EACH BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY STATE OF OHIO OR UNITED STATES COURT SITTING IN THE CITY OF CLEVELAND, COUNTY OF CUYAHOGA, STATE OF OHIO MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO SUCH BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF SUCH BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED
16.13 Set-Offs. After the occurrence and during the continuance of an Event of Default, each Borrower hereby irrevocably authorizes and directs Lender from time to time to charge such Borrowers accounts and deposits with Lender (or Lenders Affiliates), and to pay over to Lender an amount equal to any amounts from time to time due and payable to Lender hereunder, under the Note or under any other Loan Document. Each Borrower hereby grants to Lender a security interest in and to all such accounts and deposits maintained by such Borrower with Lender (or Lenders Affiliates).
16.14 Limitation of Liability. Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, no member in Borrower (other than any Guarantor in accordance with, and to the extent provided in, the Guaranty and the Indemnity) shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any of the other Loan Documents, or any amendment or amendments to any of the foregoing made at any time or times hereafter.
16.15 Authorized Representative. Each Borrower hereby appoints the Chief Financial Officer of Parent (Martin D. Brew as of the Loan Opening Date) as its Authorized Representative for purposes of dealing with Lender on behalf of such Borrower in respect of any and all matters in connection with this Agreement, the other Loan Documents, and the Loan. The Authorized Representative shall have the power, in his discretion, to give and receive all notices, monies, approvals, and other documents and instruments, and to take any other action on behalf of Borrower. All actions by the Authorized Representative shall be final and binding on Borrowers. Lender may rely on the authority given to the Authorized Representative until actual receipt by Lender of a duly authorized resolution substituting a different person as the Authorized Representative. No more than one person shall serve as Authorized Representative at any given time.
ARTICLE 17
NOTICES
Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three (3) Business Days after mailing (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier, on the day of transmission so long as copy is sent on the same day by overnight courier as set forth below:
If to any Borrower : addressed to it in care of Parent, at:
c/o AdCare Health Systems, Inc.
1145 Hembree Road
Roswell, Georgia 30076
Attention: Chief Executive Officer
Telephone: (404) 781-2885
Facsimile: (404) 842-1899
With a courtesy copy to :
Holt, Ney, Zatcoff & Wasserman, LLP
100 Galleria Parkway, Suite 1800
Atlanta, Georgia 30339
Attention: Gregory P. Youra, Esq.
Telephone: (770) 956-9600
Facsimile: (770) 956-1490
If to Lender :
KeyBank National Association
Real Estate Capital-Healthcare
Mailcode: OH-01-51-0311
4910 Tiedeman Road, 3 rd Floor
Brooklyn, Ohio 44144
Attention: Amy MacLearie, Closer
Telephone: (216) 813-6935
Facsimile: (216) 357-6383
With copies to:
KeyBank National Association
1200 Abernathy Road, NE
Suite 1550
Atlanta, Georgia 30328
Attention: Paul F. Di Vito, SVP
Telephone: (770) 510-2085
Facsimile.: (770) 510-2195; and
Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488
Attention: Robert C. Lewinson, Esq.
Telephone: (404) 572-6623
Facsimile: (404) 420-0623
or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.
ARTICLE 18
WAIVER OF JURY TRIAL
BORROWERS AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELATING THERETO
OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
ARTICLE 19
NATURE OF OBLIGATIONS
19.1 Joint and Several Obligations; Full Collateralization.
(a) Each Borrower shall be jointly and severally liable for all of the obligations of all Borrowers under this Agreement and the other Loan Documents, regardless of the amount of the Loan Proceeds that is actually disbursed to or for the benefit of each Borrower, or the manner in which Borrowers or Lender account for the Loan in their respective books and records. All of the Collateral provided by each Borrower shall secure all of the obligations of all Borrowers under this Agreement and the other Loan Documents, regardless of the amount of the Loan proceeds that is actually disbursed to or for the benefit of each Borrower.
(b) Each Borrower acknowledges that Lender has advised Borrowers that Lender is unwilling to provide the Loan to Borrowers unless each Borrower agrees to the joint and several liability and full collateralization described in paragraph (a) of this Section. Each Borrower has determined that it is in its best interest to undertake such joint and several liability and full collateralization, because of, among other things (i) the benefit to each Borrower of being able to obtain the Loan and the desirability of the terms and conditions of the Loan, (ii) the benefit and economies to be realized by Borrowers in obtaining the Loan as a single loan facility as compared to each Borrowers obtaining and individual loan facility for its Facility, and (iii) the fact that each Borrower is an Affiliate of each of the other Borrowers.
(c) The obligations of each of Borrowers under this Agreement and the other Loan Documents, including, without limitation, the joint and several liability and full collateralization as described in paragraph (a) above, shall be continuing and shall be binding upon each of them, and shall remain in full force and effect, and shall not be discharged, impaired or affected by (i) the power or authority of any other Borrower to execute, acknowledge or deliver this Agreement or any of the other Loan Documents; (ii) the existence or continuance of any obligation on the part of any other Borrower under this Agreement or any of the other Loan Documents; (iii) the validity or invalidity of the obligations of any other Borrower under this Agreement or any of the other Loan Documents; (iv) any defense, setoff or counterclaim whatsoever that any other Borrower may or might have to the performance or observance of any of the terms, provisions, covenants and agreements contained in this Agreement or any of the other Loan Documents, including, without limitation, any defense based on any alleged failure of Lender to comply with the implied covenant of good faith and fair dealing, or any limitation or exculpation of liability on the part of any other Borrower; (v) the existence or continuance of any other Borrower as a legal entity; (vi) the transfer by any other Borrower of all or any part of the property encumbered by the Loan Documents; (vii) any sale, pledge, assignment, surrender, indulgence, alteration, substitution, exchange, extension, renewal, release, compromise, change in, modification or other disposition of any of the obligations of any other Borrower or of any of the Loan Documents, all of which Lender is hereby expressly authorized to make from time to time without notice to Borrowers or any of them, or to anyone; (viii) the acceptance by Lender of
the primary or secondary obligation of any party with respect to, or any security for, all or any part of the obligations under this Agreement or any of the other Loan Documents; or (ix) any failure, neglect or omission on the part of Lender to realize or protect any of the obligations under this Agreement or any of the other Loan Documents or any collateral or appropriation of any moneys, credits or property of Borrower toward the liquidation of the obligations under this Agreement or any of the other Loan Documents or by any application of any moneys received by Lender under the Loan Documents. The obligations of Borrowers and each of them under this Agreement and under the other Loan Documents, including, without limitation, the joint and several liability and full collateralization as described in paragraph (a) above, shall not be affected, discharged, impaired or varied by any act, omission or circumstance whatsoever, whether or not specifically enumerated above, except that due and punctual payment, performance and observance of all of the obligations of Borrowers under this Agreement and the other Loan Documents, and then, in each case, only to the extent thereof.
(d) Lender shall have the right to enforce this Agreement and the other Loan Documents against any Borrower that is a party thereto, with or without enforcing or attempting to enforce the same against any other Borrower party thereto or any security for the obligation of any of them, and whether or not other proceedings or steps are pending or have been taken or have been concluded to enforce or otherwise realize upon any security for the Loan or any guaranty of the Loan. The payment of any amount or amounts by any Borrower, pursuant to its obligation under this Agreement or any of the other Loan Documents, including, without limitation, pursuant to the joint and several liability provided for herein, shall not in any way entitle such Borrower, either at law, or in equity or otherwise, to any right, title or interest in and to this Agreement, the Note, or any of the other Loan Documents, or any principal or interest payments theretofore, then or thereafter at any time made by anyone on behalf of any of Borrowers, or in and to any security therefor, or to any right of recovery against any Borrower, in each case whether by way of indemnity, reimbursement, contribution, subrogation or otherwise, and Borrowers hereby waive and relinquish any and all such right, title and interest in and to the Note, such other obligations, such principal and interest payments, and such security and any and all such rights of recovery against Borrowers. In addition, each Borrower hereby subordinates all obligations of every sort whatsoever now or hereafter coming due to such Borrower from any other Borrower, to the Loan and the Note and to all other amounts coming due to Lender under the Loan Documents.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed under seal by their respective, duly authorized officers or representatives, as of the date first set forth above.
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WOODLAND HILLS HC PROPERTY HOLDINGS,
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, as |
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Manager of each entity listed above |
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Secured Loan Agreement AdCare (Arkansas) |
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WOODLAND HILLS HC NURSING, LLC |
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NORTHRIDGE HC&R NURSING, LLC |
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APH&R NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry, as Manager of each entity listed above |
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Secured Loan Agreement AdCare (Arkansas) |
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LENDER : |
KEYBANK NATIONAL ASSOCIATION , a national banking association |
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/s/ [Illegible] |
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Title: |
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Exhibit 10.264
PROMISSORY NOTE
U.S. $16,500,000.00 |
December 28, 2012 |
FOR VALUE RECEIVED, WOODLAND HILLS HC PROPERTY HOLDINGS, LLC, NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC, APH&R PROPERTY HOLDINGS, LLC, WOODLAND HILLS HC NURSING, LLC, NORTHRIDGE HC&R NURSING, LLC, APH&R NURSING, LLC , each a Georgia limited liability company having an address at 1145 Hembree Road, Roswell, Georgia 30076, Attn: Chief Financial Officer (each a Borrower , and together, Borrowers ), jointly and severally, hereby promise to pay to the order of KEYBANK NATIONAL ASSOCIATION , a national banking association ( Lender ) having an address at 4910 Tiedeman Road, 3rd Floor, Brooklyn, Ohio 44144, the principal sum of SIXTEEN MILLION FIVE HUNDRED THOUSAND AND 00/100 Dollars ($16,500,000.00), and interest from the date hereof on the balance of principal from time to time outstanding, in United States currency, at the rates and at the times hereinafter described.
This Note is issued by Borrowers pursuant to that certain Secured Loan Agreement dated as of the date hereof (as the same may be amended, supplemented, extended, renewed, restated or replaced from time to time, the Loan Agreement ) entered into among between Lender and Borrowers. This Note evidences the Loan made by Lender to Borrowers pursuant to the Loan Agreement. Payment of this Note is governed by the Loan Agreement, the terms of which are incorporated herein by express reference as if fully set forth herein. Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
1. Interest . The principal amount hereof outstanding from time to time shall bear interest until paid in full at the Applicable Rate, or under the circumstances provided in Paragraph 5(a) of this Note, at the Default Rate.
2. Monthly Payments . Interest only shall be payable in arrears on the first (1 st ) day of each calendar month after the date hereof, commencing on February 1, 2013, up to and including the Maturity Date in the amount of all interest accrued during the immediately preceding calendar month. All payments on account of the indebtedness evidenced by this Note shall be made to Lender not later than 11:00 a.m. Cleveland, Ohio time on the day when due in lawful money of the United States and shall be first applied to late charges, costs of collection or enforcement and other similar amounts due, if any, under this Note and any of the other Loan Documents, then to interest due and payable hereunder and the remainder to principal due and payable hereunder.
3. Prepayment . The principal amount hereof is subject to optional and mandatory prepayment as and to the extent provided in the Loan Agreement.
4. Maturity Date . The indebtedness evidenced hereby shall mature on the Maturity Date. On the Maturity Date, the entire outstanding principal balance hereof, together
with accrued and unpaid interest and all other sums evidenced by this Note, shall, if not sooner paid, become due and payable.
5. General Provisions .
(a) Regardless of whether an Adjusted LIBOR Rate would otherwise then be in effect, in the event (i) the principal balance hereof is not paid when due whether by acceleration or upon the Maturity Date or (ii) an Event of Default exists, then the principal balance hereof shall, at Lenders election, bear interest at the Default Rate. In addition, for any installment (exclusive of the payment due upon the Maturity Date) which is not paid within ten (10) days after the due date thereof, a late charge as set forth in the Loan Agreement.
(b) Each Borrower agrees that the obligation evidenced by this Note is an exempt transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq.
(c) The parties hereto intend and believe that each provision in this Note comports with all applicable local, state and federal laws and judicial decisions; however, if any provision or provisions, or if any portion of any provision or provisions, in this Note is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Note to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid and enforceable, that the remainder of this Note shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein, and that the rights, obligations and interest of Borrower and the holder or holders hereof under the remainder of this Note shall continue in full force and effect. All agreements herein are expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the unpaid principal balance hereof, or otherwise, shall the amount paid or agreed to be paid to the holders hereof for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under applicable usury laws. If, from any circumstances whatsoever, the fulfillment of any provision hereof, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto , the obligation to be fulfilled shall be reduced to the limit of such validity and if from any circumstance the holder hereof shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder and not to the payment of interest.
(d) This Note and all provisions hereof shall be binding upon each Borrower and all persons claiming under or through Borrowers, or any of them, and shall inure to the benefit of Lender, together with its successors and assigns, including each owner and holder from time to time of this Note.
(e) Time is of the essence as to all dates set forth herein.
(f) Each Borrower agrees that its liability shall not be in any manner affected by any indulgence, extension of time, renewal, waiver, or modification granted or consented to by Lender; and such Borrower consents to any indulgences and all extensions of time, renewals, waivers, or modifications that may be granted by Lender with respect to the payment or other provisions of this Note, and to any substitution, exchange or release of the Collateral, or any part thereof, with or without substitution, and agrees to the addition or release of any makers, endorsers, guarantors, or sureties, all whether primarily or secondarily liable, without notice to such Borrower and without affecting its liability hereunder.
(g) Each Borrower hereby waives and renounces for itself, its successors and assigns, all rights to the benefits of any statute of limitations and any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, or exemption and homestead laws now provided, or which may hereafter be provided, by the laws of the United States and of any state thereof against the enforcement and collection of the obligations evidenced by this Note.
(h) If this Note is placed in the hands of attorneys for collection or is collected through any legal proceedings, Borrowers promise and agree to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting or attempting to collect this Note, including all reasonable attorneys fees and disbursements.
(i) All parties now or hereafter liable with respect to this Note, whether Borrower, principal, surety, guarantor, endorsee or otherwise hereby severally waive presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest. No failure to accelerate the indebtedness evidenced hereby, acceptance of a past due installment following the expiration of any cure period provided by this Note, any Loan Document or applicable law, or indulgences granted from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted hereunder or by the laws of the State. Each Borrower hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing.
(j) THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
[Remainder of Page left Blank; Execution on Following Page]
Each Borrower has executed and delivered this Note under seal as of the day and year first set forth above.
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BORROWERS : |
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WOODLAND HILLS HC PROPERTY HOLDINGS, LLC |
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NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC |
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APH&R PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(Seal) |
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Christopher F. Brogdon, as |
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Manager of each such entity |
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WOODLAND HILLS HC NURSING, LLC |
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NORTHRIDGE HC&R NURSING, LLC |
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APH&R NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
(Seal) |
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Boyd P. Gentry, as Manager of each such entity |
Promissory Note Signature Page
Exhibit 10.265
EXECUTION VERSION
SPACE ABOVE THIS LINE FOR RECORDERS USE ONLY
PREPARED BY
AND WHEN RECORDED RETURN TO:
Teresa B. Pernini, Esq.
Bryan Cave LLP
One Atlantic Center
Fourteenth Floor
1201 W. Peachtree Street, NW
Atlanta, Georgia 30309-3488
ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
(Northridge Healthcare and Rehabilitation)
THIS ABSOLUTE ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to as this Assignment ), is made and entered into as of the 28th day of December 2012, by NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company, whose address is whose address is 1145 Hembree Road, Roswell, Georgia 30076 ( Assignor ), to KEYBANK NATIONAL ASSOCIATION , a national banking association ( Lender ), whose address is 4910 Tiedeman Road, 3 rd Floor, Brooklyn, Ohio 44144.
W I T N E S S E T H:
A. On or about the date hereof, Assignor, Northridge HC&R Nursing, LLC ( Northridge Tenant ), APH&R Property Holdings, LLC ( Abington PropCo ), APH&R Nursing, LLC, a Georgia limited liability company ( Abington Tenant ), Woodland Hills HC Property Holdings, LLC ( Woodland Hills PropCo ) and Woodland Hills HC Nursing, LLC, ( Woodland Hills Tenant ), each a Georgia limited liability company (Assignor, Northridge Tenant, Abington PropCo, Abington Tenant, Woodland Hills PropCo and Woodland Hills Tenant referred to herein collectively as Borrowers ), and Lender entered into that certain Secured Loan Agreement dated as of the date hereof ( Loan Agreement ), whereby Lender agreed to make a secured term loan (the Loan ) available to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
B. In connection with the Loan, Borrowers have executed and delivered, jointly and severally, a promissory note of even date herewith (the Note ) payable to the order of Lender in the principal amount of the Loan.
C. A condition precedent to the Assignees extension of the Loan to the Assignor, is the execution and delivery by the Assignor of this Assignment.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto mutually agree as follows:
1. Definitions . All capitalized terms which are not defined herein shall have the meanings ascribed thereto in the Loan Agreement.
2. Absolute and Present Assignment . The Assignor hereby bargains, grants, sells, transfers, conveys, sets over and assigns to the Assignee, it successors and assigns, as an Absolute Assignment and not merely one for security, all of the right, title and interest of the Assignor in and to (i) all of the rents, revenues, issues, profits, proceeds, receipts, income, accounts and other receivables arising out of or from the land legally described in Exhibit A attached hereto and made a part hereof and all buildings and other improvements located thereon (said land and improvements being hereinafter referred to collectively as the Premises ), including, without limitation, lease termination fees, purchase option fees and other fees and expenses payable under any lease; (ii) all leases and subleases (collectively, Leases ), now or hereafter existing, of all or any part of the Premises, including but not limited to that certain Facility Lease dated April 1, 2012, between Assignor and Northridge Tenant, together with all guaranties of any of such Leases and all security deposits delivered by tenants thereunder, whether in cash or letter of credit; (iii) all rights and claims for damage against tenants arising out of defaults under the Leases, including rights to termination fees and compensation with respect to rejected Leases pursuant to Section 365(a) of the Federal Bankruptcy Code or any replacement Section thereof; and (iv) all tenant improvements and fixtures located on the Premises. This Assignment is an absolute perfected and present transfer and assignment of the foregoing interests to the Assignee, and not an assignment for security purposes only, which secures:
(a) Payment by the Borrowers when due of (i) the indebtedness evidenced by the Note and any and all renewals, extensions, replacements, amendments, modifications and refinancings thereof; (ii) any and all other Obligations (as defined in the Loan Agreement) that may be due and owing to the Assignee by the Borrowers under or with respect to the Loan Documents (as defined in the Loan Agreement); and (iii) all costs and expenses paid or incurred by the Assignee in enforcing its rights hereunder, including without limitation, court costs and reasonable attorneys fees actually incurred; and
(b) Observance and performance by the Borrowers of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Borrowers or any other obligor to or benefiting the Assignee which are evidenced or
secured by or otherwise provided in the Note, this Assignment or any of the other Loan Documents.
3. Representations and Warranties of Assignor . The Assignor represents and warrants to the Assignee that:
(a) This Assignment, as executed by the Assignor, constitutes the legal and binding obligation of the Assignor enforceable in accordance with its terms and provisions;
(b) The Assignor is the lessor under all Leases;
(c) There is no other existing assignment of the Assignors entire or any part of its interest in or to any of the Leases, or any of the rents, issues, income or profits assigned hereunder, nor has the Assignor entered into any agreement to subordinate any of the Leases or the Assignors right to receive any of the rents, issues, income or profits assigned hereunder;
(d) The Assignor has not executed any instrument or performed any act which may prevent the Assignee from operating under any of the terms and provisions hereof or which would limit the Assignee in such operation; and
(e) There are no defaults by the landlord and, to the Assignors knowledge, there are no material defaults by tenants under any Leases.
4. Covenants of the Assignor . The Assignor covenants and agrees that so long as this Assignment shall be in effect:
(a) The Assignor shall not enter into any additional Leases, other than Leases which are entered into in the ordinary course of the Assignors business with individual patients under patient agreements;
(b) The Assignor shall observe and perform all of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the lessor thereunder, and the Assignor shall not do or suffer to be done anything to impair the security thereof. The Assignor shall not (i) release the liability of any tenant under any Lease, (ii) consent to any tenants withholding of rent or making monetary advances and off setting the same against future rentals, (iii) consent to any tenants claim of a total or partial eviction, (iv) consent to a tenant termination or cancellation of any Lease, except as specifically provided therein, or (v) enter into any oral leases with respect to all or any portion of the Premises;
(c) The Assignor shall not collect any of the rents, issues, income or profits assigned hereunder more than 30 days in advance of the time when the same shall become due, except for security or similar deposits;
(d) The Assignor shall not make any other assignment of its entire or any part of its interest in or to any or all Leases, or any or all rents, issues, income or profits assigned hereunder, except as specifically permitted by the Loan Documents;
(e) The Assignor shall not modify the terms and provisions of any Lease, nor shall the Assignor give any consent (including, but not limited to, any consent to any assignment of, or subletting under, any Lease, except as expressly permitted thereby) or approval required or permitted by such terms and provisions, or cancel or terminate any Lease, without the Assignees prior written consent;
(f) The Assignor shall not accept a surrender of any Lease or convey or transfer, or suffer or permit a conveyance or transfer, of the premises demised under any Lease or of any interest in any Lease so as to effect, directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of, any tenant thereunder; any termination fees payable under a Lease for the early termination or surrender thereof shall be paid jointly to the Assignor and the Assignee;
(g) The Assignor shall not alter, modify or change the terms of any guaranty of any Lease, or cancel or terminate any such guaranty or do or permit to be done anything which would terminate any such guaranty as a matter of law;
(h) The Assignor shall not waive or excuse the obligation to pay rent under any Lease;
(i) The Assignor shall, at its sole cost and expense, appear in and defend any and all actions and proceedings arising under, relating to or in any manner connected with any Lease or the obligations, duties or liabilities of the lessor or any tenant or guarantor thereunder, and shall pay all costs and expenses of the Assignee, including court costs and reasonable attorneys fees actually incurred, in any such action or proceeding in which the Assignee may appear;
(j) The Assignor shall give prompt notice to the Assignee of any notice of any default by the lessor under any Lease received from any tenant or guarantor thereunder;
(k) The Assignor shall enforce the observance and performance of each covenant, term, condition and agreement contained in each Lease to be observed and performed by the tenants and guarantors thereunder and shall immediately notify the Assignee of any material breach by the tenant or guarantor under any such Lease;
(l) The Assignor shall not permit any of the Leases to become subordinate to any lien or liens other than liens securing the indebtedness secured hereby or liens for general real estate taxes not delinquent;
(m) The Assignor shall not execute hereafter any Lease unless there shall be included therein a provision providing that the tenant thereunder acknowledges that such Lease has been assigned pursuant to this Assignment and agrees not to look to the
Assignee as mortgagee, mortgagee in possession or successor in title to the Premises for accountability for any security deposit required by lessor under such Lease unless such sums have actually been received in cash by the Assignee as security for tenants performance under such Lease; and
(n) If any tenant under any Lease is or becomes the subject of any proceeding under the Federal Bankruptcy Code, as amended from time to time, or any other federal, state or local statute which provides for the possible termination or rejection of the Leases assigned hereby, the Assignor covenants and agrees that if any such Lease is so terminated or rejected, no settlement for damages shall be made without the prior written consent of the Assignee, and any check in payment of damages for termination or rejection of any such Lease will be made payable both to the Assignor and the Assignee. The Assignor hereby assigns any such payment to the Assignee and further covenants and agrees that upon the request of the Assignee, it will duly endorse to the order of the Assignee any such check, the proceeds of which shall be applied in accordance with the provisions of Section 8 below.
5. Rights Prior to Default . Unless or until an Event of Default (as defined in Section 6 hereof) shall occur and be continuing, the Assignor shall have the right and license to collect, at the time (but in no event more than 30 days in advance) provided for the payment thereof, all rents, issues, income and profits assigned hereunder, and to retain, use and enjoy the same. Upon the occurrence of an Event of Default, the Assignors right and license to collect such rents, issues, income and profits shall immediately terminate without further notice thereof to the Assignor. The Assignee shall have the right to notify the tenants under the Leases of the existence of this Assignment at any time.
6. Events of Default . Each of the following shall constitute an Event of Default under this Assignment:
(a) The Assignor fails to pay any amount payable under this Assignment when any such payment is due in accordance with the terms hereof.
(b) The Assignor fails to perform or observe, or to cause to be performed or observed, any other obligation, covenant, term, agreement or provision required to be performed or observed by the Assignor under this Assignment; provided, however, that:
(i) If such failure can be cured solely by the payment of money, such failure shall not constitute an Event of Default unless it shall continue for a period of five days after written notice to the Assignor;
(ii) If such failure cannot be cured solely by the payment of money and does not pose an emergency or dangerous condition or a material threat to the security for the Loan, such failure shall not constitute an Event of Default unless it shall continue for a period of 30 days after written notice to the Assignor; and
(iii) If a failure described in (ii) above is of such a nature that it cannot reasonably be cured within such 30-day period, and if such failure is susceptible of cure, it shall not constitute an Event of Default if corrective action is instituted
by the Assignor within such 30-day period and is diligently pursued and such failure is cured within 60 days after the occurrence of such failure.
(c) The occurrence of an Event of Default under the Loan Agreement or any of the other Loan Documents.
7. Rights and Remedies Upon Default . At any time upon or following the occurrence and during the continuance of any Event of Default, the Assignee, at its option, may exercise any one or more of the following rights and remedies without any obligation to do so, without in any way waiving such Event of Default, without further notice or demand on the Assignor, without regard to the adequacy of the security for the obligations secured hereby, without releasing the Assignor or any guarantor of the Note from any obligation, and with or without bringing any action or proceeding to foreclose the Mortgage or any other lien or security interest granted by the Loan Documents:
(a) The Assignee may declare the unpaid balance of the principal sum of the Note, together with all accrued and unpaid interest thereon, immediately due and payable.
(b) The Assignee may enter upon and take possession of the Premises, either in person or by agent or by a receiver appointed by a court, and have, hold, manage, lease and operate the same on such terms and for such period of time as the Assignee may deem necessary or proper, with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to the Assignee, to make, enforce, modify and accept the surrender of Leases, to obtain and evict tenants, to fix or modify rents, and to do any other act which the Assignee deems necessary or proper.
(c) The Assignee may either with or without taking possession of the Premises, demand, sue for, settle, compromise, collect, and give acquittances for all rents, issues, income and profits of and from the Premises and pursue all remedies for enforcement of the Leases and all the lessors rights therein and thereunder. This Assignment shall constitute an authorization and direction to the tenants under the Leases to pay all rents and other amounts payable under the Leases to the Assignee, without proof of default hereunder, upon receipt from the Assignee of written notice to thereafter pay all such rents and other amounts to the Assignee and to comply with any notice or demand by the Assignee for observance or performance of any of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the tenants thereunder, and the Assignor shall facilitate in all reasonable ways the Assignees collection of such rents, issues, income and profits, and upon request will execute written notices to the tenants under the Leases to thereafter pay all such rents and other amounts to the Assignee.
(d) The Assignee may make any payment or do any act required herein of the Assignor in such manner and to such extent as the Assignee may deem necessary, and any amount so paid by the Assignee shall become immediately due and payable by the Assignor with interest thereon until paid at the Default Rate and shall be secured by this Assignment.
8. Application of Funds . Except as otherwise provided in the Mortgage or by applicable law, all sums collected and received by the Assignee out of the rents, issues, income and profits of the Premises following the occurrence of any one or more Events of Default shall be applied in such order as the Assignee shall elect in its sole and absolute discretion.
9. Limitation of the Assignees Liability . The Assignee shall not be liable for any loss sustained by the Assignor resulting from the Assignees failure to let the Premises or from any other act or omission of the Assignee in managing, operating or maintaining the Premises following the occurrence of an Event of Default. The Assignee shall not be obligated to observe, perform or discharge, nor does the Assignee hereby undertake to observe, perform or discharge any covenant, term, condition or agreement contained in any Lease to be observed or performed by the lessor thereunder, or any obligation, duty or liability of the Assignor under or by reason of this Assignment. The Assignor shall and does hereby agree to indemnify, defend (using counsel satisfactory to the Assignee) and hold the Assignee harmless from and against any and all liability, loss or damage which the Assignee may incur under any Lease or under or by reason of this Assignment and of and from any and all claims and demands whatsoever which may be asserted against the Assignee by reason of any alleged obligation or undertaking on the Assignees part to observe or perform any of the covenants, terms, conditions and agreements contained in any Lease; provided, however, in no event shall the Assignor be liable for any liability, loss or damage which the Assignee incurs as a result of the Assignees gross negligence or willful misconduct. Should the Assignee incur any such liability, loss or damage under any Lease or under or by reason of this Assignment, or in the defense of any such claim or demand, the amount thereof, including costs, expenses and reasonable attorneys fees actually incurred, shall become immediately due and payable by the Assignor with interest thereon at the Default Rate and shall be secured by this Assignment. The indemnity provided in this Section shall be in addition to (but not in duplication of) any other indemnification provision contained in the Loan Agreement or any other Loan Document. This Assignment shall not operate to place responsibility upon the Assignee for the care, control, management or repair of the Premises or for the carrying out of any of the covenants, terms, conditions and agreements contained in any Lease, nor shall it operate to make the Assignee responsible or liable for any waste committed upon the Premises by any tenant, occupant or other party, or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, occupant, licensee, employee or stranger. Nothing set forth herein or in the Mortgage, and no exercise by the Assignee of any of the rights set forth herein or in the Mortgage shall constitute or be construed as constituting the Assignee a mortgagee in possession of the Premises, in the absence of the taking of actual possession of the Premises by the Assignee pursuant to the provisions hereof or of the Mortgage.
10. No Waiver . Nothing contained in this Assignment and no act done or omitted to be done by the Assignee pursuant to the rights and powers granted to it hereunder shall be deemed to be a waiver by the Assignee of its rights and remedies under any of the Loan Documents. This Assignment is made and accepted without prejudice to any of the rights and remedies of the Assignee under the terms and provisions of such instruments, and the Assignee may exercise any of its rights and remedies under the terms and provisions of such instruments either prior to, simultaneously with, or subsequent to any action taken by the Assignee hereunder. The Assignee may take or release any other security for the performance of the obligations secured hereby, may release any party primarily or secondarily liable therefor, and
may apply any other security held by it for the satisfaction of the obligations secured hereby without prejudice to any of the Assignees rights and powers hereunder.
11. Further Assurances . The Assignor shall execute or cause to be executed such additional instruments (including, but not limited to, general or specific assignments of such Leases as the Assignee may designate) and shall do or cause to be done such further acts, as the Assignee may request, in order to permit the Assignee to perfect, protect, preserve and maintain the assignment made to the Assignee by this Assignment.
12. Security Deposits . The Assignor acknowledges that the Assignee has not received for its own account any security deposited by any tenant pursuant to the terms of the Leases and that the Assignee assumes no responsibility or liability for any security so deposited.
13. Compliance with Law of State .
(a) If any provision in this Assignment shall be inconsistent with any provision of the applicable laws of the State in which the Premises are located, such laws shall take precedence over the provisions of this Assignment, but shall not invalidate or render unenforceable any other provision of this Assignment that can be construed in a manner consistent with such laws.
(b) If any provision of this Assignment shall grant to the Assignee any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default which are more limited than the powers, rights or remedies that would otherwise be vested in the Assignee under applicable laws of the State in which the Premises are located in the absence of said provision, the Assignee shall be vested with the powers, rights and remedies granted by such laws to the full extent permitted by law.
14. Severability . If any provision of this Assignment is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, the Assignee and the Assignor shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Assignment and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.
15. Incorporation of Sections 12.2 and 12.3 of Loan Agreement . The provisions of Sections 12.2 and 12.3 of the Loan Agreement are hereby incorporated into and made a part of this Assignment.
16. Successors and Assigns . This Assignment is binding upon the Assignor and its legal representatives, successors and assigns, and the rights, powers and remedies of the Assignee under this Assignment shall inure to the benefit of the Assignee and its successors and assigns.
17. Prior Agreements; No Reliance; Modifications . This Assignment shall represent the entire, integrated agreement between the parties hereto relating to the subject matter of this Assignment, and shall supersede all prior negotiations, representations or agreements pertaining thereto, either oral or written. The Assignor acknowledges it is executing this
Assignment without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein. This Assignment and any provision hereof shall not be modified, amended, waived or discharged in any manner other than by a written amendment executed by all parties to this Assignment.
18. Duration . This Assignment shall become null and void at such time as the Assignor shall have paid the principal sum of the Note, together with all interest thereon, and shall have fully paid and performed all of the other Obligations secured hereby and by the other Loan Documents. The recording of a satisfaction of the Mortgage by the Assignee shall terminate this Assignment.
19. Governing Law . This Assignment shall be governed by and construed in accordance with the laws of the State of Arkansas.
20. Notices . All notices, demands, requests and other correspondence which are required or permitted to be given hereunder shall be deemed sufficiently given when delivered or mailed in the manner and to the addresses of the Assignor and the Assignee, as the case may be, as specified in the Mortgage.
21. Captions . The captions and headings of various Sections of this Assignment and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
22. Gender and Number . Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.
23. Execution of Counterparts . This Assignment may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Assignment by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Assignment maintained by the Assignee shall be deemed to be an original.
24. Construction . Each party to this Assignment and legal counsel to each party have participated in the drafting of this Assignment, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Assignment.
25. Litigations Provisions .
(a) Consent to Jurisdiction . THE ASSIGNOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE
LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . THE ASSIGNOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST THE ASSIGNOR IN ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. THE ASSIGNOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) No Proceedings in Other Jurisdictions . THE ASSIGNOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST THE ASSIGNEE RELATING IN ANY MANNER TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR IF A LEGAL PROCEEDING IS COMMENCED BY THE ASSIGNEE AGAINST THE ASSIGNOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . THE ASSIGNOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
26, References to Documents . Unless expressly provided to the contrary or the context otherwise requires, all references in this Assignment to any other document, instrument or agreement shall be deemed to refer to such document, instrument or agreement as it may be amended, modified, supplemented, renewed, extended or restated from time to time; provided, however, that nothing in this Section shall operate or be construed to authorize any such amendment, modification, supplement, renewal, extension or restatement that is prohibited or restricted under any other provision of the Loan Documents.
[EXECUTION CONTAINED ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF , Assignor has executed and delivered this Assignment as of the day and year first above written.
On this day, before me, the undersigned, a Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within named Christopher F. Brogdon, to me personally well known, who stated that he is the Manager of Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, and was duly authorized in that capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 21st day of December, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
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My Commission Expires: |
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Jan. 30, 2016 |
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(S E A L) |
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Exhibit 10.266
Execution Version
SPACE ABOVE THIS LINE FOR RECORDERS USE ONLY
PREPARED BY
AND WHEN RECORDED RETURN TO:
Teresa B. Pernini, Esq.
Bryan Cave LLP
One Atlantic Center
Fourteenth Floor
1201 W. Peachtree Street, NW
Atlanta, Georgia 30309-3488
ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
(Woodland Hills Healthcare and Rehabilitation)
THIS ABSOLUTE ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to as this Assignment ), is made and entered into as of the 28th day of December 2012, by WOODLAND HILLS HC PROPERTY HOLDINGS, LLC , a Georgia limited liability company, whose address is whose address is 1145 Hembree Road, Roswell, Georgia 30076 ( Assignor ), to KEYBANK NATIONAL ASSOCIATION , a national banking association ( Lender ), whose address is 4910 Tiedeman Road, 3 rd Floor, Brooklyn, Ohio 44144.
W I T N E S S E T H:
A. On or about the date hereof, Assignor, Woodland Hills HC Nursing, LLC ( Woodland Hills Tenant ), APH&R Property Holdings, LLC ( Abington PropCo ), APH&R Nursing, LLC, a Georgia limited liability company ( Abington Tenant ), Northridge HC&R Property Holdings, LLC ( Northridge PropCo ) and Northridge HC&R Nursing, LLC, ( Northridge Tenant ), each a Georgia limited liability company (Assignor, Woodland Hills Tenant, Abington PropCo, Abington Tenant, Northridge PropCo and Northridge Tenant referred to herein collectively as Borrowers ), and Lender entered into that certain Secured Loan Agreement dated as of the date hereof ( Loan Agreement ), whereby Lender agreed to make a secured term loan (the Loan ) available to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
B. In connection with the Loan, Borrowers have executed and delivered, jointly and severally, a promissory note of even date herewith (the Note ) payable to the order of Lender in the principal amount of the Loan.
C. A condition precedent to the Assignees extension of the Loan to the Assignor, is the execution and delivery by the Assignor of this Assignment.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto mutually agree as follows:
1. Definitions . All capitalized terms which are not defined herein shall have the meanings ascribed thereto in the Loan Agreement.
2. Absolute and Present Assignment . The Assignor hereby bargains, grants, sells, transfers, conveys, sets over and assigns to the Assignee, it successors and assigns, as an Absolute Assignment and not merely one for security, all of the right, title and interest of the Assignor in and to (i) all of the rents, revenues, issues, profits, proceeds, receipts, income, accounts and other receivables arising out of or from the land legally described in Exhibit A attached hereto and made a part hereof and all buildings and other improvements located thereon (said land and improvements being hereinafter referred to collectively as the Premises ), including, without limitation, lease termination fees, purchase option fees and other fees and expenses payable under any lease; (ii) all leases and subleases (collectively, Leases ), now or hereafter existing, of all or any part of the Premises, including but not limited to that certain Facility Lease dated April 1, 2012, between Assignor and Woodland Hills Tenant, together with all guaranties of any of such Leases and all security deposits delivered by tenants thereunder, whether in cash or letter of credit; (iii) all rights and claims for damage against tenants arising out of defaults under the Leases, including rights to termination fees and compensation with respect to rejected Leases pursuant to Section 365(a) of the Federal Bankruptcy Code or any replacement Section thereof; and (iv) all tenant improvements and fixtures located on the Premises. This Assignment is an absolute perfected and present transfer and assignment of the foregoing interests to the Assignee, and not an assignment for security purposes only, which secures:
(a) Payment by the Borrowers when due of (i) the indebtedness evidenced by the Note and any and all renewals, extensions, replacements, amendments, modifications and refinancings thereof; (ii) any and all other Obligations (as defined in the Loan Agreement) that may be due and owing to the Assignee by the Borrowers under or with respect to the Loan Documents (as defined in the Loan Agreement); and (iii) all costs and expenses paid or incurred by the Assignee in enforcing its rights hereunder, including without limitation, court costs and reasonable attorneys fees actually incurred; and
(b) Observance and performance by the Borrowers of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Borrowers or any other obligor to or benefiting the Assignee which are evidenced or secured by or otherwise provided in the Note, this Assignment or any of the other Loan Documents.
3. Representations and Warranties of Assignor . The Assignor represents and warrants to the Assignee that:
(a) This Assignment, as executed by the Assignor, constitutes the legal and binding obligation of the Assignor enforceable in accordance with its terms and provisions;
(b) The Assignor is the lessor under all Leases;
(c) There is no other existing assignment of the Assignors entire or any part of its interest in or to any of the Leases, or any of the rents, issues, income or profits assigned hereunder, nor has the Assignor entered into any agreement to subordinate any of the Leases or the Assignors right to receive any of the rents, issues, income or profits assigned hereunder;
(d) The Assignor has not executed any instrument or performed any act which may prevent the Assignee from operating under any of the terms and provisions hereof or which would limit the Assignee in such operation; and
(e) There are no defaults by the landlord and, to the Assignors knowledge, there are no material defaults by tenants under any Leases.
4. Covenants of the Assignor . The Assignor covenants and agrees that so long as this Assignment shall be in effect:
(a) The Assignor shall not enter into any additional Leases, other than Leases which are entered into in the ordinary course of the Assignors business with individual patients under patient agreements;
(b) The Assignor shall observe and perform all of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the lessor thereunder, and the Assignor shall not do or suffer to be done anything to impair the security thereof. The Assignor shall not (i) release the liability of any tenant under any Lease, (ii) consent to any tenants withholding of rent or making monetary advances and off setting the same against future rentals, (iii) consent to any tenants claim of a total or partial eviction, (iv) consent to a tenant termination or cancellation of any Lease, except as specifically provided therein, or (v) enter into any oral leases with respect to all or any portion of the Premises;
(c) The Assignor shall not collect any of the rents, issues, income or profits assigned hereunder more than 30 days in advance of the time when the same shall become due, except for security or similar deposits;
(d) The Assignor shall not make any other assignment of its entire or any part of its interest in or to any or all Leases, or any or all rents, issues, income or profits assigned hereunder, except as specifically permitted by the Loan Documents;
(e) The Assignor shall not modify the terms and provisions of any Lease, nor shall the Assignor give any consent (including, but not limited to, any consent to any assignment of, or subletting under, any Lease, except as expressly permitted thereby) or approval required or permitted by such terms and provisions, or cancel or terminate any Lease, without the Assignees prior written consent;
(f) The Assignor shall not accept a surrender of any Lease or convey or transfer, or suffer or permit a conveyance or transfer, of the premises demised under any Lease or of any interest in any Lease so as to effect, directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of, any tenant thereunder; any termination fees payable under a Lease for the early termination or surrender thereof shall be paid jointly to the Assignor and the Assignee;
(g) The Assignor shall not alter, modify or change the terms of any guaranty of any Lease, or cancel or terminate any such guaranty or do or permit to be done anything which would terminate any such guaranty as a matter of law;
(h) The Assignor shall not waive or excuse the obligation to pay rent under any Lease;
(i) The Assignor shall, at its sole cost and expense, appear in and defend any and all actions and proceedings arising under, relating to or in any manner connected with any Lease or the obligations, duties or liabilities of the lessor or any tenant or guarantor thereunder, and shall pay all costs and expenses of the Assignee, including court costs and reasonable attorneys fees actually incurred, in any such action or proceeding in which the Assignee may appear;
(j) The Assignor shall give prompt notice to the Assignee of any notice of any default by the lessor under any Lease received from any tenant or guarantor thereunder;
(k) The Assignor shall enforce the observance and performance of each covenant, term, condition and agreement contained in each Lease to be observed and performed by the tenants and guarantors thereunder and shall immediately notify the Assignee of any material breach by the tenant or guarantor under any such Lease;
(l) The Assignor shall not permit any of the Leases to become subordinate to any lien or liens other than liens securing the indebtedness secured hereby or liens for general real estate taxes not delinquent;
(m) The Assignor shall not execute hereafter any Lease unless there shall be included therein a provision providing that the tenant thereunder acknowledges that such Lease has been assigned pursuant to this Assignment and agrees not to look to the Assignee as mortgagee, mortgagee in possession or successor in title to the Premises for accountability for any security deposit required by lessor under such Lease unless such sums have actually been received in cash by the Assignee as security for tenants performance under such Lease; and
(n) If any tenant under any Lease is or becomes the subject of any proceeding under the Federal Bankruptcy Code, as amended from time to time, or any other federal, state or local statute which provides for the possible termination or rejection of the Leases assigned hereby, the Assignor covenants and agrees that if any such Lease is so terminated or rejected, no settlement for damages shall be made without the prior written consent of the Assignee, and any check in payment of damages for termination or rejection of any such Lease will be made payable both to the Assignor and the Assignee. The Assignor hereby assigns any such payment to the Assignee and further covenants and agrees that upon the request of the Assignee, it will duly endorse to the order of the Assignee any such check, the proceeds of which shall be applied in accordance with the provisions of Section 8 below.
5. Rights Prior to Default . Unless or until an Event of Default (as defined in Section 6 hereof) shall occur and be continuing, the Assignor shall have the right and license to collect, at the time (but in no event more than 30 days in advance) provided for the payment thereof, all rents, issues, income and profits assigned hereunder, and to retain, use and enjoy the same. Upon the occurrence of an Event of Default, the Assignors right and license to collect such rents, issues, income and profits shall immediately terminate without further notice thereof to the Assignor. The Assignee shall have the right to notify the tenants under the Leases of the existence of this Assignment at any time.
6. Events of Default . Each of the following shall constitute an Event of Default under this Assignment:
(a) The Assignor fails to pay any amount payable under this Assignment when any such payment is due in accordance with the terms hereof.
(b) The Assignor fails to perform or observe, or to cause to be performed or observed, any other obligation, covenant, term, agreement or provision required to be performed or observed by the Assignor under this Assignment; provided, however, that:
(i) If such failure can be cured solely by the payment of money, such failure shall not constitute an Event of Default unless it shall continue for a period of five days after written notice to the Assignor;
(ii) If such failure cannot be cured solely by the payment of money and does not pose an emergency or dangerous condition or a material threat to the security for the Loan, such failure shall not constitute an Event of Default unless it shall continue for a period of 30 days after written notice to the Assignor; and
(iii) If a failure described in (ii) above is of such a nature that it cannot reasonably be cured within such 30-day period, and if such failure is susceptible of cure, it shall not constitute an Event of Default if corrective action is instituted by the Assignor within such 30-day period and is diligently pursued and such failure is cured within 60 days after the occurrence of such failure.
(c) The occurrence of an Event of Default under the Loan Agreement or any of the other Loan Documents.
7. Rights and Remedies Upon Default . At any time upon or following the occurrence and during the continuance of any Event of Default, the Assignee, at its option, may exercise any one or more of the following rights and remedies without any obligation to do so, without in any way waiving such Event of Default, without further notice or demand on the Assignor, without regard to the adequacy of the security for the obligations secured hereby, without releasing the Assignor or any guarantor of the Note from any obligation, and with or without bringing any action or proceeding to foreclose the Mortgage or any other lien or security interest granted by the Loan Documents:
(a) The Assignee may declare the unpaid balance of the principal sum of the Note, together with all accrued and unpaid interest thereon, immediately due and payable.
(b) The Assignee may enter upon and take possession of the Premises, either in person or by agent or by a receiver appointed by a court, and have, hold, manage, lease and operate the same on such terms and for such period of time as the Assignee may deem necessary or proper, with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to the Assignee, to make, enforce, modify and accept the surrender of Leases, to obtain and evict tenants, to fix or modify rents, and to do any other act which the Assignee deems necessary or proper.
(c) The Assignee may either with or without taking possession of the Premises, demand, sue for, settle, compromise, collect, and give acquittances for all rents, issues, income and profits of and from the Premises and pursue all remedies for enforcement of the Leases and all the lessors rights therein and thereunder. This Assignment shall constitute an authorization and direction to the tenants under the Leases to pay all rents and other amounts payable under the Leases to the Assignee, without proof of default hereunder, upon receipt from the Assignee of written notice to thereafter pay all such rents and other amounts to the Assignee and to comply with any notice or demand by the Assignee for observance or performance of any of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the tenants thereunder, and the Assignor shall facilitate in all reasonable ways the Assignees collection of such rents, issues, income and profits, and upon request will execute written notices to the tenants under the Leases to thereafter pay all such rents and other amounts to the Assignee.
(d) The Assignee may make any payment or do any act required herein of the Assignor in such manner and to such extent as the Assignee may deem necessary, and any amount so paid by the Assignee shall become immediately due and payable by the Assignor with interest thereon until paid at the Default Rate and shall be secured by this Assignment.
8. Application of Funds . Except as otherwise provided in the Mortgage or by applicable law, all sums collected and received by the Assignee out of the rents, issues, income and profits of the Premises following the occurrence of any one or more Events of Default shall be applied in such order as the Assignee shall elect in its sole and absolute discretion.
9. Limitation of the Assignees Liability . The Assignee shall not be liable for any loss sustained by the Assignor resulting from the Assignees failure to let the Premises or from any other act or omission of the Assignee in managing, operating or maintaining the Premises following the occurrence of an Event of Default. The Assignee shall not be obligated to observe, perform or discharge, nor does the Assignee hereby undertake to observe, perform or discharge any covenant, term, condition or agreement contained in any Lease to be observed or performed by the lessor thereunder, or any obligation, duty or liability of the Assignor under or by reason of this Assignment. The Assignor shall and does hereby agree to indemnify, defend (using counsel satisfactory to the Assignee) and hold the Assignee harmless from and against any and all liability, loss or damage which the Assignee may incur under any Lease or under or by reason of this Assignment and of and from any and all claims and demands whatsoever which may be asserted against the Assignee by reason of any alleged obligation or undertaking on the Assignees part to observe or perform any of the covenants, terms, conditions and agreements contained in any Lease; provided, however, in no event shall the Assignor be liable for any liability, loss or damage which the Assignee incurs as a result of the Assignees gross negligence or willful misconduct. Should the Assignee incur any such liability, loss or damage under any Lease or under or by reason of this Assignment, or in the defense of any such claim or demand, the amount thereof, including costs, expenses and reasonable attorneys fees actually incurred, shall become immediately due and payable by the Assignor with interest thereon at the Default Rate and shall be secured by this Assignment. The indemnity provided in this Section shall be in addition to (but not in duplication of) any other indemnification provision contained in the Loan Agreement or any other Loan Document. This Assignment shall not operate to place responsibility upon the Assignee for the care, control, management or repair of the Premises or for the carrying out of any of the covenants, terms, conditions and agreements contained in any Lease, nor shall it operate to make the Assignee responsible or liable for any waste committed upon the Premises by any tenant, occupant or other party, or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, occupant, licensee, employee or stranger. Nothing set forth herein or in the Mortgage, and no exercise by the Assignee of any of the rights set forth herein or in the Mortgage shall constitute or be construed as constituting the Assignee a mortgagee in possession of the Premises, in the absence of the taking of actual possession of the Premises by the Assignee pursuant to the provisions hereof or of the Mortgage.
10. No Waiver . Nothing contained in this Assignment and no act done or omitted to be done by the Assignee pursuant to the rights and powers granted to it hereunder shall be deemed to be a waiver by the Assignee of its rights and remedies under any of the Loan Documents. This Assignment is made and accepted without prejudice to any of the rights and remedies of the Assignee under the terms and provisions of such instruments, and the Assignee may exercise any of its rights and remedies under the terms and provisions of such instruments either prior to, simultaneously with, or subsequent to any action taken by the Assignee hereunder. The Assignee may take or release any other security for the performance of the obligations secured hereby, may release any party primarily or secondarily liable therefor, and may apply any other security held by it for the satisfaction of the obligations secured hereby without prejudice to any of the Assignees rights and powers hereunder.
11. Further Assurances . The Assignor shall execute or cause to be executed such additional instruments (including, but not limited to, general or specific assignments of such
Leases as the Assignee may designate) and shall do or cause to be done such further acts, as the Assignee may request, in order to permit the Assignee to perfect, protect, preserve and maintain the assignment made to the Assignee by this Assignment.
12. Security Deposits . The Assignor acknowledges that the Assignee has not received for its own account any security deposited by any tenant pursuant to the terms of the Leases and that the Assignee assumes no responsibility or liability for any security so deposited.
13. Compliance with Law of State .
(a) If any provision in this Assignment shall be inconsistent with any provision of the applicable laws of the State in which the Premises are located, such laws shall take precedence over the provisions of this Assignment, but shall not invalidate or render unenforceable any other provision of this Assignment that can be construed in a manner consistent with such laws.
(b) If any provision of this Assignment shall grant to the Assignee any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default which are more limited than the powers, rights or remedies that would otherwise be vested in the Assignee under applicable laws of the State in which the Premises are located in the absence of said provision, the Assignee shall be vested with the powers, rights and remedies granted by such laws to the full extent permitted by law.
14. Severability . If any provision of this Assignment is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, the Assignee and the Assignor shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Assignment and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.
15. Incorporation of Sections 12.2 and 12.3 of Loan Agreement . The provisions of Sections 12.2 and 12.3 of the Loan Agreement are hereby incorporated into and made a part of this Assignment.
16. Successors and Assigns . This Assignment is binding upon the Assignor and its legal representatives, successors and assigns, and the rights, powers and remedies of the Assignee under this Assignment shall inure to the benefit of the Assignee and its successors and assigns.
17. Prior Agreements; No Reliance; Modifications . This Assignment shall represent the entire, integrated agreement between the parties hereto relating to the subject matter of this Assignment, and shall supersede all prior negotiations, representations or agreements pertaining thereto, either oral or written. The Assignor acknowledges it is executing this Assignment without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein. This Assignment and any provision hereof shall not be modified, amended, waived or discharged in any manner other than by a written amendment executed by all parties to this Assignment.
18. Duration . This Assignment shall become null and void at such time as the Assignor shall have paid the principal sum of the Note, together with all interest thereon, and shall have fully paid and performed all of the other Obligations secured hereby and by the other Loan Documents. The recording of a satisfaction of the Mortgage by the Assignee shall terminate this Assignment.
19. Governing Law . This Assignment shall be governed by and construed in accordance with the laws of the State of Arkansas.
20. Notices . All notices, demands, requests and other correspondence which are required or permitted to be given hereunder shall be deemed sufficiently given when delivered or mailed in the manner and to the addresses of the Assignor and the Assignee, as the case may be, as specified in the Mortgage.
21. Captions . The captions and headings of various Sections of this Assignment and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
22. Gender and Number . Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.
23. Execution of Counterparts . This Assignment may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Assignment by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Assignment maintained by the Assignee shall be deemed to be an original.
24. Construction . Each party to this Assignment and legal counsel to each party have participated in the drafting of this Assignment, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Assignment.
25. Litigations Provisions .
(a) Consent to Jurisdiction . THE ASSIGNOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . THE ASSIGNOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST THE ASSIGNOR IN ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. THE ASSIGNOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) No Proceedings in Other Jurisdictions . THE ASSIGNOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST THE ASSIGNEE RELATING IN ANY MANNER TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR IF A LEGAL PROCEEDING IS COMMENCED BY THE ASSIGNEE AGAINST THE ASSIGNOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . THE ASSIGNOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
26, References to Documents . Unless expressly provided to the contrary or the context otherwise requires, all references in this Assignment to any other document, instrument or agreement shall be deemed to refer to such document, instrument or agreement as it may be amended, modified, supplemented, renewed, extended or restated from time to time; provided, however, that nothing in this Section shall operate or be construed to authorize any such amendment, modification, supplement, renewal, extension or restatement that is prohibited or restricted under any other provision of the Loan Documents.
[EXECUTION CONTAINED ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF , Assignor has executed and delivered this Assignment as of the day and year first above written.
On this day, before me, the undersigned, a Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within named Christopher F. Brogdon, to me personally well known, who stated that he is the Manager of Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company, and was duly authorized in that capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 21st day of December, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
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My Commission Expires: |
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Jan. 30, 2016 |
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Absolute Assignment of Lease and Rents - AdCare
Exhibit 10.267
EXECUTION VERSION
SPACE ABOVE THIS LINE FOR RECORDERS USE ONLY
PREPARED BY
AND WHEN RECORDED RETURN TO:
Teresa B. Pernini, Esq.
Bryan Cave LLP
One Atlantic Center
Fourteenth Floor
1201 W. Peachtree Street, NW
Atlanta, Georgia 30309-3488
ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
(Abington Place Health and Rehab Center)
THIS ABSOLUTE ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to as this Assignment ), is made and entered into as of the 28th day of December 2012, by APH&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company, whose address is whose address is 1145 Hembree Road, Roswell, Georgia 30076 ( Assignor ), to KEYBANK NATIONAL ASSOCIATION , a national banking association ( Lender ), whose address is 4910 Tiedeman Road, 3 rd Floor, Brooklyn, Ohio 44144.
W I T N E S S E T H:
A. On or about the date hereof, Assignor, APH&R Nursing, LLC ( Abington Tenant ), Woodland Hills HC Property Holdings, LLC ( Woodland PropCo ), Woodland Hills HC Nursing, LLC, a Georgia limited liability company ( Woodland Hills Tenant ), Northridge HC&R Property Holdings, LLC ( Northridge PropCo ) and Northridge HC&R Nursing, LLC, ( Northridge Tenant ), each a Georgia limited liability company (Assignor, Woodland Hills Tenant, Woodland Hills PropCo, Abington Tenant, Northridge PropCo and Northridge Tenant referred to herein collectively as Borrowers ), and Lender entered into that certain Secured Loan Agreement dated as of the date hereof ( Loan Agreement ), whereby Lender agreed to make a secured term loan (the Loan ) available to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
B. In connection with the Loan, Borrowers have executed and delivered, jointly and severally, a promissory note of even date herewith (the Note ) payable to the order of Lender in the principal amount of the Loan.
C. A condition precedent to the Assignees extension of the Loan to the Assignor, is the execution and delivery by the Assignor of this Assignment.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto mutually agree as follows:
1. Definitions . All capitalized terms which are not defined herein shall have the meanings ascribed thereto in the Loan Agreement.
2. Absolute and Present Assignment . The Assignor hereby bargains, grants, sells, transfers, conveys, sets over and assigns to the Assignee, it successors and assigns, as an Absolute Assignment and not merely one for security, all of the right, title and interest of the Assignor in and to (i) all of the rents, revenues, issues, profits, proceeds, receipts, income, accounts and other receivables arising out of or from the land legally described in Exhibit A attached hereto and made a part hereof and all buildings and other improvements located thereon (said land and improvements being hereinafter referred to collectively as the Premises ), including, without limitation, lease termination fees, purchase option fees and other fees and expenses payable under any lease; (ii) all leases and subleases (collectively, Leases ), now or hereafter existing, of all or any part of the Premises, including but not limited to that certain Facility Lease dated June 1, 2012, between Assignor and Abington Tenant, together with all guaranties of any of such Leases and all security deposits delivered by tenants thereunder, whether in cash or letter of credit; (iii) all rights and claims for damage against tenants arising out of defaults under the Leases, including rights to termination fees and compensation with respect to rejected Leases pursuant to Section 365(a) of the Federal Bankruptcy Code or any replacement Section thereof; and (iv) all tenant improvements and fixtures located on the Premises. This Assignment is an absolute perfected and present transfer and assignment of the foregoing interests to the Assignee, and not an assignment for security purposes only, which secures:
(a) Payment by the Borrowers when due of (i) the indebtedness evidenced by the Note and any and all renewals, extensions, replacements, amendments, modifications and refinancings thereof; (ii) any and all other Obligations (as defined in the Loan Agreement) that may be due and owing to the Assignee by the Borrowers under or with respect to the Loan Documents (as defined in the Loan Agreement); and (iii) all costs and expenses paid or incurred by the Assignee in enforcing its rights hereunder, including without limitation, court costs and reasonable attorneys fees actually incurred; and
(b) Observance and performance by the Borrowers of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Borrowers or any other obligor to or benefiting the Assignee which are evidenced or
secured by or otherwise provided in the Note, this Assignment or any of the other Loan Documents.
3. Representations and Warranties of Assignor . The Assignor represents and warrants to the Assignee that:
(a) This Assignment, as executed by the Assignor, constitutes the legal and binding obligation of the Assignor enforceable in accordance with its terms and provisions;
(b) The Assignor is the lessor under all Leases;
(c) There is no other existing assignment of the Assignors entire or any part of its interest in or to any of the Leases, or any of the rents, issues, income or profits assigned hereunder, nor has the Assignor entered into any agreement to subordinate any of the Leases or the Assignors right to receive any of the rents, issues, income or profits assigned hereunder;
(d) The Assignor has not executed any instrument or performed any act which may prevent the Assignee from operating under any of the terms and provisions hereof or which would limit the Assignee in such operation; and
(e) There are no defaults by the landlord and, to the Assignors knowledge, there are no material defaults by tenants under any Leases.
4. Covenants of the Assignor . The Assignor covenants and agrees that so long as this Assignment shall be in effect:
(a) The Assignor shall not enter into any additional Leases, other than Leases which are entered into in the ordinary course of the Assignors business with individual patients under patient agreements;
(b) The Assignor shall observe and perform all of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the lessor thereunder, and the Assignor shall not do or suffer to be done anything to impair the security thereof. The Assignor shall not (i) release the liability of any tenant under any Lease, (ii) consent to any tenants withholding of rent or making monetary advances and off setting the same against future rentals, (iii) consent to any tenants claim of a total or partial eviction, (iv) consent to a tenant termination or cancellation of any Lease, except as specifically provided therein, or (v) enter into any oral leases with respect to all or any portion of the Premises;
(c) The Assignor shall not collect any of the rents, issues, income or profits assigned hereunder more than 30 days in advance of the time when the same shall become due, except for security or similar deposits;
(d) The Assignor shall not make any other assignment of its entire or any part of its interest in or to any or all Leases, or any or all rents, issues, income or profits assigned hereunder, except as specifically permitted by the Loan Documents;
(e) The Assignor shall not modify the terms and provisions of any Lease, nor shall the Assignor give any consent (including, but not limited to, any consent to any assignment of, or subletting under, any Lease, except as expressly permitted thereby) or approval required or permitted by such terms and provisions, or cancel or terminate any Lease, without the Assignees prior written consent;
(f) The Assignor shall not accept a surrender of any Lease or convey or transfer, or suffer or permit a conveyance or transfer, of the premises demised under any Lease or of any interest in any Lease so as to effect, directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of, any tenant thereunder; any termination fees payable under a Lease for the early termination or surrender thereof shall be paid jointly to the Assignor and the Assignee;
(g) The Assignor shall not alter, modify or change the terms of any guaranty of any Lease, or cancel or terminate any such guaranty or do or permit to be done anything which would terminate any such guaranty as a matter of law;
(h) The Assignor shall not waive or excuse the obligation to pay rent under any Lease;
(i) The Assignor shall, at its sole cost and expense, appear in and defend any and all actions and proceedings arising under, relating to or in any manner connected with any Lease or the obligations, duties or liabilities of the lessor or any tenant or guarantor thereunder, and shall pay all costs and expenses of the Assignee, including court costs and reasonable attorneys fees actually incurred, in any such action or proceeding in which the Assignee may appear;
(j) The Assignor shall give prompt notice to the Assignee of any notice of any default by the lessor under any Lease received from any tenant or guarantor thereunder;
(k) The Assignor shall enforce the observance and performance of each covenant, term, condition and agreement contained in each Lease to be observed and performed by the tenants and guarantors thereunder and shall immediately notify the Assignee of any material breach by the tenant or guarantor under any such Lease;
(l) The Assignor shall not permit any of the Leases to become subordinate to any lien or liens other than liens securing the indebtedness secured hereby or liens for general real estate taxes not delinquent;
(m) The Assignor shall not execute hereafter any Lease unless there shall be included therein a provision providing that the tenant thereunder acknowledges that such Lease has been assigned pursuant to this Assignment and agrees not to look to the
Assignee as mortgagee, mortgagee in possession or successor in title to the Premises for accountability for any security deposit required by lessor under such Lease unless such sums have actually been received in cash by the Assignee as security for tenants performance under such Lease; and
(n) If any tenant under any Lease is or becomes the subject of any proceeding under the Federal Bankruptcy Code, as amended from time to time, or any other federal, state or local statute which provides for the possible termination or rejection of the Leases assigned hereby, the Assignor covenants and agrees that if any such Lease is so terminated or rejected, no settlement for damages shall be made without the prior written consent of the Assignee, and any check in payment of damages for termination or rejection of any such Lease will be made payable both to the Assignor and the Assignee. The Assignor hereby assigns any such payment to the Assignee and further covenants and agrees that upon the request of the Assignee, it will duly endorse to the order of the Assignee any such check, the proceeds of which shall be applied in accordance with the provisions of Section 8 below.
5. Rights Prior to Default . Unless or until an Event of Default (as defined in Section 6 hereof) shall occur and be continuing, the Assignor shall have the right and license to collect, at the time (but in no event more than 30 days in advance) provided for the payment thereof, all rents, issues, income and profits assigned hereunder, and to retain, use and enjoy the same. Upon the occurrence of an Event of Default, the Assignors right and license to collect such rents, issues, income and profits shall immediately terminate without further notice thereof to the Assignor. The Assignee shall have the right to notify the tenants under the Leases of the existence of this Assignment at any time.
6. Events of Default . Each of the following shall constitute an Event of Default under this Assignment:
(a) The Assignor fails to pay any amount payable under this Assignment when any such payment is due in accordance with the terms hereof.
(b) The Assignor fails to perform or observe, or to cause to be performed or observed, any other obligation, covenant, term, agreement or provision required to be performed or observed by the Assignor under this Assignment; provided, however, that:
(i) If such failure can be cured solely by the payment of money, such failure shall not constitute an Event of Default unless it shall continue for a period of five days after written notice to the Assignor;
(ii) If such failure cannot be cured solely by the payment of money and does not pose an emergency or dangerous condition or a material threat to the security for the Loan, such failure shall not constitute an Event of Default unless it shall continue for a period of 30 days after written notice to the Assignor; and
(iii) If a failure described in (ii) above is of such a nature that it cannot reasonably be cured within such 30-day period, and if such failure is susceptible of cure, it shall not constitute an Event of Default if corrective action is instituted
by the Assignor within such 30-day period and is diligently pursued and such failure is cured within 60 days after the occurrence of such failure.
(c) The occurrence of an Event of Default under the Loan Agreement or any of the other Loan Documents.
7. Rights and Remedies Upon Default . At any time upon or following the occurrence and during the continuance of any Event of Default, the Assignee, at its option, may exercise any one or more of the following rights and remedies without any obligation to do so, without in any way waiving such Event of Default, without further notice or demand on the Assignor, without regard to the adequacy of the security for the obligations secured hereby, without releasing the Assignor or any guarantor of the Note from any obligation, and with or without bringing any action or proceeding to foreclose the Mortgage or any other lien or security interest granted by the Loan Documents:
(a) The Assignee may declare the unpaid balance of the principal sum of the Note, together with all accrued and unpaid interest thereon, immediately due and payable.
(b) The Assignee may enter upon and take possession of the Premises, either in person or by agent or by a receiver appointed by a court, and have, hold, manage, lease and operate the same on such terms and for such period of time as the Assignee may deem necessary or proper, with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to the Assignee, to make, enforce, modify and accept the surrender of Leases, to obtain and evict tenants, to fix or modify rents, and to do any other act which the Assignee deems necessary or proper.
(c) The Assignee may either with or without taking possession of the Premises, demand, sue for, settle, compromise, collect, and give acquittances for all rents, issues, income and profits of and from the Premises and pursue all remedies for enforcement of the Leases and all the lessors rights therein and thereunder. This Assignment shall constitute an authorization and direction to the tenants under the Leases to pay all rents and other amounts payable under the Leases to the Assignee, without proof of default hereunder, upon receipt from the Assignee of written notice to thereafter pay all such rents and other amounts to the Assignee and to comply with any notice or demand by the Assignee for observance or performance of any of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the tenants thereunder, and the Assignor shall facilitate in all reasonable ways the Assignees collection of such rents, issues, income and profits, and upon request will execute written notices to the tenants under the Leases to thereafter pay all such rents and other amounts to the Assignee.
(d) The Assignee may make any payment or do any act required herein of the Assignor in such manner and to such extent as the Assignee may deem necessary, and any amount so paid by the Assignee shall become immediately due and payable by the Assignor with interest thereon until paid at the Default Rate and shall be secured by this Assignment.
8. Application of Funds . Except as otherwise provided in the Mortgage or by applicable law, all sums collected and received by the Assignee out of the rents, issues, income and profits of the Premises following the occurrence of any one or more Events of Default shall be applied in such order as the Assignee shall elect in its sole and absolute discretion.
9. Limitation of the Assignees Liability . The Assignee shall not be liable for any loss sustained by the Assignor resulting from the Assignees failure to let the Premises or from any other act or omission of the Assignee in managing, operating or maintaining the Premises following the occurrence of an Event of Default. The Assignee shall not be obligated to observe, perform or discharge, nor does the Assignee hereby undertake to observe, perform or discharge any covenant, term, condition or agreement contained in any Lease to be observed or performed by the lessor thereunder, or any obligation, duty or liability of the Assignor under or by reason of this Assignment. The Assignor shall and does hereby agree to indemnify, defend (using counsel satisfactory to the Assignee) and hold the Assignee harmless from and against any and all liability, loss or damage which the Assignee may incur under any Lease or under or by reason of this Assignment and of and from any and all claims and demands whatsoever which may be asserted against the Assignee by reason of any alleged obligation or undertaking on the Assignees part to observe or perform any of the covenants, terms, conditions and agreements contained in any Lease; provided, however, in no event shall the Assignor be liable for any liability, loss or damage which the Assignee incurs as a result of the Assignees gross negligence or willful misconduct. Should the Assignee incur any such liability, loss or damage under any Lease or under or by reason of this Assignment, or in the defense of any such claim or demand, the amount thereof, including costs, expenses and reasonable attorneys fees actually incurred, shall become immediately due and payable by the Assignor with interest thereon at the Default Rate and shall be secured by this Assignment. The indemnity provided in this Section shall be in addition to (but not in duplication of) any other indemnification provision contained in the Loan Agreement or any other Loan Document. This Assignment shall not operate to place responsibility upon the Assignee for the care, control, management or repair of the Premises or for the carrying out of any of the covenants, terms, conditions and agreements contained in any Lease, nor shall it operate to make the Assignee responsible or liable for any waste committed upon the Premises by any tenant, occupant or other party, or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, occupant, licensee, employee or stranger. Nothing set forth herein or in the Mortgage, and no exercise by the Assignee of any of the rights set forth herein or in the Mortgage shall constitute or be construed as constituting the Assignee a mortgagee in possession of the Premises, in the absence of the taking of actual possession of the Premises by the Assignee pursuant to the provisions hereof or of the Mortgage.
10. No Waiver . Nothing contained in this Assignment and no act done or omitted to be done by the Assignee pursuant to the rights and powers granted to it hereunder shall be deemed to be a waiver by the Assignee of its rights and remedies under any of the Loan Documents. This Assignment is made and accepted without prejudice to any of the rights and remedies of the Assignee under the terms and provisions of such instruments, and the Assignee may exercise any of its rights and remedies under the terms and provisions of such instruments either prior to, simultaneously with, or subsequent to any action taken by the Assignee hereunder. The Assignee may take or release any other security for the performance of the obligations secured hereby, may release any party primarily or secondarily liable therefor, and
may apply any other security held by it for the satisfaction of the obligations secured hereby without prejudice to any of the Assignees rights and powers hereunder.
11. Further Assurances . The Assignor shall execute or cause to be executed such additional instruments (including, but not limited to, general or specific assignments of such Leases as the Assignee may designate) and shall do or cause to be done such further acts, as the Assignee may request, in order to permit the Assignee to perfect, protect, preserve and maintain the assignment made to the Assignee by this Assignment.
12. Security Deposits . The Assignor acknowledges that the Assignee has not received for its own account any security deposited by any tenant pursuant to the terms of the Leases and that the Assignee assumes no responsibility or liability for any security so deposited.
13. Compliance with Law of State .
(a) If any provision in this Assignment shall be inconsistent with any provision of the applicable laws of the State in which the Premises are located, such laws shall take precedence over the provisions of this Assignment, but shall not invalidate or render unenforceable any other provision of this Assignment that can be construed in a manner consistent with such laws.
(b) If any provision of this Assignment shall grant to the Assignee any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default which are more limited than the powers, rights or remedies that would otherwise be vested in the Assignee under applicable laws of the State in which the Premises are located in the absence of said provision, the Assignee shall be vested with the powers, rights and remedies granted by such laws to the full extent permitted by law.
14. Severability . If any provision of this Assignment is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, the Assignee and the Assignor shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Assignment and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.
15. Incorporation of Sections 12.2 and 12.3 of Loan Agreement . The provisions of Sections 12.2 and 12.3 of the Loan Agreement are hereby incorporated into and made a part of this Assignment.
16. Successors and Assigns . This Assignment is binding upon the Assignor and its legal representatives, successors and assigns, and the rights, powers and remedies of the Assignee under this Assignment shall inure to the benefit of the Assignee and its successors and assigns.
17. Prior Agreements; No Reliance; Modifications . This Assignment shall represent the entire, integrated agreement between the parties hereto relating to the subject matter of this Assignment, and shall supersede all prior negotiations, representations or agreements pertaining thereto, either oral or written. The Assignor acknowledges it is executing this
Assignment without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein. This Assignment and any provision hereof shall not be modified, amended, waived or discharged in any manner other than by a written amendment executed by all parties to this Assignment.
18. Duration . This Assignment shall become null and void at such time as the Assignor shall have paid the principal sum of the Note, together with all interest thereon, and shall have fully paid and performed all of the other Obligations secured hereby and by the other Loan Documents. The recording of a satisfaction of the Mortgage by the Assignee shall terminate this Assignment.
19. Governing Law . This Assignment shall be governed by and construed in accordance with the laws of the State of Arkansas.
20. Notices . All notices, demands, requests and other correspondence which are required or permitted to be given hereunder shall be deemed sufficiently given when delivered or mailed in the manner and to the addresses of the Assignor and the Assignee, as the case may be, as specified in the Mortgage.
21. Captions . The captions and headings of various Sections of this Assignment and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
22. Gender and Number . Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.
23. Execution of Counterparts . This Assignment may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Assignment by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Assignment maintained by the Assignee shall be deemed to be an original.
24. Construction . Each party to this Assignment and legal counsel to each party have participated in the drafting of this Assignment, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Assignment.
25. Litigations Provisions .
(a) Consent to Jurisdiction . THE ASSIGNOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE
LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . THE ASSIGNOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST THE ASSIGNOR IN ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. THE ASSIGNOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) No Proceedings in Other Jurisdictions . THE ASSIGNOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST THE ASSIGNEE RELATING IN ANY MANNER TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR IF A LEGAL PROCEEDING IS COMMENCED BY THE ASSIGNEE AGAINST THE ASSIGNOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . THE ASSIGNOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS ASSIGNMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
26, References to Documents . Unless expressly provided to the contrary or the context otherwise requires, all references in this Assignment to any other document, instrument or agreement shall be deemed to refer to such document, instrument or agreement as it may be amended, modified, supplemented, renewed, extended or restated from time to time; provided, however, that nothing in this Section shall operate or be construed to authorize any such amendment, modification, supplement, renewal, extension or restatement that is prohibited or restricted under any other provision of the Loan Documents.
[EXECUTION CONTAINED ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF , Assignor has executed and delivered this Assignment as of the day and year first above written.
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APH&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company |
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/s/ Christopher F. Brogdon |
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Christopher F. Brodgon |
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Manager |
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STATE OF GEORGIA |
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COUNTY OF FULTON |
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On this day, before me, the undersigned, a Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within named Christopher F. Brogdon, to me personally well known, who stated that he is the Manager of APH&R Property Holdings, LLC, a Georgia limited liability company, and was duly authorized in that capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 21st day of December, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
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My Commission Expires: |
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Jan. 30, 2016 |
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Exhibit 10.268
Execution Version
MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING
(ARKANSAS)
MADE BY
APH&R PROPERTY HOLDINGS, LLC
as Mortgagor
to and for the benefit of
KEYBANK NATIONAL ASSOCIATION
as Lender
Dated as of: December 28, 2012
PREPARED BY AND UPON RECORDATION RETURN TO:
Bryan Cave LLP
One Atlantic Center
1201 West Peachtree Street, NW
Fourteenth Floor
Atlanta, Georgia 30309
Attention: Teresa B. Pernini, Esq.
This Document Prepared by
and after Recording Return to:
Teresa B. Pernini, Esq.
Bryan Cave LLP
One Atlantic Center
1201 West Peachtree Street, NW
Fourteenth Floor
Atlanta, Georgia 30309
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING
(Abington Place Health and Rehab Center)
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING dated as of December 28, 2012 (this Mortgage ), is executed by APH&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company, having an address at 1145 Hembree Road, Roswell, GA 30076 (the Mortgagor ) to and for the benefit of KEYBANK NATIONAL ASSOCIATION , its successors and assigns ( Lender ) whose address is 4910 Tiedeman Road, 3 rd Floor, Brooklyn, Ohio 44144.
RECITALS
A. Pursuant to the terms and conditions of that certain Secured Loan Agreement of even date herewith (the Loan Agreement ) by and among Mortgagor, Northridge HC&R Property Holdings, LLC, Woodland Hills HC Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC, each a Georgia limited liability company (Mortgagor, together with the foregoing entities, referred to herein individually, as the Borrower and collectively as the Borrowers ) and Lender, Lender has agreed to make a loan to the Borrowers in the original principal amount of $16,500,000 (the Loan ), which Loan is evidenced by a promissory note dated the date hereof (the Note ) , executed by the Borrowers and payable to the order of Lender in the principal amount of the Loan, final payment on which is due on February 27, 2015 (the Maturity Date ) , except as it may be accelerated pursuant to the terms hereof, or of the Note or the Loan Agreement or any of the other Loan Documents (as defined in the Loan Agreement) or as may be extended pursuant to the Loan Agreement. Capitalized terms used herein without definition shall have the meanings given to them in the Loan Agreement.
B. A condition precedent to Lenders extension of the Loan to Mortgagor is the execution and delivery by Mortgagor of this Mortgage.
AGREEMENTS
FOR GOOD AND VALUABLE CONSIDERATION , including the indebtedness hereby secured, the receipt and sufficiency of which are hereby acknowledged, Mortgagor agrees as follows:
Mortgagor HEREBY MORTGAGES, GRANTS, BARGAINS, SELLS, ASSIGNS, REMISES, RELEASES, WARRANTS, TRANSFERS, AND CONVEYS WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, to Lender, its successors and assigns, and grants a security interest in, the following described property, rights and interests (referred to collectively herein as the Premises ), all of which property, rights and interests are hereby pledged primarily and on a parity with the Real Estate (as defined below) and not secondarily, and as to any portion of the Premises constituting property subject to the Code (as defined in Section 36 of this Mortgage), this Mortgage is intended to be a security agreement under the Code for the purpose of creating hereby a security interest in such portion of the Premises, which Mortgagor hereby grants to Lender as secured party, and with all terms used below with respect to such portions of the Premises which are defined in the Code to have the meanings provided in the Code:
(a) The real estate located in the County of Pulaski, State of Arkansas and legally described on Exhibit A attached hereto and made a part hereof (the Real Estate );
(b) All improvements of every nature whatsoever now or hereafter situated on the Real Estate, and all fixtures and personal property of every nature whatsoever now or hereafter owned by Mortgagor and located on, or used in connection with the Real Estate or the improvements thereon, or in connection with any construction thereon, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by Mortgagor or on its behalf (the Improvements );
(c) All easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, all oil, gas and other minerals, whether surface or subsurface, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same;
(d) All rents, revenues, issues, profits, proceeds, income, royalties, accounts, including health-care-insurance receivables, escrows, letter-of-credit rights, security deposits, impounds, reserves, tax refunds and other rights to monies from the Premises and/or the businesses and operations conducted by Mortgagor thereon, to be applied against the Indebtedness (as hereinafter defined); provided, however, that Mortgagor, so
long as no Event of Default (as defined in Section 36 of this Mortgage) has occurred and is continuing hereunder, may collect rent as it becomes due, but not more than one month in advance thereof;
(e) All interest of Mortgagor in all leases now or hereafter on the Premises, whether written or oral (each, a Lease , and collectively, the Leases ), including, but not limited to, that certain Facility Lease dated June 1, 2012, between Mortgagor and APH&R Nursing, LLC (the Facility Lease ), together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such Lease;
(f) All goods, materials, supplies, chattels, fixtures and articles of personal property now or hereafter owned by Mortgagor and forming a part of, attached to, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part of the Real Estate or the Improvements, whether stored on the Real Estate or elsewhere, including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, computer hardware and software used in the operation of the Premises, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner; it being mutually agreed that all of the aforesaid property owned by Mortgagor and placed on the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the realty, and security for the Indebtedness (as hereinafter defined); notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the realty covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute goods (as such term is used in the Code), this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, in Lender, as secured party, and Mortgagor, as debtor, all in accordance with the Code;
(g) All of Mortgagors interests in general intangibles including payment intangibles and software now owned or hereafter acquired and related to the Premises, including, without limitation, all of Mortgagors right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which Mortgagor is or may become a party and which relate to the Premises; (ii) all obligations and indebtedness owed to Mortgagor thereunder; (iii) all intellectual property related to the Premises; and (iv) all choses in action and causes of action relating to the Premises;
(h) All of Mortgagors accounts now owned or hereafter created or acquired which relate to the Premises or the businesses and operations conducted thereon,
including, without limitation, all of the following now owned or hereafter created or acquired by Mortgagor: (i) accounts, contract rights, health-care-insurance receivables, book debts, notes, drafts, and other obligations or indebtedness owing to Mortgagor arising from the sale, lease or exchange of goods or other property and/or the performance of services; (ii) Mortgagors rights in, to and under all purchase orders for goods, services or other property; (iii) Mortgagors rights to any goods, services or other property represented by any of the foregoing; (iv) monies due or to become due to Mortgagor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of Mortgagor); (v) securities, investment property, financial assets and securities entitlements; (vi) proceeds of any of the foregoing and all collateral security and guaranties of any kind given by any person or entity with respect to any of the foregoing; and (vii) all warranties, guarantees, permits and licenses in favor of Mortgagor with respect to the Premises;
(i) All insurance policies pertaining to the Premises and all proceeds, including all claims to and demands for them, of the voluntary or involuntary conversion of any of the Premises, Improvements or the other property described above into cash or liquidated claims, including proceeds of all present and future fire, hazard or casualty insurance policies and all condemnation awards or payments now or later to be made by any public body or decree by any court of competent jurisdiction for any taking or in connection with any condemnation or eminent domain proceeding, and all causes of action and their proceeds for any damage or injury to the Premises, Improvements or the other property described above or any part of them, or breach of warranty in connection with the Improvements, including causes of action arising in tort, contract, fraud or concealment of a material fact;
(j) All of Mortgagors rights in and to all Interest Rate Agreements;
(k) All books and records pertaining to any and all of the property described above, including computer-readable memory and any computer hardware or software necessary to access and process such memory (Books and Records);
(l) All proceeds of, additions and accretions to, substitutions and replacements for, and changes in any of the property described above, including, without limitation, all or proceeds of any sale, option or contract to sell the Premises or any portion thereof; and
(m) Any and all judgments in connection with the foregoing.
TO HAVE AND TO HOLD the Premises, unto Lender, its successors and assigns, forever, for the purposes and upon the uses herein set forth together with all right to possession of the Premises after the occurrence and during the continuance of any Event of Default under this Mortgage; Mortgagor hereby RELEASING AND WAIVING all rights under and by virtue of the homestead exemption laws of the State of Arkansas.
FOR THE PURPOSE OF SECURING the following (collectively, the Indebtedness ):
(i) The payment by the Borrowers of the Loan, the Obligations under the Loan Agreement, and all interest, late charges, LIBOR breakage charges, prepayment premium, if any, exit fee, if any, interest rate swap or hedge expenses, if any, reimbursement obligations, fees and expenses for letters of credit issued by Lender for the account of the Borrowers, if any, and other indebtedness evidenced by or owing under the Note, any of the other Loan Documents, and any application for letters of credit and master letter of credit agreement, together with any renewals, extensions, replacements, amendments, modifications and refinancings of any of the foregoing;
(ii) The performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Borrowers or any other obligor to or benefiting Lender which are evidenced or secured by or otherwise provided in the Note, this Mortgage or any of the other Loan Documents;
(iii) Any and all Hedging Obligations (as defined in the Loan Agreement), contingent or otherwise, whether now existing or hereafter arising, of the Borrowers arising under or in connection with all Interest Rate Protection Products and Interest Rate Agreements (as each such capitalized term is defined in the Loan Agreement) to which Lender is a party;
(iv) The reimbursement to Lender of any and all sums incurred, expended or advanced by Lender pursuant to any term or provision of or constituting additional indebtedness under or secured by this Mortgage, any of the other Loan Documents, any such Hedging Obligations, Interest Rate Protection Products and Interest Rate Agreements or any application for letters of credit and master letter of credit agreement, with interest thereon as provided herein or therein; and
(v) To the extent not included in clauses (i) through (iv) above, any and all other Obligations.
PROVIDED, HOWEVER , that if the Borrowers shall pay the principal and all interest as provided in the Note and all Obligations under the Loan Agreement, and if all other sums secured hereby are paid, and if Mortgagor shall pay all other sums herein provided for, and shall well and truly keep and perform all of the covenants herein contained, then this conveyance shall be null and void and may be cancelled of record at the request and at the cost of Mortgagor, otherwise to remain in full force and effect.
IT IS FURTHER UNDERSTOOD AND AGREED THAT :
1. Title . Mortgagor represents, warrants and covenants that (a) Mortgagor is the owner and holder of the fee simple title to the Premises, free and clear of all liens and encumbrances, except those conveyances, liens and encumbrances in favor of Lender and except for Permitted Exceptions (as defined in the Loan Agreement); (b) Mortgagor has legal power and authority to convey, mortgage and encumber the Premises.
2. Maintenance, Repair, Restoration, Prior Liens, Parking . Mortgagor covenants that, so long as any portion of the Indebtedness remains unpaid, Mortgagor will:
(a) Promptly repair, restore or rebuild any Improvements now or hereafter on the Premises which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are available or sufficient for the purpose;
(b) Keep the Premises in good condition and repair, without waste, and free from mechanics, materialmens or like liens or claims or other liens or claims for lien (other than Permitted Exceptions and subject to Mortgagors right to contest liens as permitted by the terms of Section 26 hereof);
(c) Pay when due the Loan in accordance with the terms of the Note and the other Loan Documents and duly perform and observe all of the terms, covenants and conditions to be observed and performed by Mortgagor under the Note, this Mortgage and the other Loan Documents;
(d) Pay when due any indebtedness which may be secured by a permitted lien or charge on the Premises on a parity with, superior to or inferior to this Mortgage, and upon request exhibit satisfactory evidence of the discharge of such lien to Lender (subject to Mortgagors right to contest liens as permitted by the terms of Section 26 hereof);
(e) Complete within a reasonable time any improvements at any time in the process of erection upon the Premises;
(f) Comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Premises and the use thereof;
(g) Obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental authorities that may be required from time to time with respect to the performance of Mortgagors obligations under this Mortgage;
(h) Make no material alterations in the Premises or demolish any portion of the Premises without Lenders prior written consent, except as required by law or municipal ordinance;
(i) Suffer or permit no change in the use or general nature of the occupancy of the Premises, without Lenders prior written consent;
(j) Pay when due all operating costs of the Premises;
(k) Not initiate or acquiesce in any zoning reclassification with respect to the Premises, without Lenders prior written consent;
(l) Provide and thereafter maintain adequate parking areas within the Premises as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right of way to and from the adjacent public thoroughfares necessary or desirable for the use thereof; and
(m) Comply with, and cause the Premises at all times to be operated in compliance with, all applicable federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.
3. Payment of Taxes and Assessments . Mortgagor will pay when due and before any penalty attaches, all general and special taxes, levies, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called Taxes ), whether or not assessed against Mortgagor, if applicable to the Premises or any interest therein, or the Indebtedness, or any obligation or agreement secured hereby, subject to Mortgagors right to contest the same, as provided by the terms hereof and in Section 10.1(f) of the Loan Agreement; and Mortgagor will, upon written request, furnish to Lender duplicate receipts therefor within 10 days after Lenders request.
4. Tax Deposits. Mortgagor shall establish and maintain at all times while this Mortgage continues in effect an impound account (the Impound Account ) with Lender for payment of Taxes and insurance premiums on the Premises and as additional security for the Indebtedness secured hereby. Mortgagor shall deposit in the Impound Account an amount determined by Lender to be sufficient (when added to the monthly deposits described herein) to pay the next due installment of real estate taxes and assessments on the Premises at least one (1) month prior to the due date or the delinquency date thereof (as Lender shall determine in its sole discretion) and, if a monthly impound for insurance premiums is required under the terms of the Loan Agreement, the next due annual insurance premiums with respect to the Premises, at least one (1) month prior to the due date thereof. Commencing on the first monthly interest payment date (each, a Monthly Payment Date ) under the Loan Agreement and continuing thereafter on each Monthly Payment Date under the Loan Agreement, Mortgagor shall pay to Lender, concurrently with the Monthly Payment due under the Loan Agreement, deposits in an amount equal to one-twelfth (1/12) of one hundred fiver percent (105%) of the most recently ascertainable annual Taxes on the Premises (the Monthly Tax Impound ), plus (if applicable) one-twelfth (1/12) of the amount of the annual insurance premiums that will next become due and payable on insurance policies which Mortgagor is required to maintain hereunder (the Monthly Insurance Impound ), each as estimated and determined by Lender. The Monthly Tax Impound or Monthly Insurance Impound, and the payments of interest or principal or both, payable pursuant to the Note and the Loan Agreement, shall be added together and shall be paid as an aggregate sum by Mortgagor to Lender. If Lender at any time determines that the Monthly Tax Impound or Monthly Insurance Impound is insufficient, Lender may in its discretion adjust the required monthly payments of such amounts, and Mortgagor shall be obligated to pay the increased amounts for the Monthly Tax Impound or (if applicable) Monthly Insurance Impound commencing with the next Monthly Payment Date under the Loan Agreement. So long as no Event of Default or Default has occurred and is continuing, all sums in the Impound Account shall be held by Lender in the Impound Account and used to pay Taxes and insurance premiums before the same become delinquent. Mortgagor shall be responsible for ensuring the receipt by
Lender, at least thirty (30) days prior to the respective due date or the delinquency date for payment thereof (as Lender shall determine in its sole discretion), of all bills, invoices and statements for all Taxes and (if applicable) insurance premiums to be paid from the Impound Account, and so long as no Event of Default has occurred and is continuing, Lender shall pay the Governmental Authority or other party entitled thereto directly to the extent funds are available for such purpose in the Impound Account. In making any payment from the Impound Account, Lender shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof. Lender shall pay no interest on funds contained in the Impound Account to Mortgagor, and any interest or other earnings on funds deposited in the Impound Account shall be solely for the account of Lender. If the total funds in the Impound Account shall exceed the amount of payments actually applied by Lender for the purposes of the Impound Account, such excess may be credited by Lender on subsequent payments to be made hereunder or, at the option of Lender, refunded to Mortgagor. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Premises. If, however, the Impound Account shall not contain sufficient funds to pay the sums required when the same shall become due and payable, Mortgagor shall, within ten (10) days after receipt of written notice thereof, deposit with Lender the full amount of any such deficiency. The Impound Account shall not constitute a trust fund and may be commingled with other monies held by Lender.
5. Lenders Interest In and Use of Deposits . Upon an Event of Default under this Mortgage, Lender may, at its option, apply any monies at the time on deposit pursuant to Section 4 hereof to cure any Event of Default under this Mortgage or to pay any of the Indebtedness in such order and manner as Lender may elect. If such deposits are used to cure an Event of Default or pay any of the Indebtedness, Mortgagor shall immediately, upon demand by Lender, deposit with Lender an amount equal to the amount so used from the deposits. When the Indebtedness has been fully paid, any remaining deposits shall be returned to Mortgagor. Such deposits are hereby pledged as additional security for the Indebtedness and shall not be subject to the direction or control of Mortgagor. Lender shall not be liable for any failure to apply to the payment of Taxes any amount so deposited unless Mortgagor, prior to an Event of Default under this Mortgage, shall have requested Lender in writing to make application of such funds to the payment of such amounts, accompanied by the bills for such Taxes. Lender shall not be liable for any act or omission taken in good faith or pursuant to the instruction of any party.
6. Insurance .
(a) Mortgagor shall at all times keep all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Premises insured against loss or damage by fire and such other hazards as may reasonably be required by Lender, in accordance with the terms, coverages and provisions described in the Loan Agreement, and such other insurance as Lender may from time to time reasonably require. Unless Mortgagor provides Lender evidence of the insurance coverages required hereunder, Lender may purchase insurance at Mortgagors expense to cover Lenders interest in the Premises. The insurance may, but need not, protect Mortgagors interest. The coverages that Lender purchases may not pay any claim that Mortgagor makes or any claim that is
made against Mortgagor in connection with the Premises. Mortgagor may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Mortgagor has obtained insurance as required by this Mortgage. If Lender purchases insurance for the Premises, Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Indebtedness. The cost of the insurance may be more than the cost of insurance Mortgagor may be able to obtain on its own.
(b) Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless Lender is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to Lender and such separate insurance is otherwise acceptable to Lender.
(c) In the event of loss, Mortgagor shall give prompt notice thereof to Lender, and Lender shall have the sole and absolute right to make proof of loss. Lender shall have the right, at its option and in its sole discretion, to apply any insurance proceeds arising from such loss, after the payment of all of Lenders expenses, either (i) on account of the Indebtedness, irrespective of whether such principal balance is then due and payable, whereupon Lender may declare the whole of the balance of Indebtedness to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in paragraph (d) of this Section. If insurance proceeds are made available to Mortgagor by Lender as hereinafter provided, Mortgagor shall repair, restore or rebuild the damaged or destroyed portion of the Premises so that the condition and value of the Premises are substantially the same as the condition and value of the Premises prior to being damaged or destroyed. Any insurance proceeds applied on account of the unpaid principal balance of the Note shall be subject to the prepayment provisions contained in the Loan Agreement and the Note. In the event of foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale.
(d) If insurance proceeds are made available by Lender to Mortgagor, and subject to the provisions of Article 11 of the Loan Agreement, the following provisions shall apply:
(i) Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Improvements, whether by fire or other casualty, Mortgagor shall obtain from Lender its approval of all site and building plans and specifications pertaining to such repair, restoration or rebuilding.
(ii) Prior to each payment or application of any insurance proceeds to the repair or restoration of such Improvements (which payment or application may be made, at Lenders option, through an escrow, the terms and conditions of which are satisfactory to Lender and the cost of which is to be borne by Mortgagor), Lender shall be satisfied as to the following:
(A) No Default (as defined in Section 36 of this Mortgage) or Event of Default under this Mortgage has occurred and is continuing;
(B) Either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Premises, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, Mortgagor has deposited with Lender such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Premises; and
(C) Prior to each disbursement of any such proceeds, Lender shall be furnished with a statement of Lenders architect (the cost of which shall be borne by Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by Lender and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and Lender shall be furnished with appropriate evidence of payment for labor or materials furnished to the Premises, and total or partial lien waivers substantiating such payments.
(iii) If Mortgagor shall fail to restore, repair or rebuild such Improvements within a time deemed satisfactory by Lender, then Lender, at its option, may (A) commence and perform all necessary acts to restore, repair or rebuild such Improvements for or on behalf of Mortgagor, or (B) declare an Event of Default under this Mortgage. If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of such Improvements, such excess shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable without payment of any premium or penalty.
7. Condemnation . If all or any part of the Premises are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof, to the extent of the full amount of the remaining unpaid Indebtedness, is hereby assigned to Lender, who is empowered to collect and receive the same and to give proper receipts therefor in the name of Mortgagor and the same shall be paid forthwith to Lender. Such award or monies shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable and, at any time from and after the taking Lender may declare the whole of the balance of the Indebtedness to be due and payable. Notwithstanding the provisions of this Section to the contrary, if any condemnation or taking of less than the entire Premises occurs, such award or monies shall be applied, at the option of Lender and in its sole discretion, either (i) on account of the Indebtedness as provided above, or (ii) to any necessary restoration or repair of the remaining property, on the terms contained in Section 6(d) hereof.
8. Stamp Tax . If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over Mortgagor, any tax is due or becomes due in respect of the execution and delivery of this Mortgage, the Note or any of the other Loan Documents, Mortgagor shall pay such tax in the manner required by any such law. Mortgagor further agrees to reimburse Lender for any sums which Lender may expend by reason of the imposition of any such tax. Notwithstanding the foregoing, Mortgagor shall not be required to pay any income or franchise taxes of Lender.
9. Lease and Rent Assignment . Mortgagor acknowledges that, concurrently herewith, Mortgagor has executed and delivered to Lender, as additional security for the repayment of the Loan, an Absolute Assignment of Leases and Rents (the Assignment ) pursuant to which Mortgagor has assigned to Lender interests in the leases of the Premises and the rents and income from the Premises. All of the provisions of the Assignment are hereby incorporated herein as if fully set forth at length in the text of this Mortgage. Mortgagor agrees to abide by all of the provisions of the Assignment.
10. Effect of Extensions of Time and Other Changes . If the payment of the Indebtedness or any part thereof is extended or varied, if any part of any security for the payment of the Indebtedness is released, if the rate of interest charged under the Note is changed or if the time for payment thereof is extended or varied, all persons now or at any time hereafter liable therefor, or interested in the Premises or having an interest in Mortgagor, shall be held to assent to such extension, variation, release or change and their liability and the lien and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by Lender, notwithstanding such extension, variation, release or change.
11. Effect of Changes in Laws Regarding Taxation . If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Premises from the value thereof for the purpose of taxation or (b) the imposition upon Lender of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by Mortgagor, or (c) a change in the method of taxation of mortgages, deeds of trust or debts secured by mortgages or deeds of trust or Lenders interest in the Premises, or the manner of collection of taxes, so as to affect this Mortgage or the Indebtedness or the holders thereof, then Mortgagor, upon demand by Lender, shall pay such Taxes or charges, or reimburse Lender therefor; provided, however, that Mortgagor shall not be deemed to be required to pay any income or franchise taxes of Lender. Notwithstanding the foregoing, if in the opinion of counsel for Lender it is or may be unlawful to require Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then Lender may declare all of the Indebtedness to be immediately due and payable.
12. Lenders Performance of Defaulted Acts and Expenses Incurred by Lender . If an Event of Default under this Mortgage has occurred and is continuing, Lender may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient by Lender, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or consent to any tax or assessment or cure any default of Mortgagor in any lease of the Premises. All monies paid for any of the purposes
herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys fees, and any other monies advanced by Lender in regard to any tax referred to in Section 8 hereof or to protect the Premises or the lien hereof, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Lender, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate (as defined in the Loan Agreement). In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys fees, incurred by Lender in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of Lenders rights hereunder, (c) recovering any Indebtedness, (d) any litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, including without limitation, bankruptcy and probate proceedings, or (e) preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Lender, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate. The interest accruing under this Section shall be immediately due and payable by Mortgagor to Lender, and shall be additional Indebtedness evidenced by the Note and secured by this Mortgage. Lenders failure to act shall never be considered as a waiver of any right accruing to Lender on account of any Event of Default under this Mortgage or any of the other Loan Documents. Should any amount paid out or advanced by Lender hereunder, or pursuant to any agreement executed by Mortgagor in connection with the Loan, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Premises or any part thereof, then Lender shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.
13. Security Agreement . Mortgagor and Lender agree that this Mortgage shall constitute a Security Agreement within the meaning of the Code with respect to (a) all sums at any time on deposit for the benefit of Mortgagor or held by Lender (whether deposited by or on behalf of Mortgagor or anyone else) pursuant to any of the provisions of this Mortgage or the other Loan Documents, and (b) any personal property included in the granting clauses of this Mortgage, which personal property may not be deemed to be affixed to the Premises or may not constitute a fixture (within the meaning of the Code and which property is hereinafter referred to as Personal Property ), and all replacements of, substitutions for, additions to, and the proceeds thereof, and the supporting obligations (as defined in the Code) (all of said Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as Collateral ), and that a security interest in and to the Collateral is hereby granted to Lender, and the Collateral and all of Mortgagors right, title and interest therein are hereby assigned to Lender, all to secure payment of the Indebtedness. All of the provisions contained in this Mortgage pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Premises; and the following provisions of this Section shall not limit the applicability of any other provision of this Mortgage but shall be in addition thereto:
(a) Mortgagor (being the Debtor as that term is used in the Code) is and will be the true and lawful owner of the Collateral and has rights in and the power to transfer
the Collateral, subject to no liens, charges or encumbrances other than the lien of this Mortgage, other liens and encumbrances benefiting Lender and no other party, and liens and encumbrances, if any, expressly permitted by the other Loan Documents.
(b) The Collateral is to be used by Mortgagor solely for business purposes.
(c) The Collateral will be kept at the Real Estate and, except for Collateral no longer useful in connection with the operation of the Real Estate, provided that prior to the sale or other disposition thereof, such Collateral has been replaced by property of at least equal value and utility and which is subject to the lien of this Mortgage, will not be removed therefrom without the consent of Lender (being the Secured Party as that term is used in the Code). The Collateral may be affixed to the Real Estate but will not be affixed to any other real estate.
(d) The only persons having any interest in the Premises are Mortgagor, Lender and holders of interests, if any, expressly permitted hereby.
(e) No Financing Statement (other than Financing Statements showing Lender as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the Collateral or any proceeds thereof is on file in any public office except pursuant hereto; and Mortgagor, at Mortgagors own cost and expense, upon demand, will furnish to Lender such further information and will execute and deliver to Lender such financing statements and other documents in form satisfactory to Lender and will do all such acts as Lender may request at any time or from time to time or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Indebtedness, subject to no other liens or encumbrances, other than liens or encumbrances benefiting Lender and no other party, and liens and encumbrances (if any) expressly permitted hereby; and Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by Lender to be desirable. Mortgagor hereby irrevocably authorizes Lender at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto, without the signature of Mortgagor, that (i) indicate the Collateral (A) is comprised of all assets of Mortgagor or words of similar effect, regardless of whether any particular asset comprising a part of the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or (B) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein, and (ii) contain any other information required by the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether Mortgagor is an organization, the type of organization and any organizational identification number issued to Mortgagor, and (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. Mortgagor agrees to furnish any such information to Lender promptly upon request. Mortgagor further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by Lender in any
jurisdiction prior to the date of this Mortgage. In addition, Mortgagor shall make appropriate entries on its books and records disclosing Lenders security interests in the Collateral.
(f) Upon and during the continuance of an Event of Default under this Mortgage, Lender shall have the remedies of a secured party under the Code, including, without limitation, the right to take immediate and exclusive possession of the Collateral, or any part thereof, and for that purpose, so far as Mortgagor can give authority therefor, with or without judicial process, may enter (if this can be done without breach of the peace) upon any place which the Collateral or any part thereof may be situated and remove the same therefrom (provided that if the Collateral is affixed to real estate, such removal shall be subject to the conditions stated in the Code); and Lender shall be entitled to hold, maintain, preserve and prepare the Collateral for sale, until disposed of, or may propose to retain the Collateral subject to Mortgagors right of redemption in satisfaction of Mortgagors obligations, as provided in the Code. Lender may render the Collateral unusable without removal and may dispose of the Collateral on the Premises. Lender may require Mortgagor to assemble the Collateral and make it available to Lender for its possession at a place to be designated by Lender which is reasonably convenient to both parties. Lender will give Mortgagor at least 10 days notice of the time and place of any public sale of the Collateral or of the time after which any private sale or any other intended disposition thereof is made. The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of Mortgagor hereinafter set forth at least 10 days before the time of the sale or disposition. Lender may buy at any public sale. Lender may buy at private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. Any such sale may be held in conjunction with any foreclosure sale of the Premises. If Lender so elects, the Premises and the Collateral may be sold as one lot. The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys fees and legal expenses incurred by Lender, shall be applied against the Indebtedness in such order or manner as Lender shall select. Lender will account to Mortgagor for any surplus realized on such disposition.
(g) The terms and provisions contained in this Section, unless the context otherwise requires, shall have the meanings and be construed as provided in the Code.
(h) This Mortgage is intended to be a financing statement filed as a fixture filing pursuant to Section 9-502(c) of the Code, as adopted in the State of Arkansas. The addresses of Mortgagor (Debtor) and Lender (Secured Party) are hereinbelow set forth. This Mortgage is to be filed for recording in appropriate public records of the county or counties where the Premises are located and Mortgagor hereby authorizes Lender to file any and all financing statements in the county or counties where the Premises are located, and/or such other jurisdictions as reasonably determined by Lender, in order to perfect the security interests created hereby. Mortgagor is the record owner of the Premises.
(i) To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between Mortgagor or its agents as
lessor, and various tenants named therein, as lessee, including all extended terms and all extensions and renewals of the terms thereof, as well as any amendments to or replacement of said Leases, together with all of the right, title and interest of Mortgagor, as lessor thereunder.
(j) Mortgagor represents and warrants that: (i) Mortgagor is the record owner of the Premises; (ii) Mortgagors chief executive office is located in the State of Georgia; (iii) Mortgagors state of organization is the State of Georgia; (iv) Mortgagors exact legal name is as set forth on Page 1 of this Mortgage; and (v) Mortgagors organizational identification number, if any, is as stated in the Loan Agreement.
(k) Mortgagor hereby agrees that: (i) where Collateral is in possession of a third party, Mortgagor will join with Lender in notifying the third party of Lenders interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of Lender; (ii) Mortgagor will cooperate with Lender in obtaining control with respect to Collateral consisting of: deposit accounts, investment property, letter of credit rights and electronic chattel paper; and (iii) until the Indebtedness is paid in full, Mortgagor will not change the state where it is located or change its name or form of organization without giving Lender at least 30 days prior written notice in each instance, and executing and delivering, at Mortgagors expense, all documentation reasonably required by Lender in connection with perfecting or preserving the perfection of the lien and security interest granted under this Mortgage.
14. Events of Default; Acceleration . Each of the following shall constitute an Event of Default under this Mortgage:
(a) Mortgagor fails to pay any amount payable to Lender under this Mortgage when any such payment is due in accordance with the terms hereof.
(b) Mortgagor fails to perform or observe, or to cause to be performed or observed, any obligation, covenant, term, agreement or provision required to be performed or observed by Mortgagor under Sections 1, 2(h), 2(i), 2(k), 2(l), 3 or 4 of this Mortgage;
(c) The occurrence of any Transfer in violation of Section 34(a) of this Mortgage or the provisions of the Loan Agreement referenced therein;
(d) Mortgagor fails to perform or observe, or to cause to be performed or observed, any other obligation, covenant, term, agreement or provision required to be performed or observed by Mortgagor under this Mortgage and not covered under clauses (a) and (b) of this Section 14, for a period of thirty (30) days after written notice of default from Lender; provided that if any such failure is susceptible to cure and cannot reasonably be cured within said thirty (30)-day period, then such default shall not constitute an Event of Default so long as within such thirty (30)-day period Mortgagor have commenced efforts to cure such default, diligently pursues efforts to cure the applicable default, and actually cures such default no later than thirty (30) days after the end of the initial thirty (30)-day period; provided, further, that if a different notice or
grace period is specified under any other paragraph of this Section 14 with respect to a particular breach, the specific provision shall control; or
(e) The occurrence of an Event of Default under the Loan Agreement, the Note or any of the other Loan Documents.
If an Event of Default occurs under this Mortgage, Lender may, at its option, declare the whole of the Indebtedness to be immediately due and payable without further notice to Mortgagor, with interest thereon accruing from the date of such Event of Default until paid at the Default Rate. Mortgagor agrees that the occurrence of an Event of Default as defined in, and pursuant to any of the respective Loan Documents, which is not cured within applicable grace or curative periods, shall constitute an immediate Event of Default (without need of notice or the expiration of any additional cure period other than as specified in such Loan Documents) under all Loan Documents.
15. Foreclosure; Expense of Litigation .
(a) When all or any part of the Indebtedness shall become due, whether by acceleration or otherwise, Lender shall have the right to foreclose the lien hereof for such Indebtedness or part thereof and/or exercise any right, power or remedy provided (i) in this Mortgage or any of the other Loan Documents in accordance with the applicable laws of the State of Arkansas, or (ii) under Arkansas law including the use of non-judicial statutory foreclosure proceedings. In the event of a foreclosure sale, Lender is hereby authorized, without the consent of Mortgagor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as Lender may deem advisable to cause the interest of such purchaser to be protected by any of such insurance policies.
(b) In any suit or other proceeding to foreclose this Mortgage or enforce any other remedy of Lender under this Mortgage or the Note, there shall be allowed and included as additional indebtedness in the decree for sale or other judgment or decree all expenditures and expenses which may be actually paid or incurred by or on behalf of Lender for reasonable attorneys fees, appraisers fees, outlays for documentary and expert evidence, stenographers charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to the title as Lender may deem reasonably necessary either to prosecute such suit or to evidence to bidders at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Premises. All expenditures and expenses of the nature mentioned in this Section and such other expenses and fees as may be incurred in the enforcement of Mortgagors obligations hereunder, the protection of said Premises and the maintenance of the interest created by this Mortgage, including the actual and reasonable fees of any attorney employed by Lender in any litigation or proceeding affecting this Mortgage, the Note, or the Premises, including probate and bankruptcy proceedings, or in preparations for the commencement or defense of any proceeding or threatened suit or proceeding shall be immediately due and payable by Mortgagor, with interest thereon until paid at the Default Rate and shall be secured by this Mortgage.
(c) Upon any foreclosure sale, Lender may bid for and purchase the Premises in whole or in parcels and shall be entitled to apply all or any part of any indebtedness or obligation secured hereby as a credit to the purchase price.
16. Application of Proceeds of Foreclosure Sale . The proceeds of any foreclosure sale of the Premises shall be distributed a nd applied in accordance with the applicable laws of the State of Arkansas and, unless otherwise specified therein, in such order as Lender may determine in its sole and absolute discretion, subject to any express provisions of the Loan Agreement.
17. Appointment of Receiver . Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by Lender, appoint a receiver for the Premises in accordance with the applicable laws of the S tate of Arkansas. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of Mortgagor at the time of application for such receiver and without regard to the value of the Premises or whether the same shall be then occupied as a homestead or not and Lender hereunder or any other holder of the Note may be appointed as such receiver. Such receiver shall have power to collect the rents, issues and profits of the Premises (i) during the pendency of such foreclosure suit, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits. Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during said period, including, to the extent permitted by law, the right to lease all or any portion of the Premises for a term that extends beyond the time of such receivers possession without obtaining prior court approval of such lease. The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Indebtedness, or any amount found due or secured by any judgment or decree foreclosing this Mortgage, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such judgment or decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.
18. Lenders Right of Possession in Case of Default . At any time after an Event of Default under this Mortgage has occurred and is continuing, Mortgagor shall, upon demand of Lender, surrender to Lender possession of the Premises. Lender, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Premises, together with all documents, books, records, papers and accounts relating thereto, and may exclude Mortgagor and its employees, agents or servants therefrom, and Lender may then hold, operate, manage and control the Premises, either personally or by its agents. Lender shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent. Without limiting the generality of the foregoing, but subject to applicable Arkansas law, Lender shall have full power to:
(a) Cancel or terminate any lease or sublease for any cause or on any ground which would entitle Mortgagor to cancel the same;
(b) Elect to disaffirm any lease or sublease which is then subordinate to this Mortgage;
(c) Extend or modify any then existing leases and to enter into new leases, which extensions, modifications and leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Premises are subject to this Mortgage and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser;
(d) Make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Premises as Lender deems are necessary;
(e) Insure and reinsure the Premises and all risks incidental to Lenders possession, operation and management thereof;
(f) Terminate any management agreements, contracts, or agents/managers responsible, for the property management of the Premises, if in the sole discretion of Lender such property management is unsatisfactory in any respect; and
(g) Receive all of such avails, rents, issues and profits.
19. Application of Income Received by Lender . Lender, in the exercise of the rights and powers hereinabove conferred upon it, shall have full power to use and apply the avails, rents, issues and profits of the Premises to the payment of or on account of the following, in such order as Lender may determine:
(a) To the payment of the operating expenses of the Premises, including cost of management and leasing thereof (which shall include compensation to Lender and its agent or agents, if management be delegated to an agent or agents, and shall also include lease commissions and other compensation and expenses of seeking and procuring tenants and entering into leases), established claims for damages, if any, and premiums on insurance hereinabove authorized;
(b) To the payment of taxes and special assessments now due or which may hereafter become due on the Premises; and
(c) To the payment of any Indebtedness, including any deficiency which may result from any foreclosure sale.
20. Compliance with Law .
(a) If any provision in this Mortgage shall be inconsistent with any provision of the applicable laws of the State of Arkansas, such laws shall take precedence over the
provisions of this Mortgage, but shall not invalidate or render unenforceable any other provision of this Mortgage that can be construed in a manner consistent with such laws.
(b) If any provision of this Mortgage shall grant to Lender (including Lender acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Mortgage any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default under this Mortgage which are more limited than the powers, rights or remedies that would otherwise be vested in Lender or in such receiver under the applicable laws of the State of Arkansas in the absence of said provision, Lender and such receiver shall be vested with the powers, rights and remedies granted by such laws to the full extent permitted by law.
21. Rights Cumulative . Each right, power and remedy herein conferred upon Lender is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Loan Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of Lender in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default under this Mortgage or acquiescence therein.
22. Lenders Right of Inspection . Lender and its representatives shall have the right to inspect the Premises and the books and records with respect thereto as and to the extent provided in the Loan Agreement, and access thereto , subject to the rights of tenants in possession, shall be permitted for that purpose.
23. Release Upon Payment and Discharge of Mortgagors Obligations . Lender shall release this Mortgage and the lien hereof by proper instrument upon payment and discharge of all Indebtedness, including payment of all reasonable expenses incurred by Lender in connection with the execution of such release. Mortgagor shall not otherwise be entitled to a release of this Mortgage and the lien hereof, except as may be expressly provided to the contrary in the Loan Agreement.
24. Notices . All notices and other communications provided for in this Mortgage ( Notices ) shall be in writing. The Notice Addresses of the parties for purposes of this Mortgage are as follows:
Mortgagor: |
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APH&R Property Holdings, LLC 1145 Hembree Road Roswell, Georgia 30076 Attention: Boyd P. Gentry |
With a copy to: |
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Holt Ney Zatcoff & Wasserman, LLP 100 Galleria Parkway, Suite 1800 Atlanta, Georgia 30339 Attention: Gregory P. Youra |
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Lender: |
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KeyBank National Association Real Estate Capital-Healthcare Mailcode: OH-01-51-0311 4910 Tiedeman Road, 3 rd Floor Brooklyn, Ohio 44144 Attention: Amy MacLearie, Closer |
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With a copy to: |
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Bryan Cave LLP One Atlantic Center, Fourteenth Floor 1201 West Peachtree Street, NW Atlanta, Georgia 30309-3488 Attention: Robert C. Lewinson, Esq. |
or such other address as a party may designate by notice duly given in accordance with this Section to the other parties. A Notice to a party shall be effective when delivered to such partys Notice Address by any means, including, without limitation, personal delivery by the party giving the Notice, delivery by United States regular, certified or registered mail, or delivery by a commercial courier or delivery service. If the Notice Address of a party includes a facsimile number or electronic mail address, Notice given by facsimile or electronic mail shall be effective when delivered at such facsimile number or email address. If delivery of a Notice is refused, it shall be deemed to have been delivered at the time of such refusal of delivery. The party giving a Notice shall have the burden of establishing the fact and date of delivery or refusal of delivery of a Notice.
25. Waiver of Rights . Mortgagor hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner claim or take any advantage of, any stay, exemption, extension, homestead, dower, reinstatement or redemption law or any so-called Moratorium Law now or at any time hereafter in force providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to any decree, judgment or order of any court of competent jurisdiction; or, after such sale or sales, claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof; and without limiting the foregoing:
(a) Mortgagor specifically acknowledges that the transaction to which this Mortgage is a part is a transaction which does not include either agricultural real property or residential real estate and Mortgagor hereby expressly, voluntarily and knowingly waives any and all rights of appraisement, valuation, stay, extension, homestead, dower, reinstatement and redemption, if any, under any order, judgment or decree of foreclosure of this Mortgage, on its own behalf and on behalf of each and every person, it being the
intent hereof that any and all such rights of appraisement, valuation, stay, extension, homestead, dower, reinstatement and redemption of Mortgagor and of all other persons are and shall be deemed to be hereby waived to the full extent permitted by the applicable laws of the State of Arkansas, and Mortgagor specifically waives all redemption powers and rights which otherwise might be available to Mortgagor pursuant to Ark. Code Ann. § 16-66-502 and Ark. Code Ann. § 18-49-106, or that Act No. 153 of the Arkansas General Assembly passed on May 8, 1899; and
(b) Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power or remedy herein or otherwise granted or delegated to Lender but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted.
26. Contests . Notwithstanding anything to the contrary herein contained, Mortgagor shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Premises or which may be or become a lien thereon and any mechanics, materialmens or other liens or claims for lien upon the Premises (each, a Contested Lien ), and no Contested Lien shall constitute an Event of Default under this Mortgage, if, but only if:
(a) Mortgagor shall forthwith give notice of any Contested Lien to Lender at the time the same shall be asserted;
(b) Mortgagor shall either pay under protest or deposit with Lender the full amount (the Lien Amount ) of such Contested Lien, together with such amount as Lender may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment Mortgagor may furnish to Lender a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to Lender;
(c) Mortgagor shall diligently prosecute the contest of any Contested Lien by appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Premises, and shall permit Lender to be represented in any such contest and shall pay all expenses incurred, in so doing, including fees and expenses of Lenders counsel (all of which shall constitute so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand);
(d) Mortgagor shall pay each such Contested Lien and all Lien Amounts together with interest and penalties thereon (i) if and to the extent that any such Contested Lien shall be determined adverse to Mortgagor, or (ii) forthwith upon demand by Lender if, in the opinion of Lender, and notwithstanding any such contest, the Premises shall be in jeopardy or in danger of being forfeited or foreclosed; provided that if Mortgagor shall fail so to do, Lender may, but shall not be required to, pay all such Contested Liens and Lien Amounts and interest and penalties thereon and such other sums as may be necessary in the judgment of Lender to obtain the release and discharge of such liens; and any amount expended by Lender in so doing shall be so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand; and provided
further that Lender may in such case use and apply monies deposited as provided in paragraph (b) of this Section and may demand payment upon any bond or title indemnity furnished as aforesaid.
27. Expenses Relating to Note and Mortgage .
(a) Mortgagor will pay all expenses, charges, costs and fees relating to the Loan or necessitated by the terms of the Note, this Mortgage or any of the other Loan Documents, including without limitation, Lenders reasonable attorneys fees actually incurred in connection with the negotiation, documentation, administration, servicing and enforcement of the Note, this Mortgage and the other Loan Documents, all filing, registration and recording fees, all other expenses incident to the execution and acknowledgment of this Mortgage and all federal, state, county and municipal taxes, and other taxes (provided Mortgagor shall not be required to pay any income or franchise taxes of Lender), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note and this Mortgage. Mortgagor recognizes that, during the term of this Mortgage, Lender:
(i) May be involved in court or administrative proceedings, including, without restricting the foregoing, foreclosure, probate, bankruptcy, creditors arrangements, insolvency, housing authority and pollution control proceedings of any kind, to which Lender shall be a party by reason of the Loan Documents or in which the Loan Documents or the Premises are involved directly or indirectly;
(ii) May make preparations following the occurrence of an Event of Default under this Mortgage for the commencement of any suit for the foreclosure hereof, which may or may not be actually commenced;
(iii) May make preparations following the occurrence of an Event of Default under this Mortgage for, and do work in connection with, Lenders taking possession of and managing the Premises, which event may or may not actually occur;
(iv) May make preparations for and commence other private or public actions to remedy an Event of Default under this Mortgage, which other actions may or may not be actually commenced;
(v) May enter into negotiations with Mortgagor or any of its agents, employees or attorneys in connection with the existence or curing of any Event of Default under this Mortgage, the sale of the Premises, the assumption of liability for any of the Indebtedness or the transfer of the Premises in lieu of foreclosure; or
(vi) May enter into negotiations with Mortgagor or any of its agents, employees or attorneys pertaining to Lenders approval of actions taken or proposed to be taken by Mortgagor which approval is required by the terms of this Mortgage.
(b) All expenses, charges, costs and fees described in this Section shall be so much additional Indebtedness, shall bear interest from the date so incurred until paid at
the Default Rate and shall be paid, together with said interest, by Mortgagor forthwith upon demand.
28. Statement of Indebtedness . Mortgagor, within seven (7) days after being so requested by Lender, shall furnish a duly acknowledged written statement setting forth the amount of the debt secured by this Mortgage, the date to which interest has been paid and stating either that no offsets or defenses exist against such debt or, if such offsets or defenses are alleged to exist, the nature thereof.
29. Further Instruments . Upon request of Lender, Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary fully to effectuate the intent of this Mortgage and of the other Loan Documents.
30. Additional Indebtedness Secured . All persons and entities with any interest in the Premises or about to acquire any such interest should be aware that this Mortgage secures more than the stated principal amount of the Note and interest thereon; this Mortgage secures any and all other amounts which may become due under the Note, any of the other Loan Documents or any other document or instrument evidencing, securing or otherwise affecting the Indebtedness, including, without limitation, any and all amounts expended by Lender to operate, manage or maintain the Premises or to otherwise protect the Premises or the lien of this Mortgage.
31. Indemnity . Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against Lender in the exercise of the rights and powers granted to Lender in this Mortgage, and Mortgagor hereby expressly waives and releases any such liability, except to the extent resulting from the gross negligence or willful misconduct of Lender. Mortgagor shall indemnify and save Lender harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses, including reasonable attorneys fees and court costs actually incurred (collectively, Claims ), of whatever kind or nature which may be imposed on, incurred by or asserted against Lender at any time by any third party which relate to or arise from: (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which Lender may or does become party, either as plaintiff or as defendant, by reason of this Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Premises; and (c) the ownership, leasing, use, operation or maintenance of the Premises, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Premises to Lender in accordance with the terms of this Mortgage; provided, however, that Mortgagor shall not be obligated to indemnify or hold Lender harmless from and against any Claims directly arising from the gross negligence or willful misconduct of Lender. All costs provided for herein and paid for by Lender shall be so much additional Indebtedness and shall become immediately due and payable upon demand by Lender and with interest thereon from the date incurred by Lender until paid at the Default Rate. The indemnity provided in this Section shall be in addition to (but not in duplication of) any other indemnification provision contained in the Loan Agreement or any other Loan Document.
32. Subordination of Property Managers Lien . Any property management agreement for the Premises entered into hereafter with a property manager shall contain a
provision whereby the property manager agrees that any and all mechanics lien rights that the property manager or anyone claiming by, through or under the property manager may have in the Premises shall be subject and subordinate to the lien of this Mortgage and shall provide that Lender may terminate such agreement, without penalty or cost, at any time after the occurrence of an Event of Default under this Mortgage. Such property management agreement or a short form thereof, at Lenders request, shall be recorded in the appropriate public records of the county where the Premises are located. In addition, Mortgagor shall cause the property manager under such agreement to enter into a subordination of the management agreement with Lender, in recordable form, whereby such property manager subordinates present and future lien rights and those of any party claiming by, through or under such property manager to this Mortgage.
33. Compliance with Environmental Laws . Concurrently herewith Mortgagor and the Guarantors have executed and delivered to Lender that certain Indemnity Agreement Regarding Hazardous Materials dated as of the date hereof (the Indemnity ) pursuant to which Mortgagor and the Guarantors have indemnified Lender for environmental matters concerning the Premises, as more particularly described therein. The provisions of the Indemnity are hereby incorporated herein and this Mortgage shall secure the obligations of Mortgagor thereunder.
34. Miscellaneous .
(a) Incorporation of Loan Agreement Provisions Prohibiting Certain Transfers . The provisions of Sections 12.2 and 12.3 of the Loan Agreement (prohibiting certain Transfers , as defined in the Loan Agreement), together with all defined terms used therein, are hereby incorporated into and made a part of this Mortgage, as fully as if set forth herein verbatim.
(b) Usury and Truth in Lending . Notwithstanding the provisions contained in Section 34(d) of this Mortgage to the contrary, Mortgagor acknowledges that the Loan evidenced in the Loan Agreement was solicited, negotiated, closed and funded outside the State of Arkansas, and Mortgagor waives any argument that the laws of the State of Arkansas shall apply for usury purposes. The Loan is an exempted transaction under the Truth In Lending Act, 15 U.S.C., §1601, et seq.
(c) Successors and Assigns . This Mortgage and all provisions hereof shall be binding upon and enforceable against Mortgagor and its assigns and other successors. This Mortgage and all provisions hereof shall inure to the benefit of Lender, its successors and assigns and any holder or holders, from time to time, of the Note.
(d) Invalidity of Provisions; Governing Law . In the event that any provision of this Mortgage is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Mortgagor and Lender shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Mortgage and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect. Furthermore, a ll agreements between Mortgagor and Lender (including, without limitation, those contained in this Mortgage and the Note) are expressly limited so that in
no event whatsoever shall the amount paid or agreed to be paid to the Lender exceed the highest lawful rate of interest permissible under the applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or the Note or any other documents securing the Indebtedness at the time performance of such provision shall be due, shall involve the payment of interest exceeding the highest rate of interest permitted by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under the applicable law; and if for any reason whatsoever Lender shall ever receive as interest an amount which would be deemed unlawful, such interest shall be applied to the payment of the last maturing installment or installments of the principal Indebtedness (whether or not then due and payable) and not to the payment of interest. Subject to the provisions contained in Section 34(b) of this Mortgage, this Mortgage is to be construed in accordance with and governed by the laws of the State of Arkansas.
(e) Municipal Requirements . Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and Mortgagor hereby assigns to Lender any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Similarly, no building or other improvement on the Premises shall rely on any premises not subject to this Mortgage or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by Mortgagor which would result in a violation of any of the provisions of this paragraph shall be void.
(f) Rights of Tenants . Lender shall have the right and option to commence a civil action to foreclose this Mortgage and to obtain a decree of foreclosure and sale subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of Lender. The failure to join any such tenant or tenants of the Premises as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect the Indebtedness, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Premises, any statute or rule of law at any time existing to the contrary notwithstanding.
(g) Mortgagee-in-Possession . Nothing herein contained shall be construed as constituting Lender a mortgagee-in-possession in the absence of the actual taking of possession of the Premises by Lender pursuant to this Mortgage.
(h) Relationship of Lender and Mortgagor . Lender shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of Mortgagor or of any lessee, operator, concessionaire or licensee of Mortgagor in the conduct of their respective businesses, and, without limiting the foregoing, Lender shall not be deemed to be such partner, joint venturer, agent or associate on account of Lender becoming a mortgagee-in-possession or exercising any rights pursuant to this Mortgage, any of the other Loan Documents, or otherwise. The relationship of Mortgagor and Lender hereunder is solely that of debtor/creditor.
(i) Time of the Essence . Time is of the essence of the payment by Mortgagor of all amounts due and owing to Lender under the Note and the other Loan Documents and the performance and observance by Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Loan Documents.
(j) No Merger . The parties hereto intend that this Mortgage and the interest hereunder shall not merge in the fee simple title to the Premises, and if Lender acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by Lender as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the interest hereunder shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.
(k) Complete Agreement; No Reliance; Modifications . This Mortgage, the Note and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof. Mortgagor acknowledges that it is executing this Mortgage without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein or in the other Loan Documents. This Mortgage may not be modified, altered or amended except by an agreement in writing signed by both Mortgagor and Lender.
(l) Captions . The captions and headings of various Sections and paragraphs of this Mortgage and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
(m) Gender and Number . Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.
(n) Execution of Counterparts . This Mortgage may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Mortgage by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Mortgage maintained by Lender shall be deemed to be an original.
(o) Construction . Each party to this Mortgage and legal counsel to each party have participated in the drafting of this Mortgage, and accordingly the general rule of construction to the effect that any ambiguities in a contract are resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Mortgage.
(p) References to Documents . Unless expressly provided to the contrary or the context otherwise requires, all references in this Mortgage to any other document,
instrument or agreement shall be deemed to refer to such document, instrument or agreement as it may be amended, modified, supplemented, renewed, extended or restated from time to time; provided, however, that nothing in this subsection shall operate or be construed to authorize any such amendment, modification, supplement, renewal, extension or restatement that is prohibited or restricted under any other provision of the Loan Documents.
35. Litigation Provisions.
(a) Consent to Jurisdiction . MORTGAGOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . MORTGAGOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST MORTGAGOR IN ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. MORTGAGOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) No Proceedings in Other Jurisdictions . MORTGAGOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST LENDER RELATING IN ANY MANNER TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR IF A LEGAL PROCEEDING IS COMMENCED BY LENDER AGAINST MORTGAGOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . MORTGAGOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
36. Definitions of Certain Terms . The following terms shall have the following meanings in this Mortgage:
Code : The Uniform Commercial Code of the State of Arkansas as from time to time in effect; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, the
security interest in any collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Arkansas, the term Code shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Mortgage or the other Loan Documents relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
Default : When used in reference to this Mortgage or any other document, or in reference to any provision of or obligation under this Mortgage or any other document, the occurrence of an event or the existence of a condition which, with the passage of time or the giving of notice, or both, would constitute an Event of Default under this Mortgage or such other document, as the case may be.
Event of Default : The following: (i) when used in reference to this Mortgage, one or more of the events or occurrences referred to in Section 14 of this Mortgage; and (ii) when used in reference to any other document, a default or event of default under such document that has continued after the giving of any applicable notice and the expiration of any applicable grace or cure periods.
37. Waiver . TO THE EXTENT PERMITTED BY LAW, MORTGAGOR HEREBY EXPRESSLY WAIVES AND RELEASES ANY REQUIREMENT OR OBLIGATION THAT LENDER PRESENT EVIDENCE OR OTHERWISE PROCEED BEFORE ANY COURT, CLERK, OR OTHER JUDICIAL OR QUASI-JUDICIAL BODY BEFORE EXERCISE OF THE POWERS OF SALE CONTAINED IN THIS MORTGAGE AND IN THE ARKANSAS CODE.
[Remainder of Page Intentionally Left Blank;
Execution on Following Pages]
IN WITNESS WHEREOF , Mortgagor has executed and delivered this Mortgage as of the day and year first above written.
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Christopher F. Brogdon, Manager |
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STATE OF GEORGIA |
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On this day, before me, the undersigned, a Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within named Christopher F. Brogdon, to me personally well known, who stated that he is the Manager of APH&R Property Holdings, LLC, a Georgia limited liability company, and was duly authorized in that capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 21st day of December, 2012.
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/s/ Ellen W. Smith |
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Jan. 30, 2016 |
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Exhibit 10.269
Execution Version
MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING
(ARKANSAS)
MADE BY
NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC
as Mortgagor
to and for the benefit of
KEYBANK NATIONAL ASSOCIATION
as Lender
Dated as of: December 28, 2012
PREPARED BY AND UPON RECORDATION RETURN TO:
Bryan Cave LLP
One Atlantic Center
1201 West Peachtree Street, NW
Fourteenth Floor
Atlanta, Georgia 30309
Attention: Teresa B. Pernini, Esq.
This Document Prepared by
and after Recording Return to:
Teresa B. Pernini, Esq.
Bryan Cave LLP
One Atlantic Center
1201 West Peachtree Street, NW
Fourteenth Floor
Atlanta, Georgia 30309
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING
(Northridge Healthcare and Rehabilitation)
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING dated as of December 28, 2012 (this Mortgage ), is executed by NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company, having an address at 1145 Hembree Road, Roswell, GA 30076 (the Mortgagor ) to and for the benefit of KEYBANK NATIONAL ASSOCIATION , its successors and assigns ( Lender ) whose address is 4910 Tiedeman Road, 3 rd Floor, Brooklyn, Ohio 44144.
RECITALS
A. Pursuant to the terms and conditions of that certain Secured Loan Agreement of even date herewith (the Loan Agreement ) by and among Mortgagor, Woodland Hills HC Property Holdings, LLC, APH&R Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC, each a Georgia limited liability company (Mortgagor, together with the foregoing entities, referred to herein individually, as the Borrower and collectively as the Borrowers ) and Lender, Lender has agreed to make a loan to the Borrowers in the original principal amount of $16,500,000 (the Loan ), which Loan is evidenced by a promissory note dated the date hereof (the Note ) , executed by the Borrowers and payable to the order of Lender in the principal amount of the Loan, final payment on which is due on February 27, 2015 (the Maturity Date ) , except as it may be accelerated pursuant to the terms hereof, or of the Note or the Loan Agreement or any of the other Loan Documents (as defined in the Loan Agreement) or as may be extended pursuant to the Loan Agreement. Capitalized terms used herein without definition shall have the meanings given to them in the Loan Agreement.
B. A condition precedent to Lenders extension of the Loan to Mortgagor is the execution and delivery by Mortgagor of this Mortgage.
AGREEMENTS
FOR GOOD AND VALUABLE CONSIDERATION , including the indebtedness hereby secured, the receipt and sufficiency of which are hereby acknowledged, Mortgagor agrees as follows:
Mortgagor HEREBY MORTGAGES, GRANTS, BARGAINS, SELLS, ASSIGNS, REMISES, RELEASES, WARRANTS, TRANSFERS, AND CONVEYS WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, to Lender, its successors and assigns, and grants a security interest in, the following described property, rights and interests (referred to collectively herein as the Premises ), all of which property, rights and interests are hereby pledged primarily and on a parity with the Real Estate (as defined below) and not secondarily, and as to any portion of the Premises constituting property subject to the Code (as defined in Section 36 of this Mortgage), this Mortgage is intended to be a security agreement under the Code for the purpose of creating hereby a security interest in such portion of the Premises, which Mortgagor hereby grants to Lender as secured party, and with all terms used below with respect to such portions of the Premises which are defined in the Code to have the meanings provided in the Code:
(a) The real estate located in the County of Pulaski, State of Arkansas and legally described on Exhibit A attached hereto and made a part hereof (the Real Estate );
(b) All improvements of every nature whatsoever now or hereafter situated on the Real Estate, and all fixtures and personal property of every nature whatsoever now or hereafter owned by Mortgagor and located on, or used in connection with the Real Estate or the improvements thereon, or in connection with any construction thereon, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by Mortgagor or on its behalf (the Improvements );
(c) All easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, all oil, gas and other minerals, whether surface or subsurface, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same;
(d) All rents, revenues, issues, profits, proceeds, income, royalties, accounts, including health-care-insurance receivables, escrows, letter-of-credit rights, security deposits, impounds, reserves, tax refunds and other rights to monies from the Premises
and/or the businesses and operations conducted by Mortgagor thereon, to be applied against the Indebtedness (as hereinafter defined); provided, however, that Mortgagor, so long as no Event of Default (as defined in Section 36 of this Mortgage) has occurred and is continuing hereunder, may collect rent as it becomes due, but not more than one month in advance thereof;
(e) All interest of Mortgagor in all leases now or hereafter on the Premises, whether written or oral (each, a Lease , and collectively, the Leases ), including, but not limited to, that certain Facility Lease dated April 1, 2012, between Mortgagor and Northridge HC&R Nursing, LLC (the Facility Lease ), together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such Lease;
(f) All goods, materials, supplies, chattels, fixtures and articles of personal property now or hereafter owned by Mortgagor and forming a part of, attached to, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part of the Real Estate or the Improvements, whether stored on the Real Estate or elsewhere, including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, computer hardware and software used in the operation of the Premises, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner; it being mutually agreed that all of the aforesaid property owned by Mortgagor and placed on the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the realty, and security for the Indebtedness (as hereinafter defined); notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the realty covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute goods (as such term is used in the Code), this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, in Lender, as secured party, and Mortgagor, as debtor, all in accordance with the Code;
(g) All of Mortgagors interests in general intangibles including payment intangibles and software now owned or hereafter acquired and related to the Premises, including, without limitation, all of Mortgagors right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which Mortgagor is or may become a party and which relate to the Premises; (ii) all obligations and indebtedness owed to Mortgagor thereunder; (iii) all intellectual property related to the Premises; and (iv) all choses in action and causes of action relating to the Premises;
(h) All of Mortgagors accounts now owned or hereafter created or acquired which relate to the Premises or the businesses and operations conducted thereon, including, without limitation, all of the following now owned or hereafter created or acquired by Mortgagor: (i) accounts, contract rights, health-care-insurance receivables, book debts, notes, drafts, and other obligations or indebtedness owing to Mortgagor arising from the sale, lease or exchange of goods or other property and/or the performance of services; (ii) Mortgagors rights in, to and under all purchase orders for goods, services or other property; (iii) Mortgagors rights to any goods, services or other property represented by any of the foregoing; (iv) monies due or to become due to Mortgagor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of Mortgagor); (v) securities, investment property, financial assets and securities entitlements; (vi) proceeds of any of the foregoing and all collateral security and guaranties of any kind given by any person or entity with respect to any of the foregoing; and (vii) all warranties, guarantees, permits and licenses in favor of Mortgagor with respect to the Premises;
(i) All insurance policies pertaining to the Premises and all proceeds, including all claims to and demands for them, of the voluntary or involuntary conversion of any of the Premises, Improvements or the other property described above into cash or liquidated claims, including proceeds of all present and future fire, hazard or casualty insurance policies and all condemnation awards or payments now or later to be made by any public body or decree by any court of competent jurisdiction for any taking or in connection with any condemnation or eminent domain proceeding, and all causes of action and their proceeds for any damage or injury to the Premises, Improvements or the other property described above or any part of them, or breach of warranty in connection with the Improvements, including causes of action arising in tort, contract, fraud or concealment of a material fact;
(j) All of Mortgagors rights in and to all Interest Rate Agreements;
(k) All books and records pertaining to any and all of the property described above, including computer-readable memory and any computer hardware or software necessary to access and process such memory (Books and Records);
(l) All proceeds of, additions and accretions to, substitutions and replacements for, and changes in any of the property described above, including, without limitation, all or proceeds of any sale, option or contract to sell the Premises or any portion thereof; and
(m) Any and all judgments in connection with the foregoing.
TO HAVE AND TO HOLD the Premises, unto Lender, its successors and assigns, forever, for the purposes and upon the uses herein set forth together with all right to possession of the Premises after the occurrence and during the continuance of any Event of Default under
this Mortgage; Mortgagor hereby RELEASING AND WAIVING all rights under and by virtue of the homestead exemption laws of the State of Arkansas.
FOR THE PURPOSE OF SECURING the following (collectively, the Indebtedness ):
(i) The payment by the Borrowers of the Loan, the Obligations under the Loan Agreement, and all interest, late charges, LIBOR breakage charges, prepayment premium, if any, exit fee, if any, interest rate swap or hedge expenses, if any, reimbursement obligations, fees and expenses for letters of credit issued by Lender for the account of the Borrowers, if any, and other indebtedness evidenced by or owing under the Note, any of the other Loan Documents, and any application for letters of credit and master letter of credit agreement, together with any renewals, extensions, replacements, amendments, modifications and refinancings of any of the foregoing;
(ii) The performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Borrowers or any other obligor to or benefiting Lender which are evidenced or secured by or otherwise provided in the Note, this Mortgage or any of the other Loan Documents;
(iii) Any and all Hedging Obligations (as defined in the Loan Agreement), contingent or otherwise, whether now existing or hereafter arising, of the Borrowers arising under or in connection with all Interest Rate Protection Products and Interest Rate Agreements (as each such capitalized term is defined in the Loan Agreement) to which Lender is a party;
(iv) The reimbursement to Lender of any and all sums incurred, expended or advanced by Lender pursuant to any term or provision of or constituting additional indebtedness under or secured by this Mortgage, any of the other Loan Documents, any such Hedging Obligations, Interest Rate Protection Products and Interest Rate Agreements or any application for letters of credit and master letter of credit agreement, with interest thereon as provided herein or therein; and
(v) To the extent not included in clauses (i) through (iv) above, any and all other Obligations.
PROVIDED, HOWEVER , that if the Borrowers shall pay the principal and all interest as provided in the Note and all Obligations under the Loan Agreement, and if all other sums secured hereby are paid, and if Mortgagor shall pay all other sums herein provided for, and shall well and truly keep and perform all of the covenants herein contained, then this conveyance shall be null and void and may be cancelled of record at the request and at the cost of Mortgagor, otherwise to remain in full force and effect.
IT IS FURTHER UNDERSTOOD AND AGREED THAT :
1. Title . Mortgagor represents, warrants and covenants that (a) Mortgagor is the owner and holder of the fee simple title to the Premises, free and clear of all liens and encumbrances, except those conveyances, liens and encumbrances in favor of Lender and except
for Permitted Exceptions (as defined in the Loan Agreement); (b) Mortgagor has legal power and authority to convey, mortgage and encumber the Premises.
2. Maintenance, Repair, Restoration, Prior Liens, Parking . Mortgagor covenants that, so long as any portion of the Indebtedness remains unpaid, Mortgagor will:
(a) Promptly repair, restore or rebuild any Improvements now or hereafter on the Premises which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are available or sufficient for the purpose;
(b) Keep the Premises in good condition and repair, without waste, and free from mechanics, materialmens or like liens or claims or other liens or claims for lien (other than Permitted Exceptions and subject to Mortgagors right to contest liens as permitted by the terms of Section 26 hereof);
(c) Pay when due the Loan in accordance with the terms of the Note and the other Loan Documents and duly perform and observe all of the terms, covenants and conditions to be observed and performed by Mortgagor under the Note, this Mortgage and the other Loan Documents;
(d) Pay when due any indebtedness which may be secured by a permitted lien or charge on the Premises on a parity with, superior to or inferior to this Mortgage, and upon request exhibit satisfactory evidence of the discharge of such lien to Lender (subject to Mortgagors right to contest liens as permitted by the terms of Section 26 hereof);
(e) Complete within a reasonable time any improvements at any time in the process of erection upon the Premises;
(f) Comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Premises and the use thereof;
(g) Obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental authorities that may be required from time to time with respect to the performance of Mortgagors obligations under this Mortgage;
(h) Make no material alterations in the Premises or demolish any portion of the Premises without Lenders prior written consent, except as required by law or municipal ordinance;
(i) Suffer or permit no change in the use or general nature of the occupancy of the Premises, without Lenders prior written consent;
(j) Pay when due all operating costs of the Premises;
(k) Not initiate or acquiesce in any zoning reclassification with respect to the Premises, without Lenders prior written consent;
(l) Provide and thereafter maintain adequate parking areas within the Premises as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right of way to and from the adjacent public thoroughfares necessary or desirable for the use thereof; and
(m) Comply with, and cause the Premises at all times to be operated in compliance with, all applicable federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.
3. Payment of Taxes and Assessments . Mortgagor will pay when due and before any penalty attaches, all general and special taxes, levies, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called Taxes ), whether or not assessed against Mortgagor, if applicable to the Premises or any interest therein, or the Indebtedness, or any obligation or agreement secured hereby, subject to Mortgagors right to contest the same, as provided by the terms hereof and in Section 10.1(f) of the Loan Agreement; and Mortgagor will, upon written request, furnish to Lender duplicate receipts therefor within 10 days after Lenders request.
4. Tax Deposits . Mortgagor shall establish and maintain at all times while this Mortgage continues in effect an impound account (the Impound Account ) with Lender for payment of Taxes and insurance premiums on the Premises and as additional security for the Indebtedness secured hereby. Mortgagor shall deposit in the Impound Account an amount determined by Lender to be sufficient (when added to the monthly deposits described herein) to pay the next due installment of real estate taxes and assessments on the Premises at least one (1) month prior to the due date or the delinquency date thereof (as Lender shall determine in its sole discretion) and, if a monthly impound for insurance premiums is required under the terms of the Loan Agreement, the next due annual insurance premiums with respect to the Premises, at least one (1) month prior to the due date thereof. Commencing on the first monthly interest payment date (each, a Monthly Payment Date ) under the Loan Agreement and continuing thereafter on each Monthly Payment Date under the Loan Agreement, Mortgagor shall pay to Lender, concurrently with the Monthly Payment due under the Loan Agreement, deposits in an amount equal to one-twelfth (1/12) of one hundred fiver percent (105%) of the most recently ascertainable annual Taxes on the Premises (the Monthly Tax Impound ), plus (if applicable) one-twelfth (1/12) of the amount of the annual insurance premiums that will next become due and payable on insurance policies which Mortgagor is required to maintain hereunder (the Monthly Insurance Impound ), each as estimated and determined by Lender. The Monthly Tax Impound or Monthly Insurance Impound, and the payments of interest or principal or both, payable pursuant to the Note and the Loan Agreement, shall be added together and shall be paid as an aggregate sum by Mortgagor to Lender. If Lender at any time determines that the Monthly Tax Impound or Monthly Insurance Impound is insufficient, Lender may in its discretion adjust the required monthly payments of such amounts, and Mortgagor shall be obligated to pay the increased amounts for the Monthly Tax Impound or (if applicable) Monthly Insurance Impound commencing with the next Monthly Payment Date under the Loan Agreement. So long as no
Event of Default or Default has occurred and is continuing, all sums in the Impound Account shall be held by Lender in the Impound Account and used to pay Taxes and insurance premiums before the same become delinquent. Mortgagor shall be responsible for ensuring the receipt by Lender, at least thirty (30) days prior to the respective due date or the delinquency date for payment thereof (as Lender shall determine in its sole discretion), of all bills, invoices and statements for all Taxes and (if applicable) insurance premiums to be paid from the Impound Account, and so long as no Event of Default has occurred and is continuing, Lender shall pay the Governmental Authority or other party entitled thereto directly to the extent funds are available for such purpose in the Impound Account. In making any payment from the Impound Account, Lender shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof. Lender shall pay no interest on funds contained in the Impound Account to Mortgagor, and any interest or other earnings on funds deposited in the Impound Account shall be solely for the account of Lender. If the total funds in the Impound Account shall exceed the amount of payments actually applied by Lender for the purposes of the Impound Account, such excess may be credited by Lender on subsequent payments to be made hereunder or, at the option of Lender, refunded to Mortgagor. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Premises. If, however, the Impound Account shall not contain sufficient funds to pay the sums required when the same shall become due and payable, Mortgagor shall, within ten (10) days after receipt of written notice thereof, deposit with Lender the full amount of any such deficiency. The Impound Account shall not constitute a trust fund and may be commingled with other monies held by Lender.
5. Lenders Interest In and Use of Deposits . Upon an Event of Default under this Mortgage, Lender may, at its option, apply any monies at the time on deposit pursuant to Section 4 hereof to cure any Event of Default under this Mortgage or to pay any of the Indebtedness in such order and manner as Lender may elect. If such deposits are used to cure an Event of Default or pay any of the Indebtedness, Mortgagor shall immediately, upon demand by Lender, deposit with Lender an amount equal to the amount so used from the deposits. When the Indebtedness has been fully paid, any remaining deposits shall be returned to Mortgagor. Such deposits are hereby pledged as additional security for the Indebtedness and shall not be subject to the direction or control of Mortgagor. Lender shall not be liable for any failure to apply to the payment of Taxes any amount so deposited unless Mortgagor, prior to an Event of Default under this Mortgage, shall have requested Lender in writing to make application of such funds to the payment of such amounts, accompanied by the bills for such Taxes. Lender shall not be liable for any act or omission taken in good faith or pursuant to the instruction of any party.
6. Insurance .
(a) Mortgagor shall at all times keep all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Premises insured against loss or damage by fire and such other hazards as may reasonably be required by Lender, in accordance with the terms, coverages and provisions described in the Loan Agreement,
and such other insurance as Lender may from time to time reasonably require. Unless Mortgagor provides Lender evidence of the insurance coverages required hereunder, Lender may purchase insurance at Mortgagors expense to cover Lenders interest in the Premises. The insurance may, but need not, protect Mortgagors interest. The coverages that Lender purchases may not pay any claim that Mortgagor makes or any claim that is made against Mortgagor in connection with the Premises. Mortgagor may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Mortgagor has obtained insurance as required by this Mortgage. If Lender purchases insurance for the Premises, Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Indebtedness. The cost of the insurance may be more than the cost of insurance Mortgagor may be able to obtain on its own.
(b) Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless Lender is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to Lender and such separate insurance is otherwise acceptable to Lender.
(c) In the event of loss, Mortgagor shall give prompt notice thereof to Lender, and Lender shall have the sole and absolute right to make proof of loss. Lender shall have the right, at its option and in its sole discretion, to apply any insurance proceeds arising from such loss, after the payment of all of Lenders expenses, either (i) on account of the Indebtedness, irrespective of whether such principal balance is then due and payable, whereupon Lender may declare the whole of the balance of Indebtedness to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in paragraph (d) of this Section. If insurance proceeds are made available to Mortgagor by Lender as hereinafter provided, Mortgagor shall repair, restore or rebuild the damaged or destroyed portion of the Premises so that the condition and value of the Premises are substantially the same as the condition and value of the Premises prior to being damaged or destroyed. Any insurance proceeds applied on account of the unpaid principal balance of the Note shall be subject to the prepayment provisions contained in the Loan Agreement and the Note. In the event of foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale.
(d) If insurance proceeds are made available by Lender to Mortgagor, and subject to the provisions of Article 11 of the Loan Agreement, the following provisions shall apply:
(i) Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Improvements, whether by fire or other casualty, Mortgagor shall obtain from Lender its approval of all site and building plans and specifications pertaining to such repair, restoration or rebuilding.
(ii) Prior to each payment or application of any insurance proceeds to the repair or restoration of such Improvements (which payment or application may be made, at Lenders option, through an escrow, the terms and conditions of which are satisfactory to Lender and the cost of which is to be borne by Mortgagor), Lender shall be satisfied as to the following:
(A) No Default (as defined in Section 36 of this Mortgage) or Event of Default under this Mortgage has occurred and is continuing;
(B) Either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Premises, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, Mortgagor has deposited with Lender such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Premises; and
(C) Prior to each disbursement of any such proceeds, Lender shall be furnished with a statement of Lenders architect (the cost of which shall be borne by Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by Lender and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and Lender shall be furnished with appropriate evidence of payment for labor or materials furnished to the Premises, and total or partial lien waivers substantiating such payments.
(iii) If Mortgagor shall fail to restore, repair or rebuild such Improvements within a time deemed satisfactory by Lender, then Lender, at its option, may (A) commence and perform all necessary acts to restore, repair or rebuild such Improvements for or on behalf of Mortgagor, or (B) declare an Event of Default under this Mortgage. If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of such Improvements, such excess shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable without payment of any premium or penalty.
7. Condemnation . If all or any part of the Premises are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof, to the extent of the full amount of the remaining unpaid Indebtedness, is hereby assigned to Lender, who is empowered to collect and receive the same and to give proper receipts therefor in the name of Mortgagor and the same shall be paid forthwith to Lender. Such award or monies shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable and, at any time from and after the taking Lender may declare the whole of the balance of the Indebtedness to be due and payable. Notwithstanding the provisions of this Section to the contrary, if any condemnation or
taking of less than the entire Premises occurs, such award or monies shall be applied, at the option of Lender and in its sole discretion, either (i) on account of the Indebtedness as provided above, or (ii) to any necessary restoration or repair of the remaining property, on the terms contained in Section 6(d) hereof.
8. Stamp Tax . If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over Mortgagor, any tax is due or becomes due in respect of the execution and delivery of this Mortgage, the Note or any of the other Loan Documents, Mortgagor shall pay such tax in the manner required by any such law. Mortgagor further agrees to reimburse Lender for any sums which Lender may expend by reason of the imposition of any such tax. Notwithstanding the foregoing, Mortgagor shall not be required to pay any income or franchise taxes of Lender.
9. Lease and Rent Assignment . Mortgagor acknowledges that, concurrently herewith, Mortgagor has executed and delivered to Lender, as additional security for the repayment of the Loan, an Absolute Assignment of Leases and Rents (the Assignment ) pursuant to which Mortgagor has assigned to Lender interests in the leases of the Premises and the rents and income from the Premises. All of the provisions of the Assignment are hereby incorporated herein as if fully set forth at length in the text of this Mortgage. Mortgagor agrees to abide by all of the provisions of the Assignment.
10. Effect of Extensions of Time and Other Changes . If the payment of the Indebtedness or any part thereof is extended or varied, if any part of any security for the payment of the Indebtedness is released, if the rate of interest charged under the Note is changed or if the time for payment thereof is extended or varied, all persons now or at any time hereafter liable therefor, or interested in the Premises or having an interest in Mortgagor, shall be held to assent to such extension, variation, release or change and their liability and the lien and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by Lender, notwithstanding such extension, variation, release or change.
11. Effect of Changes in Laws Regarding Taxation . If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Premises from the value thereof for the purpose of taxation or (b) the imposition upon Lender of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by Mortgagor, or (c) a change in the method of taxation of mortgages, deeds of trust or debts secured by mortgages or deeds of trust or Lenders interest in the Premises, or the manner of collection of taxes, so as to affect this Mortgage or the Indebtedness or the holders thereof, then Mortgagor, upon demand by Lender, shall pay such Taxes or charges, or reimburse Lender therefor; provided, however, that Mortgagor shall not be deemed to be required to pay any income or franchise taxes of Lender. Notwithstanding the foregoing, if in the opinion of counsel for Lender it is or may be unlawful to require Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then Lender may declare all of the Indebtedness to be immediately due and payable.
12. Lenders Performance of Defaulted Acts and Expenses Incurred by Lender . If an Event of Default under this Mortgage has occurred and is continuing, Lender may, but need not, make any payment or perform any act herein required of Mortgagor in any
form and manner deemed expedient by Lender, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or consent to any tax or assessment or cure any default of Mortgagor in any lease of the Premises. All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys fees, and any other monies advanced by Lender in regard to any tax referred to in Section 8 hereof or to protect the Premises or the lien hereof, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Lender, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate (as defined in the Loan Agreement). In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys fees, incurred by Lender in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of Lenders rights hereunder, (c) recovering any Indebtedness, (d) any litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, including without limitation, bankruptcy and probate proceedings, or (e) preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Lender, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate. The interest accruing under this Section shall be immediately due and payable by Mortgagor to Lender, and shall be additional Indebtedness evidenced by the Note and secured by this Mortgage. Lenders failure to act shall never be considered as a waiver of any right accruing to Lender on account of any Event of Default under this Mortgage or any of the other Loan Documents. Should any amount paid out or advanced by Lender hereunder, or pursuant to any agreement executed by Mortgagor in connection with the Loan, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Premises or any part thereof, then Lender shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.
13. Security Agreement . Mortgagor and Lender agree that this Mortgage shall constitute a Security Agreement within the meaning of the Code with respect to (a) all sums at any time on deposit for the benefit of Mortgagor or held by Lender (whether deposited by or on behalf of Mortgagor or anyone else) pursuant to any of the provisions of this Mortgage or the other Loan Documents, and (b) any personal property included in the granting clauses of this Mortgage, which personal property may not be deemed to be affixed to the Premises or may not constitute a fixture (within the meaning of the Code and which property is hereinafter referred to as Personal Property ), and all replacements of, substitutions for, additions to, and the proceeds thereof, and the supporting obligations (as defined in the Code) (all of said Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as Collateral ), and that a security interest in and to the Collateral is hereby granted to Lender, and the Collateral and all of Mortgagors right, title and interest therein are hereby assigned to Lender, all to secure payment of the Indebtedness. All of the provisions contained in this Mortgage pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Premises; and the following provisions
of this Section shall not limit the applicability of any other provision of this Mortgage but shall be in addition thereto:
(a) Mortgagor (being the Debtor as that term is used in the Code) is and will be the true and lawful owner of the Collateral and has rights in and the power to transfer the Collateral, subject to no liens, charges or encumbrances other than the lien of this Mortgage, other liens and encumbrances benefiting Lender and no other party, and liens and encumbrances, if any, expressly permitted by the other Loan Documents.
(b) The Collateral is to be used by Mortgagor solely for business purposes.
(c) The Collateral will be kept at the Real Estate and, except for Collateral no longer useful in connection with the operation of the Real Estate, provided that prior to the sale or other disposition thereof, such Collateral has been replaced by property of at least equal value and utility and which is subject to the lien of this Mortgage, will not be removed therefrom without the consent of Lender (being the Secured Party as that term is used in the Code). The Collateral may be affixed to the Real Estate but will not be affixed to any other real estate.
(d) The only persons having any interest in the Premises are Mortgagor, Lender and holders of interests, if any, expressly permitted hereby.
(e) No Financing Statement (other than Financing Statements showing Lender as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the Collateral or any proceeds thereof is on file in any public office except pursuant hereto; and Mortgagor, at Mortgagors own cost and expense, upon demand, will furnish to Lender such further information and will execute and deliver to Lender such financing statements and other documents in form satisfactory to Lender and will do all such acts as Lender may request at any time or from time to time or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Indebtedness, subject to no other liens or encumbrances, other than liens or encumbrances benefiting Lender and no other party, and liens and encumbrances (if any) expressly permitted hereby; and Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by Lender to be desirable. Mortgagor hereby irrevocably authorizes Lender at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto, without the signature of Mortgagor, that (i) indicate the Collateral (A) is comprised of all assets of Mortgagor or words of similar effect, regardless of whether any particular asset comprising a part of the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or (B) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein, and (ii) contain any other information required by the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether Mortgagor is an organization, the type of organization and any organizational identification number issued to Mortgagor, and (B)
in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. Mortgagor agrees to furnish any such information to Lender promptly upon request. Mortgagor further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by Lender in any jurisdiction prior to the date of this Mortgage. In addition, Mortgagor shall make appropriate entries on its books and records disclosing Lenders security interests in the Collateral.
(f) Upon and during the continuance of an Event of Default under this Mortgage, Lender shall have the remedies of a secured party under the Code, including, without limitation, the right to take immediate and exclusive possession of the Collateral, or any part thereof, and for that purpose, so far as Mortgagor can give authority therefor, with or without judicial process, may enter (if this can be done without breach of the peace) upon any place which the Collateral or any part thereof may be situated and remove the same therefrom (provided that if the Collateral is affixed to real estate, such removal shall be subject to the conditions stated in the Code); and Lender shall be entitled to hold, maintain, preserve and prepare the Collateral for sale, until disposed of, or may propose to retain the Collateral subject to Mortgagors right of redemption in satisfaction of Mortgagors obligations, as provided in the Code. Lender may render the Collateral unusable without removal and may dispose of the Collateral on the Premises. Lender may require Mortgagor to assemble the Collateral and make it available to Lender for its possession at a place to be designated by Lender which is reasonably convenient to both parties. Lender will give Mortgagor at least 10 days notice of the time and place of any public sale of the Collateral or of the time after which any private sale or any other intended disposition thereof is made. The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of Mortgagor hereinafter set forth at least 10 days before the time of the sale or disposition. Lender may buy at any public sale. Lender may buy at private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. Any such sale may be held in conjunction with any foreclosure sale of the Premises. If Lender so elects, the Premises and the Collateral may be sold as one lot. The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys fees and legal expenses incurred by Lender, shall be applied against the Indebtedness in such order or manner as Lender shall select. Lender will account to Mortgagor for any surplus realized on such disposition.
(g) The terms and provisions contained in this Section, unless the context otherwise requires, shall have the meanings and be construed as provided in the Code.
(h) This Mortgage is intended to be a financing statement filed as a fixture filing pursuant to Section 9-502(c) of the Code, as adopted in the State of Arkansas. The addresses of Mortgagor (Debtor) and Lender (Secured Party) are hereinbelow set forth. This Mortgage is to be filed for recording in appropriate public records of the county or counties where the Premises are located and Mortgagor hereby authorizes Lender to file any and all financing statements in the county or counties where the Premises are located,
and/or such other jurisdictions as reasonably determined by Lender, in order to perfect the security interests created hereby. Mortgagor is the record owner of the Premises.
(i) To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between Mortgagor or its agents as lessor, and various tenants named therein, as lessee, including all extended terms and all extensions and renewals of the terms thereof, as well as any amendments to or replacement of said Leases, together with all of the right, title and interest of Mortgagor, as lessor thereunder.
(j) Mortgagor represents and warrants that: (i) Mortgagor is the record owner of the Premises; (ii) Mortgagors chief executive office is located in the State of Georgia; (iii) Mortgagors state of organization is the State of Georgia; (iv) Mortgagors exact legal name is as set forth on Page 1 of this Mortgage; and (v) Mortgagors organizational identification number, if any, is as stated in the Loan Agreement.
(k) Mortgagor hereby agrees that: (i) where Collateral is in possession of a third party, Mortgagor will join with Lender in notifying the third party of Lenders interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of Lender; (ii) Mortgagor will cooperate with Lender in obtaining control with respect to Collateral consisting of: deposit accounts, investment property, letter of credit rights and electronic chattel paper; and (iii) until the Indebtedness is paid in full, Mortgagor will not change the state where it is located or change its name or form of organization without giving Lender at least 30 days prior written notice in each instance, and executing and delivering, at Mortgagors expense, all documentation reasonably required by Lender in connection with perfecting or preserving the perfection of the lien and security interest granted under this Mortgage.
14. Events of Default; Acceleration . Each of the following shall constitute an Event of Default under this Mortgage:
(a) Mortgagor fails to pay any amount payable to Lender under this Mortgage when any such payment is due in accordance with the terms hereof.
(b) Mortgagor fails to perform or observe, or to cause to be performed or observed, any obligation, covenant, term, agreement or provision required to be performed or observed by Mortgagor under Sections 1, 2(h), 2(i), 2(k), 2(l), 3 or 4 of this Mortgage;
(c) The occurrence of any Transfer in violation of Section 34(a) of this Mortgage or the provisions of the Loan Agreement referenced therein;
(d) Mortgagor fails to perform or observe, or to cause to be performed or observed, any other obligation, covenant, term, agreement or provision required to be performed or observed by Mortgagor under this Mortgage and not covered under clauses (a) and (b) of this Section 14, for a period of thirty (30) days after written notice of default from Lender; provided that if any such failure is susceptible to cure and cannot reasonably be cured within said thirty (30)-day period, then such default shall not
constitute an Event of Default so long as within such thirty (30)-day period Mortgagor have commenced efforts to cure such default, diligently pursues efforts to cure the applicable default, and actually cures such default no later than thirty (30) days after the end of the initial thirty (30)-day period; provided, further, that if a different notice or grace period is specified under any other paragraph of this Section 14 with respect to a particular breach, the specific provision shall control; or
(e) The occurrence of an Event of Default under the Loan Agreement, the Note or any of the other Loan Documents.
If an Event of Default occurs under this Mortgage, Lender may, at its option, declare the whole of the Indebtedness to be immediately due and payable without further notice to Mortgagor, with interest thereon accruing from the date of such Event of Default until paid at the Default Rate. Mortgagor agrees that the occurrence of an Event of Default as defined in, and pursuant to any of the respective Loan Documents, which is not cured within applicable grace or curative periods, shall constitute an immediate Event of Default (without need of notice or the expiration of any additional cure period other than as specified in such Loan Documents) under all Loan Documents.
15. Foreclosure; Expense of Litigation .
(a) When all or any part of the Indebtedness shall become due, whether by acceleration or otherwise, Lender shall have the right to foreclose the lien hereof for such Indebtedness or part thereof and/or exercise any right, power or remedy provided (i) in this Mortgage or any of the other Loan Documents in accordance with the applicable laws of the State of Arkansas, or (ii) under Arkansas law including the use of non-judicial statutory foreclosure proceedings. In the event of a foreclosure sale, Lender is hereby authorized, without the consent of Mortgagor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as Lender may deem advisable to cause the interest of such purchaser to be protected by any of such insurance policies.
(b) In any suit or other proceeding to foreclose this Mortgage or enforce any other remedy of Lender under this Mortgage or the Note, there shall be allowed and included as additional indebtedness in the decree for sale or other judgment or decree all expenditures and expenses which may be actually paid or incurred by or on behalf of Lender for reasonable attorneys fees, appraisers fees, outlays for documentary and expert evidence, stenographers charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to the title as Lender may deem reasonably necessary either to prosecute such suit or to evidence to bidders at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Premises. All expenditures and expenses of the nature mentioned in this Section and such other expenses and fees as may be incurred in the enforcement of Mortgagors obligations hereunder, the protection of said Premises and the maintenance of the interest created by this Mortgage, including the actual and reasonable fees of any attorney employed by Lender in any litigation or proceeding affecting this Mortgage, the Note, or the Premises,
including probate and bankruptcy proceedings, or in preparations for the commencement or defense of any proceeding or threatened suit or proceeding shall be immediately due and payable by Mortgagor, with interest thereon until paid at the Default Rate and shall be secured by this Mortgage.
(c) Upon any foreclosure sale, Lender may bid for and purchase the Premises in whole or in parcels and shall be entitled to apply all or any part of any indebtedness or obligation secured hereby as a credit to the purchase price.
16. Application of Proceeds of Foreclosure Sale . The proceeds of any foreclosure sale of the Premises shall be distributed a nd applied in accordance with the applicable laws of the State of Arkansas and, unless otherwise specified therein, in such order as Lender may determine in its sole and absolute discretion, subject to any express provisions of the Loan Agreement.
17. Appointment of Receiver . Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by Lender, appoint a receiver for the Premises in accordance with the applicable laws of the S tate of Arkansas. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of Mortgagor at the time of application for such receiver and without regard to the value of the Premises or whether the same shall be then occupied as a homestead or not and Lender hereunder or any other holder of the Note may be appointed as such receiver. Such receiver shall have power to collect the rents, issues and profits of the Premises (i) during the pendency of such foreclosure suit, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits. Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during said period, including, to the extent permitted by law, the right to lease all or any portion of the Premises for a term that extends beyond the time of such receivers possession without obtaining prior court approval of such lease. The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Indebtedness, or any amount found due or secured by any judgment or decree foreclosing this Mortgage, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such judgment or decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.
18. Lenders Right of Possession in Case of Default . At any time after an Event of Default under this Mortgage has occurred and is continuing, Mortgagor shall, upon demand of Lender, surrender to Lender possession of the Premises. Lender, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Premises, together with all documents, books, records, papers and accounts relating thereto, and may exclude Mortgagor and its employees, agents or servants therefrom, and Lender may then hold, operate, manage and control the Premises, either personally or by its agents. Lender shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in
distress for rent. Without limiting the generality of the foregoing, but subject to applicable Arkansas law, Lender shall have full power to:
(a) Cancel or terminate any lease or sublease for any cause or on any ground which would entitle Mortgagor to cancel the same;
(b) Elect to disaffirm any lease or sublease which is then subordinate to this Mortgage;
(c) Extend or modify any then existing leases and to enter into new leases, which extensions, modifications and leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Premises are subject to this Mortgage and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser;
(d) Make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Premises as Lender deems are necessary;
(e) Insure and reinsure the Premises and all risks incidental to Lenders possession, operation and management thereof;
(f) Terminate any management agreements, contracts, or agents/managers responsible, for the property management of the Premises, if in the sole discretion of Lender such property management is unsatisfactory in any respect; and
(g) Receive all of such avails, rents, issues and profits.
19. Application of Income Received by Lender . Lender, in the exercise of the rights and powers hereinabove conferred upon it, shall have full power to use and apply the avails, rents, issues and profits of the Premises to the payment of or on account of the following, in such order as Lender may determine:
(a) To the payment of the operating expenses of the Premises, including cost of management and leasing thereof (which shall include compensation to Lender and its agent or agents, if management be delegated to an agent or agents, and shall also include lease commissions and other compensation and expenses of seeking and procuring tenants and entering into leases), established claims for damages, if any, and premiums on insurance hereinabove authorized;
(b) To the payment of taxes and special assessments now due or which may hereafter become due on the Premises; and
(c) To the payment of any Indebtedness, including any deficiency which may result from any foreclosure sale.
20. Compliance with Law .
(a) If any provision in this Mortgage shall be inconsistent with any provision of the applicable laws of the State of Arkansas, such laws shall take precedence over the provisions of this Mortgage, but shall not invalidate or render unenforceable any other provision of this Mortgage that can be construed in a manner consistent with such laws.
(b) If any provision of this Mortgage shall grant to Lender (including Lender acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Mortgage any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default under this Mortgage which are more limited than the powers, rights or remedies that would otherwise be vested in Lender or in such receiver under the applicable laws of the State of Arkansas in the absence of said provision, Lender and such receiver shall be vested with the powers, rights and remedies granted by such laws to the full extent permitted by law.
21. Rights Cumulative . Each right, power and remedy herein conferred upon Lender is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Loan Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of Lender in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default under this Mortgage or acquiescence therein.
22. Lenders Right of Inspection . Lender and its representatives shall have the right to inspect the Premises and the books and records with respect thereto as and to the extent provided in the Loan Agreement, and access thereto , subject to the rights of tenants in possession, shall be permitted for that purpose.
23. Release Upon Payment and Discharge of Mortgagors Obligations . Lender shall release this Mortgage and the lien hereof by proper instrument upon payment and discharge of all Indebtedness, including payment of all reasonable expenses incurred by Lender in connection with the execution of such release. Mortgagor shall not otherwise be entitled to a release of this Mortgage and the lien hereof, except as may be expressly provided to the contrary in the Loan Agreement.
24. Notices . All notices and other communications provided for in this Mortgage ( Notices ) shall be in writing. The Notice Addresses of the parties for purposes of this Mortgage are as follows:
Mortgagor: |
Northridge HC&R Property Holdings, LLC 1145 Hembree Road Roswell, Georgia 30076 Attention: Boyd P. Gentry |
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With a copy to: |
Holt Ney Zatcoff & Wasserman, LLP 100 Galleria Parkway, Suite 1800 Atlanta, Georgia 30339 Attention: Gregory P. Youra |
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Lender: |
KeyBank National Association Real Estate Capital-Healthcare Mailcode: OH-01-51-0311 4910 Tiedeman Road, 3 rd Floor Brooklyn, Ohio 44144 Attention: Amy MacLearie, Closer |
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With a copy to: |
Bryan Cave LLP One Atlantic Center, Fourteenth Floor 1201 West Peachtree Street, NW Atlanta, Georgia 30309-3488 Attention: Robert C. Lewinson, Esq. |
or such other address as a party may designate by notice duly given in accordance with this Section to the other parties. A Notice to a party shall be effective when delivered to such partys Notice Address by any means, including, without limitation, personal delivery by the party giving the Notice, delivery by United States regular, certified or registered mail, or delivery by a commercial courier or delivery service. If the Notice Address of a party includes a facsimile number or electronic mail address, Notice given by facsimile or electronic mail shall be effective when delivered at such facsimile number or email address. If delivery of a Notice is refused, it shall be deemed to have been delivered at the time of such refusal of delivery. The party giving a Notice shall have the burden of establishing the fact and date of delivery or refusal of delivery of a Notice.
25. Waiver of Rights . Mortgagor hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner claim or take any advantage of, any stay, exemption, extension, homestead, dower, reinstatement or redemption law or any so-called Moratorium Law now or at any time hereafter in force providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to any decree, judgment or order of any court of competent jurisdiction; or, after such sale or sales, claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof; and without limiting the foregoing:
(a) Mortgagor specifically acknowledges that the transaction to which this Mortgage is a part is a transaction which does not include either agricultural real property or residential real estate and Mortgagor hereby expressly, voluntarily and knowingly waives any and all rights of appraisement, valuation, stay, extension, homestead, dower, reinstatement and redemption, if any, under any order, judgment or decree of foreclosure of this Mortgage, on its own behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of appraisement, valuation, stay, extension, homestead, dower, reinstatement and redemption of Mortgagor and of all other persons are and shall be deemed to be hereby waived to the full extent permitted by the applicable laws of the State of Arkansas, and Mortgagor specifically waives all redemption powers and rights which otherwise might be available to Mortgagor pursuant to Ark. Code Ann. § 16-66-502 and Ark. Code Ann. § 18-49-106, or that Act No. 153 of the Arkansas General Assembly passed on May 8, 1899; and
(b) Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power or remedy herein or otherwise granted or delegated to Lender but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted.
26. Contests . Notwithstanding anything to the contrary herein contained, Mortgagor shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Premises or which may be or become a lien thereon and any mechanics, materialmens or other liens or claims for lien upon the Premises (each, a Contested Lien ), and no Contested Lien shall constitute an Event of Default under this Mortgage, if, but only if:
(a) Mortgagor shall forthwith give notice of any Contested Lien to Lender at the time the same shall be asserted;
(b) Mortgagor shall either pay under protest or deposit with Lender the full amount (the Lien Amount ) of such Contested Lien, together with such amount as Lender may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment Mortgagor may furnish to Lender a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to Lender;
(c) Mortgagor shall diligently prosecute the contest of any Contested Lien by appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Premises, and shall permit Lender to be represented in any such contest and shall pay all expenses incurred, in so doing, including fees and expenses of Lenders counsel (all of which shall constitute so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand);
(d) Mortgagor shall pay each such Contested Lien and all Lien Amounts together with interest and penalties thereon (i) if and to the extent that any such Contested Lien shall be determined adverse to Mortgagor, or (ii) forthwith upon demand by Lender if, in the opinion of Lender, and notwithstanding any such contest, the Premises shall be
in jeopardy or in danger of being forfeited or foreclosed; provided that if Mortgagor shall fail so to do, Lender may, but shall not be required to, pay all such Contested Liens and Lien Amounts and interest and penalties thereon and such other sums as may be necessary in the judgment of Lender to obtain the release and discharge of such liens; and any amount expended by Lender in so doing shall be so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand; and provided further that Lender may in such case use and apply monies deposited as provided in paragraph (b) of this Section and may demand payment upon any bond or title indemnity furnished as aforesaid.
27. Expenses Relating to Note and Mortgage .
(a) Mortgagor will pay all expenses, charges, costs and fees relating to the Loan or necessitated by the terms of the Note, this Mortgage or any of the other Loan Documents, including without limitation, Lenders reasonable attorneys fees actually incurred in connection with the negotiation, documentation, administration, servicing and enforcement of the Note, this Mortgage and the other Loan Documents, all filing, registration and recording fees, all other expenses incident to the execution and acknowledgment of this Mortgage and all federal, state, county and municipal taxes, and other taxes (provided Mortgagor shall not be required to pay any income or franchise taxes of Lender), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note and this Mortgage. Mortgagor recognizes that, during the term of this Mortgage, Lender:
(i) May be involved in court or administrative proceedings, including, without restricting the foregoing, foreclosure, probate, bankruptcy, creditors arrangements, insolvency, housing authority and pollution control proceedings of any kind, to which Lender shall be a party by reason of the Loan Documents or in which the Loan Documents or the Premises are involved directly or indirectly;
(ii) May make preparations following the occurrence of an Event of Default under this Mortgage for the commencement of any suit for the foreclosure hereof, which may or may not be actually commenced;
(iii) May make preparations following the occurrence of an Event of Default under this Mortgage for, and do work in connection with, Lenders taking possession of and managing the Premises, which event may or may not actually occur;
(iv) May make preparations for and commence other private or public actions to remedy an Event of Default under this Mortgage, which other actions may or may not be actually commenced;
(v) May enter into negotiations with Mortgagor or any of its agents, employees or attorneys in connection with the existence or curing of any Event of Default under this Mortgage, the sale of the Premises, the assumption of liability for any of the Indebtedness or the transfer of the Premises in lieu of foreclosure; or
(vi) May enter into negotiations with Mortgagor or any of its agents, employees or attorneys pertaining to Lenders approval of actions taken or proposed to be taken by Mortgagor which approval is required by the terms of this Mortgage.
(b) All expenses, charges, costs and fees described in this Section shall be so much additional Indebtedness, shall bear interest from the date so incurred until paid at the Default Rate and shall be paid, together with said interest, by Mortgagor forthwith upon demand.
28. Statement of Indebtedness . Mortgagor, within seven (7) days after being so requested by Lender, shall furnish a duly acknowledged written statement setting forth the amount of the debt secured by this Mortgage, the date to which interest has been paid and stating either that no offsets or defenses exist against such debt or, if such offsets or defenses are alleged to exist, the nature thereof.
29. Further Instruments . Upon request of Lender, Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary fully to effectuate the intent of this Mortgage and of the other Loan Documents.
30. Additional Indebtedness Secured . All persons and entities with any interest in the Premises or about to acquire any such interest should be aware that this Mortgage secures more than the stated principal amount of the Note and interest thereon; this Mortgage secures any and all other amounts which may become due under the Note, any of the other Loan Documents or any other document or instrument evidencing, securing or otherwise affecting the Indebtedness, including, without limitation, any and all amounts expended by Lender to operate, manage or maintain the Premises or to otherwise protect the Premises or the lien of this Mortgage.
31. Indemnity . Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against Lender in the exercise of the rights and powers granted to Lender in this Mortgage, and Mortgagor hereby expressly waives and releases any such liability, except to the extent resulting from the gross negligence or willful misconduct of Lender. Mortgagor shall indemnify and save Lender harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses, including reasonable attorneys fees and court costs actually incurred (collectively, Claims ), of whatever kind or nature which may be imposed on, incurred by or asserted against Lender at any time by any third party which relate to or arise from: (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which Lender may or does become party, either as plaintiff or as defendant, by reason of this Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Premises; and (c) the ownership, leasing, use, operation or maintenance of the Premises, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Premises to Lender in accordance with the terms of this Mortgage; provided, however, that Mortgagor shall not be obligated to indemnify or hold Lender harmless from and against any Claims directly arising from the gross negligence or willful misconduct of Lender. All costs provided for herein and paid for by Lender shall be so much additional Indebtedness and shall become immediately due and payable upon demand by
Lender and with interest thereon from the date incurred by Lender until paid at the Default Rate. The indemnity provided in this Section shall be in addition to (but not in duplication of) any other indemnification provision contained in the Loan Agreement or any other Loan Document.
32. Subordination of Property Managers Lien . Any property management agreement for the Premises entered into hereafter with a property manager shall contain a provision whereby the property manager agrees that any and all mechanics lien rights that the property manager or anyone claiming by, through or under the property manager may have in the Premises shall be subject and subordinate to the lien of this Mortgage and shall provide that Lender may terminate such agreement, without penalty or cost, at any time after the occurrence of an Event of Default under this Mortgage. Such property management agreement or a short form thereof, at Lenders request, shall be recorded in the appropriate public records of the county where the Premises are located. In addition, Mortgagor shall cause the property manager under such agreement to enter into a subordination of the management agreement with Lender, in recordable form, whereby such property manager subordinates present and future lien rights and those of any party claiming by, through or under such property manager to this Mortgage.
33. Compliance with Environmental Laws . Concurrently herewith Mortgagor and the Guarantors have executed and delivered to Lender that certain Indemnity Agreement Regarding Hazardous Materials dated as of the date hereof (the Indemnity ) pursuant to which Mortgagor and the Guarantors have indemnified Lender for environmental matters concerning the Premises, as more particularly described therein. The provisions of the Indemnity are hereby incorporated herein and this Mortgage shall secure the obligations of Mortgagor thereunder.
34. Miscellaneous .
(a) Incorporation of Loan Agreement Provisions Prohibiting Certain Transfers . The provisions of Sections 12.2 and 12.3 of the Loan Agreement (prohibiting certain Transfers , as defined in the Loan Agreement), together with all defined terms used therein, are hereby incorporated into and made a part of this Mortgage, as fully as if set forth herein verbatim.
(b) Usury and Truth in Lending . Notwithstanding the provisions contained in Section 34(d) of this Mortgage to the contrary, Mortgagor acknowledges that the Loan evidenced in the Loan Agreement was solicited, negotiated, closed and funded outside the State of Arkansas, and Mortgagor waives any argument that the laws of the State of Arkansas shall apply for usury purposes. The Loan is an exempted transaction under the Truth In Lending Act, 15 U.S.C., §1601, et seq.
(c) Successors and Assigns . This Mortgage and all provisions hereof shall be binding upon and enforceable against Mortgagor and its assigns and other successors. This Mortgage and all provisions hereof shall inure to the benefit of Lender, its successors and assigns and any holder or holders, from time to time, of the Note.
(d) Invalidity of Provisions; Governing Law . In the event that any provision of this Mortgage is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court,
Mortgagor and Lender shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Mortgage and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect. Furthermore, a ll agreements between Mortgagor and Lender (including, without limitation, those contained in this Mortgage and the Note) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to the Lender exceed the highest lawful rate of interest permissible under the applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or the Note or any other documents securing the Indebtedness at the time performance of such provision shall be due, shall involve the payment of interest exceeding the highest rate of interest permitted by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under the applicable law; and if for any reason whatsoever Lender shall ever receive as interest an amount which would be deemed unlawful, such interest shall be applied to the payment of the last maturing installment or installments of the principal Indebtedness (whether or not then due and payable) and not to the payment of interest. Subject to the provisions contained in Section 34(b) of this Mortgage, this Mortgage is to be construed in accordance with and governed by the laws of the State of Arkansas.
(e) Municipal Requirements . Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and Mortgagor hereby assigns to Lender any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Similarly, no building or other improvement on the Premises shall rely on any premises not subject to this Mortgage or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by Mortgagor which would result in a violation of any of the provisions of this paragraph shall be void.
(f) Rights of Tenants . Lender shall have the right and option to commence a civil action to foreclose this Mortgage and to obtain a decree of foreclosure and sale subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of Lender. The failure to join any such tenant or tenants of the Premises as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect the Indebtedness, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Premises, any statute or rule of law at any time existing to the contrary notwithstanding.
(g) Mortgagee-in-Possession . Nothing herein contained shall be construed as constituting Lender a mortgagee-in-possession in the absence of the actual taking of possession of the Premises by Lender pursuant to this Mortgage.
(h) Relationship of Lender and Mortgagor . Lender shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of Mortgagor or of any lessee, operator, concessionaire or licensee of Mortgagor in the conduct of their
respective businesses, and, without limiting the foregoing, Lender shall not be deemed to be such partner, joint venturer, agent or associate on account of Lender becoming a mortgagee-in-possession or exercising any rights pursuant to this Mortgage, any of the other Loan Documents, or otherwise. The relationship of Mortgagor and Lender hereunder is solely that of debtor/creditor.
(i) Time of the Essence . Time is of the essence of the payment by Mortgagor of all amounts due and owing to Lender under the Note and the other Loan Documents and the performance and observance by Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Loan Documents.
(j) No Merger . The parties hereto intend that this Mortgage and the interest hereunder shall not merge in the fee simple title to the Premises, and if Lender acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by Lender as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the interest hereunder shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.
(k) Complete Agreement; No Reliance; Modifications . This Mortgage, the Note and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof. Mortgagor acknowledges that it is executing this Mortgage without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein or in the other Loan Documents. This Mortgage may not be modified, altered or amended except by an agreement in writing signed by both Mortgagor and Lender.
(l) Captions . The captions and headings of various Sections and paragraphs of this Mortgage and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
(m) Gender and Number . Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.
(n) Execution of Counterparts . This Mortgage may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Mortgage by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Mortgage maintained by Lender shall be deemed to be an original.
(o) Construction . Each party to this Mortgage and legal counsel to each party have participated in the drafting of this Mortgage, and accordingly the general rule
of construction to the effect that any ambiguities in a contract are resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Mortgage.
(p) References to Documents . Unless expressly provided to the contrary or the context otherwise requires, all references in this Mortgage to any other document, instrument or agreement shall be deemed to refer to such document, instrument or agreement as it may be amended, modified, supplemented, renewed, extended or restated from time to time; provided, however, that nothing in this subsection shall operate or be construed to authorize any such amendment, modification, supplement, renewal, extension or restatement that is prohibited or restricted under any other provision of the Loan Documents.
35. Litigation Provisions.
(a) Consent to Jurisdiction . MORTGAGOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . MORTGAGOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST MORTGAGOR IN ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. MORTGAGOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) No Proceedings in Other Jurisdictions . MORTGAGOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST LENDER RELATING IN ANY MANNER TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR IF A LEGAL PROCEEDING IS COMMENCED BY LENDER AGAINST MORTGAGOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . MORTGAGOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
36. Definitions of Certain Terms . The following terms shall have the following meanings in this Mortgage:
Code : The Uniform Commercial Code of the State of Arkansas as from time to time in effect; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, the security interest in any collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Arkansas, the term Code shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Mortgage or the other Loan Documents relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
Default : When used in reference to this Mortgage or any other document, or in reference to any provision of or obligation under this Mortgage or any other document, the occurrence of an event or the existence of a condition which, with the passage of time or the giving of notice, or both, would constitute an Event of Default under this Mortgage or such other document, as the case may be.
Event of Default : The following: (i) when used in reference to this Mortgage, one or more of the events or occurrences referred to in Section 14 of this Mortgage; and (ii) when used in reference to any other document, a default or event of default under such document that has continued after the giving of any applicable notice and the expiration of any applicable grace or cure periods.
37. Waiver . TO THE EXTENT PERMITTED BY LAW, MORTGAGOR HEREBY EXPRESSLY WAIVES AND RELEASES ANY REQUIREMENT OR OBLIGATION THAT LENDER PRESENT EVIDENCE OR OTHERWISE PROCEED BEFORE ANY COURT, CLERK, OR OTHER JUDICIAL OR QUASI-JUDICIAL BODY BEFORE EXERCISE OF THE POWERS OF SALE CONTAINED IN THIS MORTGAGE AND IN THE ARKANSAS CODE.
[Remainder of Page Intentionally Left Blank;
Execution on Following Pages]
IN WITNESS WHEREOF , Mortgagor has executed and delivered this Mortgage as of the day and year first above written.
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NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
ACKNOWLEDGMENT |
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STATE OF GEORGIA |
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COUNTY OF FULTON |
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On this day, before me, the undersigned, a Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within named Christopher F. Brogdon, to me personally well known, who stated that he is the Manager of Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, and was duly authorized in that capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 21st day of December, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
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Jan. 30, 2016 |
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(S E A L) |
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Exhibit 10.270
Execution Version
MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING
(ARKANSAS)
MADE BY
WOODLAND HILLS HC PROPERTY HOLDINGS, LLC
as Mortgagor
to and for the benefit of
KEYBANK NATIONAL ASSOCIATION
as Lender
Dated as of: December 28, 2012
PREPARED BY AND UPON RECORDATION RETURN TO:
Bryan Cave LLP
One Atlantic Center
1201 West Peachtree Street, NW
Fourteenth Floor
Atlanta, Georgia 30309
Attention: Teresa B. Pernini, Esq.
This Document Prepared by
and after Recording Return to:
Teresa B. Pernini, Esq.
Bryan Cave LLP
One Atlantic Center
1201 West Peachtree Street, NW
Fourteenth Floor
Atlanta, Georgia 30309
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING
(Woodland Hills Healthcare and Rehabilitation)
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING dated as of December 28, 2012 (this Mortgage ), is executed by WOODLAND HILLS HC PROPERTY HOLDINGS, LLC , a Georgia limited liability company, having an address at 1145 Hembree Road, Roswell, GA 30076 (the Mortgagor ) to and for the benefit of KEYBANK NATIONAL ASSOCIATION , its successors and assigns ( Lender ) whose address is 4910 Tiedeman Road, 3 rd Floor, Brooklyn, Ohio 44144.
RECITALS
A. Pursuant to the terms and conditions of that certain Secured Loan Agreement of even date herewith (the Loan Agreement ) by and among Mortgagor, Northridge HC&R Property Holdings, LLC, APH&R Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC, each a Georgia limited liability company (Mortgagor, together with the foregoing entities, referred to herein individually, as the Borrower and collectively as the Borrowers ) and Lender, Lender has agreed to make a loan to the Borrowers in the original principal amount of $16,500,000 (the Loan ), which Loan is evidenced by a promissory note dated the date hereof (the Note ) , executed by the Borrowers and payable to the order of Lender in the principal amount of the Loan, final payment on which is due on February 27, 2015 (the Maturity Date ) , except as it may be accelerated pursuant to the terms hereof, or of the Note or the Loan Agreement or any of the other Loan Documents (as defined in the Loan Agreement) or as may be extended pursuant to the Loan Agreement. Capitalized terms used herein without definition shall have the meanings given to them in the Loan Agreement.
B. A condition precedent to Lenders extension of the Loan to Mortgagor is the execution and delivery by Mortgagor of this Mortgage.
AGREEMENTS
FOR GOOD AND VALUABLE CONSIDERATION , including the indebtedness hereby secured, the receipt and sufficiency of which are hereby acknowledged, Mortgagor agrees as follows:
Mortgagor HEREBY MORTGAGES, GRANTS, BARGAINS, SELLS, ASSIGNS, REMISES, RELEASES, WARRANTS, TRANSFERS, AND CONVEYS WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, to Lender, its successors and assigns, and grants a security interest in, the following described property, rights and interests (referred to collectively herein as the Premises ), all of which property, rights and interests are hereby pledged primarily and on a parity with the Real Estate (as defined below) and not secondarily, and as to any portion of the Premises constituting property subject to the Code (as defined in Section 36 of this Mortgage), this Mortgage is intended to be a security agreement under the Code for the purpose of creating hereby a security interest in such portion of the Premises, which Mortgagor hereby grants to Lender as secured party, and with all terms used below with respect to such portions of the Premises which are defined in the Code to have the meanings provided in the Code:
(a) The real estate located in the County of Pulaski, State of Arkansas and legally described on Exhibit A attached hereto and made a part hereof (the Real Estate );
(b) All improvements of every nature whatsoever now or hereafter situated on the Real Estate, and all fixtures and personal property of every nature whatsoever now or hereafter owned by Mortgagor and located on, or used in connection with the Real Estate or the improvements thereon, or in connection with any construction thereon, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by Mortgagor or on its behalf (the Improvements );
(c) All easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, all oil, gas and other minerals, whether surface or subsurface, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same;
(d) All rents, revenues, issues, profits, proceeds, income, royalties, accounts, including health-care-insurance receivables, escrows, letter-of-credit rights, security deposits, impounds, reserves, tax refunds and other rights to monies from the Premises
and/or the businesses and operations conducted by Mortgagor thereon, to be applied against the Indebtedness (as hereinafter defined); provided, however, that Mortgagor, so long as no Event of Default (as defined in Section 36 of this Mortgage) has occurred and is continuing hereunder, may collect rent as it becomes due, but not more than one month in advance thereof;
(e) All interest of Mortgagor in all leases now or hereafter on the Premises, whether written or oral (each, a Lease , and collectively, the Leases ), including, but not limited to, that certain Facility Lease dated April 1, 2012, between Mortgagor and Woodland Hills HC Nursing, LLC (the Facility Lease ), together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such Lease;
(f) All goods, materials, supplies, chattels, fixtures and articles of personal property now or hereafter owned by Mortgagor and forming a part of, attached to, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part of the Real Estate or the Improvements, whether stored on the Real Estate or elsewhere, including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, computer hardware and software used in the operation of the Premises, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner; it being mutually agreed that all of the aforesaid property owned by Mortgagor and placed on the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the realty, and security for the Indebtedness (as hereinafter defined); notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the realty covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute goods (as such term is used in the Code), this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, in Lender, as secured party, and Mortgagor, as debtor, all in accordance with the Code;
(g) All of Mortgagors interests in general intangibles including payment intangibles and software now owned or hereafter acquired and related to the Premises, including, without limitation, all of Mortgagors right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which Mortgagor is or may become a party and which relate to the Premises; (ii) all obligations and indebtedness owed to Mortgagor thereunder; (iii) all intellectual property related to the Premises; and (iv) all choses in action and causes of action relating to the Premises;
(h) All of Mortgagors accounts now owned or hereafter created or acquired which relate to the Premises or the businesses and operations conducted thereon, including, without limitation, all of the following now owned or hereafter created or acquired by Mortgagor: (i) accounts, contract rights, health-care-insurance receivables, book debts, notes, drafts, and other obligations or indebtedness owing to Mortgagor arising from the sale, lease or exchange of goods or other property and/or the performance of services; (ii) Mortgagors rights in, to and under all purchase orders for goods, services or other property; (iii) Mortgagors rights to any goods, services or other property represented by any of the foregoing; (iv) monies due or to become due to Mortgagor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of Mortgagor); (v) securities, investment property, financial assets and securities entitlements; (vi) proceeds of any of the foregoing and all collateral security and guaranties of any kind given by any person or entity with respect to any of the foregoing; and (vii) all warranties, guarantees, permits and licenses in favor of Mortgagor with respect to the Premises;
(i) All insurance policies pertaining to the Premises and all proceeds, including all claims to and demands for them, of the voluntary or involuntary conversion of any of the Premises, Improvements or the other property described above into cash or liquidated claims, including proceeds of all present and future fire, hazard or casualty insurance policies and all condemnation awards or payments now or later to be made by any public body or decree by any court of competent jurisdiction for any taking or in connection with any condemnation or eminent domain proceeding, and all causes of action and their proceeds for any damage or injury to the Premises, Improvements or the other property described above or any part of them, or breach of warranty in connection with the Improvements, including causes of action arising in tort, contract, fraud or concealment of a material fact;
(j) All of Mortgagors rights in and to all Interest Rate Agreements;
(k) All books and records pertaining to any and all of the property described above, including computer-readable memory and any computer hardware or software necessary to access and process such memory (Books and Records);
(l) All proceeds of, additions and accretions to, substitutions and replacements for, and changes in any of the property described above, including, without limitation, all or proceeds of any sale, option or contract to sell the Premises or any portion thereof; and
(m) Any and all judgments in connection with the foregoing.
TO HAVE AND TO HOLD the Premises, unto Lender, its successors and assigns, forever, for the purposes and upon the uses herein set forth together with all right to possession of the Premises after the occurrence and during the continuance of any Event of Default under
this Mortgage; Mortgagor hereby RELEASING AND WAIVING all rights under and by virtue of the homestead exemption laws of the State of Arkansas.
FOR THE PURPOSE OF SECURING the following (collectively, the Indebtedness ):
(i) The payment by the Borrowers of the Loan, the Obligations under the Loan Agreement, and all interest, late charges, LIBOR breakage charges, prepayment premium, if any, exit fee, if any, interest rate swap or hedge expenses, if any, reimbursement obligations, fees and expenses for letters of credit issued by Lender for the account of the Borrowers, if any, and other indebtedness evidenced by or owing under the Note, any of the other Loan Documents, and any application for letters of credit and master letter of credit agreement, together with any renewals, extensions, replacements, amendments, modifications and refinancings of any of the foregoing;
(ii) The performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Borrowers or any other obligor to or benefiting Lender which are evidenced or secured by or otherwise provided in the Note, this Mortgage or any of the other Loan Documents;
(iii) Any and all Hedging Obligations (as defined in the Loan Agreement), contingent or otherwise, whether now existing or hereafter arising, of the Borrowers arising under or in connection with all Interest Rate Protection Products and Interest Rate Agreements (as each such capitalized term is defined in the Loan Agreement) to which Lender is a party;
(iv) The reimbursement to Lender of any and all sums incurred, expended or advanced by Lender pursuant to any term or provision of or constituting additional indebtedness under or secured by this Mortgage, any of the other Loan Documents, any such Hedging Obligations, Interest Rate Protection Products and Interest Rate Agreements or any application for letters of credit and master letter of credit agreement, with interest thereon as provided herein or therein; and
(v) To the extent not included in clauses (i) through (iv) above, any and all other Obligations.
PROVIDED, HOWEVER , that if the Borrowers shall pay the principal and all interest as provided in the Note and all Obligations under the Loan Agreement, and if all other sums secured hereby are paid, and if Mortgagor shall pay all other sums herein provided for, and shall well and truly keep and perform all of the covenants herein contained, then this conveyance shall be null and void and may be cancelled of record at the request and at the cost of Mortgagor, otherwise to remain in full force and effect.
IT IS FURTHER UNDERSTOOD AND AGREED THAT :
1. Title . Mortgagor represents, warrants and covenants that (a) Mortgagor is the owner and holder of the fee simple title to the Premises, free and clear of all liens and encumbrances, except those conveyances, liens and encumbrances in favor of Lender and except
for Permitted Exceptions (as defined in the Loan Agreement); (b) Mortgagor has legal power and authority to convey, mortgage and encumber the Premises.
2. Maintenance, Repair, Restoration, Prior Liens, Parking . Mortgagor covenants that, so long as any portion of the Indebtedness remains unpaid, Mortgagor will:
(a) Promptly repair, restore or rebuild any Improvements now or hereafter on the Premises which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are available or sufficient for the purpose;
(b) Keep the Premises in good condition and repair, without waste, and free from mechanics, materialmens or like liens or claims or other liens or claims for lien (other than Permitted Exceptions and subject to Mortgagors right to contest liens as permitted by the terms of Section 26 hereof);
(c) Pay when due the Loan in accordance with the terms of the Note and the other Loan Documents and duly perform and observe all of the terms, covenants and conditions to be observed and performed by Mortgagor under the Note, this Mortgage and the other Loan Documents;
(d) Pay when due any indebtedness which may be secured by a permitted lien or charge on the Premises on a parity with, superior to or inferior to this Mortgage, and upon request exhibit satisfactory evidence of the discharge of such lien to Lender (subject to Mortgagors right to contest liens as permitted by the terms of Section 26 hereof);
(e) Complete within a reasonable time any improvements at any time in the process of erection upon the Premises;
(f) Comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Premises and the use thereof;
(g) Obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental authorities that may be required from time to time with respect to the performance of Mortgagors obligations under this Mortgage;
(h) Make no material alterations in the Premises or demolish any portion of the Premises without Lenders prior written consent, except as required by law or municipal ordinance;
(i) Suffer or permit no change in the use or general nature of the occupancy of the Premises, without Lenders prior written consent;
(j) Pay when due all operating costs of the Premises;
(k) Not initiate or acquiesce in any zoning reclassification with respect to the Premises, without Lenders prior written consent;
(l) Provide and thereafter maintain adequate parking areas within the Premises as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right of way to and from the adjacent public thoroughfares necessary or desirable for the use thereof; and
(m) Comply with, and cause the Premises at all times to be operated in compliance with, all applicable federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.
3. Payment of Taxes and Assessments . Mortgagor will pay when due and before any penalty attaches, all general and special taxes, levies, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called Taxes ), whether or not assessed against Mortgagor, if applicable to the Premises or any interest therein, or the Indebtedness, or any obligation or agreement secured hereby, subject to Mortgagors right to contest the same, as provided by the terms hereof and in Section 10.1(f) of the Loan Agreement; and Mortgagor will, upon written request, furnish to Lender duplicate receipts therefor within 10 days after Lenders request.
4. Tax Deposits . Mortgagor shall establish and maintain at all times while this Mortgage continues in effect an impound account (the Impound Account ) with Lender for payment of Taxes and insurance premiums on the Premises and as additional security for the Indebtedness secured hereby. Mortgagor shall deposit in the Impound Account an amount determined by Lender to be sufficient (when added to the monthly deposits described herein) to pay the next due installment of real estate taxes and assessments on the Premises at least one (1) month prior to the due date or the delinquency date thereof (as Lender shall determine in its sole discretion) and, if a monthly impound for insurance premiums is required under the terms of the Loan Agreement, the next due annual insurance premiums with respect to the Premises, at least one (1) month prior to the due date thereof. Commencing on the first monthly interest payment date (each, a Monthly Payment Date ) under the Loan Agreement and continuing thereafter on each Monthly Payment Date under the Loan Agreement, Mortgagor shall pay to Lender, concurrently with the Monthly Payment due under the Loan Agreement, deposits in an amount equal to one-twelfth (1/12) of one hundred fiver percent (105%) of the most recently ascertainable annual Taxes on the Premises (the Monthly Tax Impound ), plus (if applicable) one-twelfth (1/12) of the amount of the annual insurance premiums that will next become due and payable on insurance policies which Mortgagor is required to maintain hereunder (the Monthly Insurance Impound ), each as estimated and determined by Lender. The Monthly Tax Impound or Monthly Insurance Impound, and the payments of interest or principal or both, payable pursuant to the Note and the Loan Agreement, shall be added together and shall be paid as an aggregate sum by Mortgagor to Lender. If Lender at any time determines that the Monthly Tax Impound or Monthly Insurance Impound is insufficient, Lender may in its discretion adjust the required monthly payments of such amounts, and Mortgagor shall be obligated to pay the increased amounts for the Monthly Tax Impound or (if applicable) Monthly Insurance Impound commencing with the next Monthly Payment Date under the Loan Agreement. So long as no
Event of Default or Default has occurred and is continuing, all sums in the Impound Account shall be held by Lender in the Impound Account and used to pay Taxes and insurance premiums before the same become delinquent. Mortgagor shall be responsible for ensuring the receipt by Lender, at least thirty (30) days prior to the respective due date or the delinquency date for payment thereof (as Lender shall determine in its sole discretion), of all bills, invoices and statements for all Taxes and (if applicable) insurance premiums to be paid from the Impound Account, and so long as no Event of Default has occurred and is continuing, Lender shall pay the Governmental Authority or other party entitled thereto directly to the extent funds are available for such purpose in the Impound Account. In making any payment from the Impound Account, Lender shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof. Lender shall pay no interest on funds contained in the Impound Account to Mortgagor, and any interest or other earnings on funds deposited in the Impound Account shall be solely for the account of Lender. If the total funds in the Impound Account shall exceed the amount of payments actually applied by Lender for the purposes of the Impound Account, such excess may be credited by Lender on subsequent payments to be made hereunder or, at the option of Lender, refunded to Mortgagor. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Premises. If, however, the Impound Account shall not contain sufficient funds to pay the sums required when the same shall become due and payable, Mortgagor shall, within ten (10) days after receipt of written notice thereof, deposit with Lender the full amount of any such deficiency. The Impound Account shall not constitute a trust fund and may be commingled with other monies held by Lender.
5. Lenders Interest In and Use of Deposits . Upon an Event of Default under this Mortgage, Lender may, at its option, apply any monies at the time on deposit pursuant to Section 4 hereof to cure any Event of Default under this Mortgage or to pay any of the Indebtedness in such order and manner as Lender may elect. If such deposits are used to cure an Event of Default or pay any of the Indebtedness, Mortgagor shall immediately, upon demand by Lender, deposit with Lender an amount equal to the amount so used from the deposits. When the Indebtedness has been fully paid, any remaining deposits shall be returned to Mortgagor. Such deposits are hereby pledged as additional security for the Indebtedness and shall not be subject to the direction or control of Mortgagor. Lender shall not be liable for any failure to apply to the payment of Taxes any amount so deposited unless Mortgagor, prior to an Event of Default under this Mortgage, shall have requested Lender in writing to make application of such funds to the payment of such amounts, accompanied by the bills for such Taxes. Lender shall not be liable for any act or omission taken in good faith or pursuant to the instruction of any party.
6. Insurance .
(a) Mortgagor shall at all times keep all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Premises insured against loss or damage by fire and such other hazards as may reasonably be required by Lender, in accordance with the terms, coverages and provisions described in the Loan Agreement, and such other insurance as Lender may from time to time reasonably require. Unless Mortgagor provides Lender evidence of the insurance coverages required hereunder,
Lender may purchase insurance at Mortgagors expense to cover Lenders interest in the Premises. The insurance may, but need not, protect Mortgagors interest. The coverages that Lender purchases may not pay any claim that Mortgagor makes or any claim that is made against Mortgagor in connection with the Premises. Mortgagor may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Mortgagor has obtained insurance as required by this Mortgage. If Lender purchases insurance for the Premises, Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Indebtedness. The cost of the insurance may be more than the cost of insurance Mortgagor may be able to obtain on its own.
(b) Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless Lender is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to Lender and such separate insurance is otherwise acceptable to Lender.
(c) In the event of loss, Mortgagor shall give prompt notice thereof to Lender, and Lender shall have the sole and absolute right to make proof of loss. Lender shall have the right, at its option and in its sole discretion, to apply any insurance proceeds arising from such loss, after the payment of all of Lenders expenses, either (i) on account of the Indebtedness, irrespective of whether such principal balance is then due and payable, whereupon Lender may declare the whole of the balance of Indebtedness to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in paragraph (d) of this Section. If insurance proceeds are made available to Mortgagor by Lender as hereinafter provided, Mortgagor shall repair, restore or rebuild the damaged or destroyed portion of the Premises so that the condition and value of the Premises are substantially the same as the condition and value of the Premises prior to being damaged or destroyed. Any insurance proceeds applied on account of the unpaid principal balance of the Note shall be subject to the prepayment provisions contained in the Loan Agreement and the Note. In the event of foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale.
(d) If insurance proceeds are made available by Lender to Mortgagor, and subject to the provisions of Article 11 of the Loan Agreement, the following provisions shall apply:
(i) Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Improvements, whether by fire or other casualty, Mortgagor shall obtain from Lender its approval of all site and building plans and specifications pertaining to such repair, restoration or rebuilding.
(ii) Prior to each payment or application of any insurance proceeds to the repair or restoration of such Improvements (which payment or application may be
made, at Lenders option, through an escrow, the terms and conditions of which are satisfactory to Lender and the cost of which is to be borne by Mortgagor), Lender shall be satisfied as to the following:
(A) No Default (as defined in Section 36 of this Mortgage) or Event of Default under this Mortgage has occurred and is continuing;
(B) Either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Premises, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, Mortgagor has deposited with Lender such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Premises; and
(C) Prior to each disbursement of any such proceeds, Lender shall be furnished with a statement of Lenders architect (the cost of which shall be borne by Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by Lender and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and Lender shall be furnished with appropriate evidence of payment for labor or materials furnished to the Premises, and total or partial lien waivers substantiating such payments.
(iii) If Mortgagor shall fail to restore, repair or rebuild such Improvements within a time deemed satisfactory by Lender, then Lender, at its option, may (A) commence and perform all necessary acts to restore, repair or rebuild such Improvements for or on behalf of Mortgagor, or (B) declare an Event of Default under this Mortgage. If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of such Improvements, such excess shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable without payment of any premium or penalty.
7. Condemnation . If all or any part of the Premises are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof, to the extent of the full amount of the remaining unpaid Indebtedness, is hereby assigned to Lender, who is empowered to collect and receive the same and to give proper receipts therefor in the name of Mortgagor and the same shall be paid forthwith to Lender. Such award or monies shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable and, at any time from and after the taking Lender may declare the whole of the balance of the Indebtedness to be due and payable. Notwithstanding the provisions of this Section to the contrary, if any condemnation or taking of less than the entire Premises occurs, such award or monies shall be applied, at the option of Lender and in its sole discretion, either (i) on account of the Indebtedness as provided
above, or (ii) to any necessary restoration or repair of the remaining property, on the terms contained in Section 6(d) hereof.
8. Stamp Tax . If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over Mortgagor, any tax is due or becomes due in respect of the execution and delivery of this Mortgage, the Note or any of the other Loan Documents, Mortgagor shall pay such tax in the manner required by any such law. Mortgagor further agrees to reimburse Lender for any sums which Lender may expend by reason of the imposition of any such tax. Notwithstanding the foregoing, Mortgagor shall not be required to pay any income or franchise taxes of Lender.
9. Lease and Rent Assignment . Mortgagor acknowledges that, concurrently herewith, Mortgagor has executed and delivered to Lender, as additional security for the repayment of the Loan, an Absolute Assignment of Leases and Rents (the Assignment ) pursuant to which Mortgagor has assigned to Lender interests in the leases of the Premises and the rents and income from the Premises. All of the provisions of the Assignment are hereby incorporated herein as if fully set forth at length in the text of this Mortgage. Mortgagor agrees to abide by all of the provisions of the Assignment.
10. Effect of Extensions of Time and Other Changes . If the payment of the Indebtedness or any part thereof is extended or varied, if any part of any security for the payment of the Indebtedness is released, if the rate of interest charged under the Note is changed or if the time for payment thereof is extended or varied, all persons now or at any time hereafter liable therefor, or interested in the Premises or having an interest in Mortgagor, shall be held to assent to such extension, variation, release or change and their liability and the lien and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by Lender, notwithstanding such extension, variation, release or change.
11. Effect of Changes in Laws Regarding Taxation . If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Premises from the value thereof for the purpose of taxation or (b) the imposition upon Lender of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by Mortgagor, or (c) a change in the method of taxation of mortgages, deeds of trust or debts secured by mortgages or deeds of trust or Lenders interest in the Premises, or the manner of collection of taxes, so as to affect this Mortgage or the Indebtedness or the holders thereof, then Mortgagor, upon demand by Lender, shall pay such Taxes or charges, or reimburse Lender therefor; provided, however, that Mortgagor shall not be deemed to be required to pay any income or franchise taxes of Lender. Notwithstanding the foregoing, if in the opinion of counsel for Lender it is or may be unlawful to require Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then Lender may declare all of the Indebtedness to be immediately due and payable.
12. Lenders Performance of Defaulted Acts and Expenses Incurred by Lender . If an Event of Default under this Mortgage has occurred and is continuing, Lender may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient by Lender, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge,
compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or consent to any tax or assessment or cure any default of Mortgagor in any lease of the Premises. All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys fees, and any other monies advanced by Lender in regard to any tax referred to in Section 8 hereof or to protect the Premises or the lien hereof, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Lender, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate (as defined in the Loan Agreement). In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys fees, incurred by Lender in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of Lenders rights hereunder, (c) recovering any Indebtedness, (d) any litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, including without limitation, bankruptcy and probate proceedings, or (e) preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Lender, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate. The interest accruing under this Section shall be immediately due and payable by Mortgagor to Lender, and shall be additional Indebtedness evidenced by the Note and secured by this Mortgage. Lenders failure to act shall never be considered as a waiver of any right accruing to Lender on account of any Event of Default under this Mortgage or any of the other Loan Documents. Should any amount paid out or advanced by Lender hereunder, or pursuant to any agreement executed by Mortgagor in connection with the Loan, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Premises or any part thereof, then Lender shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.
13. Security Agreement . Mortgagor and Lender agree that this Mortgage shall constitute a Security Agreement within the meaning of the Code with respect to (a) all sums at any time on deposit for the benefit of Mortgagor or held by Lender (whether deposited by or on behalf of Mortgagor or anyone else) pursuant to any of the provisions of this Mortgage or the other Loan Documents, and (b) any personal property included in the granting clauses of this Mortgage, which personal property may not be deemed to be affixed to the Premises or may not constitute a fixture (within the meaning of the Code and which property is hereinafter referred to as Personal Property ), and all replacements of, substitutions for, additions to, and the proceeds thereof, and the supporting obligations (as defined in the Code) (all of said Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as Collateral ), and that a security interest in and to the Collateral is hereby granted to Lender, and the Collateral and all of Mortgagors right, title and interest therein are hereby assigned to Lender, all to secure payment of the Indebtedness. All of the provisions contained in this Mortgage pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Premises; and the following provisions of this Section shall not limit the applicability of any other provision of this Mortgage but shall be in addition thereto:
(a) Mortgagor (being the Debtor as that term is used in the Code) is and will be the true and lawful owner of the Collateral and has rights in and the power to transfer the Collateral, subject to no liens, charges or encumbrances other than the lien of this Mortgage, other liens and encumbrances benefiting Lender and no other party, and liens and encumbrances, if any, expressly permitted by the other Loan Documents.
(b) The Collateral is to be used by Mortgagor solely for business purposes.
(c) The Collateral will be kept at the Real Estate and, except for Collateral no longer useful in connection with the operation of the Real Estate, provided that prior to the sale or other disposition thereof, such Collateral has been replaced by property of at least equal value and utility and which is subject to the lien of this Mortgage, will not be removed therefrom without the consent of Lender (being the Secured Party as that term is used in the Code). The Collateral may be affixed to the Real Estate but will not be affixed to any other real estate.
(d) The only persons having any interest in the Premises are Mortgagor, Lender and holders of interests, if any, expressly permitted hereby.
(e) No Financing Statement (other than Financing Statements showing Lender as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the Collateral or any proceeds thereof is on file in any public office except pursuant hereto; and Mortgagor, at Mortgagors own cost and expense, upon demand, will furnish to Lender such further information and will execute and deliver to Lender such financing statements and other documents in form satisfactory to Lender and will do all such acts as Lender may request at any time or from time to time or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Indebtedness, subject to no other liens or encumbrances, other than liens or encumbrances benefiting Lender and no other party, and liens and encumbrances (if any) expressly permitted hereby; and Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by Lender to be desirable. Mortgagor hereby irrevocably authorizes Lender at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto, without the signature of Mortgagor, that (i) indicate the Collateral (A) is comprised of all assets of Mortgagor or words of similar effect, regardless of whether any particular asset comprising a part of the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or (B) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein, and (ii) contain any other information required by the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether Mortgagor is an organization, the type of organization and any organizational identification number issued to Mortgagor, and (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. Mortgagor agrees to furnish any such information to Lender
promptly upon request. Mortgagor further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by Lender in any jurisdiction prior to the date of this Mortgage. In addition, Mortgagor shall make appropriate entries on its books and records disclosing Lenders security interests in the Collateral.
(f) Upon and during the continuance of an Event of Default under this Mortgage, Lender shall have the remedies of a secured party under the Code, including, without limitation, the right to take immediate and exclusive possession of the Collateral, or any part thereof, and for that purpose, so far as Mortgagor can give authority therefor, with or without judicial process, may enter (if this can be done without breach of the peace) upon any place which the Collateral or any part thereof may be situated and remove the same therefrom (provided that if the Collateral is affixed to real estate, such removal shall be subject to the conditions stated in the Code); and Lender shall be entitled to hold, maintain, preserve and prepare the Collateral for sale, until disposed of, or may propose to retain the Collateral subject to Mortgagors right of redemption in satisfaction of Mortgagors obligations, as provided in the Code. Lender may render the Collateral unusable without removal and may dispose of the Collateral on the Premises. Lender may require Mortgagor to assemble the Collateral and make it available to Lender for its possession at a place to be designated by Lender which is reasonably convenient to both parties. Lender will give Mortgagor at least 10 days notice of the time and place of any public sale of the Collateral or of the time after which any private sale or any other intended disposition thereof is made. The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of Mortgagor hereinafter set forth at least 10 days before the time of the sale or disposition. Lender may buy at any public sale. Lender may buy at private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. Any such sale may be held in conjunction with any foreclosure sale of the Premises. If Lender so elects, the Premises and the Collateral may be sold as one lot. The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys fees and legal expenses incurred by Lender, shall be applied against the Indebtedness in such order or manner as Lender shall select. Lender will account to Mortgagor for any surplus realized on such disposition.
(g) The terms and provisions contained in this Section, unless the context otherwise requires, shall have the meanings and be construed as provided in the Code.
(h) This Mortgage is intended to be a financing statement filed as a fixture filing pursuant to Section 9-502(c) of the Code, as adopted in the State of Arkansas. The addresses of Mortgagor (Debtor) and Lender (Secured Party) are hereinbelow set forth. This Mortgage is to be filed for recording in appropriate public records of the county or counties where the Premises are located and Mortgagor hereby authorizes Lender to file any and all financing statements in the county or counties where the Premises are located, and/or such other jurisdictions as reasonably determined by Lender, in order to perfect the security interests created hereby. Mortgagor is the record owner of the Premises.
(i) To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between Mortgagor or its agents as lessor, and various tenants named therein, as lessee, including all extended terms and all extensions and renewals of the terms thereof, as well as any amendments to or replacement of said Leases, together with all of the right, title and interest of Mortgagor, as lessor thereunder.
(j) Mortgagor represents and warrants that: (i) Mortgagor is the record owner of the Premises; (ii) Mortgagors chief executive office is located in the State of Georgia; (iii) Mortgagors state of organization is the State of Georgia; (iv) Mortgagors exact legal name is as set forth on Page 1 of this Mortgage; and (v) Mortgagors organizational identification number, if any, is as stated in the Loan Agreement.
(k) Mortgagor hereby agrees that: (i) where Collateral is in possession of a third party, Mortgagor will join with Lender in notifying the third party of Lenders interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of Lender; (ii) Mortgagor will cooperate with Lender in obtaining control with respect to Collateral consisting of: deposit accounts, investment property, letter of credit rights and electronic chattel paper; and (iii) until the Indebtedness is paid in full, Mortgagor will not change the state where it is located or change its name or form of organization without giving Lender at least 30 days prior written notice in each instance, and executing and delivering, at Mortgagors expense, all documentation reasonably required by Lender in connection with perfecting or preserving the perfection of the lien and security interest granted under this Mortgage.
14. Events of Default; Acceleration . Each of the following shall constitute an Event of Default under this Mortgage:
(a) Mortgagor fails to pay any amount payable to Lender under this Mortgage when any such payment is due in accordance with the terms hereof.
(b) Mortgagor fails to perform or observe, or to cause to be performed or observed, any obligation, covenant, term, agreement or provision required to be performed or observed by Mortgagor under Sections 1, 2(h), 2(i), 2(k), 2(l), 3 or 4 of this Mortgage;
(c) The occurrence of any Transfer in violation of Section 34(a) of this Mortgage or the provisions of the Loan Agreement referenced therein;
(d) Mortgagor fails to perform or observe, or to cause to be performed or observed, any other obligation, covenant, term, agreement or provision required to be performed or observed by Mortgagor under this Mortgage and not covered under clauses (a) and (b) of this Section 14, for a period of thirty (30) days after written notice of default from Lender; provided that if any such failure is susceptible to cure and cannot reasonably be cured within said thirty (30)-day period, then such default shall not constitute an Event of Default so long as within such thirty (30)-day period Mortgagor have commenced efforts to cure such default, diligently pursues efforts to cure the
applicable default, and actually cures such default no later than thirty (30) days after the end of the initial thirty (30)-day period; provided, further, that if a different notice or grace period is specified under any other paragraph of this Section 14 with respect to a particular breach, the specific provision shall control; or
(e) The occurrence of an Event of Default under the Loan Agreement, the Note or any of the other Loan Documents.
If an Event of Default occurs under this Mortgage, Lender may, at its option, declare the whole of the Indebtedness to be immediately due and payable without further notice to Mortgagor, with interest thereon accruing from the date of such Event of Default until paid at the Default Rate. Mortgagor agrees that the occurrence of an Event of Default as defined in, and pursuant to any of the respective Loan Documents, which is not cured within applicable grace or curative periods, shall constitute an immediate Event of Default (without need of notice or the expiration of any additional cure period other than as specified in such Loan Documents) under all Loan Documents.
15. Foreclosure; Expense of Litigation .
(a) When all or any part of the Indebtedness shall become due, whether by acceleration or otherwise, Lender shall have the right to foreclose the lien hereof for such Indebtedness or part thereof and/or exercise any right, power or remedy provided (i) in this Mortgage or any of the other Loan Documents in accordance with the applicable laws of the State of Arkansas, or (ii) under Arkansas law including the use of non-judicial statutory foreclosure proceedings. In the event of a foreclosure sale, Lender is hereby authorized, without the consent of Mortgagor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as Lender may deem advisable to cause the interest of such purchaser to be protected by any of such insurance policies.
(b) In any suit or other proceeding to foreclose this Mortgage or enforce any other remedy of Lender under this Mortgage or the Note, there shall be allowed and included as additional indebtedness in the decree for sale or other judgment or decree all expenditures and expenses which may be actually paid or incurred by or on behalf of Lender for reasonable attorneys fees, appraisers fees, outlays for documentary and expert evidence, stenographers charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to the title as Lender may deem reasonably necessary either to prosecute such suit or to evidence to bidders at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Premises. All expenditures and expenses of the nature mentioned in this Section and such other expenses and fees as may be incurred in the enforcement of Mortgagors obligations hereunder, the protection of said Premises and the maintenance of the interest created by this Mortgage, including the actual and reasonable fees of any attorney employed by Lender in any litigation or proceeding affecting this Mortgage, the Note, or the Premises, including probate and bankruptcy proceedings, or in preparations for the commencement or defense of any proceeding or threatened suit or proceeding shall be immediately due
and payable by Mortgagor, with interest thereon until paid at the Default Rate and shall be secured by this Mortgage.
(c) Upon any foreclosure sale, Lender may bid for and purchase the Premises in whole or in parcels and shall be entitled to apply all or any part of any indebtedness or obligation secured hereby as a credit to the purchase price.
16. Application of Proceeds of Foreclosure Sale . The proceeds of any foreclosure sale of the Premises shall be distributed a nd applied in accordance with the applicable laws of the State of Arkansas and, unless otherwise specified therein, in such order as Lender may determine in its sole and absolute discretion, subject to any express provisions of the Loan Agreement.
17. Appointment of Receiver . Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by Lender, appoint a receiver for the Premises in accordance with the applicable laws of the S tate of Arkansas. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of Mortgagor at the time of application for such receiver and without regard to the value of the Premises or whether the same shall be then occupied as a homestead or not and Lender hereunder or any other holder of the Note may be appointed as such receiver. Such receiver shall have power to collect the rents, issues and profits of the Premises (i) during the pendency of such foreclosure suit, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits. Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during said period, including, to the extent permitted by law, the right to lease all or any portion of the Premises for a term that extends beyond the time of such receivers possession without obtaining prior court approval of such lease. The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Indebtedness, or any amount found due or secured by any judgment or decree foreclosing this Mortgage, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such judgment or decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.
18. Lenders Right of Possession in Case of Default . At any time after an Event of Default under this Mortgage has occurred and is continuing, Mortgagor shall, upon demand of Lender, surrender to Lender possession of the Premises. Lender, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Premises, together with all documents, books, records, papers and accounts relating thereto, and may exclude Mortgagor and its employees, agents or servants therefrom, and Lender may then hold, operate, manage and control the Premises, either personally or by its agents. Lender shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent. Without limiting the generality of the foregoing, but subject to applicable Arkansas law, Lender shall have full power to:
(a) Cancel or terminate any lease or sublease for any cause or on any ground which would entitle Mortgagor to cancel the same;
(b) Elect to disaffirm any lease or sublease which is then subordinate to this Mortgage;
(c) Extend or modify any then existing leases and to enter into new leases, which extensions, modifications and leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Premises are subject to this Mortgage and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser;
(d) Make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Premises as Lender deems are necessary;
(e) Insure and reinsure the Premises and all risks incidental to Lenders possession, operation and management thereof;
(f) Terminate any management agreements, contracts, or agents/managers responsible, for the property management of the Premises, if in the sole discretion of Lender such property management is unsatisfactory in any respect; and
(g) Receive all of such avails, rents, issues and profits.
19. Application of Income Received by Lender . Lender, in the exercise of the rights and powers hereinabove conferred upon it, shall have full power to use and apply the avails, rents, issues and profits of the Premises to the payment of or on account of the following, in such order as Lender may determine:
(a) To the payment of the operating expenses of the Premises, including cost of management and leasing thereof (which shall include compensation to Lender and its agent or agents, if management be delegated to an agent or agents, and shall also include lease commissions and other compensation and expenses of seeking and procuring tenants and entering into leases), established claims for damages, if any, and premiums on insurance hereinabove authorized;
(b) To the payment of taxes and special assessments now due or which may hereafter become due on the Premises; and
(c) To the payment of any Indebtedness, including any deficiency which may result from any foreclosure sale.
20. Compliance with Law .
(a) If any provision in this Mortgage shall be inconsistent with any provision of the applicable laws of the State of Arkansas, such laws shall take precedence over the provisions of this Mortgage, but shall not invalidate or render unenforceable any other provision of this Mortgage that can be construed in a manner consistent with such laws.
(b) If any provision of this Mortgage shall grant to Lender (including Lender acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Mortgage any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default under this Mortgage which are more limited than the powers, rights or remedies that would otherwise be vested in Lender or in such receiver under the applicable laws of the State of Arkansas in the absence of said provision, Lender and such receiver shall be vested with the powers, rights and remedies granted by such laws to the full extent permitted by law.
21. Rights Cumulative . Each right, power and remedy herein conferred upon Lender is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Loan Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of Lender in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default under this Mortgage or acquiescence therein.
22. Lenders Right of Inspection . Lender and its representatives shall have the right to inspect the Premises and the books and records with respect thereto as and to the extent provided in the Loan Agreement, and access thereto , subject to the rights of tenants in possession, shall be permitted for that purpose.
23. Release Upon Payment and Discharge of Mortgagors Obligations . Lender shall release this Mortgage and the lien hereof by proper instrument upon payment and discharge of all Indebtedness, including payment of all reasonable expenses incurred by Lender in connection with the execution of such release. Mortgagor shall not otherwise be entitled to a release of this Mortgage and the lien hereof, except as may be expressly provided to the contrary in the Loan Agreement.
24. Notices . All notices and other communications provided for in this Mortgage ( Notices ) shall be in writing. The Notice Addresses of the parties for purposes of this Mortgage are as follows:
Mortgagor: |
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Woodland Hills HC Property Holdings, LLC 1145 Hembree Road Roswell, Georgia 30076 Attention: Boyd P. Gentry |
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With a copy to: |
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Holt Ney Zatcoff & Wasserman, LLP 100 Galleria Parkway, Suite 1800 Atlanta, Georgia 30339 Attention: Gregory P. Youra |
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Lender: |
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KeyBank National Association Real Estate Capital-Healthcare Mailcode: OH-01-51-0311 4910 Tiedeman Road, 3 rd Floor Brooklyn, Ohio 44144 Attention: Amy MacLearie, Closer |
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With a copy to: |
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Bryan Cave LLP One Atlantic Center, Fourteenth Floor 1201 West Peachtree Street, NW Atlanta, Georgia 30309-3488 Attention: Robert C. Lewinson, Esq. |
or such other address as a party may designate by notice duly given in accordance with this Section to the other parties. A Notice to a party shall be effective when delivered to such partys Notice Address by any means, including, without limitation, personal delivery by the party giving the Notice, delivery by United States regular, certified or registered mail, or delivery by a commercial courier or delivery service. If the Notice Address of a party includes a facsimile number or electronic mail address, Notice given by facsimile or electronic mail shall be effective when delivered at such facsimile number or email address. If delivery of a Notice is refused, it shall be deemed to have been delivered at the time of such refusal of delivery. The party giving a Notice shall have the burden of establishing the fact and date of delivery or refusal of delivery of a Notice.
25. Waiver of Rights . Mortgagor hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner claim or take any advantage of, any stay, exemption, extension, homestead, dower, reinstatement or redemption law or any so-called Moratorium Law now or at any time hereafter in force providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to any decree, judgment or order of any court of competent jurisdiction; or, after such sale or sales, claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof; and without limiting the foregoing:
(a) Mortgagor specifically acknowledges that the transaction to which this Mortgage is a part is a transaction which does not include either agricultural real property or residential real estate and Mortgagor hereby expressly, voluntarily and knowingly waives any and all rights of appraisement, valuation, stay, extension, homestead, dower, reinstatement and redemption, if any, under any order, judgment or decree of foreclosure of this Mortgage, on its own behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of appraisement, valuation, stay, extension, homestead, dower, reinstatement and redemption of Mortgagor and of all other persons are and shall be deemed to be hereby waived to the full extent permitted by the applicable laws of the State of Arkansas, and Mortgagor specifically waives all redemption powers and rights which otherwise might be available to Mortgagor pursuant to Ark. Code Ann. § 16-66-502 and Ark. Code Ann. § 18-49-106, or that Act No. 153 of the Arkansas General Assembly passed on May 8, 1899; and
(b) Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power or remedy herein or otherwise granted or delegated to Lender but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted.
26. Contests . Notwithstanding anything to the contrary herein contained, Mortgagor shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Premises or which may be or become a lien thereon and any mechanics, materialmens or other liens or claims for lien upon the Premises (each, a Contested Lien ), and no Contested Lien shall constitute an Event of Default under this Mortgage, if, but only if:
(a) Mortgagor shall forthwith give notice of any Contested Lien to Lender at the time the same shall be asserted;
(b) Mortgagor shall either pay under protest or deposit with Lender the full amount (the Lien Amount ) of such Contested Lien, together with such amount as Lender may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment Mortgagor may furnish to Lender a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to Lender;
(c) Mortgagor shall diligently prosecute the contest of any Contested Lien by appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Premises, and shall permit Lender to be represented in any such contest and shall pay all expenses incurred, in so doing, including fees and expenses of Lenders counsel (all of which shall constitute so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand);
(d) Mortgagor shall pay each such Contested Lien and all Lien Amounts together with interest and penalties thereon (i) if and to the extent that any such Contested Lien shall be determined adverse to Mortgagor, or (ii) forthwith upon demand by Lender if, in the opinion of Lender, and notwithstanding any such contest, the Premises shall be
in jeopardy or in danger of being forfeited or foreclosed; provided that if Mortgagor shall fail so to do, Lender may, but shall not be required to, pay all such Contested Liens and Lien Amounts and interest and penalties thereon and such other sums as may be necessary in the judgment of Lender to obtain the release and discharge of such liens; and any amount expended by Lender in so doing shall be so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand; and provided further that Lender may in such case use and apply monies deposited as provided in paragraph (b) of this Section and may demand payment upon any bond or title indemnity furnished as aforesaid.
27. Expenses Relating to Note and Mortgage .
(a) Mortgagor will pay all expenses, charges, costs and fees relating to the Loan or necessitated by the terms of the Note, this Mortgage or any of the other Loan Documents, including without limitation, Lenders reasonable attorneys fees actually incurred in connection with the negotiation, documentation, administration, servicing and enforcement of the Note, this Mortgage and the other Loan Documents, all filing, registration and recording fees, all other expenses incident to the execution and acknowledgment of this Mortgage and all federal, state, county and municipal taxes, and other taxes (provided Mortgagor shall not be required to pay any income or franchise taxes of Lender), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note and this Mortgage. Mortgagor recognizes that, during the term of this Mortgage, Lender:
(i) May be involved in court or administrative proceedings, including, without restricting the foregoing, foreclosure, probate, bankruptcy, creditors arrangements, insolvency, housing authority and pollution control proceedings of any kind, to which Lender shall be a party by reason of the Loan Documents or in which the Loan Documents or the Premises are involved directly or indirectly;
(ii) May make preparations following the occurrence of an Event of Default under this Mortgage for the commencement of any suit for the foreclosure hereof, which may or may not be actually commenced;
(iii) May make preparations following the occurrence of an Event of Default under this Mortgage for, and do work in connection with, Lenders taking possession of and managing the Premises, which event may or may not actually occur;
(iv) May make preparations for and commence other private or public actions to remedy an Event of Default under this Mortgage, which other actions may or may not be actually commenced;
(v) May enter into negotiations with Mortgagor or any of its agents, employees or attorneys in connection with the existence or curing of any Event of Default under this Mortgage, the sale of the Premises, the assumption of liability for any of the Indebtedness or the transfer of the Premises in lieu of foreclosure; or
(vi) May enter into negotiations with Mortgagor or any of its agents, employees or attorneys pertaining to Lenders approval of actions taken or proposed to be taken by Mortgagor which approval is required by the terms of this Mortgage.
(b) All expenses, charges, costs and fees described in this Section shall be so much additional Indebtedness, shall bear interest from the date so incurred until paid at the Default Rate and shall be paid, together with said interest, by Mortgagor forthwith upon demand.
28. Statement of Indebtedness . Mortgagor, within seven (7) days after being so requested by Lender, shall furnish a duly acknowledged written statement setting forth the amount of the debt secured by this Mortgage, the date to which interest has been paid and stating either that no offsets or defenses exist against such debt or, if such offsets or defenses are alleged to exist, the nature thereof.
29. Further Instruments . Upon request of Lender, Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary fully to effectuate the intent of this Mortgage and of the other Loan Documents.
30. Additional Indebtedness Secured . All persons and entities with any interest in the Premises or about to acquire any such interest should be aware that this Mortgage secures more than the stated principal amount of the Note and interest thereon; this Mortgage secures any and all other amounts which may become due under the Note, any of the other Loan Documents or any other document or instrument evidencing, securing or otherwise affecting the Indebtedness, including, without limitation, any and all amounts expended by Lender to operate, manage or maintain the Premises or to otherwise protect the Premises or the lien of this Mortgage.
31. Indemnity . Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against Lender in the exercise of the rights and powers granted to Lender in this Mortgage, and Mortgagor hereby expressly waives and releases any such liability, except to the extent resulting from the gross negligence or willful misconduct of Lender. Mortgagor shall indemnify and save Lender harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses, including reasonable attorneys fees and court costs actually incurred (collectively, Claims ), of whatever kind or nature which may be imposed on, incurred by or asserted against Lender at any time by any third party which relate to or arise from: (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which Lender may or does become party, either as plaintiff or as defendant, by reason of this Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Premises; and (c) the ownership, leasing, use, operation or maintenance of the Premises, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Premises to Lender in accordance with the terms of this Mortgage; provided, however, that Mortgagor shall not be obligated to indemnify or hold Lender harmless from and against any Claims directly arising from the gross negligence or willful misconduct of Lender. All costs provided for herein and paid for by Lender shall be so much additional Indebtedness and shall become immediately due and payable upon demand by
Lender and with interest thereon from the date incurred by Lender until paid at the Default Rate. The indemnity provided in this Section shall be in addition to (but not in duplication of) any other indemnification provision contained in the Loan Agreement or any other Loan Document.
32. Subordination of Property Managers Lien . Any property management agreement for the Premises entered into hereafter with a property manager shall contain a provision whereby the property manager agrees that any and all mechanics lien rights that the property manager or anyone claiming by, through or under the property manager may have in the Premises shall be subject and subordinate to the lien of this Mortgage and shall provide that Lender may terminate such agreement, without penalty or cost, at any time after the occurrence of an Event of Default under this Mortgage. Such property management agreement or a short form thereof, at Lenders request, shall be recorded in the appropriate public records of the county where the Premises are located. In addition, Mortgagor shall cause the property manager under such agreement to enter into a subordination of the management agreement with Lender, in recordable form, whereby such property manager subordinates present and future lien rights and those of any party claiming by, through or under such property manager to this Mortgage.
33. Compliance with Environmental Laws . Concurrently herewith Mortgagor and the Guarantors have executed and delivered to Lender that certain Indemnity Agreement Regarding Hazardous Materials dated as of the date hereof (the Indemnity ) pursuant to which Mortgagor and the Guarantors have indemnified Lender for environmental matters concerning the Premises, as more particularly described therein. The provisions of the Indemnity are hereby incorporated herein and this Mortgage shall secure the obligations of Mortgagor thereunder.
34. Miscellaneous .
(a) Incorporation of Loan Agreement Provisions Prohibiting Certain Transfers . The provisions of Sections 12.2 and 12.3 of the Loan Agreement (prohibiting certain Transfers , as defined in the Loan Agreement), together with all defined terms used therein, are hereby incorporated into and made a part of this Mortgage, as fully as if set forth herein verbatim.
(b) Usury and Truth in Lending . Notwithstanding the provisions contained in Section 34(d) of this Mortgage to the contrary, Mortgagor acknowledges that the Loan evidenced in the Loan Agreement was solicited, negotiated, closed and funded outside the State of Arkansas, and Mortgagor waives any argument that the laws of the State of Arkansas shall apply for usury purposes. The Loan is an exempted transaction under the Truth In Lending Act, 15 U.S.C., §1601, et seq.
(c) Successors and Assigns . This Mortgage and all provisions hereof shall be binding upon and enforceable against Mortgagor and its assigns and other successors. This Mortgage and all provisions hereof shall inure to the benefit of Lender, its successors and assigns and any holder or holders, from time to time, of the Note.
(d) Invalidity of Provisions; Governing Law . In the event that any provision of this Mortgage is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court,
Mortgagor and Lender shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Mortgage and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect. Furthermore, a ll agreements between Mortgagor and Lender (including, without limitation, those contained in this Mortgage and the Note) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to the Lender exceed the highest lawful rate of interest permissible under the applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or the Note or any other documents securing the Indebtedness at the time performance of such provision shall be due, shall involve the payment of interest exceeding the highest rate of interest permitted by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under the applicable law; and if for any reason whatsoever Lender shall ever receive as interest an amount which would be deemed unlawful, such interest shall be applied to the payment of the last maturing installment or installments of the principal Indebtedness (whether or not then due and payable) and not to the payment of interest. Subject to the provisions contained in Section 34(b) of this Mortgage, this Mortgage is to be construed in accordance with and governed by the laws of the State of Arkansas.
(e) Municipal Requirements . Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and Mortgagor hereby assigns to Lender any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Similarly, no building or other improvement on the Premises shall rely on any premises not subject to this Mortgage or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by Mortgagor which would result in a violation of any of the provisions of this paragraph shall be void.
(f) Rights of Tenants . Lender shall have the right and option to commence a civil action to foreclose this Mortgage and to obtain a decree of foreclosure and sale subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of Lender. The failure to join any such tenant or tenants of the Premises as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect the Indebtedness, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Premises, any statute or rule of law at any time existing to the contrary notwithstanding.
(g) Mortgagee-in-Possession . Nothing herein contained shall be construed as constituting Lender a mortgagee-in-possession in the absence of the actual taking of possession of the Premises by Lender pursuant to this Mortgage.
(h) Relationship of Lender and Mortgagor . Lender shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of Mortgagor or of any lessee, operator, concessionaire or licensee of Mortgagor in the conduct of their
respective businesses, and, without limiting the foregoing, Lender shall not be deemed to be such partner, joint venturer, agent or associate on account of Lender becoming a mortgagee-in-possession or exercising any rights pursuant to this Mortgage, any of the other Loan Documents, or otherwise. The relationship of Mortgagor and Lender hereunder is solely that of debtor/creditor.
(i) Time of the Essence . Time is of the essence of the payment by Mortgagor of all amounts due and owing to Lender under the Note and the other Loan Documents and the performance and observance by Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Loan Documents.
(j) No Merger . The parties hereto intend that this Mortgage and the interest hereunder shall not merge in the fee simple title to the Premises, and if Lender acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by Lender as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the interest hereunder shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.
(k) Complete Agreement; No Reliance; Modifications . This Mortgage, the Note and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof. Mortgagor acknowledges that it is executing this Mortgage without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein or in the other Loan Documents. This Mortgage may not be modified, altered or amended except by an agreement in writing signed by both Mortgagor and Lender.
(l) Captions . The captions and headings of various Sections and paragraphs of this Mortgage and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.
(m) Gender and Number . Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.
(n) Execution of Counterparts . This Mortgage may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Mortgage by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Mortgage maintained by Lender shall be deemed to be an original.
(o) Construction . Each party to this Mortgage and legal counsel to each party have participated in the drafting of this Mortgage, and accordingly the general rule
of construction to the effect that any ambiguities in a contract are resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Mortgage.
(p) References to Documents . Unless expressly provided to the contrary or the context otherwise requires, all references in this Mortgage to any other document, instrument or agreement shall be deemed to refer to such document, instrument or agreement as it may be amended, modified, supplemented, renewed, extended or restated from time to time; provided, however, that nothing in this subsection shall operate or be construed to authorize any such amendment, modification, supplement, renewal, extension or restatement that is prohibited or restricted under any other provision of the Loan Documents.
35. Litigation Provisions.
(a) Consent to Jurisdiction . MORTGAGOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . MORTGAGOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST MORTGAGOR IN ANY STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. MORTGAGOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) No Proceedings in Other Jurisdictions . MORTGAGOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST LENDER RELATING IN ANY MANNER TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CLEVELAND, OHIO, OR IF A LEGAL PROCEEDING IS COMMENCED BY LENDER AGAINST MORTGAGOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . MORTGAGOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS MORTGAGE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
36. Definitions of Certain Terms . The following terms shall have the following meanings in this Mortgage:
Code : The Uniform Commercial Code of the State of Arkansas as from time to time in effect; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, the security interest in any collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Arkansas, the term Code shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Mortgage or the other Loan Documents relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
Default : When used in reference to this Mortgage or any other document, or in reference to any provision of or obligation under this Mortgage or any other document, the occurrence of an event or the existence of a condition which, with the passage of time or the giving of notice, or both, would constitute an Event of Default under this Mortgage or such other document, as the case may be.
Event of Default : The following: (i) when used in reference to this Mortgage, one or more of the events or occurrences referred to in Section 14 of this Mortgage; and (ii) when used in reference to any other document, a default or event of default under such document that has continued after the giving of any applicable notice and the expiration of any applicable grace or cure periods.
37. Waiver . TO THE EXTENT PERMITTED BY LAW, MORTGAGOR HEREBY EXPRESSLY WAIVES AND RELEASES ANY REQUIREMENT OR OBLIGATION THAT LENDER PRESENT EVIDENCE OR OTHERWISE PROCEED BEFORE ANY COURT, CLERK, OR OTHER JUDICIAL OR QUASI-JUDICIAL BODY BEFORE EXERCISE OF THE POWERS OF SALE CONTAINED IN THIS MORTGAGE AND IN THE ARKANSAS CODE.
[Remainder of Page Intentionally Left Blank;
Execution on Following Pages]
IN WITNESS WHEREOF , Mortgagor has executed and delivered this Mortgage as of the day and year first above written.
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WOODLAND HILLS HC PROPERTY HOLDINGS, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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ACKNOWLEDGMENT
STATE OF GEORGIA |
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COUNTY OF FULTON |
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On this day, before me, the undersigned, a Notary Public, duly commissioned, qualified and acting, within and for said County and State, appeared in person the within named Christopher F. Brogdon, to me personally well known, who stated that he is the Manager of Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company, and was duly authorized in that capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 21st day of December, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
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My Commission Expires: |
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Jan. 30, 2016 |
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(S E A L) |
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Exhibit 10.271
EXECUTION VERSION
PAYMENT GUARANTY
Projects Commonly Known as
Woodland Hills, Northridge and Abington Place (a/k/a Cumberland)
THIS PAYMENT GUARANTY ( Guaranty ) made as of December 28, 2012, by ADCARE OPERATIONS, LLC, a Georgia limited liability company, having an address of 1145 Hembree Road, Roswell, GA 30076 ( Guarantor ), to and for the benefit of KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns ( Lender ).
R E C I T A L S
A. On or about the date hereof, APH&R Property Holdings, LLC, a Georgia limited liability company, ( Abington PropCo ), APH&R Nursing, LLC, a Georgia limited liability company ( Abington Tenant ), Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, ( Northridge PropCo ), Northridge HC&R Nursing, LLC, ( Northridge Tenant ), Woodland Hills HC Property Holdings, LLC a Georgia limited liability company, ( Woodland Hills PropCo ), and Woodland Hills HC Nursing, LLC ( Woodland Hills Tenant ) (Abington PropCo, Abington Tenant, Northridge PropCo, Northridge Tenant, Woodland Hills PropCo, and Woodland Hills Tenant referred to herein, individually, as a Borrower and collectively as Borrowers ) and Lender entered into that certain Secured Loan Agreement ( Loan Agreement ) whereby Lender agreed to make a secured term loan (the Loan ) to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00), to be secured by those skilled nursing facilities commonly known as Woodland Hills Healthcare and Rehabilitation ( Woodland Hills ), Northridge Healthcare and Rehabilitation ( Northridge ), and Abington Place Health and Rehab Center, also to be known as Cumberland Health and Rehabilitation Center ( Abington ) (Woodland Hills, Northridge, and Abington collectively referred to herein as the Projects ). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
B. In connection with the Loan, (i) Borrowers, jointly and severally, have executed and delivered a promissory note payable to the order of Lender in the original principal amount of $16,500,000.00 (as the same may be amended, modified, extended, renewed, restated or replaced from time to time, the Note ), to evidence the Loan, payment of which is secured by (i) the Mortgages executed and delivered to Lender by the applicable Borrowers on their respective Projects, and (ii) the other Loan Documents.
C. Guarantor is a direct, wholly owned subsidiary of AdCare Health Systems, Inc., an Ohio corporation ( AdCare ), and the sole member of Abington Tenant, Northridge Tenant and Woodland Hills Tenant (collectively, the Tenant Borrowers ) and will derive material, direct and indirect financial benefit from the Loan.
AdCare OpCo Guaranty
D. Lender has relied on the statements and agreements contained herein in agreeing to make the Loan and would not have made the Loan without this Guaranty. The execution and delivery of this Guaranty by Guarantor is a condition precedent to the making of the Loan by Lender.
AGREEMENTS
NOW, THEREFORE, intending to be legally bound, Guarantor, in consideration of the matters described in the foregoing Recitals, which Recitals are incorporated herein and made a part hereof, and for other good and valuable consideration the receipt and sufficiency of which are acknowledged, hereby covenants and agrees for the benefit of Lender and its respective successors, indorsees, transferees, participants and assigns as follows:
1. Guarantor absolutely, unconditionally and irrevocably guarantees:
(a) the full and prompt payment of the principal of and interest on the Note when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, and the full and prompt payment of all sums which may now be or may hereafter become due and owing under the Note, the Loan Agreement and the other Loan Documents, including but not limited to the Indemnity;
(b) the prompt, full and complete performance of all of Borrowers obligations under each and every covenant contained in the Loan Documents; and
(c) the full and prompt payment of any Enforcement Costs (as hereinafter defined in Paragraph 7 hereof).
All amounts due, debts, liabilities and payment obligations described in subsections (a), (b) and (c) of this Paragraph 1 shall be hereinafter collectively referred to as the Guaranteed Obligations .
2. In the event of any default by Borrowers in the payment of the Guaranteed Obligations, after the expiration of any applicable cure or grace period, Guarantor agrees, on demand by Lender or the holder of the Note, to pay the Guaranteed Obligations regardless of any defense, right of set-off or claims which Borrowers or Guarantor may have against Lender or the holder of the Note.
All of the remedies set forth herein and/or provided for in any of the Loan Documents or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by Guarantor or any other person, nor shall any such choice be asserted as a defense, setoff, or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guaranty, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy. The parties have agreed to the alternative remedies provided herein in part because they recognize that the choice of remedies in the event of a default hereunder will necessarily be and should properly be a matter of good faith business judgment, which the passage of time and events may or may not prove to have been the best choice to maximize recovery by Lender at the lowest cost to Borrowers and/or Guarantor. It is the intention of the
parties that such good faith choice by Lender be given conclusive effect regardless of such subsequent developments.
3. Guarantor does hereby (a) waive notice of acceptance of this Guaranty by Lender and any and all notices and demands of every kind which may be required to be given by any statute, rule or law, (b) agree to refrain from asserting, until after repayment in full of the Loan, any defense, right of set-off or other claim which Guarantor may have against Borrowers, (c) waive any defense, right of set-off or other claim which Guarantor or Borrowers may have against Lender, or the holder of the Note, (d) waive any and all rights Guarantor may have under any anti-deficiency statute or other similar protections, (e) waive presentment for payment, demand for payment, notice of nonpayment or dishonor, protest and notice of protest, diligence in collection and any and all formalities which otherwise might be legally required to charge Guarantor with liability (other than any notices expressly required under the terms of this Guaranty), and (f) waive any failure by Lender to inform Guarantor of any facts Lender may now or hereafter know about Borrowers, the Projects, the Loan, or the transactions contemplated by the Loan Agreement, it being understood and agreed that Lender has no duty so to inform and that Guarantor is fully responsible for being and remaining informed by Borrowers of all circumstances bearing on the risk of nonperformance of Borrowers obligations. Credit may be granted or continued from time to time by Lender to Borrowers without notice to or authorization from Guarantor, regardless of the financial or other condition of Borrowers at the time of any such grant or continuation. Lender shall have no obligation to disclose or discuss with Guarantor its assessment of the financial condition of Borrowers. Guarantor acknowledges that no representations of any kind whatsoever have been made by Lender. No modification or waiver of any of the provisions of this Guaranty shall be binding upon Lender except as expressly set forth in a writing duly signed and delivered by Lender.
4. Guarantor further agrees that Guarantors liability as guarantor shall in not be impaired or affected by any renewals or extensions which may be made from time to time, with or without the knowledge or consent of Guarantor of the time for payment of interest or principal under the Note or by any forbearance or delay in collecting interest or principal under the Note, or by any waiver by Lender under the Loan Agreement, Mortgages or any other Loan Documents, or by Lenders failure or election not to pursue any other remedies it may have against Borrowers, Guarantor or any other guarantor of the Guaranteed Obligations, or by any change or modification in the Note, Loan Agreement, Mortgages or any other Loan Document, or by the acceptance by Lender of any additional security or any increase, substitution or change therein, or by the release by Lender of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation other than the Guaranteed Obligations even though Lender might lawfully have elected to apply such payments to any part or all of the Guaranteed Obligations, it being the intent hereof that, subject to Lenders compliance with the terms of this Guaranty, Guarantor shall remain liable for the payment of the Guaranteed Obligations, until the Guaranteed Obligations have been paid in full, notwithstanding any act or thing which might otherwise operate as a legal or equitable discharge of a surety. Guarantor further understands and agrees that Lender may at any time enter into agreements with Borrowers to amend and modify the Note, Loan Agreement, Mortgages or other Loan Documents, and may waive or release any provision or provisions of the Note, Loan Agreement, Mortgages and other Loan Documents or any thereof, and, with reference to such instruments, may make and enter into any such agreement or agreements as Lender and Borrowers may deem proper and desirable, without in
any manner impairing or affecting this Guaranty or any of Lenders rights hereunder or Guarantors obligations hereunder.
5. This is an absolute, present and continuing guaranty of payment and not of collection. Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral given in connection herewith or with the Note, Loan Agreement, Mortgages or any of the other Loan Documents through foreclosure or sale proceedings, as the case may be, under the Mortgages or otherwise, or resorting to any other guaranties, and Guarantor hereby waives any right to require Lender to join Borrowers in any action brought hereunder or to commence any action against or obtain any judgment against Borrowers or to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein or otherwise shall prevent Lender from pursuing concurrently or successively all rights and remedies available to it at law and/or in equity or under the Note, Loan Agreement, Mortgages or any other Loan Documents, and the exercise of any of its rights or the completion of any of its remedies shall not constitute a discharge of Guarantors obligations hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor hereunder shall be absolute, independent and unconditional under any and all circumstances whatsoever. None of Guarantors obligations under this Guaranty or any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Borrowers under the Note, Loan Agreement, Mortgages or other Loan Documents or by reason of the bankruptcy of Borrowers or by reason of any creditor or bankruptcy proceeding instituted by or against Borrowers. This Guaranty shall continue to be effective or be reinstated (as the case may be) if at any time payment of all or any part of any sum payable pursuant to the Note, Loan Agreement, Mortgages or any other Loan Document is rescinded or otherwise required to be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of any of Borrowers, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of or trustee or similar officer for, any of Borrowers or any substantial part of their respective property, or otherwise, all as though such payment to Lender had not been made, regardless of whether Lender contested the order requiring the return of such payment. In the event of the foreclosure of the Mortgages and of a deficiency, Guarantor hereby promises and agrees forthwith to pay the amount of such deficiency notwithstanding the fact that recovery of said deficiency against Borrowers would not be allowed by applicable law; however, the foregoing shall not be deemed to require that Lender institute foreclosure proceedings or otherwise resort to or exhaust any other collateral or security prior to or concurrently with enforcing this Guaranty.
6. Guarantor further covenants and agrees with Lender that, so long as any Guaranteed Obligations remain outstanding Guarantor shall deliver, or cause to be delivered, to Lender, within the time provided therein, all financial statements, certificates, reports, notices and other information required to be provided to Lender from time to time pursuant to the provisions of Section 10.1(m) and Section 10.1(t) of the Loan Agreement.
7. In the event Lender or any holder of the Note shall assign the Note to any Lender or other entity to secure a loan from such Lender or other entity to Lender or such holder for an amount not in excess of the amount which will be due, from time to time, from Borrowers to Lender under the Note with interest not in excess of the rate of interest which is payable by Borrowers to Lender under the Note, Guarantor will accord full recognition thereto and agree that all rights and remedies of Lender or such holder hereunder shall be enforceable against Guarantor by such Lender or other entity with the same force and effect and to the same extent as
would have been enforceable by Lender or such holder but for such assignment; provided, however, that unless Lender shall otherwise consent in writing, Lender shall have an unimpaired right, prior and superior to that of its assignee or transferee, to enforce this Guaranty for Lenders benefit to the extent any portion of the Guaranteed Obligations or any interest therein is not assigned or transferred.
8. If: (a) this Guaranty is placed in the hands of an attorney for collection or is collected through any legal proceeding; (b) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors rights and involving a claim under this Guaranty; (c) an attorney is retained to provide advice or other representation with respect to this Guaranty; or (d) an attorney is retained to represent Lender in any proceedings whatsoever in connection with this Guaranty, then Guarantor shall pay to Lender upon demand all attorneys fees, costs and expenses incurred in connection therewith (all of which are referred to herein as Enforcement Costs ), in addition to all other amounts due hereunder, regardless of whether all or a portion of such Enforcement Costs are incurred in a single proceeding brought to enforce this Guaranty as well as the other Loan Documents.
9. The parties hereto intend and believe that each provision in this Guaranty comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or provisions, or if any portion of any provision or provisions, in this Guaranty is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Guaranty to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid and enforceable, that the remainder of this Guaranty shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein, and that the rights, obligations and interest of Lender or the holder of the Note under the remainder of this Guaranty shall continue in full force and effect.
10. TO THE GREATEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS GUARANTY (EACH, A PROCEEDING ), LENDER AND GUARANTOR EACH IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF CLEVELAND AND STATE OF OHIO, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS GUARANTY SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. LENDER AND GUARANTOR FURTHER AGREE AND CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY OHIO STATE OR UNITED STATES COURT SITTING IN THE CITY OF
CLEVELAND AND MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE APPLICABLE PARTY AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF SUCH PARTY SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
11. Any indebtedness of Borrowers to Guarantor now or hereafter existing is hereby subordinated to the payment of the Guaranteed Obligations. Guarantor agrees that, until all Guaranteed Obligations have been paid in full, Guarantor will not seek, accept, or retain for its own account, any payment from Borrowers on account of such subordinated debt. Any payments to Guarantor on account of such subordinated debt shall be collected and received by Guarantor in trust for Lender and shall be paid over to Lender on account of the Guaranteed Obligations without impairing or releasing the obligations of Guarantor hereunder.
12. Any amounts received by Lender from any source on account of the Loan may be utilized by Lender for the payment of the Guaranteed Obligations and any other obligations of Borrowers to Lender in such order as Lender may from time to time elect, except as may be expressly provided to the contrary in any of the other Loan Documents. Additionally, if the indebtedness guaranteed hereby is less than the full indebtedness evidenced by the Note, all rents, proceeds and avails of the Projects, including proceeds of realization of Lenders Collateral, shall be deemed applied on the indebtedness of Borrowers to Lender that is not guaranteed by Guarantor until such unguaranteed indebtedness of Borrowers to Lender has been fully repaid before being applied upon the indebtedness guaranteed by Guarantor.
13. GUARANTOR AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS GUARANTY AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
14. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three Business Days after mailing (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on the day of transmission so long as copy is sent on the same day by overnight courier as set forth below:
Guarantor: |
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AdCare Operations, LLC |
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1145 Hembree Road |
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Roswell, Georgia 30076 |
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Attention: Chief Executive Officer |
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Telephone: (404) 781-2885 |
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Facsimile: (404) 842-1899 |
or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.
15. In order to induce Lender to make the Loan, Guarantor makes the following representations and warranties to Lender set forth in this Paragraph. Guarantor acknowledges that but for the truth and accuracy of the matters covered by the following representations and warranties, Lender would not have agreed to make the Loan.
(a) Guarantor is duly organized, validly existing, and in good standing in its state of organization and has qualified to do business and is in good standing in any state in which it is necessary in the conduct of its business.
(b) Guarantor maintains an office at the address set forth for such party in Paragraph 14 .
(c) The execution, delivery, and performance by Guarantor of this Guaranty, the Pledge Agreement (as defined in Paragraph 19 hereof) and the other Loan Documents to which it is a party do not and will not contravene or conflict with (i) any Laws, order, rule, regulation, writ, injunction or decree now in effect of any Government Authority, or court having jurisdiction over Guarantor, (ii) any contractual restriction binding on or affecting Guarantor or Guarantors property or assets which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty, (iii) the instruments creating any trust holding title to any assets included in Guarantors financial statements, or (iv) the organizational documents of Guarantor.
(d) This Guaranty creates legal, valid, and binding obligations of Guarantor enforceable in accordance with its terms.
(e) Except as disclosed in writing to Lender or as disclosed in any public filings by AdCare with the Securities and Exchange Commission prior to the date hereof, (i) there is no action, proceeding, or investigation pending or, to the knowledge of Guarantor, threatened or affecting, Guarantor, which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty; (ii) there are no judgments or orders for the payment of money rendered against Guarantor or any of its consolidated Subsidiaries for an amount in excess of $100,000 which have been undischarged for a period of ten (10) or more consecutive days and the enforcement of which is not stayed by reason of a pending appeal or otherwise; and (iii) neither Guarantor nor any of its consolidated Subsidiaries is in default under any agreements which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty.
(f) Each of the representations and warranties made by Borrowers and Guarantor (or any of them) in the Loan Agreement or in any other Loan Document to which they are respectively a party are true and correct as of the date hereof.
(g) All statements set forth in the Recitals are true and correct.
All of the foregoing representations and warranties shall be deemed remade on the date of the disbursement of proceeds of the Loan, and upon any extension of the Loan pursuant to the Loan Agreement. Guarantor hereby agrees to indemnify and hold Lender free and harmless from and against all loss, cost, liability, damage, and expense, including attorneys fees and costs, which Lender may sustain by reason of the inaccuracy or breach of any of the foregoing representations and warranties as of the date the foregoing representations and warranties are made and are remade.
16. This Guaranty shall be binding upon the permitted successors and assigns of Guarantor.
17. THIS GUARANTY, THE NOTE, AND ALL OTHER INSTRUMENTS EVIDENCING AND SECURING THE LOAN WERE NEGOTIATED IN THE STATE OF OHIO, AND DELIVERED BY GUARANTOR OR BORROWER, AS APPLICABLE, AND ACCEPTED BY LENDER IN THE STATE OF OHIO, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND THE UNDERLYING TRANSACTIONS EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, PERFORMANCE OF THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF OHIO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
18. Lender shall be entitled to honor any request for Loan proceeds made by Borrowers and shall have no obligation to see to the proper disposition of such advances. Guarantor agrees that its obligations hereunder shall not be released or affected by reason of any improper disposition by Borrowers of such Loan proceeds.
19. This Guaranty is secured by that certain Pledge and Security Agreement dated as of even date herewith (as the same may be amended, supplemented, restated or replaced from time to time, the Pledge Agreement) from Guarantor in favor of Lender, pursuant to which
Guarantor has pledged to Lender and granted Lender a security interest in, among other things, all of Guarantors right, title and interest in and to one hundred percent (100%) of the membership interests owned by Guarantor in the Tenant Borrowers.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Guarantor has delivered this Guaranty in the State of Ohio as of the date first written above.
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GUARANTOR : |
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ADCARE OPERATIONS, LLC , a Georgia |
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limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
AdCare OpCo Guaranty
Exhibit 10.272
EXECUTION VERSION
PAYMENT GUARANTY
Projects Commonly Known as
Woodland Hills, Northridge and Abington Place (a/k/a Cumberland)
THIS PAYMENT GUARANTY ( Guaranty ) made as of December 28, 2012, by ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company, having an address of 1145 Hembree Road, Roswell, GA 30076 ( Guarantor ), to and for the benefit of KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns ( Lender ).
R E C I T A L S
A. On or about the date hereof, APH&R Property Holdings, LLC, a Georgia limited liability company, ( Abington PropCo ), APH&R Nursing, LLC, a Georgia limited liability company ( Abington Tenant ), Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, ( Northridge PropCo ), Northridge HC&R Nursing, LLC, ( Northridge Tenant ), Woodland Hills HC Property Holdings, LLC a Georgia limited liability company, ( Woodland Hills PropCo ), and Woodland Hills HC Nursing, LLC ( Woodland Hills Tenant ) (Abington PropCo, Abington Tenant, Northridge PropCo, Northridge Tenant, Woodland Hills PropCo, and Woodland Hills Tenant referred to herein, individually, as a Borrower and collectively as Borrowers ) and Lender entered into that certain Secured Loan Agreement ( Loan Agreement ) whereby Lender agreed to make a secured term loan (the Loan ) to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00), to be secured by those skilled nursing facilities commonly known as Woodland Hills Healthcare and Rehabilitation ( Woodland Hills ), Northridge Healthcare and Rehabilitation ( Northridge ), and Abington Place Health and Rehab Center, also to be known as Cumberland Health and Rehabilitation Center ( Abington ) (Woodland Hills, Northridge, and Abington collectively referred to herein as the Projects ). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
B. In connection with the Loan, (i) Borrowers, jointly and severally, have executed and delivered a promissory note payable to the order of Lender in the original principal amount of $16,500,000.00 (as the same may be amended, modified, extended, renewed, restated or replaced from time to time, the Note ), to evidence the Loan, payment of which is secured by (i) the Mortgages executed and delivered to Lender by the applicable Borrowers on their respective Projects, and (ii) the other Loan Documents.
C. Guarantor is a direct, wholly owned subsidiary of AdCare Health Systems, Inc., an Ohio corporation ( AdCare ), and the sole member of Abington PropCo, Northridge PropCo and Woodland Hills PropCo (collectively, the PropCo Borrowers ) and will derive material, direct and indirect financial benefit from the Loan.
APH Guaranty
D. Lender has relied on the statements and agreements contained herein in agreeing to make the Loan and would not have made the Loan without this Guaranty. The execution and delivery of this Guaranty by Guarantor is a condition precedent to the making of the Loan by Lender.
AGREEMENTS
NOW, THEREFORE, intending to be legally bound, Guarantor, in consideration of the matters described in the foregoing Recitals, which Recitals are incorporated herein and made a part hereof, and for other good and valuable consideration the receipt and sufficiency of which are acknowledged, hereby covenants and agrees for the benefit of Lender and its respective successors, indorsees, transferees, participants and assigns as follows:
1. Guarantor absolutely, unconditionally and irrevocably guarantees:
(a) the full and prompt payment of the principal of and interest on the Note when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, and the full and prompt payment of all sums which may now be or may hereafter become due and owing under the Note, the Loan Agreement and the other Loan Documents, including but not limited to the Indemnity;
(b) the prompt, full and complete performance of all of Borrowers obligations under each and every covenant contained in the Loan Documents; and
(c) the full and prompt payment of any Enforcement Costs (as hereinafter defined in Paragraph 7 hereof).
All amounts due, debts, liabilities and payment obligations described in subsections (a), (b) and (c) of this Paragraph 1 shall be hereinafter collectively referred to as the Guaranteed Obligations .
2. In the event of any default by Borrowers in the payment of the Guaranteed Obligations, after the expiration of any applicable cure or grace period, Guarantor agrees, on demand by Lender or the holder of the Note, to pay the Guaranteed Obligations regardless of any defense, right of set-off or claims which Borrowers or Guarantor may have against Lender or the holder of the Note.
All of the remedies set forth herein and/or provided for in any of the Loan Documents or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by Guarantor or any other person, nor shall any such choice be asserted as a defense, setoff, or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guaranty, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy. The parties have agreed to the alternative remedies provided herein in part because they recognize that the choice of remedies in the event of a default hereunder will necessarily be and should properly be a matter of good faith business judgment, which the passage of time and events may or may not prove to have been the best choice to maximize recovery by Lender at the lowest cost to Borrowers and/or Guarantor. It is the intention of the
parties that such good faith choice by Lender be given conclusive effect regardless of such subsequent developments.
3. Guarantor does hereby (a) waive notice of acceptance of this Guaranty by Lender and any and all notices and demands of every kind which may be required to be given by any statute, rule or law, (b) agree to refrain from asserting, until after repayment in full of the Loan, any defense, right of set-off or other claim which Guarantor may have against Borrowers, (c) waive any defense, right of set-off or other claim which Guarantor or Borrowers may have against Lender, or the holder of the Note, (d) waive any and all rights Guarantor may have under any anti-deficiency statute or other similar protections, (e) waive presentment for payment, demand for payment, notice of nonpayment or dishonor, protest and notice of protest, diligence in collection and any and all formalities which otherwise might be legally required to charge Guarantor with liability (other than any notices expressly required under the terms of this Guaranty), and (f) waive any failure by Lender to inform Guarantor of any facts Lender may now or hereafter know about Borrowers, the Projects, the Loan, or the transactions contemplated by the Loan Agreement, it being understood and agreed that Lender has no duty so to inform and that Guarantor is fully responsible for being and remaining informed by Borrowers of all circumstances bearing on the risk of nonperformance of Borrowers obligations. Credit may be granted or continued from time to time by Lender to Borrowers without notice to or authorization from Guarantor, regardless of the financial or other condition of Borrowers at the time of any such grant or continuation. Lender shall have no obligation to disclose or discuss with Guarantor its assessment of the financial condition of Borrowers. Guarantor acknowledges that no representations of any kind whatsoever have been made by Lender. No modification or waiver of any of the provisions of this Guaranty shall be binding upon Lender except as expressly set forth in a writing duly signed and delivered by Lender.
4. Guarantor further agrees that Guarantors liability as guarantor shall in not be impaired or affected by any renewals or extensions which may be made from time to time, with or without the knowledge or consent of Guarantor of the time for payment of interest or principal under the Note or by any forbearance or delay in collecting interest or principal under the Note, or by any waiver by Lender under the Loan Agreement, Mortgages or any other Loan Documents, or by Lenders failure or election not to pursue any other remedies it may have against Borrowers, Guarantor or any other guarantor of the Guaranteed Obligations, or by any change or modification in the Note, Loan Agreement, Mortgages or any other Loan Document, or by the acceptance by Lender of any additional security or any increase, substitution or change therein, or by the release by Lender of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation other than the Guaranteed Obligations even though Lender might lawfully have elected to apply such payments to any part or all of the Guaranteed Obligations, it being the intent hereof that, subject to Lenders compliance with the terms of this Guaranty, Guarantor shall remain liable for the payment of the Guaranteed Obligations, until the Guaranteed Obligations have been paid in full, notwithstanding any act or thing which might otherwise operate as a legal or equitable discharge of a surety. Guarantor further understands and agrees that Lender may at any time enter into agreements with Borrowers to amend and modify the Note, Loan Agreement, Mortgages or other Loan Documents, and may waive or release any provision or provisions of the Note, Loan Agreement, Mortgages and other Loan Documents or any thereof, and, with reference to such instruments, may make and enter into any such agreement or agreements as Lender and Borrowers may deem proper and desirable, without in
any manner impairing or affecting this Guaranty or any of Lenders rights hereunder or Guarantors obligations hereunder.
5. This is an absolute, present and continuing guaranty of payment and not of collection. Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral given in connection herewith or with the Note, Loan Agreement, Mortgages or any of the other Loan Documents through foreclosure or sale proceedings, as the case may be, under the Mortgages or otherwise, or resorting to any other guaranties, and Guarantor hereby waives any right to require Lender to join Borrowers in any action brought hereunder or to commence any action against or obtain any judgment against Borrowers or to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein or otherwise shall prevent Lender from pursuing concurrently or successively all rights and remedies available to it at law and/or in equity or under the Note, Loan Agreement, Mortgages or any other Loan Documents, and the exercise of any of its rights or the completion of any of its remedies shall not constitute a discharge of Guarantors obligations hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor hereunder shall be absolute, independent and unconditional under any and all circumstances whatsoever. None of Guarantors obligations under this Guaranty or any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Borrowers under the Note, Loan Agreement, Mortgages or other Loan Documents or by reason of the bankruptcy of Borrowers or by reason of any creditor or bankruptcy proceeding instituted by or against Borrowers. This Guaranty shall continue to be effective or be reinstated (as the case may be) if at any time payment of all or any part of any sum payable pursuant to the Note, Loan Agreement, Mortgages or any other Loan Document is rescinded or otherwise required to be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of any of Borrowers, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of or trustee or similar officer for, any of Borrowers or any substantial part of their respective property, or otherwise, all as though such payment to Lender had not been made, regardless of whether Lender contested the order requiring the return of such payment. In the event of the foreclosure of the Mortgages and of a deficiency, Guarantor hereby promises and agrees forthwith to pay the amount of such deficiency notwithstanding the fact that recovery of said deficiency against Borrowers would not be allowed by applicable law; however, the foregoing shall not be deemed to require that Lender institute foreclosure proceedings or otherwise resort to or exhaust any other collateral or security prior to or concurrently with enforcing this Guaranty.
6. Guarantor further covenants and agrees with Lender that, so long as any Guaranteed Obligations remain outstanding Guarantor shall deliver, or cause to be delivered, to Lender, within the time provided therein, all financial statements, certificates, reports, notices and other information required to be provided to Lender from time to time pursuant to the provisions of Section 10.1(m) and Section 10.1(t) of the Loan Agreement.
7. In the event Lender or any holder of the Note shall assign the Note to any Lender or other entity to secure a loan from such Lender or other entity to Lender or such holder for an amount not in excess of the amount which will be due, from time to time, from Borrowers to Lender under the Note with interest not in excess of the rate of interest which is payable by Borrowers to Lender under the Note, Guarantor will accord full recognition thereto and agree that all rights and remedies of Lender or such holder hereunder shall be enforceable against Guarantor by such Lender or other entity with the same force and effect and to the same extent as
would have been enforceable by Lender or such holder but for such assignment; provided, however, that unless Lender shall otherwise consent in writing, Lender shall have an unimpaired right, prior and superior to that of its assignee or transferee, to enforce this Guaranty for Lenders benefit to the extent any portion of the Guaranteed Obligations or any interest therein is not assigned or transferred.
8. If: (a) this Guaranty is placed in the hands of an attorney for collection or is collected through any legal proceeding; (b) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors rights and involving a claim under this Guaranty; (c) an attorney is retained to provide advice or other representation with respect to this Guaranty; or (d) an attorney is retained to represent Lender in any proceedings whatsoever in connection with this Guaranty, then Guarantor shall pay to Lender upon demand all attorneys fees, costs and expenses incurred in connection therewith (all of which are referred to herein as Enforcement Costs ), in addition to all other amounts due hereunder, regardless of whether all or a portion of such Enforcement Costs are incurred in a single proceeding brought to enforce this Guaranty as well as the other Loan Documents.
9. The parties hereto intend and believe that each provision in this Guaranty comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or provisions, or if any portion of any provision or provisions, in this Guaranty is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Guaranty to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid and enforceable, that the remainder of this Guaranty shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein, and that the rights, obligations and interest of Lender or the holder of the Note under the remainder of this Guaranty shall continue in full force and effect.
10. TO THE GREATEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS GUARANTY (EACH, A PROCEEDING ), LENDER AND GUARANTOR EACH IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF CLEVELAND AND STATE OF OHIO, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS GUARANTY SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. LENDER AND GUARANTOR FURTHER AGREE AND CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY OHIO STATE OR UNITED STATES COURT SITTING IN THE CITY OF
CLEVELAND AND MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE APPLICABLE PARTY AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF SUCH PARTY SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
11. Any indebtedness of Borrowers to Guarantor now or hereafter existing is hereby subordinated to the payment of the Guaranteed Obligations. Guarantor agrees that, until all Guaranteed Obligations have been paid in full, Guarantor will not seek, accept, or retain for its own account, any payment from Borrowers on account of such subordinated debt. Any payments to Guarantor on account of such subordinated debt shall be collected and received by Guarantor in trust for Lender and shall be paid over to Lender on account of the Guaranteed Obligations without impairing or releasing the obligations of Guarantor hereunder.
12. Any amounts received by Lender from any source on account of the Loan may be utilized by Lender for the payment of the Guaranteed Obligations and any other obligations of Borrowers to Lender in such order as Lender may from time to time elect, except as may be expressly provided to the contrary in any of the other Loan Documents. Additionally, if the indebtedness guaranteed hereby is less than the full indebtedness evidenced by the Note, all rents, proceeds and avails of the Projects, including proceeds of realization of Lenders Collateral, shall be deemed applied on the indebtedness of Borrowers to Lender that is not guaranteed by Guarantor until such unguaranteed indebtedness of Borrowers to Lender has been fully repaid before being applied upon the indebtedness guaranteed by Guarantor.
13. GUARANTOR AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS GUARANTY AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
14. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three Business Days after mailing (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on the day of transmission so long as copy is sent on the same day by overnight courier as set forth below:
Guarantor: AdCare Property Holdings, LLC
1145 Hembree Road
Roswell, Georgia 30076
Attention: Chief Executive Officer
Telephone: (404) 781-2885
Facsimile: (404) 842-1899
With a copy to: Holt, Ney, Zatcoff & Wasserman LLP
100 Galleria Parkway, Suite 1800
Atlanta, Georgia 30339
Attention: Gregory P. Youra, Esq.
Telephone: (770) 956-9600
Facsimile: (770) 956-1490
Lender: KeyBank National Association
127 Public Square
Cleveland, Ohio 44114
Attention: Commercial Real Estate Department
Telephone (216)
Facsimile (216)
With a copy to: Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488
Attention: Robert C. Lewinson, Esq.
Telephone: (404) 572-6623
Facsimile: (404) 420-0623
or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.
15. In order to induce Lender to make the Loan, Guarantor makes the following representations and warranties to Lender set forth in this Paragraph. Guarantor acknowledges that but for the truth and accuracy of the matters covered by the following representations and warranties, Lender would not have agreed to make the Loan.
(a) Guarantor is duly organized, validly existing, and in good standing in its state of organization and has qualified to do business and is in good standing in any state in which it is necessary in the conduct of its business.
(b) Guarantor maintains an office at the address set forth for such party in Paragraph 14 .
(c) The execution, delivery, and performance by Guarantor of this Guaranty, the Pledge Agreement (as defined in Paragraph 19 hereof) and the other Loan Documents to which it is a party do not and will not contravene or conflict with (i) any Laws, order, rule, regulation, writ, injunction or decree now in effect of any Government Authority, or court having jurisdiction over Guarantor, (ii) any contractual restriction binding on or affecting Guarantor or Guarantors property or assets which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty, (iii) the instruments creating any trust holding title to any assets included in Guarantors financial statements, or (iv) the organizational documents of Guarantor.
(d) This Guaranty creates legal, valid, and binding obligations of Guarantor enforceable in accordance with its terms.
(e) Except as disclosed in writing to Lender or as disclosed in any public filings by AdCare with the Securities and Exchange Commission prior to the date hereof, (i) there is no action, proceeding, or investigation pending or, to the knowledge of Guarantor, threatened or affecting, Guarantor, which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty; (ii) there are no judgments or orders for the payment of money rendered against Guarantor or any of its consolidated Subsidiaries for an amount in excess of $100,000 which have been undischarged for a period of ten (10) or more consecutive days and the enforcement of which is not stayed by reason of a pending appeal or otherwise; and (iii) neither Guarantor nor any of its consolidated Subsidiaries is in default under any agreements which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty.
(f) Each of the representations and warranties made by Borrowers and Guarantor (or any of them) in the Loan Agreement or in any other Loan Document to which they are respectively a party are true and correct as of the date hereof.
(g) All statements set forth in the Recitals are true and correct.
All of the foregoing representations and warranties shall be deemed remade on the date of the disbursement of proceeds of the Loan, and upon any extension of the Loan pursuant to the Loan Agreement. Guarantor hereby agrees to indemnify and hold Lender free and harmless from and against all loss, cost, liability, damage, and expense, including attorneys fees and costs, which Lender may sustain by reason of the inaccuracy or breach of any of the foregoing representations and warranties as of the date the foregoing representations and warranties are made and are remade.
16. This Guaranty shall be binding upon the permitted successors and assigns of Guarantor.
17. THIS GUARANTY, THE NOTE, AND ALL OTHER INSTRUMENTS EVIDENCING AND SECURING THE LOAN WERE NEGOTIATED IN THE STATE OF OHIO, AND DELIVERED BY GUARANTOR OR BORROWER, AS APPLICABLE, AND ACCEPTED BY LENDER IN THE STATE OF OHIO, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND THE UNDERLYING TRANSACTIONS EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, PERFORMANCE OF THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF OHIO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
18. Lender shall be entitled to honor any request for Loan proceeds made by Borrowers and shall have no obligation to see to the proper disposition of such advances. Guarantor agrees that its obligations hereunder shall not be released or affected by reason of any improper disposition by Borrowers of such Loan proceeds.
19. This Guaranty is secured by that certain Pledge and Security Agreement dated as of even date herewith (as the same may be amended, supplemented, restated or replaced from time to time, the Pledge Agreement) from Guarantor in favor of Lender, pursuant to which
Guarantor has pledged to Lender and granted Lender a security interest in, among other things, all of Guarantors right, title and interest in and to one hundred percent (100%) of the membership interests owned by Guarantor in the PropCo Borrowers.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Guarantor has delivered this Guaranty in the State of Ohio as of the date first written above.
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GUARANTOR: |
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ADCARE PROPERTY HOLDINGS, LLC , an Ohio limited liability company |
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/s/ Boyd P. Gentry |
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Boyd P. Gentry |
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Title: |
Manager |
APH Guaranty
Exhibit 10.273
EXECUTION VERSION
PAYMENT GUARANTY
Projects Commonly Known as
Woodland Hills, Northridge and Abington Place (a/k/a Cumberland)
THIS PAYMENT GUARANTY ( Guaranty ) made as of December 28, 2012, by ADCARE HEALTH SYSTEMS, INC., an Ohio corporation, having an address of 1145 Hembree Road, Roswell, GA 30076 ( Guarantor ), to and for the benefit of KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns ( Lender ).
R E C I T A L S
A. On or about the date hereof, APH&R Property Holdings, LLC, a Georgia limited liability company, ( Abington PropCo ), APH&R Nursing, LLC, a Georgia limited liability company ( Abington Tenant ), Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, ( Northridge PropCo ), Northridge HC&R Nursing, LLC, ( Northridge Tenant ), Woodland Hills HC Property Holdings, LLC a Georgia limited liability company, ( Woodland Hills PropCo ), and Woodland Hills HC Nursing, LLC ( Woodland Hills Tenant ) (Abington PropCo, Abington Tenant, Northridge PropCo, Northridge Tenant, Woodland Hills PropCo, and Woodland Hills Tenant referred to herein, individually, as a Borrower and collectively as Borrowers ) and Lender entered into that certain Secured Loan Agreement ( Loan Agreement ) whereby Lender agreed to make a secured term loan (the Loan ) to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00), to be secured by those skilled nursing facilities commonly known as Woodland Hills Healthcare and Rehabilitation ( Woodland Hills ), Northridge Healthcare and Rehabilitation ( Northridge ), and Abington Place Health and Rehab Center, also to be known as Cumberland Health and Rehabilitation Center ( Abington ) (Woodland Hills, Northridge, and Abington collectively referred to herein as the Projects ). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
B. In connection with the Loan, (i) Borrowers, jointly and severally, have executed and delivered a promissory note payable to the order of Lender in the original principal amount of $16,500,000.00 (as the same may be amended, modified, extended, renewed, restated or replaced from time to time, the Note ), to evidence the Loan, payment of which is secured by (i) the Mortgages executed and delivered to Lender by the applicable Borrowers on their respective Projects, and (ii) the other Loan Documents.
C. Guarantor is the ultimate parent company of Borrowers and will derive material, direct and indirect financial benefit from the Loan.
D. Lender has relied on the statements and agreements contained herein in agreeing to make the Loan and would not have made the Loan without this Guaranty. The execution and delivery of this Guaranty by Guarantor is a condition precedent to the making of the Loan by Lender.
Parent Guaranty
AGREEMENTS
NOW, THEREFORE, intending to be legally bound, Guarantor, in consideration of the matters described in the foregoing Recitals, which Recitals are incorporated herein and made a part hereof, and for other good and valuable consideration the receipt and sufficiency of which are acknowledged, hereby covenants and agrees for the benefit of Lender and its respective successors, indorsees, transferees, participants and assigns as follows:
1. Guarantor absolutely, unconditionally and irrevocably guarantees:
(a) the full and prompt payment of the principal of and interest on the Note when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, and the full and prompt payment of all sums which may now be or may hereafter become due and owing under the Note, the Loan Agreement and the other Loan Documents, including but not limited to the Indemnity;
(b) the prompt, full and complete performance of all of Borrowers obligations under each and every covenant contained in the Loan Documents; and
(c) the full and prompt payment of any Enforcement Costs (as hereinafter defined in Paragraph 7 hereof).
All amounts due, debts, liabilities and payment obligations described in subsections (a), (b) and (c) of this Paragraph 1 shall be hereinafter collectively referred to as the Guaranteed Obligations .
2. In the event of any default by Borrowers in the payment of the Guaranteed Obligations, after the expiration of any applicable cure or grace period, Guarantor agrees, on demand by Lender or the holder of the Note, to pay the Guaranteed Obligations regardless of any defense, right of set-off or claims which Borrowers or Guarantor may have against Lender or the holder of the Note.
All of the remedies set forth herein and/or provided for in any of the Loan Documents or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by Guarantor or any other person, nor shall any such choice be asserted as a defense, setoff, or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guaranty, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy. The parties have agreed to the alternative remedies provided herein in part because they recognize that the choice of remedies in the event of a default hereunder will necessarily be and should properly be a matter of good faith business judgment, which the passage of time and events may or may not prove to have been the best choice to maximize recovery by Lender at the lowest cost to Borrowers and/or Guarantor. It is the intention of the parties that such good faith choice by Lender be given conclusive effect regardless of such subsequent developments.
3. Guarantor does hereby (a) waive notice of acceptance of this Guaranty by Lender and any and all notices and demands of every kind which may be required to be given by any
statute, rule or law, (b) agree to refrain from asserting, until after repayment in full of the Loan, any defense, right of set-off or other claim which Guarantor may have against Borrowers, (c) waive any defense, right of set-off or other claim which Guarantor or Borrowers may have against Lender, or the holder of the Note, (d) waive any and all rights Guarantor may have under any anti-deficiency statute or other similar protections, (e) waive presentment for payment, demand for payment, notice of nonpayment or dishonor, protest and notice of protest, diligence in collection and any and all formalities which otherwise might be legally required to charge Guarantor with liability (other than any notices expressly required under the terms of this Guaranty), and (f) waive any failure by Lender to inform Guarantor of any facts Lender may now or hereafter know about Borrowers, the Projects, the Loan, or the transactions contemplated by the Loan Agreement, it being understood and agreed that Lender has no duty so to inform and that Guarantor is fully responsible for being and remaining informed by Borrowers of all circumstances bearing on the risk of nonperformance of Borrowers obligations. Credit may be granted or continued from time to time by Lender to Borrowers without notice to or authorization from Guarantor, regardless of the financial or other condition of Borrowers at the time of any such grant or continuation. Lender shall have no obligation to disclose or discuss with Guarantor its assessment of the financial condition of Borrowers. Guarantor acknowledges that no representations of any kind whatsoever have been made by Lender. No modification or waiver of any of the provisions of this Guaranty shall be binding upon Lender except as expressly set forth in a writing duly signed and delivered by Lender.
4. Guarantor further agrees that Guarantors liability as guarantor shall in not be impaired or affected by any renewals or extensions which may be made from time to time, with or without the knowledge or consent of Guarantor of the time for payment of interest or principal under the Note or by any forbearance or delay in collecting interest or principal under the Note, or by any waiver by Lender under the Loan Agreement, Mortgages or any other Loan Documents, or by Lenders failure or election not to pursue any other remedies it may have against Borrowers, Guarantor or any other guarantor of the Guaranteed Obligations, or by any change or modification in the Note, Loan Agreement, Mortgages or any other Loan Document, or by the acceptance by Lender of any additional security or any increase, substitution or change therein, or by the release by Lender of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation other than the Guaranteed Obligations even though Lender might lawfully have elected to apply such payments to any part or all of the Guaranteed Obligations, it being the intent hereof that, subject to Lenders compliance with the terms of this Guaranty, Guarantor shall remain liable for the payment of the Guaranteed Obligations, until the Guaranteed Obligations have been paid in full, notwithstanding any act or thing which might otherwise operate as a legal or equitable discharge of a surety. Guarantor further understands and agrees that Lender may at any time enter into agreements with Borrowers to amend and modify the Note, Loan Agreement, Mortgages or other Loan Documents, and may waive or release any provision or provisions of the Note, Loan Agreement, Mortgages and other Loan Documents or any thereof, and, with reference to such instruments, may make and enter into any such agreement or agreements as Lender and Borrowers may deem proper and desirable, without in any manner impairing or affecting this Guaranty or any of Lenders rights hereunder or Guarantors obligations hereunder.
5. This is an absolute, present and continuing guaranty of payment and not of collection. Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral given in connection
herewith or with the Note, Loan Agreement, Mortgages or any of the other Loan Documents through foreclosure or sale proceedings, as the case may be, under the Mortgages or otherwise, or resorting to any other guaranties, and Guarantor hereby waives any right to require Lender to join Borrowers in any action brought hereunder or to commence any action against or obtain any judgment against Borrowers or to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein or otherwise shall prevent Lender from pursuing concurrently or successively all rights and remedies available to it at law and/or in equity or under the Note, Loan Agreement, Mortgages or any other Loan Documents, and the exercise of any of its rights or the completion of any of its remedies shall not constitute a discharge of Guarantors obligations hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor hereunder shall be absolute, independent and unconditional under any and all circumstances whatsoever. None of Guarantors obligations under this Guaranty or any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Borrowers under the Note, Loan Agreement, Mortgages or other Loan Documents or by reason of the bankruptcy of Borrowers or by reason of any creditor or bankruptcy proceeding instituted by or against Borrowers. This Guaranty shall continue to be effective or be reinstated (as the case may be) if at any time payment of all or any part of any sum payable pursuant to the Note, Loan Agreement, Mortgages or any other Loan Document is rescinded or otherwise required to be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of any of Borrowers, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of or trustee or similar officer for, any of Borrowers or any substantial part of their respective property, or otherwise, all as though such payment to Lender had not been made, regardless of whether Lender contested the order requiring the return of such payment. In the event of the foreclosure of the Mortgages and of a deficiency, Guarantor hereby promises and agrees forthwith to pay the amount of such deficiency notwithstanding the fact that recovery of said deficiency against Borrowers would not be allowed by applicable law; however, the foregoing shall not be deemed to require that Lender institute foreclosure proceedings or otherwise resort to or exhaust any other collateral or security prior to or concurrently with enforcing this Guaranty.
6. Guarantor further covenants and agrees with Lender that, so long as any Guaranteed Obligations remain outstanding:
(a) Guarantor shall deliver to Lender, within the time provided therein, all financial statements, certificates, reports, notices and other information required to be provided to Lender from time to time pursuant to the provisions of Section 10.1(m) and Section 10.1(t) of the Loan Agreement.
(b) (i) Subject to the further provisions of this subparagraph (b) , Guarantor shall not make any cash Distributions to its shareholders unless (i) AdCare Tangible Net Worth (as hereinafter defined) is equal to or in excess of $75,000,000.00 as at the end of the most recent fiscal quarter for which Lender has received the financial statements required pursuant to Section 10.1(m)(ii) of the Loan Agreement, and (ii) no Default or Event of Default exists immediately prior to or immediately after giving effect thereto. The term, AdCare Tangible Net Worth , means, as of any date of determination, total assets minus intangible assets (as defined below) of Guarantor and its consolidated Subsidiaries. For purposes of this definition, intangible assets has the meaning under Generally Accepted Accounting Principles, including, without limitation, the book value of goodwill, franchises, licenses, non-competition agreements, patents, trademarks, trade names, copyrights, service marks and brand names.
(ii) Notwithstanding the provisions of Paragraph 6(b)(i) :
(A) so long as no Default or Event of Default exists immediately prior to, or would occur after giving effect to, such payment, Guarantor may purchase shares of its issued and outstanding common stock, provided that the number of shares so purchased shall not exceed 500,000 over the term of this Agreement, and provided, further, that the aggregate consideration paid (whether cash or non-cash) by Guarantor to purchase such shares shall not exceed $2,000,000.00 over the term of the Loan Agreement; and
(B) so long as no Special Blocking Default (as hereinafter defined) exists immediately prior to, or would occur after giving effect to, such payment, and subject to the further provisions of this clause (B), Guarantor may make scheduled payments on any preferred stock of Guarantor and any Indebtedness that by its terms is convertible into common stock of Guarantor. The term scheduled payments shall be deemed to include, without limitation, (1) for preferred stock, (I) dividends either expressly provided in the designation of such series of preferred stock or otherwise declared from time to time by Guarantors board of directors, and (II) with respect solely to preferred stock issued and outstanding on the Loan Opening Date, any payment of the redemption price thereof upon mandatory redemption, and (2) scheduled payments of principal and interest on convertible Indebtedness. So long as no Special Blocking Default exists immediately prior to the declaration by Guarantors board of directors of a dividend on preferred stock, and no Special Blocking Default would exist immediately after giving effect to the payment of such dividend, if the dividend were to be paid on the date of declaration, Guarantor shall be permitted to pay the dividend so declared on the scheduled date for payment, notwithstanding the existence on such payment date of any Special Blocking Default described in clause (1) of the definition below.
The term Special Blocking Default , as used herein, means (1) any Event of Default under the following subsections of Section 14.1 of the Loan Agreement: (a), (b) [to the extent such Event of Default relates to any breach of Sections 10.1(m)(i) (iv) , (m)(viii) , (o) , (r)(iii) , (s) , (w) , (x) , (y) , (aa) [termination or cancellation only] or (dd) of the Loan Agreement], (d), (f), (h), (i), (j), (l), (m) [either as of the most recent Compliance Certificate delivered to Lender or on a pro forma basis after giving effect to the proposed Distribution], (n) or (p), or (2) acceleration of the Loan by Lender, regardless of the Event(s) of Default on which such acceleration may be based.
(c) (i) Guarantor shall not permit the ratio of AdCare Total EBITDAR (as hereinafter defined) to AdCare Fixed Charges (as hereinafter defined), on a trailing six (6)-month basis, to be less than 1.15 to 1.00, tested as of the end of each fiscal quarter of Guarantor.
(ii) For purposes of subparagraph 6(c)(i) hereof:
(A) AdCare Fixed Charges means, for any period, on a consolidated basis for Guarantor and its consolidated Subsidiaries, the sum of the following amounts (without duplication): (i) scheduled payments of principal on AdCare Total Debt, (ii) AdCare Interest Expense; and (iii) AdCare Rent Expense.
(B) AdCare Interest Expense means, for any period, the interest expense of the Guarantor and its Subsidiaries on a consolidated basis during such period, determined in accordance with GAAP, consistently applied, and shall in any event include, without limitation, (i) the amortization or write-off of debt discounts, (ii) the amortization of all debt issuance costs, commissions and other fees payable in connection with the incurrence of Indebtedness to the extent included in interest expense, and (iii) the portion of payments under Capital Lease Obligations allocable to interest expense.
(C) AdCare Rent Expense means, for any period, the aggregate amount of fixed and contingent rentals payable by Guarantor and its consolidated Subsidiaries for such period with respect to leases of real and personal property , determined on a consolidated basis in accordance with GAAP, consistently applied.
(D) AdCare Total Debt means, as of any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Guarantor and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, consistently applied.
(E) AdCare Total EBITDAR means, for any period, Net Operating Income of Guarantor and its consolidated Subsidiaries, plus the sum of the following, without duplication, after elimination of intercompany items and only to the extent such amounts are deducted from Gross Revenues in the calculation of Net Operating Income of such Persons for such period: (i) Interest Expense, (ii) provisions for taxes based on income; (iii) depreciation expense; (iv) amortization expense; and (v) AdCare Rent Expense.
(d) Guarantor shall not permit Liquidity (as hereinafter defined) to be less than $5,000,000.00 as of the end of any fiscal quarter of Guarantor. The term Liquidity means, as of any date of determination, on a consolidated basis for Guarantor and its consolidated Subsidiaries, the sum of (i) unrestricted cash and Cash Equivalents not pledged or encumbered and the use of which is not restricted by any agreement, and (ii) to the extent not included under clause (i) , the amount of cash collateral held by Lender in the Cash Collateral Account.
(e) Guarantor shall deposit an amount equal to the Minimum Cash Collateral Amount with Lender in the Cash Collateral Account as a condition precedent to the Opening of the Loan pursuant to Section 8.1(d) of the Loan Agreement, and shall maintain the Cash Collateral Account with Lender at all times. Funds held in or for credit to the Cash Collateral Account from time to time may be commingled with other funds of Lender. Guarantor hereby grants Lender a first-priority, continuing security interest in the Cash Collateral Account and all monies on deposit in such account from time to time, and Lender shall have all rights of a secured party under the Uniform Commercial Code with respect thereto.Guarantor shall, at Guarantors expense, take all actions reasonably requested by Lender from time to time to perfect or maintain the perfection of such security interest. Guarantor hereby irrevocably authorizes Lender, during the existence of an Event of Default, to apply any funds on hand from time to time in the Cash Collateral Account to any of the Guaranteed Obligations, in such order of priority as Lender may determine in its sole discretion. By its acceptance of this Guaranty, Lender agrees that after payment in full of all Guaranteed Obligations, it will refund to Guarantor all amounts held in the Cash Collateral Account and not theretofore applied against the Guaranteed Obligations.
(f) Guarantor shall cause all Tenants to be released from their respective obligations under the Working Capital Financing, and all liens and security interests on Collateral of Tenants in favor of PrivateBank to be terminated, prior to or contemporaneously with funding of the Loan and as an express condition precedent to such funding.
7. In the event Lender or any holder of the Note shall assign the Note to any Lender or other entity to secure a loan from such Lender or other entity to Lender or such holder for an amount not in excess of the amount which will be due, from time to time, from Borrowers to Lender under the Note with interest not in excess of the rate of interest which is payable by Borrowers to Lender under the Note, Guarantor will accord full recognition thereto and agree that all rights and remedies of Lender or such holder hereunder shall be enforceable against Guarantor by such Lender or other entity with the same force and effect and to the same extent as would have been enforceable by Lender or such holder but for such assignment; provided, however, that unless Lender shall otherwise consent in writing, Lender shall have an unimpaired right, prior and superior to that of its assignee or transferee, to enforce this Guaranty for Lenders benefit to the extent any portion of the Guaranteed Obligations or any interest therein is not assigned or transferred.
8. If: (a) this Guaranty is placed in the hands of an attorney for collection or is collected through any legal proceeding; (b) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors rights and involving a claim under this Guaranty; (c) an attorney is retained to provide advice or other representation with respect to this Guaranty; or (d) an attorney is retained to represent Lender in any proceedings whatsoever in connection with this Guaranty, then Guarantor shall pay to Lender upon demand all attorneys fees, costs and expenses incurred in connection therewith (all of which are referred to herein as Enforcement Costs ), in addition to all other amounts due hereunder, regardless of whether all or a portion of such Enforcement Costs are incurred in a single proceeding brought to enforce this Guaranty as well as the other Loan Documents.
9. The parties hereto intend and believe that each provision in this Guaranty comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or provisions, or if any portion of any provision or provisions, in this Guaranty is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Guaranty to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid and enforceable, that the remainder of this Guaranty shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein, and that the rights, obligations and interest of Lender or the holder of the Note under the remainder of this Guaranty shall continue in full force and effect.
10. TO THE GREATEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS GUARANTY (EACH, A PROCEEDING ), LENDER AND GUARANTOR EACH IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF CLEVELAND AND STATE OF OHIO, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE
OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS GUARANTY SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. LENDER AND GUARANTOR FURTHER AGREE AND CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY OHIO STATE OR UNITED STATES COURT SITTING IN THE CITY OF CLEVELAND AND MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE APPLICABLE PARTY AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF SUCH PARTY SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
11. Any indebtedness of Borrowers to Guarantor now or hereafter existing is hereby subordinated to the payment of the Guaranteed Obligations. Guarantor agrees that, until all Guaranteed Obligations have been paid in full, Guarantor will not seek, accept, or retain for its own account, any payment from Borrowers on account of such subordinated debt. Any payments to Guarantor on account of such subordinated debt shall be collected and received by Guarantor in trust for Lender and shall be paid over to Lender on account of the Guaranteed Obligations without impairing or releasing the obligations of Guarantor hereunder.
12. Any amounts received by Lender from any source on account of the Loan may be utilized by Lender for the payment of the Guaranteed Obligations and any other obligations of Borrowers to Lender in such order as Lender may from time to time elect, except as may be expressly provided to the contrary in any of the other Loan Documents. Additionally, if the indebtedness guaranteed hereby is less than the full indebtedness evidenced by the Note, all rents, proceeds and avails of the Projects, including proceeds of realization of Lenders Collateral, shall be deemed applied on the indebtedness of Borrowers to Lender that is not guaranteed by Guarantor until such unguaranteed indebtedness of Borrowers to Lender has been fully repaid before being applied upon the indebtedness guaranteed by Guarantor.
13. GUARANTOR AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS GUARANTY AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
14. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three Business Days after mailing (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after
delivered to such courier service or (d) if by telecopier on the day of transmission so long as copy is sent on the same day by overnight courier as set forth below:
Guarantor: AdCare Health Systems, Inc.
1145 Hembree Road
Roswell, Georgia 30076
Attention: Chief Executive Officer
Telephone: (404) 781-2885
Facsimile: (404) 842-1899
With a copy to: Holt, Ney, Zatcoff & Wasserman LLP
100 Galleria Parkway, Suite 1800
Atlanta, Georgia 30339
Attention: Gregory P. Youra, Esq.
Telephone: (770) 956-9600
Facsimile: (770) 956-1490
Lender: KeyBank National Association
Real Estate Capital-Healthcare
Mailcode: OH-01-51-0311
4910 Tiedeman Road, 3rd Floor
Brooklyn, Ohio 44144
Attention: Amy MacLearie, Closer
Telephone: (216) 813-6935
Facsimile: (216) 357-6383
With copies to: KeyBank National Association
1200 Abernathy Road, NE
Suite 1550
Atlanta, Georgia 30328
Attention: Paul F. Di Vito, SVP
Telephone: (770) 510-2085
Facsimile.: (770) 510-2195; and
Bryan Cave LLP
One Atlantic Center, Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488
Attention: Robert C. Lewinson, Esq.
Telephone: (404) 572-6623
Facsimile: (404) 420-0623
or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.
15. In order to induce Lender to make the Loan, Guarantor makes the following representations and warranties to Lender set forth in this Paragraph. Guarantor acknowledges that but for the truth and accuracy of the matters covered by the following representations and warranties, Lender would not have agreed to make the Loan.
(a) Guarantor is duly incorporated, validly existing, and in good standing in its state of incorporation and has qualified to do business and is in good standing in any state in which it is necessary in the conduct of its business.
(b) Guarantor maintains an office at the address set forth for such party in Paragraph 14 .
(c) Any and all balance sheets, net worth statements, and other financial data with respect to Guarantor and its consolidated Subsidiaries which have heretofore been given to Lender by or on behalf of Guarantor fairly and accurately present the financial condition of Guarantor as of the respective dates, or for the periods, thereof.
(d) The execution, delivery, and performance by Guarantor of this Guaranty and the other Loan Documents to which it is a party do not and will not contravene or conflict with (i) any Laws, order, rule, regulation, writ, injunction or decree now in effect of any Government Authority, or court having jurisdiction over Guarantor, (ii) any contractual restriction binding on or affecting Guarantor or Guarantors property or assets which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty, (iii) the instruments creating any trust holding title to any assets included in Guarantors financial statements, or (iv) the organizational documents of Guarantor.
(e) This Guaranty creates legal, valid, and binding obligations of Guarantor enforceable in accordance with its terms.
(f) Except as disclosed in writing to Lender or as disclosed in any public filings by Guarantor with the Securities and Exchange Commission prior to the date hereof, (i) there is no action, proceeding, or investigation pending or, to the knowledge of Guarantor, threatened or affecting, Guarantor, which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty; (ii) there are no judgments or orders for the payment of money rendered against Guarantor or any of its consolidated Subsidiaries for an amount in excess of $100,000 which have been undischarged for a period of ten (10) or more consecutive days and the enforcement of which is not stayed by reason of a pending appeal or otherwise; and (iii) neither Guarantor nor any of its consolidated Subsidiaries is in default under any agreements which may adversely affect Guarantors ability to fulfill its obligations under this Guaranty.
(g) Each of the representations and warranties made by Borrowers, APH and AdCare OpCo (or any of them) in the Loan Agreement or in any other Loan Document to which they are respectively a party are true and correct as of the date hereof.
(h) No Material Adverse Change has occurred with respect to Guarantor and its consolidated Subsidiaries since December 31, 2011.
(i) All statements set forth in the Recitals are true and correct.
All of the foregoing representations and warranties shall be deemed remade on the date of the disbursement of proceeds of the Loan, and upon any extension of the Loan pursuant to the Loan Agreement. Guarantor hereby agrees to indemnify and hold Lender free and harmless from and against all loss, cost, liability, damage, and expense, including attorneys fees and costs, which Lender may sustain by reason of the inaccuracy or breach of any of the foregoing representations
and warranties as of the date the foregoing representations and warranties are made and are remade.
16. This Guaranty shall be binding upon the permitted successors and assigns of Guarantor.
17. THIS GUARANTY, THE NOTE, AND ALL OTHER INSTRUMENTS EVIDENCING AND SECURING THE LOAN WERE NEGOTIATED IN THE STATE OF OHIO, AND DELIVERED BY GUARANTOR OR BORROWER, AS APPLICABLE, AND ACCEPTED BY LENDER IN THE STATE OF OHIO, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND THE UNDERLYING TRANSACTIONS EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, PERFORMANCE OF THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF OHIO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
18. Lender shall be entitled to honor any request for Loan proceeds made by Borrowers and shall have no obligation to see to the proper disposition of such advances. Guarantor agrees that its obligations hereunder shall not be released or affected by reason of any improper disposition by Borrowers of such Loan proceeds.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Guarantor has delivered this Guaranty in the State of Ohio as of the date first written above.
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GUARANTOR: |
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ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Chief Executive Officer |
Parent Guaranty
Exhibit 10.274
EXECUTION VERSION
PLEDGE AND SECURITY AGREEMENT
(PropCos)
This PLEDGE AND SECURITY AGREEMENT (this Agreement ) is made this 28th day of December, 2012, between ADCARE PROPERTY HOLDINGS, LLC , an Ohio limited liability company ( Grantor ), and KEYBANK NATIONAL ASSOCIATION, a national banking association, as lender ( Lender ).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Secured Loan Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the Loan Agreement ) among Lender, Woodland Hills HC Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, APH&R Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC (collectively, the Borrower ), Lender is willing to make certain financial accommodations available to Borrower from time to time pursuant to the terms and conditions thereof, and
WHEREAS, in order to induce Lender to make financial accommodations to Borrower as provided for in the Loan Agreement, Grantor has agreed to grant a continuing security interest in and to the Collateral (as hereinafter defined) in order to secure the prompt and complete payment, observance and performance of (a) the obligations of Grantor arising from this Agreement and that certain Payment Guaranty from Grantor in favor of Lender of even date herewith (as may be amended, restated, supplemented or otherwise modified from time to time (the Guaranty ) (including, without limitation, any interest, fees or expenses that accrue after the filing of an insolvency proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any insolvency proceeding), plus (b) the Obligations as defined in the Loan Agreement, plus (c) reasonable attorneys fees actually incurred and expenses if the obligations represented thereunder are collected by law, through an attorney-at-law, or under advice therefrom (clauses (a), (b) and (c) being hereinafter referred to as the Secured Obligations ), by the granting of the security interests contemplated by this Agreement, and
NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms . All capitalized terms used herein (including, without limitation, in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Loan Agreement. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:
(a) Equity Interests means all limited liability company membership interests of Grantor or other equivalents (regardless of how designated) of or in each Pledged Company, whether voting or nonvoting, or any other equity security (as such term is defined in Rule 3a 11-1 of the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934) in such Pledged Company, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character of Grantor with respect to such Pledged Company.
(b) Event of Default as used in this Agreement means an Event of Default as defined in the Loan Agreement.
(c) Investment Related Property means (i) investment property (as that term is defined in the UCC) owned by Grantor with respect to the Pledged Companies, and (ii) all of the following regardless of whether classified as investment property under the UCC: all Pledged Interests and all rights of Grantor under the Pledged Operating Agreements.
(d) Pledged Companies means, each Person listed on Schedule 1 hereto as a Pledged Company.
(e) Pledged Interests means all of Grantors right, title and interest in and to all of the Equity Interests now or hereafter owned by Grantor, regardless of class or designation, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing the Equity Interests, the right to request after the occurrence and during the continuation of an Event of Default that such Equity Interests be registered in the name of Lender or any of its nominees, the right to receive any certificates representing any of the Equity Interests and the right to require that such certificates be delivered to Lender together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property hereafter from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the Equity Interests.
(f) Pledged Operating Agreement means the limited liability company operating agreement of each Pledged Company.
(g) UCC shall mean the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of Ohio provided, that to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lenders Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Ohio the term UCC shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
2. Grant of Security . Grantor hereby unconditionally grants, assigns and pledges to Lender, a continuing security interest (hereinafter referred to as the Security Interest ), in Grantors right, title, and interest in and to the following, whether now owned or hereafter acquired or arising and wherever located (the Collateral ):
(a) all of Grantors books and records indicating, summarizing, or evidencing the Investment Related Property ( Books );
(b) all of Grantors Investment Related Property;
(c) all of the proceeds of any of the foregoing, money, or other tangible or intangible property resulting from the sale, or other disposition of any of the foregoing, the portion thereof or interest therein, and the proceeds thereof, (the Proceeds ). Without limiting the generality of the foregoing, the term Proceeds includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to Grantor or Lender from time to time with respect to any of the Investment Related Property.
3. Security for Obligations . This Agreement and the Security Interest created hereby secures the payment and performance of all the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by Grantor, to Lender, but for the fact that they are unenforceable or not allowable due to the existence of any insolvency proceeding involving Grantor.
4. Grantor Remain Liable . Anything herein to the contrary notwithstanding, (a) Grantor shall remain liable under and in accordance with the contracts and agreements included in the Collateral to those parties to whom Grantor has contracted, including, without limitation, the Pledged Operating Agreements, to perform all of the duties and obligations of Grantor thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Lender of any of the rights hereunder shall not release Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) Lender shall not have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties of Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder; provided, however, that if following an Event of Default Lender becomes the owner of the Collateral, Lender shall thenceforth be responsible for complying with such duties as may arise thereafter under the Pledged Operating Agreements as are to be performed by the member owning such Collateral. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Loan Agreement, or other Loan Documents, Grantor shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of its business, subject to and upon the terms hereof and of the Loan Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that so long as no Event of Default then exists and notwithstanding anything to the contrary contained in this Agreement, the Loan Agreement or any other Loan Document: (a) Grantor may receive (and make request for if
not timely paid) and retain all fees, distributions, returns of capital, member loan repayments and other payments payable to Grantor under the Pledged Operating Agreements on account of or with respect to the Equity Interests or otherwise payable to Grantor under the terms and conditions thereof as and when the same may become due or available for distribution and (b) record and beneficial ownership of the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights, shall remain in Grantor. Following the occurrence of an Event of Default Lender shall notify Grantor of Lenders exercise of voting, consensual, and/or dividend rights with respect to the Pledged Interests pursuant to Section 13 hereof.
5. Representations and Warranties . Grantor hereby represents and warrants as follows:
(a) The exact legal name of Grantor is set forth on the signature page of this Agreement.
(b) This Agreement creates a valid security interest in the Collateral of Grantor, to the extent a security interest therein can be created under the UCC, securing the payment of the Secured Obligations. Except to the extent a security interest in the Collateral cannot be perfected by the filing of a financing statement under the UCC, all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken or will have been taken upon the filing of the financing statement listing Grantor as a debtor, and Lender, as secured party, in the office of the Secretary of State of Ohio ( Ohio SOS ). Upon the making of such filing, Lender shall have a first priority perfected security interest in the Collateral of Grantor to the extent such security interest can be perfected by the filing of a financing statement.
(c) Except for the Security Interest created hereby, Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all liens and encumbrances other than Permitted Exceptions, of the Pledged Interests indicated on Schedule 1 . In addition: (i) all of the Pledged Interests are duly authorized and validly issued and all required capital contributions by Grantor have been made, and there are no outstanding obligations of Grantor to make additional capital contributions to such Pledged Companies, and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding Equity Interests of the Pledged Companies of Grantor identified on Schedule 1 hereto; (ii) Grantor has the right and requisite authority to pledge, the Investment Related Property pledged by Grantor to Lender as provided herein; (iii) all actions necessary or desirable to create, perfect, establish the first priority of, or otherwise protect, Lenders liens in the Investment Related Property, and the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement; (B) upon the taking of possession by Lender of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by Grantor; and (C) upon the filing of the financing statement in the Ohio SOS with respect to the Pledged Interests of Grantor that are not represented by certificates; and (iv) if and to the extent that any Pledged Interests are represented by certificates, Grantor has delivered to and deposited with Lender (or, with respect to any Pledged Interests created after the date hereof, will deliver and deposit in accordance with Sections 6(a) and 8 hereof) all certificates representing the Pledged Interests owned by Grantor, and undated powers endorsed in blank with respect to such certificates.
(d) No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any governmental authority or any other Person is required (i) for the grant of a Security Interest by Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by Grantor, or (ii) for the exercise by Lender the voting or other rights provided for in this Agreement with respect to the Investment Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally.
6. Covenants . Grantor, covenants and agrees with Lender that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 20 hereof:
(a) Possession of Collateral . In the event that any Collateral, including proceeds, is evidenced by or consists of Investment Related Property, and if and to the extent that perfection or priority of Lenders Security Interest is dependent on or enhanced by possession, Grantor, immediately upon the request of Lender and in accordance with Section 8 hereof, shall execute such other documents as shall be requested by Lender or, if applicable, endorse and deliver physical possession of such Investment Related Property to Lender, together with such undated powers endorsed in blank as shall be requested by Lender;
(b) Investment Related Property .
(i) Grantor shall promptly deliver to Lender a copy of each notice or other communication received by it from any Pledged Company or its manager in respect of any Pledged Interests;
(ii) Grantor shall not make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, or any Pledged Operating Agreement or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests other than pursuant to the Loan Documents without Lenders consent;
(iii) Grantor agrees that it will cooperate with Lender in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof;
(iv) As to all limited liability company interests issued to Grantor under the Pledged Operating Agreements, Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by Grantor (as shown on Schedule 1) in a securities account. In addition, neither the Pledged Operating Agreements, nor any other agreements governing any of the Pledged Interests issued under the Pledged Operating Agreements provide or shall provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction and that none of the articles of organization, the Pledged Operating Agreements, and the other agreements
governing any of the uncertificated Pledged Interests provide that such Pledged Interests may be certificated, in each case unless such certificates and accompanying powers endorsed in blank are delivered to Lender in accordance with Section 5(c) above; and
(v) Anything herein to the contrary notwithstanding, Grantor shall, for so long as it shall remain a member under any Pledged Operating Agreement, remain liable under such Pledged Operating Agreement, to observe and perform all of the conditions and obligations to be observed and performed by Grantor thereunder, all in accordance with and pursuant to the terms and provisions thereof.
(c) Transfers and Other Liens . So long as this Agreement remains in effect, Grantor shall not (i) create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, negative pledge, charge, restriction or other security interest of any kind upon any of the Collateral whether now owned or hereafter acquired, or upon the income or profits therefrom (other than such restrictions on transferability of the Collateral as set forth in the Pledged Operating Agreements); (ii) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, (iii) create or permit to exist any lien or encumbrance upon or with respect to any of the Collateral of Grantor except for Permitted Exceptions, or (iv) transfer any of the Collateral or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Lenders consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents.
7. Relation to Loan Agreement . In the event of any conflict between any provision in this Agreement and a provision in the Loan Agreement, such provision of the Loan Agreement shall control.
8. Further Assurances .
(a) Grantor agrees that from time to time, at its own expense, Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Lender may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.
(b) Grantor authorizes the filing of such financing or continuation statements, or amendments thereto, and Grantor will execute and deliver to Lender such other instruments or notices, as may be necessary or as Lender may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby.
(c) Grantor also hereby ratifies its authorization for Lender to have filed in any jurisdiction any financing statements filed prior to the date hereof.
(d) Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in
connection with this Agreement without the prior written consent of Lender, subject to Grantors rights under Section 9-509(d)(2) of the UCC.
9. Lender Appointed Attorney-in-Fact . Grantor hereby irrevocably appoints Lender its attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Loan Agreement, to take any action and to execute any instrument which Lender may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation: to file any claims or take any action or institute any proceedings which Lender may deem necessary or desirable for the collection of any of the Collateral of Grantor or otherwise to enforce the rights of Lender with respect to any of the Collateral.
To the extent permitted by law, Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.
10. Lender May Perform . If Grantor fails to perform any agreement contained herein, Lender may itself perform, or cause performance of, such agreement, and the reasonable expenses of Lender incurred in connection therewith shall be payable, by Grantor.
11. Lenders Duties . The powers conferred on Lender hereunder are solely to protect Lenders interest in the Collateral, and shall not impose any duty upon Lender to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Lender shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which Lender accords its own property.
12. Disposition of Pledged Interests by Lender . None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Grantor understands that in connection with such disposition, Lender may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Grantor, therefore, agrees that: (a) if Lender shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Lender shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that Lender has handled the disposition in a commercially reasonable manner.
13. Voting Rights .
(a) Upon the occurrence and during the continuation of an Event of Default, (i) Lender may, at its option, and with five (5) Business Days prior notice to Grantor, and in addition to all rights and remedies available to Lender under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests owned by Grantor, but under no circumstances is Lender obligated by the terms of this Agreement to exercise such rights, and (ii) if Lender duly exercises its right to vote any of such Pledged Interests, Grantor hereby appoints Lender, as Grantors true and lawful attorney-in-fact and IRREVOCABLE PROXY, to vote such Pledged Interests in any manner Lender deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.
(b) For so long as Grantor shall have the right to vote the Pledged Interests owned by it, Grantor covenants and agrees that it will not, without the prior written consent of Lender, vote or take any consensual action with respect to such Pledged Interests which would materially adversely affect the rights of Lender, or the value of the Pledged Interests.
14. Remedies . Upon the occurrence and during the continuance of an Event of Default:
(a) Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the UCC or any other applicable law. Without limiting the generality of the foregoing, Grantor expressly agrees that, in any such event, Lender without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon Grantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC or any other applicable law), may take immediate possession of all or any portion of the Collateral and without notice except as specified below, sell the Collateral or any part thereof in one or more components at public or private sale, at any of Lenders offices or elsewhere, for cash, on credit, and upon such other terms as Lender may deem commercially reasonable. Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable authenticated notification of disposition within the meaning of Section 9-611 of the UCC. Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by Lender as Collateral and all cash proceeds received by Lender in respect of any sale of, collection from or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in the Loan
Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, Grantor shall remain liable for any such deficiency.
(c) Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of Default shall occur, if and to the extent that either of the following remedies applies to the Collateral under applicable law, Lender shall have the right to an immediate writ of possession without notice of a hearing, the right to the appointment of a receiver for the Collateral, and Grantor hereby consents to such rights and such appointment and hereby waives any objection Grantor may have thereto or the right to have a bond or other security posted by Lender.
15. Remedies Cumulative . Each right, power, and remedy of Lender as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Lender, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Lender of any or all such other rights, powers, or remedies.
16. Intentionally Omitted
17. Indemnity and Expenses .
(a) Grantor agrees to indemnify Lender from and against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement) or any other Loan Document to which Grantor is a party, except claims, losses or liabilities resulting from the gross negligence or willful misconduct of the party seeking indemnification as determined by a final non-appealable order of a court of competent jurisdiction. This provision shall survive the termination of this Agreement and the Loan Agreement and the repayment of the Secured Obligations.
(b) Grantor shall, upon demand, pay to Lender all expenses which Lender may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Lender hereunder or (iv) the failure by Grantor to perform or observe any of the provisions hereof.
18. Merger, Amendments; Etc . THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by
Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Lender and Grantor.
19. Addresses for Notices . All notices and other communications provided for hereunder shall be given in the form and manner and delivered to Lender at its address specified in the Loan Agreement, and to Grantor at the address specified in the Loan Agreement for Borrower or, as to any party, at such other address as shall be designated by such party in a written notice to the other party, all of which to be given in accordance with a method for giving notice as prescribed in the Loan Agreement.
20. Continuing Security Interest: Assignments under Loan Agreement . This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Loan Agreement, (b) be binding upon Grantor, and its successors and assigns, and (c) inure to the benefit of, and be enforceable by, Lender, and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), Lender may, in accordance with the provisions of the Loan Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Loan Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Loan Agreement and the expiration or termination of the Loan, the Security Interest granted hereby shall automatically terminate without further action or documentation required and this Agreement all rights to the Collateral shall revert to Grantor or any other Person entitled thereto. At such time, Lender will authorize the filing of appropriate termination statements to terminate such Security Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Loan Agreement, any other Loan Document, or any other instrument or document executed and delivered by Grantor to Lender nor any additional Loans or other loans made by Lender to Borrower, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantor, by Lender, nor any other act of Lender shall release Grantor from any obligation, except a release or discharge executed in writing by Lender in accordance with the provisions of the Loan Agreement. Lender shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Lender and then only to the extent therein set forth. A waiver by Lender of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which Lender would otherwise have had on any other occasion.
21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE .
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF OHIO AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). GRANTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF OHIO OR
ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON GRANTOR BY MAIL AT THE ADDRESS SPECIFIED IN §19 HEREIN. GRANTOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
22. Intentionally Omitted .
23. Miscellaneous .
(a) This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.
(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either gender or both singular and plural, and the grammatical construction of sentences shall conform thereto.
[EXECUTION ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers under seal, as of the day and year first above written.
GRANTOR: |
ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
[Signatures continued on following page]
ADCARE PLEDGE & SECURITY AGREEMENT |
PropCo |
LENDER: |
KEYBANK NATIONAL ASSOCIATION, as Lender |
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By: |
/s/ [Illegible] |
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Name: |
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Title: |
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ADCARE PLEDGE & SECURITY AGREEMENT |
PropCo |
Each Pledged Company hereby acknowledges the execution of, and agrees to be bound by, the applicable provisions of the foregoing Pledge and Security Agreement and consents to the pledge, assignment, hypothecation, transfer and grant to Lender of a first priority security interest in the Pledged Interests, including any and all voting rights associated therewith as set forth herein. Each Pledged Company hereby agrees to reflect the foregoing assignment in its company records.
PLEDGED COMPANIES: |
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WOODLAND HILLS HC PROPERTY HOLDINGS, LLC, a Georgia limited liability company |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Manager |
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NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Manager |
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APH&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Manager |
ADCARE PLEDGE & SECURITY AGREEMENT
Exhibit 10.275
EXECUTION VERSION
PLEDGE AND SECURITY AGREEMENT
(Tenants)
This PLEDGE AND SECURITY AGREEMENT (this Agreement ) is made this 28th day of December, 2012, between ADCARE OPERATIONS, LLC , an Georgia limited liability company ( Grantor ), and KEYBANK NATIONAL ASSOCIATION, a national banking association, as lender ( Lender ).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Secured Loan Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the Loan Agreement ) among Lender, Woodland Hills HC Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, APH&R Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC (collectively, the Borrower ), Lender is willing to make certain financial accommodations available to Borrower from time to time pursuant to the terms and conditions thereof, and
WHEREAS, in order to induce Lender to make financial accommodations to Borrower as provided for in the Loan Agreement, Grantor has agreed to grant a continuing security interest in and to the Collateral (as hereinafter defined) in order to secure the prompt and complete payment, observance and performance of (a) the obligations of Grantor arising from this Agreement and that certain Payment Guaranty from Grantor in favor of Lender of even date herewith (as may be amended, restated, supplemented or otherwise modified from time to time (the Guaranty ) (including, without limitation, any interest, fees or expenses that accrue after the filing of an insolvency proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any insolvency proceeding), plus (b) the Obligations as defined in the Loan Agreement, plus (c) reasonable attorneys fees actually incurred and expenses if the obligations represented thereunder are collected by law, through an attorney-at-law, or under advice therefrom (clauses (a), (b) and (c) being hereinafter referred to as the Secured Obligations ), by the granting of the security interests contemplated by this Agreement, and
NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms . All capitalized terms used herein (including, without limitation, in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Loan Agreement. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:
(a) Equity Interests means all limited liability company membership interests of Grantor or other equivalents (regardless of how designated) of or in each Pledged Company, whether voting or nonvoting, or any other equity security (as such term is defined in Rule 3a 11-1 of the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934) in such Pledged Company, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character of Grantor with respect to such Pledged Company.
(b) Event of Default as used in this Agreement means an Event of Default as defined in the Loan Agreement.
(c) Investment Related Property means (i) investment property (as that term is defined in the UCC) owned by Grantor with respect to the Pledged Companies, and (ii) all of the following regardless of whether classified as investment property under the UCC: all Pledged Interests and all rights of Grantor under the Pledged Operating Agreements.
(d) Pledged Companies means, each Person listed on Schedule 1 hereto as a Pledged Company.
(e) Pledged Interests means all of Grantors right, title and interest in and to all of the Equity Interests now or hereafter owned by Grantor, regardless of class or designation, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing the Equity Interests, the right to request after the occurrence and during the continuation of an Event of Default that such Equity Interests be registered in the name of Lender or any of its nominees, the right to receive any certificates representing any of the Equity Interests and the right to require that such certificates be delivered to Lender together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property hereafter from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the Equity Interests.
(f) Pledged Operating Agreement means the limited liability company operating agreement of each Pledged Company.
(g) UCC shall mean the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of Ohio provided, that to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lenders Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Ohio the term UCC shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
2. Grant of Security . Grantor hereby unconditionally grants, assigns and pledges to Lender, a continuing security interest (hereinafter referred to as the Security Interest ), in Grantors right, title, and interest in and to the following, whether now owned or hereafter acquired or arising and wherever located (the Collateral ):
(a) all of Grantors books and records indicating, summarizing, or evidencing the Investment Related Property ( Books );
(b) all of Grantors Investment Related Property;
(c) all of the proceeds of any of the foregoing, money, or other tangible or intangible property resulting from the sale, or other disposition of any of the foregoing, the portion thereof or interest therein, and the proceeds thereof, (the Proceeds ). Without limiting the generality of the foregoing, the term Proceeds includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to Grantor or Lender from time to time with respect to any of the Investment Related Property.
3. Security for Obligations . This Agreement and the Security Interest created hereby secures the payment and performance of all the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by Grantor, to Lender, but for the fact that they are unenforceable or not allowable due to the existence of any insolvency proceeding involving Grantor.
4. Grantor Remain Liable . Anything herein to the contrary notwithstanding, (a) Grantor shall remain liable under and in accordance with the contracts and agreements included in the Collateral to those parties to whom Grantor has contracted, including, without limitation, the Pledged Operating Agreements, to perform all of the duties and obligations of Grantor thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Lender of any of the rights hereunder shall not release Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) Lender shall not have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties of Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder; provided, however, that if following an Event of Default Lender becomes the owner of the Collateral, Lender shall thenceforth be responsible for complying with such duties as may arise thereafter under the Pledged Operating Agreements as are to be performed by the member owning such Collateral. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Loan Agreement, or other Loan Documents, Grantor shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of its business, subject to and upon the terms hereof and of the Loan Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that so long as no Event of Default then exists and notwithstanding anything to the contrary contained in this Agreement, the Loan Agreement or any other Loan Document: (a) Grantor may receive (and make request for if
not timely paid) and retain all fees, distributions, returns of capital, member loan repayments and other payments payable to Grantor under the Pledged Operating Agreements on account of or with respect to the Equity Interests or otherwise payable to Grantor under the terms and conditions thereof as and when the same may become due or available for distribution and (b) record and beneficial ownership of the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights, shall remain in Grantor. Following the occurrence of an Event of Default Lender shall notify Grantor of Lenders exercise of voting, consensual, and/or dividend rights with respect to the Pledged Interests pursuant to Section 13 hereof.
5. Representations and Warranties . Grantor hereby represents and warrants as follows:
(a) The exact legal name of Grantor is set forth on the signature page of this Agreement.
(b) This Agreement creates a valid security interest in the Collateral of Grantor, to the extent a security interest therein can be created under the UCC, securing the payment of the Secured Obligations. Except to the extent a security interest in the Collateral cannot be perfected by the filing of a financing statement under the UCC, all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken or will have been taken upon the filing of the financing statement listing Grantor as a debtor, and Lender, as secured party, in the office of the Secretary of State of Ohio ( Ohio SOS ). Upon the making of such filing, Lender shall have a first priority perfected security interest in the Collateral of Grantor to the extent such security interest can be perfected by the filing of a financing statement.
(c) Except for the Security Interest created hereby, Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all liens and encumbrances other than Permitted Exceptions, of the Pledged Interests indicated on Schedule 1 . In addition: (i) all of the Pledged Interests are duly authorized and validly issued and all required capital contributions by Grantor have been made, and there are no outstanding obligations of Grantor to make additional capital contributions to such Pledged Companies, and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding Equity Interests of the Pledged Companies of Grantor identified on Schedule 1 hereto; (ii) Grantor has the right and requisite authority to pledge, the Investment Related Property pledged by Grantor to Lender as provided herein; (iii) all actions necessary or desirable to create, perfect, establish the first priority of, or otherwise protect, Lenders liens in the Investment Related Property, and the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement; (B) upon the taking of possession by Lender of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by Grantor; and (C) upon the filing of the financing statement in the Ohio SOS with respect to the Pledged Interests of Grantor that are not represented by certificates; and (iv) if and to the extent that any Pledged Interests are represented by certificates, Grantor has delivered to and deposited with Lender (or, with respect to any Pledged Interests created after the date hereof, will deliver and deposit in accordance with Sections 6(a) and 8 hereof) all certificates representing the Pledged Interests owned by Grantor, and undated powers endorsed in blank with respect to such certificates.
(d) No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any governmental authority or any other Person is required (i) for the grant of a Security Interest by Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by Grantor, or (ii) for the exercise by Lender the voting or other rights provided for in this Agreement with respect to the Investment Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally.
6. Covenants . Grantor, covenants and agrees with Lender that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 20 hereof:
(a) Possession of Collateral . In the event that any Collateral, including proceeds, is evidenced by or consists of Investment Related Property, and if and to the extent that perfection or priority of Lenders Security Interest is dependent on or enhanced by possession, Grantor, immediately upon the request of Lender and in accordance with Section 8 hereof, shall execute such other documents as shall be requested by Lender or, if applicable, endorse and deliver physical possession of such Investment Related Property to Lender, together with such undated powers endorsed in blank as shall be requested by Lender;
(b) Investment Related Property .
(i) Grantor shall promptly deliver to Lender a copy of each notice or other communication received by it from any Pledged Company or its manager in respect of any Pledged Interests;
(ii) Grantor shall not make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, or any Pledged Operating Agreement or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests other than pursuant to the Loan Documents without Lenders consent;
(iii) Grantor agrees that it will cooperate with Lender in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof;
(iv) As to all limited liability company interests issued to Grantor under the Pledged Operating Agreements, Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by Grantor (as shown on Schedule 1) in a securities account. In addition, neither the Pledged Operating Agreements, nor any other agreements governing any of the Pledged Interests issued under the Pledged Operating Agreements provide or shall provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction and that none of the articles of organization, the Pledged Operating Agreements, and the other agreements
governing any of the uncertificated Pledged Interests provide that such Pledged Interests may be certificated, in each case unless such certificates and accompanying powers endorsed in blank are delivered to Lender in accordance with Section 5(c) above; and
(v) Anything herein to the contrary notwithstanding, Grantor shall, for so long as it shall remain a member under any Pledged Operating Agreement, remain liable under such Pledged Operating Agreement, to observe and perform all of the conditions and obligations to be observed and performed by Grantor thereunder, all in accordance with and pursuant to the terms and provisions thereof.
(c) Transfers and Other Liens . So long as this Agreement remains in effect, Grantor shall not (i) create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, negative pledge, charge, restriction or other security interest of any kind upon any of the Collateral whether now owned or hereafter acquired, or upon the income or profits therefrom (other than such restrictions on transferability of the Collateral as set forth in the Pledged Operating Agreements); (ii) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, (iii) create or permit to exist any lien or encumbrance upon or with respect to any of the Collateral of Grantor except for Permitted Exceptions, or (iv) transfer any of the Collateral or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Lenders consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents.
7. Relation to Loan Agreement . In the event of any conflict between any provision in this Agreement and a provision in the Loan Agreement, such provision of the Loan Agreement shall control.
8. Further Assurances .
(a) Grantor agrees that from time to time, at its own expense, Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Lender may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.
(b) Grantor authorizes the filing of such financing or continuation statements, or amendments thereto, and Grantor will execute and deliver to Lender such other instruments or notices, as may be necessary or as Lender may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby.
(c) Grantor also hereby ratifies its authorization for Lender to have filed in any jurisdiction any financing statements filed prior to the date hereof.
(d) Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in
connection with this Agreement without the prior written consent of Lender, subject to Grantors rights under Section 9-509(d)(2) of the UCC.
9. Lender Appointed Attorney-in-Fact . Grantor hereby irrevocably appoints Lender its attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Loan Agreement, to take any action and to execute any instrument which Lender may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation: to file any claims or take any action or institute any proceedings which Lender may deem necessary or desirable for the collection of any of the Collateral of Grantor or otherwise to enforce the rights of Lender with respect to any of the Collateral.
To the extent permitted by law, Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.
10. Lender May Perform . If Grantor fails to perform any agreement contained herein, Lender may itself perform, or cause performance of, such agreement, and the reasonable expenses of Lender incurred in connection therewith shall be payable, by Grantor.
11. Lenders Duties . The powers conferred on Lender hereunder are solely to protect Lenders interest in the Collateral, and shall not impose any duty upon Lender to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Lender shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which Lender accords its own property.
12. Disposition of Pledged Interests by Lender . None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Grantor understands that in connection with such disposition, Lender may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Grantor, therefore, agrees that: (a) if Lender shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Lender shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that Lender has handled the disposition in a commercially reasonable manner.
13. Voting Rights .
(a) Upon the occurrence and during the continuation of an Event of Default, (i) Lender may, at its option, and with five (5) Business Days prior notice to Grantor, and in addition to all rights and remedies available to Lender under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests owned by Grantor, but under no circumstances is Lender obligated by the terms of this Agreement to exercise such rights, and (ii) if Lender duly exercises its right to vote any of such Pledged Interests, Grantor hereby appoints Lender, as Grantors true and lawful attorney-in-fact and IRREVOCABLE PROXY, to vote such Pledged Interests in any manner Lender deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.
(b) For so long as Grantor shall have the right to vote the Pledged Interests owned by it, Grantor covenants and agrees that it will not, without the prior written consent of Lender, vote or take any consensual action with respect to such Pledged Interests which would materially adversely affect the rights of Lender, or the value of the Pledged Interests.
14. Remedies . Upon the occurrence and during the continuance of an Event of Default:
(a) Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the UCC or any other applicable law. Without limiting the generality of the foregoing, Grantor expressly agrees that, in any such event, Lender without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon Grantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC or any other applicable law), may take immediate possession of all or any portion of the Collateral and without notice except as specified below, sell the Collateral or any part thereof in one or more components at public or private sale, at any of Lenders offices or elsewhere, for cash, on credit, and upon such other terms as Lender may deem commercially reasonable. Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable authenticated notification of disposition within the meaning of Section 9-611 of the UCC. Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by Lender as Collateral and all cash proceeds received by Lender in respect of any sale of, collection from or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in the Loan
Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, Grantor shall remain liable for any such deficiency.
(c) Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of Default shall occur, if and to the extent that either of the following remedies applies to the Collateral under applicable law, Lender shall have the right to an immediate writ of possession without notice of a hearing, the right to the appointment of a receiver for the Collateral, and Grantor hereby consents to such rights and such appointment and hereby waives any objection Grantor may have thereto or the right to have a bond or other security posted by Lender.
15. Remedies Cumulative . Each right, power, and remedy of Lender as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Lender, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Lender of any or all such other rights, powers, or remedies.
16. Intentionally Omitted
17. Indemnity and Expenses .
(a) Grantor agrees to indemnify Lender from and against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement) or any other Loan Document to which Grantor is a party, except claims, losses or liabilities resulting from the gross negligence or willful misconduct of the party seeking indemnification as determined by a final non-appealable order of a court of competent jurisdiction. This provision shall survive the termination of this Agreement and the Loan Agreement and the repayment of the Secured Obligations.
(b) Grantor shall, upon demand, pay to Lender all expenses which Lender may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Lender hereunder or (iv) the failure by Grantor to perform or observe any of the provisions hereof.
18. Merger, Amendments; Etc . THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by
Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Lender and Grantor.
19. Addresses for Notices . All notices and other communications provided for hereunder shall be given in the form and manner and delivered to Lender at its address specified in the Loan Agreement, and to Grantor at the address specified in the Loan Agreement for Borrower or, as to any party, at such other address as shall be designated by such party in a written notice to the other party, all of which to be given in accordance with a method for giving notice as prescribed in the Loan Agreement.
20. Continuing Security Interest: Assignments under Loan Agreement . This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Loan Agreement, (b) be binding upon Grantor, and its successors and assigns, and (c) inure to the benefit of, and be enforceable by, Lender, and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), Lender may, in accordance with the provisions of the Loan Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Loan Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Loan Agreement and the expiration or termination of the Loan, the Security Interest granted hereby shall automatically terminate without further action or documentation required and this Agreement all rights to the Collateral shall revert to Grantor or any other Person entitled thereto. At such time, Lender will authorize the filing of appropriate termination statements to terminate such Security Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Loan Agreement, any other Loan Document, or any other instrument or document executed and delivered by Grantor to Lender nor any additional Loans or other loans made by Lender to Borrower, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantor, by Lender, nor any other act of Lender shall release Grantor from any obligation, except a release or discharge executed in writing by Lender in accordance with the provisions of the Loan Agreement. Lender shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Lender and then only to the extent therein set forth. A waiver by Lender of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which Lender would otherwise have had on any other occasion.
21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE .
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF OHIO AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). GRANTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF OHIO OR
ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON GRANTOR BY MAIL AT THE ADDRESS SPECIFIED IN §19 HEREIN. GRANTOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
22. Intentionally Omitted .
23. Miscellaneous .
(a) This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.
(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either gender or both singular and plural, and the grammatical construction of sentences shall conform thereto.
[EXECUTION ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers under seal, as of the day and year first above written.
GRANTOR: |
ADCARE OPERATIONS, LLC, an Georgia limited |
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liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
[Signatures continued on following page]
ADCARE OPCO PLEDGE & SECURITY AGREEMENT |
Tenants |
LENDER: |
KEYBANK NATIONAL ASSOCIATION, as |
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Lender |
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By: |
/s/ [Illegible] |
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Name: |
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ADCARE OPCO PLEDGE & SECURITY AGREEMENT |
Tenants |
Each Pledged Company hereby acknowledges the execution of, and agrees to be bound by, the applicable provisions of the foregoing Pledge and Security Agreement and consents to the pledge, assignment, hypothecation, transfer and grant to Lender of a first priority security interest in the Pledged Interests, including any and all voting rights associated therewith as set forth herein. Each Pledged Company hereby agrees to reflect the foregoing assignment in its company records.
PLEDGED COMPANIES: |
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WOODLAND HILLS HC NURSING, LLC, a |
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Georgia limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Manager |
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NORTHRIDGE HC&R NURSING, LLC , a |
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Georgia limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
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APH&R NURSING, LLC , a Georgia limited liability |
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company |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
ADCARE OPCO PLEDGE & SECURITY AGREEMENT
Exhibit 10.276
EXECUTION VERSION
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December 28, 2012 (as amended, supplemented, restated or otherwise modified from time to time, this Agreement ), made by and among, WOODLAND HILLS HC NURSING, LLC, APH&R NURSING, LLC, and NORTHRIDGE HC&R NURSING, LLC , each a Georgia limited liability company (referred to herein collectively as Grantors and individually, a Grantor ), in favor KEYBANK NATIONAL ASSOCIATION , a national banking association, as lender ( Lender ).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Secured Loan Agreement, dated as of the date hereof (as amended, supplemented, restated or otherwise modified from time to time, the Loan Agreement ), by and among Grantors, Woodland Hills HC Property Holdings, LLC, APH&R Property Holdings, LLC, and Northridge HC&R Property Holdings, LLC (collectively, with Grantors, referred to herein as Borrowers ), and Lender, whereby Lender agreed to make a secured term loan (the Loan ) available to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00);
WHEREAS, as a condition precedent to the making of the Loan, each Grantor is required to execute and deliver this Agreement; and
WHEREAS, each Grantor has duly authorized the execution, delivery and performance of this Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lender to make the Loans to the Borrowers pursuant to the Loan Agreement, each Grantor agrees, with Lender, as follows:
ARTICLE I
DEFINITIONS
The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
Agreement is defined in the preamble .
Assigned Agreements is defined in clause (p) of Section 2.1 .
Borrower(s) is defined in the first recital .
Collateral is defined in Section 2.1 .
Collateral Account is defined in clause (a) of Section 4.15 .
Computer Hardware and Software Collateral means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware; (b) all software programs (including both source code, object code and all related applications and data files and embedded software) designed for use on the computers and electronic data processing hardware described in clause (a) ; (c) all licenses and leases of software programs; (d) all firmware associated therewith; (e) all documentation (including flow charts, logic diagrams, manuals, guides and specifications) with respect to such hardware, software and firmware described in the clauses (a) through (c) ; and (f) all rights with respect to all of the foregoing, including any and all copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, additions or model conversions of any of the foregoing.
Copyright Collateral means all copyrights of each Grantor (including Community designs, copyrights in software and databases and all Mask Works (as defined under 12 U.S.C. 901 of the U.S. Copyright Act)), whether statutory or common law, registered or unregistered, now or hereafter in force throughout the world including all of such Grantors right, title and interest in and to all copyrights registered in the United States Copyright Office or anywhere else in the world and also including the copyrights referred to in Item A of Schedule IV attached hereto (as such Schedule may be amended or supplemented from time to time), and all applications for registration thereof, whether pending or in preparation, all copyright licenses, including each copyright license referred to in Item B of Schedule IV attached hereto (as such Schedule may be amended or supplemented from time to time), the right to sue for past, present and future infringements of any thereof, all rights corresponding thereto throughout the world, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of suit.
Deposit Account has the meaning provided for in the U.C.C. and includes, without limitation, each lock-box account, concentration account and other collateral accounts maintained by each Grantor, together with all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing such accounts) maintained with a bank (including, without limitation, those accounts identified on Item I of Schedule I attached hereto, as such Schedule may be amended or supplemented from time to time).
Equipment has the meaning provided for in the U.C.C. and includes, without limitation, all Equipment wherever located and whether or not affixed to any real property, including all accessories, additions, attachments, improvements, substitutions and replacements thereto and therefor.
General Intangible has the meaning provided for in the U.C.C. and includes, without limitation, all Management Agreements, all Intellectual Property Collateral, all rights under or evidenced by choses in action or causes of action, all judgments, tax refund claims, claims against carriers and shippers, claims under liens and insurance policies, all rights under security agreements, guarantees, indemnities and other instruments and contracts securing or
otherwise relating to any of the foregoing, and all other intangible personal property of every kind and nature, and all accessions, additions, improvements, modifications and upgrades to, replacements of and substitutions for the foregoing.
Grantor(s) is defined in the preamble .
Intellectual Property Collateral means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.
Inventory has the meaning provided for in the U.C.C. and includes, without limitation, all goods manufactured, acquired or held for sale or lease, all raw materials, component materials, work-in-progress and finished goods, all supplies, goods and other items and materials used or consumed in the manufacture, production, packaging, shipping, selling, leasing or furnishing of such inventory or otherwise in the operation of the business or any Grantor, all goods in which any Grantor now or at any time hereafter has any interest or right of any kind, and all goods that have been returned to or repossessed by or on behalf of any Grantor, in each case whether or not the same is in transit or in the constructive, actual or exclusive occupancy or possession of such Grantor or all accessions thereto, products thereof and documents therefor.
Investment Accounts means, collectively, the Collateral Account, Commodities Accounts, Deposit Account and Securities Accounts.
Leases has the meaning set forth in the Loan Agreement.
Lender is defined in the first recital .
Loan Agreement is defined in the first recital .
Management Agreements has the meaning set forth in the Loan Agreement.
Organizational Document means, with respect to any Person other than a natural person, its articles or certificate of incorporation, formation or organization, partnership agreement, limited liability company agreement, operating agreement, by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized equity interests.
Patent Collateral means (a) all letters patent and applications for letters patent throughout the world (including all patent applications in preparation for filing anywhere in the world), including each patent and patent application referred to in Item A of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time); (b) all patent licenses, including each patent license referred to in Item B of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time); (c) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clauses (a) and (b) above; and (d) all proceeds of, and rights associated with, the foregoing (including license royalties and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, including any
patent or patent application referred to in Item A of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time), and for breach or enforcement of any patent license, including any patent license referred to in Item B of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time), and all rights corresponding thereto throughout the world.
Pledged Deposit Accounts means the Cash Collateral Account and the Operating Accounts.
Proceeds has the meaning provided for in the U.C.C. whether Cash Proceeds or Noncash Proceeds, and includes, without limitation, (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Grantor from time to time with respect to any of the Collateral, including unearned premiums, (b) any and all payments (in any form whatsoever) made or due and payable to any Grantor from time to time in connection with any requisition, confiscation, condemnation, eminent domain, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority, (c) any claim of any Grantor against third parties for past, present or future infringement of any Intellectual Property Collateral, (d) any recoveries by any Grantor against third parties with respect to any litigation or dispute concerning any of the Collateral, including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, the Collateral, and (e) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of the Collateral.
Receivables Collateral means all Collateral relating to the right of payment for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including, without limitation, all such rights evidenced by any Account, Documents, Instrument, Chattel Paper, General Intangible or Investment Property.
Secured Obligations is defined in Section 2.2 .
Securities Account means all securities accounts as defined in Article 8 of the U.C.C. and shall include, without limitation, all the accounts identified on Item 5 of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time).
Security Agreement Supplement is defined in clause (b) of Section 7.2 .
Supporting Obligation means a Letter-of-Credit Right or secondary obligation that supports the payment or performance of an Account, Chattel Paper, Documents, General Intangible, Instrument or Investment Property, including, without limitation, all security agreements, guaranties, leases and other contracts securing or otherwise relating to any such Accounts, Chattel Paper, Documents, Instruments, including Goods represented by the sale or lease of delivery which gave rise to any of the foregoing, returned or repossessed merchandise and rights of stoppage in transit, repletion, reclamation and other rights and remedies of an unpaid vendor, lie nor or secured party.
Trademark is defined in the definition Trademark Collateral.
Trademark Collateral means (a) all registered trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, service marks, certification marks, collective marks, logos, internet domain names, other source of business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of a like nature (all of the foregoing items in this clause (a) being collectively called a Trademark ), now existing anywhere in the world or hereafter adopted or acquired, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof or any foreign country, including those referred to in Item A of Schedule III attached hereto (as such Schedule may be amended or supplemented from time to time); (b) all Trademark licenses, including each Trademark license referred to in Item B of Schedule III attached hereto (as such Schedule may be amended or supplemented from time to time); (c) all reissues, extensions or renewals of any of the items described in clauses (a) and (b) above; (d) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clauses (a) and (b) above; and (e) all proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, including any Trademark, Trademark registration or Trademark license referred to in Item B of Schedule III attached hereto (as such Schedule may be amended or supplemented from time to time), or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license.
Trade Secret is defined in the definition Trade Secrets Collateral.
Trade Secrets Collateral means common law and statutory trade secrets and all other confidential or proprietary information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor (all of the foregoing being collectively called a Trade Secret ), whether or not such Trade Secret has been reduced to a writing or other tangible form (including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses), including each Trade Secret license referred to in Schedule V attached hereto (as such Schedule may be amended or supplemented from time to time), and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.
U.C.C. means the Uniform Commercial Code as in effect from time to time in the State of Ohio; provided that if, by reason of applicable Law, the validity or perfection or the effect of validity or perfection or non-perfection or the priority of any security interest in any Collateral granted under this Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Ohio, then as to such matters U.C.C. shall mean the Uniform Commercial Code as in effect in such other jurisdiction.
SECTION 1.1. Loan Agreement Definitions . Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Loan Agreement.
SECTION 1.2. U.C.C. Definitions . Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Agreement, including its preamble and recitals, with such meanings. Without limiting the foregoing the following terms are used herein as defined in the U.C.C.: Account, Account Debtor Authenticate, Cash Proceeds, Certificated Securities, Chattel Paper, Commercial Tort Claim, Commodities Accounts, Control, Debtor, Documents, Electronic Chattel Paper, Entitlement Holder, Entitlement Orders, Fixtures, Goods, Health-care-insurance receivable, Instruments, Investment Property, Letter-of-Credit Right, Money, Noncash Proceeds, Payment Intangibles, Security Entitlements, Uncertificated Securities and Tangible Chattel Paper.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security Interest . Each Grantor hereby pledges, hypothecates, collaterally assigns, charges, mortgages and pledges to Lender, and hereby grants to Lender, a security interest in, all of such Grantors right, title and interest in and to the following, whether now or hereafter existing or acquired and wherever located (collectively, the Collateral ):
(a) all Equipment;
(b) all Inventory;
(c) all Accounts;
(d) all Intellectual Property Collateral;
(e) all General Intangibles;
(f) all Investment Property;
(g) all Deposit Accounts;
(h) all Chattel Paper;
(i) all Commercial Tort Claims;
(j) all Goods (other than Inventory);
(k) all Instruments;
(l) all Payment Intangibles;
(m) all Documents;
(n) all Supporting Obligations;
(o) all Letter-of-Credit Rights;
(p) all Health-care-insurance-receivables;
(q) all of each Grantors right, title and interest in and to all of its Leases and Management Agreements (including the Leases and Management Agreements specified in Schedule VI attached hereto), and each Interest Rate Agreement to which any Grantor is now or may hereafter become a party, in each case as such agreements may be amended or otherwise modified from time to time (collectively, the Assigned Agreements ), including (i) all rights of each Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements; (ii) all rights of each Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements; (iii) all claims of each Grantor for damages arising out of or for breach of or default under the Assigned Agreements; and (iv) the right of each Grantor to terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder;
(r) all furniture and Fixtures;
(s) the Pledged Deposit Accounts, and all amounts therein;
(t) all of each Grantors other property and rights of every kind and description and interests therein, including all moneys, securities and other property, now or hereafter held or received by, or in transit to, Lender from or for any Grantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(u) all of each Grantors books, records, documents, instruments, electronic databases, computer records, ledger cards, customer lists, manuals, files, correspondence, tapes, drafts and related data processing software, writings, data bases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any and all of the foregoing Collateral; and
(v) all Proceeds of any and all of the foregoing Collateral;
provided , however , that any agreement to which such Grantor is a party shall be excluded from the security interest granted by such Grantor under this Section to the extent that the assignment thereof or the creation of a security interest therein would constitute a breach of the terms of such agreement, or would permit any party to such agreement to terminate such agreement, in each case as such agreement is in effect on the date of this Agreement or the date on which such agreement is first entered into by such Grantor; provided , further , however , that (i) any of the agreements excluded in accordance with the foregoing provision shall cease to be so excluded if, at such time, (A) the prohibition of assignment or creation of a security interest in such agreement is no longer in effect, or is rendered ineffective as a matter of law, or (B) such Grantor has obtained all of the consents of the other parties to such agreement necessary for the assignment of, or creation of a security interest in, such agreement and (ii) with respect to any
Management Agreement referred to in clause (p) , such Grantor shall use its commercially reasonable best efforts to obtain any such necessary consent.
SECTION 2.2. Security for Obligations . This Agreement secures the prompt payment in full in cash of all Obligations, including all amounts payable by Borrowers under or in connection with the Loan Agreement, the Note and each other Loan Document, whether for principal, interest, costs, fees, expenses, indemnities or otherwise and whether now or hereafter existing (all of such obligations being the Secured Obligations ).
SECTION 2.3. Continuing Security Interest; Transfer of Notes . This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until payment in full in cash of all Secured Obligations (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), at which time the security interest granted herein shall terminate and all rights to the Collateral shall revert to Grantors. In the event that any part of the Collateral is sold in connection with a sale permitted under the Loan Agreement (other than a sale to any Grantor) the security interest granted herein shall terminate with respect to such Collateral and all rights therein shall revert to the applicable Grantor. Upon any such termination or release, Lender will, at such applicable Grantors sole expense and without any representations, warranties or recourse of any kind whatsoever, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination or release.
SECTION 2.4. Security Interest Absolute . All rights of Lender and the security interests granted to Lender hereunder, and all obligations of each Grantor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity, legality or enforceability of any Loan Document;
(b) the failure of Lender:
(i) to assert any claim or demand or to enforce any right or remedy against any Grantor, or any other Person under the provisions of any Loan Document or otherwise; or
(ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligation;
(c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations or any other extension, compromise or renewal of any Secured Obligation, including any increase in the Secured Obligations resulting from the extension of additional credit to Grantors or otherwise;
(d) any reduction, limitation, impairment or termination of any Secured Obligation for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligation or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of any Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of any collateral (including the Collateral), or any amendment to or waiver or release of or addition to or consent to departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor, any surety or any guarantor or otherwise, including as a result of any proceeding of the nature referred to in Section 14.1(c g) of the Loan Agreement.
SECTION 2.5. Grantors Remain Liable . Anything herein to the contrary notwithstanding:
(a) Each Grantor shall remain liable under the contracts and agreements included in the Collateral (including the Assigned Agreements) to the extent set forth therein, and shall perform all of its duties and obligations under such contracts and agreements to the same extent as if this Agreement had not been executed;
(b) Each Grantor will comply in all material respects with all material laws relating to the ownership and operation of the Collateral, including, without limitation, all registration requirements under applicable material laws, and shall pay when due all taxes, fees and assessments imposed on or with respect to the Collateral, except to the extent the validity thereof is (A) being diligently contested in good faith by appropriate proceedings which (i) suspend the collection thereof and any Lien therefrom and (ii) for which adequate reserves in accordance with GAAP have been set aside by such Grantor, and (B) could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect;
(c) the exercise by Lender of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any contracts or agreements included in the Collateral; and
(d) the Lender shall not have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
SECTION 2.6. Waiver of Subrogation . Each Grantor hereby irrevocably waives to the extent permitted by applicable Law and until such time as the Secured Obligations shall have been paid in full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), any claim or other rights which it may now or hereafter acquire against the Borrowers that arises from the existence, payment, performance or enforcement of any Grantors obligations under this Agreement or any other Loan Document,
including any right of subrogation, reimbursement, exoneration or indemnification, and any right to participate in any claim or remedy of Lender against any Borrower or any collateral which Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity or under contract or law. If any amount shall be paid to any Grantor in violation of the preceding sentence, such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Lender, and shall forthwith be paid to Lender to be credited and applied against the Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits for the financing arrangements contemplated by the Loan Agreement and that the waiver set forth in this Section is knowingly made in contemplation of such benefits.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants unto Lender the following:
SECTION 3.1. Location of Grantors; Collateral, etc. Item E of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies for each Grantor the state in which it is organized and the relevant organizational identification number (or states that one does not exist). All of the Equipment, Inventory (other than Inventory that is in-transit to a location specified in Item B of Schedule I attached hereto on a vehicle owned or leased by each Grantor) and Fixtures of each Grantor are located at the places specified in Item A , Item B and Item H , respectively, of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time). The principal place of business and chief executive office of each Grantor and the office where each Grantor keeps its records concerning the Collateral, and the original copies of each Assigned Agreement and all originals of all Instruments and Tangible Chattel Paper, are located at the places specified in Item C of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time). Except as set forth in Item D of Schedule I attached hereto each Grantor has no trade names and has not been known by any legal name different from the one set forth on the signature page hereto. Except as notified by any Grantor to Lender, no Grantor is a party to anyone or more Federal, state or local government contracts.
SECTION 3.2. Ownership, No Liens, etc. Each Grantor owns the Collateral free and clear of any Lien, except for the security interest created by this Agreement and except for Permitted Exceptions. Except as disclosed in Item F of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time) or from time to time to Lender, none of the Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor, located on any leased property or subject to the Control of any Person, other than Lender or each Grantor.
SECTION 3.3. Receivables Collateral and Assigned Agreements . (a) All Receivables Collateral (i) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (ii) is and will be enforceable in accordance with its terms, (iii) is not and will not be subject to any setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in
the ordinary course of business with respect to damaged merchandise) and (iv) is and will be in compliance with all applicable law.
(a) Each Grantor has delivered to Lender exclusive Control of all intangible Chattel Paper and possession of all originals of all Instruments and Tangible Chattel Paper currently owned or held by such Grantor (duly endorsed in blank in favor of Lender), and true and correct copies of each Assigned Agreement.
SECTION 3.4. Intellectual Property Collateral. With respect to any Intellectual Property Collateral that is material to the operations of each Grantor:
(a) such Intellectual Property Collateral is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, and is valid and enforceable;
(b) such Grantor has made all necessary filings and recordations to protect its interest in such Intellectual Property Collateral, including recordations of all of its interests in (i) the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and in corresponding offices throughout the world and (ii) the Copyright Collateral in the United States Copyright Office and in corresponding offices throughout the world;
(c) in the case of any such Intellectual Property Collateral that is owned by such Grantor, such Grantor is the exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral and no claim has been made that the use of such Intellectual Property Collateral does or may violate the asserted rights of any third party;
(d) in the case of any such Intellectual Property Collateral that is licensed by such Grantor, such Grantor is in compliance with all the material terms of such license; and
(e) such Grantor has performed and will continue to perform all acts and has paid and will continue to pay all required fees and taxes to maintain each and every item of such Intellectual Property Collateral in full force and effect throughout the world.
Each Grantor owns directly or is entitled to use by license or otherwise, all patents, trademarks, trade secrets, copyrights, licenses, technology, know-how, processes and other intellectual property that is necessary for the proper conduct of such Grantors business.
SECTION 3.5. Assigned Agreements . The Assigned Agreements of each Grantor, true and complete copies of which have been furnished to Lender, have been duly authorized, executed and delivered by such Grantor and (to the best knowledge of such Grantor) each other party thereto, are in full force and effect and are binding upon and enforceable against such Grantor and (to the best knowledge of such Grantor) each other party thereto, in accordance with their terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors right generally and to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law). To the knowledge of each Grantor, there exists no default under any Assigned Agreement by any party thereto.
SECTION 3.6. Commercial Tort Claims . Except for matters disclosed in Item G of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) no Grantor owns any Commercial Tort Claims. Lender has a perfected first priority security interest in such Commercial Tort Claims.
SECTION 3.7. Investment Accounts . Item I of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies each Deposit Account of each Grantor, Item J of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies each Securities Account of such Grantor and Item K of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies each Commodities Account of such Grantor. Each Grantor is the sole Entitlement Holder of each such Investment Account, such Grantor has not consented or has knowledge that any Person, other than Lender, has Control over any interest in any such Investment Account, and Lender has exclusive Control over each such Investment Account.
SECTION 3.8. Inventory . All Inventory is, and will be, of good and merchantable quality, free from any material defects. Such Inventory is not, and will not be, subject to any licensing, patent, trademark, trade name or copyright agreement with any Person that restricts any Grantors or Lenders ability to manufacture and/or sell such Inventory. The completion and manufacturing process of such Inventory by a Person other than any Grantor would be permitted under any contract to which such Grantor is a party or to which the Inventory is subject. No Grantor sells any Inventory to any customer on approval or on any other basis that entitles the customer to return, or which may obligate the Debtor to repurchase, such Inventory.
SECTION 3.9. Letter of Credit Rights . Item L of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies all letters of credit to which any Grantor has rights. Each Grantor has obtained the consent of each issuer of each such letter of credit to the assignment of the proceeds thereof to Lender. Lender has exclusive Control over the Letter-of-Credit Rights related to such letters of credit.
SECTION 3.10. Valid Security Interest . Upon (a) the filing of U.C.C. financing statements in the U.C.C. filing offices of each jurisdiction referred to in Item E of Schedule I attached hereto that names each Grantor as Debtor and Lender as Secured Party and adequately describes the Collateral; (b) the filing of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as the case may be, with respect to all Intellectual Property Collateral; (c) consent of each applicable issuer with respect to Letter of Credit Rights and (d) execution of a control agreement establishing Lenders Control with respect to each Investment Account, the security interest granted pursuant to this Agreement creates a valid, first priority perfected security interest in the Collateral, together with all Proceeds thereof, subject to no other Liens other than Permitted Exceptions, securing the payment of the Secured Obligations.
SECTION 3.11. Authorization, Approval, etc. No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority is required either for (a) the grant by each Grantor of the security interest granted hereby or for the execution, delivery and performance of this Agreement by each Grantor or (b) the perfection of or the exercise by
Lender of its rights and remedies hereunder (other than the taking of those actions referred to in Section 3.10 ).
SECTION 3.12. Due Execution, Validity, Etc . Each Grantor has full power and authority, and holds all requisite licenses, permits and other approvals of Governmental Authorities, to enter into and perform its obligations under this Agreement. The execution, delivery and performance by each Grantor of this Agreement does not contravene or result in a default under such Grantors Organizational Documents or contravene or result in a default under any contractual restriction, Lien or law binding on such Grantor. This Agreement has been duly authorized by each Grantor, has been duly executed and delivered on behalf of such Grantor and constitutes the legal, valid and binding obligation of such Grantor enforceable in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar Law affecting the rights of creditors generally, and subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law).
ARTICLE IV
COVENANTS
Each Grantor covenants and agrees that, until all the Secured Obligations have been paid in full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), each Grantor will, perform the obligations set forth in this Section.
SECTION 4.1. Equipment and Inventory . Each Grantor hereby agrees that it shall:
(a) keep all of its Equipment, Inventory (other than Inventory sold in the ordinary course of business or that is in-transit to a location specified in Item A or Item B of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) on a vehicle owned or leased by such Grantor) and the Documents evidencing the same at the places therefor specified in Item C of Schedule I attached hereto to (as such Schedule may be amended or supplemented from time to time) unless such Grantor has given at least 30 days prior notice to Lender of another location, and all action, if any, necessary to maintain in accordance with the terms hereof Lenders perfected first priority security interest therein shall have been taken with respect to such Equipment, Inventory and Documents;
(b) comply with the covenants contained in Section 7.6 of the Loan Agreement relating to the maintenance of its properties;
(c) comply with the covenants contained in clause Section 7.8 of the Loan Agreement regarding the payment of taxes and other charges of Governmental Authorities; and
(d) not deliver any Document evidencing any Equipment or Inventory to any Person other than the issuer of such Document to claim the Goods evidenced therefor or Lender.
SECTION 4.2. Receivables Collateral and General Intangibles . (a) Each Grantor shall keep its principal place of business, chief executive office and the office where it keeps its records concerning the Receivables Collateral and all originals of the Assigned Agreements
Instruments and Tangible Chattel Paper, at the places specified in Section 3.1 unless such Grantor has given at least 30 days prior notice to Lender and all actions, if any, necessary to maintain Lenders perfected first priority security interest shall have been taken with respect to such Collateral; not change its name or state of organization unless such Grantor has given at least 30 days prior notice to Lender and all actions, if any, necessary to maintain Lenders perfected first priority security interest shall have been taken with respect to all of the Collateral; hold and preserve such records, Assigned Agreements, Instruments and Chattel Paper; and permit representatives of Lender at any time during normal business hours, upon reasonable notice, to inspect and make abstracts of the same.
(a) Each Grantor shall diligently endeavor to collect its Receivables Collateral and all amounts owing to it thereunder in the ordinary course of its business consistent with past practices and shall apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balances thereof, provided that during the continuance of any Event of Default such Grantor shall, at the request of Lender, take such action as Lender may deem necessary or advisable to enforce such collection. Each Grantor shall not, except to the extent done in the ordinary course of its business consistent with past practices and in accordance with sound business judgment (i) grant any extension of the time for payment of any Receivables Collateral, (ii) compromise or settle any Receivables Collateral for less than the full amount thereof, (iii) release, in whole or in part, any Person or property liable for the payment of any Receivables Collateral, or (iv) allow any credit or discount on any Receivables Collateral; provided that during the continuance of any Event of Default such Grantor shall comply with any limitations on the foregoing actions or specified by Lender to such Grantor. In no event shall any Grantor amend, modify, terminate or waive any provision of any Receivables Collateral in a manner which could reasonably be expected to have a material adverse effect on such Receivables Collateral. Each Grantor will use its best efforts to keep in full force and effect any Supporting Obligation relating to any Receivables Collateral.
SECTION 4.3. Investment Property . Each Grantor will take any and all actions necessary to (a) cause Lender to obtain exclusive Control of any Investment Property owned by such Grantor in a manner acceptable to Lender and (b) obtain from any issuers of such Investment Property and such other Persons, for the benefit of Lender, written confirmation of Lenders Control over such Investment Property upon terms and conditions acceptable to Lender. For purposes of this Section, Lender shall have exclusive Control of Investment Property if (i) such Investment Property consists of Certificated Securities and the applicable Grantor delivers such Certificated Securities to Lender (with appropriate endorsements if such Certificated Securities are in registered form); (ii) such Investment Property consists of Uncertificated Securities and the issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to Lender, that it will comply with instructions originated by Lender without further consent by such Grantor; and (iii) such Investment Property consists of Security Entitlements and either (A) Lender becomes the Entitlement Holder thereof or (B) the appropriate Securities Intermediary agrees, pursuant to documentation in form and substance satisfactory to Lender, that it will comply with Entitlement Orders originated by Lender without further consent by such Grantor.
SECTION 4.4. Intellectual Property Collateral. (a) Each Grantor shall not, unless such Grantor shall either (i) reasonably and in good faith determine (and notice of such determination shall have been delivered to Lender) that any of the Patent Collateral is of negligible economic value to such Grantor or (ii) have a valid business purpose (exercised in the ordinary course of business that is consistent with past practice) to do otherwise, do any act, or omit to do any act, whereby any of the Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable.
(b) Each Grantor shall not, and each Grantor shall not permit any of its licensees to, unless such Grantor shall either (i) reasonably and in good faith determine (and notice of such determination shall have been delivered to Lender) that any of the Trademark Collateral is of negligible economic value to such Grantor or (ii) have a valid business purpose (exercised in the ordinary course of business that is consistent with past practice) to do otherwise:
(A) fail to continue to use any of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any claim of abandonment for non-use;
(B) fail to maintain as in the past the quality of products and services offered under all of the Trademark Collateral;
(C) fail to employ all of the Trademark Collateral registered with any Federal or state or foreign authority with an appropriate notice of such registration; or
(D) do or permit any act or knowingly omit to do any act whereby any of the Trademark Collateral may lapse or become invalid or unenforceable.
(c) Each Grantor shall not, unless such Grantor shall either reasonably and in good faith determine (and notice of such determination shall have been delivered to Lender) that any of the Copyright Collateral or any of the Trade Secrets Collateral is of negligible economic value to such Grantor or have a valid business purpose (exercised in the ordinary course of business that is consistent with past practice) to do otherwise, do or permit any act or knowingly omit to do any act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof.
(d) Each Grantor shall notify Lender immediately if it knows that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantors ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same.
(e) In no event shall any Grantor or any of its agents, employees, designees or licensees file an application for the registration of any Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it gives prior notice thereof to Lender and, if requested by Lender, executes and delivers any and all agreements, instruments, documents and papers as Lender may reasonably request to evidence Lender first priority security interest in such Intellectual Property Collateral.
(f) Each Grantor shall take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, the Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clauses (a) , (b) and (c) ).
SECTION 4.5. Assigned Agreements . Each Grantor shall at its expense, with respect to all Assigned Agreements, comply with the covenants contained in the Loan Agreement applicable to such Assigned Agreements. Without the prior consent of Lender, no Grantor shall waive, settle, release or discharge any Person with respect to any of its obligations under any Assigned Agreement (other than upon due completion of such obligations by such Person).
SECTION 4.6. Bailees, Warehouses and Leased Premises . No Collateral shall at any time be in the possession or control of any warehouse, bailee or any of each Grantors agents or processors, or located on any leased premises, without Lenders prior consent and unless Lender has received warehouse receipts or bailee lien waivers satisfactory to Lender prior to the commencement of such possession or control. Each Grantor shall, upon the request of Lender, notify any such warehouse, bailee, agent, processor or lessor of Lenders first priority security interest in the Collateral and shall instruct such Person to hold all such Collateral for Lenders account subject to Lenders instructions given during the continuance of any Event of Default.
SECTION 4.7. Chattel Paper and Instruments . Each Grantor will deliver to Lender all Tangible Chattel Paper and Instruments duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to Lender. Each Grantor will provide Lender with exclusive Control over all Electronic Chattel Paper by having Lender identified as the assignee of the records pertaining to the single authoritative copy thereof and otherwise complying with the applicable elements of Control set forth in the U.C.C. Each Grantor will also deliver to Lender all security agreements securing any Chattel Paper and Instruments and execute U.C.C. financing statement amendments assigning to Lender any U.C.C. financing statements filed by such Grantor in connection with such security agreements. Each Grantor will mark conspicuously all Chattel Paper and Instruments with a legend, in form and substance reasonably satisfactory to Lender, indicating that such Chattel Paper and Instruments are subject to the Liens created hereunder.
SECTION 4.8. Letters of Credit . Each Grantor will deliver to Lender all letters of credit in which it is the beneficiary thereof, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to Lender. Each Grantor will take any and all actions necessary (or reasonably requested by Lender), from time to time, to cause Lender to obtain exclusive Control of any Letter-of-Credit Rights owned by such Grantor in a manner reasonably acceptable to Lender.
SECTION 4.9. Commercial Tort Claims . Each Grantor shall advise Lender promptly upon such Grantor becoming aware, after the date hereof, that it owns any Commercial Tort Claims. With respect to any such Commercial Tort Claims, each Grantor will execute and deliver such documents as Lender deems necessary to create, perfect and protect Lenders first priority security interest in such Commercial Tort Claim.
SECTION 4.10. Collateral Generally . (a) Lender may, at any time following the occurrence and during the continuance of any Event of Default, notify any parties obligated on any of the Collateral to make payment to Lender of any amounts due or to become due thereunder and enforce collection of any of the Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any Indebtedness thereunder or evidenced thereby. Upon request of Lender after the occurrence and during the continuance of any Event of Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to Lender of any amounts due or to become due thereunder.
(b) Upon the occurrence and during the continuance of an Event of Default, Lender is authorized to endorse, in the name of the applicable Grantor, any item, howsoever received by Lender, representing any payment on or other Proceeds of any of the Collateral.
SECTION 4.11. Insurance . Each Grantor will maintain or cause to be maintained insurance in accordance with the Insurance Requirements attached as Exhibit E to the Loan Agreement. All proceeds of insurance maintained by each Grantor so covering the Collateral shall be applied to the payment of the Secured Obligations under the circumstances provided for in the Loan Agreement. Each Grantor irrevocably makes, constitutes and appoints Lender (and all officers, employees or agents designated by Lender) as such Grantors true and lawful agent and attorney-in-fact for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the Proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required by Exhibit E to the Loan Agreement or to pay any premium in whole or part relating thereto, Lender may, without waiving or releasing any obligation or liability of any Grantor hereunder or any Event of Default, in its sale discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as Lender deems advisable. All sums disbursed by Lender in connection with this Section including reasonable attorneys fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by Grantors to Lender and shall be additional Secured Obligations secured hereby.
SECTION 4.12. Investment Accounts . Each Grantor will take any and all actions necessary to cause Lender to obtain exclusive Control of all Investment Accounts owned by Grantor in a manner acceptable to Lender. Each Grantor shall not close or terminate any Investment Account without the prior consent of Lender and unless a successor or replacement account has been established with the consent of Lender and is subject to a control agreement reasonably satisfactory to Lender.
SECTION 4.13. Transfers and Other Liens . Each Grantor shall not (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except as permitted by the Loan Agreement, or (b) create or suffer to exist any Lien upon or with respect to any of the Collateral, except for the security interest created by this Agreement and except for Permitted Exceptions.
SECTION 4.14. Further Assurances, etc. Each Grantor agrees that, from time to time at its own expense, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Lender may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor will:
(a) mark conspicuously each asset forming a part of the Collateral with a legend, in form and substance reasonably satisfactory to Lender, indicating that such Collateral is subject to the security interest granted hereby;
(b) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary, or as Lender may reasonably request, in order to perfect and preserve the security interests and other rights granted or purported to be granted to Lender hereby;
(c) furnish to Lender, from time to time at Lenders request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Lender may reasonably request, all in reasonable detail;
(d) if requested by Lender, with respect to each lien on Equipment which is subject to a certificate of title statute that requires notation of a lien thereon to perfect a security interest therein such Grantor shall deliver to Lender all original certificates of title for such Equipment, shall take all necessary steps to cause Lenders security interest be perfected in accordance with such statute and deliver to Lender a schedule in reasonable detail describing such Equipment, registration number, license number and all other information required to comply with such statute; provided , however , that until Lender makes such a request under this clause, the parties hereto acknowledge that the security interest of Lender in such Collateral has not been perfected and all the representations and warranties, covenants and Events of Default
contained herein and in the other Loan Documents which would otherwise be violated shall be deemed modified to reflect the foregoing and not be violated; and
(e) if requested by Lender, execute and deliver confirmatory written instruments, and obtain any consents, waivers or agreements, as may be necessary, or as Lender may reasonably request, in order to perfect and preserve the security interests and other rights granted or purported to be granted to Lender hereby, but any Grantors failure to do so shall not affect or limit the security interest granted hereby or Lenders other rights in and to the Collateral.
With respect to the foregoing and the grant of the security interest hereunder, each Grantor hereby authorizes Lender to Authenticate and to file one or more U.C.C. financing or continuation statements, and amendments thereto, and make filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country), in each case for the purpose of perfecting, confining, continuing, enforcing or protecting the security interest granted by such Grantor, without the signature of such Grantor, and naming such Grantor as debtor and Lender as secured party. A carbon, photographic, telecopied or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
SECTION 4.15. Collateral Account . (a) Upon notice by Lender to Grantors pursuant to this Section following the occurrence and during the continuance of any Event of Default, all Proceeds of Collateral received by Grantors shall be delivered in kind to Lender for deposit to a deposit account (the Collateral Account ) of such Grantor maintained by or on behalf of Lender, and until such Proceeds are so deposited they shall be held in trust for the benefit of Lender and shall not be commingled with the other assets of such Grantor.
(b) Lender shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations, subject to and in accordance with the terms of the Loan Agreement. Subject to the rights of Lender, each Grantor shall have the right on each Business Day, with respect to and to the extent of collected funds in the Collateral Account, to require Lender to purchase any Cash Equivalents, provided that, in the case of Certificated Securities, Lender will retain possession thereof as Collateral and, in the case of other Investment Property, Lender will take such actions, including registration of such Investment Property in its name, as it shall determine is necessary to perfect its security interest therein.
SECTION 4.16. Notice of Material Adverse Effect. Each Grantor shall promptly notify Lender, after obtaining knowledge thereof, of any event that could reasonably be expected to have a material adverse effect on any value of the Collateral, the ability of such Grantor or Lender to dispose of the Collateral or the rights or remedies of Lender in relation thereto.
SECTION 4.17. General Intangibles . Each Grantor shall use commercially reasonable efforts to obtain any consents, waivers or agreements necessary to enable Lender to exercise remedies hereunder and under the other Loan Documents with respect to any of such
Grantors rights under any General Intangibles, including such Grantors rights as a licensee of any Intellectual Property Collateral.
SECTION 4.18. Additional Covenants . Each Grantor agrees that, until all the Secured Obligations have been paid in full in cash on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender, it will comply with all the terms and provisions of the Loan Agreement and the other Loan Documents that are applicable to it.
ARTICLE V
THE LENDER
SECTION 5.1. Lender Appointed Attorney-in-Fact . Each Grantor hereby irrevocably constitutes and appoints Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take, upon the occurrence and during the continuance of any Event of Default, any and all actions and execute any and all documents and instruments that may, in the judgment of Lender, be necessary or desirable to accomplish the purposes of this Agreement. Without limiting the generality of the foregoing, after the occurrence and during the continuance of any Event of Default each Grantor hereby gives Lender the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:
(a) (i) demand payment of its Receivables Collateral; (ii) enforce payments of its Receivables Collateral by legal proceedings or otherwise; (iii) exercise all of its rights and remedies with respect to proceedings brought to collect its Receivables Collateral; (iv) sell or assign its Receivables Collateral upon such terms, for such amount and at such times as Lender deems advisable; (v) settle, adjust, compromise, extend or renew any of its Receivables Collateral; (vi) discharge and release any of its Receivables Collateral; (vii) prepare, file and sign such Grantors name on any proof of claim in bankruptcy or other similar document against any Loan Party of any of its Receivables Collateral; (viii) notify the post office authorities to change the address for delivery of such Grantors mail to an address designated by Lender, and open and dispose of all mail addressed to such Grantor; and (ix) endorse such Grantors name upon any Chattel Paper, Document, Instrument, invoice, or similar document or agreement relating to any Receivables Collateral or any goods pertaining thereto;
(b) in the case of any Intellectual Property Collateral, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as Lender may request to evidence the Lender Parties security interest in such Intellectual Property Collateral and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;
(c) take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under or in respect of any Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Lender for the purpose of collecting any and all such moneys due under or in respect of any Collateral whenever payable;
(d) payor discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;
(e) execute, in connection with any sale or other disposition provided for in Section 6.1 , any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
(f) (i) direct any Person liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to Lender or as Lender shall direct; (ii) ask or demand for, collect, and receive payment of and give receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (iii) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (iv) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (v) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (vi) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as Lender may deem appropriate; (vii) notify, or require such Grantor to notify, Account Debtors to make all payments directly to Lender and change the post office box number or other address to which the Account Debtors make payments; (viii) assign any Intellectual Property Collateral (along with the goodwill of the business to which any such Intellectual Property Collateral pertains), throughout the world for such terms, on such conditions, and in such manner, as Lender shall in its sole discretion determine; and (ix) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Lender were the absolute owner thereof for all purposes, and do, at Lenders option and such Grantors expense, at any time, or from time to time, all acts and things that Lender deems necessary to protect, preserve or realize upon the Collateral and the Lenders security interests therein and to effect the intent of this Agreement, all as fully and effectively as Grantor might do.
Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Lender May Perform . If any Grantor fails to perform any agreement contained herein, Lender may itself perform, or cause performance of, such agreement, and the reasonable expenses of Lender incurred in connection therewith shall be payable by such Grantor.
SECTION 5.3. Access and Examination . In order to give effect to the intent of this Agreement Lender may at all reasonable times upon reasonable advance notice (if no Default or an Event of Default has occurred and is continuing) have access to, examine, audit, make extracts from and inspect Grantors records, files and books of account and the Collateral, and may discuss Grantors affairs with Grantors officers and management. Each Grantor will deliver to Lender promptly following its request therefor any instrument necessary for Lender to
obtain records from any service bureau maintaining records for such Grantor. Lender may, at expense of the Grantors, use Grantors personnel, supplies and premises as may be reasonably necessary for maintaining or enforcing the security interest granted hereunder. Lender shall have the right, at any time, in Grantors name to verify the validity, amount or any other matter relating to the Receivables Collateral; provided that Lender shall not communicate with any account obligors of Grantors unless an Event of Default has occurred and is continuing.
SECTION 5.4. Lender Has No Duty . (a) The powers conferred on Lender hereunder are solely to protect its interest in the Collateral and shall not impose any duty on it to exercise any such powers. The Lenders sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the U.C.C. or otherwise, shall be to deal with it in the same manner as Lender deals with similar property for its own account. Neither Lender nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so, nor shall any such Person be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof (including the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral). Neither Lender nor any of its officers, directors, employees or agents shall be responsible to any Grantor for any loss, damages, depreciation or other diminution in the value of any of the Collateral that may occur as a result of or in connection with or that is in any way related to any exercise, except in respect of any damages attributable solely to any such Persons own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.
(b) Each Grantor assumes all responsibility and liability arising from or relating to the use, sale or other disposition of the Collateral. The Obligations shall not be affected by any failure of Lender to take any steps to perfect the security interest granted hereunder or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Grantor from any of its Obligations.
ARTICLE VI
REMEDIES
SECTION 6.1. Remedies . If any Event of Default shall have occurred and be continuing:
(a) Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it (including, without limitation, as provided in Section 5.1 ), all the rights and remedies of a secured party on default under the U.C.C. and also may:
(i) require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon the request of Lender forthwith, assemble all or part of the Collateral as directed by Lender and make it available to Lender at its premises or another place designated by Lender (whether or not the U.C.C. applies to the affected Collateral);
(ii) without demand of performance or other demand, presentment, obtaining a final judgment, protest, advertisement or notice of any kind (except any notice required by Law referred to below) to or upon each Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale, at any of Lenders offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Lender may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by Law, 10 days prior notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by Lender until the sale price is paid by the purchase or purchasers thereof, but Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Law, private) sale made pursuant to this Section, Lender may bid for or purchase, free (to the extent permitted by Law) from any right of redemption, stay, valuation or appraisal on the part of each Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to Lender from any Grantor as a credit against the purchase price, and Lender may upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to such Grantor therefor;
(iii) with respect to the Intellectual Property, on demand, to cause the security interest to become an assignment, transfer and conveyance of any of or all such Collateral by each Grantor to Lender, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as Lender shall determine (other than in violation of any then existing licensing arrangements to the extent that waivers cannot be obtained);
(iv) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located and occupy (without the requirement to pay rent) the same until the Secured Obligations are paid in full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender); and
(v) to notify any or all depository institutions with which any Investment Accounts are maintained to remit and transfer all monies, securities and other property on deposit in such Investment Accounts or deposited or received for deposit thereafter to Lender, for deposit in the Collateral Account or such other accounts as may be designated by Lender, for application to the Secured Obligations as provided herein.
(b) Without limiting clause (a) , Lender may exercise any and all rights and remedies of Grantors under or in connection with the Collateral, including the right to sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals, compositions, or releases, and take or omit to take any other action with respect to the Collateral, any security therefor, any agreement relating thereto, any insurance applicable thereto, or any Person liable directly or indirectly in connection with any of the foregoing, without discharging or otherwise affecting the liability of Grantors for the Obligations or under this Agreement or any other Loan Document and the Assigned Agreements or otherwise in respect of the Collateral, including any and all rights of Grantors to demand or otherwise require payment of any amount under, or performance of any provision of, any Collateral.
SECTION 6.2. Application of Proceeds . All cash proceeds received by Lender in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of Lender, be held, to the extent permitted under applicable Law, by Lender as additional collateral security for all or any part of the Secured Obligations, and/or then or at any time thereafter shall be applied (after payment of any amounts payable to Lender pursuant to Section 15 of the Loan Agreement and Section 6.3 hereof) in whole or in part by Lender against all or any part of the Secured Obligations in accordance with the terms of the Loan Agreement. Any surplus of such cash or cash proceeds held by Lender and remaining after payment in full in cash of all the Secured Obligations (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), shall be paid over to the Grantors or to whomsoever may be lawfully entitled to receive such surplus.
SECTION 6.3. Indemnity and Expenses . Each Grantor agrees to jointly and severally indemnify and hold harmless Lender and its directors, officers, employees, agents, Affiliates and their Related Parties from and against any and all claims, losses and liabilities arising out of or resulting from this Agreement (including enforcement of this Agreement), except claims, losses or liabilities resulting from any such Persons gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Each Grantor will promptly following demand pay to Lender the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which Lender may incur in connection with (a) the administration of this Agreement, (b) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (c) the exercise or enforcement of any of the rights of Lender hereunder or (d) the failure by any Grantor to perform or observe any of the provisions hereof.
SECTION 6.4. Grant of License . Each Grantor hereby grants to Lender an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any Intellectual Property Collateral now owned or licensed or hereafter acquired or licensed by such Grantor, wherever the same may be located throughout the world, for such terms, on such conditions and in such manner as Lender shall determine, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for
the compilation or printout thereof; provided , however , that no such license or sublicense is granted in the case of any such Collateral if such license or sublicense would be prohibited by, or give rise to a right to terminate any contract governing such Collateral. The use of such license or sublicense by Lender shall be exercised, at the option of Lender, only upon the occurrence and during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by Lender in accordance herewith shall be binding upon each applicable Grantor notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document . This Agreement is a Loan Document executed pursuant to the Loan Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including, but not limited to, Section 1.2 thereof.
SECTION 7.2. Amendments, etc.; Successors and Assigns . (a) No amendment to or waiver of any provision of this Agreement nor consent to any departure by any Grantor herefrom, shall be effective unless the same shall be in writing and signed by Lender, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.
(b) This Agreement shall be binding upon each Grantor and its successors, transferees and assignees, and shall inure to the benefit of and be enforceable by Lender and its successors and assigns; provided , however , that no Grantor may assign its obligations hereunder without the prior written consent of Lender. Without limiting the generality of the foregoing, Lender may assign or otherwise transfer (in whole or in part) any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the rights and benefits in respect thereof granted to such Lender under any Loan Document (including this Agreement).
SECTION 7.3. Protection of Collateral . Lender may from time to time, at its option and at the expense of Grantors, perform any act which Grantors agree hereunder to perform and which Grantors shall fail to perform after being requested to so perform (it being understood that no such request need be given after the occurrence and during the continuance of any Event of Default), and Lender may from time to time take any other action which Lender deems necessary or appropriate for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices . All notices and other communications provided for hereunder shall be made as provided in, and subject to the terms of, Section 19 of the Loan Agreement. All notices to Grantors shall be sent at its address set forth in the Loan Agreement and all notices to Lender shall be sent as provided in the Loan Agreement.
SECTION 7.5. Section Captions . Section captions used in this Agreement are for convenience of reference only, and shall not affect the construction of this Agreement.
SECTION 7.6. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 7.7. Counterparts . This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.
SECTION 7.8. Waivers . Each Grantor hereby waives any right, to the extent permitted by applicable Law, to receive prior notice of a judicial or other hearing with respect to any action or prejudgment remedy or proceeding by Lender to take possession, exercise control over or dispose of any item of Collateral, where such action is permitted under the terms of this Agreement or any other Loan Document or by applicable Law, or of the time, place or terms of sale in connection with the exercise of Lenders rights hereunder. Each Grantor waives, to the extent permitted by applicable Law, any bonds, security or sureties required by Lender with respect to any of the Collateral. Without limiting the foregoing, each Grantor agrees that it will not invoke, claim or assert any benefit of applicable Law, or take or attempt to take any action that could reasonably be expected to have the effect of delaying, impeding or preventing Lender from exercising any of its rights or remedies with respect to the Collateral as herein provided. Each Grantor also consents that Lender, in connection with the enforcement of Lenders rights and remedies under this Agreement, may enter upon any premises owned by or leased to it without obligations to pay rent or for use and occupancy, through self-help, without judicial process and without having first obtained an order of any court.
SECTION 7.9. Governing Law, Entire Agreement, etc . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF OHIO. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.10. Forum Selection and Consent to Jurisdiction . ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, LENDER OR ANY GRANTOR MAY BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE CITY OF CLEVELAND, COUNTY OF CUYAHOGA, OF THE STATE OF OHIO; PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDERS OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAYBE FOUND. EACH GRANTOR AND LENDER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREP AID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF OHIO. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT EACH GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.11. Waiver of Jury Trial . LENDER AND EACH GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF LENDER OR EACH GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
SECTION 7.12. Waiver of Certain Claims . TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY INSTRUMENT CONTEMPLATED HEREBY.
SECTION 7.13. No Strict Construction . The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date and year first above written.
GRANTORS : |
WOODLAND HILLS HC NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
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NORTHRIDGE HC&R NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
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APH&R NURSING, LLC |
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By: |
/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
Manager |
[Acknowledgement signature contained on the following page]
Security Agreement |
PropCo |
ACKNOWLEDGED AND ACCEPTED: |
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KEYBANK NATIONAL ASSOCIATION, |
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as Lender |
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By: |
/s/ [Illegible] |
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Title: |
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Exhibit 10.277
EXECUTION VERSION
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December 28, 2012 (as amended, supplemented, restated or otherwise modified from time to time, this Agreement ), made by and among, WOODLAND HILLS HC PROPERTY HOLDINGS, LLC, NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC, APH&R PROPERTY HOLDINGS, LLC, each a Georgia limited liability company (referred to herein collectively as Grantors and individually, a Grantor ), in favor KEYBANK NATIONAL ASSOCIATION , a national banking association, as lender ( Lender ).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Secured Loan Agreement, dated as of the date hereof (as amended, supplemented, restated or otherwise modified from time to time, the Loan Agreement ), by and among Grantors, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC (collectively, with Grantors, referred to herein as Borrowers ), and Lender, whereby Lender agreed to make a secured term loan (the Loan ) available to Borrowers in the original principal amount of Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00);
WHEREAS, as a condition precedent to the making of the Loan, each Grantor is required to execute and deliver this Agreement; and
WHEREAS, each Grantor has duly authorized the execution, delivery and performance of this Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lender to make the Loans to the Borrowers pursuant to the Loan Agreement, each Grantor agrees, with Lender, as follows:
ARTICLE I
DEFINITIONS
The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
Agreement is defined in the preamble .
Assigned Agreements is defined in clause (p) of Section 2.1 .
Borrower(s) is defined in the first recital .
Collateral is defined in Section 2.1 .
Collateral Account is defined in clause (a) of Section 4.15 .
Computer Hardware and Software Collateral means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware; (b) all software programs (including both source code, object code and all related applications and data files and embedded software) designed for use on the computers and electronic data processing hardware described in clause (a) ; (c) all licenses and leases of software programs; (d) all firmware associated therewith; (e) all documentation (including flow charts, logic diagrams, manuals, guides and specifications) with respect to such hardware, software and firmware described in the clauses (a) through (c) ; and (f) all rights with respect to all of the foregoing, including any and all copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, additions or model conversions of any of the foregoing.
Copyright Collateral means all copyrights of each Grantor (including Community designs, copyrights in software and databases and all Mask Works (as defined under 12 U.S.C. 901 of the U.S. Copyright Act)), whether statutory or common law, registered or unregistered, now or hereafter in force throughout the world including all of such Grantors right, title and interest in and to all copyrights registered in the United States Copyright Office or anywhere else in the world and also including the copyrights referred to in Item A of Schedule IV attached hereto (as such Schedule may be amended or supplemented from time to time), and all applications for registration thereof, whether pending or in preparation, all copyright licenses, including each copyright license referred to in Item B of Schedule IV attached hereto (as such Schedule may be amended or supplemented from time to time), the right to sue for past, present and future infringements of any thereof, all rights corresponding thereto throughout the world, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of suit.
Deposit Account has the meaning provided for in the U.C.C. and includes, without limitation, each lock-box account, concentration account and other collateral accounts maintained by each Grantor, together with all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing such accounts) maintained with a bank (including, without limitation, those accounts identified on Item I of Schedule I attached hereto, as such Schedule may be amended or supplemented from time to time).
Equipment has the meaning provided for in the U.C.C. and includes, without limitation, all Equipment wherever located and whether or not affixed to any real property, including all accessories, additions, attachments, improvements, substitutions and replacements thereto and therefor.
General Intangible has the meaning provided for in the U.C.C. and includes, without limitation, all Management Agreements, all Intellectual Property Collateral, all rights under or evidenced by choses in action or causes of action, all judgments, tax refund claims, claims against carriers and shippers, claims under liens and insurance policies, all rights under security agreements, guarantees, indemnities and other instruments and contracts securing or
otherwise relating to any of the foregoing, and all other intangible personal property of every kind and nature, and all accessions, additions, improvements, modifications and upgrades to, replacements of and substitutions for the foregoing.
Grantor(s) is defined in the preamble .
Intellectual Property Collateral means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.
Inventory has the meaning provided for in the U.C.C. and includes, without limitation, all goods manufactured, acquired or held for sale or lease, all raw materials, component materials, work-in-progress and finished goods, all supplies, goods and other items and materials used or consumed in the manufacture, production, packaging, shipping, selling, leasing or furnishing of such inventory or otherwise in the operation of the business or any Grantor, all goods in which any Grantor now or at any time hereafter has any interest or right of any kind, and all goods that have been returned to or repossessed by or on behalf of any Grantor, in each case whether or not the same is in transit or in the constructive, actual or exclusive occupancy or possession of such Grantor or all accessions thereto, products thereof and documents therefor.
Investment Accounts means, collectively, the Collateral Account, Commodities Accounts, Deposit Account and Securities Accounts.
Leases has the meaning set forth in the Loan Agreement.
Lender is defined in the first recital .
Loan Agreement is defined in the first recital .
Management Agreements has the meaning set forth in the Loan Agreement.
Organizational Document means, with respect to any Person other than a natural person, its articles or certificate of incorporation, formation or organization, partnership agreement, limited liability company agreement, operating agreement, by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized equity interests.
Patent Collateral means (a) all letters patent and applications for letters patent throughout the world (including all patent applications in preparation for filing anywhere in the world), including each patent and patent application referred to in Item A of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time); (b) all patent licenses, including each patent license referred to in Item B of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time); (c) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clauses (a) and (b) above; and (d) all proceeds of, and rights associated with, the foregoing (including license royalties and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, including any
patent or patent application referred to in Item A of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time), and for breach or enforcement of any patent license, including any patent license referred to in Item B of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time), and all rights corresponding thereto throughout the world.
Pledged Deposit Accounts means the Cash Collateral Account and the Operating Accounts.
Proceeds has the meaning provided for in the U.C.C. whether Cash Proceeds or Noncash Proceeds, and includes, without limitation, (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Grantor from time to time with respect to any of the Collateral, including unearned premiums, (b) any and all payments (in any form whatsoever) made or due and payable to any Grantor from time to time in connection with any requisition, confiscation, condemnation, eminent domain, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority, (c) any claim of any Grantor against third parties for past, present or future infringement of any Intellectual Property Collateral, (d) any recoveries by any Grantor against third parties with respect to any litigation or dispute concerning any of the Collateral, including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, the Collateral, and (e) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of the Collateral.
Receivables Collateral means all Collateral relating to the right of payment for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including, without limitation, all such rights evidenced by any Account, Documents, Instrument, Chattel Paper, General Intangible or Investment Property.
Secured Obligations is defined in Section 2.2 .
Securities Account means all securities accounts as defined in Article 8 of the U.C.C. and shall include, without limitation, all the accounts identified on Item 5 of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time).
Security Agreement Supplement is defined in clause (b) of Section 7.2 .
Supporting Obligation means a Letter-of-Credit Right or secondary obligation that supports the payment or performance of an Account, Chattel Paper, Documents, General Intangible, Instrument or Investment Property, including, without limitation, all security agreements, guaranties, leases and other contracts securing or otherwise relating to any such Accounts, Chattel Paper, Documents, Instruments, including Goods represented by the sale or lease of delivery which gave rise to any of the foregoing, returned or repossessed merchandise and rights of stoppage in transit, repletion, reclamation and other rights and remedies of an unpaid vendor, lie nor or secured party.
Trademark is defined in the definition Trademark Collateral.
Trademark Collateral means (a) all registered trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, service marks, certification marks, collective marks, logos, internet domain names, other source of business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of a like nature (all of the foregoing items in this clause (a) being collectively called a Trademark ), now existing anywhere in the world or hereafter adopted or acquired, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof or any foreign country, including those referred to in Item A of Schedule III attached hereto (as such Schedule may be amended or supplemented from time to time); (b) all Trademark licenses, including each Trademark license referred to in Item B of Schedule III attached hereto (as such Schedule may be amended or supplemented from time to time); (c) all reissues, extensions or renewals of any of the items described in clauses (a) and (b) above; (d) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clauses (a) and (b) above; and (e) all proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, including any Trademark, Trademark registration or Trademark license referred to in Item B of Schedule III attached hereto (as such Schedule may be amended or supplemented from time to time), or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license.
Trade Secret is defined in the definition Trade Secrets Collateral.
Trade Secrets Collateral means common law and statutory trade secrets and all other confidential or proprietary information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor (all of the foregoing being collectively called a Trade Secret ), whether or not such Trade Secret has been reduced to a writing or other tangible form (including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses), including each Trade Secret license referred to in Schedule V attached hereto (as such Schedule may be amended or supplemented from time to time), and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.
U.C.C. means the Uniform Commercial Code as in effect from time to time in the State of Ohio; provided that if, by reason of applicable Law, the validity or perfection or the effect of validity or perfection or non-perfection or the priority of any security interest in any Collateral granted under this Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Ohio, then as to such matters U.C.C. shall mean the Uniform Commercial Code as in effect in such other jurisdiction.
SECTION 1.1. Loan Agreement Definitions . Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Loan Agreement.
SECTION 1.2. U.C.C. Definitions . Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Agreement, including its preamble and recitals, with such meanings. Without limiting the foregoing the following terms are used herein as defined in the U.C.C.: Account, Account Debtor Authenticate, Cash Proceeds, Certificated Securities, Chattel Paper, Commercial Tort Claim, Commodities Accounts, Control, Debtor, Documents, Electronic Chattel Paper, Entitlement Holder, Entitlement Orders, Fixtures, Goods, Health-care-insurance receivable, Instruments, Investment Property, Letter-of-Credit Right, Money, Noncash Proceeds, Payment Intangibles, Security Entitlements, Uncertificated Securities and Tangible Chattel Paper.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security Interest . Each Grantor hereby pledges, hypothecates, collaterally assigns, charges, mortgages and pledges to Lender, and hereby grants to Lender, a security interest in, all of such Grantors right, title and interest in and to the following, whether now or hereafter existing or acquired and wherever located (collectively, the Collateral ):
(a) all Equipment;
(b) all Inventory;
(c) all Accounts;
(d) all Intellectual Property Collateral;
(e) all General Intangibles;
(f) all Investment Property;
(g) all Deposit Accounts;
(h) all Chattel Paper;
(i) all Commercial Tort Claims;
(j) all Goods (other than Inventory);
(k) all Instruments;
(l) all Payment Intangibles;
(m) all Documents;
(n) all Supporting Obligations;
(o) all Letter-of-Credit Rights;
(p) all Health-care-insurance-receivables;
(q) all of each Grantors right, title and interest in and to all of its Leases and Management Agreements (including the Leases and Management Agreements specified in Schedule VI attached hereto), and each Interest Rate Agreement to which any Grantor is now or may hereafter become a party, in each case as such agreements may be amended or otherwise modified from time to time (collectively, the Assigned Agreements ), including (i) all rights of each Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements; (ii) all rights of each Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements; (iii) all claims of each Grantor for damages arising out of or for breach of or default under the Assigned Agreements; and (iv) the right of each Grantor to terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder;
(r) all furniture and Fixtures;
(s) the Pledged Deposit Accounts, and all amounts therein;
(t) all of each Grantors other property and rights of every kind and description and interests therein, including all moneys, securities and other property, now or hereafter held or received by, or in transit to, Lender from or for any Grantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(u) all of each Grantors books, records, documents, instruments, electronic databases, computer records, ledger cards, customer lists, manuals, files, correspondence, tapes, drafts and related data processing software, writings, data bases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any and all of the foregoing Collateral; and
(v) all Proceeds of any and all of the foregoing Collateral;
provided , however , that any agreement to which such Grantor is a party shall be excluded from the security interest granted by such Grantor under this Section to the extent that the assignment thereof or the creation of a security interest therein would constitute a breach of the terms of such agreement, or would permit any party to such agreement to terminate such agreement, in each case as such agreement is in effect on the date of this Agreement or the date on which such agreement is first entered into by such Grantor; provided , further , however , that (i) any of the agreements excluded in accordance with the foregoing provision shall cease to be so excluded if, at such time, (A) the prohibition of assignment or creation of a security interest in such agreement is no longer in effect, or is rendered ineffective as a matter of law, or (B) such Grantor has obtained all of the consents of the other parties to such agreement necessary for the assignment of, or creation of a security interest in, such agreement and (ii) with respect to any
Management Agreement referred to in clause (p) , such Grantor shall use its commercially reasonable best efforts to obtain any such necessary consent.
SECTION 2.2. Security for Obligations . This Agreement secures the prompt payment in full in cash of all Obligations, including all amounts payable by Borrowers under or in connection with the Loan Agreement, the Note and each other Loan Document, whether for principal, interest, costs, fees, expenses, indemnities or otherwise and whether now or hereafter existing (all of such obligations being the Secured Obligations ).
SECTION 2.3. Continuing Security Interest; Transfer of Notes . This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until payment in full in cash of all Secured Obligations (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), at which time the security interest granted herein shall terminate and all rights to the Collateral shall revert to Grantors. In the event that any part of the Collateral is sold in connection with a sale permitted under the Loan Agreement (other than a sale to any Grantor) the security interest granted herein shall terminate with respect to such Collateral and all rights therein shall revert to the applicable Grantor. Upon any such termination or release, Lender will, at such applicable Grantors sole expense and without any representations, warranties or recourse of any kind whatsoever, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination or release.
SECTION 2.4. Security Interest Absolute . All rights of Lender and the security interests granted to Lender hereunder, and all obligations of each Grantor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity, legality or enforceability of any Loan Document;
(b) the failure of Lender:
(i) to assert any claim or demand or to enforce any right or remedy against any Grantor, or any other Person under the provisions of any Loan Document or otherwise; or
(ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligation;
(c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations or any other extension, compromise or renewal of any Secured Obligation, including any increase in the Secured Obligations resulting from the extension of additional credit to Grantors or otherwise;
(d) any reduction, limitation, impairment or termination of any Secured Obligation for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligation or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of any Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of any collateral (including the Collateral), or any amendment to or waiver or release of or addition to or consent to departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor, any surety or any guarantor or otherwise, including as a result of any proceeding of the nature referred to in Section 14.1(c g) of the Loan Agreement.
SECTION 2.5. Grantors Remain Liable . Anything herein to the contrary notwithstanding:
(a) Each Grantor shall remain liable under the contracts and agreements included in the Collateral (including the Assigned Agreements) to the extent set forth therein, and shall perform all of its duties and obligations under such contracts and agreements to the same extent as if this Agreement had not been executed;
(b) Each Grantor will comply in all material respects with all material laws relating to the ownership and operation of the Collateral, including, without limitation, all registration requirements under applicable material laws, and shall pay when due all taxes, fees and assessments imposed on or with respect to the Collateral, except to the extent the validity thereof is (A) being diligently contested in good faith by appropriate proceedings which (i) suspend the collection thereof and any Lien therefrom and (ii) for which adequate reserves in accordance with GAAP have been set aside by such Grantor, and (B) could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect;
(c) the exercise by Lender of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any contracts or agreements included in the Collateral; and
(d) the Lender shall not have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
SECTION 2.6. Waiver of Subrogation . Each Grantor hereby irrevocably waives to the extent permitted by applicable Law and until such time as the Secured Obligations shall have been paid in full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), any claim or other rights which it may now or hereafter acquire against the Borrowers that arises from the existence, payment, performance or enforcement of any Grantors obligations under this Agreement or any other Loan Document,
including any right of subrogation, reimbursement, exoneration or indemnification, and any right to participate in any claim or remedy of Lender against any Borrower or any collateral which Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity or under contract or law. If any amount shall be paid to any Grantor in violation of the preceding sentence, such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Lender, and shall forthwith be paid to Lender to be credited and applied against the Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits for the financing arrangements contemplated by the Loan Agreement and that the waiver set forth in this Section is knowingly made in contemplation of such benefits.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants unto Lender the following:
SECTION 3.1. Location of Grantors; Collateral, etc. Item E of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies for each Grantor the state in which it is organized and the relevant organizational identification number (or states that one does not exist). All of the Equipment, Inventory (other than Inventory that is in-transit to a location specified in Item B of Schedule I attached hereto on a vehicle owned or leased by each Grantor) and Fixtures of each Grantor are located at the places specified in Item A , Item B and Item H , respectively, of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time). The principal place of business and chief executive office of each Grantor and the office where each Grantor keeps its records concerning the Collateral, and the original copies of each Assigned Agreement and all originals of all Instruments and Tangible Chattel Paper, are located at the places specified in Item C of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time). Except as set forth in Item D of Schedule I attached hereto each Grantor has no trade names and has not been known by any legal name different from the one set forth on the signature page hereto. Except as notified by any Grantor to Lender, no Grantor is a party to anyone or more Federal, state or local government contracts.
SECTION 3.2. Ownership, No Liens, etc. Each Grantor owns the Collateral free and clear of any Lien, except for the security interest created by this Agreement and except for Permitted Exceptions. Except as disclosed in Item F of Schedule II attached hereto (as such Schedule may be amended or supplemented from time to time) or from time to time to Lender, none of the Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor, located on any leased property or subject to the Control of any Person, other than Lender or each Grantor.
SECTION 3.3. Receivables Collateral and Assigned Agreements . (a) All Receivables Collateral (i) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (ii) is and will be enforceable in accordance with its terms, (iii) is not and will not be subject to any setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in
the ordinary course of business with respect to damaged merchandise) and (iv) is and will be in compliance with all applicable law.
(a) Each Grantor has delivered to Lender exclusive Control of all intangible Chattel Paper and possession of all originals of all Instruments and Tangible Chattel Paper currently owned or held by such Grantor (duly endorsed in blank in favor of Lender), and true and correct copies of each Assigned Agreement.
SECTION 3.4. Intellectual Property Collateral. With respect to any Intellectual Property Collateral that is material to the operations of each Grantor:
(a) such Intellectual Property Collateral is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, and is valid and enforceable;
(b) such Grantor has made all necessary filings and recordations to protect its interest in such Intellectual Property Collateral, including recordations of all of its interests in (i) the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and in corresponding offices throughout the world and (ii) the Copyright Collateral in the United States Copyright Office and in corresponding offices throughout the world;
(c) in the case of any such Intellectual Property Collateral that is owned by such Grantor, such Grantor is the exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral and no claim has been made that the use of such Intellectual Property Collateral does or may violate the asserted rights of any third party;
(d) in the case of any such Intellectual Property Collateral that is licensed by such Grantor, such Grantor is in compliance with all the material terms of such license; and
(e) such Grantor has performed and will continue to perform all acts and has paid and will continue to pay all required fees and taxes to maintain each and every item of such Intellectual Property Collateral in full force and effect throughout the world.
Each Grantor owns directly or is entitled to use by license or otherwise, all patents, trademarks, trade secrets, copyrights, licenses, technology, know-how, processes and other intellectual property that is necessary for the proper conduct of such Grantors business.
SECTION 3.5. Assigned Agreements . The Assigned Agreements of each Grantor, true and complete copies of which have been furnished to Lender, have been duly authorized, executed and delivered by such Grantor and (to the best knowledge of such Grantor) each other party thereto, are in full force and effect and are binding upon and enforceable against such Grantor and (to the best knowledge of such Grantor) each other party thereto, in accordance with their terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors right generally and to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law). To the knowledge of each Grantor, there exists no default under any Assigned Agreement by any party thereto.
SECTION 3.6. Commercial Tort Claims . Except for matters disclosed in Item G of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) no Grantor owns any Commercial Tort Claims. Lender has a perfected first priority security interest in such Commercial Tort Claims.
SECTION 3.7. Investment Accounts . Item I of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies each Deposit Account of each Grantor, Item J of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies each Securities Account of such Grantor and Item K of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies each Commodities Account of such Grantor. Each Grantor is the sole Entitlement Holder of each such Investment Account, such Grantor has not consented or has knowledge that any Person, other than Lender, has Control over any interest in any such Investment Account, and Lender has exclusive Control over each such Investment Account.
SECTION 3.8. Inventory . All Inventory is, and will be, of good and merchantable quality, free from any material defects. Such Inventory is not, and will not be, subject to any licensing, patent, trademark, trade name or copyright agreement with any Person that restricts any Grantors or Lenders ability to manufacture and/or sell such Inventory. The completion and manufacturing process of such Inventory by a Person other than any Grantor would be permitted under any contract to which such Grantor is a party or to which the Inventory is subject. No Grantor sells any Inventory to any customer on approval or on any other basis that entitles the customer to return, or which may obligate the Debtor to repurchase, such Inventory.
SECTION 3.9. Letter of Credit Rights . Item L of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) identifies all letters of credit to which any Grantor has rights. Each Grantor has obtained the consent of each issuer of each such letter of credit to the assignment of the proceeds thereof to Lender. Lender has exclusive Control over the Letter-of-Credit Rights related to such letters of credit.
SECTION 3.10. Valid Security Interest . Upon (a) the filing of U.C.C. financing statements in the U.C.C. filing offices of each jurisdiction referred to in Item E of Schedule I attached hereto that names each Grantor as Debtor and Lender as Secured Party and adequately describes the Collateral; (b) the filing of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as the case may be, with respect to all Intellectual Property Collateral; (c) consent of each applicable issuer with respect to Letter of Credit Rights and (d) execution of a control agreement establishing Lenders Control with respect to each Investment Account, the security interest granted pursuant to this Agreement creates a valid, first priority perfected security interest in the Collateral, together with all Proceeds thereof, subject to no other Liens other than Permitted Exceptions, securing the payment of the Secured Obligations.
SECTION 3.11. Authorization, Approval, etc. No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority is required either for (a) the grant by each Grantor of the security interest granted hereby or for the execution, delivery and performance of this Agreement by each Grantor or (b) the perfection of or the exercise by
Lender of its rights and remedies hereunder (other than the taking of those actions referred to in Section 3.10 ).
SECTION 3.12. Due Execution, Validity, Etc . Each Grantor has full power and authority, and holds all requisite licenses, permits and other approvals of Governmental Authorities, to enter into and perform its obligations under this Agreement. The execution, delivery and performance by each Grantor of this Agreement does not contravene or result in a default under such Grantors Organizational Documents or contravene or result in a default under any contractual restriction, Lien or law binding on such Grantor. This Agreement has been duly authorized by each Grantor, has been duly executed and delivered on behalf of such Grantor and constitutes the legal, valid and binding obligation of such Grantor enforceable in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar Law affecting the rights of creditors generally, and subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law).
ARTICLE IV
COVENANTS
Each Grantor covenants and agrees that, until all the Secured Obligations have been paid in full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), each Grantor will, perform the obligations set forth in this Section.
SECTION 4.1. Equipment and Inventory . Each Grantor hereby agrees that it shall:
(a) keep all of its Equipment, Inventory (other than Inventory sold in the ordinary course of business or that is in-transit to a location specified in Item A or Item B of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to time) on a vehicle owned or leased by such Grantor) and the Documents evidencing the same at the places therefor specified in Item C of Schedule I attached hereto to (as such Schedule may be amended or supplemented from time to time) unless such Grantor has given at least 30 days prior notice to Lender of another location, and all action, if any, necessary to maintain in accordance with the terms hereof Lenders perfected first priority security interest therein shall have been taken with respect to such Equipment, Inventory and Documents;
(b) comply with the covenants contained in Section 7.6 of the Loan Agreement relating to the maintenance of its properties;
(c) comply with the covenants contained in clause Section 7.8 of the Loan Agreement regarding the payment of taxes and other charges of Governmental Authorities; and
(d) not deliver any Document evidencing any Equipment or Inventory to any Person other than the issuer of such Document to claim the Goods evidenced therefor or Lender.
SECTION 4.2. Receivables Collateral and General Intangibles . (a) Each Grantor shall keep its principal place of business, chief executive office and the office where it keeps its records concerning the Receivables Collateral and all originals of the Assigned Agreements
Instruments and Tangible Chattel Paper, at the places specified in Section 3.1 unless such Grantor has given at least 30 days prior notice to Lender and all actions, if any, necessary to maintain Lenders perfected first priority security interest shall have been taken with respect to such Collateral; not change its name or state of organization unless such Grantor has given at least 30 days prior notice to Lender and all actions, if any, necessary to maintain Lenders perfected first priority security interest shall have been taken with respect to all of the Collateral; hold and preserve such records, Assigned Agreements, Instruments and Chattel Paper; and permit representatives of Lender at any time during normal business hours, upon reasonable notice, to inspect and make abstracts of the same.
(a) Each Grantor shall diligently endeavor to collect its Receivables Collateral and all amounts owing to it thereunder in the ordinary course of its business consistent with past practices and shall apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balances thereof, provided that during the continuance of any Event of Default such Grantor shall, at the request of Lender, take such action as Lender may deem necessary or advisable to enforce such collection. Each Grantor shall not, except to the extent done in the ordinary course of its business consistent with past practices and in accordance with sound business judgment (i) grant any extension of the time for payment of any Receivables Collateral, (ii) compromise or settle any Receivables Collateral for less than the full amount thereof, (iii) release, in whole or in part, any Person or property liable for the payment of any Receivables Collateral, or (iv) allow any credit or discount on any Receivables Collateral; provided that during the continuance of any Event of Default such Grantor shall comply with any limitations on the foregoing actions or specified by Lender to such Grantor. In no event shall any Grantor amend, modify, terminate or waive any provision of any Receivables Collateral in a manner which could reasonably be expected to have a material adverse effect on such Receivables Collateral. Each Grantor will use its best efforts to keep in full force and effect any Supporting Obligation relating to any Receivables Collateral.
SECTION 4.3. Investment Property . Each Grantor will take any and all actions necessary to (a) cause Lender to obtain exclusive Control of any Investment Property owned by such Grantor in a manner acceptable to Lender and (b) obtain from any issuers of such Investment Property and such other Persons, for the benefit of Lender, written confirmation of Lenders Control over such Investment Property upon terms and conditions acceptable to Lender. For purposes of this Section, Lender shall have exclusive Control of Investment Property if (i) such Investment Property consists of Certificated Securities and the applicable Grantor delivers such Certificated Securities to Lender (with appropriate endorsements if such Certificated Securities are in registered form); (ii) such Investment Property consists of Uncertificated Securities and the issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to Lender, that it will comply with instructions originated by Lender without further consent by such Grantor; and (iii) such Investment Property consists of Security Entitlements and either (A) Lender becomes the Entitlement Holder thereof or (B) the appropriate Securities Intermediary agrees, pursuant to documentation in form and substance satisfactory to Lender, that it will comply with Entitlement Orders originated by Lender without further consent by such Grantor.
SECTION 4.4. Intellectual Property Collateral. (a) Each Grantor shall not, unless such Grantor shall either (i) reasonably and in good faith determine (and notice of such determination shall have been delivered to Lender) that any of the Patent Collateral is of negligible economic value to such Grantor or (ii) have a valid business purpose (exercised in the ordinary course of business that is consistent with past practice) to do otherwise, do any act, or omit to do any act, whereby any of the Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable.
(b) Each Grantor shall not, and each Grantor shall not permit any of its licensees to, unless such Grantor shall either (i) reasonably and in good faith determine (and notice of such determination shall have been delivered to Lender) that any of the Trademark Collateral is of negligible economic value to such Grantor or (ii) have a valid business purpose (exercised in the ordinary course of business that is consistent with past practice) to do otherwise:
(A) fail to continue to use any of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any claim of abandonment for non-use;
(B) fail to maintain as in the past the quality of products and services offered under all of the Trademark Collateral;
(C) fail to employ all of the Trademark Collateral registered with any Federal or state or foreign authority with an appropriate notice of such registration; or
(D) do or permit any act or knowingly omit to do any act whereby any of the Trademark Collateral may lapse or become invalid or unenforceable.
(c) Each Grantor shall not, unless such Grantor shall either reasonably and in good faith determine (and notice of such determination shall have been delivered to Lender) that any of the Copyright Collateral or any of the Trade Secrets Collateral is of negligible economic value to such Grantor or have a valid business purpose (exercised in the ordinary course of business that is consistent with past practice) to do otherwise, do or permit any act or knowingly omit to do any act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof.
(d) Each Grantor shall notify Lender immediately if it knows that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantors ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same.
(e) In no event shall any Grantor or any of its agents, employees, designees or licensees file an application for the registration of any Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it gives prior notice thereof to Lender and, if requested by Lender, executes and delivers any and all agreements, instruments, documents and papers as Lender may reasonably request to evidence Lender first priority security interest in such Intellectual Property Collateral.
(f) Each Grantor shall take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, the Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clauses (a) , (b) and (c) ).
SECTION 4.5. Assigned Agreements . Each Grantor shall at its expense, with respect to all Assigned Agreements, comply with the covenants contained in the Loan Agreement applicable to such Assigned Agreements. Without the prior consent of Lender, no Grantor shall waive, settle, release or discharge any Person with respect to any of its obligations under any Assigned Agreement (other than upon due completion of such obligations by such Person).
SECTION 4.6. Bailees, Warehouses and Leased Premises . No Collateral shall at any time be in the possession or control of any warehouse, bailee or any of each Grantors agents or processors, or located on any leased premises, without Lenders prior consent and unless Lender has received warehouse receipts or bailee lien waivers satisfactory to Lender prior to the commencement of such possession or control. Each Grantor shall, upon the request of Lender, notify any such warehouse, bailee, agent, processor or lessor of Lenders first priority security interest in the Collateral and shall instruct such Person to hold all such Collateral for Lenders account subject to Lenders instructions given during the continuance of any Event of Default.
SECTION 4.7. Chattel Paper and Instruments . Each Grantor will deliver to Lender all Tangible Chattel Paper and Instruments duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to Lender. Each Grantor will provide Lender with exclusive Control over all Electronic Chattel Paper by having Lender identified as the assignee of the records pertaining to the single authoritative copy thereof and otherwise complying with the applicable elements of Control set forth in the U.C.C. Each Grantor will also deliver to Lender all security agreements securing any Chattel Paper and Instruments and execute U.C.C. financing statement amendments assigning to Lender any U.C.C. financing statements filed by such Grantor in connection with such security agreements. Each Grantor will mark conspicuously all Chattel Paper and Instruments with a legend, in form and substance reasonably satisfactory to Lender, indicating that such Chattel Paper and Instruments are subject to the Liens created hereunder.
SECTION 4.8. Letters of Credit . Each Grantor will deliver to Lender all letters of credit in which it is the beneficiary thereof, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to Lender. Each Grantor will take any and all actions necessary (or reasonably requested by Lender), from time to time, to cause Lender to obtain exclusive Control of any Letter-of-Credit Rights owned by such Grantor in a manner reasonably acceptable to Lender.
SECTION 4.9. Commercial Tort Claims . Each Grantor shall advise Lender promptly upon such Grantor becoming aware, after the date hereof, that it owns any Commercial Tort Claims. With respect to any such Commercial Tort Claims, each Grantor will execute and deliver such documents as Lender deems necessary to create, perfect and protect Lenders first priority security interest in such Commercial Tort Claim.
SECTION 4.10. Collateral Generally . (a) Lender may, at any time following the occurrence and during the continuance of any Event of Default, notify any parties obligated on any of the Collateral to make payment to Lender of any amounts due or to become due thereunder and enforce collection of any of the Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any Indebtedness thereunder or evidenced thereby. Upon request of Lender after the occurrence and during the continuance of any Event of Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to Lender of any amounts due or to become due thereunder.
(b) Upon the occurrence and during the continuance of an Event of Default, Lender is authorized to endorse, in the name of the applicable Grantor, any item, howsoever received by Lender, representing any payment on or other Proceeds of any of the Collateral.
SECTION 4.11. Insurance . Each Grantor will maintain or cause to be maintained insurance in accordance with the Insurance Requirements attached as Exhibit E to the Loan Agreement. All proceeds of insurance maintained by each Grantor so covering the Collateral shall be applied to the payment of the Secured Obligations under the circumstances provided for in the Loan Agreement. Each Grantor irrevocably makes, constitutes and appoints Lender (and all officers, employees or agents designated by Lender) as such Grantors true and lawful agent and attorney-in-fact for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the Proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required by Exhibit E to the Loan Agreement or to pay any premium in whole or part relating thereto, Lender may, without waiving or releasing any obligation or liability of any Grantor hereunder or any Event of Default, in its sale discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as Lender deems advisable. All sums disbursed by Lender in connection with this Section including reasonable attorneys fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by Grantors to Lender and shall be additional Secured Obligations secured hereby.
SECTION 4.12. Investment Accounts . Each Grantor will take any and all actions necessary to cause Lender to obtain exclusive Control of all Investment Accounts owned by Grantor in a manner acceptable to Lender. Each Grantor shall not close or terminate any Investment Account without the prior consent of Lender and unless a successor or replacement account has been established with the consent of Lender and is subject to a control agreement reasonably satisfactory to Lender.
SECTION 4.13. Transfers and Other Liens . Each Grantor shall not (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except as permitted by the Loan Agreement, or (b) create or suffer to exist any Lien upon or with respect to any of the Collateral, except for the security interest created by this Agreement and except for Permitted Exceptions.
SECTION 4.14. Further Assurances, etc. Each Grantor agrees that, from time to time at its own expense, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Lender may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor will:
(a) mark conspicuously each asset forming a part of the Collateral with a legend, in form and substance reasonably satisfactory to Lender, indicating that such Collateral is subject to the security interest granted hereby;
(b) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary, or as Lender may reasonably request, in order to perfect and preserve the security interests and other rights granted or purported to be granted to Lender hereby;
(c) furnish to Lender, from time to time at Lenders request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Lender may reasonably request, all in reasonable detail;
(d) if requested by Lender, with respect to each lien on Equipment which is subject to a certificate of title statute that requires notation of a lien thereon to perfect a security interest therein such Grantor shall deliver to Lender all original certificates of title for such Equipment, shall take all necessary steps to cause Lenders security interest be perfected in accordance with such statute and deliver to Lender a schedule in reasonable detail describing such Equipment, registration number, license number and all other information required to comply with such statute; provided , however , that until Lender makes such a request under this clause, the parties hereto acknowledge that the security interest of Lender in such Collateral has not been perfected and all the representations and warranties, covenants and Events of Default
contained herein and in the other Loan Documents which would otherwise be violated shall be deemed modified to reflect the foregoing and not be violated; and
(e) if requested by Lender, execute and deliver confirmatory written instruments, and obtain any consents, waivers or agreements, as may be necessary, or as Lender may reasonably request, in order to perfect and preserve the security interests and other rights granted or purported to be granted to Lender hereby, but any Grantors failure to do so shall not affect or limit the security interest granted hereby or Lenders other rights in and to the Collateral.
With respect to the foregoing and the grant of the security interest hereunder, each Grantor hereby authorizes Lender to Authenticate and to file one or more U.C.C. financing or continuation statements, and amendments thereto, and make filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country), in each case for the purpose of perfecting, confining, continuing, enforcing or protecting the security interest granted by such Grantor, without the signature of such Grantor, and naming such Grantor as debtor and Lender as secured party. A carbon, photographic, telecopied or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
SECTION 4.15. Collateral Account . (a) Upon notice by Lender to Grantors pursuant to this Section following the occurrence and during the continuance of any Event of Default, all Proceeds of Collateral received by Grantors shall be delivered in kind to Lender for deposit to a deposit account (the Collateral Account ) of such Grantor maintained by or on behalf of Lender, and until such Proceeds are so deposited they shall be held in trust for the benefit of Lender and shall not be commingled with the other assets of such Grantor.
(b) Lender shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations, subject to and in accordance with the terms of the Loan Agreement. Subject to the rights of Lender, each Grantor shall have the right on each Business Day, with respect to and to the extent of collected funds in the Collateral Account, to require Lender to purchase any Cash Equivalents, provided that, in the case of Certificated Securities, Lender will retain possession thereof as Collateral and, in the case of other Investment Property, Lender will take such actions, including registration of such Investment Property in its name, as it shall determine is necessary to perfect its security interest therein.
SECTION 4.16. Notice of Material Adverse Effect. Each Grantor shall promptly notify Lender, after obtaining knowledge thereof, of any event that could reasonably be expected to have a material adverse effect on any value of the Collateral, the ability of such Grantor or Lender to dispose of the Collateral or the rights or remedies of Lender in relation thereto.
SECTION 4.17. General Intangibles . Each Grantor shall use commercially reasonable efforts to obtain any consents, waivers or agreements necessary to enable Lender to exercise remedies hereunder and under the other Loan Documents with respect to any of such
Grantors rights under any General Intangibles, including such Grantors rights as a licensee of any Intellectual Property Collateral.
SECTION 4.18. Additional Covenants . Each Grantor agrees that, until all the Secured Obligations have been paid in full in cash on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender, it will comply with all the terms and provisions of the Loan Agreement and the other Loan Documents that are applicable to it.
ARTICLE V
THE LENDER
SECTION 5.1. Lender Appointed Attorney-in-Fact . Each Grantor hereby irrevocably constitutes and appoints Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take, upon the occurrence and during the continuance of any Event of Default, any and all actions and execute any and all documents and instruments that may, in the judgment of Lender, be necessary or desirable to accomplish the purposes of this Agreement. Without limiting the generality of the foregoing, after the occurrence and during the continuance of any Event of Default each Grantor hereby gives Lender the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:
(a) (i) demand payment of its Receivables Collateral; (ii) enforce payments of its Receivables Collateral by legal proceedings or otherwise; (iii) exercise all of its rights and remedies with respect to proceedings brought to collect its Receivables Collateral; (iv) sell or assign its Receivables Collateral upon such terms, for such amount and at such times as Lender deems advisable; (v) settle, adjust, compromise, extend or renew any of its Receivables Collateral; (vi) discharge and release any of its Receivables Collateral; (vii) prepare, file and sign such Grantors name on any proof of claim in bankruptcy or other similar document against any Loan Party of any of its Receivables Collateral; (viii) notify the post office authorities to change the address for delivery of such Grantors mail to an address designated by Lender, and open and dispose of all mail addressed to such Grantor; and (ix) endorse such Grantors name upon any Chattel Paper, Document, Instrument, invoice, or similar document or agreement relating to any Receivables Collateral or any goods pertaining thereto;
(b) in the case of any Intellectual Property Collateral, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as Lender may request to evidence the Lender Parties security interest in such Intellectual Property Collateral and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;
(c) take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under or in respect of any Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Lender for the purpose of collecting any and all such moneys due under or in respect of any Collateral whenever payable;
(d) payor discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;
(e) execute, in connection with any sale or other disposition provided for in Section 6.1 , any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
(f) (i) direct any Person liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to Lender or as Lender shall direct; (ii) ask or demand for, collect, and receive payment of and give receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (iii) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (iv) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (v) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (vi) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as Lender may deem appropriate; (vii) notify, or require such Grantor to notify, Account Debtors to make all payments directly to Lender and change the post office box number or other address to which the Account Debtors make payments; (viii) assign any Intellectual Property Collateral (along with the goodwill of the business to which any such Intellectual Property Collateral pertains), throughout the world for such terms, on such conditions, and in such manner, as Lender shall in its sole discretion determine; and (ix) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Lender were the absolute owner thereof for all purposes, and do, at Lenders option and such Grantors expense, at any time, or from time to time, all acts and things that Lender deems necessary to protect, preserve or realize upon the Collateral and the Lenders security interests therein and to effect the intent of this Agreement, all as fully and effectively as Grantor might do.
Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Lender May Perform . If any Grantor fails to perform any agreement contained herein, Lender may itself perform, or cause performance of, such agreement, and the reasonable expenses of Lender incurred in connection therewith shall be payable by such Grantor.
SECTION 5.3. Access and Examination . In order to give effect to the intent of this Agreement Lender may at all reasonable times upon reasonable advance notice (if no Default or an Event of Default has occurred and is continuing) have access to, examine, audit, make extracts from and inspect Grantors records, files and books of account and the Collateral, and may discuss Grantors affairs with Grantors officers and management. Each Grantor will deliver to Lender promptly following its request therefor any instrument necessary for Lender to
obtain records from any service bureau maintaining records for such Grantor. Lender may, at expense of the Grantors, use Grantors personnel, supplies and premises as may be reasonably necessary for maintaining or enforcing the security interest granted hereunder. Lender shall have the right, at any time, in Grantors name to verify the validity, amount or any other matter relating to the Receivables Collateral; provided that Lender shall not communicate with any account obligors of Grantors unless an Event of Default has occurred and is continuing.
SECTION 5.4. Lender Has No Duty . (a) The powers conferred on Lender hereunder are solely to protect its interest in the Collateral and shall not impose any duty on it to exercise any such powers. The Lenders sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the U.C.C. or otherwise, shall be to deal with it in the same manner as Lender deals with similar property for its own account. Neither Lender nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so, nor shall any such Person be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof (including the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral). Neither Lender nor any of its officers, directors, employees or agents shall be responsible to any Grantor for any loss, damages, depreciation or other diminution in the value of any of the Collateral that may occur as a result of or in connection with or that is in any way related to any exercise, except in respect of any damages attributable solely to any such Persons own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.
(b) Each Grantor assumes all responsibility and liability arising from or relating to the use, sale or other disposition of the Collateral. The Obligations shall not be affected by any failure of Lender to take any steps to perfect the security interest granted hereunder or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Grantor from any of its Obligations.
ARTICLE VI
REMEDIES
SECTION 6.1. Remedies . If any Event of Default shall have occurred and be continuing:
(a) Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it (including, without limitation, as provided in Section 5.1 ), all the rights and remedies of a secured party on default under the U.C.C. and also may:
(i) require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon the request of Lender forthwith, assemble all or part of the Collateral as directed by Lender and make it available to Lender at its premises or another place designated by Lender (whether or not the U.C.C. applies to the affected Collateral);
(ii) without demand of performance or other demand, presentment, obtaining a final judgment, protest, advertisement or notice of any kind (except any notice required by Law referred to below) to or upon each Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale, at any of Lenders offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Lender may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by Law, 10 days prior notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by Lender until the sale price is paid by the purchase or purchasers thereof, but Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Law, private) sale made pursuant to this Section, Lender may bid for or purchase, free (to the extent permitted by Law) from any right of redemption, stay, valuation or appraisal on the part of each Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to Lender from any Grantor as a credit against the purchase price, and Lender may upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to such Grantor therefor;
(iii) with respect to the Intellectual Property, on demand, to cause the security interest to become an assignment, transfer and conveyance of any of or all such Collateral by each Grantor to Lender, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as Lender shall determine (other than in violation of any then existing licensing arrangements to the extent that waivers cannot be obtained);
(iv) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located and occupy (without the requirement to pay rent) the same until the Secured Obligations are paid in full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender); and
(v) to notify any or all depository institutions with which any Investment Accounts are maintained to remit and transfer all monies, securities and other property on deposit in such Investment Accounts or deposited or received for deposit thereafter to Lender, for deposit in the Collateral Account or such other accounts as may be designated by Lender, for application to the Secured Obligations as provided herein.
(b) Without limiting clause (a) , Lender may exercise any and all rights and remedies of Grantors under or in connection with the Collateral, including the right to sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals, compositions, or releases, and take or omit to take any other action with respect to the Collateral, any security therefor, any agreement relating thereto, any insurance applicable thereto, or any Person liable directly or indirectly in connection with any of the foregoing, without discharging or otherwise affecting the liability of Grantors for the Obligations or under this Agreement or any other Loan Document and the Assigned Agreements or otherwise in respect of the Collateral, including any and all rights of Grantors to demand or otherwise require payment of any amount under, or performance of any provision of, any Collateral.
SECTION 6.2. Application of Proceeds . All cash proceeds received by Lender in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of Lender, be held, to the extent permitted under applicable Law, by Lender as additional collateral security for all or any part of the Secured Obligations, and/or then or at any time thereafter shall be applied (after payment of any amounts payable to Lender pursuant to Section 15 of the Loan Agreement and Section 6.3 hereof) in whole or in part by Lender against all or any part of the Secured Obligations in accordance with the terms of the Loan Agreement. Any surplus of such cash or cash proceeds held by Lender and remaining after payment in full in cash of all the Secured Obligations (on terms and pursuant to documentation in form and substance reasonably satisfactory to Lender), shall be paid over to the Grantors or to whomsoever may be lawfully entitled to receive such surplus.
SECTION 6.3. Indemnity and Expenses . Each Grantor agrees to jointly and severally indemnify and hold harmless Lender and its directors, officers, employees, agents, Affiliates and their Related Parties from and against any and all claims, losses and liabilities arising out of or resulting from this Agreement (including enforcement of this Agreement), except claims, losses or liabilities resulting from any such Persons gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Each Grantor will promptly following demand pay to Lender the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which Lender may incur in connection with (a) the administration of this Agreement, (b) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (c) the exercise or enforcement of any of the rights of Lender hereunder or (d) the failure by any Grantor to perform or observe any of the provisions hereof.
SECTION 6.4. Grant of License . Each Grantor hereby grants to Lender an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any Intellectual Property Collateral now owned or licensed or hereafter acquired or licensed by such Grantor, wherever the same may be located throughout the world, for such terms, on such conditions and in such manner as Lender shall determine, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for
the compilation or printout thereof; provided , however , that no such license or sublicense is granted in the case of any such Collateral if such license or sublicense would be prohibited by, or give rise to a right to terminate any contract governing such Collateral. The use of such license or sublicense by Lender shall be exercised, at the option of Lender, only upon the occurrence and during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by Lender in accordance herewith shall be binding upon each applicable Grantor notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document . This Agreement is a Loan Document executed pursuant to the Loan Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including, but not limited to, Section 1.2 thereof.
SECTION 7.2. Amendments, etc.; Successors and Assigns . (a) No amendment to or waiver of any provision of this Agreement nor consent to any departure by any Grantor herefrom, shall be effective unless the same shall be in writing and signed by Lender, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.
(b) This Agreement shall be binding upon each Grantor and its successors, transferees and assignees, and shall inure to the benefit of and be enforceable by Lender and its successors and assigns; provided , however , that no Grantor may assign its obligations hereunder without the prior written consent of Lender. Without limiting the generality of the foregoing, Lender may assign or otherwise transfer (in whole or in part) any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the rights and benefits in respect thereof granted to such Lender under any Loan Document (including this Agreement).
SECTION 7.3. Protection of Collateral . Lender may from time to time, at its option and at the expense of Grantors, perform any act which Grantors agree hereunder to perform and which Grantors shall fail to perform after being requested to so perform (it being understood that no such request need be given after the occurrence and during the continuance of any Event of Default), and Lender may from time to time take any other action which Lender deems necessary or appropriate for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices . All notices and other communications provided for hereunder shall be made as provided in, and subject to the terms of, Section 19 of the Loan Agreement. All notices to Grantors shall be sent at its address set forth in the Loan Agreement and all notices to Lender shall be sent as provided in the Loan Agreement.
SECTION 7.5. Section Captions . Section captions used in this Agreement are for convenience of reference only, and shall not affect the construction of this Agreement.
SECTION 7.6. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 7.7. Counterparts . This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.
SECTION 7.8. Waivers . Each Grantor hereby waives any right, to the extent permitted by applicable Law, to receive prior notice of a judicial or other hearing with respect to any action or prejudgment remedy or proceeding by Lender to take possession, exercise control over or dispose of any item of Collateral, where such action is permitted under the terms of this Agreement or any other Loan Document or by applicable Law, or of the time, place or terms of sale in connection with the exercise of Lenders rights hereunder. Each Grantor waives, to the extent permitted by applicable Law, any bonds, security or sureties required by Lender with respect to any of the Collateral. Without limiting the foregoing, each Grantor agrees that it will not invoke, claim or assert any benefit of applicable Law, or take or attempt to take any action that could reasonably be expected to have the effect of delaying, impeding or preventing Lender from exercising any of its rights or remedies with respect to the Collateral as herein provided. Each Grantor also consents that Lender, in connection with the enforcement of Lenders rights and remedies under this Agreement, may enter upon any premises owned by or leased to it without obligations to pay rent or for use and occupancy, through self-help, without judicial process and without having first obtained an order of any court.
SECTION 7.9. Governing Law, Entire Agreement, etc . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF OHIO. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.10. Forum Selection and Consent to Jurisdiction . ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, LENDER OR ANY GRANTOR MAY BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE CITY OF CLEVELAND, COUNTY OF CUYAHOGA, OF THE STATE OF OHIO; PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDERS OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAYBE FOUND. EACH GRANTOR AND LENDER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREP AID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF OHIO. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT EACH GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.11. Waiver of Jury Trial . LENDER AND EACH GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF LENDER OR EACH GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
SECTION 7.12. Waiver of Certain Claims . TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY INSTRUMENT CONTEMPLATED HEREBY.
SECTION 7.13. No Strict Construction . The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date and year first above written.
GRANTORS: |
WOODLAND HILLS HC PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Manager |
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NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Manager |
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APH&R PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
Christopher F. Brogdon |
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Title: |
Manager |
[Acknowledgement signature contained on the following page]
Security Agreement |
Tenants |
ACKNOWLEDGED AND ACCEPTED: |
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KEYBANK NATIONAL ASSOCIATION, as Lender |
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By: |
/s/ [Illegible] |
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Title: |
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Security Agreement
Exhibit 10.278
SECOND MODIFICATION AGREEMENT
THIS SECOND MODIFICATION AGREEMENT dated as of December 28, 2012 (this Agreement ), is entered into by and among LITTLE ROCK HC&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company (the Borrower ), ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation ( AdCare ), LITTLE ROCK HC&R NURSING, LLC , a Georgia limited liability company (the Operator ) (AdCare and the Operator being sometimes referred to herein collectively as the Guarantors ) (the Borrower and the Guarantors being sometimes referred to herein collectively as the Borrower/Guarantor Parties ), and THE PRIVATEBANK AND TRUST COMPANY , an Illinois banking corporation ( Lender ).
RECITALS
A. The Borrower/Guarantor Parties and the Lender heretofore entered into the following documents (collectively, the Documents ):
(i) Loan Agreement dated as of March 30, 2012 (the Loan Agreement ), by and among the Borrower, Northridge HC&R Property Holdings, LLC, a Georgia limited liability company ( Northridge ), Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company ( Woodlands ) and the Lender.
(ii) Promissory Note A dated March 30, 2012 ( Note A ), from the Borrower to the Lender in the principal amount of $13,664,956, which, along with Note B and Note C described below, replaced the Promissory Note dated March 30, 2012 (the Original Note ), from the Borrower, Northridge and Woodlands to the Lender in the principal amount of $21,800,000.
(iii) Promissory Note B dated March 30, 2012 ( Note B ) from Northridge to the Lender in the principal amount of $4,507,038, which, along with Note A and Note C described below, replaced the Original Note.
(iv) Promissory Note C dated March 30, 2012 ( Note C ) from Woodlands to the Lender in the principal amount of $3,628,006, which, along with Note A and Note B, replaced the Original Note.
(v) Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 ( Mortgage 1 ), by Borrower to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019925.
(vi) Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 ( Mortgage 2 ), by Northridge to and for the
benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019978.
(vii) Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 ( Mortgage 3 ), by Woodlands to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019971.
(viii) Absolute Assignment of Rents and Leases dated as of April 1, 2012 ( Assignment of Rents 1 ), by Borrower to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019926.
(ix) Absolute Assignment of Rents and Leases dated as of April 1, 2012 ( Assignment of Rents 2 ), by Northridge to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019979.
(x) Absolute Assignment of Rents and Leases dated as of April 1, 2012 ( Assignment of Rents 3 ), by Woodlands to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019972.
(xi) Environmental Indemnity Agreement dated as of March 30, 2012 (the Indemnity Agreement ), by the Borrower, Northridge, Woodlands, the Guarantors, Northridge HC&R Nursing, LLC, a Georgia limited liability company (the Northridge Operator ), and Woodland Hills HC Nursing, LLC, a Georgia limited liability company (the Woodlands Operator ), to and for the benefit of the Lender.
(xii) Guaranty of Payment and Performance dated as of March 30, 2012 (the Guaranty ), by the Guarantors, the Northridge Operator and the Woodlands Operator to and for the benefit of the Lender.
B. The Documents were previously modified and amended by the Modification Agreement dated as of June 15, 2012, but effective as of March 30, 2012 (the Previous Modification ), by and among the Borrower/Guarantor Parties and the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on June 22, 2012, as Document No. 2012038003.
C. The Documents, as modified and amended by the Previous Modification, encumber the real estate described in Exhibit A attached hereto and the personal property located thereon.
D. The parties desire to make certain modifications and amendments to the Documents, as modified and amended by the Previous Modification, as more fully provided for herein, all as modifications, amendments and continuations of, but not as novations of, the Documents.
AGREEMENTS
In consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
Section 1 . Recitals Part of Agreement; Defined Terms; References to Documents .
(a) The foregoing Recitals are hereby incorporated into and made a part of this Agreement.
(b) All capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth in the Loan Agreement.
(c) Except as otherwise stated herein, all references in this Agreement to any one or more of the Documents shall be deemed to include the previous modifications and amendments to the Documents provided for in the Previous Modification, whether or not express reference is made to such previous modifications and amendments.
Section 2 . Change in Maturity Date . The maturity date of the Loan and Note A, as previously changed by the Previous Modification, is hereby extended from March 30, 2013, to December 31, 2016, and all of the Documents, as modified and amended by the Previous Modification are hereby further modified and amended accordingly. Without limitation on the generality of the foregoing provisions of this Section, the date March 30, 2013 is hereby extended to December 31, 2016 each time it appears in the Documents, as modified and amended by the Previous Modification, in reference to the maturity date of the Loan and Note A, including, without limitation in the definition of the term Maturity Date in Section 1.1 of the Loan Agreement, in Section 1 of Note A, and in Recital Paragraph A in Mortgage 1, each as modified and amended by the Previous Modification.
Section 3 . Payment on Loan; Release of Security; Removal of Guarantors and Indemnitors .
(a) As a condition precedent to the agreements of the Lender provided for in this Agreement, on the date of the execution and delivery of this Agreement, Northridge shall pay to Lender the full amount outstanding on Note B. Upon receipt of such payment, the Lender will take such action as is necessary to release Mortgage 2 and Assignment of Rents 2. From and after the date of this Agreement, Northridge shall no longer be a Borrower under the Loan, the Northridge Operator shall no longer be a guarantor under the Guaranty, and Northridge and the Northridge Operator shall no longer be environmental indemnitors under the Indemnity Agreement.
(b) As a condition precedent to the agreements of the Lender provided for in this Agreement, on the date of the execution and delivery of this Agreement, Woodlands shall pay to Lender the full amount outstanding on Note C. Upon receipt of such payment, the Lender will take such action as is necessary to release Mortgage 3 and Assignment of Rents 3. From and after the date of this Agreement, Woodlands a Borrower under the Loan, the Woodland Operator
shall no longer be a guarantor under the Guaranty, and Woodlands and the Woodlands Operator shall no longer be environmental indemnitors under the Indemnity Agreement.
(c) The payments made by Northridge and Woodlands pursuant to Sections 3(a) and (b) will cause the principal balance outstanding on the Loan and Note A to be $13,664,956.
Section 4 . Reduction in Loan Amount . The amount of the Loan and Note A is hereby reduced from $21,800,000 to $13,664,956, and all of the Documents, as modified and amended by the Previous Modification, are hereby further modified and amended accordingly. Without limitation on the generality of the foregoing provisions of this Section, the amount $21,800,000 is hereby changed to $13,664,956 each time it appears in the Documents in reference to amount of the Loan, including, without limitation in the definition of the term Loan Amount in Section 1.1 of the Loan Agreement and in Recital Paragraph A in Mortgage 1, and in the definition of the term Loan in Recital Paragraph A in Assignment 1, in Recital Paragraph A in the Guaranty and in Recital Paragraph A in the Indemnity Agreement, each as modified and amended by the Previous Modification.
Section 5 . Amendment of Loan Agreement .
(a) Without limitation on the foregoing provisions of this Section, the following defined terms in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modification, are hereby further modified and amended in their entirety to read as follows:
Borrower : Borrower 1.
Facility : Skilled nursing facility which is operated by Borrower in the Project described as follows:
Facility Name |
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Location |
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Beds |
Little Rock Healthcare and Rehab a/k/a West Markham Sub Acute and Rehabilitation Center |
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5720 West Markham Street, Little Rock, Pulaski County, Arkansas |
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154 |
Guarantors : AdCare and Operator 1.
Land : The parcel of real estate legally described in Exhibit A , together with all improvements presently located thereon and all easements and other rights appurtenant thereto.
Lease : Lease by Borrower 1 to Operator 1 of the Project dated April 1, 2012.
Loan Amount : $13,664,956
Note : Promissory Note A dated March 30, 2012, from Borrower to the Lender in the principal amount of $13,664,956.
Operator : Operator 1.
(b) From and after the date of this Agreement, all references in the Documents, as modified and amended by the Previous Modification, to the Borrowers shall be deemed to be references to Borrower 1, and the Operators shall be deemed to be references to Operator 1, and all of the Documents, as modified and amended by the Previous Modification, are hereby further modified and amended accordingly
(c) All of the Documents, as modified and amended by the Previous Modification, are hereby further modified and amended to incorporate the foregoing provisions of this Section.
Section 6 . Amendment of Mortgage 1 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Mortgage 1, as modified and amended by the Previous Modification, is hereby further modified and amended in its entirety to read as follows:
A. Pursuant to the terms and conditions of a Loan Agreement of even date herewith by and among the Mortgagor (the Borrower ) and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012, and a Second Modification Agreement dated as of December , 2012 (as so modified and amended, the Loan Agreement ), the Lender has agreed to make a loan to the Borrower in the maximum principal amount of $13,664,956 (the Loan ). The Loan will bear interest at variable interest rates based on the per annum rate of interest at which United States dollar deposits are offered in the London Interbank Eurodollar market, subject to being converted to interest at a variable rate based on the Lenders prime rate of interest from time to time in effect under certain circumstances as provided in the Note referred to below. The Loan shall be evidenced by a Promissory Note dated March 30, 2012 (the Note ), executed by the Borrower and made payable to the order of the Lender in the principal amount of $13,664,956 and due on December 31, 2016 (the Maturity Date ), except as it may be accelerated pursuant to the terms hereof, or of the Note or the Loan Agreement or any of the other Loan Documents (as defined in the Loan Agreement).
Section 7 . Amendment of Assignment of Rents 1 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Assignment of Rents 1, as modified and amended by the Previous Modification, is hereby further modified and amended in its entirety to read as follows:
A. Pursuant to the terms of a Loan Agreement of even date herewith by and among the Assignor (the Borrower ) and the Assignee, as modified and amended by a Modification Agreement dated as of June 15, 2012, and a Second Modification Agreement dated as of December , 2012 (as so modified and amended, the Loan Agreement ), the Assignee has agreed to make a loan to the Borrower in the principal amount of $13,664,956 ( the Loan ). The Loan shall be evidenced by a Promissory Note dated March 30, 2012, in the principal amount of $13,664,956 (the Note ) executed by the Borrower and made payable to the order of the Lender.
Section 8 . Amendment of Guaranty . Without limitation on any other provision of this Agreement, Recital Paragraph A in the Guaranty, as modified and amended by the Previous Modification, is hereby further modified and amended in its entirety to read as follows:
A. The Lender has agreed to make a loan to Little Rock HC&R Property Holdings, LLC, a Georgia limited liability company (the Borrower ), in the principal amount of $13,664,956 (the Loan ) pursuant to the terms and conditions of a Loan Agreement of even date herewith by and among the Borrower and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012 and a Second Modification Agreement dated as of December , 2012 (as so modified and amended, the Loan Agreement ). The Loan is evidenced by a Promissory Note dated March 30, 2012 (the Note ), executed by the Borrower and payable to the order of the Lender, in the principal amount of $13,664,956, which is secured by a Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 (the Mortgage ), executed by Borrower to and for the benefit of the Lender. All terms used and not otherwise defined herein shall have the meanings set forth in the Loan Agreement. For the avoidance of doubt, all references in this Guaranty to the Loan Documents include, without limitation, any Bank Product Agreements (as defined in the Loan Agreement) to which the Lender or any of its Affiliates is a party, including, without limitation, any Hedging Agreements (as defined in the Loan Agreement) to which the Lender is a party.
Section 9 . Amendment of Indemnity Agreement . Without limitation on any other provision of this Agreement, Recital Paragraph A in the Indemnity Agreement is hereby modified and amended in its entirety to read as follows:
A. The Lender has agreed to make a loan to the Little Rock HC&R Property Holdings, LLC, a Georgia limited liability company (the Borrower ), in the principal amount of $13,664,956 (the Loan ) pursuant to the terms and conditions of a Loan Agreement of even date herewith by and among the Borrower and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012, and a Second Modification Agreement dated as of December , 2012 (as so modified and amended, the Loan Agreement ). The Loan is evidenced by a Promissory Note dated March 30, 2012 (the Note ), executed by Borrower and payable to the order of the Lender, in the principal amount of $13,664,956, which is secured by a Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 (the Mortgage ), executed by Borrower to and for the benefit of the Lender. All terms used and not otherwise defined herein shall have the meanings set forth in the Loan Agreement.
Section 10 . Change in Terms of Collateral Account . Section 3.4 of the Loan Agreement is hereby modified and amended in its entirety to read as follows:
3.4 Collateral Account . Borrower shall establish and maintain a collateral account in the name of Borrower held by Lender (the Collateral
Account ). The amount of the Collateral Account shall be $1,340,000, and on the date of this Agreement, Borrower shall deposit the sum of $1,340,000 into the Collateral Account. The Collateral Account shall be held as additional security for the payment and performance of all of the obligations of Borrower under this Agreement and the other Loan Documents and all of the obligations of Operator under the Operator Loan Documents, and Borrower hereby pledges and assigns to Lender, and grants to Lender a first lien on and a first priority security interest in the Collateral Account, all cash and investments from time to time on deposit in the Collateral Account, and all proceeds of all of the foregoing. Amounts on deposit in the Collateral Account shall be held in a certificate of deposit issued by Lender. Interest earned on amounts on deposit in the Collateral Account shall be added to the Collateral Account. All amounts on deposit in the Collateral Account shall be released by Lender to Borrower at such time as all of the principal of and interest on the Loan have been paid in full and all of the other obligations to Lender under this Agreement and the other Loan Documents have been fully paid and performed, or at such earlier time as the amount of the EBITDAR/Fully Adjusted for Operator for a fiscal year is not less than $2,300,000, as shown in an annual reviewed financial statement of the Operator and a compliance certificate furnished to Lender as provided in Section 7.4 of this Agreement.
Section 11 . Change in Minimum EBITDAR of Operator . Section 7.16 of the Loan Agreement is hereby modified and amended in its entirety to read as follows effective as of November 1, 2012, with the existing Section 7.16 of the Loan Agreement to continue to be effective for periods prior to the date of this Agreement:
7.16 Minimum EBITDAR of Operator .
(a) It is a condition of this Agreement and the Loan that the EBITDAR/Management Fee Adjusted for Operator for each calendar month set forth in the table below, shall be not less than the amount set forth opposite such month in the table below:
Calendar Months |
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Minimum EBITDAR
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November, 2012 |
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$ |
25,000 |
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December, 2012 |
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$ |
75,000 |
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January, 2013 |
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$ |
100,000 |
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February, March and April, 2013 |
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$ |
150,000 |
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(b) Until such time as paragraph (c) of this Section becomes effective, it is a condition of this Agreement and the Loan that the EBITDAR/Fully Adjusted for Operator for each calendar month commencing with the calendar month ending May 31, 2013, shall be not less than $160,000.
(c) Effective for the first fiscal quarter ending after the EBITDAR/Fully Adjusted for Operator has been not less than $160,000 for each
of six consecutive calendar months, as shown in monthly financial statements of Operator and compliance certificates furnished to Lender as provided in Section 7.4 of this Agreement, it is a condition of this Agreement and the Loan that the EBITDAR/Fully Adjusted for Operator for each fiscal quarter shall be not less than $480,000.
Section 12 . Change in Amount of Deposits to Capital Expenditures Reserve Account . The last sentence of Section 7.19(b) of the Loan Agreement is hereby modified and amended in its entirety to read as follows:
Commencing on April 1, 2013, Borrowers shall make a deposit in the Capital Expenditures Reserve Account on the first day of each month in the amount of $4,580.
Section 13 . Representations and Warranties . The term Signing Entity as used in this Section means any entity (other than a Borrower/Guarantor Party itself) that appears in the signature block of any Borrower/Guarantor Party in this Agreement, any of the Documents or the Previous Modification, if any. In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby represent and warrant to the Lender as follows as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement:
(a) Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia, has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modification, and to perform and consummate the transactions contemplated hereby and thereby.
(b) AdCare is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio, has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modification, and to perform and consummate the transactions contemplated hereby and thereby.
(c) Operator is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia and duly registered to transact business and in good standing in the state of Arkansas. Operator has full power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement and each of the Documents to which it is a party and to perform and consummate the transactions contemplated hereby and thereby.
(d) Each Signing Entity is duly organized, validly existing and in good standing under the laws of the State in which it is organized, has all necessary power and authority to carry on its present business, and has full right, power and authority to execute this Agreement, the Documents and the Previous Modification in the capacity shown in each signature block contained in this Agreement, the Documents and the
Previous Modification in which its name appears, and such execution has been duly authorized by all necessary legal action applicable to such Signing Entity.
(e) This Agreement, each of the Documents and the Previous Modification have been duly authorized, executed and delivered by such of the Borrower/Guarantor Parties as are parties thereto, and this Agreement, each of the Documents and the Previous Modification constitute a valid and legally binding obligation enforceable against such of the Borrower/Guarantor Parties as are parties thereto. The execution and delivery of this Agreement, the Documents and the Previous Modification and compliance with the provisions thereof under the circumstances contemplated therein do not and will not conflict with or constitute a breach or violation of or default under the organizational documents of any Borrower/Guarantor Party or any Signing Entity, or any agreement or other instrument to which any of the Borrower/Guarantor Parties or any Signing Entity is a party, or by which any of them is bound, or to which any of their respective properties are subject, or any existing law, administrative regulation, court order or consent decree to which any of them is subject.
(f) The Borrower/Guarantor Parties are in full compliance with all of the terms and conditions of the Documents to which they are a party and the Previous Modification, and no Default or Event of Default has occurred and is continuing with respect to any of the Documents or the Previous Modification.
(g) There is no litigation or administrative proceeding pending or threatened to restrain or enjoin the transactions contemplated by this Agreement or any of the Documents or the Previous Modification, or questioning the validity thereof, or in any way contesting the existence or powers of any of the Borrower/Guarantor Parties or any Signing Entity, or in which an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Agreement or any of the Documents or the Previous Modification, or would result in any material adverse change in the financial condition, properties, business or operations of any of the Borrower/Guarantor Parties.
(h) The statements contained in the Recitals to this Agreement are true and correct.
Section 14 . Documents to Remain in Effect; Confirmation of Obligations; References . The Documents shall remain in full force and effect as originally executed and delivered by the parties, except as previously modified and amended by the Previous Modification and as expressly modified and amended herein. In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby (i) confirm and reaffirm all of their obligations under the Documents, as previously modified and amended by the Previous Modification and as modified and amended herein; (ii) acknowledge and agree that the Lender, by entering into this Agreement, does not waive any existing or future default or event of default under any of the Documents, or any rights or remedies under any of the Documents, except as expressly provided herein; (iii) acknowledge and agree that the Lender has not heretofore waived any default or event of default under any of the Documents, or any rights or remedies under any of the Documents; and (iv) acknowledge and agree that they do not have any defense, setoff or counterclaim to the payment or performance of any of their obligations under, or to the
enforcement by the Lender of, the Documents, as previously modified and amended by the Previous Modification and as modified and amended herein, including, without limitation, any defense, setoff or counterclaim based on the covenant of good faith and fair dealing. All references in the Documents to any one or more of the Documents, or to the Loan Documents, shall be deemed to refer to such Document, Documents or Loan Documents, as the case may be, as previously modified and amended by the Previous Modification and as modified and amended by this Agreement. Electronic records of executed documents maintained by the Lender shall be deemed to be originals thereof.
Section 15 . Certifications, Representations and Warranties . In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby certify, represent and warrant to the Lender that all certifications, representations and warranties contained in the Documents and the Previous Modification and in all certificates heretofore delivered to the Lender are true and correct as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement, and all such certifications, representations and warranties are hereby remade and made to speak as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement.
Section 16 . Entire Agreement; No Reliance . This Agreement sets forth all of the covenants, promises, agreements, conditions and understandings of the parties relating to the subject matter of this Agreement, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than as are herein set forth. The Borrower/Guarantor Parties acknowledge that they are executing this Agreement without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein.
Section 17 . Successors . This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective successors, assigns and legal representatives.
Section 18 . Severability . In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 19 . Amendments, Changes and Modifications . This Agreement may be amended, changed, modified, altered or terminated only by a written instrument executed by all of the parties hereto.
Section 20 . Construction .
(a) The words hereof, herein, and hereunder, and other words of a similar import refer to this Agreement as a whole and not to the individual Sections in which such terms are used.
(b) References to Sections and other subdivisions of this Agreement are to the designated Sections and other subdivisions of this Agreement as originally executed.
(c) The headings of this Agreement are for convenience only and shall not define or limit the provisions hereof.
(d) Where the context so requires, words used in singular shall include the plural and vice versa, and words of one gender shall include all other genders.
(e) The Borrower/Guarantor Parties and the Lender, and their respective legal counsel, have participated in the drafting of this Agreement, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Agreement.
Section 21 . Counterparts; Electronic Signatures . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Agreement maintained by the Lender shall be deemed to be an original.
Section 22 . Governing Law . This Agreement is prepared and entered into with the intention that the law of the State of Illinois shall govern its construction and enforcement, except that insofar as this Agreement relates to a Document which by its terms is governed by the law of the State of Arkansas, this Agreement shall also be governed by the law of the State of Arkansas.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
IN WITNESS WHEREOF , the parties have executed this Agreement as of the date first above written.
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LITTLE ROCK HC&R PROPERTY HOLDINGS, LLC |
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By |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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ADCARE HEALTH SYSTEMS, INC. |
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By |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Vice Chairman and |
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Chief Acquisition Officer |
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LITTLE ROCK HC&R NURSING, LLC |
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By |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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THE PRIVATEBANK AND TRUST COMPANY |
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By |
/s/ Amy K. Hallberg |
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Amy K. Hallberg, Managing Director |
Exhibit 10.279
CONSULTING AGREEMENT
This Consulting Agreement (the Agreement) is entered into effective as of the 31 st day of December, 2012, by and between AdCare Health Systems, Inc., an Ohio corporation (AdCare), and Christopher F. Brogdon (the Consultant). AdCare and the Consultant are sometimes hereinafter individually referred to as a Party and collectively as the Parties.
In consideration of the mutual covenants set forth below, the Parties agree as follows:
1 Engagement . AdCare hereby engages the Consultant to provide the following services to AdCare (the Consulting Services):
(i) Source and recommend potential acquisitions in line with AdCares business.
(ii) Recommend and arrange financing for targeted acquisitions.
(iii) Work with AdCare executives to complete acquisitions and financing.
(iv) Such other services requested by AdCare which are reasonably related or incidental to the above-described services.
The Consultant hereby accepts such engagement and agrees from time to time upon AdCares request and reasonable prior notice to provide the Consulting Services to AdCare on the terms set forth in this Agreement.
2 Term . Subject to earlier termination with or without cause as provided for in Section 11 below, this Agreement shall be in effect for the three year period from December 31, 2012, through December 31, 2015 (the Initial Term). In the event the Agreement has not been terminated prior to the expiration of this or any Term this Agreement will extend automatically for successive one-year terms. (hereinafter each one-year additional term is referred to as a Renewal Term) (the Initial Term and any Renewal Term are collectively referred to as the Term)
3 Commitment . The Consultant represents that he is not currently bound by any agreements or other commitments that might interfere with or impair his performance of his consulting responsibilities hereunder or that are inconsistent with his obligations hereunder The Consultant will devote such time and attention to the performance of the Consulting Services as are reasonably required (it being acknowledged that the Consultants time commitment is part-time, not full-time). The Consultant shall perform all Consulting Services diligently, in the best interests of AdCare and to the best of his professional ability and judgment. The Consultant shall not enter into any agreement or other obligations on behalf of AdCare without its express prior consent.
As part of the Consulting Services, Consultant agrees to provide to AdCare a Right of First Refusal on all skilled nursing facility acquisitions that the Consultant originates, becomes aware of, or in which he has an opportunity to invest. This will include both fee simple properties and leaseholds where the existing lease can be cancelled or is about to expire and AdCare could become the tenant within six months after the closing of the transaction. The Right of First Refusal will also apply to any campuses which include a skilled nursing facility even though there may also be assisted living or other facilities on the property However, stand alone assisted living facility opportunities will not be subject to the Right of First Refusal.
4. Compensation . As consideration for the Consulting Services to be provided by the Consultant hereunder, AdCare shall pay to the Consultant $10,000.00 per month in year one, $15,000 per month in year two, and $20,000 per month in year three, all without any deductions or withholdings, during the Term. In addition to the monthly payments advanced the Consultant will also receive a success fee in the amount of $20,000 on a transaction by transaction basis; however, barring a majority vote of the Board of the Directors indicating otherwise, the parties agree the total amount of success fee(s) on a yearly basis will not exceed the following: $80,000 in year one, $120,000 in year two, and $160,000 in year three. Additionally, the parties agree no success fee(s) will be paid to the Consultant for leased facilities or fee simple real estate properties where the overall consideration for the transaction is less than $2,500,000. The Consultant agrees that the amount set forth in this Section is the total amount of compensation to which he is entitled for the Consulting Services and his other undertakings pursuant to this Agreement. Unless otherwise agreed to by the parties, the Consultants compensation during any Renewal Term shall be the same as the compensation paid during the previous twelve-month period.
5 Expense Reimbursement . In performing the Consulting Services hereunder, the Consultant will engage in such travel, entertainment, attendance at industry related conventions and meetings, and other similar activities as are required to perform the Consulting Services hereunder AdCare will reimburse the Consultant for all reasonable travel, lodging, meal or any other expenses incurred by the Consultant in the performance of the Consulting Services hereunder.
6. Nondisclosure . Both during and after the Term, the Consultant shall not, and the Consultant shall not permit any employee, agent, or other representative of the Consultant or of any other entity which is controlled by the Consultant (collectively, Affiliates of the Consultant,) to disclose to any person other than Affiliates of the Consultant, or use for the benefit of the Consultant or any Affiliates of the Consultant, any non-public information concerning AdCare which has been learned or has come into the possession of the Consultant or an Affiliate of the Consultant as a result of the Consultants or such Affiliates association with AdCare pursuant to this Agreement. In the event of any disclosure required by any applicable law, regulation or judicial or regulatory order or threat of such an order, the Consultant shall provide AdCare written notice of any such disclosure request, and shall further notify AdCare as expeditiously as possible to enable AdCare to authorize such disclosure, to limit such disclosure, or to take action necessary to prevent and/or enjoin such disclosure.
7 Indemnification and Liability Limitation .
(a) AdCare . Both during and after the Term, AdCare shall indemnify, defend, and hold harmless the Consultant and all Affiliates of the Consultant from and with respect to all actions, suits, proceedings, judgments, demands, claims, liabilities, losses, or expenses whatsoever (including reasonable attorneys fees) arising from the business and/or activities of AdCare and/or from defects in products or services of AdCare that are the result of willful misconduct or gross negligence on the part of AdCare.
(b) The Consultant . Both during and after the Term, the Consultant shall indemnify, defend, and hold harmless AdCare from and with respect to all actions, suits, proceedings, judgments, demands, claims, liabilities, losses, or expenses whatsoever (including reasonable attorneys fees) arising from the business and/or activities of the Consultant or Affiliates of the Consultant that are the result of willful misconduct or gross negligence on the part of the Consultant or Affiliates of the Consultant.
8 Termination.
(a) Pre Change of Control .
i. Without Cause
AdCare may terminate this Agreement, at any time, without cause, upon providing 30 days written notice to the Consultant and a vote of the majority of the Board being in Agreement. In the event AdCare terminates this Agreement without cause prior to the end of the Term provided for in Section 2 of this Agreement, the severance pay shall be an amount equal to eighteen (18) months of the Consultants maximum total compensation (including success fees) under this Agreement payable in a lump sum at the time the Consultants services are formally terminated
ii. With Cause
Either Party may terminate this Agreement at any time upon a material breach of the terms of this Agreement by the other Party, if such breach is not cured within 30 days after receipt of written notice of such breach from the non-breaching Party; provided that where a breach can be completely cured, but cannot be completely cured within 30 days, the breaching Party shall have an additional 30 days to completely cure if the cure process has been started within the first 30-day period and the breaching Party has been diligent in its efforts to cure throughout the first 30-day period. Termination due to an uncured material breach shall be effective as of midnight on the last day of the applicable cure period. The Consultant may unilaterally terminate this Agreement effective as of any other date upon at least 60 days advance written notice to that effect to AdCare, in which case the Consultant shall be paid through the date of termination.
(b) Post Change of Control . If after a Change in Control, (i) the Consultant resigns his position for any reason or (ii) AdCare terminates the Consultants position within six (6) months without Cause (other than due to Consultants disability), or (iii) the entity acquiring a controlling interest in AdCare terminates the Consultants position without Cause (other than due to the Consultants disability) the Consultant, or his successors and assigns, shall receive the severance pay and benefits hereafter provided. The severance pay shall be an amount equal to three (3) years of his maximum total compensation (including success fees) under this Agreement payable in a lump sum at the time of closing resulting in the formal Change of Control if such termination is concurrent with such closing or (ii) at the time of termination if such termination occurs after a Change of Control. For example, if Consultant is terminated in year one he would receive the aggregate of $900,000 which is the sum of his maximum compensation for the next three years ($200,000 + $300,000 + $400,000); in year two he would receive $1,100,000 ($300,000 + $400,000 + $400,000) and in year three or during any Renewal Term the Consultant he would receive $1,200,000 ($400,000 + $400,000 + $400,000). For purposes of this Agreement, termination and similar terms means a termination constituting a separation from service within the meaning of Code Section 409A. Notwithstanding the foregoing, to the extent necessary to avoid the Consultant incurring a tax under Code Section 409A, any amount that is otherwise due within six (6) months following termination of employment shall be delayed until six months after termination of employment. The provisions contained in this Section shall survive the termination of the Consultants position. For purposes of this Agreement, the following terms shall have the following meanings. Cause means the Consultants fraud, dishonesty, willful misconduct, or gross negligence in his performance of his duties hereunder, or the Consultants conviction for a crime of moral turpitude, or material breach by the Consultant of this Agreement which the Consultant fails to cure within thirty (30) days after AdCare gives the Consultant written notice of such breach. Change in Control means one or more sales or dispositions, within a twelve (12) month period, of assets representing a majority of the value of the assets of AdCare or the acquisition (whether by purchase or through a merger or otherwise) of common stock of AdCare immediately following which the holders of common stock of AdCare immediately prior to such acquisitions cease to own directly or indirectly common stock of AdCare or its legal successor representing more than fifty percent (50%) of the voting power of the common stock of AdCare or its legal successor
9 Independent Contractor .
(a) No Employment Relationship . This Agreement shall not establish any employment, partnership or joint venture relationship between the Parties. The Consultant acknowledges that the relationship of the Consultant to AdCare is solely that of an independent contractor, and not of an employee, agent, partner, or otherwise for any purpose. The Consultant is not, by reason of this Agreement, and will not hold himself out, by reason of this Agreement, as being an employee of AdCare and acknowledges and agrees that he will not be entitled to any employee rights or benefits of any kind whatsoever from AdCare. The Consultant shall not have any right or ability to sign any document for or on behalf of AdCare, or otherwise to bind or create or enter into any obligation on the part of AdCare
(b) Indemnification and Acknowledgement . The Consultant acknowledges and agrees that he is and shall be solely responsible for the payment of any and all applicable federal, state, local, and other taxes relating to any compensation, fees or other amounts or rights granted to the Consultant under this Agreement. The Consultant further agrees to indemnify, defend, and hold harmless AdCare and the Indemnified Parties (as defined below) for and against: (i) any and all federal, state, local, or other tax liability including, without limitation, liability for back withholding, penalties, interest, and attorneys fees (Tax Liability), incurred by any of the Indemnified Parties relating in any way to Consultants Tax Liability for or with respect to any compensation, fees or other rights granted under this Agreement, (ii) any and all claims, liabilities, demands, losses, damages, suits and judgments (including without limitation costs, expenses, and attorneys fees) (collectively Claims) arising out of or relating to the Consultants provision of the Consulting Services or to any breach by the Consultant of any covenants, representations or warranties under this Agreement, and (iii) any and all Claims by any person including the Consultant because of injury or death to person(s) or loss or destruction of property attributable in whole or in part to any acts or omissions by the Consultant (whether negligent, insured or otherwise) or any fault of the Consultant, regardless of whether any such Claims are or are found to be unsuccessful, groundless, or fraudulent. The term Indemnified Parties as used in this Agreement includes AdCare and its past, present, and future affiliates, partnerships and other related entities (whether or not wholly owned); each of their respective past, present, and future owners, trustees, fiduciaries, administrators, shareholders, directors, officers, partners, associates, agents, representatives, employees, and attorneys; and the predecessors, successors, and assigns of each of the foregoing.
10 Section 409A . This Agreement is intended to comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code (Section 409A), as applicable, and shall be administered and construed consistent with this intent. Solely for purposes of complying with Section 409A, any reference to the Consultants termination shall mean the Consultants separation from service as that term is defined in Section 409A.
11 Notices . Any notice, election or other written communication required or desired to be given hereunder shall be deemed given or made at such time as it (a) is delivered personally to the intended recipient, or (b) is delivered to Federal Express,
UPS or any similar express delivery service, or is deposited in the United States mails, by registered or certified mail, return receipt requested, bearing proper postage, addressed to the intended recipient at the address set forth on the signature page of this Agreement. Any Party may specify some other address for the receipt of such written communications by giving written notice of such change to the other Parties. Although a notice, election or other communication shall be deemed given or made when delivered to an express delivery service or deposited in the mails as provided above, any time period that is to begin running by reason of such communication shall not commence until such communication actually is received by the intended recipient.
12 Entire Agreement . Except as otherwise specifically indicated herein, this document contains the entire agreement of the Parties and supersedes any and all prior understandings, agreements, representations and negotiations between them respecting the subject matters hereof.
13 Successors in Interest . Except as otherwise provided herein, all provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by and against the Parties and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns.
14. Counterparts, Facsimiles and Electronic Mail . This Agreement and any other documents related to this Agreement may be executed in several counterparts, and each executed counterpart shall be considered as an original of this Agreement or such other document, as the case may be A counterpart executed and transmitted by facsimile device or electronic mail by any person to the intended recipient thereof shall constitute and be accepted as an executed and delivered original of this Agreement or such other document, as the case may be
15 Severability . In the event any provision of this Agreement or any application thereof is held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the other provisions hereof and of any other application of the specific provision involved shall not be affected or impaired in any manner
16. No Third Party Benefit or Assignment . Except as otherwise specifically provided herein, this Agreement is intended for the exclusive benefit of the Parties and their respective successors and permitted assigns, and nothing contained in this Agreement shall be construed as creating any right or benefit in or to any third party This Agreement may not be assigned by either Party without the advance written consent of the other Party
17. Survival . If any provision of this Agreement establishes with respect to any Party any rights and/or obligations which are to be in effect after the termination or expiration of this Agreement, such provision shall survive the termination or expiration of this Agreement and shall be binding upon all persons affected by such provision for such period of time as may reasonably be required in order to give full effect to the intended application of such provision.
18. Waiver . Any waiver by either Party of a breach of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any other breach of such provision or of any breach of any other provision herein. Failure by either Party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered as a waiver or deprive that Party of the right thereafter to insist upon strict adherence to that term or any other term herein. Any waiver must be in writing.
19 Venue . The Parties hereby designate the courts sitting in Fulton County, Georgia, as the courts of proper and exclusive subject matter and personal jurisdiction and venue of and for any and all actions and proceedings relating to this Agreement; hereby irrevocably consent to such designation, jurisdiction and venue; hereby waive any objections or defenses relating to jurisdiction or venue with respect to any action or proceeding initiated in any of said courts; and agree that service of process or notice in any such action or proceeding shall be effective if delivered or mailed in accordance with the notice provisions of this Agreement.
20. Applicable Law . All rights, duties and obligations of the Parties under this Agreement shall be determined in accordance with the laws of the State of Georgia.
This Agreement has been executed and delivered effective as of the date first set forth above.
THE VICE CHAIRMAIN CONSULTANT: |
ADCARE: |
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/s/ Christopher F. Brogdon |
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By: |
/s/ Boyd P. Gentry |
Christopher F. Brogdon |
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Its: |
PRESIDENT & CEO |
Exhibit 10.280
GUARANTY INDEMNIFICATION AGREEMENT
[ADK HEMBREE ROAD PROPERTY, LLC]
This GUARANTOR INDEMNIFICATION AGREEMENT (this Agreement ) is made as of the 31 st day of December, 2012, by between AdCare Health Systems, Inc., an Ohio corporation (referred to herein as Indemnitor), and Christopher F. Brogdon (referred to herein as Guarantor). Indemnitor and the Guarantor are sometimes hereinafter individually referred to as a Party and collectively as the Parties.
RECITALS :
A. Guarantor is compensated for his services as a Consultant to Indemnitor pursuant to the Consulting Agreement between Indemnitor and Consultant dated December 31, 2012 (referred to herein as Consulting Agreement).
B. The Guaranty attached herewith dated November 30, 2012, memorializes an agreement between Guarantor and Fidelity Bank (referred to herein as Lender) in favor of Indemnitor regarding ADK Hembree Road Property, LLC (referred to herein as Borrower).
C. Guarantor previously gave the Guaranty in order to induce Lender to make the underlying agreement at issue in the Guaranty (referred to herein as the Loan).
NOW, THEREFORE, in consideration of the foregoing, and other valuable consideration in the amount of ten (10) dollars paid by Guarantor to Indemnitor, the receipt and adequacy of which is hereby acknowledged, Indemnitor agrees as follows:
1. Indemnification and Reimbursement of Guarantor.
(a) Indemnitor, hereby indemnifies and agrees to hold Guarantor harmless from and against any and all costs, losses, damages, claims and expenses (including but not limited to reasonable attorneys fees and other third-party expenses) (collectively, Losses ) incurred by Guarantor under the Guaranty, including without limitation any of the foregoing incurred in connection with enforcing this Agreement.
(b) In the event any sums are paid by the Guarantor under or on account of the Guaranty, the Guarantor shall be entitled to immediate reimbursement from the Indemnitor for such sum, and any amount so due the Guarantor, if not paid within five (5) days after demand therefor, shall bear interest at an annual rate equal to the prime rate as published from time to time by The Wall Street Journal (or if the Wall Street Journal ceases to publish a prime rate, then the 14-day moving average closing trading price of 90 day Treasury bills), plus 2% per annum, such interest accruing daily and compounding monthly.
(c) Notwithstanding the foregoing, going forward from the effective date of this Agreement, Guarantor shall not be entitled to indemnification or reimbursement under this Agreement for any Losses to the extent that such Losses are due to the gross negligence, fraud, intentional misrepresentation, willful misconduct, bad faith, misappropriation, or any criminal act of Guarantor.
2. In the event of a claim for indemnity or reimbursement hereunder, the Guarantor shall provide reasonable notice to the Indemnitor of the existence of any such claim, demand or other matters to which the indemnification obligations hereunder would apply, and the Guarantor agrees to give the Indemnitor a reasonable opportunity to participate in the defense of the same at the Indemnitors own cost and expense and with counsel of the Indemnitors own selection.
3. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action. In no event shall any provisions of this Agreement be deemed to be a waiver of or to be in lieu of any right or claim, including, without limitation, any right of contribution or other right of recovery, that any party to this Agreement might otherwise have against any other party to this Agreement.
4. If any term of this Agreement or any application thereof shall be invalid, illegal or unenforceable, the remainder of this Agreement and any other application of such term shall not be affected thereby. No delay or omission in exercising any right hereunder shall operate as a waiver of such right or any other right.
5. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies otherwise provided to the parties hereto by law or by any other agreement to which the parties hereto are bound.
6. Except as expressly set forth in Section I(c) above, the reimbursement and indemnification obligations of Indemnitor hereunder are absolute, irrevocable, and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations giving rise to the payment of the Losses or any agreement or instrument relating thereto, or any substitution, release or exchange of any other guarantee of or security for any obligation, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; it being the intent of the parties hereto that such obligations shall be absolute and unconditional under any and all circumstances. With respect to its obligations hereunder, except with respect to the notices required by this Agreement, Indemnitor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any other party exhaust any right, power or remedy or proceed against any Person.
7. This Agreement shall be binding upon each of the parties and each partys respective executors, heirs, successors and assigns (including without limitation any entity or entities that are their respective corporate, partnership or other successors and assigns) and shall inure to the benefit of Guarantor and its successors and assigns.
8. Notices given hereunder shall be given by postage paid, registered or certified mail, return receipt requested, or by recognized national overnight courier service, to the address of Indemnitor, or to such other address as Indemnitor may designate in a writing given in the manner provided in this paragraph.
9 . The Parties hereby designate the courts sitting in Fulton County, Georgia, as the courts of proper and exclusive subject matter and personal jurisdiction and venue of and for any and all actions and proceedings relating to this Agreement; hereby irrevocably consent to such designation, jurisdiction and venue; hereby waive any objections or defenses relating to jurisdiction or venue with respect to any action or proceeding initiated in any of said courts; and agree that service of process or notice in any such action or proceeding shall be effective if delivered or mailed in accordance with the notice provisions of this Agreement.
10. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Georgia.
11. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes.
[Signatures On Following Pages]
IN WITNESS WHEREOF, Indemnitor and Guarantor have executed this Agreement as an instrument under seal as of the day and date first written above.
INDEMNITOR: |
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AdCare Health Systems, Inc. |
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/s/ Boyd P. Gentry |
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Name: |
Boyd P. Gentry |
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Title: |
President & CEO |
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[Indemnitor Signature Page to Guaranty Indemnification Agreement ADK Hembree Road Property, LLC]
[Signatures continue on following page]
GUARANTOR |
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Christopher F. Brogdon |
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By: |
/s/ Christopher F. Brogdon |
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Name: |
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Title: |
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[Guarantor Signature Page to Loan Indemnification Agreement ADK Hembree Road Property, LLC]
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GUARANTY |
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Atlanta |
Georgia |
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(City) |
(State) |
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November 30, 2012 |
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(Date) |
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce FIDELITY BANK (herein, with its participants, successors and assigns, called Lender), at its option, at any time or from time to time to make loans or extend other accommodations to or for the account of ADK HEMBREE ROAD PROPERTY, LLC, a Georgia limited liability company (herein called Borrower), or to engage in any other transactions with Borrower, the Undersigned hereby absolutely and unconditionally guarantees to Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of the debts, liabilities and obligations described as follows:
A. If this o is checked, the Undersigned guarantees to Lender the payment and performance of the debt, liability or obligation of Borrower to Lender evidenced by or arising out of the following: and any extensions, renewals or replacements thereof (hereinafter referred to as the Indebtedness).
B. If this x is checked, the Undersigned guarantees to Lender the payment and performance of each and every debt, liability and obligation at every type and description which Borrower may now or at any time hereafter owe to Lender (whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several, or joint and several; all such debts, liabilities and obligations being hereinafter collectively referred to as the indebtedness). Without limitation, this guaranty includes the following described debt(s): any and all debts of ADK HEMBREE ROAD PROPERTY, LLC, a Georgia limited liability company.
The Undersigned further acknowledges and agrees with Lender that:
1. No act or thing need occur to establish the liability of the Undersigned hereunder, and no act or thing, except full payment and discharge of all indebtedness, shall in any way exonerate the Undersigned or modify, reduce, limit or release the liability of the Undersigned hereunder.
2. This is an absolute, unconditional and continuing guaranty of payment of the indebtedness and shall continue to be in force and be binding upon the Undersigned, whether or not all indebtedness is paid in full, until this guaranty is revoked by written notice actually received by the Lender, and such revocation shall not be effective as to indebtedness existing or committed for at the time of actual receipt of such notice by the Lender, or as to any renewals, extensions and refinancing thereof. If there more than one Undersigned, such revocation shall be effective only as to the one so revoking. The death or Incompetence of the Undersigned shall not revoke this guaranty, except upon actual receipt of written notice thereof by Lender and then only as to the decedent or the Incompetent and only prospectively, as to future transactions, as herein set forth.
The Undersigned represents and warrants to the Lender that Undersigned has a direct and substantial economic interest In Borrower and expects to derive substantial benefits therefrom and from any loans and financial accommodations resulting in the creation of indebtedness guaranteed hereby. Accordingly, so long as this guaranty is not revoked prospectively in accordance with this guaranty, the Lender may rely conclusively on a continuing warranty, hereby made, that the Undersigned continues to be benefited by this guaranty and the Lender shall have no duty to inquire into or confirm the receipt of any such benefits, and this guaranty shall be effective and enforceable by the Lender without regard to the receipt, nature or value of any such benefits.
3. If the Undersigned shall he dissolved, shall die, or shall be or become insolvent (however defined) or revoke this guaranty, then the Lender shall have the right to declare immediately due and payable, and the Undersigned will forthwith pay to the Lender, the full amount of all indebtedness, whether due and payable or unmatured. It the Undersigned voluntarily commences or there is commenced involuntarily against the Undersigned a case under the United States Bankruptcy Code, the full amount of all Indebtedness, whether due and payable or unmatured, shall be immediately due and payable without demand or notice thereof.
4. The liability of the Undersigned hereunder shall be limited a principal amount of $U nlimited (if unlimited or if no amount is stated, the Undersigned shall be liable for all indebtedness, without any limitation as to amount), plus accrued interest thereon and all attorneys fees, collection costs and enforcement expenses referable thereto. Indebtedness may be created and continued in any amount, whether or not it excess of such principal amount without affecting or impairing the liability of the Undersigned hereunder. The Lender may apply any sums received by or available to Lender on account of the Indebtedness from Borrower or any other person (except the Undersigned), from their properties, out of any collateral security or from any other source to payment of the excess. Such application of receipts shall not reduce, affect or impair the liability of the Undersigned hereunder. If the liability of the Undersigned limited to a stated amount pursuant to this paragraph 4, any payment made by the Undersigned under this guaranty shall be effective to reduce or discharge such liability only if accompanied by a written transmitted document, received by the Lender, advising the Lender that such payment is made under this guaranty for such purpose.
5. The Undersigned will pay or reimburse Lender for all costs and expenses (including reasonable attorneys fees and legal expenses) Incurred by Lender in connection with the protection, defense or enforcement of this guaranty in any litigation at bankruptcy or insolvency proceeding.
This guaranty includes the additional provisions on page 2, all of which are made a part hereof.
This guaranty is a x unsecured; o secured by a mortgage or security agreement dated ; o secured by .
IN WITNESS WHEREOF, this guaranty has been duty executed be the Undersigned this day and year first above written.
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/s/ Christopher F. Brogdon |
[SEAL] |
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Christopher F. Brogdon, individually |
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Undersigned shall refer to all persons who sign this guaranty, severely and jointly. |
ADDITIONAL PROVISIONS
6. Whether or not any existing relationship between the Undersigned and Borrower has been changed or ended and whether or not this guaranty has been revoked, Lender may, but shall not be obligated to enter into transactions resulting in the creation or continuance of Indebtedness, without any consent or approval by the Undersigned and without any notice to the Undersigned. The liability of the Undersigned shall not be affected or impaired by any of the following acts or things (which Lender is expressly authorized to do, omit or suffer from time to time, both before and after revocation of this guaranty, without notice to or approval by the Undersigned): (i) any acceptance of collateral security, guarantors, accommodation parties or sureties for any or all indebtedness; (ii) any one or more extensions or renewals of indebtedness (whether or not for longer than the original period) or any modification of the interest rates, maturities or other contractual terms applicable to any Indebtedness; (iii) any waiver, adjustment, forbearance, compromise or indulgence granted to Borrower, any delay or lack of diligence in the enforcement of Indebtedness, or any figure to Institute proceeding file a claim, give any required notices or otherwise protect any indebtedness; (iv) any full or partial release of, settlement with, or agreement not to sue, Borrower or any other guarantor or other person liable in respect of any indebtedness: (v) any discharge of any evidence of Indebtedness or the acceptance of any instrument in renewal thereof or substitution therefor; (vi) any failure to obtain collateral security (including rights of setoff) for indebtedness, or to see to the proper or sufficient creation and perfection thereof, or to establish the priority thereof, or to protect, insure, or enforce any collateral security: or any release, modification, substitution, discharge, impairment, deterioration, waste, or loss of any collateral security; (vii) any foreclosure or enforcement of any collateral security; (viii) any transfer of any indebtedness or any evidence thereto; (ix) any order of application of any payments or credits upon Indebtedness; (x) any election by the Lender under §1111(b)(2) of the United States Bankruptcy Code.
7. The Undersigned waives any and all defenses, claim and discharges of Borrower, or any other obligor, pertaining to Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the Undersigned will not assert, plead or enforce against Lender any defense of waiver, release, statute of limitations, res judicate, statute of frauds, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to Borrower or any other person liable in respect of any indebtedness, or any setoff available against Lender to Borrower or any such other person, whether or not on account of a related transaction. The Undersigned expressly agrees that the Undersigned shall be and remain liable, to the fullest extent permitted by applicable law, for any deficiency remaining after foreclosure of any mortgage or security interest securing the indebtedness, whether or not the liability of Borrower or any other obligor for such deficiency is discharged pursuant to statute or Judicial decision. The Undersigned shall remain obligated, to the fullest extent permitted by law, to pay such amounts as though the Borrowers obligations had not been discharged.
8. The Undersigned further agrees that the Undersigned shall be and remain obligated to pay Indebtedness even though any other person obligated to pay indebtedness, Including Borrower, has such obligation discharged in bankruptcy or otherwise discharged by law. Indebtedness shall include post-bankruptcy petition Interest and attorneys fees and any other amounts which Borrower is discharged from paying or which do not otherwise accrue to Indebtedness due to Borrowers discharge, and the Undersigned shall remain obligated to pay such amounts as though Borrowers obligations had not been discharged.
9. If any payment applied by Lender to Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of Borrower or any other obligor), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made.
10. The Undersigned waives any claim, remedy or other right which the Undersigned may now have or hereafter acquire against Borrower or any other person obligated to pay Indebtedness arising out of the creation or performance of the Undersigneds obligation under this guaranty, Including, without limitation, any right of subrogation, contribution, reimbursement, indemnification, exoneration, any right to participate in any claim or remedy the Undersigned may have against the Borrower, collateral, or other party obligated for Borrowers debts, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law.
11. The Undersigned waives presentment, demand for payment, notice of dishonor or nonpayment, and protest of any instrument evidencing indebtedness. Lender shall not be required first to resort for payment of the indebtedness to Borrower or other persons or their properties, or first to enforce, realize upon or exhaust any collateral security for Indebtedness, before enforcing this guaranty.
12. The liability of the Undersigned under this guaranty is in addition to and shall be cumulative with all other liabilities of the Undersigned to Lender as guarantor or otherwise, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.
13. This guaranty shall be enforceable against each person signing this guaranty, even if only one person signs and regardless of any failure of other persons to sign this guaranty. If there be more than one signer, all agreements and promises herein shall be construed to be, and are hereby declared to be, joint and several in each of every particular and shall be fully binding upon and enforceable against either, any or all the Undersigned. This guaranty shall be effective upon delivery to Lender, without further act, condition or acceptance by Lender, shall be binding upon the Undersigned and the heirs, representatives, successors and assigns of the Undersigned and shall inure to the benefit Lender and its participants, successors and assigns. Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and application hereof, and to this end the provisions of this guaranty are declared to be severable. Except as authorized by the terms herein, this guaranty may not be waived, modified, amended, terminated, released or otherwise changed except by a writing signed by the Undersigned and Lender. This guaranty shall be governed by the laws of the State in which it is executed. The undersigned waives notice of Lenders acceptance hereof.
Exhibit 10.281
GUARANTY INDEMNIFICATION AGREEMENT
[Rose Missouri Nursing, LLC]
This GUARANTY INDEMNIFICATION AGREEMENT (this Agreement ) is made as of the 31 st day of December, 2012, by between AdCare Health Systems, Inc., an Ohio corporation (referred to herein as Indemnitor), and Christopher F. Brogdon and Connie B. Brogdon (collectively referred to herein as Guarantors). Idemnitor and Guarantors are sometimes hereinafter individually referred to as a Party and collectively as the Parties.
RECITALS :
A. Guarantor Christopher F. Brogdon is compensated for his services as a Consultant to Indemnitor pursuant to the Consulting Agreement between Indemnitor and him dated December 31, 2012 (referred to herein as Consulting Agreement).
B. The Guaranty attached herewith dated November 1, 2011, memorializes, in pertinent part, an agreement between Guarantors and Cassville Real Estate, Inc. (referred to herein as Landlord) in favor of lndemnitor regarding Rose Missouri Nursing LLC, LLC (referred to herein as New Tenant).
C. Guarantors previously gave the Guaranty in order to induce Landlord to make the underlying agreement at issue in the Guaranty (referred to herein as the Lease).
NOW, THEREFORE, in consideration of the foregoing, and other valuable consideration in the amount of ten (10) dollars paid by Guarantors to Idemnitor, the receipt and adequacy of which is hereby acknowledged, Indemnitor agrees as follows:
1. Indemnification and Reimbursement of Guarantors .
(a) Indemnitor, hereby indemnifies and agrees to hold Guarantors harmless from and against any and all costs, losses, damages, claims and expenses (including but not limited to reasonable attorneys fees and other third-party expenses) (collectively, Losses ) incurred by Guarantors under the Guaranty, including without limitation any of the foregoing incurred in connection with enforcing this Agreement.
(b) In the event any sums are paid by the Guarantors under or on account of the Guaranty, the Guarantors shall be entitled to immediate reimbursement from the Indemnitor for such sum, and any amount so due the Guarantors, if not paid within five (5) days after demand therefor, shall bear interest at an annual rate equal to the prime rate as published from time to time by The Wall Street Journal (or if the Wall Street Journal ceases to publish a prime rate, then the 14-day moving average closing trading price of 90 day Treasury bills), plus 2% per annum, such interest accruing daily and compounding monthly.
(c) Notwithstanding the foregoing, going forward from the effective date of this Agreement, Guarantors shall not be entitled to indemnification or reimbursement under this Agreement for any Losses to the extent that such Losses are due to the gross negligence, fraud, intentional misrepresentation, willful misconduct, bad faith, misappropriation, or any criminal act of Guarantors.
2. In the event of a claim for indemnity or reimbursement hereunder, Guarantors shall provide reasonable notice to the Indemnitor of the existence of any such claim, demand or other matters to which the indemnification obligations hereunder would apply, and the Guarantors agree to give the Indemnitor a reasonable opportunity to participate in the defense of the same at the Indemnitors own cost and expense and with counsel of the Indemnitors own selection.
3. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action. In no event shall any provisions of this Agreement be deemed to be a waiver of or to be in lieu of any right or claim, including, without limitation, any right of contribution or other right of recovery, that any party to this Agreement might otherwise have against any other party to this Agreement.
4. If any term of this Agreement or any application thereof shall be invalid, illegal or unenforceable, the remainder of this Agreement and any other application of such term shall not be affected thereby. No delay or omission in exercising any right hereunder shall operate as a waiver of such right or any other right.
5 . The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies otherwise provided to the parties hereto by law or by any other agreement to which the parties hereto are bound.
6. Except as expressly set forth in Section 1(c) above, the reimbursement and indemnification obligations of Indemnitor hereunder are absolute, irrevocable, and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations giving rise to the payment of the Losses or any agreement or instrument relating thereto, or any substitution, release or exchange of any other guarantee of or security for any obligation, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; it being the intent of the parties hereto that such obligations shall be absolute and unconditional under any and all circumstances. With respect to its obligations hereunder, except with respect to the notices required by this Agreement, Indemnitor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any other party exhaust any right, power or remedy or proceed against any Person.
7. This Agreement shall be binding upon each of the parties and each partys respective executors, heirs, successors and assigns (including without limitation any entity or entities that are their respective corporate, partnership or other successors and assigns) and shall inure to the benefit of Guarantors and their successors and assigns.
8. Notices given hereunder shall be given by postage paid, registered or certified mail, return receipt requested, or by recognized national overnight courier service, to the address of Indemnitor, or to such other address as Indemnitor may designate in a writing given in the manner provided in this paragraph.
10. The Parties hereby designate the courts sitting in Fulton County, Georgia, as the courts of proper and exclusive subject matter and personal jurisdiction and venue of and for any and all actions and proceedings relating to this Agreement; hereby irrevocably consent to such designation, jurisdiction and venue; hereby waive any objections or defenses relating to jurisdiction or venue with respect to any action or proceeding initiated in any of said courts; and agree that service of process or notice in any such action or proceeding shall be effective if delivered or mailed in accordance with the notice provisions of this Agreement.
11. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Georgia.
12. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes.
[Signatures On Following Pages]
IN WITNESS WHEREOF, Indemnitor and Guarantors have executed this Agreement as an instrument under seal as of the day and date first written above.
INDEMNITOR:
AdCare Health Systems, Inc.
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/s/ Body P. Gentry |
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Body P. Gentry |
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President & CEO |
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[Indemnitor Signature Page to Guaranty Indemnification Agreement Rose Missouri Nursing, LLC]
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GUARANTOR:
Christopher F. Brogdon
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/s/ Christopher F. Brogdon |
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GUARANTOR:
Connie B. Brogdon
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/s/ Connie B. Brogdon |
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[ Guarantors Signature Page to Guaranty Indemnification Agreement Rose Missouri Nursing, LLC ]
Exhibit 10.282
FOR RECORDERS USE ONLY
ASSIGNMENT OF RENTS
THIS ASSIGNMENT OF RENTS dated December 31, 2012, is made and executed between NORTHWEST PROPERTY HOLDINGS, LLC, whose address is 3050 PEACHTREE ROAD NW, SUITE 355, ATLANTA, GA 30305; A GEORGIA LIMITED LIABILITY COMPANY (referred to below as Grantor) and FIRST COMMERCIAL BANK, whose address is 303 W MARKET, P. O. BOX 574, DEXTER, MO 63841 (referred to below as Lender).
ASSIGNMENT. For valuable consideration, Grantor hereby assigns, grants a continuing security interest in, and conveys to Lender all of Grantors right, title, and interest in and to the Rents from the following described Property located in OKLAHOMA County, State of Oklahoma:
See EXHIBIT A, which is attached to this Assignment and made a part of this Assignment as if fully set forth herein.
The Property or its address is commonly known as 2801 NORTHWEST 61 ST, OKLAHOMA CITY, OK 73122.
THIS ASSIGNMENT IS GIVEN TO SECURE (1) PAYMENT OF THE INDEBTEDNESS AND (2) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF GRANTOR UNDER THE NOTE, THIS ASSIGNMENT, AND THE RELATED DOCUMENTS. THIS ASSIGNMENT IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Assignment or any Related Documents, Grantor shall pay to Lender all amounts secured by this Assignment as they become due, and shall strictly perform all of Grantors obligations under this Assignment. Unless and until Lender exercises its right to collect the Rents as provided below and so long as there is no default under this Assignment, Grantor may remain in possession and control of and operate and manage the Property and collect the Rents, provided that the granting of the right to collect the Rents shall not constitute Lenders consent to the use of cash collateral in a bankruptcy proceeding.
GRANTORS REPRESENTATIONS AND WARRANTIES. Grantor warrants that:
Ownership . Grantor is entitled to receive the Rents free and clear of all rights, loans, liens, encumbrances, and claims except as disclosed to and accepted by Lender in writing.
Right to Assign . Grantor has the full right, power and authority to enter into this Assignment and to assign
Loan No: 4536754
and convey the Rents to Lender.
No Prior Assignment. Grantor has not previously assigned of conveyed the Rents to any other person by any instrument now in force.
No Further Transfer. Grantor will not sell, assign, encumber, or otherwise dispose of any of Grantors rights in the Rents expect as provided in this Assignment.
LENDERS RIGHT TO RECEIVE AND COLLECT RENTS . Lender shall have the right at any time, and even though no default shall have occurred under this Assignment, to collect and receive the Rents. For this purpose, Lender is hereby given and granted the following rights, powers and authority:
Notice to Tenants. Lender may send notices to any and all tenants of the Property advising them of this Assignment and directing all Rents to be paid directly to Lender or Lenders agent.
Enter the Property. Lender may enter upon and take possession of the Property; demand, collect and receive from the tenants or from any other persons liable therefor, all of the Rents; institute and carry on all legal proceedings necessary for the protection of the Property, including such proceedings as may be necessary to recover possession of the Property; collect the Rents and remove any tenant or tenants or other persons from the Property.
Maintain the Property. Lender may enter upon the Property to maintain the Property and keep the same in repair; to pay the costs thereof and of all services of all employees, including their equipment, and of all continuing costs and expenses of maintaining the Property in proper repair and condition, and also to pay all taxes, assessments and water utilities, and the premiums on fire and other insurance effected by Lender on the Property.
Compliance with Laws. Lender may do any and all things to execute and comply with the laws of the State of Oklahoma and also all other laws, rules, orders, ordinances and requirements of all other governmental agencies affecting the Property.
Lease the Property. Lender may rent or lease the whole or any part of the Property for such term or terms and on such conditions as Lender may deem appropriate.
Employ Agents. Lender may engage such agent or agents as Lender may deem appropriate, either in Lenders name or in Grantors name, to rent and manage the Property, including the collection and application of Rents.
Other Acts. Lender may do all such other things and acts with respect to the Property as Lender may deem appropriate and may act exclusively and solely in the place and stead of Grantor and to have all of the powers of Grantor for the purposes stated above.
No Requirement to Act. Lender shall not be required to do any of the foregoing acts or things, and the fact that Lender shall have performed one or more of the foregoing acts or things shall not require Lender to do any other specific act or thing.
APPLICATION OF RENTS. All costs and expenses incurred by Lender in connection with the Property shall be for Grantors account and Lender may pay such costs and expenses from the Rents. Lender, in its sole discretion, shall determine the application of any and all Rents received by it; however, any such Rents received by Lender which are not applied to such costs and expenses shall be applied to the Indebtedness. All expenditures made by Lender under this Assignment and not reimbursed from the Rents shall become a part of the Indebtedness secured by this Assignment, and shall be payable on demand, with interest at the Note rate from date of expenditure until paid.
FULL PERFORMANCE. If Grantor pays all of the Indebtedness when due and otherwise performs all the obligations imposed upon Grantor under this Assignment, the Note, and the Related Documents, Lender shall execute and deliver to Grantor a suitable satisfaction of this Assignment and suitable statements of termination of any financing statement on file evidencing Lenders security interest in the Rents and the Property. Any termination fee required by law shall be paid by Grantor, if permitted by applicable law.
LENDERS EXPENDITURES. If any action or proceeding is commenced that would materially affect Lenders interest in the Property or if Grantor fails to comply with any provision of this Assignment or any Related Documents, including but not limited to Grantors failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Assignment or any Related Documents, Lender on Grantors behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Rents or the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures incurred or paid by lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lenders option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Notes maturity. The Assignment also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. If Lender is required by law to give Grantor notice before or after Lender makes an expenditure, Grantor agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
DEFAULT. Each of the following, at Lenders option, shall constitute an Event of Default under this Assignment:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Assignment or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.
Default on Other Payments. Failure of Grantor within the time required by this Assignment to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien.
False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantors behalf under this Assignment or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Assignment or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Death or Insolvency. The dissolution of Grantors (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantors existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of Grantors property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against the Rents or any property securing the Indebtedness. This includes a garnishment of any of Grantors accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basic of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Property Damage or loss. The Property is lost, stolen, substantially damaged, sold, or borrowed against.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Grantors financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Assignment within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Grantor demanding cure of such default: (1) cures the default within twenty (20) days; or (2) if the cure requires more than twenty (20) days, immediately initiates steps which Lender deems in Lenders sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default and at any time thereafter, Lender may exercise any one or more of the following rights and remedies, in addition to any other rights or remedies provided by law:
Accelerate Indebtedness. Lender shall have the right at its option without notice to Grantor to declare the entire Indebtedness immediately due and payable, including any prepayment penalty that Grantor would be required to pay.
Collect Rents. Lender shall have the right, without notice to Grantor, to take possession of the Property and collect the Rents, including amounts past due and unpaid, and apply the net proceeds, over and above. Lenders costs, against the Indebtedness. In furtherance of this right, Lender shall have all the rights provided for in the Lenders Right to Receive and Collect Rents Section, above. If the Rents are collected by Lender, then Grantor irrevocably designates Lender as Grantors attorney-in-fact to endorse instruments received in payment thereof in the name of Grantor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender in response to Lenders demand shall satisfy the obligations for which the payments are made, whether or not any proper grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver.
Appoint Receiver. In any action by Lender for the foreclosure of this Assignment, whether by judicial foreclosure or power of sale, Lender shall be entitled to the appointment of a receiver upon any failure of Grantor to comply with any term, obligation, covenant, or condition contained in this Assignment, the Note, or any Related Documents.
Other Remedies. Lender shall have all other rights and remedies provided in this Assignment or the Note or by law.
Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Assignment, after Grantors failure to perform, shall not affect Lenders right to declare a default and exercise its remedies.
Attorneys Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Assignment, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys fees at trial and upon any appeal. Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lenders opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, lenders attorneys fees and Lenders legal expenses, whether or not there is a lawsuit, including attorneys fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors reports, and appraisal fees, title insurance, and fees for the Trustee, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Assignment:
Amendments. This Assignment, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Assignment. All prior and contemporaneous representations and discussions concerning such matters either are included in this document or do not constitute an aspect of the agreement of the parties. Except as may be specifically set forth in this Assignment, no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Grantors obligations under this Assignment. No alteration of or amendment to this Assignment shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Caption Headings. Caption headings in this Assignment are for convenience purposes only and are not to be used to interpret or define the provisions of this Assignment.
Governing law. With respect to procedural matters related to the perfection and enforcement of Lenders rights against the Property, this Assignment will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Oklahoma. In all other respects, this Assignment will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Assignment is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction that is evidenced by the Note and this Assignment has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Missouri.
Choice of Venue. If there is a lawsuit, Grantor agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD County, State of Missouri.
Merger. There shall be no merger of the interest or estate created by this assignment with any other
interest or estate in the Property at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.
Interpretation. (1) In all cases where there is more than one Borrower or Grantor, then all words used in this Assignment in the singular shall be deemed to have been used in the plural where the context and construction so require. (2) If more than one person signs this Assignment as Grantor, the obligations of each Grantor are joint and several. This means that if Lender brings a lawsuit, Lender may sue any one or more of the Grantors. If Borrower and Grantor are not the same person, Lender need not sue Borrower first, and that Borrower need not be joined in any lawsuit. (3) The names given to paragraphs or sections in this Assignment are for convenience purposes only. They are not to be used to interpret or define the provisions of this Assignment.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Assignment unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Assignment shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Assignment. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lenders rights or of any of Grantors obligations as to any future transactions. Whenever the consent of Lender is required under this Assignment, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to be given under this Assignment shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Assignment. Any party may change its address for notices under this Assignment by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the partys address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantors current address. To the extent permitted by applicable law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
Powers of Attorney. The various agencies and powers of attorney conveyed on Lender under this Assignment are granted for purposes of security and may not be revoked by Grantor until such time as the same are renounced by Lender.
Severability. If a court of competent jurisdiction finds any provision of this Assignment to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Assignment. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Assignment shall not affect the legality, validity or enforceability of any other provision of this Assignment.
Successors and Assigns. Subject to any limitations stated in this Assignment on transfer of Grantors interest, this Assignment shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantors successors with reference to this Assignment and the
Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Assignment or liability under the Indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Assignment.
Waiver of Homestead Exemption. Grantor hereby releases and waives all rights and benefits of the homestead exemption laws of the State of Oklahoma as to all Indebtedness secured by this Assignment.
Waiver of Right of Redemption. NOTWITHSTANDING ANY OF THE PROVISIONS TO THE CONTRARY CONTAINED IN THIS ASSIGNMENT, GRANTOR HEREBY WAIVES ANY AND ALL RIGHTS OF REDEMPTION FROM SALE UNDER ANY ORDER OR JUDGMENT OF FORECLOSURE ON GRANTORS BEHALF AND ON BEHALF OF EACH AND EVERY PERSON, EXCEPT JUDGMENT CREDITORS OF GRANTOR, ACQUIRING ANY INTEREST IN OR TITLE TO THE PROPERTY SUBSEQUENT TO THE DATE OF THIS ASSIGNMENT.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Assignment. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Assignment shall have the meanings attributed to such terms in the Uniform Commercial Code:
Assignment. The word Assignment means this ASSIGNMENT OF RENTS, as this ASSIGNMENT OF RENTS may be amended or modified from time to time, together with all exhibits and schedules attached to this ASSIGNMENT OF RENTS from time to time.
Borrower. The word Borrower means NORTHWEST PROPERTY HOLDINGS, LLC.
Default. The word Default means the Default set forth in this Assignment in the section titled Default.
Event of Default. The words Event of Default mean any of the events of default set forth in this Assignment in the default section of this Assignment.
Grantor. The word Grantor means NORTHWEST PROPERTY HOLDINGS, LLC.
Guarantor. The word Guarantor means any guarantor, surety, or accommodation party of any or all of the Indebtedness.
Guaranty. The word Guaranty means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Indebtedness. The word Indebtedness means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantors obligations or expenses incurred by Lender to enforce Grantors obligations under this Assignment, together with interest on such amounts as provided in this Assignment.
Lender. The word Lender means FIRST COMMERCIAL BANK, its successors and assigns.
Note. The word Note means the promissory note dated December 31, 2012, in the original principal amount of $1,501,500.00 from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement.
Property. The word Property means all of Grantors right, title and interest in and to all the Property as described in the Assignment section of this Assignment.
Related Documents. The words Related Documents mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
Rents. The word Rents means all of Grantors present and future rights, title and interest in, to and under any and all present and future leases, including, without limitation, all rents, revenue, income, issues, royalties, bonuses, accounts receivable, cash or security deposits, advance rentals, profits and proceeds from the Property, and other payments and benefits derived or to be derived from such leases of every kind and nature, whether due now or later, including without limitation Grantors right to enforce such leases and to receive and collect payment and proceeds thereunder.
THE UNDERSIGNED ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT, AND NOT PERSONALLY BUT AS AN AUTHORIZED SIGNER, HAS CAUSED THIS ASSIGNMENT TO BE SIGNED AND EXECUTED ON BEHALF OF GRANTOR ON DECEMBER 31, 2012.
GRANTOR:
NORTHWEST PROPERTY HOLDINGS, LLC
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BOYD P. GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC |
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LIMITED LIABILITY COMPANY ACKNOWLEDGMENT
STATE OF GEORGIA |
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COUNT OF FULTON |
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Before me, the undersigned, a Notary Public in and for the above County and State, on this 31 st day of December, 2012, personally appeared BOYD P GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC, a member or designated agent of NORTHWEST PROPERTY HOLDINGS, LLC, to me known to be the identical person who executed the Assignment on behalf of the limited liability company and acknowledged to me that BOYD P GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC, executed the same Assignment as his or her free and voluntary act and deed, and as the free and voluntary act and deed of said limited liability company, for the uses and purposes set forth in the Assignment.
Signed the 31st day of December, 2012. |
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Kirsten N Parker NOTARY PUBLIC
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LASER PRO Lending, Ver. 12.4.0.003 Copr. Harland Financial Solutions, Inc. 1997, 2012. All Rights
Reserved. - OK/MO C:\CFI\LPL\G14.FC TR-442
Exhibit 10.283
FOR RECORDERS USE ONLY
MORTGAGE
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.
A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED
PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION
UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.
MAXIMUM LIEN. The lien of this Mortgage shall not exceed at any one time $1,836,798.15.
THIS MORTGAGE dated December 31, 2012, is made and executed between NORTHWEST PROPERTY HOLDINGS, LLC, whose address is 3050 PEACHTREE ROAD NW, SUITE 355, ATLANTA, GA 30305; A GEORGIA LIMITED LIABILITY COMPANY (referred to below as Grantor) and FIRST COMMERCIAL BANK, whose address is 303 W MARKET, P. O. BOX 574, DEXTER, MO 63841 (referred to below as Lender).
GRANT OF MORTGAGE. For valuable consideration, Grantor mortgages and conveys to Lender all of Grantors right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, improvements and fixtures; all easements, rights of way, and appurtenances; all water, water rights, watercourses and ditch rights (including stock in utilities with ditch or irrigation rights); and all other rights, royalties, and profits relating to the real property, including without limitation all minerals, oil, gas, geothermal and similar matters, (the Real Property) located in OKLAHOMA County, State of Oklahoma:
See EXHIBIT A, which is attached to this Mortgage and made a part of this Mortgage as if fully set forth herein.
The Real Property or its address is commonly known as 2801 NORTHWEST 61 ST, OKLAHOMA CITY, OK 73122.
Grantor also grants to Lender a Uniform Commercial Code security interest in the Personal Property as defined below.
Loan No: 4536754
ASSIGNMENT OF RENTS. In addition to the mortgaging of the Real Property to Lender, if Grantors loan does not constitute a consumer loan as defined in 14A O.S. Section 3-104 and is not made primarily for an agricultural purpose as defined in 14A O.S. Section 1-301(4) to a natural person or to a farm or ranching business corporation as defined in 18 O.S. Section 951, Grantor hereby grants to Lender as additional security for the Indebtedness secured by this Mortgage and empowers Lender to collect all Rents (as defined below) from the Property. This grant is known as an Assignment of Rents, but is sometimes technically denominated as a pledge since the assignment is conditional and not absolute. This Assignment of Rents is conditioned upon the occurrence of an Event of Default under this Mortgage and becomes effective thereafter, whether or not proceedings have been instituted to foreclose this Mortgage by judicial foreclosure or power of sale upon the earliest of:
(a) Lender taking possession of the Property, and Grantor agrees that upon default Lender or its agent shall have the right to take possession of the Property, collect the Rents, and apply the proceeds to the Indebtedness;
(b) the appointment of a receiver for the Property, and Grantor recognizes that upon the occurrence of an Event of Default under this Mortgage, a court may grant specific performance of Grantors agreement that Lender will have the right to take possession of the Property by appointment of a receiver in accordance with 12 O.S. Section 1551 (Sixth), which authorizes appointment in all other cases where receivers have been appointed by the usages of the courts of equity, and may also appoint a receiver upon the other grounds for appointment of a receiver set forth in 12 O.S. Section 1551 (Second); or
(c) Lender giving Grantor and any lessees of the Property written notice to pay Rents due after a specified date to Lender, and Grantor recognizes that consistent with 46 O.S. Section 4 when the Lender receives Rents after written notice and does not also enter into physical possession of the Property and exercise exclusive operating control, Lender shall not be deemed to be a mortgagee in possession, but will account to Grantor regarding Rents actually collected.
Grantor also recognizes that Lender may as part of this Assignment of Rents extend or renew or enter into new leases for periods and payments consistent with the terms and payments customary for leases of the Property. If Lender sends written notice to a lessee obligated to pay under any lease on the Property requesting lessee to direct all Rents payable under the lease to Lender, this Assignment of Rents, when it is effective, shall transfer to Lender the lessees obligation to pay Grantor the Rents, and Grantor and all lessees agree that no modification or termination or renewal of a lease prior to or subsequent to that time or advance payment and collection of Rents will be effective against Lender unless Lender consents in writing. If any lessee obligated to pay Lender does not do so, Lender shall have available all remedies to collect the Rents, including without limitation those available to a lessor upon a lessees failure to perform under a lease. If Grantor occupies the Property, Grantor also agrees to pay to Lender a reasonable rental for the use and occupancy of the Property if after default Lender makes a demand for such payment in writing.
Grantor agrees that this Assignment of Rents will be considered as separate and independent from the Mortgage to the extent that the Assignment of Rents shall continue in effect in favor of the purchaser of the Property upon foreclosure with respect to leases that are not terminated by foreclosure or, at the election of Lender made known before any sale upon foreclosure is concluded, shall continue in effect in favor of Lender with respect to leases that are not terminated by foreclosure until any deficiency owed Lender after foreclosure is satisfied by payments under the leases, at which time further due payments shall accrue to the purchaser of the Property or to the purchasers assigns.
THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B)
PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENTS. AND THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Mortgage, Grantor shall pay to Lender all amounts secured by this Mortgage as they become due and shall strictly perform all of Grantors obligations under this Mortgage.
POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantors possession and use of the Property shall be governed by the following provisions:
Duty to Maintain. Grantor shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and maintenance necessary to preserve its value.
Compliance With Environmental Laws. Grantor represents and warrants to Lender that: (1) During the period of Grantors ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the Property; (2) Grantor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Lender in writing, (a) any breach or violation of any Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender in writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from the Property; and (b) any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations and ordinances, including without limitation all Environmental Laws. Grantor authorizes Lender and its agents to enter upon the Property to make such inspections and tests, at Grantors expense, as Lender may deem appropriate to determine compliance of the Property with this section of the Mortgage. Any inspections or tests made by Lender shall be for Lenders purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Grantor or to any other person. The representations and warranties contained herein are based on Grantors due diligence in investigating the Property for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any such laws; and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Mortgage or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release occurring prior to Grantors ownership or interest in the Property, whether or not the same was or should have been known to Grantor. The provisions of this section of the Mortgage, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien of this Mortgage and shall not be affected by Lenders acquisition of any interest in the Property, whether by foreclosure or otherwise.
Nuisance, Waste. Grantor shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on or to the Property or any portion of the Property. Without limiting the generality of the foregoing, Grantor will not remove, or grant to any other party the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil, gravel or rock products without Lenders prior written consent. This restriction will not apply to rights and easements (such as gas and oil) not owned by Grantor and of which Grantor has informed Lender in writing prior to Grantors signing of this
Mortgage.
Removal of Improvements. Grantor shall not demolish or remove any Improvements from the Real Property without Lenders prior written consent. As a condition to the removal of any Improvements, Lender may require Grantor to make arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value.
Lenders Right to Enter. Lender and Lenders agents and representatives may enter upon the Real Property at all reasonable times to attend to Lenders interests and to inspect the Real Property for purposes of Grantors compliance with the terms and conditions of this Mortgage.
Compliance with Governmental Requirements. Grantor shall promptly comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the use or occupancy of the Property, including without limitation, the Americans With Disabilities Act. Grantor may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Grantor has notified Lender in writing prior to doing so and so long as, in Lenders sole opinion, Lenders interests in the Property are not jeopardized. Lender may require Grantor to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lenders interest.
Duty to Protect. Grantor agrees neither to abandon or leave unattended the Property. Grantor shall do all other acts, in addition to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property.
DUE ON SALE - CONSENT BY LENDER. Lender may, at Lenders option, declare immediately due and payable all sums secured by this Mortgage upon the sale or transfer, without Lenders prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A sale or transfer means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Grantor is a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Grantor. However, this option shall not be exercised by Lender if such exercise is prohibited by federal law or by Oklahoma law.
TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Mortgage:
Payment. Grantor shall pay when due (and in all events prior to delinquency) all taxes, payroll taxes, special taxes, assessments, water charges and sewer service charges levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property. Grantor shall maintain the Property free of any liens having priority over or equal to the interest of Lender under this Mortgage, except for those liens specifically agreed to in writing by Lender, and except for the lien of taxes and assessments not due as further specified in the Right to Contest paragraph.
Evidence of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property.
Notice of Construction. Grantor shall notify Lender at least fifteen (15) days before any work is commenced, any services are furnished, or any materials are supplied to the Property, if any mechanics lien, materialmens lien, or other lien could be asserted on account of the work, services, or materials. Grantor will upon request of Lender furnish to Lender advance assurances satisfactory to Lender that Grantor can and will pay the cost of such improvements.
PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Mortgage:
Maintenance of Insurance. Grantor shall procure and maintain policies of fire insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Real Property in an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Grantor shall also procure and maintain comprehensive general liability insurance in such coverage amounts as Lender may request with Lender being named as additional insureds in such liability insurance policies. Additionally, Grantor shall maintain such other insurance, including but not limited to hazard, business interruption and boiler insurance as Lender may require. Policies shall be written by such insurance companies and in such form as may be reasonably acceptable to Lender. Grantor shall deliver to Lender certificates of coverage from each insurer containing a stipulation that coverage will not be cancelled or diminished without a minimum of ten (10) days prior written notice to Lender and not containing any disclaimer of the insurers liability for failure to give such notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. Should the Real Property be located in an area designated by the Director of the Federal Emergency Management Agency as a special flood hazard area, Grantor agrees to obtain and maintain Federal Flood Insurance, if available, within 45 days after notice is given by Lender that the Property is located in a special flood hazard area, for the full unpaid principal balance of the loan and any prior liens on the property securing the loan, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the term of the loan.
Application of Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Property. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. Whether or not Lenders security is impaired, Lender may, at Lenders election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property. If Lender elects to apply the proceeds to restoration and repair, Grantor shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration if Grantor is not in default under this Mortgage. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Mortgage, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Grantor as Grantors interests may appear. If all or part of the Property is damaged or destroyed by a third party and sums are due from that party or its insurer as a result, whether due to judgment, settlement or other process, these sums shall be applied in the same manner as insurance proceeds under this paragraph.
Grantors Report on Insurance. Upon request of Lender, however not more than once a year, Grantor shall furnish to Lender a report on each existing policy of insurance showing: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured, the then current replacement
value of such property, and the manner of determining that value; and (5) the expiration date of the policy. Grantor shall, upon request of Lender, have an independent appraiser satisfactory to Lender determine the cash value replacement cost of the Property.
LENDERS EXPENDITURES. If any action or proceeding is commenced that would materially affect Lenders interest in the Property or if Grantor fails to comply with any provision of this Mortgage or any Related Documents, including but not limited to Grantors failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Mortgage or any Related Documents, Lender on Grantors behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lenders option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Notes maturity. The Mortgage also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. If Lender is required by law to give Grantor notice before or after Lender makes an expenditure, Grantor agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Mortgage:
Title. Grantor warrants that: (a) Grantor holds good and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title report, or final title opinion issued in favor of, and accepted by, Lender in connection with this Mortgage, and (b) Grantor has the full right, power, and authority to execute and deliver this Mortgage to Lender.
Defense of Title. Subject to the exception in the paragraph above, Grantor warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Grantors title or the interest of Lender under this Mortgage, Grantor shall defend the action at Grantors expense. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lenders own choice, and Grantor will deliver, or cause to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation.
Compliance With Laws. Grantor warrants that the Property and Grantors use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities.
Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Mortgage shall survive the execution and delivery of this Mortgage, shall be continuing in nature, and shall remain in full force and effect until such time as Grantors Indebtedness shall be paid in full.
CONDEMNATION. The following provisions relating to condemnation proceedings are a part of this Mortgage:
Proceedings . If any proceeding in condemnation is filed, Grantor shall promptly notify Lender in writing,
and Grantor shall promptly take such steps as may be necessary to defend the action and obtain the award. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Grantor will deliver or cause to be delivered to Lender such instruments and documentation as may be requested by Lender from time to time to permit such participation.
Application of Net Proceeds. If all or any part of the Property is condemned by eminent domain proceedings or by any proceeding or purchase in lieu of condemnation, Lender may at its election require that all or any portion of the net proceeds of the award be applied to the Indebtedness or the repair or restoration of the Property. The net proceeds of the award shall mean the award after payment of all reasonable costs, expenses, and attorneys fees incurred by Lender in connection with the condemnation.
IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fees and charges are a part of this Mortgage:
Current Taxes, Fees and Charges. Upon request by Lender, Grantor shall execute such documents in addition to this Mortgage and take whatever other action is requested by Lender to perfect and continue Lenders lien on the Real Property. Grantor shall reimburse Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Mortgage, including without limitation all taxes, fees, documentary stamps, and other charges for recording or registering this Mortgage.
Taxes. The following shall constitute taxes to which this section applies: (1) a specific tax upon this type of Mortgage or upon all or any part of the Indebtedness secured by this Mortgage; (2) a specific tax on Grantor which Grantor is authorized or required to deduct from payments on the Indebtedness secured by this type of Mortgage; (3) a tax on this type of Mortgage chargeable against the Lender or the holder of the Note; and (4) a specific tax on all or any portion of the Indebtedness or on payments of principal and interest made by Grantor.
Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Mortgage, this event shall have the same effect as an Event of Default, and Lender may exercise any or all of its available remedies for an Event of Default as provided below unless Grantor either (1) pays the tax before it becomes delinquent, or (2) contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender.
SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Mortgage as a security agreement are a part of this Mortgage:
Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and Lender shall have all of the rights of a secured party under the Uniform Commercial Code as amended from time to time.
Security Interest. Upon request by Lender, Grantor shall take whatever action is requested by Lender to perfect and continue Lenders security interest in the Rents and Personal Property. In addition to recording this Mortgage in the real property records. Lender may, at any time and without further authorization from Grantor, file executed counterparts, copies or reproductions of this Mortgage as a financing statement. Grantor shall reimburse Lender for all expenses incurred in perfecting or continuing this security interest. Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shall assemble any Personal Property not affixed to the Property in a manner and at a place reasonably convenient to Grantor and Lender and make it available to Lender within three (3) days after receipt of written demand from Lender to the extent permitted by applicable law.
Addresses. The mailing addresses of Grantor (debtor) and Lender (secured party) from which information concerning the security interest granted by this Mortgage may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of this Mortgage.
FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to further assurances and attorney-in-fact are a part of this Mortgage:
Further Assurances. At any time, and from time to time, upon request of Lender, Grantor will make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to Lenders designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve (1) Grantors obligations under the Note, this Mortgage, and the Related Documents, and (2) the liens and security interests created by this Mortgage as first and prior liens on the Property, whether now owned or hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary in writing, Grantor shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph.
Attorney-in-Fact. If Grantor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Grantor and at Grantors expense. For such purposes, Grantor hereby irrevocably appoints Lender as Grantors attorney-in-fact for the purpose of making, executing, delivering, filing, recording, and doing all other things as may be necessary or desirable, in Lenders sole opinion, to accomplish the matters referred to in the preceding paragraph.
FULL PERFORMANCE. If Grantor pays all the Indebtedness when due, and otherwise performs all the obligations imposed upon Grantor under this Mortgage, Lender shall execute and deliver to Grantor a suitable satisfaction of this Mortgage and suitable statements of termination of any financing statement on file evidencing Lenders security interest in the Rents and the Personal Property. Grantor will pay, if permitted by applicable law, any reasonable termination fee as determined by Lender from time to time.
EVENTS OF DEFAULT. Each of the following, at Lenders option, shall constitute an Event of Default under this Mortgage:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Default on Other Payments. Failure of Grantor within the time required by this Mortgage to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien.
Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Mortgage or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.
Condemnation, Casualty. The taking by rights of eminent domain of all or any portion of the Property or the damage or destruction by an uninsured casualty of the Property.
False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantors behalf under this Mortgage or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Mortgage or any of the Related Documents ceases to be in full force and
effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Death or Insolvency. The dissolution of Grantors (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantors existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of Grantors property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any property securing the Indebtedness. This includes a garnishment of any of Grantors accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Breach of Other Agreement. Any breach by Grantor under the terms of any other agreement between Grantor and Lender that is not remedied within any grace period provided therein, including without limitation any agreement concerning any indebtedness or other obligation of Grantor to Lender, whether existing now or later.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Grantors financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Mortgage within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Grantor demanding cure of such default: (1) cures the default within twenty (20) days; or (2) if the cure requires more than twenty (20) days, immediately initiates steps which Lender deems in Lenders sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of an Event of Default and at any time thereafter, Lender, at Lenders option, may exercise any one or more of the following rights and remedies, in addition to any other rights or remedies provided by law:
Accelerate Indebtedness. Lender shall have the right at its option without notice to Grantor to declare the entire Indebtedness immediately due and payable, including any prepayment penalty that Grantor would be required to pay.
UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code.
Collect Rents. Lender shall have the right, without notice to Grantor, to take possession of the Property and collect the Rents, including amounts past due and unpaid, and apply the net proceeds, over and above Lenders costs, against the Indebtedness. In furtherance of this right, Lender may require any tenant or other user of the Property to make payments of rent or use fees directly to Lender. If the Rents are collected by Lender, then Grantor irrevocably designates Lender as Grantors attorney-in-fact to endorse instruments received in payment thereof in the name of Grantor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender in response to Lenders demand shall satisfy the obligations for which the payments are made, whether or not any proper grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver.
Appoint Receiver. In any action by Lender for the foreclosure of this Mortgage, whether by judicial foreclosure or power of sale, Lender shall be entitled to the appointment of a receiver upon any failure of Grantor to comply with any term, obligation, covenant, or condition contained in this Mortgage, the Note, or any Related Documents.
Judicial Foreclosure. Lender may obtain a judicial decree foreclosing Grantors interest in all or any part of the Property.
Power of Sale.(1) Lender, as an alternative remedy, may elect to foreclose by power of sale, and Grantor authorizes Lender, or Lenders attorney, and grants to Lender, or Lenders attorney, the power (a) to sell and to convey the Property to a purchaser and the purchasers heirs or assigns, forever, and (b) to foreclose Grantors rights and the rights of all persons who took an interest in the Property subject to this Mortgage.(2) This right to foreclose and to sell and convey the Property which Grantor has given Lender by contract is called the power of sale and may, at the option of Lender, be utilized in lieu of the procedure authorized by law for acceleration and foreclosure by judicial process. The power of sale means that in accordance with applicable Oklahoma law with respect to notice to Grantor and other persons, Grantors interest and the other persons interests in the Property can be sold by Lender at public sale and that the proceeds can be applied to pay the accelerated debt evidenced by the Note and any other Indebtedness secured by this Mortgage without Lender having to go to court in a foreclosure action.(3) However, under the power of sale, before Lender, after an Event of Default, declares all sums secured by this Mortgage immediately due and payable irrespective of any maturity date specified in the Note or in this Mortgage, Lender must give Grantor written notice of intention to foreclose by power of sale, which notice informs Grantor how Grantor has failed to perform under this Mortgage and what Grantor must do to cure the failure.(4) Grantor will have the right for thirty-five (35) days from the date notice is sent, or for any other period provided by law, to cure the failure by paying money or otherwise providing the performance due, unless Grantor previously has been in default more than the number of times specified by statute within the previous two (2) years, in which case (a) Lender is entitled immediately to accelerate the sums secured by this Mortgage and to proceed with the power of sale, and (b) Lender is not required to send a notice of intention of foreclosure with any right to cure. If Grantor cures the default or if Lender accepts a partial performance and a promise to complete performance later, Lender may not require immediate payment in full by acceleration. Grantor understands cure of a default or Lenders acceptance of partial cure and a promise to complete performance later does not affect or compromise Lenders rights if there is again a default. If Lender so requests, Grantor agrees to sign and return a form stating (a) when Grantor received the notice specified in this paragraph, (b) whether the Property is homestead property, and (c) if so, whether Grantor will elect judicial foreclosure or elect against a deficiency. Grantor understands that Grantor may, but need not, waive a right to cure in any such receipt form if requested by Lender.(5) In any effort to collect the amounts secured by this Mortgage, whether or not involving foreclosure and sale by power of sale, Lender will have the right to collect all costs allowed by law, and Grantor agrees to pay
to the extent permitted by law Lenders legal expenses.
Deficiency Judgment. If permitted by applicable law, Lender may obtain a judgment for any deficiency remaining in the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this section.
Appraisement. Lender, at Lenders option, may waive or not waive appraisement of the Property at the time judgment is rendered in any judicial foreclosure of the Property or at any time prior to such foreclosure.
Other Remedies. Lender shall have all other rights and remedies provided in this Mortgage or the Note or available at law or in equity.
Sale of the Property. To the extent permitted by applicable law, Grantor hereby waives any and all right to have the Property marshalled. In exercising its rights and remedies, Lender, to the extent permitted by applicable law, shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales. Lender shall be entitled to bid at any public sale on all or any portion of the Property.
Notice of Sale. Lender shall give Grantor reasonable notice of the time and place of any public sale of the Personal Property or of the time after which any private sale or other intended disposition of the Personal Property is to be made. Reasonable notice shall mean notice given at least ten (10) days before the time of the sale or disposition. Any sale of the Personal Property may be made in conjunction with any sale of the Real Property.
Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Mortgage, after Grantors failure to perform, shall not affect Lenders right to declare a default and exercise its remedies. Nothing under this Mortgage or otherwise shall be construed so as to limit or restrict the rights and remedies available to Lender following an Event of Default, or in any way to limit or restrict the rights and ability of Lender to proceed directly against Grantor and/or against any other co-maker, guarantor, surety or endorser and/or to proceed against any other collateral directly or indirectly securing the Indebtedness.
Attorneys Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Mortgage, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys fees at trial and upon any appeal. Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lenders opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lenders attorneys fees and Lenders legal expenses, whether or not there is a lawsuit, including attorneys fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors reports, and appraisal fees and title insurance, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.
NOTICES. To the extent permitted by applicable law, any notice required to be given under this Mortgage, including without limitation any notice of default and any notice of sale shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United
States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Mortgage. All copies of notices of foreclosure from the holder of any lien which has priority over this Mortgage shall be sent to Lenders address, as shown near the beginning of this Mortgage. Any party may change its address for notices under this Mortgage by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the partys address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantors current address. To the extent permitted by applicable law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Mortgage:
Amendments. This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Mortgage. All prior and contemporaneous representations and discussions concerning such matters either are included in this document or do not constitute an aspect of the agreement of the parties. Except as may be specifically set forth in this Mortgage, no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Grantors obligations under this Mortgage. No alteration of or amendment to this Mortgage shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Annual Reports. If the Property is used for purposes other than Grantors residence, Grantor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Grantors previous fiscal year in such form and detail as Lender shall require. Net operating income shall mean all cash receipts from the Property less all cash expenditures made in connection with the operation of the Property.
Caption Headings. Caption headings in this Mortgage are for convenience purposes only and are not to be used to interpret or define the provisions of this Mortgage.
Governing Law. With respect to procedural matters related to the perfection and enforcement of Lenders rights against the Property, this Mortgage will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Oklahoma. In all other respects, this Mortgage will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Mortgage is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction that is evidenced by the Note and this Mortgage has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Missouri.
Choice of Venue. If there is a lawsuit, Grantor agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD County, State of Missouri.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Mortgage unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Mortgage shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Mortgage. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lenders rights or of any of Grantors obligations as to any future transactions. Whenever the consent of Lender is
required under this Mortgage, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Severability. If a court of competent jurisdiction finds any provision of this Mortgage to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Mortgage. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Mortgage shall not affect the legality, validity or enforceability of any other provision of this Mortgage.
Merger. There shall be no merger of the interest or estate created by this Mortgage with any other interest or estate in the Property at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.
Successors and Assigns. Subject to any limitations stated in this Mortgage on transfer of Grantors interest, this Mortgage shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantors successors with reference to this Mortgage and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Mortgage or liability under the Indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Mortgage.
Waiver of Homestead Exemption. Grantor hereby releases and waives all rights and benefits of the homestead exemption laws of the State of Oklahoma as to all Indebtedness secured by this Mortgage.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Mortgage. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Mortgage shall have the meanings attributed to such terms in the Uniform Commercial Code:
Borrower. The word Borrower means NORTHWEST PROPERTY HOLDINGS, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Default. The word Default means the Default set forth in this Mortgage in the section titled Default.
Environmental Laws. The words Environmental Laws mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (CERCLA), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (SARA), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words Event of Default mean any of the events of default set forth in this Mortgage in the events of default section of this Mortgage.
Grantor. The word Grantor means NORTHWEST PROPERTY HOLDINGS, LLC.
Guarantor. The word Guarantor means any guarantor, surety, or accommodation party of any or all of
the Indebtedness.
Guaranty. The word Guaranty means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words Hazardous Substances mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words Hazardous Substances are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term Hazardous Substances also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Improvements. The word Improvements means all existing and future improvements, buildings, structures, mobile homes affixed on the Real Property, facilities, additions, replacements and other construction on the Real Property.
Indebtedness. The word Indebtedness means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantors obligations or expenses incurred by Lender to enforce Grantors obligations under this Mortgage, together with interest on such amounts as provided in this Mortgage.
Lender. The word Lender means FIRST COMMERCIAL BANK, its successors and assigns.
Mortgage. The word Mortgage means this Mortgage between Grantor and Lender.
Note. The word Note means the promissory note dated December 31, 2012, in the original principal amount of $1,501,500.00 from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement. The maturity date of this Mortgage is December 31, 2017. NOTICE TO GRANTOR: THE NOTE CONTAINS A VARIABLE INTEREST RATE.
Personal Property. The words Personal Property mean all equipment, fixtures, and other articles of personal property now or hereafter owned by Grantor, and now or hereafter attached or affixed to the Real Property; together with all accessions, parts, and additions to, all replacements of, and all substitutions for, any of such property; and together with all proceeds (including without limitation all insurance proceeds and refunds of premiums) from any sale or other disposition of the Property.
Property. The word Property means collectively the Real Property and the Personal Property.
Real Property. The words Real Property mean the real property, interests and rights, as further described in this Mortgage.
Related Documents. The words Related Documents mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
Rents. The word Rents means all present and future rents, revenues, income, issues, royalties, profits, and other benefits derived from the Property.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND GRANTOR AGREES TO ITS TERMS.
GRANTOR:
NORTHWEST PROPERTY HOLDINGS, LLC
By: |
/s/ Boyd P Gentry |
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BOYD P GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC |
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LIMITED LIABILITY COMPANY ACKNOWLEDGMENT |
STATE OF |
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Before me, the undersigned, a Notary Public in and for the above County and State, on this 31st day of December , 2012, personally appeared BOYD P GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC, a member or designated agent of NORTHWEST PROPERTY HOLDINGS, LLC, to me known to be the identical person who executed the Mortgage on behalf of the limited liability company and acknowledged to me that BOYD P GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC, executed the same Mortgage as his or her free and voluntary act and deed, and as the free and voluntary act and deed of said limited liability company, for the uses and purposes set forth in the Mortgage.
Signed the 31 st day of December, 2012.
Kirsten N Parker |
/s/ Kirsten N Parker |
NOTARY PUBLIC |
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Gwinnett County, GEORGIA |
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Exhibit 10.284
PROMISSORY NOTE
Principal |
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Loan Date |
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Maturity |
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Loan No |
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Call / Coll |
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Account |
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Officer |
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Initials |
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$ |
1,501,500.00 |
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12-31-2012 |
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12-31-2017 |
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4536754 |
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23 |
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07 |
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[ILLEGIBLE] |
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References in the boxes above are for Lenders use only and do not limit the applicability of this document to any particular loan or item.
And item above containing *** has been omitted due to text length limitations.
Borrower: |
NORTHWEST PROPERTY HOLDINGS, LLC (TIN: 32-0357188) |
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Lender: |
FIRST COMMERCIAL BANK DEXTER FACILITY |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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303 W MARKET |
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ATLANTA, GA 30305 |
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P. O. BOX 574 |
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DEXTER, MO 63841 |
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(573) 624-8828 |
Principal Amount: $1,501,500.00 |
Date of Note: December 31, 2012 |
PROMISE TO PAY. NORTHWEST PROPERTY HOLDINGS, LLC (Borrower) promises to pay to FIRST COMMERCIAL BANK (Lender), or order, in lawful money of the United States of America, the principal amount of One Million Five Hundred One Thousand Five Hundred & 00/100 Dollars ($1,501,500.00), together with interest on the unpaid principal balance from December 31, 2012, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in 59 regular payments of $11,929.07 each and one irregular last payment estimated at $1,132,983.02. Borrowers first payment is due January 31, 2013, and all subsequent payments are due on the same day of each month after that. Borrowers final payment will be due on December 31, 2017, and will be for all principal and all accrued interest not yet paid. Payments Include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges. Borrower will pay Lender at Lenders address shown above or at such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the NEW YORK PRIME AS STATED IN THE WALL STREET JOURNAL (the Index). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrowers request. The interest rate change will not occur more often than each DAY. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the INTEREST CALCULATION METHOD paragraph using a rate equal to the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 5.000% per annum based on a year of 360 days. NOTICE: Under no circumstances will the interest rate on this Note be less than 5.000% per annum or more than the maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: (A) increase Borrowers payments to ensure Borrowers loan will pay off by its original final maturity date, (B) increase Borrowers payments to cover accruing interest, (C) Increase the number of Borrowers payments, and (D) continue Borrowers payments at the same amount and increase Borrowers final payment.
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lander in writing, relieve Borrower of Borrowers obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers making fewer payments. Borrower agrees not to send Lender payments marked paid in full, without recourse, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Landers rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes payment in full of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: FIRST COMMERCIAL BANK, DEXTER FACILITY, 303 W MARKET, P. O. BOX 574, DEXTER, MO 63841.
LATE CHARGE. If a payment is more than 15 days late, Borrower will be charged 5.000% of the regularly scheduled payment.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the total sum due under this Note will continue to accrue interest at the interest rate under this Note. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
DEFAULT. Each of the following shall constitute an event of default (Event of Default) under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrowers behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Death or Insolvency. The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrowers existence as a going business or the death of any member, the insolvency of Borrower, the appointment of a receiver for any part of Borrowers property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, sell-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrowers accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
Adverse Change. A material adverse change occurs in Borrowers financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within twenty (20) days; or (2) if the cure requires more than twenty (20) days, immediately initiates steps which Lender deems in Lenders sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
LENDERS RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.
ATTORNEYS FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lenders attorneys fees and Lenders legal expenses whether or not there is a lawsuit, including attorneys fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Missouri.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD
Loan No: 4536754
County, State of Missouri.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrowers accounts with Lender (whether checking, savings, or some other account). This Includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts.
COLLATERAL. Borrower acknowledges this Note is secured by FIRST DEED OF TRUST ON REAL PROPERTY LOCATED AT 2801 NORTHWEST 61 ST., OKLAHOMA CITY, OK 73122 AND UCC ON INVENTORY, EQUIPMENT, ACCOUNTS AND ACCOUNTS RECEIVABLE OF NW 61ST NURSING LLC AND UCC ON INVENTORY, EQUIPMENT, ACCOUNTS, ACCOUNTS RECEIVABLE OF NORTHWEST PROPERTY HOLDINGS, LLC.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrowers heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower end any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lenders security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT. ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
NORTHWEST PROPERTY HOLDINGS, LLC
By: |
/s/ Boyd P. Gentry |
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BOYD P. GENTRY, Manager of NORTHWEST
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LENDER:
FIRST COMMERCIAL BANK
X |
/s/ [ILLEGIBLE] |
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Authorized Signer |
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[ILLEGIBLE]
Exhibit 10.285
COMMERCIAL SECURITY AGREEMENT
Principal |
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Loan Date |
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Maturity |
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Loan No |
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Call / Coll |
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Account |
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Officer |
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Initials |
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$ |
1,501,500.00 |
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12-31-2012 |
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12-31-2017 |
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4536754 |
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23 |
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07 |
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[ILLEGIBLE] |
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References in the boxes above are for Lenders use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing *** has been omitted due to text length limitations.
Grantor: |
NORTHWEST PROPERTY HOLDINGS, LLC (TIN: |
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Lender: |
FIRST COMMERCIAL BANK |
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32-0357188) |
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DEXTER FACILITY |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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303 W MARKET |
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ATLANTA, GA 30305 |
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P. O. BOX 574 |
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DEXTER, MO 63841 |
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(573) 624-8828 |
THIS COMMERCIAL SECURITY AGREEMENT dated December 31, 2012, is made and executed between NORTHWEST PROPERTY HOLDINGS, LLC (Grantor) and FIRST COMMERCIAL BANK (Lender).
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word Collateral as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:
Purchase Money Security Interest in all Inventory, Accounts, Accounts Receivables and Equipment
In addition, the word Collateral also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.
(B) All products and produce of any of the property described in this Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that partys insurer, whether due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantors right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantors accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Kaogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
GRANTORS REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:
Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lenders security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lenders interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender.
Notices to Lender. Grantor will promptly notify Lender in writing at Lenders address shown above (or such other addresses as Lender may designate from time to time) prior to any (1) change in Grantors name; (2) change in Grantors assumed business name(s); (3) change in the management or in the members or managers of the limited liability company Grantor; (4) change in the authorized signer(s); (5) change in Grantors principal office address; (6) change in Grantors state of organization; (7) conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantors name or state of organization will take effect until after Lender has received notice.
No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good end valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect. Grantor shall not, without Lenders prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.
Location of the Collateral. Except in the ordinary course of Grantors business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantors address shown above or at such other locations as are acceptable to Lender. Upon Lenders request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantors operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located.
Removal of the Collateral. Except in the ordinary course of Grantors business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lenders prior written consent. To the extent that the Collateral consists of vehicles, of other titled properly, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Georgia, without Lenders prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.
Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantors business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantors business does not include a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt. Grantor shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lenders rights in the Collateral against the claims and demands of all other persons.
Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order,
Loan No: 4536754
repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.
Inspection of Collateral. Lender and Lenders designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lenders interest in the Collateral is not jeopardized in Lenders sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, attorneys fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself end Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obliges under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lenders interest in the Collateral is not jeopardized.
Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lenders interest in the Collateral, in Lenders opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used In violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantors due diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender and not including any disclaimer of the insurers liability for failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest. Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses single interest insurance, which will cover only Lenders interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss Is covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as pert of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are Insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantors sole responsibility.
Insurance Reports. Grantor. upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration data of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.
Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lenders security interest. At Lenders request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lenders security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement. If Grantor changes Grantors name or address, or the name or address of any person granting a security interest under this Agreement changes, Grantor will promptly notify the Lender of such change.
GRANTORS RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantors right to possession and beneficial use shall not apply in any Collateral where possession of the Collateral by Lender is required by few to perfect Lenders security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the indebtedness. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lenders sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, not to protect, preserve or maintain any security merest given to secure the Indebtedness.
LENDERS EXPENDITURES. If any action or proceeding is commenced that would materially affect Lenders interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantors failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantors behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrance and other claims, at any time levied or placed on the collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures Incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the data incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lenders option, will (A) be payable on demand; (B) be added to balance of the Note and be apportioned among and be payable with any installment payment to become due during either (1) the term of any applicable insurance policy: or (2) the remaining term of the Note: or (C) be treated as a balloon payment which will be due and payable at the Notes maturity. The agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.
False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantors behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Insolvency. The dissolution of Grantor (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantors existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of Grantors property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Grantors accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Grantors financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Grantor demanding cure of such default: (1) cures the default within twenty (20) days; or (2) if the cure requires more than twenty (20) days, immediately initiates steps which Lender deems in Lenders sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter. Lender shall have all the rights of a secured party under the Georgia Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lenders own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that persons right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.
Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lenders right to the appointment of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver.
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lenders discretion transfer any Collateral into Lenders own name or that of Lenders nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.
Election of Remedies. Except as may be prohibited by applicable law, all of Lenders rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantors failure to perform, shall not affect Lenders right to declare a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys Fees; Expenses. Grantor agrees to pay upon demand all of Lenders costs and expenses, including Lenders attorneys fees and Lenders legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lenders attorneys lees and legal expenses whether or not there is a lawsuit, including attorneys fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Governing Law. With respect to procedural matters related to the perfection and enforcement of Lenders rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the state of Georgia. In all other respects, this Agreement will be governed by federal law applicable to Lender and to the extent not promoted by
federal law, the laws of the State of Missouri without regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Agreement is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction that is evidenced by the Note and this Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Missouri.
Choice of Venue. If there is a lawsuit, Grantor agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD County, State of Missouri.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lenders rights or of any of Grantors obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the partys address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantors current address. Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
Power of Attorney. Grantor hereby appoints Lender as Grantors irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lenders security interest in the Collateral.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the Illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantors interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantors successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness.
Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Grantors Indebtedness shall be paid in full.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word Agreement means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.
Borrower. The word Borrower means NORTHWEST PROPERTY HOLDINGS, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Collateral. The word Collateral means all of Grantors right, title and Interest in and to all the Collateral as described in the Collateral Description section of this Agreement.
Default. The word Default means the Default set forth in this Agreement in the section titled Default.
Environmental Laws. The words Environmental Laws mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (CERCLA), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (SARA), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words Event of Default mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Grantor. The word Grantor means NORTHWEST PROPERTY HOLDINGS, LLC.
Guarantor. The word Guarantor means any guarantor, surety, or accommodation party of any or all of the Indebtedness.
Guaranty. The word Guaranty means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words Hazardous Substances mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words Hazardous Substances are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials of waste as defined by or listed under the Environmental Laws. The term Hazardous Substances also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word Indebtedness means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents.
Lender. The word Lender means FIRST COMMERCIAL BANK, its successors and assigns.
Note. The word Note means the Note dated December 31, 2012 and executed by NORTHWEST PROPERTY HOLDINGS, LLC in the principal amount of $1,501,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Property. The word Property means all of Grantors right, title and interest in and to all the Property as described in the Collateral Description section of this Agreement.
Related Documents. The words Related Documents mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED DECEMBER 31, 2012.
THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
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NORTHWEST PROPERTY HOLDINGS, LLC |
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/s/ BOYD P. GENTRY |
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BOYD P GENTRY, Manager of NORTHWEST
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LENDER: |
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FIRST COMMERCIAL BANK |
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/s/ [ILLEGIBLE] |
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Authorized Signer |
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[ILLEGIBLE]
Exhibit 10.286
COMMERCIAL SECURITY AGREEMENT
Principal |
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Loan Date |
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Maturity |
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Loan No |
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Call / Coll |
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Account |
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Officer |
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Initials |
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1,501,500.00 |
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12-31-2012 |
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12-31-2017 |
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4536754 |
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23 |
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07 |
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[ILLEGIBLE] |
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References in the boxes above are for Lenders use only and do not limit the applicability of this document to any particular loan item.
Any item above containing *** has been omitted due to text length limitations.
Borrower: |
NORTHWEST PROPERTY HOLDINGS, LLC (TIN: |
Lender: |
FIRST COMMERCIAL BANK |
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32-0357188) |
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DEXTER FACILITY |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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303 W MARKET |
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ATLANTA, GA 30305 |
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P. O. BOX 574 |
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DEXTER, MO 63841 |
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(573) 624-8828 |
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Grantor: |
NW 61ST NURSING, LLC (TIN: 38-3855607) |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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ATLANTA, GA 30305 |
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THIS COMMERCIAL SECURITY AGREEMENT dated December 31, 2012, is made and executed among NW 61ST NURSING, LLC (Grantor); NORTHWEST PROPERTY HOLDINGS, LLC (Borrower); and FIRST COMMERCIAL BANK (Lender).
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word Collateral as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:
All Inventory, Accounts, Account Receivables and Equipment
In addition, the word Collateral also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.
(B) All products and produce of any of the property described in this Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that partys insurer, whether due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantors right, title, and interest In and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.
BORROWERS WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B) Borrower assumes the responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender lakes or fails to lake under this Agreement.
GRANTORS REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this Agreement is executed at Borrowers request and not at the request of Lender; (B) Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender; (C) Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrowers financial condition; and (D) Lender has made no representation to Grantor about Borrower or Borrowers creditworthiness.
GRANTORS WAIVERS. Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (A) grant any extension of time for any payment, (B) grant any renewal, (C) permit any modification of payment terms or other terms, or (D) exchange or release any Collateral or other security. No such act or failure to act shall affect Lenders rights against Grantor or the Collateral.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantors accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
GRANTORS REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:
Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lenders security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lenders interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender.
Notices to Lender . Grantor will promptly notify Lender in writing at Lenders address shown above for such other addresses as Lender may designate from time to time) prior to any (1) change in Grantors name; (2) change in Grantors assumed business name(s); (3) change in the management or in the members or managers of the limited liability company Grantor; (4) change in the authorized signer(s); (5) change in Grantors principal office address; (6) change in Grantors state of organization; (7) conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantors name or state of organization will take effect until after Lender has received notice.
No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lenders prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.
Location of the Collateral. Except in the ordinary course of Grantors business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantors address shown above or at such other locations as are acceptable to Lender. Upon Lenders request. Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantors operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located.
Removal of the Collateral. Except in the ordinary course of Grantors business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lenders prior written consent. To the extent that the Collateral consists of vehicles, or
Loan No: 4536754
other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Oklahoma, without Lenders prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.
Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantors business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantors business does not include a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other then those which reflect the security Interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lenders rights in the Collateral against the claims and demands of all other persons.
Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.
Inspection of Collateral. Lender and Lenders designated representatives and agents shall have the right at all reasonable times to examine and Inspect the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lenders interest in the Collateral is not jeopardized in Lenders solo opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shell deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, coats, attorneys fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lenders interest in the Collateral is not jeopardized.
Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land of relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lenders interest In the Collateral, in Lenders opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantors due diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnity, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender and not including any disclaimer of the insurers liability for failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest. Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses single interest insurance, which will cover only Lenders interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shell be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral. Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair of restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shell pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shell be used to prepay the Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantors sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.
Financing Statements. Grantor authorizes Lander to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lenders security interest. At Lenders request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect and continue Lenders security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement. If Grantor changes Grantors name or address, or the name or address of any person granting a security interest under this Agreement changes. Grantor will promptly notify the Lender of such change.
GRANTORS RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantors right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lenders security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall
be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lenders sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the indebtedness.
LENDERS EXPENDITURES. If any action or proceeding is commenced that would materially affect Lenders interest in the Collateral or it Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantors failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantors behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lenders option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Notes maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. If Lender is required by law to give Grantor notice before or after Lender makes an expenditure, Grantor agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Indebtedness.
Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower or Grantor.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or Grantor or on Borrowers or Grantors behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false of misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and far any reason.
Insolvency. The dissolution of Grantor (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Borrowers or Grantors existence as a going business or the death of any member, the insolvency of Borrower or Grantor, the appointment of a receiver for any part of Borrowers or Grantors property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Borrowers or Grantors accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower or Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower or Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Borrowers or Grantors financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within twenty (20) days; or (2) if the cure requires more then twenty (20) days, immediately initiates steps which Lender deems in Lenders sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Oklahoma Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise dispose of the Collateral. Unless the Collateral in whole or in part is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or of the time after which any private sale or other disposition is to be made. Notwithstanding any other provision of this Agreement, any requirement of notice for this purpose shall be met if notice is provided at least ten (10) day before sale or other disposition or action. Lender shall be entitled to, and Grantor shall be liable for, all reasonable costs and expenditures incurred in realizing on Lenders security interest, including without limitation, all court costs, fees for sale, selling costs and reasonable attorneys fees as set forth in the Note or in this Agreement. All such costs shall be secured by the security interest in the Collateral covered by this Agreement.
Appoint Receiver. In any action by Lender for the foreclosure of this Agreement, whether by judicial foreclosure or power of sale, Lender shall be entitled to the appointment of a receiver upon any failure of Grantor to comply with any term, obligation, covenant, or condition contained in this Agreement, the Note, or any Related Documents.
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lenders discretion transfer any Collateral into Lenders own name or that of Lenders nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or ail of the Collateral, Lender may obtain a judgment against Borrower for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Borrower shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.
Election of Remedies. Except as may be prohibited by applicable law, all of Lenders rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Grantor under this Agreement, after Grantors failure to perform, shall not affect Lenders right to declare a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. All prior and contemporaneous representations and discussions concerning such matters either are included in this document or do not constitute an aspect of the agreement of the parties, Except as may be specifically set forth in this Agreement, no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Grantors obligations under this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys Fees; Expenses. Grantor agrees to pay upon demand all of Lenders costs and expenses, including Lenders attorneys fees and Lenders legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lenders attorneys fees and legal expenses whether or not there is a lawsuit, including attorneys fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shell pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Governing Law. With respect to procedural matters related to the perfection and enforcement of Lenders rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Oklahoma. In all other respects, this Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Agreement is valid or enforceable, the provision that Is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction that is evidenced by the Note and this Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Missouri.
Choice of Venue. If there is a lawsuit, Grantor agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD County, State of Missouri.
Joint and Several Liability. All obligations of Borrower and Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor, and all references to Borrower shall mean each and every Borrower. This means that each Borrower and Grantor signing below is responsible for all obligations in this Agreement. Where any one or more of the parties is a corporation, partnership, limited liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the officers, directors, partners, members, or other agents acting or purporting to act on the entitys behalf, and any obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lenders rights or of any of Grantors obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the partys address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantors current address. To the extent permitted by applicable law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
Power of Attorney. Grantor hereby appoints Lender as Grantors irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lenders security interest in the Collateral.
Severability. If a court of competent Jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantors interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantors successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness.
Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Borrowers Indebtedness shall be paid in full.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word Agreement means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.
Borrower. The word Borrower means NORTHWEST PROPERTY HOLDINGS, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Collateral. The word Collateral means all of Grantors right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.
Default. The word Default means the Default set forth in this Agreement in the section titled Default.
Environmental Laws . The words Environmental Laws mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601. et seq. (CERCLA), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99.499 (SARA), the Hazardous Materials Transportation Act. 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, of seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default . The words Event of Default mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Grantor. The word Grantor means NW 61ST NURSING, LLC.
Guarantor. The word Guarantor means any guarantor, surety, or accommodation party of any or all of the Indebtedness.
Guaranty. The word Guaranty means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words Hazardous Substances mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The wards Hazardous Substances are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term Hazardous Substances also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word Indebtedness means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word Lender means FIRST COMMERCIAL BANK, its successors and assigns.
Note. The word Note means the Note dated December 31, 2012 and executed by NORTHWEST PROPERTY HOLDINGS, LLC in the principal amount of $1,501,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Property. The word Property means all of Grantors right, title and interest in and to all the Property as described in the Collateral Description section of this Agreement.
Related Documents. The words Related Documents mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED DECEMBER 31, 2012.
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GRANTOR: |
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NW 61ST NURSING, LLC |
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By: |
/s/ BOYD P GENTRY |
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BOYD P GENTRY, Manager of NW 61ST NURSING, LLC |
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BORROWER: |
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NORTHWEST PROPERTY HOLDINGS LLC |
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By: |
/s/ BOYD P GENTRY |
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BOYD P GENTRY, Manager of NORTHWEST PROPERTY HOLDINGS, LLC |
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LENDER: |
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FIRST COMMERCIAL BANK |
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/s/ [ILLEGIBLE] |
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Authorized Signer |
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[ILLEGIBLE]
Exhibit 10.287
COMMERCIAL GUARANTY
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07 |
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[ILLEGIBLE] |
References in the boxes above are for Lenders use only and do not limit the applicability of this document to any particular loan or item.
Any item n above containing *** has been omitted due to text length limitations.
Borrower: |
NORTHWEST PROPERTY HOLDINGS, LLC (TIN: 32-0357188) |
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Lender: |
FIRST COMMERCIAL BANK DEXTER FACILITY |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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303 W MARKET |
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ATLANTA, GA 30305 |
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P. O. BOX 574 |
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DEXTER, MO 63841 |
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(573) 624-8828 |
Guarantor: |
ADCARE HEALTH SYSTEMS INC (TIN: |
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31-1332119) |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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ATLANTA, GA 30305 |
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CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrowers obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lenders remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrowers obligations under the Note and Related Documents. Under this Guaranty, Guarantors liability is unlimited and Guarantors obligations are continuing.
INDEBTEDNESS. The word Indebtedness as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. Indebtedness includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.
If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lenders rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantors liability will be Guarantors aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.
CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTORS OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantors other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantors written notice of revocation must be mailed to Lender, by certified mail, at Lenders address listed above or such other place as Lender may designate in writing, Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantors written revocation. For this purpose and without limitation, the term new Indebtedness does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, new Indebtedness does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness. This Guaranty shall bind Guarantors estate as to the Indebtedness created both before and after Guarantors death or incapacity, regardless of Lenders actual notice of Guarantors death. Subject to the foregoing, Guarantors executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantors hairs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).
GUARANTORS AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantors liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest, principal amount, fees or other charges on the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrowers sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.
GUARANTORS REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrowers request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantors assets, or any interest therein; (F) upon Lenders request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantors financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantors financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantors financial condition; (H) no litigation, claim, investigation, Administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened: (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrowers financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstance which might in any way affect Guarantors risks under this Guaranty, and Guarantor further agrees that, absent a request for information. Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lander in the course of its relationship with Borrower.
GUARANTORS WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower,
Loan No: 4536754
Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lenders power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.
Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any one action or anti-deficiency law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lenders commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantors subrogation rights or Guarantors rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrowers liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrowers trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTORS UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantors full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.
SUBORDINATION OF BORROWERS DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender lull payment in legal lender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty:
Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys Fees; Expanses. Guarantor agrees to pay upon demand all of Lenders costs and expenses, including Lenders attorneys fees and Lenders legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lenders attorneys fees and legal expenses whether or not there is a lawsuit, including attorneys fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty.
Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions.
Choice of Venue. If there is a lawsuit, Guarantor agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD County, State of Missouri.
Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantors attorney with respect to this Guaranty; the Guaranty fully reflects Guarantors intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lenders attorneys fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations end agreements of this paragraph.
Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words Borrower and Guarantor respectively shall mean all and any one or more of them. The words Guarantor, Borrower, and Lender include the heirs, successors, assigns, and transferees of each of them. All of the obligations of Guarantor under this Guaranty (if more than one Guarantor) shall be joint and several. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.
Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, it mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled DURATION OF GUARANTY. Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the partys address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantors current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lenders rights or of any of Guarantors obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Successors and Assigns . This Guaranty shall be understood to be for the benefit of Lender and for such other person or persons as may from time to time become or be the holder or owner of any of the Indebtedness or any interest therein, and this Guaranty shall be transferable to the same extent and with the same force and effect as any such Indebtedness may be transferable.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms
used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:
Borrower. The word Borrower means NORTHWEST PROPERTY HOLDINGS, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Guarantor. The word Guarantor means everyone signing this Guaranty, including without limitation ADCARE HEALTH SYSTEMS INC, and in each case, any signers successors and assigns.
Guaranty. The word Guaranty means this guaranty from Guarantor to Lender.
Indebtedness. The word Indebtedness means Borrowers indebtedness to Lender as more particularly described in this Guaranty.
Lender. The word Lender means FIRST COMMERCIAL BANK, its successors and assigns.
Note. The word Note means and includes without limitation all of Borrowers promissory notes and/or credit agreements evidencing Borrowers loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.
Related Documents. The words Related Documents mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTORS EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED DURATION OF GUARANTY. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED DECEMBER 31, 2012.
GUARANTOR:
ADCARE HEALTH SYSTEMS INC.
BY: |
/s/ BOYD P GENTRY |
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BOYD P GENTRY, CEO of ADCARE HEALTH SYSTEMS INC |
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CORPORATE ACKNOWLEDGMENT
STATE OF GEORGIA |
) |
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) ss |
COUNTY OF JULTAN |
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On this 31st day of December, 2012, before me appeared BOYD P GENTRY , to me personally known, who, being by me duly sworn, did say that he or she is CEO of ADCARE HEALTH SYSTEMS INC , and that on behalf of said corporation, by authority of its board of directors, said BOYD P GENTRY acknowledged said Guaranty to be the free [ILLEGIBLE] of said corporation and that said corporation has no corporate seal.
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/s/ Kirsten N. Parker |
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Notary public |
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My Commission express:
Kirsten N Parker |
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NOTARY PUBLIC |
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Gwinnett County, GEORGIA |
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My Comm. Exp. 4/16/16 |
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[ILLEGIBLE]
Exhibit 10.288
COMMERCIAL GUARANTY
Principal |
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Loan Date |
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Maturity |
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Call / Coll |
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Account |
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Officer |
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Initials |
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23 |
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07 |
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[ILLEGIBLE] |
References in the boxes above are for Lenders use only and do not limit the applicability of this document to any particular loan or item. Any item above containing *** has been omitted due to text length limitations.
Borrower: |
NORTHWEST PROPERTY HOLDINGS, LLC (TIN: 32-0357188) |
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Lender: |
FIRST COMMERCIAL BANK DEXTER FACILITY |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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303 W MARKET |
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ATLANTA, GA 30305 |
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P. O. BOX 574 |
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DEXTER, MO 63841 |
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(573) 624-8828 |
Guarantor: |
NW 61ST NURSING, LLC (TIN: 38-3855607) |
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3050 PEACHTREE ROAD NW, SUITE 355 |
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ATLANTA, GA 30305 |
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CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrowers obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lenders remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrowers obligations under the Note and Related Documents. Under this Guaranty, Guarantors liability is unlimited and Guarantors obligations are continuing.
INDEBTEDNESS. The word Indebtedness as used in this Guaranty means all of the principal amount outstanding from time to time end at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. Indebtedness includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.
If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lenders rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantors liability will be Guarantors aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.
CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTORS OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantors other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantors written notice of revocation must be mailed to Lender, by certified mail, at Lenders address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantors written revocation. For this purpose and without limitation, the term new Indebtedness does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, new Indebtedness does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness. This Guaranty shall bind Guarantors estate as to the Indebtedness created both before and after Guarantors death or incapacity, regardless of Lenders actual notice of Guarantors death. Subject to the foregoing, Guarantors executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect, Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor end Guarantors heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).
GUARANTORS AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantors liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest, principal amount, lees or other charges on the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrowers sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.
GUARANTORS REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrowers request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantors assets, or any interest therein; (F) upon Lenders request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantors financial condition as of the dales the financial information is provided; (G) no material adverse change has occurred in Guarantors financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantors financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrowers financial condition. Guarantor agrees to keep adequately informed from much means of any facts, events, or circumstances which might in any way affect Guarantors risks under this Guaranty, and Guarantor further parses that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any Information or documents acquired by Lender in the course of its relationship with Borrower.
GUARANTORS WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional
Loan No: 4536754
loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lenders power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.
Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any one action or anti-deficiency law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lenders commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantors subrogation rights or Guarantors rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrowers liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrowers trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTORS UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantors full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be affective only to the extent permitted by law or public policy.
SUBORDINATION OF BORROWERS DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness, Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee In bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness, If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty:
Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys Fees; Expenses. Guarantor agrees to pay upon demand all of Lenders costs and expenses, including Lenders attorneys fees and Lenders legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lenders attorneys fees and legal expenses whether, or not there is a lawsuit, including attorneys fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty.
Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions.
Choice of Venue. If there is a lawsuit, Guarantor agrees upon Lenders request to submit to the jurisdiction of the courts of STODDARD County, State of Missouri.
Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantors attorney with respect to this Guaranty; the Guaranty fully reflects Guarantors intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lenders attorneys fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.
Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words Borrower and Guarantor respectively shall mean all and any one or more of them. The words Guarantor, Borrower and Lender include the hairs, successors, assigns, and transferees of each of them. All of the obligations of Guarantor under this Guaranty (if mom than one Guarantor) shall be joint and several. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of This Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.
Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled DURATION OF GUARANTY. Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the partys address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantors current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lenders rights or of any of Guarantors obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Successors and Assigns. This Guaranty shall be understood to be for the benefit of Lender and for such other person or persons as may from time to time become or be the holder or owner of any of the Indebtedness or any interest therein, and this Guaranty shall be transferable to the same extent and with the same force and effect as any such Indebtedness may be transferable.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise
defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:
Borrower. The word Borrower means NORTHWEST PROPERTY HOLDINGS, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Guarantor. The word Guarantor means everyone signing this Guaranty, including without limitation NW 61ST NURSING, LLC, and in each case, any signers successors and assigns.
Guaranty. The word Guaranty means this guaranty from Guarantor to Lender.
Indebtedness. The word Indebtedness means Borrowers indebtedness to Lender as more particularly described in this Guaranty.
Lender. The word Lender means FIRST COMMERCIAL BANK, its successors and assigns.
Note. The word Note means and includes without limitation all of Borrowers promissory notes and/or credit agreements evidencing Borrowers loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.
Related Documents. The words Related Documents mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS, IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTORS EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED DURATION OF GUARANTY. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED DECEMBER 31, 2012.
GUARANTOR:
NW 61ST NURSING, LLC
By: |
/s/ Boyd P. Gentry |
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BOYD P GENTRY, Manager of NW 61ST NURSING, LLC |
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LIMITED LIABILITY COMPANY ACKNOWLEDGMENT
STATE OF GEORGIA |
) |
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) ss |
COUNTY OF FULTON |
) |
On this 31 st day of December, 2012, before me appeared BOYD P GENTRY, Manager of NW 61ST NURSING, LLC, to me known to be the person described in and who executed the foregoing Commercial Guaranty, as the member or designated agent of NW 61ST NURSING, LLC, a limited liability company, and acknowledged that he or she executed the same as the act and deed of said limited liability company and is acting for and on behalf of and as member or designated agent of the company.
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/s/ Kirsten N. Parker |
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Notary Public |
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My Commission expires:
Kirsten N Parker |
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Notary Public |
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Gwinnett County, Georgia |
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My Comm. Exp. 4/16/16 |
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[ILLEGIBLE]
Exhibit 10.289
15176184
01-14-13
MEMORANDUM OF AGREEMENT
January 25, 2013
The PrivateBank and Trust Company, an Illinois banking corporation (the Lender ), is the Lender under a Loan and Security Agreement dated as of September 20, 2012, as modified and amended by a Modification Agreement dated as of October 26, 2012 (as so modified and amended, the Loan Agreement ), by and among the Borrowers named therein (the Borrowers ), each of which is a party to this Memorandum of Agreement (this Agreement ), and the Lender. The Loan under the Loan Agreement (the Loan ) is guaranteed by AdCare Health Systems, Inc., an Ohio corporation (the Guarantor ), which is a party to this Agreement. The Borrowers include Northridge HC&R Nursing, LLC, Woodland Hills HC Nursing, LLC, and APH&R Nursing, LLC, each a Georgia limited liability company (the Subject Borrowers ). Capitalized terms used and not otherwise defined in this Agreement shall have the same meanings as in the Loan Agreement. The Borrowers, the Guarantor and the Lender hereby agree as follows:
1. On December 28, 2012, one or more of the Subject Borrowers made a payment on the Loan to the Lender in the amount of $683,549, which was an amount agreed to by the Borrowers, the Guarantor and the Lender to obtain a release of the Subject Borrowers and their Collateral from the Loan. In consideration of such payment, the Lender hereby releases each of the Subject Borrowers as a Borrower under the Loan Agreement, and releases the Collateral which is the property of such Subject Borrower as security for the Loan.
2. The Borrowers, the Guarantor and the Lender acknowledge and agree that this Agreement sets forth all of the covenants, promises, agreements, conditions and understandings of the Borrowers, the Guarantor and the Lender relating to the subject matter of this Agreement, and that there are no covenants, promises, agreements, conditions or understandings, either oral or written, among the Borrowers, the Guarantor and the Lender relating to the subject matter of this Agreement other than as are herein set forth. The Borrowers and the Guarantor also acknowledge that they are executing this Agreement without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth in this Agreement.
3. The Loan Agreement and the other Loan Documents remain in full force and effect as originally executed and delivered by the parties thereto, as modified and amended by the Modification Agreement described above, and subject to the releases contained in this Agreement, and the Loan Agreement and the other Loan Documents, as so modified and amended, are hereby confirmed and reaffirmed by the Borrowers, other than the Subject Borrowers, and the Guarantor, subject to the releases contained in this Agreement.
4. The Borrowers, other than the Subject Borrowers, and the Guarantor hereby (i) acknowledge and agree that the Lender has not heretofore waived any Default or Event of Default under the Loan Agreement or any of the other Loan Documents, or any rights or
remedies under the Loan Agreement or any of the other Loan Documents; and (ii) acknowledge and agree that they do not have any defense, setoff or counterclaim to the payment or performance of any of their obligations under, or to the enforcement by the Lender of, the Loan Agreement or any of the other Loan Documents, as modified and amended by the said Modification Agreement, including, without limitation, any defense, setoff or counterclaim based on the covenant of good faith and fair dealing.
5. This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective successors, assigns and legal representatives. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. This Agreement may be amended, changed, modified or altered only by a written instrument executed the party sought to be bound by such amendment, change, modification or alteration.
6. The Borrowers, the Guarantor and the Lender, and their respective legal counsel, have participated in the drafting of this Agreement, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Agreement.
7. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof.
8. This Agreement is prepared and entered into with the intention that the law of the State of Illinois shall govern its construction and enforcement.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
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ADK THOMASVILLE OPERATOR, LLC |
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ADK LUMBER CITY OPERATOR, LLC |
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ADK JEFFERSONVILLE OPERATOR, LLC |
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ADK LAGRANGE OPERATOR, LLC |
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ADK POWDER SPRINGS OPERATOR, LLC |
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ADK OCEANSIDE OPERATOR, LLC |
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ADK THUNDERBOLT OPERATOR, LLC |
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ADK SAVANNAH BEACH OPERATOR, LLC |
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ATTALLA NURSING ADK, LLC |
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MOUNTAIN TRACE NURSING ADK, LLC |
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MT. KENN NURSING, LLC |
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ERIN NURSING, LLC |
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CP NURSING, LLC |
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BENTON NURSING, LLC |
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VALLEY RIVER NURSING, LLC |
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PARK HERITAGE NURSING, LLC |
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HOMESTEAD NURSING, LLC |
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WOODLAND MANOR NURSING, LLC |
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MOUNTAIN VIEW NURSING, LLC |
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NORTHRIDGE HC&R NURSING, LLC |
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LITTLE ROCK HC&R NURSING, LLC |
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WOODLAND HILLS HC NURSING, LLC |
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APH&R NURSING, LLC |
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GLENVUE H&R NURSING, LLC |
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COOSA NURSING ADK, LLC |
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By |
/s/ Boyd P. Gentry |
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Boyd P. Gentry, Manager of Each Borrower |
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ADCARE HEALTH SYSTEMS, INC. |
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By |
/s/ Boyd P. Gentry |
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Boyd P. Gentry, Chief Executive Officer |
- AdCare Portfolio Operator Loan Memorandum of Agreement -
- Signature Page 1 -
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THE PRIVATEBANK AND TRUST COMPANY |
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By |
/s/ Amy K. Hallberg |
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Amy K. Hallberg, Managing Director |
- AdCare Portfolio Operator Loan Memorandum of Agreement -
- Signature Page 2 -
Exhibit 10.290
THIS INSTRUMENT IS SUBJECT TO A DEBT SUBORDINATION AGREEMENT DATED AS OF DECEMBER 28, 2012, BY AND AMONG PARENT, SUBORDINATED CREDITOR (AS EACH IS DEFINED THEREIN) AND THE HUNTINGTON NATIONAL BANK, AS ADMINISTRATIVE AGENT. BY ITS ACCEPTANCE OF THIS INSTRUMENT, THE HOLDER HEREOF AND ANY SUCCESSOR, ASSIGN, DEVISEE, REPRESENTATIVE OR SUBSEQUENT HOLDER OF THIS INSTRUMENT AGREES TO BE BOUND BY THE PROVISIONS OF SUCH DEBT SUBORDINATION AGREEMENT TO THE SAME EXTENT THAT SUBORDINATED CREDITOR IS BOUND.
SECURED PROMISSORY NOTE
U.S. $3,600,000 |
December 28, 2012 |
COLUMBUS, OHIO
FOR VALUE RECEIVED, the undersigned CHP ACQUISITION COMPANY, LLC, an Ohio limited liability company (Borrower) promises to pay to the order of AdCare Health Systems, Inc., an Ohio corporation (Lender), the principal sum of Three Million Six Hundred Thousand and No/100 Dollars ($3,600,000.00) (the Principal). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement of Sale between Borrower and Lender dated October 11, 2012 (the Sale Agreement).
The unpaid Principal of this Note shall bear interest from the date hereof until paid in full at the annual percentage rate of five percent (5%); provided, however, that if, for any reason whatsoever, the Borrower has not assumed the Vandalia HUD Loan (as defined below) by May 31, 2013, then, and in such an event, the interest rate on the unpaid Principal of the Note shall automatically be increased by one percentage point for each month or part thereof during which any of the principal amount of this Note shall remain unpaid.
The Principal balance plus accrued interest shall be due and payable as follows:
Accrued interest shall be due and payable monthly in arrears with the first (1st) installment due on the first (1st) day of February, 2013 and continuing thereafter each month until the Maturity Date (as hereinafter defined), at which time the principal balance and any accrued interest shall be due and payable in full. For purposes of this Note, Maturity Date means the earlier of (i) Borrowers assumption of that certain HUD Loan secured by the real property commonly known as Hearth & Home of Vandalia, 55 Great Hill Drive, Vandalia, Ohio, which HUD Loan is evidenced by that certain Mortgage of record from Hearth & Home of Vandalia, Inc., an Ohio corporation, to Red Mortgage Capital, Inc., dated January 26, 2012, filed for record on January 31, 2012 in Official Record 2012-00006113, Recorders Office, Montgomery County, Ohio (the Vandalia HUD Loan)or (ii) September 1, 2014.
Borrower acknowledges and agrees that all amounts under this Secured Promissory Note (the Note) are due and payable as stated herein, and Lender has no obligation to renew or extend this Note. The books and records of Lender shall constitute prima facie evidence of all matters with respect to the amounts due hereunder. Payments shall be applied first to interest and then to Principal.
ADDITIONAL COVENANTS:
1. Secured Note . Payment of this Note is secured by that certain Pledge and Security Agreement of even date herewith entered into by Borrower and Lender.
2. Default .
a. Each of the following shall be a default (Default) under this Note:
i. failure of Borrower to pay any amount due hereunder, or any part hereof, or any extension or renewal hereof, within five (5) days of when the same becomes due;
ii. if, after the satisfaction of the conditions precedent as set forth in that certain amendment to the Purchase Agreement dated concurrently herewith respecting the closing of sale of the Facility commonly known as Lincoln Lodge Retirement Residence, Borrower fails to close on the acquisition of such Facility;
iii. failure of Borrower to comply with any term, covenant, requirement or condition of Section 2 of that certain At Risk Agreement by and between Borrower and Lender with respect to the Vandalia Facility;
iv. Borrowers failure to perform or comply with any of the covenants or agreements contained herein.
b. If this Note is placed in the hands of one or more attorneys for collection or in the hands of one or more attorneys for representation of Lender in connection with any bankruptcy, probate or other court or by any other legal proceedings, Borrower shall pay the fees and expenses of such attorneys in addition to the full amount due hereon, whether or not litigation is commenced.
c. In the event ( i ) that there occurs any Default hereunder; or ( ii ) that Borrower shall become insolvent or make an assignment for the benefit of its creditors; or ( iii ) that a petition is filed or any other proceeding is commenced under the Federal Bankruptcy Act or any state insolvency statute by or against Borrower; or ( iv ) that a receiver or similar person is appointed for Borrower; or ( v ) any type of foreclosure or similar proceeding is filed with respect to any property serving as collateral for this Note; then, in any such event, the entire unpaid Principal balance due hereon and all accrued interest at the option of the holder hereof shall become immediately due and payable without any notice or demand. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Default.
3. Prepayment . Borrower may prepay the balance of the Note in full or in part at any time.
4. Waivers by Borrower and Others . Borrower and all endorsers, sureties and guarantors hereof hereby severally waive presentment for payment, notice of non-payment, protest, and notice of protest, and diligence in enforcing payment hereof, and consent that the time of payment may be extended without notice. The Borrower, maker, endorser, guarantor, and surety executing this Note also waive any and all defenses which they may have upon the ground of any extension of time of payment which may be given by the holder of this indebtedness to any of the undersigned, or to any other person assuming payment hereof.
5. Amendments, Modifications and Waiver . No amendment, modification or waiver of any provision of this Note, nor consent to any departure by Borrower therefrom, shall be effective unless the same shall be in a writing signed by Lender, and then only in the specific instance and for the purpose for which given. No failure or delay on the part of Lender to exercise any right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right under this Note preclude any other or further exercise thereof, or the exercise of any other right. Each and every right granted to Lender under this Note or allowed to it at law or in equity shall be deemed cumulative and such remedies may be exercised from time to time concurrently or consecutively at Lenders option.
6. Payment . All payments due under this Note shall be paid to Lender in accordance with the wire instructions attached hereto as Exhibit A or at such other place or in such other manner as Lender may direct. Whenever a payment is due on a day other than a business day (all days except Saturday, Sunday and legal holidays under federal or Ohio law), the maturity thereof shall be extended to the next succeeding business day and interest shall accrue thereon at the rate described herein. If any amount due hereunder is not paid within ten (10) days of the date when due, Borrower shall pay Lender an administrative and late charge equal to the lesser of (a) five percent (5%) on and in addition to the amount of such overdue amount, or (b) the maximum charges allowable under applicable law.
7. Set Off . The payments due under this Note are subject to set off by Borrower against claims for indemnification from Lender (or its subsidiaries) pursuant to Section 21.1 (a), (b), (c), (d), (e), or (f) of the Sale Agreement
8. Subordination . THIS AGREEMENT IS SUBJECT TO A DEBT SUBORDINATION AGREEMENT OF EVEN DATE HEREWITH, BY AND AMONG PARENT, SUBORDINATED CREDITOR (AS EACH IS DEFINED THEREIN) AND THE HUNTINGTON NATIONAL BANK, AS ADMINISTRATIVE AGENT. BY ITS ACCEPTANCE OF THIS INSTRUMENT, THE HOLDER HEREOF AND ANY SUCCESSOR, ASSIGN, DEVISE, REPRESENTATIVE OR SUBSEQUENT HOLDER OF THIS INSTRUMENT AGREES TO BE BOUND BY THE PROVISIONS OF SUCH DEBT SUBORDINATION AGREEMENT TO THE SAME EXTENT THAT SUBORDINATED CREDITOR IS BOUND.
9. Notices . All notices required to be given or which may be given in connection with this Note shall be given in the manner required for notices under the Second Mortgage.
10. Paragraph Headings . Paragraph headings are inserted for convenience of reference only, do not form part of this Note and shall be disregarded for purposes of the interpretation of the terms of this Note.
11. Time of Essence . Time is of the essence with respect to each and every covenant and obligation of Borrower under this Note.
10. Governing Law . This note shall be governed and construed according to the statutes and laws of the State of Ohio from time to time in effect, except to the extent that any federal statute or law that preempts or provides an alternative or alternatives to otherwise applicable state statutes or laws, or other applicable federal statute or law, may permit the charging of a higher rate of interest than applicable state statute or law, in which event such applicable federal statute or law, as amended and supplemented from time to time shall govern and control maximum rate of interest permitted to be charged hereunder; it being intended that, as to the maximum rate of interest which may be charged, received, and collected hereunder, those applicable statutes and laws, whether state or federal, from time to time in effect, which permit the charging of a higher rate of interest, shall govern and control; provided, always, however that in no event and under no circumstances shall Borrower be liable for the payment of interest in excess of the maximum rate permitted by such applicable law, from time to time in effect.
11. Severability . Wherever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note.
[Remainder of page intentionally blank; signature on following page.]
IN WITNESS WHEREOF, this Secured Promissory Note has been duly executed and delivered under seal as of the day and year first above written.
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BORROWER : |
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CHP ACQUISITION COMPANY LLC |
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an Ohio limited liability company |
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By: |
/s/ Roger C. Vincent |
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Roger C. Vincent, Manager |
SIGNATURE PAGE
Secured promissory note
Exhibit 10.291
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (the Agreement) is entered into and executed as of December 28, 2012, by and between CHP ACQUISITION COMPANY LLC, an Ohio limited liability company (Pledgor), and AdCare Health Systems, Inc., an Ohio corporation (Pledgee).
WITNESSETH:
WHEREAS, Pledgor is the owner of one hundred percent (100%) of the ownership interest in H & H OF VANDALIA LLC, an Ohio limited liability company (the Interest), which Interest is to be pledged to Pledgee; and
WHEREAS, Pledgor has executed and delivered to Pledgee a Promissory Note of even date herewith in the original principal amount of Three Million Six Hundred Thousand Dollars ($3,600,000) (the Note) evidencing certain obligations due to Pledgee as set forth therein between Pledgor and Pledgee (the Loan); and
WHEREAS, it is a condition precedent and material inducement to the credit extended and represented by the Note that Pledgor shall have executed and delivered this Agreement to Pledgee granting a continuing security interest to Pledgee in the Interest to secure the obligations of Pledgor to Pledgee.
NOW, THEREFORE, in consideration of the above, the parties hereto agree as follows:
1. Pledge . Pledgor hereby pledges, assigns and delivers to Pledgee by blank Assignment of Membership Interest, the Interest, and grants to Pledgee a first lien thereon and perfected first security interest therein and in all certificates, units, options, rights and other noncash distributions issued in addition to, in substitution or exchange for, or on account of the Interest(collectively, the Collateral). Pledgee shall have all of the rights, remedies and recourses with respect to the Collateral afforded to a secured party under the Uniform Commercial Code, in addition to any other rights, remedies, and recourses afforded to Pledgee by this Agreement. Pledgee shall hold the Collateral as security for Pledgors obligations to Pledgee pursuant to the Note.
2. Dividends and other Distributions With Respect to the Interest . If, while this Agreement is in effect, Pledgor shall become entitled to receive or shall receive (i) any unit or certificate or other security representing a dividend or other noncash distribution with respect to the Interest (including without limitation any certificate or other security issued in connection with a reclassification, increase or reduction of capital or issued in connection with any reorganization of the entity in which the Interest is held by Pledgor), or (ii) any option or rights, whether in addition to, in substitution of, or in exchange for any of the Interest, or otherwise, Pledgor agrees to accept the same as Pledgees agent and to hold the same in trust on behalf of and for the benefit of Pledgee in the exact form received, with the endorsement by Pledgor when necessary and/or appropriate of undated assignment of membership interest duly executed in blank, to be held by Pledgee subject to the terms hereof as
additional Collateral. Any sums paid upon or in respect of the Interest upon the liquidation or dissolution of any entity in which the Interest is held by Pledgor shall be paid over to Pledgee to be held as additional Collateral; and in case any distribution of capital shall be made on or in respect of the Interest, or any property shall be distributed on or with respect to the Interest pursuant to the recapitalization or reclassification of such entity in which the Interest is held by Pledgor capital, or pursuant to the reorganization of the entity, the property so distributed shall be delivered to Pledgee to be held as additional Collateral. All sums of money and property so paid or distributed in respect of the Interest which are received by Pledgor shall, until paid or delivered to Pledgee, be held by Pledgor in trust as additional Collateral. Notwithstanding the above, unless and until an Event of Default has occurred, Pledgor shall have the right to receive all reasonable cash dividends and distributions with respect to the Interest.
3. Voting Rights . During the term of this Agreement and so long as an Event of Default, as hereinafter defined, has not occurred, the Interest may be voted by Pledgor. Notwithstanding the foregoing, during the term of this Agreement Pledgor may not vote the Interest for any of the following actions, or otherwise allow or permit any of the following actions to be taken, without the prior written consent of Pledgee:
(a) issuance by the entity in which the Interest is held by Pledgor of any additional Interest or other securities of any class or form.
(b) redemption of any of the Interest or any other equity securities in the entity in which the Interest is held by Pledgor owned by any party other than Pledgee.
(c) sale, transfer, hypothecation, or other disposition of all or substantially all of the assets of the entity in which the Interest is held by Pledgor or of any equity securities in the entity in which the Interest is held by Pledgor owned by any party other than Pledgee.
(d) liquidation, merger, consolidation, recapitalization or other form of reorganization involving the entity in which the Interest is held by Pledgor.
(e) transfer or cancellation of any permits or licenses used by the entity in connection with the business of the entity.
(f) failure to comply with any requirements necessary to maintain licensure to operate a skilled nursing facility by the entity in which Pledgor owns the Interest.
4. Representations and Warranties of Pledgor . Pledgor represents and warrants to Pledgee as follows:
(a) Pledgor is the legal, record and beneficial owner of, and has good and marketable title to, the Interest, subject to no lien, pledge, charge, encumbrance, security interest, or adverse claims or rights whatsoever, except the lien, pledge, and security interest created by this Agreement;
(b) The Interest has been duly and validly issued, is fully paid and non-assessable,
has been fully paid for by Pledgor and constitutes the ownership percentage of the issued and outstanding membership/ownership interests of the entity in which the Interest is held by Pledgor;
(c) The pledge, assignment and delivery of the Collateral pursuant to this Agreement creates a valid first lien on and a perfected first priority security interest in such Collateral, and the proceeds thereof, subject to no prior lien, pledge, charge, encumbrance or security interest;
(d) Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated, nor compliance with the terms and provisions hereof will (i) contravene any provision of any law, statute, rule or regulation to which Pledgor is subject or any judgment, decree, award, franchise, order or permit applicable to Pledgor or the entity in which the Interest is held by Pledgor, or (ii) conflict with, be inconsistent with, or result in a breach of any of the terms, covenants or provisions of, constitute a default under, or result in the creation or imposition of any lien, security interest, charge or other encumbrance upon the Interest (other than the lien and security interest contemplated by this Agreement), pursuant to the terms of any note, indenture, mortgage, deed of trust, agreement or other instrument to which Pledgor or the entity in which the Interest is held by Pledgor is a party or by which any of them may be bound or subject;
(e) Pledgor has full power and authority to execute, deliver and perform this Agreement and to pledge and deliver the Collateral;
(f) This Agreement constitutes the valid and binding obligation of Pledgor enforceable in accordance with its terms.
5. Covenants of Pledgor . Pledgor covenants and agrees that so long as any amounts due to Pledgee pursuant to the Note have not been received in full by Pledgee, Pledgor will perform and observe each and all of the following covenants, and to cause the entity in which the Interest is held by Pledgor to conform with (a) (h) below, by exercising Pledgors voting rights and management rights in a manner consistent with this Section 5, unless otherwise agreed to in writing by Pledgee in its sole discretion:
(a) To permit Pledgee, or its representatives, upon reasonable notice given by Pledgee, to review the books and records of the entity in which the Interest is held by Pledgor.
(c) Pledgor will not consent to allow the entity in which the Interest is held by Pledgor, directly or indirectly, to sell, transfer, or otherwise dispose of all or substantially all of its properties or assets, or consolidate with, merge or liquidate into, any other corporation or entity, or permit any other corporation or entity, to consolidate with, merge, or liquidate into such entity.
(d) Pledgor will use Pledgors best efforts to cause the entity in which the Interest is held by Pledgor to maintain, with financially sound and reputable insurers, insurance with respect to its business and properties against loss and damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar business and similarly situated and in amounts of not less than the full replacement value for property damage.
(e) Pledgor will use its best efforts to cause the entity in which the Interest is held by Pledgor to pay or cause to be paid all taxes, assessments and other governmental charges levied upon any of its properties or assets or in respect of its franchise, business, income or profits before the same becomes delinquent, except that, unless and until foreclosure, distraint, sale or other similar proceedings have been commenced, no such charge need be paid if contested in good faith and by appropriate proceedings promptly initiated and diligently conducted and a reserve or other appropriate provision, if any, as shall be required by generally accepted accounting principles, shall have been made therefor.
(f) Pledgor shall at no time cause or permit the transfer or conveyance, in any manner, of the Interest or any of the Collateral to any party or entity, provided, however, that Pledgor may grant to Huntington National Bank, a subordinate security interest in the Collateral.
(g) Pledgor will defend Pledgees right, title and security interest in and to the Collateral and the proceeds thereof against the claims and demands of all persons or entities.
(h) Pledgor shall execute and deliver or cause to be executed and delivered to Pledgee now, and at any time or times hereafter at the request of Pledgee, all documents, instruments, letters of direction, notices, reports, acceptance receipts, financing statements, consents, waivers, affidavits and certificates as Pledgee may reasonably request, in a form satisfactory to Pledgee, to perfect and maintain a perfected first lien and security interest granted by Pledgor pursuant to this Agreement, and in order to consummate fully all of the transactions contemplated hereunder.
6. Payment of Note . Upon full payment of principal and interest on the Note, Pledgee shall transfer to Pledgor all of the Collateral, and this Agreement shall terminate.
7. Events of Default . Pledgor shall be in default under the terms of this Agreement on the happening of any one or more of the following, each of which shall be considered an Event of Default:
(a) Nonpayment of any portion of the principal or interest of the Note when due and a continuance thereof for a period of ten (10) days or more;
(b) The occurrence of any breach or any other event or circumstance which would permit the acceleration of the payment of the Note;
(c) The members, officers, or appropriate governing body of the entity in which the Interest is held by Pledgor, adopting a resolution to dissolve or liquidate such entity, to sell all or substantially all of such entitys assets or to authorize or request approval of the members of such entity of any merger, reorganization or other recapitalization of such entity in any manner;
(d) The institution of bankruptcy, receivership, or insolvency proceedings by or against the entity in which the Interest is held by Pledgor, Pledgor or any subsidiary of such entity;
(e) The entity in which the Interest is held by Pledgor, any of its subsidiaries, or Pledgor making an assignment for the benefit of creditors or otherwise admitting in writing an inability to pay debts as they become due;
(f) The entity in which the Interest is held by Pledgor, any of its subsidiaries, or Pledgor filing any petition or answer seeking for itself or themselves any reorganization, rearrangement, composition or readjustment of their debts; or
(g) The occurrence of any material breach by the entity in which the Interest is held by Pledgor or Pledgor of any warranty, representation, covenant or obligation contained in this Agreement or the Note.
8. Rights of Pledgee Upon an Event of Default . Upon the occurrence of any Event of Default, Pledgee, may, at its option:
(a) Declare the entire balance of principal and accrued interest on the Note immediately due and payable; and
(b) Proceed to exercise all rights with respect to the Collateral of a secured creditor under the Uniform Commercial Code as adopted in the State of Ohio, including, without limitation, rights to liquidate and sell the Collateral at public or private sale, in any commercially reasonable manner. At any such sale, the Collateral may be sold in whole, or in part, by single or separate contracts, and upon such terms and conditions as Pledgee deems appropriate in the circumstances. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by Pledgee to Pledgor at the address designated in Paragraph 9, unless Pledgor has signed after default a statement renouncing or modifying its right to notification of sale. For this purpose, notification shall be deemed reasonable if given in the manner provided in Paragraph 9, at least ten (10) days prior to the day of any such sale. Pledgee shall be entitled to participate in the public sale and purchase the Collateral at any such sale on terms no less favorable than the highest qualified, competing bid from a third party. Pledgors rights shall further include, without limitation, the authority (hereby granted) to cause the Interest to be transferred into Pledgees own name, or the name of Pledgees nominee, and shall be entitled to exercise all rights and privileges in connection with said Interest by virtue of being the holder of record thereof. In this connection, Pledgor acknowledges that it has delivered to Pledgee a duly executed Assignment of Membership Interest in the form attached hereto as Exhibit A to convey the Interest to Pledgee upon the occurrence of an Event of Default which is not cured within any applicable grace periods. Pledgee shall not be liable for failure to collect or realize upon the Collateral security or any part thereof, or for any delay in so doing nor shall it be under any obligation to take any action whatsoever with regard thereto. Pledgee may exercise any and all right of conversion, exchange, subscription or any other rights, privileges or options pertaining to any of the Interest as if Pledgee was the absolute owner thereof, all without any liability on the part of Pledgee.
Upon enforcement of this Agreement following the occurrence of an Event of Default, any Interest or Interests or the net proceeds from the disposition thereof (after deducting all reasonable costs and expenses incurred by Pledgee in connection therewith or incurred in connection with the care and safekeeping of the Collateral) (and after the payment by Pledgee of any other amount required to be paid by any provision of law) shall be applied to the payment in whole or in part of the Note. Pledgee shall account for the surplus, if any, to the Pledgor. To the extent permitted by applicable law, the Pledgor waives all claims, damages and demands against Pledgee arising out of the repossession, retention or sale of the Interest, except for those arising out of the gross negligence or willful misconduct of Pledgee or the failure of Pledgee to comply with any express obligation hereunder to Pledgor including the accounting for the surplus, if any, to the Pledgor as contemplated by the immediately preceding sentence. All surplus funds, if any, shall be paid to such Persons as are entitled under applicable law. If the proceeds of sale are not sufficient to satisfy the unpaid principal and accrued interest under the Note and the expenses of sale, Pledgor shall remain liable for any deficiency.
9. Notice . Any notice, request, consent or demand hereunder shall be in writing and shall be deemed to have been given when mailed by first class, registered or certified mail, postage prepaid, return receipt requested, or when delivered personally, as follows:
(a) If to Pledgee, to:
CHP Acquisition Company LLC
4100 Regent Street, Suite F
Columbus, Ohio 43219
Attn: Roger C. Vincent, Manager
With a copy to:
Scot C. Crow, Esq.
Roetzel & Andress
155 East Broad Street, 12 th Floor
Columbus, Ohio 43215
(b) If to Pledgor:
AdCare Health Systems, Inc.
Two Buckhead Plaza, Suite 355
Atlanta, Georgia 30305
Attn: Chief Financial Officer
With a copy to:
Gregory P. Youra, Esq.
Holt Ney Zatcoff & Wasserman, LLP
100 Galleria Parkway, Suite 1800
Atlanta, Georgia 30339
or, in each case, to such other address as hereafter shall be furnished as provided in this paragraph by Pledgor or Pledgee to the other.
10. Modification . No provision herein may be modified, amended or waived except by written agreement signed by all the parties hereto.
11. Binding on Assigns . This Agreement shall inure to the benefit of, and be binding upon, the parties, their heirs, executors and administrators, successors, and assigns.
12. Headings . Subject headings are included for convenience purposes only and shall have no effect in the interpretation of this Agreement.
13. Waiver . No waiver of a breach or violation of any provision of this Agreement shall operate or be construed as a waiver of any subsequent breach.
14. Entire Agreement . This document constitutes the entire agreement of the parties and supersedes any and all other agreements, oral or written, with respect to the subject matter contained herein.
15. Counterpart Execution . This Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed an original, but all of which taken together shall constitute but one and the same agreement.
16. Termination of Agreement . This Agreement, and all obligations of the Pledgor hereunder, shall terminate upon payment in full of the Note, and all right, title and interest of Pledgee in and to the Collateral shall revert to the Pledgor and its successors and assigns. Upon the termination of Pledgees security interest and the release of the Collateral Pledgee will promptly, (a) execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence the termination of such security interest or the release of the Collateral, and (b) deliver or cause to be delivered to the Pledgor all property of Pledgor then held by Pledgee or any nominee thereof.
17. Choice of Laws . This Agreement shall be governed by and be construed in accordance with the law of the State of Ohio, without regard to the principles of conflicts of law thereof.
18. Severability . The provisions of this Agreement are severable, and if any clause or provision hereof shall be held invalid or unenforceable in whole or in part, then such invalidity or unenforceability shall attach only to such clause or provision or part thereof and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision in this Pledge Agreement in any jurisdiction.
19. Further Assurances . Pledgor agrees that at any time and from time to time upon the request of Pledgee, Pledgor will execute and deliver such further documents and do such further acts and things as Pledgee may reasonably request in order to effect the purposes of this Agreement
including without limitation reasonable assistance to Pledgee with respect to the transfer of Pledgors provider numbers to any entity directed by Pledgee as reasonably necessary to permit Pledgee to exercise its remedies under this Agreement in connection with an Event of Default.
20. Incorporation by Reference . All documents specifically named herein shall be deemed to be incorporated herein by any reference thereto as if fully set out herein.
21. No Third Party Beneficiaries . Nothing contained herein shall create any rights for the benefit of any third party.
[INTENTIONAL SHORT PAGE; SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed and delivered this Pledge Agreement under seal as of the date set forth above.
PLEDGOR : |
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PLEDGEE : |
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CHP ACQUISITION COMPANY LLC, |
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ADCARE HEALTH SYSTEMS, INC. |
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an Ohio limited liability company |
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an Ohio corporation |
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By: |
/s/ Roger C. Vincent |
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By: |
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Roger C. Vincent, Manager |
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Name: |
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Title: |
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SIGNATURE PAGE
Pledge and Security Agreement
IN WITNESS WHEREOF, the parties have executed and delivered this Pledge Agreement under seal as of the date set forth above.
PLEDGOR : |
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PLEDGEE : |
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CHP ACQUISITION COMPANY LLC, |
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ADCARE HEALTH SYSTEMS, INC. |
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an Ohio limited liability company |
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an Ohio corporation |
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By: |
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By: |
/s/ Boyd P. Gentry |
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Roger C. Vincent, Manager |
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Name: |
Boyd P. Gentry |
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Title: |
Chief Executive Officer |
SIGNATURE PAGE
Pledge and Security Agreement
Exhibit 10.292
$6,950,000.00 |
December 31, 2012 |
FOR VALUE RECEIVED, Sumter Valley Property Holdings, LLC and Georgetown HC&R Property Holdings, LLC, both Georgia Limited Liability Companies, (collectively the Borrower) promise to pay to the order of Metro City Bank, having an address at 5441 Buford Highway, Suite 109, Doraville, GA 30340, or its successors or assigns, (the Lender) the principal sum of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100THS ($6,950,000.00) DOLLARS or so much outstanding thereof, together with interest thereon at the rate stated below from the date of this Promissory Note (Note) until maturity in lawful money of the United States of America, which shall at the time of payment be legal tender in payment of all debts, public and private, such principal and interest to be paid in the following manner, to-wit:
Interest shall accumulate daily on the outstanding principal balance of this Note from time to time at the initial rate of 5.50% per annum. Borrower shall pay interest only payments to Lender commencing on February 1, 2013, and continuing to be due on the same day of each month thereafter. All accrued and unpaid interest and principal shall be due and payable in full on or before February 1, 2014. All payments made under this Note shall be made to Lender at its address above, or to such other place as the Lender may from time to time designate in writing. Payments shall be applied first to the payment of any applicable late charges and default charges, then to accrued and unpaid interest on the outstanding principal sum, and the balance of said payment shall be applied to principal. If any payment of principal or interest on this Note shall become due on a Saturday, Sunday or legal holiday under the laws of the State of Georgia, such payment shall be made on the next succeeding business day, and such extension of time shall in such case be included in computing interest due in connection with such payment.
The interest rate will be determined by adding one and one-half (1.5%) percentage points to the Prime Rate published by the Wall Street Journal as the Prime Rate (Index), in effect at the close of the first business day of each calendar quarter, provided that if this Prime Rate is no longer quoted by said paper, Lender will choose a new Index which is based upon comparable information and will give Borrower notice of the new Index. Notwithstanding anything to the contrary herein and notwithstanding the Index rate, the applicable annual interest rate shall never be lower than 5.50%.
Should any installments hereof not be paid when due, or should the Borrower hereof fail to comply with any of the terms or requirements of Mortgages of even date herewith conveying title to real property being known as 2715 South Island Road, Georgetown, South Carolina 29440 and 1761 Pinewood Road, Sumter, South Carolina 29154 as security for this indebtedness, a Loan Agreement of even date, or any other requirements of documents entered into in connection with or given as collateral for this indebtedness (collectively, the Loan Documents), Borrower shall be in default hereunder and the entire unpaid principal sum evidenced by this Note, with all accrued interest, shall, at the option of the Lender, and without notice to the undersigned, become due and may be collected forthwith, time being of the essence. It is further agreed that failure of the Lender to exercise this right of accelerating the maturity of the debt, or indulgence granted from time to time, shall in no event be considered as a waiver of such right of acceleration or stop the Lender from exercising such right.
A late fee of five percent (5%) of each installment due shall automatically be imposed on any installment not received on or before ten (10) days after the due date.
In the event Borrower is in default under this Note or under any of the Loan Documents, the interest rate shall increase by 400 basis points (4%) over the current interest rate, and such
new interest rate shall remain in effect until the default has been cured and Lender has reinstated the Note as being in good standing.
Should this Note or any part of the indebtedness evidenced hereby be collected by law or through an attorney-at-law, the Lender shall be entitled to all costs of collection, plus fifteen percent (15%) of the principal and interest as attorneys fees.
The obligation of the Borrower to make or cause to be made the payments required hereunder shall be absolute and unconditional. Borrower and each and every co-Borrower, endorser, guarantor, surety, and other party, severally waives and renounces any and all homestead and exemption rights the undersigned may have under or by virtue of the laws of the State of Georgia, or any other State, or the United States, as against this debt or any renewal or extension thereof and further waives demand, protest, notice of demand, protest, and non-payment.
This Note has been negotiated, and is being executed and delivered in the State of Georgia, or if executed elsewhere, shall become effective upon Lenders receipt and acceptance of the executed original of this Note in the State of Georgia; provided, however, that Lender shall have no obligation to give, nor shall Borrower be entitled to receive, any notice of such acceptance for this Note to become a binding obligation of Borrower. It is the intention of the Borrower and Lender that this Note be construed, governed, and enforced in every respect in accordance with the laws of the State of Georgia, and Borrower hereby consents to the jurisdiction of the Federal and state courts of Georgia for the resolution of any matters relating to this Note.
This Note and all provisions hereof and of all documents securing this Note shall conform in all respects to the laws of the State of Georgia so that no payment of interest or other sum construed to be interest or charges in the nature of interest shall exceed the highest lawful contract rate permissible under the laws of the State of Georgia as applicable to this transaction. If, under any circumstances whatsoever, fulfillment of any provision hereof, or of any other instrument evidencing or securing this indebtedness, at the time performance of such provision shall be due, shall involve the payment of interest in excess of that authorized by law, the obligation to be fulfilled shall be reduced to the limit so authorized by law.
This Note may be modified only by an agreement in writing signed by Lender and Borrower.
In the event Borrower elects to refinance the Note with any lender other than Metro City Bank, Borrower agrees to pay a prepayment fee equal to ten percent (10%) of the original principal balance of the Note.
(Signature page for Promissory Note)
IN WITNESS WHEREOF, the undersigned authorized signatory of Borrower has executed this Note under seal.
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BORROWER: |
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SUMTER VALLEY PROPERTY HOLDINGS, LLC |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry, Manager |
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GEORGETOWN HC&R PROPERTY HOLDINGS, LLC |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry, Manager |
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Exhibit 10.293
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After recording return to: |
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Richard Gaalema |
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Kitchens Kelley Gaynes, P.C. |
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3495 Piedmont Road |
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Building 11, Suite 900 |
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Atlanta, Georgia 30305 |
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8943.386 |
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to as this Assignment) made and entered into this 31 st day of December, 2012, by and between SUMTER VALLEY PROPERTY HOLDINGS, LLC, a South Carolina limited liability company , having a mailing address of 1761 Pinewood Road, Sumter, South Carolina 29154 (hereinafter called Borrower), and METRO CITY BANK , having a mailing address of 5441 Buford Highway, Suite 109, Doraville, Georgia 30340 (hereinafter called Lender).
W I T N E S S E T H :
That for and in consideration of the sum of Ten and no/100 Dollars ($10.00) and other valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, and in order to secure the indebtedness and other obligations of Borrower, hereinafter set forth, Borrower does hereby grant, transfer and assign to Lender and the successors and assigns of Lender all of the right, title and interest of Borrower in, to and under any lease agreements respecting property described on Exhibit A attached hereto and made a part hereof (the Property), including any and all extensions, renewals and modifications thereof and guarantees of the performance or obligations of any Tenant thereunder now or hereafter entered into, together with any other leases on the Property now or hereafter entered into (hereinafter referred to as the Leases), TOGETHER WITH all of the interest of Borrower in and to all rents, issues and profits from the Leases and from the Property.
This Assignment is made for the purpose of securing the following described indebtedness (hereinafter sometimes referred to collectively as the Indebtedness):
(a) the debt evidenced by that certain Note (hereinafter referred to as the Note and to which Note reference is hereby made for all purposes) dated of even date herewith, made by Borrower to the order of Lender in the principal amount of SIX MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100ths DOLLARS ($4,800,000.00) with the final payment being due on February 1, 2014, together with any and all renewals and/or extensions of the indebtedness evidenced by the Note;
(b) any and all indebtedness secured by that certain Mortgage (hereinafter referred to as the Security Instrument and to which Security Instrument reference is hereby made for all purposes) dated of even date herewith, made by Borrower in favor of Lender, conveying the Property to secure the indebtedness evidenced by the Note (the Note, Security Instrument and any other document executed in connection therewith being hereinafter sometimes collectively referred to as the Loan Documents);
(c) any and all advances made by Lender to protect or preserve the security created by this Assignment, or to protect or preserve the Property or the Premises (as that term is defined in the Security Instrument) or the lien of the security instrument on said Premises, or for taxes or insurance premiums as provided in the Security Instrument; and
(d) the performance and discharge of each obligation, covenant and agreement of Borrower contained herein, in the Note or in the Security Instrument.
Borrower and Lender agree that (i) an extension or extensions may be made of the time of payment of all or any part of the indebtedness evidenced by the Note or of any other indebtedness secured by this Assignment or by the Security Instrument; (ii) the terms of the Note, the Security Instrument and this Assignment may be modified; and (iii) additional security may be given by Borrower; all without altering or affecting the security created by this Assignment in favor of any junior encumbrancer, grantee, purchaser or other person, or any person acquiring or holding an interest in the Leases of the Property or any portion thereof and without altering or releasing the obligation of Borrower or any guarantors under the Note, the Security Instrument or this Assignment.
Should the indebtedness secured by this Assignment be paid in full, then this Assignment shall be cancelled and surrendered as hereinafter provided.
Borrower and Lender hereby further covenant and agree as follows, in addition to and not in substitution for or derogation of any other covenants contained in the Security Instrument or other instruments concerning the indebtedness secured hereby or by the Security Instrument:
ARTICLE I
1.01 Warranties of Borrower . Borrower hereby warrants unto Lender that:
(a) Borrower has made no assignment other than this Assignment of any of the rights of Borrower under the Leases;
(b) Borrower has neither done any act nor omitted to do any act which might prevent Lender from, or limit Lender in, acting under any of the provisions of this Assignment;
(c) Borrower has not accepted payment of rental under the Leases for more than one (1) month in advance of the due date thereof;
(d) So far as is known to Borrower, there is no default by any Tenant under the terms of the Leases;
(e) Borrower is not prohibited under any agreement with any other person or any judgment or decree from (i) the execution and delivery of either this Assignment or the Leases; (ii) the performance of each and every covenant of Borrower under either this Assignment or the Leases; or (iii) the meeting of each and every condition contained in this Assignment;
(f) no action has been brought or, so far as is known to Borrower, is threatened, which in anywise would interfere with the right of Borrower to execute this Assignment and perform all of Borrowers obligations contained in this Assignment and in the Leases; and
(g) the Leases are in full force and effect and has not been modified or amended unless as expressly set forth herein.
1.02 Covenants of Borrower . Borrower hereby covenants with Lender that:
(a) Borrower will (i) fulfill, perform and observe each and every condition and covenant of Borrower contained in the Leases; (ii) give prompt notice to Lender of any claim of default under the Leases either given by the Tenant under the Leases to Borrower or given by Borrower to the Tenant under the Leases, together with a complete copy of any such claim; (iii) at no cost or expense to Lender, enforce, short of termination, the performance and observance of each and every covenant and condition of the Leases to be performed or observed by the Tenant thereunder; and (iv) appear in and defend any action growing out of, or in any matter connected with, the Leases or the obligations or liabilities of Borrower as the Landlord thereunder or of the Tenant or any guarantor thereunder;
(b) Borrower will not, without the prior written consent of Lender, either (i) modify any material term of the Leases; (ii) terminate the term or accept the surrender of the Leases; (iii) waive, or release the Tenant from, the performance or observance by the Tenant of any material obligation or condition of the Leases; (iv) permit the prepayment of any rents under the Leases for more than one (1) month prior to the accrual thereof; or (v) give any consent to any assignment or sublease by the Tenant under the Leases except for Concessionaire Leases by tenant or Borrower as landlord;
(c) Borrower shall take no action which shall cause or permit the estate of the Tenant under the Leases to merge with the reversionary interest of Borrower in the Property or any portion thereof; and
(d) Lender shall not be obligated to perform or discharge any obligation of Borrower under the Leases, and Borrower agrees to, and does hereby indemnify and hold Lender harmless against any and all liability, loss or damage which Lender may incur under any of the Leases or under or by reason of this Assignment, and from all
claims and demands whatsoever which may be asserted against Lender by reason of an act of Lender under this Assignment.
1.03 Covenants of Lender . By acceptance of delivery of this Assignment, Lender covenants with Borrower that so long as there shall exist no Event of Default, as defined, in Paragraph 2.01 hereinbelow, on the part of Borrower, Borrower shall have the right to collect, but not more than one (1) month prior to accrual, all rents, issues and profits from the Property (including, but not by way of limitation, all rent payments under any of the Leases) and to retain, use and enjoy the same.
ARTICLE II
2.01 Event of Default . The term Event of Default, wherever used in this Assignment, shall mean any one or more of the following events:
(a) the occurrence of any default or event of default as defined in the Note or the Security Instrument.
(b) the failure by Borrower to duly observe any covenant, condition or agreement of this Assignment, or the breach of any warranty by Borrower contained in this Assignment.
2.02 Remedies . Upon the occurrence of any Event of Default, in addition to any and all other rights and remedies available to Lender under the Note and the Security Instrument, and not in substitution therefor or in derogation thereof, and without any notice to Borrower, Lender may (i) proceed to enter upon, take possession of and operate the Property, including the collection of rent without becoming a mortgagee in possession; (ii) proceed to perform any and all obligations of Borrower under the Leases and exercise any and all rights of Borrower therein contained as fully as Borrower itself could, all without regard to the adequacy of security for the indebtedness hereby secured and with or without the bringing of any legal action or the causing of any receiver to be appointed by any court or other judicial authority; (iii) notify Tenant to make payments of rent to Lender; (iv) make, enforce, modify and accept the surrender of the Leases or evict the Tenant under the Leases; (v) fix or modify rent; (vi) apply for appointment of a receiver of the rents and profits of the premises without notice, and shall be entitled to the appointment of such a receiver as a matter of right, without consideration of the value of the property or the solvency of any party liable for the indebtedness; and (vii) do all of the acts which Lender may deem necessary or proper to protect the security created by this Assignment. If an Event of Default shall have occurred and be continuing, Borrower does hereby specifically authorize Lender, in the name of Borrower or in the name of Lender, to sue for or otherwise collect and receive all rents, issues and profits from the Property, including those past due and unpaid, and apply such as required or permitted by the Security Instrument. Entry upon and taking possession of the Property and the collection of the rents, issues and profits of the Property and the application thereof, as aforesaid, shall not operate to waive any default or prohibit the taking of any action by Lender under the Note, the Security Instrument, this Assignment or other related loan documents or at law or in equity to enforce payment of the indebtedness secured hereby or by the Security Instrument or to realize on any other security.
ARTICLE III
3.01 Successors and Assigns . This Assignment shall inure to the benefit of and be binding upon Borrower and Lender and their respective heirs, executors, legal representatives, successors and assigns. Whenever a reference is made in this Assignment to Borrower or Lender such reference shall be deemed to include a reference to the heirs, executors, legal representatives, successors and assigns of Borrower or Lender.
3.02 Terminology . All personal pronouns used in this Assignment whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Titles and Articles are for convenience only and neither limit nor amplify the provisions of this Assignment itself.
3.03 Severability . If any provision of this Assignment or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Assignment and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.
3.04 Applicable Law . This Assignment shall be interpreted, construed and enforced according to the laws of the state in which the Property is situated.
3.05 Reassignment . Lender shall have the right to reassign its interests hereunder without the consent of Borrower.
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal, as of the day and year first above written.
WITNESSES: |
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SUMTER VALLEY PROPERTY HOLDINGS, LLC, a Georgia limited liability company |
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/s/ [Illegible] |
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By: |
/s/ Boyd P. Gentry |
(SEAL) |
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Boyd P. Gentry, Manager |
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/s/ [Illegible] |
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STATE OF SOUTH CAROLINA) |
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COUNTY OF ) |
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I, Ellen W. Smith, Notary Public for Georgia do hereby certify that Boyd P. Gentry as Manager of Sumter Valley Property Holdings, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the 31 day of December, 2012.
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/s/ Ellen W. Smith |
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NOTARY PUBLIC FOR GEORGIA |
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(Official/Notarial Seal) |
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My Commission Expires: |
Jan. 30, 2016 |
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Exhibit 10.294
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the Agreement) is made and entered into on June 22, 2010, by and between Riverchase Village ADK, LLC (hereinafter called Owner), and AdCare Management Company, Inc., an Ohio corporation (hereinafter called AdCare).
Owner and AdCare agree that AdCare shall manage that certain senior living facility commonly known as The Park at Riverchase and located at 1851 Data Drive, Hoover, Alabama (the Facility), owned by Owner, on the following terms and conditions:
SECTION ONE: MANAGEMENT DUTIES AND OBLIGATIONS
1.01 Management of Facility . During the term of this Agreement, AdCare shall supervise the management of the Facility including but not limited to staffing, accounting, billing, collections, setting of rates and charges and general administration. In connection therewith AdCare (either directly or through supervision of employees of the Facility) shall:
(a) Hire on behalf of Owner and maintain (to the extent such personnel are reasonably available in the community in which the Facility is located) an adequate staff of nurses, technicians, office and other employees, including an administrator, at wage and salary rates for various job classifications approved from time to time by Owner; and release employees at AdCares discretion.
(b) Recommend and institute, subject to approval of Owner, appropriate employee benefits. Employee benefits may include pension and profit sharing plans, insurance benefits, and incentive plans for key employees and vacation policies.
(c) Design and maintain accounting, billing, patient and collection records; prepare and file insurance, and any and all other necessary or desirable reports and claims related to revenue production.
(d) Order, supervise and conduct a program of regular maintenance and repair of the Facility except that physical improvements costing more than $5,000.00 shall be subject to prior approval of Owner which shall not be unreasonably withheld.
(e) Purchase supplies, drugs, solutions, equipment, furniture and furnishings on behalf of Owner, except that purchases of items of equipment which cost more than $5,000.00 shall be subject to prior approval of Owner which shall not be unreasonably withheld.
(f) Administer and schedule all services of the Facility.
(g) Supervise and provide the operation of food service facilities.
(h) Provide for the orderly payment (to the extent funds of Owner are available therefore) of accounts payable, employee payroll, taxes and insurance premiums.
(i) Institute standards and procedures for admitting patients, for charging patients for services, and for collection the charges from the patients or third parties.
(j) Advise and assist Owner in obtaining and maintaining adequate insurance coverage with Owner, Manager and such other persons as requested by Owner named as insured for the Facility. AdCare shall advise Owner with regard to the availability, nature and desirable policy limits of insurance coverage for the Facility, and shall request and receive bids for such coverage.
(k) Negotiate on behalf of Owner (and in conjunction with Owners counsel) with any labor union lawfully entitled to represent employees of the Owner who work at the Facility, but any collective bargaining agreement of labor contract must be submitted to Owner for approval and execution.
(l) Make periodic evaluation of the performance of all departments of the facility paying particular attention to those departments where there is an inconsistency between expenditures and budget.
(m) Establish and maintain books of account using accounts and classifications consistent with those used by AdCare at other facilities owned or leased by it or its affiliates.
(n) Advise and assist Owner in designing an adequate and appropriate public and personnel relations program.
1.02 Reports to Owner . AdCare shall prepare and deliver to Owner monthly financial statements (unaudited) containing a balance sheet and statement of income in reasonable detail, and such monthly financial statements will be delivered to Owner within 30 days after the close of each calendar month. AdCare shall submit to Owner each month a vacancy report for the Facility.
1.03 Bank Accounts and Working Capital . AdCare shall deposit all funds received from the operation of the Facility in an Operating Account in a bank or banks presently being used by the Facility or such other banks as are designated from time to time by AdCare. Owner shall provide sufficient working capital for the operation of the Facility and shall make deposits in the Operating Accounts of such working capital from time to time upon the request of AdCare. All costs and expenses incurred in the operation of the Facility shall be paid out of the Operating Accounts. All checks or other documents withdrawal must be signed by the Comptroller of AdCare or his designate. Deposits may be made by the Comptroller of AdCare or his designate.
1.04 Access to Records and Facility . The books and records kept by AdCare for the Facility shall be maintained at the Facility, although AdCare shall have the right to maintain copies of such records at its home office for the purpose of providing services under this Agreement. AdCare shall make available to Owner, its agents, accountants and attorneys, during normal business hours, all books and records pertaining to the Facility and AdCare shall promptly respond to any questions of Owner with respect to such books and records and shall confer with Owner at all reasonable times, upon request, concerning operation of the Facility. In addition, Owner shall have access to the Facility at all reasonable hours for the purpose of examining or inspecting the Facility.
1.05 Licenses .
(a) AdCare shall use its best efforts to manage the Facility in a manner necessary to maintain all necessary licenses, permits, consents, and approvals from all governmental agencies, which have jurisdiction over the operation of the Facility. AdCare shall not assume the liability for any employee action, failure to act or negligence prohibiting the intent of this provision to be met.
(b) Neither Owner nor AdCare shall knowingly take any action which may (1) cause any governmental authority having jurisdiction over the operation of the Facility to institute any proceeding for the rescission or revocation of any necessary license, permit, consent or approval, or (2) adversely affect Owners right to accept and obtain payments under Medicare, Medicaid, or any other public or private medical payment program; however, this Agreement in no way guarantees or warrants that any or all of the above will not or could not occur.
(c) AdCare shall, with the written approval of Owner, have the right to contest by appropriate legal proceedings, diligently conducted in good faith, in the name of the Owner, the validity or application of any law, ordinance, rule, ruling, regulation, order or requirement of any governmental agency having jurisdiction over the operation of similar facilities. Owner, after having given its written approval, shall cooperate with AdCare with regard to the contest, and Owner shall pay the reasonable attorneys fees incurred with regard to the contest. Counsel for any such contest shall be mutually selected by AdCare and Owner. AdCare shall have the right, without the written consent of the Owner, to process all third-party payment claims for the services of the Facility, including the full right to contest adjustments and denials by governmental agencies (or their fiscal intermediaries) as third-party payor.
1.06 Taxes . Any taxes or other governmental obligations properly imposed on the Facility are the obligations of the Owner, not of AdCare, and shall be paid out of the operating Accounts of the Facility. With the Owners written consent, AdCare may contest the validity or amount of any such tax or imposition on the Facility in the same manner as described in Section 1.05(c).
1.07 Use of AdCares Personnel . AdCare shall actively utilize AdCare staff specialists in such areas as accounting, auditing, budgeting, computer services, dietary services, housekeeping, industrial engineering, interior design, legal, nursing, personnel, pharmaceutical, purchasing, systems and procedures, and third-party payments for services of facilities in the management of the Facility when considered desirable by AdCare or upon the reasonable request of Owner.
SECTION TWO: TERM AND TERMINATION
2.01 Term . The term of this Agreement shall commence on the date on which the Owner shall acquire ownership of the Facility and shall terminate on May 31, 2015.
2.02 Termination . Owner may terminate this Agreement upon giving AdCare sixty (60) days written notice after the end of the third year of this Agreement. AdCare may terminate this Agreement at any time upon giving the Owner sixty (60) days written notice.
SECTION THREE: MANAGEMENT FEE
3.01 Fee to AdCare . During each term of this Agreement the Owner shall pay AdCare a monthly fee equal to five percent (5%) of the gross revenues of the Facility.
3.02 Subordination of Management Fee . Owner and AdCare agree that, for so long as AdCare or any affiliate thereof shall manage the Facility, payment of the Management Fee shall be fully subordinated to the prior payment, as and when due, of all: (a) debt service (principal, interest and premium, if any) on the Series 2010A and Series 2010B Bonds (the Series 2010 Bonds), which were issued by The Medical Clinic Board of Hoover First Mortgage Healthcare Facility Revenue Bonds to provide the funds whereby the Owner acquired the Facility; and (b) all other sums that the Owner may, at any time, be required to pay for deposit into any fund or account established under the Trust Indenture pursuant to which the Series 2010 Bonds were issued.
SECTION FOUR: COVENANTS OF OWNER
4.01 Insurance . Owner shall provide and maintain throughout the Term, the following insurance with responsible companies naming Owner and AdCare (as its interest may appear) as insured thereunder in amounts approved by AdCare and Owner.
(a) public liability insurance and insurance against theft of or damage to patients property in the Facility or its Premises;
(b) workmans compensation, employers liability or similar insurance as may be required by law;
(c) insurance against loss or damage to the Facility from fire and such other risks and casualties now or hereafter embraced by Extended Coverage, as well as such other risks and casualties with respect to which insurance is customarily carried for similar facilities;
(d) business interruption insurance against loss of income due to the risks insured against under this Section 4.01;
(e) such other insurance or additional insurance as AdCare and Owner together shall reasonably deem necessary for protection against claims, liabilities and losses arising from the operation or ownership of the Facility.
If Owner fails to effect or maintain any such insurance, Owner will indemnify AdCare against damage, loss or liability resulting from all risks for which such insurance should have been maintained, and AdCare may, but shall not be liable for its failure to do so, effect the same as the agent of Owner by taking out policies in such insurance companies as may be selected by AdCare, running for a period not to exceed one year.
4.02 Convalescent Services . Owner covenants and agrees that Facility is and will continue to be a fully licensed assisted living facility containing the number of licensed beds set forth on the first page of this Agreement. AdCare and Owner agree that the services rendered by
the Facility will not, during the term thereof, be changed in any material respect, unless there shall first have been mutual agreement between AdCare and Owner to such change.
SECTION FIVE: MISCELLANEOUS
5.01 Assignment by AdCare . AdCare shall not assign its rights or obligations under this Agreement without the consent of Owner.
5.02 Assignment by Owner . Owner shall not assign its rights or obligations under this Agreement without the notice to AdCare.
5.03 Binding on Successors and Assigns . The terms, covenants, conditions, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto, their heirs, administrators, executors, successors and assigns, subject to provisions of Section 5.01 and 5.02 above.
5.04 Negation of Partnership, Joint Venture and Agency . Nothing in this Agreement contained shall constitute or be construed to be or to create a partnership, joint venture or lease between Owner and AdCare with respect to the Facility. The parties intend for the relationship of AdCare to Owner under this Agreement to be that of an independent contractor, nor that of an agent. Owner shall not have the power to control the time method or manner of AdCares performance hereunder, Owner shall look solely to the results to be achieved by AdCare, and nothing contained herein shall be construed to create a relationship of agency between AdCare and Owner.
5.05 Notices . All notices hereunder by either party to the other shall be in writing. All notices, demands and request shall be deemed given when mailed, postage prepaid, registered, or certified mail, return receipt requested,
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to Owner: |
Riverchase Village ADK, LLC |
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Two Buckhead Plaza |
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3050 Peachtree Road NW, Suite 570 |
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Atlanta, GA 30305 |
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(b) |
to AdCare: |
AdCare Management Company, Inc. |
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5057 Troy Rd |
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Springfield, OH 45502 |
or to such other address or to such other person as may be designated by notice given from time to time during the term by one party to the other.
5.06 Entire Agreement . This Agreement contains the entire agreement between the parties hereto, and no representations or agreements, oral or otherwise, between the parties not embodied herein or attached hereto shall be of any force and effect. Any additions or amendments to this Agreement subsequent hereto shall be of no force and effect unless in writing and signed by the party to be bound.
5.07 Governing Law . This Agreement has been executed and delivered in the State of Georgia, all the terms and provisions hereof and the rights and obligations of the parties hereto shall be construed and enforced in accordance with the laws thereof.
5.08 Captions and Headings . The captions and headings throughout this Agreement are for convenience and reference only, and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Agreement nor in any way affect this Agreement.
5.09 Disclaimer of Employment of Facility Employees . No person employed by Owner in operation of the Facility will be an employee of AdCare, and AdCare will have no liability for payment of wages, payroll taxes and other expenses of employment, except that AdCare shall have the obligation to exercise reasonable care in its management of the Facility to properly apply available Facility funds to the payment of such wages and payroll taxes.
5.10 Impossibility of Performance . Neither party to this Agreement shall be deemed to be in violation of this Agreement if it is prevented from performing any of its obligations hereunder for any reason beyond its control, including without limitation, acts of God or of the public enemy, flood or storm, strikes or statutory regulation or rule of any federal, state, or local government, or any agency thereof.
5.11 Non-assumption of Liabilities . AdCare shall not, by entering into and performing this Agreement, become liable for any of the existing or future obligations, liabilities or debts of Owner, and AdCare shall not be managing the Facility assume or become liable for any of the obligations, debts and liabilities of Owner, and AdCare will in its role as manager of the Facility have only the obligation to exercise reasonable care in its management and handling of the funds generated from the operation of the Facility.
5.12 Responsibility for Misconduct of Employees and Other Personnel . AdCare will have no liability whatever for damages suffered on account of the dishonesty, willful misconduct or negligence of any employee of the Owner regarding the Facility in connection with damage or loss directly sustained by it by reason of the dishonesty, willful misconduct and gross negligence of AdCare employees in the operation of the Facility during the term of this Agreement.
5.13 Rights Cumulative, No Waiver . No right or remedy herein conferred upon or reserved to either of the parties hereto is intended to be exclusive of any other right or remedy, an each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, or now or hereafter legally existing upon the occurrence of any event of default hereunder. The failure of either party hereto to insist at any time upon the strict observance or performance of any of the provisions of this Agreement or to exercise any right or remedy as provided in this Agreement shall not impair any such right or remedy to be construed as a waiver or relinquishment thereof. Every right and remedy given by this Agreement to the parties hereto may be exercised from time to time and as often as may be deemed expedient by the parties hereto, as the case may be.
5.14 Time of Essence . Time is of the essence of this Agreement.
5.15 Invalid or Unenforceable Provisions . If any terms, covenants or conditions of this Agreement or the application thereof to any person or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law.
5.16 Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.
5.17 Authorization of Agreement . AdCare and Owner represent and warrant, each to the other, that this Agreement has been duly authorized by its respective Board of Directors and, if required by law, shareholders; and that this Agreement constitutes a valid and enforceable obligation of AdCare and Owner in accordance with its terms.
5.18 Designation . Owner agrees that, during the term of this Agreement, AdCare shall have the right to designate and make public reference to the Facility as a AdCare managed facility.
[Signature on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, the day and year first above written.
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ADCARE MANAGEMENT COMPANY, INC. |
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By: |
/s/ Scott Cunningham |
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Name: |
Scott Cunningham |
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Title: |
Chief Financial Officer |
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RIVERCHASE VILLAGE ADK, LLC. |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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Exhibit 10.295
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the Agreement) is made and entered into on September 19, 2011, by and among the entities listed on the signature page hereto (collectively, the Operators) and AdCare Oklahoma Management, LLC, a Georgia limited liability company (hereinafter called Manager).
WHEREAS, the Operators are the licensed operators of those certain skilled nursing facilities described on Exhibit A attached hereto (collectively, the Facilities) and the Operator and Manager agree that Manager shall manage the Facilities, on the following terms and conditions:
SECTION ONE: MANAGEMENT DUTIES AND OBLIGATIONS
1.01 Management of Facility. During the term of this Agreement, Manager shall supervise the management of the Facility including but not limited to staffing, accounting, billing, collections, setting of rates and charges and general administration. In connection therewith, Manager (either directly or through supervision of employees of the Facility) shall:
(a) Hire on behalf of Operators and maintain (to the extent such personnel are reasonably available in the community in which the Facility is located) an adequate staff of nurses, technicians, office and other employees, including an administrator, at wage and salary rates for various jobs classifications approved from time to time by Operators; and release employees at Managers discretion.
(b) Recommend and institute, subject to approval of Operators, appropriate employee benefits. Employee benefits may include pension and profit sharing plans, insurance benefits, and incentive plans for key employees and vacation policies.
(c) Design and maintain accounting, billing, patient and collection records; prepare and file insurance, and any and all other necessary or desirable reports and claims related to revenue production.
(d) Order, supervise and conduct a program of regular maintenance and repair of the Facility except that physical improvements costing more than $5,000.00, shall be subject to prior approval of Operators which shall not be unreasonably withheld.
(e) Purchase supplies, drugs, solutions, equipment, furniture, and furnishings on behalf of Operators, except that purchases of items of equipment which cost more than $5,000.00, shall be subject to prior approval of Operators which shall not be unreasonably withheld.
(f) Administer and schedule all services of the Facility.
(g) Supervise and provide the operation of food service facilities.
(h) Provide for the orderly payment (to the extent funds of Operators are available) of accounts payable, employee payroll, taxes and insurance premiums.
(i) Institute standards and procedures for admitting patients, for charging patients for services, and for collecting the charges from the patients or these parties.
(j) Advise and assist Operators in obtaining and maintaining adequate insurance coverage with Operators, Manager and such other persons as requested by Operators named as insured for the Facility. Manager shall advise Operators with regard to the availability, nature and desirable policy limits of insurance coverage for the Facility, and shall request and receive bids for such coverage.
(k) Negotiate on behalf of Operators (and in conjunction with Operators counsel) with any labor union lawfully entitled to represent employees of the Operators who work at the Facility, but any collective bargaining agreement of labor contract must be submitted to Operators for approval and execution.
(l) Make periodic evaluation of the performance of all departments of the Facility paying particular attention to those departments where there is an inconsistency between expenditures and budget.
(m) Establish and maintain books of account using accounts and classifications consistent with those used by Manager at other facilities owned or lease by it or its affiliates.
(n) Advise and assist Operators in designing an adequate and appropriate public and personnel relations program.
1.02 Reports to Operators. Manager shall prepare and deliver to Operators monthly financial statements (unaudited) containing a balance sheet and statement of income in reasonable detail, and such monthly financial statements will be delivered to Operators within 30 days after the close of each calendar month. Manager shall submit to Operators each month a census report for the Facility.
1.03 Bank Accounts and Working Capital. Manager shall deposit all funds received from the operation of the Facility in and Operating Account in a bank or banks presently being used by the Facility or such other banks as are designated from time to time by Operators. Operators shall provide sufficient working capital for the operation of the Facility and shall made deposits in the Operating Accounts of such working capital from time to time upon the request of Manager. All costs and expenses incurred in operation of the Facility shall be paid out of the Operating Accounts. All checks or other documents withdrawal must be signed by the Operators. Deposits may be made by Comptroller of the Manager or his designee.
1.04 Access to Records and Facility . The books and records kept by Manager for the Operators shall be maintained by the Facility, although Manager shall have the right to maintain copies of such records at its home office for the purpose of providing services under this Agreement. Manager shall make available to Operators, its agents, accountants and attorneys, during normal business hours, all books and records pertaining to the Facility and Manager shall promptly respond to any questions of Operators with respect to such books and records and shall confer with Operators at all reasonable times, upon request, concerning operation of the Facility. In addition, Operators shall have access to the Facility at all reasonable hours for the purpose of examining or inspecting the Facility.
1.05 Licenses.
(a) Manager shall use its best efforts to manage the Facility in a manner necessary to maintain all necessary licenses, permits, consents, and approvals from all governmental agencies, which have jurisdiction over the operation of the Facility. Manager shall not assume the liability for any employee action or negligence prohibiting the intent of this provision to be met.
(b) Neither Operators nor Manager shall knowingly take any action which may (1) cause any governmental authority having jurisdiction over the operation of the Facility to institute any proceeding for the rescission or revocation of any necessary license, permit, consent or approval, or (2) adversely affect Operators right to accept and obtain payments under Medicare, Medicaid, or any other public or private medical payment program; however, this Agreement in no way guarantees or warrants that any or all of the above will not or could not occur.
(c) Manager shall, with the written approval of Operators, have the right to contest by appropriate legal proceedings, diligently conducted in good faith, in the name of the Operators, the validity or application of any law, ordinance, rule, ruling, regulation, order or requirement of any governmental agency having jurisdiction over the operation of similar facilities. Operators, after having given its written approval, shall cooperate with Manager with regard to the contest, and Operators shall pay the reasonable attorneys fees incurred with regard to the contest. Counsel for any such contest shall be mutually selected by Manager and Operators. Manager shall have the right, without the written consent of the Operators, to process all third-party payment claims for the services of the Facility, including the full right to contest adjustments and denials by governmental agencies (or their fiscal intermediaries) as third-party payor.
(d) Manager shall provide to Operators all correspondence from any governmental entity involving surveys, taxes or other actions relating to the Facility, within five (5) days of receipt.
1.06 Taxes. Any taxes or other governmental obligations properly imposed on the Facility are the obligations of the Operators, not of Manager, and shall be paid out of the Operating Accounts of the Facility. With the Operators written consent, Manager may contest
the validity or amount of any such tax or imposition of the Facility in the same manner as described in Section 1.05(c).
1.07 Use of Managers Personnel. Manager shall actively utilize Manager staff specialists in such areas as accounting, auditing, budgeting, computer services, dietary services, housekeeping, industrial engineering, interior design, legal, nursing, personnel, pharmaceutical, purchasing, systems and procedures, and third-party payments for services of facilities in the management of the Facility when considered desirable by Manager or upon the reasonable request of Operators.
SECTION TWO: TERM AND TERMINATION
2.01 Term and Termination. The initial term of this Agreement shall commence immediately upon approval by the Oklahoma State Department of Health Protective Health Services/Health Resources Development Service of Managers Certificate of Need Application for Exemption for a Licensed Nursing or Specialized Facility Management Agreement with respect to the Facilities, and shall continue for a period of one (1) year (the Initial Term). At the expiration of the Initial Term, this Agreement shall automatically renew for successive one-year terms unless either party gives notice to the other of its intention not to renew this Agreement at least sixty (60) days prior to the expiration of the then current term.
2.02 Termination. Operators may terminate this Agreement upon giving Manager thirty (30) days written notice. Manager may terminate this Agreement at any time upon giving the Operators thirty (30) days written notice.
SECTION THREE: MANAGEMENT FEE
3.01 Fee to Manager. During each month of this Agreement the Operators shall pay Manager a fee in an amount equal to five percent (5%) of the aggregate gross revenues of the Facilities computed in accordance with GAAP (the Management Fee). The Management Fee for each month shall be payable within ten (10) business days following the delivery to Manager of the monthly financial report required pursuant to Section 1.02 for such month. Any Management Fee or portion thereof not paid within thirty (30) days following the date it was due shall bear interest at the rate of five percent (5%) per annum from its due date until paid.
SECTION FOUR: COVENANTS OF OWNER
4.01 Insurance. Operators shall provide and maintain throughout the Term, the following insurance with responsible companies naming Operators and Manager (as its interest may appear) as insured thereunder in amounts approved by Operators and Manager.
(a) public liability insurance and insurance against theft of or damage to patients property in the Facility or its Premises;
(b) workmans compensation, employers liability or similar insurance as may be required by law;
(c) such other insurance or additional insurance as Manager and Operators together shall reasonably deem necessary for protection against claims, liabilities and losses arising from the operation or ownership of the Facility.
SECTION FIVE: MISCELLANEOUS
5.01 Binding on Successors and Assigns . The terms, covenants, conditions, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto, their heirs, administrators, executors, successors and assigns.
5.02 Negation of Partnership, Joint Venture and Agency. Nothing in this Agreement contained shall constitute or be construed to be or to create a partnership, joint venture or lease between Operators and Manager with respect to the Facility. the parties intend for the relationship of Manager to Operators under this Agreement to be that of an independent contractor, not that of an agent.
5.03 Notices. All notices hereunder by either party to the other shall be in writing. All notices, demands and requests shall be deemed given when mailed, postage prepaid, registered, or certified mail, return receipt requested,
(a) |
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Operators: |
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Christopher F. Brogdon |
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Two Buckhead Plaza |
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3050 Peachtree Road NW, Suite 355 |
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Atlanta, GA 30305 |
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(b) |
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Manager: |
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AdCare Oklahoma Management, LLC |
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1145 Hembree Road |
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Roswell, Georgia 30076 |
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Attn: Robert Lancaster |
or to such other address or to such other person as may be designated by notice given from time to time during the term by one party to the other.
5.04 Entire Agreement. This Agreement contains the entire agreement between the parties hereto, and no representations or agreements, oral or otherwise, between the parties not embodied herein or attached hereto shall be of any force and effect. Any additions or amendments to this Agreement subsequent hereto shall be of no force and effect unless in writing and signed by the party to be bound.
5.05 Governing Law . This Agreement has been executed and delivered in the State of Oklahoma, all the terms and provisions hereof and the rights and obligations of the parties hereto shall be construed and enforced in accordance with the laws thereof.
5.06 Captions and Headings. The captions and headings throughout this Agreement are for convenience and reference only, and the words contained therein shall in no way be held
or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Agreement nor in any way affect this Agreement.
5.07 Disclaimer of Employment of Facility Employees. No person employed by Operators in cooperation of the Facility will be an employee of Manager, and Manager will have no liability for payment of wages, payroll taxes and other expenses of employment, except that Manager shall have the obligation to exercise reasonable care on its management of the Facility to properly apply available Facility funds to the payment of such wages and payroll taxes.
5.08 Impossibility of Performance. Neither party to this Agreement shall be deemed to be in violation of this Agreement if it is prevented from performing any of its obligations hereunder for any reason beyond its control, including without limitation, acts of God or of the public enemy, flood or storm, strikes or statutory regulation or rule of any federal, state, or local government, or any agency thereof.
5.09 Non-Assumption of Liabilities. Manager shall not, by entering into and performing this Agreement, become liable for any of the existing or future obligations, liabilities or debts of Operators, and Manager shall not be managing the Facility assume or become liable for any of the obligations, debts and liabilities of Operators, and Manager will in its role as Manager of the Facility have only the obligation to exercise reasonable care in its management and handling of the funds generated from the operation of the Facility.
5.10 Responsibility for Misconduct of Employees and Other Personnel. Manager will have no liability whatever for damages suffered on account of the dishonesty, willful misconduct or negligence of an employee of the Operators regarding the Facility in connection with damage or loss directly sustained by it by reason of the dishonesty, willful misconducts and gross negligence of employees in the operation of the Facility during the term of this Agreement.
5.11 Rights Cumulative, No Waiver. No right or remedy herein conferred upon or reserved to either of the parties hereto is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, or now or hereafter legally existing upon the occurrence of any event of default hereunder. The failure of either party hereto to insist at any time upon the strict observance or performance of any of the provisions of this Agreement or to exercise any right or remedy as provided in this Agreement shall not impair such right or remedy to be construed as a waiver or relinquishment thereof. Every right and remedy given by this Agreement to the parties hereto may be exercised from time to time and as often as may be deemed expedient by the parties hereto, as the case may be.
5.12 Time of Essence. Time is of the essence of this Agreement.
5.13 Invalid or Unenforceable Provisions. If any terms, covenants or conditions of this Agreement or the application thereof to any person or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law.
5.14 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.
5.15 Authorization of Agreement. Manager and Operators represent and warrant, each to the other, that this Agreement has been duly authorized by its respective Board of Directors and, if required by law, shareholders; and that this Agreement constitutes a valid and enforceable obligation of Manager and Operators in accordance with its terms upon approval by OSDH of the CON Application for Exemption for a Licensed Nursing Facility Management Agreement.
5.16 Designation. Operators agree that, during the term of this Agreement, Manager shall have the right to designate and make public reference to the Facility as a Manager managed facility.
[Signatures on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, the day and year first above written.
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MANAGER: |
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ADCARE OKLAHOMA MANAGEMENT, LLC |
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By: |
/s/ Martin D. Brew |
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Name: |
Martin D. Brew |
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Title: |
CFO |
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OPERATORS: |
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LIVING CENTER, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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KENMETAL, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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SENIOR NH, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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BAN NH, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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OAK LAKE, LLC |
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By: |
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Christopher F. Brogdon, Manager |
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EXHIBIT A
1. |
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The Living Center |
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1409 N. 17 th Street |
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Enid, Oklahoma |
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Kenwood Manor |
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502 W. Pine Avenue |
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Enid, Oklahoma |
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Enid Senior Care |
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410 N. 30 th Street |
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Enid, Oklahoma |
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4. |
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Betty Ann Nursing Center |
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1400 South Main Street |
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Grove, Oklahoma |
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Grand Lake Villa |
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103 Har Ber Road |
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Grove, Oklahoma |
Exhibit 10.296
EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc. (the Company)
and
Ronald W. Fleming (the Officer)
This Employment Agreement (Agreement) is entered into July 3, 2013 (the Signing Date), to be generally effective May 15, 2013 (the Effective Date).
Background
The Company and the Officer desire that the Officer be engaged as Senior Vice President and Chief Financial Officer of the Company and desire to enter into this Agreement to reflect the terms and conditions of the Officers employment.
Statement of Agreement
For good and valuable consideration (including the respective obligations of the parties hereunder), the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as of the Effective Date as follows:
Section 1. Employment . For the purposes and upon the terms and conditions hereinafter set forth, the Company agrees to employ the Officer and the Officer accepts such employment. The Officers employment shall be based in the Atlanta, Georgia greater metropolitan area, subject to business travel as necessary. As of the Effective Date, the Company shall provide the Officer with an office at its corporate offices in Atlanta, Georgia and an office at its corporate offices in Roswell, Georgia.
Section 2. Duties . The Officer shall be employed by the Company during the Employment Term (as defined in Section 5(a)). The Officer shall be employed by the Company as of the Effective Date as Senior Vice President and Chief Financial Officer of the Company. The Officer shall have such duties and responsibilities as are commonly incident to such offices of a substantial corporation and shall report to the President and Chief Executive Officer. The Officer shall devote his full-time, attention and energy to the business of the Company and the performance of his duties hereunder. Notwithstanding any other provision hereof, the Company consents to the Officer continuing after the Effective Date to perform services, for not in excess of thirty (30) hours per month on average, as a consultant to Georgia Cancer Specialists and its affiliates that are controlled by, controlling or under common control with that entity, provided that the Officers services for that entity and its affiliates do not materially interfere with his performance of duties for and his obligations to the Company hereunder. The Officer represents and warrants that his entry into and performance of services under this Agreement does not violate the terms of his engagement with Georgia Cancer Specialists or the restrictive covenants in any agreement with Georgia Cancer Specialists. The Officer also represents and warrants that he is bound by no agreement that would in any way restrict his ability to perform his duties for
the Company. The Officer will be expected to carry out his duties with the highest degree of ethical and moral standards and to comply with all terms and conditions regarding the nature and manner in carrying out his duties as may be established from time to time by the Company and set forth in its employee handbook or manual.
Section 3. Compensation .
(a) Salary . The Officer shall be paid an initial salary of $270,000 per year (the Annual Salary), payable in installments on the date of the Companys regular pay periods. The Annual Salary shall be reviewed at least annually by the Compensation Committee of the Board of Directors of the Company (the Compensation Committee) for possible increases, and if so increased, the increased amount shall thereafter be deemed to be the Annual Salary for all purposes under this Agreement.
(b) Bonus . The Officer shall be eligible to earn an annual bonus for 2013 and each year thereafter, the target amount of which, based on reasonably expected performance, shall be at least seventy-five percent (75%) of Annual Salary (the Target Bonus); provided, however that the bonus and the Target Bonus for 2013 will be based on the amount of the Officers Annual Salary actually paid in 2013 and not on his annual rate of Annual Salary, and provided, further, that irrespective of the degree of achievement of performance criteria, the Officers bonus for 2013 will not be less than $80,000. The performance criteria for earning the bonus and the formula for determining the amount of the bonus shall be established by the Compensation Committee, with input from the CEO, under the Companys management incentive plan for executive officers. The criteria and the formula for each year after 2013 will be provided to the Officer no later than the ninetieth (90 th ) day of that year. The bonus earned shall be paid as soon as feasible following the end of each year, but not later than March 30 of the following year. The bonus for any year will be earned and accrued and payable only if the Officer is employed by the Company on the last day of the year for which the bonus is earned.
(c) Equity Compensation . As of the Effective Date and as a material inducement to the Officer to enter into employment with the Company, the Compensation Committee granted to the Officer a warrant to purchase 70,000 shares of the Companys common stock, no par value (the Common Stock), with an exercise price per share equal to the $5.90 per share (the Warrant). The Warrant shall vest one third (1/3) on each of the three subsequent anniversaries of the Effective Date. All vesting requires that the Officer is employed by the Company on such date, provided however, that if the Officer resigns for Good Reason, or a Change in Control occurs while the Officer is employed by the Company, then the Warrant shall immediately become one hundred percent (100%) vested. The Warrant shall be exercisable for cash, or at the option of the Officer, in a cashless exercise (by reducing the number of shares he receives upon exercise by a number of shares with a then Fair Market Value equal to the aggregate exercise price of the shares purchased). The Warrant shall be evidenced by a warrant certificate bearing restrictive legends and otherwise not inconsistent with this Agreement.
As a material inducement to the Officer to enter into employment with the Company, the Compensation Committee shall also grant to the Officer promptly following the Filing Date and in no event later than March 15, 2014, 30,000 shares of the Companys restricted Common
Stock pursuant to the Companys 2011 Stock Incentive Plan (the 2011 Plan), subject to vesting as provided herein (the Restricted Stock). The Restricted Stock shall vest one third (1/3) on each of the three subsequent anniversaries of the Effective Date. All vesting requires that the Officer is employed by the Company on such date, provided however, that if the Officer resigns for Good Reason, or a Change in Control occurs while the Officer is employed by the Company, then the Restricted Stock shall become one hundred percent (100%) vested upon the later of the date of such event or the date of issuance of the Restricted Stock. The Restricted Stock shall be evidenced by a restricted stock agreement bearing restrictive legends and otherwise not inconsistent with this Agreement. In the event that a (i) Change in Control occurs prior to March 15, 2014 while the Officer is employed by the Company or (ii) the Officer resigns his employment for Good Reason prior to March 15, 2014 and the Compensation Committee has not yet granted the Officer the Restricted Stock pursuant to the terms of this Agreement, the Compensation Committee shall grant the Officer a cash payment equal to the fair market value of the Restricted Stock as of the date of the occurrence of the Change in Control or the date of the Officers resignation for Good Reason (as applicable).
The Officer understands and acknowledges that (i) the issuance of the Common Stock issuable upon the exercise of the Warrant or portion thereof and the issuance of the Restricted Stock may be made only if such issuance is subject to an effective registration statement or an exemption from the registration requirements of the Securities Act and any applicable state securities laws is available; and (ii) all shares of Common Stock issuable upon exercise of the Warrant and the Restricted Stock may be disposed of only in accordance with the Securities Act of 1933, as amended, and any applicable state securities laws.
The Officer shall be eligible to receive future grants of equity compensation at the discretion of the Compensation Committee.
For purposes of this Agreement, the following terms shall have the following meanings.
Resignation for Good Reason means the Officers resignation within ninety (90) days following the Companys failure to cure a material breach of this Agreement within thirty (30) days after the Officer gives the Company written notice of such breach within ninety (90) days of the occurrence of such breach .
Cause means the Officers fraud, dishonesty, willful misconduct, or gross negligence in his performance of his duties hereunder, or the Officers conviction for a crime of moral turpitude, or material breach by the Officer of this Agreement which the Officer fails to cure within thirty (30) days after the Company gives the Officer written notice of such breach.
Change in Control has the meaning set forth in the 2011 Plan.
Fair Market Value has the meaning set forth in the 2011 Plan.
Filing Date means the first date on which the Companys Annual Report on Form 10-K for the year ended December 31, 2012 and the Companys Quarterly Report on Form 10-Q for
the quarter ended March 31, 2013 have been filed with the Securities and Exchange Commission.
Section 4. Officer Benefits; Vacation . During the Employment Term, the Officer shall be entitled to participate in life insurance, hospitalization medical insurance, retirement, and other benefits, to the extent that such benefits are provided generally to other executive officers of the Company and paid vacation in accordance with the Companys vacation policy for executive officers. In addition to the benefits generally available to executive officers of the Company, the Company agrees to (a) pay the COBRA premiums of the Officer and his spouse and eligible dependents for the period from the Effective Date until the Officer is covered under the Companys group health plan, such amounts to be paid as soon as feasible, (b) waive any waiting period for eligibility under the Companys existing benefit plans (other than the group health plan) to the extent permitted under the existing terms of the applicable plans and to the extent that such waiver would not result in discrimination prohibited by applicable law or that would result in adverse tax consequences or other adverse consequences under any such plan, and (c) continue to pay the Officer at the rate of 100% of his Annual Salary for a period of three (3) months after the date of Disability and at the rate of 60% of his Annual Salary as of the date of Disability for an additional twenty-one (21) months, although such payments may be made pursuant to insurance provided by the Company. For purposes of this Agreement, the term Disability means the inability of the Officer to perform his duties for medical reasons for a period of ninety (90) days in any three hundred sixty-five (365) day period. In the event there is a question as to whether or not the Officer is subject to a Disability, the Board of Directors of the Company will select a qualified physician who will make the determination which will be binding on both the Officer and the Company.
Section 5. Term of Employment .
(a) The term of this Agreement shall begin on the Effective Date and remain in effect thereafter while the Officer is employed by the Company (the Employment Term).
(b) The Company and the Officer shall at all times have the right to terminate the Officers employment, in the case of the Company with or without Cause, and in the case of the Officer with or without Good Reason, and in either case subject to the terms of this Agreement. Upon termination of the Officers employment, the Officer shall have no obligation or duty to further serve the Company in any capacity (other than to comply with the obligations set forth in Section 6 below), nor shall the Company be under any obligation or duty to employ the Officer or provide the benefits specified in Section 4 or make any of the payments provided for in Sections 3, or 4, (except to the extent any such benefits are required to be provided by this Agreement, the applicable plan or law or any such payments under Sections 3, or 4, have accrued prior to and remain unpaid as of the effective date of such termination).
(c) If, during the first three months of continuous employment with the Company the Officer resigns his employment for Good Reason, or the Company terminates the Officers employment without Cause (other than due to the Officers Disability), the Officer shall receive severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for three (3) months after the termination date. If after a minimum of three months continuous employment with the Company after the Effective Date, but less than
a six months of continuous employment with the Company, the Officer resigns his employment for Good Reason or the Company terminates the Officers employment without Cause (other than due to the Officers Disability), the Officer, or his successors and assigns, shall receive severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for six (6) months after the termination date. If, after a minimum of six months of continuous employment with the Company after the Effective Date the Officer resigns his employment for Good Reason or the Company terminates the Officers employment without Cause (other than due to the Officers Disability), the Officer or his successors and assigns shall receive severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for twelve (12) months after the termination date. Notwithstanding the foregoing, regardless of the period of the Officers continuous employment after the Effective Date, if within three (3) months before or twenty-four (24) months after the occurrence of a Change in Control, the Officer resigns his employment for Good Reason or the Company terminates the Officers employment without Cause (other than due to the Officers Disability), the Officer or his successors and assigns shall receive severance pay in the form of salary continuation, payable in substantially equal installments at least monthly for eighteen (18) months after the termination date, plus an additional sum equal to one-half (1/2) of the Target Bonus, which sum shall be payable in substantially equal prorated installments at least monthly for six (6) months beginning twelve (12) months following the termination date.
For the period for which severance pay is paid, i.e., three (3), six (6), twelve (12) or eighteen (18) months following termination of employment (the Severance Period), the Officer and his family shall be entitled to continue to be covered under all employee benefit plans of the Company under which executive officers of the Company are covered and at the same cost and under the same terms and conditions as apply to executive officers, provided, however, that if the Company is unable to do that under applicable law, the coverage would result in discrimination prohibited by applicable law, the coverage would result in adverse tax consequences or other adverse consequences under any such plan, or the insurer will not permit the Officer to be covered under any such plan, the Company shall pay to the Officer an amount each month during the Severance Period equal to the Companys cost of coverage for similarly situated executive officers. For purposes of this Agreement, each installment payment in Subsection (c) shall be deemed to be a separate payment for purposes of Section 409A of the Internal Revenue Code (the Code), and termination of employment and similar terms means a termination of employment constituting a separation from service within the meaning of Code Section 409A. Notwithstanding the foregoing, to the extent necessary to avoid the Officer incurring a tax under Code Section 409A, any amount that is otherwise due within six (6) months following termination of employment shall be delayed until six months after termination of employment. The provisions contained in this Section shall survive the termination of the Officers employment.
Section 6. Certain Officer Covenants . The Officer expressly covenants and agrees to and with the Company as hereinafter set forth in this Section 6.
(a) Non-Competition . During the Employment Term and in the event that the Officers employment is voluntarily terminated by the Officer other than for Good Reason or is terminated by the Company for Cause, then for a period of twelve (12) months after the date of
termination, the Officer shall not within the Area, directly or indirectly, acting alone or with others, on behalf of a competitor of the Company undertake to perform executive management responsibilities similar to those the Officer provides for the Company during the last twenty-four (24) months of his employment with the Company. For purposes of this Agreement Area shall be defined as a twenty-five (25) mile radius from the physical address of any skilled nursing facility or business office owned or operated by the Company as of the date of the termination of this Agreement. The foregoing restrictions shall not, however, prohibit the Officer from performing services for a division or business unit of a competitor of the Company if such division or business unit does not provide goods or services competitive with those offered by the Company. Notwithstanding anything herein to the contrary, the provisions of this Section shall not prohibit the Officer from acquiring less than 1% of the securities of any corporation which competes with the Company and whose shares are regularly traded on a nationally recognized stock exchange or over-the-counter market.
(b) Prohibition Against Hiring Employees . For a period of twelve (12) months after the date of termination, regardless of the reason for termination, the Officer shall not directly or indirectly solicit for employment, or directly or indirectly assist others in soliciting for employment, any person employed by the Company whom the Officer managed or supervised, or with whom the Officer worked directly, during the then twelve (12) months of the Officers employment, whether or not such person is a full-time or part-time employee of the Company.
(c) Confidential Information . The Officer shall receive and hold all Confidential Information and Trade Secrets in trust for the Company and in the strictest confidence. Except to the extent required in the performance of his duties hereunder, the Officer shall not at any time while he is employed by the Company or after termination of his employment, directly or indirectly, use, disclose, disseminate or otherwise publish Confidential Information or Trade Secrets. For purposes of this Agreement, the term Confidential Information means data and information relating to the business of the Company (whether constituting a Trade Secret or not) which is or has been disclosed to the Officer or of which the Officer became aware as a consequence of or through his relationship with Company and which has value to the Company and is not generally known to the Companys competitors. Confidential Information shall include, without limitation, trade secrets, methods of operation, names of customers, price lists, financial information, personnel data and similar information, but shall not include any data or information which has been voluntarily disclosed to the public by the Company (except where such disclosure has been made by the Officer without authorization) or that has been independently developed and disclosed by others, or otherwise has entered the public domain through lawful means. Trade Secrets means information of the Company, without regard to form, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which is not commonly known by or available to the public and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The restrictions on use and disclosure of Confidential Information shall
survive following the Officers termination of employment for so long as the information remains Confidential Information as defined by this Agreement. The restrictions on use and disclosure of Trade Secrets shall survive following the Officers termination of employment for so long as the information is a trade secret under applicable law.
(d) Return of Information . Upon termination of the Officers employment for whatever reason, the Officer shall return to or leave with the Company, without making or retaining copies thereof, all documents, records, notebooks and similar repositories containing Confidential Information.
(e) Reasonableness of Covenants . The Officer has carefully considered the nature and extent of the restrictions upon him and the rights and remedies conferred upon the Company under this Section 6, and hereby acknowledges and agrees that, in light of his position, the information to which he will be privy, and the nature of the business, the restrictions are reasonable in time and territory, are designed to eliminate unfair competition to the Company, are fully required to protect the Companys legitimate interests, and do not confer a benefit upon the Company disproportionate to any detriment to the Officer.
If the Officer breaches any of the agreements contained in this Section 6, then, in addition to any other rights or remedies which the Company may have, the Company shall have the right to an accounting and repayment of all profits or other benefits directly realized as a result of any such breach, to collect any damages caused by such breach in addition to those specifically listed herein, and to enforce any legal or equitable remedy (including injunctive relief) that it may have against the Officer to prevent further injury to the Company resulting from such breach.
The Officer acknowledges that any breach of the agreements contained in this Section could cause irreparable harm to the Company. The Officer acknowledges that damages in the event of Officers breach of this Agreement will be difficult, if not impossible, to ascertain and therefore it is agreed that the Company, in addition to, and without limiting any other remedy or right it may have under this Agreement or the law, will have the right to an injunction enjoining any such breach. The Officer agrees to reimburse the Company for all costs and expenses, including reasonable attorneys fees, incurred by the Company because of any breach of this provision, but only in the event that the Officer fails to cure such breach, within ten (10) days after being provided written notice thereof by the Company.
All covenants and provisions contained in Section 6 shall survive the termination of the Officers employment, regardless of the reason of such termination.
The Officer acknowledges that the Company recommends that the Officer review this Agreement with his own legal counsel prior to signing this Agreement and the Officer confirms that the Officer has had ample opportunity to do so.
Section 7. Notices . Any notice or other communication required or desired to be given hereunder shall be in writing and shall be deemed duly given when personally delivered or when deposited in the United States mail, first class postage prepaid, properly addressed to the parties at their respective addresses below or such addresses as shall be given by notice of any party.
The Company: |
AdCare Health Systems, Inc. |
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5057 Troy Road |
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Springfield, OH 45502 |
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Attn: Chairman |
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With a copy to: |
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Chief Executive Officer |
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AdCare Health Systems, Inc. |
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Two Buckhead Plaza |
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3050 Peachtree Road NW |
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Suite 355 |
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Atlanta, GA 30305 |
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The Officer: |
The most recent address that the Company has on file. |
Section 8. Actions by the Company . Any determination, consent, waiver, agreement, or other action under or with respect to this Agreement and its implementation of or by the Company shall not be deemed made, taken or effected hereunder unless made, taken or effected in a writing signed by a duly authorized officer of the Company.
Section 9. Waiver; Remedies Cumulative . No waiver of any right or option hereunder by any party shall operate as a waiver of any other right or option, or the same right or option as respects any subsequent occasion for its exercise, or of any legal remedy. No waiver by any party of any breach of this Agreement or of any agreement or covenant contained herein shall be held to constitute a waiver of any other breach or a continuation of the same breach. All remedies provided by this Agreement are in addition to all other remedies by it or the law provided.
Section 10. Assignment . This Agreement shall be binding upon and inure to the benefit of the legal successors of the Company. Neither this Agreement nor any rights hereunder shall be assignable and any such purported assignment by his shall be void and of no force or effect; provided, however, that in the event of the Officers death, any amounts that are unpaid and owing to the Officer or rights that are exercisable by the Officer shall be paid to or exercisable by his estate.
Section 11. Applicable Law . This Agreement shall be governed and construed in accordance with the laws of the State of Georgia. Any action for breach or to enforce the terms of this Agreement, or in any way arising out of or related to Officers employment with the company or this Agreement, including without limitation the covenants and provisions contained in Section 6, shall be brought in the Superior Court of Fulton County, Georgia or in a federal court sitting in Atlanta, Georgia, and the parties hereto each consent to jurisdiction and venue in such courts.
Section 12. Indemnification . The Company shall indemnify the Officer for his actions and omissions as an officer and provide for advancement of expenses in connection therewith to the maximum extent permitted by its state of incorporation, but not for the Officers gross negligence or willful misconduct. The Company shall maintain, during the Employment Term
and for at least three (3) years thereafter, an adequate officers liability policy covering the Officer for actions and omissions during the Employment Term.
Section 13. Severability and Judicial Modification . The parties agree that each provision of this Agreement is separate, distinct and severable from the other remaining provisions of this Agreement, and that the invalidity or unenforceability of any Agreement provision shall not effect the validity and unenforceability of any other provision or provisions of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of the conflict between such provision and any applicable law or public policy, it is the intent of the parties that such provision shall be modified by the Court to the extent appropriate to render the provision reasonable valid and enforceable. If any court of competent jurisdiction shall at any time deem the duration of the restrictions of Section 6, the Area as defined in Section 6, or any provisions of Section 6 unenforceable, the duration of the applicable restrictions set forth in Section 6 shall be deemed to be the longest duration permissible by law under the circumstances, the Area shall be deemed to comprise the largest territory permissible by law under the circumstances, and the remainder of the Agreement shall nevertheless stand. The court in each case shall reduce the aforementioned provisions to permissible duration or territory.
Section 14. Miscellaneous . This Agreement constitutes the entire understanding between the parties concerning the Officers employment with the Company and supersedes any and all previous agreements between the Officer and the Company concerning such employment. Except for judicial modification as set forth in Section 13, this Agreement cannot be amended or modified in any respect, unless such amendment or modification is evidenced by a written instrument signed by both the Company and the Officer. The captions of the various sections of this Agreement are not a part of the context hereof, are inserted merely for convenience in locating the different provisions hereof and shall be ignored in construing this Agreement.
The parties have executed multiple counterparts of this Agreement, each of which shall be deemed to be an original, as of the date set forth at the beginning hereof.
THE COMPANY: |
THE OFFICER: |
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ADCARE HEALTH SYSTEMS, INC. |
RONALD W. FLEMING |
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By: |
/s/ Boyd P. Gentry |
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/s/ Ronald W. Fleming |
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Boyd P. Gentry, |
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Ronald W. Fleming |
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President and CEO |
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Exhibit 10.297
CONFIDENTIAL SEPARATION AGREEMENT AND RELEASE
I, GARY L. WADE, on behalf of myself and my heirs, executors, guardians, administrators, successors, and assigns, and each of them jointly and severally, have entered into this Separation Agreement and Release (the Agreement), on this 1 st day of July 2011, with ADCARE HEALTH SYSTEMS, INC. on behalf of itself, its officers, directors, shareholders, employees, and agents (in their individual and representative capacities), and any parent companies, affiliates, predecessors, successors, subsidiaries, and other related companies, and each of them, jointly and severally (collectively, ADK, or Company), and we agree to be bound by the following terms and conditions:
1. EFFECTIVE DATE OF SEPARATION. I have agreed that my separation will start on July 1, 2013 (the Separation Date) and I will continue to perform my duties as I have historically performed them for ADK up until July 1, 2011.
2. SALARY CONTINUATION. I understand that in exchange for my promises made herein, ADK will pay me my salary and benefits through the Separation Date. Any accrued or unpaid vacation and sick pay will be paid to me upon the Separation (in accordance with Company policy). In addition, ADK will continue to treat me as an employee for pay and benefit purposes and to pay me my salary and benefits based on an annual salary of $190,000.00, plus my $35,000.00 expense allowance for an additional 24 months after the Separation Date, including health, life, accident, and other benefits as have been provided historically. The Company will provide me and any covered dependents information regarding my continuation coverage rights, but I understand and acknowledge that, as a result of my eligibility for Medicare I will not be able to elect continuation coverage rights for myself. I may, however, to the extent permitted by plan eligibility provisions or by law, be entitled to elect to continue to obtain supplemental coverage.
3. NO REINSTATEMENT. I understand that by accepting this separation offer, I am not entitled to reemployment or reinstatement with ADK.
4. RETURN OF PROPERTY. On or before the last day that I provide services for ADK, but no later than July 1, 2011, I will return all ADK property, including but not limited to originals and any and all duplicates (whether stored in paper, electronic, or other format) of documents, manuals, customer files, customer lists and contact information, laptops (except that I shall be permitted to keep the laptop that I am currently using after it has been inspected by the Companys Information Technology Manager and that all company documents and software have been removed from it), keys, access cards, or other property belonging to ADK. Furthermore, ADK agrees to have Gary L. Wades name, image, facsimile or electronic signature, guarantee or other affiliations or commitments with ADK to be immediately released and returned to Gary L. Wade and to no longer use such items following the Separation Date.
5. CONFIDENTIALITY AND NON-SOLICITATION. Additionally, I hereby agree that, without the express written consent of ADK s Board, I will not directly or indirectly, for my personal benefit or on behalf of any other entity, firm, or person: (i) I will not at any time prior to June 30, 2012, call upon any client or customer of ADK or in any way solicit, divert or take
away any client or customer of ADK: or (ii) prior to June 30, 2012, entice away or in any other manner persuade any employee or contractor to alter, modify or terminate their relationship with ADK. In the event I am contacted by any customer, I will advise them that I am no longer with ADK and I will direct them to such person or persons at ADK as are designated to me by ADK for such purposes. In addition, prior to working with or becomingan affiliate of any business that competes with ADK ). I will obtain the written assurance of such potential employer that it will not solicit any client or customer of ADK prior to June 30, 2012, and I will notify ADK of my intention to accept employment from such potential employer. I understand and acknowledge that nothing in this provision relieves me of my ongoing obligation to never disclose any of ADKs trade secrets or confidential proprietary information and I agree not to retain or use any of ADKs documents or objects, or copy thereof. I understand and acknowledge that my breach of any of the foregoing obligations will result in ADK seeking injunctive relief against me, in addition to any relief for damages incurred by ADK, and that any such injunction or period of limitation will run from the time that a final judicial determination is made by a court of competent jurisdiction. I further understand and acknowledge that the Company will not be required to post a bond in order to obtain such injunctive relief if I breach these provisions.
6. WAIVER. I hereby warrant that I have not filed any complaints, grievances, lawsuits, or other actions against ADK, and that I will not do so in the future with respect to any aspect of my employment by ADK or any other matter, whether known or unknown to me at the time of execution of this Agreement. Furthermore, ADK warrants that it has not filed any complaints, grievances, lawsuits, or other actions against Gary L. Wade, his heirs, executors, guardians, administrators or successors, and that ADK will not do so in the future with respect to any known aspect of Gary L. Wades employment at ADK. ADK agrees that it will not contest or otherwise prevent Gary L. Wade from pursuing unemployment compensation that may be available to him from time to time. ADK agrees to indemnify Gary L. Wade to the same extent that it is required to indemnify other officers of ADK for complaints, grievances, lawsuits, or other actions against Gary L. Wade, his heirs, executors, guardians, administrators or successors, that he may be named in as a result of his employment with ADK.
7. RELEASE. I acquit, release, and forever discharge any right or claim, known or unknown, that I may have in connection with my employment with ADK, under any federal, state, local law, including, but not limited to, claims for back pay, severance pay, front pay, wages, personal time, benefits, commissions, attorneys fees, costs, interest, damages, or with respect to any other matter whatsoever, unless ADK breaches its obligations pursuant to this Agreement. I understand and agree that this Agreement shall, to the extent permitted by law, bar each and every claim, demand, and cause of action specified herein, whether known to me at the time I execute this Agreement, including but not limited to a waiver of any and all rights or remedies which I had or may now have against ADK, its officers, directors, employees and affiliates under any federal, state, or local statute or law, including, but not limited to, Ohio Revised Code Chapter 4112; Title VII of the I 964 Civil Rights Act; the Age Discrimination in Employment Act; the Civil Rights Act of 1991; the Americans with Disabilities Act; the Fair Labor Standards Act of 1938; the Family and Medical Leave Act of 1993; Ohios Workers Compensation Law; the Employee Retirement Income Security Act of 1974; the National Labor Relations Act; the Consolidated Omnibus Budget & Reconciliation Act of 1986, and any statutory amendments.
8. CONSIDERATION. My covenants and promises made in this Agreement are in consideration of the covenants and promises made hereunder by ADK, and I understand that I would not be entitled to these absent my agreement to abide by the terms and conditions of this Agreement.
9. NON-DISCLOSURE. I agree that neither I nor any person acting at my direction or on my behalf will reveal the existence of this Agreement or any of it terms to any person, entity, or organization, except that I may do so with my spouse or tax preparer, or attorney and if used in any litigation or administrative proceeding I may be engaged with regarding ADK or as may be required by law.
10. NON-DISPARAGEMENT. I agree not to speak or refer in any way to or regarding ADK, its officers, directors, agents, supervisors or employees in a disparaging or derogatory manner. Likewise, ADK through its officers, directors, agents, supervisors or employees agree not to speak or refer in any way to or regarding me in a disparaging or derogatory manner.
11. DAMAGES, COSTS AND ATTORNEYS FEES. In the event that I or any person, entity, or organization acting on my behalf breaches any of the promises made in this Agreement and ADK defends or pursues any charge, suit, complaint, claim, or grievance as a result thereof and provided that such breach results in either a final arbitration award or a final non-appealable judgment by a court having jurisdiction, I understand and acknowledge that I will be liable for all damages, attorneys fees, expenses, and costs incurred by ADK in defending or pursuing the same. In the event that ADK or its officers, agents, directors, supervisors or employees acting on its behalf breaches any of the promises made in this Agreement and Gary L. Wade or his designated representative defends or pursues any charge, suit, complaint, claim, or grievance as a result thereof and provided that such breach results in either a final non-appealable arbitration award or a final non-appealable judgment by a court having jurisdiction, ADK understand and acknowledges that it will be liable for all damages, attorneys fees, expenses, and costs incurred by Gary L. Wade in defending or pursuing the same.
12. NON-ADMISSION. By entering into this Agreement, ADK does not admit to the violation of any federal, state, or local law, or common law, and any claimed breaches or violations are hereby specifically denied by ADK. Likewise, by entering into this Agreement, Gary L. Wade does not admit to the violation of any federal, state or local law, or common law, and any claimed breaches or violations are hereby specifically denied by Gary L. Wade.
13. ACKNOWLEDGEMENT. Both ADK and Gary L. Wade have entered into this Agreement knowingly and voluntarily, in consideration for the foregoing promises and covenants.
14. CHOICE OF LAW, JURISDICTION, AND VENUE. Any action brought by any party hereunder may be instituted and maintained only in the appropriate court having jurisdiction in Ohio, and shall be interpreted subject to the laws of the state of Ohio.
15. REMEDIES FOR BREACH. I acknowledge that the covenants contained in this Agreement are independent covenants and that any failure by ADK to perform any of its
obligations under this Agreement will not be a defense to enforcement of any other covenant contained herein, including, but not limited to, an action for a temporary or permanent injunction. I also acknowledge that damages in the event of a breach by me of this Agreement will be difficult if not impossible, to ascertain and it is therefore agreed that ADK, in addition to, and without limiting any other remedy or right it may have under this Agreement or at law, will have the right to an injunction enjoining any such breach. I further agree to reimburse ADK for all costs and expenses, including reasonable attorneys fees, incurred by ADK because of any breach of these provisions by me, but only in the event that I willfully continue such breach or fail to cure the breach, following written notice thereof from ADK. I have carefully considered the nature and extent of the restrictions set forth in this Agreement, and hereby acknowledge in agreement, in light of my position with ADK, that in light of the information which I have regarding ADK, and the nature of the business of ADK, the restrictions are reasonable in time and territory, are designed to eliminate competition which would be unfair to ADK, are fully required to protect ADKs legitimate interest, and does not confer a benefit upon ADK disproportionate to the detriment to me. In the event that I breach any of the agreements contained herein, then, in addition to any or other rights or remedies which ADK may have, ADK will have the right to an accounting and repayment of all profits and other benefits directly realized a result of such breach, collect any damages caused by such breach in addition to those specifically listed herein, and to enforce any legal or equitable remedy (including injunctive relief) that they may have against me in order to prevent further injury to ADK as a result of such
16. LEGAL NOTICE. I have been advised of the right to have twenty-one (21) days within which to review and consider this Agreement once it is delivered in final form, and have been advised of my right to consult with legal counsel at my expense. I understand that I am able to sign this Agreement in a shorter time than twenty-one (21) days if I choose to do so. I further acknowledge that I have entered into this Agreement voluntarily and of my own free will. I acknowledge my right to revoke this agreement within seven (7) days following execution thereof, by giving written notice thereof to ADK and delivering such notice to David A. Tenwick. In the event of such revocation, this Agreement shall become null and void, and no party hereto shall have any rights or obligations hereunder.
17. ENTIRE AGREEMENT. The foregoing constitutes the entire agreement among the parties, and that there exists no other agreements (with the exception of the Employment Agreement dated Sept 1, 2008), oral or written, express or implied, relating to any matters covered by this Agreement, whether within the knowledge or contemplation of either of the Parties at the time of execution of this Agreement. This Agreement may only be changed in writing signed by all Parties hereto.
18. BINDING AGREEMENT. This Agreement shall be binding upon and inure to the benefit of each of the parties and their respective heirs, personal representatives, successors and assigns.
WHEREFORE, the Parties have read all of the foregoing, understand the same, and agree to all of the provisions contained herein.
ADCARE HEALTH SYSTEMS, INC. |
EMPLOYEE |
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By: |
/s/ David A. Tenwick |
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/s/ Gary L. Wade |
Title: |
Chairman |
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Gary L. Wade |
Exhibit 21.1
Subsidiaries of the Registrant
Entity |
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Jurisdiction of Organization |
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AdCare Acquisition, Inc. |
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Ohio |
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AdCare Administrative Services, LLC |
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Georgia |
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AdCare Consulting, LLC |
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Georgia |
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AdCare Employee Leasing, LLC |
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Georgia |
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AdCare Financial Management, LLC |
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Georgia |
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AdCare Health Systems, Inc. |
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Ohio |
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AdCare Management Company, Inc. |
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Ohio |
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AdCare Oklahoma Management, LLC |
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Georgia |
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AdCare Operations, LLC |
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Georgia |
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AdCare Property Holdings, LLC |
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Ohio |
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ADK Administrative Property, LLC |
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Georgia |
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ADK Bonterra/Parkview, LLC |
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Georgia |
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ADK Georgia, LLC |
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Georgia |
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ADK Hembree Road Property, LLC |
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Georgia |
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ADK Jeffersonville Operator, LLC |
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Georgia |
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ADK LaGrange Operator, LLC |
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Georgia |
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ADK Lumber City Operator, LLC |
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Georgia |
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ADK Oceanside Operator, LLC |
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Georgia |
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ADK Powder Springs Operator, LLC |
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Georgia |
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ADK Savannah Beach Operator, LLC |
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Georgia |
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ADK Thomasville Operator, LLC |
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Georgia |
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ADK Thunderbolt Operator, LLC |
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Georgia |
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APH&R Nursing, LLC |
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Georgia |
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APH&R Property Holdings, LLC |
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Georgia |
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Assured Health Care, Inc. |
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Ohio |
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Attalla Nursing ADK, LLC |
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Georgia |
Entity |
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Jurisdiction of Organization |
BAN Nursing, LLC |
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Georgia |
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BAN 1400 Property Holdings, LLC (f/k/a BAN Property Holdings, LLC) |
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Georgia |
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Benton Nursing, LLC |
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Georgia |
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Benton Property Holdings, LLC |
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Georgia |
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Communitys Hearth & Home. Ltd. |
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Ohio |
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Coosa Nursing ADK, LLC |
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Georgia |
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CP Nursing, LLC |
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Georgia |
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CP Property Holdings, LLC |
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Georgia |
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CSCC Nursing, LLC |
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Georgia |
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CSCC Property Holdings, LLC |
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Georgia |
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Eaglewood Property Holdings, LLC |
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Georgia |
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Eaglewood Village, LLC |
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Georgia |
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ER Nursing, LLC |
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Georgia |
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Erin Nursing, LLC |
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Georgia |
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Erin Property Holdings, LLC |
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Georgia |
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Georgetown HC&R Nursing, LLC |
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Georgia |
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Georgetown HC&R Property Holdings, LLC |
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Georgia |
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Glenvue H&R Nursing, LLC |
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Georgia |
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Glenvue H&R Property Holdings, LLC |
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Georgia |
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GLV Grove Property Holdings, LLC (f/k/a Grand Lake Property Holdings, LLC) |
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Georgia |
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Grand Lake Nursing, LLC |
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Georgia |
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Harrah Property Holdings, LLC |
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Georgia |
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Harrah Whites Meadows Nursing, LLC |
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Georgia |
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Hearth & Care of Greenfield, LLC |
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Ohio |
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Hearth & Home of Ohio, Inc. |
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Ohio |
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Hearth & Home of Urbana, LLC |
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Ohio |
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Hearth & Home of Van Wert, LLC |
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Ohio |
Entity |
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Jurisdiction of Organization |
Hearth & Home of Vandalia, Inc. |
|
Ohio |
|
|
|
Home Office Property Holdings, LLC |
|
Georgia |
|
|
|
Homestead Nursing, LLC |
|
Georgia |
|
|
|
Homestead Property Holdings, LLC |
|
Georgia |
|
|
|
KM 502 Nursing, LLC (f/k/a Kenwood Manor Nursing, LLC) |
|
Georgia |
|
|
|
Kenwood 502 Property Holdings (f/k/a Kenwood Property Holdings, LLC) |
|
Georgia |
|
|
|
Little Rock HC&R Nursing, LLC |
|
Georgia |
|
|
|
Little Rock HC&R Property Holdings, LLC |
|
Georgia |
|
|
|
Living Center Nursing, LLC |
|
Georgia |
|
|
|
Living Center Property Holdings, LLC |
|
Georgia |
|
|
|
MCL Nursing, LLC |
|
Georgia |
|
|
|
McLoud Property Holdings, LLC |
|
Georgia |
|
|
|
Meeker North Dawson Nursing, LLC |
|
Georgia |
|
|
|
Meeker Property Holdings, LLC |
|
Georgia |
|
|
|
Mountain Top ALF, LLC |
|
Georgia |
|
|
|
Mountain Top Property Holdings, LLC |
|
Georgia |
|
|
|
Mountain Trace Nursing ADK, LLC |
|
Ohio |
|
|
|
Mountain View Nursing, LLC |
|
Georgia |
|
|
|
Mt. V Property Holdings, LLC |
|
Georgia |
|
|
|
Mt. Kenn Nursing, LLC |
|
Georgia |
|
|
|
Mt. Kenn Property Holdings, LLC |
|
Georgia |
|
|
|
NW 61st Nursing, LLC |
|
Georgia |
|
|
|
New Lincoln Ltd. |
|
Ohio |
|
|
|
Northridge HC&R Nursing, LLC |
|
Georgia |
|
|
|
Northridge HC&R Property Holdings, LLC |
|
Georgia |
|
|
|
Northwest Property Holdings, LLC |
|
Georgia |
Entity |
|
Jurisdiction of Organization |
Park Heritage Nursing, LLC |
|
Georgia |
|
|
|
Park Heritage Property Holdings, LLC |
|
Georgia |
|
|
|
Pavilion Care Center, LLC, The |
|
Ohio |
|
|
|
QC Nursing, LLC |
|
GA |
|
|
|
QC Property Holdings, LLC |
|
GA |
|
|
|
Rose Missouri Nursing, LLC |
|
GA |
|
|
|
Senior 410 Property Holdings, LLC (f/k/a Senior Property Holdings, LLC) |
|
GA |
|
|
|
Senior Nursing, LLC |
|
GA |
|
|
|
Sumter N&R, LLC |
|
GA |
|
|
|
Sumter Valley Property Holdings, LLC |
|
GA |
|
|
|
Valley River Nursing, LLC |
|
GA |
|
|
|
Valley River Property Holdings, LLC |
|
GA |
|
|
|
West Toledo Management, Inc. |
|
Ohio |
|
|
|
Woodland Hills HC Nursing, LLC |
|
GA |
|
|
|
Woodland Hills HC Property Holdings, LLC |
|
GA |
|
|
|
Woodland Manor Nursing, LLC |
|
GA |
|
|
|
Woodland Manor Property Holdings, LLC |
|
GA |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements (File No.s 333-131542, 333-166488, 333-171184, 333-177531, 333-175541, 333-183912, 333-184462 and 333-184534) of AdCare Health Systems, Inc. of our report dated March 19, 2012, relating to the consolidated financial statements which appears in this Form 10-K.
/s/ BATTELLE & BATTELLE LLP |
|
|
|
|
|
|
|
|
Dayton, Ohio |
|
|
July 8, 2013 |
|
|
EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
The Board of Directors
AdCare Health Systems, Inc. and subsidiaries:
We consent to the incorporation by reference in the registration statements (No. 333-184462 and 333-177531) on Form S-8 of AdCare Health Systems, Inc. and subsidiaries of our report dated July 8, 2013, with respect to the consolidated balance sheets of AdCare Health Systems, Inc. and subsidiaries as of December 31, 2012, and the related consolidated statements of operations, stockholders equity, and cash flows, for the year ended December 31, 2012, which report appears in the December 31, 2012 annual report on Form 10-K of AdCare Health Systems, Inc. and subsidiaries.
/s/ KPMG LLP |
|
|
|
|
|
Atlanta, Georgia |
|
|
July 8, 2013 |
|
|
Exhibit 31.1
CERTIFICATIONS
I, Boyd P. Gentry, certify that:
1. I have reviewed this annual report on Form 10-K of AdCare Health Systems, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15 d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: July 8, 2013 |
By |
/s/ BOYD P. GENTRY |
|
|
Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, Ronald W. Fleming, certify that:
1. I have reviewed this annual report on Form 10-K of AdCare Health Systems, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15 d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: July 8, 2013 |
By |
/s/ RONALD W. FLEMING |
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of AdCare Health Systems, Inc. (the Company) on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission (the Report), I, Boyd P. Gentry, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
Date: July 8, 2013 |
By: |
/s/ BOYD P. GENTRY |
|
|
Boyd P. Gentry,
|
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of AdCare Health Systems, Inc. (the Company) on Form 10-K for the period ended December 31, 2012 as filed with the Securities and Exchange Commission (the Report), I, Ronald W. Fleming, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
Date: July 8, 2013 |
By: |
/s/ RONALD W. FLEMING |
|
|
Ronald W. Fleming,
|